ITEM 7. MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The following discussion and analysis contains
forward-looking statements about future revenues, operating
results, plans and expectations. Forward-looking statements are
based on a number of assumptions and estimates that are inherently
subject to significant risks and uncertainties and our results
could differ materially from the results anticipated by our
forward-looking statements as a result of many known or unknown
factors, including, but not limited to, those factors discussed in
Part I, Item 1A. Risk Factors. Also, please read the
“Cautionary Statement Regarding Forward-Looking
Statements” set forth at the beginning of this Annual Report
on Form 10-K.
In
addition, the following discussion should be read in conjunction
with Part I of this Annual Report on Form 10-K as well as our
consolidated financial statements and the related Notes contained
elsewhere in this Annual Report on Form 10-K.
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Overview
We are
a medical technology company focused on developing and
commercializing transformative technologies to improve clinical
outcomes and reduce healthcare expenditures in the surgical and
chronic wound and skin care markets. Our portfolio of products and
services will allow us to deliver comprehensive wound and skin care
solutions for patients in all care settings, including acute
(hospitals and long-term acute care hospitals
(“LTACHs”)) and post-acute (wound care clinics,
physician offices, skilled nursing facilities (“SNFs”),
home health, hospice, and retail). Each of our products, services,
and technologies contributes to our overall goal of achieving
better clinical outcomes at a lower overall cost for patients
regardless of where they receive care. We strive to be one of the
most innovative and comprehensive providers of effective wound and
skin care products and technologies and are continually seeking to
expand our offerings for patients requiring wound and skin care
treatments across the entire continuum of care in the United
States.
We
currently market seven products across chronic and surgical wound
care applications and have multiple products in our pipeline. We
license our products from research and development partners Applied
Nutritionals, LLC (“AN”) (through a sublicense with CGI
Cellerate RX, LLC (“CGI Cellerate RX”), an affiliate of
The Catalyst Group, Inc. (“Catalyst”)) and Rochal
Industries, LLC (“Rochal”) and have the right to
exclusively distribute certain products under development by Cook
Biotech Inc. (“Cook Biotech”). In 2021, we intend to
begin marketing three biologic products for surgical and wound care
applications pursuant to our marketing and distribution agreement
with Cook Biotech.
In June
2020, we formed a subsidiary, United Wound and Skin Solutions LLC
(“UWSS”), to hold certain investments and operations in
wound and skin care virtual consult services. We anticipate that
our various service offerings will allow clinicians/physicians
utilizing our technologies to collect and analyze large amounts of
data on patient conditions and outcomes that will improve treatment
protocols and ultimately lead to more evidence-based formulary to
improve patient outcomes. We intend to launch our initial virtual
consult service offerings in 2021. Through a combination of our
UWSS services and our Sanara products, we believe we will be able
to offer patient care solutions at every step in the continuum of
wound and skin care from diagnosis through healing.
Impact of the COVID-19 Pandemic
Beginning
in March 2020, many states issued orders suspending elective
surgeries in order to free-up hospital resources to treat COVID-19
patients. This resulted in a reduction in demand for our surgical
products beginning in the second half of March 2020. Additionally,
most states limited access to SNFs to only resident caregivers,
which impeded our ability to provide education and product training
to the clinicians who use our products in these facilities. These
restrictions resulted in an overall decline in sales for the second
quarter of 2020. During the third and fourth quarters of 2020, we
saw a strong rebound in product sales as restrictions on elective
surgeries eased in our primary markets in Texas, Florida, and the
southeastern United States.
As a
result of the COVID-19 pandemic, we significantly reduced costs in
areas such as payroll, consulting, business travel, and other
discretionary spending. The duration of the pandemic is uncertain;
however, management believes that elective surgical procedures will
continue to be performed with the exception of certain geographic
COVID-19 hotspots. We will continue to closely monitor the COVID-19
pandemic in order to ensure the safety of our people and our
ability to serve our customers and patients.
Cellerate Acquisition
Effective
August 28, 2018, we consummated definitive agreements that
continued operations to market our principal product, CellerateRX,
through a 50% ownership interest in a newly formed entity,
Cellerate, LLC (“Cellerate”), which began operations on
September 1, 2018. The remaining 50% ownership interest was held by
an affiliate of Catalyst, which acquired the exclusive license to
CellerateRX products. Cellerate conducted operations with an
exclusive sublicense from the Catalyst affiliate to distribute
CellerateRX products in the United States, Canada and Mexico (which
sublicense was subsequently amended to include worldwide
distribution rights). In connection with the formation of
Cellerate, we issued a convertible promissory note to an affiliate
of Catalyst in the original principal amount of $1.5 million, which
was convertible into shares of our common stock at a conversion
price of $9.00 per share.
