UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K

☒ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)

OF SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31 2015, 2021

Commission File Number: 0-21683

hopTo Inc.

(Exact name of Registrant as specified in its charter)

51 East Campbell Avenue, 189 North Main St., Suite 128102

Campbell, California 95008Concord, New Hampshire03301

(Address of principal executive offices)

(800)472-7466

(408) 688-2674

(Registrant’s telephone number)

Securities registered pursuant to Section 12(b) of the Exchange Act: NoneHPTO

Securities registered pursuant to Section 12(g) of the Exchange Act: (1) Common Stock, $0.0001 par valuevalue; and (2) Preferred Stock Purchase Rights

Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes[  ]☐ No [X]☒

Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes[  ] ☐ No [X] ☒

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] ☒ No [  ]☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulations S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes [X] ☒ No [  ]☐

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.[  ]

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company, or emerging growth company. See definitions of “large accelerated filer,” “accelerated filer”filer,” “smaller reporting company” and “smaller reporting“emerging growth company” in Rule 12b-2 of the Exchange Act.

[  ]☐ Large accelerated filer[  ] ☐ Accelerated filer[  ]☒ Non-Accelerated filer [X]☒ Smaller reporting company

☐ Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes[  ]No [X]

Yes ☐ No ☒

As of June 30, 2015,2021, the aggregate market value of the Registrant’s common stock held by non-affiliates was $10,998,045.$3,969,777.

As of March 24, 2016,31, 2022, there were outstanding 9,861,07818,850,675 shares of the Registrant’s common stock.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Registrant’s definitive proxy statement for the fiscal year ended December 31, 2015 (“Proxy Statement”) to be issued in conjunction with the Registrant’s 2016 Annual Meeting of Stockholders are incorporated by reference in Part III of this Report on Form 10-K. The Proxy Statement (or a Form 10-K/A) will be filed by the Registrant with the Securities and Exchange Commission not later than 120 days after the end of the Registrant’s fiscal year ended December 31, 2015.

hopTo Inc.

ANNUAL REPORT ON FORM 10-K

TABLE OF CONTENTS

Forward-Looking Information

This report includes, in addition to historical information, “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. This act provides a “safe harbor” for forward-looking statements to encourage companies to provide prospective information about themselves so long as they identify these statements as forward-looking and provide meaningful cautionary statements identifying important factors that could cause actual results to differ from the projected results.. All statements other than statements of historical fact we make in this report are forward-looking statements. In particular, the statements regarding industry prospects and our future results of operations or financial position are forward-looking statements. Such statements are based on management’s current expectations and are subject to a number of uncertainties and risks that could cause actual results to differ significantly from those described in the forward looking statements. Factors that may cause such a difference include, but are not limited to, those discussed in Item 1A. “Risk Factors,” as well as those discussed elsewhere in this report. Statements included in this report are based upon information known to us as of the date that this report is filed with the SEC,Securities and Exchange Commission (the “SEC”), and we assume no obligation to update or alter our forward-looking statements made in this report, whether as a result of new information, future events or otherwise, except as otherwise required by applicable federal securities laws.

PART I

ITEM 1. BUSINESSIntroduction

Introduction

We are developershopTo, Inc., through its wholly owned subsidiary GraphOn Corporation (collectively, “we”, “us,” “our” or the “Company”), is a developer of software productivity products for mobile devices such as tablets and smartphones, and application publishing software solutions.which includes application virtualization software and cloud computing software for multiple computer operating systems including Windows, UNIX and several Linux-based variants. Our newest product line,application publishing software solutions are sold under the brand name GO-Global, which is called hopTo, was originally marketedour sole revenue source. GO-Global is an application access solution for use by independent software vendors (“ISVs”), corporate enterprises, governmental and educational institutions, and others who wish to consumerstake advantage of cross-platform remote access and is now also marketedWeb-enabled access to small and medium sized businesses and enterprise level customers under the name hopTo Work, which is now our primary focus intheir existing software applications, as well as those who are deploying secure, private cloud environments.

For detailed historical information on the hopTo product line.

hopTo provides mobile end-users with a productivity workspaceproducts and technologies, please refer to our previously filed Annual Report on form 10-K which are available at www.sec.gov. Such filings are being noted for their mobile devices that allows them to manage, share, view, and edit their documents, regardless of wherehistorical information only; unless expressly noted, they are stored. We launched the first commercial version of hopTo through Apple’s App Store on November 14, 2013. This version was targeted at Apple’s tablet devices, the iPad and the iPad Mini.  From the initial launch through 2015, we made hopTo available for free. not incorporated herein by reference.

On November 10, 2014, we launched the first version of hopTo Work, a version of the hopTo workspace made available to businesses for a fee.  hopTo Work expands upon the core capabilities of hopTo by providing mobile access to applications that businesses rely on for their daily operations.

During 2015, we announced several major enhancements to hopTo Work, including the introduction of the MAX (Mobile App eXperience) feature set, which allows customers to instantly transform their legacy applications to become touch friendly on modern mobile devices.  We also worked to integrate our hopTo Work product with certain software products offered by Citrix Systems and on November 12, 2015 we launched hopTo Work for Citrix through Apple’s App Store.

Over the years, we have also made significant investments in intellectual property (“IP”). We have filed many patents designed to protect the new technologies embedded in hopTo, and we plan to continue to aggressively invest in the creation and protection of new IP as we continue to develop hopTo and other products.

Recent Developments

On January 27, 2016, we filed an amendment of our Amended and Restated Certificate of Incorporation, as amended, to effect a 1-for-15 reverse stock split of our common stock (the “Reverse Stock Split”). The Reverse Stock Split became effective in the stock market upon commencement of trading on January 28, 2016. As a result of the Reverse Stock Split, every fifteen shares of our pre-Reverse Stock Split common stock were combined and reclassified into one share of our common stock. No fractional shares were issued in connection with the Reverse Stock Split, and cash paid to stockholders for potential fractional shares was insignificant. The number of shares of common stock subject to outstanding options, restricted stock units, warrants and convertible securities were also reduced by a factor of fifteen as of January 27, 2016. All historical share and per share amounts reflected throughout this report have been adjusted to reflect the Reverse Stock Split. The authorized number of shares and the par value per share of our common stock were not affected by the Reverse Stock Split.

On January 13, 2016, we announced Project Mobilis, our development project to provide a deep integration with Citrix® mobile end-user technologies to deliver hopTo’s MAX features in conjunction with the complete capabilities of Citrix XenApp® and HDX™.

On January 11, 2016, we announced the development of MAX-IE, the first native mobile app experience for Microsoft’s Internet Explorer®. This exciting breakthrough capability will allow enterprises to instantly mobilize and provide a native mobile experience for Internet Explorer® based web applications, including applications that employ Java, Adobe Flash, or Silverlight technologies.

Corporate Background

We are a Delaware corporation, founded in May 1996. Our headquarters are located at 51 East Campbell Avenue,189 Main St., Suite 128, Campbell, California, 95008, our toll-free phone number is 1-800-472-7466,102, Concord, NH 03301, and our phone number for local and international calls is 408-688-2674. We also have an office in Concord, New Hampshire. Additionally, we have remote employees located in various states, as well as internationally in the United Kingdom and Israel.Kingdom. Our corporate Internet Website is http://www.hopTo.com. The information on our Website is not part of this annual report.Annual Report on Form 10-K.

Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and any amendments to such reports filed with or furnished to the SEC under sections 13(a) or 15(d) of the Securities Exchange Act of 1934 are made available free of charge on our corporate Internet Website investor webpage atwww.hopto.com/investorswww.hopto.com (click the “Financialon “SEC Reporting” link and then the “SEC Filings” link) as soon as reasonably practicable after such reports are electronically filed with or furnished to the SEC.

The hopTo Opportunity

The adoption of mobile devices, We may suspend our obligation to make such as smartphones and tablets,reports in the workplace has revealed the need for a mobile application and content access platform that addresses a range of mobile productivity challenges for professional/consumer users (“prosumers”), small and home offices (“SOHO”), small- to medium-sized businesses (“SMB” or “SMBs”), and Enterprise organizations. We believe a mobile platform that addresses this need will become a critical asset for any size organization, or information technology (“IT”) department, offering the most productive end user experience.future.

Focusing more specifically on the larger SMB/Enterprise business markets, adoption of mobile devices is reshaping how organizations deliver, secure, and manage applications and content on these devices. This has also introduced challenges for organizations to integrate the devices into daily workflows and manage security on both company-owned and employee-owned devices.

From a workflow standpoint, we believe business users want mobile solutions that enable them to replace or extend their traditional desktop PC environment with mobile devices, which is often easier said than done. PC users have enjoyed a rich ecosystem of applications and technologies that has been growing for over 30 years, and have come to expect an exceptional level of power and flexibility to get their work done. Many solutions have been developed to meet this challenge but generally have failed, in particular for the iOS and Android devices that dominate both the consumer and business markets.

The hopTo Work Product

In March, 2014, we announced our hopTo Work product which was subsequently released on November 11, 2014. hopTo Work builds upon the hopTo consumer product, bringing its core mobile productivity features to SMB/Enterprise users, with additional security and manageability functions. It targets IT departments that are concerned with protecting and managing access to sensitive data, controlling access to business applications, compliance with internal policies and, in some cases, government regulations.

With hopTo Work, IT departments will be able to more easily and safely address these concerns while integrating mobile technology into their networks and user workflows. The initial version of hopTo Work leverages a customer’s existing Microsoft RDS infrastructure – a significant portion of Microsoft’s on-premise customer base – which enables an IT department to have mobile access for end users in minutes. Subsequent versions of hopTo Work are integrated to leverage a customer’s existing Citrix Systems infrastructure, which represents a significant percentage of the Enterprise market for our product.

hopTo Work allows business users to make a smooth and simple transition from PCs to mobile devices for all or part of their work. As with the original prosumer/SOHO version of hopTo, the premise of hopTo Work is that mobile users in SMB/Enterprise businesses using devices such as the Apple iPad would like to travel with just their tablets but still have the benefits of secure access and editing capabilities for documents in their corporate cloud or network storage, personal cloud storage, and on their Windows computers. In addition, hopTo Work delivers the capability to mobilize Windows applications that businesses and organizations rely on for their daily operation.

hopTo Work is designed not only to assist users in performing operations on their iPads that typically require a Mac or Windows PC, but to do so within the data protection and access control policies of their IT organizations. Our view is that current solutions are limited because of the need to install special applications and procedures that are a hindrance to user productivity. We address these issues with the following features:

hopTo Work Target Markets

We view hopTo Work, with its additional application mobilization, security and manageability features, as a product that appeals to the SMB and Enterprise markets. We expect sales strategies for the hopTo Work versions of the product to involve a combination of strategic partnerships with various relevant enterprise software companies, a sales partner channel, and a direct sales team, just to name a few. hopTo Work is a paid offering that is currently sold on a perpetual license plus maintenance model. Other models such as subscription based pricing might be made available in the future based on market requirements.

The hopTo Consumer Product

hopTo also offers a comprehensive productivity workspace for mobile devices (currently for the Apple iPad) that empowers mobile users by offering them functionalities similar to what they’ve come to expect from their PCs. For example, hopTo aggregates files and documents from multiple storage silos (such as Box, Dropbox, Google Drive, Microsoft OneDrive, or the user’s PC) into a single touch-friendly workspace. Within this workspace, users are able to search for documents in the workspace (which includes their cloud storage silos and their PC), view, edit, and share their documents, and import photos from their iPad camera roll or Google Image from Web.

hopTo provides powerful document editing capabilities that leverage legacy Windows applications, such as Microsoft Office, to give users a rich, native editing feature set. Its high degree of compatibility with Microsoft Office enables easy collaboration with other users running Microsoft Office on Mac or Windows PCs. hopTo is unique in that it both leverages legacy applications for document editing and provides a touch-friendly user experience that, in our view, none of our competitors have achieved, and which mobile users will view as highly desirable.

