Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Mar. 23, 2020 | Jun. 29, 2019 | |
Document and Entity Information [Abstract] | |||
Entity Registrant Name | ANDREA ELECTRONICS CORP | ||
Entity Central Index Key | 0000006494 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2019 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2019 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Shell Company | false | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | false | ||
Entity Public Float | $ 2,882,993 | ||
Entity Common Stock, Shares Outstanding | 68,104,957 | ||
Entity Interactive Data Current | Yes | ||
Entity Incorporation State Country Code | NY | ||
Entity File Number | 001-04324 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Current assets: | ||
Cash | $ 335,790 | $ 486,521 |
Accounts receivable, net of allowance for doubtful accounts of $4,789 and $4,793, respectively | 378,179 | 418,681 |
Inventories | 210,161 | 213,056 |
Prepaid expenses and other current assets | 42,446 | 77,593 |
Total current assets | 966,576 | 1,195,851 |
Property and equipment, net | 26,160 | 55,088 |
Intangible assets, net | 231,123 | 262,819 |
Other assets, net | 65,612 | 5,250 |
Total assets | 1,289,471 | 1,519,008 |
Current liabilities: | ||
Trade accounts payable and other current liabilities | 390,558 | 380,685 |
Accrued Series C Preferred Stock Dividends | 19,168 | 19,168 |
Total current liabilities | 409,726 | 399,853 |
Lease liabilities payable | 15,221 | |
Long-term debt | 1,827,509 | 1,551,284 |
Total liabilities | 2,252,456 | 1,951,137 |
Series B Redeemable Convertible Preferred Stock, $.01 par value; authorized: 1,000 shares; issued and outstanding: 0 shares | ||
Commitments and contingencies: | ||
Shareholders' (deficit): | ||
Preferred stock, $.01 par value; authorized: 2,497,500 shares; none issued and outstanding | ||
Common stock, $.01 par value; authorized: 200,000,000 shares; 68,104,957 issued and outstanding | 681,050 | 681,050 |
Additional paid-in capital | 78,086,910 | 78,069,200 |
Accumulated deficit | (79,740,017) | (79,191,451) |
Total shareholders' (deficit) | (962,985) | (432,129) |
Total liabilities and shareholders' (deficit) | 1,289,471 | 1,519,008 |
Series C Convertible Preferred Stock [Member] | ||
Shareholders' (deficit): | ||
Preferred stock, $.01 par value; authorized: 2,497,500 shares; none issued and outstanding | ||
Total shareholders' (deficit) | ||
Series D Convertible Preferred Stock [Member] | ||
Shareholders' (deficit): | ||
Preferred stock, $.01 par value; authorized: 2,497,500 shares; none issued and outstanding | 9,072 | 9,072 |
Total shareholders' (deficit) | $ 9,072 | $ 9,072 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Allowance for doubtful accounts | $ 4,789 | $ 4,793 |
Series B Redeemable Convertible Preferred Stock, par value | $ 0.01 | $ 0.01 |
Series B Redeemable Convertible Preferred Stock, shares authorized | 1,000 | 1,000 |
Series B Redeemable Convertible Preferred Stock, shares issued | 0 | 0 |
Series B Redeemable Convertible Preferred Stock, shares outstanding | 0 | 0 |
Preferred stock, par value | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 2,497,500 | 2,497,500 |
Preferred stock, shares issued | ||
Preferred stock, shares outstanding | ||
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 200,000,000 | 200,000,000 |
Common stock, shares issued | 68,104,957 | 68,104,957 |
Common stock, shares outstanding | 68,104,957 | 68,104,957 |
Series C Convertible Preferred Stock [Member] | ||
Preferred stock, par value | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 1,500 | 1,500 |
Preferred stock, shares issued | 11.47 | 11.47 |
Preferred stock, shares outstanding | 11.47 | 11.47 |
Preferred stock, liquidation value | $ 114,692 | $ 114,692 |
Series D Convertible Preferred Stock [Member] | ||
Preferred stock, par value | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 2,500,000 | 2,500,000 |
Preferred stock, shares issued | 907,144 | 907,144 |
Preferred stock, shares outstanding | 907,144 | 907,144 |
Preferred stock, liquidation value | $ 907,144 | $ 907,144 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Revenues | ||
Net product revenues | $ 1,852,322 | $ 1,391,335 |
License revenues and service related revenues | 42,918 | 73,199 |
Total revenues | 1,895,240 | 1,464,534 |
Cost of revenues | 538,200 | 433,746 |
Gross margin | 1,357,040 | 1,030,788 |
Patent Monetization Expenses | 194,215 | 152,622 |
Research and development expenses | 568,799 | 601,349 |
General, administrative and selling expenses | 1,070,654 | 1,167,002 |
Operating loss | (476,628) | (890,185) |
Interest expense, net | (70,133) | (52,360) |
Loss from operations before provision for income taxes | (546,761) | (942,545) |
Provision for income taxes | 1,805 | 2,563 |
Net loss | $ (548,566) | $ (945,108) |
Basic and diluted weighted average shares | 68,104,957 | 66,289,137 |
Basic and diluted net loss per share | $ (0.01) | $ (0.01) |
CONSOLIDATED STATEMENTS OF SHAR
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ (DEFICIT) EQUITY - USD ($) | Series C Convertible Preferred Stock [Member] | Series D Convertible Preferred Stock [Member] | Common Stock [Member] | Additional Paid-in Capital [Member] | Accumulated Deficit [Member] | Total |
Beginning Balance at Dec. 31, 2017 | $ 1 | $ 9,072 | $ 649,149 | $ 77,931,051 | $ (78,246,343) | $ 342,930 |
Beginning Balance, shares at Dec. 31, 2017 | 33,326,899 | 907,144 | 64,914,935 | |||
Stock-based Compensation Expense related to Stock Option Grants | 45,920 | 45,920 | ||||
Stock option exercises | $ 21,900 | 65,700 | 87,600 | |||
Stock option exercises, shares | 2,190,000 | |||||
Conversion of Series C Convertible Preferred Stock | $ (1) | $ 10,001 | 26,529 | 36,529 | ||
Conversion of Series C Convertible Preferred Stock, shares | (21,857,650) | 1,000,022 | ||||
Net loss | (945,108) | (945,108) | ||||
Ending Balance at Dec. 31, 2018 | $ 9,072 | $ 681,050 | 78,069,200 | (79,191,451) | (432,129) | |
Ending Balance, shares at Dec. 31, 2018 | 11,469,249 | 907,144 | 68,104,957 | |||
Stock-based Compensation Expense related to Stock Option Grants | 17,710 | 17,710 | ||||
Net loss | (548,566) | (548,566) | ||||
Ending Balance at Dec. 31, 2019 | $ 9,072 | $ 681,050 | $ 78,086,910 | $ (79,740,017) | $ (962,985) | |
Ending Balance, shares at Dec. 31, 2019 | 11,469,249 | 907,144 | 68,104,957 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Cash flows from operating activities: | ||
Net loss | $ (548,566) | $ (945,108) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 77,361 | 98,050 |
Stock based compensation | 17,710 | 45,920 |
Inventory net realizable adjustment | 16,978 | (13,489) |
Provision for income tax withholding | 1,805 | 2,563 |
Right-of-use assets | 47,974 | |
PIK interest, net | 76,226 | 61,320 |
Change in: | ||
Accounts receivable | 38,697 | (160,298) |
Inventories | (14,083) | (63,118) |
Prepaid expenses, other current assets and other assets | 35,147 | (33,119) |
Trade accounts payable and other current liabilities and lease liability payable | (83,243) | 13,359 |
Net cash used in operating activities | (333,994) | (993,920) |
Cash flows from investing activities: | ||
Purchases of property and equipment | (24,309) | |
Purchases of patents and trademarks | (16,737) | (46,907) |
Net cash used in investing activities | (16,737) | (71,216) |
Cash flows from financing activities: | ||
Proceeds from exercise of stock options | 87,600 | |
Proceeds from long-term debt | 200,000 | 300,000 |
Net cash provided by financing activities | 200,000 | 387,600 |
Net decrease in cash | (150,731) | (677,536) |
Cash, beginning of year | 486,521 | 1,164,057 |
Cash, end of year | 335,790 | 486,521 |
Cash paid for: | ||
Income Taxes | 2,473 | 4,610 |
Non Cash Financing Activity: | ||
Conversion of Series C Convertible Preferred Stock and related dividends into common stock | $ 36,529 |
ORGANIZATION AND BUSINESS
ORGANIZATION AND BUSINESS | 12 Months Ended |
Dec. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
ORGANIZATION AND BUSINESS | 1. ORGANIZATION AND BUSINESS Andrea Electronics Corporation, incorporated in the State of New York in 1934, (together with its subsidiaries, “Andrea” or the “Company”) has been engaged in the electronic communications industry since its inception. Since the early 1990s, Andrea has been primarily focused on developing and manufacturing state-of-the-art microphone technologies and products for enhancing speech-based applications software and communications, primarily in the computer and business enterprise markets that require high quality, clear voice signals. Andrea’s technologies eliminate unwanted background noise to enable the optimum performance of various speech-based and audio applications. Andrea DSP Microphone and Audio Software Products have been designed for applications that are controlled by or depend on speech across a broad range of hardware and software platforms. These products incorporate Digital Signal Processing, Noise Cancellation, Active Noise Cancellation and Active Noise Reduction microphone technologies, and are designed to cancel background noise in a wide range of noisy environments, such as homes, offices, factories and automobiles. Andrea also manufactures a line of accessories for these products for the consumer and commercial markets in the United States as well as in Europe and Asia. Andrea’s products and technologies are developed in part using our proprietary intellectual property. Andrea intends to vigorously defend and monetize its intellectual property through licensing arrangements and, where necessary, enforcement actions against those entities using our patented solutions in their products. Royalties resulting from these patent monetization efforts can be structured in a variety of ways, including but not limited to one-time paid up licenses or on-going royalty arrangements. Andrea records these activities as part of Andrea’s Patent Monetization segment. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Liquidity ASC 205-40, “Presentation of Financial statements-Going Concern,” requires that management evaluate whether there are relevant conditions and events that, in the aggregate, raise substantial doubt about the entity’s ability to continue as a going concern and to meet its obligations as they become due within one year after the date that the financial statements are issued. Based upon the evaluation, management believes that there is not substantial doubt about the Company’s ability to continue as a going concern and to meet its obligations as they become due within the next twelve months from the date of the financial statement issuance. The Company’s loss before income taxes was approximately $547,000 for the year ended December 31, 2019, of which $95,000 represents non-cash stock based compensation, depreciation and amortization expenses. As part of the evaluation, management considered the Company’s cash balance of $335,790 and its positive working capital of $556,850 as of December 31, 2019 as well as the Company’s projected revenues and expenses for the next twelve months. If the Company is not successful in achieving its projected revenues and expenses, it may need to seek other sources of revenue, areas of further expense reduction or additional funding from other sources such as debt or equity raising; however, there is no assurance that the Company would be successful in a debt or equity raise or that such funding would be on terms that it would find acceptable. Principles of Consolidation The consolidated financial statements include the accounts of Andrea and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. Loss Per Share Basic loss per share is computed by dividing the net loss by the weighted average number of common shares outstanding during the period. Diluted loss adjusts basic loss earnings per share for the effects of convertible securities, stock options and other potentially dilutive financial instruments, only in the periods in which such effect is dilutive. Diluted loss per share is based on the assumption that all dilutive convertible shares and stock options were converted or exercised. Dilution is computed by applying the treasury stock method for the outstanding options, and the if-converted method for the outstanding convertible instruments. Under the treasury stock method, options are assumed to be exercised at the beginning of the period (or at the time of issuance, if later) and as if funds obtained thereby were used to purchase common stock at the average market price during the period. Under the if-converted method, outstanding convertible instruments are assumed to be converted into common stock at the beginning of the period (or at the time of issuance, if later). Securities that could potentially dilute basic earnings per share (“EPS”) in the future that were not included in the computation of the diluted EPS because to do so would have been anti-dilutive for the periods presented, consist of the following: December 31, 2019 2018 Total potentially dilutive common shares as of: Stock options to purchase common stock (Note 12) 8,100,500 10,008,001 Series C Convertible Preferred Stock and related accrued dividends (Note 8) 524,736 524,736 Series D Convertible Preferred Stock (Note 9) 3,628,576 3,628,576 Total potentially dilutive common shares 12,253,812 14,161,313 Cash Cash includes cash and highly liquid investments with original maturities of three months or less. At times during the years ended December 31, 2019 and 2018, the Company had cash deposits in excess of the maximum amounts insured by the Federal Deposit Insurance Corporation insurance limits. At December 31, 2019, the Company’s cash was held at four financial institutions. Concentration of Risk The following customers accounted for 10% or more of Andrea’s consolidated total revenues during at least one of the periods presented below: December 31, 2019 2018 Customer A 40 % 44 % Customer B 18 % * Customer C 18 % 20 % Customer D * 11 % ____________________ * Amounts are less than 10% As of December 31, 2019, Customers A, B and C accounted for approximately 39%, 31% and 17%, respectively, of accounts receivable. As of December 31, 2018, Customers A, C and D accounted for approximately 55%, 14% and 19%, respectively, of accounts receivable. Allowance for Doubtful Accounts The Company performs on-going credit evaluations of its customers and adjusts credit limits based upon payment history and the customer’s current credit worthiness, as determined by the review of their current credit information. Collections and payments from customers are continuously monitored. The Company maintains an allowance for doubtful accounts, which is based upon historical experience as well as specific customer collection issues that have been identified. While such bad debt expenses