Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2020 | Nov. 09, 2020 | |
Cover [Abstract] | ||
Entity Registrant Name | TOMI Environmental Solutions, Inc. | |
Entity Central Index Key | 0000314227 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2020 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Is Entity's Reporting Status Current? | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Emerging Growth Company | false | |
Entity Small Business | true | |
Entity Shell Company | false | |
Entity Interactive Data Current | Yes | |
Entity Incorporation, State or Country Code | FL | |
Entity File Number | 000-09908 | |
Entity Common Stock, Shares Outstanding | 16,761,013 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2020 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Current Assets: | ||
Cash and Cash Equivalents | $ 5,885,383 | $ 897,223 |
Accounts Receivable - net | 3,504,284 | 1,494,658 |
Other Receivables | 157,487 | 0 |
Inventories (Note 3) | 4,374,500 | 2,315,214 |
Vendor Deposits (Note 4) | 333,212 | 141,052 |
Prepaid Expenses | 376,758 | 187,664 |
Total Current Assets | 14,631,624 | 5,035,811 |
Property and Equipment - net (Note 5) | 1,111,342 | 1,367,864 |
Other Assets: | ||
Intangible Assets - net (Note 6) | 658,969 | 939,010 |
Operating Lease - Right of Use Asset (Note 7) | 642,738 | 674,471 |
Capitalized Software Development Costs - net (Note 8) | 62,852 | 94,278 |
Other Assets | 469,024 | 114,033 |
Total Other Assets | 1,833,583 | 1,821,792 |
Total Assets | 17,576,548 | 8,225,467 |
Current Liabilities: | ||
Accounts Payable | 2,149,988 | 713,222 |
Accrued Expenses and Other Current Liabilities (Note 14) | 671,381 | 450,112 |
Accrued Officers Compensation | 40,050 | 0 |
Accrued Interest (Note 10) | 0 | 66,667 |
Current Portion of Long-Term Operating Lease | 78,723 | 71,510 |
Convertible Notes Payable, Net of Discount of $0 at December 31, 2019 (Note 10) | 0 | 5,000,000 |
Total Current Liabilities | 2,940,142 | 6,301,511 |
Long-Term Liabilities: | ||
Loan Payable (Note 16) | 410,700 | 0 |
Long-Term Operating Lease, Net of Current Portion (Note 7) | 974,311 | 1,034,413 |
Total Long-Term Liabilities | 1,385,011 | 1,034,413 |
Total Liabilities | 4,325,153 | 7,335,924 |
Commitments and Contingencies | ||
Stockholders' Equity: | ||
Common stock; par value $0.01 per share, 250,000,000 shares authorized: 16,748,513 and 15,587,552 shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively | 167,485 | 155,875 |
Additional Paid-in Capital | 49,287,039 | 44,232,274 |
Accumulated Deficit | (36,203,766) | (43,499,244) |
Total Shareholders' Equity | 13,251,396 | 889,543 |
Total Liabilities and Shareholders' Equity | 17,576,549 | 8,225,467 |
Cumulative Convertible Series A Preferred Stock | ||
Stockholders' Equity: | ||
Cumulative Convertible Preferred Stock | 638 | 638 |
Cumulative Convertible Series B Preferred Stock | ||
Stockholders' Equity: | ||
Cumulative Convertible Preferred Stock | $ 0 | $ 0 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED) (Parenthetical) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Convertible Notes Payable, Current, Net of Discount | $ 0 | $ 0 |
Stockholders' Equity: | ||
Common Stock; Par Value | $ 0.01 | $ 0.01 |
Common Stock; Shares Authorized | 250,000,000 | 250,000,000 |
Common Stock; Shares Issued | 16,748,513 | 15,587,552 |
Common Stock; Shares Outstanding | 16,748,513 | 15,587,552 |
Cumulative Convertible Series A Preferred Stock | ||
Stockholders' Equity: | ||
Cumulative Convertible Preferred Stock; Par Value | $ 0.01 | $ 0.01 |
Cumulative Convertible Preferred Stock; Shares Authorized | 1,000,000 | 1,000,000 |
Cumulative Convertible Preferred Stock; Shares Issued | 63,750 | 63,750 |
Cumulative Convertible Preferred Stock; Shares Outstanding | 63,750 | 63,750 |
Cumulative Convertible Series B Preferred Stock | ||
Stockholders' Equity: | ||
Cumulative Convertible Preferred Stock; Par Value | $ 1,000 | $ 1,000 |
Cumulative Convertible Preferred Stock; Shares Authorized | 4,000 | 4,000 |
Cumulative Convertible Preferred Stock; Shares Issued | 0 | 0 |
Cumulative Convertible Preferred Stock; Shares Outstanding | 0 | 0 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Income Statement [Abstract] | ||||
Sales, net | $ 4,291,589 | $ 1,600,387 | $ 21,373,504 | $ 4,491,719 |
Cost of Sales | 1,455,568 | 460,008 | 8,484,580 | 1,616,680 |
Gross Profit | 2,836,021 | 1,140,379 | 12,888,924 | 2,875,039 |
Operating Expenses: | ||||
Professional Fees | 227,560 | 82,945 | 418,516 | 297,349 |
Depreciation and Amortization | 177,279 | 182,689 | 521,486 | 539,070 |
Selling Expenses | 212,624 | 314,110 | 980,096 | 1,274,326 |
Research and Development | 44,862 | 88,137 | 245,443 | 249,373 |
Equity Compensation Expense (Note 11) | 10,621 | 0 | 307,686 | 87,033 |
Consulting Fees | 75,204 | 31,799 | 226,454 | 87,066 |
General and Administrative | 991,543 | 628,285 | 2,776,846 | 1,931,770 |
Total Operating Expenses | 1,739,693 | 1,327,965 | 5,476,527 | 4,465,987 |
Income (Loss) from Operations | 1,096,328 | (187,586) | 7,412,397 | (1,590,948) |
Other Income (Expense): | ||||
Amortization of Debt Discounts | 0 | 0 | 0 | (17,534) |
Interest Income | 762 | 773 | 2,347 | 2,432 |
Interest Expense | (790) | (50,000) | (42,266) | (150,000) |
Total Other Income (Expense) | (28) | (49,227) | (39,919) | (165,102) |
Income (Loss) Before Income Taxes | 1,096,300 | (236,813) | 7,372,478 | (1,756,050) |
Provision for Income Taxes (Note 17) | 77,000 | 0 | 77,000 | 0 |
Net Income (Loss) | $ 1,019,300 | $ (236,813) | $ 7,295,478 | $ (1,756,050) |
Net Income (Loss) Per Common Share | ||||
Basic | $ 0.06 | $ (0.02) | $ 0.44 | $ (0.11) |
Diluted | $ 0.05 | $ (0.02) | $ .40 | $ (0.11) |
Basic Weighted Average Common Shares Outstanding | 16,741,622 | 15,588,680 | 16,429,360 | 15,585,822 |
Diluted Weighted Average Common Shares Outstanding | 18,593,255 | 15,588,680 | 18,280,993 | 15,585,822 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (UNAUDITED) - USD ($) | Series A Preferred | Common Stock | Additional Paid in Capital | Accumulated Deficit | Total |
Beginning Balance, Shares at Dec. 31, 2018 | 63,750 | 15,536,302 | |||
Beginning Balance, Amount at Dec. 31, 2018 | $ 638 | $ 155,363 | $ 44,040,708 | $ (41,201,511) | $ 2,995,198 |
Equity Compensation | 146,878 | 146,878 | |||
Common Stock Issued for Services Provided, Shares | 51,250 | ||||
Common Stock Issued for Services Provided, Amount | $ 513 | 44,688 | 45,201 | ||
Conversion of Notes Payable into Common Stock, Amount | 0 | ||||
Net Income (Loss) | (1,756,050) | (1,756,050) | |||
Ending Balance, Shares at Sep. 30, 2019 | 63,750 | 15,587,552 | |||
Ending Balance, Amount at Sep. 30, 2019 | $ 638 | $ 155,876 | 44,232,273 | (42,957,560) | 1,431,227 |
Beginning Balance, Shares at Jun. 30, 2019 | 63,750 | 15,587,552 | |||
Beginning Balance, Amount at Jun. 30, 2019 | $ 638 | $ 155,876 | 44,232,273 | (42,720,747) | 1,668,040 |
Net Income (Loss) | (236,813) | (236,813) | |||
Ending Balance, Shares at Sep. 30, 2019 | 63,750 | 15,587,552 | |||
Ending Balance, Amount at Sep. 30, 2019 | $ 638 | $ 155,876 | 44,232,273 | (42,957,560) | 1,431,227 |
Beginning Balance, Shares at Dec. 31, 2019 | 63,750 | 15,587,552 | |||
Beginning Balance, Amount at Dec. 31, 2019 | $ 638 | $ 155,876 | 44,232,274 | (43,499,244) | 889,543 |
Equity Compensation | 334,875 | 334,875 | |||
Common Stock Issued for Services Provided, Shares | 50,000 | ||||
Common Stock Issued for Services Provided, Amount | $ 500 | 47,500 | 48,000 | ||
Conversion of Notes Payable into Common Stock, Shares | 1,041,667 | ||||
Conversion of Notes Payable into Common Stock, Amount | $ 10,417 | 4,489,584 | 4,500,000 | ||
Warrants and Options Exercised, Shares | 66,796 | ||||
Warrants and Options Exercised, Amount | $ 668 | 182,832 | 183,500 | ||
Other, Shares | 2,499 | ||||
Other, Amount | $ 25 | (25) | 0 | ||
Net Income (Loss) | 7,295,478 | 7,295,478 | |||
Ending Balance, Shares at Sep. 30, 2020 | 63,750 | 16,748,514 | |||
Ending Balance, Amount at Sep. 30, 2020 | $ 638 | $ 167,485 | 49,287,039 | (36,203,765) | 13,251,396 |
Beginning Balance, Shares at Jun. 30, 2020 | 63,750 | 16,719,075 | |||
Beginning Balance, Amount at Jun. 30, 2020 | $ 638 | $ 167,191 | 49,214,210 | (37,223,065) | 12,158,974 |
Equity Compensation | 10,621 | 10,621 | |||
Warrants and Options Exercised, Shares | 26,940 | ||||
Warrants and Options Exercised, Amount | $ 269 | 62,230 | 62,499 | ||
Other, Shares | 2,499 | ||||
Other, Amount | $ 25 | (25) | 0 | ||
Net Income (Loss) | 1,019,300 | 1,019,300 | |||
Ending Balance, Shares at Sep. 30, 2020 | 63,750 | 16,748,514 | |||
Ending Balance, Amount at Sep. 30, 2020 | $ 638 | $ 167,485 | $ 49,287,039 | $ (36,203,765) | $ 13,251,396 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED) - USD ($) | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Cash Flow From Operating Activities: | ||
Net Income (Loss) | $ 7,295,478 | $ (1,756,050) |
Adjustments to Reconcile Net Income (Loss) to Net Cash Provided by (Used) in Operating Activities: | ||
Depreciation and Amortization | 521,486 | 539,070 |
Amortization of Lease Liability | 117,986 | 117,986 |
Amortization of Debt Discount | 0 | 17,534 |
Amortization of Software Costs | 31,425 | 6,285 |
Equity Compensation Expense | 307,686 | 87,033 |
Value of Equity Issued for Services | 48,000 | 45,200 |
Reserve for Bad Debt | 205,000 | (190,000) |
Inventory Reserve | (100,000) | 0 |
Decrease (Increase) in: | ||
Accounts Receivable | (2,214,625) | 1,161,434 |
Inventory | (1,923,030) | 276,438 |
Other Receivables | (157,487) | 0 |
Prepaid Expenses | (189,095) | (20,217) |
Vendor Deposits | (192,160) | (109,689) |
Other Assets | (354,991) | (130,692) |
Increase (Decrease) in: | ||
Accounts Payable | 1,436,766 | (704,675) |
Accrued Expenses | 248,458 | 91,204 |
Accrued Interest | (66,667) | (50,000) |
Accrued Officer Compensation | 40,050 | (39,833) |
Customer Deposits | 0 | 116,327 |
Lease Liability | (109,747) | (29,888) |
Net Cash Provided by (Used in) Operating Activities | 4,944,535 | (572,533) |
Cash Flow From Investing Activities: | ||
Capitalized Software Costs | 0 | (125,704) |
Capitalized Patent Costs | 0 | (21,980) |
Purchase of Property and Equipment | (50,574) | (140,647) |
Net Cash Used in Investing Activities | (50,574) | (288,331) |
Cash Flow From Financing Activities: | ||
Proceeds from Exercise of Warrants and Options | 183,500 | 0 |
Proceeds from Loan Payable | 410,700 | 0 |
Repayment of Principal Balance on Convertible Note | (500,000) | 0 |
Net Cash Provided By Financing Activities | 94,200 | 0 |
Increase (Decrease) In Cash and Cash Equivalents | 4,988,160 | (860,864) |
Cash and Cash Equivalents - Beginning | 897,223 | 2,004,938 |
Cash and Cash Equivalents - Ending | 5,885,383 | 1,144,075 |
Supplemental Cash Flow Information: | ||
Cash Paid for Interest | 107,356 | 200,000 |
Cash Paid for Income Taxes | 800 | 800 |
Non-Cash Investing and Financing Activities : | ||
Accrued Equity Compensation | 27,189 | 59,845 |
Conversion of Note Payable into Common Stock | 4,500,000 | 0 |
Equipment, Net Transferred to Inventory | 36,256 | 0 |
Capitalization of patent costs reclassified from Other Assets | $ 0 | $ 36,227 |
1. DESCRIPTION OF BUSINESS
1. DESCRIPTION OF BUSINESS | 9 Months Ended |
Sep. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
DESCRIPTION OF BUSINESS | TOMI Environmental Solutions, Inc., a Florida corporation (“TOMI”, the “Company”, “we”, “our” and “us”) is a global provider of disinfection and decontamination essentials through our premier Binary Ionization Technology ® ™ ® ® Invented under a defense grant in association with the Defense Advanced Research Projects Agency (DARPA) of the U.S. Department of Defense, BIT ™ . ™ ® ™ Our products are designed to service a broad spectrum of commercial structures, including, but not limited to, hospitals and medical facilities, bio-safety labs, pharmaceutical facilities, meat and produce processing facilities, universities and research facilities, vivarium labs, all service industries including cruise ships, office buildings, hotel and motel rooms, schools, restaurants, military barracks, police and fire departments, prisons, and athletic facilities. Our products are also used in single-family homes and multi-unit residences. Additionally, our products have been listed on the EPA’s List N as products that help combat COVID-19, and are actively being used for this purpose. |
2. SUMMARY OF SIGNIFICANT ACCOU
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | Basis of Presentation The interim unaudited condensed consolidated financial statements included herein, presented in accordance with generally accepted accounting principles utilized in the United States of America (“GAAP”), and stated in U.S. dollars, have been prepared by us, without an audit, pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations, although we believe that the disclosures are adequate to make the information presented not misleading. These financial statements reflect all adjustments, consisting of normal recurring adjustments, which, in the opinion of management, are necessary for fair presentation of the information contained therein. These unaudited condensed consolidated financial statements should be read in conjunction with our audited financial statements for the year ended December 31, 2019 and notes thereto which are included in the Annual Report on Form 10-K previously filed with the SEC on March 30, 2020. We follow the same accounting policies in the preparation of interim reports. The results of operations for the interim periods covered by this Form 10-Q may not necessarily be indicative of results of operations for the full fiscal year or any other interim period. Principles of Consolidation The accompanying condensed consolidated financial statements include the accounts of TOMI and its wholly owned subsidiary, TOMI Environmental Solutions, Inc., a Nevada corporation. All significant intercompany accounts and transactions have been eliminated in consolidation. Reclassification of Accounts Certain reclassifications have been made to prior-year comparative financial statements to conform to the current year presentation. These reclassifications had no effect on previously reported results of operations or financial position. Use of Estimates The preparation of the condensed consolidated financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the amounts reported and disclosed in the accompanying condensed consolidated financial statements and the accompanying notes. Actual results could differ materially from these estimates. On an ongoing basis, we evaluate our estimates, including those related to accounts receivable, inventory, fair values of financial instruments, intangible assets, useful lives of intangible assets and property and equipment, fair values of stock-based awards, income taxes, and contingent liabilities, among others. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of our assets and liabilities. Fair Value Measurements The authoritative guidance for fair value measurements defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or the most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Market participants are buyers and sellers in the principal market that are (i) independent, (ii) knowledgeable, (iii) able to transact, and (iv) willing to transact. The guidance describes a fair value hierarchy based on the levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value, which are the following: Level 1: Quoted prices in active markets for identical assets or liabilities. Level 2: Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the value of the assets or liabilities. Our financial instruments include cash and cash equivalents, accounts receivable, accounts payable and accrued expenses. All these items were determined to be Level 1 fair value measurements. The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable and accrued expenses approximated fair value because of the short maturity of these instruments. Cash and Cash Equivalents For purposes of the statement of cash flows, cash and cash equivalents includes cash on hand, held at financial institutions and other liquid investments with original maturities of three months or less. At times, these deposits may be in excess of insured limits. Accounts Receivable Our accounts receivable are typically from credit worthy customers or, for certain international customers, are supported by pre-payments. For those customers to whom we extend credit, we perform periodic evaluations of their status and maintain allowances for potential credit losses as deemed necessary. We have a policy of reserving for doubtful accounts based on our best estimate of the amount of potential credit losses in existing accounts receivable. We periodically review our accounts receivable to determine whether an allowance is necessary based on an analysis of past due accounts and other factors that may indicate that the realization of an account may be in doubt. Account balances deemed to be uncollectible are charged to the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. Bad debt expense for the three and nine months ended September 30, 2020 was approximately $153,000 and $226,000, respectively. Bad debt expense for the three and nine months ended September 30, 2019 was approximately $1,000 and $33,000, respectively. At September 30, 2020 and December 31, 2019, the allowance for doubtful accounts was $315,000 and $110,000, respectively. Inventories Inventories are valued at the lower of cost or market using the first-in, first-out (FIFO) method. Inventories consist primarily of finished goods. We expense costs to maintain certification to cost of goods sold as incurred. We review inventory on an ongoing basis, considering factors such as deterioration and obsolescence. We record an allowance for estimated losses when the facts and circumstances indicate that particular inventories may not be usable. Our reserve for obsolete inventory was $0 and $100,000 as of September 30, 2020 and December 31, 2019, respectively. Property and Equipment We account for property and equipment at cost less accumulated depreciation. We compute depreciation using the straight-line method over the estimated useful lives of the assets, generally three to five years. Depreciation for equipment, furniture and fixtures and vehicles commences once placed in service for its intended use. Leasehold improvements are amortized using the straight-line method over the lives of the respective leases or service lives of the improvements, whichever is shorter. Leases In February 2016, the FASB issued ASU No. 2016-02 (ASC 842), Leases Codification Improvements to Topic 842, Leases Targeted Improvements Narrow-Scope Improvements for Lessors Codification Improvements Operating lease assets are included within operating lease right-of-use assets, and the corresponding operating lease liabilities are recorded as current portion of long-term operating lease, and within long-term liabilities as long-term operating lease, net of current portion on our condensed consolidated balance sheet as of September 30, 2020 and December 31, 2019. We have elected not to present short-term leases on the condensed consolidated balance sheet as these leases have a lease term of 12 months or less at lease inception and do not contain purchase options or renewal terms that we are reasonably certain to exercise. All other lease assets and lease liabilities are recognized based on the present value of lease payments over the lease term at commencement date. Because most of our leases do not provide an implicit rate of return, we used our incremental borrowing rate based on the information available at adoption date in determining the present value of lease payments. Capitalized Software Development Costs In accordance with ASC 985-20 regarding the development of software to be sold, leased, or marketed, we expense such costs as they are incurred until technological feasibility has been established, at and after which time those costs are capitalized until the product is available for general release to customers. The periodic expense for the amortization of capitalized software development costs will be included in cost of sales. Amortization expense for the three and nine months ended September 30, 2020 was $10,475 and $31,425, respectively. Amortization expense for the three and nine months ended September 30, 2019 was $6,285. Accounts Payable As of September 30, 2020, three vendors accounted for approximately 56% of accounts payable. As of December 31, 2019, one vendor accounted for approximately 40% of accounts payable. For the three and nine months ended September 30, 2020, two vendors accounted for 66% and 77% of cost of sales, respectively. For the three and nine months ended September 30, 2019, one vendor accounted for 54% and 68% of cost of sales, respectively. Accrued Warranties Accrued warranties represent the estimated costs, if any, that will be incurred during the warranty period of our products. We estimate the expected costs to be incurred during the warranty period and record the expense to the condensed consolidated statement of operations at the date of sale. Our manufacturers assume the warranty against product defects from date of sale, which we extend to our customers upon sale of the product. We assume responsibility for product reliability and results. As of September 30, 2020, and December 31, 2019, our warranty reserve was $105,000 and $30,000, respectively (See Note 15). Income Taxes Deferred income tax assets and liabilities are determined based on differences between the financial statement reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws in effect when the differences are expected to reverse. The measurement of deferred income tax assets is reduced, if necessary, by a valuation allowance for any tax benefits that are, on a more likely than not basis, not expected to be realized in accordance with Accounting Standards Codification (ASC) guidance for income taxes. Net deferred tax benefits have been fully reserved at September 30, 2020 and December 31, 2019. The effect on deferred income tax assets and liabilities of a change in tax rates is recognized in the period that such tax rate changes are enacted. Net Income (Loss) Per Share Basic net income or (loss) per share is computed by dividing our net income or (loss) by the weighted average number of shares of common stock outstanding during the period presented. Diluted income or (loss) per share is based on the treasury stock method and includes the effect from potential issuance of shares of common stock, such as shares issuable pursuant to the exercise of options and warrants and conversions of preferred stock or debentures. Potentially dilutive securities as of September 30, 2020 consisted of 1,686,633 shares of common stock issuable upon exercise of outstanding warrants, 101,250 shares of common stock issuable upon outstanding options and 63,750 shares of common stock issuable upon conversion of outstanding shares of Preferred A stock (“Convertible Series A Preferred Stock”). Potentially dilutive securities as of September 30, 2019 consisted of 1,157,407 shares of common stock from convertible debentures, 2,667,565 shares of common stock issuable upon exercise of outstanding warrants, 77,500 shares of common stock issuable upon outstanding options and 63,750 shares of common stock issuable upon conversion of outstanding shares of Convertible Series A Preferred Stock. Diluted and basic weighted average shares are the same, as potentially dilutive shares are anti-dilutive. Diluted net income or (loss) per share is computed similarly to basic net income or (loss) per share except that the denominator is increased to include the number of additional shares of common stock that would have been outstanding if the potential shares of common stock had been issued and if such additional shares were dilutive. Options, warrants, preferred stock and shares associated with the conversion of debt to purchase approximately 1.9 million and 3.5 million shares of common stock were outstanding at September 30, 2020 and December 31, 2019, respectively, but were excluded from the computation of diluted net loss per share at December 31, 2019 due to the anti-dilutive effect on net loss per share. For the Three Months Ended September 30, (Unaudited) 2020 2019 Net Income (Loss) $ 1,019,300 $ (236,813 ) Adjustments for convertible debt - as converted Interest on convertible debt - 50,000 Amortization of debt discount on convertible debt - - Net income (loss) attributable to common shareholders $ 1,019,300 $ (186,813 ) Weighted average number of shares of common stock outstanding: Basic 16,741,622 15,588,680 Diluted 18,593,255 15,588,680 Net income (loss) attributable to common shareholders per share: Basic $ 0.06 $ (0.01 ) Diluted $ 0.05 $ (0.01 ) The following provides a reconciliation of the shares used in calculating the per share amounts for the periods presented: For the Three Months Ended September 30 (Unaudited) 2020 2019 Numerator: Net Income (Loss) $ 1,019,300 $ (236,813 ) Denominator: Basic weighted-average shares 16,741,622 15,588,680 Effect of dilutive securities Warrants 1,686,633 - Convertible Debt - - Options 101,250 - Preferred Stock 63,750 - Diluted Weighted Average Shares 18,593,255 15,588,680 Net Income (Loss) Per Common Share: Basic $ 0.06 $ (0.02 ) Diluted $ 0.05 $ (0.02 ) Note: Warrants, options and preferred stock for the three months ended September 30, 2019 are not included in the computation of diluted weighted average shares as such inclusion would be anti-dilutive. Income (loss) from Operations Data: Income (Loss) from Operations $ 1,096,328 $ (187,586 ) Basic and Diluted Weighted Average Shares Basic 16,741,922 15,588,680 Diluted 18,593,255 15,588,680 Basic and Diluted Income (loss) Per Common Share Basic $ 0.07 $ (0.01 ) Diluted $ 0.06 $ (0.01 ) For the Nine Months Ended September 30, (Unaudited) 2020 2019 Net Income (Loss) $ 7,295,478 $ (1,756,050 ) Adjustments for convertible debt - as converted Interest on convertible debt 40,689 150,000 Amortization of debt discount on convertible debt - 17,534 Net income (loss) attributable to common shareholders $ 7,336,167 $ (1,588,516 ) Weighted average number of shares of common stock outstanding: Basic 16,429,360 15,585,822 Diluted 18,280,993 15,585,822 Net income (loss) attributable to common shareholders per share: Basic $ 0.45 $ (0.10 ) Diluted $ 0.40 $ (0.10 ) The following provides a reconciliation of the shares used in calculating the per share amounts for the periods presented: For the Nine Months Ended September 30 (Unaudited) 2020 2019 Numerator: Net Income (Loss) $ 7,295,478 $ (1,756,050 ) Denominator: Basic weighted-average shares 16,429,360 15,585,822 Effect of dilutive securities Warrants 1,686,633 - Convertible Debt - - Options 101,250 - Preferred Stock 63,750 - Diluted Weighted Average Shares 18,280,993 15,585,822 Net Income (Loss) Per Common Share: Basic $ 0.44 $ (0.11 ) Diluted $ 0.40 $ (0.11 ) Note: Warrants, options and preferred stock for the nine months ended September 30, 2019 are not included in the computation of diluted weighted average shares as such inclusion would be anti-dilutive. Income (loss) from Operations Data: Income (Loss) from Operations $ 7,412,397 $ (1,590,948 ) Basic and Diluted Weighted Average Shares Basic 16,429,360 15,585,822 Diluted 18,280,993 15,585,822 Basic and Diluted Income (loss) Per Common Share Basic $ 0.45 $ (0.10 ) Diluted $ 0.41 $ (0.10 ) Revenue Recognition We recognize revenue in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers (Topic 606). We recognize revenue when we transfer promised goods or services to customers in an amount that reflects the consideration to which we expect to be entitled in exchange for those goods or services. To determine revenue recognition for contracts with customers we perform the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligation(s) in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligation(s) in the contract; and (v) recognize revenue when (or as) we satisfy the performance obligation(s). At contract inception, we assess the goods or services promised within each contract, assess whether each promised good or service is distinct and identify those that are performance obligations. We must use judgment to determine: a) the number of performance obligations based on the determination under step (ii) above and whether those performance obligations are distinct from other performance obligations in the contract; b) the transaction price under step (iii) above; and c) the stand-alone selling price for each performance obligation identified in the contract for the allocation of transaction price in step (iv) above. Title and risk of loss generally pass to our customers upon shipment. Our Customers include end users as well as dealers and distributors who market and sell our products. Our revenue is not contingent upon resale by the dealer or distributor, and we have no further obligations related to bringing about resale. Shipping and handling costs charged to customers are included in Product Revenues. The associated expenses are treated as fulfillment costs and are included in Cost of Revenues. Revenues are reported net of sales taxes collected from Customers. Disaggregation of Revenue The following table presents our revenues disaggregated by revenue source. Product and Service Revenue For the Three Months Ended September 30, (Unaudited) 2020 2019 SteraMist Product $ 3,677,000 $ 928,000 Service and Training 615,000 672,000 Total $ 4,292,000 $ 1,600,000 For the Nine Months Ended September 30, (Unaudited) 2020 2019 SteraMist Product $ 19,557,000 $ 3,461,000 Service and Training 1,817,000 1,031,000 Total $ 21,374,000 $ 4,492,000 Revenue by Geographic Region For the Three Months Ended September 30, (Unaudited) 2020 2019 United States $ 3,446,000 $ 1,288,000 International 846,000 312,000 Total $ 4,292,000 $ 1,600,000 For the Nine Months Ended September 30, (Unaudited) 2020 2019 United States $ 15,437,000 $ 3,852,000 International 5,937,000 640,000 Total $ 21,374,000 $ 4,492,000 Product revenue includes sales from our standard and customized equipment, solution and accessories sold with our equipment. Revenue is recognized upon transfer of control of promised products to customers in an amount that reflects the consideration we expect to receive in exchange for those products. Service and training revenue include sales from our high-level decontamination and service engagements, validation of our equipment and technology and customer training. Service revenue is recognized as the agreed upon services are rendered to our customers in an amount that reflects the consideration we expect to receive in exchange for those services. Costs to Obtain a Contract with a Customer We apply a practical expedient to expense costs as incurred for costs to obtain a contract with a customer when the amortization period would have been one year or less. We generally expense sales commissions when incurred because the amortization period would have been one year or less. These costs are recorded within selling expenses. Contract Balances As of September 30, 2020, and December 31, 2019 we did not have any unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) contracts for which we recognize revenue at the amount to which we have the right to invoice for services performed. Arrangements with Multiple Performance Obligations Our contracts with customers may include multiple performance obligations. We enter into contracts that can include various combinations of products and services, which are primarily distinct and accounted for as separate performance obligations. Significant Judgments Our contracts with customers for products and services often dictate the terms and conditions of when the control of the promised products or services is transferred to the customer and the amount of consideration to be received in exchange for the products and services. Equity Compensation Expense We account for equity compensation expense in accordance