Document And Entity Information
Document And Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Mar. 21, 2019 | Jun. 30, 2018 | |
Document And Entity Information [Abstract] | |||
Entity Registrant Name | Intellicheck, Inc. | ||
Entity Central Index Key | 0001040896 | ||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Period End Date | Dec. 31, 2018 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filer | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Small Business Flag | true | ||
Entity Emerging Growth Company | false | ||
Entity Ex Transition Period | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 288,333,510 | ||
Entity Common Stock, Shares Outstanding | 15,638,765 | ||
Trading Symbol | IDN | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2018 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
CURRENT ASSETS: | ||
Cash | $ 4,376,017 | $ 8,010,161 |
Accounts receivable, net of allowance of $24,675 and $18,750 as of December 31, 2018, and 2017, respectively | 1,019,434 | 652,627 |
Inventory | 82,337 | 85,321 |
Other current assets | 271,415 | 218,835 |
Total current assets | 5,749,203 | 8,966,944 |
NOTE RECEIVABLE, net of current portion | 29,017 | 71,138 |
PROPERTY AND EQUIPMENT, net | 264,583 | 211,602 |
GOODWILL | 8,101,661 | 8,101,661 |
INTANGIBLE ASSETS, net | 306,575 | 463,578 |
OTHER ASSETS | 9,742 | 67,181 |
Total assets | 14,460,781 | 17,882,104 |
CURRENT LIABILITIES: | ||
Accounts payable | 73,334 | 71,578 |
Accrued expenses | 726,918 | 815,350 |
Deferred revenue, current portion | 704,536 | 739,980 |
Total current liabilities | 1,504,788 | 1,626,908 |
OTHER LIABILITIES | ||
Deferred revenue, long-term portion | 29,486 | 87,736 |
Other long-term liabilities | 6,802 | 158,407 |
Total liabilities | 1,541,076 | 1,873,051 |
COMMITMENTS AND CONTINGENCIES (Note 12) | ||
STOCKHOLDERS' EQUITY: | ||
Common stock - $.001 par value; 40,000,000 shares authorized; 15,638,765 and 15,009,246 shares issued and outstanding as of December 31, 2018 and 2017, respectively | 15,639 | 15,009 |
Additional paid-in capital | 127,290,467 | 126,416,869 |
Accumulated deficit | (114,386,401) | (110,422,825) |
Total stockholders' equity | 12,919,705 | 16,009,053 |
Total liabilities and stockholders' equity | $ 14,460,781 | $ 17,882,104 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Statement of Financial Position [Abstract] | ||
Allowance for accounts receivable | $ 24,675 | $ 18,750 |
Common stock, par value | $ 0.001 | $ .001 |
Common stock, shares authorized | 40,000,000 | 40,000,000 |
Common stock, shares issued | 15,638,765 | 15,009,246 |
Common stock, shares outstanding | 15,638,765 | 15,009,246 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Income Statement [Abstract] | ||
REVENUES | $ 4,433,454 | $ 3,598,296 |
COST OF REVENUES | (386,617) | (521,835) |
Gross profit | 4,046,837 | 3,076,461 |
OPERATING EXPENSES | ||
Selling, general and administrative | 5,236,170 | 5,865,278 |
Research and development | 2,904,166 | 1,916,107 |
Impairment of intangible assets | 1,375,422 | |
Total operating expenses | 8,140,336 | 9,156,807 |
Loss from operations | (4,093,499) | (6,080,346) |
OTHER INCOME | ||
Interest and other income | 129,923 | 59,841 |
Net loss | $ (3,963,576) | $ (6,020,505) |
PER SHARE INFORMATION: | ||
Loss per common share - Basic/Diluted | $ (0.26) | $ (0.48) |
Weighted average common shares used in computing per share amounts - Basic/Diluted | 15,542,480 | 12,428,652 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity - USD ($) | Common Stock [Member] | Additional Paid-in Capital [Member] | Accumulated Deficit [Member] | Total |
Balance at Dec. 31, 2016 | $ 10,719 | $ 117,293,158 | $ (104,368,426) | $ 12,935,451 |
Balance, shares at Dec. 31, 2016 | 10,718,553 | |||
Cumulative adjustment upon modified retrospective adoption of ASU 2016-09 at Dec. 31, 2017 | 33,894 | (33,894) | ||
Balance after adoption of recent accounting pronouncement at Dec. 31, 2016 | 10,719 | 117,327,052 | (104,402,320) | 12,935,451 |
Balance after adoption of recent accounting pronouncement, shares at Dec. 31, 2016 | 10,718,553 | |||
Stock-based compensation expense (employees and directors) | 435,679 | 435,679 | ||
Issuance of common stock, net of costs | $ 4,169 | 8,508,692 | 8,512,861 | |
Issuance of common stock, net of costs, shares | 4,168,750 | |||
Exercise of stock options | $ 10 | 10,090 | 10,100 | |
Exercise of stock options, shares | 10,000 | |||
Exercise of warrants | $ 63 | 139,637 | 139,700 | |
Exercise of warrants, shares | 63,500 | |||
Vesting of restricted stock | $ 50 | (50) | ||
Vesting of restricted stock, shares | 50,207 | |||
Shares forfeited in exchange for payment of withholding taxes | $ (2) | (4,231) | (4,233) | |
Shares forfeited in exchange for payment of withholding taxes, shares | (1,764) | |||
Net loss | (6,020,505) | (6,020,505) | ||
Balance at Dec. 31, 2017 | $ 15,009 | 126,416,869 | (110,422,825) | 16,009,053 |
Balance, shares at Dec. 31, 2017 | 15,009,246 | |||
Stock-based compensation expense (employees and directors) | 186,707 | 186,707 | ||
Exercise of stock options | $ 594 | 686,927 | 687,521 | |
Exercise of stock options, shares | 593,838 | |||
Vesting of restricted stock | $ 36 | (36) | ||
Vesting of restricted stock, shares | 35,681 | |||
Net loss | (3,963,576) | (3,963,576) | ||
Balance at Dec. 31, 2018 | $ 15,639 | $ 127,290,467 | $ (114,386,401) | $ 12,919,705 |
Balance, shares at Dec. 31, 2018 | 15,638,765 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (3,963,576) | $ (6,020,505) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 245,548 | 412,351 |
Stock-based compensation expense | 186,707 | 435,679 |
Change in provision for doubtful accounts | 5,925 | |
Deferred rent | (5,202) | (47,628) |
Impairment of intangible assets | 1,375,422 | |
Changes in assets and liabilities: | ||
(Increase) in accounts receivable | (372,732) | (150,501) |
Decrease (increase) in inventory | 2,984 | (14,774) |
(Increase) in other current assets | (50,931) | (52,051) |
Decrease (increase) in other assets | 57,439 | (5,883) |
(Decrease) increase in accounts payable and accrued expenses | (74,672) | 339,326 |
(Decrease) in deferred revenue | (93,694) | (175,128) |
(Decrease) increase in other long-term liabilities | (158,407) | 158,407 |
Net cash used in operating activities | (4,220,611) | (3,745,285) |
CASH FLOWS FROM INVESTING activities: | ||
Purchases of property and equipment | (141,526) | (37,614) |
Collection on note receivable | 40,472 | 42,460 |
Net cash (used in) provided by investing activities | (101,054) | 4,846 |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Net proceeds from the issuance of common stock | 8,512,861 | |
Net proceeds from issuance of common stock from exercise of stock options | 687,521 | 10,100 |
Net proceeds from the issuance of common stock from exercise of warrants | 139,700 | |
Withholding taxes paid on vesting of restricted stock units | (4,233) | |
Net cash provided by financing activities | 687,521 | 8,658,428 |
Net (decrease) increase in cash | (3,634,144) | 4,917,989 |
CASH, beginning of year | 8,010,161 | 3,092,172 |
CASH, end of year | $ 4,376,017 | $ 8,010,161 |
Nature of Business
Nature of Business | 12 Months Ended |
Dec. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Nature of Business | 1. NATURE OF BUSINESS Business Intellicheck, Inc. (the “Company” or “Intellicheck”) is a prominent technology company that is engaged in developing, integrating and marketing threat identification and identity authentication solutions to address challenges that include retail fraud prevention, law enforcement threat identification, and mobile and handheld access control and security for the government, military and commercial markets. Intellicheck’s products include Retail ID®, a solution for preventing fraud in the retail industry; Age ID®, a smartphone or tablet-based solution for preventing sale of age-restricted products to minors; Law ID®, a smartphone-based solution used by law enforcement officers to identify and mitigate threats; and Defense ID®, a mobile and fixed infrastructure solution for threat identification, identity authentication and access control to military bases and other government facilities. Intellicheck continues to develop and release innovative products based upon its rich patent portfolio consisting of eighteen issued patents and six pending. Liquidity For the year ended December 31, 2018, the Company incurred a net loss of $3,963,576 and used cash in operations of $4,220,751. As of December 31, 2018, the Company had cash of $4,376,017 and an accumulated deficit of $114,386,401. On August 4, 2017, the Company completed a public offering of 4,168,750 shares of its common stock, offered to the public at $2.25 per share resulting in net proceeds to the Company of approximately $8,513,000 after deducting underwriter’s discounts and commissions paid by the Company. Intellicheck intends to use these net proceeds for general corporate purposes including product development in key markets, the integration of new features into existing new products and expansion of its sales force and engineering personnel. Based on the Company’s business plan and cash resources, Intellicheck expects its existing and future resources and revenues generated from operations to satisfy its working capital requirements for at least the next 12 months. However, if performance expectations fall short or expenses exceed expectations, the Company may need to secure additional financing or reduce expenses to continue operations. Failure to do so would have a material adverse impact on its financial condition. There can be no assurance that any contemplated additional financing will be available on terms acceptable, if at all. If required, the Company believes it would be able to reduce expenses to a sufficient level to continue as a going concern. Principles of Consolidation The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Mobilisa, Inc. (“Mobilisa”) and Positive Access Corporation (“Positive Access”). All intercompany balances and transactions have been eliminated upon consolidation. On December 31, 2018, the Company merged its subsidiaries into Intellicheck, Inc. |
Significant Accounting Policies
Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies | 2. SIGNIFICANT ACCOUNTING POLICIES Allowance for Doubtful Accounts The Company records its allowance for doubtful accounts based upon its assessment of various factors. The Company considers historical experience, the age of the accounts receivable balances, credit quality of the Company’s customers, current economic conditions and other factors that may affect customers’ ability to pay. Inventory Inventory is stated at the lower of cost or market and cost is determined using the first-in, first-out method. Inventory is primarily comprised of finished goods. As of December 31, 2018, most of our inventory related to Government and Commercial Identity products for intended near-term sales. Long-Lived Assets and Impairment of Long-Lived Assets The Company’s long-lived assets include property and equipment, goodwill and intangible assets. The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of these assets may not be fully recoverable in accordance with ASC topic 350 and ASC Topic 360 to determine recoverability of its long-lived assets, the Company evaluates the probability that future undiscounted net cash flows, without interest charges, will be less than the carrying amount of the assets. Impairment is measured at fair value. Property and Equipment Property and equipment are recorded at cost and are depreciated over their estimated useful lives ranging from three to ten-years using the straight-line method. Leasehold improvements are amortized utilizing the straight-line method over the lesser of the term of the lease or estimated useful life of the asset. Goodwill Goodwill represents the excess of acquisition cost over the fair value of net assets acquired in business combinations. Pursuant to ASC Topic 350, the Company tests goodwill for impairment on an annual basis in the fourth quarter, or between annual tests, in certain circumstances. Under guidance, the Company first assessed qualitative factors to determine whether it was necessary to perform the two-step quantitative goodwill impairment test. An entity is not required to calculate the fair value of a reporting unit unless the entity determines, based on a qualitative assessment, that it is more likely than not that its fair value is less than its carrying amount. Events or changes in circumstances which could trigger an impairment review include macroeconomic conditions, industry and market conditions, cost factors, overall financial performance, other entity specific events and sustained decrease in share price. The Company performed its annual impairment test of goodwill in the fourth quarter for the years ended December 31, 2018 and 2017. For the years ended December 31, 2018 and 2017, the Company determined no impairment charge was required. Intangible Assets Intangible assets include trade names, patents and non-contractual customer relationships as described more fully in Note 5. The Company uses the straight-line method to amortize these assets over their estimated useful lives. The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of these assets may not be fully recoverable in accordance with ASC Topic 360. To determine recoverability of its long-lived assets, the Company evaluates the probability that future undiscounted net cash flows, without interest charges, will be less than the carrying amount of the assets. Impairment is measured at fair value. As a result of a projected loss of revenue from certain customers moving to another platform along with a shift in the Company’s marketing strategy for 2018, the Company performed a quantitative impairment test as of December 31, 2017 for the patents, trade names and customer relationships acquired in the Mobilisa acquisition. The Company utilized the income approach to test its patent and tradenames, specifically the Relief-from-Royalty method, which assumes that a user of that intangible asset would have to make a stream of payments to the owner of the asset in return for the rights to use that asset. By acquiring the intangible asset, the user avoids these payments. As a result of the analysis, $250,582 and $287,928, respectively, of impairment was recorded due to the decline in the valuation of trade names and patents. The Company utilized the income approach to test its customer relationships, specifically the Multi-Period Excess Earnings Method, which estimates the cash flows attributable to the customer relationships, after considering the return associated with other contributing assets. As a result of the analysis, $836,912 of impairment was recorded due to the decline in the valuation of the customer relationships. Application of the impairment test requires