Document And Entity Information
Document And Entity Information | 9 Months Ended |
Sep. 30, 2020 | |
Cover [Abstract] | |
Document Type | S-1/A |
Amendment Flag | true |
Amendment Description | To update document. |
Document Period End Date | Sep. 30, 2020 |
Entity Registrant Name | AMERICAN BIO MEDICA CORP |
Entity Central Index Key | 0000896747 |
Entity Filer Category | Non-accelerated Filer |
Entity Emerging Growth Company | false |
Entity Small Business | true |
Entity Incorporation State Country Code | NY |
Condensed Balance Sheets
Condensed Balance Sheets - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
Current assets: | |||
Cash and cash equivalents | $ 61,000 | $ 4,000 | $ 113,000 |
Accounts receivable, net of allowance for doubtful accounts of $35,000 at September 30, 2020, $34,000 at December 31, 2019 and $36,000 at December 31, 2018 | 364,000 | 370,000 | 452,000 |
Inventory, net of allowance of $397,000 at September 30, 2020, $291,000 at December 31, 2019 and $268,000 at December 31, 2018 | 602,000 | 810,000 | 1,019,000 |
Prepaid expenses and other current assets | 85,000 | 6,000 | 29,000 |
Right of use asset - operating leases | 35,000 | 34,000 | 0 |
Total current assets | 1,147,000 | 1,224,000 | 1,613,000 |
Property, plant and equipment, net | 594,000 | 644,000 | 718,000 |
Patents, net | 110,000 | 116,000 | 123,000 |
Right of use asset - operating leases | 49,000 | 73,000 | 0 |
Other assets | 21,000 | 21,000 | 21,000 |
Total assets | 1,921,000 | 2,078,000 | 2,475,000 |
Current liabilities: | |||
Accounts payable | 604,000 | 652,000 | 359,000 |
Accrued expenses and other current liabilities | 577,000 | 543,000 | 449,000 |
Right of use liability - operating leases | 33,000 | 34,000 | 0 |
Wages payable | 98,000 | 104,000 | 278,000 |
Line of credit | 208,000 | 337,000 | 502,000 |
PPP Loan | 332,000 | 0 | 0 |
Current portion of long-term debt, net of deferred finance costs | 1,120,000 | 17,000 | 237,000 |
Total current liabilities | 2,972,000 | 1,687,000 | 1,825,000 |
Long-term debt/other liabilities, net of current portion and deferred finance costs | 0 | 1,108,000 | 796,000 |
Right of use liability - operating leases | 49,000 | 73,000 | 0 |
Total liabilities | 3,021,000 | 2,868,000 | 2,621,000 |
COMMITMENTS AND CONTINGENCIES | |||
Stockholders' deficit: | |||
Preferred stock; par value $.01 per share; 5,000,000 shares authorized, none issued and outstanding at September 30, 2020 and December 31, 2019 | 0 | 0 | 0 |
Common stock; par value $.01 per share; 50,000,000 shares authorized; 35,953,476 issued and outstanding at September 30, 2020 and 32,680,984 issued and outstanding as of December 31, 2019 and 32,279,368 issued and outstanding as of December 31, 2018 | 359,000 | 327,000 | 323,000 |
Additional paid-in capital | 21,658,000 | 21,437,000 | 21,404,000 |
Accumulated deficit | (23,117,000) | (22,554,000) | (21,873,000) |
Total stockholders' deficit | (1,100,000) | (790,000) | (146,000) |
Total liabilities and stockholders' deficit | $ 1,921,000 | $ 2,078,000 | $ 2,475,000 |
Condensed Balance Sheets (Paren
Condensed Balance Sheets (Parenthetical) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
Statement of Financial Position [Abstract] | |||
Allowance for doubtful accounts receivable, current | $ 35,000 | $ 34,000 | $ 36,000 |
Inventory valuation reserves | $ 397,000 | $ 291,000 | $ 268,000 |
Preferred stock, par value | $ .01 | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | 0 | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 | 0 |
Common stock, par value | $ .01 | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 50,000,000 | 50,000,000 | 50,000,000 |
Common stock, shares issued | 35,953,476 | 32,680,984 | 32,279,368 |
Common stock, shares outstanding | 35,953,476 | 32,680,984 | 32,279,368 |
Condensed Statements of Operati
Condensed Statements of Operations - 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 | Dec. 31, 2018 | |
Income Statement [Abstract] | ||||||
Net sales | $ 883,000 | $ 895,000 | $ 3,370,000 | $ 2,775,000 | $ 3,655,000 | $ 3,872,000 |
Cost of goods sold | 648,000 | 536,000 | 2,362,000 | 1,805,000 | 2,471,000 | 2,584,000 |
Gross profit | 235,000 | 359,000 | 1,008,000 | 970,000 | 1,184,000 | 1,288,000 |
Operating expenses: | ||||||
Research and development | 24,000 | 23,000 | 77,000 | 62,000 | 82,000 | 93,000 |
Selling and marketing | 89,000 | 131,000 | 408,000 | 350,000 | 459,000 | 545,000 |
General and administrative | 294,000 | 286,000 | 951,000 | 968,000 | 1,236,000 | 1,412,000 |
Total operating expenses | 407,000 | 440,000 | 1,436,000 | 1,380,000 | 1,777,000 | 2,050,000 |
Operating loss | (172,000) | (81,000) | (428,000) | (410,000) | (593,000) | (762,000) |
Other (expense) / income: | ||||||
Interest income | 0 | 0 | 0 | 0 | 0 | 1,000 |
Interest expense | (42,000) | (66,000) | (133,000) | (200,000) | (265,000) | (284,000) |
Other income, net | 0 | 3,000 | 0 | 172,000 | 172,000 | 19,000 |
Total other (expense) / income | (42,000) | (63,000) | (133,000) | (28,000) | (93,000) | (264,000) |
Net loss before tax | (214,000) | (144,000) | (561,000) | (438,000) | (686,000) | (1,026,000) |
Income tax expense | (2,000) | 0 | (2,000) | (2,000) | 5,000 | (2,000) |
Net loss | $ (216,000) | $ (144,000) | $ (563,000) | $ (440,000) | $ (681,000) | $ (1,028,000) |
Basic and diluted loss per common share | $ (0.01) | $ 0 | $ (0.02) | $ (0.01) | $ (0.02) | $ (0.03) |
Weighted average number of shares outstanding - basic & diluted | 35,953,476 | 32,545,776 | 35,278,455 | 32,479,123 | 32,526,669 | 30,115,063 |
STATEMENTS OF CHANGES IN STOCKH
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY - USD ($) | Common Stock | Additional Paid-in Capital | Retained Earnings | Total |
Balance (in shares) at Dec. 31, 2017 | 29,782,770 | |||
Balance at Dec. 31, 2017 | $ 298,000 | $ 21,170,000 | $ (20,845,000) | $ 623,000 |
Shares issued in connection with Landmark consulting agreement extensions (in shares) | 277,778 | |||
Shares issued in connection with Landmark consulting agreement extensions | $ 3,000 | 22,000 | 25,000 | |
Shares issued to Cherokee in connection with loan (in shares) | 150,000 | |||
Shares issued to Cherokee in connection with loan | $ 1,000 | 16,000 | 17,000 | |
Shares issued for board meeting attendance in lieu of cash (in shares) | 68,820 | |||
Shares issued for board meeting attendance in lieu of cash | $ 1,000 | 6,000 | 7,000 | |
Shares issued under December 2018 Private Placement (in shares) | 2,000,000 | |||
Shares issued under December 2018 Private Placement | $ 20,000 | 180,000 | 200,000 | |
Net loss | (1,028,000) | (1,028,000) | ||
Balance (in shares) at Dec. 31, 2018 | 32,279,368 | |||
Balance at Dec. 31, 2018 | $ 323,000 | 21,404,000 | 21,873,000 | (146,000) |
Share based payment expense | 0 | 5,000 | 5,000 | |
Net loss | (440,000) | |||
Balance at Sep. 30, 2019 | $ 325,000 | 21,425,000 | (22,313,000) | (563,000) |
Balance (in shares) at Dec. 31, 2018 | 32,279,368 | |||
Balance at Dec. 31, 2018 | $ 323,000 | 21,404,000 | 21,873,000 | (146,000) |
Shares issued to Cherokee in connection with loan (in shares) | 200,000 | |||
Shares issued to Cherokee in connection with loan | $ 2,000 | 12,000 | 14,000 | |
Shares issued for board meeting attendance in lieu of cash (in shares) | 201,616 | |||
Shares issued for board meeting attendance in lieu of cash | $ 2,000 | 15,000 | 17,000 | |
Share based payment expense | 6,000 | 6,000 | ||
Net loss | (681,000) | (681,000) | ||
Balance (in shares) at Dec. 31, 2019 | 32,680,984 | |||
Balance at Dec. 31, 2019 | $ 327,000 | 21,437,000 | (22,554,000) | (790,000) |
Share based payment expense | 1,000 | 30,000 | 31,000 | |
Net loss | (563,000) | (563,000) | ||
Balance at Sep. 30, 2020 | $ 359,000 | $ 21,658,000 | $ (23,117,000) | $ (1,100,000) |
Condensed Statements of Cash Fl
Condensed Statements of Cash Flows - USD ($) | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | |
Cash flows from operating activities: | ||||
Net loss | $ (563,000) | $ (440,000) | $ (681,000) | $ (1,028,000) |
Adjustments to reconcile net loss to net cash provided by / (used in) operating activities: | ||||
Depreciation and amortization | 60,000 | 61,000 | 81,000 | 81,000 |
Amortization of debt issuance costs | 37,000 | 82,000 | 108,000 | 126,000 |
Allowance for doubtful accounts | 1,000 | (2,000) | (2,000) | (16,000) |
Provision for slow moving and obsolete inventory | 114,000 | 63,000 | 96,000 | 134,000 |
Share-based payment expense | 2,000 | 4,000 | 6,000 | 10,000 |
Director fee paid with restricted stock | 31,000 | 5,000 | 17,000 | 6,000 |
Refinance fee paid with restricted stock | 21,000 | 0 | 0 | 0 |
Changes in: | ||||
Accounts receivable | 5,000 | (38,000) | 84,000 | (88,000) |
Inventory | 94,000 | 66,000 | 113,000 | 320,000 |
Prepaid expenses and other current assets | (56,000) | 11,000 | 23,000 | 93,000 |
Accounts payable | (48,000) | 247,000 | 293,000 | (15,000) |
Accrued expenses and other current liabilities | 9,000 | 78,000 | 94,000 | 138,000 |
Wages payable | (6,000) | (142,000) | (174,000) | 19,000 |
Net cash used in operating activities | (299,000) | (5,000) | 58,000 | (220,000) |
Cash flows from investing activities: | ||||
Purchase of property, plant, and equipment | (4,000) | 0 | 0 | 0 |
Patent application costs | 0 | 0 | 0 | (22,000) |
Net cash used in investing activities | (4,000) | 0 | 0 | (22,000) |
Cash flows from financing activities: | ||||
Proceeds from debt financing | 332,000 | 62,000 | 86,000 | 63,000 |
Payments on debt financing | (7,000) | (85,000) | (88,000) | 0 |
Proceeds from Private Placement | 164,000 | 0 | 0 | 200,000 |
Proceeds from lines of credit | 3,449,000 | 2,876,000 | 3,835,000 | 4,216,000 |
Payments on lines of credit | (3,578,000) | (2,946,000) | (4,000,000) | (4,160,000) |
Net cash provided by / (used in) financing activities | 360,000 | (93,000) | (167,000) | 319,000 |
Net change in cash and cash equivalents | 57,000 | (98,000) | (109,000) | 77,000 |
Cash and cash equivalents - beginning of period | 4,000 | 113,000 | 113,000 | 36,000 |
Cash and cash equivalents - end of period | 61,000 | 15,000 | 4,000 | 113,000 |
Supplemental disclosures of cash flow information: | ||||
Consulting expense paid with restricted stock | 0 | 0 | 0 | 25,000 |
Debt issuance cost paid with restricted stock | 0 | 14,000 | 14,000 | 19,000 |
Director Fee paid with restricted stock | 31,000 | 5,000 | 17,000 | 6,000 |
Patent application costs | 0 | 0 | 0 | 22,000 |
Loans converted to stock | 39,000 | 0 | 0 | 0 |
Cash paid during period for interest | 109,000 | 117,000 | 155,000 | 157,000 |
Cash paid during period for taxes | $ 2,000 | $ 2,000 | $ 0 | $ 2,000 |
Basis of Reporting
Basis of Reporting | 9 Months Ended | 12 Months Ended |
Sep. 30, 2020 | Dec. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Basis of Reporting | The accompanying unaudited interim condensed financial statements of American Bio Medica Corporation (the “Company”) have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Regulation S-X. Accordingly, these unaudited interim condensed financial statements do not include all information and footnotes required by U.S. GAAP for complete financial statement presentation. These unaudited interim condensed financial statements should be read in conjunction with audited financial statements and related notes contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. In the opinion of management, the interim condensed financial statements include all normal, recurring adjustments which are considered necessary for a fair presentation of the financial position of the Company at September 30, 2020, and the results of operations for the three and nine month periods ended September 30, 2020 and September 30, 2019 and cash flows for the nine month periods ended September 30, 2020 and September 30, 2019. Operating results for the nine months ended September 30, 2020 are not necessarily indicative of results that may be expected for the year ending December 31, 2020. Amounts at December 31, 2019 are derived from audited financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. During the nine months ended September 30, 2020, there were no significant changes to the Company’s critical accounting policies, which are included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. The preparation of these interim condensed financial statements requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, the Company evaluates estimates, including those related to product returns, bad debts, inventories, income taxes, warranty obligations, contingencies and litigation. The Company bases estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. These unaudited interim condensed financial statements have been prepared assuming that the Company will continue as a going concern and, accordingly, do not include any adjustments that might result from the outcome of this uncertainty. The independent registered public accounting firm’s report on the financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, contained an explanatory paragraph regarding the Company’s ability to continue as a going concern. As of the date of this report, the Company’s current cash balances, together with cash generated from future operations and amounts available under the Company’s credit facilities may not be sufficient to fund operations through November 2021. Throughout the nine months ended September 30, 2020, the Company had a line of credit with Crestmark Bank. The maximum availability on the Company’s line of credit was $1,000,000 beginning June 22, 2020 when the facility was amended and extended. However, because the amount available under the line of credit is based upon the Company’s accounts receivable, the amounts actually available under our line of credit (historically) have been significantly less than the maximum availability. As of September 30, 2020, based on the Company’s availability calculation, there were no additional amounts available under the Company’s line of credit because the Company draws any balance available on a daily basis. In February 2020, our credit facilities with Cherokee Financial, LLC were extended for another 12 months, or until February 15, 2021 (which is less than 12 months from the date of this report). Our total debt at September 30, 2020 with Cherokee Financial, LLC is $1,120,000. We do not expect cash from operations within the next 12 months to be sufficient to pay the amounts due under these credit facilities, which is due in full on February 15, 2021. We are currently looking at alternatives to further extend or refinance these facilities. As discussed in more detail in “Cash Flow, Outlook/Risk”, if sales levels decline, the Company will have reduced availability on its line of credit due to decreased accounts receivable balances. If availability under the Company’s line of credit is not sufficient to satisfy its working capital and capital expenditure requirements, the Company will be required to obtain additional credit facilities or sell additional equity securities, or delay capital expenditures, which could have a material adverse effect on the business. There is no assurance that such financing will be available or that the Company will be able to complete financing on satisfactory terms, if at all. Recently Adopted Accounting Standards ASU 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement” ASU 2019-08, Compensation – Stock Compensation (Topic 718) and Revenue from Contracts with Customers (Topic 606)” Accounting Standards Issued; Not Yet Adopted ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes” ASU 2020-01, “Investments-Equity Securities (Topic 321), Investments-Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815)” ASU 2020-06, “Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity”, Any other new accounting pronouncements recently issued, but not yet effective, have been reviewed and determined to be not applicable or were related to technical amendments or codification. As a result, the adoption of such new accounting pronouncements, when effective, is not expected to have a material effect on the Company’s financial position or results of operations. Reclassifications Certain items have been reclassified from the prior year to conform to the current year presentation. | The Company: American Bio Medica Corporation (the “Company”) 1) manufactures and sells lateral flow immunoassay tests, primarily for the immediate detection of drugs in urine and oral fluid, 2) provides strip manufacturing and assembly and packaging services for unaffiliated third parties and 3) sells (via distribution) a number of other products related to the immediate detection of drugs in urine and oral fluid as well as point of care diagnostic products via distribution. Going Concern: The Company’s financial statements have been prepared assuming the Company will continue as a going concern, which assumes the realization of assets and the satisfaction of liabilities in the normal course of business. For the year ended December 31, 2019 (“Fiscal 2019”), the Company had a net loss of $681,000 and net cash provided by operating activities of $58,000, compared to a net loss of $1,028,000 and net cash used in operating activities of $220,000 in the year ended December 31, 2018 (“Fiscal 2018”). The Company’s cash position decreased by $109,000 in Fiscal 2019 and increased by $77,000 in Fiscal 2019. The Company had a working capital deficit of $463,000 at December 31, 2019 compared to a working capital deficit of $212,000 at December 31, 2018. This increase in working capital deficit is primarily due to decreased sales. As of December 31, 2019, the Company had an accumulated deficit of $22,554,000. Over the course of the last several fiscal years, the Company has implemented a number of expense and personnel cuts, implemented a salary and commission deferral program (which currently only consists of salary deferral), consolidated certain manufacturing operations of the Company, and refinanced debt. The salary deferral program consists of a 10% salary deferral for the Company’s Chief Executive