have historically been within expectations and allowances established, the Company cannot guarantee that it will continue to experience the same credit loss rates that it has in the past. If the financial condition of customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required. Inventories Inventories are stated at the lower of cost (on a first-in, first-out) or net realizable value. The cost of inventory is based on the respective cost of materials. Andrea reviews its inventory reserve for obsolescence on a quarterly basis and establishes reserves on inventories based on the specific identification method as well as a general reserve. Andrea records charges in inventory reserves as part of cost of revenues. Property and Equipment, net Property and equipment is stated at cost less accumulated depreciation and amortization. Depreciation is provided on a straight-line basis over the estimated useful lives of the assets ranging from 3 to 10 years. Leasehold improvements are amortized on a straight-line basis over the shorter of the lives of the respective leases or the expected useful lives of those improvements. Expenditures for maintenance and repairs that do not materially prolong the normal useful life of an asset are charged to operations as incurred. Improvements that substantially extend the useful lives of the assets are capitalized. Upon sale or other disposition of assets, the cost and related accumulated depreciation and amortization are removed from the accounts and the resulting gain or loss, if any, is reflected in the statement of operations. Other Intangible Assets Andrea amortizes its core technology and patents and trademarks on a straight-line basis over their estimated useful lives that range from 10 to 20 years. Long-Lived Assets Andrea accounts for its long-lived assets in accordance with ASC 360 “Plant, Property and Equipment, ” for purposes of determining and measuring impairment of its long-lived assets (primarily intangible assets) other than goodwill. Andrea’s policy is to review the value assigned to its long-lived assets to determine if they have been permanently impaired by adverse conditions which may affect Andrea whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. If Andrea identifies a permanent impairment such that the carrying amount of Andrea’s long-lived assets is not recoverable using the sum of an undiscounted cash flow projection (gross margin dollars from product sales), the impaired asset is adjusted to its estimated fair value, based on an estimate of future discounted cash flows which becomes the new cost basis for the impaired asset. Considerable management judgment is necessary to estimate undiscounted future operating cash flows and fair values and, accordingly, actual results could vary significantly from such estimates. No impairment charges were recognized during the years ended December 31, 2019 and 2018. Revenue Recognition On January 1, 2018 the Company adopted ASU No. 2014-09, "Revenue from Contracts with Customers" (Topic 606) (“ASU No. 2014-09”), which is described below in Recent Accounting Pronouncements. In accordance with Topic 606, the Company recognizes revenue using the following five-step approach: 1. Identify the contract with a customer. 2. Identify the performance obligations in the contract. 3. Determine the transaction price of the contract. 4. Allocate the transaction price to the performance obligations in the contract. 5. Recognize revenue when the performance obligations are met or delivered. Andrea utilized the modified retrospective approach when reviewing its current accounting policies to identify potential differences that would result from applying the new requirements to its customer contracts. This approach includes the evaluation of sales terms, performance obligations, variable consideration, and costs to obtain and fulfill contracts. Based on the Company’s review, management did not need to record a cumulative effect adjustment to retained earnings as of the date of initial application and application of this guidance did not have a material impact on its consolidated financial statements. The Company disaggregates its revenues into three contract types: (1) product revenues, (2) service related revenues and (3) license revenues and then further disaggregates its revenues by operating segment. Generally, product revenue is comprised of microphones and microphone connectivity product revenues. Product revenue is recognized when the Company satisfies its performance obligation by transferring promised goods to a customer. Product revenue is measured at the transaction price, which is based on the amount of consideration that the Company expects to receive in exchange for transferring the promised goods to the customer. Contracts with customers are comprised of customer purchase orders, invoices and written contracts. Customer product orders are fulfilled at a point in time and not over a period of time. The Company does not have arrangements for returns from customers and does not have any future obligations directly or indirectly related to product resale by customers. The Company has no sales incentive programs. Service related and licensing revenues are recognized based on the terms and conditions of individual contracts using the five step approach listed above, which identifies performance obligations and transaction price. Typically, Andrea receives licensing reports from its licensees approximately one quarter in arrears due to the fact that its agreements require customers to report revenues between 30-60 days after the end of the quarter. Under this accounting policy, the licensing revenues reported are not based upon estimates. In addition, service related revenues, which are short-term in nature, are generally performed on a time-and-material basis under separate service arrangements and the corresponding revenue is generally recognized as the services are performed. At December 31, 2019, the Company did not have any deferred revenue. See Note 13 for additional description of the Company’s reportable business segments and the revenue reported in each segment. Income Taxes Andrea accounts for income taxes in accordance with ASC 740, “Income Taxes” (“ASC 740”). ASC 740 requires an asset and liability approach for financial accounting and reporting for income taxes and establishes for all entities a minimum threshold for financial statement recognition of the benefit of tax positions, and requires certain expanded disclosures. The provision for income taxes is based upon income or loss after adjustment for those permanent items that are not considered in the determination of taxable income. Deferred income taxes represent the tax effects of differences between the financial reporting and tax bases of the Company’s assets and liabilities at the enacted tax rates in effect for the years in which the differences are expected to reverse. The Company evaluates the recoverability of deferred tax assets and establishes a valuation allowance when it is more likely than not that some portion or all of the deferred tax assets will not be realized. As of December 31, 2019, the Company has recorded a full valuation allowance. Andrea expects it will reduce its valuation allowance in future periods to the extent that it can demonstrate its ability to utilize the assets. Management makes judgments as to the interpretation of the tax laws that might be challenged upon an audit and cause changes to previous estimates of tax liability. In management’s opinion, adequate provisions for income taxes have been made for all years. If actual taxable income by tax jurisdiction varies from estimates, additional allowances or reversals of reserves may be necessary. Income tax expense consists of taxes payable for the period, withholding of income tax as mandated by the foreign jurisdiction in which the revenues are earned and the change during the period in deferred tax assets and liabilities. The Company has identified its federal tax return and its state tax return in New York as "major" tax jurisdictions. Based on the Company's evaluation, it has concluded that there are no significant uncertain tax positions requiring recognition in the Company's consolidated financial statements. The Company's evaluation was performed for tax years ended 2015 through 2019. The Company believes that its income tax positions and deductions will be sustained on audit and does not anticipate any adjustments that will result in a material change to its financial position. Stock-Based Compensation At December 31, 2019, Andrea had one stock-based employee compensation plan, which is described more fully in Note 12. Andrea accounts for stock based compensation in accordance with ASC 718, “Compensation – Stock Compensation” (“ASC 718”). ASC 718 establishes accounting for stock-based awards exchanged for employee services. Under the provisions of ASC 718, share-based compensation cost is measured at the grant date, based on the fair value of the award, and is recognized as expense over the employee’s requisite service period (generally the vesting period of the equity grant). The fair value of the Company’s common stock options are estimated using the Black Scholes option-pricing model with the following assumptions: expected volatility, dividend rate, risk free interest rate and the expected life. The Company expenses stock-based compensation by using the straight-line method. In accordance with ASC 718, excess tax benefits realized from the exercise of stock-based awards are classified in cash flows from financing activities. The future realization of the reserved deferred tax assets related to these tax benefits associated with the exercise of stock options will result in a credit to additional paid in capital if the related tax deduction reduces taxes payable. The Company has elected the “with and without approach” regarding ordering of windfall tax benefits to determine whether the windfall tax benefit did reduce taxes payable in the current year. Under this approach, the windfall tax benefit would be recognized in additional paid-in-capital only if an incremental tax benefit is realized after considering all other benefits presently available. Research and Development Andrea expenses all research and development costs as incurred. Advertising Expenses All media costs of newspaper and magazine advertisements as well as trade show costs are expensed as incurred. Total advertising and marketing expenses for the years ended December 31, 2019 and 2018 were approximately $12,000 and $17,000, respectively and are included in general, administrative and selling expenses. Fair Value of Financial Instruments ASC 820 “Fair Value Measurement and Disclosures: (“ASU 820”) defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles in the United States of America (“GAAP”), and expands disclosures about payments to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 applies to all assets and liabilities that are measured and reported on a fair value basis. The Company will apply the provisions of ASC 820 to nonfinancial assets and liabilities. Andrea calculates the fair value of financial instruments and includes this additional information in the notes to consolidated financial statements when the fair value is different than the book value of those financial instruments. When the book value approximates fair value, no additional disclosure is made. Andrea uses quoted market prices whenever available to calculate these fair values. When quoted market prices are not available, Andrea uses standard pricing models for various types of financial instruments which take into account the present value of estimated future cash flows. As of December 31, 2019 and 2018, the carrying value of all financial instruments approximated fair value. Use of Estimates The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and disclosures 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. Management bases its estimates on historical experience and on various assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. The most significant estimates, among other things, are used in accounting for allowances for bad debts, inventory valuation and obsolescence, product warranty, depreciation, deferred income taxes, expected realizable values for assets (primarily intangible assets), contingencies, revenue recognition as well as the recording and presentation of the Company’s convertible preferred stock. Estimates and assumptions are periodically reviewed and the effects of any material revisions are reflected in the consolidated financial statements in the period that they are determined to be necessary. Actual results could differ from those estimates and assumptions. Recent Accounting Pronouncements In January 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842).” This standard requires that a lessee recognize the assets and liabilities that arise from operating leases. A lessee should recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. In transition, lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. ASU 2016-02 became effective for fiscal years, and interim periods within those years, beginning after December 15, 2018. The Company elected the short-term lease recognition exemption for all leases that qualify. This means, for those leases that qualify, the Company will not recognize right of use (“ROU”) assets or lease liabilities, and this includes not recognizing ROU assets or lease liabilities for existing short-term leases of those assets in transition. The adoption of this standard did not have a material effect on the Company’s financial statements. See Note 11 for additional lease related disclosure. Subsequent Events The Company evaluates events that occurred after the balance sheet date but before the financial statements are issued. Based upon the evaluation, the Company did not identify any recognized or non-recognized subsequent events that would have required adjustment or disclosure in the consolidated financial statements. |
INTANGIBLE ASSETS
INTANGIBLE ASSETS | 12 Months Ended |
Dec. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