On
March 15, 2019, we acquired Catalyst’s 50% interest in
Cellerate in exchange for the issuance of 1,136,815 shares of our
newly created Series F Convertible Preferred Stock (the
“Cellerate Acquisition”). Each share of Series F
Convertible Preferred Stock was convertible at the option of the
holder, at any time, into two shares of common stock. Additionally,
each holder of Series F Convertible Preferred Stock was entitled to
vote on all matters submitted for a vote of our shareholders with
votes equal to the number of shares of common stock into which such
holder’s shares of Series F Convertible Preferred Stock could
then be converted. Following the closing of the Cellerate
Acquisition, Mr. Ronald T. Nixon, Founder and Managing Partner of
Catalyst, was elected to our board of directors, effective March
15, 2019.
46
The
Cellerate Acquisition was accounted for as a reverse merger and
recapitalization because, immediately following the completion of
the transaction, Catalyst could obtain effective control of the
Company upon conversion of its convertible preferred stock and
convertible promissory note, both of which could occur at
Catalyst’s option. Additionally, Cellerate’s officers
and senior executive positions continued on as management of the
combined entity after consummation of the Cellerate Acquisition.
For accounting purposes, Cellerate was deemed to be the acquirer in
the transaction and, consequently, the Cellerate Acquisition was
treated as a recapitalization of Sanara MedTech. As part of the
reverse merger and recapitalization, the net liabilities existing
in the Company as of the date of the Cellerate Acquisition totaling
approximately $1,666,537, which included $508,973 of cash, were
converted to equity as part of the Cellerate Acquisition. No
step-up in basis or intangible assets or goodwill was recorded in
this transaction.
The
Company’s financials for the twelve months ended December 31,
2019 do not include revenues and expenses related to the
predecessor for the period January 1, 2019 through March 15, 2019.
During this period, the predecessor’s revenues were
approximately $34,000 and expenses were approximately
$348,000.
Reverse Stock Split
Effective
May 10, 2019, we effected a reverse stock split of the issued and
outstanding shares of our common stock at a ratio of one share for
every 100 shares. All share and per share information in this
discussion and analysis has been adjusted to reflect the reverse
stock split.
Components of Results of Operations
Sources of Revenues
Our
revenue is derived primarily from sales of our surgical wound care
products to hospitals and other acute care facilities, and sales of
our chronic wound care products to customers across the post-acute
continuum of care. Our revenue is driven by direct orders shipped
by us to our customers, and to a lesser extent, direct sales to
customers through delivery at the time of procedure by one of our
sales representatives. We generally recognize revenue when our
product is received by the customer.
Revenue
streams from product sales and royalties are summarized below for
the years ended December 31, 2020 and 2019. All revenue was
generated in the United States.
Year Ended December 31,
We
recognize royalty revenue from a development and licensing
agreement with BioStructures, LLC. We record revenue each calendar
quarter as earned per the terms of the agreement which stipulates
that we will receive quarterly royalty payments of at least
$50,250. Under the terms of the development and license agreement,
royalties of 2.0% are recognized on sales of products containing
our patented resorbable bone hemostasis. The minimum annual royalty
due to our Company is $201,000 per year throughout the life of the
patent which expires in 2023. These royalties are payable in
quarterly installments of $50,250. To date, royalties related to
this development and licensing agreement have not exceeded the
annual minimum of $201,000 ($50,250 per quarter).
Cost of Goods Sold
Cost of
goods sold consists of the acquisition costs from the manufacturers
of our licensed products, raw material costs for certain components
sourced directly by our Company, and all royalties related due as a
result of the sale of our products. Our gross profit represents
total revenue less the cost of goods sold, and gross margin is
gross profit expressed as a percentage of total
revenue.
Operating Expenses
Selling,
general and administrative expenses (“SG&A”)
consist primarily of salaries, sales commissions, benefits,
bonuses, and stock-based compensation. SG&A also includes
outside legal counsel, audit fees, insurance premiums, rent, and
other corporate expenses. We expense all SG&A expenses as
incurred. We expect our SG&A expenses to increase in absolute
dollars and decrease as a percent of revenue as we grow our
commercial organization.