Officer/Principal Financial Officer Melissa Waterhouse. The salary of another member of senior management was also deferred 10% until his retirement in November 2019. As of December 31, 2019, the Company had total deferred compensation owed to these two individuals in the amount of $191,000. As cash flow from operations allows, the Company intends to repay portions of the deferred compensation. The Company did not make any payments on deferred compensation to Melissa Waterhouse in Fiscal 2019 or Fiscal 2018. After the member of senior management retired in November 2019, the Company agreed to make payments for the deferred comp owed to this individual. In Fiscal 2019, the Company made payments totaling $4,000 to this individual and no payments in Fiscal 2018. The Company expects the salary deferral program will continue for an undetermined period of time. The Company’s current cash balances, together with cash generated from future operations and amounts available under its credit facilities may not be sufficient to fund operations through June 2021. At December 31, 2019, the Company had negative Stockholders’ Equity of $790,000. The Company’s loan and security agreement and 2019 Term Note with Cherokee for $900,000 and $200,000, respectively, expired on February 15, 2020. As of December 31, 2019, all amounts due to Cherokee are included in our short-term debt given the facilities expire in less than 12 months. The Company did extend the facilities with Cherokee as indicated in Note J – Subsequent Events. The Crestmark line of credit has a maximum availability of $1,500,000; however, the amount available under the line of credit is much lower as it is based upon the balance of the Company’s accounts receivable and a limited amount of inventory. Lower sales levels result in reduced availability on the line of credit, and starting in July 2018, the Inventory Sub-Cap Limit on the line of credit (which determines our availability from the inventory) is being reduced by $10,000 per month until the Inventory Sub-Cap Limit is $0 (making the line of credit an accounts-receivable based line only). This means that as of December 31, 2019, the Inventory Sub-Cap Limit is only $70,000 and that the Company’s availability related to inventory is significantly reduced. As of December 31, 2019, based on an availability calculation, there were no additional amounts available under the Crestmark line of credit because the Company draws any balance available on a daily basis. If sales levels continue to decline, the Company will have reduced availability on the line of credit due to decreased accounts receivable balances. The line of credit with Crestmark expires on June 22, 2020. Based on discussions with Crestmark, the Company expects to extend the current facility or enter into a new facility with Crestmark prior to the expiration date of June 22, 2020. If availability under the Crestmark line of credit is not sufficient to satisfy the Company’s working capital and capital expenditure requirements, the Company will be required to obtain additional credit facilities or sell additional equity securities, or delay capital expenditures which could have a material adverse effect on the Company’s business. There is no assurance that such financing will be available or that the Company will be able to complete financing on satisfactory terms, if at all. The Company’s ability to be in compliance with the obligations under its current credit facilities will depend on the Company’s ability to replace lost sales and further increase sales. The Company’s ability to repay its current debt may also be affected by general economic, financial, competitive, regulatory, legal, business and other factors beyond the Company’s control, including those discussed herein. If the Company is unable to meet its credit facility obligations, the Company would be required to raise money through new equity and/or debt financing(s) and, there is no assurance that the Company would be able to find new financing, or that any new financing would be at favorable terms. On June 22, 2020, the Company extended the Crestmark line of credit until June 22, 2021. All terms and conditions of the Crestmark line of credit remain unchanged under the extension period with the exception of the following, 1) the maximum availability under the Crestmark line of credit was reduced from $1,500,000 to $1,000,000, 2) availability under the Crestmark line of credit is based on receivables only (under the same terms), 3) the requirement for field audits of the Company was removed, and 4) the Tangible Net Worth (TNW) covenant was removed. Prior to the extension, the Company was not in compliance with the TNW covenant under the Crestmark line of credit as of December 31, 2019. As of the date of this report, the Company is in the process of obtaining another waiver from Crestmark related to the TNW non-compliance for the three months ended December 31, 2019. Due to internal requirements within Crestmark, the waiver could not be obtained prior to the date of this report. The Company expects to be charged a fee of $5,000 for this waiver when it is received. A failure to comply with the TNW covenant under the Crestmark line of credit for the quarter ended December 31, 2019 or the quarter ended March 31, 2020; if the Company is not compliant at March 31, 2020, (a failure that is not waived by Crestmark) could result in an event of default, which, if not cured, could result in the Company being required to pay much higher costs associated with the indebtedness. The Company’s history of limited cash flow and/or operating cash flow deficits, its current cash position and lack of access to capital raise doubt about its ability to continue as a going concern and its continued existence is dependent upon several factors, including its ability to raise revenue levels and control costs to generate positive cash flows, to sell additional shares of the Company’s common stock to fund operations and obtain additional credit facilities. Selling additional shares of the Company’s common stock and obtaining additional credit facilities may be more difficult as a result of limited access to equity markets and the tightening of credit markets. If events and circumstances occur such that 1) the Company cannot raise revenue levels, 2) the Company is unable to control operational costs to generate positive cash flows, 3) the Company cannot maintain its current credit facilities or refinance its current credit facilities, 4) the Company is unable to utilize its common stock as a form of payment in lieu of cash and 4) the Company is unable to obtain working capital by selling additional shares of common stock, , the Company may be required to further reduce expenses or take other steps which could have a material adverse effect on the Company’s future performance. The Company’s financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amount of or classification of liabilities that might be necessary as a result of this uncertainty. In March 2020, the World Health Organization declared COVID-19 to be a pandemic. COVID-19 has spread throughout the globe, including in the State of New York where the Company’s headquarters are located, and in the State of New Jersey where the Company’s strip manufacturing facility is located. In response to the outbreak, the Company has followed the guidelines of the U.S. Centers for Disease Control and Prevention (“CDC”) and applicable state government authorities to protect the health and safety of the Company’s employees, families, suppliers, customers and communities. While these existing measures and, COVID-19 generally, have not materially disrupted the Company’s business to date, any future actions necessitated by the COVID-19 pandemic may result in disruption to the Company’s business. While the COVID-19 pandemic continues to rapidly evolve, the Company continues to assess the impact of the COVID-19 pandemic to best mitigate risk and continue the operations of the Company’s business. The extent to which the outbreak impacts the Company’s business, liquidity, results of operations and financial condition will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including new information that may emerge concerning the severity of the COVID-19 pandemic and the actions to contain it or treat its impact, among others. If the Company, its customers or suppliers experience prolonged shutdowns or other business disruptions, the Company’s business, liquidity, results of operations and financial condition are likely to be materially adversely affected, and the Company’s ability to access the capital markets may be limited. Significant Accounting Policies: [1] Cash equivalents: [2] Accounts Receivable: [3] Inventory: [4] Income taxes: On December 22, 2017, the Tax Reform Act was signed into law. Among the provisions, the Tax Reform ACT reduces the U.S. federal corporate income tax rate from a maximum of 35% to a flat 21% effective January 1, 2018, requires companies to pay a one-time transition tax on deemed repatriated earnings of certain foreign subsidiaries that were previously tax deferred, and creates new taxes on certain foreign sourced earnings. At December 31, 2019, the Company has completed its accounting for the tax effects of the enactment of the Tax Reform Act. The Company has finalized the tax effects on its existing deferred tax balances and the one-time transition tax under Staff Accounting Bulletin No. 118 ("SAB 118"). The Company has also included current year impacts of the Tax Reform Act in our tax provision. Deferred income tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to reverse. [5] Depreciation and amortization: [6] Revenue recognition: In Fiscal 2018, the Company elected the Modified Retrospective Method (the "Cumulate Effect Method") to comply with ASU 2014-09. The Cumulative Effect Method does not affect the amounts for the prior periods, but requires that the current period be reported in accordance with ASU 2014-09. ASU 2014-09 was adopted on January 1, 2018 which was the first day of the Company's 2018 fiscal year. There was no material impact on the Company’s financial position or results of operations. Product returns, discounts and allowances are variable consideration and are recorded as a reduction of revenue in the same period that the related sale is recorded. The Company has reviewed the overall sales transactions for variable consideration and has determined that these costs are not significant. The Company has not experienced any impairment losses, has no future performance obligations and does not capitalize costs to obtain or fulfill contracts. [7] Shipping and handling: [8] Research and development: [9] Net loss per common share: Potential common shares outstanding as of December 31, 2019 and 2018: December 31, 2019 December 31, 2018 Warrants 2,000,000 2,000,000 Options 2,252,000 2,222,000 Total 4,252,000 4,222,000 For Fiscal 2019 and Fiscal 2018, the number of securities not included in the diluted loss per share was 4,252,000 and 4,222,000, respectively, as their effect was anti-dilutive due to a net loss in each year. [10] Use of estimates: ● estimates of the fair value of stock options and warrants at date of grant; and ● estimates of accounts receivable reserves; and ● estimates of the inventory reserves; and ● estimates of accruals and liabilities; and ● deferred tax valuation. The fair value of stock options issued to employees, members of our Board of Directors, and consultants and of warrants issued in connection with debt financings is estimated on the date of grant based on the Black-Scholes options-pricing model utilizing certain assumptions for a risk free interest rate; volatility; and expected remaining lives of the awards. The assumptions used in calculating the fair value of share-based payment awards represent management's best estimates, but these estimates involve inherent uncertainties and the application of management judgment. As a result, if factors change and the Company uses different assumptions, the Company's equity-based compensation expense could be materially different in the future. In addition, the Company is required to estimate the expected forfeiture rate and only recognize expense for those shares expected to vest. In estimating the Company's forfeiture rate, the Company analyzed its historical forfeiture rate, the remaining lives of unvested options, and the amount of vested options as a percentage of total options outstanding. If the Company's actual forfeiture rate is materially different from its estimate, or if the Company reevaluates the forfeiture rate in the future, the equity-based compensation expense could be significantly different from what we have recorded in the current period. Actual results may differ from estimates and assumptions of future events. [11] Impairment of long-lived assets: [12] Financial Instruments: Estimated fair value of financial instruments is determined using available market information. In evaluating the fair value information, considerable judgment is required to interpret the market data used to develop the estimates. The use of different market assumptions and/or different valuation techniques may have a material effect on the estimated fair value amounts. Accordingly, the estimates of fair value presented herein may not be indicative of the amounts that could be realized in a current market exchange. ASC Topic 820, “Fair Value Measurements and Disclosures” (“ASC Topic 820”) establishes a hierarchy for ranking the quality and reliability of the information used to determine fair values. ASC Topic 820 requires that assets and liabilities carried at fair value be classified and disclosed in one of the following three categories: Level 1: Unadjusted quoted market prices in active markets for identical assets or liabilities. Level 2: Unadjusted quoted prices in active markets for similar assets or liabilities, unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs other than quoted prices are observable for the asset or liability. Level 3: Unobservable inputs for the asset or liability. The Company endeavors to utilize the best available information in measuring fair value. Financial assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement. The following methods and assumptions were used by the Company in estimating its fair value disclosures for financial instruments: Cash —The carrying amount reported in the balance sheet for cash and cash equivalents approximates its fair value due to the short-term maturity of these instruments. Line of Credit and Long-Term Debt—The carrying amounts of the Company’s borrowings under its line of credit agreement and other long-term debt approximates fair value, based upon current interest rates, some of which are variable interest rates. Other Asset/liabilities – The carrying amounts reported in the balance sheet for other current assets and liabilities approximates their fair value, based on the nature of the assets and liabilities. In August 2018, ASU 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement”, was issued. ASU 2018-03 adds, modifies and removes several disclosure requirements relative to the three levels of inputs used to measure fair value in accordance with Topic 820, “Fair Value Measurement.” ASU 2018-13 is effective for fiscal years beginning after December 15, 2019, including interim periods within that fiscal year. Early adoption is permitted. The Company adopted ASU 2018-03 in the quarter ended March 31, 2020 and the adoption did not have an impact on its financial position or results of operations. [13] Accounting for share-based payments and stock warrants: The weighted average fair value of options issued and outstanding in Fiscal 2019 and Fiscal 2018 was $0.13 in each year. (See Note H [2] – Stockholders’ Equity) In Fiscal 2018, the Company accounted for derivative instruments in accordance with ASC Topic 815 “Derivatives and Hedging” (“ASC Topic 815”). The guidance within ASC Topic 815 requires the Company to recognize all derivatives as either assets or liabilities on the statement of financial position unless the contract, including common stock warrants, settles in the Company’s own stock and qualifies as an equity instrument. A contract designated as an equity instrument is included in equity at its fair value, with no further fair value adjustments required; and if designated as an asset or liability is carried at fair value with any changes in fair value recorded in the results of operations. The weighted average fair value of warrants issued and outstanding was $0.18 in both Fiscal 2019 and Fiscal 2018. (See Note H [3] – Stockholders’ Equity) [14] Concentration of credit risk: At December 31, 2019, one customer accounted for 55.6% of the Company’s net accounts receivable and another customer accounted for 15.0%. A substantial portion of both of these balances were collected in the first quarter of the year ending December 31, 2020. Due to the long standing nature of the Company’s relationship with these customers and contractual obligations, the Company is confident it will recover these amounts. At December 31, 2018, one customer accounted for 56.5% of the Company’s net accounts receivable. A substantial portion of this balance was collected in the first quarter of the year ended December 31, 2019. Due to the long standing nature of the Company’s relationship with this customer and contractual obligations, the Company is confident it will recover these amounts. The Company has established an allowance for doubtful accounts of $34,000 and $36,000 at December 31, 2019 and December 31, 2018, respectively, based on factors surrounding the credit risk of our customers and other information. One of the Company’s customers accounted for 44.8% of net sales in Fiscal 2019 and 44.0% of net sales in Fiscal 2018. The Company maintains certain cash balances at financial institutions that are federally insured and at times the balances have exceeded federally insured limits. [15] Reporting comprehensive income: [16] Reclassifications: [17] New accounting pronouncements: In the year ended December 31, 2019, we adopted the following accounting standards set forth by the Financial Accounting Standards Board (“FASB”): ASU 2016-02, “Leases” ASU 2018-11, “Leases (Topic 842); Targeted Improvements” ASU 2018-20, “Leases (Topic 842)” ASU 2019-01, Leases (Topic 842)” The Company adopted ASU 2016-02, ASU 2018-11, ASU 2018-20 and ASU 2019-01 in the first quarter of Fiscal 2019. In reviewing the Company’s current leases, there were two operating leases that fell within the scope of the standard, as amended, one for a copier in the Company’s New York facility and another lease related to the Company’s New Jersey facility. Starting in the first quarter of Fiscal 2019, the Company is recognizing a lease liability and a right-of-use asset on its balance sheet related to both of these leases. ASU 2017-11, “Earnings Per Share, Distinguishing Liabilities from Equity, Derivatives and Hedging” ASU 2018-07, “Compensation - Stock Compensation/Improvements to Nonemployee Share-Based Payment Accounting” The following accounting standards have been issued prior to the end of Fiscal 2019 but, did not require adoption as in Fiscal 2019: ASU 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement” ASU 2019-08, Compensation – Stock Compensation (Topic 718) and Revenue from Contracts with Customers (Topic 606)” ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes” Any other new accounting pronouncements recently issued, but not yet effective, have been reviewed and determined to be not applicable or were related to technical amendments or codification. As a result, the adoption of such new accounting pronouncements, when effective, is not expected to have a material effect on the Company’s financial position or results of operations. |