judgement, including determination of royalty rates, and projecting revenue attributable to the assets in order to determine fair value. These impairments, totaling $1,375,422 in 2017, are recorded as Impairment of Intangible Assets on our Consolidated Statements of Operations. No impairment charge was made for fiscal year 2018. Deferred Rent The Company received certain rent abatements and incentives from landlord as an inducement to move into its Melville, New York office facility. The Company is amortizing these incentives on a straight-line basis over the period of its respective lease. Revenue Recognition and Deferred Revenue General Effective January 1, 2018, the Company adopted ASC 606. In accordance with ASC 606, the Company’s analysis indicated that there was no change to how the Company records revenue and that the standard only impacted enhanced disclosure regarding revenue recognition, including disclosures of revenue streams, performance obligations and the related judgments and estimates necessary to apply the new standard. ASC 606 was applied using the modified retrospective method. There was no cumulative effect of the initial application to be recognized as an adjustment to opening retained earnings at January 1, 2018. Accordingly, comparative periods have not been adjusted and continue to be reported under FASB ASC Topic 605, Revenue Recognition The majority of license fees and services revenue are generated from a combination of fixed-price and per-scan contracts. Under the per-scan revenue model, customers are charged a fee each time the customer scans an identity document, such as a driver’s license, with the Company’s software. Under the fixed-price revenue model customers are charged a fixed monthly fee either per device or physical business location to access the Company’s software. In certain instances, customization services are determined to be essential to the functionality of the delivered software. Under ASC 606, revenue is recognized when a customer obtains control of promised goods or services in an amount that reflects the consideration expected to be received in exchange for those goods or services. The Company measures revenue based on the consideration specified in a customer arrangement, and revenue is recognized when the performance obligations in an arrangement are satisfied. A performance obligation is a promise in a contract to transfer a distinct service to the customer. The transaction price of a contract is allocated to each distinct performance obligation and recognized as revenue when or as, the customer receives the benefit of the performance obligation. Customers typically receive the benefit of the Company’s services as they are performed. Substantially all customer contracts provide that the Company is compensated for services performed to date. Invoicing is based on schedules established in customer contracts. Payment terms are generally established at 30 days from the invoice date. Product returns are recorded as a reduction to revenue. Revenue is measured based on a consideration specified in a contract with a customer, and excludes any sales incentives and amounts collected on behalf of third parties. Revenues are recognized when control of the promised goods or services is transferred to the customer, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. Furthermore, the Company recognizes revenue when it satisfies a performance obligation by transferring control over a product or service to a customer. Nature of goods and services The following is a description of the products and services from which the Company generates revenue, as well as the nature, timing of satisfaction of performance obligations, and significant payment terms for each: Hosted Subscription Services Revenue Subscription services allows customers to access a set of data for a predetermined period of time. As the customer obtains access at a point in time but continues to have access for the remainder of the subscription period, the customer is considered to simultaneously receive and consume the benefits provided by the entity’s performance as the entity performs. Accordingly, subscription revenue should be recognized over time based on the usage of the hosted subscription services, which can vary from month to month. The revenue is typically based on a formula such as number of stores using the service in a given month multiplied by a fee per store. License Revenue The Company also recognizes revenues from licensing of its software to customers. The license allows customers to access a set of data for a predetermined period of time. The licensed software requires continuing service or post contractual customer support and performance. As the customer obtains access at a point in time but continues to have access for the remainder of the subscription period, the customer is considered to simultaneously receive and consume the benefits provided by the entity’s performance as the entity performs. Accordingly, the revenue should be recognized over time based on usage, which can vary from month to month. The revenue is typically based on a formula such as number of stores in a given month multiplied by a fee per store. Royalties from the licensing of the Company’s technology are recognized as revenues in the period they are earned. Equipment Revenue Revenue from the sale of equipment is recognized at a point in time. The point in time that the revenue is recognized is when the customer has control of the equipment which is when the customer receives the benefit and the Company’s performance obligation has been satisfied. Depending on the contract terms, that could either be at the time the equipment is shipped or at the time the equipment is received. Non-Recurring Services Revenue The non-recurring services include items such as training, installation, customization, and configuration. The Company recognizes revenue from non-recurring services contracts ratably over the service contract period as the customer consumes the benefit as it is provided and the Company’s performance obligation has been satisfied. Extended Warranty Extended warranty revenues is generated when a warranty is provided to the customer separately of other performance obligations when the equipment is sold. As the customer obtains access at a point in time and continues to have access for the remainder of the warranty term, the customer is considered to simultaneously receive and consume the benefits provided by the Company’s performance as the Company performs. The related revenue is recognized ratably over the specified term of the warranty period. The extended warranty is separate to the Company’s standard warranty of usually one year that it receives from its vendor. Disaggregation of revenue In the following tables, revenue is disaggregated by product and service and the timing of revenue recognition. The table also includes a reconciliation of the disaggregated revenue. For the Years Ended December 31, 2018 2017 Products and services Hosted subscription services $ 2,225,724 $ 1,579,733 Licensing 1,461,753 1,270,127 Equipment 367,675 424,588 Non-recurring services 298,619 216,602 Extended warranties on equipment 60,007 86,676 Other 19,676 20,570 $ 4,433,454 $ 3,598,296 Timing of revenue recognition Products transferred at a point in time $ 387,351 $ 445,158 Services transferred over time 4,046,103 3,153,138 $ 4,433,454 $ 3,598,296 Contract balances The current portion of deferred revenue at December 31, 2018 and December 31, 2017 was $704,536 and $739,980, respectively, and primarily consists of revenue that is recognized over time for one-year software license contracts and hosted subscription services. The changes in these balances are related to the satisfaction or partial satisfaction of these contracts. Of this balance as of December 31, 2017, $738,815 was recognized as revenue for the year ended December 31, 2018. The long-term portion of deferred revenue is $29,486 and $87,736 as of December 31, 2018 and December 31, 2017, respectively. The Company did not recognize any material revenue in the current reporting period for performance obligations that were fully satisfied in previous periods. Transaction price allocated to the remaining performance obligations The following table includes estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) at the end of the reporting period: 2019 2020 2021 Total Hosted subscription services $ 447,433 $ - $ - $ 447,433 Licensing 200,335 3,782 1,250 205,367 Non-recurring services 392 - - 392 Extended warranties on equipment 56,376 18,943 5,511 80,830 $ 704,536 $ 22,725 $ 6,761 $ 734,022 All consideration from contracts with customers is included in the amounts presented above. Research and Development Costs Research and development costs are charged to expense as incurred. Shipping Costs The Company’s shipping and handling costs are included in cost of revenues for all periods presented. Income Taxes The Company accounts for income taxes under in accordance with ASC Topic 740, “Accounting for Income Taxes.” Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and net operating loss carryforwards. Deferred tax assets and liabilities are measured using expected tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. Deferred tax assets are recognized subject to management’s judgment that realization is more likely than not. The Company has recorded a full valuation allowance for its net deferred tax assets as of December 31, 2018 and 2017, due to the uncertainty of the realizability of those assets. Fair Value of Financial Instruments The Company adheres to the provisions of ASC Topic 820, “Fair Value Measurements and Disclosures”. This pronouncement requires that the Company calculate the fair value of financial instruments and include this additional information in the notes to financial statements when the fair value is different than the book value of those financial instruments. The Company’s financial instruments include cash, accounts receivable, note receivable, accounts payable and accrued expenses. At December 31, 2018 and 2017, the carrying value of the Company’s financial instruments approximated fair value, due to their short-term nature. Business Concentration and Credit Risk Financial instruments, which subject the Company to concentrations of credit risk, consist primarily of cash and cash equivalents. The Company maintains cash with one financial institution. The Company performs periodic evaluations of the relative credit standing of these institutions. The Company’s sales are principally made to large retail customers, financial institutions concentrated in the United States of America and to U.S. government entities. The Company performs ongoing credit evaluations, generally does not require collateral, and establishes an allowance for doubtful accounts based upon factors surrounding the credit risk of customers, historical trends and other information. During the year ended December 31, 2018, the Company had two customers that accounted for 31% of revenue. The revenue was associated with two commercial identity sales customers. These customers represented 8% of total accounts receivable as of December 31, 2018. During the year ended December 31, 2017, the Company had two customers that accounted for 26% of revenue. As of December 31, 2018, the Company had three suppliers to produce its input devices. The Company has modified its software to operate in windows based systems and can integrate with different hardware platforms that are readily available in the marketplace. The Company does not maintain a manufacturing facility of its own and is not dependent on maintaining its production relationships due to the flexibility of its software to run on multiple existing platforms. Net Loss Per Share Basic net loss per share is computed by dividing the net loss for the period by the weighted average number of common shares outstanding during the period. Diluted net loss per share is computed by dividing the net loss for the period by the weighted average number of shares of common stock and potentially dilutive common stock outstanding during the period. The dilutive effect of outstanding options and restricted stock is reflected in diluted earnings per share by application of the treasury stock method. The calculation of diluted net loss per share excludes all anti-dilutive shares. Year Ended December 31, 2018 2017 Numerator: Net Loss $ (3,963,576 ) $ (6,020,505 ) Denominator: Weighted average common shares – Basic/Diluted 15,542,480 12,428,652 Net Loss per share – Basic/Diluted $ (0.26 ) $ (0.48 ) The following table summarizes the common stock equivalents excluded from loss per diluted share because their effect would be anti-dilutive: 2018 2017 Stock options 1,072,332 1,631,358 Warrants 471,801 471,801 Restricted stock - 5,859 Total 1,544,133 2,109,018 Share Based Compensation The Company accounts for the issuance of equity awards to employees in accordance ASC Topic 718 and 505, which requires that the cost resulting from all share based payment transactions be recognized in the financial statements. This pronouncement establishes fair value as the measurement objective in accounting for share based payment arrangements and requires all companies to apply a fair value based measurement method in accounting for all share based payment transactions with employees. Period compensation costs are included in selling, general and administrative and research and development expenses. The Company recognizes compensation expense related to stock option grants on a straight-line basis over the vesting period. Comprehensive Loss The Company’s comprehensive loss is equal to its net loss for the years ended December 31, 2018 and 2017. Segment Information The Company adheres to the provisions of ASC Topic 280, which establishes standards for the way public business enterprises report information about operating segments in annual financial statements and requires that those enterprises report selected information about operating segments in financial statements issued to shareholders. Management has determined that it has only one reporting segment. Use of Estimates The preparation of the Company’s financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the Company’s financial statements and accompanying notes. Significant estimates and assumptions that affect amounts reported in the financial statements include impairment consideration and valuation of goodwill and intangible assets, deferred tax valuation allowances, allowances for doubtful accounts, revenue allocation of multi-element arrangements and the fair value of options granted under the Company’s share based compensation plans. Due to the inherent uncertainties involved in making estimates, actual results reported in future periods may be different from those estimates. Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers” (“ASU 2014-09”), which supersedes nearly all existing revenue recognition guidance under GAAP. The core principle of ASU 2014-09 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services. ASU 2014-09 defines a five-step process to achieve this core principle and, in doing so, more judgment and estimates may be required within the revenue recognition process than are required under existing GAAP. In addition, this guidance requires new or expanded disclosures related to the judgments made by companies when following this framework and additional quantitative disclosures regarding contract balances and remaining performance obligations. ASU No. 2014-09 may be applied using either a full retrospective approach, under which all years included in the financial statements will be presented under the revised guidance, or a modified retrospective approach, under which financial statements will be prepared under the revised guidance for the year of adoption, but not for prior years. Under the latter method, entities will recognize a cumulative catch-up adjustment to the opening balance of retained earnings at the effective date for contracts that still require performance by the entity. On January 1, 2018, the Company adopted ASC 606 using the modified retrospective method. Results for reporting periods beginning after January 1, 2018 are presented under ASC 606, while the comparative information will not be restated and will continue to be reported under the accounting standards in effect for those periods. See the section “Revenue Recognition and Deferred Revenue” for a detailed disclosure later in this footnote titled Significant Accounting Policies in these consolidated financial statements. In August 2018, the Securities and Exchange Commission (“SEC”) adopted the final rule amending certain disclosure requirements that have become redundant, duplicative, overlapping, outdated, or superseded. In addition, the amendments expand the disclosure requirements on the analysis of stockholders’ equity for interim financial statements. Under the amendments, an analysis of changes in each caption of stockholders’ equity presented in the balance sheet must be provided in a note or separate statement. and will be effective for the quarter that begins after the effective date. Since the Company includes a year to date statement of stockholders’ equity in its interim financial statement filings, the adoption of this guidance will result in the inclusion of a quarter to date statement of stockholders’ equity in its June and September interim financial statement filings and the corresponding prior periods statement of stockholders’ equity for all periods presented. In May 2017, the FASB issued ASU No. 2017-09, Compensation-Stock Compensation (Topic 718): Scope of Modification Accounting In January 2017, the FASB issued ASU No. 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Accounting for Goodwill Impairment In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments In February 2016, the FASB issued ASU No. 2016-02, Leases |
Accounts Receivable
Accounts Receivable | 12 Months Ended |
Dec. 31, 2018 | |
Receivables [Abstract] | |
Accounts Receivable | 3. ACCOUNTS RECEIVABLE Accounts receivable represent amounts due from the Company’s customers and are presented net of allowance for doubtful accounts. The components of accounts receivable, net are as follows: 2018 2017 Accounts receivable $ 1,044,109 $ 671,377 Less: Allowance for doubtful accounts (24,675 ) (18,750 ) Accounts receivable, net $ 1,019,434 $ 652,627 |
Property and Equipment
Property and Equipment | 12 Months Ended |
Dec. 31, 2018 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | 4. PROPERTY AND EQUIPMENT Property and equipment are comprised of the following as of December 31, 2018 and 2017: 2018 2017 Computer equipment $ 992,336 $ 965,797 Furniture and fixtures 136,524 73,305 Leasehold improvements 41,257 43,249 Office equipment 589,357 578,846 1,759,474 1,661,197 Less – Accumulated depreciation and amortization (1,494,891 ) (1,449,595 ) $ 264,583 $ 211,602 Depreciation expense for the years ended December 31, 2018 and 2017 amounted to $88,545 and $96,788, respectively. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 12 Months Ended |
Dec. 31, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | 5. GOODWILL AND INTANGIBLE ASSETS Identifiable intangible assets The changes in the carrying amount of intangible assets for the year ended December 31, 2018 and 2017 were as follows: 2018 2017 Balance at beginning of year $ 463,578 $ 2,154,563 Deduction: Impairment charge - (1,375,422 ) Deduction: Amortization expense (157,003 ) (315,563 ) Balance at end of year $ 306,575 $ 463,578 The following table sets forth the components of intangible assets as of December 31, 2018 and 2017: As of December 31, 2018 Estimated Adjusted Useful Carrying Accumulated Life Amount Amortization Net Trade name 2 years $ 286,590 $ (278,825 ) $ 7,765 Patents and copyrights 2-17 years 954,915 (746,229 ) 208,686 Non-contractual customer relationships 2-10 years 2,431,655 (2,341,531 ) 90,124 $ 3,673,160 $ (3,366,585 ) $ 306,575 As of December 31, 2017 Adjusted Carrying Accumulated Amount Amortization Net Trade name $ 339,590 $ (324,060 ) $ 15,530 Patents and copyrights 954,915 (711,781 ) 243,134 Non-contractual customer relationships 2,431,655 (2,226,741 ) 204,914 $ 3,726,160 $ (3,262,582 ) 463,578 The following summarizes amortization of acquisition related intangible assets included in the statement of operations: Years Ended December 31, 2018 2017 Cost of sales $ 129,496 $ 236,651 General and administrative 27,507 78,912 $ 157,003 $ 315,563 The Company expects that amortization expense for the next five succeeding years will be as follows: 2019 $ 132,336 2020 $ 24,980 2021 $ 24,980 2022 $ 24,980 2023 $ 24,980 These amounts are subject to change based upon the review of recoverability and useful lives that are performed at least annually. Goodwill The excess of the purchase consideration over the fair value of the assets of acquired businesses is considered goodwill. Under authoritative guidance, purchased goodwill is not amortized, but rather it is periodically reviewed for impairment. The Company had goodwill of $8,101,661 as of December 31, 2018 and 2017. This goodwill resulted from the acquisition of Mobilisa, Inc. and Positive Access Corporation. For the years ended December 31, 2018 and 2017, the Company performed its annual impairment test of goodwill in the fourth quarter. Under authoritative guidance, the Company can use industry and Company specific qualitative factors to determine whether it is more likely than not that impairment exists, before using a two-step quantitative analysis. Events or changes in circumstances which could trigger an impairment review include macroeconomic conditions, industry and market conditions, cost factors, overall financial performance, other entity specific events and sustained decrease in share price. The Company performed the first step of the goodwill impairment test to identify potential impairment by comparing fair value of the Company to its carrying amount, including goodwill. The fair value was determined using the weighting of certain valuation techniques, including both income and market approaches which include a discounted cash flow analysis, an estimation of an implied control premium, in addition to the Company’s market capitalization on the measurement date. The implied control premium selected was developed based on certain observable market data of comparable companies. The market capitalization is sensitive to the volatility of the Company’s stock price. Although the Company believes that the factors considered in the impairment analysis are reasonable, changes in any one of the assumptions used could have produced a different result which may have led to an impairment charge. Any future impairment loss could have a material adverse effect on our long-term assets and operating expenses in the period in which impairment is determined to exist. For the years ended December 31, 2018 and 2017, the Company determined that the fair value was more than its carrying amount and therefore the second step of the goodwill impairment test was not required. Accumulated impairment charges on goodwill through December 31, 2018 are $30,085,862. |
Note Receivable
Note Receivable | 12 Months Ended |
Dec. 31, 2018 | |
Receivables [Abstract] | |
Note Receivable | 6. NOTE RECEIVABLE On August 31, 2015, the Company sold its wireless enterprise assets to the Jamestown S’Klallam Tribe (the “Buyer”) for total consideration of $350,000 which consists of an upfront cash payment of $30,000, the issuance of a promissory note totaling $200,000 and contingent consideration up to a maximum of $120,000 based on future earnings. The Company recognized a gain on the sale of approximately $109,000 which was included in interest and other income for the year ended December 31, 2015. Total assets disposed include certain trade names associated with the wireless assets with a net book value of approximately $65,000 and certain fixed assets with a net book value of approximately $56,000. Any gain on contingent consideration will be recognized as it is earned. Under the terms of the promissory note, monthly payments in the amount of $3,683 including principal and interest at 4%, are to be made over a 60-month term expiring in August 2020. At December 31, 2018, the total note receivable was $71,137, of which $42,120 and $29,017 is included in Other Current Assets and Notes Receivable, net of current portion, respectively on the Consolidated Balance Sheets. At December 31, 2017, the total note receivable was $111,609, of which $40,471 and $71,138 is included in Other Current Assets and Notes Receivable, net of current portion, respectively on the Consolidated Balance Sheets. |
Debt
Debt | 12 Months Ended |
Dec. 31, 2018 | |
Debt Disclosure [Abstract] | |
Debt | 7. DEBT Revolving Line of Credit During 2018, the Company has a revolving credit facility with Northwest Bank (“Northwest”) that allows for borrowings to the lesser of (i) $2,000,000 or (ii) 95% of the balance in the Company’s money market account less $250,000. The borrowings are secured by the Company’s existing deposit and money market accounts with Northwest. The facility bears interest at a rate consistent with Northwest’s money market account (1.51% at December 31, 2018) plus 3%. Interest is payable monthly and the principal is due upon maturity on May 22, 2019. As of December 31, 2018, there were no amounts outstanding under this facility and unused availability under this facility was $2,000,000. On January 10, 2019 the Company terminated the above facility with Northwest and on February 6, 2019 it entered into a similar facility with Citibank that allows borrowings up to $2,000,000 and are secured by collateralized accounts. The facility bears interest at a rate of Citibank’s Base Rate minus 2%. Interest is payable monthly. As of March 21, 2019, there were no amounts outstanding under this facility and unused availability under this facility was $2,000,000. |
Accrued Expenses
Accrued Expenses | 12 Months Ended |
Dec. 31, 2018 | |
Payables and Accruals [Abstract] | |
Accrued Expenses | 8. ACCRUED EXPENSES Accrued expenses are comprised of the following as of December 31, 2018 and 2017: 2018 2017 Professional fees $ 69,406 $ 78,552 Payroll and related 406,925 365,384 Severance payments to former officer 158,406 316,812 Other 92,181 54,602 $ 726,918 $ 815,350 At December 31, 2018 and 2017, the long-term portion of severance payments to a former officer was $0 and $158,407, respectively and is included in Other Long-term Labilities on the Consolidated Balance Sheets. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 9. INCOME TAXES On December 22, 2017, the Tax Cuts and Jobs Act (the “TCJA”) was enacted into law which significantly modified U.S. corporate income tax law. The TCJA contains significant changes to corporate income taxation, including but not limited to the reduction of the corporate income tax rate from a top marginal rate of 35% to a flat rate of 21% in 2018. Notwithstanding the reduction in the corporate income tax rate, the overall impact of the new federal tax law is uncertain, including to what extent various states will conform to the newly enacted federal tax law. The deferred tax assets and liabilities are measured using the enacted tax rates that the Company believes will apply in the years in which the temporary differences are expected to be recovered or paid. As a result, the Company remeasured the deferred tax assets and deferred tax liabilities to reflect the reduction in the enacted U.S. corporate income tax rate. This resulted in a decrease in our gross deferred tax assets and liabilities and corresponding valuation allowance of approximately $1.5 million. The Company is subject to federal and state income taxes as regular (Subchapter C) corporation. As a result of continuing losses for tax purposes, the Company has historically not paid income taxes and has recorded a full valuation allowance against the net deferred tax asset. The Company’s deferred tax assets are primarily the result of net operating losses (or NOLs). The Company has recorded a valuation allowance against its net deferred tax assets at December 31, 2018 as it is more likely than not that not all of the deferred tax assets will be realized. The valuation is based on management’s assessment that it is more likely than not the NOL carryforwards may not be realized in the foreseeable future due to objective negative evidence that the Company would not generate sufficient taxable income to realize the deferred tax assets. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets for federal and state income taxes as of December 31, 2018 and 2017 are as follows: 2018 2017 Deferred tax assets: Net operating loss carryforwards $ 3,914,000 $ 2,818,000 Stock-based compensation 82,000 81,000 Reserves 7,000 5,000 Intangible assets 55,000 26,000 Severance costs and deferred rent 44,000 130,000 Research and development tax credits 258,000 206,000 Total deferred tax assets 4,360,000 3,266,000 Deferred tax liabilities: Depreciation (37,000 ) (33,000 ) Total deferred tax liabilities (37,000 ) (33,000 ) Net deferred tax assets 4,323,000 3,233,000 Less: Valuation allowance (4,323,000 ) (3,233,000 ) Deferred tax assets, net of allowance $ - $ - There were no tax interest or penalties recorded in the consolidated financial statements for the years ended December 31, 2018 and 2017. The Company’s available NOL at December 31, 2018 was approximately $15 million. The federal and state NOL’s incurred in all years through 2017 are available to offset future taxable income and expire from 2019 through 2038 if not utilized. The 2018 gross NOL incurred for the year ended December 31, 2018 can be utilized at 80% with no expiration. The Company files numerous tax returns in various jurisdictions. The Company is not currently under examination by any taxing authority, nor has the Company signed any waiver of the statute of limitations with any taxing authority. The Company remains open to examination by major taxing jurisdictions from 2015 to date. The Company believes there are no unresolved tax issues or tax claims likely to be material to its financial position. ASC Topic 740-10 requires evaluation of uncertain tax positions. As of December 31, 2018, the Company has no material uncertain tax positions. The effective tax rate for the years ended December 31, 2018 and 2017 is different from the tax benefit that would result from applying the statutory tax rates primarily due to the recognition of valuation allowances. In 2018, the valuation allowance increased approximately $1.1 million primarily related to an increase of the Company’s NOLs. |
