Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2020 | Mar. 11, 2021 | Jun. 30, 2020 | |
Cover [Abstract] | |||
Entity Registrant Name | RESEARCH FRONTIERS INC | ||
Entity Central Index Key | 0000793524 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2020 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity a Well-known Seasoned Issuer | No | ||
Entity a Voluntary Filer | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Small Business Flag | true | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 101,397,136 | ||
Entity Common Stock, Shares Outstanding | 31,650,396 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2020 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Current assets: | ||
Cash and cash equivalents | $ 4,772,705 | $ 6,591,960 |
Royalties receivable, net of reserves of $972,202 in 2020 and $1,135,598 in 2019 | 598,292 | 656,062 |
Prepaid expenses and other current assets | 56,512 | 58,835 |
Total current assets | 5,427,509 | 7,306,857 |
Fixed assets, net | 121,772 | 141,720 |
Operating lease ROU assets | 616,442 | 773,989 |
Deposits and other assets | 33,567 | 33,567 |
Total assets | 6,199,290 | 8,256,133 |
Current liabilities: | ||
Current portion of operating lease liability | 166,377 | 163,236 |
Accounts payable | 33,410 | 169,750 |
Accrued expenses and other | 26,279 | 46,709 |
Deferred revenue | 7,734 | |
Total current liabilities | 226,066 | 387,429 |
Operating lease liability, net of current portion | 646,219 | 812,596 |
Total liabilities | 872,285 | 1,200,025 |
Shareholders' equity: | ||
Common stock, par value $0.0001 per share; authorized 100,000,000 shares, issued and outstanding 31,575,786 in 2020 and 31,254,262 in 2019 | 3,158 | 3,125 |
Additional paid-in capital | 123,164,623 | 122,552,895 |
Accumulated deficit | (117,840,776) | (115,499,912) |
Total shareholders' equity | 5,327,005 | 7,056,108 |
Total liabilities and shareholders' equity | $ 6,199,290 | $ 8,256,133 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Statement of Financial Position [Abstract] | ||
Royalties receivables, reserves | $ 972,202 | $ 1,135,598 |
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 31,575,786 | 31,254,262 |
Common stock, shares outstanding | 31,575,786 | 31,254,262 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Income Statement [Abstract] | ||
Fee income | $ 828,450 | $ 1,564,024 |
Operating expenses | 2,777,535 | 3,677,740 |
Research and development | 628,304 | 1,035,623 |
Total expenses | 3,405,839 | 4,713,363 |
Operating loss | (2,577,389) | (3,149,339) |
Warrant market adjustment | (652,025) | |
Loss on disposal of fixed asset | (50,666) | |
PPP loan forgiveness | 202,052 | |
Net investment income | 34,473 | 43,052 |
Net loss | $ (2,340,864) | $ (3,808,978) |
Basic and diluted net loss per common share | $ (0.07) | $ (0.13) |
Weighted average number of common shares outstanding | 31,487,785 | 30,011,556 |
Consolidated Statements of Shar
Consolidated Statements of Shareholders' Equity - USD ($) | Common Stock [Member] | Additional Paid-in Capital [Member] | Accumulated Deficit [Member] | Total |
Balance beginning at Dec. 31, 2018 | $ 2,767 | $ 114,787,657 | $ (111,690,934) | $ 3,099,490 |
Balance beginning, shares at Dec. 31, 2018 | 27,665,211 | |||
Exercise of options and warrants | $ 158 | 1,170,388 | 1,170,546 | |
Exercise of options and warrants, shares | 1,587,814 | |||
Issuance of capital stock | $ 200 | 4,599,799 | 4,599,999 | |
Issuance of capital stock, shares | 2,001,237 | |||
Warrants converted to equity | 1,153,439 | 1,153,439 | ||
Share-based compensation | 841,612 | 841,612 | ||
Net loss | (3,808,978) | (3,808,978) | ||
Balance ending at Dec. 31, 2019 | $ 3,125 | 122,552,895 | (115,499,912) | 7,056,108 |
Balance ending, shares at Dec. 31, 2019 | 31,254,262 | |||
Exercise of options and warrants | $ 33 | 284,174 | 284,207 | |
Exercise of options and warrants, shares | 321,524 | |||
Share-based compensation | 327,554 | 327,554 | ||
Net loss | (2,340,864) | (2,340,864) | ||
Balance ending at Dec. 31, 2020 | $ 3,158 | $ 123,164,623 | $ (117,840,776) | $ 5,327,005 |
Balance ending, shares at Dec. 31, 2020 | 31,575,786 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Cash flows from operating activities: | ||
Net loss | $ (2,340,864) | $ (3,808,978) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 67,082 | 195,377 |
Warrant market adjustment | 652,025 | |
Share-based compensation | 327,554 | 841,612 |
Loss on disposal of fixed asset | 50,666 | |
Bad debts | 81,367 | 156,636 |
Other income - PPP loan forgiveness | (202,052) | |
Change in assets and liabilities: | ||
Royalty receivables | (23,597) | (123,021) |
Prepaid expenses and other current assets | 2,323 | (6,104) |
Accounts payable and accrued expenses | (156,770) | 1,904 |
Deferred revenue | (7,734) | (42,836) |
Net cash used in operating activities | (2,252,691) | (2,082,719) |
Cash flows from investing activities: | ||
Purchases of fixed assets | (56,536) | (65,282) |
Proceeds from sale of fixed asset | 3,713 | |
Net cash used in investing activities | (52,823) | (65,282) |
Cash flows from financing activities: | ||
Net proceeds from issuances of common stock and warrants and exercise of options and warrants | 284,207 | 5,770,545 |
Proceeds from PPP loan | 202,052 | |
Net cash provided by financing activities | 486,259 | 5,770,545 |
Net (decrease) increase in cash and cash equivalents | (1,819,255) | 3,622,544 |
Cash and cash equivalents at beginning of year | 6,591,960 | 2,969,416 |
Cash and cash equivalents at end of year | $ 4,772,705 | $ 6,591,960 |
Business and Basis for Presenta
Business and Basis for Presentation | 12 Months Ended |
Dec. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Business and Basis for Presentation | (1) Business and Basis for Presentation Research Frontiers Incorporated (“Research Frontiers” or the “Company”) operates in a single business segment which is engaged in the development and marketing of technology and devices to control the flow of light. Such devices, often referred to as “light valves” or suspended particle devices (“SPDs”), use colloidal particles that are either incorporated within a liquid suspension or a film, which is usually enclosed between two sheets of glass or plastic having transparent, electrically conductive coatings on the facing surfaces thereof. At least one of the two sheets is transparent. SPD technology, made possible by a flexible light-control film invented by Research Frontiers, allows the user to instantly and precisely control the shading of glass/plastic manually or automatically. SPD technology has numerous product applications, including SPD-Smart™ windows, sunshades, skylights and interior partitions for homes and buildings; automotive windows, sunroofs, sun visors, sunshades, rear-view mirrors, instrument panels and navigation systems; aircraft windows; museum display panels, eyewear products; and flat panel displays for electronic products. SPD-Smart light control film is now being developed for, or used in, architectural, automotive, marine, aerospace and appliance applications. The Company has primarily utilized its cash, cash equivalents, and investments generated from sales of our common stock, proceeds from the exercise of options and warrants, and royalty fees collected to fund its research and development of SPD light valves, for marketing initiatives, and for other working capital purposes. The Company’s working capital and capital requirements depend upon numerous factors, including the results of research and development activities, competitive and technological developments, the timing and cost of patent filings, and the development of new licensees and changes in the Company’s relationships with its existing licensees. The degree of dependence of the Company’s working capital requirements on each of the foregoing factors cannot be quantified; increased research and development activities and related costs would increase such requirements; the addition of new licensees may provide additional working capital or working capital requirements, and changes in relationships with existing licensees would have a favorable or negative impact depending upon the nature of such changes. We have incurred recurring losses since inception and expect to continue to incur losses as a result of costs and expenses related to our research and continued development of our SPD technology and our corporate general and administrative expenses. Our limited capital resources and operations to date have been substantially funded through sales of our common stock, exercise of options and warrants and royalty fees collected. As of December 31, 2020, we had working capital of approximately $5.2 million, cash and cash equivalents of approximately $4.8 million, shareholders’ equity of approximately $5.3 million and an accumulated deficit of approximately $117.8 million. Our projected cash flow shortfall based on our current operations adjusted for any non-recurring cash expenses for the next 12 months is approximately $400,000-$450,000 per quarter. Based on our current expectations of our cash flow shortfall for the next 12 months, our working capital would support our activities for the next 33 months. In the event that we are unable to generate sufficient cash from our operating activities or raise additional funds, we may be required to delay, reduce or severely curtail our operations or otherwise impede our on-going business efforts, which could have a material adverse effect on our business, operating results, financial condition and long-term prospects. The Company may seek to obtain additional funding through future equity issuances. There can be no assurance as to the availability or terms upon which such financing and capital might be available. The eventual success of the Company and generation of positive cash flow will be dependent upon the commercialization of products using the Company’s technology by the Company’s licensees and payments of continuing royalties on account thereof. To date, the Company has not generated sufficient revenue from its licensees to fund its operations. Recent Global Events: On March 11, 2020, the World Health Organization declared the novel strain of coronavirus (“COVID-19”) a global pandemic and recommended containment and mitigation measures worldwide. As a result, the Company expects operations at its facility to continue to be affected in some capacity, as the COVID-19 virus continues to proliferate and the federal, state and local governments under which we operate continue to adopt new rules. The Company has put in place enhanced procedures, such as restricting international and domestic travel, adopting a variety of steps designed to ensure social distancing in our facilities, including working remotely where available, and increasing our cleaning and sanitizing procedures in our facilities, in an effort to protect its employees and communities. Revenues were negatively impacted in our second, third and fourth quarters due to delays in manufacture of products using our technology. Most of the products using our technology are manufactured by licensees overseas in Europe and Asia who have been similarly affected by the pandemic. The disruption caused by public health crises, such as COVID-19, could result