with FASB ASC 718, “Compensation—Stock Compensation.” Under the provisions of FASB ASC 718, equity compensation expense is estimated at the grant date based on the award’s fair value. On July 7, 2017, our shareholders approved the 2016 Equity Incentive Plan, or (the 2016 Plan). The 2016 Plan authorizes the grant of stock options, stock appreciation rights, restricted stock, restricted stock units and performance units/shares. Up to 625,000 shares of common stock are authorized for issuance under the 2016 Plan. Shares issued under the 2016 Plan may be either authorized but unissued shares, treasury shares, or any combination thereof. Provisions in the 2016 Plan permit the reuse or reissuance by the 2016 Plan of shares of common stock for numerous reasons, including, but not limited to, shares of common stock underlying canceled, expired, or forfeited awards of stock-based compensation and stock appreciation rights paid out in the form of cash. Equity compensation expense will typically be awarded in consideration for the future performance of services to us. All recipients of awards under the 2016 Plan are required to enter into award agreements with us at the time of the award; awards under the 2016 Plan are expressly conditioned upon such agreements. For the nine months ended September 30, 2020 and 2019, we issued 50,000 and 50,000 shares of common stock, respectively, out of the 2016 Plan. Concentrations of Credit Risk Financial instruments that potentially subject us to significant concentrations of credit risk consist principally of cash and cash equivalents. We maintain cash balances at financial institutions which exceed the current Federal Deposit Insurance Corporation limit of $250,000 at times during the year. Long-Lived Assets Including Acquired Intangible Assets We assess long-lived assets for potential impairments at the end of each year, or during the year if an event or other circumstance indicates that we may not be able to recover the carrying amount of the asset. In evaluating long-lived assets for impairment, we measure recoverability of these assets by comparing the carrying amounts to the future undiscounted cash flows the assets are expected to generate. If our long-lived assets are considered to be impaired, the impairment to be recognized equals the amount by which the carrying value of the asset exceeds its fair market value. We base the calculations of the estimated fair value of our long-lived assets on the income approach. For the income approach, we use an internally developed discounted cash flow model that includes, among others, the following assumptions: projections of revenues and expenses and related cash flows based on assumed long-term growth rates and demand trends; expected future investments to grow new units; and estimated discount rates. We base these assumptions on our historical data and experience, industry projections, micro and macro general economic condition projections, and our expectations. We had no long-lived asset impairment charges for the three and nine months ended September 30, 2020 and 2019. Advertising and Promotional Expenses We expense advertising costs in the period in which they are incurred. Advertising and promotional expenses included in selling expenses for the three and nine months ended September 30, 2020 were approximately $56,000 and $156,000, respectively. Advertising and promotional expenses included in selling expenses for the three and nine months ended September 30, 2019 were approximately $29,000 and $94,000, respectively. Research and Development Expenses We expense research and development expenses in the period in which they are incurred. Business Segments We currently have one reportable business segment due to the fact that we derive our revenue primarily from one product. A breakdown of revenue is presented in “Revenue Recognition” in Note 2 above. Recent Accounting Pronouncements In August 2018, the FASB issued ASU No. 2018-15, “Intangibles-Goodwill and Other-Internal-Use Software (Topic 350): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract.” This new guidance aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. This new guidance is effective on a prospective or retrospective basis beginning on January 1, 2020, with early adoption permitted. We elected to adopt this guidance early, in 2020 on a prospective basis. The new guidance did not have a material impact on our Condensed Consolidated Financial Statements. |
3. INVENTORIES
3. INVENTORIES | 9 Months Ended |
Sep. 30, 2020 | |
Inventory Disclosure [Abstract] | |
INVENTORIES | Inventories consist of the following at: September 30, 2020 (Unaudited) December 31, 2019 Finished goods $ 4,052,532 $ 2,364,786 Raw Materials 321,968 50,428 Inventory Reserve - (100,000 ) $ 4,374,500 $ 2,315,214 |
4. VENDOR DEPOSITS
4. VENDOR DEPOSITS | 9 Months Ended |
Sep. 30, 2020 | |
Notes to Financial Statements | |
VENDOR DEPOSITS | At September 30, 2020 and December 31, 2019, we maintained vendor deposits of $333,212 and $141,052, respectively, for open purchase orders for inventory. |
5. PROPERTY AND EQUIPMENT
5. PROPERTY AND EQUIPMENT | 9 Months Ended |
Sep. 30, 2020 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | Property and equipment consist of the following at: September 30, 2020 (Unaudited) December 31, 2019 Furniture and fixtures $ 357,236 $ 357,236 Equipment 1,292,860 1,355,014 Vehicles 60,703 60,703 Computer and software 193,950 166,598 Leasehold improvements 386,120 362,898 Tenant Improvement Allowance 405,000 405,000 2,695,870 2,707,449 Less: Accumulated depreciation 1,584,528 1,339,585 $ 1,111,342 $ 1,367,864 For the three and nine months ended September 30, 2020, depreciation was $83,932 and $241,445, respectively. For the three and nine months ended September 30, 2019, depreciation was $90,312 and $261,939, respectively. For the three and nine months ended September 30, 2020 and 2019, amortization of tenant improvement allowance was $9,798 and $29,395, respectively and was recorded as lease expense and included within general and administrative expense on the consolidated statement of operations. |
6. INTANGIBLE ASSETS
6. INTANGIBLE ASSETS | 9 Months Ended |
Sep. 30, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
INTANGIBLE ASSETS | Intangible assets consist of patents and trademarks related to our Binary Ionization Technology. We amortize the patents over the estimated remaining lives of the related patents. The trademarks have an indefinite life. Amortization expense was $93,347 and $280,041 for the three and nine months ended September 30, 2020. Amortization expense was $92,377 and $277,131 for the three and nine months ended September 30, 2019. Definite life intangible assets consist of the following: September 30, 2020 (Unaudited) December 31, 2019 Intellectual Property and Patents $ 2,906,507 $ 2,906,507 Less: Accumulated Amortization 2,759,795 2,479,754 Intangible Assets, net $ 146,712 $ 426,753 Indefinite life intangible assets consist of the following: Trademarks $ 512,257 $ 512,257 Total Intangible Assets, net $ 658,969 $ 939,010 Approximate future amortization is as follows: Year Ended: Amount October 1 – December 31, 2020 $ 93,000 December 31, 2021 3,000 December 31, 2022 3,000 December 31, 2023 3,000 December 31, 2024 3,000 Thereafter 42,000 $ 147,000 |
7. LEASES
7. LEASES | 9 Months Ended |
Sep. 30, 2020 | |
Leases [Abstract] | |
LEASES | In April 2018, we entered into a 10-year lease agreement for a new 9,000-square-foot facility that contains office, warehouse, lab and research and development space in Frederick, Maryland. The lease agreement was scheduled to commence on December 1, 2018 or when the property was ready for occupancy. The agreement provided for annual rent of $143,460, an escalation clause that increases the rent 3% year over year, a landlord tenant improvement allowance of $405,000 and additional landlord work as discussed in the lease agreement. We took occupancy of the property on December 17, 2018 and the lease was amended in March 2019 to provide for a 4-month rent holiday and a commencement date of April 1, 2019. Lease expense for operating lease payments is recognized on a straight-line basis over the lease term. The balances for our operating lease where we are the lessee are presented as follows within our condensed consolidated balance sheet: Operating leases: September 30, 2020 (Unaudited) December 31, 2019 Assets: Operating lease right-of-use asset $ 642,738 $ 674,471 Liabilities: Current Portion of Long-Term Operating Lease $ 78,723 $ 71,510 Long-Term Operating Lease, Net of Current Portion 974,311 1,034,413 $ 1,053,034 $ 1,105,923 The components of lease expense are as follows within our condensed consolidated statement of operations: For the Three Months Ended September 30, 2020 (Unaudited) For the Three Months Ended September 30, 2019 (Unaudited) Operating lease expense $ 39,329 $ 39,329 For the Nine Months Ended September 30, 2020 (Unaudited) For the Nine Months Ended September 30, 2019 (Unaudited) Operating lease expense $ 117,986 $ 117,986 Other information related to leases where we are the lessee is as follows: September 30, 2020 (Unaudited) December 31, 2019 Weighted-average remaining lease term: Operating leases 8.50 years 9.25 years Discount rate: Operating leases 7.00% 7.00% Supplemental cash flow information related to leases where we are the lessee is as follows: For the Three Months Ended September 30, 2020 (Unaudited) For the Three Months Ended September 30, 2019 (Unaudited) Cash paid for amounts included in the measurement of lease liabilities: $ 36,940 $ 29,888 For the Nine Months Ended September 30, 2020 (Unaudited) For the Nine Months Ended September 30, 2019 (Unaudited) Cash paid for amounts included in the measurement of lease liabilities: $ 109,747 $ 29,888 As of September 30, 2020, the maturities of our operating lease liability are as follows: Year Ended: Operating Lease October 1 – December 31, 2020 $ 36,941 December 31, 2021 151,088 December 31, 2022 155,621 December 31, 2023 160,290 December 31, 2024 165,098 Thereafter 745,183 Total minimum lease payments 1,414,221 Less: Interest 361,187 Present value of lease obligations 1,053,034 Less: Current portion 78,723 Long-term portion of lease obligations $ 974,311 |
8. CAPITALIZED SOFTWARE DEVELOP
8. CAPITALIZED SOFTWARE DEVELOPMENT COSTS | 9 Months Ended |
Sep. 30, 2020 | |
Capitalized Computer Software, Net [Abstract] | |
CAPITALIZED SOFTWARE DEVELOPMENT COSTS | In accordance with ASC 985-20 we capitalized certain software development costs associated with updating our continuing line of product offerings. Capitalized software development costs consist of the following at: September 30, 2020 (Unaudited) December 31, 2019 Capitalized Software Development Costs $ 125,704 $ 125,704 Less: Accumulated Amortization (62,852 ) (31,426 ) $ 62,852 $ 94,278 Amortization expense for the three and nine months ended September 30, 2020 was $10,475 and $31,425, respectively. Amortization expense for the three and nine months ended September 30, 2019 was $6,285. |
9. CLOUD COMPUTING SERVICE CONT
9. CLOUD COMPUTING SERVICE CONTRACT | 9 Months Ended |
Sep. 30, 2020 | |
Cloud Computing Service Contract | |
CLOUD COMPUTING SERVICE CONTRACT | In May 2020 we entered into a cloud computing service contract. The contract provides for annual payments in the amount of $30,409 and has a term of 5 years. The annual contract payments are capitalized as a prepaid expense and amortized over a twelve-month period. Amortization expense for the three and nine months ended September 30, 2020 was $7,602 and $10,143, respectively. We have incurred implementation costs of $37,573 in connection with the cloud computing service contract which have been capitalized in prepaid expenses as of September 30, 2020. In accordance with such implementation costs will be amortized once the cloud-based service contract is placed in service. |
10. CONVERTIBLE DEBT
10. CONVERTIBLE DEBT | 9 Months Ended |
Sep. 30, 2020 | |
Convertible Debt [Abstract] | |
CONVERTIBLE DEBT | In March and May 2017, we closed a private placement transaction in which we issued to certain accredited investors unregistered senior callable convertible promissory notes, or the Notes, and three-year warrants to purchase an aggregate of 125,000 shares of common stock at an exercise price of $5.52 per share in exchange for aggregate gross proceeds of $6,000,000. The Notes bear interest at a rate of 4% per annum. $5,300,000 in principal was originally scheduled to mature on August 31, 2018 and $700,000 in principal was originally scheduled to mature on November 8, 2018, unless earlier redeemed, repurchased or converted. The Notes are convertible at the option of the holder into common stock at a conversion price of $4.32 per share. Subsequent to September 1, 2017, we may redeem the Notes that are scheduled to mature on August 31, 2018 at any time prior to maturity at a price equal to 100% of the outstanding principal amount of the Notes to be redeemed, plus accrued and unpaid interest as of the redemption date. Prior to November 8, 2018, we may redeem the Notes that are scheduled to mature on such date at any time prior to maturity at a price equal to 100% of the outstanding principal amount of the Notes to be redeemed, plus accrued and unpaid interest as of the redemption date. Interest on the Notes is payable semi-annually in cash on February 28 and August 31 of each year, beginning on August 31, 2017. Interest expense related to the Notes for the three and nine months ended September 30, 2020 was $0 and $40,689, respectively. Interest expense related to the Notes for the three and nine months ended September 30, 2019 was $50,000 and $150,000, respectively. The warrants were valued at $62,559 using the Black-Scholes pricing model with the following assumptions: expected volatility: 104.06% –111.54%; expected dividend: $0; expected term: 3 years; and risk-free rate: 1.49%–1.59%. We recorded the warrants’ relative fair value of $61,904 as an increase to additional paid-in capital and a discount against the related Notes. The debt discount was amortized over the life of the Notes using the effective interest method. Amortization expense for the three and nine months ended September 30, 2019, was $0 and $17,534, respectively. In February and March 2018, we extended the maturity date of the Notes— we extended the maturity date to April 1, 2019 for $5,300,000 of principal on the Notes and to June 8, 2019 for the remaining $700,000 Note. No additional consideration was paid or accrued by us. The stated rate of the Notes was unchanged, and the estimated fair value of the new debt approximates its carrying amount (principal plus accrued interest at the date of the modification). We determined that the modification of these Notes is not a substantial modification in accordance with ASC 470-50, “Modifications and Extinguishments”. In May 2018, we offered a noteholder the option to convert its Note at a reduced conversion price of $3.68. Pursuant to the terms of the conversion offer, an aggregate of $700,000 of principal and $5,212 of accrued interest outstanding under the Note were converted into 234,745 shares of common stock. We recognized an induced conversion cost of $57,201 related to the conversion. In December 2018, a noteholder redeemed a note with a principal balance of $300,000 in exchange for $150,000 in cash. On March 30, 2019, the two remaining noteholders agreed to extend the maturity dates of their notes totaling $5,000,000 to April 3, 2020. As part of the extensions, we agreed that if we do not make payment on or before the new maturity dates, after five (5) days written notice, the holders will have the right, but not the obligation, to convert the notes into our common shares at a conversion price of $0.88 per share or a total of 5,681,818 shares. All other provisions of the notes remain unchanged. We determined that the modification of these Notes is not a substantial modification in accordance with ASC 470-50, “Modifications and Extinguishments”. In March 2020, convertible notes with a principal balance of $4,500,000 were converted into 1,041,667 shares of our common stock at a conversion price of $4.32 per share and the remaining outstanding balance of $500,000 was repaid in the form of cash. With respect to the 125,000 warrants issued as part of the convertible note transaction, 100,000 warrants expired in March 2020. In March 2020, 10,417, warrants were exercised, and 14,583 warrants expired in May 2020. Convertible notes consist of the following at: September 30, 2020 (Unaudited) December 31, 2019 Convertible notes $ - $ 5,000,000 Initial discount - (53,873 ) Accumulated amortization - 53,873 Convertible notes, net $ - $ 5,000,000 |