The first commercially available version of hopTo was released on November 14, 2013, through the Apple App Store. hopTo currently runs on the Apple iPad family of devices, and we may make it available for other devices, such as the Apple iPhone and devices based on the Google Android platform. This product is targeted at users who are transitioning from PC to mobile—to provide access to their content regardless of where it’s stored, along with rich document editing capabilities, multitasking, file management, and more. The hopTo product is currently offered free of charge. Based on usage patterns and market acceptance we may, at some point in the future, decide to charge fees for this offering.

Our Intellectual Property

We believe that IP is a business tool that potentially maximizes our competitive advantages and product differentiation, grows revenue opportunities, encourages collaboration with key business partners, and protects our long-term growth opportunities. Strategic IP development is therefore a critical component of our overall business strategy. It is a business function that consistently interacts with our research and development, product development, and marketing initiatives to generate further value from those operations.

We rely primarily on trade secret protection, copyright law, confidentiality, and proprietary information agreements to protect our proprietary technology and registered trademarks. Despite our precautions, it may be possible for unauthorized third parties to copy portions of our products, or to obtain information we regard as proprietary. The loss of any material trade secret, trademark, trade name or copyright could have a material adverse effect on our results of operations and financial condition. We intend to defend our proprietary technology rights; however, we cannot give any assurance that our efforts to protect our proprietary technology rights will be successful.

We also currently hold rights to patents. We regularly file patent applications to protect innovations arising from our research, development and design, and are currently pursuing additional patent applications.

We do not believe our products infringe on the rights of any third parties, but we can give no assurance that third parties will not assert infringement claims against us in the future, or that any such assertion will not result in costly litigation or require us to obtain a license to proprietary technology rights of such parties.

ipCapital Group, Inc.

On October 11, 2011, we engaged ipCapital Group, Inc. (“ipCapital”), an affiliate of John Cronin, who is one of our directors, to assist us in the execution of our strategic decision to significantly strengthen, grow and commercially exploit our intellectual property assets. Our engagement agreement with ipCapital, which has been amended three times, affords us the right to request ipCapital to perform a number of diverse services, employing its proprietary processes and methodologies, to facilitate our ability to identify and extract from our current intellectual property base new inventions, potential patent applications, and marketing and licensing opportunities. See the Exhibits referred to in Item 15 in this Form 10-K for further details on the ipCapital engagement agreement and amendments thereto.

In addition to the fees we agreed to pay ipCapital for its services, we issued ipCapital a five-year warrant to purchase up to 26,667 shares of our common stock at an initial price of $3.90 per share. Half of the warrant (13,333 shares) has a time-based vesting condition, with such vesting to occur in three equal annual installments. The vesting installments occurred on October 11, 2012, 2013 and 2014, respectively. The remaining 13,333 shares became fully vested upon the completion to our satisfaction of all services that we requested from ipCapital under the engagement agreement, prior to the signing of the amendments. Such performance was deemed satisfactory during 2012. We believe that these fees, together with the issuance of the warrant, constitute no greater compensation than we would be required to pay an unaffiliated person for substantially similar services.

As a result of ipCapital’s work under the engagement agreement, as amended, as of March 30, 2016, 173 new patent applications have been filed. Of these 173 applications, 37 patents have been granted by the USPTO. We have also received notice from the USPTO that 8 additional patent applications have been allowed and will ultimately issue as US patents in the next 60-90 days. We expect to file more applications in 2016.

ipCapital Licensing Company I, LLC

On February 4, 2013, we entered into an IP Brokerage agreement with ipCapital Licensing Company I, LLC (“ipCLC”) (the “IP Brokerage Agreement”). At the time that we entered into this agreement, John Cronin was a partner at ipCLC. He is no longer affiliated with ipCLC. Pursuant to the IP Brokerage Agreement, we have engaged ipCLC, on a no-retainer basis, to identify and present us with candidates who may be seeking to acquire a certain limited group of our patents unrelated to our current business strategy. If during the applicable term we enter into an agreement with any candidate presented by ipCLC to acquire or otherwise exploit the covered patents, we will pay ipCLC a fee of ten percent (10%) of the royalties, fees, and other consideration paid over the life of the agreement.

The IP Brokerage Agreement is effective as of February 4, 2013, and will end 18 months after we or ipCLC serve 60 days written notice of termination to the other party (with earlier termination possible in the event of a material breach). To date, we have paid no fee to ipCLC under the terms of the IP Brokerage Agreement.

The IP Brokerage Agreement provides for customary confidentiality undertakings, limitations on ipCLC’s total liability and mutual indemnification provisions.

We believe the terms of the IP Brokerage Agreement are fair and reasonable to us and are at least as favorable as those that could be obtained on an arms’ length basis.

The GO-Global Software Products

Our GO-Global product offerings, which currently are our only revenue source, can be categorized into product families as follows:

Target Markets

The target market for our GO-Global products includes small to medium-sized companies, departments within large corporations, governmental and educational institutions and independent software vendors (ISVs) and value-added resellers (VARs). Our software enables these targeted organizations to move their existing applications to the public cloud and provide SaaS, or move them to a secure, private cloud environment. By using our software, organizations can give their remote users, partners and customers access to their native applications. Our software is designed to allow these organizations and enterprises to tailor the configuration of the end-user device for a particular purpose, rather than following a “one PC fits all” high-cost ownership model. We believe our opportunities are as follows:

Strategic Customer Relationships

We believe it is important to maintainSales and Marketing

Our GO-Global products are primarily sold through resellers both domestically and internationally. The resellers consist of OEMs, system integrators, value-added resellers and distributors. The reseller channel acts as a sales force for our GO-Global products by creating awareness and also providing integration and support services for our current strategic alliances and potential customers. We support our existing reseller channel and seek to seek suitable new alliances in order to enhance shareholder value, improvegrow our technology and/or enhance our ability to penetrate relevant target markets. We also are focusing on strategic relationships that have immediate revenue generating potential, strengthen our position in the server-based software market, add complementary capabilities and/or raise awareness of our products and us. Our strategic relationships for all GO-Global products include the following:

Sales, Marketing and Support

Sales and marketing efforts for our software products are directed at increasing product awareness and demand among ISVs, small to medium-sized enterprises, departments within larger corporations and VARs who have a vertical orientation or are focused on Windows, UNIX and/or Linux environments. Currentreseller partners through direct marketing activities that include Internetdigital marketing, promotional materials, direct response targeted advertising campaigns, tradeshows, promotional materials, public relations, and maintaining an active Web presence for marketing and sale purposes.

For the year ended December 31, 2021, we had one reseller that represented more than 27.8% of sales purposes.

We currently considerand three resellers that represented 51.5%, 15.0%, and 11.9% of accounts receivable, respectively. For the following to be our most significant customersyear ended December 31, 2020, we had one reseller that represented more than 14.5% of sales and partners.one reseller that represented 44.7% of accounts receivable. For the purposes of this table, “Sales”description, “sales” refers to the dollar value of orders received from these customers and partners in the period indicated. These SalesThe sales values do not necessarily equal recognized revenue for these periods due to our revenue recognition policies which require deferral of revenue associated with stocking orders of software licenses and prepaid software service fees.

Many of our customers enter into, and periodically renew, maintenance contracts to ensure continued product updates and support. Currently, we offer maintenance contracts for one, two, three and five-year periods.

Operations

We perform all purchasing, order processing and shipping of products and accounting functions related to our operations. Although weWe generally ship products and fulfill orders electronically when a customer requires us to physically ship them a disc, production of the disc, printing of documentation and packaging are also accomplished through in-house means; however, since virtually all of our orders are currently being fulfilled electronically,so we do not maintain any prepackaged inventory. Additionally, we have relatively little backlog at any given time; thus, we do not consider backlog a significant indicator of future performance.

Research and Development

Our research and development efforts currently are focused on further enhancing the functionality, performance and reliability of existing products and developing new products – principally hopTo. We invested approximately $4,224,000 and $4,911,400 in research and development with respect to our software products in 2015 and 2014, respectively. During 2015 and 2014 we capitalized an additional $12,000 and $16,500 of development investments incurred in the development of hopTo, respectively. During 2015, we determined that an impairment of $182,400 existed with certain capitalized software development costs associated with our hopTo consumer product and recognized that cost as part of cost of revenue.

Competition

The software markets in which we participate are highly competitive. Competitive factors in our market space include price, product quality, functionality, product differentiation and the breadth and variety of product offerings and product features. We believe that our products offer certain advantages over our competitors, particularly in product performance and market positioning.

Although hopTo Work is a unique mobile workspace offering, we believe it is at the intersection of an established software market known as end-user computing (EUC) and more specifically a fairly new category that’s becoming known as application mobilization, or application refactoring.

In the application mobilization market, we believe we compete with products from Capriza, Inc., Reddo Mobility, Inc., StarMobile Inc and Powwow, Inc, as well several other providers.

GO-Global competes with developers of conventional server-based software for the individual PC, as well as with other companies in the cloud computing software market and the application virtualization software market. We believe our principal competitors in the cloud computing software market include Citrix Systems, Inc., OpenText Communications, Ltd. and Microsoft Corporation. Citrix is an established leading vendor of virtualization software, OpenText is an established market leader for remote access to UNIX applications and Microsoft is an established leading vendor of Windows operating systems and services for servers.

Employees

Employees

As of March 30, 2016,31, 2022, we had a full-time equivalent of 2612.5 total employees, including 52 in marketing, sales and support, 15.58.5 in research and development (which is inclusive of employees who may also perform customer service related activities), 52 in administration and finance and 0.5 in our patent group.finance. We believe our relationship with our employees is good. None of our employees are covered by a collective bargaining agreement.

Recent Developments

Item 1A. Risk Factors

The risks and uncertainties described below could materially and adversely affect our business, financial condition and results of operations and could cause actual results to differ materially from our expectations. The Risk Factorsrisk factors described below include the considerable risks associated with the current economic environment and the related potential adverse effects on our financial condition and results of operations. You should read these Risk Factorsrisk factors in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 7 and our Consolidated Financial Statements and related notes in Item 8. There also may be other factors that we cannot anticipate or that are not described in this report generally because we do not currently perceive them to be material. Those factors could cause results to differ materially from our expectations.

Risks Related to Our Business

We have a history of operating losses and expect these losses to continue, at least for the near future.net losses.

We have experienced significant operating and net losses since we began operations. We incurredAfter years of losses, from operations before provisionwe had net income for income taxes2020 of $4,387,400$693,700 and $3,590,800 for the years ended December 31, 2015 and 2014, respectively. We expect to report an operating loss on a consolidated basis for the year ended December 31, 2016. In subsequent reporting periods,2021 of $1,052,200; however, such improvement in our financial performance could reverse if revenues grow more slowly than anticipated,our GO-Global business, our only source of revenue, declines or if aggregate operating expenses exceed expectations, we will continue to be unprofitable. Even if we become profitable, we may beare unable to sustain such profitability.maintain control over our expenses. Income from each year was partially a result of unique one-time transactions that are not expecting to continue.

hopTo is subject to

The coronavirus pandemic could adversely affect our results of operations.