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Other Income (Expense)
Other
income (expense) is primarily comprised of interest income,
interest expense and other non-operating activities. Interest
expense during 2020 consisted primarily of interest expense
associated with our unsecured promissory note under the Paycheck
Protection Program (the “PPP”) pursuant to the
Coronavirus Aid, Relief and Economic Security Act, and for 2019,
consisted primarily of interest on amounts due on our revolving
line of credit that matured in June 2020. Interest income consists
of interest earned on our cash and cash equivalents.
Results of Operations
Revenues. For the year ended December 31, 2020,
we generated revenues of $15,586,976 compared to revenues of
$11,766,763 for the year ended December 31, 2019, a 32% increase
from the prior year. The higher
revenues in 2020 were primarily
due to increased sales of surgical wound care products as we
continued the execution of our strategy to expand our sales force
and independent distribution network in both new and existing U.S.
markets.
Beginning
in March 2020, many states issued orders suspending elective
surgeries in order to free-up hospital resources to treat COVID-19
patients. This resulted in a reduction in demand for our surgical
products beginning in the second half of March 2020. Additionally,
most states limited access to SNFs to only resident caregivers,
which impeded our ability to provide education and product training
to the clinicians who use our products in these facilities. These
restrictions resulted in an overall decline in sales for the second
quarter of 2020.
During
the third and fourth quarters of 2020, we saw a strong rebound in
product sales as restrictions on elective surgeries eased in our
primary markets in Texas, Florida, and the southeastern United
States. Fourth quarter revenues of $4,789,138 were up 43%
compared to the fourth quarter of 2019, and represented a record
high sales quarter for the Company.
Cost of goods sold.
Cost of goods sold for the year ended December 31, 2020 was
$1,616,625, compared to costs of goods sold of $1,209,300 for the
year ended December 31, 2019. The increase over prior year was
primarily due to higher sales volume.
Selling, generalandadministrativeexpenses(“SG&A”).
SG&A expenses for the year ended December 31, 2020 were
$18,683,594 compared to SG&A expenses of $13,067,569 for the
year ended December 31, 2019. The higher SG&A expenses in 2020
were primarily due to increased payroll costs resulting from sales
force expansion and operational support, higher sales commission
expense as a result of higher product sales, and higher costs
related to the expansion of our comprehensive wound and skin care
strategy.
The
higher SG&A expenses are consistent with our strategy of
building out a larger sales force and independent distribution
network and the expansion of our comprehensive wound and skin care
strategy. New sales representatives generally take six to twelve
months to begin generating significant revenue. We expect SG&A
expenses to decline as a percentage of revenue in the next two
years as revenue generated by new sales representatives begins to
offset the cost of the sales force expansion.
Interest
expense.
Interest expense was $11,528 for the year ended December 31, 2020,
as compared to $105,919 for the year ended December 31, 2019. The
lower interest expense was primarily due to declines in draws on
our revolving line of credit that matured in June 2020 and the
conversion of an interest-bearing promissory note to common stock
in early 2020.
Net income / loss. For the year ended
December 31, 2020, we had a net loss of $4,445,145, compared to net
loss of $2,835,778 for the year ended December 31, 2019. Our fourth
quarter net loss of $266,453 was favorably impacted by the
recognition of $586,174 of Other income related to the forgiveness
of our PPP Loan, and a $342,930 reduction of SG&A due to the
capitalization of certain SG&A costs as internal use software.
The net loss in 2020 was due to higher SG&A costs described
above, which have been driven by our strategy to expand our
geographic coverage through significant investments in sales force
expansion, operational support and the expansion of our
comprehensive wound and skin care strategy.
Liquidity and Capital Resources
Cash on
hand at December 31, 2020 was $455,366, compared to $6,611,928 at
December 31, 2019. Historically, we have financed our operations
primarily from the sale of equity securities. During 2019 and 2020,
our principal sources of liquidity have been cash generated from
operations, utilization of our bank line of credit that matured in
June 2020, cash provided by an unsecured promissory note in the
principal amount of $583,000 (“the PPP Loan”) to
Cadence Bank, N.A. (“Cadence”) pursuant to the PPP, and
$10,000,000 in proceeds received from a private placement of our
common stock in October 2019.