Stockholders' Equity
Stockholders' Equity | 12 Months Ended |
Dec. 31, 2018 | |
Equity [Abstract] | |
Stockholders' Equity | 10. STOCKHOLDERS’ EQUITY Series A Convertible Preferred Stock In January 1997, the Board of Directors authorized the creation of a class of Series A Convertible Preferred Stock with a par value of $.01. The Series A Convertible Preferred Stock is convertible into an equal number of common shares at the holder’s option, subject to adjustment for anti-dilution. The holders of Series A Convertible Preferred Stock are entitled to receive dividends as and if declared by the Board of Directors. In the event of liquidation or dissolution of the Company, the holders of Series A Convertible Preferred Stock are entitled to receive all accrued dividends, if applicable, plus the liquidation price of $1.00 per share. As of December 31, 2018, and 2017, there were no outstanding shares of Series A Convertible Preferred Stock. Stock Options and Share Based Compensation To retain and attract qualified personnel necessary for the success of the Company, the Company adopted the 2015 Omnibus Incentive Plan (the “Plan”) covering up to 3,000,000 of the Company’s common shares, pursuant to which officers, directors, key employees and consultants to the Company are eligible to receive incentive stock options, nonqualified stock options and restricted stock units. All the Plans prior to Company’s 2015 Omnibus Incentive Plan have been closed. The Compensation Committee of the Board of Directors administers this Plan and determines the terms and conditions of options granted, including the exercise price. This Plan generally provides that all stock options will expire within ten years of the date of grant. Incentive stock options granted under this Plan must be granted at an exercise price that is not less than the fair market value per share at the date of the grant and the exercise price must not be less than 110% of the fair market value per share at the date of the grant for grants to persons owning more than 10% of the voting stock of the Company. This Plan also entitles non-employee directors to receive grants of non-qualified stock options as approved by the Board of Directors. The Company uses the Black-Scholes option pricing model to value the options. The table below presents the weighted average expected life of the options in years. The expected life computation is based on the time to option expiration. Volatility is determined using changes in historical stock prices. The interest rate for periods within the expected life of the award is based on the U.S. Treasury yield curve in effect at the time of grant. The fair value of share-based payment units was estimated using the Black-Scholes option pricing model with the following assumptions and weighted average fair values as follows: Years Ended December 31, 2018 2017 Valuation assumptions: Grant price $2.30 - $2.87 - Exercise price $2.30 - $2.87 - Expected dividend yield 0 % - Expected volatility 94.02% - 97.22 % - Expected life (in years) 5 - Risk-free interest rate 2.69% - 2.73 % - Stock option activity under the Plans during the periods indicated below is as follows: Number of Shares Subject to Issuance Weighted- average Exercise Price Weighted- average Remaining Contractual Term Aggregate Intrinsic Value Outstanding at December 31, 2016 1,665,420 $ 1.40 3.62 years - Granted - - Forfeited or expired (24,062 ) 4.06 Exercised (10,000 ) 1.01 Outstanding at December 31, 2017 1,631,358 $ 1.36 1.70 years $ 2,106,669 Granted 102,500 2.86 Forfeited or expired (67,488 ) 4.18 Exercised (593,838 ) 1.16 Outstanding at December 31, 2018 1,072,332 $ 1.44 1.85 years $ 881,493 Exercisable at December 31, 2018 937,332 $ 1.28 1.58 years $ 864,092 The following is a summary of stock options as of December 31, 2018: Options Outstanding Options Exercisable Range of Exercise Prices Number of Options Weighted- average Remaining Life Weighted- average Exercise Price Number of Options Weighted- average Exercise Price $ 1.15 to $1.56 889,460 1.59 years $ 1.16 876,960 $ 1.16 $ 1.75 to $2.87 155,500 3.51 years $ 2.56 33,000 $ 2.11 $ 3.93 27,372 0.75 years $ 3.93 27,372 $ 3.93 1,072,332 1.85 years $ 1.44 937,332 $ 1.28 The weighted-average fair value of the options granted during the years ended December 31, 2018 and 2017 is $2.12 and $0, respectively. As of December 31, 2018, the Company had 746,103 shares available for future grants under the Plans. Restricted Stock Units The Company issues Restricted Stock Units (“RSUs”) which are equity-based instruments that may be settled in shares of common stock of the Company. The Company issues RSUs to certain directors as compensation which vest with the passage of time. The vesting of all RSUs is contingent on continued board services. The compensation expense incurred by the Company for RSUs is based on the closing market price of the Company’s common stock on the date of grant and is amortized ratably on a straight-line basis over the requisite service period and charged to general and administrative expense with a corresponding increase to additional paid-in capital. Restricted stock unit activity under the Plans during the periods indicated below is as follows: Number of Shares Weighted Average Grant Date Fair Value Aggregate Intrinsic Value Outstanding at December 31, 2016 32,714 1.89 26,010 Granted 23,352 2.87 Vested and Settled in shares (50,207 ) 2.31 Outstanding at December 31, 2017 5,859 $ 2.56 $ - Granted 29,822 2.07 Vested and Settled in shares (35,681 ) 2.15 Outstanding at December 31, 2018 - $ - $ - As of December 31, 2018, there was $193,161 of total unrecognized compensation cost, net of estimated forfeitures, related to all unvested stock options and restricted stock units, which is expected to be recognized over a weighted average period of approximately 2.83 years. Share based compensation expense for the years ended December 31, 2018 and 2017 is as follows: Years Ended December 31, Compensation cost recognized: 2018 2017 Stock options $ 124,886 $ 368,465 Restricted stock units 61,821 67,214 $ 186,707 $ 435,679 Share based compensation is included in operating expenses as follows: Years Ended December 31, 2018 2017 Selling, general and administrative $ 169,654 $ 408,772 Research and development 17,053 26,907 $ 186,707 $ 435,679 The Company has a net operating loss carry-forward as of December 31, 2018, and no excess tax benefits for the tax deductions related to share based awards were recognized in the statements of operations. Additionally, no incremental tax benefits were recognized from stock options exercised in 2018 that would have resulted in a reclassification to reduce net cash provided by operating activities with an offsetting increase in net cash provided by financing activities. All stock options have been issued with an exercise price that is equal or above the fair market value of the Company’s Common Stock on the date of grant. Warrants All previously granted warrants were issued with an exercise price that was equal to or above the fair market value of the Company’s common stock on the date of grant. As of December 31, 2018, the Company had 471,801 remaining warrants outstanding at exercise prices ranging from $2.20 to $8.00 through 2021. There were 63,500 warrants exercised at a price of $2.20 during the year ended December 31, 2017. No warrants were exercised in the year ended December 31, 2018. |
Issuance of Common Stock
Issuance of Common Stock | 12 Months Ended |
Dec. 31, 2018 | |
Equity [Abstract] | |
Issuance of Common Stock | 11. ISSUANCE OF COMMON STOCK On August 4, 2017, the Company completed a public offering of 4,168,750 shares of its common stock, offered to the public at $2.25 per share. Net proceeds to the Company from this offering were approximately $8,670,000 after deducting underwriting discounts and commissions paid by the Company. Direct offering costs totaling approximately $157,000 were recorded as a reduction to the net proceeds on the consolidated statement of stockholders’ equity. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 12. COMMITMENTS AND CONTINGENCIES Operating Leases The Company leases an office in Melville, New York which expires on March 31, 2021. Future minimum lease payments under this lease agreement are as follows for the years ended December 31: 2019 $ 127,117 2020 130,930 2021 32,892 Total $ 290,939 Rent expense for the years ended December 31, 2018 and 2017 amounted to $161,095 and $287,535, respectively. Royalty and License Agreements The Company entered into an agreement with a former officer of the Company during 1996 to license certain software. The agreement stipulated, among other provisions, that the officer would receive royalties equal to a percentage of the Company’s gross sales. This agreement was terminated in May 1999 and was superseded by a new agreement which calls for payment of royalties of 0.005% on gross sales from $2,000,000 to $52,000,000 and .0025% on gross sales more than $52,000,000 pertaining to those patents on this former officer was identified as an inventor. Cumulatively through December 31, 2018, total fees paid under this agreement amounted to approximately $2,000. Legal Proceedings The Company is not aware of any infringement by our products or technology on the proprietary rights of others. The Company is not currently involved in any legal or regulatory proceeding, or arbitration, the outcome of which is expected to have a material adverse effect on its business. Severance and Change-in-Control Agreements On November 29, 2017, Bill White, the Chief Financial Officer and the then Interim Chief Executive Officer entered into a severance agreement with the Company (the “Agreement”). The Agreement provides that in consideration of his services and pursuant to the Agreement, in the event that Mr. White’s employment is terminated without “cause” (as such term is defined in the Agreement), Mr. White will receive a 24-month continuation of salary payments, continuation of certain eligible medical benefits under the COBRA program, and a lump sum payment equal to any quarterly bonus target applicable during the quarter of termination plus any prior completed quarterly bonus which has not yet been determined (if any). In addition, the Agreement provides that upon such termination without Cause, the Company will accelerate the vesting of all of Mr. White’s outstanding but unvested stock options or other equity incentives. This Agreement replaces a severance agreement, as amended, initially executed by Mr. White and the Company on September 30, 2014 and amended May 30, 2017 (the “Original Agreement”). The Original Agreement, as amended, provided equivalent severance benefits as provided in the Agreement. The Original Agreement expired by its terms September 30, 2017. On October 4, 2017, Dr. William Roof, the Company’s President and Chief Executive Officer retired from the Company at the request of the board of directors (the “Board”). The parties have entered into a separation and consulting agreement dated as of November 2, 2017 (the “Agreement”). Pursuant to the Agreement, the Company may contact Dr. Roof to provide consulting services and he will provide consulting services at the Company’s request to ensure a smooth and effective transition of management and business affairs. In consideration of these services and to fulfill the Company’s obligations under Dr. Roof’s employment agreement with the Company, Dr. Roof will receive aggregate cash payments of $500,000 over a 20-month period together with reimbursement of certain vision and dental benefit premiums. The Company does not anticipate this to be a significant effort and therefore has accounted for these payments as severance on the date of separation. In addition, the board of directors of the Company has extended the expiration date of Dr. Roof’s options to purchase Company’s common stock to six months from the Separation Date. The Board immediately appointed Bill White, the Company’s current Chief Financial Officer, as its Interim President and Chief Executive Officer. At December 31, 2018, the total severance liability was $158,406 which is included in Accrued Expenses on the Consolidated Balance Sheets. Each of the agreements requires the executive to devote substantially all his time and efforts to our business and contains non-competition and nondisclosure covenants of the officer for the term of his employment and for a one-year period thereafter. Each agreement provides that we may terminate the agreement for cause. 401(k) Plan The Company has a retirement savings 401(k) plan. The plan permits eligible employees to make voluntary contributions to a trust, up to a maximum of 35% of compensation, subject to certain limitations. The Company has elected to contribute a matching contribution equal to 50% of the first 6% of an eligible employee’s deferral election. The Company may also make discretionary contributions, subject to certain conditions, as defined in the plan. The Company’s matching contributions were $53,784 and $45,441 for 2018 and 2017, respectively. The plan assets were approximately $2.2 million at December 31, 2018. |
Quarterly Financial Data (Unaud
Quarterly Financial Data (Unaudited) | 12 Months Ended |
Dec. 31, 2018 | |
Quarterly Financial Information Disclosure [Abstract] | |
Quarterly Financial Data (Unaudited) | 13. QUARTERLY FINANCIAL DATA (UNAUDITED) The following table sets forth unaudited financial data for each of the Company’s last eight fiscal quarters. Year Ended December 31, 2018 Year Ended December 31, 2017 First Quarter Second Quarter Third Quarter Fourth Quarter First Quarter Second Quarter Third Quarter Fourth Quarter (Dollars in thousands, except per share data) Income Statement Data: Revenues $ 1,062 $ 1,001 $ 1,040 $ 1,330 $ 713 $ 951 $ 967 $ 967 Gross profit 962 919 927 1,239 603 747 862 864 Loss from operations (1,082 ) (1,143 ) (1,154 ) (714 ) (940 ) (1,101 ) (1,083 ) (2,957 ) Net loss (1,068 ) (1,101 ) (1,131 ) (664 ) (937 ) (1,099 ) (1,075 ) (2,910 ) Net loss per common share: Basic $ (0.07 ) $ (0.07 ) $ (0.07 ) $ (0.04 ) $ (0.09 ) $ (0.10 ) $ (0.08 ) $ (0.19 ) Diluted $ (0.07 ) $ (0.07 ) $ (0.07 ) $ (0.04 ) $ (0.09 ) $ (0.10 ) $ (0.08 ) $ (0.19 ) Due to rounding, quarterly net loss per share may not add up to the total net loss for the year. |