The recent coronavirus pandemic throughout the risksUnited States and the world has resulted in the United States and other countries halting or sharply curtailing the movement of new software products in developmentpeople, goods and any failure to successfully commercially launch hopTo couldservices. All of this has caused extended shutdowns of businesses and the prolonged economic impact remains uncertain. At this point, we believe the conditions will have a material negative impact on us. Our integration with Citrix is subject to these risks as well as the additional risks of being reliant on Citrix for cooperation.

During April 2013, we launched the first public release of hopTo through Apple’s App Store and on November 14, 2013 we launched the first commercial version of hopTo through Apple’s App Store. The releases were targeted at Apple’s tablet devices, the iPad and the iPad Mini. On November 10, 2014 we launched the first commercial version of hopTo Work through Apple’s App Store. On November 12, 2015 we launched hopTo Work for Citrix through Apple’s App Store.

Future releases will be targeted at other devices such as Apple’s iPhone, as well as competing devices such as those based on Google’s Android platform. There is no assurance that we will be able to develop a commercially viable version of our hopTo product, or that we may be able to successfully penetrate into its perceived marketplace. Any failure to develop a commercially viable version or to successfully penetrate into the market could have a material negative impactadverse effect on our resultsbusiness but given the rapidly changing developments we cannot accurately predict what effects these conditions will have on our business, which will depend on, among other factors, the ultimate geographic spread of operations, financial positionthe virus, the duration of the outbreak and cash flow.

hopTotravel restrictions and hopTo Work are new products in development. As such they face both development and market risks. Our development timetable could be adversely impacted by technical challenges that take longer than expected or require more engineering or capital resources to resolve. Our development timetable can also be adversely affected by third party delays, such as our current integration efforts with Citrix Systems or qualification standardsbusiness closures imposed by companies such as Apple Inc. in the administration of the Apple App Store.United States and various other governments.

Our current Citrix integration effort, begun in the fourth quarter of 2015, is a substantial technical challenge, and is subject to the aforementioned software development risks, as well as the added risk that we require cooperation from Citrix to complete the integration, which is at their sole discretion to provide.

Even a successful and timely launch on app stores does not assure wide-scale adoption of a new product given the extremely competitive market for new productivity applications and the changing and difficult to ascertain demands of our target customers and users. In addition, we must develop a successful pricing policy to economically benefit from our development investments. Pricing policies are subject to considerable variation and require a high degree of judgment, and any significant failure to appropriately price our products could limit or even prevent our ability to effectively compete and profit from those products.

Our revenue is typically generated from a limited number of significant customers.resellers.

A material portion of our revenue, all of which is currently derived from our GO-Global products, during any reporting period is typically generated from a limited number of significant customers,resellers in certain countries or geographic regions, all of which are unrelated third parties. We categorize our customers into three broad categories for revenue recognition purposes: stockingare seeking to expand the number of resellers non-stocking resellers and direct end users. If any of our significant non-stocking resellers or direct end users reduce their order level or failGO-Global products to order during a reporting period,grow our revenues and diversify our revenue geographically. However, our inability to expand the number of resellers and/or a reduction in the orders from our current resellers could be materially adversely impacted because we recognize revenue on sales to these customers upon product delivery, assuming all other revenue recognition criteria have been met.impact our revenues.

Our significant stocking resellers are typically ISVs who have bundled our products with theirs to sell as Web-enabled versions of their products. These customers maintain inventories of our products for resale, and we do not recognize revenue until our products are resold to end users, assuming all other revenue recognition criteria have been met. If these customers decide to maintain a lower level of inventory in the future and/or they are unable to sell their inventory to end users as quickly as they have in the past, our revenue and business could be materially adversely impacted.

If we are unable to develop new products and enhancements to our existing products, our business, results of operations, financial condition, and cash flows could be materially adversely impacted.

The market for our products and services is characterized by:

Our future success depends on our ability to continually enhance our current products and develop and introduce new productsfeatures and capabilities that our customers choose to buy. If we are unable to satisfy our customers’ demands and remain competitive with other products that could satisfy their needs by introducing new productsfeatures, capabilities and enhancements, our business, results of operations, financial condition, and cash flows could be materially adversely impacted. Our future success could be hindered by, among other factors:

For example, sales of our GO-Global Windows Host software could be affected by the announcement from Microsoft of an intended release, and the subsequent actual release, of a new Windows-based operating system, or an upgrade to a previously released Windows-based operating system version. These new or upgraded systems may contain similar features to our products or they could contain architectural changes that would temporarily prevent our products from functioning properly within a Windows-based operating system environment.

Our operations consume cash and we will needWe are subject to raise additional capital in the future to fundvarious liquidity risks.

We have incurred significant net losses since our continued operating needs.

inception. As of December 31, 2015, our2021, we had an accumulated deficit of $78,188,500 and a working capital of $4,316,500. Our ability to continue to generate net profits and positive cash balance was $1,777,300, as compared with $1,557,100 as of December 31, 2014, an increase of $220,200, or 14.1%. The increase primarily resultedflows from the cash provided by the payment received in January 2015 for a $1.5 million stocking order from one of our GO-Global ISV resellers and cash received of $2,550,500 on July 28, 2015 as a result of the sale of shares of our common stock in a private placement (the “2015 Private Placement”). These cash receipts were partially offset by consumption by our operations as well as the investments we made in fixed assets, and employee costs, primarily associated with our new products development team.

Basedis dependent on our cash on hand as of December 31, 2015, the cash we anticipateability to derivecontinue to generate revenue from our legacy GO-Global business, which in turn is subject to a variety of risks, some of which are described in this Annual Report on Form 10-K. As a small company, we have limited ability to deploy new revenue increasing opportunities, and the cash we anticipatelimited flexibility to derive fromrespond to unforeseen adverse developments, such as customer losses, adverse market developments or unanticipated expenses. Although our hopTo Work product, we believe that we will have sufficient resources to support our operational planscurrent operating plan does not call for the next twelve months; however full implementation of our business plans for the next twelve months will require capital from issuances of debt or equity, or greater than expected revenue from our recently launched hopTo Work product or our GO-Global product line.

There can be no assurance of new revenue from new or existing product lines or additional capital from debt or equity issuances. In addition, issuancesraising of new capital, stockif we need to raise new capital, our ability to do so is extremely limited given our small market capitalization and the limited volume in the trading of our common stock.

If we do need to issue new equity, such issuances may be at a significant discount to market prices, would dilute existing stockholders and may give the purchasers of new capital stock additional rights, preferences and privileges relative to existing stockholders. There can be no assurance that additional capital necessary for fullany execution of our hopTo business strategyoperations will be available on a timely basis, on reasonable terms or at all.

InChallenges to develop new business may reverse the eventimprovements in our finances.

Our management believes that any significant improvement in our cash flow must result from increases in revenues from our current products or future products areexisting sources and from new revenue sources. Our ability to develop new revenues depends on many factors not consistent with the levels assumed in our current operational planscontrol, or only partially in its control, including available capital resources which affect the extent of our marketing activities and our research and development activities, all of which are limited by our small size and revenue base. We cannot assure you that the resources that we are not ablecan devote to secure new capital through issuances of debt or equity, we may needmarketing and to reorganize our operationsresearch and development will be sufficient to continueincrease its revenues to levels that will enable us to maintain our current business.positive operating cash flow in the future.

Sales of products within our GO-Global product families are likely to be our primaryonly source of revenue during 2016.2022.

Although we believe that we will begin to generate revenue through sales of hopTo Work during 2016, we anticipate that salesSales of products within our GO-Global product families, and related enhancements, will bewere our primaryonly source of revenue during 2016.2021 and will continue to be our only source of revenue during 2022. The success, if any, of our new GO-Global releases may depend on a number of factors, including market acceptance of the new GO-Global releases and our ability to manage the risks associated with introducing such releases. Declines in demand for our GO-Global products could occur as a result of, among other factors:

If our customers do not continue to purchase GO-Global products as a result of these or other factors, our revenue would decrease and our results of operations, financial condition, and cash flows would be adversely affected.

Our operating results in one or more future periods are likely to fluctuate significantly and may fail to meet or exceed the expectations of investors.

Our operating results are likely to fluctuate significantly in the future on a quarterly and annual basis due to a number of factors, many of which are outside our control. Factors that could cause our operating results and therefore our revenues to fluctuate include the following, among other factors:

In addition, our royalty and license revenues are impacted by fluctuations in OEM licensing activity from quarter to quarter, which may involve one-time orders from non-recurring customers, or customers who order infrequently. Our expense levels are based, in part, on expected future orders and sales; therefore, if orders and sales levels are below expectations, our operating results are likely to be materially adversely affected. Additionally, because significant portions of our expenses are fixed, a reduction in sales levels may disproportionately affect our net income.financial results. Also, we may reduce prices and/or increase spending in response to competition or to pursue new market opportunities. Because of these factors, our operating results in one or more future periods may fail to meet or exceed the expectations of investors. In that event, the trading price of our common stock would likely be adversely affected.

We will encounter challenges in recruiting, hiring and retaining new personnel and/or replacements for any members of key management or other personnel who depart.

Our success and business strategy is dependent in large part on our ability to attract and retain key management and other personnel in certain areas of our business. If any of these employees were to leave, we would need to attract and retain replacements for them. We have lost employees, including at the officer level and in our new products engineering group, in the past. Without a successful replacement, the loss of the services of one or more key members of our management group and other key personnel could have a material adverse effect on our business.

With the exception of the employment agreement we entered into with our Chief Executive Officer during 2013, weWe do not have long-term employment agreements with any of our key personnel and any officer or other employee can terminate their relationship with us at any time. We may also need to add key personnel in the future in order to successfully implement our business strategies. The market for such qualified personnel is highly competitive and it includes other potential employers whose financial resources for such qualified personnel are more substantial than ours. Consequently, we could find it difficult to attract, assimilate or retain such qualified personnel in sufficient numbers to successfully implement our business strategies.

We have sought to match our expenses structure with business opportunities, but this creates risks. We rely on the considerable expertise of our Board of Directors and the moderate use of professional advisors. This arrangement limits our ability to respond to challenges and develop opportunities. Should we revise our approach to management by hiring additional resources, this too, can create risks to the cost savings we have achieved, if any anticipated business opportunities are not realized.

Our failure to adequately protect our proprietary rights may adversely affect us.

Our commercial success is dependent, in large part, upon our ability to protect our proprietary rights. We rely on a combination of patent, copyright and trademark laws, as well as trade secrets, confidentiality provisions and other contractual provisions to protect our proprietary rights. These measures afford only limited protection. We cannot assure you that measures we have taken or may take in the future will be adequate to protect us from misappropriation or infringement of our intellectual property. Despite our efforts to protect proprietary rights, it may be possible for unauthorized third parties to copy aspects of our products or obtain and use information that we regard as proprietary. In addition, the laws of some foreign countries do not protect our intellectual property or other proprietary rights as fully as do the laws of the United States. Furthermore, we cannot assure you that the existence of any proprietary rights will prevent the development of competitive products. The infringement upon, or loss of, any proprietary rights, or the development of competitive products despite such proprietary rights, could have a material adverse effect on our business.

Our business significantly benefits from strategic relationships and there can be no assurance that such relationships will continue in the future.

Our business and strategy reliesrely to a significant extent on our strategic relationships with other companies. There is no assurance that we will be able to maintain or further develop any of these relationships or to replace them in the event any of these relationships are terminated. In addition, any failure to renew or extend any license between any third party and us may adversely affect our business.

We rely on indirect distribution channels for our products and may not be able to retain existing reseller relationships or develop new reseller relationships.

