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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended
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Dec. 31, 2023
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Accounting estimates The preparation of financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires Management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ significantly from those estimates. The amount reported as a contractual allowance for rebates involves examination of past historical trends related to sales to customers and the related credits issued once contractual obligations of the customers have been met. The establishment of a liability for future claims of rebates against sales in the current period requires that the Company has an understanding of the relevant sales with respect to product categories, sales distribution channels, and the likelihood of contractual obligations being satisfied. Cash and cash equivalents For purposes of reporting cash flows, cash and cash equivalents include cash, money market accounts, and investments with original maturities of three months or less. Accounts receivable The Company records trade receivables when revenue is recognized. No product has been consigned to customers. The Company’s allowance for credit losses is primarily determined by review of specific trade receivables based on historical collection rates and specific knowledge regarding the current creditworthiness of the customers. Those accounts that are doubtful of collection are included in the allowance. The Company considers historical experience, the current economic environment, customer credit ratings or bankruptcies, legal disputes, collections on past due amounts, pricing discrepancies, and reasonable and supportable forecasts to develop its allowance for credit losses. Management reviews these factors quarterly to determine if any adjustments are needed to the allowance. Trade receivables are charged off when there is certainty as to their being uncollectible. Trade receivables are considered delinquent when payment has not been made within contract terms. The allowance for credit losses was $890,541 and $675,208 as of December 31, 2023 and 2022, respectively. The Company requires certain customers to make a prepayment prior to beginning production or shipment of their order. Customers may apply such prepayments to their outstanding invoices or pay the invoice and continue to carry forward the deposit for future orders. Such amounts are included in Other accrued liabilities on the Balance Sheets and are shown in Note 7, Other Accrued Liabilities. The Company records an allowance for estimated returns as a reduction to Accounts receivable and Gross sales. Historically, returns have been insignificant. Inventories Inventories are valued at the lower of cost or net realizable value, with cost being determined using actual average cost. The Company compares the average cost to the net realizable value and records the lower value. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. For the year ended December 31, 2023, the Company recorded a $101 thousand lower of cost or net realizable value inventory adjustment associated with the VanishPoint® 3mL and EasyPoint® needle product segments. There was no lower of cost or net realizable value inventory adjustment as of December 31, 2022. Management considers such factors as the amount of inventory on hand and in the distribution channel, estimated time to sell such inventory, the shelf life of inventory, and current market conditions when determining excess or obsolete inventories. Once inventory items are deemed to be either excess or obsolete, they are written down to their net realizable value. As of December 31, 2023 and December 31, 2022, the Company’s inventory reserve was $473 thousand and $297 thousand, respectively. Investments in debt and equity securities The Company holds mutual funds, debt, and equity securities as investments. These assets are held as trading securities and are carried at fair value as of the date of the Balance Sheets. Net unrealized and realized gains or losses on these investments are reflected separately on the Statements of Operations. Realized gains or losses on investments are recognized using the specific identification method. Property, plant, and equipment Property, plant, and equipment are stated at cost less accumulated depreciation. Expenditures for maintenance and repairs are charged to operations as incurred. Cost includes major expenditures for improvements and replacements which extend useful lives or increase capacity and interest costs associated with significant capital additions. Gains or losses from disposals are included in Interest and other income. The Company's property, plant, and equipment primarily consist of buildings, land, assembly equipment, molding machines, molds, office equipment, furniture, and fixtures. Depreciation and amortization are calculated using the straight-line method over the following useful lives: ​