Inventory
Inventory | 9 Months Ended | 12 Months Ended |
Sep. 30, 2020 | Dec. 31, 2019 | |
Inventory Disclosure [Abstract] | ||
Inventory | Inventory is comprised of the following: September 30, 2020 December 31, 2019 Raw Materials $ 695,000 $ 670,000 Work In Process 113,000 141,000 Finished Goods 191,000 290,000 Allowance for slow moving and obsolete inventory (397,000 ) (291,000 ) $ 602,000 $ 810,000 | Inventory is comprised of the following: December 31, 2019 December 31, 2018 Raw Materials $ 670,000 $ 778,000 Work In Process 141,000 184,000 Finished Goods 290,000 325,000 Allowance for slow moving and obsolete inventory (291,000 ) (268,000 ) $ 810,000 $ 1,019,000 |
PROPERTY, PLANT AND EQUIPMENT
PROPERTY, PLANT AND EQUIPMENT | 12 Months Ended |
Dec. 31, 2019 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY, PLANT AND EQUIPMENT | Property, plant and equipment, at cost, are as follows: December 31, 2019 December 31, 2018 Land $ 102,000 $ 102,000 Buildings and improvements 1,352,000 1,352,000 Manufacturing and warehouse equipment 2,108,000 2,108,000 Office equipment (incl. furniture and fixtures) 412,000 412,000 3,974,000 3,974,000 Less accumulated depreciation (3,330,000 ) (3,256,000 ) $ 644,000 $ 718,000 Depreciation expense was $74,000 in both Fiscal 2019and Fiscal 2018. |
ACCRUED EXPENSES AND OTHER CURR
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | 12 Months Ended |
Dec. 31, 2019 | |
Payables and Accruals [Abstract] | |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | Accrued expenses and other current liabilities consisted of the following: December 31, 2019 December 31, 2018 Accounting fees $ 77,000 $ 75,000 Interest payable 15,000 13,000 Accounts receivable credit balances 55,000 34,000 Sales tax payable 142,000 115,000 Deferred compensation 191,000 167,000 Customer Deposits 10,000 25,000 Other current liabilities 52,000 20,000 $ 542,000 $ 449,000 |
Net Loss Per Common Share
Net Loss Per Common Share | 9 Months Ended |
Sep. 30, 2020 | |
Earnings Per Share [Abstract] | |
Net Loss Per Common Share | Basic net loss per common share is calculated by dividing the net loss by the weighted average number of outstanding common shares during the period. Diluted net loss per common share includes the weighted average dilutive effect of stock options and warrants. Potential common shares outstanding as of September 30, 2020 and 2019: September 30, 2020 September 30, 2019 Warrants 0 2,000,000 Options 2,142,000 2,252,000 2,142,000 4,252,000 The number of securities not included in the diluted net loss per share for the three and nine months ended September 30, 2020 and the three and nine months ended September 30, 2019 was 2,142,000 and 4,252,000, respectively, as their effect would have been anti-dilutive due to the net loss in both of the three and nine month periods. |
Litigation_Legal Matters
Litigation/Legal Matters | 9 Months Ended |
Sep. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Litigation/Legal Matters | ABMC v. Todd Bailey On August 5, 2019, we settled litigation with Todd Bailey; a former Vice President, Sales & Marketing and sales consultant of the Company until December 23, 2016; hereinafter referred to as “Bailey”). The litigation was filed by the Company in the Northern District of New York in February 2017. Our complaint sought damages related to profits and revenues that resulted from actions taken by Bailey related to our customers. The settlement also addressed a counter-claim filed by Bailey in October 2017 (filed originally in Minnesota but, transferred to the Norther District of New York in January 2019). Bailey was seeking deferred commissions in the amount of $164,000 that he alleged were owed to him by the Company. These amounts were originally deferred under a deferred compensation program initiated in 2013; a program in which Bailey was one of the participants. We believed the amount sought was not due to Bailey given the actions indicated in our litigation. Under the settlement, both parties elected to resolve the litigation and settle any and all claims made within the litigation. Neither party admitted to any of the allegations contained within the ABMC v. Baily litigation (including any allegations made by Bailey in his counterclaim). Both parties also agreed to dismiss all claims made against each other. From time to time, the Company may be named in legal proceedings in connection with matters that arose during the normal course of business. While the ultimate outcome of any such litigation cannot be predicted, if the Company is unsuccessful in defending any such litigation, the resulting financial losses are not expected to have a material adverse effect on the financial position, results of operations and cash flows of the Company. |
Line of Credit and Debt
Line of Credit and Debt | 9 Months Ended | 12 Months Ended |
Sep. 30, 2020 | Dec. 31, 2019 | |
Debt Disclosure [Abstract] | ||
Line of Credit and Debt | The Company’s Line of Credit and Debt consisted of the following as of September 30, 2020 and December 31, 2019: September 30, 2020 December 31, 2019 Loan and Security Agreement with Cherokee Financial, LLC $ 900,000 $ 900,000 Crestmark Line of Credit: 208,000 337,000 Crestmark Equipment Term Loan : 0 7,000 2019 Term Loan with Cherokee Financial, LLC: 220,000 200,000 July 2019 Term Loan with Chaim Davis, et al: 0 10,000 December 2019 Convertible Note: 0 25,000 April 2020 PPP Loan with Crestmark: 332,000 0 $ 1,660,000 $ 1,479,000 Less debt discount & issuance costs (Cherokee Financial, LLC loans) 0 (17,000 ) Total debt, net $ 1,660,000 $ 1,462,000 Current portion $ 1,660,000 $ 354,000 Long-term portion, net of current portion $ 0 $ 1,125,000 LOAN AND SECURITY AGREEMENT WITH CHEROKEE FINANCIAL, LLC (“CHEROKEE”) On March 26, 2015, the Company entered into a LSA with Cherokee (the “Cherokee LSA”). The debt with Cherokee is collateralized by a first security interest in real estate and machinery and equipment. Under the Cherokee LSA, the Company was provided the sum of $1,200,000 in the form of a 5-year Note at a fixed annual interest rate of 8%. The Company received net proceeds of $80,000 after $1,015,000 of debt payments, and $105,000 in other expenses and fees. The expenses and fees (with the exception of the interest expense) were deducted from the balance on the Cherokee LSA and were amortized over the initial term of the debt (in accordance with ASU No. 2015-03). The Company was required to make annual principal reduction payments of $75,000 on each anniversary of the date of the closing; with the first principal reduction payment being made on February 15, 2016 and the last principal reduction payment being made on February 15, 2019; partially with proceeds received from a new, larger term loan with Cherokee (See 2019 Term Loan with Cherokee within this Note E). On February 24, 2020 (the “Closing Date”), the Company completed a transaction related to a one-year Extension Agreement dated February 14, 2020 (the “Extension Agreement”) with Cherokee under which Cherokee extended the due date of the Cherokee LSA (with a balance of $900,000) to February 15, 2021. No terms of the facility were changed under the Extension Agreement. For consideration of the Extension Agreement, the Company issued 2% of the $900,000 principal, or $18,000, in 257,143 restricted shares of the Company’s common stock to Cherokee on behalf of their investors. In the event of default, this includes, but is not limited to; the Company’s inability to make any payments due under the Cherokee LSA (as amended) Cherokee has the right to increase the interest rate on the financing to 18%. If the amount due is not paid by the extended due date, Cherokee will automatically add a delinquent payment penalty of $100,000 to the outstanding principal. The Company will continue to make interest only payments quarterly on the Cherokee LSA. In addition to the 8% interest, the Company pays Cherokee a 1% annual fee for oversight and administration of the loan. This oversight fee is paid in cash and is paid contemporaneously with the quarterly interest payments. The Company can pay off the Cherokee loan at any time with no penalty; except that a 1% administration fee would be required to be paid to Cherokee to close out all participations. The Company recognized $72,000 in interest expense related to the Cherokee LSA in the nine months ended September 30, 2020 (of which $16,000 is debt issuance cost amortization recorded as interest expense), and $125,000 in interest expense related to the Cherokee LSA in the nine months ended September 30, 2019 (of which $70,000 is debt issuance cost amortization recorded as interest expense). The Company recognized $20,000 in interest expense related to the Cherokee LSA in the three months ended September 30, 2020 (of which $0 is debt issuance cost amortization recorded as interest expense), and $42,000 in interest expense related to the Cherokee LSA in the three months ended September 30, 2019 (of which $23,000 is debt issuance cost amortization recorded as interest expense). The Company had $12,000 in accrued interest expense at September 30, 2020 related to the Cherokee LSA and $10,000 in accrued interest expense at September 30, 2019. As of September 30, 2020, the balance on the Cherokee LSA was $900,000. As of December 31, 2019, the balance on the Cherokee LSA was $900,000; however, the discounted balance was $884,000. LINE OF CREDIT WITH CRESTMARK BANK (“CRESTMARK”) On June 29, 2015 (the “Closing Date”), the Company entered into a Loan and Security Agreement (“LSA”) with Crestmark related to a revolving line of credit (the “Crestmark LOC”). The Crestmark LOC is used for working capital and general corporate purposes. The Company amended the Crestmark LOC on June 22, 2020 and as a result of this amendment, the Crestmark LOC expires on June 22, 2021. Until the amendment on June 22, 2020, the Crestmark LOC provided the Company with a revolving line of credit up to $1,500,000 (“Maximum Amount”). The Maximum Amount was subject to an Advance Formula comprised of: 1) 90% of Eligible Accounts Receivables (excluding, receivables remaining unpaid for more than 90 days from the date of invoice and sales made to entities outside of the United States), and 2) up to 40% of eligible inventory plus up to 10% of Eligible Generic Packaging Components not to exceed the lesser of $350,000, or 100% of Eligible Accounts Receivable. However, as a result of an amendment executed on June 25, 2018, the amount available under the inventory component of the line of credit was changed to 40% of eligible inventory plus up to 10% of Eligible Generic Packaging Components not to exceed the lesser of $250,000 (“Inventory Sub-Cap Limit”) or 100% of Eligible Accounts Receivable. In addition, the Inventory Sub-Cap Limit was reduced by $10,000 per month as of July 1, 2018 and thereafter on the first day of the month until the Inventory Sub-Cap Limit was reduced to $0, (making the Crestmark LOC an accounts-receivable based line only). This means that as of June 30, 2020, there is no inventory sub-cap. Upon execution of the amendment, the Maximum Amount was reduced to $1,000,000 and with the Inventory Sub-Cap Limit gone as of July 1, 2020; the Crestmark LOC is a receivables-based only line of credit. The Crestmark LOC has a minimum loan balance requirement of $500,000. At September 30, 2020, the Company did not meet the minimum loan balance requirement as our balance was $208,000. Under the LSA, Crestmark has the right to calculate interest on the minimum balance requirement rather than the actual balance on the Crestmark LOC (and they are exercising that right). The Crestmark LOC is secured by a first security interest in the Company’s inventory, and receivables and security interest in all other assets of the Company (in accordance with permitted prior encumbrances). Prior to the amendment on June 22, 2020, the Crestmark LOC contained a minimum Tangible Net Worth (“TNW”) covenant (previously defined in other periodic reports). With the exception of the quarter ended June 30, 2019, the Company did not historically comply with the TNW covenant and Crestmark previously provided a number of waivers (for which the Company was charged $5,000 each). The TNW covenant was removed effective with the quarter ended June 30, 2020. In the event of a default under the LSA, which includes but is not limited to, failure of the Company to make any payment when due, Crestmark is permitted to charge an Extra Rate. The Extra Rate is the Company’s then current interest rate plus 12.75% per annum. Interest on the Crestmark LOC is at a variable rate based on the Prime Rate plus 3% with a floor of 5.25%. As of the date of this report, the interest only rate on the Crestmark LOC is 6.25%. As of the date of this report, with all fees considered (the interest rate + an Annual Loan Fee of $7,500 + a monthly maintenance fee of 0.30% of the actual average monthly balance from the prior month), the interest rate on the Crestmark LOC was 12.94%. The Company recognized $29,000 in interest expense related to the Crestmark LOC in the nine months ended September 30, 2020 and $36,000 in interest expense related to the Crestmark LOC in the nine months ended September 30, 2019. The Company recognized $10,000 in interest expense in the three months ended September 30, 2020 and $11,000 in interest expense in the three months ended September 30, 2019. Given the nature of the administration of the Crestmark LOC, at September 30, 2020, the Company had $0 in accrued interest expense related to the Crestmark LOC, and there is $0 in additional availability under the Crestmark LOC. At September 30, 2020, the balance on the Crestmark LOC was $208,000 and as of December 31, 2019, the balance on the Crestmark LOC was $337,000. EQUIPMENT LOAN WITH CRESTMARK On May 1, 2017, the Company entered into term loan with Crestmark in the amount of $38,000 related to the purchase of manufacturing equipment. The equipment loan is collateralized by a first security interest in a specific piece of manufacturing equipment. The Company executed an amendment to its LSA and Promissory Note with Crestmark. The amendments addressed the inclusion of the term loan into the LSA and an extension of the Crestmark LOC. No terms of the Crestmark LOC were changed in the amendment. The interest rate on the term loan was the WSJ Prime Rate plus 3%; or 6.25%. The loan was satisfied in the quarter ended September 30, 2020. The Company incurred minimal interest expense in the nine months ended September 30, 2020 related to the Equipment Loan and less than $1,000 in interest expense in the nine months ended September 30, 2019. The Company incurred minimal interest expense in the three months ended September 30, 2020 and less than $1,000 in interest expense in the three months ended September 30, 2019. The balance on the Equipment Loan is $0 at September 30, 2020 and $7,000 at December 31, 2019. 