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On
February 12, 2021, we closed an underwritten public offering of
1,265,000 shares of our common stock at a public offering price of
$25.00 per share resulting in gross proceeds of $31,625,000, before
deducting underwriting discounts and commissions and estimated
offering expenses. We expect to use the net proceeds from the
offering to expand our salesforce and for further development of
its products, services and technologies pipeline, clinical studies
and general corporate purposes, including working capital (see
Note 13 to the consolidated
financial statements contained elsewhere in this Annual Report on
Form 10-K for more information on this offering). Based on our
current plan of operations, including acquisitions, we believe our
cash on hand, when combined with expected cash flows from
operations and amounts available under our revolving credit
facility, will be sufficient to fund our growth strategy and to
meet our anticipated operating expenses and capital expenditures
for at least the next twelve months.
On
January 15, 2021, we entered into a new loan agreement with Cadence
(the “Loan Agreement”), providing for a $2.5 million
revolving line of credit. The revolving line of credit matures on
January 13, 2023, and is secured by substantially all of our
assets. Any amounts outstanding will bear interest of 0.75% plus
the “Prime Rate” designated in the “Money
Rates” section of the Wall Street Journal. Proceeds from the
line of credit are to be used to provide additional working capital
in support of current assets and for other general corporate
purposes and may not be used for acquisitions.
The
line of credit contains customary representations and warranties
and requires us to maintain compliance with certain financial
covenants, including, among others, a minimum liquidity of
$1,000,000 as of December 31, 2020 and March 31, 2021, a minimum
Tangible Net Worth (as defined in the Loan Agreement) of $1,000,000
and, beginning with the fiscal quarter ending June 30, 2021, a
minimum Interest Coverage Ratio (as defined in the Loan Agreement)
of 1.5 to 1.0. The Loan Agreement also contains customary events of
default. If such an event of default occurs, Cadence would be
entitled to take various actions, including the acceleration of
amounts due under the Loan Agreement. We generally may (and must,
under certain circumstances) prepay all or a portion of the
principal outstanding on the revolving line of credit prior to its
contractual maturity. As of March 30, 2021, no amounts were owed
under the Loan Agreement.
As a
result of the COVID-19 pandemic, beginning in March 2020, we
significantly reduced costs in areas such as payroll, consulting,
business travel, and other discretionary spending. We are
continuing to monitor our cash flow and plan to make additional
expenditure adjustments as necessary. In November 2020, we were
informed that the full amount of the PPP Loan was forgiven. The
forgiveness of the loan was recognized as Other income at that
time. If appropriate, we may pursue additional financing including
issuing additional stock and incurring additional debt to support
our strategic initiatives. If we are unable to obtain additional
funding for operations at any time in the future, we may not be
able to continue expanding the business as currently planned which
would require us to modify various aspects of our
operations.
On
November 9, 2020, our subsidiary, UWSS, entered into agreements to
purchase shares of Series A Convertible Preferred Stock (the
“Series A Stock”) of Precision Healing Inc.
(“Precision Healing”) for an aggregate purchase price
of $600,000. The Series A Stock is convertible into 150,000 shares
of common stock of Precision Healing and has a senior liquidity
preference relative to the common shareholders. As stipulated in
the agreements with Precision Healing, UWSS invested an additional
$600,000 in February 2021 for 150,000 additional shares of Series A
Stock. The additional shares of Series A Stock will convert into
shares of common stock of Precision Healing at a ratio based on the
date Precision Healing delivers a development milestone related to
a wound diagnostic tool currently under development.
On July
7, 2019, we executed a license agreement with Rochal whereby we
acquired an exclusive world-wide license to market, sell and
further develop antimicrobial products for the prevention and
treatment of microbes on the human body utilizing certain Rochal
patents and pending patent applications (the “BIAKŌS
License Agreement”). Under the terms of the BIAKŌS
License Agreement, we agreed to pay Rochal $750,000 upon the
completion of a capital raise, on or before December 31, 2022, of
at least $10,000,000 through the sale of our common stock or
assets. At our option, the $750,000 payment may be paid in any
combination of cash and our common stock. In March 2021, we issued
20,834 shares of our common stock to Rochal as full payment of the
$750,000 which became due upon the Company’s completion of a
capital raise in February 2021.
