Accounting Policies, by Policy (Policies)

9 Months Ended

Sep. 30, 2021

Accounting Policies [Abstract]

Use of Estimates

(a) Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the 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. The Company’s significant estimates include stock-based compensation and reserves related to accounts receivable, inventories and deferred tax assets. Actual results could differ from those estimates.

Net income (loss) Per Share

(b) Net income (loss) Per Share

Net income (loss) per share is calculated in accordance with Accounting Standards Codification (“ASC”) ASC Topic 260 “Earnings Per Share,” which provides for the calculation of “basic” and “diluted” net income (loss) per share. Basic net income (loss) per share includes no dilution and is computed by dividing net income (loss) by the weighted average number of common shares outstanding for the period. Diluted net income (loss) per share reflect, in periods in which they have a dilutive effect, the effect of potential issuances of common shares. The Company calculates diluted net income per share using the treasury stock method for warrants and options and the if converted method for convertible debt.

The following table presents the computation of basic and diluted net income per share for the nine months ended September 30, 2021:

	Income (Numerator)		Shares (Denominator)		Per-Share Amount
Basic EPS	$	1,011		11,956	$	0.08
Effect of dilutive securities
Convertible debt		213		2,079
Warrants				48
Options				1,228
Diluted EPS	$	1,224		15,311	$	0.08

The diluted share base excludes the following potential common shares due to their antidilutive effect:

	Three months ended September 30				Nine months ended September 30
	2021		2020		2021		2020
Stock options		4,221		1,157		491		1,264
Convertible debt		2,079		1,682		-		1,682
Warrants		45		5		-		-
		6,345		2,844		491		2,946

Amortization of Debt Discount

(c) Amortization of Debt Discount

The Company accounts for the amortization of the debt discount utilizing the effective interest method.

Adoption of Recent Accounting Pronouncements

(d) Adoption of Recent Accounting Pronouncements

In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes (“Topic 740”). The list of changes is comprehensive; however, the changes will not significantly impact the Company due to the full valuation allowance that is recorded against the Company’s deferred tax assets. Early adoption of ASU 2019-12 is permitted, including adoption in any interim period for public business entities for periods for which financial statements have not yet been issued. An entity that elects to early adopt the amendments in an interim period should reflect any adjustments as of the beginning of the annual period that includes that interim period. Additionally, an entity that elects early adoption must adopt all the amendments in the same period. The Company adopted ASU 2019-12 in 2021. The adoption of this new standard did not have a material impact on the Company’s financial position, results of operations or financial statement disclosure.

Liquidity and Ability to Continue as a Going Concern

(e) Liquidity and Ability to Continue as a Going Concern

In March 2020, the World Health Organization declared the outbreak of a novel coronavirus (COVID-19) as a pandemic which continues to spread throughout the United States. On March 21, 2020, the Governor of New Jersey declared a health emergency and issued an order to close all nonessential businesses until further notice. As a maker of telecommunication equipment, the Company is deemed to be an essential business. Nonetheless, out of concern for our workers and pursuant to the government order, the Company reduced the scope of its operations and where possible, certain workers are telecommuting from their homes. In June 2021, the Governor of New Jersey rescinded the public health emergency. While the Company expects this matter to continue to negatively impact its results of operations, cash flows and financial position, the related impact cannot be reasonably estimated at this time.

As disclosed in the Company’s most recent Annual Report on Form 10-K, the Company experienced a decline in sales, a reduction in working capital, a loss from operations and net cash used in operating activities, in conjunction with liquidity constraints. The above factors raised substantial doubt about the Company’s ability to continue as a going concern. As of September 30, 2021, certain of these factors still exist. Accordingly, there still exists substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments relating to the recoverability of the recorded assets or the classification of the liabilities that might be necessary should the Company be unable to continue as a going concern.

In response to lower than expected sales due to a slowdown in market activities experienced during 2019, exacerbated by the outbreak of the novel coronavirus during the early part of 2020, the Company has continued a multi-phase operational cost-reduction program, which included adjustments to our staffing (in the form of furloughs and both temporary and permanent layoffs) and strategically timed reductions in manufacturing activities, which we believe will improve our ability to continue our operations and meet our obligations to customers.

The Company’s primary sources of liquidity have been its existing cash balances, cash generated from operations, amounts available under the MidCap Facility (see Note 5 below), amounts available under the Subordinated Loan Facility (see Note 6 below) and cash generated from sales of common stock, as well as funds made available to the Company through participation in several federal government financial assistance programs implemented pursuant to the Coronavirus Aid, Relief, and Economic Security Act, including the Paycheck Protection Program and the Employee Retention Tax Credit. As of September 30, 2021, the Company had approximately $2,058 outstanding under the MidCap Facility and $516 of additional availability for borrowing under the MidCap Facility.

If anticipated operating results are not achieved and/or the Company is unable to obtain additional financing, it may be required to take additional measures to reduce costs in order to conserve its cash in amounts sufficient to sustain operations and meet its obligations, which measures could have a material adverse effect on the Company’s ability to achieve its intended business objectives and may be insufficient to enable the Company to continue as a going concern.

Subsequent Events

(f) Subsequent Events

The Company evaluates events that have occurred after the balance sheet date but before the financial statements are issued. Based upon the evaluation, the Company did not identify any additional recognized or non-recognized subsequent events that would require adjustment to or disclosure in the condensed consolidated financial statements.