Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Apr. 20, 2020 | Jun. 30, 2019 | |
Document And Entity Information | |||
Entity Registrant Name | Nano Magic Inc. | ||
Entity Central Index Key | 0000891417 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2019 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 1,125,970 | ||
Entity Common Stock, Shares Outstanding | 7,199,941 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2019 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
CURRENT ASSETS: | ||
Cash | $ 216,801 | $ 211,498 |
Investments | 10,236 | 10,004 |
Restricted cash | 85,000 | |
Accounts receivable, net | 151,290 | 307,554 |
Inventory | 422,622 | 559,802 |
Prepaid expenses and contract assets | 34,160 | 98,350 |
Total Current Assets | 835,109 | 1,272,208 |
Right-of-use assets | 257,523 | |
Property, plant and equipment, net | 221,565 | 294,983 |
Other assets | 5,890 | 32,196 |
Total Assets | 1,320,087 | 1,599,387 |
CURRENT LIABILITIES: | ||
Accounts payable | 801,788 | 1,169,067 |
Accounts payable - related parties | 19,887 | 19,887 |
Accrued expenses and other current liabilities | 199,875 | 478,155 |
Bank revolving line of credit | 330,892 | |
Current portion of notes payable | 52,641 | 73,562 |
Advances from related parties | 140,000 | 140,000 |
Current portion of lease liabilities | 131,835 | |
Contract liabilities | 162,123 | 95,610 |
Total Current Liabilities | 1,508,149 | 2,307,173 |
Notes payable, net of current portion | 122,170 | 129,798 |
Lease liabilities, net of current portion | 136,624 | |
Total Liabilities | 1,766,943 | 2,436,971 |
Commitments and Contingencies (See Note 13) | ||
STOCKHOLDERS' DEFICIT: | ||
Preferred stock, $0.0001 par value, 100,000 shares authorized; no shares issued and outstanding | ||
Additional paid-in capital | 7,242,067 | 5,886,600 |
Accumulated deficit | (7,689,545) | (6,724,558) |
Total Stockholders' Deficit | (446,856) | (837,585) |
Total Liabilities and Stockholders' Deficit | 1,320,087 | 1,599,387 |
Class A Common Stock [Member] | ||
STOCKHOLDERS' DEFICIT: | ||
Common stock, value | 622 | 374 |
Class B Common Stock [Member] | ||
STOCKHOLDERS' DEFICIT: | ||
Common stock, value | ||
Class Z Common Stock [Member] | ||
STOCKHOLDERS' DEFICIT: | ||
Common stock, value |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2019 | Dec. 31, 2018 |
Preferred stock, par value | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 100,000 | 100,000 |
Preferred stock, shares issued | ||
Preferred stock, shares outstanding | ||
Class A Common Stock [Member] | ||
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 7,200,000 | 7,200,000 |
Common stock, shares issued | 6,222,881 | 3,741,481 |
Common stock, shares outstanding | 6,222,881 | 3,741,481 |
Class B Common Stock [Member] | ||
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 2,500,000 | 2,500,000 |
Common stock, shares issued | ||
Common stock, shares outstanding | ||
Class Z Common Stock [Member] | ||
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 300,000 | 300,000 |
Common stock, shares issued | ||
Common stock, shares outstanding |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
REVENUES: | ||
Total Revenues | $ 2,436,010 | $ 4,500,755 |
COST OF REVENUES: | ||
Total Cost of Revenues | 2,112,109 | 3,451,970 |
GROSS PROFIT | 323,901 | 1,048,785 |
OPERATING EXPENSES: | ||
Selling and marketing expenses | 66,892 | 35,638 |
Salaries, wages and related benefits | 361,188 | (34,265) |
Research and development | 68,539 | 60,846 |
Professional fees | 310,141 | 414,729 |
General and administrative expenses | 548,224 | 612,230 |
Total Operating Expenses | 1,354,984 | 1,089,178 |
INCOME (LOSS) FROM OPERATIONS | (1,031,083) | (40,393) |
OTHER (EXPENSE) INCOME: | ||
Interest expense | (8,637) | (90,573) |
Other income, net | 74,733 | 153,038 |
Total Other (Expense) Income | 66,096 | 62,465 |
NET INCOME (LOSS) | $ (964,987) | $ 22,072 |
NET INCOME (LOSS) PER COMMON SHARE: | ||
Basic | $ (0.21) | $ 0.01 |
Diluted | $ (0.21) | $ 0.01 |
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: | ||
Basic | 4,673,244 | 3,224,529 |
Diluted | 4,673,244 | 3,224,529 |
Products [Member] | ||
REVENUES: | ||
Total Revenues | $ 1,539,191 | $ 3,170,210 |
COST OF REVENUES: | ||
Total Cost of Revenues | 1,200,168 | 2,609,872 |
Contract Services [Member] | ||
REVENUES: | ||
Total Revenues | 896,819 | 1,330,545 |
COST OF REVENUES: | ||
Total Cost of Revenues | $ 911,941 | 842,098 |
OPERATING EXPENSES: | ||
Total Operating Expenses | 108,103 | |
OTHER (EXPENSE) INCOME: | ||
Total Other (Expense) Income | $ 205,788 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Stockholders' Deficit - USD ($) | Class A Common Stock [Member] | Class B Common Stock [Member] | Class Z Common Stock [Member] | Additional Paid-in Capital [Member] | Accumulated Deficit [Member] | Total |
Balance at Dec. 31, 2017 | $ 165 | $ 142 | $ 5,490,923 | $ (6,587,235) | $ (1,096,005) | |
Balance, shares at Dec. 31, 2017 | 1,653,322 | 1,423,252 | ||||
Impact of adoption of ASC 606 on opening contract values | (159,395) | (159,395) | ||||
Common stock issued for cash, net of issuance costs | $ 59 | 295,366 | 295,426 | |||
Common stock issued for cash, net of issuance costs, shares | 590,847 | |||||
Common stock issued for services | $ 6 | $ 2 | 50,733 | 50,741 | ||
Common stock issued for services, shares | 61,260 | 12,800 | ||||
Warrants , options, and warrant options on private placement | 49,577 | 49,577 | ||||
Conversion of Class B to Class A shares | $ 144 | $ (144) | ||||
Conversion of Class B to Class A shares. shares | 1,436,052 | (1,436,052) | ||||
Net loss | 22,072 | 22,072 | ||||
Balance at Dec. 31, 2018 | $ 374 | 5,886,600 | (6,724,558) | (837,585) | ||
Balance, shares at Dec. 31, 2018 | 3,741,481 | |||||
Common stock issued for cash, net of issuance costs | $ 228 | 1,101,794 | 1,102,022 | |||
Common stock issued for cash, net of issuance costs, shares | 2,281,286 | |||||
Common stock issued for services | $ 20 | 126,604 | 126,604 | |||
Common stock issued for services, shares | 200,114 | |||||
Warrants , options, and warrant options on private placement | 67,978 | 67,978 | ||||
Stock-based compensation | 59,091 | 59,091 | ||||
Net loss | (964,987) | (964,987) | ||||
Balance at Dec. 31, 2019 | $ 622 | $ 7,242,067 | $ (7,689,545) | $ (446,856) | ||
Balance, shares at Dec. 31, 2019 | 6,222,881 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net income (loss) | $ (964,987) | $ 22,072 |
Adjustments to reconcile net income (loss) to net cash provided (used) by operating activities: | ||
Change in inventory obsolescence reserve | (76,125) | 403,370 |
Bad debt expense | 34,977 | |
Depreciation and amortization expense | 84,547 | 97,710 |
Stock-based compensation | 185,943 | 50,800 |
Change in operating assets and liabilities: | ||
Accounts receivable | 156,264 | 265,101 |
Accounts receivable - related party | 14,226 | |
Inventory | 213,304 | (229,191) |
Prepaid expenses and contract assets | 90,496 | 72,816 |
Accounts payable | (367,279) | (214,447) |
Operating lease liabilities | 10,936 | |
Accrued expenses | (278,280) | (29,410) |
Customer deposits and contract liabilities | 66,513 | (332,138) |
NET CASH USED BY OPERATING ACTIVITIES | (878,668) | 155,886 |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Net activity on investments | (232) | |
Purchases of property, plant and equipment | (11,129) | (3,916) |
NET CASH PROVIDED BY INVESTING ACTIVITIES | (11,361) | (3,916) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Proceeds from bank lines of credit | 177,967 | 2,398,600 |
Repayment of bank lines of credit | (508,859) | (2,773,335) |
Repayment of bank loans | (18,199) | (73,976) |
Proceeds from sale of common stock and warrants | 1,169,773 | 344,944 |
Repayment of notes payable | (10,350) | |
Proceeds from advances from related parties | 25,000 | |
NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES | 810,332 | (78,767) |
NET INCREASE (DECREASE) IN CASH | (79,697) | 73,203 |
CASH, beginning of year | 296,498 | 223,295 |
CASH, end of period | 216,801 | 296,498 |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | ||
Interest | 10,861 | 67,459 |
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||
Accrued director fees settled with common stock | 50,733 | |
The following table provides a reconciliation of cash and restricted cash reported within the consolidated balance sheet that sum to the total of the same such amounts shown in the consolidated statement of cash flows: | ||
Cash | 216,801 | 211,498 |
Restricted cash | 85,000 | |
Total cash and restricted cash | $ 216,801 | $ 296,498 |
Organization and Basis of Prese
Organization and Basis of Presentation | 12 Months Ended |
Dec. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Basis of Presentation | NOTE 1 – ORGANIZATION AND BASIS OF PRESENTATION Organization Nano Magic Inc. (“we”, “us”, “our”, “Nano Magic” or the “Company”), a Delaware corporation, develops and sells a portfolio of nano-layer coatings, nano-based cleaners, and nano-composite products based on its proprietary technology, and performs nanotechnology product research and development generating revenues through performing contract services. On March 3, 2020, we changed our name from PEN Inc. to Nano Magic Inc. Through the Company’s wholly-owned subsidiary, Nano Magic LLC, formerly known as PEN Brands LLC, we develop, manufacture and sell consumer and institutional products using nanotechnology to deliver unique performance attributes at the surfaces of a wide variety of substrates. These products are marketed internationally primarily to customers in the optical industry. On March 31, 2020, PEN Brands LLC changed its name to Nano Magic LLC. Through the Company’s wholly-owned subsidiary, Applied Nanotech, Inc., we primarily perform contract research services for the Company and for governmental and private customers. Basis of Presentation and Principles of Consolidation The Company’s consolidated financial statements include the financial statements of its wholly-owned subsidiaries, Applied Nanotech, Inc. and Nano Magic LLC. All significant intercompany accounts and transactions have been eliminated in consolidation. Going Concern These consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. As reflected in the consolidated financial statements, the Company had losses from operations and net cash used by operations of $1,031,083 and $878,668, respectively, for the year ended December 31, 2019. Furthermore, the Company had an accumulated deficit, a stockholders’ deficit and a working capital deficit of $7,689,545, $446,856 and $673,040, respectively, at December 31, 2019 and $6,724,558, $837,585, and $1,034,965 at December 31, 2018. These factors raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that these consolidated financial statements are issued. Management cannot provide assurance that the Company will ultimately achieve profitable operations, become cash flow positive or raise additional capital. During 2018 management took measures to reduce operating expenses and continued to closely monitor costs in 2019. In addition, the Company raised equity capital in 2018, 2019 and 2020. These consolidated financial statements do not include any adjustments related to the recoverability and classification of assets or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Use of Estimates The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“US GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates for the years ended December 31, 2019 and 2018 include estimates for allowance for doubtful accounts on accounts receivable, the estimates for obsolete inventory, the useful life of property and equipment, assumptions used in assessing impairment of long-term assets, estimates of current and deferred income taxes and deferred tax valuation allowances, the fair value of non-cash equity transactions, and the fair value of equity incentives. Fair Value of Financial Instruments and Fair Value Measurements The Company adopted the guidance of Accounting Standards Codification (“ASC”) 820 for fair value measurements which clarifies the definition of fair value, prescribes methods for measuring fair value, and establishes a fair value hierarchy to classify the inputs used in measuring fair value as follows: Level 1 - Inputs are unadjusted quoted prices in active markets for identical assets or liabilities available at the measurement date. Level 2 - Inputs are quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, inputs other than quoted prices that are observable, and inputs derived from or corroborated by observable market data. Level 3 - Inputs are unobservable inputs which reflect the reporting entity’s own assumptions on what assumptions the market participants would use in pricing the asset or liability based on the best available information. The carrying amounts reported in the consolidated balance sheets for cash and cash equivalents, accounts receivable, loans and lines of credit, accounts payable, accrued expenses, and other payables approximate their fair market value based on the short-term maturity of these instruments. The Company analyzes all financial and non-financial instruments with features of both liabilities and equity under the Financial Accounting Standards Board (“FASB”) accounting standard for such instruments. Under this standard, financial and non-financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company accounts for no items at fair value using level 3 valuation. ASC 825-10 “Financial Instruments”, allows entities to voluntarily choose to measure certain financial assets and liabilities at fair value (fair value option). The fair value option may be elected on an instrument-by-instrument basis and is irrevocable, unless a new election date occurs. If the fair value option is elected for an instrument, unrealized gains and losses for that instrument should be reported in earnings at each subsequent reporting date. The Company did not elect to apply the fair value option to any outstanding instruments. Cash, Cash Equivalents and Restricted Cash For purposes of the consolidated statements of cash flows, the Company considers all highly liquid instruments with a maturity of three months or less at the purchase date and money market accounts to be cash equivalents. Investments Investments consist of long-term certificates of deposit. The certificate of deposit held at December 31, 2019 and 2018 matures in May 2021 and carries interest at a rate of 2.29% per year. Accounts Receivable The Company recognizes an allowance for losses on accounts receivable in an amount equal to the estimated probable losses net of recoveries. The allowance is based on an analysis of historical bad debt experience, current receivables aging, and expected future write-offs, as well as an assessment of specific identifiable customer accounts considered at risk or uncollectible. The expense associated with the allowance for doubtful accounts is recognized as general and administrative expense. Inventory Inventory is stated at the lower of cost or net realizable value. Cost is determined using the first-in, first-out (FIFO) method based on prices paid for inventory items. This valuation requires us to make judgments, based on currently available information, about the likely method of disposition, such as sales to individual customers and expected recoverable values. Property and Equipment Property and equipment are stated at cost and are depreciated using the straight-line method over their estimated useful lives, which range from three to ten years. Leasehold improvements are depreciated over the shorter of the useful life or lease term including scheduled renewal terms. Maintenance and repairs are charged to expense as incurred. When assets are retired or disposed of, the cost and accumulated depreciation are removed from