Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2019 | Apr. 29, 2019 | |
Document And Entity Information [Abstract] | ||
Entity Registrant Name | Fuse Medical, Inc. | |
Entity Central Index Key | 0000319016 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2019 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Is Entity's Reporting Status Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Common Stock, Shares Outstanding | 74,600,181 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2019 | |
Trading Symbol | FZMD | |
Entity Small Business | true | |
Entity Emerging Growth Company | false |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) | Mar. 31, 2019 | Dec. 31, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 851,751 | $ 844,314 |
Accounts receivable, net of allowance of $832,605 and $667,963, respectively | 3,220,296 | 5,225,999 |
Inventories, net of allowance of $1,741,315 and $1,711,871, respectively | 10,999,763 | 11,075,889 |
Prepaid expenses and other current assets | 32,218 | 29,553 |
Total current assets | 15,104,028 | 17,175,755 |
Property and equipment, net | 37,605 | 42,974 |
Deferred tax asset | 886,021 | 760,993 |
Intangible assets, net | 1,267,685 | 1,288,040 |
Goodwill | 2,905,089 | 2,905,089 |
Total assets | 20,200,428 | 22,172,851 |
Current liabilities: | ||
Accounts payable | 1,518,415 | 2,712,919 |
Accrued expenses | 2,353,520 | 2,784,271 |
Notes payable - related parties | 150,000 | 150,000 |
Senior secured revolving credit facility | 1,396,871 | 1,477,448 |
Total current liabilities | 5,418,806 | 7,124,638 |
Earn-out liability | 13,581,529 | 13,581,529 |
Total liabilities | 19,000,335 | 20,706,167 |
Commitments and contingencies | ||
Stockholders' equity: | ||
Preferred stock, $0.01 par value; 20,000,000 shares authorized, no shares issued and outstanding | ||
Common stock, $0.01 par value; 100,000,000 shares authorized, 74,600,181 shares issued and 71,489,066 shares outstanding as of March 31, 2019, and 74,600,181 shares issued and 71,489,066 shares outstanding as of December 31, 2018. | 714,891 | 714,891 |
Additional paid-in capital | 244,407 | |
Retained earnings | 240,795 | 751,793 |
Total stockholders' equity | 1,200,093 | 1,466,684 |
Total liabilities and stockholders' equity | $ 20,200,428 | $ 22,172,851 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) | Mar. 31, 2019 | Dec. 31, 2018 |
Statement Of Financial Position [Abstract] | ||
Net of allowance, accounts receivable | $ 832,605 | $ 667,963 |
Net of allowance, inventories | $ 1,741,315 | $ 1,711,871 |
Preferred Stock Par Value | $ 0.01 | $ 0.01 |
Preferred Stock Shares Authorized | 20,000,000 | 20,000,000 |
Preferred Stock Shares Issued | 0 | 0 |
Preferred Stock Shares Outstanding | 0 | 0 |
Common Stock Par Value | $ 0.01 | $ 0.01 |
Common Stock Shares Authorized | 100,000,000 | 100,000,000 |
Common Stock Shares Issued | 74,600,181 | 74,600,181 |
Common Stock Shares Outstanding | 71,489,066 | 71,489,066 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Income Statement [Abstract] | ||
Net revenues | $ 4,770,659 | $ 6,004,048 |
Cost of revenues | 1,975,345 | 3,123,502 |
Gross profit | 2,795,314 | 2,880,546 |
Operating expenses: | ||
Selling, general, administrative and other | 2,364,168 | 2,195,933 |
Commissions | 1,005,531 | 1,579,186 |
Depreciation and amortization | 25,724 | 2,079 |
Total operating expenses | 3,395,423 | 3,777,198 |
Operating loss | (600,109) | (896,652) |
Other expense: | ||
Interest expense | 25,435 | 35,905 |
Total other expense | 25,435 | 35,905 |
Operating loss before tax | (625,544) | (932,557) |
Income tax benefit | (114,546) | (197,590) |
Net loss | $ (510,998) | $ (734,967) |
Net loss per common share - basic | $ (0.01) | $ (0.03) |
Weighted average number of common shares outstanding - basic | 68,737,473 | 28,356,561 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Cash flows from operating activities | ||
Net loss | $ (510,998) | $ (734,967) |
Adjustments to reconcile net loss to net cash provided by operating activities: | ||
Depreciation and amortization | 25,724 | 2,079 |
Share-based compensation | 244,407 | 138,086 |
Provision for bad debts and discounts | 164,642 | (247,125) |
Benefits for deferred taxes | (125,028) | (208,392) |
Changes in operating assets and liabilities: | ||
Accounts receivable | 1,841,061 | 2,108,429 |
Inventories, net slow-moving and obsolescence reserves | 76,126 | 373,509 |
Prepaid expenses and other current assets | (2,665) | 1,709 |
Accounts payable | (1,194,504) | (1,053,654) |
Accrued expenses | (430,751) | 354,982 |
Net cash provided by operating activities | 88,014 | 734,656 |
Cash flows from financing activities | ||
Payments on senior secured revolving credit facility, net | (80,577) | (741,568) |
Net cash used in financing activities | (80,577) | (741,568) |
Net increase (decrease) in cash and cash equivalents | 7,437 | (6,912) |
Cash and cash equivalents - beginning of period | 844,314 | 804,715 |
Cash and cash equivalents - end of period | 851,751 | 797,803 |
Supplemental disclosure of cash flow information: | ||
Cash paid for interest | $ 20,756 | $ 29,698 |
Nature of Operations
Nature of Operations | 3 Months Ended |
Mar. 31, 2019 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Nature of Operations | Note 1. Nature of Operations Overview Fuse Medical, Inc., a Delaware corporation (the “ Company During July 1999, GolfRounds, Inc. was re-domesticated to Delaware through a merger into its wholly-owned subsidiary GolfRounds.com, Inc. On December 19, 2016 (the “ Change-in-Control Date Company, NC 143 Family Holdings, LP, a Texas limited partnership (“ NC 143 Mr. Brooks ”), the Company’s Chairman of the Board of Directors (“ ”) and President; and Reeg Medical Industries, Inc., a Texas corporation (“ RMI Mr. Reeg Investors outstanding shares of common stock, par value $0.01 per share (“ Common Stock On December 31, 2017, the Company completed the acquisition of CPM Medical Consultants, LLC (“ CPM purchase agreement dated December 15, 2017 (“ CPM Acquisition Agreement CPM Acquisition Acquisition. CPM is the successor entity and becomes the reporting entity which combines the Company at the Change-in-Control Date, with the assets and liabilities of both companies combined at historical cost. Subsequent to the Change-in-Control Date, CPM and Company operations are consolidated. See “Note 4. CPM Acquisition.” On July 30, 2018, the Company, entered into that certain securities purchase agreement (the “ Maxim Purchase Agreement between the Company, Palm Springs Partners, LLC d/b/a Maxim Surgical, a Texas limited liability company (“ Maxim Mr. Amir David Tahernia, an individual (“ Tahernia Sellers representative of the Sellers dated July 30, 2018, pursuant to which the Company agreed to purchase all of the outstanding equity securities of Maxim (“ Maxim Interests Maxim Acquisition On August 1, 2018 (“ Maxim Closing Date Basis of Presentation The interim unaudited condensed consolidated financial statements included herein reflect all material adjustments (consisting of normal recurring adjustments and reclassifications and non-recurring adjustments) which, in the opinion of the Company’s management, are ordinary and necessary for a fair presentation of results for the interim periods. Certain information and footnote disclosures required under generally accepted accounting principles in the United States of America (“ GAAP SEC The unaudited condensed consolidated balance sheet information as of December 31, 2018, was derived from the Company’s 2018 Annual Report. These unaudited condensed consolidated financial statements should be read in conjunction with the 2018 Annual Report. The results of operations for the three months ended March 31, 2019, are not necessarily indicative of the results to be expected for the entire fiscal year or for any other period as the Company has historically experienced seasonal trends with greater revenue and volume between the last two calendar quarters compared to the first two calendar quarters of the year. |
Significant Accounting Policies
Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2019 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies | Note 2. Significant Accounting Policies Principles of Consolidation The unaudited condensed consolidated financial statements include the accounts of the Company, CPM, and Maxim, the Company’s wholly-owned subsidiaries of which the operations have been integrated with the Company. Intercompany transactions have been eliminated in consolidation. Use of Estimates The preparation of the consolidated financial statements in accordance with GAAP, requires the Company’s management to make estimates and assumptions that affect the Company’s reported amounts in the consolidated financial statements. Actual results could differ from those estimates. Significant estimates on the accompanying consolidated financial statements include the valuation of inventories, the Company’s effective income tax rate, and the recoverability of deferred tax assets, which are based upon the Company’s management expectation of future taxable income and allowable deductions and the fair value calculations of stock-based compensation and earn-out (“ Earn-Out Segment Reporting In accordance with Accounting Standards Update (“ ASU Net Loss Per Common Share Basic net loss per common share is calculated by dividing net loss attributable to common stockholders by the weighted-average number of common shares outstanding during the period, without consideration of common stock equivalents. Shares of restricted stock are included in the basic weighted-average number of common shares outstanding from the time they vest. Diluted net loss per common share is computed by dividing net loss attributable to common stockholders by the weighted-average number of common share equivalents outstanding for the period determined using the treasury stock method. Fair Value Measurements Fair value is the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. The Company classifies assets and liabilities recorded at fair value under the fair value hierarchy based upon the observability of inputs used in valuation techniques. Observable inputs (highest level) reflect market data obtained from independent sources, while unobservable inputs (lowest level) reflect internally developed market assumptions. The fair value measurements are classified under the following hierarchy: Level 1—Observable inputs that reflect quoted market prices (unadjusted) for identical assets and liabilities in active markets; Level 2—Observable inputs, other than quoted market prices, that are either directly or indirectly observable in the marketplace for identical or similar assets and liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets and liabilities; and Level 3—Unobservable inputs that are supported by little or no market activity