Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Mar. 22, 2018 | Jun. 30, 2017 | |
Document And Entity Information | |||
Entity Registrant Name | MECHANICAL TECHNOLOGY INC | ||
Entity Central Index Key | 64,463 | ||
Current Fiscal Year End Date | --12-31 | ||
Amendment Flag | false | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2017 | ||
Entity a Well-known Seasoned Issuer | No | ||
Entity a Voluntary Filer | No | ||
Entity's Reporting Status Current | Yes | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Common Stock, Shares Outstanding | 9,369,177 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2,017 | ||
Entity Public Float | $ 4,724,668 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Current Assets: | ||
Cash | $ 3,828 | $ 3,381 |
Accounts receivable - less allowances of $2 in 2017 and $0 in 2016 | 1,406 | 881 |
Inventories | 694 | 676 |
Prepaid expenses and other current assets | 90 | 82 |
Total Current Assets | 6,018 | 5,020 |
Property, plant and equipment, net | 184 | 160 |
Total Assets | 6,202 | 5,180 |
Current Liabilities: | ||
Accounts payable | 325 | 124 |
Accrued liabilities | 913 | 906 |
Total Current Liabilities | 1,238 | 1,030 |
Commitments and Contingencies (Note 12) | ||
Stockholders' Equity: | ||
Common stock, par value $0.01 per share, authorized 75,000,000; 10,378,975 issued in 2017 and 10,026,136 issued in 2016 | 104 | 100 |
Additional paid-in capital | 139,022 | 138,794 |
Accumulated deficit | (120,398) | (120,980) |
Common stock in treasury, at cost, 1,015,493 shares in both 2017 and 2016 | (13,764) | (13,764) |
Total stockholders' equity | 4,964 | 4,150 |
Total Liabilities and Stockholders' Equity | $ 6,202 | $ 5,180 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Statement of Financial Position [Abstract] | ||
Allowance for doubtful account receivable (in dollars) | $ 2 | $ 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common Stock, shares authorized | 75,000,000 | 75,000,000 |
Common Stock, shares issued | 10,378,975 | 10,026,136 |
Common Stock, shares outstanding | 9,363,482 | 9,010,643 |
Treasury stock, shares | 1,015,493 | 1,015,493 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Income Statement [Abstract] | ||
Product revenue | $ 7,061 | $ 7,056 |
Operating costs and expenses: | ||
Cost of product revenue | 2,234 | 2,722 |
Research and product development expenses | 1,149 | 1,243 |
Selling, general and administrative expenses | 3,090 | 3,452 |
Operating income (loss) | 588 | (361) |
Other expense, net | 0 | (7) |
Income (loss) before income taxes | 588 | (368) |
Income tax (expense) benefit | (6) | 9 |
Net income (loss) | $ 582 | $ (359) |
Income (loss) per share (Basic) | $ 0.06 | $ (0.06) |
Income (loss) per share (Diluted) | $ 0.06 | $ (0.06) |
Weighted average shares outstanding (Basic) | 9,129,178 | 5,988,545 |
Weighted average shares outstanding (Diluted) | 9,332,676 | 5,988,545 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Equity - USD ($) $ in Thousands | Common Stock | Additional Paid-In Capital [Member] | Retained Earnings / Accumulated Deficit [Member] | Treasury Stock [Member] | Total |
Beginning Balance at Dec. 31, 2015 | $ 63 | $ 135,839 | $ (120,621) | $ (13,754) | $ 1,527 |
Beginning Balance (in shares) at Dec. 31, 2015 | 6,263,975 | 1,005,092 | |||
Net (loss) income | (359) | (359) | |||
Stock based compensation | 449 | 449 | |||
Issuance of shares - stock purchase, shares | 3,750,000 | ||||
Issuance of shares - stock purchase, value | $ 37 | 2,700 | 2,737 | ||
Costs of stock purchase | (201) | $ (201) | |||
Issuance of shares - option exercises, shares | 12,161 | 12,161 | |||
Issuance of shares - option exercises, value | 7 | $ 7 | |||
Purchase of common stock for treasury, shares | 10,401 | ||||
Purchase of common stock for treasury, value | $ (10) | (10) | |||
Ending Balance at Dec. 31, 2016 | $ 100 | 138,794 | (120,980) | $ (13,764) | 4,150 |
Ending Balance (in shares) at Dec. 31, 2016 | 10,026,136 | 1,015,493 | |||
Net (loss) income | 582 | 582 | |||
Stock based compensation | 41 | 41 | |||
Costs of stock purchase | (25) | $ (25) | |||
Issuance of shares - option exercises, shares | 352,839 | 352,839 | |||
Issuance of shares - option exercises, value | $ 4 | 212 | $ 216 | ||
Ending Balance at Dec. 31, 2017 | $ 104 | $ 139,022 | $ (120,398) | $ (13,764) | $ 4,964 |
Ending Balance (in shares) at Dec. 31, 2017 | 10,378,975 | 1,015,493 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Operating Activities | ||
Net income (loss) | $ 582 | $ (359) |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||
Depreciation | 81 | 85 |
Provision for (recovery of) bad debts | 2 | (21) |
Stock based compensation | 41 | 449 |
Provision for excess and obsolete inventories | (31) | 365 |
Loss on disposal of equipment | 2 | 6 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (527) | 71 |
Inventories | 13 | (35) |
Prepaid expenses and other current assets | (8) | (10) |
Accounts payable | 201 | (28) |
Accrued liabilities | 7 | (1) |
Net cash provided by operating activities | 363 | 522 |
Investing Activities | ||
Purchases of equipment | (107) | (136) |
Net cash used in investing activities | (107) | (136) |
Financing Activities | ||
Proceeds from stock option exercises | 216 | 7 |
Proceeds from stock purchase | 0 | 2,737 |
Costs of stock purchase | (25) | (201) |
Purchases of common stock for treasury | 0 | (10) |
Net cash provided by financing activities | 191 | 2,533 |
Increase in cash | 447 | 2,919 |
Cash - beginning of period | 3,381 | 462 |
Cash - end of period | $ 3,828 | $ 3,381 |
1. Nature of Operations
1. Nature of Operations | 12 Months Ended |
Dec. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Nature of Operations | Description of Business Mechanical Technology, Incorporated (MTI or the Company), a New York corporation, was incorporated in 1961. The Company’s core business is conducted through MTI Instruments, Inc. (MTI Instruments), its wholly-owned subsidiary. MTI Instruments was incorporated in New York on March 8, 2000 and is a supplier of precision linear displacement solutions, vibration measurement and system balancing systems, and wafer inspection tools, consisting of electronic gauging instruments for position, displacement and vibration application within the industrial manufacturing/production markets, as well as the research, design and process development market; tensile stage systems for materials testing at academic and industrial research settings; and engine vibration analysis systems for both military and commercial aircraft. These tools, systems and solutions are developed for markets and applications that require the precise measurements and control of products, processes, and the development and implementation of automated manufacturing, assembly, and consistent operation of complex machinery. Liquidity The Company has historically incurred significant losses primarily due to its past efforts to fund direct methanol fuel cell product development and commercialization programs, and had a consolidated accumulated deficit of approximately $120.4 million as of December 31, 2017. As of December 31, 2017, the Company had working capital of approximately $4.8 million, no debt, $17 thousand in outstanding commitments for capital expenditures, and approximately $3.8 million of cash available to fund our operations. Based on the Company’s projected cash requirements for operations and capital expenditures, its current available cash of approximately $3.8 million and its projected 2018 cash flow pursuant to management’s plans, management believes it will have adequate resources to fund operations and capital expenditures for the year ending December 31, 2018 and through the end of the first quarter of 2019. If cash generated from operations is insufficient to satisfy the Company’s operational working capital and capital expenditure requirements, the Company may be required to obtain credit facilities, if available, to fund these initiatives. The Company has no other formal commitments for funding future needs of the organization at this time and any additional financing during 2018, if required, may not be available to us on acceptable terms or at all. |
2. Accounting Policies
2. Accounting Policies | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Accounting Policies | Principles of Consolidation The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, MTI Instruments. All intercompany balances and transactions are eliminated in consolidation. Use of Estimates The consolidated financial statements of the Company have been prepared in accordance with United States of America Generally Accepted Accounting Principles (U.S. GAAP), which require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Fair Value of Financial Instruments The Company’s financial instruments consist of cash, accounts receivable and accounts payable. The estimated fair values of these financial instruments approximate their carrying values at December 31, 2017 and 2016. The estimated fair values have been determined through information obtained from market sources, where available. Accounts Receivable and Allowance for Doubtful Accounts Trade accounts receivable are stated at the invoiced amount billed to customers and do not bear interest. An allowance for doubtful accounts, if necessary, represents the Company’s best estimate of the amount of probable credit losses in its existing accounts receivable. The Company determines the allowance based on historical write-off experience and current exposures identified. The Company reviews its allowance for doubtful accounts monthly. Past due balances over 90 days and over a specified amount are reviewed individually for collectability. All other balances are reviewed on a pooled basis by type of receivable. Account balances are charged off against the allowance when the Company believes it is probable the receivable will not be recovered. The Company does not have any off-balance-sheet credit exposure related to its customers. Inventories Inventories are valued at the lower of cost (first-in, first-out) or net realizable value. The Company provides estimated inventory allowances for excess, slow moving and obsolete inventory as well as inventory whose carrying value is in excess of net realizable value. Property, Plant, and Equipment Property, plant and equipment are stated at cost and depreciated using the straight-line method over their estimated useful lives as follows: Leasehold improvements Lesser of the life of the lease or the useful life of the improvement Computers and related software 3 to 5 years Machinery and equipment 3 to 10 years Office furniture, equipment and fixtures 2 to 10 years Significant additions or improvements extending assets’ useful lives are capitalized; normal maintenance and repair costs are expensed as incurred. The costs of fully depreciated assets remaining in use are included in the respective asset and accumulated depreciation accounts. When items are sold or retired, related gains or losses are included in net (loss) income. Income Taxes Deferred tax assets and liabilities are recognized for temporary differences between financial statement and income tax bases of assets and liabilities, loss carryforwards, and tax credit carryforwards, for which income tax benefits are expected to be realized in future years. A valuation allowance has been established to reduce deferred tax assets, if it is more likely than not that all, or some portion, of such deferred tax assets will not be realized. The effect on deferred taxes of a change in tax rates is recognized in the period that includes the enactment date. The Company accounts for uncertain tax positions in accordance with accounting standards that address income taxes. The Company must recognize in its financial statements the impact of a tax position, if that position is more likely than not to be sustained on an audit, based on the technical merits of the position. Equity Method Investments The Company’s consolidated net income (loss) will include our proportionate share, if any, of the net income or loss of our equity method investee. When the Company records its proportionate share of net income, it increases equity income (loss), net in our consolidated statements of operations and our carrying value in that investment. Conversely, when the Company records its proportionate share of a net loss, it decreases equity income (loss), net in our consolidated statements of operations and our carrying value in that investment. The Company’s proportionate share of the net income or loss of our equity method investee includes significant operating and non-operating items recorded by our equity method investee. These items can have a significant impact on the amount of equity income (loss), net in our consolidated statements of operations and our carrying value in that investment. The carrying value of our equity method investment is also impacted by our proportionate share of items impacting the equity investee’s accumulated other comprehensive income, if any. When the Company’s carrying value in an equity method investee company has been reduced to zero, no further losses are recorded in the Company’s financial statements unless the Company guaranteed obligations of the investee company or has committed additional funding. When the investee company subsequently reports income, the Company will not record its share of such income until it equals the amount of its share of losses not previously recognized. Fair Value Measurement The estimated fair value of certain financial instruments, including cash and short-term debt approximates their carrying value due to their short maturities and varying interest rates. “Fair value” is the price that would be received to sell an asset or transfer a liability in an orderly transaction between market participants at the measurement date. The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. Based on the observability of the inputs used in the valuation methods, the Company is required to provide the following information according to the fair value accounting standards. These standards established a fair value hierarchy as specified that ranks the quality and reliability of the information used to determine fair values. Financial assets and liabilities are classified and disclosed in one of the following three categories: Level 1: Quoted market prices in active markets for identical assets or liabilities, which includes listed equities. Level 2: Observable market based inputs or unobservable inputs that are corroborated by market data. These items are typically priced using models or other valuation techniques. These models are primarily financial industry-standard models that consider various assumptions, including the time value of money, yield curves, volatility factors, as well as other relevant economic measures. Level 3: These use unobservable inputs that are not corroborated by market data. These values are generally estimated based upon methodologies utilizing significant inputs that are generally less observable from objective sources. Product Revenue Product revenue is recognized when there is persuasive evidence of an arrangement, the collection of a fixed fee is probable or determinable, and delivery of the product to the customer or distributor has occurred, at which time title generally is passed to the customer or distributor. All of these generally occur upon shipment of the product. If the product requires specific customer acceptance criteria, such as on-site customer acceptance and/or acceptance after install, then revenue is deferred until customer acceptance occurs or the acceptance provisions lapse, unless the Company can objectively and reliably demonstrate that the criteria specified in the acceptance provisions is satisfied. MTI Instruments currently has distributor agreements in place for the international sale of general instrument and semiconductor products in certain global regions. Such agreements grant a distributor the right of first refusal to act as distributor for such products in the distributor’s territory. In return, the distributor agrees to not market other products which are considered by MTI Instruments to be in direct competition with MTI Instruments’ products. The distributor is allowed to purchase MTI Instruments’ equipment at a price which is discounted off the published domestic/international list prices. Such list prices can be adjusted by MTI Instruments during the term of the distributor agreement. Generally, payment terms with the distributor are standard net 30 days; however, on occasion, extended payment terms have been granted. Title and risk of loss of the product passes to the distributor upon delivery to the independent carrier (standard “free-on-board” factory), and the distributor is responsible for any required training and/or service with the end-user. The sale (and subsequent payment) between MTI Instruments and the distributor is not contingent upon the successful resale of the product by the distributor. Distributor sales are covered by MTI Instruments’ standard one-year warranty and there are no special return policies for distributors. Cost of Product Revenue Cost of product revenue includes material, labor, overhead and shipping and handling costs. Deferred Revenue Deferred revenue consists of billings to customers in advance of services performed, completed installation or customer acceptance. As of December 31, 2017 and 2016, the Company had no deferred revenue. Warranty The Company accrues a warranty liability at the time product revenue is recorded based on historical experience. The liability is reviewed during the year and is adjusted, if appropriate, to reflect new product offerings or changes in experience. Actual warranty claims are tracked by product line. Warranty liability was $14 thousand and $14 thousand at December 31, 2017 and 2016, respectively. Warranty expense was $13 thousand and $5 thousand for 2017 and 2016, respectively. Long-Lived Assets The Company accounts for impairment or disposal of long-lived assets in accordance with accounting standards that address the financial accounting and reporting for the impairment or disposal of long-lived assets, specify how impairment will be measured, and how impaired assets will be classified in the consolidated financial statements. On a quarterly basis, the Company analyzes the status of its long-lived assets at each subsidiary for potential impairment. As of December 31, 2017, the Company does not believe that any of its long-lived assets have suffered any type of impairment that would require an adjustment to that asset’s recorded value. Cash and Cash Equivalents Cash and cash equivalents consist of cash and highly liquid short-term investments with original maturities of less than three months. Net Income (Loss) per Share The Company computes basic income (loss) per common share by dividing net income (loss) by the weighted average number of common shares outstanding during the reporting period. Diluted income (loss) per share reflects the potential dilution, if any, computed by dividing income (loss) by the combination of dilutive common share equivalents, comprised of shares issuable under outstanding investment rights, warrants and the Company’s share-based compensation plans, and the weighted average number of common shares outstanding during the reporting period. Dilutive common share equivalents include the dilutive effect of in-the-money stock options, which are calculated based on the average share price for each period using the treasury stock method. Under the treasury stock method, the exercise price of a stock option, the amount of compensation cost, if any, for future service that the Company has not yet recognized, and the amount of windfall tax benefits that would be recorded in additional paid-in capital for the periods presented prior to the adoption of accounting standard update 2016-09 on January 1, 2017, if any, when the stock option is exercised are assumed to be used to repurchase shares in the current period. Share-Based Payments The Company accounts for stock based awards exchanged for employee service in accordance with the share-based payment accounting guidance. Stock-based compensation represents the cost related to stock-based awards granted to employees and directors. The Company measures stock-based compensation cost at grant date based on the estimated fair value of the award, and recognizes the cost as expense on a straight-line basis in accordance with the vesting of the options (net of estimated forfeitures) over the option’s requisite service period. The Company estimates the fair value of stock-based awards using a Black Scholes valuation model. Stock-based compensation expense is recorded in the lines titled “Cost of product revenue,” “Selling, general and administrative expenses” and “Research and product development expenses” in the Consolidated Statements of Operations based on the employees’ respective functions. The Company records deferred tax assets for awards that potentially can result in deductions on the Company’s income tax returns based on the amount of compensation cost that would be recognized upon issuance of the award and the Company’s statutory tax rate. Differences between the deferred tax assets recognized for financial reporting purposes and the actual tax deduction reported on the Company’s income tax return are recorded in Additional Paid-In Capital (if the tax deduction exceeds the deferred tax asset) or in the Consolidated Statement of Operations (if the deferred tax asset exceeds the tax deduction and no historical pool of windfall tax benefits exists). Since the adoption of the revised accounting standard on share-based payments, no tax benefits have been recognized related to share-based compensation since the Company has established a full valuation allowance to offset all potential tax benefits associated with these deferred tax assets. Concentration of Credit Risk Financial instruments that subject the Company to concentrations of credit risk principally consist of cash equivalents and trade accounts receivable. The Company’s trade accounts receivable are primarily from sales to commercial customers, the U.S. government and state agencies. The Company does not require collateral and has not historically experienced significant credit losses related to receivables from individual customers or groups of customers in any particular industry or geographic area. In 2017 and 2016, approximately 40.5% and 32.3%, respectively, of our product revenues was from customers outside of the United States. The Company has cash deposits in excess of federally insured limits, but does not believe them to be at risk. Research and Development Costs The Company expenses research and development costs as incurred. The Company incurred research and development costs of approximately $1.1 million and $1.2 million, which was entirely related to MTI Instruments, for the years ended December 31, 2017 and 2016, respectively. Advertising Costs The Company expenses advertising costs as incurred. The Company incurred advertising costs of approximately $37 and $22 thousand, which was entirely related to MTI Instruments, for the years ended December 31, 2017 and 2016, respectively. Other Comprehensive Income The Company had no other comprehensive income (loss) items for the years ended December 31, 2017 and 2016. Effect of Recent Accounting Standards or Updates Not Yet Effective Changes to U.S. GAAP are established by the Financial Accounting Standards Board (the FASB) in the form of accounting standard updates (ASUs) to the FASB’s Accounting Standards Codification (ASC). The Company considered the applicability and impact of all ASUs. ASUs not mentioned below were assessed and determined to be either not applicable or are expected to have minimal impact on our consolidated financial position or results of operations. In May 2014, the FASB issued ASU 2014-09 (Revenue from Contracts with Customers (Topic 606)) and issued subsequent amendments to the initial guidance in August 2015, March 2016, April 2016, May 2016 and December 2016 within ASU 2015-14, ASU 2016-08, ASU 2016-10, ASU 2016-12 and ASU 2016-20, respectively (collectively, Topic 606) to clarify the principles for recognizing revenue and to develop a common revenue standard for U.S. GAAP and International Financial Reporting Standards. Topic 606 supersedes nearly all existing revenue recognition guidance under U.S. GAAP. Topic 606 is principles-based and provides a five-step model to determine when and how revenue is recognized. It is possible more judgment and estimates may be required within the revenue recognition process than are required under existing U.S. GAAP. The core principle is that a company should recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. To achieve that core principle, an entity should apply the following steps: Step 1: Identify the contract(s) with a customer. Step 2: Identify the performance obligations in the contract. Step 3: Determine the transaction price. Step 4: Allocate the transaction price to the performance obligations in the contract. Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation. Topic 606 also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. This standard, as amended, will be effective for the Company for annual and interim reporting periods beginning after December 15, 2017. The Company will adopt this standard in fiscal 2018. There will not be a material impact on our consolidated financial statements. In January 2016, the FASB issued ASU 2016-01 (Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Liabilities) the main objective of which is to enhance the reporting model for financial instruments to provide users of financial statements with more decision-useful information and address certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. This standard will be effective for the Company for annual and interim reporting periods beginning on or after December 15, 2017. The Company will adopt this standard in fiscal 2018. There will not be a material impact on our consolidated financial statements. In February 2016, the FASB issued ASU 2016-02 (Leases (Topic 842)), which requires lessees to recognize a right-of-use asset and a lease liability on their balance sheet for virtually all of their leases (other than leases that meet the definition of a short-term lease). The lease liability will be equal to the present value of lease payments and the right-of-use asset will be based on the lease liability, subject to adjustment such as for initial direct costs. For income statement purposes, this standard retains a dual model similar to ASC 840, requiring leases to be classified as either operating or finance. For lessees, operating leases will result in straight-line expense (similar to current accounting by lessees for operating leases under ASC 840) while finance leases will result in a front-loaded expense pattern (similar to current accounting by lessees for capital leases under ASC 840). While this standard maintains similar accounting for lessors as under ASC 840, this standard reflects updates to, among other things, align with certain changes to the lessee model. This standard will be effective for the Company for annual and interim reporting periods beginning on or after December 15, 2018, and early adoption is permitted. Although we have not completed our assessment, we believe adoption of this standard may have a significant impact on our consolidated balance sheets. However, we do not expect the adoption to change the recognition, measurement or presentation of lease expense within our consolidated statements of operations or the consolidated statements of cash flows. We currently expect that most of our operating lease commitments will be subject to the new standard and recognized as operating lease liabilities and right-of-use assets upon our adoption of the standard, which will increase our total assets and total liabilities that we report relative to such amounts prior to adoption. Information about our undiscounted future lease payments and the timing of those payments is in Note 12, Commitments and Contingencies. In August 2016, the FASB issued ASU 2016-15 (Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments), which clarifies the treatment of several cash flow categories. In addition, ASU 2016-15 clarifies that when cash receipts and cash payments have aspects of more than one class of cash flows and cannot be separated, classification will depend on the predominant source or use. This standard will be effective for the Company for annual and interim reporting periods beginning after December 15, 2017. using a retrospective transition method to each period presented. In May 2017, the FASB issued ASU 2017-09 (Compensation-Stock Compensation (Topic 718): Scope of Modification Accounting), which provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. This standard will be effective for the Company for annual and interim reporting periods beginning after December 15, 2017. The Company will adopt this standard in fiscal 2018 prospectively to an award modified on or after the adoption date. There will not be a material impact on our consolidated financial statements. Recently Adopted Accounting Standards On January 1, 2017, we adopted ASU 2015-11 (Inventory (Topic 330): Simplifying the Measurement of Inventory), which applies to inventory that is measured using first-in, first-out (FIFO) or average cost. As required by ASU 2015-11, we measure inventory that is within scope at the lower of cost and net realizable value, which is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. Subsequent measurement was unchanged for inventory that is measured using last-in, last-out (LIFO). The Company adopted this standard on a prospective basis. The adoption of this standard did not have a material impact on its consolidated financial statements. On January 1, 2017, we adopted ASU 2015-17 (Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes). The amendments in this standard require entities that present a classified balance sheet to classify all deferred tax liabilities and assets as a noncurrent amount. The requirement that deferred tax liabilities and assets of a tax-paying component of an entity be offset and presented as a single amount was not affected by the amendments in this standard. Additionally, the amendments in this standard align the deferred income tax presentation with the requirements in International Accounting Standards (IAS) 1 (Presentation of Financial Statements). The Company adopted this standard on a prospective basis. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements as its deferred tax assets and liabilities are currently in a full valuation allowance. Prior periods were not retrospectively adjusted. On January 1, 2017, we adopted ASU 2016-09 (Compensation–Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting). As required by ASU 2016-09, all income tax effects of awards, including excess tax benefits, recognized on stock-based compensation expense are reflected in the consolidated statements of operations as a component of the provision for income taxes on a prospective basis. As required by ASU 2016-09, all tax related cash flows recognized on stock-based compensation expense are classified as an operating activity in our consolidated statements of cash flows on a prospective basis. Accordingly, prior periods have not been adjusted. Additionally, ASU 2016-09 allows companies to make a policy election to account for forfeitures either upon occurrence or by estimating forfeitures. We have elected to continue estimating forfeitures expected to occur in order to determine the amount of compensation cost to be recognized each period. See Note 6 for additional information. On January 1, 2017, we adopted ASU 2017-03 (Accounting Changes and Error Corrections (Topic 250) and Investments – Equity Method and Joint Ventures (Topic 323); Amendments to SEC Paragraphs Pursuant to Staff Announcements at the September 22, 2016 and November 17, 2016 Emerging Issues Task Force (EITF) Meetings (SEC Update)), which amends certain topics of the ASC as defined in this ASU and also adds an SEC paragraph and amends other topics pursuant to an SEC Staff Announcement made at the September 22, 2016 EITF meeting. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements. |
3. Accounts Receivable
3. Accounts Receivable | 12 Months Ended |
Dec. 31, 2017 | |
Receivables [Abstract] | |
Accounts Receivable | Accounts receivables consist of the following at December 31: (dollars in thousands) 2017 2016 U.S. and State Government $ 221 $ 103 Commercial 1,187 778 Allowance for doubtful accounts (2 ) – Total $ 1,406 $ 881 |
4. Inventories
4. Inventories | 12 Months Ended |
Dec. 31, 2017 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories consist of the following at December 31: (dollars in thousands) 2017 2016 Finished goods $ 214 $ 244 Work in process 174 143 Raw materials 306 289 Total $ 694 $ 676 |
5. Property, Plant and Equipmen
5. Property, Plant and Equipment | 12 Months Ended |
Dec. 31, 2017 | |
Property, Plant and Equipment [Abstract] | |
Property, Plant and Equipment | Property, plant and equipment consist of the following at December 31: (dollars in thousands) 2017 2016 Leasehold improvements $ 39 $ 39 Computers and related software 971 1,068 Machinery and equipment 881 892 Office furniture and fixtures 34 25 1,925 2,024 Less: Accumulated depreciation 1,741 1,864 $ 184 $ 160 Depreciation expense was $81 thousand and $85 thousand for 2017 and 2016, respectively. Repairs and maintenance expense was $13 thousand and $14 thousand for 2017 and 2016, respectively. |
6. Income Taxes
6. Income Taxes | 12 Months Ended |
Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | The 2017 Tax Act was signed into law on December 22, 2017 and significantly revises the U.S. corporate income tax regime by, among other things, lowering the statutory corporate tax rate from 35% to 21%, eliminating certain deductions, imposing a mandatory one-time tax on accumulated earnings of foreign subsidiaries, introducing new tax regimes and changing how foreign earnings are subject to U.S. tax. The 2017 Tax Act also enhanced and extended through 2026 the option to claim accelerated depreciation deductions on qualified property. The Company completed its determination of the accounting implications of the 2017 Tax Act on its tax accruals and reasonably estimated the effects of the 2017 Tax Act and recorded provisional amounts in its financial statements as of December 31, 2017. The Company recorded a $7.2 million adjustment with a corresponding full valuation allowance adjustment to our net deferred tax liabilities for the impact of the 2017 Tax Act. This amount is comprised of the remeasurement of federal net deferred tax liabilities resulting from the permanent reduction in the U.S. statutory corporate tax rate to 21% from 35%. As the Company interprets any additional guidance issued by the U.S. Treasury Department, the IRS, and other standard-setting bodies, the Company may make adjustments to the provisional amounts. Those adjustments may materially impact our provision for income taxes in the period in which the adjustments are made. The Company adopted the provisions of accounting standard update (ASU) 2016-09 as of the beginning of the current fiscal year, which required recognition through opening retained earnings of any pre-adoption date net operating loss (NOL) carryforwards from nonqualified stock options for excess tax benefits that were not previously recognized because the related tax deduction had not reduced taxes payable and other employee share-based payments, as well as recognition of all income tax effects from share-based payments arising on or after January 1, 2017 (our adoption date) in income tax expense. As a result, the Company recognized through opening retained earnings $1.3 million of pre-adoption date NOL carryforwards with remaining carryforward periods of more than 10 years (the corresponding deferred tax asset is $457 thousand). The Company recorded a full valuation allowance for this deferred tax asset. In addition, the Company realized windfall tax benefits of less than $1 thousand during the three months ended December 31, 2017 and September 30, 2017, shortfall tax expense of $19 thousand during the three months ended June 30, 2017 and windfall tax benefits of $2 thousand during the three months ended March 31, 2017, which the Company recognized as discrete period income benefits and tax, accordingly, as required by the ASU. Income tax benefit (expense) for each of the years ended December 31 consists of the following: (dollars in thousands) 2017 2016 Federal $ – $ 10 State (6 ) (1 ) Deferred – – Total $ (6 ) $ 9 The significant components of deferred income tax (expense) benefit from operations for each of the years ended December 31 consists of the following: (dollars in thousands) 2017 2016 Deferred tax (expense) benefit $ (380 ) $ 240 Net operating loss carry forward (6,550 ) (120 ) Valuation allowance 6,930 (120 ) $ – $ – The Company’s effective income tax rate from operations differed from the Federal statutory rate for each of the years ended December 31 as follows: 2017 2016 Federal statutory tax rate 34 % (34 )% Change in valuation allowance (1,179 ) 33 Change in tax rate 1,221 – Expiration of stock option 4 2 Prior year tax adjustments and other (2 ) (4 ) Stock option windfall benefit (78 ) – Other, net 1 1 Tax rate 1 % (2 )% Pre-tax income (loss) was $588 thousand and $(368) thousand for 2017 and 2016, respectively. Deferred Tax Assets: Deferred tax assets are determined based on the temporary differences between the financial statement and tax bases of assets and liabilities as measured by the enacted tax rates. Temporary differences, net operating loss carryforwards and tax credit carryforwards that give rise to deferred tax assets and liabilities are summarized as follows as of December 31: (dollars in thousands) 2017 2016 Deferred tax assets: Inventory valuation $ 61 $ 225 Inventory capitalization 1 2 Vacation pay 18 29 Warranty and other sale obligations 3 5 Allowance for related party note receivable 60 95 Other reserves and accruals – 24 Net operating loss 10,914 17,464 Property, plant and equipment (17 ) (17 ) Stock options 126 269 Research and development tax credit 450 450 Alternative minimum tax credit 54 54 11,670 18,600 Valuation allowance (11,670 ) (18,600 ) Net deferred tax assets $ – $ – As of December 31, 2017, the Company has approximately $450 thousand of research and development tax credit carry forwards, which begin to expire in 2018, and approximately $54 thousand of alternative minimum tax credit carry forwards, which have no expiration date. Valuation Allowance: The Company provides for recognition of deferred tax assets if the realization of such assets is more likely than not to occur in accordance with accounting standards that address income taxes. Significant management judgment is required in determining the period in which the reversal of a valuation allowance should occur. The Company has considered all available evidence, both positive and negative, such as historical levels of income and future forecasts of taxable income amongst other items, in determining its valuation allowance. In addition, the Company’s assessment requires us to schedule future taxable income in accordance with accounting standards that address income taxes to assess the appropriateness of a valuation allowance which further requires the exercise of significant management judgment. The Company has recorded a full valuation allowance at December 31, 2017 and December 31, 2016 for its deferred tax assets. We will continue to evaluate the ability to realize our deferred tax assets and related valuation allowance on a quarterly basis. The valuation allowance at December 31, 2017 and 2016 was $11.7 million and $18.6 million, respectively. Activity in the valuation allowance for deferred tax assets is as follows as of December 31: (dollars in thousands) 2017 2016 Valuation allowance, beginning of year $ 18,600 $ 18,480 Change in federal tax rate (7,170 ) – Allowance for accounts receivable – – Allowance for related party note receivable 4 (16 ) Inventory (124 ) 128 Net operating income (loss) 2 (120 ) Property, plant and equipment (13 ) (20 ) Stock options 395 149 Other reserves and accruals (24 ) (1 ) Valuation allowance, end of year $ 11,670 $ 18,600 Net operating losses : At December 31, 2017, the Company has unused Federal net operating loss carryforwards of approximately $52.0 million. Of these, approximately $737 thousand will expire in 2020, with the remainder expiring through 2037. The Company's and/or its subsidiaries’ ability to utilize their net operating loss carryforwards may be significantly limited by Section 382 of the IRC of 1986, as amended, if the Company or any of its subsidiaries undergoes an “ownership change” as a result of changes in the ownership of the Company's or its subsidiaries’ outstanding stock pursuant to the exercise of the warrants or otherwise. Unrecognized tax benefits: The unrecognized tax benefits in accordance with accounting standards that address income taxes at December 31, 2017 and 2016 was $1.2 million. These unrecognized tax benefits relate to former subsidiaries of the Company and a prior investment in a partnership. In future periods, if $1.2 million of these unrecognized benefits become supportable, the Company may not recognize a change in its effective tax rate as long as it remains in a partial valuation allowance position. Additionally, the Company does not have uncertain tax positions that it expects will increase or decrease within twelve months of this reporting date. The Company recognizes interest and penalties related to uncertain tax positions as a component of tax expense. The Company did not recognize any interest or penalties in 2017 and 2016. The Company files income tax returns, including returns for its subsidiaries, with federal and state jurisdictions. The Company is no longer subject to IRS or NYS examinations for its federal and state returns for any periods prior to 2014, although carryforward attributes that were generated prior to 2014 may still be adjusted upon examination by the IRS if they either have been or will be used in a future period. |
7. Accrued Liabilities
7. Accrued Liabilities | 12 Months Ended |
Dec. 31, 2017 | |
Payables and Accruals [Abstract] | |
Accrued Liabilities | Accrued liabilities consist of the following at December 31: (dollars in thousands) 2017 2016 Salaries, wages and related expenses $ 288 $ 223 Liability to shareholders for previous acquisition 363 363 Legal and professional fees 111 128 Warranty and other sale obligations 14 14 Commissions 44 27 Other 93 151 $ 913 $ 906 |
8. Stockholders' Equity
8. Stockholders' Equity | 12 Months Ended |
Dec. 31, 2017 | |
Equity [Abstract] | |
Stockholders' Equity | Common Stock The Company has one class of common stock, par value $.01. Each share of the Company’s common stock is entitled to one vote on all matters submitted to stockholders. As of December 31, 2017 and 2016 there were 9,363,482 and 9,010,643 shares of common stock issued and outstanding, respectively. Reservation of Shares The Company has reserved common shares for future issuance as follows as of December 31, 2017: Stock options outstanding 766,339 Common stock available for future equity awards or issuance of options 68,661 Number of common shares reserved 835,000 |