11. SHAREHOLDERS' EQUITY
11. SHAREHOLDERS' EQUITY | 9 Months Ended |
Sep. 30, 2020 | |
Stockholders' Equity: | |
SHAREHOLDERS' EQUITY | Our Board of Directors (the “Board”) may, without further action by our shareholders, from time to time, direct the issuance of any authorized but unissued or unreserved shares of preferred stock in series and at the time of issuance, determine the rights, preferences and limitations of each series. The holders of such preferred stock may be entitled to receive a preference payment in the event of any liquidation, dissolution or winding-up by us before any payment is made to the holders of our common stock. Furthermore, the Board could issue preferred stock with voting and other rights that could adversely affect the voting power of the holders of our common stock. Reverse Stock Split On September 9, 2020, the Board approved a reverse stock split of our common stock and our Convertible Series A Preferred Stock, in each case, at a ratio of 1-for-8 and without any change to the respective par value thereof (the “Reverse Stock Split”), and, on September 10, 2020, we filed an Articles of Amendment to our Articles of Incorporation with the Department of State of the State of Florida to effect the Reverse Stock Split. The Reverse Stock Split became effective as of 5:00 p.m., Eastern time, on September 10, 2020 (the “Effective Time”). All per-share and share amounts have been retroactively restated in this Quarterly Report on Form 10-Q for all periods presented to reflect the reverse stock split. Convertible Series A Preferred Stock Our authorized Convertible Series A Preferred Stock, $0.01 par value, consists of 1,000,000 shares. At September 30, 2020 and December 31, 2019, there were 63,750 shares issued and outstanding. The Convertible Series A Preferred Stock is convertible at the rate of one share of common stock for one share of Convertible Series A Preferred Stock. Convertible Series B Preferred Stock Our authorized Convertible Series B Preferred Stock, $1,000 stated value, 7.5% cumulative dividend, consists of 4,000 shares. At September 30, 2020 and December 31, 2019, there were no shares issued and outstanding, respectively. Each share of Convertible Series B Preferred Stock may be converted (at the holder’s election) into two hundred shares of our common stock. Common Stock During the nine months ended September 30, 2019, we issued 50,000 shares of common stock valued at $44,000 to members of our Board (see Note 13). During the nine months ended September 30, 2019, we issued 1,250 shares of common stock valued at $1,200 to a consultant. During the nine months ended September 30, 2020, we issued 50,000 shares of common stock valued at $48,000 to members of our Board (see Note 13). In March 2020, 1,041,667 shares of common stock were issued in connection with the conversion of convertible notes payable aggregating $4,500,000 (see Note 10). In March 2020, 10,417 shares of common stock were issued in connection with the exercise of warrants for which we received proceeds of $57,500. In May 2020, 2,500 shares of common stock were issued in connection with the exercise of options for which we received proceeds of $1,000. In June 2020, 26,940 shares of common stock were issued in connection with the exercise of warrants for which we received proceeds of $62,500. In July 2020, 26,940 shares of common stock were issued in connection with the exercise of warrants for which we received proceeds of $62,500. Stock Options In January 2019, pursuant to an employment agreement, we issued options to purchase an aggregate of 31,250 shares of common stock to our Chief Operating Officer, valued at $24,694. The options have an exercise price of $0.88 per share and expire in January 2024. The options were valued using the Black-Scholes model using the following assumptions: volatility: 144%; dividend yield: 0%; zero coupon rate: 2.47%; and a life of 5 years. The value of the options was expensed in the fourth quarter of 2018 and included in accrued expenses at December 31, 2018. In January 2019, we issued options to purchase an aggregate of 6,250 shares of common stock to our Chief Financial Officer, valued at $4,483. The options have an exercise price of $0.80 per share and expire in January 2024. The options were valued using the Black-Scholes model using the following assumptions: volatility: 143%; dividend yield: 0%; zero coupon rate: 2.58%; and a life of 5 years. In January 2020, we issued two options to purchase an aggregate of 31,250 shares of common stock to our Chief Operating Officer at an exercise price of $0.80 and $0.96 per share pursuant to her employment agreement with us. The options were valued at a total of $23,595 and have a term of 5 years. We utilized the Black-Scholes method to fair value the options received by the COO with the following assumptions: volatility, 135%; expected dividend yield, 0%; risk free interest rate, 1.64%; and a life of 5 years. The grant date fair value of each share of common stock underlying the options was $0.72 and $0.80. The value of the stock option was included in accrued expenses at December 31, 2019. The following table summarizes stock options outstanding as of September 30, 2020 and December 31, 2019: September 30, 2020 (Unaudited) December 31, 2019 Number of Options Weighted Average Exercise Price Number of Options Weighted Average Exercise Price Outstanding, beginning of period 77,500 $ 2.56 40,000 $ 4.16 Granted 31,250 0.88 37,500 0.88 Exercised (2,500 ) 0.40 - - Expired (5,000 ) 16.8 - - Outstanding, end of period 101,250 $ 1.38 77,500 $ 2.56 Options outstanding and exercisable by price range as of September 30, 2020 were as follows: Outstanding Options Average Weighted Exercisable Options Range Number Remaining Contractual Life in Years Number Weighted Average Exercise Price $ 0.80 27,500 4.35 27,500 $ 0.80 $ 0.88 31,250 3.26 31,250 $ 0.88 $ 0.96 25,000 3.27 25,000 $ 0.96 $ 2.16 5,000 4.26 5,000 $ 2.16 $ 4.40 12,500 5.35 12,500 $ 4.40 101,250 3.87 101,250 $ 1.38 Stock Warrants In January 2019 we issued a warrant to purchase 125,000 shares of common stock to our Chief Executive Officer at an exercise price of $0.80 per share pursuant to an employment agreement. The warrant was valued at $89,654 and has a term of 5 years. We utilized the Black-Scholes model to fair value the warrant received by our Chief Executive Officer with the following assumptions: volatility, 143%; expected dividend yield, 0%; risk free interest rate, 2.58%; and a life of 5 years. The grant date fair value of each share of common stock underlying the warrant was $0.72. In January 2019 we issued a warrant to purchase 31,250 shares of common stock to an employee at an exercise price of $0.96 per share. The warrant was valued at $21,931 and has a term of 3 years. We utilized the Black-Scholes model to fair value the warrant received by the employee with the following assumptions: volatility, 148%; expected dividend yield, 0%; risk free interest rate, 2.55%; and a life of 3 years. The grant date fair value of each share of common stock underlying the warrant was $0.72. The value of the warrants was expensed in the fourth quarter of 2018 and included in accrued expenses at December 31, 2018. In April 2019 we issued a warrant to purchase 6,250 shares of common stock to an employee at an exercise price of $1.12 per share. The warrant was valued at $6,116 and has a term of 5 years. We utilized the Black-Scholes model to fair value the warrant received by the employee with the following assumptions: volatility, 134%; expected dividend yield, 0%; risk free interest rate, 2.32%; and a life of 5 years. The grant date fair value of each share of common stock underlying the warrant was $0.96. In January 2020 we issued a warrant to purchase 156,250 shares of common stock to our Chief Executive Officer at an exercise price of $1.20 per share pursuant to an employment agreement. The warrant was valued at $164,201 and has a term of 5 years. We utilized the Black-Scholes model to fair value the warrant received by our Chief Executive Officer with the following assumptions: volatility, 136%; expected dividend yield, 0%; risk free interest rate, 1.64%; and a life of 5 years. The grant date fair value of each share of common stock underlying the warrant was $1.04. In January 2020 we issued a warrant to purchase 5,208 shares of common stock to an employee at an exercise price of $0.96 per share. The warrant was valued at $3,594 and has a term of 5 years. We utilized the Black-Scholes model to fair value the warrant received by the employee with the following assumptions: volatility, 135%; expected dividend yield, 0%; risk free interest rate, 1.58%; and a life of 5 years. The grant date fair value of each share of common stock underlying the warrant was $0.72. The value of the warrants was expensed in the fourth quarter of 2019 and included in accrued expenses at December 31, 2019. In February 2020 we issued a warrant to purchase 18,750 shares of common stock to an employee at an exercise price of $1.20 per share. The warrant was valued at $18,571 and has a term of 3 years. We utilized the Black-Scholes model to fair value the warrant received by the employee with the following assumptions: volatility, 155%; expected dividend yield, 0%; risk free interest rate, 1.64%; and a life of 3 years. The grant date fair value of each share of common stock underlying the warrant was $0.96. In April 2020 we issued a warrant to purchase 12,500 shares of common stock to our Chief Executive Officer at an exercise price of $4.00 per share pursuant to an employment agreement. The warrant was valued at $49,693 and has a term of 10 years. We utilized the Black-Scholes model to fair value the warrant received by our Chief Executive Officer with the following assumptions: volatility, 173%; expected dividend yield, 0%; risk free interest rate, 0.68%; and a life of 10 years. The grant date fair value of each share of common stock underlying the warrant was $4.00. In April 2020 we issued a warrant to purchase 6,250 shares of common stock to our Chief Operating Officer at an exercise price of $4.00 per share pursuant to an employment agreement. The warrant was valued at $24,846 and has a term of 10 years. We utilized the Black-Scholes model to fair value the warrant received by our Chief Operating Officer with the following assumptions: volatility, 173%; expected dividend yield, 0%; risk free interest rate, 0.68%; and a life of 10 years. The grant date fair value of each share of common stock underlying the warrant was $4.00. In April 2020 we issued a warrant to purchase 6,250 shares of common stock to our Chief Financial Officer at an exercise price of $4.00 per share pursuant to an employment agreement. The warrant was valued at $24,846 and has a term of 10 years. We utilized the Black-Scholes model to fair value the warrant received by our Chief Financial Officer with the following assumptions: volatility, 173%; expected dividend yield, 0%; risk free interest rate, 0.68%; and a life of 10 years. The grant date fair value of each share of common stock underlying the warrant was $4.00. In April 2020 we issued a warrant to purchase 3,750 shares of common stock to a consultant at an exercise price of $4.00 per share. The warrant was valued at $14,908 and has a term of 10 years. We utilized the Black-Scholes model to fair value the warrant received by the consultant with the following assumptions: volatility, 173%; expected dividend yield, 0%; risk free interest rate, 0.68%; and a life of 10 years. The grant date fair value of each share of common stock underlying the warrant was $4.00. In August 2020 we issued a warrant to purchase 893 shares of common stock to a consultant at an exercise price of $8.40 per share. The warrant was valued at $6,372 and has a term of 3 years. We utilized the Black-Scholes model to fair value the warrant received by the consultant with the following assumptions: volatility, 166%; expected dividend yield, 0%; risk free interest rate, 0.13%; and a life of 3 years. The grant date fair value of each share of common stock underlying the warrant was $7.13. In August 2020 we issued a warrant to purchase 595 shares of common stock to a consultant at an exercise price of $8.40 per share. The warrant was valued at $4,249 and has a term of 3 years. We utilized the Black-Scholes model to fair value the warrant received by the consultant with the following assumptions: volatility, 166%; expected dividend yield, 0%; risk free interest rate, 0.13%; and a life of 3 years. The grant date fair value of each share of common stock underlying the warrant was $7.14. The following table summarizes the outstanding common stock warrants as of September 30, 2020 and December 31, 2019: September 30, 2020 (Unaudited) December 31, 2019 Number of Warrants Weighted Average Exercise Price Number of Warrants Weighted Average Exercise Price Outstanding, beginning of period 2,155,065 $ 3.12 3,318,826 $ 2.72 Granted 210,447 1.36 162,500 0.88 Exercised (64,296 ) (2.84 ) - - Expired (614,583 ) (6.40 ) (1,326,261 ) (1.84 ) Outstanding, end of period 1,686,633 $ 1.73 2,155,065 $ 3.12 Warrants outstanding and exercisable by price range as of September 30, 2020 were as follows: Outstanding Warrants Exercisable Warrants Exercise Price Number Average Weighted Remaining Contractual Life in Years Number Weighted Average Exercise Price $ 0.64 31,250 3.15 31,250 $ 0.64 $ 0.80 158,125 3.01 158,125 $ 0.80 $ 0.96 473,958 2.19 473,958 $ 0.96 $ 1.12 6,250 3.55 6,250 $ 1.12 $ 1.20 175,000 4.13 175,000 $ 1.20 $ 1.36 1,250 2.07 1,250 $ 1.36 $ 2.16 31,250 1.25 31,250 $ 2.16 $ 2.32 523,061 1.41 523,061 $ 2.32 $ 2.40 150,000 0.39 150,000 $ 2.40 $ 2.56 31,250 1.00 31,250 $ 2.56 $ 3.36 31,250 0.75 31,250 $ 3.36 $ 4.00 60,000 4.85 60,000 $ 4.00 $ 4.40 12,500 0.33 12,500 $ 4.40 $ 8.40 1,488 2.88 1,488 $ 8.40 1,686,633 2.11 1,686,633 $ 1.73 There were no unvested warrants outstanding as of September 30, 2020. |
12. COMMITMENTS AND CONTINGENCI
12. COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | Legal Contingencies We may become a party to litigation in the normal course of business. In the opinion of management, there are no legal matters involving us that would have a material adverse effect upon our financial condition, results of operations or cash flows. In addition, from time to time, we may have to file claims against parties that infringe on our intellectual property. Product Liability As of September 30, 2020, and December 31, 2019, there were no claims against us for product liability. SARS CoV-2 coronavirus On March 11, 2020 the World Health Organization declared the SARS CoV-2 coronavirus a global pandemic and recommended containment and mitigation measures worldwide. We have been identified as an essential disinfectant and decontamination vendor by various agencies and countries. Our operations being essential have been materially affected by the coronavirus outbreak to date, as demand for our product and services is increasing. The uncertain nature of its spread globally may or may not impact our business operations resulting from quarantines of employees, customers and suppliers as well as potential travel restrictions in areas affected or may be affected in the future. |
13. CONTRACTS AND AGREEMENTS
13. CONTRACTS AND AGREEMENTS | 9 Months Ended |
Sep. 30, 2020 | |