in lower levels of sale activity for products using our technology resulting in lower level of royalties owed to us from the sale of these products. The duration of the potential business disruptions and related financial impact cannot be reasonably estimated at this time, but could materially adversely affect our business, financial condition, results of operations, and cash flows. Net of amounts previously reserved which were fully written off in 2020, the Company has increased its allowance for uncollectible royalty receivables in 2020 until the collectability from certain licensees can be better ascertained in the regions affected by COVID-19. In connection with the COVID-19 crisis, Congress passed, and the president signed, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) which, among other things, provides relief for businesses impacted by the pandemic. The Company applied for and received $202,052 in proceeds from the Paycheck Protection Program (“PPP Loan”) made available under the CARES Act. The PPP Loan is intended to offer businesses hurt by the COVID-19 pandemic economic assistance with the potential for the principal to be forgiven based on certain expenses incurred during the first 24 weeks after the issuance of the PPP Loan. The Company estimated that the $194,140 of the PPP Loan principal will be forgiven based on payroll and other expenses incurred through June 30, 2020. The Company estimated that all of the loan will be forgiven when the additional payroll and other expenses incurred from July 1, 2020 to September 30, 2020 are included. Consequently, the Company recorded $202,052 as other income for the year ended December 31, 2020 representing the PPP loan estimated to be forgiven. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2020 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | (2) Summary of Significant Accounting Policies (a) Cash and Cash Equivalents The Company considers securities purchased with original maturities of three months or less, to be cash equivalents. Cash equivalents consist of short-term investments in money market accounts at December 31, 2020 and 2019. Cash and cash equivalents are maintained at financial institutions and, at times, balances may exceed federally insured limits. We have never experienced any losses related to these balances. FDIC insurance coverage is $250,000 per depositor at each financial institution, and our non-interest bearing cash balances may again exceed federally insured limits. Amounts on deposit in excess of federally insured limits at December 31, 2020 and 2019 are approximately $4.5 million and $6.3 million, respectively. (b) Royalties Receivable Royalties receivable from licensees are recorded at the amounts specified within the license agreements when the collectability of the receivable is reasonably assured. The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses in the Company’s existing royalties receivable. The Company determines the allowance based on historical write off experience as well as the current status of the Company’s customers. The Company reviews its allowance for doubtful accounts periodically. Past due accounts are reviewed individually for collectability. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. As of December 31, 2020, three companies accounted for 16%, 11% and 10%, respectively, of the Company’s outstanding receivables. As of December 31, 2019, two companies accounted for 14% and 13%, respectively, of the Company’s outstanding receivables. (c) Fixed Assets Fixed assets are carried at cost less accumulated depreciation and amortization. Depreciation and amortization are computed using the straight-line method over the estimated useful lives of the assets. (d) Revenue Recognition/Fee Income The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers. The standard provides a single comprehensive revenue recognition model for all contracts with customers and supersedes existing revenue recognition guidance. The revenue standard contains principles that an entity will apply to determine the measurement of revenue and timing of when it is recognized. The underlying principle is that an entity will recognize revenue to depict the transfer of goods or services to customers at an amount that the entity expects to be entitled to in exchange for those goods or services. ASC 606 follows a five-step approach to determining revenue recognition including: 1) Identification of the contract; 2) Identification of the performance obligations; 3) Determination of the transaction price; 4) Allocation of the transaction price and 5) Recognition of revenue. The Company determined that its license agreements provide for three performance obligations which include: (i) the Grant of Use to its Patent Portfolio “Grant of Use”, (ii) Stand-Ready Technical Support (“Technical Support”) including the transfer of trade secrets and other know-how, production of materials, scale-up support, analytical testing, etc., and (iii) access to new Intellectual Property (“IP”) that may be developed some time during the course of the contract period (“New Improvements”). Given the nature of IP development, such New Improvements are on an unspecified basis and can occur and be made available to licensees at any time during the contract period. When a contract includes more than one performance obligation, the Company needs to allocate the total consideration to each performance obligation based on its relative standalone selling price or estimate the standalone selling price if it is not observable. A standalone selling price is not available for our performance obligations since we do not sell any of the services separately and there is no competitor pricing that is available. As a consequence, the best method for determining standalone selling price of our Grant of Use performance obligation is through a comparison of the average royalty rate for comparable license agreements as compared to our license agreements. Comparable license agreements must consider several factors including: (i) the materials that are being licensed, (ii) the market application for the licensed materials, and (iii) the financial terms in the license agreements that can increase or decrease the risk/reward nature of the agreement. Based on the royalty rate comparison referred to above, any pricing above and beyond the average royalty rate would relate to the Technical Support and New Improvements performance obligations. The Company focuses a significant portion of its time and resources to provide the Technical Support and New Improvements services to its licensees, which further supports the conclusions reached using the royalty rate analysis. The Technical Support and New Improvements performance obligations are co-terminus over the term of the license agreement. For purposes of determining the transaction price, and recognizing revenue, the Company combined the Technical Support and New Improvements performance obligations because they have the same pattern of transfer and the same term. We maintain a staff of scientists and other professionals whose primary job responsibilities throughout the year are: (i) being available to respond to Technical Support needs of our licensees, and (ii) developing improvements to our technology which are offered to our licensees as New Improvements. Since the costs incurred to satisfy the Technical Support and New Improvements performance obligations are incurred evenly throughout the year, the value of the Technical Support and New Improvements services are recognized throughout the initial contract period as these performance obligations are satisfied. If the agreement is not terminated at the end of the initial contract period, it will renew on the same terms as the initial contract for a one-year period. Consequently, any fees or minimum annual royalty obligations relating to this renewal contract will be allocated similarly to the initial contract over the additional one-year period. We recognize revenue when or as the performance obligations in the contract are satisfied. For performance obligations that are fulfilled at a point in time, revenue is recognized at the fulfillment of the performance obligation. Since the IP is determined to be a functional license, the value of the Grant of Use is recognized in the first period of the contract term in which the license agreement is in force. The value of the Technical Support and New Improvements obligations is allocated throughout the contract period based on the satisfaction of its performance obligations. If the agreement is not terminated at the end of the contract period, it will renew on the same terms as the original agreement for a one-year period. Consequently, any fees or minimum annual royalties (“MAR”) relating to this renewal contract will be allocated similarly over that additional year. The Company’s license agreements have a variable royalty fee structure (meaning that royalties are a fixed percentage of sales that vary from period to period) and frequently include a minimum annual royalty commitment. In instances when sales of licensed products by its licensees exceed the MAR, the Company recognizes fee income as the amounts have been earned. Typically, the royalty rate for such sales is 10-15% of the selling price. While this is variable consideration, it is subject to the sales/usage royalty exception to recognition of variable consideration in ASC 606 10-55-65 and therefore is not recognized until the subsequent sales or usage occurs or the MAR period commences. Because of the immediate recognition of the Grant of Use performance obligation: (i) the first period of the contract term will generally have a higher percent allocation of the transaction price under ASC 606 and (ii) the remaining periods will have less of the transaction price recognized under ASC 606. After the initial period in the contract term, the revenue for the remaining periods will be based on the satisfaction of the technical support and New Improvements obligations. Since most of our license agreements start as of January 1st, the revenue recognized for the contract under ASC 606 in our first quarter will tend to be higher subsequent quarters in the fiscal year. Certain of the contract fees are accrued by, or paid to, the Company in advance of the period in which they are earned resulting in deferred revenue (contract liabilities). Such excess amounts are recorded as deferred revenue and are recognized as revenue in future periods as earned. Contract assets represent unbilled receivables and are presented within accounts receivable, net on the consolidated balance sheets. The Company operates in a single business segment which is engaged in the development and marketing of technology and devices to control the flow of light. Our revenue source comes from the licensing of this technology and all of these license agreements have similar terms and provisions. The majority of the Company’s licensing fee income comes from the activities of several licensees participating in the automotive market. The Company currently believes that the automotive market will be the largest source of its royalty income over the next several years. The Company’s royalty income from this market may be influenced by numerous