For the
year ended December 31, 2020, net cash used in operating activities
was $4,034,518 compared to $2,167,401 used in operating activities
for the year ended December 31, 2019. The higher use of cash in
2020 was primarily due to our investment in sales force expansion,
corporate infrastructure, and start-up costs related to telehealth
services including the development of electronic imagery and data
sharing technology to support virtual consultation and
diagnostics.
For the
year ended December 31, 2020, net cash used in investing activities
was $2,744,374 compared to $1,197,097 used in investing activities
during the year ended December 31, 2019. The cash used in investing
activities during 2020 was primarily due to our entry into a
product license agreement with Rochal in May 2020, which included
an initial cash payment of $600,000, along with a $500,000
milestone payment made to Rochal during the first quarter of 2020
as a result of FDA clearance of BIAKŌS Antimicrobial Wound
Gel. During the third quarter of 2020, a $500,000 long-term
investment was made to purchase a minority interest in DirectDerm.
During the fourth quarter of 2020, a $600,000 long-term investment
was made in Precision Healing.
For the
year ended December 31, 2020, net cash provided by financing
activities was $622,330 as compared to $9,800,005 provided by
financing activities for the year ended December 31, 2019. The cash
provided by financing activities in 2020 was primarily related to
funds received from the PPP Loan. Cash provided by financing
activities for the year ended December 31, 2019 was due to proceeds
received from a $10,000,000 private placement of our common stock
in October 2019.
49
Material Transactions with Related Parties
CellerateRx Sublicense Agreement
We have
an exclusive, world-wide sublicense to distribute CellerateRX
products into the wound care and surgical markets from an affiliate
of Catalyst, CGI Cellerate RX, which licenses the rights to
CellerateRX from AN. Sales of CellerateRX have comprised the
majority of our sales during 2018, 2019 and 2020. On January 26,
2021, we amended the term of the sublicense agreement to extend the
term to May 17, 2050, with automatic one-year renewals so long as
annual net sales of CellerateRX exceed $1,000,000. We pay royalties
based on our annual net sales of CellerateRX consisting of 3% of
all collected net sales each year up to $12,000,000, 4% of all
collected net sales each year that exceed $12,000,000 up to
$20,000,000, and 5% of all collected net sales each year that
exceed $20,000,000. Minimum royalties of $400,000 per year are
payable for the first five years of the sublicense agreement, which
was entered on August 27, 2018. For the years ended December 31,
2020 and 2019, royalties due under the terms of this agreement
totaled $479,809 and $400,000, respectively.
Ronald
T. Nixon, our Executive Chairman, is the founder and managing
partner of Catalyst. Mr. Nixon and Catalyst, collectively with
their affiliates, including CGI Cellerate RX, beneficially owned
3,481,406 shares of our common stock as of December 31,
2020.
Convertible Notes Payable
In
connection with the Cellerate Acquisition, we issued a 30-month
convertible promissory note to CGI Cellerate RX, an affiliate of
Catalyst, in the principal amount of $1,500,000, bearing interest
at a 5% annual interest rate, compounded quarterly. Interest on the
promissory note was payable quarterly but could have been deferred
at our election to the maturity of the promissory note. Outstanding
principal and interest were convertible at CGI Cellerate RX’s
option into shares of our common stock at a conversion price of
$9.00 per share.
On
February 7, 2020, CGI Cellerate RX converted its $1,500,000
promissory note, including accrued interest of $111,911, into
179,101 shares of our common stock. As of December 31, 2020, there
were no related party promissory notes or accrued interest
outstanding.
Payables
We had
outstanding payables to related parties totaling $223,589 at
December 31, 2020, and $68,668 at December 31, 2019.
Manufacturing and Technical Services Agreements
On
September 9, 2020, we executed a manufacturing agreement with
Rochal. Under the terms of the manufacturing agreement, Rochal
agreed to manufacture, package, and label products we licensed from
Rochal. The manufacturing agreement includes customary terms and
conditions. The term of the agreement is for a period of five years
unless extended by the mutual consent of the parties. For the year
ended December 31, 2020, we incurred $285,155 of inventory
manufacturing costs with Rochal.
On
September 9, 2020, we executed a technical services agreement with
Rochal. Under the terms of the technical services agreement, Rochal
will provide its expertise and services on technical service
projects identified by us for wound care, skin care and surgical
site care applications. The technical services agreement includes
customary terms and conditions for our industry. For the year ended
December 31, 2020, we incurred $364,881 of costs for Rochal
technical services. We may terminate this agreement at any
time.