that are significant to the fair value of assets or liabilities. In connection with the CPM Acquisition, the Company recorded a $19,244,543 liability related to the Earn-Out portion of the purchase consideration. See Note 4, “CPM Acquisition,” for further discussion of the Earn-Out liability. The Company has classified the Earn-Out liability as a Level 3 liability and the fair value of the Earn-Out liability will be evaluated each reporting period and changes in its fair value will be included in the Company’s earnings. The Earn-Out payments are based on the financial performance of the Company between the period of January 1, 2018, and December 31, 2034. The base amount of the Earn-Out is $16,000,000 with an additional bonus payment of $10,000,000. The payments of the base and bonus Earn-Out amounts are subject to the Company meeting certain earnings thresholds as detailed in the CPM Acquisition Agreement. The Earn-Out payments during the Earn-Out period specified above, ranges from $0 to $26,000,000. The fair value of the Earn-Out liability was calculated using the Monte Carlo simulation, which was then applied to estimated Earn-Out payments with a discount rate of four percent (4%). To determine the fair value of the Earn-Out liability, the Company’s management evaluates assumptions that require significant judgement. Significant assumptions used for estimating the Earn-Out liability included gross margins of approximately forty-eight percent (48%), net income margins averaging nine percent (9%) per year, revenue growth of approximately five percent (5%) over a forecast horizon period of 11 years. The Earn-Out liability, which represented contingent consideration associated with the CPM Acquisition, is recorded as a liability. This liability is subject to re-measurement to fair value at each reporting date until the contingency is resolved and the changes in fair value are recognized in the statement of operations at each reporting period since the arrangement is not subject to the accounting for hedging instruments. The estimated fair value of certain financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and accrued expenses are carried at historical cost basis, which approximates their fair values because of the short-term nature of these instruments. The recorded values of notes payable approximate their respective fair values based upon their effective interest rates. For the year ended December 31, 2018, the Company has determined the earnings threshold as detailed in the CPM Acquisition Agreement was not met and therefore no payments for either the base or bonus Earn-Out tranches would be achieved, based on the Company’s 2018 financial performance. The Earn-Out was re-measured to fair value under the probability weighted income approach. As a result, the initial fair value of the Earn-Out liability was reduced by $5,663,014 from $19,244,543 to $13,581,529. The Earn-Out liability was reduced by $5,663,014 with the offset reflected as “Change in fair value of contingent purchase consideration” on the Company’s 2018 Annual Report. The estimated fair value of certain financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and accrued expenses are carried at historical cost basis, which approximates their fair values because of the short-term nature of these instruments. The recorded values of notes payable approximate their respective fair values based upon their effective interest rates. Reclassification Certain amounts in the accompanying unaudited condensed consolidated statements of operations have been reclassified to conform to the current presentation. State income tax expense has been reclassified from selling, general, administrative and other expenses to income tax expense (benefit). Cash and Cash Equivalents The Company considers highly liquid investments with maturities of three months or less at the time of purchase to be cash equivalents. There were no cash equivalents at March 31, 2019, and December 31, 2018. The Company’s cash is concentrated in two large financial institutions that at times may exceed federally insured limits of $250,000 per financial institution. The Company has not experienced any financial institution losses from inception through March 31, 2019. As of March 31, 2019, and December 31, 2018, there were deposits of $351,303 and $322,693 , respectively , Accounts Receivable and Allowances Accounts receivable are non-interest bearing and are stated at gross invoice amounts less an allowance for doubtful accounts receivable and an allowance for contractual discount pricing. Credit is extended to customers based on an evaluation of their financial condition, industry reputation, and other judgmental factors considered by the Company’s management. The Company generally does not require collateral or other security interest to support accounts receivable. Based on trends and specific factors, the customer’s credit terms may be modified, including required payment upon delivery. The Company performs regular on-going credit evaluations of its customers as deemed relevant. As events, trends, and circumstance, warrant, the Company’s management estimates the amounts that are more likely than not to be uncollectible; reflecting these amounts in the allowance for doubtful accounts along with an offset to bad debt expense is reflected within selling, general, administrative and other expenses on the Company’s accompanying unaudited condensed consolidated statements of operations. When accounts are deemed uncollectible, they are often referred to the Company’s outside legal firm for litigation. Accounts deemed uncollectible are written-off in the period when the Company has exhausted its efforts to collect overdue and unpaid receivables or otherwise has evaluated other circumstances that indicate that the Company should abandon such efforts. Accounts deemed uncollectible are removed from the Company’s accounts receivable portfolio, with a corresponding offset to the allowance for doubtful accounts receivable. The Company may record additional allowances for doubtful accounts based on known trends and expectations to ensure the Company’s accounts receivable portfolio is recorded at net realizable value. Specific allowances are re-evaluated and adjusted as additional facts and information become available. Previously written-off accounts receivable subsequently collected are recognized as a reduction of bad debt expense when funds are received. The Company’s management estimates its allowance for contractual discount pricing, by evaluating specific accounts where information indicates the customer is offered contractual pricing and discount allowances. In these arrangements, the Company’s management uses assumptions and judgement, based on the best available facts and circumstances to record a specific allowance for the amounts due from those customers. The allowance is offset by a corresponding reduction to revenue. These specific allowances are re-evaluated, analyzed, and adjusted as additional information becomes available to determine the total amount of the allowance. The Company may record additional allowances based on trends and expectations to ensure the Company’s accounts receivable portfolio is recorded at net realizable value. Inventories Inventories are stated at the lower of cost or net realizable value (first-in, first-out). Inventories consist entirely of finished goods and include internal and external fixation products; upper and lower extremity plating and total joint reconstruction; soft tissue fixation and augmentation for sports medicine procedures; spinal implants for trauma, degenerative disc disease, and deformity indications (collectively, “ Orthopedic Implants Biologics Property and Equipment Property and equipment are recorded at cost less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the related assets per the following table. Expenditures for additions and improvements are capitalized while repairs and maintenance are expensed as incurred. Category Useful Life Computer equipment and software 3 years Furniture and fixtures 3 years Office equipment 3 years Software 3 years Upon the retirement or disposition of property and equipment, the related cost and accumulated depreciation is removed. A gain is recorded when consideration received is more than the disposed asset’s cost, net of depreciation, and a loss is recorded when consideration received is less than the disposed asset’s cost, net of depreciation. Long-Lived Assets The Company reviews long-lived assets quarterly or whenever changes in circumstances indicate that the carrying amount of an asset might not be recoverable. Assets are grouped and evaluated for impairment at the lowest level for which there are identifiable cash flows that are largely independent of the cash flows of other groups of assets, which generally represents furniture and fixtures. Earnings before interest, taxes, depreciation and amortization (“ EBITDA Goodwill and Other Intangible Assets Goodwill is determined based on an acquisition purchase price in excess of the fair value of identified net assets acquired. Intangible assets with lives restricted by contractual, legal or other means are amortized over their useful lives. The Company tests goodwill at least annually for impairment using the fair value approach on a reporting unit basis. Since the Company is one reporting unit, potential goodwill impairment is evaluated by comparing the fair value of the Company to its carrying value. The fair value of the Company is determined using a market approach. If the carrying value of the Company exceeds fair value, a comparison of the fair value of goodwill against the carrying value of goodwill is made to determine whether goodwill has been impaired. The Company performs the annual assessment of the recoverability of goodwill during the fourth quarter of each fiscal year. The Company’s intangible assets subject to amortization consist primarily of acquired non-compete agreements and customer relationships. Amortization expense is calculated using the straight-line method over the asset’s expected useful life. See Note 3 – “Maxim Acquisition” for Goodwill and Other Intangibles for additional related disclosures. Revenue Recognition Revenue is recognized when a customer obtains control of promised goods. The amount of revenue recognized reflects the consideration that the Company expects to be entitled to receive in exchange for these goods. The Company has contractual agreements with its customers that set forth the general terms and conditions of the relationship including line item pricing, payment terms, and contract duration. Revenues are generated from the sales of Orthopedic Implants and Biologics to support orthopedic surgeries and related procedures . For customers that purchase products as needed, Products that have been sold