INTANGIBLE ASSETS | 3. INTANGIBLE ASSETS Intangible assets, net, consisted of the following: December 31, 2019 2018 Core Technology $ 8,567,448 $ 8,567,448 Patents and trademarks 963,707 946,970 9,531,155 9,514,418 Less: accumulated amortization (9,300,032 ) (9,251,599 ) $ 231,123 $ 262,819 The changes in the carrying amount of intangible assets during the years ended December 31, 2019 and 2018 were as follows: Balance as of January 1, 2018 $ 284,408 Additions during the period 46,907 Amortization (68,496 ) Balance as of December 31, 2018 262,819 Additions during the period 16,737 Amortization (48,433 ) Balance as of December 31, 2019 $ 231,123 Andrea accounts for its long-lived assets in accordance with ASC 360 “Property, Plant and Equipment” for purposes of determining and measuring impairment of its long-lived assets (primarily intangible assets) other than goodwill. Andrea’s policy is to periodically review the value assigned to its long-lived assets to determine if they have been permanently impaired by adverse conditions which may affect Andrea. If Andrea identifies a permanent impairment such that the carrying amount of Andrea’s long-lived assets are not recoverable using the sum of an undiscounted cash flow projection (gross margin dollars from product revenues), a new cost basis for the impaired asset will be established. If required, an impairment charge is recorded based on an estimate of future discounted cash flows. This new cost basis will be net of any recorded impairment. At December 31, 2019 and 2018, Andrea concluded that there were no long-lived assets that were required to be tested for recoverability. Amortization expense was $48,433 and $68,496 for the years ended December 31, 2019 and 2018, respectively. Patents and trademarks, once issued are amortized on a straight-line basis over periods ranging from 10 to 20 years. Assuming no changes in the Company's intangible assets, estimated amortization expense for each of the five succeeding fiscal years ending December 31 is expected to be approximately $36,000, $27,000, $26,000, $24,000 and $24,000, respectively. |
INVENTORIES
INVENTORIES | 12 Months Ended |
Dec. 31, 2019 | |
Inventory Disclosure [Abstract] | |
INVENTORIES | 4. INVENTORIES Inventories consisted of the following: December 31, 2019 2018 Raw materials $ 22,254 $ 12,855 Finished goods 187,907 200,201 $ 210,161 $ 213,056 |
PROPERTY AND EQUIPMENT, net
PROPERTY AND EQUIPMENT, net | 12 Months Ended |
Dec. 31, 2019 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT, net | 5. PROPERTY AND EQUIPMENT, net Property and equipment, net, consisted of the following: December 31, 2019 2018 Information Technology Equipment $ 274,735 $ 274,735 Furniture and fixtures 87,958 87,958 Tools, molds and testing equipment 212,366 212,366 575,059 575,059 Less: accumulated depreciation and amortization (548,899 ) (519,971 ) $ 26,160 $ 55,088 Depreciation and amortization of property and equipment was $28,928 and $29,554 for the years ended December 31, 2019 and 2018, respectively. |
REVENUE SHARING, NOTE PURCHASE
REVENUE SHARING, NOTE PURCHASE AGREEMENT, AND LONG-TERM DEBT | 12 Months Ended |
Dec. 31, 2019 | |
Revenue Sharing, Note Purchase Agreement and Long-Term Debt [Abstract] | |
REVENUE SHARING, NOTE PURCHASE AGREEMENT, AND LONG-TERM DEBT | 6. REVENUE SHARING, NOTE PURCHASE AGREEMENT, AND LONG-TERM DEBT Revenue Sharing and Note Purchase Agreement On December 24, 2014, the Company entered into an Amended and Restated Revenue Sharing and Note Purchase Agreement (the “Revenue Sharing Agreement”) with AND34 Funding LLC (“AND34”) (acting as the “Revenue Participants,” the “Note Purchasers,” and the “Collateral Agent”), which was retroactively effective as of February 14, 2014. Under the Revenue Sharing Agreement, the Company granted AND34 a perpetual predetermined share in the rights of the Company’s specified future revenues from patents (“Monetization Revenues”) owned by the Company (the “Patents”) in exchange for $3,500,000, which was fully repaid as of September 30, 2016 and issued certain notes containing the features described in the Revenue Sharing Agreement (the “Notes”), which were repaid in 2016. In 2016, 2017 and 2019, the parties executed and amended a rider to the Revenue Sharing Agreement (the “Rider”) pursuant to which Andrea agreed to issue and sell to AND34 additional Notes up to an aggregate amount of $11,500,000 (the “Additional Notes”), or such greater amount as AND34 may agree to in its sole discretion. The most recent rider executed in 2019 increased the aggregate principal amount from $7,500,000 to $11,500,000. The Additional Notes have a maturity date of August 31, 2022. The proceeds of the Additional Notes will be used to pay certain expenses related to the Revenue Sharing Agreement and expenses of the Company incurred in pursuing patent monetization. As of December 31, 2019, there was $1,684,422 of Additional Notes principal and $143,087 PIK Interest outstanding. Any Monetization Revenues will first be applied 100% to the payment of accrued and unpaid interest on, and then to repay outstanding principal of, the Additional Notes. After the Additional Notes are paid in full, the Monetization Revenues will be allocated amongst the Revenue Participants and the Company in accordance with certain predetermined percentages (based on aggregate amounts received by the Revenue Participants) ranging from 50% to the Revenue Participants to ultimately 20%. Monetization Revenues is defined in the Revenue Sharing Agreement to include, but is not limited to, amounts that the Company receives from third parties with respect to the Patents, which may include new license revenues, certain product revenue, payments and judgments. Monetization Revenues and associated expenses are included in the Company’s Patent Monetization Segment (See Note 13). The Revenue Sharing Agreement contains many stipulations between the parties regarding the handling of various matters related to the monetization of the Patents including tax treatment. Following an Event of Default under the Revenue Sharing Agreement, the Note Purchasers and Revenue Participants may proceed to protect and enforce their rights by suit or other appropriate proceeding, either for specific performance or the exercise of any power granted under the Revenue Sharing Agreement or ancillary documents including the Additional Notes. Long-term debt December 31, 2019 2018 Note Payable $ 1,684,422 $ 1,484,422 PIK interest 143,087 66,862 Total long-term debt 1,827,509 1,551,284 Less: current maturities of long-term debt - - Long-term debt, net of current maturities $ 1,827,509 $ 1,551,284 The unpaid principal amount of the Additional Notes (including any PIK Interest) has an interest rate equal to LIBOR (as defined in the Revenue Sharing Agreement) plus 2% per annum, (totaling 4.10% and 4.40% at December 31, 2019 and 2018, respectively); provided that upon and during the continuance of an Event of Default (as set forth in the Revenue Sharing Agreement), the interest rate will increase an additional 2% per annum. Interest may be paid in cash at the option of the Company or otherwise shall be paid by increasing the principal amount of the Additional Notes by the amount of such interest (“PIK Interest”). The Company may prepay the Additional Notes from time to time in whole or in part, without penalty or premium. During the years ended December 31, 2019 and 2018, $200,000 and $300,000, respectively, of Additional Notes were issued to AND34. As of December 31, 2019, the remaining amount of Additional Notes that can be issued is $3,900,000. Amounts reported as current maturities of long-term debt reflect amounts expected to be paid in the next twelve months. On March 6, 2020 $100,000 of Additional Notes were issued to AND34. |
TRADE ACCOUNTS PAYABLE AND OTHE
TRADE ACCOUNTS PAYABLE AND OTHER CURRENT LIABILITIES | 12 Months Ended |
Dec. 31, 2019 | |
Other Liabilities Disclosure [Abstract] | |
TRADE ACCOUNTS PAYABLE AND OTHER CURRENT LIABILITIES | 7. TRADE ACCOUNTS PAYABLE AND OTHER CURRENT LIABILITIES Trade accounts payable and other current liabilities consisted of the following: December 31, 2019 2018 Trade accounts payable $ 87,524 $ 86,706 Payroll and related expenses 7,788 49,937 Patent monetization expenses 107,605 124,422 Current lease liabilities 47,364 - Deferred revenue - 25,341 Professional and other service fees 140,277 94,279 Total trade accounts payable and other current liabilities $ 390,558 $ 380,685 |
SERIES C CONVERTIBLE PREFERRED
SERIES C CONVERTIBLE PREFERRED STOCK | 12 Months Ended |
Dec. 31, 2019 | |
Series C Convertible Preferred Stock [Abstract] | |
SERIES C CONVERTIBLE PREFERRED STOCK | 8. SERIES C CONVERTIBLE PREFERRED STOCK On October 10, 2000, Andrea issued and sold in a private placement $7,500,000 of Series C Redeemable Convertible Preferred Stock (the “Series C Preferred Stock”). Each of these shares of Series C Preferred Stock had a stated value of $10,000 plus a $1,671 increase in the stated value, which sum is convertible into Common Stock at a conversion price of $0.2551. On February 17, 2004, Andrea announced that it had entered into an Exchange and Termination Agreement and an Acknowledgment and Waiver Agreement, which eliminated the dividend of 5% per annum on the stated value. The additional amount of $1,671 represents the 5% per annum from October 10, 2000 through February 17, 2004. The shares of Series C Preferred Stock are subject to antidilution provisions, which are triggered in the event of certain stock splits, recapitalizations, or other dilutive transactions. In addition, issuances of common stock at a price below the conversion price then in effect (currently $0.2551), or the issuance of warrants, options, rights, or convertible securities which have an exercise price or conversion price less than that conversion price, other than for certain previously outstanding securities and certain “excluded securities” (as defined in the certificate of amendment), require the adjustment of the conversion price to that lower price at which shares of common stock have been issued or may be acquired. In the event that Andrea issues securities in the future which have a conversion price or exercise price which varies with the market price and the terms of such variable price are more favorable than the conversion price in the Series C Preferred Stock, the purchasers may elect to substitute the more favorable variable price when making conversions of the Series C Preferred Stock. In accordance with Sub Topic 815-40, Andrea evaluated the Series C Preferred Stock and concluded that it is not indexed to the Company’s stock because of the conversion price adjustment feature described above. Accordingly, under the provisions of ASC 815, “Derivatives and Hedging” (“ASC 815”), Andrea evaluated the Series C Preferred Stock embedded conversion feature. The Company has concluded that the embedded conversion feature would be classified in shareholders’ equity if it were a freestanding instrument, but as the Series C Preferred Stock is more akin to equity and as such it should not be bifurcated from the Series C instrument and accounted for separately. On July 17, 2018, 21.85765 shares of Series C Preferred Stock, together with related accrued dividends, were converted into 1,000,022 shares of Common Stock at a conversion price of $0.2551. As of December 31, 2019, there were 11.469249 shares of Series C Preferred Stock outstanding, which were convertible into 524,736 shares of Common Stock and had remaining accrued dividends of $19,168. |
SERIES D CONVERTIBLE PREFERRED
SERIES D CONVERTIBLE PREFERRED STOCK | 12 Months Ended |
Dec. 31, 2019 | |
Series D Convertible Preferred Stock [Abstract] | |
SERIES D CONVERTIBLE PREFERRED STOCK | 9. SERIES D CONVERTIBLE PREFERRED STOCK On February 17, 2004, Andrea entered into a Securities Purchase Agreement (including a Registration Rights Agreement) with certain holders of the Series C Preferred Stock and other investors (collectively, the “Buyers”) pursuant to which the Buyers agreed to invest a total of $2,500,000. In connection with this agreement, on February 23, 2004, the Buyers purchased, for a purchase price of $1,250,000, an aggregate of 1,250,000 shares of a new class of preferred stock, the Series D Preferred Stock, convertible into 5,000,000 shares of Common Stock (an effective conversion price of $0.25 per share) and Common Stock warrants exercisable for an aggregate of 2,500,000 shares of Common Stock. These warrants were exercisable at any time after August 17, 2004, at an exercise price of $0.38 per share. On February 23, 2009, these warrants expired without being exercised. In addition, on June 4, 2004, the Buyers purchased for an additional $1,250,000, an additional 1,250,000 shares of Series D Preferred Stock convertible into 5,000,000 shares of Common Stock (an effective conversion price of $0.25 per share) and Common Stock warrants exercisable for an aggregate of 2,500,000 shares of Common Stock. The warrants were exercisable at any time after December 4, 2004 and before June 4, 2009 at an exercise price of $0.17 per share. On June 4, 2009, these warrants expired without being exercised. The shares of Series D Preferred Stock are also subject to antidilution provisions, which are triggered in the event of certain stock splits, recapitalizations, or other dilutive transactions. In addition, issuances of common stock at a price below the conversion price then in effect (currently $0.25), or the issuance of warrants, options, rights, or convertible securities which have an exercise price or conversion price less than that conversion price, other than for certain previously outstanding securities and certain “excluded securities” (as defined in the certificate of amendment), require the adjustment of the conversion price to that lower price at which shares of common stock have been issued or may be acquired. In the event that Andrea issues securities in the future which have a conversion price or exercise price which varies with the market price and the terms of such variable price are more favorable than the conversion price in the Series D Preferred Stock, the purchasers may elect to substitute the more favorable variable price when making conversions of the Series D Preferred Stock. In addition, the Company is required to use its best efforts to secure the inclusion for quotation on the Over the Counter Bulletin Board for the common stock issuable under the Series D Preferred Stock and to arrange for at least two market makers to register with the Financial Industry Regulatory Authority. In the event that the holder of the Series D Preferred Stock is unable to convert these securities into Andrea Common Stock, the Company shall pay to each such holder a Registration Delay Payment. This payment is to be paid in cash and is equal to the product of (i) the stated value of such Preferred Shares multiplied by (ii) the product of (1) .0005 multiplied by (2) the number of days that sales cannot be made pursuant to the Registration Statement (excluding any days during that may be considered grace periods as defined by the Registration Rights Agreement). In accordance with Sub Topic 815-40, Andrea evaluated the Series D Preferred Stock and concluded that it is not considered to be indexed to the Company’s stock because of the conversion price adjustment feature described above. Accordingly, under the provisions of ASC 815, Andrea evaluated the Series D Preferred Stock embedded conversion feature. The Company has concluded that the embedded conversion feature would be classified in shareholders’ equity if it were a freestanding instrument, but as the Series D Preferred Stock is more akin to equity and as such it should not be bifurcated from the Series D instrument and accounted for separately. As of December 31, 2019, there were 907,144 shares of Series D Preferred Stock outstanding which were convertible into 3,628,576 shares of Common Stock. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | 10. INCOME TAXES The Company accounts for income taxes in accordance with ASC 740 which prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC 740 also provides guidance on de-recognition, classification, interest and penalties, accounting in interim period, disclosure and transition. There were no unrecognized tax benefits as of January 1, 2018 and during the years ended December 31, 2019 and 2018. The Company has identified its federal tax return and its state tax return in New York as "major" tax jurisdictions, as defined in ASC 740. Based on the Company's evaluation, it has concluded that there are no significant uncertain tax positions requiring recognition in the Company's consolidated financial statements. The Company's evaluation was performed for tax years ended 2016 through 2019. The Company believes that its income tax positions and deductions will be sustained on audit and does not anticipate any adjustments that will result in a material change to its consolidated financial position. The Company's policy for recording interest and penalties associated with audits is to record such items as a component of income tax expense. There were no amounts accrued for penalties or interest as of or during the year ended December 31, 2019. For the year ended December 31, 2019, the Company determined that, more likely than not, its deferred tax assets would not be realized and, accordingly, increased the valuation allowance. The increase in the valuation allowance is included in the income tax provision in the accompanying consolidated statement of operations for the year ended December 31, 2019. Management is currently unaware of any issues under review that could result in significant payments, accruals or material deviations from its position. The provision for income tax consisted of the following: For the Years Ended December 31, 2019 2018 Current: Federal $ - $ - Foreign 1,805 2,563 State and Local - - Total Current 1,805 2,563 Deferred Federal 2,139,000 (229,000 ) Foreign - - State and Local 509,000 (55,000 ) Adjustment to valuation allowance related to net deferred tax assets (2,648,000 ) 284,000 Total Deferred - - Provision for income taxes $ 1,805 $ 2,563 The provision for income taxes for the years ended December 31, 2019 and 2018 of approximately $1,800 and $2,600, respectively, is the result of certain licensing revenues that are subject to withholding of income tax as mandated by the foreign jurisdiction in which the revenues are earned partially offset by a Federal income tax refund relating to alternative minimum tax credits. Loss before income taxes is comprised of the following: For the Years Ended December 31, 2019 2018 Domestic $ (555,843 ) $ (955,411 ) Foreign 9,082 12,866 Net loss before income taxes $ (546,761 ) $ (942,545 ) A reconciliation between the effective rate for income taxes and the amount computed by applying the statutory Federal income tax rate to loss before provision for income taxes is as follows: For the Years Ended December 31, 2019 2018 Tax provision at statutory rate (21 )% )% State and local taxes (5 )% (5 )% Incentive Stock Option Expense 1 % 1 % Change in valuation allowance for net deferred tax assets 25 % 25 % - % - % The components of temporary differences that give rise to significant portions of the deferred tax asset, net, are as follows: For the Years Ended December 31, 2019 2018 Deferred tax assets: Accrued expenses $ 20,000 $ 27,000 Allowance for doubtful accounts 1,000 1,000 Deferred revenue - 7,000 Reserve for obsolescence 29,000 25,000 Expense associated with non-qualified stock options 44,000 94,000 Revenue Sharing Agreement 276,000 200,000 General business credit 1,198,000 1,378,000 NOL carryforward 8,893,000 11,377,000 10,461,000 13,109,000 Less: valuation allowance (10,461,000 ) (13,109,000 ) Deferred tax asset, net $ - $ - The change in the valuation allowance for deferred tax assets are summarized as follows: For the Years Ended December 31, 2019 2018 Beginning Balance $ 13,109,000 $ 12,825,000 Change in Allowance (2,648,000 ) 284,000 Ending Balance $ 10,461,000 $ 13,109,000 As of December 31, 2019, Andrea had net operating loss carryforwards of approximately $34,200,000. $1,500,000 of these net operating loss carryforwards are carried forward indefinitely, the remaining $32,700,000 expire in varying amounts beginning in 2020 through 2037. Andrea has General Business Credits of approximately $1,200,000 expiring in varying amounts beginning in 2020 through 2039. The Company records tax benefits and expense in the statements of earnings. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | 11. COMMITMENTS AND CONTINGENCIES Leases Effective January 1, 2019, the Company adopted the new lease accounting standard using the modified retrospective method of applying the new standard at the adoption date. In addition, we elected the package of practical expedients permitted under the transition guidance within the new standard. This allowed us to carry forward the historical lease classification. Adoption of this standard resulted in the recording of net operating lease right-of-use (“ROU”) assets and corresponding operating lease liabilities of $77,547, with no material cumulative effect adjustment to equity as of the date of adoption. The financial position for reporting periods beginning on or after January 1, 2019 are presented under the new guidance, while prior period amounts are not adjusted and continue to be reported in accordance with previous guidance. Our operating lease portfolio includes corporate offices, information technology (IT) equipment, and automobiles with remaining lease terms of 1 year to 2 years. Operating lease ROU assets are presented within other assets. The current portion of operating lease liabilities are presented within trade accounts payable and other current liabilities, and the non-current portion of operating lease liabilities are presented separately on the accompanying consolidated balance sheet. Supplemental balance sheet information related to leases was as follows: Operating Leases December 31, Other Assets $ 60,362 Trade accounts payable and other current liabilities $ 47,364 Lease liabilities payable non-current 15,221 Total operating lease liabilities $ 62,585 Weighted-average remaining lease term 17 months Weighted-average discount rate 7.34% As of December 31, 2019, maturities of operating lease liabilities were as follows: 2020 $ 48,958 2021 11,970 2022 3,990 Total 64,918 Less: interest (2,333 ) Total Lease Payments $ 62,585 Employment Agreements In August 2014, the Company entered into an employment agreement with Mr. Andrea, which was subsequently amended on February 19, 2018, August 9, 2018, March 22, 2019, August 12, 2019 and February 4, 2020. The effective date of the original employment agreement was August 1, 2014 and it currently expires on July 31, 2020, subject to renewal as approved by the Compensation Committee of the Board of Directors. Pursuant to his amended employment agreement, Mr. Andrea will receive an annual base salary of $216,000. The employment agreement provides for quarterly bonuses equal to 5% of the Company’s pre-bonus net after tax quarterly earnings for a total quarterly bonus amount not to exceed $12,500; and annual bonuses equal to 9% of the Company’s annual pre-bonus net after tax earnings in excess of $300,000 up to $3,000,000, and 3% of the Company’s annual pre-bonus adjusted net after tax earnings in excess of $3,000,000. Adjustments to net after tax earnings shall be made to remove the impact of change in recognition of accumulated deferred tax asset value. All bonuses shall be payable as soon as the Company’s cash flow permits. All bonus determinations or any additional bonus in excess of the above will be made in the sole discretion of the Compensation Committee. Under certain circumstances, Mr. Andrea is entitled to a change in control payment equal to twelve months of Mr. Andrea's most recent Base Salary plus a pro-rated portion of Mr. Andrea's most recent annual and four quarterly bonuses paid immediately preceding the Change of Control, continuation of health and medical benefits for twelve months and immediate vesting of all stock options in the event of a change in control during the term of his agreement and subsequent termination of his employment within twelve months following the change of control. In the event of his termination without cause or resignation with the Company’s consent, Mr. Andrea is entitled to a severance payment equal to two months of his base salary, plus the two months pro-rated portion of his most recent annual and quarterly bonuses, payment of $12,500, the un-paid bonus for the quarter ended September 30, 2017 and a continuation of health insurance coverage for Mr. Andrea and his dependents for 6 months. At December 31, 2019, the future minimum cash commitments under this agreement aggregate $126,000. On November 11, 2008, the Company entered into an amended and restated change in control agreement with Corisa L. Guiffre, Vice President, Chief Financial Officer and Assistant Corporate Secretary of the Company. The change in control agreement provides Ms. Guiffre with a severance benefit upon termination in connection with a change in control (as defined in the agreement). If Ms. Guiffre is terminated following a change in control, the Company will pay Ms. Guiffre a sum equal to three times Ms. Guiffre’s average annual compensation for the five preceding taxable years. All restrictions on any restricted stock will lapse immediately and incentive stock options and stock appreciation rights, if any, will become immediately exercisable in the event of a change in control of the Company. Upon the occurrence of a change in control followed by Ms. Guiffre’s termination of employment, the Company will cause to be continued life, medical, dental and disability coverage. Such coverage and payments shall cease upon the expiration of 36 full calendar months following the date of termination. Legal Proceedings In September 2016, the Company filed a complaint with the United States District Court for the Eastern District of New York, alleging patent infringement against Apple Inc. (“Apple”) and requesting monetary and injunctive relief (the “New York Litigation”). The New York Litigation was stayed pending final disposition of a parallel case that the Company filed against Apple with the United States International Trade Commission (“ITC”). The ITC’s final decision finding that Apple did not violate the ITC’s statute was issued on March 22, 2018. Apple informed the New York judge of this final decision on May 30, 2018. The ITC’s final decision does not affect Andrea’s right to continue prosecuting the New York litigation. In January 2017, Apple filed four (4) petitions for inter partes review (“IPR”) of the Company’s patents asserted in the New York Litigation with the United States Patent and Trademark Office (PTO). The Company filed its Patent Owner’s Preliminary Response in two of these IPR proceedings on May 1, 2017. The PTO instituted the four IPR proceedings requested by Apple on July 24, 2017. The Company filed its Patent Owner’s Response in two of these IPR proceedings on November 7, 2017. On March 19, 2018, both the Company and Apple requested oral argument in these two IPR proceedings, which occurred on April 25, 2018. On July 12, 2018, the PTO issued its final written decisions in those two IPR proceedings, ruling that claims 6-9 of the Company’s U.S. Patent No. 6,363,345 remain valid and enforceable after the PTO’s review. On September 13, 2018, Apple filed its Notice of Appeal of that ruling to the United States Court of Appeals for the Federal Circuit (the “Federal Circuit”). Apple filed its Appeal Brief with the Federal Circuit on January 31, 2019. The Company filed its Response to Apple’s Appeal Brief on March 12, 2019. The Federal Circuit held an oral argument on October 1, 2019, during which both the Company and Apple presented arguments through their attorneys. On February 7, 2020, the Federal Circuit issued its decisions on Apple’s appeals. The Federal Circuit affirmed the PTO’s findings in one of the ongoing IPRs. In the other ongoing IPR, the Federal Circuit partly affirmed the PTO’s findings, but also partly vacated the PTO’s findings, and remanded the case back to the PTO for further proceedings. On July 20, 2018, after the PTO’s final written decisions, the Company informed the New York judge of the status of the PTO proceedings, and its intention to move forward with the New York Litigation regarding claims 6-9 of the Company’s U.S. Patent No. 6,363,345. Apple asked the New York judge to maintain the previously entered stay of the New York Litigation pending its appeal of the PTO holdings to the Federal Circuit. At the New York judge’s request, the parties fully briefed their competing arguments regarding whether to lift or maintain the stay and submitted those briefs to the New York judge on December 13, 2018. The Company and Apple are still awaiting the New York judge’s ruling on whether to lift the stay. Andrea intends to vigorously prosecute the New York Litigation and the ongoing IPR proceedings. |
STOCK PLANS AND STOCK-BASED COM
STOCK PLANS AND STOCK-BASED COMPENSATION | 12 Months Ended |
Dec. 31, 2019 | |
Share-based Payment Arrangement [Abstract] | |