factors including various trends affecting demand in the automotive industry and the rate of introduction of new technology in OEM product lines. In addition to these macro factors, the Company’s royalty income from the automotive market could also be influenced by specific factors such as whether the Company’s SPD-SmartGlass technology appears as standard equipment or as an option on a particular vehicle, the number of additional vehicle models that SPD-SmartGlass appears on, the size of each window on a vehicle and the number of windows on a vehicle that use SPD SmartGlass, fluctuations in the total number of vehicles produced by a manufacturer, and in the percentage of cars within each model produced with SPD-SmartGlass, and changes in pricing or exchange rates. As of December 31, 2020, the Company has three license agreements that are in their initial multiyear term (“Initial Term”) with continuing performance obligations going forward. The Initial Term of one of these agreements will end as of December 31, 2021, one will end as of December 31, 2022, and one will end as of December 31, 2024. The Company currently expects all three of these agreements will renew annually at the end of the Initial Term. As of December 31, 2020, the aggregate amount of the revenue to be recognized upon the satisfaction of the remaining performance obligations for the three license agreements is $490,000. The revenue for these remaining performance obligations for each of the three license agreements is expected to be recognized evenly throughout their remaining period of the Initial Term. For the years ended December 31, 2020 and 2019, the Company entered into a number of license agreements covering its light control technology. The Company received minimum annual royalties under certain license agreements and recorded fee income based on ASC 606 revenue recognition each quarter. In instances when sales of licensed products by its licensees exceed minimum annual royalties, the Company recognized additional fee income as the amounts have been earned. Certain of the fees are accrued by, or paid to, the Company in advance of the period in which they are earned resulting in deferred revenue. Such excess amounts are recorded as deferred revenue and are typically recognized as fee income when earned. As of December 31, 2020, there was no balance in deferred revenue. As of December 31, 2019, the deferred revenue balance was $7,734. Fee income represents amounts earned by the Company under various license and other agreements relating to technology developed by the Company. During 2020, five licensees accounted for 18%, 16%, 12%, 12% and 12% of fee income recognized during the year. During 2019, three licensees accounted for 38%, 12% and 10% of fee income recognized for the year. (e) Basic and Diluted Loss Per Common Share Basic loss per share excludes any dilution. It is based upon the weighted average number of common shares outstanding during the period. Dilutive loss per share reflects the potential dilution that would occur if securities or other contracts to issue common stock were exercised or converted into common stock. The Company’s dilutive loss per share equals basic loss per share for each of the years in the two-year period ended December 31, 2020 because all potentially dilutive securities ( i.e., (f) Research and Development Costs Research and development costs are charged to expense as incurred. (g) Patent Costs The Company expenses costs relating to the development or acquisition of patents due to the uncertainty of the recoverability of these items. (h) Use of Estimates The preparation of the Company’s consolidated financial statements requires management of the Company to make a number of estimates and assumptions relating to the reported amount of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during this period. Actual results could differ from those estimates. (i) Income Taxes Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry-forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to be recovered or settled. In accordance with ASC Topic 740, we recognize tax benefits only for tax positions that are more likely than not to be sustained upon examination by tax authorities. The amount recognized is measured as the largest amount of benefit that is greater than 50 percent likely to be realized upon ultimate settlement. Unrecognized tax benefits are tax benefits claimed in tax returns that do not meet these recognition and measurement standards. We classify accrued interest and penalties related to any unrecognized tax benefits in our income tax provision. At December 31, 2020 and 2019, we do not have accrued interest and penalties related to any unrecognized tax benefits. We do not believe we have any uncertain tax positions as of December 31, 2020 and 2019. The tax years subject to examination by major tax jurisdictions include the years 2015 and forward by the U.S. Internal Revenue Service and certain states. The Company is not currently being audited by any tax jurisdiction. (j) Equity-Based Compensation We recognize all stock-based compensation as an expense in the consolidated financial statements and such costs are measured at the fair value of the award at the date of grant. In addition to reflecting compensation expense for new share-based payment awards, expense is also recognized to reflect the remaining vesting period of awards that had been granted in prior periods. Tax benefits related to stock option exercises are reflected as financing cash inflows. The exercise prices for stock options granted are generally set at the average for the high and low trading prices of the Company’s common stock on the trading date immediately prior to the date of grant, and the related numbers of shares granted are fixed at the date of grant. In order to determine the fair value of stock options on the date of grant, the Company uses the Black-Scholes option-pricing model. Inherent in this model are assumptions related to expected stock-price volatility, option term, risk-free interest rate and dividend yield. While the risk-free interest rate and dividend yield are less subjective assumptions that are based on factual data derived from public sources, the expected stock-price volatility and option term assumptions require a greater level of judgment. In connection with employee and director stock options, the Company charged to compensation expense $327,554 and $790,339 during the years ended December 31, 2020 and 2019, respectively. As of December 31, 2020, these awards were fully vested. In lieu of higher cash compensation, the Company has granted warrants and non-employee options to consultants. These warrants and non-employee options vested fully on the date of grant. During the year ended December 31, 2019, the Company charged $51,273 to expense in connection with options granted to a consultant. There were no such charges for the year ended December 31, 2020. (k) Restricted Stock Compensation cost for restricted stock is measured using the quoted market price of the Company’s common stock at the date the common stock is granted. The compensation cost is recognized over the period between the issue date and the vesting period for such shares. Restricted stock is included in total common shares outstanding upon the lapse of any vesting conditions. (l) Impairment of Long-Lived Assets The Company reviews long-lived assets to determine whether an event or change in circumstances indicates the carrying value of the asset may not be recoverable. The Company bases its evaluation on such impairment indicators as the nature of the assets, the future economic benefit of the assets and any historical or future profitability measurements, as well as other external market conditions or factors that may be present. In 2019, the Company incurred a loss from the impairment of a fixed asset of $50,666 in value of an automobile which was subsequently sold to an employee at fair market value. There was no impairment of long-lived assets recorded during 2020. (m) Fair Value Measurements As of December 31, 2020 and 2019, the fair value of the Company’s financial assets and non-warrant liabilities including cash and cash equivalents, royalties receivable, accounts payable and accrued expenses approximated carrying value due to the short-term maturity of these instruments. (n) Recent Accounting Pronouncements New Accounting Standards In August 2018, the FASB issued ASU 2018-13, “Fair Value Measurement: Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement,” which eliminates, amends and adds disclosure requirements for fair value measurement. The standard is effective for the interim and annual periods beginning after December 15, 2019, with early adoption permitted. The Company adopted this standard as of January 1, 2020 and it did not have a material impact on the consolidated financial statements. In June 2018, the FASB issued ASU 2018-07 “Compensation—Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting” (“ASU 2018-07”), which simplifies the accounting for share-based payments to nonemployees by aligning it with the accounting for share-based payments to employees, with certain exceptions. ASU 2018-07 was effective for the Company in the first quarter of fiscal 2020 and it did not have a material impact on the consolidated financial statements. Effective January 1, 2019, the Company adopted the Financial Accounting Standards Board’s Standard, “Leases” (Topic 842) ● An entity need not reassess whether any expired or existing contracts are or contain leases. ● An entity need not reassess the lease classification for any expired or existing leases. Instead, any leases previously classified as operating leases will continue to be classified as operating leases, while any leases previously classified as capital leases will be classified as finance leases. ● An entity need not reassess initial direct costs for any leases. The Company used the above practical expedients as the transition method in the application of the new lease standard at January 1, 2019. The Company applied a policy election to exclude short-term leases from balance sheet recognition and elected certain practical expedients at adoption. As permitted, the Company did not reassess whether existing contracts are or contain leases, the lease classification for any existing leases or the initial direct costs for any existing leases which were not previously accounted for as leases, are or contain a lease. At adoption on January 1, 2019, an operating lease liability of $1,134,000 and an operating lease right of use asset of $941,000 were recorded (most of this liability relating to the Company’s lease for its facilities in Woodbury, New York). The operating lease liability was $193,000 more than the operating lease right of use asset due to unamortized lease incentive from periods prior to the adoption of the new lease standard. There was no cumulative earnings effect adjustment. In June 2016, the FASB issued ASU 2016-13, “Financial Instruments” – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”), which requires entities to use a new impairment model based on expected losses. Under this new model an entity would recognize an impairment allowance equal to its current estimate of credit losses on financial assets measured at amortized cost. ASU 2016-13 was effective for us beginning January 1, 2020. The adoption of this standard did not have a material impact on the consolidated financial statements. |