are not subject to returns unless the product is deemed defective. Credits or refunds are recognized when they are determinable and estimable. The Company’s management reduces net revenues to account for estimates of the Company’s sales returns, discounts, and other incentives. Stock-Based Compensation Stock-based compensation expense is measured at the grant date fair value of the award and is expensed over the requisite service period. For employee stock-based awards, the Company calculates the fair value of the award on the date of grant using the Black-Scholes option pricing model. Determining the fair value of stock-based awards at the grant date under this model requires judgment, including estimating volatility, employee stock option exercise behaviors and forfeiture rates. The assumptions used in calculating the fair value of stock-based awards represent the Company's best estimates, but these estimates involve inherent uncertainties and the application of management judgment. For non-employee stock-based awards, the Company calculates the fair value of the award on the date of grant in the same manner as employee awards, however, the awards are revalued at the end of each reporting period and the pro-rata compensation expense is adjusted accordingly until such time the non-employee award is fully vested, at which time the total compensation recognized to date shall equal the fair value of the stock-based award as calculated on the measurement date, which is the date at which the award recipient’s performance is complete. The estimation of stock-based awards that will ultimately vest requires judgment, and to the extent actual results or updated estimates differ from original estimates, such amounts are recorded as a cumulative adjustment in the period estimates are revised. Recent Accounting Pronouncements The Company considers the applicability and impact of all ASUs issued, both effective and not yet effective. In February 2016, the Financial Accounting Standards Board (the “ FASB In March 2018, the FASB issued ASU No.2018-05 “Income Taxes (Topic 740): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118.” This new standard adds SEC paragraphs pursuant to the SEC Staff Accounting Bulletin No. 118, which expresses the view of the staff regarding application of Topic 740, Income Taxes, in the reporting period that includes December 22, 2017 - the date on which the Tax Cuts and Jobs Act (H.R.1, An Act to Provide for Reconciliation Pursuant to Titles II and V of the Concurrent Resolution on the Budget for Fiscal Year 2018) was signed into law. ASU 2018-05 is effective upon inclusion in the FASB codification. The Company’s management is currently evaluating the impact that the adoption of ASU 2018-05 will have on its consolidated financial statements. Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the SEC did not or are not believed by the Company’s management to have a material impact on the Company's present or future consolidated financial statements. |
Maxim Acquisition
Maxim Acquisition | 3 Months Ended |
Mar. 31, 2019 | |
Maxim Surgical, LLC [Member] | |
Acquisition | Note 3. Maxim Acquisition On the Maxim Closing Date, the Company completed the Maxim Acquisition pursuant to the Maxim Purchase Agreement. (See Note 1, “Nature of Operations – Overview.”) The Company issued 4,210,526 restricted shares of its Common Stock to the Sellers in exchange for one-hundred percent (100%) of the outstanding Maxim Interests, at an agreed-upon value of $0.76 per share of Common Stock, which was equal to the 30-day volume-weighted average price of the Common Stock as of three (3) business days prior to the Maxim Closing Date. The Company accounted for the Maxim Acquisition as a business combination and recorded the assets acquired and liabilities assumed at their respective estimated fair values as of the Maxim Closing Date. The assets acquired and liabilities assumed were recorded as of the Maxim Closing Date at their respective fair values and consolidated with those of the Company. The reported unaudited condensed consolidated balance sheet of the Company after completion of the acquisition reflects these fair values. The transaction has been accounted for using the acquisition method of accounting, which requires that assets acquired and liabilities assumed be recognized at their estimated fair values as of the Maxim Closing Date of such acquisition. The following table summarizes the intangible assets acquired of Maxim as of the Maxim Closing Date: March 31, 2019 December 31, 2018 Amortization period (years) Intangible assets: Non-compete agreements $ 61,766 $ 61,766 2 510k product technology 704,380 704,380 Indefinite Customer relationships 555,819 555,819 11 Goodwill 2,084,439 2,084,439 Indefinite Total intangible assets 3,406,404 3,406,404 Less: accumulated amortization (54,280 ) (33,925 ) Intangible assets, net $ 3,352,124 $ 3,372,479 Amortization expense for the three months ended March 31, 2019, was $20,355. There was no amortization expense for the three months ended March 31, 2018. The Company recorded the excess of the aggregate purchase price over the estimated fair values of the identifiable assets acquired as goodwill, which is not deductible for tax purposes. Goodwill is primarily attributable to the benefits the Company expects to realize by expanding its product offerings and addressable markets, thereby contributing to an expanded revenue base. The assets and liabilities assumed in the acquisition have been included in the Company’s unaudited condensed consolidated balance sheets as of March 31, 2019. The results of Maxim operations are included in the Company’s unaudited condensed consolidated statements of operations subsequent to the Maxim Closing Date. |
CPM Acquisition
CPM Acquisition | 3 Months Ended |
Mar. 31, 2019 | |
CPM [Member] | |
Acquisition | Note 4. CPM Acquisition On December 29, 2017, the Company completed the previously-announced CPM Acquisition, pursuant to the CPM Acquisition Agreement. The Company issued 50 million shares of its Common Stock, par value $0.01 per share, in exchange for one-hundred percent (100%) of the outstanding membership interests of CPM, at an agreed-upon value of $0.20 per share of Common Stock, equaling a value of $10,000,000. The remaining $26,000,000 of the purchase price consideration will be paid by the Company to NC 143 in the form of contingent Earn-Out payments based on the Company achieving certain future profitability targets for years after 2017. The effective date of the CPM Acquisition was December 31, 2017 (the “ CPM Effective Date The Company’s management engaged an independent third-party valuation specialist to calculate the fair value of the Earn-Out liability. The Company recorded $19,244,543 as a contingent liability related to the fair value of the $26,000,000 Earn-Out liability As of December 31, 2018, the Earn-Out was re-measured to fair value under the probability weighted income approach. As a result, the initial fair value of the Earn-Out liability was reduced by $5,663,014 from $19,244,543 to $13,581,529. The Earn-Out liability was reduced by $5,663,014 with the offset reflected as “Change in fair value of contingent purchase consideration” on the Company’s 2018 Annual Report. The Company’s management will evaluate the estimated fair value of the Earn-Out liability each reporting period. See Note 2, “Fair Value Measurements.” The CPM Purchase Agreement provides for a working capital post-closing adjustment (“ CPM Post-Closing Adjustment |
Property and Equipment
Property and Equipment | 3 Months Ended |
Mar. 31, 2019 | |
Property Plant And Equipment [Abstract] | |
Property and Equipment | Note 5. Property and Equipment Property and equipment consisted of the following at March 31, 2019, and December 31, 2018: March 31, 2019 December 31, 2018 Computer equipment and software $ 41,840 $ 41,840 Furniture and fixtures 5,047 5,047 Office equipment 21,913 21,913 Property and equipment costs 68,800 68,800 Less: accumulated depreciation (31,195 ) (25,826 ) Property and equipment, net $ 37,605 $ 42,974 Depreciation expense for the three months ended March 31, 2019, and 2018 was $5,369 and $2,079, respectively. |
Senior Secured Revolving Credit
Senior Secured Revolving Credit Facility | 3 Months Ended |
Mar. 31, 2019 | |
Debt Disclosure [Abstract] | |
Senior Secured Revolving Credit Facility | Note 6. Senior Secured Revolving Credit Facility On December 29, 2017, the Company became party to a Senior Secured Revolving Credit Facility (“ RLOC Amegy Bank On November 19, 2018 the Company executed the Second Amendment to the RLOC with Amegy Bank (the “ Second Amendment The Second Amendment (i) waived the Company’s events of default under the RLOC, (ii) The Company was not in compliance with the minimum quarterly EBITDA requirement of $100,000 for the three months ended March 31, 2019 and has requested a waiver for this event of default from Amegy Bank. “See Note 12. Subsequent Events.” The outstanding balance of the RLOC was $1,396,871 and $1,477,448 at March 31, 2019 and December 31, 2018, respectively. Interest expense incurred on the RLOC was $18,778 and $29,247 for the three months ended March 31, 2019 and 2018, respectively, and is reflected in interest expense on the Company’s accompanying unaudited condensed consolidated statements of operations. Accrued interest on the RLOC at March 31, 2019 and December 31, 2018 was $2,371 and $4,350, respectively, and is reflected in accrued expenses on the Company’s accompanying unaudited condensed consolidated balance sheets. At March 31, 2019, the effective interest rate was calculated to be 6.48%. |
Notes Payable - Related Parties
Notes Payable - Related Parties | 3 Months Ended |
Mar. 31, 2019 | |
Debt Disclosure [Abstract] | |
Notes Payable - Related Parties | Note 7. Notes Payable – Related Parties During July 2016 through October 2016, the Company obtained three working capital loans from NC 143 and RMI in the form of convertible promissory notes (“ Notes Maturity Date During the three months ended March 31, 2019, and 2018, interest expense of $6,658 and $6,658, respectively, is reflected in interest expense on the Company’s accompanying unaudited condensed consolidated statements of operations. As of March 31, 2019, and December 31, 2018, accrued interest was $65,753 and $59,096, respectively, which is reflected in accrued expenses on the Company’s accompanying unaudited condensed consolidated balance sheets. |
Stockholders' Equity
Stockholders' Equity | 3 Months Ended |
Mar. 31, 2019 | |
Stockholders Equity Deficit [Abstract] | |