​ | ​ | ​
Production equipment |  | 3 to 13 years
Office furniture and equipment |  | 3 to 10 years
Buildings |  | 39 years
Building improvements |  | 15 years
​ Long-lived assets The Company assesses the recoverability of long-lived assets using an assessment of the estimated undiscounted future cash flows related to such assets. In the event that assets are found to be carried at amounts which are in excess of estimated gross future cash flows, the assets will be adjusted for impairment to a level commensurate with fair value determined using a discounted cash flow analysis or appraised values of the underlying assets. Fair value measurements For assets and liabilities that are measured using quoted prices in active markets, total fair value is the published market price per unit multiplied by the number of units held without consideration of transaction costs. Assets and liabilities that are measured using significant other observable inputs are valued by reference to similar assets or liabilities, adjusted for contract restrictions and other terms specific to that asset or liability. For these items, a significant portion of fair value is derived by reference to quoted prices of similar assets or liabilities in active markets. For all remaining assets and liabilities, fair value is derived using a fair value model, such as a discounted cash flow model or Black-Scholes model. Financial instruments The Company estimates the fair value of financial instruments through the use of public market prices, quotes from financial institutions, and other available information. Judgment is required in interpreting data to develop estimates of fair value and, accordingly, amounts are not necessarily indicative of the amounts that could be realized in a current market exchange. Short-term financial instruments, including cash and cash equivalents, accounts receivable, accounts payable, and other liabilities, consist primarily of instruments without extended maturities, the fair value of which, based on Management’s estimates, equals their recorded values. Investments in debt and equity securities consist primarily of individual equity securities and mutual funds and are reported at their fair value based upon quoted prices in active markets. The fair value of long-term liabilities, based on Management’s estimates, approximates their reported values. Concentration risks The Company’s financial instruments exposed to concentrations of credit risk consist primarily of cash, cash equivalents, certificates of deposit, exchange-traded and closed-end funds, mutual funds, equity securities, and accounts receivable. Cash balances, some of which exceed federally insured limits, are maintained in financial institutions; however, Management believes the institutions are of high credit quality. The majority of accounts receivable are due from companies that are well-established entities. The Company assesses market risk in equity securities through consultation with its outside investment advisors. Management is responsible for directing investment activity based on current economic conditions. Management considers any exposure from concentrations of credit risks to be limited. The following table reflects our significant customers in 2023, 2022, and 2021: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | Years Ended December 31, |
​ |  | ​ | 2023 |  | 2022 |  | 2021 |
Number of significant customers |  |  | ​ | 4 |  | ​ | 4 |  | ​ | 1 | ​
Aggregate dollar amount of net sales to significant customers | ​ | ​ | $ | 25.9 million | ​ | $ | 66.4 million | ​ | $ | 113.7 million | ​
Percentage of net sales to significant customers | ​ | ​ | ​ | 61.3 | % | ​ | 70.0 | % | ​ | 60.3 | %
​ The Company manufactures some of its products in Little Elm, Texas, as well as utilizing manufacturers in China. The Company obtained roughly 88.4% of its products in 2023 from its Chinese manufacturers. Purchases from Chinese manufacturers aggregated 91.6% and 92% of products in 2022 and 2021, respectively. In the event that the Company becomes unable to purchase products from its Chinese manufacturers, the Company may need to find an alternate manufacturer for its blood collection set, EasyPoint® blood collection tube holder with needle, IV catheter, Patient Safe® syringe, 0.5mL insulin syringe, 0.5mL autodisable syringe, and 2mL, 5mL, and 10mL syringes, and would increase domestic production for the 1mL and 3mL syringes and EasyPoint® needles. Revenue recognition The Company recognizes revenue when control of performance obligations passes to the customer, generally when the product ships. Payments from