From 2013 until May 2020, we were involved in several lawsuits with our principal competitor, EMED Technologies Corporation (“EMED”). EMED alleged that our needle sets infringed various patents controlled by EMED. Certain of these lawsuits also alleged antitrust violations, unfair business practices, and various other business tort claims. On May 26, 2020, the parties announced the settlement of all of the litigation between KORU Medical and EMED. The settlement agreement provides KORU Medical with freedom to operate under EMED’s existing patent portfolio, dismissal of all litigation with prejudice (including the claims against Andrew Sealfon, our former President and Chief Executive Officer), and an equity payment by KORU Medical to EMED. The settled litigation is described below.
The initial case involving EMED was filed by us in the United States District Court for the Eastern District of California on September 20, 2013 (the “California case”), in response to a letter from EMED claiming patent infringement by us, and sought a declaratory judgment establishing the invalidity of the patent referenced in the letter – EMED’s US patent 8,500,703 – “’703.” EMED answered the complaint and asserted patent infringement of the ’703 patent and several counterclaims relating generally to claims of unfair business practices against us. We responded by adding several claims against EMED, generally relating to claims of unfair business practices on EMED’s part. On June 16, 2015, the California court entered a preliminary injunction against KORU Medical for making certain statements regarding products cleared for use by the FDA, or that could be safely used, with KORU Medical’s Freedom60 pump, without voiding the product warranty. On September 11, 2015, we requested an ex parte reexamination of the ’703 patent by the U.S. Patent and Trademark Office (“USPTO”). The ex parte reexamination resulted in the Patent Trial and Appeal Board (“PTAB”) of the USPTO determining that claims 1-10 of the ’703 patent are invalid, leaving claim 11 as the only surviving claim of the ’703 patent. Claim 11 of the ’703 patent, however, was not asserted in the California case. EMED informed KORU Medical it will neither appeal the PTAB’s decision nor pursue a claim based on infringement of claim 11 of the ’703 patent in the California case.
The second court case was filed by EMED in the United States District Court for the Eastern District of Texas (the “Texas Court”) on June 25, 2015, claiming patent infringement on another of its patents (US 8,961,476 – “’476”), by our needle sets, and seeking unspecified monetary damages (“ED Texas ’476 matter”). This ’476 patent is related to the invalid claims of the EMED ’703 patent.
On September 17, 2015, we requested an inter partes review (“IPR”) of the ’476 patent, and subsequently after a trial the PTAB issued a Final Written Decision in our favor, invalidating all claims but one (“dependent Claim 9”) of the ’476 patent. EMED appealed the PTAB’s ruling to the United States Court of Appeals for the Federal Circuit (the “CAFC”), which affirmed the PTAB’s Final Written Decision in our favor on April 3, 2018.
During the IPR proceedings regarding the ’476 patent, EMED filed a new patent application that subsequently issued as US 9,808,576 – “’576” on November 7, 2017. On this same date, EMED filed a new case (the “third case”) in the Texas Court claiming patent infringement of the ’576 patent by our needle sets, and seeking unspecified damages and a preliminary injunction against marketing and sales of our needle sets. We moved to dismiss or transfer venue to the United States District Court for the Southern District of New York (“SDNY”), which resulted in the transfer of the third case to SDNY (“SDNY ’576 matter”) on May 30, 2018.
On April 23, 2018, EMED filed a new civil case (the “fourth case”) against us in the Texas Court asserting antitrust, defamation and unfair business practice claims, and seeking unspecified damages, similar to those previously presented in the California case, described above. The fourth case also named Andrew Sealfon, then President and Chief Executive Officer of KORU Medical, individually as a defendant. Following a hearing held on November 14, 2018 to address a motion we had filed to transfer venue, on December 7, 2018, the Texas Court transferred the fourth case to the United States District Court for the Eastern District of California (the “California Court”). We then moved to dismiss that complaint, and Andrew Sealfon filed a separate motion to dismiss the case as to him for lack of jurisdiction.