Stockholders' Equity | Note 8. Stockholders’ Equity Stock Incentive Plans The 2018 Equity Incentive Plan of Fuse Medical, Inc. (“ 2018 Equity Plan The Company’s management estimates that the fair value of stock-based compensation utilizing the Black-Scholes option pricing model, which is dependent upon several variables such as the expected option term, expected volatility of the Company’s stock price over the expected option term, expected risk-free interest rate over the expected option term, expected dividend yield rate over the expected option term, and an estimate of expected forfeiture rates. The Company’s management believes this valuation methodology is appropriate for estimating the fair value of stock options granted to employees and directors which are subject to ASC Topic 718 requirements. These amounts are the estimates made by the Company’s management and thus, may not be reflective of actual future results, nor amounts ultimately realized by recipients of these grants. The Company recognizes compensation on a straight-line basis over the requisite service period for each award. The Company’s management utilizes the simplified method to estimate the expected life for stock options granted to employees, as the Company does not have sufficient historical data regarding stock option exercises. The risk-free interest rate is based on the U.S. Treasury yields with terms equivalent to the expected life of the related option at the time of the grant. Dividend yield is based on historical trends. While the Company’s management believes these estimates are reasonable, the compensation expense recorded would increase if the expected life was increased, a higher expected volatility was used, or if the expected dividend yield increased. For the three months ended March 31, 2019, the Board granted, in the aggregate, 900,000 non-qualified stock option awards (“ NQSO A summary of the Company’s NQSO activity for the three months ended March 31, 2019, is presented below: No. of Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Term Aggregate Intrinsic Value Balance outstanding at December 31, 2018 3,915,000 $ 0.78 7.0 $ 443,000 Granted 900,000 0.75 - - Exercised - - - - Forfeited - - - - Expired - - - - Balance outstanding at March 31, 2019 4,815,000 $ 0.78 7.3 $ 417,000 Exercisable at March 31, 2019 1,700,000 $ 0.42 3.7 $ 417,000 The weighted-average grant-date fair value of options granted during the three months ended March 31, 2019, was $0.69. Restricted Stock Award For the three months ended March 31, 2019, the Company did not have restricted stock awards (“ RSAs The following table summarizes RSAs activity: Number of Shares Fair Value Weighted Average Grant Date Fair Value Non-vested, December 31, 2018 4,378,615 $ 2,060,000 $ 0.47 Granted - - - Vested - - - Forfeited - - - Non-vested, March 31, 2019 4,378,615 $ 2,060,000 $ 0.47 The non-vested RSAs, as of March 31, 2019, were granted by the Company’s Board to the Board members as compensation and vest only upon: (i) the occurrence of a Change in Control (as defined in the 2017 RSAs), listing of the Company’s Common Stock on a national exchange, or the director’s termination of Continuous Service (as defined in the 2017 RSAs), and (ii) the director’s notification to the Company of such accelerating events, within a specified period. |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Note 9. Income Taxes The Company is subject to U.S. federal income taxes, in addition to state and local income taxes. The components of income tax expense (benefit) are as follows: For the Three Months Ended March 31, 2019 For the Three Months Ended March 31, 2018 Current: Federal $ - $ - State 10,482 10,802 Income tax expense 10,482 10,802 Deferred: Federal (125,028 ) (208,392 ) State - - Income tax benefit (125,028 ) (208,392 ) Total income tax expense (benefit), net $ (114,546 ) $ (197,590 ) Significant components of the Company's deferred income tax assets and liabilities are as follows: March 31, 2019 December 31, 2018 Deferred tax assets: Net operating loss carryover $ 224,581 $ 216,793 Accounts receivable 174,847 140,272 Compensation 284,119 232,793 Inventory 391,576 383,744 Other 33,259 28,128 Total deferred tax assets 1,108,382 1,001,730 Deferred tax liabilities: Intangibles (218,427 ) (232,835 ) Property and equipment (3,934 ) (7,902 ) Total deferred tax liabilities (222,361 ) (240,737 ) Deferred tax assets, net 886,021 760,993 Net deferred tax asset $ 886,021 $ 760,993 As of March 31, 2019, the Company recognized a net deferred tax asset of $886,021, or an increase of $125,028 recognized at December 31, 2018. Consistent with the one-year period and the current business trends and expectations, the Company’s management does not deem a valuation allowance to be appropriate as of March 31, 2019. At March 31, 2019, the Company estimates it has approximately $1,069,434 of net operating loss carryforwards which will expire during 2019 through 2037. The Company’s management believes its tax positions are highly certain of being upheld upon examination. As such, the Company has not recorded a liability for unrecognized tax benefits. As of March 31, 2019, the Company’s tax years 2016 through 2018 remain open for Internal Revenue Service (“ IRS A reconciliation of income tax computed at the U.S. statutory rate to the effective income tax rate is as follows: Three Months Ended March 31, 2019 March 31, 2018 Expected U.S. federal incomes as statutory rate 21.0% 21.0% State and local income taxes, net of federal benefit -1.3% -1.1% Permanent differences -0.6% -0.6% Other -0.8% 0.0% Effective tax rate 18.3% 19.3% |
Concentrations
Concentrations | 3 Months Ended |
Mar. 31, 2019 | |
Nature Of Operations And Going Concern [Abstract] | |
Concentrations | Note 10. Concentrations Concentration of Revenues, Accounts Receivable and Suppliers For the three months ended March 31, 2019, and 2018, the following significant customers had an individual percentage of total revenues equaling ten percent (10%) or greater: For the Three Months Ended March 31, 2019 March 31, 2018 Customer 1 11.8 % 15.8 % Totals 11.8 % 15.8 % At March 31, 2019 and December 31, 2018, there were no significant customers that had a concentration of accounts receivable representing ten percent (10%) or greater of accounts receivable: For the three months ended March 31, 2019 and 2018, the following significant suppliers represented ten percent (10%) or greater of goods purchased: For the Three Months Ended March 31, 2019 March 31, 2018 Supplier 1 21.2 % 9.3 % Totals 21.2 % 9.3 % |
Related Party Transactions
Related Party Transactions | 3 Months Ended |
Mar. 31, 2019 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Note 11. Related Party Transactions Lease with 1565 North Central Expressway, LP For its principal executive office, the Company leases an aggregate of approximately 11,500 square-foot space at 1565 North Central Expressway, Suite 220, Richardson, Texas 75080 from 1565 North Central Expressway, LP, a real estate investment company that is owned and controlled by Mr. Brooks. The Company’s lease arrangement includes (1) the lease acquired pursuant to the CPM Acquisition effective January 1, 2013 and (2) a lease effective July 14, 2017 entered-into to support the Company’s relocation of its Fort Worth, Texas corporate offices to CPM’s executive offices. Both leases terminated December 31, 2017, with month-to-month renewals. For the three months ended March 31, 2019, and 2018, the Company paid approximately $42,000 and $42,000 in rent expense, which is reflected in selling, general, administrative, and other expenses in the Company’s accompanying unaudited condensed consolidated statements of operations. AmBio Contract The Company engaged AmBio Staffing, LLC (“ AmBio FTE As of March 31, 2019, and December 31, 2018, the Company owed amounts to AmBio of approximately $0.00 and $180,000, respectively, which is reflected in the accounts payable on the Company’s unaudited condensed consolidated balance sheets. For the three months ended March 31, 2019, and 2018, the Company paid approximately $51,000 and $47,000, respectively, to AmBio in administrative fees, which is reflected in selling, general, administrative, and other expenses in the Company’s accompanying unaudited condensed consolidated statements of operations. Operations Historically, the Company conducts various related-party transactions with entities that are owned by or affiliated with Mr. Brooks and Mr. Reeg. These transactions are based on wholesale contractual agreements, that the Company’s management believes are on terms and conditions substantially similar to other third-party contractual arrangements. As described more fully below, these transactions include: selling and purchasing of inventory on wholesale basis, commissions earned and paid, and shared-service fee arrangements. MedUSA Group, LLC MedUSA Group, LLC (“ MedUSA During the three months ended March 31, 2019, and 2018, the Company: • sold Orthopedic Implants and Biologics products to MedUSA in the amounts of approximately $300,000 and $828,000, respectively, which is reflected in net revenues in the Company’s accompanying unaudited condensed consolidated statements of operations; • purchased approximately $0.00 and $97,000, respectively, of Orthopedic Implants, medical instruments, and Biologics from MedUSA, which is reflected in inventories in the Company’s accompanying unaudited condensed consolidating balance sheets; and • incurred approximately $617,000 and $317,000, respectively, in commission costs, which is reflected in commissions in the Company’s accompanying unaudited condensed consolidated statements of operations. As of March 31, 2019, and December 31, 2018, the Company has outstanding balances due from MedUSA of approximately $327,000 and $389,000, respectively. These amounts are reflected in accounts receivable in the Company’s accompanying unaudited condensed consolidated balance sheets. Texas Overlord, LLC Texas Overlord, LLC (“ Overlord During the three months ended March 31, 2019, and 2018 the Company: • purchased approximately $25,000 and $439,000, respectively, in Orthopedic Implants and medical instruments, and Biologics from Overlord, which is reflected within inventories on the Company’s accompanying unaudited condensed consolidating balance sheets; and • incurred approximately $0.00 and $287,000, respectively, in commission costs to Overlord, which is reflected in commissions in the Company’s accompanying unaudited condensed consolidated statements of operations. As of March 31, 2019, and December 31, 2018, the Company had outstanding balances owed to Overlord of approximately $0.00 and $2,000, respectively. These amounts are reflected in accounts payable in the Company’s accompanying unaudited condensed consolidated balance sheets. NBMJ, Inc. NBMJ, Inc. d/b/a Incare Technology (“ NBMJ During the three months ended March 31, 2019, and 2018, the Company sold Biologics products to NBMJ in the amounts of approximately $122,000, and $34,000, respectively, which are reflected in net revenues in the Company’s accompanying unaudited condensed consolidated