the accounts, and any resulting gains or losses are included in other income or expense in the year of disposition. The Company examines the possibility of decreases in the value of these assets when events or changes in circumstances reflect the fact that their recorded value may not be recoverable. Impairment of Long-Lived Assets In accordance with ASC Topic 360, the Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable, or at least annually. The Company recognizes an impairment loss when the sum of expected undiscounted future cash flows is less than the carrying amount of the asset. The amount of impairment is measured as the difference between the asset’s estimated fair value and its book value. The Company did not record any impairment charge for the year ended December 31, 2019 and 2018. Revenue Recognition We adopted ASC Topic 606, Revenue from Contracts with Customers Identification of the contract, or contracts, with a customer A contract with a customer exists when (i) we enter into an enforceable contract with a customer that defines each party’s rights regarding the goods or services to be transferred and identifies the payment terms related to these goods or services, (ii) the contract has commercial substance and, (iii) we determine that collection of substantially all consideration for goods or services that are transferred is probable based on the customer’s intent and ability to pay the promised consideration. We apply judgment in determining the customer’s ability and intention to pay, which is based on a variety of factors including the customer’s historical payment experience or, in the case of a new customer, published credit and financial information pertaining to the customer. Identification of the performance obligations in the contract Performance obligations promised in a contract are identified based on the goods or services that will be transferred to the customer that are both capable of being distinct, whereby the customer can benefit from the goods or service either on its own or together with other resources that are readily available from third parties or from us, and are distinct in the context of the contract, whereby the transfer of the goods or services is separately identifiable from other promises in the contract. When a contract includes multiple promised goods or services, we apply judgment to determine whether the promised goods or services are capable of being distinct and are distinct within the context of the contract. If these criteria are not met, the promised goods or services are accounted for as a combined performance obligation. Determination of the transaction price The transaction price is determined based on the consideration to which we will be entitled to receive in exchange for transferring goods or services to our customer. We estimate any variable consideration included in the transaction price using the expected value method that requires the use of significant estimates for discounts, cancellation periods, refunds and returns. Variable consideration is described in detail below. Allocation of the transaction price to the performance obligations in the contract If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. Contracts that contain multiple performance obligations require an allocation of the transaction price to each performance obligation based on a relative Stand-Alone Selling Price (“SSP,”) basis. We determine SSP based on the price at which the performance obligation would be sold separately. If the SSP is not observable, we estimate the SSP based on available information, including market conditions and any applicable internally approved pricing guidelines. Recognition of revenue when, or as, we satisfy a performance obligation We recognize contract revenue over time and product revenue at a point in time, when the related performance obligation is satisfied by transferring the promised goods or services to our customer. Contract revenue is recognized based on a cost-to-cost input method. Disaggregation of Revenue For the years ended December 31, 2019 and 2018, total sales in the United States represent approximately 83% and 93% of total consolidated revenues, respectively. No other geographical area accounted for more than 10% of total sales during the years ended December 31, 2019 and 2018. Principal versus Agent Considerations When another party is involved in providing goods or services to our customer, we apply the principal versus agent guidance in ASC Topic 606 to determine if we are the principal or an agent to the transaction. When we control the specified goods or services before they are transferred to our customer, we report revenue gross, as principal. If we do not control the goods or services before they are transferred to our customer, revenue is reported net of the fees paid to the other party, as agent. Our evaluation to determine if we control the goods or services within ASC Topic 606 includes the following indicators: We are primarily responsible for fulfilling the promise to provide the specified good or service. When we are primarily responsible for providing the goods and services, such as when the other party is acting on our behalf, we have indication that we are the principal to the transaction. We consider if we may terminate our relationship with the other party at any time without penalty or without permission from our customer. We have inventory risk before the specified good or service has been transferred to a customer or after transfer of control to the customer. We may commit to obtaining the services of another party with or without an existing contract with our customer. In these situations, we have risk of loss as principal for any amount due to the other party regardless of the amount(s) we earn as revenue from our customer. The entity has discretion in establishing the price for the specified good or service. We have discretion in establishing the price our customer pays for the specified goods or services. Contract Assets We capitalize costs and estimated earnings in excess of billings as a contract asset in current assets. At December 31, 2019 and 2018, contract assets totaled $15,525 and $16,486, respectively. Contract Liabilities Contract liabilities consist of customer advance payments and billings in excess of revenue recognized. We may receive payments from our customers in advance of completing our performance obligations. We record contract liabilities equal to the amount of payments received in excess of revenue recognized, Contract liabilities are recorded under the caption “contract liabilities” and are reported as current liabilities on our consolidated financial statements when the time to fulfill the performance obligations under terms of our contracts is less than one year. At December 31, 2019 and 2018, contract liabilities totaled $162,123 and $95,610, respectively. Cost of Sales Cost of sales includes inventory costs, materials and supplies costs, internal labor and related benefits, subcontractor costs, depreciation, overhead and shipping and handling costs incurred. Shipping and Handling Costs Shipping and handling costs incurred relating to the purchase of inventory are included in inventory which is charged to cost of sales as products are sold. Shipping and handling costs incurred for product shipped to customers are included in cost of sales. For the years ended December 31, 2019 and 2018 shipping and handling costs amounted to $94,431 and $110,761, respectively. Research and Development Research and development costs incurred in the development of the Company’s products and under other Company sponsored research and development projects are expensed as incurred. Costs such as direct labor, direct costs, and other allocated costs incurred to perform research and development service pursuant to government and private research projects are in included in cost of sales. Research and development costs incurred in the development of the Company’s products for the years ended December 31, 2019 and 2018 were $68,539 and $60,846, respectively, and are included in operating expenses on the accompanying consolidated statements of operations. Advertising Costs The Company participates in various advertising programs. All costs related to advertising of the Company’s products are expensed in the period incurred. Advertising costs charged to operations for the years ended December 31, 2019 and 2018 were $4,969 and $779, respectively, and are included in selling and marketing on the consolidated accompanying statements of operations. These advertising expenses do not include cooperative advertising and sales incentives which have been deducted from sales. Federal and State Income Taxes The Company accounts for income tax using the liability method prescribed by ASC 740, “Income Taxes”. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial reporting and tax bases of assets and liabilities using enacted tax rates that will be in effect in the year in which the differences are expected to reverse. The Company records a valuation allowance to offset deferred tax assets if based on the weight of available evidence, it is more-likely-than-not that some portion, or all, of the deferred tax assets will not be realized. The effect on deferred taxes of a change in tax rates is recognized as income or loss in the period that includes the enactment date. The Company follows the accounting guidance for uncertainty in income taxes using the provisions of ASC 740 “Income Taxes Stock-Based Compensation Stock-based compensation is accounted for based on the requirements of the Share-Based Payment Topic of ASC 718 which requires recognition in the financial statements of the cost of employee and director services received in exchange for an award of equity instruments over the period the employee or director is required to perform the services in exchange for the award (presumptively, the vesting period). The ASC also requires measurement of the cost of employee and director services received in exchange for an award based on the grant-date fair value of the award. The Company adopted ASU No. 2017-09 in 2018; its adoption did not have a material impact on its consolidated financial statements. Pursuant to ASC Topic 505-50, for share-based payments to consultants and other third-parties, compensation expense is determined at the “measurement date.” The expense is recognized over the service period of the award. Until the measurement date is reached, the total amount of compensation expense remains uncertain. The Company initially records compensation expense based on the fair value of the award at the reporting date. Earnings (Loss) Per Share of Common Stock ASC 260 “Earnings Per Share”, requires dual presentation of basic and diluted earnings per share (“EPS”) with a reconciliation of the numerator and denominator of the basic EPS computation to the numerator and denominator of the diluted EPS computation. Basic EPS excludes dilution. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity. Basic net loss per common share is computed by dividing net loss available to common shareholders by the weighted average number of shares of common shares outstanding during the period. Diluted net loss per common share is computed by dividing net loss by the weighted average number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during each period. As of December 31, 2018, 37,778 contingently issuable common shares that were issuable based on certain market conditions (see Note 11) were not included in the potential dilutive shares in calculating the diluted EPS. Additionally, potentially dilutive common shares consist of common stock options and warrants (using the treasury stock method). These common stock equivalents may be dilutive in the future . December 31, 2019 December 31, 2018 Stock options 455,502 8,726 Stock warrants 2,817,463 551,559 Restricted stock - 37,778 Warrant options - 550,847 Total 3,272,952 1,148,910 Additionally, there are an unknown quantity of common stock equivalents that result from a potential conversion of stock appreciation rights (See Note 16). Net income (loss) per share for each class of common stock is as follows: Net income (loss) per common shares outstanding: Year Ended Year Ended Class A common stock $ (0.21 ) $ 0.01 Weighted average shares outstanding: Class A common stock 5,607,392 3,741,481 Class B common stock - - Class Z common stock - - Total weighted average shares outstanding 5,607,392 3,741,481 Segment Reporting The Company uses “the management approach” in determining reportable operating segments. The management approach considers the internal organization and reporting used by the Company’s chief operating decision maker for making operating decisions and assessing performance as the source for determining the Company’s reportable segments. The Company’s chief operating decision maker is the President of the Company, who reviews operating results to make decisions about allocating resources and assessing performance for the entire Company. The Company classified the reportable operating segments into (i) the development, manufacture and sale of consumer and institutional products using nanotechnology to deliver unique performance attributes at the surfaces of a wide variety of substrates (the “Product segment”) and (ii) nanotechnology design and development services for our future products and for government and private entities and sales of products developed for third parties (the “Contract services segment”). Leases The Company adopted ASC 842 on January 1, 2019 using the modified retrospective basis and did not adjust comparative periods as permitted under Accounting Standards Update (“ASU”) 2018-11. ASC 842 supersedes nearly all existing lease accounting guidance under U.S. GAAP issued by the Financial Accounting Standards Board (“FASB”) including ASC Topic 840, Leases. ASC 842 requires that lessees recognize Right-of-Use (ROU) assets and lease liabilities calculated based on the present value of lease payments for all lease agreements with terms that are greater than twelve months. ASC 842 distinguishes leases as either a finance lease or an operating lease that affects how the leases are measured and presented in the statement of operations and statement of cash flows. For operating leases, we calculated ROU assets and lease liabilities based on the present value of the remaining lease payments as of the date of adoption using the IBR as of that date. On the date of adoption, operating lease liabilities and right-of-use assets totaled $400,327. We do not have finance leases as per the definition of ASC 842 as of December 31, 2019. The FASB issued practical expedients and accounting policy elections that the Company has applied as described below. Practical Expedients ASC 842 provides a package of three practical expedients that must be adopted together and applied to all lease agreements. The Company elected the package of practical expedients as follows for all leases: Whether expired or existing contracts contain leases under the new definition of a lease. Because the accounting for operating leases and service contracts was similar under ASC 840, there was no accounting reason to separate lease agreements from service contracts in order to account for them correctly. The Company reviewed existing service contracts to determine if the agreement contained an embedded lease to be accounted for on the balance sheet under ASC 842. Lease classification for expired or existing leases. Leases that were capital leases under ASC 840 are accounted for as financing leases under ASC 842 while leases that were operating leases under ASC 840 are accounted for as operating leases under ASC 842. Whether previously capitalized initial direct costs would meet the definition of initial direct costs