At the same hearing on November 14, 2018, the Texas Court granted EMED leave to amend its infringement contentions to assert infringement of that sole remaining claim 9 of the ’476 patent. In April 2019, EMED served its damages expert’s report opining that EMED’s past infringement damages amount to $1.5 million, and in May KORU Medical served its damages expert’s rebuttal report opining that EMED’s expert miscalculated damages which if properly calculated would amount to less than $100,000. We moved to dismiss the case for lack of infringement. On June 24, 2019, the Texas Court Magistrate Judge issued a Report and Recommendation decision granting summary judgment in our favor, finding no infringement, literally or under the doctrine of equivalents, by KORU Medical’s accused products. EMED’s objections were overruled and on June 28, 2019, the Texas Court issued a Final Judgment in favor of KORU Medical, awarded court costs to KORU Medical, and dismissed the case. A final judgment was entered and KORU Medical submitted its Bill of Costs for approximately $16,000, which was ordered granted by the Texas Court. KORU Medical also moved to declare the case exceptional and for recovery of its attorney fees and expenses of approximately $2.5 million in defense of EMED’s assertion of the ’476 Patent. EMED appealed the non-infringement judgment to the CAFC. On April 9, 2020, the CAFC issued a unanimous decision affirming the Texas Court’s judgment of non-infringement. The Texas Court had stayed proceedings in the district court until the appeal process was completed.
The SDNY ’576 matter proceeded in the New York court through claim construction on the ’576 Patent, whereupon KORU Medical filed a motion for summary judgement of non-infringement. That motion was granted on August 30, 2019, and the New York court dismissed the lawsuit and entered a final judgement. KORU Medical submitted a Bill of Costs for approximately $1,500, to which EMED objected, and moved the New York court to declare the case exceptional and for recovery of its attorney fees and expenses of at least $1.16 million. On November 12, 2019, the Magistrate Judge issued a Report and Recommendation that KORU Medical’s fee motion be granted, and KORU Medical be awarded approximately $1.1 million in fees and expenses. EMED filed objections to that Report and Recommendation. EMED also appealed the New York court’s judgment of non-infringement to the CAFC, which the parties had fully briefed, and were awaiting a decision from the CAFC Court.
The aforementioned district court litigation has now been finally dismissed with prejudice, and all associated appeals dismissed.
NOTE 4 STOCK-BASED COMPENSATION
On June 29, 2016, the Board of Directors amended the Company’s 2015 Stock Option Plan (as amended, the “Plan”) authorizing the Company to grant awards to certain executives, key employees, and consultants under the Plan, which was approved by shareholders at the Annual Meeting of Shareholders held on September 6, 2016. The total number of shares of Common Stock, with respect to which awards may be granted pursuant to the Plan, may not exceed 6,000,000 pursuant to an amendment to the Plan approved by shareholders on April 23, 2019, at the 2019 Annual Meeting of Shareholders.
As of June 30, 2020, the Company had options to purchase 3,785,000 shares of Common Stock outstanding to certain executives, key employees and consultants under the Plan, of which 60,000 were issued during the six months ended June 30, 2020.
On May 20, 2020, the Company entered into a Settlement Agreement with EMED as described above in NOTE 3 LEGAL PROCEEDINGS. Pursuant to the Settlement Agreement, the Company issued to EMED (i) 95,238 restricted stock units, which vested on May 21, 2020 and 95,238 restricted stock units vesting on January 1, 2021, and (ii) an option to purchase up to 400,000 shares of the Company’s common stock at an exercise price of $11.21 per share prior to February 1, 2021, which can be settled in cash in lieu of common stock at the Company’s sole discretion, provided that the number of shares of common stock and/or amount of cash paid by the Company upon exercise will be capped at a value of $16.21 per share. The option was recorded at $347,008, the estimated fair value of the option using the Black-Scholes option pricing model with a volatility rate of 52.68% and a risk-free rate of 0.17%.
On February 20, 2019, the Board of Directors of the Company approved an increase in compensation for each non-employee director from $25,000 to $50,000 annually effective January 1, 2019, and an additional $10,000 annually for the chair of each Board committee effective February 20, 2019, in each case to be paid quarterly half in cash and half in common stock at the end of each fiscal quarter. On September 30, 2019, the Board of Directors of the Company named R. John Fletcher, a current KORU Medical director, as Chairman, replacing Executive Chairman, Daniel S. Goldberger, who remains a non-executive member of KORU Medical’s Board of Directors. In Mr. Fletcher’s role as Chairman, he receives an additional $50,000 in annual compensation, to be paid quarterly in shares of KORU Medical common stock based on the closing price of the stock on the last day of each quarter.