STOCK PLANS AND STOCK-BASED COMPENSATION | 12. STOCK PLANS AND STOCK-BASED COMPENSATION In August 2019, the Board adopted the Andrea Electronics Corporation 2019 Equity Compensation Plan (“2019 Plan”), which was subsequently approved by the shareholders on October 24, 2019. The 2019 Plan authorizes the granting of awards, the exercise of which would allow up to an aggregate of 10,000,000 shares of Andrea’s common stock to be acquired by the holders of those awards. Awards can be granted to key employees, officers, directors and consultants. No awards have been granted under the 2019 Plan. In October 2006, the Board adopted the Andrea Electronics Corporation 2006 Equity Compensation Plan (“2006 Plan”), which was subsequently approved by the shareholders. The 2006 Plan, as amended, authorized the granting of awards, the exercise of which would allow up to an aggregate of 18,000,000 shares of Andrea’s Common Stock to be acquired by the holders of those awards. Awards could be granted to key employees, officers, directors and consultants. As the 2006 Plan has expired, no further awards will be granted under the 2006 Plan. The stock option awards granted under the 2006 Plan have been granted with an exercise price equal to the market price of the Company’s stock at the date of grant with vesting periods of up to four years and 10-year contractual terms. The fair values of each stock option grant is estimated on the date of grant using the Black-Scholes option-pricing model that uses the weighted-average assumptions noted in the following table. Expected volatilities are based on implied volatilities from historical volatility of the Company’s stock. The expected term of options granted represents the period of time that options granted are expected to be outstanding. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. No options were granted during the year ended December 31, 2019 or 2018. Option activity during 2019 is summarized as follows: Options Outstanding Options Exercisable Options Weighted Weighted Weighted Options Weighted Weighted Weighted At January 1, 2019 10,008,001 $ 0.08 $ 0.08 4.81 years 8,847,351 $ 0.08 $ 0.08 4.41 years Canceled (1,907,501 ) $ 0.11 $ 0.11 At December 31, 2019 8,100,500 $ 0.07 $ 0.07 4.80 years 8,100,500 $ 0.07 $ 0.07 4.80 years During the year ended December 31, 2019, 1,160,650 options vested with a weighted average exercise price of $0.05 and a weighted average fair value of $0.05 per option. Based on the December 31, 2019 fair market value of the Company’s common stock of $0.02 per share, there is no aggregate intrinsic value for the 8,100,500 options outstanding and exercisable. Total compensation expense recognized related to stock option awards was $17,710 and $45,920 for the years ended December 31, 2019 and 2018, respectively. In the accompanying consolidated statement of operations for the year ended December 31, 2019, $15,659 of expense is included in general, administrative and selling expenses and $2,051 is included in research and development expenses. In the accompanying consolidated statement of operations for the year ended December 31, 2018, $42,430 of expense is included in general, administrative and selling expenses and $3,490 is included in research and development expenses. As of December 31, 2019, there is no unrecognized compensation cost related to nonvested share-based compensation arrangements. |
SEGMENT INFORMATION
SEGMENT INFORMATION | 12 Months Ended |
Dec. 31, 2019 | |
Segment Reporting [Abstract] | |
SEGMENT INFORMATION | 13. SEGMENT INFORMATION Andrea follows the provisions of ASC 280 “Segment Reporting” (“ASC 280”). Reportable operating segments are determined based on Andrea’s management approach. The management approach, as defined by ASC 280, is based on the way that the chief operating decision-maker organizes the segments within an enterprise for making operating decisions and assessing performance. While Andrea’s results of operations are primarily reviewed on a consolidated basis, the chief operating decision-maker manages the enterprise in two segments: (i) Patent Monetization; and (ii) Andrea DSP Microphone and Audio Software Products. Patent Monetization includes Monetization Revenues (as defined in our Revenue Sharing Agreement). Andrea DSP Microphone and Audio Software Products primarily include products based on the use of some, or all, of the following technologies: Andrea Digital Super Directional Array microphone technology (“DSDA”), Andrea Direction Finding and Tracking Array microphone technology (“DFTA”), Andrea PureAudio noise filtering technology, and Andrea EchoStop, an advanced acoustic echo cancellation technology. The following represents selected consolidated financial information for Andrea’s segments for the years ended December 31, 2019 and 2018: 2019 Twelve Month Segment Data Patent Andrea DSP Total 2019 Net product revenues $ - $ 1,852,322 $ 1,852,322 Service related revenues - 17,271 17,271 License revenues 950 24,697 25,647 Loss from operations (397,200 ) (79,428 ) (476,628 ) Depreciation and amortization 24,220 53,141 77,361 Purchases of patents and trademarks 8,369 8,368 16,737 Assets 257,685 1,031,786 1,289,471 Total long lived assets 115,562 141,721 257,283 2018 Twelve Month Segment Data Patent Andrea DSP Total 2018 Net product revenues $ - $ 1,391,335 $ 1,391,335 Service related revenues - 38,999 38,999 License revenues 1,241 32,959 34,200 Loss from operations (394,382 ) (495,803 ) (890,185 ) Depreciation and amortization 34,250 63,800 98,050 Purchases of patents and trademarks 23,453 23,454 46,907 Purchases of property and equipment - 24,309 24,309 Assets 287,206 1,231,802 1,519,008 Total long lived assets 131,410 186,497 317,907 Management of Andrea assesses assets and non-operating income statement data on a consolidated basis only. International revenues are based on the country in which the end-user is located. For the years ended December 31, 2019 and 2018, and as of each respective year-end, total revenues and accounts receivable by geographic area were as follows: Geographic Data 2019 2018 Total Revenues: United States $ 1,420,447 $ Foreign (1) 474,793 355,785 $ 1,895,240 $ 1,464,534 Accounts receivable: United States $ 218,935 $ 293,978 Foreign 159,244 124,703 $ 378,179 $ 418,681 ____________________ (1) Net revenues to any one foreign country did not exceed 10% for the year ended December 31, 2019 or 2018. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
Liquidity | Liquidity ASC 205-40, “Presentation of Financial statements-Going Concern,” requires that management evaluate whether there are relevant conditions and events that, in the aggregate, raise substantial doubt about the entity’s ability to continue as a going concern and to meet its obligations as they become due within one year after the date that the financial statements are issued. Based upon the evaluation, management believes that there is not substantial doubt about the Company’s ability to continue as a going concern and to meet its obligations as they become due within the next twelve months from the date of the financial statement issuance. The Company’s loss before income taxes was approximately $547,000 for the year ended December 31, 2019, of which $95,000 represents non-cash stock based compensation, depreciation and amortization expenses. As part of the evaluation, management considered the Company’s cash balance of $335,790 and its positive working capital of $556,850 as of December 31, 2019 as well as the Company’s projected revenues and expenses for the next twelve months. If the Company is not successful in achieving its projected revenues and expenses, it may need to seek other sources of revenue, areas of further expense reduction or additional funding from other sources such as debt or equity raising; however, there is no assurance that the Company would be successful in a debt or equity raise or that such funding would be on terms that it would find acceptable. |
Principles of Consolidation | Principles of Consolidation The consolidated financial statements include the accounts of Andrea and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. |
Loss Per Share | Loss Per Share Basic loss per share is computed by dividing the net loss by the weighted average number of common shares outstanding during the period. Diluted loss adjusts basic loss earnings per share for the effects of convertible securities, stock options and other potentially dilutive financial instruments, only in the periods in which such effect is dilutive. Diluted loss per share is based on the assumption that all dilutive convertible shares and stock options were converted or exercised. Dilution is computed by applying the treasury stock method for the outstanding options, and the if-converted method for the outstanding convertible instruments. Under the treasury stock method, options are assumed to be exercised at the beginning of the period (or at the time of issuance, if later) and as if funds obtained thereby were used to purchase common stock at the average market price during the period. Under the if-converted method, outstanding convertible instruments are assumed to be converted into common stock at the beginning of the period (or at the time of issuance, if later). Securities that could potentially dilute basic earnings per share (“EPS”) in the future that were not included in the computation of the diluted EPS because to do so would have been anti-dilutive for the periods presented, consist of the following: December 31, 2019 2018 Total potentially dilutive common shares as of: Stock options to purchase common stock (Note 12) 8,100,500 10,008,001 Series C Convertible Preferred Stock and related accrued dividends (Note 8) 524,736 524,736 Series D Convertible Preferred Stock (Note 9) 3,628,576 3,628,576 Total potentially dilutive common shares 12,253,812 14,161,313 |
Cash | Cash Cash includes cash and highly liquid investments with original maturities of three months or less. At times during the years ended December 31, 2019 and 2018, the Company had cash deposits in excess of the maximum amounts insured by the Federal Deposit Insurance Corporation insurance limits. At December 31, 2019, the Company’s cash was held at four financial institutions. |
Concentration of Risk | Concentration of Risk The following customers accounted for 10% or more of Andrea’s consolidated total revenues during at least one of the periods presented below: December 31, 2019 2018 Customer A 40 % 44 % Customer B 18 % * Customer C 18 % 20 % Customer D * 11 % ____________________ * Amounts are less than 10% As of December 31, 2019, Customers A, B and C accounted for approximately 39%, 31% and 17%, respectively, of accounts receivable. As of December 31, 2018, Customers A, C and D accounted for approximately 55%, 14% and 19%, respectively, of accounts receivable. |
Allowance for Doubtful Accounts | Allowance for Doubtful Accounts The Company performs on-going credit evaluations of its customers and adjusts credit limits based upon payment history and the customer’s current credit worthiness, as determined by the review of their current credit information. Collections and payments from customers are continuously monitored. The Company maintains an allowance for doubtful accounts, which is based upon historical experience as well as specific customer collection issues that have been identified. While such bad debt expenses have historically been within expectations and allowances established, the Company cannot guarantee that it will continue to experience the same credit loss rates that it has in the past. If the financial condition of customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required. |
Inventories | Inventories Inventories are stated at the lower of cost (on a first-in, first-out) or net realizable value. The cost of inventory is based on the respective cost of materials. Andrea reviews its inventory reserve for obsolescence on a quarterly basis and establishes reserves on inventories based on the specific identification method as well as a general reserve. Andrea records charges in inventory reserves as part of cost of revenues. |
Property and Equipment, net | Property and Equipment, net Property and equipment is stated at cost less accumulated depreciation and amortization. Depreciation is provided on a straight-line basis over the estimated useful lives of the assets ranging from 3 to 10 years. Leasehold improvements are amortized on a straight-line basis over the shorter of the lives of the respective leases or the expected useful lives of those improvements. Expenditures for maintenance and repairs that do not materially prolong the normal useful life of an asset are charged to operations as incurred. Improvements that substantially extend the useful lives of the assets are capitalized. Upon sale or other disposition of assets, the cost and related accumulated depreciation and amortization are removed from the accounts and the resulting gain or loss, if any, is reflected in the statement of operations. |
Other Intangible Assets | Other Intangible Assets Andrea amortizes its core technology and patents and trademarks on a straight-line basis over their estimated useful lives that range from 10 to 20 years. |
Long-Lived Assets | Long-Lived Assets Andrea accounts for its long-lived assets in accordance with ASC 360 “Plant, Property and Equipment, ” for purposes of determining and measuring impairment of its long-lived assets (primarily intangible assets) other than goodwill. Andrea’s policy is to review the value assigned to its long-lived assets to determine if they have been permanently impaired by adverse conditions which may affect Andrea whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. If Andrea identifies a permanent impairment such that the carrying amount of Andrea’s long-lived assets is not recoverable using the sum of an undiscounted cash flow projection (gross margin dollars from product sales), the impaired asset is adjusted to its estimated fair value, based on an estimate of future discounted cash flows which becomes the new cost basis for the impaired asset. Considerable management judgment is necessary to estimate undiscounted future operating cash flows and fair values and, accordingly, actual results could vary significantly from such estimates. No impairment charges were recognized during the years ended December 31, 2019 and 2018. |