2019 TERM LOAN WITH CHEROKEE On February 25, 2019 (the “Closing Date”), the Company entered into an agreement dated (and effective) February 13, 2019 (the “Agreement”) with Cherokee under which Cherokee provided the Company with a loan in the amount of $200,000 (the “2019 Cherokee Term Loan”). Gross proceeds of the 2019 Cherokee Term Loan were $200,000; $150,000 of which was used to satisfy the 2018 Cherokee Term Loan, $48,000 (which was used to pay a portion of the $75,000 principal reduction payment; with the remaining $27,000 being paid with cash on hand) and $2,000 which was used to pay Cherokee’s legal fees in connection with the financing. In connection with the 2019 Cherokee Term Loan, the Company issued 200,000 restricted shares of common stock to Cherokee in the three months ended March 31, 2019. The annual interest rate under the 2019 Cherokee Term Loan is 18% (fixed) paid quarterly in arrears with the first interest payment being made on May 15, 2019 and the latest interest payment being made in September 2020. The loan was required to be paid in full on February 15, 2020. On February 24, 2020, the Company completed a transaction related to a one-year Extension Agreement dated February 14, 2020 (the “Extension Agreement”) with Cherokee under which Cherokee extended the due date of the 2019 Term Loan to February 15, 2021. No terms of the facility were changed under the Extension Agreement. For consideration of the Extension Agreement, the Company issued 1.5% of the $200,000 principal, or $3,000, in 42,857 restricted shares of the Company’s common stock to Cherokee. The Company also incurred a penalty in the amount of $20,000 which was added to the principal balance of the Cherokee Term Loan. In the event of default, this includes, but is not limited to, the Company’s inability to make any payments due under the Agreement, Cherokee has the right to increase the interest rate on the financing to 20% and Cherokee will automatically add a delinquent payment penalty of $20,000 to the outstanding principal. The Company recognized $30,000 in interest expense related to the 2019 Cherokee Term Loan in the nine months ended September 30, 2020 (of which $1,000 is debt issuance cost amortization recorded as interest expense) and $35,000 in interest expense (of which $11,000 was debt issuance costs recorded as interest expense) in the nine months ended September 30, 2019. The Company recognized $10,000 in interest expense related to the 2019 Cherokee Term Loan in the three months ended September 30, 2020 (of which $0 is debt issuance cost amortization recorded as interest expense) and $13,000 in interest expense in the three months ended September 30, 2019, (of which $4,000 was debt issuance cost amortization recorded as interest expense). The Company had $6,000 in accrued interest expense at September 30, 2020 related to the Cherokee Term Loan and $5,000 in accrued interest expense at September 30, 2019. The balance on the 2019 Term Loan is $220,000 at September 30, 2020 (including the $20,000 penalty referenced above). SBA PAYCHECK PROTECTION LOAN (PPP LOAN) On April 22, 2020, we entered into a Promissory Note (“PPP Note”) for $332,000 with Crestmark Bank, pursuant to the U.S. Small Business Administration Paycheck Protection Program under Title I of the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act passed by Congress and signed into law on March 27, 2020. The PPP Note is unsecured, bears interest at 1.00% per annum, with principal and interest payments deferred for the first six months, and matures in two years. The principal is payable in equal monthly installments, with interest, beginning on the first business day after the end of the deferment period. The PPP Note may be forgiven subject to the terms of the Paycheck Protection Program. Additionally, certain acts of the Company, including but not limited to: (i) the failure to pay any taxes when due, (ii) becoming the subject of a proceeding under any bankruptcy or insolvency law, (iii) making an assignment for the benefit of creditors, or (iv) reorganizing, merging, consolidating or otherwise changing ownership or business structure without PPP Lender’s prior written consent, are considered events of default which grant Lender the right to seek immediate payment of all amounts owing under the PPP Note. The Company intends to apply for forgiveness of loan in the amount of $332,000 under PPP guidelines after 24 weeks, or after October 2020. The Company recognized $2,000 in interest expense related to the PPP loan in the nine and three months ended September 30, 2020. The $2,000 was accrued at September 30, 2020 and is eligible for forgiveness under PPP guidelines. OTHER DEBT INFORMATION In addition to the debt indicated previously, previous debt facilities (paid in full via refinance or conversion into equity) had financial impact on the nine months ended September 30, 2020. More specifically: 2018 TERM LOAN WITH CHEROKEE On March 2, 2018, the Company entered into a one-year Loan Agreement made as of February 15, 2018 (the “Closing Date”) with Cherokee under which Cherokee provided the Company with $150,000 (the “2018 Cherokee Term Loan”). The proceeds from the 2018 Cherokee Term Loan were used by the Company to pay a $75,000 principal reduction payment to Cherokee that was due on February 15, 2018 and $1,000 in legal fees incurred by Cherokee. Net proceeds (to be used for working capital and general business purposes) were $74,000. The annual interest rate for the 2018 Cherokee Term Loan was 12% to be paid quarterly in arrears with the first interest payment being made on May 15, 2018. In connection with the 2018 Cherokee Term Loan, the Company issued 150,000 restricted shares of common stock to Cherokee on March 8, 2018. The 2018 Cherokee Term Loan was required to be paid in full on February 15, 2019 and was paid in full via refinance into the 2019 Term Loan with Cherokee. The Company recognized $3,000 in interest expense related to the 2018 Cherokee Term Loan in the nine months ended September 30, 2019 (of which $2,000 was debt issuance costs recorded as interest expense). The company recognized $0 of interest expense in the 3 months ended September 30, 2019. As of September 30, 2020 and December 31, 2019, the balance on the 2018 Cherokee Term Loan was $0 as the Company paid the facility in full with proceeds from the 2019 Term Loan with Cherokee. JULY 2019 TERM LOAN WITH CHAIM DAVIS, ET AL On July 31, 2019, the Company entered into loan agreements with two (2) individuals, under which each individual provided the Company the sum of $7,000 (for a total of $14,000) to be used in connection with certain fees and/or expenses related legal matters of the Company (the “July 2019 Term Loan”). One of the individuals was our Chairman of the Board Chaim Davis. There were no expenses related to the July 2019 Term Loan. The first payment of principal and interest was due on September 1, 2019 and the last payment of principal and interest was due on October 1, 2020. The annual interest rate of the July 2019 Term Loan was fixed at 7.5% (which represented the WSJ Prime Rate when the loan agreements were executed) +2.0%. All amounts loaned under the July 2019 Term Loan were converted into equity as part of a private placement closed in February 2020. Any interest that was incurred under the facility in 2019 and up to the conversion in February 2020 was forgiven by the holders. The balance on the July 2019 Term Loan was $0 at September 30, 2020 and $10,000 at December 31, 2019. DECEMBER 2019 CONVERTIBLE NOTE On December 31, 2019, the Company entered into a Convertible Note with one individual in the amount of $25,000 (“2019 Convertible Note”). Under the terms of the 2019 Convertible Note, the principal amount would convert into equity within 120 days of the origination of the note or upon the close of a contemplated private placement in early 2020, whichever was sooner. The 2019 Convertible Note did not bear any interest and was ultimately converted into equity as part of a private placement closed in February 2020. The balance on the 2019 Convertible Note was $0 at September 30, 2020 and $25,000 at December 31, 2019. | The Company’s Line of Credit and Debt consisted of the following as of December 31, 2019 and December 31, 2018: December 31, 2019 December 31, 2018 Loan and Security Agreement with Cherokee Financial, LLC $ 900,000 $ 975,000 Crestmark Line of Credit: 337,000 502,000 Crestmark Equipment Term Loan: 7,000 19,000 2018 Term Loan with Cherokee Financial LLC: 0 150,000 2019 Term Loan with Cherokee Financial, LLC: 200,000 0 July 2019 Term Loan with Chaim Davis, et al: 10,000 0 December 2019 Convertible Note: 25,000 0 $ 1,479,000 $ 1,646,000 Less debt discount & issuance costs (Cherokee Financial, LLC loans) (17,000 ) (111,000 ) Total debt, net $ 1,462,000 $ 1,535,000 Current portion $ 354,000 $ 739,000 Long-term portion, net of current portion $ 1,125,000 $ 796,000 At December 31, 2019, the following are the debt maturities for each of the next five years: 2020 $ 369,000 2021 1,110,000 2022 0 2023 0 2024 0 $ 1,479,000 LOAN AND SECURITY AGREEMENT WITH CHEROKEE FINANCIAL, LLC. (“CHEROKEE”) On March 26, 2015, the Company entered into a LSA with Cherokee (the “Cherokee LSA”). The debt with Cherokee is collateralized by a first security interest in real estate and machinery and equipment. Under the Cherokee LSA, the Company was provided the sum of $1,200,000 in the form of a 5-year Note at a fixed annual interest rate of 8%. The Company received net proceeds of $80,000 after $1,015,000 of debt payments, and $105,000 in other expenses and fees. The expenses and fees (with the exception of the interest expense) are being deducted from the balance on the Cherokee LSA and are being amortized over the term of the debt (in accordance with ASU No. 2015-03). The Company is making interest only payments quarterly on the Cherokee LSA, with the first interest payment paid on May 15, 2015. The Company is also required to make an annual principal reduction payment of $75,000 on each anniversary of the date of the closing; with the first principal reduction payment being made on February 15, 2016 and the most recent principal reduction payment being made on February 15, 2019; partially with proceeds received from a new, larger term loan with Cherokee (See 2019 Term Loan with Cherokee within this Note E). In addition to the 8% interest, the Company pays Cherokee a 1% annual fee for oversight and administration of the loan. This oversight fee is paid in cash and is paid contemporaneously with the quarterly interest payments. The Company can pay off the Cherokee loan at any time with no penalty; except that a 1% administration fee would be required to be paid to Cherokee to close out all participations. The Company recognized $166,000 in interest expense related to the Cherokee LSA in Fiscal 2019 (of which $94,000 is debt issuance cost amortization recorded as interest expense and $173,000 in interest expense related to the Cherokee LSA in Fiscal 2018 (of which $94,000 is debt issuance cost amortization recorded as interest expense). The Company had $15,000 in accrued interest expense at December 31, 2019 and $13,000 in accrued interest expense at December 31, 2018. As of December 31, 2019, the balance on the Cherokee LSA was $900,000; however, the discounted balance was $884,000. As of December 31, 2018, the balance on the Cherokee LSA was $975,000; however the discounted balance was $866,000. A final balloon payment was due on February 15, 2020. See Note J – Subsequent Events for information regarding the extension of the Cherokee LSA. LINE OF CREDIT WITH CRESTMARK BANK (“CRESTMARK”) On June 29, 2015 (the “Closing Date”), the Company entered into a Loan and Security Agreement (“LSA”) with Crestmark related to a revolving line of credit (the “Crestmark LOC”). The Crestmark LOC is used for working capital and general corporate purposes and expired on June 22, 2020. (See Note J- Subsequent Event for information related to the extension of the Crestmark LOC). The Crestmark LOC provided the Company with a revolving line of credit up to $1,500,000 (“Maximum Amount”) with a minimum loan balance requirement of $500,000. At December 30, 2019, the Company did not meet this minimum loan balance requirement as our balance was $337,000. Under the LSA, Crestmark has the right to calculate interest on the minimum balance requirement rather than the actual balance on the Crestmark LOC. The Crestmark LOC is secured by a first security interest in the Company’s inventory, and receivables and security interest in all other assets of the Company (in accordance with permitted prior encumbrances). The Maximum Amount is subject to an Advance Formula comprised of: 1) 90% of Eligible Accounts Receivables (excluding, receivables remaining unpaid for more than 90 days from the date of invoice and sales made to entities outside of the United States), and 2) up to 40% of eligible inventory plus up to 10% of Eligible Generic Packaging Components not to exceed the lesser of $350,000, or 100% of Eligible Accounts Receivable. However, as a result of an amendment executed on June 25, 2018, the amount available under the inventory component of the line of credit was changed to 40% of eligible inventory plus up to 10% of Eligible Generic Packaging Components not to exceed the lesser of $250,000 (“Inventory Sub-Cap Limit”) or 100% of Eligible Accounts Receivable. In addition, the Inventory Sub-Cap Limit is being permanently reduced by $10,000 per month as of July 1, 2018 and thereafter on the first day of the month until the Inventory Sub-Cap Limit is reduced to $0, (making the Crestmark LOC an accounts-receivable based line only). This means that as of December 31, 2019, the Inventory Sub-Cap Limit is only $70,000 and that our availability related to inventory is significantly reduced. So long as any obligations are due to Crestmark (and until the extension executed on June 22, 2020, the Company had to comply with a minimum Tangible Net Worth (“TNW”) Covenant. As a result of an amendment executed in June 2019, the TNW covenant was reduced from $150,000 to $(600,000) effective with the quarter ended June 30, 2019. TNW is still defined as: Total Assets less Total Liabilities less the sum of (i) the aggregate amount of non-trade accounts receivables, including accounts receivables from affiliated or related persons, (ii) prepaid expenses, (iii) deposits, (iv) net lease hold improvements, (v) goodwill and (vi) any other asset that would be treated as an intangible asset under GAAP; plus Subordinated Debt. Subordinated Debt means any and all indebtedness presently or in the future incurred by the Company to any creditor of the Company entering into a written subordination agreement with Crestmark. The Company was not in compliance with the TNW covenant at December 30, 2019 and with the exception of the quarter ended June 30, 2019; the Company has not been in compliance with prior TNW covenants since December 31, 2017. On June 22, 2020, we extended the Crestmark LOC and as a result of this extension, the TNW covenant was removed effective with the quarter ending June 30, 2020. We were not in compliance with the TNW covenant at December 31, 2019 and with the exception of the quarter ended June 30, 2019; we have not been in compliance with prior TNW covenants since December 31, 2017. We are in the process of obtaining a waiver from Crestmark Bank in connection with the non-compliance with the TNW covenant at December 31, 2019. If we are not compliant with the TNW covenant for the quarter ending March 31, 2020, we also expect to receive a waiver from Crestmark Bank. We have received a waiver from Crestmark related to our non-compliance with the TNW covenant. The Company expects to be charged a fee of $5,000 for the receipt of this latest waiver (as this has been the fee charged for all prior waivers) and the March 31, 2020 waiver (if needed). In the event of a default of the LSA, which includes but is not limited to, failure of the Company to make any payment when due and non-compliance with the TNW covenant (that is not waived by Crestmark and until the extension was executed on June 22, 2020), Crestmark is permitted to charge an Extra Rate. The Extra Rate is the Company’s then current interest rate plus 12.75% per annum. Interest on the Crestmark LOC is at a variable rate based on the Prime Rate plus 3% with a floor of 5.25%. As of December 31, 2019, the interest only rate on the Crestmark LOC was 7.75%; however, as of the date of this report, the interest only rate on the Crestmark LOC was 6.25% due to a decrease in the Prime Rate effective March 15, 2020. As of the date of this report, with all fees considered (the interest rate + an Annual Loan Fee of $7,500 + a monthly maintenance fee of 0.30% of the actual average monthly balance from the prior month), the interest rate on the Crestmark LOC was 12.32%. The Company recognized $46,000 in interest expense related to the Crestmark LOC in Fiscal 2019 ($0 of which is debt issuance cost amortization recorded as interest expense) and $76,000 in interest expense related to the Crestmark LOC in Fiscal 2018 (of which $15,000 is debt issuance cost amortization recorded as interest expense). Given the nature of the administration of the Crestmark LOC, at December 31, 2019, the Company had $0 in accrued interest expense related to the Crestmark LOC, and there is $0 in additional availability under the Crestmark LOC. As of December 31, 2019, the balance on the Crestmark LOC was $337,000, and as of December 31, 2018, the balance on the Crestmark LOC was $502,000. EQUIPMENT LOAN WITH CRESTMARK On May 1, 2017, the Company entered into term loan with Crestmark in the amount of $38,000 related to the purchase of manufacturing equipment. The equipment loan is collateralized by a first security interest in a specific piece of manufacturing equipment. The Company executed an amendment to its LSA and Promissory Note with Crestmark. The amendments addressed the inclusion of the term loan into the LSA and an extension of the Crestmark LOC. No terms of the Crestmark LOC were changed in the amendment. The interest rate on the term loan is the WSJ Prime Rate plus 3%; or 6.25% as of the date of this report. The Company incurred $1,000 in interest expense in Fiscal 2019 and $2,000 in interest expense in Fiscal 2018 related to the Equipment Loan. The balance on the Equipment Loan is $7,000 at December 31, 2019 and $19,000 at December 31, 2018. 2018 TERM LOAN WITH CHEROKEE On March 2, 2018, the Company entered into a one-year Loan Agreement made as of February 15, 2018 (the “Closing Date”) with Cherokee under which Cherokee provided the Company with $150,000 (the “2018 Cherokee Term Loan”). The proceeds from the 2018 Cherokee Term Loan were used by the Company to pay a $75,000 principal reduction payment to Cherokee that was due on February 15, 2018 and $1,000 in legal fees incurred by Cherokee. Net proceeds (to be used for working capital and general business purposes) were $74,000. The annual interest rate for the 2018 Cherokee Term Loan was 12% to be paid quarterly in arrears with the first interest payment being made on May 15, 2018. The 2018 Cherokee Term Loan was required to be paid in full on February 15, 2019. In connection with the 2018 Cherokee Term Loan, the Company issued 150,000 restricted shares of common stock to Cherokee on March 8, 2018. The Company recognized $3,000 in interest expense related to the 2018 Cherokee Term Loan in Fiscal 2019, (of which $2,000 was debt issuance cost amortization recorded as interest expense), and $33,000 in interest expense related to the Cherokee Term Loan in Fiscal 2018 (of which $19,000 was debt issuance costs recorded as interest expense). At December 31, 2019, the balance on the 2018 Cherokee Term Loan was $0 (as it was refinanced in February 2019), and at December 31, 2018, the balance on the 2018 Cherokee Term Loan was $150,000. 