under the new standard guidance. The definition of initial direct costs is more restrictive under ASC 842 than under ASC 840. Entities that do not elect the practical expedient are required to reassess capitalized initial direct costs under ASC 840 and record an equity adjustment for those that are not capitalizable under ASC 842. Accounting Policy Elections Lease Term The Company calculates the term for each lease agreement to include the noncancelable period specified in the agreement together with (1) the periods covered by options to extend the lease if the Company is reasonably certain to exercise that option, (2) periods covered by an option to terminate if the Company is reasonably certain not to exercise that option and (3) period covered by an option to extend (or not terminate) if controlled by the lessor. The assessment of whether the Company is reasonably certain to exercise an option to extend a lease requires significant judgement surrounding contract-based factors, asset-based factors, entity-based factors and market-based factors. Lease Payments Lease payments consist of the following payments (as applicable) related to the use of the underlying asset during the lease term: ● Fixed payments, including in substance fixed payments, less any lease incentives paid or payable to the lessee ● Variable lease payments that depend on an index or a rate, such as the Consumer Price Index or a market interest rate, initially measured using the index or rate at the commencement date of January 1, 2019. ● The exercise price of an option to purchase the underlying asset if the lessee is reasonably certain to exercise that option. ● Payments for penalties for terminating the lease if the lease term reflects the lessee exercising an option to terminate the lease. ● Fees paid by the lessee to the owners of a special-purpose entity for structuring the transaction ● For a lessee only, amounts probable of being owed by the lessee under residual value guarantees Incremental Borrowing Rate The ROU asset and related lease liabilities recorded under ASC 842 are calculated based on the present value of the lease payments using (1) the rate implicit in the lease or (2) the lessee’s IBR, defined as the rate of interest that a lessee would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. Recently Issued Accounting Pronouncements Financial Instruments — Credit Losses (Topic 326) In June 2016, the FASB issued ASU 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments Measurement of expected credit losses is to be based on relevant forecasts that affect collectability. The scope of financial assets within the CECL methodology is broad and includes trade receivables from certain revenue transactions and certain off-balance sheet credit exposures. Different components of the guidance require modified retrospective or prospective adoption. ASU 2016-13 is effective for the annual reporting period beginning on or after December 15, 2020. The Company adopted this standard January 1, 2020 and there was no material impact. Except for our accounting policies for leases as a result of adopting ASC 842, there have been no changes to our significant accounting policies described in Note 2 to our Annual Report on Form 10-K for the year ended December 31, 2019, that have had a material impact on our Consolidated Financial Statements and related notes. Reclassifications Certain accounts and financial statement captions in the prior periods have been reclassified to conform to the current period financial statements. None of the reclassifications, excluding the correction disclosed in Note 3 below, had any impact on the net loss reported in 2018. |
Correction of Immaterial Errors
Correction of Immaterial Errors | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Changes and Error Corrections [Abstract] | |
Correction of Immaterial Errors | NOTE 3 – CORRECTION OF IMMATERIAL ERRORS During the fourth quarter of 2019, the Company identified errors in accounting for revenues and cost of revenues resulting in immaterial correction of errors in previously issued consolidated financial statements. Each of these errors affected periods beginning prior to 2018 through December 31, 2019. In accordance with Staff Accounting Bulletin (SAB) No. 99, Materiality Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements The adjustments cumulatively impacted the following balance sheet items as of December 31, 2018: As Reported Adjustment As Corrected Inventories $ 827,527 $ (267,725 ) (a) $ 559,802 Prepaid expenses and other current assets 81,864 16,486 (b) 98,350 Property, plant and equipment, net 328,028 (33,045 ) (c) 294,983 Total Assets 1,883,671 (284,284 ) 1,599,387 Accounts payable 1,375,042 (205,975 ) (d) 1,169,067 Contract liabilities 89,730 5,880 (e) 95,610 Total Liabilities 2,637,066 (200,095 ) 2,436,971 Total Stockholders’ Deficit $ (753,396 ) (84,189 ) (f) $ (837,585 ) References to above adjustments a. The Company lost lens care customers in 2018 that had an impact on the realizable value of specific customer-inventory that was held in inventory and not reserved for at year-end. b. This adjustment accounts for the value of contract assets due to earnings on contracts that had not been billed for at year-end. c. There was an error in the calculation of accumulated depreciation for specific property, plant and equipment. d. Accrued accounts payable invoices for goods received not invoiced were reconciled after year-end and subsequently reversed. Additionally, audit fees accrued in 2018 for the audit performed in 2019 was reversed, while legal fees that related to 2018 that were not booked were recorded in the above adjustments. e. An increase in contract liabilities was booked as a result of proper adoption of ASC 606 for contracts in-progress at year-end. f. Total Stockholders’ Deficit increased due to a revaluation of opening contracts with the adoption of ASC Topic 606 on January 1, 2018 totaling $159,396 offset by the understatement of net earnings for the year ended December 31, 2018 of $75,207 as detailed below. The errors discussed above resulted in an understatement of net earnings of $75,207 for the year ended December 31, 2018 as detailed in the table below: As Reported Adjustment As Corrected Product revenues $ 3,048,164 $ 122,046 (a) $ 3,170,210 Contract services revenues 1,282,588 47,957 (b) 1,330,545 Cost of product revenues 2,325,617 284,255 (c) 2,609,872 Cost of contract services revenues 1,126,352 (284,254 )(d) 842,098 Gross profit 878,783 170,002 1,048,785 Total operating expenses 1,197,281 (108,103 )(e) 1,089,178 (Loss) from operations (318,498 ) 278,105 (40,393 ) Other Income 265,363 (202,898 )(f) 62,465 Net Income (Loss) $ (53,135 ) $ 75,207 $ 22,072 References to above adjustments a. Represents the reclassification of product revenues formerly included in contract services revenue segment on the Applied Nanotech, Inc. books in 2018. b. With the proper recognition of contract services revenues with the adoption of ASC Topic 606, in-progress contract revenue was determined to be understated in 2018 by $170,003, offset by the reclassification noted in item (a) above of $122,046. c. Cost of product revenues increased by $284,255 for the net effect of the $267,725 increase to the inventory reserve, the error found in the depreciation calculation of $33,045, a general reclassification of operating expenses to cost of revenues of $96,779, an increase associated with costs related to the product revenues reclass to the product segment identified in item (a) above of $78,466, offset by the reversal of the balance in goods received not invoiced of $191,760. d. Cost of contract services revenues decreased by $284,254 resulting from a reclass of $205,788 of sublease income from Other Income plus $78,466 in cost of revenues associated with the product revenues reclass to the product segment identified in item (a) above. e. Operating expenses decreased by $108,103 resulting primarily from a general reclassification of expenses to cost of revenues of $96,778 plus the net effect of corrections in accruals explained in the balance sheet section above. f. Other Income decreased primarily from the reclassification of sublease income totaling $205,788 to net out rent expenses in cost of revenues, offset by a small reclassification of interest expense to operating expense. |
Accounts Receivable
Accounts Receivable | 12 Months Ended |
Dec. 31, 2019 | |
Receivables [Abstract] | |
Accounts Receivable | NOTE 4 – ACCOUNTS RECEIVABLE At December 31, 2019 and 2018, accounts receivable consisted of the following: December 31, 2019 December 31, 2018 Accounts receivable $ 164,960 $ 321,224 Less: allowance for doubtful accounts (13,960 ) (13,670 ) Accounts receivable, net $ 151,290 $ 307,554 Bad debt expense, net of recoveries, was $0 and $34,977 for the years ended December 31, 2019 and 2018, respectively. |
Inventory
Inventory | 12 Months Ended |
Dec. 31, 2019 | |
Inventory Disclosure [Abstract] | |
Inventory | NOTE 5 – INVENTORY At December 31, 2019 and 2018, inventory consisted of the following: December 31, 2019 December 31, 2018 Raw materials $ 663,932 $ 823,283 Finished goods 335,762 389,716 999,694 1,212,999 Less: reserve for obsolescence (577,072 ) (653,197 ) Inventory, net $ 422,622 $ 559,802 Excess write-downs related to inventory obsolescence during the years ended December 31, 2019 and 2018 were $160,439 and $267,724, respectively, and included within cost of sales on consolidated statement of operations. |
Property and Equipment
Property and Equipment | 12 Months Ended |
Dec. 31, 2019 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | NOTE 6 - PROPERTY AND EQUIPMENT At December 31, 2019 and 2018, property and equipment consisted of the following: Useful Life December 31, 2019 December 31, 2018 Machinery and equipment 5 - 10 Years $ 2,729,308 $ 2,729,308 Furniture and office equipment 3 - 7 Years 589,860 578,731 Leasehold improvements 2 - 15 Years 10,843 10,843 3,330,011 3,318,882 Less: accumulated depreciation (3,108,446 ) (3,023,899 ) Property and equipment, net $ 221,565 $ 294,983 For the years ended December 31, 2019 and 2018, depreciation and amortization expense amounted to $84,547 and $97,710, respectively. During the years ended December 31, 2019 and 2018 there were no sales of equipment. |
Operating Lease Right-Of-Use As
Operating Lease Right-Of-Use Assets | 12 Months Ended |
Dec. 31, 2019 | |
Leases [Abstract] | |
Operating Lease Right-Of-Use Assets | NOTE 7 – OPERATING LEASE RIGHT-OF-USE ASSETS Leasing Transactions The Company’s leased assets include offices, production and research and development facilities. Our current lease portfolio has remaining terms from less than one-year up to four years. Many of these leases contain options under which we can extend the term for several years. Renewal options are excluded from our calculation of lease liabilities unless we are reasonably assured to exercise the renewal option. Our lease agreements do not contain residual value guarantees or material restrictive covenants. On September 20, 2017, the Company entered into a three-year lease agreement for 22,172 square feet of office space in Brooklyn Heights, Ohio beginning September 20, 2017 and ending September 20, 2020. Monthly lease payments amount to $8,688. On December 10, 2018, we entered into a five-year lease agreement for 3,742 square feet of space for the design facility in Austin, beginning January 2019 and ending February 29, 2024. Monthly lease payments start at $3,472 per month, increasing 3% each year. On June 21, 2019, we leased approximately 1,200 square feet of office space in Bingham Farms, Michigan for nine months for a sales office. Monthly payments are $1,529 per month. The lease has been extended through December 31, 2020. Operating leases are reflected on our balance sheet within operating lease ROU assets and the related current and non-current operating lease liabilities. Leases with terms of less than twelve months have been classified as current ROU assets, whereas the lease with a remaining term of more than twelve months has been classified as a non-current ROU asset. ROU assets represent the right to use an underlying asset for the lease term, and lease liabilities represent the obligation to make lease payments arising from lease agreement. Operating lease ROU assets and liabilities are recognized at the commencement date, or the date on which the lessor makes the underlying asset available for use, based upon the present value of the lease payments over the respective lease term. Lease expense is recognized on a straight-line basis over the lease term, subject to any changes in the lease or expectation regarding the terms. Variable lease costs such as common area maintenance, property taxes and insurance are expensed as incurred. Balance Sheet Supplemental balance sheet information related to leases was as follows: December 31, 2019 Operating Leases Total operating lease ROU assets $ 257,523 Operating lease liabilities (current) 131,835 Operating lease liabilities (noncurrent) 136,624 Total operating lease liabilities $ 268,459 The average remaining lease term in months is 24.3 with an average discount rate of 8.50%. Income Statement Supplemental income statement information related to leases was as follows: December 31, 2019 Operating Lease Costs Cost of product revenue $ 124,617 Cost of contract services 46,339 Sublease (income) (23,200 ) Net operating lease cost $ 147,756 Maturities Future minimum lease payments under leases that had initial or remaining non-cancelable lease terms in excess of one year as of December 31, 2019, are as follows: Operating Leases 2020 $ 140,161 2021 46,085 2022 48,841 2023 50,315 2024 8,427 Undiscounted Cash Flows $ 293,829 Less: imputed interest (25,370 ) Total $ 268,459 |
Bank Loans and Lines of Revolvi
Bank Loans and Lines of Revolving Credit Facility | 12 Months Ended |
Dec. 31, 2019 | |
Debt Disclosure [Abstract] | |
Bank Loans and Lines of Revolving Credit Facility | NOTE 8 – BANK LOANS AND LINES OF REVOLVING CREDIT FACILITY In April 2014, our subsidiary, Nano Magic LLC entered into a $1,500,000 revolving credit line agreement (the “Revolving Note”) with Mackinac Commercial Credit, LLC (the “Lender”) with draws limited to a borrowing base as defined in the Revolving Note. The unpaid principal balance of this Revolving Note was payable on demand and was secured by all of Nano Magic LLC’s assets. The Revolving Note was amended five times in 2015, 2017 and 2018. As amended, the interest rate was, 3.0% above the Prime Rate (as reported in the Wall Street Journal). Under a subsequent amendment, the maturity date was extended to July 3, 2019 with an automatic one-year renewal unless terminated by either party 60 days in advance. On January 31, 2019, the Company paid $172,101 to the Lender. This payment, and the application of $85,000 in cash collateral held by the Lender, constituted the outstanding principal balance of $234,841 and accrued interest and fees of $22,260 due to the Lender and thus paid in full all of our remaining obligations under the Revolving Note. The parties also terminated a revolving credit line agreement originally executed in April 2014 that was renewed in August 2018. At December 31, 2019 and 2018 the Company had a line of credit balance outstanding of $0 and $330,892, respectively, which includes accrued interest of $0 and $2,475, respectively. Subject to the limitations of the borrowing base, the amount available on the line of credit was $1,176,440 at December 31, 2018. The weighted average interest rate during the years ended December 31, 2019 and 2018 was approximately 8.5% and 7.9%, respectively. |
Notes Payable
Notes Payable | 12 Months Ended |
Dec. 31, 2019 | |
Debt Disclosure [Abstract] | |