customers with approved credit terms are typically due 30 days from the invoice date. Under certain contracts, revenue is recorded on the basis of sales price to distributors, less contractual pricing allowances. Contractual pricing allowances consist of: (i) rebates granted to distributors who provide tracking reports which show, among other things, the facility that purchased the products, and (ii) a provision for estimated contractual pricing allowances for products for which the Company has not received tracking reports. When rebates are issued, they are applied against the customer’s receivable balance. Distributors receive a rebate for the difference between the Wholesale Acquisition Cost and the appropriate contract price as reflected on a tracking report provided by the distributor to the Company. If product is sold by a distributor to an entity that has no contract, there is a standard rebate (lower than a contracted rebate) given to the distributor. One of the purposes of the rebate is to encourage distributors to submit tracking reports to the Company. The provision for contractual pricing allowances is recognized in the period the related sales are recognized and is reviewed at the end of each quarter and adjusted for changes in levels of products for which there is no tracking report. Additionally, if it becomes clear that tracking reports will not be provided by individual distributors, the provision is further adjusted. The estimated contractual allowance is included in Accounts payable in the Balance Sheets and deducted from Revenues in the Statements of Operations. Accounts payable included estimated contractual allowances for $2.2 million and $3.0 million as of December 31, 2023 and 2022, respectively. The terms and conditions of contractual pricing allowances are governed by contracts between the Company and its distributors. Revenue for shipments directly to end-users is recognized when title and risk of ownership pass from the Company. End-users do not receive any contractual allowances on their purchases. Any product shipped or distributed for evaluation purposes is expensed. The Company provides product warranties that: i) the products are fit for medical use as generally defined within the boundaries of United States FDA approval; ii) the products are not defective; and iii) the products will conform to the descriptions set forth in their respective labeling, provided that they are used in accordance with such labeling and the Company’s written directions for use. The Company has historically not incurred significant warranty claims. The Company’s domestic return policy provides that a customer may return incorrect shipments within 10 days following arrival at the distributor’s facility. In all such cases, the distributor must obtain an authorization code from the Company and affix the code to the returned product. The Company’s domestic return policy also generally provides that a customer may return product that is overstocked. Overstocking returns are limited to two times in each 12-month period up to 1% of distributor’s total purchase of products for the prior 12-month period. All product overstocks and returns are subject to inspection and acceptance by the Company. The Company has not historically incurred significant returns. The Company’s international distribution agreements generally do not provide for any returns. The Company requires certain customers to pay in advance of product shipment. Such prepayments from customers are recorded in Other accrued liabilities and are generally recognized as revenue upon shipment of the product. The Company periodically recognizes revenue from licensing agreements of its intellectual property. Such licensing agreements provide licensee with right to use the Company’s intellectual property. The Company accounts for revenue generated under these licensing agreements in accordance with ASC 606. A license may be perpetual or time limited in its application. The Company has concluded that its licensing agreement is distinct as the customer can benefit from the license on their own. In accordance with ASC 606, the licensing agreement is considered functional as it is without professional services, updates and technical support. The Company has determined the current licensing agreement is sales-based or usage-based as defined in ASC 606. In accordance with ASC 606, the Company recognizes revenue from sales-based or usage-based license at the later of a) subsequent sale or usage occurrence or b) the performance obligation to which some or all of the sales-based or usage-based royalty has been allocated has been satisfied (or partially satisfied). The Company recognized $778 thousand in licensing fees for year end December 31, 2023. No licensing fees were recognized for the year end December 31, 2022. If the Company licenses its products for sale and the customers of the sublicensee are not known to the Company, the Company is obligated to pay Thomas J. Shaw, the owner of certain patented technology, fifty percent (50%) of such revenue pursuant to the terms of the Technology License Agreement between the Company and Mr. Shaw. Disaggregated information of revenue recognized from contracts with customers and licensing fees recognized are as follows: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | For the year ended December 31, 2023:
​ |  | ​ | ​ |  | Blood |  | ​ | ​ |  | ​ | ​ |  | ​
​ | ​ | ​ | ​ | ​ | Collection | ​ | EasyPoint® | ​ | Other | ​ | ​ | Total
Geographic Segment | ​ | Syringes | ​ | Products | ​ | Needles | ​ | Products | ​ | ​ | Revenue
U.S. sales (excluding U.S. government) | ​ | $ | 26,119,940 | ​ | ​ | 1,414,783 | ​ | ​ | 7,031,798 | ​ | ​ | 33,233 | ​ | $ | 34,599,754
Sales to U.S. government | ​ | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | —
North and South America sales (excluding U.S.) | ​ |  | 5,858,726 | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 226,440 | ​ |  | 6,085,166
Other international revenue | ​ |  | 2,176,674 | ​ | ​ | 511,788 | ​ | ​ | 216,944 | ​ | ​ | 6,600 | ​ |  | 2,912,006
Total | ​ | $ | 34,155,340 | ​ | $ | 1,926,571 | ​ | $ | 7,248,742 | ​ | $ | 266,273 | ​ | $ | 43,596,926
​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | For the year ended December 31, 2022:
​ |  | ​ | ​ |  | Blood |  | ​ | ​ |  | ​ | ​ |  | Total
​ | ​ | ​ | ​ | ​ | Collection | ​ | EasyPoint® | ​ | Other | ​ | Product
Geographic Segment | ​ | Syringes | ​ | Products | ​ | Needles | ​ | Products | ​ | Sales
U.S. sales (excluding U.S. government) | ​ | $ | 29,283,122 | ​ | $ | 2,685,785 | ​ | $ | 4,481,202 | ​ | $ | 42,166 | ​ | $ | 36,492,275
Sales to U.S. government | ​ | ​ | 15,731,136 | ​ | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 15,731,136
North and South America sales (excluding U.S.) | ​ |  | 28,720,378 | ​ |  | — | ​ |  | 2,608 | ​ |  | 403,834 | ​ |  | 29,126,820
Other international sales | ​ |  | 13,004,225 | ​ |  | 268,064 | ​ |  | 190,468 | ​ |  | 5,950 | ​ |  | 13,468,707
Total | ​ | $ | 86,738,861 | ​ | $ | 2,953,849 | ​ | $ | 4,674,278 | ​ | $ | 451,950 | ​ | $ | 94,818,938
​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | For the year ended December 31, 2021:
​ |  | ​ | ​ |  | Blood |  | ​ | ​ |  | ​ | ​ |  | Total
​ | ​ | ​ | ​ | ​ | Collection | ​ | EasyPoint® | ​ | Other | ​ | Product
Geographic Segment | ​ | Syringes | ​ | Products | ​ | Needles | ​ | Products | ​ | Sales
U.S. sales (excluding U.S. government) | ​ | $ | 42,770,403 | ​ | $ | 2,171,680 | ​ | $ | 8,892,712 | ​ | $ | 53,341 | ​ | $ | 53,888,136
Sales to U.S. government | ​ |  | 113,662,440 | ​ | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ |  | 113,662,440
North and South America sales (excluding U.S.) | ​ | ​ | 14,345,874 | ​ | ​ | 4,800 | ​ | ​ | 100,848 | ​ | ​ | 109,714 | ​ | ​ | 14,561,236
Other international sales | ​ |  | 5,551,592 | ​ | ​ | 71,670 | ​ | ​ | 642,880 | ​ | ​ | 4,500 | ​ |  | 6,270,642
Total | ​ | $ | 176,330,309 | ​ | $ | 2,248,150 | ​ | $ | 9,636,440 | ​ | $ | 167,555 | ​ | $ | 188,382,454
​ Income taxes The Company evaluates tax positions taken or expected to be taken in a tax return for recognition in the financial statements based on whether it is “more-likely-than-not” that a tax position will be sustained based upon the technical merits of the position. Measurement of the tax position is based upon the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement. The Company provides for deferred income taxes through utilizing an asset and liability approach for financial accounting and reporting based on the tax effects of differences between the financial statement and tax bases of assets and liabilities, based on enacted rates expected to be in effect when such differences reverse in future periods. Deferred tax assets are periodically reviewed for realizability. Management has concluded that a $283 thousand valuation allowance is needed for state net operating losses as of December 31, 2023 and 2022. Earnings per share The Company computes basic earnings per share (“EPS”) by dividing net earnings for the period (adjusted for any cumulative dividends for the period) by the weighted average number of common shares outstanding during the period. Diluted EPS includes the determinants of basic EPS and, in addition, reflects the dilutive effect, if any, of the common stock deliverable pursuant to stock options and/or common stock issuable upon the conversion of convertible preferred stock. ​ The calculation of diluted EPS under the treasury stock method included the following shares in 2023, 2022, and 2021: ​
​ | ​ | ​ | ​ | ​ | ​
​ | Years Ended December 31,
​ | 2023 |  | 2022 |  | 2021