Fixed Assets
Fixed Assets | 12 Months Ended |
Dec. 31, 2020 | |
Property, Plant and Equipment [Abstract] | |
Fixed Assets | (3) Fixed Assets Depreciation and amortization expense for the years ended December 31, 2020 and 2019 was $67,082 and $195,377, respectively. Fixed assets and their estimated useful lives as of December 31, 2020 and 2019 are as follows: 2020 2019 Estimated useful life Equipment and furniture $ 1,390,017 $ 1,387,245 5 years Trade show materials 775,654 775,654 5 years Autos 53,764 62,148 5 years Life of lease or estimated Leasehold improvements 584,967 584,967 life of asset if shorter 2,804,402 2,810,014 Less accumulated depreciation and amortization (2,682,630 ) (2,668,294 ) $ 121,772 $ 141,720 |
Accrued Expenses and Other
Accrued Expenses and Other | 12 Months Ended |
Dec. 31, 2020 | |
Payables and Accruals [Abstract] | |
Accrued Expenses and Other | (4) Accrued Expenses and Other Accrued expenses consist of the following at December 31, 2020 and 2019: 2020 2019 Payroll, bonuses and related benefits $ 15,121 $ 43,049 Professional services 10,800 3,300 Other 358 360 $ 26,279 $ 46,709 |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | (5) Income Taxes Since inception, the Company has incurred losses from operations and as a result has not recorded income tax expense. Benefits related to net operating loss carry-forwards and deferred items have been fully reserved because it is not more likely than not that the Company will achieve profitable operations. The difference between the total income taxes at the federal statutory rate for each of the years ended December 31, 2020 and 2019 and the fact that no income tax benefit was recorded in each of these years are attributable to the change in the valuation allowance recorded in each year. The tax effects of temporary differences that give rise to significant portions of the deferred tax assets at December 31, 2020 and 2019 are presented below: 2020 2019 Deferred tax assets: Depreciation $ 117,000 $ 102,000 Allowance for bad debts 202,000 243,000 Net operating loss carry-forwards 14,755,000 15,314,000 Stock option expense 403,000 354,000 Research and other credits 952,000 1,099,000 Other temporary differences 15,000 15,000 Total gross deferred tax assets 16,444,000 17,127,000 Less valuation allowance (16,444,000 ) (17,127,000 ) $ - $ - The reconciliation of the income tax expense (benefit) computed at the Federal statutory tax rates to income tax expense (benefit) is as follows: 2020 2019 Income tax provision at federal statutory rate $ (485,000 ) $ (800,000 ) Permanent differences (43,000 ) 136,900 Credits - (5,000 ) Expired carryforwards and other 1,211,000 823,100 Valuation allowance (683,000 ) (155,000 ) $ - $ - In assessing the realizability of deferred tax assets, the Company considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon future taxable income during the period in which those temporary differences become deductible. The Company considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. Based upon its historical operating losses, utilization of deferred tax assets cannot currently be determined. Accordingly, the Company has recorded a full valuation allowance against the deferred tax assets due to the uncertainty regarding the future utilization of the deferred tax assets for all periods presented. At December 31, 2020, the Company had net operating loss carryforwards for federal income tax purposes of approximately $68,951,000. Net operating loss carryforwards accumulated through December 31, 2017 of approximately $62,129,000 will expire in varying amounts from 2021 through 2037. Net operating losses generated in 2018, 2019 and 2020, totaling approximately $6,822,000, will carryforward indefinitely, but cannot offset more than 80 percent of taxable income. Research and other credit carryforwards of approximately $952,000 are available to the Company to reduce income taxes payable in future years principally through 2039. The Company’s ability to utilize its net operating loss carryforwards and its current year tax credits in future periods could be subject to the 382 limitation. The Company will need to complete an analysis to determine whether its net operating losses are subject to the 382 limitation. |
Shareholders' Equity
Shareholders' Equity | 12 Months Ended |
Dec. 31, 2020 | |
Equity [Abstract] | |
Shareholders' Equity | (6) Shareholders’ Equity (a) Common Stock and Warrants On or around May 30, 2019, the Company sold to accredited investors a total of 1,276,599 shares of common stock and warrants expiring May 31, 2024 to purchase 638,295 shares of common stock at an exercise price of $3.384, $3.666 or $4.23 per share depending on the exercise date. Research Frontiers Incorporated also sold to Gauzy, at a price of $1.38 per unit, with each unit comprised of one share of unregistered common stock and one half of one warrant. The warrant can be converted into one share of unregistered common stock at an exercise price of $1.656, $1.794 or $2.07 per share depending on the exercise date. Gauzy received a total of 724,638 shares of unregistered common stock and warrants expiring May 31, 2024 to purchase 362,319 shares of common stock. The aggregate proceeds from these stock offerings was $4.6 million. Investors that participated in the May 30, 2019 offering agreed to amending/clarifying language to the terms of the warrants that they received in the September 7, 2018 offering. Those investors that received warrants in the September 7, 2018 offering that did not participate in the May 30, 2019 offering, separately agreed as of June 27, 2019 to the same amending/clarifying language used in the May 30, 2019 offering. The amending/clarifying language relating to the September 7, 2018 warrants does not allow for a net cash settlement option for the warrants even if no registered shares of common stock are available upon the exercise of the warrant. The warrant liability was valued at $1,153,439 (including all valuation adjustments since their issuance) through the date of these new agreements and amendments and, based on the amended warrant terms, the warrant liability was reclassified to equity as of these dates. The Company recorded a non-cash expense $652,025 for the twelve-month period ended December 31, 2019 to mark these warrants to their estimated market value as of their respective amendment/clarification date when they were reclassified as equity. During 2019, the Company received proceeds of $1,170,546 and issued 1,587,814 shares of common stock in connection with the exercise of outstanding options and warrants. During 2020, the Company received proceeds of $284,207 and issued 321,524 shares of common stock in connection with the exercise of outstanding options and warrants. (b) Options and Warrants (i) Employee Options In 2019, the shareholders approved the Company’s 2019 Equity Incentive Plan, which provides for the granting of both incentive stock options at the fair market value at the date of grant and nonqualified stock options at the fair market value at the date of grant to employees or non-employees who, in the determination of the Board of Directors, have made or may make significant contributions to the Company in the future. The Company may also award stock appreciation rights, restricted stock, or restricted stock units under this plan. The Company initially reserved 1,400,000 shares of its common stock for issuance under this plan, and 683,500 options and other awards were available for issuance under this plan as of December 31, 2020. At the discretion of the Board of Directors, options expire in ten years or less from the date of grant and are generally fully exercisable upon grant but in some cases may be subject to vesting in the future. Full payment of the exercise price may be made in cash or in shares of common stock valued at the fair market value thereof on the date of exercise, or by agreeing with the Company to cancel a portion of the exercised options. The Company granted 517,500 fully vested options during 2019 and recorded share-based compensation of $841,612. The Company granted 199,000 fully vested options during 2020 and recorded share-based compensation of $327,554. The Company valued these grants using the Black-Scholes option pricing model with the following weighted average assumptions: 2020 2019 Fair value on grant date $ 1.65 $ 1.63 Expected dividend yield - - Expected volatility 73 % 63 % Risk free interest rate 0.36 % 1.75 % Expected term of the option 5 years 5 years Activity for stock options is summarized below: All options are exercisable at December 31, 2020. Weighted Average Number of Shares Subject to Option Weighted Average Exercise Price Remaining Contractual Term (Years) Aggregate Intrinsic Value Balance at December 31, 2018 1,126,092 $ 3.84 6.6 $ 161,602 Granted 517,500 $ 3.00 Cancelled (30,400 ) $ 3.69 Exercised (64,841 ) $ 1.07 Balance at December 31, 2019 1,548,351 $ 3.68 6.9 $ 603,683 Granted 199,000 $ 2.79 Cancelled - Exercised (450,091 ) $ 2.09 Balance at December 31, 2020 1,297,260 $ 4.09 5.8 $ 142,885 (ii) Warrants and Non-Employee Options Activity in warrants is summarized below: Number of Shares Underlying Weighted Average Warrants Granted Exercise Price Balance at December 31, 2018 2,628,294 $ 1.49 Exercised (1,961,765 ) 1.20 Terminated (184,000 ) 6.00 Issued 1,000,614 2.76 Balance at December 31, 2019 1,483,143 $ 2.13 Exercised (83,152 ) 3.42 Terminated - Issued - Balance at December 31, 2020 1,399,991 $ 2.27 In lieu of cash compensation, the Company has granted warrants to investors and non-employee options to consultants. These warrants and non-employee options vested ratably over various terms ranging from 12 to 59 months. The non-employee options are valued at fair value at the time that the related services are provided using the Black-Scholes option valuation model and marked to market quarterly using the Black-Scholes option valuation model. There are 1,399,991 warrants issued to investors that are outstanding that are accounted for as equity. Warrants and non-employee options generally expire in five years from the date of issuance. At December 31, 2020, all warrants and non-employee options outstanding were exercisable. (c) Restricted Stock Grants During 2020 and 2019, the Company did not issue restricted stock to its directors and employees. |
License and Other Agreements
License and Other Agreements | 12 Months Ended |
Dec. 31, 2020 | |
License And Other Agreements | |