Notes Payable | NOTE 9 – NOTES PAYABLE On February 10, 2015, our subsidiary Nano Magic LLC entered into a promissory note (the “Equipment Note”) with KeyBank, N.A. (the “Bank”) to borrow up to $373,000. The borrower may obtain one or more advances not to exceed $373,000. The unpaid principal balance of the Equipment Note is payable in 60 equal monthly installments of principal and interest through June 10, 2020. The Equipment Note is secured by certain equipment, as defined in the Equipment Note, and bears interest computed at a rate of interest of 4.35% per annum based on a year of 360 days. On June 18, 2019, Nano Magic LLC entered into an Amendment to the Equipment Note with the Bank (the “Amendment”). By the amendment, the maturity date of the note was extended until April 10, 2022, the interest rate was raised to 6.29% per year, and the monthly payments were reduced to $4,053 per month including interest. At December 31, 2019 and 2018, the principal amount due under the Equipment Note, as amended by the Amendment, amounted to $115,926, and $134,944, respectively. As of December 31, 2019, $48,641 and $67,285, respectively, represent the current and non-current portion due under the Equipment Note, as amended by the Amendment. At December 31, 2018, the current and non-current portions were $73,562 and $60,563, respectively. In June and November 2015, in connection with a severance package offered to four employees, the Company entered into four promissory note agreements with the four employees which obligate the Company to pay these employees accrued and unpaid deferred salary in an aggregate amount of $51,808. The principal amounts due under these notes shall bear interest at the minimum rate of interest applicable under the internal revenue code (approximately 3.0% at December 31, 2019). All principal and interest payable under three of these notes aggregating $37,469 are due in 2025 and all principal and interest payable under two of these notes amounting to $18,350 are due in 2020. Accordingly, $51,808 is included in non-current notes payable. January 2017, the Company issued a promissory note in the principal amount of $17,425 to a departing employee representing the amount of his accrued and unpaid salary. The note does not bear interest and is due in January 2027, and is included in non-current notes payable. Future payments of notes payable are as follows: Year As of December 31, 2019 2020 $ 52,641 2021 $ 48,641 2022 $ 18,644 2023 - 2024 $ 54,885 Total $ 174,811 |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2019 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | NOTE 10 – RELATED PARTY TRANSACTIONS Accounts Payable – related parties and advances from related parties of $159,887 used as working capital in 2018 from Mr. Rickert and Ms. Rickert and accrued payroll of $16,000 due to them have been included within the consolidated balance sheets as of December 31, 2019 and December 31, 2018. We paid legal and consulting fees to director Mr. Ron Berman of $94,100 in 2019 and of $18,750 in 2018. We paid legal and consulting fees of $90,600 in 2019, $36,425 in 2018 to the law firm of Mr, Tom Berman, who is our President, Chief Executive Officer and a director. Mr. Ron Berman and Mr. Tom Berman are the managers of the limited liability company that is the manager of both of PEN Comeback, LLC and PEN Comeback 2, LLC. These two limited liability companies purchased shares of Class A common stock and derivative securities from us in 2018 and 2019. See the subsection on Sales of Stock under Issuances of Common Stock |
Stockholders' Deficit
Stockholders' Deficit | 12 Months Ended |
Dec. 31, 2019 | |
Equity [Abstract] | |
Stockholders' Deficit | NOTE 11 - STOCKHOLDERS’ DEFICIT Description of Preferred and Common Stock On December 11, 2015, the Board of Directors of the Company approved a reverse stock split of the issued and outstanding shares of the Company’s common stock at the ratio of 1-for-180 (the “Reverse Stock Split”) and authorized an amendment of the Company’s Amended and Restated Certificate of Incorporation, as amended, to effect the Reverse Stock Split, to reduce the number of authorized shares of common stock, and to set a par value of $0.0001 per share after the Reverse Stock Split. On January 26, 2016, each one hundred eighty (180) shares of the Company’s (i) Class A Common Stock (“Class A common stock”), (iii) Class B Common Stock and (iii) Class Z Common Stock, then issued and outstanding were automatically combined into one validly issued, fully paid and non-assessable share of Class A Common Stock, Class B Common Stock and Class Z Common Stock, respectively, without any further action by the Company or the holder. Additionally, the authorized number of shares of common stock were reduced to 10,000,000 comprised of 7,200,000 shares of Class A Common Stock, 2,500,000 shares of Class B Common Stock (“Class B common stock”), and 300,000 shares of Class Z Common Stock (“Class Z common stock”). The par value of each class of common stock remained the same at $0.0001 per common share. All share and per share data in the accompanying consolidated financial statements have been retroactively restated to reflect the effect of the Reverse Stock Split and authorized shares. The Company is also authorized to issue 20,000,000 shares of Preferred Stock, par value $0.0001 per share (“preferred stock”). Preferred Stock The preferred stock may be issued in one or more series. The Company’s board of directors are authorized to issue the shares of preferred stock in such series and to fix from time to time before issuance thereof the number of shares to be included in any such series and the designation, powers, preferences and relative, participating, optional or other rights, and the qualifications, limitations or restrictions thereof, of such series. Common Stock – General The rights of each share of Class A common stock, each share of Class B common stock and each share of Class Z common stock are the same with respect to dividends, distributions and rights upon liquidation. Class A Common Stock Holders of the Class A common stock are entitled to one vote per share in the election of directors and other matters submitted to a vote of the stockholders. Class B Common Stock Conversion Rights Voting Rights Class Z Common Stock Conversion Rights. Shares of Class Z common stock can be converted, one-for-one, into shares of Class A common stock at any time at the option of the holder. Shares of Class Z common stock will automatically be converted into shares of Class A common stock if the shares of Class Z common stock are not owned by Carl Zeiss Inc. (“Zeiss”) or an entity wholly owned by the ultimate parent of Zeiss. Zeiss was one of the parties to the business combination in August, 2014 and the rights of holders of Class Z common stock reflect rights it had as an equity owner of what is now our wholly-owned subsidiary, Nano Magic LLC. Voting Rights Other Rights Issuances of Common Stock Common Stock Issued for Services On February 28, 2018, the Company issued an aggregate of 4,443 shares of Class A common stock and 2,962 shares of Class B common stock to the Company’s directors as compensation to them for service on its board. These shares were valued on that date at $1.35 per share based on the quoted price of the stock for a total value of $10,000. On that same day, the Company issued 6,746 shares of Class B common stock in satisfaction of the outstanding equity credits. On May 23, 2018, the Company issued an aggregate of 5,043 shares of Class A common stock and 3,362 shares of Class B common stock to the Company’s directors as compensation to them for service on its board. These shares were valued on that date at $1.19 per share based on the quoted price of the stock for a total value of $10,000. On October 15, 2018, we issued an aggregate of 20,000 shares of Class A common stock to the Company’s directors as compensation to them for service on our board. These shares were valued on that date at $0.50 per share based on the price paid in the private placement for a total value of $10,000. On that date 1,774 shares of Class A common stock were issued to fully retire the last outstanding equity credits. On December 5, 2018, we issued an aggregate of 30,000 shares of Class A common stock to our directors as compensation to them for service on our Board. These shares were valued on that date at $0.40 per share based on the quoted price of the stock for a total value of $12,000. On April 3, 2019, we issued an aggregate of 18,180 shares of Class A common stock to five of our directors as compensation to them for service on our Board. These shares were valued on that date at $0.55 per share based on the quoted price of the stock for a total value of $10,000. On April 24, 2019, we issued an aggregate of 19,998 shares of Class A common stock to our directors as compensation to them for service on our Board. These shares were valued on that date at $0.60 per share based on the quoted price of the stock for a total value of $12,000. On July 24, 2019, we issued an aggregate of 18,750 shares of Class A common stock to our directors as compensation to them for service on our Board. These shares were valued on that date at $0.64 per share based on the quoted price of the stock for a total value of $12,000. On October 24, 2019, we issued an aggregate of 23,331 shares of Class A common stock to our directors as compensation to them for service on our Board and its committees. These shares were valued on that date at $0.60 per share based on the quoted price of the stock for a total value of $14,000. On December 18, 2019, we issued an aggregate of 20,688 shares of Class A common stock to our directors as compensation to them for service on our Board. These shares were valued on that date at $0.58 per share based on the quoted price of the stock for a total value of $12,000. On December 31, 2019, we issued an aggregate of 35,000 shares of Class A common stock under the 2015 Equity Incentive Plan to three employees in settlement of accrued salary due to them. These shares were valued on that date at $0.65 per share based on the quoted price of the stock for a total value of $22,750. Sales of Common Stock On October 15, 2018, we sold 590,847 shares of Class A common stock for a purchase price of $0.50 per share in a private placement for aggregate proceeds of $295,423. Purchasers were PEN Comeback, LLC (“PEN Comeback”) and the Rickert family, Limited Partnership. Ronald Berman, one of our directors, and his son, Tom Berman have reported that they each have 50% control of PEN Comeback. Immediately prior to this sale, Tom Berman was elected as our President and as President of PEN Brands that operates as our Products segment. Tom Berman was also elected to our board. On January 31, 2019, we sold 325,581 shares of Class A common stock in a private placement to PEN Comeback at a per share price of $0.40 for aggregate proceeds of $130,232. At the same time the investor bought warrants to purchase up to 325,581 additional shares at a warrant exercise price of $1.50. The right to purchase warrant shares expires on the earlier of (1) 45 days after the day that Nano Magic shares have been trading at or above 120% of the exercise price for a period of 90 days, or (2) four years from date of issue. Aggregate proceeds from the sales of the warrants were $9,767. Proceeds were used, along with other corporate funds, to pay in full the principal balance, accrued interest and fees due to our lender Mackinac Commercial Credit, LLC. On March 22, 2019, we sold 232,558 shares of Class A common stock in a private placement to PEN Comeback at a per share price of $0.40 for aggregate proceeds of $93,023. At the same time the investor bought warrants to purchase up to 325,581 additional shares at a warrant exercise price of $1.50. The right to purchase warrant shares expires on the earlier of (1) 45 days after the day that Nano Magic shares have been trading at or above 120% of the exercise price for a period of 90 days, or (2) four years from date of issue. Aggregate proceeds from the sales of the warrants were $6,977. On May 10, 2019, we sold 523,266 shares of Class A common stock in a private placement to PEN Comeback at a per share price of $0.40 for aggregate proceeds of $209,302. At the same time the investor bought warrants to purchase up to 523,266 additional shares at a warrant exercise price of $1.50. The right to purchase warrant shares expires on the earlier of (1) 45 days after the day that Nano Magic shares have been trading at or above 120% of the exercise price for a period of 90 days, or (2) four years from date of issue. Aggregate proceeds from the sales of the warrants were $15,698. On June 27, 2019, we sold 441,860 shares of Class A common stock in a private placement to PEN Comeback at a per share price of $0.40 for aggregate proceeds of $176,744. At the same time the investor bought warrants to purchase up to 441,860 additional shares at a warrant exercise price of $1.50. The right to purchase warrant shares expires on the earlier of (1) 45 days after the day that Nano Magic shares have been trading at or above 120% of the exercise price for a period of 90 days, or (2) four years from date of issue. Aggregate proceeds from the sales of the warrants were $13,256. On September 6, 2019, we sold 216,912 shares of Class A common stock in a private placement to PEN Comeback 2, LLC (“PEN Comeback 2”) at a per share price of $0.65 for aggregate proceeds of $140,993. At the same time the investor bought 216,906 warrants to purchase up to 216,906 additional shares at a warrant exercise price of $1.50. The right to purchase warrant shares expires four years from date of issue. Aggregate proceeds from the sales of the warrants were $6,507. On October 9, 2019, we sold an additional 88,235 shares of Class A common stock in a private placement to PEN Comeback 2 at a per share price of $0.65 for aggregate proceeds of $57,353. At the same time the investor bought 88,235 warrants to purchase up to 88,235 additional shares at a warrant exercise price of $1.50. The right to purchase warrant shares expires four years from date of issue. Aggregate proceeds from the sales of the warrants were $2,647. On October 31, 2019, we sold an additional 165,441 shares of Class A common stock in a private placement to PEN Comeback 2 and 15,384 shares of Class A common stock to the Rickert Family, Limited Partnership, all at a per share price of $0.65 for aggregate proceeds of $117,537. At the same time PEN Comeback 2 bought 165,441 warrants to purchase up to 165,441 additional shares and the partnership bought 13 warrants to purchase up to 13 additional shares, all at a warrant exercise price of $1.50. The right to purchase warrant shares expires four years from date of issue. Aggregate proceeds from the sales of the warrants were $4,963. On December 10, 2019, we sold an additional 272,059 shares of Class A common stock in a private placement to PEN Comeback 2 at a per share price of $0.65 for aggregate proceeds of $176,838. At the same time the investor bought 272,055 warrants to purchase up to 272,055 additional shares at a warrant exercise price of $1.50. The right to purchase warrant shares expires four years from date of issue. Aggregate proceeds from the sales of the warrants were $0.03 per warrant for an aggregate of $8,162. Stock Options In October 2018, options granted to two consultants to purchase an aggregate of 10,000 shares of the Company’s common stock were forfeited when the consulting relationship terminated before the options vested. On October 15, 2018, in connection with the sale of shares of our Class A common stock to PEN Comeback the Company also sold at a price of $0.03 per option, options that would allow PEN Comeback to acquire up to an additional 550,847 shares at an option exercise price of $1.00 per share. Those options were not exercised and expired, by their terms, on June 30, 2019. On April 3, 2019, we issued to our CEO and President, Tom Berman, an option to purchase up to 550,000 shares of Class A common Stock at a price of $0.55 per share. The option vests over time, each tranche exercisable for 4 years after vesting. The right to purchase: Consisting of: Is vested or will vest on: Tranche 1 50,000 Option Shares The date of grant Tranche 2 75,000 Option Shares December 31, 2019 Tranche 3 100,000 Option Shares June 30, 2020 Tranche 4 125,000 Option Shares December 31, 2020 Tranche 5 100,000 Option Shares If the Bonus Cap is reached for 2019 Tranche 6 100,000 Option Shares If the Bonus Cap is reached for 2020 The bonus cap under Mr. Berman’s employment agreement was not reached in 2019 and that tranche will never vest. The fair value of the option award to Mr. Tom Berman was calculated using the Black-Scholes method. The assumptions used in the calculation are shown below. The expected term represents the period of time that the option is expected to be outstanding. 