Significant Accounting Polici_2
Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Allowance for Doubtful Accounts | Allowance for Doubtful Accounts The Company records its allowance for doubtful accounts based upon its assessment of various factors. The Company considers historical experience, the age of the accounts receivable balances, credit quality of the Company’s customers, current economic conditions and other factors that may affect customers’ ability to pay. |
Inventory | Inventory Inventory is stated at the lower of cost or market and cost is determined using the first-in, first-out method. Inventory is primarily comprised of finished goods. As of December 31, 2018, most of our inventory related to Government and Commercial Identity products for intended near-term sales. |
Long-Lived Assets and Impairment of Long-Lived Assets | Long-Lived Assets and Impairment of Long-Lived Assets The Company’s long-lived assets include property and equipment, goodwill and intangible assets. The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of these assets may not be fully recoverable in accordance with ASC topic 350 and ASC Topic 360 to determine recoverability of its long-lived assets, the Company evaluates the probability that future undiscounted net cash flows, without interest charges, will be less than the carrying amount of the assets. Impairment is measured at fair value. |
Property and Equipment | Property and Equipment Property and equipment are recorded at cost and are depreciated over their estimated useful lives ranging from three to ten-years using the straight-line method. Leasehold improvements are amortized utilizing the straight-line method over the lesser of the term of the lease or estimated useful life of the asset. |
Goodwill | Goodwill Goodwill represents the excess of acquisition cost over the fair value of net assets acquired in business combinations. Pursuant to ASC Topic 350, the Company tests goodwill for impairment on an annual basis in the fourth quarter, or between annual tests, in certain circumstances. Under guidance, the Company first assessed qualitative factors to determine whether it was necessary to perform the two-step quantitative goodwill impairment test. An entity is not required to calculate the fair value of a reporting unit unless the entity determines, based on a qualitative assessment, that it is more likely than not that its fair value is less than its carrying amount. Events or changes in circumstances which could trigger an impairment review include macroeconomic conditions, industry and market conditions, cost factors, overall financial performance, other entity specific events and sustained decrease in share price. The Company performed its annual impairment test of goodwill in the fourth quarter for the years ended December 31, 2018 and 2017. For the years ended December 31, 2018 and 2017, the Company determined no impairment charge was required. |
Intangible Assets | Intangible Assets Intangible assets include trade names, patents and non-contractual customer relationships as described more fully in Note 5. The Company uses the straight-line method to amortize these assets over their estimated useful lives. The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of these assets may not be fully recoverable in accordance with ASC Topic 360. To determine recoverability of its long-lived assets, the Company evaluates the probability that future undiscounted net cash flows, without interest charges, will be less than the carrying amount of the assets. Impairment is measured at fair value. As a result of a projected loss of revenue from certain customers moving to another platform along with a shift in the Company’s marketing strategy for 2018, the Company performed a quantitative impairment test as of December 31, 2017 for the patents, trade names and customer relationships acquired in the Mobilisa acquisition. The Company utilized the income approach to test its patent and tradenames, specifically the Relief-from-Royalty method, which assumes that a user of that intangible asset would have to make a stream of payments to the owner of the asset in return for the rights to use that asset. By acquiring the intangible asset, the user avoids these payments. As a result of the analysis, $250,582 and $287,928, respectively, of impairment was recorded due to the decline in the valuation of trade names and patents. The Company utilized the income approach to test its customer relationships, specifically the Multi-Period Excess Earnings Method, which estimates the cash flows attributable to the customer relationships, after considering the return associated with other contributing assets. As a result of the analysis, $836,912 of impairment was recorded due to the decline in the valuation of the customer relationships. Application of the impairment test requires judgement, including determination of royalty rates, and projecting revenue attributable to the assets in order to determine fair value. These impairments, totaling $1,375,422 in 2017, are recorded as Impairment of Intangible Assets on our Consolidated Statements of Operations. No impairment charge was made for fiscal year 2018. |
Deferred Rent | Deferred Rent The Company received certain rent abatements and incentives from landlord as an inducement to move into its Melville, New York office facility. The Company is amortizing these incentives on a straight-line basis over the period of its respective lease. |
Revenue Recognition and Deferred Revenue | Revenue Recognition and Deferred Revenue General Effective January 1, 2018, the Company adopted ASC 606. In accordance with ASC 606, the Company’s analysis indicated that there was no change to how the Company records revenue and that the standard only impacted enhanced disclosure regarding revenue recognition, including disclosures of revenue streams, performance obligations and the related judgments and estimates necessary to apply the new standard. ASC 606 was applied using the modified retrospective method. There was no cumulative effect of the initial application to be recognized as an adjustment to opening retained earnings at January 1, 2018. Accordingly, comparative periods have not been adjusted and continue to be reported under FASB ASC Topic 605, Revenue Recognition The majority of license fees and services revenue are generated from a combination of fixed-price and per-scan contracts. Under the per-scan revenue model, customers are charged a fee each time the customer scans an identity document, such as a driver’s license, with the Company’s software. Under the fixed-price revenue model customers are charged a fixed monthly fee either per device or physical business location to access the Company’s software. In certain instances, customization services are determined to be essential to the functionality of the delivered software. Under ASC 606, revenue is recognized when a customer obtains control of promised goods or services in an amount that reflects the consideration expected to be received in exchange for those goods or services. The Company measures revenue based on the consideration specified in a customer arrangement, and revenue is recognized when the performance obligations in an arrangement are satisfied. A performance obligation is a promise in a contract to transfer a distinct service to the customer. The transaction price of a contract is allocated to each distinct performance obligation and recognized as revenue when or as, the customer receives the benefit of the performance obligation. Customers typically receive the benefit of the Company’s services as they are performed. Substantially all customer contracts provide that the Company is compensated for services performed to date. Invoicing is based on schedules established in customer contracts. Payment terms are generally established at 30 days from the invoice date. Product returns are recorded as a reduction to revenue. Revenue is measured based on a consideration specified in a contract with a customer, and excludes any sales incentives and amounts collected on behalf of third parties. Revenues are recognized when control of the promised goods or services is transferred to the customer, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. Furthermore, the Company recognizes revenue when it satisfies a performance obligation by transferring control over a product or service to a customer. Nature of goods and services The following is a description of the products and services from which the Company generates revenue, as well as the nature, timing of satisfaction of performance obligations, and significant payment terms for each: Hosted Subscription Services Revenue Subscription services allows customers to access a set of data for a predetermined period of time. As the customer obtains access at a point in time but continues to have access for the remainder of the subscription period, the customer is considered to simultaneously receive and consume the benefits provided by the entity’s performance as the entity performs. Accordingly, subscription revenue should be recognized over time based on the usage of the hosted subscription services, which can vary from month to month. The revenue is typically based on a formula such as number of stores using the service in a given month multiplied by a fee per store. License Revenue The Company also recognizes revenues from licensing of its software to customers. The license allows customers to access a set of data for a predetermined period of time. The licensed software requires continuing service or post contractual customer support and performance. As the customer obtains access at a point in time but continues to have access for the remainder of the subscription period, the customer is considered to simultaneously receive and consume the benefits provided by the entity’s performance as the entity performs. Accordingly, the revenue should be recognized over time based on usage, which can vary from month to month. The revenue is typically based on a formula such as number of stores in a given month multiplied by a fee per store. Royalties from the licensing of the Company’s technology are recognized as revenues in the period they are earned. Equipment Revenue Revenue from the sale of equipment is recognized at a point in time. The point in time that the revenue is recognized is when the customer has control of the equipment which is when the customer receives the benefit and the Company’s performance obligation has been satisfied. Depending on the contract terms, that could either be at the time the equipment is shipped or at the time the equipment is received. Non-Recurring Services Revenue The non-recurring services include items such as training, installation, customization, and configuration. The Company recognizes revenue from non-recurring services contracts ratably over the service contract period as the customer consumes the benefit as it is provided and the Company’s performance obligation has been satisfied. Extended Warranty Extended warranty revenues is generated when a warranty is provided to the customer separately of other performance obligations when the equipment is sold. As the customer obtains access at a point in time and continues to have access for the remainder of the warranty term, the customer is considered to simultaneously receive and consume the benefits provided by the Company’s performance as the Company performs. The related revenue is recognized ratably over the specified term of the warranty period. The extended warranty is separate to the Company’s standard warranty of usually one year that it receives from its vendor. Disaggregation of revenue In the following tables, revenue is disaggregated by product and service and the timing of revenue recognition. The table also includes a reconciliation of the disaggregated revenue. For the Years Ended December 31, 2018 2017 Products and services Hosted subscription services $ 2,225,724 $ 1,579,733 Licensing 1,461,753 1,270,127 Equipment 367,675 424,588 Non-recurring services 298,619 216,602 Extended warranties on equipment 60,007 86,676 Other 19,676 20,570 $ 4,433,454 $ 3,598,296 Timing of revenue recognition Products transferred at a point in time $ 387,351 $ 445,158 Services transferred over time 4,046,103 3,153,138 $ 4,433,454 $ 3,598,296 Contract balances The current portion of deferred revenue at December 31, 2018 and December 31, 2017 was $704,536 and $739,980, respectively, and primarily consists of revenue that is recognized over time for one-year software license contracts and hosted subscription services. The changes in these balances are related to the satisfaction or partial satisfaction of these contracts. Of this balance as of December 31, 2017, $738,815 was recognized as revenue for the year ended December 31, 2018. The long-term portion of deferred revenue is $29,486 and $87,736 as of December 31, 2018 and December 31, 2017, respectively. The Company did not recognize any material revenue in the current reporting period for performance obligations that were fully satisfied in previous periods. Transaction price allocated to the remaining performance obligations The following table includes estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) at the end of the reporting period: 2019 2020 2021 Total Hosted subscription services $ 447,433 $ - $ - $ 447,433 Licensing 200,335 3,782 1,250 205,367 Non-recurring services 392 - - 392 Extended warranties on equipment 56,376 18,943 5,511 80,830 $ 704,536 $ 22,725 $ 6,761 $ 734,022 All consideration from contracts with customers is included in the amounts presented above. |
Research and Development Costs | Research and Development Costs Research and development costs are charged to expense as incurred. |
Shipping Costs | Shipping Costs The Company’s shipping and handling costs are included in cost of revenues for all periods presented. |
Income Taxes | Income Taxes The Company accounts for income taxes under in accordance with ASC Topic 740, “Accounting for Income Taxes.” Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and net operating loss carryforwards. Deferred tax assets and liabilities are measured using expected tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. Deferred tax assets are recognized subject to management’s judgment that realization is more likely than not. The Company has recorded a full valuation allowance for its net deferred tax assets as of December 31, 2018 and 2017, due to the uncertainty of the realizability of those assets. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The Company adheres to the provisions of ASC Topic 820, “Fair Value Measurements and Disclosures”. This pronouncement requires that the Company calculate the fair value of financial instruments and include this additional information in the notes to financial statements when the fair value is different than the book value of those financial instruments. The Company’s financial instruments include cash, accounts receivable, note receivable, accounts payable and accrued expenses. At December 31, 2018 and 2017, the carrying value of the Company’s financial instruments approximated fair value, due to their short-term nature. |