Contracts And Agreements | |
CONTRACTS AND AGREEMENTS | Agreements with Directors In December 2017, we increased the annual fee to the members of our Board to $40,000, to be paid in cash on a quarterly basis, with the exception of the audit committee chairperson, whose annual fee we increased to $45,000, also to be paid in cash on a quarterly basis. Director compensation also includes the annual issuance of our common stock. For the nine months ended September 30, 2019, we issued an aggregate of 50,000 shares of common stock that were valued at $44,000 to members of our Board. For the nine months ended September 30, 2020, we issued an aggregate of 50,000 shares of common stock that were valued at $48,000 to members of our Board. Manufacturing Agreement In June 2020 we entered into a manufacturing agreement with Planet Innovation Products, Pty Ltd (“PI”). The agreement does not provide for any minimum purchase commitments and is for a term of three years. The agreement also provides for a warranty against product defects. Cloud Computing Service Contract In May 2020 we entered into an agreement for a cloud computing service contract. The contract provides for annual payments in the amount of $30,409 and has a term of 5 years. Year Ended: Amount December 31, 2021 $ 18,000 December 31, 2022 30,000 December 31, 2023 30,000 December 31, 2024 30,000 Thereafter 15,000 $ 123,000 Agreements In June 2015, we launched the TOMI Service Network (“TSN”). The TSN is a national service network composed of existing full-service restoration industry specialists that have entered into licensing agreements with us to become Primary Service Providers (“PSPs”). The licensing agreements grant protected territories to PSPs to perform services using our SteraMist® platform of products and also provide for potential job referrals to PSPs whereby we are entitled to referral fees. Additionally, the agreement provides for commissions due to PSPs for equipment and solution sales they facilitate to other service providers in their respective territories. As part of these agreements, we are obligated to provide to the PSPs various training, ongoing support and facilitate a referral network call center. As of September 30, 2020, we had entered into 175 agreements in connection with the launch of the TSN. The licensing agreements contain fixed price minimum equipment and solution orders based on the population of the territories granted pursuant to the licensing agreements. The nature and terms of our TSN agreements may represent multiple deliverable arrangements. Each of the deliverables in these arrangements typically represent a separate unit of accounting. As of January 1, 2020, we have removed the exclusivity portion of our service partner company agreements |
14. ACCRUED EXPENSES AND OTHER
14. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | 9 Months Ended |
Sep. 30, 2020 | |
Accrued Liabilities and Other Liabilities [Abstract] | |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | Accrued expenses and other current liabilities consisted of the following at: September 30, 2020 (Unaudited) December 31, 2019 Commissions $ 217,364 $ 112,102 Payroll and related costs 136,095 167,689 Director fees 41,250 41,250 Sales Tax Payable 14,415 21,814 Income Taxes Payable (Note 17) 77,000 - Accrued warranty (Note 15) 105,000 30,000 Other accrued expenses 80,257 77,257 Total $ 671,381 $ 450,112 |
15. ACCRUED WARRANTY
15. ACCRUED WARRANTY | 9 Months Ended |
Sep. 30, 2020 | |
Less: Accumulated Amortization | |
ACCRUED WARRANTY | Our manufacturers assume warranty against product defects, which we extend to our customers upon sale of the product. We assume responsibility for product reliability and results. The warranty is generally limited to a refund of the original purchase price of the product or a replacement part. We estimate warranty costs based on historical warranty claim experience. The following table presents warranty reserve activities at: September 30, 2020 (Unaudited) December 31, 2019 Beginning accrued warranty costs $ 30,000 $ 30,000 Provision for warranty expense 79,545 2,609 Settlement of warranty claims (4,545 ) (2,609 ) Ending accrued warranty costs $ 105,000 $ 30,000 |
16. LOAN PAYABLE
16. LOAN PAYABLE | 9 Months Ended |
Sep. 30, 2020 | |
Loans Payable [Abstract] | |
LOAN PAYABLE | On April 21, 2020, we received $410,700 in loan funding from the Paycheck Protection Program (the "PPP") established pursuant to the recently enacted Coronavirus Aid, Relief, and Economic Security Act of 2020 (the "CARES Act") and administered by the U.S. Small Business Administration ("SBA"). The unsecured loan (the "PPP Loan") is evidenced by a promissory note of the Company, dated April 21, 2020 (the "Note") in the principal amount of $410,700 with City National Bank (the "Bank"), the lender. Interest expense for the three and nine months ended September 30, 2020 was $789 and $1,576, respectively. Under the terms of the Note and the PPP Loan, interest accrues on the outstanding principal at the rate of 1.0% per annum. The term of the Note is two years, though it may be payable sooner in connection with an event of default under the Note. To the extent the loan amount is not forgiven under the PPP, we will be obligated to make equal monthly payments of principal and interest beginning on the date that is seven months from the date of the Note, until the maturity date. |
17. INCOME TAXES
17. INCOME TAXES | 9 Months Ended |
Sep. 30, 2020 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | For the three and nine-months ended September 30, 2020 and 2019, our provision for income tax was $77,000 and $0, respectively. Deferred income tax assets and liabilities are determined based on differences between the financial statement reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws in effect when the differences are expected to reverse. The measurement of deferred income tax assets is reduced, if necessary, by a valuation allowance for any tax benefits, which are, on a more likely than not basis, not expected to be realized in accordance with ASC guidance for income taxes. As of September 30, 2020, and December 31, 2019, we recorded a valuation allowance of $3,429,000 and $5,580,000, respectively for the portion of the deferred tax assets that we do not expect to be realized. The valuation allowance on our net deferred taxes decreased by $2,151,000 during the nine months ended September 30, 2020, primarily due to the utilization of deferred tax assets. Management believes that based on the available information, it is more likely than not that the remaining U.S. deferred tax assets will not be realized, such that a valuation allowance is required against U.S. deferred tax assets. The effect on deferred income tax assets and liabilities of a change in tax rates is recognized in the period that such tax rate changes are enacted. |
18. CUSTOMER CONCENTRATION
18. CUSTOMER CONCENTRATION | 9 Months Ended |
Sep. 30, 2020 | |
Risks and Uncertainties [Abstract] | |
CUSTOMER CONCENTRATION | We had certain customers whose revenue individually represented 10% or more of the Company’s total revenue, or whose accounts receivable balances individually represented 10% or more of the Company’s accounts receivable. As of December 31, 2019, three customers accounted for 37% of accounts receivable. As of September 30, 2020, two customers accounted for 23% of accounts receivable. For the three months ended September 30, 2019, one customer accounted for 12% of net revenue. For the nine months ended September 20, 2020, one customer accounted for 11% of net revenue. For the nine months ended September 20, 2019, one customer accounted for 10% of net revenue. |
19. SUBSEQUENT EVENTS
19. SUBSEQUENT EVENTS | 9 Months Ended |
Sep. 30, 2020 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | On September 22, 2020, we entered into an employment agreement with Halden S. Shane, or the CEO Employment Agreement, pursuant to which Mr. Shane will continue to serve as our Chief Executive Officer for an additional three-year term. The CEO Employment Agreement, effective October 1, 2020, replaces Mr. Shane’s previous employment agreement, which expired by its terms on December 31, 2020. Under the Employment Agreement, Mr. Shane is entitled to an annual base salary of $500,000, a signing bonus of 375,000 warrants at a strike price equal to the VWAP for the three-day period prior to the date of issuance and having a ten-year term, an annual bonus of 31,250 stock options to be granted pursuant to the 2016 Plan and a performance-based bonus at the discretion of our Board. In connection with the CEO Employment Agreement, on October 1, 2020 we issued 375,000 warrants to Mr. Shane, with such warrants being exercisable at $6.17 per share. On October 1, 2020, our stock commenced trading on the NASDAQ Capital Market. On October 1, 2020, we entered into an employment agreement with Elissa J. Shane, or the COO Employment Agreement, pursuant to which Ms. Shane will continue to serve as our Chief Operating Officer for an additional three-year term effective as of the date of the agreement. The COO Employment Agreement replaces Ms. Shane’s previous employment agreement, which expired by its terms on December 31, 2020. Under the Employment Agreement, Ms. Shane is entitled to an annual base salary of $270,000, a signing bonus of 93,750 warrants at a strike price equal to the VWAP for the three-day period prior to the date of issuance and having a ten-year term and a performance based bonus at the discretion of our Board. In connection with the COO Employment Agreement, on October 1, 2020 we issued 93,750 warrants to Ms. Shane, with such warrants being exercisable at $6.17 per share. |
2. SUMMARY OF SIGNIFICANT ACC_2
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
Basis of Presentation | The interim unaudited condensed consolidated financial statements included herein, presented in accordance with generally accepted accounting principles utilized in the United States of America (“GAAP”), and stated in U.S. dollars, have been prepared by us, without an audit, pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations, although we believe that the disclosures are adequate to make the information presented not misleading. These financial statements reflect all adjustments, consisting of normal recurring adjustments, which, in the opinion of management, are necessary for fair presentation of the information contained therein. These unaudited condensed consolidated financial statements should be read in conjunction with our audited financial statements for the year ended December 31, 2019 and notes thereto which are included in the Annual Report on Form 10-K previously filed with the SEC on March 30, 2020. We follow the same accounting policies in the preparation of interim reports. The results of operations for the interim periods covered by this Form 10-Q may not necessarily be indicative of results of operations for the full fiscal year or any other interim period. |
Principles of Consolidation | The accompanying condensed consolidated financial statements include the accounts of TOMI and its wholly owned subsidiary, TOMI Environmental Solutions, Inc., a Nevada corporation. All significant intercompany accounts and transactions have been eliminated in consolidation. |
Reclassification of Accounts | Certain reclassifications have been made to prior-year comparative financial statements to conform to the current year presentation. These reclassifications had no effect on previously reported results of operations or financial position. |
Use of Estimates | The preparation of the condensed consolidated financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the amounts reported and disclosed in the accompanying condensed consolidated financial statements and the accompanying notes. Actual results could differ materially from these estimates. On an ongoing basis, we evaluate our estimates, including those related to accounts receivable, inventory, fair values of financial instruments, intangible assets, useful lives of intangible assets and property and equipment, fair values of stock-based awards, income taxes, and contingent liabilities, among others. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of our assets and liabilities. |
Fair Value Measurements | The authoritative guidance for fair value measurements defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or the most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Market participants are buyers and sellers in the principal market that are (i) independent, (ii) knowledgeable, (iii) able to transact, and (iv) willing to transact. The guidance describes a fair value hierarchy based on the levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value, which are the following: Level 1: Quoted prices in active markets for identical assets or liabilities. Level 2: Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the value of the assets or liabilities. Our financial instruments include cash and cash equivalents, accounts receivable, accounts payable and accrued expenses. All these items were determined to be Level 1 fair value measurements. The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable and accrued expenses approximated fair value because of the short maturity of these instruments. |
Cash and Cash Equivalents | For purposes of the statement of cash flows, cash and cash equivalents includes cash on hand, held at financial institutions and other liquid investments with original maturities of three months or less. At times, these deposits may be in excess of insured limits. |
Accounts Receivable | Our accounts receivable are typically from credit worthy customers or, for certain international customers, are supported by pre-payments. For those customers to whom we extend credit, we perform periodic evaluations of their status and maintain allowances for potential credit losses as deemed necessary. We have a policy of reserving for doubtful accounts based on our best estimate of the amount of potential credit losses in existing accounts receivable. We periodically review our accounts receivable to determine whether an allowance is necessary based on an analysis of past due accounts and other factors that may indicate that the realization of an account may be in doubt. Account balances deemed to be uncollectible are charged to the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. Bad debt expense for the three and nine months ended September 30, 2020 was approximately $153,000 and $226,000, respectively. Bad debt expense for the three and nine months ended September 30, 2019 was approximately $1,000 and $33,000, respectively. At September 30, 2020 and December 31, 2019, the allowance for doubtful accounts was $315,000 and $110,000, respectively. |
Inventories | Inventories are valued at the lower of cost or market using the first-in, first-out (FIFO) method. Inventories consist primarily of finished goods. We expense costs to maintain certification to cost of goods sold as incurred. We review inventory on an ongoing basis, considering factors such as deterioration and obsolescence. We record an allowance for estimated losses when the facts and circumstances indicate that particular inventories may not be usable. Our reserve for obsolete inventory was $0 and $100,000 as of September 30, 2020 and December 31, 2019, respectively. |
Property and Equipment | We account for property and equipment at cost less accumulated depreciation. We compute depreciation using the straight-line method over the estimated useful lives of the assets, generally three to five years. Depreciation for equipment, furniture and fixtures and vehicles commences once placed in service for its intended use. Leasehold improvements are amortized using the straight-line method over the lives of the respective leases or service lives of the improvements, whichever is shorter. |