Pursuant to Daniel S. Goldberger’s employment agreement dated October 12, 2018, on February 1, 2019, when Donald B. Pettigrew was appointed to President and Chief Executive Officer, Mr. Goldberger was awarded a performance bonus in the amount of $270,000 to be paid half in cash and half in stock. The number of shares that were issued totaled 90,604 and was based upon the closing price of the Common Stock of the Company on February 1, 2019, as reported by the OTCQX. These shares were issued on April 3, 2019.
- 10 -
2015 STOCK OPTION PLAN, as amended
Time Based Stock Options
The per share weighted average fair value of stock options granted during the six months ended June 30, 2020 and June 30, 2019 was $6.68 and $1.16, respectively. The fair value of each award is estimated on the grant date using the Black-Scholes option pricing model with the following weighted average assumptions used for grants in the six months ended June 30, 2020 and June 30, 2019. Historical information was the primary basis for the selection of the expected volatility, expected dividend yield and the expected lives of the options. The risk-free interest rate was selected based upon yields of the U.S. Treasury issues with a term equal to the expected life of the option being valued.
|
|
|
|
|
|
|
|
|
|
June 30,
|
|
|
|
2020
|
|
2019
|
|
|
|
|
|
|
|
|
|
Dividend yield
|
|
|
0.00%
|
|
|
0.00%
|
|
Expected Volatility
|
|
|
62.1%
|
|
|
58.9-60.3%
|
|
Weighted-average volatility
|
|
|
—
|
|
|
—
|
|
Expected dividends
|
|
|
—
|
|
|
—
|
|
Expected term (in years)
|
|
|
10 Years
|
|
|
10 Years
|
|
Risk-free rate
|
|
|
0.63%
|
|
|
2.12-2.72%
|
|
The following table summarizes the status of the Plan with respect to time based stock options:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30,
|
|
|
|
2020
|
|
2019
|
|
|
|
Shares
|
|
Weighted
Average
Exercise
Price
|
|
Shares
|
|
Weighted
Average
Exercise
Price
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at January 1
|
|
3,647,000
|
|
$
|
1.32
|
|
|
2,419,000
|
|
$
|
1.00
|
|
Granted
|
|
60,000
|
|
$
|
9.76
|
|
|
1,300,000
|
|
$
|
1.66
|
|
Exercised
|
|
722,000
|
|
$
|
0.58
|
|
|
65,000
|
|
$
|
0.38
|
|
Forfeited
|
|
200,000
|
|
$
|
2.09
|
|
|
—
|
|
$
|
—
|
|
Outstanding at June 30
|
|
2,785,000
|
|
$
|
1.64
|
|
|
3,654,000
|
|
$
|
1.24
|
|
Options exercisable at June 30
|
|
812,760
|
|
$
|
1.37
|
|
|
804,260
|
|
$
|
0.63
|
|
Weighted average fair value of options granted during the period
|
|
|
|
$
|
6.68
|
|
|
—
|
|
$
|
1.16
|
|
Stock-based compensation expense
|
|
—
|
|
$
|
290,991
|
|
|
—
|
|
$
|
274,731
|
|
Total stock-based compensation expense totaled $290,991 and $274,731 for the six months ended June 30, 2020 and 2019, respectively. Cash received from option exercises for the six months ended June 30, 2020 and 2019 was $95,880 and $24,700, respectively.
The weighted-average grant-date fair value of options granted during the six months ended June 30, 2020 and 2019 was $0.4 million and $1.5 million, respectively. The total intrinsic value of options exercised during the six months ended June 30, 2020 and 2019 was $253,386 and $12,796, respectively.
The following table presents information pertaining to options outstanding at June 30, 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Range of Exercise Price
|
|
Number
Outstanding
|
|
Weighted
Average
Remaining
Contractual
Life
|
|
Weighted
Average
Exercise
Price
|
|
Number
Exercisable
|
|
Weighted
Average
Exercise
Price
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$0.50 – 9.76
|
|
2,785,000
|
|
7.6 years
|
|
$
|
1.64
|
|
812,760
|
|
$
|
1.37
|
|
- 11 -
As of June 30, 2020, there was $2,011,224 of total unrecognized compensation cost related to non-vested share-based compensation arrangements granted under the Plan. That cost is expected to be recognized over a weighted-average period of 48 months. The total fair value of shares vested as of June 30, 2020 and 2019, was $1,110,068 and $313,714, respectively.