2019 TERM LOAN WITH CHEROKEE On February 25, 2019 (the “Closing Date”), the Company entered into an agreement dated (and effective) February 13, 2019 (the “Agreement”) with Cherokee under which Cherokee provided the Company with a loan in the amount of $200,000 (the “2019 Cherokee Term Loan”). Gross proceeds of the 2019 Cherokee Term Loan were $200,000; $150,000 of which was used to satisfy the 2018 Cherokee Term Loan, $48,000 (which was used to pay a portion of the $75,000 principal reduction payment; with the remaining $27,000 being paid with cash on hand) and $2,000 which was used to pay Cherokee’s legal fees in connection with the financing. The annual interest rate under the 2019 Cherokee Term Loan is 18% (fixed) paid quarterly in arrears with the first interest payment being made on May 15, 2019 and the latest interest payment being made in November 2019. The loan was required to be paid in full on February 15, 2020. In connection with the 2019 Cherokee Term Loan, the Company issued 200,000 restricted shares of common stock to Cherokee in the three months ended March 31, 2019. In the event of default, this includes, but is not limited to, the Company’s inability to make any payments due under the Agreement, Cherokee has the right to increase the interest rate on the financing to 20%, automatically add a delinquent payment penalty of $20,000 to the outstanding principal and the Company would be required to issue an additional 200,000 shares of restricted common stock. The Company recognized $48,000 in interest expense related to the 2019 Cherokee Term Loan in Fiscal 2019, (of which $15,000 is debt issuance cost amortization recorded as interest expense), and $0 in interest expense in Fiscal 2018 (as the 2019 Cherokee Term Loan was not yet in place). The Company had $9,000 in accrued interest related to the 2019 Cherokee Term Loan at December 31, 2019 and $0 in accrued interest expense at December 31, 2018 (as the 2019 Cherokee Term Loan was not yet in place). The balance on the 2019 Term Loan is $200,000 at December 31, 2019 (however, the discounted balance is $199,000), and $0 at December 31, 2018 (as the facility was not in place at December 31, 2018). See Note J – Subsequent Event for information regarding the extension of the 2019 Term Loan. JULY 2019 TERM LOAN WITH CHAIM DAVIS, ET AL On July 31, 2019, the Company entered into loan agreements with two (2) individuals, under which each individual provided the Company the sum of $7,000 (for a total of $14,000) to be used in connection with certain fees and/or expenses related legal matters of the Company (the “July 2019 Term Loan”). One of the individuals was our Chairman of the Board Chaim Davis. There were no expenses related to the July 2019 Term Loan. The first payment of principal and interest was due on September 1, 2019 and the last payment of principal and interest is due on October 1, 2020. The annual interest rate of the July 2019 Term Loan is fixed at 7.5% (which represented the WSJ Prime Rate +2.0%). The Company incurred less than $1,000 in interest expense in Fiscal 2019 and $0 in interest expense in Fiscal 2018 (as the facility was not in place until July 2019). The balance on the July 2019 Term Loan was $10,000 at December 31, 2019, and $0 at December 31, 2018 (as the facility was not in place at December 31, 2018). DECEMBER 2019 CONVERTIBLE NOTE On December 31, 2019, the Company entered into a Convertible Note with one individual in the amount of $25,000 (“2019 Convertible Note”). Under the terms of the 2019 Convertible Note, the principal amount would convert into equity within 120 days of the origination of the note or upon the close of a contemplated private placement in early 2020, whichever was sooner. The 2019 Convertible Note did not bear any interest and was ultimately converted into equity as part of a private placement closed in February 2020. The balance on the 2019 Convertible Note was $25,000 at December 31, 2019 and $0 at December 31, 2018 (as the convertible note was not in place at December 31, 2018). |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | The Company follows ASC 740 “Income Taxes” (“ASC 740”) which prescribes the asset and liability method whereby deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities, and are measured using the enacted laws and tax rates that will be in effect when the differences are expected to reverse. The measurement of deferred tax assets is reduced, if necessary, by a valuation allowance for any tax benefits that are not expected to be realized. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the period that such tax rate changes are enacted. Under ASC 740, tax benefits are recorded only for tax positions that are more likely than not to be sustained upon examination by tax authorities. The amount recognized is measured as the largest amount of benefit that is greater than 50 percent likely to be realized upon ultimate settlement. Unrecognized tax benefits are tax benefits claimed in the Company’s tax returns that do not meet these recognition and measurement standards. On December 22, 2017, the Tax Reform Act was signed into law. Among the provisions, the Tax Reform ACT reduces the U.S. federal corporate income tax rate from a maximum of 35% to a flat 21% effective January 1, 2018, requires companies to pay a one-time transition tax on deemed repatriated earnings of certain foreign subsidiaries that were previously tax deferred, and creates new taxes on certain foreign sourced earnings. At December 31, 2019, the Company has completed its accounting for the tax effects of the enactment of the Tax Reform Act. The Company has finalized the tax effects on its existing deferred tax balances and the one-time transition tax under Staff Accounting Bulletin No. 118 ("SAB 118"). The Company has also included current year impacts of the Tax Reform Act in our tax provision. Deferred income tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to reverse. On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was enacted in response to the COVID-19 pandemic. The CARES Act, among other things, permits NOL carryovers and carrybacks to offset 100% of taxable income for taxable years beginning before 2021. In addition, the CARES Act allows NOLs incurred in tax years 2018, 2019, and 2020 to be carried back to each of the five preceding taxable years to generate a refund of previously paid income taxes. The CARES Act also contains modifications on the limitation of business interest for tax years beginning in 2019 and 2020. The modifications to Section 163(j) increase the allowable interest expense deduction. Any tax benefit as a result of the CARES Act is primarily due to the carryback of net operating losses to prior years and increased interest expense deductions. A reconciliation of the U.S. Federal statutory income tax rate to the effective income tax rate is as follows: Year Ended December 31, 2019 Year Ended December 31, 2018 Tax expense at federal statutory rate (21%) (21%) ) State tax expense, net of federal tax effect 0% 0% Expired NOL 46% 0% Deferred income tax asset valuation allowance (26%) 21% Effective income tax rate (1%) 0% Significant components of the Company’s deferred income tax assets are as follows: December 31, 2019 December 31, 2018 Inventory capitalization $ 8,000 $ 9,000 Inventory allowance 76,000 70,000 Allowance for doubtful accounts 9,000 9,000 Accrued compensation 18,000 22,000 Stock based compensation 168,000 168,000 Deferred wages payable 50,000 43,000 Depreciation – Property, Plant & Equipment (1,000 ) (6,000 ) Net operating loss carry-forward 3,339,000 3,569,000 Total gross deferred income tax assets 3,667,000 3,884,000 Less deferred income tax assets valuation allowance (3,667,000 ) (3,884,000 ) Net deferred income tax assets $ 0 $ 0 The valuation allowance for deferred income tax assets as of December 31, 2019 and December 31, 2018 was $3,667,000 and $3,884,000, respectively. The net change in the deferred income tax assets valuation allowance was $217,000 for Fiscal 2019 and $265,000 for Fiscal 2018. The Company believes that it is more likely than not that the deferred tax assets will not be realized. As of December 31, 2019, the prior three years remain open for examination by the federal or state regulatory agencies for purposes of an audit for tax purposes. At December 31, 2019, the Company had Federal net operating loss carry-forwards for income tax purposes of approximately $3,339,000. The Company’s net operating loss carry-forwards began to expire in 2019 and continue to expire through 2035. In assessing the realizability of deferred income tax assets, management considers whether or not it is more likely than not that some portion or all deferred income tax assets will be realized. The ultimate realization of deferred income tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the projected future taxable income and tax planning strategies in making this assessment. The Company’s ability to utilize the operating loss carry-forwards may be subject to an annual limitation in future periods pursuant to Section 382 of the Internal Revenue Code of 1986, as amended, if future changes in ownership occur. The Company recognizes potential interest and penalties related to income tax positions as a component of the provision for income taxes on operations. The Company does not anticipate that total unrecognized tax benefits will materially change in the next twelve months. |
OTHER INCOME _ EXPENSE
OTHER INCOME / EXPENSE | 12 Months Ended |
Dec. 31, 2019 | |
Other Income and Expenses [Abstract] | |
OTHER INCOME / EXPENSE | Other expense in Fiscal 2019 consisted of interest expense associated with our credit facilities, offset by other income from proceeds for an insurance claim related to our New Jersey facility (a claim that resulted from actions of a service vendor) and a gain on an accrual for a contingent liability. Other expense in Fiscal 2018 consisted of interest expense associated with our credit facilities, offset by other income related to gains on certain liabilities and a small amount of interest income. |
Stock Options and Warrants
Stock Options and Warrants | 9 Months Ended | 12 Months Ended |
Sep. 30, 2020 | Dec. 31, 2019 | |
Stockholders' Equity Note [Abstract] | ||
Stock Options and Warrants | The Company currently has two non-statutory stock option plans, the Fiscal 2001 Non-statutory Stock Option Plan (the “2001 Plan”) and the 2013 Equity Compensation Plan (the “2013 Plan”). Both plans have been adopted by our Board of Directors and approved by our shareholders. Both the 2001 Plan and the 2013 Plan have options available for future issuance. Any common shares issued as a result of the exercise of stock options would be new common shares issued from our authorized issued shares. During the three months ended September 30, 2020, the Company issued 0 options to purchase shares of common stock. During the three months ended September 30, 2019, the Company issued 0 options to purchase shares of stock to any of its non-employee board members. Stock option activity for the nine months ended September 30, 2020 and the nine months ended September 30, 2019 is summarized as follows (the figures contained within the tables below have been rounded to the nearest thousand): Nine months ended September 30, 2020 Nine months ended September 30, 2019 Shares Weighted Average Exercise Price Aggregate Intrinsic Value as of September 30, 2020 Shares Weighted Average Exercise Price Aggregate Intrinsic Value as of September 30, 2019 Options outstanding at beginning of year 2,252,000 $ 0.13 2,222,000 $ 0.13 Granted 0 NA 80,000 $ 0.07 Exercised 0 NA 0 NA Cancelled/expired (110,000 ) $ 0.10 (50,000 ) $ 0.20 Options outstanding at end of period 2,142,000 $ 0.13 $ 398,000 2,252,000 $ 0.13 $ 1,000 Options exercisable at end of period 2,142,000 $ 0.13 2,172,000 $ 0.13 The Company recognized $2,000 in share based payment expense in the nine months ended September 30, 2020 and $4,000 in share based payment expense in the nine months ended September 30, 2019. The Company recognized $0 in share based payment expense in the three months ended September 30, 2020 and $1,000 in share based payment expense in the three months ended September 30, 2019. At September 30, 2020, there was $0 of total unrecognized share based payment expense related to stock options. The following table summarizes weighted-average assumptions using the Black-Scholes option-pricing model used on the date of the grants issued during the nine months ended September 30, 2020 and September 30, 2019: Nine months ended 2020 2019 Volatility NA 85% Expected term (years) NA 10 years Risk-free interest rate NA 2.01% Dividend yield NA 0% Warrants Warrant activity for the nine months ended September 30, 2020 and the nine months ended September 30, 2019 is summarized as follows: Nine months ended September 30, 2020 Nine months ended September 30, 2019 Shares Weighted Average Exercise Price Aggregate Intrinsic Value as of September 30, 2020 Shares Weighted Average Exercise Price Aggregate Intrinsic Value as of September 30, 2019 Warrants outstanding at beginning of year 2,000,000 $ 0.18 2,000,000 $ 0.18 Granted 0 NA 0 NA Exercised 0 NA 0 NA Cancelled/expired (2,000,000 ) $ 0.18 0 NA Warrants outstanding at end of year 0 NA None 2,000,000 $ 0.18 None Warrants exercisable at end of year 0 NA 2,000,000 $ 0.18 In the nine months ended September 30, 2020 and September 30, 2019, the Company recognized $0 in debt issuance and deferred finance costs related to the issuance of warrants. In the three months ended September 30, 2020 and September 30, 2019, the Company recognized $0 in debt issuance and deferred finance costs related to the issuance of warrants. As of September 30, 2020, there was $0 of total unrecognized expense. | [1] Stock option plans: [2] Stock options: As of December 31, 2019, there were 2,252,000 options issued and outstanding under the 2001 Plan. There were no options issued under the 2013 Plan, making the total issued and outstanding options 2,252,000 as of December 31, 2019. Of the total options issued and outstanding, 2,172,000 were fully vested as of December 31, 2019. As of December 31, 2019, there were 1,465,000 options available for issuance under the 2001 Plan and 4,000,000 options available under the 2013 Plan. Stock option activity for Fiscal 2019 and Fiscal 2018 is summarized as follows: (the figures contained within the tables below have been rounded to the nearest thousand) Year Ended December 31,2019 Year Ended December 31, 2018 Shares Weighted Average Exercise Price Aggregate Intrinsic Value as of December 31, 2019 Shares Weighted Average Exercise Price Aggregate Intrinsic Value as of December 31, 2018 Options outstanding at beginning of year 2,222,000 $ 0.13 $ 3,000 2,147,000 $ 0.13 Granted 80,000 $ 0.07 80,000 $ 0.10 Exercised 0 NA 0 NA Cancelled/expired (50,000 ) $ 0.20 (5,000 ) $ 0.26 Options outstanding at end of year 2,252,000 $ 0.14 $ 1,000 2,222,000 $ 0.13 $ 3,000 Options exercisable at end of year 2,172,000 $ 0.13 2,142,000 $ 0.13 The following table presents information relating to stock options outstanding as of December 31, 2019: Options Outstanding Options Exercisable Range of exercise price Shares Weighted average exercise price Weighted average remaining life in years Shares Weighted average exercise price $0.07 - $0.10 365,000 $ 0.09 4.43 285,000 $ 0.09 $0.11 - $0.14 1,485,000 $ 0.12 5.35 1,485,000 $ 0.12 $0.15 - $0.26 402,000 $ 0.18 3.47 402,000 $ 0.18 TOTAL 2,252,000 $ 0.14 4.87 2,172,000 $ 0.13 The following table summarizes weighted-average assumptions using the Black-Scholes option-pricing model used on the date of the grants issued during Fiscal 2019 and Fiscal 2018: Year Ended December 31 2019 2018 Volatility 85% 79% Expected term (years) 10 years 10 years Risk-free interest rate 2.01% 2.90% Dividend yield 0% 0% The Company recognized $6,000 in share based payment expense related to stock options in Fiscal 2019, and $10,000 in share based payment expense related to stock options in Fiscal 2018. As of December 31, 2019, there was approximately $2,000 of total unrecognized share based payment expense related to stock options. This cost is expected to be recognized over 5 months. [3] Warrants: Warrant activity for Fiscal 2018 and Fiscal 2017 is summarized as follows. Any common shares issued as a result of the exercise of warrants would be new common shares issued from our authorized issued shares. Year Ended December 31, 2019 Year Ended December 31, 2018 Shares Weighted Average Exercise Price Aggregate Intrinsic Value as of December 31, 2019 Shares Weighted Average Exercise Price Aggregate Intrinsic Value as of December 31, 2018 Warrants outstanding at beginning of year 2,000,000 $ 0.18 None 2,060,000 $ 0.18 Granted 0 NA 0 NA Exercised 0 NA 0 NA Cancelled/expired (0 ) NA 60,000 $ 0.18 Warrants outstanding at end of year 2,000,000 $ 0.18 None 2,000,000 $ 0.18 None Warrants exercisable at end of year 2,000,000 $ 0.18 2,000,000 $ 0.18 The Company recognized $0 in debt issuance and deferred finance costs related to the issuance of these warrants outstanding in Fiscal 2019 and Fiscal 2018. As of December 31, 2019, there was $0 of total unrecognized debt issuance costs associated with the issuance of the above warrants outstanding. |
Changes in Stockholders' Defici
Changes in Stockholders' Deficit | 9 Months Ended |
Sep. 30, 2020 | |