Leases | In February 2016, the FASB issued ASU No. 2016-02 (ASC 842), Leases Codification Improvements to Topic 842, Leases Targeted Improvements Narrow-Scope Improvements for Lessors Codification Improvements Operating lease assets are included within operating lease right-of-use assets, and the corresponding operating lease liabilities are recorded as current portion of long-term operating lease, and within long-term liabilities as long-term operating lease, net of current portion on our condensed consolidated balance sheet as of September 30, 2020 and December 31, 2019. We have elected not to present short-term leases on the condensed consolidated balance sheet as these leases have a lease term of 12 months or less at lease inception and do not contain purchase options or renewal terms that we are reasonably certain to exercise. All other lease assets and lease liabilities are recognized based on the present value of lease payments over the lease term at commencement date. Because most of our leases do not provide an implicit rate of return, we used our incremental borrowing rate based on the information available at adoption date in determining the present value of lease payments. |
Capitalized Software Development Costs | In accordance with ASC 985-20 regarding the development of software to be sold, leased, or marketed, we expense such costs as they are incurred until technological feasibility has been established, at and after which time those costs are capitalized until the product is available for general release to customers. The periodic expense for the amortization of capitalized software development costs will be included in cost of sales. Amortization expense for the three and nine months ended September 30, 2020 was $10,475 and $31,425, respectively. Amortization expense for the three and nine months ended September 30, 2019 was $6,285. |
Accounts Payable | As of September 30, 2020, three vendors accounted for approximately 56% of accounts payable. As of December 31, 2019, one vendor accounted for approximately 40% of accounts payable. For the three and nine months ended September 30, 2020, two vendors accounted for 66% and 77% of cost of sales, respectively. For the three and nine months ended September 30, 2019, one vendor accounted for 54% and 68% of cost of sales, respectively. |
Accrued Warranties | Accrued warranties represent the estimated costs, if any, that will be incurred during the warranty period of our products. We estimate the expected costs to be incurred during the warranty period and record the expense to the condensed consolidated statement of operations at the date of sale. Our manufacturers assume the warranty against product defects from date of sale, which we extend to our customers upon sale of the product. We assume responsibility for product reliability and results. As of September 30, 2020, and December 31, 2019, our warranty reserve was $105,000 and $30,000, respectively (See Note 15). |
Income Taxes | Deferred income tax assets and liabilities are determined based on differences between the financial statement reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws in effect when the differences are expected to reverse. The measurement of deferred income tax assets is reduced, if necessary, by a valuation allowance for any tax benefits that are, on a more likely than not basis, not expected to be realized in accordance with Accounting Standards Codification (ASC) guidance for income taxes. Net deferred tax benefits have been fully reserved at September 30, 2020 and December 31, 2019. The effect on deferred income tax assets and liabilities of a change in tax rates is recognized in the period that such tax rate changes are enacted. |
Net Income (Loss) Per Share | Basic net income or (loss) per share is computed by dividing our net income or (loss) by the weighted average number of shares of common stock outstanding during the period presented. Diluted income or (loss) per share is based on the treasury stock method and includes the effect from potential issuance of shares of common stock, such as shares issuable pursuant to the exercise of options and warrants and conversions of preferred stock or debentures. Potentially dilutive securities as of September 30, 2020 consisted of 1,686,633 shares of common stock issuable upon exercise of outstanding warrants, 101,250 shares of common stock issuable upon outstanding options and 63,750 shares of common stock issuable upon conversion of outstanding shares of Preferred A stock (“Convertible Series A Preferred Stock”). Potentially dilutive securities as of September 30, 2019 consisted of 1,157,407 shares of common stock from convertible debentures, 2,667,565 shares of common stock issuable upon exercise of outstanding warrants, 77,500 shares of common stock issuable upon outstanding options and 63,750 shares of common stock issuable upon conversion of outstanding shares of Convertible Series A Preferred Stock. Diluted and basic weighted average shares are the same, as potentially dilutive shares are anti-dilutive. Diluted net income or (loss) per share is computed similarly to basic net income or (loss) per share except that the denominator is increased to include the number of additional shares of common stock that would have been outstanding if the potential shares of common stock had been issued and if such additional shares were dilutive. Options, warrants, preferred stock and shares associated with the conversion of debt to purchase approximately 1.9 million and 3.5 million shares of common stock were outstanding at September 30, 2020 and December 31, 2019, respectively, but were excluded from the computation of diluted net loss per share at December 31, 2019 due to the anti-dilutive effect on net loss per share. For the Three Months Ended September 30, (Unaudited) 2020 2019 Net Income (Loss) $ 1,019,300 $ (236,813 ) Adjustments for convertible debt - as converted Interest on convertible debt - 50,000 Amortization of debt discount on convertible debt - - Net income (loss) attributable to common shareholders $ 1,019,300 $ (186,813 ) Weighted average number of shares of common stock outstanding: Basic 16,741,622 15,588,680 Diluted 18,593,255 15,588,680 Net income (loss) attributable to common shareholders per share: Basic $ 0.06 $ (0.01 ) Diluted $ 0.05 $ (0.01 ) The following provides a reconciliation of the shares used in calculating the per share amounts for the periods presented: For the Three Months Ended September 30 (Unaudited) 2020 2019 Numerator: Net Income (Loss) $ 1,019,300 $ (236,813 ) Denominator: Basic weighted-average shares 16,741,622 15,588,680 Effect of dilutive securities Warrants 1,686,633 - Convertible Debt - - Options 101,250 - Preferred Stock 63,750 - Diluted Weighted Average Shares 18,593,255 15,588,680 Net Income (Loss) Per Common Share: Basic $ 0.06 $ (0.02 ) Diluted $ 0.05 $ (0.02 ) Note: Warrants, options and preferred stock for the three months ended September 30, 2019 are not included in the computation of diluted weighted average shares as such inclusion would be anti-dilutive. Income (loss) from Operations Data: Income (Loss) from Operations $ 1,096,328 $ (187,586 ) Basic and Diluted Weighted Average Shares Basic 16,741,922 15,588,680 Diluted 18,593,255 15,588,680 Basic and Diluted Income (loss) Per Common Share Basic $ 0.07 $ (0.01 ) Diluted $ 0.06 $ (0.01 ) For the Nine Months Ended September 30, (Unaudited) 2020 2019 Net Income (Loss) $ 7,295,478 $ (1,756,050 ) Adjustments for convertible debt - as converted Interest on convertible debt 40,689 150,000 Amortization of debt discount on convertible debt - 17,534 Net income (loss) attributable to common shareholders $ 7,336,167 $ (1,588,516 ) Weighted average number of shares of common stock outstanding: Basic 16,429,360 15,585,822 Diluted 18,280,993 15,585,822 Net income (loss) attributable to common shareholders per share: Basic $ 0.45 $ (0.10 ) Diluted $ 0.40 $ (0.10 ) The following provides a reconciliation of the shares used in calculating the per share amounts for the periods presented: For the Nine Months Ended September 30 (Unaudited) 2020 2019 Numerator: Net Income (Loss) $ 7,295,478 $ (1,756,050 ) Denominator: Basic weighted-average shares 16,429,360 15,585,822 Effect of dilutive securities Warrants 1,686,633 - Convertible Debt - - Options 101,250 - Preferred Stock 63,750 - Diluted Weighted Average Shares 18,280,993 15,585,822 Net Income (Loss) Per Common Share: Basic $ 0.44 $ (0.11 ) Diluted $ 0.40 $ (0.11 ) Note: Warrants, options and preferred stock for the nine months ended September 30, 2019 are not included in the computation of diluted weighted average shares as such inclusion would be anti-dilutive. Income (loss) from Operations Data: Income (Loss) from Operations $ 7,412,397 $ (1,590,948 ) Basic and Diluted Weighted Average Shares Basic 16,429,360 15,585,822 Diluted 18,280,993 15,585,822 Basic and Diluted Income (loss) Per Common Share Basic $ 0.45 $ (0.10 ) Diluted $ 0.41 $ (0.10 ) |
Revenue Recognition | We recognize revenue in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers (Topic 606). We recognize revenue when we transfer promised goods or services to customers in an amount that reflects the consideration to which we expect to be entitled in exchange for those goods or services. To determine revenue recognition for contracts with customers we perform the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligation(s) in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligation(s) in the contract; and (v) recognize revenue when (or as) we satisfy the performance obligation(s). At contract inception, we assess the goods or services promised within each contract, assess whether each promised good or service is distinct and identify those that are performance obligations. We must use judgment to determine: a) the number of performance obligations based on the determination under step (ii) above and whether those performance obligations are distinct from other performance obligations in the contract; b) the transaction price under step (iii) above; and c) the stand-alone selling price for each performance obligation identified in the contract for the allocation of transaction price in step (iv) above. Title and risk of loss generally pass to our customers upon shipment. Our Customers include end users as well as dealers and distributors who market and sell our products. Our revenue is not contingent upon resale by the dealer or distributor, and we have no further obligations related to bringing about resale. Shipping and handling costs charged to customers are included in Product Revenues. The associated expenses are treated as fulfillment costs and are included in Cost of Revenues. Revenues are reported net of sales taxes collected from Customers. Disaggregation of Revenue The following table presents our revenues disaggregated by revenue source. Product and Service Revenue For the Three Months Ended September 30, (Unaudited) 2020 2019 SteraMist Product $ 3,677,000 $ 928,000 Service and Training 615,000 672,000 Total $ 4,292,000 $ 1,600,000 For the Nine Months Ended September 30, (Unaudited) 2020 2019 SteraMist Product $ 19,557,000 $ 3,461,000 Service and Training 1,817,000 1,031,000 Total $ 21,374,000 $ 4,492,000 Revenue by Geographic Region For the Three Months Ended September 30, (Unaudited) 2020 2019 United States $ 3,446,000 $ 1,288,000 International 846,000 312,000 Total $ 4,292,000 $ 1,600,000 For the Nine Months Ended September 30, (Unaudited) 2020 2019 United States $ 15,437,000 $ 3,852,000 International 5,937,000 640,000 Total $ 21,374,000 $ 4,492,000 Product revenue includes sales from our standard and customized equipment, solution and accessories sold with our equipment. Revenue is recognized upon transfer of control of promised products to customers in an amount that reflects the consideration we expect to receive in exchange for those products. Service and training revenue include sales from our high-level decontamination and service engagements, validation of our equipment and technology and customer training. Service revenue is recognized as the agreed upon services are rendered to our customers in an amount that reflects the consideration we expect to receive in exchange for those services. Costs to Obtain a Contract with a Customer We apply a practical expedient to expense costs as incurred for costs to obtain a contract with a customer when the amortization period would have been one year or less. We generally expense sales commissions when incurred because the amortization period would have been one year or less. These costs are recorded within selling expenses. Contract Balances As of September 30, 2020, and December 31, 2019 we did not have any unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) contracts for which we recognize revenue at the amount to which we have the right to invoice for services performed. Arrangements with Multiple Performance Obligations Our contracts with customers may include multiple performance obligations. We enter into contracts that can include various combinations of products and services, which are primarily distinct and accounted for as separate performance obligations. Significant Judgments Our contracts with customers for products and services often dictate the terms and conditions of when the control of the promised products or services is transferred to the customer and the amount of consideration to be received in exchange for the products and services. |
Equity Compensation Expense | We account for equity compensation expense in accordance with FASB ASC 718, “Compensation—Stock Compensation.” Under the provisions of FASB ASC 718, equity compensation expense is estimated at the grant date based on the award’s fair value. On July 7, 2017, our shareholders approved the 2016 Equity Incentive Plan, or (the 2016 Plan). The 2016 Plan authorizes the grant of stock options, stock appreciation rights, restricted stock, restricted stock units and performance units/shares. Up to 625,000 shares of common stock are authorized for issuance under the 2016 Plan. Shares issued under the 2016 Plan may be either authorized but unissued shares, treasury shares, or any combination thereof. Provisions in the 2016 Plan permit the reuse or reissuance by the 2016 Plan of shares of common stock for numerous reasons, including, but not limited to, shares of common stock underlying canceled, expired, or forfeited awards of stock-based compensation and stock appreciation rights paid out in the form of cash. Equity compensation expense will typically be awarded in consideration for the future performance of services to us. All recipients of awards under the 2016 Plan are required to enter into award agreements with us at the time of the award; awards under the 2016 Plan are expressly conditioned upon such agreements. For the nine months ended September 30, 2020 and 2019, we issued 50,000 and 50,000 shares of common stock, respectively, out of the 2016 Plan. |
Concentrations of Credit Risk | Financial instruments that potentially subject us to significant concentrations of credit risk consist principally of cash and cash equivalents. We maintain cash balances at financial institutions which exceed the current Federal Deposit Insurance Corporation limit of $250,000 at times during the year. |
Long-Lived Assets Including Acquired Intangible Assets | We assess long-lived assets for potential impairments at the end of each year, or during the year if an event or other circumstance indicates that we may not be able to recover the carrying amount of the asset. In evaluating long-lived assets for impairment, we measure recoverability of these assets by comparing the carrying amounts to the future undiscounted cash flows the assets are expected to generate. If our long-lived assets are considered to be impaired, the impairment to be recognized equals the amount by which the carrying value of the asset exceeds its fair market value. We base the calculations of the estimated fair value of our long-lived assets on the income approach. For the income approach, we use an internally developed discounted cash flow model that includes, among others, the following assumptions: projections of revenues and expenses and related cash flows based on assumed long-term growth rates and demand trends; expected future investments to grow new units; and estimated discount rates. We base these assumptions on our historical data and experience, industry projections, micro and macro general economic condition projections, and our expectations. We had no long-lived asset impairment charges for the three and nine months ended September 30, 2020 and 2019. |
