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Subsequent Event – Nasdaq Compliance
 9 Months Ended
Sep. 30, 2023
Subsequent Events [Abstract]  
Subsequent Event – Nasdaq Compliance

Note 10. Subsequent Event – Nasdaq Compliance

 

On May 5, 2023, the Company received a notice letter from the Listing Qualifications Staff of The Nasdaq Stock Market, LLC (“Nasdaq”) notifying the Company that it was not in compliance with the Listing Rule 5550(b) (the “Rule”), which requires listed companies to maintain a minimum $2,500,000 stockholders’ equity, $35,000,000 market value of listed securities, or $500,000 net income from continuing operations. In its quarterly report for the period ended March 31, 2023, the Company reported stockholders’ equity of $1,845,000, and as a result, did not satisfy the Rule. On June 14, 2023, the Company received a letter from Nasdaq granting the Company an extension through October 30, 2023 to regain compliance with the Rule.

 

On October 23, 2023, the Company issued convertible notes in the amount of $1,390,000 pursuant to the subscription agreements described in Note 6. Note balances of $1,207,000 were immediately converted into approximately 820,000 shares of common stock. A pro-forma balance sheet giving effect to the transactions is presented below:

 

   September 30,

2023

(unaudited)

  

Convertible Debt

Drawdown

  

Conversion of

Debt to Equity

  

September 30, 2023

(proforma, unaudited)

 
Assets                    
Current assets:                    
Cash  $1,011,000   $1,390,000   $-    $2,401,000 
Trade accounts receivable, net   1,159,000              1,159,000 
Other receivables   116,000              116,000 
Inventory, net   748,000              748,000 
Prepaid expenses and other current assets   167,000              167,000 
Total current assets   3,201,000    1,390,000    -    4,591,000 
Property, plant and equipment, net of depreciation   487,000              487,000 
Intangible assets, net of amortization   258,000              258,000 
Deposits   7,000              7,000 
Total assets  $3,953,000   $1,390,000   $-   $5,343,000 
                     
Liabilities and Stockholders’ Equity                    
Current liabilities:                    
Accounts payable  $1,692,000   $-    $-    $1,692,000 
Disputed co-manufacturer accounts payable   499,000              499,000 
Accrued expenses   229,000              229,000 
Accrued payroll and employee related   240,000              240,000 
Convertible notes payable   -    1,390,000    (1,207,000)   183,000 
Total current liabilities   2,660,000    1,390,000    (1,207,000)   2,843,000 
Total liabilities   2,660,000    1,390,000    (1,207,000)   2,843,000 
                     
Stockholders’ equity:                    
Common stock   -              - 
Additional paid in capital   61,388,000              61,388,000 
Accumulated deficit   (60,095,000)      1,207,000    (58,888,000)
Total stockholders’ equity   1,293,000    -   1,207,000    2,500,000 
Total liabilities and stockholders’ equity  $3,953,000   $1,390,000   $-   $5,343,000 

 

Management believes that taking into consideration the October 23, 2023 note issuance and conversion, the Company satisfies the stockholders’ equity requirement on a pro-forma basis as of September 30, 2023 and as of October 26, 2023. Nasdaq will continue to monitor the Company’s ongoing compliance with the Rule and, if at the time of its next periodic report the Company does not evidence compliance, it may be subject to delisting.