License and Other Agreements | (7) License and Other Agreements The Company has entered into a number of license agreements covering various products using the Company’s SPD technology. Some of these license agreements are limited to specific countries and/or markets. Licensees of Research Frontiers who incorporate SPD technology into end products pay Research Frontiers an earned royalty of 5-15% of net sales of licensed products under license agreements currently in effect and may also be required to pay Research Frontiers fees and minimum annual royalties. Licensees who sell products or components to other licensees of Research Frontiers do not pay a royalty on such sale; Research Frontiers will collect such royalty from the licensee incorporating such products or components into its own end-products. Research Frontiers’ license agreements typically allow the licensee to terminate the license after some period of time and give Research Frontiers only limited rights to terminate before the license expires. Most licenses are non-exclusive and generally last as long as our patents remain in effect. On March 14, 2019, the Company suspended its VariGuard SmartGlass business unit activities. Instead, the Company licensed a new entity to pursue the business opportunities previously pursued by the Company’s VariGuard SmartGlass business unit. This new licensee continues to use the VariGuard SmartGlass name. In addition to other employees at VariGuard SmartGlass Inc., one of the Company’s officers (Michael R. LaPointe) and one former officer (Seth L. Van Voorhees) are shareholders of VariGuard SmartGlass Inc. and as consequence, this transaction is a related party relationship which has been reviewed and approved by the Company’s Board of Directors pursuant to the requirements of Delaware corporate law and the Company’s Code of Ethics Mr. LaPointe also remains a full-time employee at the Company. |
Commitments
Commitments | 12 Months Ended |
Dec. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments | (8) Commitments The Company has an employment agreement with its chief executive officer which provides for an annual base salary of $500,000 for calendar year 2021. This employment agreement has an evergreen provision that extends the term by one year on the expiration date unless either the Company or the employee has given notice that they will not be renewing the agreement upon the expiration of its term. The Company has a defined contribution profit sharing (401K) plan covering employees who have completed one year of service. Contributions are made at the discretion of the Company. The Company did not make any contributions to this plan for 2020 or 2019. The Company determines if an arrangement is a lease at its inception. This determination generally depends on whether the arrangement conveys the right to control the use of an identified fixed asset explicitly or implicitly for a period of time in exchange for consideration. Control of an underlying asset is conveyed if the Company obtains the rights to direct the use of, and to obtain substantially all of the economic benefits from the use of, the underlying asset. Lease expense for variable leases and short-term leases is recognized when the obligation is incurred. The Company has operating leases for certain facilities, vehicles and equipment with a weighted average remaining lease term of 4.2 years as of December 31, 2020. Operating leases are included in right of use lease assets, other current liabilities and long-term lease liabilities on the consolidated balance sheet. Right of use lease assets and liabilities are recognized at each lease’s commencement date based on the present value of its lease payments over its respective lease term. The Company does not have an established incremental borrowing rate as it does not have any debt. The Company uses the stated borrowing rate for a lease when readily determinable. When the interest rate implicit in its lease agreements are not readily determinable, the Company uses an interest rate based on the marketplace for public debt. The weighted-average discount rate associated with operating leases as of December 31, 2020 is 5.5%. Subsequent to the Company’s adoption of the new lease accounting guidance on January 1, 2019, the Company recorded new right of use lease assets of approximately $900,000 and associated lease liabilities of approximately $1.1 million. Maturities of operating lease liabilities as of December 31, 2020 were as follows: Year 1 $ 207,000 Years 2-3 430,000 Years 4-5 278,000 Thereafter - Total lease payments 915,000 Less: imputed lease interest (102,404 ) Present value of lease liabilities $ 812,596 |
Rights Plan
Rights Plan | 12 Months Ended |
Dec. 31, 2020 | |
Treasury Stock, Number of Shares and Restriction Disclosures [Abstract] | |
Rights Plan | (9) Rights Plan In February 2013, the Company’s Board of Directors adopted a Stockholders’ Rights Plan (the “Rights Plan”) and declared a dividend distribution of one right (a “Right”) for each outstanding share of Company common stock to stockholders of record at the close of business on March 3, 2003 (“Record Time”) and authorized the issuance of one Right in respect of each share of Common Stock issued after the Record Time and prior to the Separation Time. “Separation Time” shall mean the earlier of the Close of Business on the tenth Business Day (or such later date as the Board of Directors may from time to time fix by resolution adopted prior to the Separation Time that otherwise would have occurred) following but not including (i) the date on which any Person commences a tender or exchange offer that, if consummated, would result in such Person’s becoming an Acquiring Person, and (ii) the date of the first event causing a Flip-in Date to occur; provided that if any tender or exchange offer referred to in clause (i) of this paragraph is cancelled, terminated or otherwise withdrawn prior to the Separation Time without the purchase of any shares of Common Stock pursuant thereto, such offer shall be deemed, for purposes of this paragraph, never to have been made. Subject to certain exceptions listed in the Rights Plan, if a person or group has acquired beneficial ownership of, or commences a tender or exchange offer for, 15% or more of the Company’s common stock, unless redeemed by the Company’s Board of Directors, each Right entitles the holder (other than the acquiring person) to purchase from the Company $80 worth of common stock for $40. If the Company is merged into, or 50% or more of its assets or earning power is sold to, the acquiring company, the Rights will also enable the holder (other than the acquiring person) to purchase $80 worth of common stock of the acquiring company for $40. The Rights will expire at the close of business on February 11, 2023, unless the Rights Plan is extended by the Company’s Board of Directors or unless the Rights are earlier redeemed by the Company at a price of $.0001 per Right. The Rights are not exercisable during the time when they are redeemable by the Company. The above description highlights some of the features of the Company’s Rights Plan and is not a complete description of the Rights Plan. A more detailed description and copy of the Rights Plan has been filed with the SEC and is available from the Company upon request. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2020 | |
Accounting Policies [Abstract] | |
Cash and Cash Equivalents | (a) Cash and Cash Equivalents The Company considers securities purchased with original maturities of three months or less, to be cash equivalents. Cash equivalents consist of short-term investments in money market accounts at December 31, 2020 and 2019. Cash and cash equivalents are maintained at financial institutions and, at times, balances may exceed federally insured limits. We have never experienced any losses related to these balances. FDIC insurance coverage is $250,000 per depositor at each financial institution, and our non-interest bearing cash balances may again exceed federally insured limits. Amounts on deposit in excess of federally insured limits at December 31, 2020 and 2019 are approximately $4.5 million and $6.3 million, respectively. |
Royalties Receivable | (b) Royalties Receivable Royalties receivable from licensees are recorded at the amounts specified within the license agreements when the collectability of the receivable is reasonably assured. The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses in the Company’s existing royalties receivable. The Company determines the allowance based on historical write off experience as well as the current status of the Company’s customers. The Company reviews its allowance for doubtful accounts periodically. Past due accounts are reviewed individually for collectability. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. As of December 31, 2020, three companies accounted for 16%, 11% and 10%, respectively, of the Company’s outstanding receivables. As of December 31, 2019, two companies accounted for 14% and 13%, respectively, of the Company’s outstanding receivables. |
Fixed Assets | (c) Fixed Assets Fixed assets are carried at cost less accumulated depreciation and amortization. Depreciation and amortization are computed using the straight-line method over the estimated useful lives of the assets. |
Revenue Recognition/Fee Income | (d) Revenue Recognition/Fee Income The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers. The standard provides a single comprehensive revenue recognition model for all contracts with customers and supersedes existing revenue recognition guidance. The revenue standard contains principles that an entity will apply to determine the measurement of revenue and timing of when it is recognized. The underlying principle is that an entity will recognize revenue to depict the transfer of goods or services to customers at an amount that the entity expects to be entitled to in exchange for those goods or services. ASC 606 follows a five-step approach to determining revenue recognition including: 1) Identification of the contract; 2) Identification of the performance obligations; 3) Determination of the transaction price; 4) Allocation of the transaction price and 5) Recognition of revenue. The Company determined that its license agreements provide for three performance obligations which include: (i) the Grant of Use to its Patent Portfolio “Grant of Use”, (ii) Stand-Ready Technical Support (“Technical Support”) including the transfer of trade secrets and other know-how, production of materials, scale-up support, analytical testing, etc., and (iii) access to new Intellectual Property (“IP”) that may be developed some time during the course of the contract period (“New Improvements”). Given the nature of IP development, such New Improvements are on an unspecified basis and can occur and be made available to licensees at any time during the contract period. When a contract includes more than one performance obligation, the Company needs to allocate the total consideration to each performance obligation based on its relative standalone selling price or estimate the standalone selling price if it is not observable. A standalone selling price is not available for our performance obligations since we do not sell any of the services separately and there is no competitor pricing that is available. As a consequence, the best method for determining standalone selling price of our Grant of Use performance obligation is through a comparison of the average royalty rate for comparable license agreements as compared to our license agreements. Comparable license agreements must consider several factors including: (i) the materials that are being licensed, (ii) the market application for the licensed materials, and (iii) the financial terms in the license agreements that can increase or