125,000 shares were vested at December 31, 2019 and Exercise price per option $ 0.55 Weighted average fair value per option at grant date $ 0.47 Expected term 5 years Expected volatility 141 % Expected dividend yield 0 % Risk-free interest rate 1.66 % Stock options outstanding are to purchase Class A common stock. Stock option activities for the years ended December 31, 2019 and 2018 are summarized as follows: Number of Options Weighted Average Exercise Price Weighted Average Remaining Contractual Term (Years) Aggregate Intrinsic Value Balance Outstanding, December 31, 2017 19,120 $ 29.38 2.82 $ - Exercised - Forfeited or expired (10,394 ) 44.34 Granted 550,847 1.00 Balance Outstanding, December 31, 2018 559,573 $ 1.91 1.94 $ - Exercised - Forfeited or expired (654,071 ) 1.23 Granted 550,000 0.55 Balance Outstanding, December 31, 2019 455,502 $ 1.24 4.22 $ 18,000 Exercisable, December 31, 2019 130,502 $ 2.95 4.14 $ 5,000 Warrants As of December 31, 2019, there were outstanding and exercisable warrants to purchase 2,817,463 shares of common stock with a weighted average exercise price of $1.50 per share and a weighted average remaining contractual term of 40.2 months. As of December 31, 2018, there were outstanding and exercisable warrants to purchase (1) 712 shares of common stock with a weighted average exercise price of $2.81 per share and a weighted average remaining contractual term of 31 months, and (2) 550,847 shares of Class A common stock at a weighted average exercise price of 1.50 per share with a weighted average remaining contractual term of 6 months. As of December 31, 2018, there was no intrinsic value for the warrants. Warrant Options As of December 31, 2018, there were outstanding 550,847 warrant options that entitled the holder, for a price of $0.03 per option, to purchase up to 550,847 options. Warrant options were only exercisable if and to the extent that options with an exercise price of $1.00 per share were in fact exercised. None of the $1.00 options were exercised. The $1.00 options and the warrant options expired by their terms on June 30, 2019. Contingently Issuable Class A Common Shares On August 27, 2014, the Company entered into a Restricted Stock Agreement with Dr. Zvi Yaniv, the former Chief Operating Officer and President, of Applied Nanotech, Inc., and a current employee of the Company, granting Dr. Yaniv 37,778 shares of Class A common stock, subject to forfeiture. All these shares become vested and not subject to forfeiture on the earlier of a change of control of the Company, Dr. Yaniv’s death, or if more than 180 days after closing, the average trading price of the shares during a measurement period of ten consecutive trading days would reach certain price thresholds. Any shares did not vest in the five years after the effective date were to be forfeited. The fifth anniversary occurred August 27, 2019 and none of the shares had yet vested. Accordingly, all were forfeited. Pursuant to ASC 718-10 and related subsections, the Company estimated the fair value of the awards with market conditions using a Binomial simulation. Under that method, the awards were amortized under a three-year service period and there was no amortization in the years ended December 31, 2018 or 2019. Conversion of Class Z Common Stock On May 23, 2017, Zeiss converted 262,631 shares of Class Z common stock into 262,631 shares of Class A common stock. Immediately thereafter, Zeiss sold 262,631 shares of Class A common stock to certain buyers which included the Company’s Chief Executive Officer for an aggregate of $100,000. In addition, pursuant to the certificate of incorporation, Zeiss’ Board representation automatically terminated and, as a result, Zeiss ceased to be a related party as of May 23, 2017. Conversion of Class B Common Stock On or about October 15, 2018 as part of the terms for the stock sale to PEN Comeback, Scott and Jeanne Rickert and their family partnership exercised the right to convert Class B shares into Class A shares on a 1:1 basis resulting in the issuance of 1,436,052 shares of Class A common stock. 2015 Equity Incentive Plan On November 30, 2015, the Board of Directors authorized the 2015 Equity Incentive Plan (the “Plan”), which reserved 111,111 shares of common stock. If any share of common stock that has been granted pursuant to a stock option ceases to be subject to a stock option, or if any forfeiture or termination affects shares of common stock that are the subject to any other stock-based award, the shares are again available for future grants and awards under the Plan. The Plan’s purpose is to enable the Company to offer its employees, officers, directors and consultants an opportunity to acquire a proprietary interest in the Company for their contributions. As of December 31, 2018, options to purchase up to 10,000 Class A common shares were issued under the Plan. As of December 31, 2019, the options had been forfeited. On December 31, 2019, we issued an aggregate of 102,500 shares to employees in settlement of accrued salaries totaling $66,615. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | NOTE 12 – INCOME TAXES The Company maintains deferred tax assets and liabilities that reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The net deferred tax asset has been fully offset by a valuation allowance because of the uncertainty of the attainment of future taxable income. The items accounting for the difference between income taxes at the effective statutory rate and the provision for income taxes for the years ended December 31, 2019 and 2018 were as follows: Years Ended December 31, 2019 2018 Income tax provision (benefit) at U.S. statutory rate of 21% $ (203,000 ) $ 5,000 Non-deductible expenses - - Other 12,000 (8,000 ) Change in valuation allowance 191,000 3,000 Revaluation of deferred tax assets under U.S. tax act - - Total provision for income tax $ - $ - The Company’s approximate net deferred tax assets as of December 31, 2019 and 2018 were as follows: December 31, 2019 December 31, 2018 Deferred Tax Assets: Net operating loss carryforward $ 2,247,000 $ 2,046,000 Stock-based compensation 1,000 1,000 Allowance for inventory obsolescence 125,000 141,000 Accrued compensation 34,000 28,000 Other 32,000 32,000 Total deferred tax assets 2,439,000 2,248,000 Valuation allowance (2,439,000 ) (2,248,000 ) Net deferred tax assets $ - The estimated net operating loss carryforward was approximately $10,699,000 at December 31, 2019, which is an estimate of the Company’s net operating loss carryforward acquired in the Combination after giving effect to the limitation on the usage of such net operating loss carryforwards due to a change in ownership in accordance with Section 382 of the Internal Revenue Code plus net operating loss carryforwards since the Combination. The Company provided a valuation allowance equal to the net deferred income tax asset for the year ended December 31, 2019 because it was not known whether future taxable income will be sufficient to utilize the loss carryforward. The potential tax benefit arising from tax loss carryforwards prior to 2017 will expire between 2020 and 2037, while the potential tax benefits arising after 2017 currently have no expiration date. In accordance with Section 382 of the Internal Revenue Code, the usage of the Company’s net operating loss carry forwards are subject to annual limitations due to greater than 50% ownership changes. Additionally, the future utilization of the net operating loss carryforwards to offset future taxable income may be subject to special tax rules which may limit their usage under the Separate Return Limitation Year (“SRLY”) rules. If necessary, the deferred tax assets will be reduced by any carryforward that expires prior to utilization as a result of such limitations, with a corresponding reduction of the valuation allowance. The Company’s 2017, 2018 and 2019 Corporate Income Tax Returns are subject to Internal Revenue Service examination. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | NOTE 13 - COMMITMENTS AND CONTINGENCIES Litigation The Company may be, from time to time, subject to various administrative, regulatory, and other legal proceedings arising in the ordinary course of business. We are not currently a defendant in any proceedings. Our policy is to accrue costs for contingent liabilities, including legal proceedings or unasserted claims that may result in legal proceedings, when a liability is probable and the amount can be reasonably estimated. In 2018 the Company reversed of a portion of an accrual made in 2017 because the matter accrued for was settled in December 2018 and the settlement was fully paid that year. As of December 31, 2019, the Company has not accrued any amount for litigation contingencies. |
Concentrations
Concentrations | 12 Months Ended |
Dec. 31, 2019 | |
Risks and Uncertainties [Abstract] | |
Concentrations | NOTE 14 – CONCENTRATIONS Concentrations of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of trade accounts receivable and cash deposits and investments in cash equivalent instruments. Customer Concentrations Customer concentrations for the years ended December 31, 2019 and 2018 are as follows: Product Revenues For the Years Ended 2019 2018 Customer A * % 40 % Customer B * % 11 % Total * % 51 % Contract Services Revenues For the Years Ended 2019 2018 Customer C 46 % 9 % Customer D 36 % 41 % Customer E 17 % 17 % Total 99 % 67 % *Less than 10% Related to the Company’s product sales, two customers accounted for 51% of the Company’s total product revenue in 2018. No customer represented greater than 10% of the Company’s total product revenue in 2019. These customers did not have material accounts receivable balances at December 31, 2019 and 2018. Related to the Company’s contract services revenues, three customers accounted for 99% and 67% of total contract services revenues for 2019 and 2018, respectively. These customers did not have material accounts receivable balances at December 31, 2019 and 2018. A reduction in sales from or loss of such customers would have a material adverse effect on our results of operations and financial condition. Geographic Concentrations of Sales For the years ended December 31, 2019 and 2018, total sales in the United States represent approximately 83% and 93% of total consolidated revenues, respectively. No other geographical area accounted for more than 10% of total sales during the years ended December 31, 2019 and 2018. Vendor Concentrations Vendor concentrations for inventory purchases for the years ended December 31, 2019 and 2018 are: For the Years Ended 2019 2018 Vendor A * % 22 % Vendor B * % 21 % Vendor C * % 10 % Total * % 53 % *Less than 10% |
Equity Credits
Equity Credits | 12 Months Ended |
Dec. 31, 2019 | |
Equity [Abstract] | |
Equity Credits | NOTE 15 – EQUITY CREDITS In 1997, Nano Magic LLC established The Equity Credit Incentive Program. This program enabled select employees the opportunity to purchase equity credits that increase in value based upon an increase in Nano Magic LLC’s revenue over a base year of 1996. Eligible credits could be redeemed after two years at the equity credit value for that year. Under certain circumstances, the equity credits were convertible into Nano Magic LLC equity. In 2018 shares were issued to convert the remaining equity credits into our stock. As of December 31, 2018 and 2019, no equity credits were issued and outstanding. |
Stock Appreciation Rights Plan
Stock Appreciation Rights Plan | 12 Months Ended |
Dec. 31, 2019 | |
Share-based Payment Arrangement [Abstract] | |
Stock Appreciation Rights Plan | NOTE 16 – STOCK APPRECIATION RIGHTS PLAN From June 1, 1988, until December 31, 1997, when the plan was terminated, Nano Magic LLC had in place a Stock Appreciation Rights Plan A (the “SAR Plan”), intended to provide employees, directors, members of a technical advisory board and certain independent contractors selected by the Board with equity-like participation in the growth of Nano Magic LLC. The maximum number of stock appreciation rights that could be granted by the Board was 1,000,000. There were 235,782 fully vested stock appreciation rights outstanding under the terms of the SAR Plan at December 31, 2019 and 2018. At December 31, 2019 and 2018, the Company accrued $42,823 and $54,290, respectively, related to the cash redemption value associated with the stock appreciation rights held by terminated employees. |
Segment Reporting
Segment Reporting | 12 Months Ended |
Dec. 31, 2019 | |
Segment Reporting [Abstract] | |
Segment Reporting | NOTE 17 – SEGMENT REPORTING The Company’s principal operating segments coincide with the types of products to be sold. The products from which revenues are derived are consistent with the reporting structure of the Company’s internal organization. The Company’s two reportable segments for the years ended December 31, 2019 and 2018 were the Product segment and the Contract services segment (formerly the research and development segment). The Company’s chief operating decision-maker has been identified as the President, who reviews operating results to make decisions about allocating resources and assessing performance for the entire Company. Segment information is presented based upon the Company’s management organization structure as of December 31, 2019 and the distinctive nature of each segment. Future changes to this internal financial structure may result in changes to the reportable segments disclosed. There are no inter-segment revenue transactions and, therefore, revenues are only to external customers. As the Company primarily generates its revenues from customers in the United States, no geographical segments are presented. Segment operating profit is determined based upon internal performance measures used by the chief operating decision-maker. The Company derives the segment results from its internal management reporting system. The accounting policies the Company uses to derive reportable segment results are the same as those used for external reporting purposes. Management measures the performance of each reportable segment based upon several metrics, including net revenues, gross profit and operating loss. Management uses these results to evaluate the performance of, and to assign resources to, each of the reportable segments. The Company manages certain operating expenses separately at the corporate level and does not allocate such expenses to the segments. Segment income from operations excludes interest income/expense and other income or expenses and income taxes according to how a particular reportable segment’s management is measured. Management does not consider impairment charges, and unallocated costs in measuring the performance of the reportable segments. Segment information available with respect to these reportable business segments for the years ended December 31, 2019 and 2018 was as follows: For the Years Ended December 31, 2019 2018 Revenues: Product segment $ 1,539,191 $ 3,170,210 Contract services segment $ 896,819 1,330,545 Total segment and consolidated revenues $ 2,436,010 $ 4,500,755 Cost of revenues: Products $ 1,200,168 $ 2,609,872 Contract services segment $ 911,941 $ 842,098 Total segment and consolidated cost of revenues $ 2,112,109 $ 3,451,970 Gross profit (loss): Product segment $ 339,023 $ 560,338 Contract services segment (15,122 ) 488,447 Total segment and consolidated gross profit $ 323,901 $ 1,048,785 Gross margin: Product segment 22.0 % 17.7 % Contract services segment -1.7 % 36.7 % Total gross margin 13.3 % 23.3 % Segment operating expenses: Product segment 770,667 928,720 Contract services segment 215,026 200,621 Total segment operating expenses 985,694 1,129,341 Income (loss) from operations: Product segment $ (431,644 ) $ (368,382 ) Contract services segment (230,148 ) 287,826 Total segment income (loss) (661,792 ) (80,556 ) Unallocated costs (369,291 ) 40,163 Total consolidated income (loss) from operations $ (1,031,083 ) $ (40,393 ) Depreciation and amortization: Product segment $ 83,281 $ 97,286 Contract services segment 1,266 424 Total segment depreciation and amortization 84,547 97,710 Unallocated depreciation - - Total consolidated depreciation and amortization $ 84,547 $ 97,710 Capital additions: Product segment $ 9,400 $ - Contract services segment 1,729 3,917 Total segment capital additions 11,129 3,917 Unallocated capital additions - - Total consolidated capital additions 11,129 $ 3,917 December 31, 2019 December 31, 2018 Segment total assets: Product segment $ 1,132,858 $ 1,436,588 Contract services segment 176,568 137,189 Corporate 10,661 25,610 Total consolidated total assets $ 1,320,087 $ 1,599,387 |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2019 | |