Our GO-Global and hopTo Work products are primarily sold through several distribution channels. An integral part of our strategy is to strengthen our relationships with resellers such as OEMs, systems integrators, VARs,value-added resellers s, distributors and other vendors to encourage these parties to recommend or distribute our products and to add resellers both domestically and internationally. We currently invest, and intend to continue to invest, significant resources to expand our sales and marketing capabilities. We cannot assure you that we will be able to attract and/or retain resellers to market our products effectively. Our inability to attract resellers and the loss of any current reseller relationships could have a material adverse effect on our business, results of operations, financial condition, and cash flows. Additionally, we cannot assure you that resellers will devote enough resources to provide effective sales and marketing support to our products.

The markets in which we participate are highly competitive and have more established competitors.

The markets we participate in with GO-Global and hopTo Work are intensely competitive, rapidly evolving and subject to continuous technological changes. We expect competition to increase in each of these markets as other companies introduce additional competitive products. In order to compete effectively, we must continually develop and market new and enhanced products and market those products at competitive prices. As markets for our products continue to develop, additional companies, including companies in the computer hardware, software and networking industries with significant market presence, may enter the markets in which we compete and further intensify competition. A number of our current and potential competitors have longer operating histories, greater name recognition and significantly greater financial, sales, technical, marketing and other resources than we do. We cannot give any assurance that our competitors will not develop and market competitive products that will offer superior price or performance features, or that new competitors will not enter our markets and offer such products. We believe that we will need to invest significant financial resources in research and development to remain competitive in the future in each of the markets in which we compete. Such financial resources may not be available to us at the time or times that we need them, or upon terms acceptable to us, or at all. We cannot assure you that we will be able to establish and maintain a significant market position in the face of our competition and our failure to do so would adversely affect our business.

Risk

Risks Related to Our Common Stock

Our stock is thinly traded and its price has been historically volatile.

Our stock is thinly traded. As such, holders of our stock are subject to a high risk of illiquidity, e.g., you may not be able to sell as many shares at the price you would like, or you may not be able to purchase as many shares at the price you would like, due to the low average daily trading volume of our stock. Additionally, the market price of our stock has historically been volatile; it has fluctuated significantly to date. The trading price of our stock is likely to continue to be highly volatile and subject to wide fluctuations. Your investment in our stock could lose some or all of its value.

Future sales of our common stock could adversely affect its price and our future capital-raising activities, and could involve the issuance of additional equity securities, which would dilute current shareholderstockholder investments in our common stock and could result in lowering the trading price of our common stock.

We may sell securities in the public or private equity markets if and when conditions are favorable. Sales of substantial amounts of common stock, or the perception that such sales could occur, could adversely affect the prevailing market price of our common stock and our ability to raise capital. We may issue additional common stock in future financing transactions or as incentive compensation for our management team and other key personnel, consultants and advisors. Issuing any equity securities would be dilutive to the equity interests represented by our then-outstanding shares of common stock. The market price for our common stock could decrease as the market takes into account the dilutive effect of any of these issuances. Furthermore, we may enter into financing transactions and issue securities with rights and preferences senior to the rights and preferences of our common stock, and we may issue securities at prices that represent a substantial discount to the market price of our common stock. A negative reaction by investors and securities analysts to any discounted sale of our equity securities could result in a decline in the trading price of our common stock.

We may make acquisitions, which could require significant management attention, disrupt our business, dilute our stockholders, and seriously harm our business.

As part of our business strategy, we intend to make acquisitions in the future (although we do not currently have any probable acquisitions). Our ability to acquire and successfully integrate larger or more complex companies, products, and technologies is unproven. In the future, we may not be able to find other suitable acquisition candidates, and we may not be able to complete acquisitions on favorable terms, if at all. In addition, if we fail to successfully close transactions or integrate new teams, or integrate the products and technologies associated with these acquisitions into our company, our business could be seriously harmed. Any integration process may require significant time and resources, and we may not be able to manage the process successfully. We may not successfully evaluate or use the acquired products, technology, and personnel, or accurately forecast the financial impact of an acquisition transaction, including accounting charges. We may also incur unanticipated liabilities that we assume as a result of acquiring companies. We may have to pay cash, incur debt, or issue equity securities to pay for any acquisition, any of which could seriously harm our business. Selling equity to finance any such acquisitions would also dilute our stockholders. Incurring debt would increase our fixed obligations and could also include covenants or other restrictions that would impede our ability to manage our operations.

In addition, on average, it is difficult to finalize the purchase price allocation and accounting. Therefore, it is possible that our valuation of an acquisition may change and result in unanticipated write-offs or charges, impairment of our goodwill, or a material change to the fair value of the assets and liabilities associated with a particular acquisition, any of which could seriously harm our business.

We are not likely to have the capital to acquire large businesses. Therefore, the businesses we acquire may require significant investment in corporate infrastructure, repositioning, incremental sales, marketing or product development.

Our acquisition strategy may not succeed if we are unable to remain attractive to target companies or expeditiously close transactions.

We have a significant number of outstanding warrants and options, and future sales of these shares could adversely affect the market price of our common stock.

As of December 31, 2015 and December 31, 2014,2021, we had outstanding warrants for an aggregate of 1,411,619 and 1,411,619248,216 shares of common stock, respectively, at a weighted average exercise pricesprice of $6.90$0.01 per share for both years.share. As of December 31, 2015 and December 31, 2014,2021, we had outstanding options exercisable for an aggregate of 705,990 and 685,8674,946 shares of our common stock respectively, at a weighted average exercise pricesprice of $2.63 and $2.70$3.86 per share, respectively.share. The holders may sell these shares exercisable under warrants or options in the public markets from time to time. In addition, asif our stock price rises, more outstanding warrants and options will be “in-the-money” and the holders may exercise their warrants and options and sell a large number of shares. This could cause the market price of our common stock to decline.

Our common stock is quoted on the FINRA OTC Bulletin Board, which may have an unfavorable impact on our stock price and liquidity.

Our common stock is currently quoted under the symbol “HPTO” on the OTC Bulletin Board market (“OTCBB”) operated by FINRA (Financial Industry Regulatory Authority) and on the OTC Markets Group QB tier (“OTCQB”). Neither the OTCBB nor the OTCQB is a “national securities exchange,” and in general, each is a significantly more limited market than the markets operated by the New York Stock Exchange and NASDAQ. The quotation of our shares on the OTCBB and the OTCQB could result in a less liquid market being available for existing and potential stockholders to trade shares of our common stock, which could depress the trading price of our common stock and have a long-term adverse impact on our ability to raise capital in the future. Because of the limited trading market for our common stock, and because of the significant price volatility, investors may not be able to sell their shares of common stock when they want to do so. We may not support any continued trading market for our shares.

Our stock may lose access to a viable trading market.

Given the increasing cost and resource demands of being a public company, we may decide to “go dark,” or discontinue our obligation to make periodic filings with the SEC, by deregistering our securities, for a period of time until our assets and stockholder base are sufficient to warrant public trading again. During such time, there would be a substantial decrease in disclosure by us of our operations and prospects, and a substantial decrease in the liquidity in our common stock even though stockholders may still continue to trade our common stock in the OTC market or “pink sheets.” The market’s interpretation of a company’s motivation for “going dark” varies from cost savings, to negative changes in the firm’s prospects, to serving insider interests, which may affect the overall price and liquidity of a company’s securities.

We have never paid dividends on our common stock, and we do not anticipate paying any cash dividends in the foreseeable future.

We have never declared or paid dividends on our common stock, nor do we anticipate paying any cash dividends for the foreseeable future. We currently intend to retain future earnings, if any, to finance the operations and expansion of our business. Any future determination to pay cash dividends will be at the discretion of our Board of Directors and will be dependent upon the earnings, financial condition, operating results, capital requirements and other factors as deemed necessary by our Board of Directors.

FINRA’s sales practice requirements may also limit a stockholder’s ability to buy and sell our stock.

FINRA has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives and other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative low priced securities will not be suitable for at least some customers. FINRA’s requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit your ability to buy and sell our stock and have an adverse effect on the market for our shares.

Provisions in our Amended and Restated Certificate of Incorporation and Second Amended and Restated Bylaws and applicable Delaware lawour Rights Agreement may prevent or discourage third parties or our stockholders from attempting to replace our management or influencing significant decisions.

Provisions in our Amended and Restated Certificate of Incorporation and Second Amended and Restated Bylaws may have the effect of delaying or preventing a change in control of our company or our management, even if doing so would be beneficial to our stockholders. These provisions include, but are not limited to, authorizing our Boardboard of Directorsdirectors to issue preferred stock without stockholder approval and limiting the persons who may call special meetings of stockholders and providing that stockholders cannot take action by written consent in lieu of a meeting. AsIn addition, our Rights Agreement, entered into by us and American Stock Transfer & Trust Company, LLC (as rights agent) on February 16, 2018, as amended on November 2, 2018 and February 16, 2021 (collectively, the “Rights Agreement”), works by imposing a Delaware corporation, wesignificant penalty upon any person or group (including a group of persons that are also subject to section 203 of the Delaware General Corporation Law (“DGCL”acting in concert with each other) that acquires five percent (5%), which among other things, and subject to various exceptions, restricts against certain business transactions between a corporation and a stockholder owning 15% or more of our common stock without the corporation’s outstanding voting stock (“an interested stockholder”) for a period of three years from the date the stockholder becomes an interested stockholder unless our Board of Directors approved the holder’s acquisitionapproval of our stockboard of directors. As a result, the overall effect of the Rights Agreement and the issuance of the rights thereunder may be to render more difficult or discourage a merger, tender or exchange offer or other business combination involving that is not approved by our board of directors. The Rights Agreement is not intended to interfere with any merger, tender or exchange offer or other business combination approved by our board of directors. Nor does the Rights Agreement prevent the Board from considering any offer that it considers to be in advance.the best interest of its stockholders. The Rights Agreement expired at or prior to the earlier of (i) February 16, 2031 or (ii) the redemption or exchange of the rights thereunder, as provided for in the Rights Agreement. Together, these charter and statutory provisionscontractual arrangements could make the removal of management more difficult and may discourage transactions that otherwise could involve payment of a premium over prevailing market prices for our common stock.

Risks Related toAnti-takeover provisions contained in our certificate of incorporation and bylaws, as well as provisions of Delaware law, could impair a takeover attempt.

Our certificate of incorporation, bylaws and Delaware law contain provisions that could have the Reverse Spliteffect of rendering more difficult or discouraging an acquisition deemed undesirable by our board of directors. Our corporate governance documents include provisions:

On January 27, 2016, we filed an amendmentThese provisions, alone or together, could delay hostile takeovers and changes in control of our Amended and Restated Certificatecompany or changes in our management.

As a Delaware corporation, we are also subject to provisions of Incorporation, as amended, to effect a 1-for-15 reverse stock splitDelaware law, including Section 203 of our common stock. The reverse stock split became effective in the stock market upon commencement of trading on January 28, 2016. If the market price of our common stock declines following the reverse stock split, the percentage decline may be greaterDelaware General Corporation Law, which prevents some stockholders holding more than would occur in the absence of a reverse stock split.

The reverse stock split15% of our outstanding common stock is intended to increasefrom engaging in certain business combinations without approval of the market priceholders of substantially all of our outstanding common stock. However,Any provision of our amended and restated certificate of incorporation or bylaws or Delaware law that has the effect of delaying or deterring a reverse stock split uponchange in control could limit the market price ofopportunity for our common stock cannot be predicted with certainty, and the results of reverse stock splits by companies in similar circumstances have been varied. It is not uncommonstockholders to receive a premium for the market price of a company’s common stock to decline in the period following a reverse stock split. If the market price of our common stock declines following the reverse stock split, the percentage decline may be greater than would occur in the absence of a reverse stock split. In any event, other factors unrelated to the number oftheir shares of our common stock, outstanding, such as negative financial or operational results,and could adverselyalso affect the market price ofthat some investors are willing to pay for our common stock.