Performance Based Stock Options
The per share weighted average fair value of stock options granted during the six months ended June 30, 2020 and 2019 was zero and $1.16, respectively. The fair value of each award is estimated on the grant date using the Black-Scholes option pricing model with the following weighted average assumptions used for grants in the six months ended June 30, 2020 and June 30, 2019. Historical information was the primary basis for the selection of the expected volatility, expected dividend yield and the expected lives of the options. The risk-free interest rate was selected based upon yields of the U.S. Treasury issues with a term equal to the expected life of the option being valued.
|
|
|
|
|
|
|
|
|
|
June 30,
|
|
|
|
2020
|
|
2019
|
|
|
|
|
|
|
|
|
|
Dividend yield
|
|
|
—
|
|
|
0.00%
|
|
Expected Volatility
|
|
|
—
|
|
|
58.9%
|
|
Weighted-average volatility
|
|
|
—
|
|
|
—
|
|
Expected dividends
|
|
|
—
|
|
|
—
|
|
Expected term (in years)
|
|
|
—
|
|
|
10 Years
|
|
Risk-free rate
|
|
|
—
|
|
|
2.07%
|
|
The following table summarizes the status of the Plan with respect to performance based stock options:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30,
|
|
|
|
2020
|
|
2019
|
|
|
|
Shares
|
|
Weighted
Average
Exercise
Price
|
|
Shares
|
|
Weighted
Average
Exercise
Price
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at January 1
|
|
1,000,000
|
|
$
|
1.70
|
|
|
—
|
|
$
|
—
|
|
Granted
|
|
—
|
|
$
|
—
|
|
|
1,000,000
|
|
$
|
1.70
|
|
Exercised
|
|
—
|
|
$
|
—
|
|
|
—
|
|
$
|
—
|
|
Forfeited
|
|
—
|
|
$
|
—
|
|
|
—
|
|
$
|
—
|
|
Outstanding at June 30
|
|
1,000,000
|
|
$
|
1.70
|
|
|
1,000,000
|
|
$
|
1.70
|
|
Options exercisable at June 30
|
|
—
|
|
$
|
—
|
|
|
—
|
|
$
|
—
|
|
Weighted average fair value of options granted during the period
|
|
—
|
|
$
|
—
|
|
|
—
|
|
$
|
1.16
|
|
Stock-based compensation expense
|
|
—
|
|
$
|
373,826
|
|
|
—
|
|
$
|
41,909
|
|
Total performance stock-based compensation expense totaled $373,826 and $41,909 for the six months ended June 30, 2020 and 2019, respectively.
The weighted-average grant-date fair value of options granted during the six months ended June 30, 2020 and June 30, 2019, was zero and $1,162,561, respectively.
The following table presents information pertaining to performance based options outstanding at June 30, 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Range of Exercise Price
|
|
Number
Outstanding
|
|
Weighted
Average
Remaining
Contractual
Life
|
|
Weighted
Average
Exercise
Price
|
|
Number
Exercisable
|
|
Weighted
Average
Exercise
Price
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$1.70
|
|
1,000,000
|
|
8.9 years
|
|
$
|
1.70
|
|
—
|
|
$
|
1.70
|
|
- 12 -
As of June 30, 2020, there was $495,372 of total unrecognized compensation cost related to non-vested performance share option based compensation arrangements granted under the Plan. That cost is expected to be recognized over a weighted-average period of 31 months. The total fair value of shares vested as of June 30, 2020 and 2019 was zero for both periods.
NOTE 5 DEBT OBLIGATIONS
On February 8, 2018, the Company issued a Promissory Note to KeyBank National Association (“KeyBank”) in the amount of $1.5 million as a variable rate revolving line of credit loan due on demand with an interest rate of LIBOR plus 2.25%, collateralized with a certificate of deposit in the amount of $1.5 million. On September 25, 2018, KeyBank released the certificate of deposit as collateral for the loan and the Company executed a Commercial Security Agreement as collateral for the loan.