Subsequent Events [Abstract] | |
Subsequent Events | NOTE 18 - SUBSEQUENT EVENTS Sales of Common Stock and Derivate Equity Securities On January 22, 2020, we sold 198,530 shares of Class A common stock in a private placement to PEN Comeback 2 at a per share price of $0.65 for aggregate proceeds of $129,044. At the same time the investor bought 198,516 warrants to purchase up to 198,516 additional shares at a warrant exercise price of $1.50. The right to purchase warrant shares expires four years from date of issue. Aggregate proceeds from the sales of the warrants were $5,955. On February 24, 2020, we sold 205,883 shares of Class A common stock in a private placement to PEN Comeback 2 at a per share price of $0.65 for aggregate proceeds of $133,824. At the same time the investor bought 205,868 warrants to purchase up to 198,516 additional shares at a warrant exercise price of $1.50. The right to purchase warrant shares expires four years from date of issue. Aggregate proceeds from the sales of the warrants were $6,176. On March 24, 2020, in a private placement to PEN Comeback 2, we sold 551,600 shares of Class A common stock and committed to issue an additional 242,518 shares when we have additional authorized shares. If the additional shares have not been issued by March 24, 2021, we must refund the purchase price (without interest). Proceeds, at a per share price of $0.65, were $516,177. At the same time the investor bought 794,110 warrants to purchase up to 794,110 additional shares at a warrant exercise price of $1.50. The right to purchase warrant shares expires four years from date of issue. Aggregate proceeds from the sale of the warrants were $23,823. On March 26, 2020, in a private placement to the same investor we committed to issue 36,765 shares when we have additional authorized shares and accepted $.65 per share for proceeds of $23,897. If the shares have not been issued by March 26, 2021, we must refund the purchase price (without interest). At the same time the investor bought 36,758 warrants to purchase up to 36,780 additional shares at a warrant exercise price of $1.50. The right to purchase warrant shares expires four years from date of issue. Aggregate proceeds from the sale of the warrants were $1,103. Stock for Services On February 12, 2020, we issued an aggregate of 21,048 shares of Class A common stock to our directors as compensation to them for service on our Board. These shares were valued on that date at $0.57 per share based on the quoted price of the stock for a total value of $12,000. Paycheck Protection Program Loan On May 8, 2020, we obtained a loan from Fifth Third Bank for $130,000 under the Small Business Administration Paycheck Protection Program. Depending on the severity and term of the disruptions from the COVID-19 pandemic, our business may still suffer from a lack of working capital. COVID-19 Pandemic In December 2019, a novel strain of coronavirus disease (“COVID-19”) was first reported in Wuhan, China. Less than four months later, on March 11, 2020, the World Health Organization declared COVID-19 a pandemic. Restrictions imposed by Federal, state and local governments have affected operations of our business and those of our vendors and customers as well as logistics for shipping and receiving supplies and shipping our products. Apart from the disruption affecting all manufacturing businesses, some of the raw materials and bottles used to produce our liquid products, including the new surface product, are used to produce hand sanitizer and other cleaning product that are in high demand and some of our raw materials and packaging have become harder to find due to the COVID-19 pandemic. If shortages continue, we may not be able to obtain adequate supply. Moreover, when the material is available, the price can be substantially higher which will probably adversely impact our profit margin even if we can implement some price increases. The increased use of face masks and other personal protective equipment as a result of the pandemic has created additional demand for our antifog product. There has also been a slow-down in business activity as a result of the COVID-19 pandemic, and the severity of the disruption and the length of the slow-down and timing of recovery are unknown. As disclosed above, on May 8, 2020, we obtained a loan from Fifth Third Bank for $130,000 under the Small Business Administration Paycheck Protection Program. Depending on the severity and term of the disruptions from the COVID-19 pandemic, our business may still suffer from a lack of working capital. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
Use of Estimates | Use of Estimates The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“US GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates for the years ended December 31, 2019 and 2018 include estimates for allowance for doubtful accounts on accounts receivable, the estimates for obsolete inventory, the useful life of property and equipment, assumptions used in assessing impairment of long-term assets, estimates of current and deferred income taxes and deferred tax valuation allowances, the fair value of non-cash equity transactions, and the fair value of equity incentives. |
Fair Value of Financial Instruments and Fair Value Measurements | Fair Value of Financial Instruments and Fair Value Measurements The Company adopted the guidance of Accounting Standards Codification (“ASC”) 820 for fair value measurements which clarifies the definition of fair value, prescribes methods for measuring fair value, and establishes a fair value hierarchy to classify the inputs used in measuring fair value as follows: Level 1 - Inputs are unadjusted quoted prices in active markets for identical assets or liabilities available at the measurement date. Level 2 - Inputs are quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, inputs other than quoted prices that are observable, and inputs derived from or corroborated by observable market data. Level 3 - Inputs are unobservable inputs which reflect the reporting entity’s own assumptions on what assumptions the market participants would use in pricing the asset or liability based on the best available information. The carrying amounts reported in the consolidated balance sheets for cash and cash equivalents, accounts receivable, loans and lines of credit, accounts payable, accrued expenses, and other payables approximate their fair market value based on the short-term maturity of these instruments. The Company analyzes all financial and non-financial instruments with features of both liabilities and equity under the Financial Accounting Standards Board (“FASB”) accounting standard for such instruments. Under this standard, financial and non-financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company accounts for no items at fair value using level 3 valuation. ASC 825-10 “Financial Instruments”, allows entities to voluntarily choose to measure certain financial assets and liabilities at fair value (fair value option). The fair value option may be elected on an instrument-by-instrument basis and is irrevocable, unless a new election date occurs. If the fair value option is elected for an instrument, unrealized gains and losses for that instrument should be reported in earnings at each subsequent reporting date. The Company did not elect to apply the fair value option to any outstanding instruments. |
Cash, Cash Equivalents and Restricted Cash | Cash, Cash Equivalents and Restricted Cash For purposes of the consolidated statements of cash flows, the Company considers all highly liquid instruments with a maturity of three months or less at the purchase date and money market accounts to be cash equivalents. |
Investments | Investments Investments consist of long-term certificates of deposit. The certificate of deposit held at December 31, 2019 and 2018 matures in May 2021 and carries interest at a rate of 2.29% per year. |
Accounts Receivable | Accounts Receivable The Company recognizes an allowance for losses on accounts receivable in an amount equal to the estimated probable losses net of recoveries. The allowance is based on an analysis of historical bad debt experience, current receivables aging, and expected future write-offs, as well as an assessment of specific identifiable customer accounts considered at risk or uncollectible. The expense associated with the allowance for doubtful accounts is recognized as general and administrative expense. |
Inventory | Inventory Inventory is stated at the lower of cost or net realizable value. Cost is determined using the first-in, first-out (FIFO) method based on prices paid for inventory items. This valuation requires us to make judgments, based on currently available information, about the likely method of disposition, such as sales to individual customers and expected recoverable values. |
Property and Equipment | Property and Equipment Property and equipment are stated at cost and are depreciated using the straight-line method over their estimated useful lives, which range from three to ten years. Leasehold improvements are depreciated over the shorter of the useful life or lease term including scheduled renewal terms. Maintenance and repairs are charged to expense as incurred. When assets are retired or disposed of, the cost and accumulated depreciation are removed from the accounts, and any resulting gains or losses are included in other income or expense in the year of disposition. The Company examines the possibility of decreases in the value of these assets when events or changes in circumstances reflect the fact that their recorded value may not be recoverable. |
Impairment of Long-lived Assets | Impairment of Long-Lived Assets In accordance with ASC Topic 360, the Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable, or at least annually. The Company recognizes an impairment loss when the sum of expected undiscounted future cash flows is less than the carrying amount of the asset. The amount of impairment is measured as the difference between the asset’s estimated fair value and its book value. The Company did not record any impairment charge for the year ended December 31, 2019 and 2018. |
Revenue Recognition | Revenue Recognition We adopted ASC Topic 606, Revenue from Contracts with Customers Identification of the contract, or contracts, with a customer A contract with a customer exists when (i) we enter into an enforceable contract with a customer that defines each party’s rights regarding the goods or services to be transferred and identifies the payment terms related to these goods or services, (ii) the contract has commercial substance and, (iii) we determine that collection of substantially all consideration for goods or services that are transferred is probable based on the customer’s intent and ability to pay the promised consideration. We apply judgment in determining the customer’s ability and intention to pay, which is based on a variety of factors including the customer’s historical payment experience or, in the case of a new customer, published credit and financial information pertaining to the customer. Identification of the performance obligations in the contract Performance obligations promised in a contract are identified based on the goods or services that will be transferred to the customer that are both capable of being distinct, whereby the customer can benefit from the goods or service either on its own or together with other resources that are readily available from third parties or from us, and are distinct in the context of the contract, whereby the transfer of the goods or services is separately identifiable from other promises in the contract. When a contract includes multiple promised goods or services, we apply judgment to determine whether the promised goods or services are capable of being distinct and are distinct within the context of the contract. If these criteria are not met, the promised goods or services are accounted for as a combined performance obligation. Determination of the transaction price The transaction price is determined based on the consideration to which we will be entitled to receive in exchange for transferring goods or services to our customer. We estimate any variable consideration included in the transaction price using the expected value method that requires the use of significant estimates for discounts, cancellation periods, refunds and returns. Variable consideration is described in detail below. Allocation of the transaction price to the performance obligations in the contract If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. Contracts that contain multiple performance obligations require an allocation of the transaction price to each performance obligation based on a relative Stand-Alone Selling Price (“SSP,”) basis. We determine SSP based on the price at which the performance obligation would be sold separately. If the SSP is not observable, we estimate the SSP based on available information, including market conditions and any applicable internally approved pricing guidelines. Recognition of revenue when, or as, we satisfy a performance obligation We recognize contract revenue over time and product revenue at a point in time, when the related performance obligation is satisfied by transferring the promised goods or services to our customer. Contract revenue is recognized based on a cost-to-cost input method. Disaggregation of Revenue For the years ended December 31, 2019 and 2018, total sales in the United States represent approximately 83% and 93% of total consolidated revenues, respectively. No other geographical area accounted for more than 10% of total sales during the years ended December 31, 2019 and 2018. Principal versus Agent Considerations When another party is involved in providing goods or services to our customer, we apply the principal versus agent guidance in ASC Topic 606 to