9. Retirement Plan
9. Retirement Plan | 12 Months Ended |
Dec. 31, 2017 | |
Retirement Benefits [Abstract] | |
9. Retirement Plan | The Company maintains a voluntary savings and retirement plan under IRC Section 401(k) covering substantially all employees. Employees must complete six months of service and have attained the age of twenty-one prior to becoming eligible for participation in the plan. The Company plan allows eligible employees to contribute a percentage of their compensation on a pre-tax basis and the Company matches employee contributions, on a discretionary basis, currently in an amount equal to 100% of the first 3% and 50% of the next 2% of the employee’s salary, subject to annual tax deduction limitations. Effective January 1, 2017, Company matching contributions are vested immediately. Company matching contributions were $83 thousand and $97 thousand for 2017 and 2016, respectively. The Company may also make additional discretionary contributions in amounts as determined by management and the Board of Directors. There were no additional discretionary contributions by the Company for the years 2017 or 2016. |
10. Income (Loss) per Share
10. Income (Loss) per Share | 12 Months Ended |
Dec. 31, 2017 | |
Earnings Per Share [Abstract] | |
Income (Loss) per Share | The following table sets forth the reconciliation of the numerators and denominators of the basic and diluted per share computations for continuing operations for the years ended December 31: (dollars in thousands, except shares) 2017 2016 Numerator: Net income (loss) $ 582 $ (359 ) Denominator: Basic EPS: Common shares outstanding, beginning of period 9,010,643 5,258,883 Weighted average common shares issued during the period 118,535 729,662 Denominator for basic earnings per common shares — Weighted average common shares 9,129,178 5,988,545 Diluted EPS: Common shares outstanding, beginning of period 9,010,643 5,258,883 Common stock equivalents – options 203,498 – Weighted average common shares issued during the period 118,535 729,662 Denominator for diluted earnings per common shares - Weighted average common shares 9,332,676 5,988,545 Not included in the computation of earnings per share, assuming dilution, for the year ended December 31, 2017, were options to purchase 271,589 shares of the Company’s common stock. These potentially dilutive items were excluded even though the average market price of the common stock exceeded the exercise prices for a portion of the options because the calculation of incremental shares resulted in an anti-dilutive effect. Not included in the computation of earnings per share-assuming dilution for the year ended December 31, 2016 were options to purchase 1,142,339 shares of the Company’s common stock. These potentially dilutive items were excluded because the Company incurred a loss during the periods and their inclusion would be anti-dilutive. |
11. Stock Based Compensation
11. Stock Based Compensation | 12 Months Ended |
Dec. 31, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock Based Compensation | Stock-based incentive awards are provided to employees and directors under the terms of the Company’s 2006 Equity Incentive Plan (2006 Plan), which was amended and restated effective June 30, 2011, September 16, 2009 and October 20, 2016, 2012 Equity Incentive Plan (the 2012 Plan), which was amended and restated as of October 20, 2016, and 2014 Equity Incentive Plan (the 2014 Plan) (collectively, the Plans). Awards under the Plans have generally included at-the-money options and restricted stock grants. Stock options are awards which allow holders to purchase shares of the Company’s common stock at a fixed price. Stock options issued to employees and non-employee members of the MTI Board of Directors generally vest at a rate of 25% on each of the first four anniversaries of the date of the award. Certain options granted may be fully or partially exercisable immediately, may vest on other than a four year schedule or vest upon attainment of specific performance criteria. Restricted stock awards generally vest one year after the date of grant; however, certain awards may vest immediately or vest upon attainment of specific performance criteria. Option exercise prices are generally equivalent to the closing market price of the Company’s common stock on the date of grant. Unexercised options generally terminate either seven or ten years after date of grant. The 2006 Plan was adopted by the Company’s Board of Directors on March 16, 2006 and approved by stockholders on May 18, 2006. The 2006 Plan was amended and restated by the Board of Directors effective September 16, 2009, June 30, 2011 and October 20, 2016. The September 16, 2009 amendment increased the initial aggregate number of 250,000 shares of common stock that may be awarded or issued to 600,000, the June 30, 2011 amendment increased the aggregate number of shares of common stock that may be awarded or issued under the 2006 Plan to 1,200,000, and the October 2016 amendment allowed for the award agreement or another agreement entered into between the Company and the award grantee to vary the method of exercise of options issued under the 2006 Plan and the provisions governing expiration of options or other awards under the 2006 Plan following termination of the award recipient. The number of shares that may be awarded under the 2006 Plan and awards outstanding has been adjusted for stock splits and other similar events. Under the 2006 Plan, the Board of Directors is authorized to issue stock options, stock appreciation rights, restricted stock, and other stock-based incentives to officers, employees and others. In connection with seeking stockholder approval of the 2012 Plan, the Company agreed not to make further awards under the 2006 Plan. The 2012 Plan was adopted by the Company’s Board of Directors on April 14, 2012 and approved by its stockholders on June 14, 2012. The 2012 Plan was amended and restated by the Board of Directors effective October 20, 2016. The October 2016 amendment allowed for the award agreement or another agreement entered into between the Company and the award grantee to vary the method of exercise of options issued under the 2012 Plan and an agreement entered into between the Company and the award grantee to vary the provisions governing expiration of options or other awards under the 2012 Plan following termination of the award recipient. The 2012 Plan provides an initial aggregate number of 600,000 shares of common stock that may be awarded or issued. The number of shares that may be awarded under the 2012 Plan and awards outstanding may be subject to adjustment on account of any recapitalization, reclassification, stock split, reverse stock split and other dilutive changes in our common stock. Under the 2012 Plan, the Board of Directors is authorized to issue stock options (incentive and nonqualified), stock appreciation rights, restricted stock, restricted stock units and other stock-based awards to employees, officers, directors, consultants and advisors of the Company and its subsidiaries. Incentive stock options may only be granted to employees of the Company and its subsidiaries. The 2014 Plan was adopted by the Company’s Board of Directors on March 12, 2014 and approved by its stockholders on June 11, 2014. The 2014 Plan provides an initial aggregate number of 500,000 shares of common stock that may be awarded or issued. The number of shares that may be awarded under the 2014 Plan and awards outstanding may be subject to adjustment on account of any stock dividend, spin-off, stock split, reverse stock split, split-up, recapitalization, reclassification, reorganization, combination or exchange of shares, merger, consolidation, liquidation, business combination, exchange of shares or the like. Under the 2014 Plan, the Board-appointed administrator of the 2014 Plan is authorized to issue stock options (incentive and nonqualified), stock appreciation rights, restricted stock, restricted stock units, phantom stock, performance awards and other stock-based awards to employees, officers and directors of, and other individuals providing bona fide services to or for, the Company or any affiliate of the Company. Incentive stock options may only be granted to employees of the Company and its subsidiaries. In connection with the sale of shares of common stock to Brookstone, the Company entered into an Option Exercise and Stock Transfer Restriction Agreement (collectively, the Option and Transfer Agreements) with its Chief Executive Officer, its Chief Financial Officer and each of its non-employee directors (collectively, the Insiders). The Option and Transfer Agreements amend the stock option grant agreements between the Company and each Insider with respect to an option granted under, and modify the terms of any option to purchase Common Stock held by each such Insider (collectively, Options) granted under, the Plans. The Option and Transfer Agreements restrict the aggregate amount of shares of Common Stock for which the Insiders may exercise Options during calendar years 2016, 2017, 2018 and 2019, and provide for a modified procedure for exercising Options in order to ensure the limit on the aggregate amount of Options that may be exercised in any such year is not exceeded. Such amendments and modifications also operate to, except with respect to the termination of Options in connection with an Insider’s termination of employment or service in connection with misconduct as described in the Option and Transfer Agreements, (i) remove all references to an expiration of the exercisability of such Options within a special, delineated time period following the termination of service to or employment by the Company, and (ii) provide that all vested Options are exercisable by the Insider until default expiration under the applicable Plan (i.e., ten years from the date of grant). If an Option and Transfer Agreement is terminated, the limitations on Option exercises described above will terminate, but the exercisability of the Insider’s vested Options until default expiration under the applicable Plan and stock option agreement (i.e., ten years from the date of grant) will survive indefinitely. No options were granted during 2017. During 2016, the Company granted options to purchase 261,000 shares of the Company’s common stock from the 2014 Plan, which generally vest 25% on each of the first four anniversaries of the date of the award. The exercise price of these options is $0.78 per share and was based on the closing market price of the Company’s common stock on the date of grant. Using a Black-Scholes Option Pricing Model, the weighted average fair value of these options is $0.74 per share and was estimated at the date of grant. During 2016, the Company granted options to purchase 2,000 shares of the Company’s common stock from the 2012 Plan, which generally vest 25% on each of the first four anniversaries of the date of the award. The exercise price of these options is $0.78 per share and was based on the closing market price of the Company’s common stock on the date of grant. Using a Black-Scholes Option Pricing Model, the weighted average fair value of these options is $0.74 per share and was estimated at the date of grant. Stock-based compensation expense for the years ended December 31, 2017 and 2016 was generated from stock option awards. Stock options are awards that allow holders to purchase shares of the Company’s common stock at a fixed price. Under the 2014 and 2012 Plans, stock options issued to employees generally vest 25% over four years. Options issued to non-employee members of the MTI Board of Directors generally vest 25% over four years. Certain options granted may be fully or partially exercisable immediately, may vest on other than a four year schedule or vest upon attainment of specific performance criteria. Restricted stock awards generally vest one year after the date of grant, although certain awards may vest immediately or vest upon attainment of specific performance criteria. Option exercise prices are generally equivalent to the closing market value price of the Company’s common stock on the date of grant. Unexercised options generally terminate ten years after date of grant. The Company estimates the fair value of stock options using a Black-Scholes valuation model. Key inputs and assumptions used to estimate the fair value of stock options include the grant price of the award, the expected option term, volatility of the Company’s stock, an appropriate risk-free rate, and the Company’s dividend yield. Estimates of fair value are not intended to predict actual future events or the value ultimately realized by employees who receive equity awards, and subsequent events are not indicative of the reasonableness of the original estimates of fair value made by the Company. The Company’s estimate of an expected option term was calculated in accordance with the simplified method for calculating the expected term assumption. The following table presents the weighted-average assumptions used for options granted under the 2014 Plan: 2016 Option term (years) 5.05 Volatility 171.91 % Risk-free interest rate 1.52 % Dividend yield 0 % Weighted-average fair value per option granted $ 0.74 The following table presents the weighted-average assumptions used for options granted under the 2012 Plan: 2016 Option term (years) 5.05 Volatility 171.91 % Risk-free interest rate 1.52 % Dividend yield 0 % Weighted-average fair value per option granted $ 0.74 Share-based compensation expense recognized in the Consolidated Statements of Operations is based on awards ultimately expected to vest, therefore, awards are reduced for estimated forfeitures. The revised accounting standard requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Total share-based compensation expense, related to all of the Company’s share-based awards, recognized for the years ended December 31, was comprised as follows: 2017 2016 (dollars in thousands, except eps) Cost of product revenue $ – $ 3 Research and product development 2 45 Selling, general and administrative 39 401 Share-based compensation expense $ 41 $ 449 Impact on basic EPS $ 0.00 $ 0.08 Impact on diluted EPS $ 0.00 $ 0.08 Total unrecognized compensation costs related to non-vested awards as of December 31, 2017 and