Revenue Recognition | Revenue Recognition On January 1, 2018 the Company adopted ASU No. 2014-09, "Revenue from Contracts with Customers" (Topic 606) (“ASU No. 2014-09”), which is described below in Recent Accounting Pronouncements. In accordance with Topic 606, the Company recognizes revenue using the following five-step approach: 1. Identify the contract with a customer. 2. Identify the performance obligations in the contract. 3. Determine the transaction price of the contract. 4. Allocate the transaction price to the performance obligations in the contract. 5. Recognize revenue when the performance obligations are met or delivered. Andrea utilized the modified retrospective approach when reviewing its current accounting policies to identify potential differences that would result from applying the new requirements to its customer contracts. This approach includes the evaluation of sales terms, performance obligations, variable consideration, and costs to obtain and fulfill contracts. Based on the Company’s review, management did not need to record a cumulative effect adjustment to retained earnings as of the date of initial application and application of this guidance did not have a material impact on its consolidated financial statements. The Company disaggregates its revenues into three contract types: (1) product revenues, (2) service related revenues and (3) license revenues and then further disaggregates its revenues by operating segment. Generally, product revenue is comprised of microphones and microphone connectivity product revenues. Product revenue is recognized when the Company satisfies its performance obligation by transferring promised goods to a customer. Product revenue is measured at the transaction price, which is based on the amount of consideration that the Company expects to receive in exchange for transferring the promised goods to the customer. Contracts with customers are comprised of customer purchase orders, invoices and written contracts. Customer product orders are fulfilled at a point in time and not over a period of time. The Company does not have arrangements for returns from customers and does not have any future obligations directly or indirectly related to product resale by customers. The Company has no sales incentive programs. Service related and licensing revenues are recognized based on the terms and conditions of individual contracts using the five step approach listed above, which identifies performance obligations and transaction price. Typically, Andrea receives licensing reports from its licensees approximately one quarter in arrears due to the fact that its agreements require customers to report revenues between 30-60 days after the end of the quarter. Under this accounting policy, the licensing revenues reported are not based upon estimates. In addition, service related revenues, which are short-term in nature, are generally performed on a time-and-material basis under separate service arrangements and the corresponding revenue is generally recognized as the services are performed. At December 31, 2019, the Company did not have any deferred revenue. See Note 13 for additional description of the Company’s reportable business segments and the revenue reported in each segment. |
Income Taxes | Income Taxes Andrea accounts for income taxes in accordance with ASC 740, “Income Taxes” (“ASC 740”). ASC 740 requires an asset and liability approach for financial accounting and reporting for income taxes and establishes for all entities a minimum threshold for financial statement recognition of the benefit of tax positions, and requires certain expanded disclosures. The provision for income taxes is based upon income or loss after adjustment for those permanent items that are not considered in the determination of taxable income. Deferred income taxes represent the tax effects of differences between the financial reporting and tax bases of the Company’s assets and liabilities at the enacted tax rates in effect for the years in which the differences are expected to reverse. The Company evaluates the recoverability of deferred tax assets and establishes a valuation allowance when it is more likely than not that some portion or all of the deferred tax assets will not be realized. As of December 31, 2019, the Company has recorded a full valuation allowance. Andrea expects it will reduce its valuation allowance in future periods to the extent that it can demonstrate its ability to utilize the assets. Management makes judgments as to the interpretation of the tax laws that might be challenged upon an audit and cause changes to previous estimates of tax liability. In management’s opinion, adequate provisions for income taxes have been made for all years. If actual taxable income by tax jurisdiction varies from estimates, additional allowances or reversals of reserves may be necessary. Income tax expense consists of taxes payable for the period, withholding of income tax as mandated by the foreign jurisdiction in which the revenues are earned and the change during the period in deferred tax assets and liabilities. The Company has identified its federal tax return and its state tax return in New York as "major" tax jurisdictions. Based on the Company's evaluation, it has concluded that there are no significant uncertain tax positions requiring recognition in the Company's consolidated financial statements. The Company's evaluation was performed for tax years ended 2015 through 2019. The Company believes that its income tax positions and deductions will be sustained on audit and does not anticipate any adjustments that will result in a material change to its financial position. |
Stock-Based Compensation | Stock-Based Compensation At December 31, 2019, Andrea had one stock-based employee compensation plan, which is described more fully in Note 12. Andrea accounts for stock based compensation in accordance with ASC 718, “Compensation – Stock Compensation” (“ASC 718”). ASC 718 establishes accounting for stock-based awards exchanged for employee services. Under the provisions of ASC 718, share-based compensation cost is measured at the grant date, based on the fair value of the award, and is recognized as expense over the employee’s requisite service period (generally the vesting period of the equity grant). The fair value of the Company’s common stock options are estimated using the Black Scholes option-pricing model with the following assumptions: expected volatility, dividend rate, risk free interest rate and the expected life. The Company expenses stock-based compensation by using the straight-line method. In accordance with ASC 718, excess tax benefits realized from the exercise of stock-based awards are classified in cash flows from financing activities. The future realization of the reserved deferred tax assets related to these tax benefits associated with the exercise of stock options will result in a credit to additional paid in capital if the related tax deduction reduces taxes payable. The Company has elected the “with and without approach” regarding ordering of windfall tax benefits to determine whether the windfall tax benefit did reduce taxes payable in the current year. Under this approach, the windfall tax benefit would be recognized in additional paid-in-capital only if an incremental tax benefit is realized after considering all other benefits presently available. |
Research and Development | Research and Development Andrea expenses all research and development costs as incurred. |
Advertising Expenses | Advertising Expenses All media costs of newspaper and magazine advertisements as well as trade show costs are expensed as incurred. Total advertising and marketing expenses for the years ended December 31, 2019 and 2018 were approximately $12,000 and $17,000, respectively and are included in general, administrative and selling expenses. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments ASC 820 “Fair Value Measurement and Disclosures: (“ASU 820”) defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles in the United States of America (“GAAP”), and expands disclosures about payments to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 applies to all assets and liabilities that are measured and reported on a fair value basis. The Company will apply the provisions of ASC 820 to nonfinancial assets and liabilities. Andrea calculates the fair value of financial instruments and includes this additional information in the notes to consolidated financial statements when the fair value is different than the book value of those financial instruments. When the book value approximates fair value, no additional disclosure is made. Andrea uses quoted market prices whenever available to calculate these fair values. When quoted market prices are not available, Andrea uses standard pricing models for various types of financial instruments which take into account the present value of estimated future cash flows. As of December 31, 2019 and 2018, the carrying value of all financial instruments approximated fair value. |
Use of Estimates | Use of Estimates The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and disclosures 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. Management bases its estimates on historical experience and on various assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. The most significant estimates, among other things, are used in accounting for allowances for bad debts, inventory valuation and obsolescence, product warranty, depreciation, deferred income taxes, expected realizable values for assets (primarily intangible assets), contingencies, revenue recognition as well as the recording and presentation of the Company’s convertible preferred stock. Estimates and assumptions are periodically reviewed and the effects of any material revisions are reflected in the consolidated financial statements in the period that they are determined to be necessary. Actual results could differ from those estimates and assumptions. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In January 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842).” This standard requires that a lessee recognize the assets and liabilities that arise from operating leases. A lessee should recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. In transition, lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. ASU 2016-02 became effective for fiscal years, and interim periods within those years, beginning after December 15, 2018. The Company elected the short-term lease recognition exemption for all leases that qualify. This means, for those leases that qualify, the Company will not recognize right of use (“ROU”) assets or lease liabilities, and this includes not recognizing ROU assets or lease liabilities for existing short-term leases of those assets in transition. The adoption of this standard did not have a material effect on the Company’s financial statements. See Note 11 for additional lease related disclosure. |
Subsequent Events | Subsequent Events The Company evaluates events that occurred after the balance sheet date but before the financial statements are issued. Based upon the evaluation, the Company did not identify any recognized or non-recognized subsequent events that would have required adjustment or disclosure in the consolidated financial statements. |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
Schedule of antidilutive securities excluded from computation of earnings per share | December 31, 2019 2018 Total potentially dilutive common shares as of: Stock options to purchase common stock (Note 12) 8,100,500 10,008,001 Series C Convertible Preferred Stock and related accrued dividends (Note 8) 524,736 524,736 Series D Convertible Preferred Stock (Note 9) 3,628,576 3,628,576 Total potentially dilutive common shares 12,253,812 14,161,313 |
Schedule of concentration of credit risk, customer as a percentage of total revenues | December 31, 2019 2018 Customer A 40 % 44 % Customer B 18 % * Customer C 18 % 20 % Customer D * 11 % ____________________ * Amounts are less than 10% |
INTANGIBLE ASSETS (Tables)
INTANGIBLE ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of intangible assets | December 31, 2019 2018 Core Technology $ 8,567,448 $ 8,567,448 Patents and trademarks 963,707 946,970 9,531,155 9,514,418 Less: accumulated amortization (9,300,032 ) (9,251,599 ) $ 231,123 $ 262,819 |
Schedule of changes in the carrying amount of intangible assets | Balance as of January 1, 2018 $ 284,408 Additions during the period 46,907 Amortization (68,496 ) Balance as of December 31, 2018 262,819 Additions during the period 16,737 Amortization (48,433 ) Balance as of December 31, 2019 $ 231,123 |
INVENTORIES (Tables)
INVENTORIES (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Inventory Disclosure [Abstract] | |
Schedule of inventories | December 31, 2019 2018 Raw materials $ 22,254 $ 12,855 Finished goods 187,907 200,201 $ 210,161 $ 213,056 |
PROPERTY AND EQUIPMENT, net (Ta
PROPERTY AND EQUIPMENT, net (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property and equipment, net | December 31, 2019 2018 Information Technology Equipment $ 274,735 $ 274,735 Furniture and fixtures 87,958 87,958 Tools, molds and testing equipment 212,366 212,366 575,059 575,059 Less: accumulated depreciation and amortization (548,899 ) (519,971 ) $ 26,160 $ 55,088 |
REVENUE SHARING, NOTE PURCHAS_2
REVENUE SHARING, NOTE PURCHASE AGREEMENT, AND LONG-TERM DEBT (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Revenue Sharing, Note Purchase Agreement and Long-Term Debt [Abstract] | |
Schedule of long-term debt | December 31, 2019 2018 Note Payable $ 1,684,422 $ 1,484,422 PIK interest 143,087 66,862 Total long-term debt 1,827,509 1,551,284 Less: current maturities of long-term debt - - Long-term debt, net of current maturities $ 1,827,509 $ 1,551,284 |
TRADE ACCOUNTS PAYABLE AND OT_2
TRADE ACCOUNTS PAYABLE AND OTHER CURRENT LIABILITIES (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Other Liabilities Disclosure [Abstract] | |
Schedule of trade accounts payable and other current liabilities | December 31, 2019 2018 Trade accounts payable $ 87,524 $ 86,706 Payroll and related expenses 7,788 49,937 Patent monetization expenses 107,605 124,422 Current lease liabilities 47,364 - Deferred revenue - 25,341 Professional and other service fees 140,277 94,279 Total trade accounts payable and other current liabilities $ 390,558 $ 380,685 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Schedule of provision for income tax | For the Years Ended December 31, 2019 2018 Current: Federal $ - $ - Foreign 1,805 2,563 State and Local - - Total Current 1,805 2,563 Deferred Federal 2,139,000 (229,000 ) Foreign - - State and Local 509,000 (55,000 ) Adjustment to valuation allowance related to net deferred tax assets (2,648,000 ) 284,000 Total Deferred - - Provision for income taxes $ 1,805 $ 2,563 |
Schedule of loss before income taxes | For the Years Ended December 31, 2019 2018 Domestic $ (555,843 ) $ (955,411 ) Foreign 9,082 12,866 Net loss before income taxes $ (546,761 ) $ (942,545 ) |
Schedule of effective rate for income taxes | For the Years Ended December 31, 2019 2018 Tax provision at statutory rate (21 )% )% State and local taxes (5 )% (5 )% Incentive Stock Option Expense 1 % 1 % Change in valuation allowance for net deferred tax assets 25 % 25 % - % - % |
Schedule of components of temporary differences of deferred tax asset, net | For the Years Ended December 31, 2019 2018 Deferred tax assets: Accrued expenses $ 20,000 $ 27,000 Allowance for doubtful accounts 1,000 1,000 Deferred revenue - 7,000 Reserve for obsolescence 29,000 25,000 Expense associated with non-qualified stock options 44,000 94,000 Revenue Sharing Agreement 276,000 200,000 General business credit 1,198,000 1,378,000 NOL carryforward 8,893,000 11,377,000 10,461,000 13,109,000 Less: valuation allowance (10,461,000 ) (13,109,000 ) Deferred tax asset, net $ - $ - |