The reverse stock split may decrease the liquidity of the shares of our common stock.

The liquidity of the shares of our common stock may be affected adversely by the reverse stock split given the reduced number of shares that are outstanding following the reverse stock split, especially if the market price of our common stock does not increase as a result of the reverse stock split. In addition, the reverse stock split increased the number of stockholders who own odd lots (less than 100 shares) of our common stock, creating the potential for such stockholders to experience an increase in the cost of selling their shares and greater difficulty effecting such sales.

Following the reverse stock split, the resulting market price of our common stock may not attract new investors, including institutional investors, and may not satisfy the investing requirements of those investors. Consequently, the trading liquidity of our common stock may not improve.

Although we believe that a higher market price of our common stock may help generate greater or broader investor interest, there can be no assurance that the reverse stock split will result in a share price that will attract new investors, including institutional investors. In addition, there can be no assurance that the market price of our common stock will satisfy the investing requirements of those investors. As a result, the trading liquidity of our common stock may not necessarily improve.

Item 1B. Unresolved Staff CommentsNone.

None.

Item 2. Properties

Our corporate headquarters currently occupies approximately 2,514 square feet of office space in Campbell, California, under a lease that will expire in October 1, 2018. Rental of these premises will average approximately $9,200 per month over the remaining term of the lease.

Our domestic research and development team currently occupies approximately 2,5271,548 square feet of office space in Concord, New Hampshire, under a three-year lease that will expire in August 2016. Rent on the Concord facility is $4,000arrangement for a monthly payment of $2,500 per month, for the life of the lease.which can be cancelled at any time by either party with a six-month advance notice.

Our former corporate headquarters at 1919 S. Bascom AveWe have certain employees who work remotely in Campbell, California is comprised of approximately 10,667 square feet of office space under a lease that will expire on October 31, 2018. Rental of these premises for the remaining term averages $39,600 per month. On August 11, 2015 we entered into a sublease agreement to sublease the entirety of the leased space at 1919 S. Bascom Avenue to a third party for the remainder of the master lease term.

various states. We believe our current and future facilities will be adequate to accommodate our needs for the foreseeable future.

Item 3. Legal Proceedings

From time to time, we are party to various lawsuits, claims and other legal proceedings that arise in the ordinary course of our business. We are not currently a party to any legal proceedings that we believe would reasonably be expected to have a materially adverse effect on our business, financial condition or results of operations.

Item 4. Mine safety disclosures

Not applicable.

PART II

Market Information

The following table sets forth, for the periods indicated, the high and low reported sales price of our common stock. Since March 27, 2003 our common stock has been quoted on the Over-the-Counter Bulletin Board. Our common stock is quotedBoard under the symbol “HPTO.” The amounts reflected in the following table are also adjusted to reflect the impact of the Reverse Stock Split, which became effective in the stock market upon commencement of trading on January 28, 2016.

On March 24, 201631, 2022 there were approximately 17748 holders of record of our common stock. Between January 1, 2016 and March 24, 2016 the high and low reported sales price of our common stock was $2.25 and $0.40, respectively, and on March 24, 2016 the closing price of our common stock was $1.51.

Dividends

We have never declared or paid dividends on our common stock, nor do we anticipate paying any cash dividends for the foreseeable future. We currently intend to retain future earnings, if any, to finance the operations and expansion of our business. Any future determination to pay cash dividends will be at the discretion of our Board of Directors and will be dependent upon the earnings, financial condition, operating results, capital requirements and other factors as deemed necessary by the Board of Directors.

Unregistered Sales of Equity Securities

On July 24, 2015 we entered into a securities purchase agreement and subscription agreement, pursuant to which we issued and sold for cash an aggregate of 2,105,919 shares of our common stock at a purchase price of $1.21 per share (such amounts reflecting the impact of the Reverse Stock Split). We derived gross proceeds of $2,550,500 from this placement. A summary of this sale was previously provided in our Current Report on Form 8-K, which was filed with the SEC on July 30, 2015.

Stock Repurchase Program

On January 8, 2008, our Board of Directors authorized a program to repurchase up to $1,000,000 of our outstanding common stock. Under terms of the program, we are not obligated to repurchase any specific number of shares and the program may be suspended or terminated at management’s discretion. On November 18, 2015, our Board of Directors decided to terminate this program. We made no repurchases of our outstanding common stock during either of the years ended December 31, 2015 or 2014.

Item 6. Selected Financial Data

Not applicable for smaller reporting companies.

Introduction

We are developers of software productivity products for mobile devices such as tablets and smartphones, and application publishing software solutions.which includes application virtualization software and cloud computing software for multiple computer operating systems including Windows, UNIX and several Linux-based variants. Our newest product, which is called hopTo, will be marketed to both consumers and businesses. hopTo will provide mobile end-users with a productivity workspace for their mobile devices that will allow users to manage, share, view, and edit their documents, regardless of where theyapplication publishing software solutions are stored. We launched the first public release of hopTo through Apple’s App Store on April 15, 2013 and the first commercial version of hopTo on November 14, 2013. This release was targeted at Apple’s tablet devices, the iPad and the iPad Mini. Future releases will be targeted at other devices such as Apple’s iPhone, as well as competing devices such as those based on Google’s Android platform. From the initial launch through 2014, we made hopTo available for free. On November 10, 2014, we launched the first version of hopTo Work, a version of the hopTo workspace made available to businesses for a fee. hopTo Work expands upon the core capabilities of hopTo by providing mobile access to applications that businesses rely on for their daily operations.

In addition to hopTo, we also sell a family of productssold under the brand name GO-Global, which is a software application publishing business and is our sole revenue source at this time. GO-Global is an application access solution for use and/or resale by independent software vendors (“ISVs”), corporate enterprises, governmental and educational institutions, and others who wish to take advantage of cross-platform remote access and Web-enabled access to their existing software applications, as well as those who are deploying secure, private cloud environments.

Over the years, we’ve also made significant investments in intellectual property (“IP”). We have filed many patents designed to protect the new technologies embedded in hopTo, and we plan to continue to aggressively invest in the creation and protection of new IP as we continue to develop hopTo and other products.

The following discussion should be read in conjunction with the consolidated financial statements and related notes provided in Item 8 “Financial Statements and Supplementary Data” in this Annual Report on Form 10-K.

Critical Accounting Policies.

Basis of Presentation and Use of Estimates

The consolidated financial statements include the accounts of hopTo Inc. and its subsidiaries (collectively, “we”, “us”, “our”, or “Company”); significant intercompany accounts and transactions are eliminated upon consolidation. The preparation of consolidated financial statements and related disclosures in conformity with accounting principles generally accepted in the United States (“GAAP”) requires management to make judgments,estimates and assumptions and estimates that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the period(s) being reported upon. Estimates are used for, but not limited to,reporting period. These estimates include: the amount of stock-based compensation expense, the warrants liability, the amount of capitalized software development costs,expense; the allowance for doubtful accounts,accounts; the estimated lives of property of equipment, valuation and amortization of intangible assets (including capitalized software),; depreciation of long-lived assets,assets; valuation of warrants; post-employment benefits,benefits; and accruals for liabilities, deferred rent, and taxes. While we believethe Company believes that such estimates are fair, actual results could differ materially from those estimates.

Revenue Recognition

We marketThe Company markets and license ourlicenses its products indirectly through channel distributors, ISVs, VARs (collectively “resellers”independent software vendors (“ISVs”) and directly to, value-added resellers, hosting service providers, corporate enterprises, governmental and educational institutions and others. Our product licenses are perpetual. We also separately sell intellectual property licenses, maintenance contracts, (whichwhich are comprised of license updates and customer service access), andaccess, as well as other products and services.

Software license revenues are recognized when:

Revenue recognized on software arrangements involving multiple deliverables is allocated to each deliverable based on vendor-specific objective evidence (“VSOE”) or third party evidence of the fair values of each deliverable; such deliverables include licenses for software products, maintenance, private labeling fees, and customer training. We limit our assessment of VSOE for each deliverable to either the price charged when the same deliverable is sold separately, or the price established by management having the relevant authority to do so, for a deliverable not yet sold separately.

If sufficient VSOE of fair value does not exist, so as to permit the allocation of revenue to the various elements of the arrangement, all revenue from the arrangement is deferred until such evidence exists or until all elements are delivered. If VSOE of the fair value does not exist, and the only undelivered element is maintenance, then we recognize revenue on a ratable basis. If VSOE of the fair value of all undelivered elements exists but does not exist for one or more delivered elements, then revenue is recognized using the residual method. Under the residual method, the fair value of the undelivered elements is deferred and the remaining portion of the arrangement fee is recognized as revenue.

Certain resellers (“stocking resellers”) purchase product licenses that they hold in inventory until they are resold to the ultimate end user (an “inventory stocking order”). At the time that a stocking reseller places an inventory stocking order, we do not ship any product licenses to them, rather, the stocking reseller’s inventory is credited with the number of licenses purchased and the stocking reseller can resell (issue) any number of licenses from their inventory at any time. Upon receipt of an order to issue one or more licenses from a stocking reseller’s inventory (a “draw down order”), we will ship the license(s) in accordance with the draw down order’s instructions. We defer recognition of revenue from inventory stocking orders until the underlying licenses are sold and shipped to the end user, as evidenced by the receipt and fulfillment of the stocking reseller’s draw down order, assuming all other revenue recognition criteria have been met.

There are no rights of return granted to resellers or other purchasers of ourthe Company’s software products.

The Company recognizes revenue in accordance with Accounting Standards Codification (“ASC”) 606, “Revenue from Contracts with Customers.” Revenues under ASC 606 are recognized when the promised goods or services are transferred to customers in an amount that reflects the consideration to which the Company expects to be entitled to in exchange for those goods or services.

For the years ended December 31, 2021 and 2020, revenue recognition was determined by

When control of the promised products and services are transferred to our customers, we recognize revenue in the amount that reflects the consideration we expect to receive in exchange for these products and services.

Product Sales

All of our licenses are delivered to the customer electronically. The Company sends the license key to the customer to download the related software from Company portal. We recognize revenue upon delivery of these licenses. For stocking resellers who purchase licenses through inventory stocking orders with the intent to resell to an end-user, revenue is recognized when the resellers’ accounts have been credited, at their discretion, for the number of licenses purchased.

Maintenance revenue is also recognized from maintenanceservice contracts ratably over the related contract period, which generally ranges from oneperiod.

Cash and Cash Equivalents

The Company considers all highly liquid holdings with maturities of three months or less at the time of purchase to five years.

Allbe cash equivalents. The Company had no cash equivalents as of our software licenses are sold in U.S. dollars.

Deferred Rent

The lease for our office at 1919 S. Bascom Avenue in Campbell, California, as amended, (See Note 7) contains free rent and predetermined fixed escalations in our minimum rent payments. On August 11, 2015 we entered into a sublease agreement to sublease the entirety of the leased space at 1919 S. Bascom Avenue to a third party (See Note 7).

On August 24, 2015 we entered into a lease agreement for office space at 51 E. Campbell Avenue in Campbell, California which became effective on October 1, 2015 (See Note 7).

We recognize rent expense related to these leases on a straight-line basis over the term of the lease. We record any difference between the straight-line rent amounts and amounts payable under the leases as part of deferred rent in current or long-term liabilities, as appropriate.

Incentives that we received pursuant to the amended lease agreement are recognized on a straight-line basis as a reduction to rent over the term of the lease. We record the unamortized portion of these incentives as a part of deferred rent in current or long-term liabilities, as appropriate.