Common Stock underlying issued and outstanding stock options | 15,040 | ​ | 65,597 | ​ | 141,435
Common stock issuable upon the conversion of convertible preferred shares | — | ​ | — | ​ | 232,445
​ | 15,040 | ​ | 65,597 | ​ | 373,880
​ In 2023 and 2022, preferred stock was excluded from the calculation of diluted EPS because the effect was antidilutive. ​ The potential dilution, if any, is shown on the following schedule: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | Years Ended December 31,
​ |  | ​ | 2023 |  | 2022 |  | 2021
Net income | ​ | ​ | $ | (7,011,036) | ​ | $ | 5,078,557 | ​ | $ | 56,064,241
Preferred stock dividend requirements | ​ | ​ |  | (231,946) | ​ |  | (232,444) | ​ |  | (241,703)
Income applicable to common shareholders | ​ | ​ | $ | (7,242,982) | ​ | $ | 4,846,113 | ​ | $ | 55,822,538
Average common shares outstanding | ​ | ​ |  | 29,937,159 | ​ |  | 32,896,348 | ​ |  | 33,870,819
Average common and common equivalent shares outstanding — assuming dilution | ​ | ​ |  | 29,937,159 | ​ |  | 32,961,945 | ​ |  | 34,244,699
Basic earnings per share | ​ | ​ | $ | (0.24) | ​ | $ | 0.15 | ​ | $ | 1.65
Diluted earnings per share | ​ | ​ | $ | (0.24) | ​ | $ | 0.15 | ​ | $ | 1.63
​ Shipping and handling costs ​ The Company classifies shipping and handling costs as part of Cost of sales in the Statements of Operations. Share-based Compensation The Company’s share-based payments are accounted for using the Black-Scholes fair value method. The Company generally records share-based compensation expense on a straight-line basis over the requisite service period. The Company records forfeitures as they occur. Self-insured employee benefit costs The Company self-insures certain health insurance benefits for its employees under certain policy limits. The Company has additional coverage provided by an insurance company for any individual with claims in excess of $100,000 and/or total plan claims in excess of $1.7 million for the plan year. Research and development costs Research and development costs are expensed as incurred. Technology Investment Agreement (TIA) Effective July 1, 2020, the Company entered into a Technology Investment Agreement (“TIA”) with the United States Government Department of Defense, U.S. Army Contracting Command-Aberdeen Proving Ground, Natick Contracting Division & Edgewood Contracting Division (ACC-APG, NCD & ECD) on behalf of the Biomedical Advanced Research and Development Authority (BARDA), as amended, for $81,029,518 in government funding for expanding the Company’s domestic production of needles and syringes. At the request of the US government, the TIA was transferred to a successor agreement, identified as Other Transaction Agreement in April 2023. Such agreement contains no additional requirements and, for the purposes of this report, the agreement shall continue to be referred to herein as the “TIA”. Under this agreement, the Company has made significant additions to its facilities which allows the Company to increase domestic production capacity. For further explanation, please refer to Note 9 – Technology Investment Agreement. The amounts set forth as Receivable from Technology Investment Agreement (TIA) in the Balance Sheets represent amounts receivable under the TIA. The amounts represented advance requests or reimbursement requests for expenditures. As reimbursements were received from the U.S. government for such expenditures, the Company recorded a deferred liability. In 2021, the deferred liability began to be systematically amortized as a gain over the life of the related property, plant, and equipment and is presented as Other income – TIA on the Statements of Operations. For any reimbursements received for expenditures not capitalized as property, plant, and equipment, Other income – TIA was recognized in the same period as the expense. Recently Issued Pronouncements In June 2022, the FASB issued ASU 2022-03, “Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions”, intended to clarify that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value. The amendment also clarifies that an entity cannot, as a separate unit of account, recognize and measure a contractual sale restriction. ASU No. 2022-03 is effective for public business entities for fiscal years, including interim periods within those fiscal years, beginning after December 15, 2023. Early adoption is permitted. For all other entities, it is effective for fiscal years, including interim periods within those fiscal years beginning after December 15, 2024. Early adoption is permitted for both interim and annual financial statements that have not yet been issued or made available for issuance. The adoption of the amendments is unlikely to have a material effect on the Company’s financial statements or disclosures.

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