decrease the risk/reward nature of the agreement. Based on the royalty rate comparison referred to above, any pricing above and beyond the average royalty rate would relate to the Technical Support and New Improvements performance obligations. The Company focuses a significant portion of its time and resources to provide the Technical Support and New Improvements services to its licensees, which further supports the conclusions reached using the royalty rate analysis. The Technical Support and New Improvements performance obligations are co-terminus over the term of the license agreement. For purposes of determining the transaction price, and recognizing revenue, the Company combined the Technical Support and New Improvements performance obligations because they have the same pattern of transfer and the same term. We maintain a staff of scientists and other professionals whose primary job responsibilities throughout the year are: (i) being available to respond to Technical Support needs of our licensees, and (ii) developing improvements to our technology which are offered to our licensees as New Improvements. Since the costs incurred to satisfy the Technical Support and New Improvements performance obligations are incurred evenly throughout the year, the value of the Technical Support and New Improvements services are recognized throughout the initial contract period as these performance obligations are satisfied. If the agreement is not terminated at the end of the initial contract period, it will renew on the same terms as the initial contract for a one-year period. Consequently, any fees or minimum annual royalty obligations relating to this renewal contract will be allocated similarly to the initial contract over the additional one-year period. We recognize revenue when or as the performance obligations in the contract are satisfied. For performance obligations that are fulfilled at a point in time, revenue is recognized at the fulfillment of the performance obligation. Since the IP is determined to be a functional license, the value of the Grant of Use is recognized in the first period of the contract term in which the license agreement is in force. The value of the Technical Support and New Improvements obligations is allocated throughout the contract period based on the satisfaction of its performance obligations. If the agreement is not terminated at the end of the contract period, it will renew on the same terms as the original agreement for a one-year period. Consequently, any fees or minimum annual royalties (“MAR”) relating to this renewal contract will be allocated similarly over that additional year. The Company’s license agreements have a variable royalty fee structure (meaning that royalties are a fixed percentage of sales that vary from period to period) and frequently include a minimum annual royalty commitment. In instances when sales of licensed products by its licensees exceed the MAR, the Company recognizes fee income as the amounts have been earned. Typically, the royalty rate for such sales is 10-15% of the selling price. While this is variable consideration, it is subject to the sales/usage royalty exception to recognition of variable consideration in ASC 606 10-55-65 and therefore is not recognized until the subsequent sales or usage occurs or the MAR period commences. Because of the immediate recognition of the Grant of Use performance obligation: (i) the first period of the contract term will generally have a higher percent allocation of the transaction price under ASC 606 and (ii) the remaining periods will have less of the transaction price recognized under ASC 606. After the initial period in the contract term, the revenue for the remaining periods will be based on the satisfaction of the technical support and New Improvements obligations. Since most of our license agreements start as of January 1st, the revenue recognized for the contract under ASC 606 in our first quarter will tend to be higher subsequent quarters in the fiscal year. Certain of the contract fees are accrued by, or paid to, the Company in advance of the period in which they are earned resulting in deferred revenue (contract liabilities). Such excess amounts are recorded as deferred revenue and are recognized as revenue in future periods as earned. Contract assets represent unbilled receivables and are presented within accounts receivable, net on the consolidated balance sheets. The Company operates in a single business segment which is engaged in the development and marketing of technology and devices to control the flow of light. Our revenue source comes from the licensing of this technology and all of these license agreements have similar terms and provisions. The majority of the Company’s licensing fee income comes from the activities of several licensees participating in the automotive market. The Company currently believes that the automotive market will be the largest source of its royalty income over the next several years. The Company’s royalty income from this market may be influenced by numerous factors including various trends affecting demand in the automotive industry and the rate of introduction of new technology in OEM product lines. In addition to these macro factors, the Company’s royalty income from the automotive market could also be influenced by specific factors such as whether the Company’s SPD-SmartGlass technology appears as standard equipment or as an option on a particular vehicle, the number of additional vehicle models that SPD-SmartGlass appears on, the size of each window on a vehicle and the number of windows on a vehicle that use SPD SmartGlass, fluctuations in the total number of vehicles produced by a manufacturer, and in the percentage of cars within each model produced with SPD-SmartGlass, and changes in pricing or exchange rates. As of December 31, 2020, the Company has three license agreements that are in their initial multiyear term (“Initial Term”) with continuing performance obligations going forward. The Initial Term of one of these agreements will end as of December 31, 2021, one will end as of December 31, 2022, and one will end as of December 31, 2024. The Company currently expects all three of these agreements will renew annually at the end of the Initial Term. As of December 31, 2020, the aggregate amount of the revenue to be recognized upon the satisfaction of the remaining performance obligations for the three license agreements is $490,000. The revenue for these remaining performance obligations for each of the three license agreements is expected to be recognized evenly throughout their remaining period of the Initial Term. For the years ended December 31, 2020 and 2019, the Company entered into a number of license agreements covering its light control technology. The Company received minimum annual royalties under certain license agreements and recorded fee income based on ASC 606 revenue recognition each quarter. In instances when sales of licensed products by its licensees exceed minimum annual royalties, the Company recognized additional fee income as the amounts have been earned. Certain of the fees are accrued by, or paid to, the Company in advance of the period in which they are earned resulting in deferred revenue. Such excess amounts are recorded as deferred revenue and are typically recognized as fee income when earned. As of December 31, 2020, there was no balance in deferred revenue. As of December 31, 2019, the deferred revenue balance was $7,734. Fee income represents amounts earned by the Company under various license and other agreements relating to technology developed by the Company. During 2020, five licensees accounted for 18%, 16%, 12%, 12% and 12% of fee income recognized during the year. During 2019, three licensees accounted for 38%, 12% and 10% of fee income recognized for the year. |
Basic and Diluted Loss Per Common Share | (e) Basic and Diluted Loss Per Common Share Basic loss per share excludes any dilution. It is based upon the weighted average number of common shares outstanding during the period. Dilutive loss per share reflects the potential dilution that would occur if securities or other contracts to issue common stock were exercised or converted into common stock. The Company’s dilutive loss per share equals basic loss per share for each of the years in the two-year period ended December 31, 2020 because all potentially dilutive securities ( i.e., |
Research and Development Costs | (f) Research and Development Costs Research and development costs are charged to expense as incurred. |
Patent Costs | (g) Patent Costs The Company expenses costs relating to the development or acquisition of patents due to the uncertainty of the recoverability of these items. |
Use of Estimates | (h) Use of Estimates The preparation of the Company’s consolidated financial statements requires management of the Company to make a number of estimates and assumptions relating to the reported amount of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during this period. Actual results could differ from those estimates. |
Income Taxes | (i) Income Taxes Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry-forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to be recovered or settled. In accordance with ASC Topic 740, we recognize tax benefits only for tax positions that are more likely than not to be sustained upon examination by tax authorities. The amount recognized is measured as the largest amount of benefit that is greater than 50 percent likely to be realized upon ultimate settlement. Unrecognized tax benefits are tax benefits claimed in tax returns that do not meet these recognition and measurement standards. We classify accrued interest and penalties related to any unrecognized tax benefits in our income tax provision. At December 31, 2020 and 2019, we do not have accrued interest and penalties related to any unrecognized tax benefits. We do not believe we have any uncertain tax positions as of December 31, 2020 and 2019. The tax years subject to examination by major tax jurisdictions include the years 2015 and forward by the U.S. Internal Revenue Service and certain states. The Company is not currently being audited by any tax jurisdiction. |
Equity-Based Compensation | (j) Equity-Based Compensation We recognize all stock-based compensation as an expense in the consolidated financial statements and such costs are measured at the fair value of the award at the date of grant. In addition to reflecting compensation expense for new share-based payment awards, expense is also recognized to reflect the remaining vesting period of awards that had been granted in prior periods. Tax benefits related to stock option exercises are reflected as financing cash inflows. The exercise prices for stock options granted are generally set at the average for the high and low trading prices of the Company’s common stock on the trading date immediately prior to the date of grant, and the related numbers of shares granted are fixed at the date of grant. In order to determine the fair value of stock options on the date of grant, the Company uses the Black-Scholes option-pricing model. Inherent in this model are assumptions related to expected stock-price volatility, option term, risk-free interest rate and dividend yield. While the risk-free interest rate and dividend yield are less subjective assumptions that are based on factual data derived from public sources, the expected stock-price volatility and option term assumptions require a greater level of judgment. In connection with employee and director stock options, the Company charged to compensation expense $327,554 and $790,339 during the years ended December 31, 2020 and 2019, respectively. As of December 31, 2020, these awards were fully vested. In lieu of higher cash compensation, the Company has granted warrants and non-employee options to consultants. These warrants and non-employee options vested fully on the date of grant. During the year ended December 31, 2019, the Company charged $51,273 to expense in connection with options granted to a consultant. There were no such charges for the year ended December 31, 2020. |