Stockholders' deficit: | |
Changes in Stockholders' Deficit | The following table summarizes the changes in stockholders’ deficit for the nine month periods ended September 30, 2020 and September 30, 2019: Common Stock Shares Amount Additional Paid in Capital Accumulated Deficit Total Balance – December 31, 2019 32,680,984 $ 327,000 $ 21,437,000 (22,554,000 ) $ (790,000 ) Shares issued in connection with private placement 2,842,856 28,000 171,000 199,000 Shares issued to Cherokee in connection with loan 300,000 3,000 18,000 21,000 Share based payment expense 2,000 2,000 Shares issued for board meeting attendance in lieu of cash 129,636 1,000 30,000 31,000 Net loss (563,000 ) (563,000 ) Balance – September 30, 2020 35,953,476 $ 359,000 $ 21,658,000 $ (23,117,000 ) $ (1,100,000 ) Balance – December 31, 2018 32,279,368 $ 323,000 $ 21,404,000 $ (21,873,000 ) $ (146,000 ) Shares issued to Cherokee in connection with loan 200,000 2,000 12,000 14,000 Shares issued for board meeting attendance in lieu of cash 66,408 5,000 5,000 Share based payment expense 4,000 4,000 Net loss (440,000 ) (440,000 ) Balance-September 30, 2019 32,545,776 $ 325,000 $ 21,425,000 $ (22,313,000 ) $ (563,000 ) PRIVATE PLACEMENT On February 20, 2020, we entered into a Securities Purchase Agreement (the “Purchase Agreement”) with Chaim Davis (the Chairman of our Board of Directors) and certain other accredited investors (the “Investors”), pursuant to which we agreed to issue and sell to the Investors in a private placement (the “Private Placement”), 2,842,857 Units (the “Units”). Each Unit consists of one (1) share of our common stock, par value $0.01 per share (“Common Share”), at a price per Unit of $0.07 (the “Purchase Price”) for aggregate gross proceeds of approximately $199,000. We received net proceeds of $199,000 from the Private Placement as expenses related to the Private Placement were minimal. We did not utilize a placement agent for the Private Placement. We used the net proceeds for working capital and general corporate purposes. The July 2019 Term Loan with Chaim Davis, Et Al and the December 2019 Convertible Note (See Note E); totaling $39,000, were both converted into equity as part of a private placement closed in February 2020. Any interest that was incurred under the July 2019 Term Loan with Chaim Davis, Et in 2019 and up to the conversion in February 2020 was forgiven by the holders and the December 2019 Convertible Note did not bear any interest. We do not intend to register the Units issued under the Private Placement; rather the Units issued will be subject to the holding period requirements and other conditions of Rule 144. The Purchase Agreement contains customary representations, warranties and covenants made solely for the benefit of the parties to the Purchase Agreement. Although our Chairman of the Board was an investor in the Private Placement, the pricing of the Units was determined by the non-affiliate investors. |
COMMITMENTS, CONTINGENCIES AND
COMMITMENTS, CONTINGENCIES AND OTHER MATTERS | 12 Months Ended |
Dec. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS, CONTINGENCIES AND OTHER MATTERS | [1] Operating leases: 2020 $ 37,000 2022 37,000 2022 36,000 2023 1,000 2024 1,000 Thereafter 1,000 $ 113,000 Rent Expense was $46,000 and $43,000 in Fiscal 2019 and Fiscal 2018, respectively. [2] Employment agreements: [3] Legal: ABMC v. Todd Bailey On August 5, 2019, we settled litigation with Todd Bailey; a former Vice President, Sales & Marketing and sales consultant of the Company until December 23, 2016; hereinafter referred to as “Bailey”). The litigation was filed by the Company in the Northern District of New York in February 2017. Our complaint sought damages related to profits and revenues that resulted from actions taken by Bailey related to our customers. The settlement also addressed a counter-claim filed by Bailey in October 2017 (filed originally in Minnesota but, transferred to the Norther District of New York in January 2019). Bailey was seeking deferred commissions in the amount of $164,000 that he alleged were owed to him by the Company. These amounts were originally deferred under a deferred compensation program initiated in 2013; a program in which Bailey was one of the participants. We believed the amount sought was not due to Bailey given the actions indicated in our litigation. Under the settlement, both parties elected to resolve the litigation and settle any and all claims made within the litigation. Neither party admitted to any of the allegations contained within the ABMC v. Baily litigation (including any allegations made by Bailey in his counterclaim). Both parties also agreed to dismiss all claims made against each other. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2019 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | PRIVATE PLACEMENT On February 20, 2020, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with Chaim Davis (the Chairman of our Board of Directors) and certain other accredited investors (the “Investors”), pursuant to which the Company agreed to issue and sell to the Investors in a private placement (the “Private Placement”), 2,842,857 Units (the “Units”). Each Unit consists of one (1) share of the Company’s common stock, par value $0.01 per share (“Common Share”), at a price per Unit of $0.07 (the “Purchase Price”) for aggregate gross proceeds of approximately $199,000. The Company received net proceeds of $199,000 from the Private Placement as expenses related to the Private Placement were minimal. The Company did not utilize a placement agent for the Private Placement. The Company used the net proceeds for working capital and general corporate purposes. The Company does not intend to register the Units issued under the Private Placement; rather the Units issued will be subject to the holding period requirements and other conditions of Rule 144. CHEROKEE FINANCIAL LLC LOAN EXTENSIONS On February 24, 2020 (the “Closing Date”), the Company completed a transaction related to a one-year Extension Agreement dated February 14, 2020 (the “Extension Agreement”) with Cherokee under which Cherokee extended the due date of the Company’s credit facilities (a $900,000 (mortgage) Term Note and a $200,000 2019 Term Loan) to February 15, 2021. No terms of either facility were changed under the Extension Agreement. For consideration of the Extension Agreement, the Company issued 1.5% of the $200,000 principal, or $3,000, in 42,857 restricted shares of the Company’s common stock to Cherokee and, 2% of the $900,000 principal, or $18,000, in 257,143 restricted shares of the Company’s common stock to Cherokee on behalf of their investors. The Company also paid Cherokee’s legal fees in the amount of $1,000. COVID-19 On March 11, 2020, the World Health Organization declared a pandemic related to the rapidly spreading COVID-19 outbreak, which has led to a global health emergency. The extent of the public-health impact of the outbreak is currently unknown and rapidly evolving, and the related health crisis could adversely affect the global economy, resulting in an economic downturn. Any disruption of the Company’s facilities or those of our suppliers could likely adversely impact the Company’s operations. Currently, there is significant uncertainty relating to the potential effect of the novel coronavirus on our business. DISTRIBUTION OF COVID-19 RAPID TEST On March 23, 2020, the Company announced in a press releases that it began marketing (on March 17, 2020), via a distribution partnership, a Rapid Test to detect Covid-19 antibodies in whole blood, serum or plasma.. The test is not available for consumer use and is being marketed in full compliance with the March 16, 2020 Emergency Use Authorization (“EUA”) policy set forth by the FDA. An EUA was issued by FDA on May 29, 2020. While The Company does expect the marketing of the Covid-19 test to positively impact its revenues in Fiscal 2021, the Company does not yet know the full extent of the positive impact of COVID-19 test sales on its business, its financial condition and results of operations. The extent to which sales of the COVID-19 test may impact the Company’s business, operating results, financial condition, or liquidity in the future will depend on future developments which are evolving and highly uncertain including the duration of the outbreak and the need for antibody testing in the future. EXTENSION OF THE CRESTMARK LINE OF CREDIT On June 22, 2020, the Company extended its line of credit with Crestmark Bank extending the line of credit until June 22, 2021. All terms and conditions of the line of credit remain unchanged under the extension period with the exception of the following, 1) the maximum availability under the line of credit was reduced from $1,500,000 to $1,000,000, 2) availability under the line of credit is based on receivables only (under the same terms), 3) the requirement for field audits of the Company was removed, and 4) the Tangible Net Worth (TNW) covenant was removed. SBA PAYCHECK PROTECTION LOAN (PPP LOAN) On April 22, 2020, the Company entered into a Promissory Note (“PPP Note”) for $332,000 with Crestmark Bank, pursuant to the U.S. Small Business Administration Paycheck Protection Program under Title I of the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act passed by Congress and signed into law on March 27, 2020. The PPP Note is unsecured, bears interest at 1.00% per annum, with principal and interest payments deferred for the first six months, and matures in two years. The principal is payable in equal monthly installments, with interest, beginning on the first business day after the end of the deferment period. The PPP Note may be forgiven subject to the terms of the Paycheck Protection Program. Additionally, certain acts of the Company, including but not limited to: (i) the failure to pay any taxes when due, (ii) becoming the subject of a proceeding under any bankruptcy or insolvency law, (iii) making an assignment for the benefit of creditors, or (iv) reorganizing, merging, consolidating or otherwise changing ownership or business structure without PPP Lender’s prior written consent, are considered events of default which grant Lender the right to seek immediate payment of all amounts owing under the PPP Note. |
SEGMENT AND GEOGRAPHIC INFORMAT
SEGMENT AND GEOGRAPHIC INFORMATION | 12 Months Ended |
Dec. 31, 2019 | |
Segment Reporting [Abstract] | |
SEGMENT AND GEOGRAPHIC INFORMATION | The Company operates in one reportable segment. All of the Company’s long-lived assets are located within the United States. Information concerning net sales by principal geographic location is as follows: Year Ended December 31, 2019 Year Ended December 31, 2018 United States $ 3,189,000 $ 3,411,000 North America (not domestic) 11,000 56,000 Europe 108,000 133,000 Asia/Pacific Rim 13,000 25,000 South America 344,000 246,000 Africa 0 1,000 $ 3,655,000 $ 3,872,000 |
Basis of Reporting (Policies)
Basis of Reporting (Policies) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2020 | Dec. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Cash equivalents | The Company considers all highly liquid financial instruments purchased with a maturity of three months or less to be cash equivalents. | |
Accounts Receivable | Accounts receivable consists of mainly trade receivables due from customers for the sale of our products. Payment terms vary on a customer-by-customer basis, and currently range from cash on delivery to net 60 days. Receivables are considered past due when they have exceeded their payment terms. Accounts receivable have been reduced by an estimated allowance for doubtful accounts. The Company estimates its allowance for doubtful accounts based on facts, circumstances and judgments regarding each receivable. Customer payment history and patterns, length of relationship with the customer, historical losses, economic and political conditions, trends and individual circumstances are among the items considered when evaluating the collectability of the receivables. Accounts are reviewed regularly for collectability and those deemed uncollectible are written off. At December 31, 2019 and December 31, 2018, the Company had an allowance for doubtful accounts of $34,000 and $36,000, respectively. | |
Inventory | Inventory is stated at the lower of cost or net realizable value. Work in process and finished goods are comprised of labor, overhead and raw material costs. Labor and overhead costs are determined on a rolling average cost basis and raw materials are determined on an average cost basis. At December 31, 2019 and December 31, 2018, the Company established an allowance for slow moving and obsolete inventory of $291,000 and $268,000, respectively. | |
Income taxes | The Company follows ASC 740 “Income Taxes” (“ASC 740”) which prescribes the asset and liability method whereby deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities, and are measured using the enacted laws and tax rates that will be in effect when the differences are expected to reverse. The measurement of deferred tax assets is reduced, if necessary, by a valuation allowance for any tax benefits that are not expected to be realized. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the period that such tax rate changes are enacted. Under ASC 740, tax benefits are recorded only for tax positions that are more likely than not to be sustained upon examination by tax authorities. The amount recognized is measured as the largest amount of benefit that is greater than 50 percent likely to be realized upon ultimate settlement. Unrecognized tax benefits are tax benefits claimed in the Company’s tax returns that do not meet these recognition and measurement standards. On December 22, 2017, the Tax Reform Act was signed into law. Among the provisions, the Tax Reform ACT reduces the U.S. federal corporate income tax rate from a maximum of 35% to a flat 21% effective January 1, 2018, requires companies to pay a one-time transition tax on deemed repatriated earnings of certain foreign subsidiaries that were previously tax deferred, and creates new taxes on certain foreign sourced earnings. At December 31, 2019, the Company has completed its accounting for the tax effects of the enactment of the Tax Reform Act. The Company has finalized the tax effects on its existing deferred tax balances and the one-time transition tax under Staff Accounting Bulletin No. 118 ("SAB 118"). The Company has also included current year impacts of the Tax Reform Act in our tax provision. Deferred income tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to reverse. | |
Depreciation and amortization | Property, plant and equipment are depreciated on the straight-line method over their estimated useful lives; generally 3-5 years for equipment and 30 years for buildings. Leasehold improvements and capitalized lease assets are amortized by the straight-line method over the shorter of their estimated useful lives or the term of the lease. Intangible assets include the cost of patent applications, which are deferred and charged to operations over 19 years. The accumulated amortization of patents is $190,000 at December 31, 2019 and $182,000 at December 31, 2018. Annual amortization expense of such intangible assets is expected to be $7,000 per year for the next 5 years. | |
Revenue recognition | In Fiscal 2018, the Company elected the Modified Retrospective Method (the "Cumulate Effect Method") to comply with ASU 2014-09. The Cumulative Effect Method does not affect the amounts for the prior periods, but requires that the current period be reported in accordance with ASU 2014-09. ASU 2014-09 was adopted on January 1, 2018 which was the first day of the Company's 2018 fiscal year. There was no material impact on the Company’s financial position or results of operations. Product returns, discounts and allowances are variable consideration and are recorded as a reduction of revenue in the same period that the related sale is recorded. The Company has reviewed the overall sales transactions for variable consideration and has determined that these costs are not significant. The Company has not experienced any impairment losses, has no future performance obligations and does not capitalize costs to obtain or fulfill contracts. | |
Shipping and handling | Shipping and handling fees charged to customers are included in net sales, and shipping and handling costs incurred by the Company, to the extent of those costs charged to customers, are included in cost of sales. | |
Research and development | Research and development (“R&D”) costs are charged to operations when incurred. These costs include salaries, benefits, travel, costs associated with regulatory applications, supplies, depreciation of R&D equipment and other miscellaneous expenses. | |
Net loss per common share | Potential common shares outstanding as of December 31, 2019 and 2018: December 31, 2019 December 31, 2018 Warrants 2,000,000 2,000,000 Options 2,252,000 2,222,000 Total 4,252,000 4,222,000 For Fiscal 2019 and Fiscal 2018, the number of securities not included in the diluted loss per share was 4,252,000 and 4,222,000, respectively, as their effect was anti-dilutive due to a net loss in each year. | |