Ronald
T. Nixon, our Executive Chairman, is also a director of Rochal, and
indirectly a significant shareholder of Rochal, and through the
potential exercise of warrants a majority shareholder of Rochal.
Ann Beal Salamone, a director, is a significant shareholder, the
former president and current Chairman of the Board of
Rochal.
Impact of Inflation and Changing Prices
Inflation
and changing prices have not had a material impact on our
historical results of operations. We do not currently anticipate
that inflation and changing prices will have a material impact on
our future results of operations.
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Critical Accounting Policies
Our
discussion and analysis of our financial condition and results of
operations are based on our consolidated financial statements,
which have been prepared in accordance with accounting principles
generally accepted in the U.S. The preparation of these
consolidated financial statements requires us to make estimates and
judgments that affect the reported amounts of assets, liabilities,
and expenses. We base our estimates on historical experience and on
various other assumptions that we believe to be reasonable under
the circumstances. The results of these assumptions form the basis
for making judgments about the carrying values of assets and
liabilities that are not readily apparent from other sources. Under
different assumptions or conditions, actual results may differ from
these estimates. We have identified certain significant accounting
policies which involve a higher degree of judgment and complexity
in making certain estimates and assumptions that affect amounts
reported in our consolidated financial statements, as summarized
below.
Revenue Recognition
We
recognize revenue in accordance with Accounting Standards
Codification (“ASC”) Topic 606, Revenue from Contracts
with Customers, which we adopted on January 1, 2018 using the
modified retrospective method. Revenues are recognized when control
of the promised goods or services is transferred to the customer in
an amount that reflects the consideration we expect to be entitled
to receive in exchange for transferring those goods or services.
Revenue is recognized based on the following five step
model:
-
Identification of the contract with a customer
-
Identification of the performance obligations in the
contract
-
Determination of the transaction price
-
Allocation of the transaction price to the performance obligations
in the contract
-
Recognition of revenue when, or as, we satisfy a performance
obligation
Impairment of Long-Lived Assets
Long-lived
assets, including certain identifiable intangibles held and to be
used by our Company, are reviewed for impairment whenever events or
changes in circumstances, including the COVID-19 pandemic, indicate
that the carrying amount of such assets may not be recoverable. We
continuously evaluate the recoverability of our long-lived assets
based on estimated future cash flows and the estimated liquidation
value of such long-lived assets and provide for impairment if such
undiscounted cash flows are insufficient to recover the carrying
amount of the long-lived assets. If impairment exists, an
adjustment is made to write the asset down to its fair value, and a
loss is recorded as the difference between the carrying value and
fair value. Fair values are determined based on quoted market
values, undiscounted cash flows or internal and external
appraisals, as applicable. Assets to be disposed of are carried at
the lower of carrying value or estimated net realizable value. No
impairment was recorded during the years ended December 31, 2020
and 2019.
Investment in Equity Securities
Our
investments consist of non-marketable equity securities in
privately held companies without readily determinable fair values,
and are reported at cost minus impairment, if any, plus or minus
changes resulting from observable price changes in orderly
transactions for the identical or similar investment of the same
issuer. We have reviewed the carrying value of our investments and
have determined there was no impairment or observable price changes
as of December 31, 2020.
Inventories
Inventories
are stated at the lower of cost or net realizable value, with cost
computed on a first-in, first-out basis. Inventories consist of
finished goods and related packaging components. We recorded
inventory obsolescence expense of $318,076 for the year ended
December 31, 2020 and $120,442 for the year ended December 31,
2019. The allowance for obsolete and slow-moving inventory had a
balance of $276,603 at December 31, 2020, and $43,650 at December
31, 2019. We considered the impact of COVID-19 on our recorded
value of inventory and determined no adjustment was necessary as of
December 31, 2020.
Use of Estimates
The
preparation of financial statements in conformity with generally
accepted accounting principles requires management to make
estimates and assumptions that affect amounts reported in the
financial statements and accompanying notes. The extent to which
the COVID-19 pandemic may directly or indirectly impact our
business, financial condition, and results of operations is highly
uncertain and subject to change. We considered the potential impact
of the COVID-19 pandemic on our estimates and assumptions and
determined there was not a material impact on our estimates and
assumptions used in preparing our consolidated financial statements
as of and for the year ended December 31, 2020; however, actual
results could differ from those estimates and there may be changes
to our estimates in future periods.
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