Restricted Stock | (k) Restricted Stock Compensation cost for restricted stock is measured using the quoted market price of the Company’s common stock at the date the common stock is granted. The compensation cost is recognized over the period between the issue date and the vesting period for such shares. Restricted stock is included in total common shares outstanding upon the lapse of any vesting conditions. |
Impairment of Long-lived Assets | (l) Impairment of Long-Lived Assets The Company reviews long-lived assets to determine whether an event or change in circumstances indicates the carrying value of the asset may not be recoverable. The Company bases its evaluation on such impairment indicators as the nature of the assets, the future economic benefit of the assets and any historical or future profitability measurements, as well as other external market conditions or factors that may be present. In 2019, the Company incurred a loss from the impairment of a fixed asset of $50,666 in value of an automobile which was subsequently sold to an employee at fair market value. There was no impairment of long-lived assets recorded during 2020. |
Fair Value Measurements | (m) Fair Value Measurements As of December 31, 2020 and 2019, the fair value of the Company’s financial assets and non-warrant liabilities including cash and cash equivalents, royalties receivable, accounts payable and accrued expenses approximated carrying value due to the short-term maturity of these instruments. |
Recent Accounting Pronouncements | (n) Recent Accounting Pronouncements New Accounting Standards In August 2018, the FASB issued ASU 2018-13, “Fair Value Measurement: Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement,” which eliminates, amends and adds disclosure requirements for fair value measurement. The standard is effective for the interim and annual periods beginning after December 15, 2019, with early adoption permitted. The Company adopted this standard as of January 1, 2020 and it did not have a material impact on the consolidated financial statements. In June 2018, the FASB issued ASU 2018-07 “Compensation—Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting” (“ASU 2018-07”), which simplifies the accounting for share-based payments to nonemployees by aligning it with the accounting for share-based payments to employees, with certain exceptions. ASU 2018-07 was effective for the Company in the first quarter of fiscal 2020 and it did not have a material impact on the consolidated financial statements. Effective January 1, 2019, the Company adopted the Financial Accounting Standards Board’s Standard, “Leases” (Topic 842) ● An entity need not reassess whether any expired or existing contracts are or contain leases. ● An entity need not reassess the lease classification for any expired or existing leases. Instead, any leases previously classified as operating leases will continue to be classified as operating leases, while any leases previously classified as capital leases will be classified as finance leases. ● An entity need not reassess initial direct costs for any leases. The Company used the above practical expedients as the transition method in the application of the new lease standard at January 1, 2019. The Company applied a policy election to exclude short-term leases from balance sheet recognition and elected certain practical expedients at adoption. As permitted, the Company did not reassess whether existing contracts are or contain leases, the lease classification for any existing leases or the initial direct costs for any existing leases which were not previously accounted for as leases, are or contain a lease. At adoption on January 1, 2019, an operating lease liability of $1,134,000 and an operating lease right of use asset of $941,000 were recorded (most of this liability relating to the Company’s lease for its facilities in Woodbury, New York). The operating lease liability was $193,000 more than the operating lease right of use asset due to unamortized lease incentive from periods prior to the adoption of the new lease standard. There was no cumulative earnings effect adjustment. In June 2016, the FASB issued ASU 2016-13, “Financial Instruments” – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”), which requires entities to use a new impairment model based on expected losses. Under this new model an entity would recognize an impairment allowance equal to its current estimate of credit losses on financial assets measured at amortized cost. ASU 2016-13 was effective for us beginning January 1, 2020. The adoption of this standard did not have a material impact on the consolidated financial statements. |
Fixed Assets (Tables)
Fixed Assets (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Fixed Assets | Fixed assets and their estimated useful lives as of December 31, 2020 and 2019 are as follows: 2020 2019 Estimated useful life Equipment and furniture $ 1,390,017 $ 1,387,245 5 years Trade show materials 775,654 775,654 5 years Autos 53,764 62,148 5 years Life of lease or estimated Leasehold improvements 584,967 584,967 life of asset if shorter 2,804,402 2,810,014 Less accumulated depreciation and amortization (2,682,630 ) (2,668,294 ) $ 121,772 $ 141,720 |
Accrued Expenses and Other (Tab
Accrued Expenses and Other (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Payables and Accruals [Abstract] | |
Schedule of Accrued Expenses and Other | Accrued expenses consist of the following at December 31, 2020 and 2019: 2020 2019 Payroll, bonuses and related benefits $ 15,121 $ 43,049 Professional services 10,800 3,300 Other 358 360 $ 26,279 $ 46,709 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
Schedule of Deferred Tax Assets | The tax effects of temporary differences that give rise to significant portions of the deferred tax assets at December 31, 2020 and 2019 are presented below: 2020 2019 Deferred tax assets: Depreciation $ 117,000 $ 102,000 Allowance for bad debts 202,000 243,000 Net operating loss carry-forwards 14,755,000 15,314,000 Stock option expense 403,000 354,000 Research and other credits 952,000 1,099,000 Other temporary differences 15,000 15,000 Total gross deferred tax assets 16,444,000 17,127,000 Less valuation allowance (16,444,000 ) (17,127,000 ) $ - $ - |
Schedule of Reconciliation Income Tax Expenses Benefit | The reconciliation of the income tax expense (benefit) computed at the Federal statutory tax rates to income tax expense (benefit) is as follows: 2020 2019 Income tax provision at federal statutory rate $ (485,000 ) $ (800,000 ) Permanent differences (43,000 ) 136,900 Credits - (5,000 ) Expired carryforwards and other 1,211,000 823,100 Valuation allowance (683,000 ) (155,000 ) $ - $ - |
Shareholders' Equity (Tables)
Shareholders' Equity (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Equity [Abstract] | |
Schedule of Assumptions Used to Value Options Granted to Employees | The Company valued these grants using the Black-Scholes option pricing model with the following weighted average assumptions: 2020 2019 Fair value on grant date $ 1.65 $ 1.63 Expected dividend yield - - Expected volatility 73 % 63 % Risk free interest rate 0.36 % 1.75 % Expected term of the option 5 years 5 years |
Schedule of Option Activity | All options are exercisable at December 31, 2020. Weighted Average Number of Shares Subject to Option Weighted Average Exercise Price Remaining Contractual Term (Years) Aggregate Intrinsic Value Balance at December 31, 2018 1,126,092 $ 3.84 6.6 $ 161,602 Granted 517,500 $ 3.00 Cancelled (30,400 ) $ 3.69 Exercised (64,841 ) $ 1.07 Balance at December 31, 2019 1,548,351 $ 3.68 6.9 $ 603,683 Granted 199,000 $ 2.79 Cancelled - Exercised (450,091 ) $ 2.09 Balance at December 31, 2020 1,297,260 $ 4.09 5.8 $ 142,885 |
Schedule of Warrant Activity | Activity in warrants is summarized below: Number of Shares Underlying Weighted Average Warrants Granted Exercise Price Balance at December 31, 2018 2,628,294 $ 1.49 Exercised (1,961,765 ) 1.20 Terminated (184,000 ) 6.00 Issued 1,000,614 2.76 Balance at December 31, 2019 1,483,143 $ 2.13 Exercised (83,152 ) 3.42 Terminated - Issued - Balance at December 31, 2020 1,399,991 $ 2.27 |
Commitments (Tables)
Commitments (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Minimum Annual Future Rental Commitments | Maturities of operating lease liabilities as of December 31, 2020 were as follows: Year 1 $ 207,000 Years 2-3 430,000 Years 4-5 278,000 Thereafter - Total lease payments 915,000 Less: imputed lease interest (102,404 ) Present value of lease liabilities $ 812,596 |
Business and Basis for Presen_2
Business and Basis for Presentation (Details Narrative) - USD ($) | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Working capital | $ 5,200,000 | ||
Cash and cash equivalents | 4,772,705 | $ 6,591,960 | |
Shareholders' equity | 5,327,005 | 7,056,108 | $ 3,099,490 |
Accumulated deficit | (117,840,776) | (115,499,912) | |
Other income | 202,052 | ||
PPP Loan [Member] | |||
Proceeds from loan | 202,052 | ||
Estimated forgiveness of debt | 194,140 | ||
Minimum [Member] | |||
Non-recurring cash expenses per quarter | 400,000 | ||
Maximum [Member] | |||
Non-recurring cash expenses per quarter | $ 450,000 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 12 Months Ended | |||
Dec. 31, 2020 | Dec. 31, 2019 | Jan. 02, 2020 | Jan. 02, 2019 | |
FDIC insurance coverage | $ 250,000 | |||
Amounts on deposit in excess of federally insured limits | 4,500,000 | $ 6,300,000 | ||
Revenue recognition | 828,450 | 1,564,024 | ||
Deferred revenue | $ 7,734 | |||
Number of options and warrants that were not included because their effect is antidilutive | 2,697,251 | 3,031,494 | ||
Recognized benefit measured | greater than 50 percent | |||
Unrecognized tax benefits, income tax penalties and interest accrued | ||||
Uncertain tax positions | ||||
Share based compensation | 327,554 | 841,612 | ||
Loss on impairment of fixed asset | 50,666 | |||
Operating lease liability | 812,596 | |||
Operating lease ROU assets | 616,442 | 773,989 | ||
Accounting Standards Update 2016-02 [Member] | ||||
Operating lease liability | $ 1,134,000 | $ 1,100,000 | ||
Operating lease ROU assets | 941,000 | $ 900,000 | ||
Operting lease liability, unamortized lease incentive prior to adoption | $ 193,000 | |||
Employees and Directors [Member] | ||||
Share based compensation | 327,554 | 790,339 | ||