Post-employment Benefits (Severance Liability)

Nonretirement postemployment benefits, including salary continuation, supplemental unemployment benefits, severance benefits, disability-related benefits and continuation of benefits such as health care benefits, are recognized as a liability and a loss when it is probable that the employee(s) will be entitled to such benefits and the amount can be reasonably estimated. The cost of termination benefits recognized as a liability and an expense includes the amount of any lump-sum payments and the present value of any expected future payments. During the years ended December 31, 2015 and 2014 we recorded $42,100 and $48,100 of severance expense, respectively as a result of a separation and release agreement we entered into with a former vice president-level employee (See Note 6). An aggregate $5,900 and $0 is reported as a severance liability at December 31, 2015 and 2014, respectively.2021 or 2020.

Long-Lived Assets

Long-lived assets, which consist primarily of capitalized software, are assessed for possible impairment whenever events or changes in circumstances indicate that the carrying amounts may not be recoverable, whenever we have committed to a plan to dispose of the assets or, at a minimum, annually. Typically, for long-lived assets to be held and used, measurement of an impairment loss is based on the fair value of such assets, with fair value being determined based on appraisals, current market value, comparable sales value, and undiscounted future cash flows, among other variables, as appropriate. Assets to be held and used that are affected by an impairment loss are depreciated or amortized at their new carrying amount over their remaining estimated life; assets to be sold or otherwise disposed of are not subject to further depreciation or amortization. During 2015, we determined that an impairment of $182,400 existed with certain capitalized software development costs associated with our hopTo consumer product and recognized that cost as part of cost of revenue.

Software Development Costs

We capitalize software development costs incurred from the time technological feasibility of the software is established until the time the software is available for general release, in accordance with accounting principles generally accepted in the United States (“GAAP”). Research and development costs and other computer software maintenance costs related to the software development are expensed as incurred. Upon the establishment of technological feasibility, related software development costs are capitalized. Such capitalized costs are subsequently amortized as costs of revenue over the shorter of three years or the remaining estimated useful life of the product. Software development costs, and amortization of such costs, are discussed further under “Results of Operations – Costs of Revenue.”

We make ongoing evaluations of the recoverability of its capitalized software projects by comparing the net amount capitalized for each product to the estimated net realizable value of the product. If such evaluations indicate that the unamortized software development costs exceed the net realizable value, we will write off the amount by which the unamortized software development costs exceed net realizable value.

During 2015, we determined that certain capitalized software development costs associated with the hopTo consumer product totaling $184,200 should be written off as we do not anticipate monetization of that particular product during the time fame that the costs were scheduled to be amortized.

Allowance for Doubtful Accounts

We maintain an allowance for doubtful accounts that reflects our best estimate of potentially uncollectible trade receivables. The allowance is based on assessments of the collectability of specific customer accounts and the general aging and size of the accounts receivable. We regularly review the adequacy of our allowance for doubtful accounts by considering such factors as historical experience, credit worthiness, and current economic conditions that may affect a customer’s ability to pay. We specifically reserve for those accounts deemed uncollectible. We also establish, and adjust, a general allowance for doubtful accounts based on our review of the aging and size of our accounts receivable. The following table sets forth the detailsAs of the Allowance for Doubtful Accounts for the years ended December 31, 20152021 and 2014:2020, the allowance for doubtful accounts totaled $7,000 and $5,900, respectively.

Stock-Based CompensationSoftware Development Costs

We applyUnder the fair value recognition provisions of thecriteria set forth in Financial Accounting Standards BoardBoard’s (FASB) Accounting Standards Codification Subtopic (ASC) 718-10,985-20, “Compensation – Stock Compensation.Costs of Software to be Sold, Leased or Marketed,” Wedevelopment costs incurred in the research and development of new software products are expensed as incurred until technological feasibility, in the form of a working model, has been established, at which time such costs are capitalized until the product is available for general release to customers. The Company did not capitalize any software development costs during 2021 or 2020. The Company makes ongoing evaluations of the recoverability of its capitalized software projects by comparing the net amount capitalized for each product to the estimated net realizable value of the product. If such evaluations indicate that the unamortized software development costs exceed the net realizable value, the Company writes off the amount by which the unamortized software development costs exceed net realizable value.

Long-Lived Assets

Long-lived assets are assessed for possible impairment whenever events or changes in circumstances indicate that the carrying amounts may not be recoverable, whenever we have committed to a plan to dispose of the assets or, at a minimum, annually. Typically, for long-lived assets to be held and used, measurement of an impairment loss is based on the fair value of each option grant madesuch assets, with fair value being determined based on appraisals, current market value, comparable sales value, and discounted future cash flows, among other variables, as appropriate. Assets to be held and used (which assets are affected by an impairment loss) are depreciated or amortized at their new carrying amount over their remaining estimated life; assets to be sold or otherwise disposed of are not subject to further depreciation or amortization. No such impairment charge was recorded during the yearsyear ended December 31, 2015 and 2014 on the date of grant using a binomial model, with the assumptions set forth in the following table:2021 or 2020.

In estimating our stock price volatility for grants awarded during the years ended December 31, 2015 and 2014, we analyzed our historic volatility over a period of time equal in length to the expected option term for the option being issued. For grants made to newly hired employees the period of time over which we analyzed our historic volatility ended on the last day of the quarter during which the new employee was hired. We derived an annualized forfeiture rate by analyzing our historical forfeiture data, including consideration of the impact of certain non-recurring events, such as reductions in our work force. Our estimates of the expected option term and the estimated exercise factor were derived from our analysis of historical data and future projections. The approximate risk-free interest rate was based on the implied yield available on U. S. Treasury issues with remaining terms equivalent to our expected option term. We believe that each of these estimates is reasonable in light of the data we analyzed. However, as with any estimate, the ultimate accuracy of these estimates is only verifiable over time.

During 2015, we awarded 15,000 shares of restricted common stock to employees. The valuation of the restricted common stock awards was based on the closing fair market value of our common stock on the grant date. For the awards made to employees, such fair market value ranged from $1.95 to $2.40 per share

During 2015, we granted 57,911 options to purchase common stock to our Chief Financial Officer at a weighted average exercise price of $1.80 per share. This option grant was offered as an exchange for forfeiting 44,445 of unreleased restricted stock award that was originally awarded in May 2014. The following table illustrates the non-cash stock-based compensation expense recorded, net of amounts capitalized, during the years ended December 31, 2015 and 2014 by income statement classification:

Fair Value of Financial Instruments

The fair value of the Company’s accounts receivable, accounts payable and other current liabilities approximate their carrying amounts due to the relative short maturities of these items.

The fair value of the Company’s warrants are determined in accordance with FASB ASC 820,“Fair Value Measurement,”which establishes a fair value hierarchy that prioritizes the assumptions (inputs) to valuation techniques used to price assets or liabilities that are measured at fair value. The hierarchy, as defined below, gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The guidance for fair value measurements requires that assets and liabilities measured at fair value be classified and disclosed in one of the following categories:

As of December 31, 2015 and 2014, all of the Company’s $31,600 and $647,300 Warrants Liability reported at fair value, respectively, was categorized as Level 3 inputs (see Note 8).

Concentration of Credit Risk

Financial instruments, which potentially subject usthe Company to concentration of credit risk, consist principally of cash and trade receivables. We placeThe Company places its cash and, when applicable, cash equivalents, with high quality financial institutions and, by policy, limit the amount of credit exposure to any one financial institution.institutions. As of December 31, 2015, we2021, the Company had approximately $1,559,900$4,505,300 of cash with financial institutions in excess of FDIC insurance limits. As of December 31, 2014,2020, the Company had approximately $1,316,600$4,125,300 of cash with financial institutions in excess of FDIC insurance limits.

For the yearsyear ended December 31, 20152021, we had one reseller that represented more than 27.8% of sales and three resellers that represented 51.5%, 15.0%, and 11.9%, respectively of accounts receivable. For the year ended December 31, 2014,2020, we had one reseller that represented more than 14.5% of sales and one reseller that represented 44.7% of accounts receivable. For the purposes of this description, “sales” refers to the dollar value of orders received from these customers and partners in the period indicated. The sales values do not necessarily equal recognized revenue for these periods due to our revenue recognition policies which require deferral of revenue associated with prepaid software service fees.

Income Taxes

The Company accounts for income taxes in accordance with ASC 740, “Income Taxes,” using the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of assets and liabilities and their respective tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

Basic and Diluted Earnings Per Share

In accordance with ASC 260, “Earnings Per Share,” the basic income (loss) per common share is computed by dividing the net income (loss) available to common stockholders by the weighted average common shares outstanding during the period. Diluted income (loss) per share reflect per share amounts that would have resulted if diluted potential common stock had been converted to common stock. Dilutive common share equivalents as of December 31, 2021 and 2020, representing 248,216 outstanding in-the-money warrants, were included in the computation of diluted net income (loss) per share using the Treasury Stock Method. During the year ended December 31, 2021 and 2020, the Company consideredhad total common stock equivalents of 4,946 and 93,076 shares, respectively, which excluded from the followingcomputation of net income per share because they are anti-dilutive.

Fair Value of Financial Instruments

The Company’s financial instruments consist of cash and cash equivalents, accounts receivable, accounts payable, and accrued expenses. The carrying amount of these financial instruments approximates fair value due to be its most significant customers:the nature of the accounts and their short-term maturities.

Results of Operations for the Year Ended December 31, 2021 and 2020

Set forth belowThe following is statementa comparison of the results of our operations data for the years ended December 31, 20152021 and 2014 along with the dollar and percentage changes from 20142020.

See accompanying notes to 2015 in the respective line items.consolidated financial statements

Revenue.

Revenues

Software Licenses

The table that follows summarizes software licenses revenue for the years ended December 31, 2015 and 2014, and calculates the change in dollars and percentage from 2014 to 2015 in the respective line item.

Our software revenue is currently almost entirely related to our GO-Global product line, and historically has been primarily derived from product licensing fees and service fees from maintenance contracts. The majority of this revenue has been earned, and continues to be earned, from a limited number of significant customers, most of whom are resellers. Manysome of our resellers purchase software licenses that they hold in inventory until they are resold to the ultimate end user (a “stocking reseller”). We defer recognition of revenue from these sales (on our Consolidated Balance Sheet under the caption “Deferred Revenue”) until the stocking reseller sells the underlying software licenses to the ultimate end user. Consequently, if any of our significant stocking resellers materially change the rate at which they resell our software licenses to the ultimate end user, our software licenses revenue could be materially impacted.

When a software license is sold directly to an end user by us, or by one of our resellers who does not stock licenses into inventory, revenue is recognized immediately upon shipment, assuming all other criteria for revenue recognition are met. Consequently, if any significant end user customer substantially changes its order level, or fails to order during the reporting period, whether the order is placed directly with us or through one of our non-stocking resellers, our software licenses revenue could be materially impacted.

Almost all stocking resellers maintain inventoriesThe following is a summary of our Windows products; few stocking resellers maintain inventories of our UNIX products.

The decrease in Windows software licenses revenuerevenues by category for the year ended December 31, 2015,2021 and 2020.

Software Licenses

Windows software licenses revenue decreased by $58,700 or 8.0% to $673,400 during the year ended December 31, 2021, from $732,100 as compared withto 2020. The decrease was due to due to lower revenue from standard license orders following elevated license order activity in the prior year was primarily dueperiod related to a combinationthe onset of lower sell through to end users by stocking resellers as those resellers adjusted their pricing to absorb the weakening of their respective currencies versus the US dollar and a lower effective price for seats sold by the ISV stocking reseller which placed the large order in November 2014.COVID-19 pandemic.