Business Concentrations and Credit Risk | Business Concentration and Credit Risk Financial instruments, which subject the Company to concentrations of credit risk, consist primarily of cash and cash equivalents. The Company maintains cash with one financial institution. The Company performs periodic evaluations of the relative credit standing of these institutions. The Company’s sales are principally made to large retail customers, financial institutions concentrated in the United States of America and to U.S. government entities. The Company performs ongoing credit evaluations, generally does not require collateral, and establishes an allowance for doubtful accounts based upon factors surrounding the credit risk of customers, historical trends and other information. During the year ended December 31, 2018, the Company had two customers that accounted for 31% of revenue. The revenue was associated with two commercial identity sales customers. These customers represented 8% of total accounts receivable as of December 31, 2018. During the year ended December 31, 2017, the Company had two customers that accounted for 26% of revenue. As of December 31, 2018, the Company had three suppliers to produce its input devices. The Company has modified its software to operate in windows based systems and can integrate with different hardware platforms that are readily available in the marketplace. The Company does not maintain a manufacturing facility of its own and is not dependent on maintaining its production relationships due to the flexibility of its software to run on multiple existing platforms. |
Net Loss Per Share | Net Loss Per Share Basic net loss per share is computed by dividing the net loss for the period by the weighted average number of common shares outstanding during the period. Diluted net loss per share is computed by dividing the net loss for the period by the weighted average number of shares of common stock and potentially dilutive common stock outstanding during the period. The dilutive effect of outstanding options and restricted stock is reflected in diluted earnings per share by application of the treasury stock method. The calculation of diluted net loss per share excludes all anti-dilutive shares. Year Ended December 31, 2018 2017 Numerator: Net Loss $ (3,963,576 ) $ (6,020,505 ) Denominator: Weighted average common shares – Basic/Diluted 15,542,480 12,428,652 Net Loss per share – Basic/Diluted $ (0.26 ) $ (0.48 ) The following table summarizes the common stock equivalents excluded from loss per diluted share because their effect would be anti-dilutive: 2018 2017 Stock options 1,072,332 1,631,358 Warrants 471,801 471,801 Restricted stock - 5,859 Total 1,544,133 2,109,018 |
Share Based Compensation | Share Based Compensation The Company accounts for the issuance of equity awards to employees in accordance ASC Topic 718 and 505, which requires that the cost resulting from all share based payment transactions be recognized in the financial statements. This pronouncement establishes fair value as the measurement objective in accounting for share based payment arrangements and requires all companies to apply a fair value based measurement method in accounting for all share based payment transactions with employees. Period compensation costs are included in selling, general and administrative and research and development expenses. The Company recognizes compensation expense related to stock option grants on a straight-line basis over the vesting period. |
Comprehensive Loss | Comprehensive Loss The Company’s comprehensive loss is equal to its net loss for the years ended December 31, 2018 and 2017. |
Segment Information | Segment Information The Company adheres to the provisions of ASC Topic 280, which establishes standards for the way public business enterprises report information about operating segments in annual financial statements and requires that those enterprises report selected information about operating segments in financial statements issued to shareholders. Management has determined that it has only one reporting segment. |
Use of Estimates | Use of Estimates The preparation of the Company’s financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the Company’s financial statements and accompanying notes. Significant estimates and assumptions that affect amounts reported in the financial statements include impairment consideration and valuation of goodwill and intangible assets, deferred tax valuation allowances, allowances for doubtful accounts, revenue allocation of multi-element arrangements and the fair value of options granted under the Company’s share based compensation plans. Due to the inherent uncertainties involved in making estimates, actual results reported in future periods may be different from those estimates. |
Recent Accounting Pronouncements Not Yet Effective | Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers” (“ASU 2014-09”), which supersedes nearly all existing revenue recognition guidance under GAAP. The core principle of ASU 2014-09 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services. ASU 2014-09 defines a five-step process to achieve this core principle and, in doing so, more judgment and estimates may be required within the revenue recognition process than are required under existing GAAP. In addition, this guidance requires new or expanded disclosures related to the judgments made by companies when following this framework and additional quantitative disclosures regarding contract balances and remaining performance obligations. ASU No. 2014-09 may be applied using either a full retrospective approach, under which all years included in the financial statements will be presented under the revised guidance, or a modified retrospective approach, under which financial statements will be prepared under the revised guidance for the year of adoption, but not for prior years. Under the latter method, entities will recognize a cumulative catch-up adjustment to the opening balance of retained earnings at the effective date for contracts that still require performance by the entity. On January 1, 2018, the Company adopted ASC 606 using the modified retrospective method. Results for reporting periods beginning after January 1, 2018 are presented under ASC 606, while the comparative information will not be restated and will continue to be reported under the accounting standards in effect for those periods. See the section “Revenue Recognition and Deferred Revenue” for a detailed disclosure later in this footnote titled Significant Accounting Policies in these consolidated financial statements. In August 2018, the Securities and Exchange Commission (“SEC”) adopted the final rule amending certain disclosure requirements that have become redundant, duplicative, overlapping, outdated, or superseded. In addition, the amendments expand the disclosure requirements on the analysis of stockholders’ equity for interim financial statements. Under the amendments, an analysis of changes in each caption of stockholders’ equity presented in the balance sheet must be provided in a note or separate statement. and will be effective for the quarter that begins after the effective date. Since the Company includes a year to date statement of stockholders’ equity in its interim financial statement filings, the adoption of this guidance will result in the inclusion of a quarter to date statement of stockholders’ equity in its June and September interim financial statement filings and the corresponding prior periods statement of stockholders’ equity for all periods presented. In May 2017, the FASB issued ASU No. 2017-09, Compensation-Stock Compensation (Topic 718): Scope of Modification Accounting In January 2017, the FASB issued ASU No. 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Accounting for Goodwill Impairment In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments In February 2016, the FASB issued ASU No. 2016-02, Leases |
Significant Accounting Polici_3
Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Schedule of Disaggregation of Revenue | The table also includes a reconciliation of the disaggregated revenue. For the Years Ended December 31, 2018 2017 Products and services Hosted subscription services $ 2,225,724 $ 1,579,733 Licensing 1,461,753 1,270,127 Equipment 367,675 424,588 Non-recurring services 298,619 216,602 Extended warranties on equipment 60,007 86,676 Other 19,676 20,570 $ 4,433,454 $ 3,598,296 Timing of revenue recognition Products transferred at a point in time $ 387,351 $ 445,158 Services transferred over time 4,046,103 3,153,138 $ 4,433,454 $ 3,598,296 |
Schedule of Performance Obligation | The following table includes estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) at the end of the reporting period: 2019 2020 2021 Total Hosted subscription services $ 447,433 $ - $ - $ 447,433 Licensing 200,335 3,782 1,250 205,367 Non-recurring services 392 - - 392 Extended warranties on equipment 56,376 18,943 5,511 80,830 $ 704,536 $ 22,725 $ 6,761 $ 734,022 |
Schedule of Earnings Per Share Basic and Diluted | The calculation of diluted net loss per share excludes all anti-dilutive shares. Year Ended December 31, 2018 2017 Numerator: Net Loss $ (3,963,576 ) $ (6,020,505 ) Denominator: Weighted average common shares – Basic/Diluted 15,542,480 12,428,652 Net Loss per share – Basic/Diluted $ (0.26 ) $ (0.48 ) |
Summary of Common Stock Equivalents Excluded from Loss Per Diluted Share | The following table summarizes the common stock equivalents excluded from loss per diluted share because their effect would be anti-dilutive: 2018 2017 Stock options 1,072,332 1,631,358 Warrants 471,801 471,801 Restricted stock - 5,859 Total 1,544,133 2,109,018 |
Accounts Receivable (Tables)
Accounts Receivable (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Receivables [Abstract] | |
Schedule of Accounts Receivable | Accounts receivable represent amounts due from the Company’s customers and are presented net of allowance for doubtful accounts. The components of accounts receivable, net are as follows: 2018 2017 Accounts receivable $ 1,044,109 $ 671,377 Less: Allowance for doubtful accounts (24,675 ) (18,750 ) Accounts receivable, net $ 1,019,434 $ 652,627 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property and Equipment | Property and equipment are comprised of the following as of December 31, 2018 and 2017: 2018 2017 Computer equipment $ 992,336 $ 965,797 Furniture and fixtures 136,524 73,305 Leasehold improvements 41,257 43,249 Office equipment 589,357 578,846 1,759,474 1,661,197 Less – Accumulated depreciation and amortization (1,494,891 ) (1,449,595 ) $ 264,583 $ 211,602 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Finite-Lived Intangible Assets | The changes in the carrying amount of intangible assets for the year ended December 31, 2018 and 2017 were as follows: 2018 2017 Balance at beginning of year $ 463,578 $ 2,154,563 Deduction: Impairment charge - (1,375,422 ) Deduction: Amortization expense (157,003 ) (315,563 ) Balance at end of year $ 306,575 $ 463,578 |
Schedule of Intangible Assets and Goodwill | The following table sets forth the components of intangible assets as of December 31, 2018 and 2017: As of December 31, 2018 Estimated Adjusted Useful Carrying Accumulated Life Amount Amortization Net Trade name 2 years $ 286,590 $ (278,825 ) $ 7,765 Patents and copyrights 2-17 years 954,915 (746,229 ) 208,686 Non-contractual customer relationships 2-10 years 2,431,655 (2,341,531 ) 90,124 $ 3,673,160 $ (3,366,585 ) $ 306,575 As of December 31, 2017 Adjusted Carrying Accumulated Amount Amortization Net Trade name $ 339,590 $ (324,060 ) $ 15,530 Patents and copyrights 954,915 (711,781 ) 243,134 Non-contractual customer relationships 2,431,655 (2,226,741 ) 204,914 $ 3,726,160 $ (3,262,582 ) 463,578 |
Schedule of Finite-Lived Intangible Assets Amortization Expense | The following summarizes amortization of acquisition related intangible assets included in the statement of operations: Years Ended December 31, 2018 2017 Cost of sales $ 129,496 $ 236,651 General and administrative 27,507 78,912 $ 157,003 $ 315,563 |
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense | The Company expects that amortization expense for the next five succeeding years will be as follows: 2019 $ 132,336 2020 $ 24,980 2021 $ 24,980 2022 $ 24,980 2023 $ 24,980 |
Accrued Expenses (Tables)
Accrued Expenses (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Payables and Accruals [Abstract] | |
Schedule of Accrued Expenses | Accrued expenses are comprised of the following as of December 31, 2018 and 2017: 2018 2017 Professional fees $ 69,406 $ 78,552 Payroll and related 406,925 365,384 Severance payments to former officer 158,406 316,812 Other 92,181 54,602 $ 726,918 $ 815,350 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Schedule of Deferred Tax Assets and Liabilities | Significant components of the Company’s deferred tax assets for federal and state income taxes as of December 31, 2018 and 2017 are as follows: 2018 2017 Deferred tax assets: Net operating loss carryforwards $ 3,914,000 $ 2,818,000 Stock-based compensation 82,000 81,000 Reserves 7,000 5,000 Intangible assets 55,000 26,000 Severance costs and deferred rent 44,000 130,000 Research and development tax credits 258,000 206,000 Total deferred tax assets 4,360,000 3,266,000 Deferred tax liabilities: Depreciation (37,000 ) (33,000 ) Total deferred tax liabilities (37,000 ) (33,000 ) Net deferred tax assets 4,323,000 3,233,000 Less: Valuation allowance (4,323,000 ) (3,233,000 ) Deferred tax assets, net of allowance $ - $ - |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Equity [Abstract] | |
Schedule of Fair Value of Share Based Payment | The fair value of share-based payment units was estimated using the Black-Scholes option pricing model with the following assumptions and weighted average fair values as follows: Years Ended December 31, 2018 2017 Valuation assumptions: Grant price $2.30 - $2.87 - Exercise price $2.30 - $2.87 - Expected dividend yield 0 % - Expected volatility 94.02% - 97.22 % - Expected life (in years) 5 - Risk-free interest rate 2.69% - 2.73 % - |