December 31, 2016 is $4 thousand and $49 thousand, respectively, and is expected to be recognized over a weighted-average remaining vesting period of approximately 0.48 years and 1.04 years, respectively. Presented below is a summary of the Company’s stock option plans’ activity for the years ended December 31: 2017 2016 Shares under option, beginning 1,142,339 926,565 Granted – 263,000 Exercised (352,839 ) (12,161 ) Forfeited (10,000 ) (19,436 ) Expired/canceled (13,161 ) (15,629 ) Shares under option, ending 766,339 1,142,339 Options exercisable 748,839 1,043,214 Remaining shares available for granting of options 68,661 45,500 The weighted average exercise price for the Plans is as follows for each of the years ended December 31: 2017 2016 Shares under option, beginning $ 0.76 $ 0.77 Granted – $ 0.78 Exercised $ 0.61 $ 0.57 Forfeited $ 0.75 $ 0.89 Expired/canceled $ 1.08 $ 1.69 Shares under option, ending $ 0.82 $ 0.76 Options exercisable, ending $ 0.82 $ 0.75 The following table summarizes information for options outstanding and exercisable for the Plans as of December 31, 2017: Outstanding Options Options Exercisable Exercise Price Range Number Weighted Average Remaining Contractual Life Weighted Average Exercise Price Number Weighted Average Exercise Price $0.29 - $1.15 618,839 5.95 $ 0.73 601,339 $ 0.72 $1.16 - $1.40 147,500 6.62 $ 1.22 147,500 $ 1.22 766,339 6.08 $ 0.82 748,839 $ 0.82 The aggregate intrinsic value (i.e. the difference between the closing stock price and the price to be paid by the option holder to exercise the option) is $183 thousand for the Company’s outstanding options and $183 thousand for the exercisable options as of December 31, 2017. The amounts are based on the Company’s closing stock price of $1.01 as of December 31, 2017. There were no unvested restricted stock grants for the year ended December 31, 2017 and 2016. Non-vested options activity is as follows for the year ended December 31: 2017 Options 2017 Weighted Non-vested options balance, beginning January 1 99,125 $ 0.92 Non-vested options granted – – Vested options (71,625 ) $ 0.91 Non-vested options forfeited (10,000 ) $ 0.75 Non-vested options balance, ending December 31 17,500 $ 1.05 |
12. Commitments and Contingenci
12. Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Contingencies: Legal We are subject to legal proceedings, claims and liabilities which arise in the ordinary course of business. When applicable, we accrue for losses associated with legal claims when such losses are probable and can be reasonably estimated. These accruals are adjusted as additional information becomes available or circumstances change. Legal fees are charged to expense as they are incurred. Commitments: Leases The Company and its subsidiary lease certain manufacturing, laboratory and office facilities. The lease provides for the Company to pay its allocated share of insurance, taxes, maintenance and other costs of the leased property. Future minimum rental payments required under non-cancelable operating leases (with initial or remaining lease terms in excess of one year) as of December 31, 2017 are: $224 thousand in 2018; $209 thousand in 2019 and $3 thousand in 2020. As of December 31, 2017 and December 31, 2016, rent expense under all leases was $225 thousand and $231 thousand, respectively. Employment Agreement On May 5, 2017, the Company entered into an employment agreement with one employee. The agreement provides for an initial term ending December 31, 2018, and, unless either party provides written notice that the agreement will not be renewed, is renewed for an additional year on December 31, 2018 and each subsequent December 31; such non-renewal may be for any or for no stated reason. The agreement provides for certain payments upon termination of employment under certain circumstances. As of December 31, 2017, the Company’s potential minimum obligation to this employee was approximately $198 thousand. |
13. Related Party Transactions
13. Related Party Transactions | 12 Months Ended |
Dec. 31, 2017 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | MeOH Power, Inc. The Company records its investment in MeOH Power, Inc. using the equity method of accounting. The fair value of the Company’s interest in MeOH Power, Inc. has been determined to be $0 as of December 31, 2017 and December 31, 2016, based on MeOH Power, Inc.’s net position and expected cash flows. As of December 31, 2017, the Company retained its ownership of approximately 47.5% of MeOH Power, Inc.’s outstanding common stock, or 75,049,937 shares. The number of shares of MeOH Power, Inc.’s common stock authorized for issuance is 240,000,000 as of December 31, 2017. The Company previously held warrants to purchase 31,904,136 shares of common stock of MeOH Power, Inc., which expired in December 2016. On December 18, 2013, MeOH Power, Inc. and the Company executed a Senior Demand Promissory Note (the Note) in the amount of $380 thousand to secure the intercompany amounts due to the Company from MeOH Power, Inc. upon the deconsolidation of MeOH Power, Inc. Interest accrues on the Note at the Prime Rate in effect on the first business day of the month, as published in the Wall Street Journal. At the Company’s option, all or part of the principal and interest due on this Note may be converted to shares of common stock of MeOH Power, Inc. at a rate of $0.07 per share. Interest began accruing on January 1, 2014. At December 31, 2013, the Company recorded a full allowance against the Note. In 2014, $115 thousand was received from MeOH Power, Inc. in principle and interest and an additional $20 thousand was released from the allowance in advance of a January 2015 payment from MeOH Power, Inc. As of December 31, 2017 and December 31, 2016, $285 thousand and $275 thousand, respectively, of principal and interest are available to convert into shares of common stock of MeOH Power, Inc. Any adjustments to the allowance are recorded as miscellaneous expense during the period incurred. Legal Services During the years ended December 31, 2017 and December 31, 2016, the Company incurred $10 thousand and $80 thousand, respectively, to Couch White, LLP for legal services associated with contract review. A partner at Couch White, LLP is an immediate family member of one of our Directors. |
14. Geographic and Segment Info
14. Geographic and Segment Information | 12 Months Ended |
Dec. 31, 2017 | |
Segment Reporting [Abstract] | |
Geographic and Segment Information | The Company sells its products on a worldwide basis with its principal markets listed in the table below where information on product revenue is summarized by geographic area for the Company as a whole for each of the years ended December 31: (dollars in thousands) 2017 2016 Product revenue: United States $ 4,200 $ 4,774 Association of South East Asian Nations (ASEAN) 1,710 1,368 Europe, the Middle East and Africa (EMEA) 1,024 659 North America 123 205 South America 4 50 Total product revenue $ 7,061 $ 7,056 Revenues are attributed to regions based on the location of customers. In 2017 and 2016, approximately 40.5% and 32.3%, respectively, of our product revenues was from customers outside of the United States. Long-lived assets of $184 thousand and $160 thousand at December 31, 2017 and 2016, respectively consist of property, plant and equipment all located within the United States. At MTI Instruments, the largest commercial customer in 2017 was a manufacturer of semiconductor equipment in Asia, which accounted for 10.0% of total product revenue. In 2016, the largest commercial customer was an Asian distributor of our general instrumentation products, who accounted for 8.1% of total product revenue. The U.S. Air Force continues to be the largest government customer, accounting for 20.1% and 18.1% of total product revenue in 2017 and 2016, respectively. The Company operates in one segment and therefore segment information is not presented. |
15. Debt
15. Debt | 12 Months Ended |
Dec. 31, 2017 | |
Debt Disclosure [Abstract] | |
Debt | During the first quarter of 2016, we entered into discussions with Bank of America, N.A. (the Bank) to strengthen the Company’s then-existing lines of credit and re-align their terms to be more consistent with our current business plan. During such discussions, the Bank informed the Company that based on its results for 2015 it was not in compliance with certain financial covenants of the lines. Since an agreement on new covenants could not be reached, the Company decided that the lines of credit could not be utilized and therefore terminated them on March 24, 2016. There were no amounts outstanding under the credit facilities at the time of cancellation. |
16. Subsequent Events
16. Subsequent Events | 12 Months Ended |
Dec. 31, 2017 | |
Subsequent Events [Abstract] | |
16. Subsequent Events | On March 19, 2018, the Company filed a Form 15 with the Securities and Exchange Commission (“SEC”) terminating the registration of MTI’s common stock, par value $0.01 per share (the “Common Stock”), thereby suspending its obligations to file periodic and current reports and other filings with the SEC, including annual reports on Form 10-K and quarterly reports on Form 10-Q for years beginning after December 31, 2017. The deregistration of the Common Stock is expected to result in significant cost savings to MTI in the near term from the elimination of complying with SEC reporting requirements. Also, the deregistration of the Common Stock will allow the Company to avoid the substantial additional costs associated with the compliance and auditing requirements of the Securities Exchange Act of 1934, as amended, and to focus its resources on increasing long-term growth. Although it will not be required to do so, following deregistration MTI plans to continue to provide stockholders with annual audited financial statements and quarterly unaudited financial statements through the OTC Markets Group website. |
2. Accounting Policies (Policie
2. Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Principles of Consolidation | Principles of Consolidation The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, MTI Instruments. All intercompany balances and transactions are eliminated in consolidation. |
Use of Estimates | Use of Estimates The consolidated financial statements of the Company have been prepared in accordance with United States of America Generally Accepted Accounting Principles (U.S. GAAP), which require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The Company’s financial instruments consist of cash, accounts receivable and accounts payable. The estimated fair values of these financial instruments approximate their carrying values at December 31, 2017 and 2016. The estimated fair values have been determined through information obtained from market sources, where available. |
Accounts Receivable and Allowance for Doubtful Accounts | Accounts Receivable and Allowance for Doubtful Accounts Trade accounts receivable are stated at the invoiced amount billed to customers and do not bear interest. An allowance for doubtful accounts, if necessary, represents the Company’s best estimate of the amount of probable credit losses in its existing accounts receivable. The Company determines the allowance based on historical write-off experience and current exposures identified. The Company reviews its allowance for doubtful accounts monthly. Past due balances over 90 days and over a specified amount are reviewed individually for collectability. All other balances are reviewed on a pooled basis by type of receivable. Account balances are charged off against the allowance when the Company believes it is probable the receivable will not be recovered. The Company does not have any off-balance-sheet credit exposure related to its customers. |
Inventories | Inventories Inventories are valued at the lower of cost (first-in, first-out) or net realizable value. The Company provides estimated inventory allowances for excess, slow moving and obsolete inventory as well as inventory whose carrying value is in excess of net realizable value. |
Property, Plant, and Equipment | Property, Plant, and Equipment Property, plant and equipment are stated at cost and depreciated using the straight-line method over their estimated useful lives as follows: Leasehold improvements Lesser of the life of the lease or the useful life of the improvement Computers and related software 3 to 5 years Machinery and equipment 3 to 10 years Office furniture, equipment and fixtures 2 to 10 years Significant additions or improvements extending assets’ useful lives are capitalized; normal maintenance and repair costs are expensed as incurred. The costs of fully depreciated assets remaining in use are included in the respective asset and accumulated depreciation accounts. When items are sold or retired, related gains or losses are included in net (loss) income. |
Income Taxes | Income Taxes Deferred tax assets and liabilities are recognized for temporary differences between financial statement and income tax bases of assets and liabilities, loss carryforwards, and tax credit carryforwards, for which income tax benefits are expected to be realized in future years. A valuation allowance has been established to reduce deferred tax assets, if it is more likely than not that all, or some portion, of such deferred tax assets will not be realized. The effect on deferred taxes of a change in tax rates is recognized in the period that includes the enactment date. The Company accounts for uncertain tax positions in accordance with accounting standards that address income taxes. The Company must recognize in its financial statements the impact of a tax position, if that position is more likely than not to be sustained on an audit, based on the technical merits of the position. |