statements of operations. As of March 31, 2019, and December 31, 2018 the Company has outstanding balances due from NBMJ of approximately $252,000 and $155,000, respectively. These amounts are reflected in accounts receivable in the Company’s accompanying unaudited condensed consolidated balance sheets. Bass Bone and Spine Specialists Bass Bone & Spine Specialists (“ Bass During the three months ended March 31, 2019, and 2018, the Company: • sold Orthopedic Implants and Biologics products to Bass in the amounts of approximately $62,000 and $117,000, respectively, which is reflected in net revenues in the Company’s accompanying unaudited condensed consolidated statements of operations; • incurred approximately $9,000 and $0.00, respectively, in commission costs to Bass, which is reflected in commissions in the Company’s accompanying unaudited condensed consolidated statements of operations. As of March 31, 2019, and December 31, 2018, the Company has outstanding balances due from Bass of approximately $5,000 and $179,000, respectively. These amounts are reflected in accounts receivable in the Company’s accompanying unaudited condensed consolidated balance sheets. Sintu, LLC Sintu, LLC (“ Sintu During the three months ended March 31, 2019, and 2018, the Company incurred approximately $78,000 and $249,000, respectively, in commission costs to Sintu, which is reflected in commissions on the Company’s accompanying unaudited condensed consolidated statement of operations. Tiger Orthopedics, LLC Tiger Orthopedics, LLC (“ Tiger During the three months ended March 31, 2019, and 2018, the Company sold Orthopedic Implants and Biologics products to Tiger in the amounts of approximately $50,000 and $109,000, respectively, which is reflected in net revenues in the Company’s accompanying unaudited condensed consolidated statements of operations; As of March 31, 2019, and December 31, 2018, the Company has outstanding balances due from Tiger of approximately $35,000 and $5,000, respectively. These amounts are reflected in accounts receivable in the Company’s accompanying unaudited condensed consolidated balance sheets. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2019 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 12. Subsequent Events In preparing these financial statements, the Company has evaluated events and transactions for potential recognition or disclosure through April 29, 2019, the date the financial statements were available to be issued. On April 26, 2019, the Company’s management obtained a waiver from Amegy Bank with respect to the event of default for the three months ended March 31, 2019, to comply with the terms of the RLOC. The Company’s management expects to execute a Third Amendment to the RLOC with Amegy Bank during the second quarter 2019. See Note 6, “Senior Secured Revolving Credit Facility.” The Company’s management concluded there are no other material events or transactions for potential recognition or disclosure. |
Significant Accounting Polici_2
Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2019 | |
Accounting Policies [Abstract] | |
Principles of Consolidation | Principles of Consolidation The unaudited condensed consolidated financial statements include the accounts of the Company, CPM, and Maxim, the Company’s wholly-owned subsidiaries of which the operations have been integrated with the Company. Intercompany transactions have been eliminated in consolidation. |
Use of Estimates | Use of Estimates The preparation of the consolidated financial statements in accordance with GAAP, requires the Company’s management to make estimates and assumptions that affect the Company’s reported amounts in the consolidated financial statements. Actual results could differ from those estimates. Significant estimates on the accompanying consolidated financial statements include the valuation of inventories, the Company’s effective income tax rate, and the recoverability of deferred tax assets, which are based upon the Company’s management expectation of future taxable income and allowable deductions and the fair value calculations of stock-based compensation and earn-out (“ Earn-Out |
Segment Reporting | Segment Reporting In accordance with Accounting Standards Update (“ ASU |
Net Loss Per Common Share | Net Loss Per Common Share Basic net loss per common share is calculated by dividing net loss attributable to common stockholders by the weighted-average number of common shares outstanding during the period, without consideration of common stock equivalents. Shares of restricted stock are included in the basic weighted-average number of common shares outstanding from the time they vest. Diluted net loss per common share is computed by dividing net loss attributable to common stockholders by the weighted-average number of common share equivalents outstanding for the period determined using the treasury stock method. |
Fair Value Measurements | Fair Value Measurements Fair value is the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. The Company classifies assets and liabilities recorded at fair value under the fair value hierarchy based upon the observability of inputs used in valuation techniques. Observable inputs (highest level) reflect market data obtained from independent sources, while unobservable inputs (lowest level) reflect internally developed market assumptions. The fair value measurements are classified under the following hierarchy: Level 1—Observable inputs that reflect quoted market prices (unadjusted) for identical assets and liabilities in active markets; Level 2—Observable inputs, other than quoted market prices, that are either directly or indirectly observable in the marketplace for identical or similar assets and liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets and liabilities; and Level 3—Unobservable inputs that are supported by little or no market activity that are significant to the fair value of assets or liabilities. In connection with the CPM Acquisition, the Company recorded a $19,244,543 liability related to the Earn-Out portion of the purchase consideration. See Note 4, “CPM Acquisition,” for further discussion of the Earn-Out liability. The Company has classified the Earn-Out liability as a Level 3 liability and the fair value of the Earn-Out liability will be evaluated each reporting period and changes in its fair value will be included in the Company’s earnings. The Earn-Out payments are based on the financial performance of the Company between the period of January 1, 2018, and December 31, 2034. The base amount of the Earn-Out is $16,000,000 with an additional bonus payment of $10,000,000. The payments of the base and bonus Earn-Out amounts are subject to the Company meeting certain earnings thresholds as detailed in the CPM Acquisition Agreement. The Earn-Out payments during the Earn-Out period specified above, ranges from $0 to $26,000,000. The fair value of the Earn-Out liability was calculated using the Monte Carlo simulation, which was then applied to estimated Earn-Out payments with a discount rate of four percent (4%). To determine the fair value of the Earn-Out liability, the Company’s management evaluates assumptions that require significant judgement. Significant assumptions used for estimating the Earn-Out liability included gross margins of approximately forty-eight percent (48%), net income margins averaging nine percent (9%) per year, revenue growth of approximately five percent (5%) over a forecast horizon period of 11 years. The Earn-Out liability, which represented contingent consideration associated with the CPM Acquisition, is recorded as a liability. This liability is subject to re-measurement to fair value at each reporting date until the contingency is resolved and the changes in fair value are recognized in the statement of operations at each reporting period since the arrangement is not subject to the accounting for hedging instruments. The estimated fair value of certain financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and accrued expenses are carried at historical cost basis, which approximates their fair values because of the short-term nature of these instruments. The recorded values of notes payable approximate their respective fair values based upon their effective interest rates. For the year ended December 31, 2018, the Company has determined the earnings threshold as detailed in the CPM Acquisition Agreement was not met and therefore no payments for either the base or bonus Earn-Out tranches would be achieved, based on the Company’s 2018 financial performance. The Earn-Out was re-measured to fair value under the probability weighted income approach. As a result, the initial fair value of the Earn-Out liability was reduced by $5,663,014 from $19,244,543 to $13,581,529. The Earn-Out liability was reduced by $5,663,014 with the offset reflected as “Change in fair value of contingent purchase consideration” on the Company’s 2018 Annual Report. The estimated fair value of certain financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and accrued expenses are carried at historical cost basis, which approximates their fair values because of the short-term nature of these instruments. The recorded values of notes payable approximate their respective fair values based upon their effective interest rates. |
Reclassification | Reclassification Certain amounts in the accompanying unaudited condensed consolidated statements of operations have been reclassified to conform to the current presentation. State income tax expense has been reclassified from selling, general, administrative and other expenses to income tax expense (benefit). |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers highly liquid investments with maturities of three months or less at the time of purchase to be cash equivalents. There were no cash equivalents at March 31, 2019, and December 31, 2018. The Company’s cash is concentrated in two large financial institutions that at times may exceed federally insured limits of $250,000 per financial institution. The Company has not experienced any financial institution losses from inception through March 31, 2019. As of March 31, 2019, and December 31, 2018, there were deposits of $351,303 and $322,693 , respectively , |