On April 14, 2020, the Company issued a promissory note to the KeyBank National Association (the “Bank”) in the aggregate principal amount of $3.5 million (the “Note”) as an extension of its line of credit, replacing its current line of credit agreement and promissory note with the Bank dated February 8, 2018 (the “Original Note”). The Company drew on the additional $2.0 million on April 23, 2020. The Original Note was in the form of a variable rate revolving line of credit with an interest rate of LIBOR plus 2.25%. The $3.5 million Note is in the form of a variable rate non-disclosable revolving line of credit with an interest rate of Prime Rate announced by the Bank minus 0.75%. Interest is due monthly, and all principal and unpaid interest is due on June 1, 2021. The $3.5 million Note may be prepaid at any time prior to maturity with no prepayment penalties. The $3.5 million Note contains events of default and other provisions customary for a loan of this type.
In connection with the Note, the Company entered into a Commercial Security Agreement with the Bank dated April 14, 2020 (the “Security Agreement”), pursuant to which the Company granted a security interest in substantially all assets of the Company to secure the obligations of the Company under the Note. The Security Agreement contains terms and conditions typical for the granting of security interests of this kind.
The Company had $3.5 million and zero outstanding against the line of credit as of June 30, 2020 and 2019, respectively.
On April 20, 2020, the Company entered into a Loan Agreement with the Bank (the “PPP Loan
Agreement”) pursuant to the Paycheck Protection Program under the Coronavirus Aid, Relief, and Economic Security Act
(the “CARES Act”), providing for a loan in the principal amount of $1,476,508 (the “PPP Loan”).
The PPP Loan was funded on April 27, 2020. On May 13, 2020, the Company returned the funds it received.
On April 27, 2020, the Company entered into a Progress Payment Loan and Security Agreement (“PPLSA”) and a Master Security Agreement (the “MSA”), each dated as of April 20, 2020, with Key Equipment Finance, a division of the Bank (“KEF”), to provide up to $2.5 million in financing for equipment purchases from third party vendors. The PPLSA allows the Company to make draws with KEF to make certain payments to the equipment suppliers prior to the commencement of periodic payments under a term loan. Each draw under the PPLSA will bear interest at a variable rate equal to the then-current Prime Rate and will be secured by the financed equipment under the MSA. At the end of each calendar quarter or year, the advances made under the PPLSA will be converted to term loans, subject to KEF’s approval of the equipment and certain other closing conditions being met. Once the draws under the PPLSA are converted into a term loan, each promissory note will bear interest at a fixed rate of 4.07% per annum, subject to adjustment based on KEF’s cost of funds, with principal and interest payable in 84 equal consecutive monthly installments. Each fixed rate installment promissory note may be prepaid, subject to a penalty if prepaid before the fifth anniversary of its issuance. As of June 30, 2020, the Company had zero outstanding against the PPLSA.
NOTE 6 LEASES
We have finance and operating leases for our corporate office and certain office and computer equipment. Our leases have remaining lease terms of 1 to 3 years, some of which include options to extend the leases annually and some with options to terminate the leases within 1 year.