Equity Method Investments | Equity Method Investments The Company’s consolidated net income (loss) will include our proportionate share, if any, of the net income or loss of our equity method investee. When the Company records its proportionate share of net income, it increases equity income (loss), net in our consolidated statements of operations and our carrying value in that investment. Conversely, when the Company records its proportionate share of a net loss, it decreases equity income (loss), net in our consolidated statements of operations and our carrying value in that investment. The Company’s proportionate share of the net income or loss of our equity method investee includes significant operating and non-operating items recorded by our equity method investee. These items can have a significant impact on the amount of equity income (loss), net in our consolidated statements of operations and our carrying value in that investment. The carrying value of our equity method investment is also impacted by our proportionate share of items impacting the equity investee’s accumulated other comprehensive income, if any. When the Company’s carrying value in an equity method investee company has been reduced to zero, no further losses are recorded in the Company’s financial statements unless the Company guaranteed obligations of the investee company or has committed additional funding. When the investee company subsequently reports income, the Company will not record its share of such income until it equals the amount of its share of losses not previously recognized. |
Fair Value Measurement | Fair Value Measurement The estimated fair value of certain financial instruments, including cash and short-term debt approximates their carrying value due to their short maturities and varying interest rates. “Fair value” is the price that would be received to sell an asset or transfer a liability in an orderly transaction between market participants at the measurement date. The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. Based on the observability of the inputs used in the valuation methods, the Company is required to provide the following information according to the fair value accounting standards. These standards established a fair value hierarchy as specified that ranks the quality and reliability of the information used to determine fair values. Financial assets and liabilities are classified and disclosed in one of the following three categories: Level 1: Quoted market prices in active markets for identical assets or liabilities, which includes listed equities. Level 2: Observable market based inputs or unobservable inputs that are corroborated by market data. These items are typically priced using models or other valuation techniques. These models are primarily financial industry-standard models that consider various assumptions, including the time value of money, yield curves, volatility factors, as well as other relevant economic measures. Level 3: These use unobservable inputs that are not corroborated by market data. These values are generally estimated based upon methodologies utilizing significant inputs that are generally less observable from objective sources. |
Product Revenue | Product Revenue Product revenue is recognized when there is persuasive evidence of an arrangement, the collection of a fixed fee is probable or determinable, and delivery of the product to the customer or distributor has occurred, at which time title generally is passed to the customer or distributor. All of these generally occur upon shipment of the product. If the product requires specific customer acceptance criteria, such as on-site customer acceptance and/or acceptance after install, then revenue is deferred until customer acceptance occurs or the acceptance provisions lapse, unless the Company can objectively and reliably demonstrate that the criteria specified in the acceptance provisions is satisfied. MTI Instruments currently has distributor agreements in place for the international sale of general instrument and semiconductor products in certain global regions. Such agreements grant a distributor the right of first refusal to act as distributor for such products in the distributor’s territory. In return, the distributor agrees to not market other products which are considered by MTI Instruments to be in direct competition with MTI Instruments’ products. The distributor is allowed to purchase MTI Instruments’ equipment at a price which is discounted off the published domestic/international list prices. Such list prices can be adjusted by MTI Instruments during the term of the distributor agreement. Generally, payment terms with the distributor are standard net 30 days; however, on occasion, extended payment terms have been granted. Title and risk of loss of the product passes to the distributor upon delivery to the independent carrier (standard “free-on-board” factory), and the distributor is responsible for any required training and/or service with the end-user. The sale (and subsequent payment) between MTI Instruments and the distributor is not contingent upon the successful resale of the product by the distributor. Distributor sales are covered by MTI Instruments’ standard one-year warranty and there are no special return policies for distributors. |
Cost of Product Revenue | Cost of Product Revenue Cost of product revenue includes material, labor, overhead and shipping and handling costs. |
Deferred Revenue | Deferred Revenue Deferred revenue consists of billings to customers in advance of services performed, completed installation or customer acceptance. As of December 31, 2017 and 2016, the Company had no deferred revenue. |
Warranty | Warranty The Company accrues a warranty liability at the time product revenue is recorded based on historical experience. The liability is reviewed during the year and is adjusted, if appropriate, to reflect new product offerings or changes in experience. Actual warranty claims are tracked by product line. Warranty liability was $14 thousand and $14 thousand at December 31, 2017 and 2016, respectively. Warranty expense was $13 thousand and $5 thousand for 2017 and 2016, respectively. |
Long-Lived Assets | Long-Lived Assets The Company accounts for impairment or disposal of long-lived assets in accordance with accounting standards that address the financial accounting and reporting for the impairment or disposal of long-lived assets, specify how impairment will be measured, and how impaired assets will be classified in the consolidated financial statements. On a quarterly basis, the Company analyzes the status of its long-lived assets at each subsidiary for potential impairment. As of December 31, 2017, the Company does not believe that any of its long-lived assets have suffered any type of impairment that would require an adjustment to that asset’s recorded value. |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents consist of cash and highly liquid short-term investments with original maturities of less than three months. |
Net Income (Loss) per Share | Net Income (Loss) per Share The Company computes basic income (loss) per common share by dividing net income (loss) by the weighted average number of common shares outstanding during the reporting period. Diluted income (loss) per share reflects the potential dilution, if any, computed by dividing income (loss) by the combination of dilutive common share equivalents, comprised of shares issuable under outstanding investment rights, warrants and the Company’s share-based compensation plans, and the weighted average number of common shares outstanding during the reporting period. Dilutive common share equivalents include the dilutive effect of in-the-money stock options, which are calculated based on the average share price for each period using the treasury stock method. Under the treasury stock method, the exercise price of a stock option, the amount of compensation cost, if any, for future service that the Company has not yet recognized, and the amount of windfall tax benefits that would be recorded in additional paid-in capital for the periods presented prior to the adoption of accounting standard update 2016-09 on January 1, 2017, if any, when the stock option is exercised are assumed to be used to repurchase shares in the current period. |
Share-Based Payments | Share-Based Payments The Company accounts for stock based awards exchanged for employee service in accordance with the share-based payment accounting guidance. Stock-based compensation represents the cost related to stock-based awards granted to employees and directors. The Company measures stock-based compensation cost at grant date based on the estimated fair value of the award, and recognizes the cost as expense on a straight-line basis in accordance with the vesting of the options (net of estimated forfeitures) over the option’s requisite service period. The Company estimates the fair value of stock-based awards using a Black Scholes valuation model. Stock-based compensation expense is recorded in the lines titled “Cost of product revenue,” “Selling, general and administrative expenses” and “Research and product development expenses” in the Consolidated Statements of Operations based on the employees’ respective functions. The Company records deferred tax assets for awards that potentially can result in deductions on the Company’s income tax returns based on the amount of compensation cost that would be recognized upon issuance of the award and the Company’s statutory tax rate. Differences between the deferred tax assets recognized for financial reporting purposes and the actual tax deduction reported on the Company’s income tax return are recorded in Additional Paid-In Capital (if the tax deduction exceeds the deferred tax asset) or in the Consolidated Statement of Operations (if the deferred tax asset exceeds the tax deduction and no historical pool of windfall tax benefits exists). Since the adoption of the revised accounting standard on share-based payments, no tax benefits have been recognized related to share-based compensation since the Company has established a full valuation allowance to offset all potential tax benefits associated with these deferred tax assets. |
Concentration of Credit Risk | Concentration of Credit Risk Financial instruments that subject the Company to concentrations of credit risk principally consist of cash equivalents and trade accounts receivable. The Company’s trade accounts receivable are primarily from sales to commercial customers, the U.S. government and state agencies. The Company does not require collateral and has not historically experienced significant credit losses related to receivables from individual customers or groups of customers in any particular industry or geographic area. In 2017 and 2016, approximately 40.5% and 32.3%, respectively, of our product revenues was from customers outside of the United States. The Company has cash deposits in excess of federally insured limits, but does not believe them to be at risk. |
Research and Development Costs | Research and Development Costs The Company expenses research and development costs as incurred. The Company incurred research and development costs of approximately $1.1 million and $1.2 million, which was entirely related to MTI Instruments, for the years ended December 31, 2017 and 2016, respectively. |
Advertising Costs | Advertising Costs The Company expenses advertising costs as incurred. The Company incurred advertising costs of approximately $37 and $22 thousand, which was entirely related to MTI Instruments, for the years ended December 31, 2017 and 2016, respectively. |
Other Comprehensive Income | Other Comprehensive Income The Company had no other comprehensive income (loss) items for the years ended December 31, 2017 and 2016. |
Effect of Recent Accounting Standards or Updates Not Yet Effective | Effect of Recent Accounting Standards or Updates Not Yet Effective Changes to U.S. GAAP are established by the Financial Accounting Standards Board (the FASB) in the form of accounting standard updates (ASUs) to the FASB’s Accounting Standards Codification (ASC). The Company considered the applicability and impact of all ASUs. ASUs not mentioned below were assessed and determined to be either not applicable or are expected to have minimal impact on our consolidated financial position or results of operations. In May 2014, the FASB issued ASU 2014-09 (Revenue from Contracts with Customers (Topic 606)) and issued subsequent amendments to the initial guidance in August 2015, March 2016, April 2016, May 2016 and December 2016 within ASU 2015-14, ASU 2016-08, ASU 2016-10, ASU 2016-12 and ASU 2016-20, respectively (collectively, Topic 606) to clarify the principles for recognizing revenue and to develop a common revenue standard for U.S. GAAP and International Financial Reporting Standards. Topic 606 supersedes nearly all existing revenue recognition guidance under U.S. GAAP. Topic 606 is principles-based and provides a five-step model to determine when and how revenue is recognized. It is possible more judgment and estimates may be required within the revenue recognition process than are required under existing U.S. GAAP. The core principle is that a company should recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. To achieve that core principle, an entity should apply the following steps: Step 1: Identify the contract(s) with a customer. Step 2: Identify the performance obligations in the contract. Step 3: Determine the transaction price. Step 4: Allocate the transaction price to the performance obligations in the contract. Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation. Topic 606 also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. This standard, as amended, will be effective for the Company for annual and interim reporting periods beginning after December 15, 2017. The Company will adopt this standard in fiscal 2018. There will not be a material impact on our consolidated financial statements. In January 2016, the FASB issued ASU 2016-01 (Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Liabilities) the main objective of which is to enhance the reporting model for financial instruments to provide users of financial statements with more decision-useful information and address certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. This standard will be effective for the Company for annual and interim reporting periods beginning on or after December 15, 2017. The Company will adopt this standard in fiscal 2018. There will not be a material impact on our consolidated financial statements. In February 2016, the FASB issued ASU 2016-02 (Leases (Topic 842)), which requires lessees to recognize a right-of-use asset and a lease liability on their balance sheet for virtually all of their leases (other than leases that meet the definition of a short-term lease). The lease liability will be equal to the present value of lease payments and the right-of-use asset will be based on the lease liability, subject to adjustment such as for initial direct costs. For income statement purposes, this standard retains a dual model similar to ASC 840, requiring leases to be classified as either operating or finance. For lessees, operating leases will result in straight-line expense (similar to current accounting by lessees for operating leases under ASC 840) while finance leases will result in a front-loaded expense pattern (similar to current accounting by lessees for capital leases under ASC 840). While this standard maintains similar accounting for lessors as under ASC 840, this standard reflects updates to, among other things, align with certain changes to the lessee model. This standard will be effective for the Company for annual and interim reporting periods beginning on or after December 15, 2018, and early adoption is permitted. Although we have not completed our assessment, we believe adoption of this standard may have a significant impact on our consolidated balance sheets. However, we do not expect the adoption to change the recognition, measurement or presentation of lease expense within our consolidated statements of operations or the consolidated statements of cash flows. We currently expect that most of our operating lease commitments will be subject to the new standard and recognized as operating lease liabilities and right-of-use assets upon our adoption of the standard, which will increase our total assets and total liabilities that we report relative to such amounts prior to adoption. Information about our undiscounted future lease payments and the timing of those payments is in Note 12, Commitments and Contingencies. In August 2016, the FASB issued ASU 2016-15 (Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments), which clarifies the treatment of several cash flow categories. In addition, ASU 2016-15 clarifies that when cash receipts and cash payments have aspects of more than one class of cash flows and cannot be separated, classification will depend on the predominant source or use. This standard will be effective for the Company for annual and interim reporting periods beginning after December 15, 2017. using a retrospective transition method to each period presented. In May 2017, the FASB issued ASU 2017-09 (Compensation-Stock Compensation (Topic 718): Scope of Modification Accounting), which provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. This standard will be effective for the Company for annual and interim reporting periods beginning after December 15, 2017. The Company will adopt this standard in fiscal 2018 prospectively to an award modified on or after the adoption date. There will not be a material impact on our consolidated financial statements. |
Recently Adopted Accounting Standards | Recently Adopted Accounting Standards On January 1, 2017, we adopted ASU 2015-11 (Inventory (Topic 330): Simplifying the Measurement of Inventory), which applies to inventory that is measured using first-in, first-out (FIFO) or average cost. As required by ASU 2015-11, we measure inventory that is within scope at the lower of cost and net realizable value, which is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. Subsequent measurement was unchanged for inventory that is measured using last-in, last-out (LIFO). The Company adopted this standard on a prospective basis. The adoption of this standard did not have a material impact on its consolidated financial statements. On January 1, 2017, we adopted ASU 2015-17 (Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes). The amendments in this standard require entities that present a classified balance sheet to classify all deferred tax liabilities and assets as a noncurrent amount. The requirement that deferred tax liabilities and assets of a tax-paying component of an entity be offset and presented as a single amount was not affected by the amendments in this standard. Additionally, the amendments in this standard align the deferred income tax presentation with the requirements in International Accounting Standards (IAS) 1 (Presentation of Financial Statements). The Company adopted this standard on a prospective basis. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements as its deferred tax assets and liabilities are currently in a full valuation allowance. Prior periods were not retrospectively adjusted. On January 1, 2017, we adopted ASU 2016-09 (Compensation–Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting). As required by ASU 2016-09, all income tax effects of awards, including excess tax benefits, recognized on stock-based compensation expense are reflected in the consolidated statements of operations as a component of the provision for income taxes on a prospective basis. As required by ASU 2016-09, all tax related cash flows recognized on stock-based compensation expense are classified as an operating activity in our consolidated statements of cash flows on a prospective basis. Accordingly, prior periods have not been adjusted. Additionally, ASU 2016-09 allows companies to make a policy election to account for forfeitures either upon occurrence or by estimating forfeitures. We have elected to continue estimating forfeitures expected to occur in order to determine the amount of compensation cost to be recognized each period. See Note 6 for additional information. On January 1, 2017, we adopted ASU 2017-03 (Accounting Changes and Error Corrections (Topic 250) and Investments – Equity Method and Joint Ventures (Topic 323); Amendments to SEC Paragraphs Pursuant to Staff Announcements at the September 22, 2016 and November 17, 2016 Emerging Issues Task Force (EITF) Meetings (SEC Update)), which amends certain topics of the ASC as defined in this ASU and also adds an SEC paragraph and amends other topics pursuant to an SEC Staff Announcement made at the September 22, 2016 EITF meeting. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements. |
2. Accounting Policies (Tables)
2. Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Schedule of Useful Lives | Leasehold improvements Lesser of the life of the lease or the useful life of the improvement Computers and related software 3 to 5 years Machinery and equipment 3 to 10 years Office furniture, equipment and fixtures 2 to 10 years |
3. Accounts Receivables (Tables
3. Accounts Receivables (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Receivables [Abstract] | |
Schedule of accounts receivables | (dollars in thousands) 2017 2016 U.S. and State Government $ 221 $ 103 Commercial 1,187 778 Allowance for doubtful accounts (2 ) – Total $ 1,406 $ 881 |
4. Inventories (Tables)
4. Inventories (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Inventory Disclosure [Abstract] | |
Schedule of inventory | (dollars in thousands) 2017 2016 Finished goods $ 214 $ 244 Work in process 174 143 Raw materials 306 289 Total $ 694 $ 676 |
5. Property, Plant and Equipm27
5. Property, Plant and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property, Plant and Equipment | (dollars in thousands) 2017 2016 Leasehold improvements $ 39 $ 39 Computers and related software 971 1,068 Machinery and equipment 881 892 Office furniture and fixtures 34 25 1,925 2,024 Less: Accumulated depreciation 1,741 1,864 $ 184 $ 160 |
6. Income Taxes (Tables)
6. Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Schedule of income tax expense | (dollars in thousands) 2017 2016 Federal $ – $ 10 State (6 ) (1 ) Deferred – – Total $ (6 ) $ 9 |
Schedule of deferred income tax expense | (dollars in thousands) 2017 2016 Deferred tax (expense) benefit $ (380 ) $ 240 Net operating loss carry forward (6,550 ) (120 ) Valuation allowance 6,930 (120 ) $ – $ – |
Schedule of effective income tax rate | 2017 2016 Federal statutory tax rate 34 % (34 )% Change in valuation allowance (1,179 ) 33 Change in tax rate 1,221 – Expiration of stock option 4 2 Prior year tax adjustments and other (2 ) (4 ) Stock option windfall benefit (78 ) – Other, net 1 1 Tax rate 1 % (2 )% |
Schedule of deferred tax assets | (dollars in thousands) 2017 2016 Deferred tax assets: Inventory valuation $ 61 $ 225 Inventory capitalization 1 2 Vacation pay 18 29 Warranty and other sale obligations 3 5 Allowance for related party note receivable 60 95 Other reserves and accruals – 24 Net operating loss 10,914 17,464 Property, plant and equipment (17 ) (17 ) Stock options 126 269 Research and development tax credit 450 450 Alternative minimum tax credit 54 54 11,670 18,600 Valuation allowance (11,670 ) (18,600 ) Net deferred tax assets $ – $ – |
Schedule of deferred tax asset valuation allowance | (dollars in thousands) 2017 2016 Valuation allowance, beginning of year $ 18,600 $ 18,480 Change in federal tax rate (7,170 ) – Allowance for accounts receivable – – Allowance for related party note receivable 4 (16 ) Inventory (124 ) 128 Net operating income (loss) 2 (120 ) Property, plant and equipment (13 ) (20 ) Stock options 395 149 Other reserves and accruals (24 ) (1 ) Valuation allowance, end of year $ 11,670 $ 18,600 |
7. Accrued Liabilities (Tables)
7. Accrued Liabilities (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Payables and Accruals [Abstract] | |
Schedule of accrued liabilities | (dollars in thousands) 2017 2016 Salaries, wages and related expenses $ 288 $ 223 Liability to shareholders for previous acquisition 363 363 Legal and professional fees 111 128 Warranty and other sale obligations 14 14 Commissions 44 27 Other 93 151 $ 913 $ 906 |
8. Stockholders' Equity (Tables
8. Stockholders' Equity (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Equity [Abstract] | |
Schedule of reserved common shares for future issuance | Stock options outstanding 766,339 Common stock available for future equity awards or issuance of options 68,661 Number of common shares reserved 835,000 |
10. Income (Loss) per Share (Ta
10. Income (Loss) per Share (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Earnings Per Share [Abstract] | |
Reconciliation of earnings (loss) per share | (dollars in thousands, except shares) 2017 2016 Numerator: Net income (loss) $ 582 $ (359 ) Denominator: Basic EPS: Common shares outstanding, beginning of period 9,010,643 5,258,883 Weighted average common shares issued during the period 118,535 729,662 Denominator for basic earnings per common shares — Weighted average common shares 9,129,178 5,988,545 Diluted EPS: Common shares outstanding, beginning of period 9,010,643 5,258,883 Common stock equivalents – options 203,498 – Weighted average common shares issued during the period 118,535 729,662 Denominator for diluted earnings per common shares - Weighted average common shares 9,332,676 5,988,545 |
11. Stock Based Compensation (T
11. Stock Based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Weighted average assumptions table | The following table presents the weighted-average assumptions used for options granted under the 2014 Plan: 2016 Option term (years) 5.05 Volatility 171.91 % Risk-free interest rate 1.52 % Dividend yield 0 % Weighted-average fair value per option granted $ 0.74 The following table presents the weighted-average assumptions used for options granted under the 2012 Plan: 2016 Option term (years) 5.05 Volatility 171.91 % Risk-free interest rate 1.52 % Dividend yield 0 % Weighted-average fair value per option granted $ 0.74 |
Allocation of share based compensation table | 2017 2016 (dollars in thousands, except eps) Cost of product revenue $ – $ 3 Research and product development 2 45 Selling, general and administrative 39 401 Share-based compensation expense $ 41 $ 449 Impact on basic EPS $ 0.00 $ 0.08 Impact on diluted EPS $ 0.00 $ 0.08 |
Stock option activity table | 2017 2016 Shares under option, beginning 1,142,339 926,565 Granted – 263,000 Exercised (352,839 ) (12,161 ) Forfeited (10,000 ) (19,436 ) Expired/canceled (13,161 ) (15,629 ) Shares under option, ending 766,339 1,142,339 Options exercisable 748,839 1,043,214 Remaining shares available for granting of options 68,661 45,500 2017 2016 Shares under option, beginning $ 0.76 $ 0.77 Granted – $ 0.78 Exercised $ 0.61 $ 0.57 Forfeited $ 0.75 $ 0.89 Expired/canceled $ 1.08 $ 1.69 Shares under option, ending $ 0.82 $ 0.76 Options exercisable, ending $ 0.82 $ 0.75 |
Weighted average exercise price table | Outstanding Options Options Exercisable Exercise Price Range Number Weighted Average Remaining Contractual Life Weighted Average Exercise Price Number Weighted Average Exercise Price $0.29 - $1.15 618,839 5.95 $ 0.73 601,339 $ 0.72 $1.16 - $1.40 147,500 6.62 $ 1.22 147,500 $ 1.22 766,339 6.08 $ 0.82 748,839 $ 0.82 |
Schedule of non-vested options | 2017 Options 2017 Weighted Non-vested options balance, beginning January 1 99,125 $ 0.92 Non-vested options granted – – Vested options (71,625 ) $ 0.91 Non-vested options forfeited (10,000 ) $ 0.75 Non-vested options balance, ending December 31 17,500 $ 1.05 |
14. Geographic and Segment In33
14. Geographic and Segment Information (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Segment Reporting [Abstract] | |
Revenue by geographic area | (dollars in thousands) 2017 2016 Product revenue: United States $ 4,200 $ 4,774 Association of South East Asian Nations (ASEAN) 1,710 1,368 Europe, the Middle East and Africa (EMEA) 1,024 659 North America 123 205 South America 4 50 Total product revenue $ 7,061 $ 7,056 |
1. Nature of Operations (Detail
1. Nature of Operations (Details Narrative) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||
Accumulated deficit | $ (120,398) | $ (120,980) | |
Working capital | 4,800 | ||
Cash | $ 3,828 | $ 3,381 | $ 462 |
2. Accounting Policies (Details
2. Accounting Policies (Details - Useful lives) | 12 Months Ended |
Dec. 31, 2017 | |
Leasehold Improvements [Member] | |
Useful live | Lesser of the life of the lease or the useful life of the improvement |
Computer and related software [Member] | |
Useful live | 3 to 5 years |
Machinery and Equipment [Member] | |
Useful live | 3 to 10 years |
Office furniture, equpment and fixtures [Member] | |
Useful live | 2 to 10 years |
2. Accounting Policies (Detai36
2. Accounting Policies (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Deferred revenue | $ 0 | $ 0 |
Warranty liability | 14 | 14 |
Warranty expense | 13 | 5 |
Research and development expense | 1,149 | 1,243 |
Advertising expense | $ 37 | $ 22 |
Sales Revenue, Net [Member] | Outside United States [Member] | ||
Concentration percentage | 40.50% | 32.30% |
3. Accounts Receivable (Details
3. Accounts Receivable (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Allowance for doubtful accounts | $ (2) | $ 0 |
Accounts receivable, net | 1,406 | 881 |