determine if we are the principal or an agent to the transaction. When we control the specified goods or services before they are transferred to our customer, we report revenue gross, as principal. If we do not control the goods or services before they are transferred to our customer, revenue is reported net of the fees paid to the other party, as agent. Our evaluation to determine if we control the goods or services within ASC Topic 606 includes the following indicators: We are primarily responsible for fulfilling the promise to provide the specified good or service. When we are primarily responsible for providing the goods and services, such as when the other party is acting on our behalf, we have indication that we are the principal to the transaction. We consider if we may terminate our relationship with the other party at any time without penalty or without permission from our customer. We have inventory risk before the specified good or service has been transferred to a customer or after transfer of control to the customer. We may commit to obtaining the services of another party with or without an existing contract with our customer. In these situations, we have risk of loss as principal for any amount due to the other party regardless of the amount(s) we earn as revenue from our customer. The entity has discretion in establishing the price for the specified good or service. We have discretion in establishing the price our customer pays for the specified goods or services. Contract Assets We capitalize costs and estimated earnings in excess of billings as a contract asset in current assets. At December 31, 2019 and 2018, contract assets totaled $15,525 and $16,486, respectively. Contract Liabilities Contract liabilities consist of customer advance payments and billings in excess of revenue recognized. We may receive payments from our customers in advance of completing our performance obligations. We record contract liabilities equal to the amount of payments received in excess of revenue recognized, Contract liabilities are recorded under the caption “contract liabilities” and are reported as current liabilities on our consolidated financial statements when the time to fulfill the performance obligations under terms of our contracts is less than one year. At December 31, 2019 and 2018, contract liabilities totaled $162,123 and $95,610, respectively. |
Cost of Sales | Cost of Sales Cost of sales includes inventory costs, materials and supplies costs, internal labor and related benefits, subcontractor costs, depreciation, overhead and shipping and handling costs incurred. |
Shipping and Handling Costs | Shipping and Handling Costs Shipping and handling costs incurred relating to the purchase of inventory are included in inventory which is charged to cost of sales as products are sold. Shipping and handling costs incurred for product shipped to customers are included in cost of sales. For the years ended December 31, 2019 and 2018 shipping and handling costs amounted to $94,431 and $110,761, respectively. |
Research and Development | Research and Development Research and development costs incurred in the development of the Company’s products and under other Company sponsored research and development projects are expensed as incurred. Costs such as direct labor, direct costs, and other allocated costs incurred to perform research and development service pursuant to government and private research projects are in included in cost of sales. Research and development costs incurred in the development of the Company’s products for the years ended December 31, 2019 and 2018 were $68,539 and $60,846, respectively, and are included in operating expenses on the accompanying consolidated statements of operations. |
Advertising Costs | Advertising Costs The Company participates in various advertising programs. All costs related to advertising of the Company’s products are expensed in the period incurred. Advertising costs charged to operations for the years ended December 31, 2019 and 2018 were $4,969 and $779, respectively, and are included in selling and marketing on the consolidated accompanying statements of operations. These advertising expenses do not include cooperative advertising and sales incentives which have been deducted from sale |
Federal and State Income Taxes | Federal and State Income Taxes The Company accounts for income tax using the liability method prescribed by ASC 740, “Income Taxes”. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial reporting and tax bases of assets and liabilities using enacted tax rates that will be in effect in the year in which the differences are expected to reverse. The Company records a valuation allowance to offset deferred tax assets if based on the weight of available evidence, it is more-likely-than-not that some portion, or all, of the deferred tax assets will not be realized. The effect on deferred taxes of a change in tax rates is recognized as income or loss in the period that includes the enactment date. The Company follows the accounting guidance for uncertainty in income taxes using the provisions of ASC 740 “Income Taxes |
Stock-based Compensation | Stock-Based Compensation Stock-based compensation is accounted for based on the requirements of the Share-Based Payment Topic of ASC 718 which requires recognition in the financial statements of the cost of employee and director services received in exchange for an award of equity instruments over the period the employee or director is required to perform the services in exchange for the award (presumptively, the vesting period). The ASC also requires measurement of the cost of employee and director services received in exchange for an award based on the grant-date fair value of the award. The Company adopted ASU No. 2017-09 in 2018; its adoption did not have a material impact on its consolidated financial statements. Pursuant to ASC Topic 505-50, for share-based payments to consultants and other third-parties, compensation expense is determined at the “measurement date.” The expense is recognized over the service period of the award. Until the measurement date is reached, the total amount of compensation expense remains uncertain. The Company initially records compensation expense based on the fair value of the award at the reporting date. |
Earnings (Loss) Per Share of Common Stock | Earnings (Loss) Per Share of Common Stock ASC 260 “Earnings Per Share”, requires dual presentation of basic and diluted earnings per share (“EPS”) with a reconciliation of the numerator and denominator of the basic EPS computation to the numerator and denominator of the diluted EPS computation. Basic EPS excludes dilution. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity. Basic net loss per common share is computed by dividing net loss available to common shareholders by the weighted average number of shares of common shares outstanding during the period. Diluted net loss per common share is computed by dividing net loss by the weighted average number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during each period. As of December 31, 2018, 37,778 contingently issuable common shares that were issuable based on certain market conditions (see Note 11) were not included in the potential dilutive shares in calculating the diluted EPS. Additionally, potentially dilutive common shares consist of common stock options and warrants (using the treasury stock method). These common stock equivalents may be dilutive in the future . December 31, 2019 December 31, 2018 Stock options 455,502 8,726 Stock warrants 2,817,463 551,559 Restricted stock - 37,778 Warrant options - 550,847 Total 3,272,952 1,148,910 Additionally, there are an unknown quantity of common stock equivalents that result from a potential conversion of stock appreciation rights (See Note 16). Net income (loss) per share for each class of common stock is as follows: Net income (loss) per common shares outstanding: Year Ended Year Ended Class A common stock $ (0.21 ) $ 0.01 Weighted average shares outstanding: Class A common stock 5,607,392 3,741,481 Class B common stock - - Class Z common stock - - Total weighted average shares outstanding 5,607,392 3,741,481 |
Segment Reporting | Segment Reporting The Company uses “the management approach” in determining reportable operating segments. The management approach considers the internal organization and reporting used by the Company’s chief operating decision maker for making operating decisions and assessing performance as the source for determining the Company’s reportable segments. The Company’s chief operating decision maker is the President of the Company, who reviews operating results to make decisions about allocating resources and assessing performance for the entire Company. The Company classified the reportable operating segments into (i) the development, manufacture and sale of consumer and institutional products using nanotechnology to deliver unique performance attributes at the surfaces of a wide variety of substrates (the “Product segment”) and (ii) nanotechnology design and development services for our future products and for government and private entities and sales of products developed for third parties (the “Contract services segment”). |
Leases | Leases The Company adopted ASC 842 on January 1, 2019 using the modified retrospective basis and did not adjust comparative periods as permitted under Accounting Standards Update (“ASU”) 2018-11. ASC 842 supersedes nearly all existing lease accounting guidance under U.S. GAAP issued by the Financial Accounting Standards Board (“FASB”) including ASC Topic 840, Leases. ASC 842 requires that lessees recognize Right-of-Use (ROU) assets and lease liabilities calculated based on the present value of lease payments for all lease agreements with terms that are greater than twelve months. ASC 842 distinguishes leases as either a finance lease or an operating lease that affects how the leases are measured and presented in the statement of operations and statement of cash flows. For operating leases, we calculated ROU assets and lease liabilities based on the present value of the remaining lease payments as of the date of adoption using the IBR as of that date. On the date of adoption, operating lease liabilities and right-of-use assets totaled $400,327. We do not have finance leases as per the definition of ASC 842 as of December 31, 2019. The FASB issued practical expedients and accounting policy elections that the Company has applied as described below. |
Practical Expedients | Practical Expedients ASC 842 provides a package of three practical expedients that must be adopted together and applied to all lease agreements. The Company elected the package of practical expedients as follows for all leases: Whether expired or existing contracts contain leases under the new definition of a lease. Because the accounting for operating leases and service contracts was similar under ASC 840, there was no accounting reason to separate lease agreements from service contracts in order to account for them correctly. The Company reviewed existing service contracts to determine if the agreement contained an embedded lease to be accounted for on the balance sheet under ASC 842. Lease classification for expired or existing leases. Leases that were capital leases under ASC 840 are accounted for as financing leases under ASC 842 while leases that were operating leases under ASC 840 are accounted for as operating leases under ASC 842. Whether previously capitalized initial direct costs would meet the definition of initial direct costs under the new standard guidance. The definition of initial direct costs is more restrictive under ASC 842 than under ASC 840. Entities that do not elect the practical expedient are required to reassess capitalized initial direct costs under ASC 840 and record an equity adjustment for those that are not capitalizable under ASC 842. |
Accounting Policy Elections | Accounting Policy Elections Lease Term The Company calculates the term for each lease agreement to include the noncancelable period specified in the agreement together with (1) the periods covered by options to extend the lease if the Company is reasonably certain to exercise that option, (2) periods covered by an option to terminate if the Company is reasonably certain not to exercise that option and (3) period covered by an option to extend (or not terminate) if controlled by the lessor. The assessment of whether the Company is reasonably certain to exercise an option to extend a lease requires significant judgement surrounding contract-based factors, asset-based factors, entity-based factors and market-based factors. Lease Payments Lease payments consist of the following payments (as applicable) related to the use of the underlying asset during the lease term: ● Fixed payments, including in substance fixed payments, less any lease incentives paid or payable to the lessee ● Variable lease payments that depend on an index or a rate, such as the Consumer Price Index or a market interest rate, initially measured using the index or rate at the commencement date of January 1, 2019. ● The exercise price of an option to purchase the underlying asset if the lessee is reasonably certain to exercise that option. ● Payments for penalties for terminating the lease if the lease term reflects the lessee exercising an option to terminate the lease. ● Fees paid by the lessee to the owners of a special-purpose entity for structuring the transaction ● For a lessee only, amounts probable of being owed by the lessee under residual value guarantees Incremental Borrowing Rate The ROU asset and related lease liabilities recorded under ASC 842 are calculated based on the present value of the lease payments using (1) the rate implicit in the lease or (2) the lessee’s IBR, defined as the rate of interest that a lessee would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements Financial Instruments — Credit Losses (Topic 326) In June 2016, the FASB issued ASU 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments Measurement of expected credit losses is to be based on relevant forecasts that affect collectability. The scope of financial assets within the CECL methodology is broad and includes trade receivables from certain revenue transactions and certain off-balance sheet credit exposures. Different components of the guidance require modified retrospective or prospective adoption. ASU 2016-13 is effective for the annual reporting period beginning on or after December 15, 2020. The Company adopted this standard January 1, 2020 and there was no material impact. Except for our accounting policies for leases as a result of adopting ASC 842, there have been no changes to our significant accounting policies described in Note 2 to our Annual Report on Form 10-K for the year ended December 31, 2019, that have had a material impact on our Consolidated Financial Statements and related notes. |
Reclassifications | Reclassifications Certain accounts and financial statement captions in the prior periods have been reclassified to conform to the current period financial statements. None of the reclassifications, excluding the correction disclosed in Note 3 below, had any impact on the net loss reported in 2018. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
Schedule of Anti-dilutive Per Share Information | These common stock equivalents may be dilutive in the future . December 31, 2019 December 31, 2018 Stock options 455,502 8,726 Stock warrants 2,817,463 551,559 Restricted stock - 37,778 Warrant options - 550,847 Total 3,272,952 1,148,910 |