Software licenses revenue from our UNIX/Linux products decreased by $56,800 or 46.9% to $64,400 during 2015 approximate samethe year ended December 31, 2021 from $121,200 as 2014.

We expect aggregate GO-Global software license revenue in 2016compared to be modestly lower than 2015 levels2020. The decrease was primarily due to lower aggregate revenue from standard order licenses as we continue to focus primarily on our stocking resellers and our European telecommunications customers. At the same time, we will seek to improve cash flow from the GO-Global business through cost control and other measures.Windows products. 

Software Service Fees

The table that follows summarizes revenue recognized derived from software serviceService fees for the years ended December 31, 2015 and 2014, and calculates the changes in dollars and percentage from 2014 to 2015 in the respective line item.

The slight decrease in software service fees revenue attributable to our Windows productsproduct service increased by $349,600 or 15.5% to $2,604,800 during 2015,the year ended December 31, 2021, from $2,255,200 as compared with 2014,to 2020. The increase was primarily due to the timing of customer renewal ofhigher subscription revenue and higher revenue recognized from deferred maintenance contracts during 2015.support fees.

The decrease in serviceService fees revenue attributable to our UNIX products for 2015,decreased by $35,600 or 16.2% to $183,700 during the year ended December 31, 2021, from $219,300 as compared with 2014, was primarily the result of the lower level of our UNIX product sales throughout the current and prior year and a decrease in maintenance contract renewals. The majority of this decrease was attributable to our European telecommunications customers, as discussed above.

We expect that software service fees for 2016 will be modestly lower than those for 2015, consistent with the modest decreases in GO-Global software license revenue.

Other

2020. The decrease in other revenue for 2015, as compared with 2014, was primarily due to decrease inthe expiration of certain long-term maintenance contracts.

Other

Other revenue consists of private labeling fees, professional services, and private labeling fees associatednon-recurring revenues. Other revenue decreased by $229,800 or 72.7% to $86,400 for the year ended December 31, 2021, from $316,200 compared to 2020. The primary decrease was related to revenue recognized in 2020 from a one-time, non-recurring a license agreement with an existing customer for the use of our GO-Global ISV Partners.license.

Costs

Cost of RevenueRevenues

Cost of revenue is comprised primarily of software service costs, which represent the costs of customer service. Also included in cost of revenue are software product costs, which are primarily comprised of the amortization of capitalized software development costs and costs associated with licenses to third party software included in our product offerings.offerings, and the required import tax withholdings from Brazil resellers. We incur no significant shipping or packaging costs as virtually all of our deliveries are made via electronic means over the Internet.

Research and development costs for new product development, after technological feasibility is established, are recorded as “capitalized software” on our Consolidated Balance Sheet. Such capitalized costs are subsequently amortized to cost of revenue as a component of software product costs over the shorter of three years or the remaining estimated life of the products so capitalized. We capitalized $12,000 and $16,500 of software development costs during 2015 and 2014, respectively. Such costs were incurred in the development of hopTo, and were primarily comprised of employee costs and the cost of licenses to third party software used by hopTo. Amortization related to capitalized software development costs charged to costs of revenue was approximately $217,400 and $227,200 during 2015 and 2014, respectively. This amortization was separate from the impairment costs detailed below.

Cost of revenue for the year ended December 31, 20152021 increased by $156,000,$11,500, or 34.4%7.4%, to $609,400 from $453,000$166,500 as compared to $155,000 for 2014.2020. Cost of revenue represented 12.2%4.6% and 8.2%4.3% of total revenue for the yearsyear ended December 31, 20152021 and 2014,2020, respectively.

Software Service Costs -Software service costs decreased during 2015, as compared with 2014, as less time was spent on customer service issues, The primarily due to the mature state of our GO-Global products. We anticipate that customer service costs will increase in 2016, as compared with 2015, as we release further commercial versions of hopTo and new versions of products within the GO-Global family.

Software Product Costs -The slight increase in software product costs for 2015, as compared with 2014, was due to amortization of hopTo capitalized software development costs which commenced in November of 2013.

Write-Down of Capitalized Software Development Cost- During 2015, Company wrote down the capitalized software development costs of $182,400. These costs wereincrease import tax withholdings associated solely with the hopTo consumer product which we do not anticipate to monetize duringhigher revenue from Brazil resellers for the period in which these costs were scheduled to be amortized. These impairment costs are in addition to the amortization costs detailed above.ended December 31, 2021.

For the reasons outlined above, we expect 2016 costs of revenue to be lower than 2015 levels.

Selling and Marketing Expenses.

Selling and marketing expenses primarily consistconsisted of employee, costs (inclusive of non-cash stock-based compensation expense), outside services and travel and entertainment expenses.

Selling and marketing expenses increased by $97,300, or 19.1%, to $606,600 for the year ended December 31, 2015 decreased by $481,500, or 23.3%,2021 from $509,300 as compared to $1,588,200 from $2,069,700 in 2014.2020. Selling and marketing expenses represented approximately 16.8% and 14.0% of total revenue for the yearsyear ended December 31, 20152021 and 2014 represented approximately 31.9% and 37.3% of total revenue,2020, respectively. The decreaseincrease in selling and marketing expenses during 2015, compared to 2014, was due a decrease in advertising and promotional costs associated with our hopTo products as we have transitioned from consumer oriented product to a product targeted at businesses.

We expect to maintain ouran increase spend on sales and marketing efforts in 2016 for hopTo Work, and for anticipated GO-Global releases at a level consistent with the second half of 2015; accordingly, we expect 2016 sales and marketing expenses be lower than 2015 levels.initiatives.

General and Administrative Expenses.

General and administrative expenses primarily consist of employee amortizationcosts, depreciation and depreciation,amortization, legal, accounting, other professional services, (including those related to our patents, rent, travel and entertainment and insurance. Certain costs associated with being a publicly-heldpublicly held corporation are also included in general and administrative expenses, as well as bad debtsdebt expense.

General and administrative expenses decreased by $151,700, or 16.8%, to $748,800 for the year ended December 31, 2015 decreased by $197,200, or 5.9%,2021 from 900,500 as compared to $3,136,600 from $3,333,800 for 2014. General and administrative expenses for the years ended December 31, 2015 and 2014 represented approximately 63.0% and 60.0% of total revenue, respectively.

2020. The decrease in general and administrative expense for 2015, compared with 2014, was primarily due to lowerthe decrease in legal expenses associated with activity related to our patentspatent fees, outside services and other administrative matters such as investor relations.board of director fees.

In 2016, we intend to continue these cost controls and to benefit from lower rent expense associated with our new headquarters location. We therefore expect that our 2016 general and administrative costs will be slightly lower than those for 2015.

Research and Development Expenses.

Research and development expenses consist primarily of employee costs, payments to contract programmers, software subscriptions, travel and entertainment for our engineers, and all rent for our leased engineering facilities.

Research and development expenses net of amounts capitalized, decreasedincreased by $687,400,$5,300, or 14.0%,0.4% to $4,224,000$1,435,400 for the year ended December 31, 20152021 from $4,911,400 in the prior year. Research and development expenses for the years ended December 31, 2015 and 2014 represented approximately 84.8% and 88.4% of total revenue, respectively.

During 2015 and 2014, we capitalized $12,000 and $16,500 of software development costs associated with the development of hopTo, respectively, which, had they not met the criteria for capitalization, would have otherwise been expensed.

$1,430,100 as compared to 2020. The decrease in research and development expense iswas primarily due to lower employee costs associated with lower headcount as a result of reorganization of our hopTo team which was implemented during the three-month period ended June 30, 2014 and additional headcount reductions during 2015.

In 2016, we expect to maintain a level of research and development resource consistent with the levels of the second half of 2015 and to benefit from the lowerdecrease in rent expense associated with our new headquarters location. We therefore expect 2016 research and development expenses, net of capitalizedconsulting fees for outsourced software developments costs, to be lower than 2015 levels.development.

Change in Fair Value of Warrants LiabilityOther Income. During 2015 and 2014, we recognized a net change of $190,300 and $1,624,300 respectively, in the aggregate fair value of the warrant liability, net of amounts reclassified to equity (See Note 8 to Notes to Consolidated Financial Statements). The change in fair value of warrants liability was approximately 3.8% and 29.2% of total revenues for the years ended December 31, 2015 and 2014, respectively. Such amounts resulted from price changes in the market value for our common stock and can vary from period to period due to the exercise and/or issuance of warrants accounted for under the liability method. For further information regarding our Warrants Liability, see Note 8 to the Notes to Consolidated Financial Statements.

Income Taxes. For the years ended December 31, 2015 and 2014, we recorded a current tax provision for foreign subsidiary of approximately $3,700 and $3,100, respectively. At December 31, 2015, we had approximately $61.0 million of federal net operating loss carryforwards, which will begin to expire in 2018. Also at December 31, 2015, we had approximately $7.5 million of California state net operating loss carryforwards available to reduce future taxableOther income which will begin to expire in 2014. During the years ended December 31, 2015 and 2014, we did not utilize any of our federal and California net operating losses and have recorded a full valuation allowance against each of them.

At December 31, 2015, we had approximately $1.0 million of federal research and development tax credits, for which a full valuation allowance has been provided. Such tax credits will begin to expire in 2018.

Net Loss. As a result of the foregoing items, we reported a net loss of $4,391,100increased by $352,200 for the year ended December 31, 2015, as2021, compared with a net lossto same period in 2020 was primarily the sale of $3,593,900 for 2014.patents and unrealized gain from our marketable securities.

Liquidity and Capital Resources

Our reported net lossAs of $4,391,100 in 2015 included four significant non-cash items: depreciation and amortizationDecember 31, 2021, we had cash of $334,800, which was primarily related to amortization of our capitalized software development costs; impairment of capitalized software development costs of $182,400; stock-based compensation expense of $757,500;$4,755,300 and a gainworking capital of $4,316,500 as compared to cash of $4,375,300 and a working capital of $474,600 at December 31, 2020. The increase in the change in value of our warrants liability of $190,300.

We invested $7,300 in capital expenditures and $12,000 in capitalized software development cost during 2015, primarily related to our new products development team in Campbell, California.

We are aggressively looking at ways to improve our revenue stream through the development, marketing and sale of new products. We have also streamlined our GO-Global operations in order to align its cost structure with its sales. Should business combination opportunities present themselves to us, and should such opportunities appear to make financial sense and add value for our shareholders, we will consider those opportunities.

We believe that as a result of the expected introduction of new products slated for 2016, our revenue will increase. During 2016, we expect to continue to prioritize the investment of our resources into the development of various new products, and we expect that certain of these investments may ultimately be capitalized as software development costs. Further, due to our expected investments in new products and continued investments in intellectual property, we expect our cash outflow from operations to continue. Based on our cash on hand as of December 31, 2015,2021 was primarily the result of cash proceeds from sale of patents. We expect our results from operations and capital resources will be sufficient to fund our operations for at least the next 12 months from the date of the filing of this annual report on Form 10-K.

The following is a summary of our cash flows from operating, investing and financing activities for the year ended December 31, 2021 and 2020.

During the year ended December 31, 2021, our operating cash flow from our GO-Global business andof $410,600 was primarily the anticipation of revenue from our hopTo Work product, we believe that we will have sufficient capital resources to support our operational plans for the next twelve months. However, implementation of expansion plans for hopTo Work may require significant revenue from our hopTo Work product or new capital from issuances of debt or equity.