U.S. and State Government [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Accounts receivable, gross | 221 | 103 |
Commercial [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Accounts receivable, gross | $ 1,187 | $ 778 |
4. Inventories (Details)
4. Inventories (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Inventory Disclosure [Abstract] | ||
Finished goods | $ 214 | $ 244 |
Work in process | 174 | 143 |
Raw materials | 306 | 289 |
Total | $ 694 | $ 676 |
5. Property, Plant and Equipm39
5. Property, Plant and Equipment (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | $ 1,925 | $ 2,024 |
Less: Accumulated depreciation | 1,741 | 1,864 |
Property, plant and equipment, net | 184 | 160 |
Leasehold improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | 39 | 39 |
Computers and related software [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | 971 | 1,068 |
Machinery and equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | 881 | 892 |
Office furniture and fixtures [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | $ 34 | $ 25 |
5. Property, Plant and Equipm40
5. Property, Plant and Equipment (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation expense | $ 81 | $ 85 |
Repairs and maintenance expense | $ 13 | $ 14 |
6. Income Taxes (Details - Inco
6. Income Taxes (Details - Income tax expense) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | ||
Federal | $ 0 | $ 10 |
State | (6) | (1) |
Deferred income tax (expense) benefit | 0 | 0 |
Income tax benefit (expense) | $ (6) | $ 9 |
6. Income Taxes (Details - Defe
6. Income Taxes (Details - Deferred income tax expense) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | ||
Deferred tax benefit (expense) | $ (380) | $ 240 |
Net operating loss carry forward | (6,550) | (120) |
Valuation allowance | 6,930 | (120) |
Deferred tax benefit (expense) | $ 0 | $ 0 |
6. Income Taxes (Details - Effe
6. Income Taxes (Details - Effective income tax rate) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | ||
Federal statutory tax rate | (34.00%) | (34.00%) |
Change in valuation allowance | (1179.00%) | 33.00% |
Change in tax rate | 1221.00% | 0.00% |
Expiration of stock option | 4.00% | 2.00% |
Prior year tax adjustments and other | (2.00%) | (4.00%) |
Stock option windfall benefit | (78.00%) | 0.00% |
Other, net | 1.00% | 1.00% |
Tax rate | 1.00% | (2.00%) |
6. Income Taxes (Details - De44
6. Income Taxes (Details - Deferred tax assets) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Current deferred tax assets: | |||
Inventory valuation | $ 61 | $ 225 | |
Inventory capitalization | 1 | 2 | |
Vacation pay | 18 | 29 | |
Warranty and other sale obligations | 3 | 5 | |
Allowance for related party note receivable | 60 | 95 | |
Other reserves and accruals | 0 | 24 | |
Net operating loss | 10,914 | 17,464 | |
Property, plant and equipment | (17) | (17) | |
Stock options | 126 | 269 | |
Research and development tax credit | 450 | 450 | |
Alternative minimum tax credit | 54 | 54 | |
Deferred tax assets, gross | 11,670 | 18,600 | |
Valuation allowance | (11,670) | (18,600) | $ (18,480) |
Net deferred tax assets | $ 0 | $ 0 |
6. Income Taxes (Details - Valu
6. Income Taxes (Details - Valuation allowance) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | ||
Valuation allowance, beginning of year | $ 18,600 | $ 18,480 |
Change in federal tax rate | (7,170) | 0 |
Allowance for accounts receivable | 0 | 0 |
Allowance for related party note receivable | 4 | (16) |
Inventory | (124) | 128 |
Net operating income (loss) | 2 | (120) |
Property, plant and equipment | (13) | (20) |
Stock options | 395 | 149 |
Other reserves and accruals | (24) | (1) |
Valuation allowance, end of year | $ 11,670 | $ 18,600 |
6. Income Taxes (Details Narrat
6. Income Taxes (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | |
Valuation allowance change in federal tax rate | $ (7,170) | $ 0 | ||
Retained earnings affect of change in tax law | 1,300 | |||
Deferred tax asset from change in tax law | 457 | |||
Shortfall tax expense | $ 19 | |||
Windfall tax benefit | $ 2 | |||
Pre-tax income (loss) | 588 | (368) | ||
Research and development tax credit | $ 450 | |||
Tax credit expiration date | Dec. 31, 2018 | |||
Net operating loss carryforward | $ 52,000 | |||
Unrecognized tax benefits | 1,200 | $ 1,200 | ||
Expires 2020 [Member] | ||||
Net operating loss carryforward | $ 737 | |||
Net operating loss carryforward expiration date | Dec. 31, 2020 | |||
Expires 2037 [Member] | ||||
Net operating loss carryforward expiration date | Dec. 31, 2037 |
7. Accrued Liabilities (Details
7. Accrued Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Payables and Accruals [Abstract] | ||
Salaries, wages and related expenses | $ 288 | $ 223 |
Liability to shareholders for previous acquisition | 363 | 363 |
Legal and professional fees | 111 | 128 |
Warranty and other sale obligations | 14 | 14 |
Commissions | 44 | 27 |
Other | 93 | 151 |
Accrued liabilities | $ 913 | $ 906 |
8. Stockholders' Equity (Detail
8. Stockholders' Equity (Details) - shares | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Equity [Abstract] | |||
Stock options outstanding | 766,339 | 1,142,339 | 926,565 |
Common stock available for future equity awards or issuance of options | 68,661 | 45,500 | |
Number of common shares reserved | 835,000 |
8. Stockholders' Equity (Deta49
8. Stockholders' Equity (Details Narrative) - $ / shares | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Equity [Abstract] | |||
Common stock par value (in dollars per share) | $ 0.01 | $ 0.01 | |
Common stock shares issued | 10,378,975 | 10,026,136 | |
Common stock shares outstanding | 9,363,482 | 9,010,643 | 5,258,883 |
9. Retirement Plan (Details Nar
9. Retirement Plan (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Retirement Benefits [Abstract] | ||
Company matching contributions to pension plan | $ 83 | $ 97 |
10. Income (Loss) per Share (De
10. Income (Loss) per Share (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Numerator: | ||
Net income (loss) | $ 582 | $ (359) |
Basic EPS: | ||
Common shares outstanding, beginning of period | 9,010,643 | 5,258,883 |
Weighted average common shares issued during the period | 118,535 | 729,662 |
Denominator for basic earnings per common shares - Weighted average common shares | 9,129,178 | 5,988,545 |
Diluted EPS: | ||
Common shares outstanding, beginning of period | 9,010,643 | 5,258,883 |
Common stock equivalents - options | 203,498 | 0 |
Weighted average common shares issued during the period | 118,535 | 729,662 |
Denominator for diluted earnings per common shares - Weighted average common shares | 9,332,676 | 5,988,545 |
10. Income (Loss) per Share (52
10. Income (Loss) per Share (Details Narrative) - shares | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Earnings Per Share [Abstract] | ||
Potentially dilutive securities | 271,589 | 1,142,339 |
11. Stock Based Compensation (D
11. Stock Based Compensation (Details - Assumptions) | 12 Months Ended |
Dec. 31, 2017$ / shares | |
2014 Equity Incentive Plan [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Option term (years) | 5 years 18 days |
Volatility | 171.91% |
Risk-free interest rate | 1.52% |
Dividend yield | 0.00% |
Weighted-average fair value per option granted | $ 0.74 |
2012 Equity Incentive Plan [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Option term (years) | 5 years 18 days |
Volatility | 171.91% |
Risk-free interest rate | 1.52% |
Dividend yield | 0.00% |
Weighted-average fair value per option granted | $ 0.74 |
11. Stock Based Compensation 54
11. Stock Based Compensation (Details - Share Based Compensation) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share-based compensation expense | $ 41 | $ 449 |
Impact on basic EPS | $ 0 | $ 0.08 |
Impact on diluted EPS | $ 0 | $ 0.08 |
Cost of product revenue [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share-based compensation expense | $ 0 | $ 3 |
Research and product development [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share-based compensation expense | 2 | 45 |
Selling, general and administrative [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share-based compensation expense | $ 39 | $ 401 |
11. Stock Based Compensation 55
11. Stock Based Compensation (Details - Option activity) - $ / shares | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | ||
Shares under option, beginning | 1,142,339 | 926,565 |
Granted | 0 | 263,000 |
Exercised | (352,839) | (12,161) |
Forfeited | (10,000) | (19,436) |
Expired/canceled | (13,161) | (15,629) |
Shares under option, ending | 766,339 | 1,142,339 |
Options exercisable | 748,839 | 1,043,214 |
Remaining shares available for granting of options | 68,661 | 45,500 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Roll Forward] | ||
Weighted average exercise price under option, beginning | $ 0.76 | $ .77 |
Granted | 0.78 | |
Exercised | 0.61 | 0.57 |
Forfeited | 0.75 | 0.89 |
Expired/canceled | 1.08 | 1.69 |
Weighted average exercise price under option, ending | 0.82 | 0.76 |
Weighted average exercise price under option exercisable, ending | $ 0.82 | $ 0.75 |
11. Stock Based Compensation 56
11. Stock Based Compensation (Details - Options by Exercise price) | 12 Months Ended |
Dec. 31, 2017$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Outstanding Options, Number | shares | 766,339 |
Outstanding Options, Weighted Average Remaining Contractual Life | 6 years 29 days |
Outstanding Options, Weighted Average Exercise Price | $ / shares | $ 0.82 |
Options Exercisable, Number | shares | 748,839 |
Options Exercisable, Weighted Average Exercise Price | $ / shares | $ 0.82 |
$0.29-$1.15 [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Outstanding Options, Number | shares | 618,839 |
Outstanding Options, Weighted Average Remaining Contractual Life | 5 years 11 months 12 days |
Outstanding Options, Weighted Average Exercise Price | $ / shares | $ 0.73 |
Options Exercisable, Number | shares | 601,339 |
Options Exercisable, Weighted Average Exercise Price | $ / shares | $ 0.72 |
$1.16-$1.40 [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Outstanding Options, Number | shares | 147,500 |
Outstanding Options, Weighted Average Remaining Contractual Life | 6 years 7 months 13 days |
Outstanding Options, Weighted Average Exercise Price | $ / shares | $ 1.22 |
Options Exercisable, Number | shares | 147,500 |
Options Exercisable, Weighted Average Exercise Price | $ / shares | $ 1.22 |
11. Stock Based Compensation 57
11. Stock Based Compensation (Details - Nonvested options) - $ / shares | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested, Number of Shares [Roll Forward] | ||
Non-vested options balance, beginning | 99,125 | |
Non-vested options granted | 0 | 263,000 |
Vested options | (71,625) | |
Non-vested options forfeited | (10,000) | |
Non-vested options balance, ending | 17,500 | 99,125 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested, Weighted Average Grant Date Fair Value [Roll Forward] | ||
Weighted Average Exercise Price, Non-vested options balance, beginning | $ 0.92 | |
Non-vested options granted | ||
Vested options | 0.91 | |
Non-vested options forfeited | 0.75 | |
Weighted Average Exercise Price, Non-vested options balance, ending | $ 1.05 | $ 0.92 |
11. Stock Based Compensation 58
11. Stock Based Compensation (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Number of option shares granted | 0 | 263,000 |
Weighted average exercise price shares granted (in dollars per share) | $ 0.78 | |
Total unrecognized compensation costs | $ 4 | $ 49 |
Weighted-average remaining vesting period | 5 months 23 days | 1 year 14 days |
Aggregate intrinsic value of outstanding options | $ 183 | |
Aggregate intrinsic value of options exercisable | $ 183 | |
Share price (in dollars per share) | $ 1.01 | |
Restricted stock grants during period | 0 | 0 |
2012 Equity Incentive Plan [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Number of shares authorized | 600,000 | |
Number of option shares granted | 2,000 | |
Weighted average exercise price shares granted (in dollars per share) | $ 0.78 | |
Weighted average fair value shares granted (in dollars per share) | $ 0.74 | |
2014 Equity Incentive Plan [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Number of shares authorized | 500,000 | |
Number of option shares granted | 261,000 | |
Weighted average exercise price shares granted (in dollars per share) | $ 0.78 | |
Weighted average fair value shares granted (in dollars per share) | $ 0.74 |
12. Commitments and Contingen59
12. Commitments and Contingencies (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Future minimum rental payments required under non-cancelable operating leases | ||
2,018 | $ 224 | |
2,019 | 209 | |
2,020 | 3 | |
Potential minimum obligation under employment agreement | 198 | |
Rent expense | $ 225 | $ 231 |
13. Related Party Transactions
13. Related Party Transactions (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 18, 2013 | |
Common stock authorized | 75,000,000 | 75,000,000 | |
Couch White [Member] | |||
Professional fees | $ 10 | $ 80 | |
MeOH Power, Inc. [Member] | |||
Fair value of equity investment | $ 0 | ||
Equity ownership percentage | 47.50% | ||
Stock owned in subsidiary | 75,049,937 | ||
Common stock authorized | 240,000,000 | ||
MeOH Power, Inc. [Member] | Senior Demand Promissory Note [Member] | |||
Debt face amount | $ 380 | ||
Debt principal and interest available for conversion | $ 285 | $ 275 |
14. Geographic and Segment In61
14. Geographic and Segment Information (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Total product revenue | $ 7,061 | $ 7,056 |
UNITED STATES | ||
Total product revenue | 4,200 | 4,774 |
ASEAN [Member] | ||
Total product revenue | 1,710 | 1,368 |
EMEA [Member] | ||
Total product revenue | 1,024 | 659 |
North America [Member] | ||
Total product revenue | 123 | 205 |
South America [Member] | ||
Total product revenue | $ 4 | $ 50 |
14. Geographic and Segment In62
14. Geographic and Segment Information (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
UNITED STATES | ||
Long-lived assets | $ 184 | $ 160 |
Sales Revenue, Net [Member] | U.S. Air Force [Member] | ||
Concentration percentage | 20.10% | 18.10% |
Sales Revenue, Net [Member] | Outside United States [Member] | ||
Concentration percentage | 40.50% | 32.30% |
Sales Revenue, Net [Member] | Asian Distributor [Member] | MTI Instruments [Member] | ||
Concentration percentage | 10.00% | 8.10% |