Accounts Receivable and Allowances | Accounts Receivable and Allowances Accounts receivable are non-interest bearing and are stated at gross invoice amounts less an allowance for doubtful accounts receivable and an allowance for contractual discount pricing. Credit is extended to customers based on an evaluation of their financial condition, industry reputation, and other judgmental factors considered by the Company’s management. The Company generally does not require collateral or other security interest to support accounts receivable. Based on trends and specific factors, the customer’s credit terms may be modified, including required payment upon delivery. The Company performs regular on-going credit evaluations of its customers as deemed relevant. As events, trends, and circumstance, warrant, the Company’s management estimates the amounts that are more likely than not to be uncollectible; reflecting these amounts in the allowance for doubtful accounts along with an offset to bad debt expense is reflected within selling, general, administrative and other expenses on the Company’s accompanying unaudited condensed consolidated statements of operations. When accounts are deemed uncollectible, they are often referred to the Company’s outside legal firm for litigation. Accounts deemed uncollectible are written-off in the period when the Company has exhausted its efforts to collect overdue and unpaid receivables or otherwise has evaluated other circumstances that indicate that the Company should abandon such efforts. Accounts deemed uncollectible are removed from the Company’s accounts receivable portfolio, with a corresponding offset to the allowance for doubtful accounts receivable. The Company may record additional allowances for doubtful accounts based on known trends and expectations to ensure the Company’s accounts receivable portfolio is recorded at net realizable value. Specific allowances are re-evaluated and adjusted as additional facts and information become available. Previously written-off accounts receivable subsequently collected are recognized as a reduction of bad debt expense when funds are received. The Company’s management estimates its allowance for contractual discount pricing, by evaluating specific accounts where information indicates the customer is offered contractual pricing and discount allowances. In these arrangements, the Company’s management uses assumptions and judgement, based on the best available facts and circumstances to record a specific allowance for the amounts due from those customers. The allowance is offset by a corresponding reduction to revenue. These specific allowances are re-evaluated, analyzed, and adjusted as additional information becomes available to determine the total amount of the allowance. The Company may record additional allowances based on trends and expectations to ensure the Company’s accounts receivable portfolio is recorded at net realizable value. |
Inventories | Inventories Inventories are stated at the lower of cost or net realizable value (first-in, first-out). Inventories consist entirely of finished goods and include internal and external fixation products; upper and lower extremity plating and total joint reconstruction; soft tissue fixation and augmentation for sports medicine procedures; spinal implants for trauma, degenerative disc disease, and deformity indications (collectively, “ Orthopedic Implants Biologics |
Property and Equipment | Property and Equipment Property and equipment are recorded at cost less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the related assets per the following table. Expenditures for additions and improvements are capitalized while repairs and maintenance are expensed as incurred. Category Useful Life Computer equipment and software 3 years Furniture and fixtures 3 years Office equipment 3 years Software 3 years Upon the retirement or disposition of property and equipment, the related cost and accumulated depreciation is removed. A gain is recorded when consideration received is more than the disposed asset’s cost, net of depreciation, and a loss is recorded when consideration received is less than the disposed asset’s cost, net of depreciation. |
Long-Lived Assets | Long-Lived Assets The Company reviews long-lived assets quarterly or whenever changes in circumstances indicate that the carrying amount of an asset might not be recoverable. Assets are grouped and evaluated for impairment at the lowest level for which there are identifiable cash flows that are largely independent of the cash flows of other groups of assets, which generally represents furniture and fixtures. Earnings before interest, taxes, depreciation and amortization (“ EBITDA |
Goodwill and Other Intangible Assets | Goodwill and Other Intangible Assets Goodwill is determined based on an acquisition purchase price in excess of the fair value of identified net assets acquired. Intangible assets with lives restricted by contractual, legal or other means are amortized over their useful lives. The Company tests goodwill at least annually for impairment using the fair value approach on a reporting unit basis. Since the Company is one reporting unit, potential goodwill impairment is evaluated by comparing the fair value of the Company to its carrying value. The fair value of the Company is determined using a market approach. If the carrying value of the Company exceeds fair value, a comparison of the fair value of goodwill against the carrying value of goodwill is made to determine whether goodwill has been impaired. The Company performs the annual assessment of the recoverability of goodwill during the fourth quarter of each fiscal year. The Company’s intangible assets subject to amortization consist primarily of acquired non-compete agreements and customer relationships. Amortization expense is calculated using the straight-line method over the asset’s expected useful life. See Note 3 – “Maxim Acquisition” for Goodwill and Other Intangibles for additional related disclosures. |
Revenue Recognition | Revenue Recognition Revenue is recognized when a customer obtains control of promised goods. The amount of revenue recognized reflects the consideration that the Company expects to be entitled to receive in exchange for these goods. The Company has contractual agreements with its customers that set forth the general terms and conditions of the relationship including line item pricing, payment terms, and contract duration. Revenues are generated from the sales of Orthopedic Implants and Biologics to support orthopedic surgeries and related procedures . For customers that purchase products as needed, Products that have been sold are not subject to returns unless the product is deemed defective. Credits or refunds are recognized when they are determinable and estimable. The Company’s management reduces net revenues to account for estimates of the Company’s sales returns, discounts, and other incentives. |
Stock-Based Compensation | Stock-Based Compensation Stock-based compensation expense is measured at the grant date fair value of the award and is expensed over the requisite service period. For employee stock-based awards, the Company calculates the fair value of the award on the date of grant using the Black-Scholes option pricing model. Determining the fair value of stock-based awards at the grant date under this model requires judgment, including estimating volatility, employee stock option exercise behaviors and forfeiture rates. The assumptions used in calculating the fair value of stock-based awards represent the Company's best estimates, but these estimates involve inherent uncertainties and the application of management judgment. For non-employee stock-based awards, the Company calculates the fair value of the award on the date of grant in the same manner as employee awards, however, the awards are revalued at the end of each reporting period and the pro-rata compensation expense is adjusted accordingly until such time the non-employee award is fully vested, at which time the total compensation recognized to date shall equal the fair value of the stock-based award as calculated on the measurement date, which is the date at which the award recipient’s performance is complete. The estimation of stock-based awards that will ultimately vest requires judgment, and to the extent actual results or updated estimates differ from original estimates, such amounts are recorded as a cumulative adjustment in the period estimates are revised. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements The Company considers the applicability and impact of all ASUs issued, both effective and not yet effective. In February 2016, the Financial Accounting Standards Board (the “ FASB In March 2018, the FASB issued ASU No.2018-05 “Income Taxes (Topic 740): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118.” This new standard adds SEC paragraphs pursuant to the SEC Staff Accounting Bulletin No. 118, which expresses the view of the staff regarding application of Topic 740, Income Taxes, in the reporting period that includes December 22, 2017 - the date on which the Tax Cuts and Jobs Act (H.R.1, An Act to Provide for Reconciliation Pursuant to Titles II and V of the Concurrent Resolution on the Budget for Fiscal Year 2018) was signed into law. ASU 2018-05 is effective upon inclusion in the FASB codification. The Company’s management is currently evaluating the impact that the adoption of ASU 2018-05 will have on its consolidated financial statements. Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the SEC did not or are not believed by the Company’s management to have a material impact on the Company's present or future consolidated financial statements. |
Significant Accounting Polici_3
Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Accounting Policies [Abstract] | |
Estimated Useful Lives of Assets | Category Useful Life Computer equipment and software 3 years Furniture and fixtures 3 years Office equipment 3 years Software 3 years |
Maxim Acquisition (Tables)
Maxim Acquisition (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Business Combinations [Abstract] | |
Summary of Intangible Assets Acquired | The following table summarizes the intangible assets acquired of Maxim as of the Maxim Closing Date: March 31, 2019 December 31, 2018 Amortization period (years) Intangible assets: Non-compete agreements $ 61,766 $ 61,766 2 510k product technology 704,380 704,380 Indefinite Customer relationships 555,819 555,819 11 Goodwill 2,084,439 2,084,439 Indefinite Total intangible assets 3,406,404 3,406,404 Less: accumulated amortization (54,280 ) (33,925 ) Intangible assets, net $ 3,352,124 $ 3,372,479 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Property Plant And Equipment [Abstract] | |
Property and Equipment | Property and equipment consisted of the following at March 31, 2019, and December 31, 2018: March 31, 2019 December 31, 2018 Computer equipment and software $ 41,840 $ 41,840 Furniture and fixtures 5,047 5,047 Office equipment 21,913 21,913 Property and equipment costs 68,800 68,800 Less: accumulated depreciation (31,195 ) (25,826 ) Property and equipment, net $ 37,605 $ 42,974 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Stockholders Equity Deficit Tables [Abstract] | |