Schedule of change in valuation allowance for deferred tax assets | For the Years Ended December 31, 2019 2018 Beginning Balance $ 13,109,000 $ 12,825,000 Change in Allowance (2,648,000 ) 284,000 Ending Balance $ 10,461,000 $ 13,109,000 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Operating Leases | December 31, Other Assets $ 60,362 Trade accounts payable and other current liabilities $ 47,364 Lease liabilities payable non-current 15,221 Total operating lease liabilities $ 62,585 Weighted-average remaining lease term 17 months Weighted-average discount rate 7.34% |
Schedule of Maturities of Operating Lease Liabilities | 2020 $ 48,958 2021 11,970 2022 3,990 Total 64,918 Less: interest (2,333 ) Total Lease Payments $ 62,585 |
STOCK PLANS AND STOCK-BASED C_2
STOCK PLANS AND STOCK-BASED COMPENSATION (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Share-based Payment Arrangement [Abstract] | |
Schedule of stock option activity | Options Outstanding Options Exercisable Options Weighted Weighted Weighted Options Weighted Weighted Weighted At January 1, 2019 10,008,001 $ 0.08 $ 0.08 4.81 years 8,847,351 $ 0.08 $ 0.08 4.41 years Canceled (1,907,501 ) $ 0.11 $ 0.11 At December 31, 2019 8,100,500 $ 0.07 $ 0.07 4.80 years 8,100,500 $ 0.07 $ 0.07 4.80 years |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Segment Reporting [Abstract] | |
Schedule of selected consolidated financial information for Andrea's segments | 2019 Twelve Month Segment Data Patent Andrea DSP Total 2019 Net product revenues $ - $ 1,852,322 $ 1,852,322 Service related revenues - 17,271 17,271 License revenues 950 24,697 25,647 Loss from operations (397,200 ) (79,428 ) (476,628 ) Depreciation and amortization 24,220 53,141 77,361 Purchases of patents and trademarks 8,369 8,368 16,737 Assets 257,685 1,031,786 1,289,471 Total long lived assets 115,562 141,721 257,283 2018 Twelve Month Segment Data Patent Andrea DSP Total 2018 Net product revenues $ - $ 1,391,335 $ 1,391,335 Service related revenues - 38,999 38,999 License revenues 1,241 32,959 34,200 Loss from operations (394,382 ) (495,803 ) (890,185 ) Depreciation and amortization 34,250 63,800 98,050 Purchases of patents and trademarks 23,453 23,454 46,907 Purchases of property and equipment - 24,309 24,309 Assets 287,206 1,231,802 1,519,008 Total long lived assets 131,410 186,497 317,907 |
Schedule of total revenues and accounts receivable by geographic area | Geographic Data 2019 2018 Total Revenues: United States $ 1,420,447 $ Foreign (1) 474,793 355,785 $ 1,895,240 $ 1,464,534 Accounts receivable: United States $ 218,935 $ 293,978 Foreign 159,244 124,703 $ 378,179 $ 418,681 ____________________ (1) Net revenues to any one foreign country did not exceed 10% for the year ended December 31, 2019 or 2018. |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Narrative) (Details) | 12 Months Ended | ||
Dec. 31, 2019USD ($)Institutions | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | |
Summary of Significant Accounting Policies (Textual) | |||
Number of financial institutions where cash is held | Institutions | 4 | ||
Description of revenue from contracts with customers | Service related and licensing revenues are recognized based on the terms and conditions of individual contracts using the five step approach listed above, which identifies performance obligations and transaction price. Typically, Andrea receives licensing reports from its licensees approximately one quarter in arrears due to the fact that its agreements require customers to report revenues between 30-60 days after the end of the quarter. | ||
Loss before income taxes | $ (546,761) | $ (942,545) | |
Non-cash stock based compensation | 95,000 | 144,000 | |
Cash | 335,790 | 486,521 | $ 1,164,057 |
Positive working capital | 556,850 | ||
Advertising and marketing expenses | $ 12,000 | $ 17,000 | |
Underlying asset lease term, description | A term of 12 months or less. | ||
Net Revenue [Member] | |||
Summary of Significant Accounting Policies (Textual) | |||
Concentration of credit risk, customers accounted | 10% or more | ||
Accounts Receivable [Member] | Customer A [Member] | |||
Summary of Significant Accounting Policies (Textual) | |||
Concentration risk percentage | 39.00% | 55.00% | |
Accounts Receivable [Member] | Customer B [Member] | |||
Summary of Significant Accounting Policies (Textual) | |||
Concentration risk percentage | 31.00% | 14.00% | |
Accounts Receivable [Member] | Customer C [Member] | |||
Summary of Significant Accounting Policies (Textual) | |||
Concentration risk percentage | 17.00% | 19.00% | |
Minimum [Member] | |||
Summary of Significant Accounting Policies (Textual) | |||
Estimated useful life of property and equipment | 3 years | ||
Minimum [Member] | Patents and Trademarks [Member] | |||
Summary of Significant Accounting Policies (Textual) | |||
Estimated useful life of intangible assets | 10 years | ||
Minimum [Member] | Core Technology [Member] | |||
Summary of Significant Accounting Policies (Textual) | |||
Estimated useful life of intangible assets | 10 years | ||
Maximum [Member] | |||
Summary of Significant Accounting Policies (Textual) | |||
Estimated useful life of property and equipment | 10 years | ||
Maximum [Member] | Patents and Trademarks [Member] | |||
Summary of Significant Accounting Policies (Textual) | |||
Estimated useful life of intangible assets | 20 years | ||
Maximum [Member] | Core Technology [Member] | |||
Summary of Significant Accounting Policies (Textual) | |||
Estimated useful life of intangible assets | 20 years |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Schedule of antidilutive securities) (Details) - shares | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Summary of antidilutive securities excluded from computation of earnings per share | ||
Total potentially dilutive common shares | 12,253,812 | 14,161,313 |
Series C Convertible Preferred Stock and related accrued dividends [Member] | ||
Summary of antidilutive securities excluded from computation of earnings per share | ||
Total potentially dilutive common shares | 524,736 | 524,736 |
Series D Convertible Preferred Stock [Member] | ||
Summary of antidilutive securities excluded from computation of earnings per share | ||
Total potentially dilutive common shares | 3,628,576 | 3,628,576 |
Stock options to purchase common stock [Member] | ||
Summary of antidilutive securities excluded from computation of earnings per share | ||
Total potentially dilutive common shares | 8,100,500 | 10,008,001 |
SUMMARY OF SIGNIFICANT ACCOUN_6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Schedule of concentration of credit risk, percentage of total revenues) (Details) - Revenue [Member] | 12 Months Ended | |||
Dec. 31, 2019 | Dec. 31, 2018 | |||
Customer A [Member] | ||||
Summary of concentration of credit risk, customer as a percentage of total revenues | ||||
Concentration risk percentage | 40.00% | 44.00% | ||
Customer B [Member] | ||||
Summary of concentration of credit risk, customer as a percentage of total revenues | ||||
Concentration risk percentage | 18.00% | [1] | ||
Customer C [Member] | ||||
Summary of concentration of credit risk, customer as a percentage of total revenues | ||||
Concentration risk percentage | 18.00% | 20.00% | ||
Customer D [Member] | ||||
Summary of concentration of credit risk, customer as a percentage of total revenues | ||||
Concentration risk percentage | [1] | 11.00% | ||
[1] | Amounts are less than 10% |
INTANGIBLE ASSETS (Narrative) (
INTANGIBLE ASSETS (Narrative) (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Intangible Assets (Textual) | ||
Amortization expense | $ 48,433 | $ 68,496 |
Estimated amortization expense of intangible assets, Year One | 36,000 | |
Estimated amortization expense of intangible assets, Year Two | 27,000 | |
Estimated amortization expense of intangible assets, Year Three | 26,000 | |
Estimated amortization expense of intangible assets, Year Four | 24,000 | |
Estimated amortization expense of intangible assets, Year Five | $ 24,000 | |
Trademarks And Patents [Member] | Minimum [Member] | ||
Intangible Assets (Textual) | ||
Estimated useful life of intangible assets | 10 years | |
Trademarks And Patents [Member] | Maximum [Member] | ||
Intangible Assets (Textual) | ||
Estimated useful life of intangible assets | 20 years |
INTANGIBLE ASSETS (Schedule of
INTANGIBLE ASSETS (Schedule of intangible assets) (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Summary of finite lived Intangible assets | |||
Intangible assets, Gross | $ 9,531,155 | $ 9,514,418 | |
Less: accumulated amortization | (9,300,032) | (9,251,599) | |
Intangible assets, net | 231,123 | 262,819 | $ 284,408 |
Core Technology [Member] | |||
Summary of finite lived Intangible assets | |||
Intangible assets, Gross | 8,567,448 | 8,567,448 | |
Trademarks And Patents [Member] | |||
Summary of finite lived Intangible assets | |||
Intangible assets, Gross | $ 963,707 | $ 946,970 |
INTANGIBLE ASSETS (Schedule o_2
INTANGIBLE ASSETS (Schedule of changes in the carrying amount of intangible assets) (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Summary of changes the carrying amount of finite lived intangible assets of Patents and Trademarks | ||
Beginning balance | $ 262,819 | $ 284,408 |
Additions during the period | 16,737 | 46,907 |
Amortization | (48,433) | (68,496) |
Ending balance | $ 231,123 | $ 262,819 |
INVENTORIES (Schedule of invent
INVENTORIES (Schedule of inventories) (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Inventory Net | ||
Raw materials | $ 22,254 | $ 12,855 |
Finished goods | 187,907 | 200,201 |
Inventories, net | $ 210,161 | $ 213,056 |
PROPERTY AND EQUIPMENT, net (Na
PROPERTY AND EQUIPMENT, net (Narrative) (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Property and Equipment, net (Textual) | ||
Depreciation and amortization of property and equipment | $ 548,899 | $ 519,971 |
Property, Plant and Equipment [Member] | ||
Property and Equipment, net (Textual) | ||
Depreciation and amortization of property and equipment | $ 28,928 | $ 29,554 |
PROPERTY AND EQUIPMENT, net (Sc
PROPERTY AND EQUIPMENT, net (Schedule of property and equipment, net) (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Property, Plant and Equipment [Line Items] | ||
Property and equipment, net, gross | $ 575,059 | $ 575,059 |
Less: accumulated depreciation and amortization | (548,899) | (519,971) |
Property and equipment, net | 26,160 | 55,088 |
Information Technology Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, net, gross | 274,735 | 274,735 |
Furniture and Fixtures [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, net, gross | 87,958 | 87,958 |
Tools, molds and testing equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, net, gross | $ 212,366 | $ 212,366 |
REVENUE SHARING, NOTE PURCHAS_3
REVENUE SHARING, NOTE PURCHASE AGREEMENT, AND LONG-TERM DEBTt (Narrative) (Details) - USD ($) | 12 Months Ended | |||
Dec. 31, 2019 | Dec. 31, 2018 | Mar. 06, 2020 | Sep. 30, 2016 | |
Debt Instrument [Line Items] | ||||
Advance from revenue sharing agreement | $ 3,500,000 | |||
Additional notes outstanding | $ 1,684,422 | |||
Percentage of monetization revenue applied for payment of accrued and unpaid interest | 100.00% | |||
Additional notes an aggregate amount | $ 11,500,000 | $ 7,500,000 | ||
Maturity date for notes | Aug. 31, 2022 | |||
PIK interest | $ 143,087 | 66,862 | ||
London Interbank Offered Rate (LIBOR) [Member] | ||||
Debt Instrument [Line Items] | ||||
Interest rate | 2.00% | |||
Description of interest rate | The unpaid principal amount of the Additional Notes (including any PIK Interest) has an interest rate equal to LIBOR (as defined in the Revenue Sharing Agreement) plus 2% per annum, (totaling 4.10% and 4.40% at December 31, 2019 and 2018, respectively); provided that upon and during the continuance of an Event of Default (as set forth in the Revenue Sharing Agreement), the interest rate will increase an additional 2% per annum. | |||
Minimum [Member] | ||||
Debt Instrument [Line Items] | ||||
Percentage of revenue allocated to revenue participants | 20.00% | |||
Maximum [Member] | ||||
Debt Instrument [Line Items] | ||||
Percentage of revenue allocated to revenue participants | 50.00% | |||
AND34 Funding LLC [Member] | ||||
Debt Instrument [Line Items] | ||||
Note issued | $ 200,000 | $ 300,000 | ||
Additional notes can be issued amount | $ 3,900,000 | |||
AND34 Funding LLC [Member] | Subsequent Event [Member] | ||||
Debt Instrument [Line Items] | ||||
Additional notes can be issued amount | $ 100,000 |
REVENUE SHARING, NOTE PURCHAS_4
REVENUE SHARING, NOTE PURCHASE AGREEMENT, AND LONG-TERM DEBT (Schedule of long-term debt) (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Revenue Sharing, Note Purchase Agreement and Long-Term Debt [Abstract] | ||
Note Payable | $ 1,684,422 | $ 1,484,422 |
PIK interest | 143,087 | 66,862 |
Total long-term debt | 1,827,509 | 1,551,284 |
Less: current maturities of long-term debt | ||
Long-term debt, net of current maturities | $ 1,827,509 | $ 1,551,284 |
TRADE ACCOUNTS PAYABLE AND OT_3
TRADE ACCOUNTS PAYABLE AND OTHER CURRENT LIABILITIES (Schedule of trade payable and other current liabilities) (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Other Current Liabilities | ||
Trade accounts payable | $ 87,524 | $ 86,706 |
Payroll and related expenses | 7,788 | 49,937 |
Patent monetization expenses | 107,605 | 124,422 |
Current lease liabilities | 47,364 | |
Deferred revenue | 25,341 | |
Professional and other service fees | 140,277 | 94,279 |
Total trade accounts payable and other current liabilities | $ 390,558 | $ 380,685 |
SERIES C CONVERTIBLE PREFERRE_2
SERIES C CONVERTIBLE PREFERRED STOCK (Details) - USD ($) | 1 Months Ended | 12 Months Ended | ||
Jul. 17, 2018 | Oct. 10, 2000 | Dec. 31, 2019 | Dec. 31, 2018 | |
Series C Convertible Preferred Stock (Textual) | ||||
Preferred stock, $.01 par value; authorized: 2,497,500 shares; none issued and outstanding | ||||
Accrued Series C Preferred Stock Dividends | $ 19,168 | $ 19,168 | ||
Series C Convertible Preferred Stock and related accrued dividends [Member] | ||||
Series C Convertible Preferred Stock (Textual) | ||||
Proceed from issuance of private placement | $ 7,500,000 | |||
Preferred stock, $.01 par value; authorized: 2,497,500 shares; none issued and outstanding | 10,000 | |||
Increase in stated value of preferred stock | $ 1,671 | |||
Additional increase per annum value of preferred stock | 5.00% | |||
Preferred stock, conversion price | $ 0.2551 | $ 0.2551 | ||
Description of additional stated value | The additional amount of $1,671 represents the 5% per annum from October 10, 2000 through February 17, 2004. | |||
Number of common stock shares conversion of preferred stock | 1,000,022 | 524,736 | ||
Shares, outstanding | 11.469249 | |||
Accrued Series C Preferred Stock dividends, Shares | 21.85765 |
SERIES D CONVERTIBLE PREFERRE_2
SERIES D CONVERTIBLE PREFERRED STOCK (Details) - USD ($) | 1 Months Ended | 12 Months Ended | |||