Use of estimates | ● estimates of the fair value of stock options and warrants at date of grant; and ● estimates of accounts receivable reserves; and ● estimates of the inventory reserves; and ● estimates of accruals and liabilities; and ● deferred tax valuation. The fair value of stock options issued to employees, members of our Board of Directors, and consultants and of warrants issued in connection with debt financings is estimated on the date of grant based on the Black-Scholes options-pricing model utilizing certain assumptions for a risk free interest rate; volatility; and expected remaining lives of the awards. The assumptions used in calculating the fair value of share-based payment awards represent management's best estimates, but these estimates involve inherent uncertainties and the application of management judgment. As a result, if factors change and the Company uses different assumptions, the Company's equity-based compensation expense could be materially different in the future. In addition, the Company is required to estimate the expected forfeiture rate and only recognize expense for those shares expected to vest. In estimating the Company's forfeiture rate, the Company analyzed its historical forfeiture rate, the remaining lives of unvested options, and the amount of vested options as a percentage of total options outstanding. If the Company's actual forfeiture rate is materially different from its estimate, or if the Company reevaluates the forfeiture rate in the future, the equity-based compensation expense could be significantly different from what we have recorded in the current period. Actual results may differ from estimates and assumptions of future events. | |
Impairment of long-lived assets | The Company records impairment losses on long-lived assets used in operations when events and circumstances indicate that the assets might be impaired and the undiscounted cash flows estimated to be generated by those assets are less than the carrying amounts of those assets. The Company has performed an analysis of the undiscounted cash flows expected to be generated from the Company’s fixed assets and intangibles. Based on the Company’s analysis, the Company believes the carrying value of these assets are recoverable and an impairment does not exist. | |
Financial Instruments | Estimated fair value of financial instruments is determined using available market information. In evaluating the fair value information, considerable judgment is required to interpret the market data used to develop the estimates. The use of different market assumptions and/or different valuation techniques may have a material effect on the estimated fair value amounts. Accordingly, the estimates of fair value presented herein may not be indicative of the amounts that could be realized in a current market exchange. ASC Topic 820, “Fair Value Measurements and Disclosures” (“ASC Topic 820”) establishes a hierarchy for ranking the quality and reliability of the information used to determine fair values. ASC Topic 820 requires that assets and liabilities carried at fair value be classified and disclosed in one of the following three categories: Level 1: Unadjusted quoted market prices in active markets for identical assets or liabilities. Level 2: Unadjusted quoted prices in active markets for similar assets or liabilities, unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs other than quoted prices are observable for the asset or liability. Level 3: Unobservable inputs for the asset or liability. The Company endeavors to utilize the best available information in measuring fair value. Financial assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement. The following methods and assumptions were used by the Company in estimating its fair value disclosures for financial instruments: Cash —The carrying amount reported in the balance sheet for cash and cash equivalents approximates its fair value due to the short-term maturity of these instruments. Line of Credit and Long-Term Debt—The carrying amounts of the Company’s borrowings under its line of credit agreement and other long-term debt approximates fair value, based upon current interest rates, some of which are variable interest rates. Other Asset/liabilities – The carrying amounts reported in the balance sheet for other current assets and liabilities approximates their fair value, based on the nature of the assets and liabilities. In August 2018, ASU 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement”, was issued. ASU 2018-03 adds, modifies and removes several disclosure requirements relative to the three levels of inputs used to measure fair value in accordance with Topic 820, “Fair Value Measurement.” ASU 2018-13 is effective for fiscal years beginning after December 15, 2019, including interim periods within that fiscal year. Early adoption is permitted. The Company adopted ASU 2018-03 in the quarter ended March 31, 2020 and the adoption did not have an impact on its financial position or results of operations. | |
Accounting for share-based payments and stock warrants | The weighted average fair value of options issued and outstanding in Fiscal 2019 and Fiscal 2018 was $0.13 in each year. (See Note H [2] – Stockholders’ Equity) In Fiscal 2018, the Company accounted for derivative instruments in accordance with ASC Topic 815 “Derivatives and Hedging” (“ASC Topic 815”). The guidance within ASC Topic 815 requires the Company to recognize all derivatives as either assets or liabilities on the statement of financial position unless the contract, including common stock warrants, settles in the Company’s own stock and qualifies as an equity instrument. A contract designated as an equity instrument is included in equity at its fair value, with no further fair value adjustments required; and if designated as an asset or liability is carried at fair value with any changes in fair value recorded in the results of operations. The weighted average fair value of warrants issued and outstanding was $0.18 in both Fiscal 2019 and Fiscal 2018. (See Note H [3] – Stockholders’ Equity) | |
Concentration of credit risk | At December 31, 2019, one customer accounted for 55.6% of the Company’s net accounts receivable and another customer accounted for 15.0%. A substantial portion of both of these balances were collected in the first quarter of the year ending December 31, 2020. Due to the long standing nature of the Company’s relationship with these customers and contractual obligations, the Company is confident it will recover these amounts. At December 31, 2018, one customer accounted for 56.5% of the Company’s net accounts receivable. A substantial portion of this balance was collected in the first quarter of the year ended December 31, 2019. Due to the long standing nature of the Company’s relationship with this customer and contractual obligations, the Company is confident it will recover these amounts. The Company has established an allowance for doubtful accounts of $34,000 and $36,000 at December 31, 2019 and December 31, 2018, respectively, based on factors surrounding the credit risk of our customers and other information. One of the Company’s customers accounted for 44.8% of net sales in Fiscal 2019 and 44.0% of net sales in Fiscal 2018. The Company maintains certain cash balances at financial institutions that are federally insured and at times the balances have exceeded federally insured limits. | |
Reporting comprehensive income | The Company reports comprehensive income in accordance with the provisions of ASC Topic 220, “Reporting Comprehensive Income” (“ASC Topic 220”). The provisions of ASC Topic 220 require the Company to report the change in the Company's equity during the period from transactions and events other than those resulting from investments by, and distributions to, the shareholders. For Fiscal 2019 and Fiscal 2018, comprehensive income was the same as net income. | |
Accounting Standards | ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes” ASU 2020-01, “Investments-Equity Securities (Topic 321), Investments-Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815)” ASU 2020-06, “Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity”, Any other new accounting pronouncements recently issued, but not yet effective, have been reviewed and determined to be not applicable or were related to technical amendments or codification. As a result, the adoption of such new accounting pronouncements, when effective, is not expected to have a material effect on the Company’s financial position or results of operations. | In the year ended December 31, 2019, we adopted the following accounting standards set forth by the Financial Accounting Standards Board (“FASB”): ASU 2016-02, “Leases” ASU 2018-11, “Leases (Topic 842); Targeted Improvements” ASU 2018-20, “Leases (Topic 842)” ASU 2019-01, Leases (Topic 842)” The Company adopted ASU 2016-02, ASU 2018-11, ASU 2018-20 and ASU 2019-01 in the first quarter of Fiscal 2019. In reviewing the Company’s current leases, there were two operating leases that fell within the scope of the standard, as amended, one for a copier in the Company’s New York facility and another lease related to the Company’s New Jersey facility. Starting in the first quarter of Fiscal 2019, the Company is recognizing a lease liability and a right-of-use asset on its balance sheet related to both of these leases. ASU 2017-11, “Earnings Per Share, Distinguishing Liabilities from Equity, Derivatives and Hedging” ASU 2018-07, “Compensation - Stock Compensation/Improvements to Nonemployee Share-Based Payment Accounting” The following accounting standards have been issued prior to the end of Fiscal 2019 but, did not require adoption as in Fiscal 2019: ASU 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement” ASU 2019-08, Compensation – Stock Compensation (Topic 718) and Revenue from Contracts with Customers (Topic 606)” ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes” Any other new accounting pronouncements recently issued, but not yet effective, have been reviewed and determined to be not applicable or were related to technical amendments or codification. As a result, the adoption of such new accounting pronouncements, when effective, is not expected to have a material effect on the Company’s financial position or results of operations. |
Reclassifications | Certain items have been reclassified from the prior year to conform to the current year presentation. | Certain items have been reclassified from the prior years to conform to the current year presentation. |
THE COMPANY AND ITS SIGNIFICANT
THE COMPANY AND ITS SIGNIFICANT ACCOUNTING POLICIES (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2020 | Dec. 31, 2019 | |
Accounting Policies [Abstract] | ||
Shares outstanding | September 30, 2020 September 30, 2019 Warrants 0 2,000,000 Options 2,142,000 2,252,000 2,142,000 4,252,000 | December 31, 2019 December 31, 2018 Warrants 2,000,000 2,000,000 Options 2,252,000 2,222,000 Total 4,252,000 4,222,000 |
Inventory (Tables)
Inventory (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2020 | Dec. 31, 2019 | |
Inventory Disclosure [Abstract] | ||
Inventory | Inventory is comprised of the following: September 30, 2020 December 31, 2019 Raw Materials $ 695,000 $ 670,000 Work In Process 113,000 141,000 Finished Goods 191,000 290,000 Allowance for slow moving and obsolete inventory (397,000 ) (291,000 ) $ 602,000 $ 810,000 | December 31, 2019 December 31, 2018 Raw Materials $ 670,000 $ 778,000 Work In Process 141,000 184,000 Finished Goods 290,000 325,000 Allowance for slow moving and obsolete inventory (291,000 ) (268,000 ) $ 810,000 $ 1,019,000 |
PROPERTY, PLANT AND EQUIPMENT (
PROPERTY, PLANT AND EQUIPMENT (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Property, Plant and Equipment [Abstract] | |
Property, plant and equipment | December 31, 2019 December 31, 2018 Land $ 102,000 $ 102,000 Buildings and improvements 1,352,000 1,352,000 Manufacturing and warehouse equipment 2,108,000 2,108,000 Office equipment (incl. furniture and fixtures) 412,000 412,000 3,974,000 3,974,000 Less accumulated depreciation (3,330,000 ) (3,256,000 ) $ 644,000 $ 718,000 |
ACCRUED EXPENSES AND OTHER CU_2
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Payables and Accruals [Abstract] | |
Schedule of accrued expenses and other current liabilities | December 31, 2019 December 31, 2018 Accounting fees $ 77,000 $ 75,000 Interest payable 15,000 13,000 Accounts receivable credit balances 55,000 34,000 Sales tax payable 142,000 115,000 Deferred compensation 191,000 167,000 Customer Deposits 10,000 25,000 Other current liabilities 52,000 20,000 $ 542,000 $ 449,000 |
Net Loss Per Common Share (Tabl
Net Loss Per Common Share (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2020 | Dec. 31, 2019 | |
Earnings Per Share [Abstract] | ||
Potentially dilutive shares | September 30, 2020 September 30, 2019 Warrants 0 2,000,000 Options 2,142,000 2,252,000 2,142,000 4,252,000 | December 31, 2019 December 31, 2018 Warrants 2,000,000 2,000,000 Options 2,252,000 2,222,000 Total 4,252,000 4,222,000 |
Line of Credit and Debt (Tables
Line of Credit and Debt (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2020 | Dec. 31, 2019 | |
Debt Disclosure [Abstract] | ||
Line of credit and debt | September 30, 2020 December 31, 2019 Loan and Security Agreement with Cherokee Financial, LLC $ 900,000 $ 900,000 Crestmark Line of Credit: 208,000 337,000 Crestmark Equipment Term Loan : 0 7,000 2019 Term Loan with Cherokee Financial, LLC: 220,000 200,000 July 2019 Term Loan with Chaim Davis, et al: 0 10,000 December 2019 Convertible Note: 0 25,000 April 2020 PPP Loan with Crestmark: 332,000 0 $ 1,660,000 $ 1,479,000 Less debt discount & issuance costs (Cherokee Financial, LLC loans) 0 (17,000 ) Total debt, net $ 1,660,000 $ 1,462,000 Current portion $ 1,660,000 $ 354,000 Long-term portion, net of current portion $ 0 $ 1,125,000 | December 31, 2019 December 31, 2018 Loan and Security Agreement with Cherokee Financial, LLC $ 900,000 $ 975,000 Crestmark Line of Credit: 337,000 502,000 Crestmark Equipment Term Loan: 7,000 19,000 2018 Term Loan with Cherokee Financial LLC: 0 150,000 2019 Term Loan with Cherokee Financial, LLC: 200,000 0 July 2019 Term Loan with Chaim Davis, et al: 10,000 0 December 2019 Convertible Note: 25,000 0 $ 1,479,000 $ 1,646,000 Less debt discount & issuance costs (Cherokee Financial, LLC loans) (17,000 ) (111,000 ) Total debt, net $ 1,462,000 $ 1,535,000 Current portion $ 354,000 $ 739,000 Long-term portion, net of current portion $ 1,125,000 $ 796,000 |
Schedule of maturities of long-term debt | 2020 $ 369,000 2021 1,110,000 2022 0 2023 0 2024 0 $ 1,479,000 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Schedule of effective income tax rate reconciliation | Year Ended December 31, 2019 Year Ended December 31, 2018 Tax expense at federal statutory rate (21%) (21%) ) State tax expense, net of federal tax effect 0% 0% Expired NOL 46% 0% Deferred income tax asset valuation allowance (26%) 21% Effective income tax rate (1%) 0% |
Schedule of deferred tax assets and liabilities | December 31, 2019 December 31, 2018 Inventory capitalization $ 8,000 $ 9,000 Inventory allowance 76,000 70,000 Allowance for doubtful accounts 9,000 9,000 Accrued compensation 18,000 22,000 Stock based compensation 168,000 168,000 Deferred wages payable 50,000 43,000 Depreciation – Property, Plant & Equipment (1,000 ) (6,000 ) Net operating loss carry-forward 3,339,000 3,569,000 Total gross deferred income tax assets 3,667,000 3,884,000 Less deferred income tax assets valuation allowance (3,667,000 ) (3,884,000 ) Net deferred income tax assets $ 0 $ 0 |
Stock Options and Warrants (Tab
Stock Options and Warrants (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2020 | Dec. 31, 2019 | |
Valuation assumptions | Nine months ended September 30, 2020 Nine months ended September 30, 2019 Shares Weighted Average Exercise Price Aggregate Intrinsic Value as of September 30, 2020 Shares Weighted Average Exercise Price Aggregate Intrinsic Value as of September 30, 2019 Warrants outstanding at beginning of year 2,000,000 $ 0.18 2,000,000 $ 0.18 Granted 0 NA 0 NA Exercised 0 NA 0 NA Cancelled/expired (2,000,000 ) $ 0.18 0 NA Warrants outstanding at end of year 0 NA None 2,000,000 $ 0.18 None Warrants exercisable at end of year 0 NA 2,000,000 $ 0.18 | |
Stock Options | ||
Stock option/warrant activity | Nine months ended September 30, 2020 Nine months ended September 30, 2019 Shares Weighted Average Exercise Price Aggregate Intrinsic Value as of September 30, 2020 Shares Weighted Average Exercise Price Aggregate Intrinsic Value as of September 30, 2019 Options outstanding at beginning of year 2,252,000 $ 0.13 2,222,000 $ 0.13 Granted 0 NA 80,000 $ 0.07 Exercised 0 NA 0 NA Cancelled/expired (110,000 ) $ 0.10 (50,000 ) $ 0.20 Options outstanding at end of period 2,142,000 $ 0.13 $ 398,000 2,252,000 $ 0.13 $ 1,000 Options exercisable at end of period 2,142,000 $ 0.13 2,172,000 $ 0.13 | Year Ended December 31,2019 Year Ended December 31, 2018 Shares Weighted Average Exercise Price Aggregate Intrinsic Value as of December 31, 2019 Shares Weighted Average Exercise Price Aggregate Intrinsic Value as of December 31, 2018 Options outstanding at beginning of year 2,222,000 $ 0.13 $ 3,000 2,147,000 $ 0.13 Granted 80,000 $ 0.07 80,000 $ 0.10 Exercised 0 NA 0 NA Cancelled/expired (50,000 ) $ 0.20 (5,000 ) $ 0.26 Options outstanding at end of year 2,252,000 $ 0.14 $ 1,000 2,222,000 $ 0.13 $ 3,000 Options exercisable at end of year 2,172,000 $ 0.13 2,142,000 $ 0.13 |
Schedule of share-based compensation, shares authorized under stock option plans, by exercise price range | Options Outstanding Options Exercisable Range of exercise price Shares Weighted average exercise price Weighted average remaining life in years Shares Weighted average exercise price $0.07 - $0.10 365,000 $ 0.09 4.43 285,000 $ 0.09 $0.11 - $0.14 1,485,000 $ 0.12 5.35 1,485,000 $ 0.12 $0.15 - $0.26 402,000 $ 0.18 3.47 402,000 $ 0.18 TOTAL 2,252,000 $ 0.14 4.87 2,172,000 $ 0.13 | |
Valuation assumptions | Year Ended December 31 2019 2018 Volatility 85% 79% Expected term (years) 10 years 10 years Risk-free interest rate 2.01% 2.90% Dividend yield 0% 0% | |
Warrants | ||
Stock option/warrant activity | Nine months ended September 30, 2020 Nine months ended September 30, 2019 Shares Weighted Average Exercise Price Aggregate Intrinsic Value as of September 30, 2020 Shares Weighted Average Exercise Price Aggregate Intrinsic Value as of September 30, 2019 Warrants outstanding at beginning of year 2,000,000 $ 0.18 2,000,000 $ 0.18 Granted 0 NA 0 NA Exercised 0 NA 0 NA Cancelled/expired (2,000,000 ) $ 0.18 0 NA Warrants outstanding at end of year 0 NA None 2,000,000 $ 0.18 None Warrants exercisable at end of year 0 NA 2,000,000 $ 0.18 | Year Ended December 31, 2019 Year Ended December 31, 2018 Shares Weighted Average Exercise Price Aggregate Intrinsic Value as of December 31, 2019 Shares Weighted Average Exercise Price Aggregate Intrinsic Value as of December 31, 2018 Warrants outstanding at beginning of year 2,000,000 $ 0.18 None 2,060,000 $ 0.18 Granted 0 NA 0 NA Exercised 0 NA 0 NA Cancelled/expired (0 ) NA 60,000 $ 0.18 Warrants outstanding at end of year 2,000,000 $ 0.18 None 2,000,000 $ 0.18 None Warrants exercisable at end of year 2,000,000 $ 0.18 2,000,000 $ 0.18 |