Summary of Non-qualified Stock Option Activity | A summary of the Company’s NQSO activity for the three months ended March 31, 2019, is presented below: No. of Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Term Aggregate Intrinsic Value Balance outstanding at December 31, 2018 3,915,000 $ 0.78 7.0 $ 443,000 Granted 900,000 0.75 - - Exercised - - - - Forfeited - - - - Expired - - - - Balance outstanding at March 31, 2019 4,815,000 $ 0.78 7.3 $ 417,000 Exercisable at March 31, 2019 1,700,000 $ 0.42 3.7 $ 417,000 |
Summary of Restricted Stock Awards Activity | The following table summarizes RSAs activity: Number of Shares Fair Value Weighted Average Grant Date Fair Value Non-vested, December 31, 2018 4,378,615 $ 2,060,000 $ 0.47 Granted - - - Vested - - - Forfeited - - - Non-vested, March 31, 2019 4,378,615 $ 2,060,000 $ 0.47 |
Income Taxes (Tables)
Income Taxes (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Components of Income Tax Expense (Benefit) | The components of income tax expense (benefit) are as follows: For the Three Months Ended March 31, 2019 For the Three Months Ended March 31, 2018 Current: Federal $ - $ - State 10,482 10,802 Income tax expense 10,482 10,802 Deferred: Federal (125,028 ) (208,392 ) State - - Income tax benefit (125,028 ) (208,392 ) Total income tax expense (benefit), net $ (114,546 ) $ (197,590 ) |
Significant Components of Deferred Income Tax Assets and Liabilities | Significant components of the Company's deferred income tax assets and liabilities are as follows: March 31, 2019 December 31, 2018 Deferred tax assets: Net operating loss carryover $ 224,581 $ 216,793 Accounts receivable 174,847 140,272 Compensation 284,119 232,793 Inventory 391,576 383,744 Other 33,259 28,128 Total deferred tax assets 1,108,382 1,001,730 Deferred tax liabilities: Intangibles (218,427 ) (232,835 ) Property and equipment (3,934 ) (7,902 ) Total deferred tax liabilities (222,361 ) (240,737 ) Deferred tax assets, net 886,021 760,993 Net deferred tax asset $ 886,021 $ 760,993 |
Reconciliation of Income Tax Computed at U.S. Statutory Rate to Effective Income Tax Rate | A reconciliation of income tax computed at the U.S. statutory rate to the effective income tax rate is as follows: Three Months Ended March 31, 2019 March 31, 2018 Expected U.S. federal incomes as statutory rate 21.0% 21.0% State and local income taxes, net of federal benefit -1.3% -1.1% Permanent differences -0.6% -0.6% Other -0.8% 0.0% Effective tax rate 18.3% 19.3% |
Concentrations (Tables)
Concentrations (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Revenues [Member] | |
Concentration Risk [Line Items] | |
Concentration of Revenues, Accounts Receivable and Suppliers | For the three months ended March 31, 2019, and 2018, the following significant customers had an individual percentage of total revenues equaling ten percent (10%) or greater: For the Three Months Ended March 31, 2019 March 31, 2018 Customer 1 11.8 % 15.8 % Totals 11.8 % 15.8 % |
Goods Purchased [Member] | |
Concentration Risk [Line Items] | |
Concentration of Revenues, Accounts Receivable and Suppliers | For the three months ended March 31, 2019 and 2018, the following significant suppliers represented ten percent (10%) or greater of goods purchased: For the Three Months Ended March 31, 2019 March 31, 2018 Supplier 1 21.2 % 9.3 % Totals 21.2 % 9.3 % |
Nature of Operations (Details N
Nature of Operations (Details Narrative) - USD ($) | Jul. 30, 2018 | Dec. 31, 2017 | Dec. 29, 2017 | Mar. 31, 2019 | Dec. 31, 2018 |
Nature Of Operations And Going Concern [Line Items] | |||||
Percentage of common stock issued | 61.40% | ||||
Percentage of common stock outstanding | 61.40% | ||||
Common Stock Par Value | $ 0.01 | $ 0.01 | |||
Indefinite lived goodwill asset excess of carrying value | $ 820,650 | ||||
CPM [Member] | |||||
Nature Of Operations And Going Concern [Line Items] | |||||
Common Stock Par Value | $ 0.01 | ||||
Date of acquisition agreement | Dec. 31, 2017 | Dec. 29, 2017 | |||
Maxim Surgical, LLC [Member] | |||||
Nature Of Operations And Going Concern [Line Items] | |||||
Date of acquisition agreement | Jul. 30, 2018 | ||||
Approximate aggregate purchase price of outstanding membership interests | $ 3,400,000 |
Significant Accounting Polici_4
Significant Accounting Policies (Details Narrative) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2019USD ($)Segment | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | |
Significant Accounting Policies [Line Items] | |||
Amount of earn-out liability reduced | $ 5,663,014 | ||
Earn-out liability | $ 13,581,529 | 13,581,529 | $ 19,244,543 |
Number of operating segments | Segment | 1 | ||
Number of reportable segments | Segment | 1 | ||
Cash equivalents | $ 0 | 0 | |
FDIC insurance limit | 250,000 | ||
Deposits greater than federally insured limit | $ 351,303 | 322,693 | |
CPM [Member] | |||
Significant Accounting Policies [Line Items] | |||
Amount of earn-out liability reduced | 5,663,014 | ||
Earn-out liability | $ 13,581,529 | $ 19,244,543 | |
Earn-out payment start date | Jan. 1, 2018 | ||
Earn-out payment end date | Dec. 31, 2034 | ||
Earn-out payment base amount | $ 16,000,000 | ||
Earn-out payment additional bonus amount | $ 10,000,000 | ||
Discount rate on fair value earn-out liability | 4.00% | ||
Approximate gross profit margin included in earn-out liability | 48.00% | ||
Average net income margin included in earn-out liability | 9.00% | ||
Approximate growth rate used to calculate in earn-out liability | 5.00% | ||
Earn-out liability forecast horizon period | 11 years | ||
CPM [Member] | Minimum [Member] | |||
Significant Accounting Policies [Line Items] | |||
Earn-out payment during earn-out period | $ 0 | ||
CPM [Member] | Maximum [Member] | |||
Significant Accounting Policies [Line Items] | |||
Earn-out payment during earn-out period | $ 26,000,000 |
Significant Accounting Polici_5
Significant Accounting Policies - Estimated Useful Lives of Assets (Details) | 3 Months Ended |
Mar. 31, 2019 | |
Computer Equipment and Software [Member] | |
Property Plant And Equipment [Line Items] | |
Estimated useful lives of the assets | 3 years |
Furniture and fixtures [Member] | |
Property Plant And Equipment [Line Items] | |
Estimated useful lives of the assets | 3 years |
Office equipment [Member] | |
Property Plant And Equipment [Line Items] | |
Estimated useful lives of the assets | 3 years |
Software [Member] | |
Property Plant And Equipment [Line Items] | |
Estimated useful lives of the assets | 3 years |
Maxim Acquisition (Details Narr
Maxim Acquisition (Details Narrative) - USD ($) | Aug. 01, 2018 | Mar. 31, 2019 | Mar. 31, 2018 |
Business Acquisition [Line Items] | |||
Amortization expense | $ 20,355 | $ 0 | |
Maxim Surgical, LLC [Member] | |||
Business Acquisition [Line Items] | |||
Percentage of outstanding equity securities acquired | 100.00% | ||
Common stock price per share | $ 0.76 | ||
Days of volume-weighted average price of common stock as of three days prior to closing to decide purchase price of common stock | 30 days | ||
Restricted Common Stock [Member] | Maxim Surgical, LLC [Member] | |||
Business Acquisition [Line Items] | |||
Number of shares issued for acquisition | 4,210,526 |
Maxim Acquisition - Summary of
Maxim Acquisition - Summary of Intangible Assets Acquired (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2019 | Dec. 31, 2018 | |
Intangible assets: | ||
Goodwill | $ 2,905,089 | $ 2,905,089 |
Maxim Surgical, LLC [Member] | ||
Intangible assets: | ||
Goodwill | 2,084,439 | 2,084,439 |
Total intangible assets | 3,406,404 | 3,406,404 |
Less: accumulated amortization | (54,280) | (33,925) |
Intangible assets, net | 3,352,124 | 3,372,479 |
Maxim Surgical, LLC [Member] | 510K Product Technology [Member] | ||
Intangible assets: | ||
Purchase price of indefinite lived intangible assets | $ 704,380 | 704,380 |
Intangible assets, amortization period | Indefinite | |
Maxim Surgical, LLC [Member] | Goodwill [Member] | ||
Intangible assets: | ||
Intangible assets, amortization period | Indefinite | |
Maxim Surgical, LLC [Member] | Non-Compete Agreements [Member] | ||
Intangible assets: | ||
Purchase price of finite lived intangible assets | $ 61,766 | 61,766 |
Intangible assets, amortization period | 2 years | |
Maxim Surgical, LLC [Member] | Customer Relationships [Member] | ||
Intangible assets: | ||
Purchase price of finite lived intangible assets | $ 555,819 | $ 555,819 |
Intangible assets, amortization period | 11 years |
CPM Acquisition (Details Narrat
CPM Acquisition (Details Narrative) - USD ($) | Jun. 27, 2018 | Dec. 31, 2017 | Dec. 29, 2017 | Dec. 31, 2018 | Mar. 31, 2019 |
Business Acquisition [Line Items] | |||||
Common Stock Par Value | $ 0.01 | $ 0.01 | |||
Earn-out liability | $ 19,244,543 | $ 13,581,529 | $ 13,581,529 | ||
Decrease in earn-out liability | 5,663,014 | ||||
CPM [Member] | |||||
Business Acquisition [Line Items] | |||||
Date of acquisition agreement | Dec. 31, 2017 | Dec. 29, 2017 | |||
Number of shares issued for acquisition | 50,000,000 | ||||
Common Stock Par Value | $ 0.01 | ||||
Equity interest percentage | 100.00% | ||||
Share price | $ 0.20 | ||||
Business acquisition common stock value | $ 10,000,000 | ||||
Business acquisition remaining purchase price | $ 26,000,000 | ||||
Effective date of acquisition | Dec. 31, 2017 | ||||
Earn-out liability | $ 19,244,543 | 13,581,529 | |||
Fair value of earn-out liability | $ 26,000,000 | ||||
Decrease in earn-out liability | $ 5,663,014 | ||||
Post-closing adjustment paid in cash | $ 397,463 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) | Mar. 31, 2019 | Dec. 31, 2018 |
Property Plant And Equipment [Line Items] | ||
Property and equipment costs | $ 68,800 | $ 68,800 |
Less: accumulated depreciation | (31,195) | (25,826) |
Property and equipment, net | 37,605 | 42,974 |
Computer Equipment and Software [Member] | ||
Property Plant And Equipment [Line Items] | ||
Property and equipment costs | 41,840 | 41,840 |
Furniture and fixtures [Member] | ||
Property Plant And Equipment [Line Items] | ||
Property and equipment costs | 5,047 | 5,047 |
Office equipment [Member] | ||
Property Plant And Equipment [Line Items] | ||
Property and equipment costs | $ 21,913 | $ 21,913 |
Property and Equipment (Detai_2
Property and Equipment (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Property Plant And Equipment [Abstract] | ||
Depreciation expense | $ 5,369 | $ 2,079 |
Senior Secured Revolving Cred_2
Senior Secured Revolving Credit Facility (Details Narrative) - CPM [Member] - USD ($) | Nov. 19, 2018 | Dec. 31, 2017 | Dec. 29, 2017 | Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 |
Debt Instrument [Line Items] | ||||||
Date of acquisition agreement | Dec. 31, 2017 | Dec. 29, 2017 | ||||
RLOC [Member] | ZB, N.A. (d/b/a Amegy Bank) [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Date of acquisition agreement | Dec. 29, 2017 | |||||
Line of credit maximum borrowing capacity | $ 4,000,000 | $ 5,000,000 | ||||
Percentage of guarantees of outstanding loan amount | 50.00% | |||||