Jun. 04, 2004 | Feb. 23, 2004 | Dec. 31, 2019 | Dec. 31, 2018 | Feb. 17, 2004 | |
Series D Convertible Preferred Stock (Textual) | |||||
Investment amount under agreement | $ 2,500,000 | ||||
Preferred stock, shares outstanding | |||||
Series D Convertible Preferred Stock [Member] | |||||
Series D Convertible Preferred Stock (Textual) | |||||
Shares purchased under agreement amount | $ 1,250,000 | $ 1,250,000 | |||
Shares purchased under agreement shares | 1,250,000 | 1,250,000 | |||
Number of common stock for exercise of warrant | 2,500,000 | 2,500,000 | |||
Conversion price | $ 0.25 | $ 0.25 | |||
Description of registration delay payment | This payment is to be paid in cash and is equal to the product of (i) the stated value of such Preferred Shares multiplied by (ii) the product of (1) .0005 multiplied by (2) the number of days that sales cannot be made pursuant to the Registration Statement. | ||||
Preferred stock, shares outstanding | 907,144 | ||||
Number of common stock shares conversion of preferred stock | 5,000,000 | 5,000,000 | 3,628,576 | ||
Exercise warrant, period | Warrants were exercisable at any time after December 4, 2004 and before June 4, 2009. | Warrants were exercisable at any time after August 17, 2004. | |||
Warrants, exercise price | $ 0.17 | $ 0.38 | |||
Warrants expiration date | Jun. 4, 2009 | Feb. 23, 2009 |
INCOME TAXES (Narrative) (Detai
INCOME TAXES (Narrative) (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Income Taxes (Textual) | ||
Operating loss and credit carryforwards expiration, Description | Andrea had net operating loss carryforwards of approximately $34,200,000. $1,500,000 of these net operating loss carryforwards are carried forward indefinitely, the remaining $32,700,000 expire in varying amounts beginning in 2020 through 2037. | |
General business credits expiration, Description | Andrea has General Business Credits of approximately $1,200,000 expiring in varying amounts beginning in 2020 through 2039. | |
Provision for income taxes | $ 1,805 | $ 2,563 |
INCOME TAXES (Schedule of provi
INCOME TAXES (Schedule of provision for income tax) (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Current: | ||
Federal | ||
Foreign | 1,805 | 2,563 |
State and Local | ||
Total Current | 1,805 | 2,563 |
Deferred | ||
Federal | 2,139,000 | (229,000) |
Foreign | ||
State and Local | 509,000 | (55,000) |
Adjustment to valuation allowance related to net deferred tax assets | (2,648,000) | 284,000 |
Total Deferred | ||
Provision for income taxes | $ 1,805 | $ 2,563 |
INCOME TAXES (Schedule of loss
INCOME TAXES (Schedule of loss before income taxes) (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Schedule of loss before income taxes | ||
Domestic | $ (555,843) | $ (955,411) |
Foreign | 9,082 | 12,866 |
Net loss before income taxes | $ (546,761) | $ (942,545) |
INCOME TAXES (Schedule of effec
INCOME TAXES (Schedule of effective rate for income taxes) (Details) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Schedule of reconciliation between effective income taxes rate and statutory federal tax rate | ||
Tax provision at statutory rate | (21.00%) | (21.00%) |
State and local taxes | (5.00%) | (5.00%) |
Incentive Stock Option Expense | 1.00% | 1.00% |
Change in valuation allowance for net deferred tax assets | 25.00% | 25.00% |
Effective income tax rate |
INCOME TAXES (Schedule of compo
INCOME TAXES (Schedule of components of temporary differences of deferred tax asset, net) (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Deferred tax assets: | |||
Accrued expenses | $ 20,000 | $ 27,000 | |
Allowance for doubtful accounts | 1,000 | 1,000 | |
Deferred revenue | 7,000 | ||
Reserve for obsolescence | 29,000 | 25,000 | |
Expense associated with non-qualified stock options | 44,000 | 94,000 | |
Revenue Sharing Agreement | 276,000 | 200,000 | |
General business credit | 1,198,000 | 1,378,000 | |
NOL carryforward | 8,893,000 | 11,377,000 | |
Deferred tax assets, gross | 10,461,000 | 13,109,000 | |
Less: valuation allowance | (10,461,000) | (13,109,000) | $ (12,825,000) |
Deferred tax asset, net |
INCOME TAXES (Schedule of chang
INCOME TAXES (Schedule of change in valuation allowance for deferred tax assets) (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | ||
Beginning Balance | $ 13,109,000 | $ 12,825,000 |
Change in Allowance | (2,648,000) | 284,000 |
Ending Balance | $ 10,461,000 | $ 13,109,000 |
COMMITMENTS AND CONTINGENCIES_2
COMMITMENTS AND CONTINGENCIES (Narrative) (Details) | 1 Months Ended | |||
May 31, 2015SquareFeet | Aug. 31, 2014USD ($) | Nov. 11, 2008 | Dec. 31, 2019USD ($) | |
Commitments and Contingencies (Textual) | ||||
Lease expiration date | Oct. 31, 2020 | |||
Area of warehousing, sales and executive offices | SquareFeet | 3,000 | |||
Lease and rental expense, Description | The current monthly rent under this lease is $2,910 with annual escalations of 3.5%. | |||
Employment agreements, description | The Company entered into an amended and restated change in control agreement with Corisa Guiffre, Vice President, Chief Financial Officer and Assistant Corporate Secretary of the Company. The change in control agreement provides Ms. Guiffre with a severance benefit upon termination in connection with a change in control (as defined in the agreement). If Ms. Guiffre is terminated following a change in control, the Company will pay Ms. Guiffre a sum equal to three times Ms. Guiffre’s average annual compensation for the five preceding taxable years. All restrictions on any restricted stock will lapse immediately and incentive stock options and stock appreciation rights, if any, will become immediately exercisable in the event of a change in control. Upon the occurrence of a change in control followed by Ms. Guiffre’s termination of employment, the Company will cause to be continued life, medical, dental and disability coverage. Such coverage and payments shall cease upon the expiration of 36 full calendar months following the date of termination. | |||
Assets and corresponding operating lease liabilities | $ 77,547 | |||
Lease terms | 17 months | |||
Property, Plant and Equipment [Member] | Minimum [Member] | ||||
Commitments and Contingencies (Textual) | ||||
Lease terms | 1 year | |||
Property, Plant and Equipment [Member] | Maximum [Member] | ||||
Commitments and Contingencies (Textual) | ||||
Lease terms | 2 years | |||
Chief Executive Officer [Member] | ||||
Commitments and Contingencies (Textual) | ||||
Term of employment agreement | The effective date of the original employment agreement was August 1, 2014 and it currently expires on July 31, 2020, subject to renewal as approved by the Compensation Committee of the Board of Directors. | |||
Annual base salary | $ 216,000 | |||
Percentage of quarterly bonus | 5.00% | |||
Maximum quarterly bonus | $ 12,500 | |||
Percentage of annual bonus | 9.00% | |||
Annual pre-bonus net after tax earnings, Minimum | $ 300,000 | |||
Annual pre-bonus net after tax earnings, Maximum | $ 3,000,000 | |||
Percentage of adjusted pre-annual bonus | 3.00% | |||
Annual pre-bonus adjusted net after tax earnings, Maximum | $ 3,000,000 | |||
Description of employment agreement with Mr. Andrea | Mr. Andrea is entitled to a change in control payment equal to twelve months of Mr. Andrea’s most recent base salary plus a pro-rated portion of Mr. Andrea's most recent annual and four quarterly bonuses paid immediately preceding the change of control, continuation of health and medical benefits for twelve months and immediate vesting of all stock options in the event of a change in control during the term of his agreement and subsequent termination of his employment within twelve months following the change of control. In the event of his termination without cause or resignation with the Company’s consent, Mr. Andrea is entitled to a severance payment equal to two months of his base salary, plus the two months pro-rated portion of his most recent annual and quarterly bonuses, payment of $12,500, the un-paid bonus for the quarter ended September 30, 2017 and a continuation of health insurance coverage for Mr. Andrea and his dependents for 6 months. | |||
Future minimum cash commitments | $ 126,000 |
COMMITMENTS AND CONTINGENCIES_3
COMMITMENTS AND CONTINGENCIES (Schedule of Operating Leases) (Details) | Dec. 31, 2019USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
Other Assets | $ 60,362 |
Trade accounts payable and other current liabilities | 47,364 |
Lease liabilities payable non-current | 15,221 |
Total operating lease liabilities | $ 62,585 |
Weighted-average remaining lease term | 17 months |
Weighted-average discount rate | 7.34% |
COMMITMENTS AND CONTINGENCIES_4
COMMITMENTS AND CONTINGENCIES (Schedule of Maturities of Operating Lease Liabilities) (Details) | Dec. 31, 2019USD ($) |
Maturities of operating lease liabilities | |
2020 | $ 48,958 |
2021 | 11,970 |
2022 | 3,990 |
Total | 64,918 |
Less: interest | (2,333) |
Total Lease Payments | $ 62,585 |
STOCK PLANS AND STOCK-BASED C_3
STOCK PLANS AND STOCK-BASED COMPENSATION (Narrative) (Details) - USD ($) | 12 Months Ended | |||
Dec. 31, 2019 | Dec. 31, 2018 | Aug. 31, 2019 | Oct. 31, 2006 | |
Stock Plans and Stock-Based Compensation (Textual) | ||||
Total compensation expense recognized related to stock option awards | $ 17,710 | $ 45,920 | ||
Options vested | 1,160,650 | |||
Weighted average exercise price, Vested | $ 0.05 | |||
Weighted average fair value of option | 0.05 | |||
Option [Member] | ||||
Stock Plans and Stock-Based Compensation (Textual) | ||||
Common stock fair value | $ 0.02 | |||
Option outstanding aggregated intrinsic value | $ 8,100,500 | |||
Selling, General and Administrative Expenses [Member] | ||||
Stock Plans and Stock-Based Compensation (Textual) | ||||
Total compensation expense recognized related to stock option awards | 15,659 | 42,430 | ||
Research and Development Expense [Member] | ||||
Stock Plans and Stock-Based Compensation (Textual) | ||||
Total compensation expense recognized related to stock option awards | $ 2,051 | $ 3,490 | ||
Stock Compensation Plan One [Member] | ||||
Stock Plans and Stock-Based Compensation (Textual) | ||||
Stock options vesting periods | 4 years | |||
Stock options contractual terms | 10 years | |||
Stock option exercisable | 10,000,000 | 18,000,000 |
STOCK PLANS AND STOCK-BASED C_4
STOCK PLANS AND STOCK-BASED COMPENSATION (Schedule of Stock Option Activity) (Details) - 2006 Plan [Member] | 12 Months Ended |
Dec. 31, 2019$ / sharesshares | |
Summary of stock options activity | |
Options Outstanding, Beginning balance | shares | 10,008,001 |
Options Outstanding, Canceled | shares | (1,907,501) |
Options Outstanding, Ending balance | shares | 8,100,500 |
Options Outstanding, Weighted Average Exercise Price, Beginning balance | $ 0.08 |
Options Outstanding, Weighted Average Exercise Price, Canceled | 0.11 |
Options Outstanding, Weighted Average Exercise Price, Ending balance | 0.07 |
Options Outstanding, Weighted Average Fair Value, Beginning balance | $ 0.08 |
Options Outstanding, Weighted Average Fair Value, Canceled | shares | 0.11 |
Options Outstanding, Weighted Average Fair Value, Ending balance | $ 0.07 |
Options Outstanding, Weighted Average Remaining Contractual Life, Beginning balance | 4 years 9 months 22 days |
Options Outstanding, Weighted Average Remaining Contractual Life, Ending balance | 4 years 9 months 18 days |
Options Exercisable, Beginning balance | shares | 8,847,351 |
Options Exercisable, Ending balance | shares | 8,100,500 |
Options Exercisable, Weighted Average Exercise Price, Beginning balance | $ 0.08 |
Options Exercisable, Weighted Average Exercise Price, Ending balance | 0.07 |
Options Exercisable, Weighted Average Fair Value, Beginning balance | 0.08 |
Options Exercisable, Weighted Average Fair Value, Ending balance | $ 0.07 |
Options Exercisable, Weighted Average Remaining Contractual Life, Beginning balance | 4 years 4 months 28 days |
Options Exercisable, Weighted Average Remaining Contractual Life, Ending balance | 4 years 9 months 18 days |
SEGMENT INFORMATION (Narrative)
SEGMENT INFORMATION (Narrative) (Details) | 12 Months Ended |
Dec. 31, 2019Segments | |
Segment Information (Textual) | |
Number of operating segments | 2 |
Percentage of net revenues | 10.00% |
SEGMENT INFORMATION (Schedule o
SEGMENT INFORMATION (Schedule of selected consolidated financial information for Andrea's segments) (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Summary of condensed consolidated interim financial information for Andrea's segments | ||
Net product revenues | $ 1,852,322 | $ 1,391,335 |
Service related revenues | 17,271 | 38,999 |
License revenues | 42,918 | 73,199 |
Loss from operations | (476,628) | (890,185) |
Depreciation and amortization | 77,361 | 98,050 |
Purchases of patents and trademarks | 16,737 | 46,907 |
Purchases of property and equipment | 24,309 | |
Assets | 1,289,471 | 1,519,008 |
Total long lived assets | 257,283 | 317,907 |
Patent Monetization [Member] | ||
Summary of condensed consolidated interim financial information for Andrea's segments | ||
Net product revenues | ||
Service related revenues | ||
License revenues | 950 | 1,241 |
Loss from operations | (397,200) | (394,382) |
Depreciation and amortization | 24,220 | 34,250 |
Purchases of patents and trademarks | 8,369 | 23,453 |
Purchases of property and equipment | ||
Assets | 257,685 | 287,206 |
Total long lived assets | 115,562 | 131,410 |
Andrea Dsp Microphone and Audio Software Products [Member] | ||
Summary of condensed consolidated interim financial information for Andrea's segments | ||
Net product revenues | 1,852,322 | 1,391,335 |
Service related revenues | 17,271 | 38,999 |
License revenues | 24,697 | 32,959 |
Loss from operations | (79,428) | (495,803) |
Depreciation and amortization | 53,141 | 63,800 |
Purchases of patents and trademarks | 8,368 | 23,454 |
Purchases of property and equipment | 24,309 | |
Assets | 1,031,786 | 1,231,802 |
Total long lived assets | $ 141,721 | $ 186,497 |
SEGMENT INFORMATION (Schedule_2
SEGMENT INFORMATION (Schedule of total revenues and accounts receivable by geographic area) (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | ||
Summary of total revenues and accounts receivable by geographic area | |||
Total Revenues | $ 1,895,240 | $ 1,464,534 | |
Accounts receivable | 378,179 | 418,681 | |
United States [Member] | |||
Summary of total revenues and accounts receivable by geographic area | |||
Total Revenues | 1,420,447 | 1,108,749 | |
Accounts receivable | 218,935 | 293,978 | |
Foreign [Member] | |||
Summary of total revenues and accounts receivable by geographic area | |||
Total Revenues | [1] | 474,793 | 355,785 |
Accounts receivable | $ 159,244 | $ 124,703 | |
[1] | Net revenues to any one foreign country did not exceed 10% for the year ended December 31, 2019 or 2018. |