Changes in Stockholders' Defi_2
Changes in Stockholders' Deficit (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Stockholders' deficit: | |
Statement of Stockholders' Deficit | Common Stock Shares Amount Additional Paid in Capital Accumulated Deficit Total Balance – December 31, 2019 32,680,984 $ 327,000 $ 21,437,000 (22,554,000 ) $ (790,000 ) Shares issued in connection with private placement 2,842,856 28,000 171,000 199,000 Shares issued to Cherokee in connection with loan 300,000 3,000 18,000 21,000 Share based payment expense 2,000 2,000 Shares issued for board meeting attendance in lieu of cash 129,636 1,000 30,000 31,000 Net loss (563,000 ) (563,000 ) Balance – September 30, 2020 35,953,476 $ 359,000 $ 21,658,000 $ (23,117,000 ) $ (1,100,000 ) Balance – December 31, 2018 32,279,368 $ 323,000 $ 21,404,000 $ (21,873,000 ) $ (146,000 ) Shares issued to Cherokee in connection with loan 200,000 2,000 12,000 14,000 Shares issued for board meeting attendance in lieu of cash 66,408 5,000 5,000 Share based payment expense 4,000 4,000 Net loss (440,000 ) (440,000 ) Balance-September 30, 2019 32,545,776 $ 325,000 $ 21,425,000 $ (22,313,000 ) $ (563,000 ) |
COMMITMENTS, CONTINGENCIES AN_2
COMMITMENTS, CONTINGENCIES AND OTHER MATTERS (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of future minimum rental payments for operating leases | 2020 $ 37,000 2022 37,000 2022 36,000 2023 1,000 2024 1,000 Thereafter 1,000 $ 113,000 |
SEGMENT AND GEOGRAPHIC INFORM_2
SEGMENT AND GEOGRAPHIC INFORMATION (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Segment Reporting [Abstract] | |
Schedule of segment reporting information, by segment | Year Ended December 31, 2019 Year Ended December 31, 2018 United States $ 3,189,000 $ 3,411,000 North America (not domestic) 11,000 56,000 Europe 108,000 133,000 Asia/Pacific Rim 13,000 25,000 South America 344,000 246,000 Africa 0 1,000 $ 3,655,000 $ 3,872,000 |
THE COMPANY AND ITS SIGNIFICA_2
THE COMPANY AND ITS SIGNIFICANT ACCOUNTING POLICIES (Details) - shares | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Weighted average number diluted shares outstanding adjustment | 4,252,000 | 4,222,000 |
Employee Stock Option | ||
Weighted average number diluted shares outstanding adjustment | 2,252,000 | 2,222,000 |
Note Warrant | ||
Weighted average number diluted shares outstanding adjustment | 2,000,000 | 2,000,000 |
THE COMPANY AND ITS SIGNIFICA_3
THE COMPANY AND ITS 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 | Dec. 31, 2018 | |
Net loss | $ (216,000) | $ (144,000) | $ (563,000) | $ (440,000) | $ (681,000) | $ (1,028,000) |
Net cash provided by operating activities | 58,000 | (220,000) | ||||
Increase/decrease in cash | 57,000 | $ (98,000) | (109,000) | 77,000 | ||
Accumulated deficit | (23,117,000) | (23,117,000) | (22,554,000) | (21,873,000) | ||
Allowance for doubtful accounts | 35,000 | 35,000 | 34,000 | 36,000 | ||
Allowance for slow moving and obsolete inventory | $ 397,000 | $ 397,000 | 291,000 | 268,000 | ||
Accumulated amortization of patents | $ 190,000 | $ 182,000 | ||||
Securities not included in diluted loss per share | 2,142,000 | 4,252,000 | 2,142,000 | 4,252,000 | 4,252,000 | 4,222,000 |
Accounts Receivable | Customer One | ||||||
Concentration of credit risk | 55.60% | 56.50% | ||||
Accounts Receivable | Customer Two | ||||||
Concentration of credit risk | 15.00% | |||||
Sales Revenue | Customer One | ||||||
Concentration of credit risk | 44.80% | 44.00% |
Inventory (Details)
Inventory (Details) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
Inventory Disclosure [Abstract] | |||
Raw materials | $ 695,000 | $ 670,000 | $ 778,000 |
Work in process | 113,000 | 141,000 | 184,000 |
Finished goods | 191,000 | 290,000 | 325,000 |
Allowance for slow moving and obsolete inventory | (397,000) | (291,000) | (268,000) |
Inventory, net | $ 602,000 | $ 810,000 | $ 1,019,000 |
PROPERTY, PLANT AND EQUIPMENT_2
PROPERTY, PLANT AND EQUIPMENT (Details) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
Property, Plant and Equipment [Abstract] | |||
Land | $ 102,000 | $ 102,000 | |
Buildings and improvements | 1,352,000 | 1,352,000 | |
Manufacturing and warehouse equipment | 2,108,000 | 2,108,000 | |
Office equipment (incl. furniture and fixtures) | 412,000 | 412,000 | |
Property, plant and equipment, gross | 3,974,000 | 3,974,000 | |
Less accumulated depreciation | (3,330,000) | (3,256,000) | |
Property, plant and equipment, net | $ 594,000 | $ 644,000 | $ 718,000 |
PROPERTY, PLANT AND EQUIPMENT_3
PROPERTY, PLANT AND EQUIPMENT (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation | $ 74,000 | $ 74,000 |
ACCRUED EXPENSES AND OTHER CU_3
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Payables and Accruals [Abstract] | ||
Accounting fees | $ 77,000 | $ 75,000 |
Interest payable | 15,000 | 13,000 |
Accounts receivable credit balances | 55,000 | 34,000 |
Sales tax payable | 142,000 | 115,000 |
Deferred compensation | 191,000 | 167,000 |
Customer deposits | 10,000 | 25,000 |
Other current liabilities | 52,000 | 20,000 |
Accrued expenses and other current liabilities | $ 542,000 | $ 449,000 |
Net Loss Per Common Share (Deta
Net Loss Per Common Share (Details) - shares | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | |
Weighted average number diluted shares outstanding adjustment | 2,142,000 | 4,252,000 | 2,142,000 | 4,252,000 | 4,252,000 | 4,222,000 |
Warrants | ||||||
Weighted average number diluted shares outstanding adjustment | 0 | 2,000,000 | ||||
Stock Options | ||||||
Weighted average number diluted shares outstanding adjustment | 2,142,000 | 2,252,000 |
Net Loss Per Common Share (De_2
Net Loss Per Common Share (Details Narrative) - shares | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | |
Earnings Per Share [Abstract] | ||||||
Antidilutive securities excluded from computation of earnings per share, amount | 2,142,000 | 4,252,000 | 2,142,000 | 4,252,000 | 4,252,000 | 4,222,000 |
Line of Credit and Debt (Detail
Line of Credit and Debt (Details) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
Long-term debt, gross | $ 1,660,000 | $ 1,479,000 | $ 1,646,000 |
Less debt discount & issuance costs (Cherokee Financial, LLC Loan) | 0 | (17,000) | (111,000) |
Total debt, net | 1,660,000 | 1,462,000 | 1,535,000 |
Current portion | 1,660,000 | 354,000 | 739,000 |
Long-term portion, net of current portion | 0 | 1,125,000 | 796,000 |
Loan and Security Agreement with Cherokee Financial, LLC | |||
Long-term debt, gross | 900,000 | 900,000 | 975,000 |
Crestmark Line of Credit | |||
Long-term debt, gross | 208,000 | 337,000 | 502,000 |
Crestmark Equipment Term Loan | |||
Long-term debt, gross | 0 | 7,000 | 150,000 |
2019 Term Loan with Cherokee Financial, LLC | |||
Long-term debt, gross | 220,000 | 200,000 | 19,000 |
July 2019 Term Loan with Chaim Davis, et al | |||
Long-term debt, gross | 0 | 10,000 | 0 |
December 2019 Convertible Note | |||
Long-term debt, gross | 0 | 25,000 | 0 |
April 2020 PPP Loan with Crestmark | |||
Long-term debt, gross | $ 332,000 | $ 0 | $ 0 |
DEBT AND LINE OF CREDIT (Detail
DEBT AND LINE OF CREDIT (Details 1) | Dec. 31, 2019USD ($) |
Debt Disclosure [Abstract] | |
2020 | $ 369,000 |
2021 | 1,110,000 |
2022 | 0 |
2023 | 0 |
2024 | 0 |
Long-term debt | $ 1,479,000 |
INCOME TAXES (Details)
INCOME TAXES (Details) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | ||
Tax expense at federal statutory rate | (21.00%) | (21.00%) |
State tax expense, net of federal tax effect | 0.00% | 0.00% |
Permanent timing differences | 46.00% | 0.00% |
Deferred income tax asset valuation allowance | (26.00%) | 21.00% |
Effective income tax rate | (1.00%) | 0.00% |
INCOME TAXES (Details 1)
INCOME TAXES (Details 1) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Income Tax Disclosure [Abstract] | ||
Inventory capitalization | $ 8,000 | $ 9,000 |
Inventory allowance | 76,000 | 70,000 |
Allowance for doubtful accounts | 9,000 | 9,000 |
Accrued compensation | 18,000 | 22,000 |
Stock based compensation | 168,000 | 168,000 |
Deferred wages payable | 50,000 | 43,000 |
Depreciation - Property, Plant & Equipment | (1,000) | (6,000) |
Net operating loss carry-forward | 3,339,000 | 3,569,000 |
Total gross deferred income tax assets | 3,667,000 | 3,884,000 |
Less deferred income tax assets valuation allowance | (3,667,000) | (3,884,000) |
Net deferred income tax assets | $ 0 | $ 0 |
INCOME TAXES (Details Narrative
INCOME TAXES (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | ||
Deferred tax assets, valuation allowance | $ 3,667,000 | $ 3,884,000 |
Valuation allowance, deferred tax asset, change in amount | 217,000 | $ 265,000 |
Operating loss carryforwards | $ 3,339,000 |
Stock Options and Warrants (Det
Stock Options and Warrants (Details) - USD ($) | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | |
Shares, exercisable | 2,172,000 | |||
Weighted average exercise price, exercisable | $ 0.13 | |||
Stock Options | ||||
Shares, beginning balance | 2,252,000 | 2,222,000 | 2,222,000 | 2,147,000 |
Shares, granted | 0 | 80,000 | 80,000 | 80,000 |
Shares, exercised | 0 | 0 | 0 | 0 |
Shares, cancelled/expired | (110,000) | (50,000) | (50,000) | (5,000) |
Shares, ending balance | 2,142,000 | 2,252,000 | 2,252,000 | 2,222,000 |
Shares, exercisable | 2,142,000 | 2,172,000 | 2,172,000 | 2,142,000 |
Weighted average exercise price, beginning balance | $ 0.14 | $ 0.13 | $ 0.13 | $ 0.13 |
Weighted average exercise price, granted | .00 | .07 | 0.07 | 0.10 |
Weighted average exercise price, exercised | .00 | .00 | 0 | 0 |
Weighted average exercise price, cancelled/expired | .10 | .20 | 0.20 | 0.26 |
Weighted average exercise price, ending balance | .13 | .13 | 0.14 | 0.13 |
Weighted average exercise price, exercisable | $ .13 | $ .13 | $ 0.13 | $ 0.13 |
Aggregate intrinsic value, outstanding | $ 398,000 | $ 1,000 | $ 1,000 | $ 3,000 |
Stock Options and Warrants (D_2
Stock Options and Warrants (Details 1) | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | |
Stockholders' Equity Note [Abstract] | ||||
Volatility | 0.00% | 85.00% | 85.00% | 79.00% |
Expected term (years) | 0 years | 10 years | 10 years | 10 years |
Risk-free interest rate | 0.00% | 2.01% | 2.01% | 2.90% |
Dividen yield | 0.00% | 0.00% | 0.00% | 0.00% |
Stock Options and Warrants (D_3
Stock Options and Warrants (Details 2) - USD ($) | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | |
Shares, exercisable | 2,172,000 | |||
Weighted average exercise price, exercisable | $ 0.13 | |||
Warrants | ||||
Shares, beginning balance | 2,000,000 | 2,000,000 | 2,000,000 | 2,060,000 |
Shares, granted | 0 | 0 | 0 | 0 |
Shares, exercised | 0 | 0 | 0 | 0 |
Shares, cancelled/expired | (2,000,000) | 0 | 0 | (60,000) |
Shares, ending balance | 0 | 2,000,000 | 2,000,000 | 2,000,000 |
Shares, exercisable | 0 | 2,000,000 | 2,000,000 | 2,000,000 |
Weighted average exercise price, beginning balance | $ 0.18 | $ 0.18 | $ 0.18 | $ 0.18 |
Weighted average exercise price, granted | .00 | 0 | 0 | 0 |
Weighted average exercise price, exercised | 0 | 0 | 0 | 0 |
Weighted average exercise price, cancelled/expired | 0.18 | 0 | 0 | 0 |
Weighted average exercise price, ending balance | 0 | 0.18 | 0.18 | 0.18 |
Weighted average exercise price, exercisable | $ 0 | $ 0.18 | $ 0.18 | $ 0.18 |
Aggregate intrinsic value, outstanding | $ 0 | $ 0 |
Stock Options and Warrants (D_4
Stock Options and Warrants (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Stockholders' Equity Note [Abstract] | ||||
Share based payment expense | $ 0 | $ 1,000 | $ 2,000 | $ 4,000 |
Unrecognized share based payment expense related to stock options | 0 | 0 | ||
Debt issuance and deferred finance costs | 0 | $ 0 | 0 | $ 0 |
Unrecognized share based payment expense related to warrants | $ 0 | $ 0 |
STOCKHOLDERS' EQUITY (Details 1
STOCKHOLDERS' EQUITY (Details 1) | 12 Months Ended |
Dec. 31, 2019$ / sharesshares | |
Options outstanding, shares | shares | 2,252,000 |
Options outstanding, weighted average exercise price | $ / shares | $ 0.14 |
Options outstanding, weighted average remaining life in years | 4 years 10 months 13 days |
Options exercisable, shares | shares | 2,172,000 |
Options exercisable, weighted average exercise price | $ / shares | $ 0.13 |
Range of Exercise Price 0.07 - 0.10 | |
Options outstanding, shares | shares | 365,000 |
Options outstanding, weighted average exercise price | $ / shares | $ 0.09 |
Options outstanding, weighted average remaining life in years | 4 years 5 months 5 days |
Options exercisable, shares | shares | 285,000 |
Options exercisable, weighted average exercise price | $ / shares | $ 0.09 |
Range of Exercise Price 0.11 - 0.14 | |
Options outstanding, shares | shares | 1,485,000 |
Options outstanding, weighted average exercise price | $ / shares | $ 0.12 |
Options outstanding, weighted average remaining life in years | 5 years 4 months 6 days |
Options exercisable, shares | shares | 1,485,000 |
Options exercisable, weighted average exercise price | $ / shares | $ 0.12 |
Range of Exercise Price 0.15 - 0.26 | |
Options outstanding, shares | shares | 402,000 |
Options outstanding, weighted average exercise price | $ / shares | $ 0.18 |
Options outstanding, weighted average remaining life in years | 3 years 5 months 19 days |
Options exercisable, shares | shares | 402,000 |
Options exercisable, weighted average exercise price | $ / shares | $ 0.18 |
STOCKHOLDERS' EQUITY (Details N
STOCKHOLDERS' EQUITY (Details Narrative) - USD ($) | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Share based payment expense related to stock options | $ 2,000 | $ 4,000 | $ 6,000 | $ 10,000 | |
Warrants | |||||
Share-based compensation arrangement by share-based payment award, options, grants in period, gross | 0 | 0 | 0 | 0 | |
Share-based compensation arrangement by share-based payment award, options, outstanding, number | 0 | 2,000,000 | 2,000,000 | 2,000,000 | 2,060,000 |
Stock Options | |||||
Share-based compensation arrangement by share-based payment award, options, grants in period, gross | 0 | 80,000 | 80,000 | 80,000 | |
Share-based compensation arrangement by share-based payment award, options, outstanding, number | 2,142,000 | 2,252,000 | 2,252,000 | 2,222,000 | 2,147,000 |
Changes in Stockholders' Defi_3
Changes in Stockholders' Deficit (Details) - 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 | Dec. 31, 2018 | |
Common Stock | ||||||
Balance (in shares) | 32,680,984 | 32,279,368 | 32,279,368 | |||
Balance | $ 327,000 | $ 323,000 | $ 323,000 | $ 298,000 | ||
Shares issued in connection with private placement, shares | 2,842,856 | |||||
Shares issued in connection with private placement, amount | $ 28,000 | |||||
Shares issued to Cherokee in connection with loan, shares | 300,000 | 200,000 | ||||
Shares issued to Cherokee in connection with loan, amount | $ 3,000 | $ 2,000 | ||||
Shares issued for board meeting attendance in lieu of cash, shares | 129,636 | 66,408 | ||||
Shares issued for board meeting attendance in lieu of cash, amount | $ 1,000 | $ 0 | ||||
Balance (in shares) | 35,953,476 | 32,545,776 | 35,953,476 | 32,545,776 | 32,680,984 | 32,279,368 |
Balance | $ 359,000 | $ 325,000 | $ 359,000 | $ 325,000 | $ 327,000 | $ 323,000 |
Additional Paid in Capital | ||||||
Balance | 21,437,000 | 21,404,000 | 21,404,000 | 21,170,000 | ||
Shares issued in connection with private placement, amount | 171,000 | |||||
Shares issued to Cherokee in connection with loan, amount | 18,000 | 12,000 | ||||
Shares issued for board meeting attendance in lieu of cash, amount | 30,000 | 5,000 | 6,000 | |||
Share based payment expense | 2,000 | 4,000 | ||||
Balance | 21,658,000 | 21,425,000 | 21,658,000 | 21,425,000 | 21,437,000 | 21,404,000 |
Accumulated Deficit | ||||||
Balance | (22,554,000) | 21,873,000 | 21,873,000 | (20,845,000) | ||
Net loss | (563,000) | (681,000) | (1,028,000) | |||
Balance | (23,117,000) | (22,313,000) | (23,117,000) | (22,313,000) | (22,554,000) | 21,873,000 |
Balance | (790,000) | (146,000) | (146,000) | 623,000 | ||
Shares issued in connection with private placement, amount | 199,000 | |||||
Shares issued to Cherokee in connection with loan, amount | 21,000 | 14,000 | ||||
Shares issued for board meeting attendance in lieu of cash, amount | 31,000 | 5,000 | 6,000 | |||
Share based payment expense | 0 | 1,000 | 2,000 | 4,000 | ||
Net loss | (216,000) | (144,000) | (563,000) | (440,000) | (681,000) | (1,028,000) |
Balance | $ (1,100,000) | $ (563,000) | $ (1,100,000) | $ (563,000) | $ (790,000) | $ (146,000) |
COMMITMENTS, CONTINGENCIES AN_3
COMMITMENTS, CONTINGENCIES AND OTHER MATTERS (Details) | Dec. 31, 2019USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
2020 | $ 37,000 |
2021 | 37,000 |
2022 | 36,000 |
2023 | 1,000 |
2024 | 1,000 |
Thereafter | 1,000 |
Operating leases, future minimum payments due | $ 113,000 |
COMMITMENTS, CONTINGENCIES AN_4
COMMITMENTS, CONTINGENCIES AND OTHER MATTERS (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Operating leases, rent expense | $ 46,000 | $ 43,000 |
SEGMENT AND GEOGRAPHIC INFORM_3
SEGMENT AND GEOGRAPHIC INFORMATION (Details) - 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 | Dec. 31, 2018 | |
Net sales | $ 883,000 | $ 895,000 | $ 3,370,000 | $ 2,775,000 | $ 3,655,000 | $ 3,872,000 |
United States | ||||||
Net sales | 3,189,000 | 3,411,000 | ||||
North America | ||||||
Net sales | 11,000 | 56,000 | ||||
Europe | ||||||
Net sales | 108,000 | 133,000 | ||||
Asia Pacific | ||||||
Net sales | 13,000 | 25,000 | ||||
South America | ||||||
Net sales | 344,000 | 246,000 | ||||
Africa | ||||||
Net sales | $ 0 | $ 1,000 |