Advertising and Promotional Expenses | We expense advertising costs in the period in which they are incurred. Advertising and promotional expenses included in selling expenses for the three and nine months ended September 30, 2020 were approximately $56,000 and $156,000, respectively. Advertising and promotional expenses included in selling expenses for the three and nine months ended September 30, 2019 were approximately $29,000 and $94,000, respectively. |
Research and Development Expenses | We expense research and development expenses in the period in which they are incurred. |
Business Segments | We currently have one reportable business segment due to the fact that we derive our revenue primarily from one product. A breakdown of revenue is presented in “Revenue Recognition” in Note 2 above. |
Recent Accounting Pronouncements | In August 2018, the FASB issued ASU No. 2018-15, “Intangibles-Goodwill and Other-Internal-Use Software (Topic 350): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract.” This new guidance aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. This new guidance is effective on a prospective or retrospective basis beginning on January 1, 2020, with early adoption permitted. We elected to adopt this guidance early, in 2020 on a prospective basis. The new guidance did not have a material impact on our Condensed Consolidated Financial Statements. |
2. SUMMARY OF SIGNIFICANT ACC_3
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
Net Income (Loss) Per Share | For the Three Months Ended September 30, (Unaudited) 2020 2019 Net Income (Loss) $ 1,019,300 $ (236,813 ) Adjustments for convertible debt - as converted Interest on convertible debt - 50,000 Amortization of debt discount on convertible debt - - Net income (loss) attributable to common shareholders $ 1,019,300 $ (186,813 ) Weighted average number of shares of common stock outstanding: Basic 16,741,622 15,588,680 Diluted 18,593,255 15,588,680 Net income (loss) attributable to common shareholders per share: Basic $ 0.06 $ (0.01 ) Diluted $ 0.05 $ (0.01 ) The following provides a reconciliation of the shares used in calculating the per share amounts for the periods presented: For the Three Months Ended September 30 (Unaudited) 2020 2019 Numerator: Net Income (Loss) $ 1,019,300 $ (236,813 ) Denominator: Basic weighted-average shares 16,741,622 15,588,680 Effect of dilutive securities Warrants 1,686,633 - Convertible Debt - - Options 101,250 - Preferred Stock 63,750 - Diluted Weighted Average Shares 18,593,255 15,588,680 Net Income (Loss) Per Common Share: Basic $ 0.06 $ (0.02 ) Diluted $ 0.05 $ (0.02 ) Note: Warrants, options and preferred stock for the three months ended September 30, 2019 are not included in the computation of diluted weighted average shares as such inclusion would be anti-dilutive. Income (loss) from Operations Data: Income (Loss) from Operations $ 1,096,328 $ (187,586 ) Basic and Diluted Weighted Average Shares Basic 16,741,922 15,588,680 Diluted 18,593,255 15,588,680 Basic and Diluted Income (loss) Per Common Share Basic $ 0.07 $ (0.01 ) Diluted $ 0.06 $ (0.01 ) For the Nine Months Ended September 30, (Unaudited) 2020 2019 Net Income (Loss) $ 7,295,478 $ (1,756,050 ) Adjustments for convertible debt - as converted Interest on convertible debt 40,689 150,000 Amortization of debt discount on convertible debt - 17,534 Net income (loss) attributable to common shareholders $ 7,336,167 $ (1,588,516 ) Weighted average number of shares of common stock outstanding: Basic 16,429,360 15,585,822 Diluted 18,280,993 15,585,822 Net income (loss) attributable to common shareholders per share: Basic $ 0.45 $ (0.10 ) Diluted $ 0.40 $ (0.10 ) The following provides a reconciliation of the shares used in calculating the per share amounts for the periods presented: For the Nine Months Ended September 30 (Unaudited) 2020 2019 Numerator: Net Income (Loss) $ 7,295,478 $ (1,756,050 ) Denominator: Basic weighted-average shares 16,429,360 15,585,822 Effect of dilutive securities Warrants 1,686,633 - Convertible Debt - - Options 101,250 - Preferred Stock 63,750 - Diluted Weighted Average Shares 18,280,993 15,585,822 Net Income (Loss) Per Common Share: Basic $ 0.44 $ (0.11 ) Diluted $ 0.40 $ (0.11 ) Note: Warrants, options and preferred stock for the nine months ended September 30, 2019 are not included in the computation of diluted weighted average shares as such inclusion would be anti-dilutive. Income (loss) from Operations Data: Income (Loss) from Operations $ 7,412,397 $ (1,590,948 ) Basic and Diluted Weighted Average Shares Basic 16,429,360 15,585,822 Diluted 18,280,993 15,585,822 Basic and Diluted Income (loss) Per Common Share Basic $ 0.45 $ (0.10 ) Diluted $ 0.41 $ (0.10 ) |
Disaggregation of Revenue | Product and Service Revenue For the three months ended September 30, (Unaudited) 2020 2019 SteraMist Product $ 3,677,000 $ 928,000 Service and Training 615,000 672,000 Total $ 4,292,000 $ 1,600,000 For the nine months ended September 30, (Unaudited) 2020 2019 SteraMist Product $ 19,557,000 $ 3,461,000 Service and Training 1,817,000 1,031,000 Total $ 21,374,000 $ 4,492,000 Revenue by Geographic Region For the three months ended September 30, (Unaudited) 2020 2019 United States $ 3,446,000 $ 1,288,000 International 846,000 312,000 Total $ 4,292,000 $ 1,600,000 For the nine months ended September 30, (Unaudited) 2020 2019 United States $ 15,437,000 $ 3,852,000 International 5,937,000 640,000 Total $ 21,374,000 $ 4,492,000 |
3. INVENTORIES (Tables)
3. INVENTORIES (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Inventory Disclosure [Abstract] | |
Inventories | September 30, 2020 (Unaudited) December 31, 2019 Finished goods $ 4,052,532 $ 2,364,786 Raw Materials 321,968 50,428 Inventory Reserve - (100,000 ) $ 4,374,500 $ 2,315,214 |
5. PROPERTY AND EQUIPMENT (Tabl
5. PROPERTY AND EQUIPMENT (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | September 30, 2020 (Unaudited) December 31, 2019 Furniture and fixtures $ 357,236 $ 357,236 Equipment 1,292,860 1,355,014 Vehicles 60,703 60,703 Computer and software 193,950 166,598 Leasehold improvements 386,120 362,898 Tenant Improvement Allowance 405,000 405,000 2,695,870 2,707,449 Less: Accumulated depreciation 1,584,528 1,339,585 $ 1,111,342 $ 1,367,864 |
6. INTANGIBLE ASSETS (Tables)
6. INTANGIBLE ASSETS (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Definite Life Intangible Assets | September 30, 2020 (Unaudited) December 31, 2019 Intellectual Property and Patents $ 2,906,507 $ 2,906,507 Less: Accumulated Amortization 2,759,795 2,479,754 Intangible Assets, net $ 146,712 $ 426,753 |
Indefinite Life Intangible Assets | Trademarks $ 512,257 $ 512,257 Total Intangible Assets, net $ 658,969 $ 939,010 |
Approximate Future Amortization | Year Ended: Amount October 1 – December 31, 2020 $ 93,000 December 31, 2021 3,000 December 31, 2022 3,000 December 31, 2023 3,000 December 31, 2024 3,000 Thereafter 42,000 $ 147,000 |
7. LEASES (Tables)
7. LEASES (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Leases [Abstract] | |
Operating Lease | Operating leases: September 30, 2020 (Unaudited) December 31, 2019 Assets: Operating lease right-of-use asset $ 642,738 $ 674,471 Liabilities: Current Portion of Long-Term Operating Lease $ 78,723 $ 71,510 Long-Term Operating Lease, Net of Current Portion 974,311 1,034,413 $ 1,053,034 $ 1,105,923 |
Lease Expense | For the Three Months Ended September 30, 2020 (Unaudited) For the Three Months Ended September 30, 2019 (Unaudited) Operating lease expense $ 39,329 $ 39,329 For the Nine Months Ended September 30, 2020 (Unaudited) For the Nine Months Ended September 30, 2019 (Unaudited) Operating lease expense $ 117,986 $ 117,986 |
Other Information Related to Leases | September 30, 2020 (Unaudited) December 31, 2019 Weighted-average remaining lease term: Operating leases 8.50 years 9.25 years Discount rate: Operating leases 7.00% 7.00% |
Supplemental Cash Flow Information related to leases | For the Three Months Ended September 30, 2020 (Unaudited) For the Three Months Ended September 30, 2019 (Unaudited) Cash paid for amounts included in the measurement of lease liabilities: $ 36,940 $ 29,888 For the Nine Months Ended September 30, 2020 (Unaudited) For the Nine Months Ended September 30, 2019 (Unaudited) Cash paid for amounts included in the measurement of lease liabilities: $ 109,747 $ 29,888 |
Maturities of Lease Payments | Year Ended: Operating Lease October 1 – December 31, 2020 $ 36,941 December 31, 2021 151,088 December 31, 2022 155,621 December 31, 2023 160,290 December 31, 2024 165,098 Thereafter 745,183 Total minimum lease payments 1,414,221 Less: Interest 361,187 Present value of lease obligations 1,053,034 Less: Current portion 78,723 Long-term portion of lease obligations $ 974,311 |
8. CAPITALIZED SOFTWARE DEVEL_2
8. CAPITALIZED SOFTWARE DEVELOPMENT COSTS (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Capitalized Computer Software, Net [Abstract] | |
Capitalized Software Development Costs | September 30, 2020 (Unaudited) December 31, 2019 Capitalized Software Development Costs $ 125,704 $ 125,704 Less: Accumulated Amortization (62,852 ) (31,426 ) $ 62,852 $ 94,278 |
10. CONVERTIBLE DEBT (Tables)
10. CONVERTIBLE DEBT (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Convertible Debt [Abstract] | |
Convertible Notes | September 30, 2020 (Unaudited) December 31, 2019 Convertible notes $ - $ 5,000,000 Initial discount - (53,873 ) Accumulated amortization - 53,873 Convertible notes, net $ - $ 5,000,000 |
11. SHAREHOLDERS' EQUITY (Table
11. SHAREHOLDERS' EQUITY (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Stockholders' Equity: | |
Stock Options Outstanding | September 30, 2020 (Unaudited) December 31, 2019 Number of Options Weighted Average Exercise Price Number of Options Weighted Average Exercise Price Outstanding, beginning of period 77,500 $ 2.56 40,000 $ 4.16 Granted 31,250 0.88 37,500 0.88 Exercised (2,500 ) 0.40 - - Expired (5,000 ) 16.8 - - Outstanding, end of period 101,250 $ 1.38 77,500 $ 2.56 |
Options Outstanding and Exercisable by Price Range | Outstanding Options Average Weighted Exercisable Options Range Number Remaining Contractual Life in Years Number Weighted Average Exercise Price $ 0.80 27,500 4.35 27,500 $ 0.80 $ 0.88 31,250 3.26 31,250 $ 0.88 $ 0.96 25,000 3.27 25,000 $ 0.96 $ 2.16 5,000 4.26 5,000 $ 2.16 $ 4.40 12,500 5.35 12,500 $ 4.40 101,250 3.87 101,250 $ 1.38 |
Stock Warrants Outstanding | September 30, 2020 (Unaudited) December 31, 2019 Number of Warrants Weighted Average Exercise Price Number of Warrants Weighted Average Exercise Price Outstanding, beginning of period 2,155,065 $ 3.12 3,318,826 $ 2.72 Granted 210,447 1.36 162,500 0.88 Exercised (64,296 ) (2.84 ) - - Expired (614,583 ) (6.40 ) (1,326,261 ) (1.84 ) Outstanding, end of period 1,686,633 $ 1.73 2,155,065 $ 3.12 |
Warrants Outstanding and Exercisable by Price Range | Outstanding Warrants Exercisable Warrants Exercise Price Number Average Weighted Remaining Contractual Life in Years Number Weighted Average Exercise Price $ 0.64 31,250 3.15 31,250 $ 0.64 $ 0.80 158,125 3.01 158,125 $ 0.80 $ 0.96 473,958 2.19 473,958 $ 0.96 $ 1.12 6,250 3.55 6,250 $ 1.12 $ 1.20 175,000 4.13 175,000 $ 1.20 $ 1.36 1,250 2.07 1,250 $ 1.36 $ 2.16 31,250 1.25 31,250 $ 2.16 $ 2.32 523,061 1.41 523,061 $ 2.32 $ 2.40 150,000 0.39 150,000 $ 2.40 $ 2.56 31,250 1.00 31,250 $ 2.56 $ 3.36 31,250 0.75 31,250 $ 3.36 $ 4.00 60,000 4.85 60,000 $ 4.00 $ 4.40 12,500 0.33 12,500 $ 4.40 $ 8.40 1,488 2.88 1,488 $ 8.40 1,686,633 2.11 1,686,633 $ 1.73 |
13. CONTRACTS AND AGREEMENTS (T
13. CONTRACTS AND AGREEMENTS (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Contracts And Agreements | |
Approximate Minimum Contract Payments | Year Ended: Amount December 31, 2021 $ 18,000 December 31, 2022 30,000 December 31, 2023 30,000 December 31, 2024 30,000 Thereafter 15,000 $ 123,000 |
14. ACCRUED EXPENSES AND OTHE_2
14. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Accrued Liabilities and Other Liabilities [Abstract] | |
Accrued Expenses and Other Current Liabilities | September 30, 2020 (Unaudited) December 31, 2019 Commissions $ 217,364 $ 112,102 Payroll and related costs 136,095 167,689 Director fees 41,250 41,250 Sales Tax Payable 14,415 21,814 Income Taxes Payable (Note 17) 77,000 - Accrued warranty (Note 15) 105,000 30,000 Other accrued expenses 80,257 77,257 Total $ 671,381 $ 450,112 |
15. ACCRUED WARRANTY (Tables)
15. ACCRUED WARRANTY (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Less: Accumulated Amortization | |
Warranty Reserve Activity | September 30, 2020 (Unaudited) December 31, 2019 Beginning accrued warranty costs $ 30,000 $ 30,000 Provision for warranty expense 79,545 2,609 Settlement of warranty claims (4,545 ) (2,609 ) Ending accrued warranty costs $ 105,000 $ 30,000 |
2. SUMMARY OF SIGNIFICANT ACC_4
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Accounting Policies [Abstract] | ||||
Net Income (Loss) | $ 1,019,300 | $ (236,813) | $ 7,295,478 | $ (1,756,050) |
Interest on Convertible Debt | 0 | 50,000 | 40,689 | 150,000 |
Amortization of Debt Discount on Convertible Debt | 0 | 0 | 0 | 17,534 |
Net Income (Loss) Attributable to Common Shareholders | $ 1,019,300 | $ (186,813) | $ 7,336,167 | $ (1,588,516) |
Weighted Average Number of Common Shares Outstanding: | ||||
Basic | 16,741,622 | 15,588,680 | 16,429,360 | 15,585,822 |
Diluted | 18,593,255 | 15,588,680 | 18,280,993 | 15,585,822 |
Net Income (Loss) Attributable to Common Shareholders Per Share: | ||||
Basic | $ 0.06 | $ (0.02) | $ 0.44 | $ (0.11) |
Diluted | $ 0.05 | $ (0.02) | $ .40 | $ (0.11) |
2. SUMMARY OF SIGNIFICANT ACC_5
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 1) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Summary Of Significant Accounting Policies | ||||
Net Income (Loss) | $ 1,019,300 | $ (236,813) | $ 7,295,478 | $ (1,756,050) |
Basic Weighted-Average Shares | 16,741,622 | 15,588,680 | 16,429,360 | 15,585,822 |
Effect of dilutive securities | ||||
Warrants | 1,686,633 | 0 | 1,686,633 | 0 |
Convertible Debt | 0 | 0 | 0 | 0 |
Options | 101,250 | 0 | 101,250 | 0 |
Preferred Stock | 63,750 | 0 | 63,750 | 0 |
Diluted Weighted Average Shares | 18,593,255 | 15,588,680 | 18,280,993 | 15,585,822 |
Net Income (Loss) Per Common Share: | ||||
Basic | $ 0.06 | $ (0.02) | $ 0.44 | $ (0.11) |
Diluted | $ 0.05 | $ (0.02) | $ .40 | $ (0.11) |
2. SUMMARY OF SIGNIFICANT ACC_6
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 2) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Summary Of Significant Accounting Policies Details 2Abstract | ||||
Income (Loss) from Operations | $ 1,096,328 | $ (187,586) | $ 7,412,397 | $ (1,590,948) |
Weighted Average Number of Common Shares Outstanding: | ||||
Basic | 16,741,622 | 15,588,680 | 16,429,360 | 15,585,822 |
Diluted | 18,593,255 | 15,588,680 | 18,280,993 | 15,585,822 |
Net Income (Loss) Attributable to Common Shareholders Per Share: | ||||
Basic | $ 0.06 | $ (0.02) | $ 0.44 | $ (0.11) |
Diluted | $ 0.05 | $ (0.02) | $ .40 | $ (0.11) |
2. SUMMARY OF SIGNIFICANT ACC_7
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 3) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Net Revenue | $ 4,291,589 | $ 1,600,387 | $ 21,373,504 | $ 4,491,719 |
United States | ||||
Net Revenue | 3,446,000 | 1,288,000 | 15,437,000 | 3,852,000 |
International | ||||
Net Revenue | 846,000 | 312,000 | 5,937,000 | 640,000 |
SteraMist Product | ||||
Net Revenue | 3,677,000 | 928,000 | 19,557,000 | 3,461,000 |
Service & Training | ||||
Net Revenue | $ 615,000 | $ 672,000 | $ 1,817,000 | $ 1,031,000 |