Schedule of Stock Option Activity | Stock option activity under the Plans during the periods indicated below is as follows: Number of Shares Subject to Issuance Weighted- average Exercise Price Weighted- average Remaining Contractual Term Aggregate Intrinsic Value Outstanding at December 31, 2016 1,665,420 $ 1.40 3.62 years - Granted - - Forfeited or expired (24,062 ) 4.06 Exercised (10,000 ) 1.01 Outstanding at December 31, 2017 1,631,358 $ 1.36 1.70 years $ 2,106,669 Granted 102,500 2.86 Forfeited or expired (67,488 ) 4.18 Exercised (593,838 ) 1.16 Outstanding at December 31, 2018 1,072,332 $ 1.44 1.85 years $ 881,493 Exercisable at December 31, 2018 937,332 $ 1.28 1.58 years $ 864,092 |
Summary of Stock Options | The following is a summary of stock options as of December 31, 2018: Options Outstanding Options Exercisable Range of Exercise Prices Number of Options Weighted- average Remaining Life Weighted- average Exercise Price Number of Options Weighted- average Exercise Price $ 1.15 to $1.56 889,460 1.59 years $ 1.16 876,960 $ 1.16 $ 1.75 to $2.87 155,500 3.51 years $ 2.56 33,000 $ 2.11 $ 3.93 27,372 0.75 years $ 3.93 27,372 $ 3.93 1,072,332 1.85 years $ 1.44 937,332 $ 1.28 |
Schedule of Restricted Stock Units Outstanding | Restricted stock unit activity under the Plans during the periods indicated below is as follows: Number of Shares Weighted Average Grant Date Fair Value Aggregate Intrinsic Value Outstanding at December 31, 2016 32,714 1.89 26,010 Granted 23,352 2.87 Vested and Settled in shares (50,207 ) 2.31 Outstanding at December 31, 2017 5,859 $ 2.56 $ - Granted 29,822 2.07 Vested and Settled in shares (35,681 ) 2.15 Outstanding at December 31, 2018 - $ - $ - |
Schedule of Share Based Compensation Expense | Share based compensation expense for the years ended December 31, 2018 and 2017 is as follows: Years Ended December 31, Compensation cost recognized: 2018 2017 Stock options $ 124,886 $ 368,465 Restricted stock units 61,821 67,214 $ 186,707 $ 435,679 |
Schedule of Stock Based Compensation | Share based compensation is included in operating expenses as follows: Years Ended December 31, 2018 2017 Selling, general and administrative $ 169,654 $ 408,772 Research and development 17,053 26,907 $ 186,707 $ 435,679 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Future Minimum Rental Payments for Operating Leases | Future minimum lease payments under this lease agreement are as follows for the years ended December 31: 2019 $ 127,117 2020 130,930 2021 32,892 Total $ 290,939 |
Quarterly Financial Data (Una_2
Quarterly Financial Data (Unaudited) (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Quarterly Financial Information Disclosure [Abstract] | |
Schedule of Quarterly Financial Information | The following table sets forth unaudited financial data for each of the Company’s last eight fiscal quarters. Year Ended December 31, 2018 Year Ended December 31, 2017 First Quarter Second Quarter Third Quarter Fourth Quarter First Quarter Second Quarter Third Quarter Fourth Quarter (Dollars in thousands, except per share data) Income Statement Data: Revenues $ 1,062 $ 1,001 $ 1,040 $ 1,330 $ 713 $ 951 $ 967 $ 967 Gross profit 962 919 927 1,239 603 747 862 864 Loss from operations (1,082 ) (1,143 ) (1,154 ) (714 ) (940 ) (1,101 ) (1,083 ) (2,957 ) Net loss (1,068 ) (1,101 ) (1,131 ) (664 ) (937 ) (1,099 ) (1,075 ) (2,910 ) Net loss per common share: Basic $ (0.07 ) $ (0.07 ) $ (0.07 ) $ (0.04 ) $ (0.09 ) $ (0.10 ) $ (0.08 ) $ (0.19 ) Diluted $ (0.07 ) $ (0.07 ) $ (0.07 ) $ (0.04 ) $ (0.09 ) $ (0.10 ) $ (0.08 ) $ (0.19 ) |
Nature of Business (Details Nar
Nature of Business (Details Narrative) - USD ($) | Aug. 04, 2014 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 |
Number of patents, description | Intellicheck continues to develop and release innovative products based upon its rich patent portfolio consisting of eighteen issued patents and six pending. | ||||||||||
Net loss | $ 664,000 | $ 1,131,000 | $ 1,101,000 | $ 1,068,000 | $ 2,910,000 | $ 1,075,000 | $ 1,099,000 | $ 937,000 | $ 3,963,576 | $ 6,020,505 | |
Net cash used in operating activities | 4,220,611 | 3,745,285 | |||||||||
Cash | 4,376,017 | 8,010,161 | 4,376,017 | 8,010,161 | |||||||
Accumulated deficit | $ 114,386,401 | $ 110,422,825 | $ 114,386,401 | 110,422,825 | |||||||
Common stock value | $ 8,512,861 | ||||||||||
IPO [Member] | |||||||||||
Common stock value | $ 4,168,750 | ||||||||||
Common stock per share | $ 2.25 | ||||||||||
Proceeds from equity raise | $ 8,513,000 |
Significant Accounting Polici_4
Significant Accounting Policies (Details Narrative) | 12 Months Ended | ||
Dec. 31, 2018USD ($)Segment | Dec. 31, 2017USD ($) | Feb. 29, 2016USD ($) | |
Accounting Policies [Line Items] | |||
Impairment charges | |||
Impairment charges on intangible assets | 1,375,422 | ||
Deferred revenue, current portion | 704,536 | 739,980 | |
Recognized deferred revenue | 738,815 | ||
Deferred revenue, non current portion | $ 29,486 | $ 87,736 | |
Number of reporting segment | Segment | 1 | ||
Right-to-use asset and corresponding liability | $ 266,000 | ||
Minimum [Member] | |||
Accounting Policies [Line Items] | |||
Estimated useful lives of property and equipment | 3 years | ||
Maximum [Member] | |||
Accounting Policies [Line Items] | |||
Estimated useful lives of property and equipment | 10 years | ||
Two Customer [Member] | Sales Revenue, Net [Member] | |||
Accounting Policies [Line Items] | |||
Percentage of credit risk | 31.00% | ||
Two Customer [Member] | Accounts Receivable [Member] | |||
Accounting Policies [Line Items] | |||
Percentage of credit risk | 8.00% | ||
Two Customer [Member] | Sales Revenue, Net [Member] | |||
Accounting Policies [Line Items] | |||
Percentage of credit risk | 26.00% | ||
Trade Names [Member] | |||
Accounting Policies [Line Items] | |||
Impairment charges on intangible assets | $ 250,582 | ||
Patents [Member] | |||
Accounting Policies [Line Items] | |||
Impairment charges on intangible assets | 287,928 | ||
Non-contractual Customer Relationships [Member] | |||
Accounting Policies [Line Items] | |||
Impairment charges on intangible assets | $ 836,912 |
Significant Accounting Polici_5
Significant Accounting Policies - Schedule of Disaggregation of Revenue (Details) - USD ($) | 3 Months Ended | 12 Months Ended | ||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | |
Revenues | $ 1,330,000 | $ 1,040,000 | $ 1,001,000 | $ 1,062,000 | $ 967,000 | $ 967,000 | $ 951,000 | $ 713,000 | $ 4,433,454 | $ 3,598,296 |
Hosted Subscription Services [Member] | ||||||||||
Revenues | 2,225,724 | 1,579,733 | ||||||||
Licensing [Member] | ||||||||||
Revenues | 1,461,753 | 1,270,127 | ||||||||
Equipment [Member] | ||||||||||
Revenues | 367,675 | 424,588 | ||||||||
Non-recurring Services [Member] | ||||||||||
Revenues | 298,619 | 216,602 | ||||||||
Extended Warranties on Equipment [Member] | ||||||||||
Revenues | 60,007 | 86,676 | ||||||||
Other [Member] | ||||||||||
Revenues | 19,676 | 20,570 | ||||||||
Products Transferred at a Point in Time [Member] | ||||||||||
Revenues | 387,351 | 445,158 | ||||||||
Services Transferred Over Time [Member] | ||||||||||
Revenues | $ 4,046,103 | $ 3,153,138 |
Significant Accounting Polici_6
Significant Accounting Policies - Schedule of Revenue Performance Obligation (Details) | Dec. 31, 2018USD ($) |
Revenue remaining performance obligations | $ 734,022 |
Hosted Subscription Services [Member] | |
Revenue remaining performance obligations | 447,433 |
Licensing [Member] | |
Revenue remaining performance obligations | 205,367 |
Non-recurring Services [Member] | |
Revenue remaining performance obligations | 392 |
Extended Warranties on Equipment [Member] | |
Revenue remaining performance obligations | 80,830 |
2019 [Member] | |
Revenue remaining performance obligations | 704,536 |
2019 [Member] | Hosted Subscription Services [Member] | |
Revenue remaining performance obligations | 447,433 |
2019 [Member] | Licensing [Member] | |
Revenue remaining performance obligations | 200,335 |
2019 [Member] | Non-recurring Services [Member] | |
Revenue remaining performance obligations | 392 |
2019 [Member] | Extended Warranties on Equipment [Member] | |
Revenue remaining performance obligations | 56,376 |
2020 [Member] | |
Revenue remaining performance obligations | 22,725 |
2020 [Member] | Hosted Subscription Services [Member] | |
Revenue remaining performance obligations | |
2020 [Member] | Licensing [Member] | |
Revenue remaining performance obligations | 3,782 |
2020 [Member] | Non-recurring Services [Member] | |
Revenue remaining performance obligations | |
2020 [Member] | Extended Warranties on Equipment [Member] | |
Revenue remaining performance obligations | 18,943 |
2021 [Member] | |
Revenue remaining performance obligations | 6,761 |
2021 [Member] | Hosted Subscription Services [Member] | |
Revenue remaining performance obligations | |
2021 [Member] | Licensing [Member] | |
Revenue remaining performance obligations | 1,250 |
2021 [Member] | Non-recurring Services [Member] | |
Revenue remaining performance obligations | |
2021 [Member] | Extended Warranties on Equipment [Member] | |
Revenue remaining performance obligations | $ 5,511 |
Significant Accounting Polici_7
Significant Accounting Policies - Schedule of Earnings Per Share Basic and Diluted (Details) - USD ($) | 3 Months Ended | 12 Months Ended | ||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | |
Accounting Policies [Abstract] | ||||||||||
Net Loss | $ (664,000) | $ (1,131,000) | $ (1,101,000) | $ (1,068,000) | $ (2,910,000) | $ (1,075,000) | $ (1,099,000) | $ (937,000) | $ (3,963,576) | $ (6,020,505) |
Weighted average common shares - Basic/Diluted | 15,542,480 | 12,428,652 | ||||||||
Net Loss per share - Basic/Diluted | $ (0.26) | $ (0.48) |
Significant Accounting Polici_8
Significant Accounting Policies - Summary of Common Stock Equivalents Excluded from Loss Per Diluted Share (Details) - shares | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share amount | 1,544,133 | 2,109,018 |
Stock Options [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share amount | 1,072,332 | 1,631,358 |
Warrants [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share amount | 471,801 | 471,801 |
Restricted Stock [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share amount | 5,859 |
Accounts Receivable - Shedule o
Accounts Receivable - Shedule of Accounts Receivable (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Receivables [Abstract] | ||
Accounts receivable | $ 1,044,109 | $ 671,377 |
Less: Allowance for doubtful accounts | (24,675) | (18,750) |
Accounts receivable, net | $ 1,019,434 | $ 652,627 |
Property and Equipment (Details
Property and Equipment (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation expense | $ 88,545 | $ 96,788 |
Property and Equipment - Schedu
Property and Equipment - Schedule of Property and Equipment (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Property, Plant and Equipment [Line Items] | ||
Property and Equipment, Gross | $ 1,759,474 | $ 1,661,197 |
Less - Accumulated depreciation and amortization | (1,494,891) | (1,449,595) |
Property and Equipment, Net | 264,583 | 211,602 |
Computer Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and Equipment, Gross | 992,336 | 965,797 |
Furniture and Fixtures [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and Equipment, Gross | 136,524 | 73,305 |
Leasehold Improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and Equipment, Gross | 41,257 | 43,249 |
Office Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and Equipment, Gross | $ 589,357 | $ 578,846 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets (Details Narrative) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Goodwill | $ 8,101,661 | $ 8,101,661 |
Accumulated impairment charges on goodwill | $ 30,085,862 |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets - Schedule of Finite Lived Intangible Assets (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Balance at beginning of year | $ 463,578 | $ 2,154,563 |
Deduction: Impairment charge | (1,375,422) | |
Deduction: Amortization expense | (157,003) | (315,563) |
Balance at end of year | $ 306,575 | $ 463,578 |
Goodwill and Intangible Asset_4
Goodwill and Intangible Assets - Schedule of Intangible Assets and Goodwill (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Finite-Lived Intangible Assets [Line Items] | |||
Adjusted Carrying Amount | $ 3,673,160 | $ 3,726,160 | |
Accumulated Amortization | (3,366,585) | (3,262,582) | |
Net | 306,575 | 463,578 | $ 2,154,563 |
Trade Names [Member] | |||
Finite-Lived Intangible Assets [Line Items] | |||
Adjusted Carrying Amount | 286,590 | 339,590 | |
Accumulated Amortization | (278,825) | (324,060) | |
Net | $ 7,765 | 15,530 | |
Trade Names [Member] | |||
Finite-Lived Intangible Assets [Line Items] | |||
Estimated Useful Life | 2 years | ||
Patents and Copyrights [Member] | |||
Finite-Lived Intangible Assets [Line Items] | |||
Adjusted Carrying Amount | $ 954,915 | 954,915 | |
Accumulated Amortization | (746,229) | (711,781) | |
Net | $ 208,686 | 243,134 | |
Patents and Copyrights [Member] | Minimum [Member] | |||
Finite-Lived Intangible Assets [Line Items] | |||
Estimated Useful Life | 2 years | ||
Patents and Copyrights [Member] | Maximum [Member] | |||
Finite-Lived Intangible Assets [Line Items] | |||
Estimated Useful Life | 17 years | ||
Non-contractual Customer Relationships [Member] | |||
Finite-Lived Intangible Assets [Line Items] | |||
Adjusted Carrying Amount | $ 2,431,655 | 2,431,655 | |
Accumulated Amortization | (2,341,531) | (2,226,741) | |
Net | $ 90,124 | $ 204,914 | |
Non-contractual Customer Relationships [Member] | Minimum [Member] | |||
Finite-Lived Intangible Assets [Line Items] | |||
Estimated Useful Life | 2 years | ||
Non-contractual Customer Relationships [Member] | Maximum [Member] | |||
Finite-Lived Intangible Assets [Line Items] | |||
Estimated Useful Life | 10 years |
Goodwill and Intangible Asset_5
Goodwill and Intangible Assets - Schedule of Amortization Expenses (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Amortization of intangible assets | $ 157,003 | $ 315,563 |
Cost of Sales [Member] | ||
Amortization of intangible assets | 129,496 | 236,651 |
General and Administrative [Member] | ||
Amortization of intangible assets | $ 27,507 | $ 78,912 |
Goodwill and Intangible Asset_6
Goodwill and Intangible Assets - Schedule of Finite-Lived Intangible Assets, Future Amortization Expense (Details) | Dec. 31, 2018USD ($) |
Goodwill and Intangible Assets Disclosure [Abstract] | |
2019 | $ 132,336 |
2020 | 24,980 |
2021 | 24,980 |
2022 | 24,980 |
2023 | $ 24,980 |
Note Receivable (Details Narrat
Note Receivable (Details Narrative) - USD ($) | Aug. 31, 2015 | Dec. 31, 2015 | Dec. 31, 2018 | Dec. 31, 2017 |
Gain on sale of assets | $ 109,000 | |||
Value of intangible assets disposed | $ 65,000 | |||
Value of fixed assets disposed | 56,000 | |||
Note receivable | 71,137 | $ 111,609 | ||
Note receivable net of allowances | 42,120 | 40,471 | ||