Consultant [Member] | ||||
Charge recorded for employee and director options | $ 51,273 | |||
License Agreement [Member] | ||||
Revenue recognition | $ 490,000 | |||
Sales Revenue [Member] | License Agreement [Member] | Minimum [Member] | ||||
Royalty rate on selling price | 10.00% | |||
Sales Revenue [Member] | License Agreement [Member] | Maximum [Member] | ||||
Royalty rate on selling price | 15.00% | |||
Company One [Member] | Accounts Receivable [Member] | ||||
Concentration risk percentage | 16.00% | 14.00% | ||
Company Two [Member] | Accounts Receivable [Member] | ||||
Concentration risk percentage | 11.00% | 13.00% | ||
Company Three [Member] | Accounts Receivable [Member] | ||||
Concentration risk percentage | 10.00% | |||
Licensee One [Member] | Sales Revenue [Member] | ||||
Concentration risk percentage | 18.00% | 38.00% | ||
Licensee Two [Member] | Sales Revenue [Member] | ||||
Concentration risk percentage | 16.00% | 12.00% | ||
Licensee Three [Member] | Sales Revenue [Member] | ||||
Concentration risk percentage | 12.00% | 10.00% | ||
Licensee Four [Member] | Sales Revenue [Member] | ||||
Concentration risk percentage | 12.00% | |||
Licensee Five [Member] | Sales Revenue [Member] | ||||
Concentration risk percentage | 12.00% |
Fixed Assets (Details Narrative
Fixed Assets (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation and amortization | $ 67,082 | $ 195,377 |
Fixed Assets - Schedule of Fixe
Fixed Assets - Schedule of Fixed Assets (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Fixed assets | $ 2,804,402 | $ 2,810,014 |
Less accumulated depreciation and amortization | (2,682,630) | (2,668,294) |
Fixed assets, net | 121,772 | 141,720 |
Equipment and Furniture [Member] | ||
Fixed assets | $ 1,390,017 | 1,387,245 |
Estimated useful life | 5 years | |
Trade Show Materials [Member] | ||
Fixed assets | $ 775,654 | 775,654 |
Estimated useful life | 5 years | |
Autos [Member] | ||
Fixed assets | $ 53,764 | 62,148 |
Estimated useful life | 5 years | |
Leasehold Improvements [Member] | ||
Fixed assets | $ 584,967 | $ 584,967 |
Estimated useful life description | Life of lease or estimated life of asset if shorter |
Accrued Expenses and Other - Sc
Accrued Expenses and Other - Schedule of Accrued Expenses and Other (Details) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Payables and Accruals [Abstract] | ||
Payroll, bonuses and related benefits | $ 15,121 | $ 43,049 |
Professional services | 10,800 | 3,300 |
Other | 358 | 360 |
Accrued expenses | $ 26,279 | $ 46,709 |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) - USD ($) | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |||
Net operating loss carry-forward | $ 68,951,000 | ||
Net operating loss carry-forward with expiration | $ 66,956,000 | ||
Net operating loss carry-forward expiration description | expire in varying amounts from 2021 through 2037. | ||
Net operating loss carry-forward indefinitely | $ 6,822,000 | $ 6,822,000 | $ 6,822,000 |
Income tax percentage | 80.00% | ||
Research and other credit carry-forwards | $ 952,000 | ||
Research and other credit carry-forwards expiration dates | Dec. 31, 2039 |
Income Taxes - Schedule of Defe
Income Taxes - Schedule of Deferred Tax Assets (Details) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Income Tax Disclosure [Abstract] | ||
Depreciation | $ 117,000 | $ 102,000 |
Allowance for bad debts | 202,000 | 243,000 |
Net operating loss carry-forwards | 14,755,000 | 15,314,000 |
Stock option expense | 403,000 | 354,000 |
Research and other credits | 952,000 | 1,099,000 |
Other temporary differences | 15,000 | 15,000 |
Total gross deferred tax assets | 16,444,000 | 17,127,000 |
Less valuation allowance | (16,444,000) | (17,127,000) |
Deferred Tax Assets, Net of Valuation Allowance |
Income Taxes - Schedule of Reco
Income Taxes - Schedule of Reconciliation Income Tax Expenses Benefit (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | ||
Income tax provision at federal statutory rate | $ (485,000) | $ (800,000) |
Permanent differences | (43,000) | 136,900 |
Credits | (5,000) | |
Expired carryforwards and other | 1,211,000 | 823,100 |
Valuation allowance | (683,000) | (155,000) |
Total income tax provision |
Shareholders' Equity (Details N
Shareholders' Equity (Details Narrative) - USD ($) | May 30, 2019 | Dec. 31, 2020 | Dec. 31, 2019 |
Warrant exercise price per share | $ 40 | ||
Proceeds from stock offering | $ 4,600,000 | ||
Warrant liability including valuation adjustments | $ 1,153,439 | ||
Warrant market adjustment | $ 652,025 | ||
Proceeds from exercise of warrants | $ 284,207 | $ 1,170,546 | |
Number of common shares issued in connection with exercise of outstanding warrants | 31,575,786 | 31,254,262 | |
Shares of common stock reserved for issuance | 1,400,000 | ||
Shares available for issuance | 683,500 | ||
Number of options granted | 199,000 | 517,500 | |
Share based compensation | $ 327,554 | $ 841,612 | |
Common Stock [Member] | |||
Number of shares issued to investors | 2,001,237 | ||
Warrants [Member] | SPD Technology [Member] | |||
Warrants to purchase common stock | 362,319 | ||
Warrant expiry date | May 31, 2024 | ||
Shares issued price per share | $ 1.38 | ||
Warrant Exercise Price One [Member] | Gauzy Ltd. [Member] | |||
Warrant exercise price per share | 1.656 | ||
Warrant Exercise Price Two [Member] | Gauzy Ltd. [Member] | |||
Warrant exercise price per share | 1.794 | ||
Warrant Exercise Price Three [Member] | Gauzy Ltd. [Member] | |||
Warrant exercise price per share | $ 2.07 | ||
Unregistered Common Stock [Member] | SPD Technology [Member] | |||
Number of shares issued to investors | 724,638 | ||
Warrants [Member] | |||
Number of common shares issued in connection with exercise of outstanding warrants | 321,524 | 1,587,814 | |
Warrants [Member] | Non- Employee Stock Option [Member] | |||
Warrants issued | 1,399,991 | ||
Option expiration period | 5 years | ||
Warrants [Member] | Non- Employee Stock Option [Member] | Minimum [Member] | |||
Warrants and non-employee options vested term | 12 months | ||
Warrants [Member] | Non- Employee Stock Option [Member] | Maximum [Member] | |||
Warrants and non-employee options vested term | 59 months | ||
Accredited Investors [Member] | Common Stock [Member] | |||
Number of common stock sold | 1,276,599 | ||
Accredited Investors [Member] | Warrants [Member] | |||
Warrants to purchase common stock | 638,295 | ||
Warrant expiry date | May 31, 2024 | ||
Accredited Investors [Member] | Warrant Exercise Price One [Member] | |||
Warrant exercise price per share | $ 3.384 | ||
Accredited Investors [Member] | Warrant Exercise Price Two [Member] | |||
Warrant exercise price per share | 3.666 | ||
Accredited Investors [Member] | Warrant Exercise Price Three [Member] | |||
Warrant exercise price per share | $ 4.23 | ||
Employees and Directors [Member] | |||
Share based compensation | $ 327,554 | $ 790,339 | |
Stock issued during the period restricted |
Shareholders' Equity - Schedule
Shareholders' Equity - Schedule of Assumptions Used to Value Options Granted to Employees (Details) - $ / shares | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Share-based Payment Arrangement [Abstract] | ||
Fair value on grant date | $ 1.65 | $ 1.63 |
Expected dividend yield | ||
Expected volatility | 73.00% | 63.00% |
Risk free interest rate | 0.36% | 1.75% |
Expected term of the option | 5 years | 5 years |
Shareholders' Equity - Schedu_2
Shareholders' Equity - Schedule of Option Activity (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Number of Shares Subject to Option, Granted | 199,000 | 517,500 |
Stock Option [Member] | ||
Number of Shares Subject to Option, Beginning | 1,548,351 | 1,126,092 |
Number of Shares Subject to Option, Granted | 199,000 | 517,500 |
Number of Shares Subject to Option, Cancelled | (30,400) | |
Number of Shares Subject to Option, Exercised | (450,091) | (64,841) |
Number of Shares Subject to Option, Ending | 1,297,260 | 1,548,351 |
Weighted Average Exercise Price, Beginning | $ 3.68 | $ 3.84 |
Weighted Average Exercise Price, Granted | 2.79 | 3 |
Weighted Average Exercise Price, Cancelled | 3.69 | |
Weighted Average Exercise Price, Exercised | 2.09 | 1.07 |
Weighted Average Exercise Price, Ending | $ 4.09 | $ 3.68 |
Weighted Average Remaining Contractual Term (Years), Beginning | 6 years 10 months 25 days | 6 years 7 months 6 days |
Weighted Average Remaining Contractual Term (Years), Ending | 5 years 9 months 18 days | 6 years 10 months 25 days |
Aggregate Intrinsic Value, Beginning | $ 603,683 | $ 161,602 |
Aggregate Intrinsic Value, Exercised | ||
Aggregate Intrinsic Value, Ending | $ 142,885 | $ 603,683 |
Shareholders' Equity - Schedu_3
Shareholders' Equity - Schedule of Warrant Activity (Details) - $ / shares | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Equity [Abstract] | ||
Number of Shares Underlying Warrants and Non-Employee Options Granted, Beginning | 1,483,143 | 2,628,294 |
Number of Shares Underlying Warrants and Non-Employee Options Granted, Exercised | (83,152) | (1,961,765) |
Number of Shares Underlying Warrants and Non-Employee Options Granted, Terminated | (184,000) | |
Number of Shares Underlying Warrants and Non-Employee Options Granted, Issued | 1,000,614 | |
Number of Shares Underlying Warrants and Non-Employee Options Granted, Ending | 1,399,991 | 1,483,143 |
Weighted Average Exercise Price, Beginning | $ 2.13 | $ 1.49 |
Weighted Average Exercise Price, Exercised | 3.42 | 1.20 |
Weighted Average Exercise Price, Terminated | 6 | |
Weighted Average Exercise Price, Issued | 2.76 | |
Weighted Average Exercise Price, Ending | $ 2.27 | $ 2.13 |
License and Other Agreements (D
License and Other Agreements (Details Narrative) | 12 Months Ended |
Dec. 31, 2020 | |
Minimum [Member] | |
Royalty earned percentage | 5.00% |
Maximum [Member] | |
Royalty earned percentage | 15.00% |
Commitments (Details Narrative)
Commitments (Details Narrative) - USD ($) | 12 Months Ended | |||
Dec. 31, 2020 | Jan. 02, 2020 | Dec. 31, 2019 | Jan. 02, 2019 | |
Lease expiration term | 1 year | |||
Weighted average remaining lease term | 4 years 2 months 12 days | |||
Weighted-average discount rate | 5.50% | |||
Right of use lease assets | $ 616,442 | $ 773,989 | ||
Lease liabilities | 812,596 | |||
Accounting Standards Update 2016-02 [Member] | ||||
Right of use lease assets | $ 941,000 | $ 900,000 | ||
Lease liabilities | $ 1,134,000 | $ 1,100,000 | ||
Chief Executive Officer [Member] | ||||
Annual base salary | $ 500,000 |
Commitments - Schedule of Minim
Commitments - Schedule of Minimum Annual Future Rental Commitments (Details) | Dec. 31, 2020USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
Year 1 | $ 207,000 |
Years 2-3 | 430,000 |
Years 4-5 | 278,000 |
Thereafter | |
Total lease payments | 915,000 |
Less: imputed lease interest | (102,404) |
Present value of lease liabilities | $ 812,596 |
Rights Plan (Details Narrative)
Rights Plan (Details Narrative) | 12 Months Ended |
Dec. 31, 2020USD ($)$ / shares | |
Treasury Stock, Number of Shares and Restriction Disclosures [Abstract] | |
Percentage of acquisition threshold | 15.00% |
Value of stock covered by each right | $ | $ 80 |
Exercise price of rights | $ 40 |
Threshold for change in control | 50.00% |
Rights plan expire date | Feb. 11, 2023 |
Redemption price | $ 0.0001 |