2. SUMMARY OF SIGNIFICANT ACC_8
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Bad Debt Expense | $ 153,000 | $ 1,000 | $ 226,000 | $ 33,000 | |
Allowance for Doubtful Accounts | 315,000 | 315,000 | $ 110,000 | ||
Inventory Reserve | 0 | 0 | 100,000 | ||
Amortization of Capitalized Software Development Costs | 10,475 | 6,285 | 31,425 | 6,285 | |
Warranty Reserve | 105,000 | 105,000 | $ 30,000 | ||
Advertising and Promotional Expenses | 56,000 | 29,000 | 156,000 | 94,000 | |
Research and Development Expenses | $ 44,862 | $ 88,137 | $ 245,443 | $ 249,373 | |
Convertible Debentures | |||||
Potentially Dilutive Securities | 1,157,407 | ||||
Warrants | |||||
Potentially Dilutive Securities | 1,686,633 | 2,667,565 | |||
Options | |||||
Potentially Dilutive Securities | 101,250 | 77,500 | |||
Cumulative Convertible Series A Preferred Stock | |||||
Potentially Dilutive Securities | 63,750 | 63,750 | |||
Two Vendors | Accounts Payable | |||||
Concentration Risk, Percentage | 56.00% | ||||
Two Vendors | Cost of Sales | |||||
Concentration Risk, Percentage | 66.00% | 77.00% | |||
One Vendor | Accounts Payable | |||||
Concentration Risk, Percentage | 40.00% | ||||
One Vendor | Cost of Sales | |||||
Concentration Risk, Percentage | 54.00% | 68.00% |
3. INVENTORIES (Details)
3. INVENTORIES (Details) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Inventory Disclosure [Abstract] | ||
Finished Goods | $ 4,052,532 | $ 2,364,786 |
Raw Materials | 321,968 | 50,428 |
Inventory Reserve | 0 | (100,000) |
Inventory | $ 4,374,500 | $ 2,315,214 |
4. VENDOR DEPOSITS (Details Nar
4. VENDOR DEPOSITS (Details Narrative) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Notes to Financial Statements | ||
Vendor Deposits | $ 333,212 | $ 141,052 |
5. PROPERTY AND EQUIPMENT (Deta
5. PROPERTY AND EQUIPMENT (Details) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Property, Plant and Equipment [Abstract] | ||
Furniture and Fixtures | $ 357,236 | $ 357,236 |
Equipment | 1,292,860 | 1,355,014 |
Vehicles | 60,703 | 60,703 |
Computer and Software | 193,950 | 166,598 |
Leasehold Improvements | 386,120 | 362,898 |
Tenant Improvement Allowance | 405,000 | 405,000 |
Property and Equipment, Gross | 2,695,870 | 2,707,449 |
Less: Accumulated Depreciation | 1,584,528 | 1,339,585 |
Property and Equipment, Net | $ 1,111,342 | $ 1,367,864 |
5. PROPERTY AND EQUIPMENT (De_2
5. PROPERTY AND EQUIPMENT (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Property, Plant and Equipment [Abstract] | ||||
Depreciation | $ 83,932 | $ 90,312 | $ 241,445 | $ 261,939 |
Amortization of Tenant Improvement Allowance | $ 9,798 | $ 9,798 | $ 29,395 | $ 29,395 |
6. INTANGIBLE ASSETS (Details)
6. INTANGIBLE ASSETS (Details) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Intellectual Property and Patents | $ 2,906,507 | $ 2,906,507 |
Less: Accumulated Amortization | 2,759,795 | 2,479,754 |
Intangible Assets, Net | $ 146,712 | $ 426,753 |
6. INTANGIBLE ASSETS (Details 1
6. INTANGIBLE ASSETS (Details 1) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Trademarks | $ 512,257 | $ 512,257 |
Total Intangible Assets, Net | $ 658,969 | $ 939,010 |
6. INTANGIBLE ASSETS (Details 2
6. INTANGIBLE ASSETS (Details 2) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Amortization | ||
October 1 - December 31, 2020 | $ 93,000 | |
2021 | 3,000 | |
2022 | 3,000 | |
2023 | 3,000 | |
2024 | 3,000 | |
Thereafter | 42,000 | |
Total | $ 146,712 | $ 426,753 |
6. INTANGIBLE ASSETS (Details N
6. INTANGIBLE ASSETS (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||||
Amortization Expense | $ 93,347 | $ 92,377 | $ 280,041 | $ 277,131 |
7. LEASES (Details)
7. LEASES (Details) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Assets | ||
Operating Lease Right of Use Asset | $ 642,738 | $ 674,471 |
Liabilities | ||
Current Portion of Long-Term Operating Lease | 78,723 | 71,510 |
Long-Term Operating Lease, Net of Current Portion | 974,311 | 1,034,413 |
Total | $ 1,053,034 | $ 1,105,923 |
7. LEASES (Details 1)
7. LEASES (Details 1) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Leases [Abstract] | ||||
Operating Lease Expense | $ 39,329 | $ 39,329 | $ 117,986 | $ 117,986 |
7. LEASES (Details 2)
7. LEASES (Details 2) | Sep. 30, 2020 | Dec. 31, 2019 |
Leases [Abstract] | ||
Weighted-Average Remaining Lease Term: Operating Leases | 8 years 6 months | 9 years 3 months |
Discount Rate: Operating Leases | 7.00% | 7.00% |
7. LEASES (Details 3)
7. LEASES (Details 3) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Leases [Abstract] | ||||
Cash Paid for Amounts Included in the Measurement of Lease Liabilities | $ 36,940 | $ 29,888 | $ 109,747 | $ 29,888 |
7. LEASES (Details 4)
7. LEASES (Details 4) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Leases [Abstract] | ||
October 1 - December 31, 2020 | $ 36,941 | |
December 31, 2021 | 151,088 | |
December 31, 2022 | 155,621 | |
December 31, 2023 | 160,290 | |
December 31, 2024 | 165,098 | |
Thereafter | 745,183 | |
Total minimum lease payments | 1,414,221 | |
Less: interest | 361,187 | |
Present value of lease obligations | 1,053,034 | $ 1,105,923 |
Less: current portion | 78,723 | 71,510 |
Long-term operating lease, net of current portion | $ 974,311 | $ 1,034,413 |
8. CAPITALIZED SOFTWARE DEVEL_3
8. CAPITALIZED SOFTWARE DEVELOPMENT COSTS (Details) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Capitalized Computer Software, Net [Abstract] | ||
Capitalized Software Development Costs, Gross | $ 125,704 | $ 125,704 |
Less: Accumulated Amortization | (62,852) | (31,426) |
Capitalized Software Development Costs, Net | $ 62,852 | $ 94,278 |
8. CAPITALIZED SOFTWARE DEVEL_4
8. CAPITALIZED SOFTWARE DEVELOPMENT COSTS (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Capitalized Computer Software, Net [Abstract] | ||||
Amortization of Capitalized Software Development Costs | $ 10,475 | $ 6,285 | $ 31,425 | $ 6,285 |
10. CONVERTIBLE DEBT (Details)
10. CONVERTIBLE DEBT (Details) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Convertible Debt [Abstract] | ||
Convertible Notes | $ 0 | $ 5,000,000 |
Initial Discount | 0 | (53,873) |
Accumulated Amortization | 0 | 53,873 |
Convertible Notes, Net | $ 0 | $ 5,000,000 |
10. CONVERTIBLE DEBT (Details N
10. CONVERTIBLE DEBT (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Interest Expense | $ 790 | $ 50,000 | $ 42,266 | $ 150,000 |
Expected Dividend Yield | 0.00% | 0.00% | ||
Remaining Term (Years) | 3 years | |||
Amortization Expense | $ 0 | $ 17,534 | ||
Minimum | ||||
Expected Volatility | 104.06% | 104.06% | ||
Risk-Free Rate | 1.49% | 1.49% | ||
Maximum | ||||
Expected Volatility | 111.54% | 111.54% | ||
Risk-Free Rate | 1.59% | 1.59% |
11. SHAREHOLDERS' EQUITY (Detai
11. SHAREHOLDERS' EQUITY (Details) - $ / shares | 9 Months Ended | 12 Months Ended |
Sep. 30, 2020 | Dec. 31, 2019 | |
Number of Options | ||
Outstanding, Beginning Balance | 77,500 | 40,000 |
Granted | 31,250 | 37,500 |
Exercised | (2,500) | 0 |
Expired | (5,000) | 0 |
Outstanding, Ending Balance | 101,250 | 77,500 |
Weighted Average Exercise Price | ||
Outstanding, Beginning Balance | $ 2.56 | $ 4.16 |
Granted | .88 | .88 |
Exercised | .40 | .00 |
Expired | 16.80 | .00 |
Outstanding, Ending Balance | $ 1.38 | $ 2.56 |
11. SHAREHOLDERS' EQUITY (Det_2
11. SHAREHOLDERS' EQUITY (Details 1) - $ / shares | 9 Months Ended | ||
Sep. 30, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Outstanding Options | 101,250 | 77,500 | 40,000 |
Average Weighted Remaining Contractual Life in Years, Outstanding | 3 years 10 months 13 days | ||
Exercisable Options | 101,250 | ||
Weighted Average Exercise Price, Exercisable | $ 1.38 | ||
$ 0.80 | |||
Outstanding Options | 27,500 | ||
Average Weighted Remaining Contractual Life in Years, Outstanding | 4 years 4 months 6 days | ||
Exercisable Options | 27,500 | ||
Weighted Average Exercise Price, Exercisable | $ .80 | ||
$ 0.88 | |||
Outstanding Options | 31,250 | ||
Average Weighted Remaining Contractual Life in Years, Outstanding | 3 years 3 months 4 days | ||
Exercisable Options | 31,250 | ||
Weighted Average Exercise Price, Exercisable | $ .88 | ||
$ 0.96 | |||
Outstanding Options | 25,000 | ||
Average Weighted Remaining Contractual Life in Years, Outstanding | 3 years 3 months 7 days | ||
Exercisable Options | 25,000 | ||
Weighted Average Exercise Price, Exercisable | $ .96 | ||
$ 2.16 | |||
Outstanding Options | 5,000 | ||
Average Weighted Remaining Contractual Life in Years, Outstanding | 4 years 3 months 4 days | ||
Exercisable Options | 5,000 | ||
Weighted Average Exercise Price, Exercisable | $ 2.16 | ||
$ 4.40 | |||
Outstanding Options | 12,500 | ||
Average Weighted Remaining Contractual Life in Years, Outstanding | 5 years 4 months 6 days | ||
Exercisable Options | 12,500 | ||
Weighted Average Exercise Price, Exercisable | $ 4.40 |
11. SHAREHOLDERS' EQUITY (Det_3
11. SHAREHOLDERS' EQUITY (Details 2) - $ / shares | 9 Months Ended | 12 Months Ended |
Sep. 30, 2020 | Dec. 31, 2019 | |
Stockholders' Equity: | ||
Outstanding, Beginning Balance | 2,155,065 | 3,318,826 |
Granted | 210,447 | 162,500 |
Exercised | (64,296) | 0 |
Expired | (614,583) | (1,326,261) |
Outstanding, Ending Balance | 1,686,633 | 2,155,065 |
Weighted Average Exercise Price | ||
Outstanding, Beginning Balance | $ 3.12 | $ 2.72 |
Granted | 1.36 | .88 |
Exercised | (2.84) | (.00) |
Expired | (6.40) | (1.84) |
Outstanding, Ending Balance | $ 1.73 | $ 3.12 |
11. SHAREHOLDERS' EQUITY (Det_4
11. SHAREHOLDERS' EQUITY (Details 3) - $ / shares | 9 Months Ended | ||
Sep. 30, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Outstanding Warrants | 1,686,633 | 2,155,065 | 3,318,826 |
Average Weighted Remaining Contractual Life in Years, Outstanding | 2 years 1 month 10 days | ||
Exercisable Warrants | 1,686,633 | ||
Weighted Average Exercise Price, Exercisable | $ 1.73 | ||
$ 0.64 | |||
Outstanding Warrants | 31,250 | ||
Average Weighted Remaining Contractual Life in Years, Outstanding | 3 years 1 month 24 days | ||
Exercisable Warrants | 31,250 | ||
Weighted Average Exercise Price, Exercisable | $ .64 | ||
$ 0.80 | |||
Outstanding Warrants | 158,125 | ||
Average Weighted Remaining Contractual Life in Years, Outstanding | 3 years 4 days | ||
Exercisable Warrants | 158,125 | ||
Weighted Average Exercise Price, Exercisable | $ .80 | ||
$ 0.96 | |||
Outstanding Warrants | 473,958 | ||
Average Weighted Remaining Contractual Life in Years, Outstanding | 2 years 2 months 8 days | ||
Exercisable Warrants | 473,958 | ||
Weighted Average Exercise Price, Exercisable | $ .96 | ||
$ 1.12 | |||
Outstanding Warrants | 6,250 | ||
Average Weighted Remaining Contractual Life in Years, Outstanding | 3 years 6 months 18 days | ||
Exercisable Warrants | 6,250 | ||
Weighted Average Exercise Price, Exercisable | $ 1.12 | ||
$ 1.20 | |||
Outstanding Warrants | 175,000 | ||
Average Weighted Remaining Contractual Life in Years, Outstanding | 4 years 1 month 17 days | ||
Exercisable Warrants | 175,000 | ||
Weighted Average Exercise Price, Exercisable | $ 1.20 | ||
$ 1.36 | |||
Outstanding Warrants | 1,250 | ||
Average Weighted Remaining Contractual Life in Years, Outstanding | 2 years 25 days | ||
Exercisable Warrants | 1,250 | ||
Weighted Average Exercise Price, Exercisable | $ 1.36 | ||
$ 2.16 | |||
Outstanding Warrants | 31,250 | ||
Average Weighted Remaining Contractual Life in Years, Outstanding | 1 year 3 months | ||
Exercisable Warrants | 31,250 | ||
Weighted Average Exercise Price, Exercisable | $ 2.16 | ||
$ 2.32 | |||
Outstanding Warrants | 523,061 | ||
Average Weighted Remaining Contractual Life in Years, Outstanding | 1 year 4 months 28 days | ||
Exercisable Warrants | 523,061 | ||
Weighted Average Exercise Price, Exercisable | $ 2.32 | ||
$ 2.40 | |||
Outstanding Warrants | 150,000 | ||
Average Weighted Remaining Contractual Life in Years, Outstanding | 4 months 20 days | ||
Exercisable Warrants | 150,000 | ||
Weighted Average Exercise Price, Exercisable | $ 2.40 | ||
$ 2.56 | |||
Outstanding Warrants | 31,250 | ||
Average Weighted Remaining Contractual Life in Years, Outstanding | 1 year | ||
Exercisable Warrants | 31,250 | ||
Weighted Average Exercise Price, Exercisable | $ 2.56 | ||
$ 3.36 | |||
Outstanding Warrants | 31,250 | ||
Average Weighted Remaining Contractual Life in Years, Outstanding | 9 months | ||
Exercisable Warrants | 31,250 | ||
Weighted Average Exercise Price, Exercisable | $ 3.36 | ||
$ 4.00 | |||
Outstanding Warrants | 60,000 | ||
Average Weighted Remaining Contractual Life in Years, Outstanding | 4 years 10 months 6 days | ||
Exercisable Warrants | 60,000 | ||
Weighted Average Exercise Price, Exercisable | $ 4 | ||
$ 4.40 | |||
Outstanding Warrants | 12,500 | ||
Average Weighted Remaining Contractual Life in Years, Outstanding | 3 months 29 days | ||
Exercisable Warrants | 12,500 | ||
Weighted Average Exercise Price, Exercisable | $ 4.40 | ||
$ 8.40 | |||
Outstanding Warrants | 1,488 | ||
Average Weighted Remaining Contractual Life in Years, Outstanding | 2 years 10 months 17 days | ||
Exercisable Warrants | 1,488 | ||
Weighted Average Exercise Price, Exercisable | $ 8.40 |
11. SHAREHOLDERS' EQUITY (Det_5
11. SHAREHOLDERS' EQUITY (Details Narrative) - $ / shares | Sep. 30, 2020 | Dec. 31, 2019 |
Cumulative Convertible Series A Preferred Stock | ||
Cumulative Convertible Preferred Stock; Shares Authorized | 1,000,000 | 1,000,000 |
Cumulative Convertible Preferred Stock; Shares Issued | 63,750 | 63,750 |
Cumulative Convertible Preferred Stock; Shares Outstanding | 63,750 | 63,750 |
Cumulative Convertible Preferred Stock; Par Value | $ 0.01 | $ 0.01 |
Cumulative Convertible Series B Preferred Stock | ||
Cumulative Convertible Preferred Stock; Shares Authorized | 4,000 | 4,000 |
Cumulative Convertible Preferred Stock; Shares Issued | 0 | 0 |
Cumulative Convertible Preferred Stock; Shares Outstanding | 0 | 0 |
Cumulative Convertible Preferred Stock; Par Value | $ 1,000 | $ 1,000 |
13. CONTRACTS AND AGREEMENTS (D
13. CONTRACTS AND AGREEMENTS (Details) | Sep. 30, 2020USD ($) |
Contracts And Agreements | |
December 31, 2021 | $ 18,000 |
December 31, 2022 | 30,000 |
December 31, 2023 | 30,000 |
December 31, 2024 | 30,000 |
Thereafter | 15,000 |
Total Minimum Payments | $ 123,000 |
14. ACCRUED EXPENSES AND OTHE_3
14. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Details) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Accrued Liabilities and Other Liabilities [Abstract] | ||
Commissions | $ 217,364 | $ 112,102 |
Payroll and Related Costs | 136,095 | 167,689 |
Director Fees | 41,250 | 41,250 |
Sales Tax Payable | 14,415 | 21,814 |
Income Taxes Payable (Note 17) | 77,000 | 0 |
Accrued Warranty (Note 15) | 105,000 | 30,000 |
Other Accrued Expenses | 80,257 | 77,257 |
Total | $ 671,381 | $ 450,112 |
15. ACCRUED WARRANTY (Details)
15. ACCRUED WARRANTY (Details) - USD ($) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2020 | Dec. 31, 2019 | |
Less: Accumulated Amortization | ||
Accrued Warranty Costs, Beginning Balance | $ 30,000 | $ 30,000 |
Provision for Product Warranty Costs | 79,545 | 2,609 |
Settlement of Warranty Claims | (4,545) | (2,609) |
Accrued Warranty Costs, Ending Balance | $ 105,000 | $ 30,000 |
16. LOAN PAYABLE (Details Narra
16. LOAN PAYABLE (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended |
Sep. 30, 2020 | Sep. 30, 2020 | |
Loans Payable [Abstract] | ||
Interest expense | $ 789 | $ 1,576 |
17. INCOME TAXES (Details Narra
17. INCOME TAXES (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |||||
Provision for Income Taxes | $ 77,000 | $ 0 | $ 77,000 | $ 0 | |
Deferred Tax Asset Valuation Allowance | $ 3,249,000 | 3,249,000 | $ 5,580,000 | ||
Increase (Decrease) in Deferred Tax Asset Valuation Allowance | $ (2,151,000) |
18. CUSTOMER CONCENTRATION (Det
18. CUSTOMER CONCENTRATION (Details Narrative) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Two Customers | Accounts Receivable | ||||
Concentration Risk Percentage | 23.00% | |||
Three Customers | Accounts Receivable | ||||
Concentration Risk Percentage | 37.00% | |||
One Customer | Revenue, Net | ||||
Concentration Risk Percentage | 12.00% | 11.00% | 10.00% |