Note receivable net | $ 29,017 | $ 71,138 | ||
Buyer [Member] | ||||
Sale of assets cash consideration | $ 350,000 | |||
Upfront cash payment amount | 30,000 | |||
Issuance of promissory note | 200,000 | |||
Contingent consideration maximum amount | 120,000 | |||
Promissory note monthly payment | $ 3,683 | |||
Promissory note interest rate | 4.00% | |||
Promissory note term | 60 months | |||
Promissory note expiration year | Aug. 31, 2020 |
Debt (Details Narrative)
Debt (Details Narrative) | 12 Months Ended |
Dec. 31, 2018USD ($) | |
Line of Credit Facility [Line Items] | |
Line of credit facility, unused availability | $ 2,000,000 |
Revolving Credit Facility [Member] | March 21, 2019 [Member] | |
Line of Credit Facility [Line Items] | |
Line of credit facility, unused availability | 200,000 |
Revolving Credit Facility [Member] | Northwest Bank [Member] | |
Line of Credit Facility [Line Items] | |
Line of credit facility, maximum borrowing capacity | $ 2,000,000 |
Percentage of line of credit interest | 95.00% |
Line of credit | $ 250,000 |
Line of credit facility, interest rate description | The facility bears interest at a rate consistent with Northwest"s money market account (1.51% at December 31, 2018) plus 3%. |
Line of credit maturity date | May 22, 2019 |
Revolving Credit Facility [Member] | Citi Bank [Member] | January 10, 2019 [Member] | |
Line of Credit Facility [Line Items] | |
Line of credit facility, maximum borrowing capacity | $ 2,000,000 |
Percentage of line of credit interest | 2.00% |
Accrued Expenses (Details Narra
Accrued Expenses (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Payables and Accruals [Abstract] | ||
Long-term portion of severance payments | $ 0 | $ 158,407 |
Accrued Expenses - Schedule of
Accrued Expenses - Schedule of Accrued Expenses (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Payables and Accruals [Abstract] | ||
Professional fees | $ 69,406 | $ 78,552 |
Payroll and related | 406,925 | 365,384 |
Severance payments to former officer | 158,406 | 316,812 |
Other | 92,181 | 54,602 |
Accrued expenses | $ 726,918 | $ 815,350 |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | ||
Income tax, description | The reduction of the corporate income tax rate from a top marginal rate of 35% to a flat rate of 21% in 2018. Notwithstanding the reduction in the corporate income tax rate, the overall impact of the new federal tax law is uncertain, including to what extent various states will conform to the newly enacted federal tax law. The deferred tax assets and liabilities are measured using the enacted tax rates that the Company believes will apply in the years in which the temporary differences are expected to be recovered or paid. As a result, the Company remeasured the deferred tax assets and deferred tax liabilities to reflect the reduction in the enacted U.S. corporate income tax rate. This resulted in a decrease in our gross deferred tax assets and liabilities and corresponding valuation allowance of approximately $1.5 million. | |
Effective corporate tax rate | 21.00% | |
Valuation allowance and deferred tax assets (increased) decreased, value | $ 1,500,000 | $ 1,100,000 |
Tax interest or penalties | ||
Net Operating loss carryforwards | $ 15,000,000 | |
Operating loss carryforwards expiration term | 2019 through 2038 | |
Percentage of operating loss | 80.00% |
Income Taxes - Schedule of Defe
Income Taxes - Schedule of Deferred Tax Assets and Liabilities (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Income Tax Disclosure [Abstract] | ||
Net operating loss carryforwards | $ 3,914,000 | $ 2,818,000 |
Stock-based compensation | 82,000 | 81,000 |
Reserves | 7,000 | 5,000 |
Intangible assets | 55,000 | 26,000 |
Severance costs and deferred rent | 44,000 | 130,000 |
Research and development tax credits | 258,000 | 206,000 |
Total deferred tax assets | 4,360,000 | 3,266,000 |
Depreciation | (37,000) | (33,000) |
Total deferred tax liabilities | (37,000) | (33,000) |
Net deferred tax assets | 4,323,000 | 3,233,000 |
Less: Valuation allowance | (4,323,000) | (3,233,000) |
Deferred tax assets, net of allowance |
Stockholders' Equity (Details N
Stockholders' Equity (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock options weighted average fair value price per shares | $ 2.12 | $ 0 |
Class of warrant or right, outstanding | 471,801 | |
Warrants exercisable description | As of December 31, 2018, the Company had 471,801 remaining warrants outstanding at exercise prices ranging from $2.20 to $8.00 through 2021. | |
Warrants exercise price | $ 2.20 | $ 2.20 |
Number of warrants exercised | 63,500 | |
Restricted Stock Units (RSUs) [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Unrecognized compensation cost related to non-vested share-based compensation | $ 193,161 | |
Recognized over weight average period | 2 years 9 months 29 days | |
Through 2021 [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Warrants exercise price | $ 8 | |
2015 Omnibus Incentive Plan [Member] | Maximum [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Maximum number of shares issuance during the period | 3,000,000 | |
2015 Omnibus Incentive Plan [Member] | Minimum [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Percentage of fair value per share granted | 110.00% | |
Percentage of grants owning more than voting stock | 10.00% | |
Stock Option Plans [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Options available for future grants | 746,103 | |
Series A Convertible Preferred Stock [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Preferred stock shares outstanding | ||
Series A Convertible Preferred Stock [Member] | January 1997 [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Preferred stock par value | $ 0.01 | |
Preferred stock liquidation price per share | $ 1 |
Stockholders' Equity - Schedule
Stockholders' Equity - Schedule of Fair Value of Share Based Payment (Details) - $ / shares | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Grant price | ||
Exercise price | ||
Expected dividend yield | 0.00% | |
Expected volatility | ||
Expected life (in years) | 5 years | 0 years |
Risk-free interest rate | ||
Minimum [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Grant price | $ 2.30 | |
Exercise price | $ 2.30 | |
Expected volatility | 94.02% | |
Risk-free interest rate | 2.69% | |
Maximum [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Grant price | $ 2.87 | |
Exercise price | $ 2.87 | |
Expected volatility | 97.22% | |
Risk-free interest rate | 2.73% |
Stockholders' Equity - Schedu_2
Stockholders' Equity - Schedule of Stock Option Activity (Details) - Stock Option Plans [Member] - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Number of Shares Subject to Issuance, Outstanding | 1,631,358 | 1,665,420 |
Number of Shares Subject to Issuance, Granted | 102,500 | |
Number of Shares Subject to Issuance, Forfeited or expired | (67,488) | (24,062) |
Number of Shares Subject to Issuance, Exercised | (593,838) | (10,000) |
Number of Shares Subject to Issuance, Outstanding | 1,072,332 | 1,631,358 |
Number of Shares Subject to Issuance, Exercisable | 937,332 | |
Weighted-average Exercise Price, Outstanding | $ 1.36 | $ 1.40 |
Weighted-average Exercise Price, Granted | 2.86 | |
Weighted-average Exercise Price, Forfeited or expired | 4.18 | 4.06 |
Weighted-average Exercise Price, Exercised | 1.16 | 1.01 |
Weighted-average Exercise Price, Outstanding | 1.44 | $ 1.36 |
Weighted-average Exercise Price, Exercisable | $ 1.28 | |
Weighted-average Remaining Contractual Term, Outstanding Beginning | 1 year 8 months 12 days | 3 years 7 months 13 days |
Weighted-average Remaining Contractual Term, Outstanding Ending | 1 year 10 months 6 days | 1 year 8 months 12 days |
Weighted-average Remaining Contractual Term, Exercisable | 1 year 6 months 29 days | |
Outstanding-Aggregate Intrinsic Value, Ending | $ 881,493 | $ 2,106,669 |
Exercisable-Aggregate Intrinsic Value | $ 864,092 |
Stockholders' Equity - Summary
Stockholders' Equity - Summary of Stock Options (Details) | 12 Months Ended |
Dec. 31, 2018$ / sharesshares | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Options Outstanding - Number Of Options | shares | 1,072,332 |
Options Outstanding - Weighted-Average Remaining Life | 1 year 10 months 6 days |
Options Outstanding - Weighted Average Exercise Price | $ 1.44 |
Options Exercisable - Number of Options | shares | 937,332 |
Options Exercisable - Weighted Average Exercise Price | $ 1.28 |
Exercise Price One [Member] | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Range of Exercise Prices - Lower Range Limit | 1.15 |
Range of Exercise Prices - Upper Range Limit | $ 1.56 |
Options Outstanding - Number Of Options | shares | 889,460 |
Options Outstanding - Weighted-Average Remaining Life | 1 year 7 months 2 days |
Options Outstanding - Weighted Average Exercise Price | $ 1.16 |
Options Exercisable - Number of Options | shares | 876,960 |
Options Exercisable - Weighted Average Exercise Price | $ 1.16 |
Exercise Price Two [Member] | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Range of Exercise Prices - Lower Range Limit | 1.75 |
Range of Exercise Prices - Upper Range Limit | $ 2.87 |
Options Outstanding - Number Of Options | shares | 155,500 |
Options Outstanding - Weighted-Average Remaining Life | 3 years 6 months 3 days |
Options Outstanding - Weighted Average Exercise Price | $ 2.56 |
Options Exercisable - Number of Options | shares | 33,000 |
Options Exercisable - Weighted Average Exercise Price | $ 2.11 |
Exercise Price Three [Member] | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Range of Exercise Prices - Upper Range Limit | $ 3.93 |
Options Outstanding - Number Of Options | shares | 27,372 |
Options Outstanding - Weighted-Average Remaining Life | 9 months |
Options Outstanding - Weighted Average Exercise Price | $ 3.93 |
Options Exercisable - Number of Options | shares | 27,372 |
Options Exercisable - Weighted Average Exercise Price | $ 3.93 |
Stockholders' Equity - Schedu_3
Stockholders' Equity - Schedule of Restricted Stock Units Outstanding (Details) - Restricted Stock Units (RSUs) [Member] - $ / shares | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Number of Shares Outstanding Beginning Balance | 5,859 | 32,714 |
Number of Shares Granted | 29,822 | 23,352 |
Number of Shares Vested and Settled in Shares | (35,681) | (50,207) |
Number of Shares Outstanding Ending Balance | 5,859 | |
Weighted Average Grant Date Fair Value Outstanding Beginning Balance | $ 2.56 | $ 1.89 |
Weighted Average Grant Date Fair Value Granted | 2.07 | 2.87 |
Weighted Average Grant Date Fair Value Vested and Settled in Shares | 2.15 | 2.31 |
Weighted Average Grant Date Fair Value Outstanding Ending Balance | 2.56 | |
Aggregate Intrinsic Value Outstanding Beginning Balance | $ 26,010 | |
Aggregate Intrinsic Value Outstanding Ending Balance |
Stockholders' Equity - Schedu_4
Stockholders' Equity - Schedule of Share Based Compensation Expense (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Equity [Abstract] | ||
Stock options | $ 124,886 | $ 368,465 |
Restricted stock units | 61,821 | 67,214 |
Share-based Compensation, Total | $ 186,707 | $ 435,679 |
Stockholders' Equity - Schedu_5
Stockholders' Equity - Schedule of Stock Based Compensation (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Share-based Compensation Expense | $ 186,707 | $ 435,679 |
Selling General and Administrative [Member] | ||
Share-based Compensation Expense | 169,654 | 408,772 |
Research and Development [Member] | ||
Share-based Compensation Expense | $ 17,053 | $ 26,907 |
Issuance of Common Stock (Detai
Issuance of Common Stock (Details Narrative) - Common Stock [Member] - USD ($) | Aug. 04, 2017 | Dec. 31, 2017 |
Class of Stock [Line Items] | ||
Stock issued during period, shares, new issues | 4,168,750 | |
Public Offering [Member] | ||
Class of Stock [Line Items] | ||
Stock issued during period, shares, new issues | 4,168,750 | |
Shares issued, price per share | $ 2.25 | |
Proceeds from issuance of offering | $ 8,670,000 | |
Direct offering costs | $ 157,000 |
Commitments and Contingencies_2
Commitments and Contingencies (Details Narrative) - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Oct. 04, 2017 | |
Commitments And contingencies [Line Items] | |||
Rent expense | $ 161,095 | $ 287,535 | |
Severance liability | $ 158,406 | ||
Percentage of maximum compensation | 35.00% | ||
Percentage of contribute a matching contribution | 50.00% | ||
Percentage of eligible employee's deferral election | 6.00% | ||
Matching contributions | $ 53,784 | $ 45,441 | |
Plan asset value | $ 2,200,000 | ||
Dr. William Roof [Member] | |||
Commitments And contingencies [Line Items] | |||
Receive aggregate cash payments | $ 500,000 | ||
Royalty and License Agreements [Member] | |||
Commitments And contingencies [Line Items] | |||
Percentage of royalties payment | 0.005% | ||
Payment of fees | $ 2,000 | ||
Royalty and License Agreements [Member] | Minimum [Member] | |||
Commitments And contingencies [Line Items] | |||
Gross sales | $ 2,000,000 | ||
Royalty and License Agreements [Member] | Minimum [Member] | Former Officer [Member] | Patents [Member] | |||
Commitments And contingencies [Line Items] | |||
Percentage of royalties payment | 0.0025% | ||
Gross sales | $ 52,000,000 | ||
Royalty and License Agreements [Member] | Maximum [Member] | |||
Commitments And contingencies [Line Items] | |||
Gross sales | $ 52,000,000 | ||
Melville, New York [Member] | |||
Commitments And contingencies [Line Items] | |||
Lease expiration | Mar. 31, 2021 |
Commitments and Contingencies -
Commitments and Contingencies - Schedule of Future Minimum Rental Payments for Operating Leases (Details) | Dec. 31, 2018USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
2019 | $ 127,117 |
2020 | 130,930 |
2021 | 32,892 |
Total | $ 290,939 |
Quarterly Financial Data (Una_3
Quarterly Financial Data (Unaudited) - Schedule of Quarterly Financial Information (Details) - USD ($) | 3 Months Ended | 12 Months Ended | ||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | |
Quarterly Financial Information Disclosure [Abstract] | ||||||||||
Revenues | $ 1,330,000 | $ 1,040,000 | $ 1,001,000 | $ 1,062,000 | $ 967,000 | $ 967,000 | $ 951,000 | $ 713,000 | $ 4,433,454 | $ 3,598,296 |
Gross profit | 1,239,000 | 927,000 | 919,000 | 962,000 | 864,000 | 862,000 | 747,000 | 603,000 | 4,046,837 | 3,076,461 |
Loss from operations | (714,000) | (1,154,000) | (1,143,000) | (1,082,000) | (2,957,000) | (1,083,000) | (1,101,000) | (940,000) | ||
Net loss | $ (664,000) | $ (1,131,000) | $ (1,101,000) | $ (1,068,000) | $ (2,910,000) | $ (1,075,000) | $ (1,099,000) | $ (937,000) | $ (3,963,576) | $ (6,020,505) |
Net loss per common share: Basic | $ (0.04) | $ (0.07) | $ (0.07) | $ (0.07) | $ (0.19) | $ (0.08) | $ (0.10) | $ (0.09) | ||
Net loss per common share: Diluted | $ (0.04) | $ (0.07) | $ (0.07) | $ (0.07) | $ (0.19) | $ (0.08) | $ (0.10) | $ (0.09) |