There can be no assurance of new revenue from new or existing product lines or additional capital from debt or equity issuances. In addition, issuances of new capital stock would dilute existing stockholders and may give the purchasers of new capital stock additional rights, preferences and privileges relative to existing stockholders. There can be no assurance that additional capital necessary for full executionresult of our hopTo business strategy will be available on a timely basis, on reasonable terms or at all.

In the event that revenues from our current products or future products are not consistent with the levels assumed in our current operational plans and we are not able to secure new capital through issuancesnet income of debt or equity, we believe that we can reorganize our operations to continue to maintain our current business.

Cash

As of December 31, 2015, cash was $1,777,300 as compared with $1,557,100 as of December 31, 2014, an increase of $220,200, or 14.1%. The increase primarily resulted from the cash provided by the payment received in January 2015 for a $1.5 million stocking order from one of our GO-Global ISV resellers and cash received of $2,550,500 on July 28, 2015 as a result of the sale of shares of our commons stock in a private placement (the “2015 Private Placement”). These cash receipts were partially$1,052,200, offset by consumption by our operations, as well as the investments we made in fixed assets, and employee costs, primarily associated with our new products development team.

Accounts Receivable, net

At December 31, 2015 and 2014, we had $434,900 and $2,211,300, respectively,increase in accounts receivable netand non-operating gains from sale of allowances totaling $17,300patent and $32,600, respectively. The decrease in net accounts receivable was primarily due tounrealized gain from marketable securities During the collection of a $1.5 million stocking order from one of our GO-Global ISV stocking resellers. From time to time we could have individually significant accounts receivable balances due us from one or more of our significant customers. If the financial condition of any of these significant customers should deteriorate, our operating results could be materially affected.

Stock Repurchase Program

During January 2008, our Board of Directors approved a stock repurchase program. Under this program, up to $1,000,000 may be used in repurchasing our stock; however, we are not obligated to repurchase any specific number of shares and the program may be suspended or terminated at our discretion. On November 18, 2015, our Board of Directors decided to terminate this program. We did not repurchase any shares under this plan during either 2015 or 2014, and at the time of termination, $782,600 was available for stock repurchases.

Working Capital

As of December 31, 2015, we had current assets of $2,351,400 and current liabilities of $3,514,400, which netted to a working capital deficit of $(1,163,000). Included in current liabilities was the current portion of deferred revenue of $2,467,000.

Commitments and Contingencies

The following table discloses our contractual commitments for future periods, which consist entirely of leases for office space and is inclusive of our contractual commitments for our Campbell, California office, including the commitments under the lease amendment. The table assumes that we will occupy all currently leased facilities for the full term of each respective lease:

Rent expense aggregated approximately $396,400 and $447,900 for the yearsyear ended December 31, 20152020, our operating cash flow of $352,800 was primarily the result of our net income for the period of $693,700 including non-cash expenses of $112,400 for contributed services, offset by a decrease in cash resulting from a decrease in accounts payable and 2014, respectively.accrued expenses

During the year ended December 31, 2021, our investing cashflow of $30,600, was primarily the result net proceeds from sale of patent, offset by purchase of marketable securities. We had no cash flow activity relating to investing activities for the year ended December 31, 2020.

Recent Accounting Pronouncements

In February 2016,During the FASB issued Accounting Standards Update (“ASU”) 2016-02,Leases (Topic 842). Under this guidance, an entity is required to recognize right-of-use assets and lease liabilities on its balance sheet and disclose key information about leasing arrangements. This guidance offers specific accounting guidance for a lessee, a lessor and sale and leaseback transactions. Lessees and lessors are required to disclose qualitative and quantitative information about leasing arrangements to enable a user of the financial statements to assess the amount, timing and uncertainty of cash flows arising from leases. This guidance is effective for annual reporting periods beginning afteryear December 15, 2018, including interim periods within that reporting period, and requires a modified retrospective adoption, with early adoption permitted. We are currently evaluating the impact on our consolidated financial statements.

In November, 2015, the FASB issued ASU 2015-17,Balance Sheet Classification of Deferred Taxes(“ASU 2015-17”). The ASU is part of the Board’s simplification initiative aimed at reducing complexity in accounting standards and requires companies to classify all deferred tax assets and liabilities, along with any related valuation allowance, as noncurrent on the balance sheet. Although ASU 2015-17 isn’t required for public companies to implement until fiscal years beginning after December 15, 2016 (and private companies until fiscal years beginning after December 15, 2017), early adoption is allowed. We have decided to adopt early and has classified all of its deferred tax assets and liabilities as noncurrent on the balance sheet. We early adopted ASU 2015-17 as the Company considers this change an improvement in the usefulness of information provided to users of the Company’s financial statements. The Company applied the standard prospectively and31, 2021, we did not retrospectively adjust any prior periods. Retrospective adjustments were immaterialhave cash flow activity relating to financing activities. In 2020, we received net proceeds of $2,480,600 from the Company’s total current assetsRights Offering and Backstop Agreement. We intend to use the proceeds from the Rights Offering and the adoption had no impact on our results of operation.

In August 2015, FASB issued ASU No. 2015-14 “Revenue from Contracts with Customers (Topic 606)” – Deferral of the Effective Date (“ASU 2015-14”). The purpose of this update is to defer the effective date of ASU 2014-09, detailed below, by one year. Therefore, ASU 2014-09 is now to be effectiveBackstop Agreement for annual reporting periods beginning after December 15, 2017, including interim periods within such annual period.

In April 2015, FASB issued ASU No. 2015-05 “Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement”(“ASU 2013-05”). The objective of ASU 2015-05 is to provide guidance to reporting entities in the accounting for fees paid in a cloud computing arrangement. Specifically, if a cloud computing arrangement includes a software license, then the entity should account for the software license element of the arrangement consistent with the acquisition of other software licenses. If a cloud computing arrangement does notgeneral corporate purposes, which may include a software license, the entity should account for the arrangement as a service contract. The guidance will not change GAAP for an entity’s accounting for service contracts. The amendments in this ASU are effective for annual periods beginning after December 15, 2015, including interim periods within those annual periods. Early adoption is permitted. We are currently evaluating this ASU in order to determine whether or not its adoption will have a material impact on our results of operations, cash flows or financial position.

In August 2014, FASB issued Accounting Standards Update (“ASU”) No. 2014-15 “Preparation of Financial Statements - Going Concern (Subtopic 205-40).” Under U.S. GAAP, continuation of a reporting entity as a going concern is presumed as the basis for preparing financial statements unless and until the entity’s liquidation becomes imminent. Preparation of financial statements under this presumption is commonly referred to as the going concern basis of accounting. If and when an entity’s liquidation becomes imminent, financial statements should be prepared under the liquidation basis of accounting in accordance with Subtopic 205-30, Presentation of Financial Statements-Liquidation Basis of Accounting. Even when an entity’s liquidation is not imminent, there may be conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern. In those situations, financial statements should continue to be prepared under the going concern basis of accounting, but the amendments in the update should be followed to determine whether to disclose information about the relevant conditions and events. The amendments in this ASU are effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. Early application is permitted. We will evaluate the going concern considerations in this ASU, however, at the current period,acquisitions (although we do not believe that the Company has met conditions which would subject its consolidated financial statements to additional disclosure.

In June 2014, FASB issued ASU No. 2014-12“Compensation – Stock Compensation (Topic 718)” (“ASU 2014-12”). The objective of ASU 2014-12 is to resolve the diverse accounting treatment being applied in practice by reporting entities in the accounting for share-based payment awards that require a specific performance target to be achieved in order for employees to become eligible to vest in the awards, particularly those awards whose terms may provide that the performance target could be achieved after the employee completes the requisite service period. That is, the employee would be eligible to vest in the award regardless of whether the employee is rendering service on the date the performance target is achieved. ASU 2014-12 is effective for annual periods and interim periods within those annual periods beginning after December 15, 2015, and earlier adoption is permitted. The share-based payment awards we currently have outstanding which have performance targets do not contain clauses wherein the performance target could be achieved after the employee completes the requisite service period; accordingly, adoption of ASU 2014-12 did not have a material impact on our results of operations, cash flows or financial position.any plans with respect to any acquisition).

In May 2014, FASB issued ASU No. 2014-09 “Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-09”). ASU 2014-09 is the end result of a joint project initiated by FASB and the International Accounting Standards Board (“IASB”). IASB is the body that sets International Financial Reporting Standards (“IFRS”). The goal of FASB’s and IASB’s joint project was to clarify the principles for recognizing revenue and to develop a common revenue standard for U.S. GAAP and under IFRS. Specifically, ASU 2014-09:

The core principle of ASU 2014-09 is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 is effective for annual reporting periods beginning after December 15, 2016, including interim periods within such annual period. Early adoption is not permitted. We are currently evaluating this ASU in order to determine whether or not its adoption will have a material impact on our results of operations, cash flows or financial position.

In April 2014, FASB issued ASU No. 2014-08“Presentation of Financial Statements (Topic 205) and Property, Plant and Equipment (Topic 360)” (“ASU 2014-08”). The objective of ASU 2014-08 is to address issues in Subtopic 205-20,“Presentation of Financial Statements – Discontinued Operations,” that give rise to complexity and difficulties in practice. Generally, ASU 2014-08 is effective for discontinued operations that occur within annual periods beginning on or after December 31, 2014, and interim periods within those years. Early adoption is permitted, but only for discontinued operations that have not been reported in financial statements previously issued or available for issuance. We currently have no discontinued operations to report; consequently, adoption of ASU 2014-08 did not have a material impact on our results of operations, cash flows or financial position.

In July 2013, FASB issued ASU No. 2013-11“Income Taxes (Topic 740)”(ASU 2013-11). The objective of ASU 2013-11 is to provide explicit guidance on the financial statement presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. FASB recognized that there was inconsistency in how previous guidance in this topic was applied in practice, thus; the objective of ASU 2013-11 is to eliminate the diversity of how previous guidance was applied. As the amendments in ASU 2013-11 do not require new recurring disclosures, rather, they are aimed at creating consistency in how previous guidance is applied, we do not believe that adoption of ASU 2013-11, which will become effective for fiscal years, and interim periods within those years, beginning after December 15, 2013, will have a material impact on our results of operations, cash flows or financial position.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Not applicable for smaller reporting companies.

Item 8. Financial Statements and Supplementary Data

Index to Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders

Stockholders of hopTo, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of hopTo, Inc. and subsidiaries (the(collectively the “Company”) as of December 31, 20152021 and 20142020, and the related consolidated statements of operations, shareholders’stockholders’ equity (deficit), and cash flows for each of the years then ended. ended, and the related notes (collectively referred to as the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2021 and 2020, and the results of their operations and their cash flows for each of the years then ended, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on thesethe Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).PCAOB. Those standards require that we plan and perform the auditaudits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement.misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. OurAs part of our audits, included considerationwe are required to obtain an understanding of internal control over financial reporting, as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence supportingregarding the amounts and disclosures in the consolidated financial statements, assessingstatements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statement presentation.statements. We believe that our audits provide a reasonable basis for our opinion.

In our opinion,Critical Audit Matters

Critical audit matters are matters arising from the consolidatedcurrent period audit of the financial statements referredthat were communicated or required to above present fairly, in allbe communicated to the audit committee and that: (1) relate to accounts or disclosures that are material respects,to the financial position of hopTo Inc.statements and subsidiaries(2) involved our especially challenging, subjective, or complex judgments. We determined that there are no critical audit matters.

/s/ dbbmckennon

We have served as of Decemberthe Company’s auditor since 2019.

Newport Beach, California

March 31, 2015 and 2014, and the results of their operations and their cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.2022

hopTo Inc.

Consolidated Balance Sheets

See accompanying notes to consolidated financial statements

hopTo Inc.

Consolidated Statements of Operations