Line of credit facility, expiration date | Nov. 4, 2019 | |||||
Variable rate, description | one-month LIBOR rate plus four percent | |||||
Variable rate | 4.00% | |||||
Minimum fixed charge coverage ratio | 1.25% | |||||
Description of financial covenants | the Fixed Charge Coverage Ratio of any calendar quarter end from and after the quarter ending June 30, 2019, to be less than 1.25 to 1.00; EBITDA to be less than $700,000 for the fiscal quarter ending December 31, 2018, and $100,000 for the fiscal quarter ending March 31, 2019 | |||||
Description of possible effect of non-compliance | The Company was not in compliance with the minimum quarterly EBITDA requirement of $100,000 | |||||
Minimum net profit required for compliance | $ 100,000 | |||||
Line of credit outstanding balance amount | 1,396,871 | $ 1,477,448 | ||||
Interest expense | 18,778 | $ 29,247 | ||||
Accrued interest | $ 2,371 | $ 4,350 | ||||
Effective interest rate | 6.48% |
Notes Payable - Related Parti_2
Notes Payable - Related Parties (Details Narrative) - USD ($) | 3 Months Ended | 4 Months Ended | 12 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Oct. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2018 | |
Debt Instrument [Line Items] | |||||
Interest expense on notes payable | $ 6,658 | $ 6,658 | |||
Accrued expenses [Member] | |||||
Debt Instrument [Line Items] | |||||
Accrued interest | $ 65,753 | $ 59,096 | |||
10% Promissory Notes [Member] | NC 143 Family Holdings, LP and RMI [Member] | |||||
Debt Instrument [Line Items] | |||||
Convertible notes payable - related parties | $ 150,000 | ||||
Interest rate of promissory notes | 10.00% | 18.00% | |||
Debt Instrument, description | principal and interest balance into shares of the Company’s Common Stock at a conversion price of $0.08 per share. | ||||
Conversion price of common stock | $ 0.08 |
Stockholders' Equity (Details N
Stockholders' Equity (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Class Of Stock [Line Items] | ||
Stock options, granted | 900,000 | |
Weighted-average grant-date fair value of options, granted | $ 0.69 | |
Non-qualified Stock Options [Member] | ||
Class Of Stock [Line Items] | ||
Stock options, granted | 900,000 | |
Unrecognized compensation expenses on stock options | $ 2,250,943 | |
Non-qualified Stock Options [Member] | Selling, General, Administrative and Other Expenses [Member] | ||
Class Of Stock [Line Items] | ||
Share-based compensation expense | 244,407 | $ 59,003 |
Restricted Stock Award [Member] | ||
Class Of Stock [Line Items] | ||
Share-based compensation expense | $ 0 | $ 79,083 |
Stockholders' Equity - Summary
Stockholders' Equity - Summary of Non-qualified Stock Option Activity (Details) - USD ($) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2019 | Dec. 31, 2018 | |
No. of Shares, Abstract | ||
No. of Shares, Beginning Balance | 3,915,000 | |
Granted, No. of Shares | 900,000 | |
No. of Shares, Ending Balance | 4,815,000 | 3,915,000 |
Exercisable, No. of Shares | 1,700,000 | |
Weighted Average Exercise Price, Abstract | ||
Weighted Average Exercise Price, Beginning Balance | $ 0.78 | |
Granted, Weighted Average Exercise Price | 0.75 | |
Weighted Average Exercise Price, Ending Balance | 0.78 | $ 0.78 |
Exercisable, Weighted Average Exercise Price | $ 0.42 | |
Weighted Average Remaining Contractual Term, Abstract | ||
Weighted Average Remaining Contractual Term, Balance outstanding | 7 years 3 months 18 days | 7 years |
Weighted Average Remaining Contractual Term, Exercisable | 3 years 8 months 12 days | |
Aggregate Intrinsic Value, Abstract | ||
Aggregate Intrinsic Value, Balance outstanding | $ 417,000 | $ 443,000 |
Aggregate Intrinsic Value, Exercisable | $ 417,000 |
Stockholders' Equity - Summar_2
Stockholders' Equity - Summary of Restricted Stock Awards Activity (Details) - Restricted Stock Award [Member] - USD ($) | Mar. 31, 2019 | Dec. 31, 2018 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | ||
Number of Shares, Non-vested, Balance | 4,378,615 | 4,378,615 |
Share-based Compensation Arrangement by Share Based Payment Award, Equity Instruments Other than Options, Nonvested, Fair Value [Abstract] | ||
Fair Value, Non-vested, Balance | $ 2,060,000 | $ 2,060,000 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract] | ||
Weighted Average Grant Date Fair Value, Non-vested, Balance | $ 0.47 | $ 0.47 |
Income Taxes - Components of In
Income Taxes - Components of Income Tax Expense (Benefit) (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Current: | ||
Federal | $ 0 | $ 0 |
State | 10,482 | 10,802 |
Income tax expense | 10,482 | 10,802 |
Deferred: | ||
Federal | (125,028) | (208,392) |
State | 0 | 0 |
Income tax benefit | (125,028) | (208,392) |
Total income tax expense (benefit), net | $ (114,546) | $ (197,590) |
Income Taxes - Significant Comp
Income Taxes - Significant Components of Deferred Income Tax Assets and Liabilities (Details) - USD ($) | Mar. 31, 2019 | Dec. 31, 2018 |
Deferred tax assets: | ||
Net operating loss carryover | $ 224,581 | $ 216,793 |
Accounts receivable | 174,847 | 140,272 |
Compensation | 284,119 | 232,793 |
Inventory | 391,576 | 383,744 |
Other | 33,259 | 28,128 |
Total deferred tax assets | 1,108,382 | 1,001,730 |
Deferred tax liabilities: | ||
Intangibles | (218,427) | (232,835) |
Property and equipment | (3,934) | (7,902) |
Total deferred tax liabilities | (222,361) | (240,737) |
Deferred tax assets, net | 886,021 | 760,993 |
Net deferred tax asset | $ 886,021 | $ 760,993 |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2019 | Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | ||
Deferred tax asset | $ 886,021 | $ 760,993 |
Recognized increase in deferred tax asset | $ 125,028 | |
Net operating loss carryforwards | $ 1,069,434 | |
Net operating loss carryforwards earliest expiration year | 2019 | |
Net operating loss carryforwards latest expiration year | 2037 | |
Open tax year | 2016 2017 2018 |
Income Taxes - Reconciliation o
Income Taxes - Reconciliation of Income Tax Computed at U.S. Statutory Rate to Effective Income Tax Rate (Details) | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Income Tax Disclosure [Abstract] | ||
Expected U.S. federal incomes as statutory rate | 21.00% | 21.00% |
State and local income taxes, net of federal benefit | (1.30%) | (1.10%) |
Permanent differences | (0.60%) | (0.60%) |
Other | (0.80%) | 0.00% |
Effective tax rate | 18.30% | 19.30% |
Concentrations - Significant Cu
Concentrations - Significant Customers with Individual Percentage of Total Revenues Equaling Ten Percent (10%) or Greater (Details) - Revenues [Member] - Customer Concentration Risk [Member] | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Concentration Risk [Line Items] | ||
Concentration risk, percentage | 11.80% | 15.80% |
Customer 1 [Member] | ||
Concentration Risk [Line Items] | ||
Concentration risk, percentage | 11.80% | 15.80% |
Concentrations - Significant Su
Concentrations - Significant Suppliers Represented Ten Percent (10%) or Greater of Goods Purchased (Details) - Goods Purchased [Member] - Supplier Concentration Risk [Member] | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Concentration Risk [Line Items] | ||
Concentration risk, percentage | 21.20% | 9.30% |
Supplier 1 [Member] | ||
Concentration Risk [Line Items] | ||
Concentration risk, percentage | 21.20% | 9.30% |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) | 3 Months Ended | ||
Mar. 31, 2019USD ($)ft²FullTimeEquivalent | Mar. 31, 2018USD ($) | Dec. 31, 2018USD ($) | |
1565 North Central Expressway, LP [Member] | |||
Related Party Transaction [Line Items] | |||
Area of leased property | ft² | 11,500 | ||
Lease termination date | Dec. 31, 2017 | ||
1565 North Central Expressway, LP [Member] | Selling, General, Administrative and Other Expenses [Member] | |||
Related Party Transaction [Line Items] | |||
Rent expense | $ 42,000 | $ 42,000 | |
AmBio Staffing, LLC [Member] | |||
Related Party Transaction [Line Items] | |||
Number of full time equivalents supporting operations | FullTimeEquivalent | 63 | ||
Number of full time equivalents directly supporting company | FullTimeEquivalent | 43 | ||
Number of full time equivalents supporting other companies | FullTimeEquivalent | 13 | ||
Number of full time equivalents shares with other companies | FullTimeEquivalent | 7 | ||
AmBio Staffing, LLC [Member] | Account Payables [Member] | |||
Related Party Transaction [Line Items] | |||
Due to related parties | $ 0 | $ 180,000 | |
AmBio Staffing, LLC [Member] | Selling, General, Administrative and Other Expenses [Member] | |||
Related Party Transaction [Line Items] | |||
Administrative fees paid for services | 51,000 | 47,000 | |
MedUSA Group, LLC [Member] | |||
Related Party Transaction [Line Items] | |||
Net revenues to related parties | 300,000 | 828,000 | |
Purchases from related parties | 0 | 97,000 | |
MedUSA Group, LLC [Member] | Account Receivables [Member] | |||
Related Party Transaction [Line Items] | |||
Due from related parties | 327,000 | 389,000 | |
MedUSA Group, LLC [Member] | Commission [Member] | |||
Related Party Transaction [Line Items] | |||
Expense incurred on behalf of related parties | 617,000 | 317,000 | |
Texas Overlord, LLC [Member] | Account Receivables [Member] | |||
Related Party Transaction [Line Items] | |||
Due from related parties | 0 | 2,000 | |
Texas Overlord, LLC [Member] | Inventory [Member] | |||
Related Party Transaction [Line Items] | |||
Purchases from related parties | 25,000 | 439,000 | |
Texas Overlord, LLC [Member] | Commission [Member] | |||
Related Party Transaction [Line Items] | |||
Expense incurred on behalf of related parties | 0 | 287,000 | |
N.B.M.J., Inc. [Member] | |||
Related Party Transaction [Line Items] | |||
Net revenues to related parties | 122,000 | 34,000 | |
N.B.M.J., Inc. [Member] | Account Receivables [Member] | |||
Related Party Transaction [Line Items] | |||
Due from related parties | 252,000 | 155,000 | |
Bass Bone And Spine Specialists [Member] | |||
Related Party Transaction [Line Items] | |||
Net revenues to related parties | 62,000 | 117,000 | |
Bass Bone And Spine Specialists [Member] | Account Receivables [Member] | |||
Related Party Transaction [Line Items] | |||
Due from related parties | 5,000 | 179,000 | |
Bass Bone And Spine Specialists [Member] | Commission [Member] | |||
Related Party Transaction [Line Items] | |||
Expense incurred on behalf of related parties | 9,000 | 0 | |
Sintu L L C | Commission [Member] | |||
Related Party Transaction [Line Items] | |||
Expense incurred on behalf of related parties | 78,000 | 249,000 | |
Tiger Orthopedics, LLC [Member] | |||
Related Party Transaction [Line Items] | |||
Net revenues to related parties | 50,000 | $ 109,000 | |
Tiger Orthopedics, LLC [Member] | Account Receivables [Member] | |||
Related Party Transaction [Line Items] | |||
Due from related parties | $ 35,000 | $ 5,000 |