- 13 -
The components of lease expense were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the
Three Months Ended
|
|
For the
Six Months Ended
|
|
|
|
June 30,
|
|
June 30,
|
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating lease cost
|
|
$
|
37,921
|
|
$
|
37,921
|
|
$
|
75,843
|
|
$
|
73,750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance lease cost:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of right-of-use assets
|
|
$
|
1,855
|
|
$
|
1,061
|
|
$
|
3,711
|
|
$
|
2,121
|
|
Interest on lease liabilities
|
|
|
65
|
|
|
59
|
|
|
152
|
|
|
131
|
|
Total finance lease cost
|
|
$
|
1,920
|
|
$
|
1,120
|
|
$
|
3,863
|
|
$
|
2,252
|
|
Supplemental cash flow information related to leases was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the
Three Months Ended
|
|
For the
Six Months Ended
|
|
|
|
June 30,
|
|
June 30,
|
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid for amounts included in the measurement of lease liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance cash flows from finance leases
|
|
$
|
1,869
|
|
$
|
1,041
|
|
$
|
3,717
|
|
$
|
2,069
|
|
Finance lease cost:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of right-of-use assets
|
|
$
|
1,855
|
|
$
|
1,061
|
|
$
|
3,711
|
|
$
|
2,121
|
|
Interest on lease liabilities
|
|
|
65
|
|
|
59
|
|
|
152
|
|
|
131
|
|
Total finance lease cost
|
|
$
|
1,920
|
|
$
|
1,120
|
|
$
|
3,863
|
|
$
|
2,252
|
|
Supplemental balance sheet information related to leases was as follows:
|
|
|
|
|
|
|
|
|
|
|
For the
Six Months Ended
|
|
|
|
June 30,
|
|
|
|
2020
|
|
|
2019
|
|
|
|
|
|
|
|
|
|
|
Operating Leases
|
|
|
|
|
|
|
|
|
Operating lease right-of-use assets
|
|
$
|
306,101
|
|
|
$
|
439,782
|
|
|
|
|
|
|
|
|
|
|
Operating lease current liabilities
|
|
|
139,618
|
|
|
|
133,417
|
|
Operating lease long term liabilities
|
|
|
166,483
|
|
|
|
306,365
|
|
Total operating lease liabilities
|
|
$
|
306,101
|
|
|
$
|
439,782
|
|
|
|
|
|
|
|
|
|
|
Finance Leases
|
|
|
|
|
|
|
|
|
Property and equipment, at cost
|
|
$
|
12,725
|
|
|
$
|
6,363
|
|
Accumulated depreciation
|
|
|
(8,549
|
)
|
|
|
(2,121
|
)
|
Property and equipment, net
|
|
$
|
4,176
|
|
|
$
|
4,242
|
|
|
|
|
|
|
|
|
|
|
Finance lease current liabilities
|
|
|
3,195
|
|
|
|
4,295
|
|
Finance lease long term liabilities
|
|
|
1,030
|
|
|
|
—
|
|
Total finance lease liabilities
|
|
$
|
4,225
|
|
|
$
|
4,295
|
|
- 14 -
|
|
|
|
|
|
|
|
Six Months Ended
June 30, 2020
|
|
Six Months Ended
June 30, 2019
|
|
Weighted Average Remaining Lease Term
|
|
|
|
|
|
Operating leases
|
|
2 Years
|
|
3 Years
|
|
Finance leases
|
|
1 Year
|
|
1 Year
|
|
|
|
|
|
|
|
Weighted Average Discount Rate
|
|
|
|
|
|
Operating leases
|
|
4.75%
|
|
4.75%
|
|
Finance leases
|
|
4.75%
|
|
4.75%
|
|
Maturities of lease liabilities are as follows:
|
|
|
|
|
|
|
|
Year Ending December 31,
|
|
Operating Leases
|
|
Finance Leases
|
|
2020
|
|
|
75,843
|
|
|
1,664
|
|
2021
|
|
|
149,476
|
|
|
2,705
|
|
2022
|
|
|
97,256
|
|
|
—
|
|
Total lease payments
|
|
|
322,575
|
|
|
4,369
|
|
Less imputed interest
|
|
|
(16,474
|
)
|
|
(144
|
)
|
Total
|
|
$
|
306,101
|
|
$
|
4,225
|
|
NOTE 7 RELATED PARTY TRANSACTIONS
BUILDING LEASE
Mark Pastreich, a former director through April 2019, is a principal in the entity that owns the building leased by us for our corporate headquarters and manufacturing facility at 24 Carpenter Road, Chester, New York 10918. On February 28, 2019, we completed year twenty of a twenty-year lease with monthly lease payments of $11,042. On November 14, 2017, we executed a lease extension, which calls for six-month extensions beginning March 1, 2019 with the option to renew six times at a monthly lease amount of $12,088. The Company exercised four of the six additional renewal options for September 1, 2019, through August 31, 2021.
The lease payments were $36,264 for both three months ended June 30, 2020, and 2019 and $72,528 and $70,436 for the six months ended June 30, 2020 and 2019, respectively. The Company also paid property taxes in the amount of $13,238 and $12,989 for three months ended June 30, 2020 and 2019, respectively and $26,659 and $25,416 for the six months ended June 30, 2020 and 2019, respectively.