Schedule of Reconciliation of Basic and Diluted Net Income Loss | Net income (loss) per share for each class of common stock is as follows: Net income (loss) per common shares outstanding: Year Ended Year Ended Class A common stock $ (0.21 ) $ 0.01 Weighted average shares outstanding: Class A common stock 5,607,392 3,741,481 Class B common stock - - Class Z common stock - - Total weighted average shares outstanding 5,607,392 3,741,481 |
Correction of Immaterial Erro_2
Correction of Immaterial Errors (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Changes and Error Corrections [Abstract] | |
Schedule of Error Corrections and Restatement Adjustments | The errors discussed above resulted in an understatement of net earnings of $75,207 for the year ended December 31, 2018 as detailed in the table below: As Reported Adjustment As Corrected Product revenues $ 3,048,164 $ 122,046 (a) $ 3,170,210 Contract services revenues 1,282,588 47,957 (b) 1,330,545 Cost of product revenues 2,325,617 284,255 (c) 2,609,872 Cost of contract services revenues 1,126,352 (284,254 )(d) 842,098 Gross profit 878,783 170,002 1,048,785 Total operating expenses 1,197,281 (108,103 )(e) 1,089,178 (Loss) from operations (318,498 ) 278,105 (40,393 ) Other Income 265,363 (202,898 )(f) 62,465 Net Income (Loss) $ (53,135 ) $ 75,207 $ 22,072 References to above adjustments a. Represents the reclassification of product revenues formerly included in contract services revenue segment on the Applied Nanotech, Inc. books in 2018. b. With the proper recognition of contract services revenues with the adoption of ASC Topic 606, in-progress contract revenue was determined to be understated in 2018 by $170,003, offset by the reclassification noted in item (a) above of $122,046. c. Cost of product revenues increased by $284,255 for the net effect of the $267,725 increase to the inventory reserve, the error found in the depreciation calculation of $33,045, a general reclassification of operating expenses to cost of revenues of $96,779, an increase associated with costs related to the product revenues reclass to the product segment identified in item (a) above of $78,466, offset by the reversal of the balance in goods received not invoiced of $191,760. d. Cost of contract services revenues decreased by $284,254 resulting from a reclass of $205,788 of sublease income from Other Income plus $78,466 in cost of revenues associated with the product revenues reclass to the product segment identified in item (a) above. e. Operating expenses decreased by $108,103 resulting primarily from a general reclassification of expenses to cost of revenues of $96,778 plus the net effect of corrections in accruals explained in the balance sheet section above. f. Other Income decreased primarily from the reclassification of sublease income totaling $205,788 to net out rent expenses in cost of revenues, offset by a small reclassification of interest expense to operating expense. |
Accounts Receivable (Tables)
Accounts Receivable (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Receivables [Abstract] | |
Schedule of Accounts Receivable | At December 31, 2019 and 2018, accounts receivable consisted of the following: December 31, 2019 December 31, 2018 Accounts receivable $ 164,960 $ 321,224 Less: allowance for doubtful accounts (13,960 ) (13,670 ) Accounts receivable, net $ 151,290 $ 307,554 |
Inventory (Tables)
Inventory (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventory | At December 31, 2019 and 2018, inventory consisted of the following: December 31, 2019 December 31, 2018 Raw materials $ 663,932 $ 823,283 Finished goods 335,762 389,716 999,694 1,212,999 Less: reserve for obsolescence (577,072 ) (653,197 ) Inventory, net $ 422,622 $ 559,802 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property and Equipment | At December 31, 2019 and 2018, property and equipment consisted of the following: Useful Life December 31, 2019 December 31, 2018 Machinery and equipment 5 - 10 Years $ 2,729,308 $ 2,729,308 Furniture and office equipment 3 - 7 Years 589,860 578,731 Leasehold improvements 2 - 15 Years 10,843 10,843 3,330,011 3,318,882 Less: accumulated depreciation (3,108,446 ) (3,023,899 ) Property and equipment, net $ 221,565 $ 294,983 |
Operating Lease Right-Of-Use _2
Operating Lease Right-Of-Use Assets (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Leases [Abstract] | |
Schedule of Supplemental Information to Leases | Supplemental balance sheet information related to leases was as follows: December 31, 2019 Operating Leases Total operating lease ROU assets $ 257,523 Operating lease liabilities (current) 131,835 Operating lease liabilities (noncurrent) 136,624 Total operating lease liabilities $ 268,459 Supplemental income statement information related to leases was as follows: December 31, 2019 Operating Lease Costs Cost of product revenue $ 124,617 Cost of contract services 46,339 Sublease (income) (23,200 ) Net operating lease cost $ 147,756 |
Schedule of Future Minimum Lease Payments | Future minimum lease payments under leases that had initial or remaining non-cancelable lease terms in excess of one year as of December 31, 2019, are as follows: Operating Leases 2020 $ 140,161 2021 46,085 2022 48,841 2023 50,315 2024 8,427 Undiscounted Cash Flows $ 293,829 Less: imputed interest (25,370 ) Total $ 268,459 |
Notes Payable (Tables)
Notes Payable (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Debt Disclosure [Abstract] | |
Schedule of Future Payments of Notes Payable | Future payments of notes payable are as follows: Year As of December 31, 2019 2020 $ 52,641 2021 $ 48,641 2022 $ 18,644 2023 - 2024 $ 54,885 Total $ 174,811 |
Stockholders' Deficit (Tables)
Stockholders' Deficit (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Equity [Abstract] | |
Schedule of Fair Value of Option Award Valuation Assumptions | Exercise price per option $ 0.55 Weighted average fair value per option at grant date $ 0.47 Expected term 5 years Expected volatility 141 % Expected dividend yield 0 % Risk-free interest rate 1.66 % |
Schedule of Stock Option Plan Activity | Stock options outstanding are to purchase Class A common stock. Stock option activities for the years ended December 31, 2019 and 2018 are summarized as follows: Number of Options Weighted Average Exercise Price Weighted Average Remaining Contractual Term (Years) Aggregate Intrinsic Value Balance Outstanding, December 31, 2017 19,120 $ 29.38 2.82 $ - Exercised - Forfeited or expired (10,394 ) 44.34 Granted 550,847 1.00 Balance Outstanding, December 31, 2018 559,573 $ 1.91 1.94 $ - Exercised - Forfeited or expired (654,071 ) 1.23 Granted 550,000 0.55 Balance Outstanding, December 31, 2019 455,502 $ 1.24 4.22 $ 18,000 Exercisable, December 31, 2019 130,502 $ 2.95 4.14 $ 5,000 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Schedule of Effective Statutory Rate of Income Taxes | The items accounting for the difference between income taxes at the effective statutory rate and the provision for income taxes for the years ended December 31, 2019 and 2018 were as follows: Years Ended December 31, 2019 2018 Income tax provision (benefit) at U.S. statutory rate of 21% $ (203,000 ) $ 5,000 Non-deductible expenses - - Other 12,000 (8,000 ) Change in valuation allowance 191,000 3,000 Revaluation of deferred tax assets under U.S. tax act - - Total provision for income tax $ - $ - |
Schedule of Components of Deferred Tax Assets and Liabilities | The Company’s approximate net deferred tax assets as of December 31, 2019 and 2018 were as follows: December 31, 2019 December 31, 2018 Deferred Tax Assets: Net operating loss carryforward $ 2,247,000 $ 2,046,000 Stock-based compensation 1,000 1,000 Allowance for inventory obsolescence 125,000 141,000 Accrued compensation 34,000 28,000 Other 32,000 32,000 Total deferred tax assets 2,439,000 2,248,000 Valuation allowance (2,439,000 ) (2,248,000 ) Net deferred tax assets $ - |
Concentrations (Tables)
Concentrations (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Schedule of Concentration Risk, Customer | Customer concentrations for the years ended December 31, 2019 and 2018 are as follows: Product Revenues For the Years Ended 2019 2018 Customer A * % 40 % Customer B * % 11 % Total * % 51 % Contract Services Revenues For the Years Ended 2019 2018 Customer C 46 % 9 % Customer D 36 % 41 % Customer E 17 % 17 % Total 99 % 67 % *Less than 10% |
Vendor Concentrations [Member] | |
Schedule of Concentration Risk, Customer | Vendor Concentrations Vendor concentrations for inventory purchases for the years ended December 31, 2019 and 2018 are: For the Years Ended 2019 2018 Vendor A * % 22 % Vendor B * % 21 % Vendor C * % 10 % Total * % 53 % *Less than 10% |
Segment Reporting (Tables)
Segment Reporting (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Segment Reporting [Abstract] | |
Segment Information Available with Respect to Reportable Business Segments | Segment information available with respect to these reportable business segments for the years ended December 31, 2019 and 2018 was as follows: For the Years Ended December 31, 2019 2018 Revenues: Product segment $ 1,539,191 $ 3,170,210 Contract services segment $ 896,819 1,330,545 Total segment and consolidated revenues $ 2,436,010 $ 4,500,755 Cost of revenues: Products $ 1,200,168 $ 2,609,872 Contract services segment $ 911,941 $ 842,098 Total segment and consolidated cost of revenues $ 2,112,109 $ 3,451,970 Gross profit (loss): Product segment $ 339,023 $ 560,338 Contract services segment (15,122 ) 488,447 Total segment and consolidated gross profit $ 323,901 $ 1,048,785 Gross margin: Product segment 22.0 % 17.7 % Contract services segment -1.7 % 36.7 % Total gross margin 13.3 % 23.3 % Segment operating expenses: Product segment 770,667 928,720 Contract services segment 215,026 200,621 Total segment operating expenses 985,694 1,129,341 Income (loss) from operations: Product segment $ (431,644 ) $ (368,382 ) Contract services segment (230,148 ) 287,826 Total segment income (loss) (661,792 ) (80,556 ) Unallocated costs (369,291 ) 40,163 Total consolidated income (loss) from operations $ (1,031,083 ) $ (40,393 ) Depreciation and amortization: Product segment $ 83,281 $ 97,286 Contract services segment 1,266 424 Total segment depreciation and amortization 84,547 97,710 Unallocated depreciation - - Total consolidated depreciation and amortization $ 84,547 $ 97,710 Capital additions: Product segment $ 9,400 $ - Contract services segment 1,729 3,917 Total segment capital additions 11,129 3,917 Unallocated capital additions - - Total consolidated capital additions 11,129 $ 3,917 December 31, 2019 December 31, 2018 Segment total assets: Product segment $ 1,132,858 $ 1,436,588 Contract services segment 176,568 137,189 Corporate 10,661 25,610 Total consolidated total assets $ 1,320,087 $ 1,599,387 |
Organization and Basis of Pre_2
Organization and Basis of Presentation (Details Narrative) - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||
Operating income (loss) | $ (1,031,083) | $ (40,393) | |
Net cash used by operations | (878,668) | 155,886 | |
Accumulated deficit | (7,689,545) | (6,724,558) | |
Stockholders' deficit | (446,856) | (837,585) | $ (1,096,005) |
Working capital deficit | $ 673,040 | $ 1,034,965 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details Narrative) | 12 Months Ended | ||
Dec. 31, 2019USD ($)Segment | Dec. 31, 2018USD ($)Segmentshares | Jan. 02, 2018USD ($) | |
Investments on deposits maturity date | May 31, 2021 | May 31, 2021 | |
Investment interest rate | 2.29% | 2.29% | |
Impairment of long-lived assets | |||
Impact of adoption for open contracts | 75,207 | ||
Contract assets | 16,486 | 15,525 | |
Contract liabilities | 162,123 | 95,610 | |
Research and development expense | 68,539 | 60,846 | |
Advertising expense | $ 4,969 | $ 779 | |
Contingently issuable common stock shares | shares | 37,778 | ||
Reportable segments | Segment | 2 | 2 | |
Operating lease liabilities | $ 268,459 | ||
Operating lease right of use assets | 257,523 | ||
Shipping and Handling [Member] | |||
Shipping and handle costs | $ 94,431 | $ 110,761 | |
Sales Revenue, Net [Member] | United States [Member] | |||
Percentage of sales | 83.00% | 93.00% | |
Sales Revenue, Net [Member] | No Other Geographical Area [Member] | |||
Percentage of sales | 10.00% | 10.00% | |
ASC 606 [Member] | |||
Impact of adoption for open contracts | $ 159,396 | ||
ASC 842 [Member] | |||
Operating lease liabilities | $ 400,327 | ||
Operating lease right of use assets | $ 400,327 | ||
Minimum [Member] | |||
Estimated useful lives for property and equipment | 3 years | ||
Maximum [Member] | |||
Estimated useful lives for property and equipment | 10 years |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Schedule of Anti-dilutive Per Share Information (Details) - shares | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Total | 3,272,952 | 1,148,910 |
Stock Options [Member] | ||
Total | 455,502 | 8,726 |
Warrant [Member] | ||
Total | 2,817,463 | 551,559 |
Restricted Stock [Member] | ||
Total | 37,778 | |
Warrant Options [Member] | ||
Total | 550,847 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Schedule of Reconciliation of Basic and Diluted Net Income Loss (Details) - $ / shares | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Total weighted average shares outstanding | 5,607,392 | 3,741,481 |
Class A Common Stock [Member] | ||
Net income (loss) per common shares outstanding | $ (0.21) | $ 0.01 |
Total weighted average shares outstanding | 5,607,392 | 3,741,481 |
Class B Common Stock [Member] | ||
Net income (loss) per common shares outstanding | ||
Total weighted average shares outstanding | ||
Class Z Common Stock [Member] | ||
Total weighted average shares outstanding |
Correction of Immaterial Erro_3
Correction of Immaterial Errors - Schedule of Error Corrections and Restatement Adjustments (Details) - USD ($) | 12 Months Ended | |||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | ||
Inventories | $ 422,622 | $ 559,802 | ||
Prepaid expenses and other current assets | 34,160 | 98,350 | ||
Property, plant and equipment, net | 221,565 | 294,983 | ||
Total Assets | 1,320,087 | 1,599,387 | ||
Accounts payable | 801,788 | 1,169,067 | ||
Contract liabilities | 162,123 | 95,610 | ||
Total Liabilities | 1,766,943 | 2,436,971 | ||
Total Stockholders' Deficit | (446,856) | (837,585) | $ (1,096,005) | |
Total revenue | 2,436,010 | 4,500,755 | ||
Total cost of revenue | 2,112,109 | 3,451,970 | ||
Gross profit | 323,901 | 1,048,785 | ||
Total operating expenses | 1,354,984 | 1,089,178 | ||
(Loss) from operations | (1,031,083) | (40,393) | ||
Other Income | 66,096 | 62,465 | ||
Net Income (Loss) | (964,987) | 22,072 | ||
Products [Member] | ||||
Total revenue | 1,539,191 | 3,170,210 | ||
Total cost of revenue | 1,200,168 | 2,609,872 | ||
Contract Services [Member] | ||||
Total revenue | 896,819 | 1,330,545 | ||
Total cost of revenue | $ 911,941 | 842,098 | ||
Total operating expenses | 108,103 | |||
Other Income | 205,788 | |||
As Reported [Member] | ||||
Inventories | 827,527 | |||
Prepaid expenses and other current assets | 81,864 | |||
Property, plant and equipment, net | 328,028 | |||
Total Assets | 1,883,671 | |||
Accounts payable | 1,375,042 | |||
Contract liabilities | 89,730 | |||
Total Liabilities | 2,637,066 | |||
Total Stockholders' Deficit | (753,396) | |||
Gross profit | 878,783 | |||
Total operating expenses | 1,197,281 | |||
(Loss) from operations | (318,498) | |||
Other Income | 265,363 | |||
Net Income (Loss) | (53,135) | |||
As Reported [Member] | Products [Member] | ||||
Total revenue | 3,048,164 | |||
Total cost of revenue | 2,325,617 | |||
As Reported [Member] | Contract Services [Member] | ||||
Total revenue | 1,282,588 | |||
Total cost of revenue | 1,126,352 | |||
Adjustment [Member] | ||||
Inventories | [1] | (267,725) | ||
Prepaid expenses and other current assets | 16,486 | |||
Property, plant and equipment, net | [2] | (33,045) | ||
Total Assets | (284,284) | |||
Accounts payable | [3] | (205,975) | ||
Contract liabilities | [4] | 5,880 | ||
Total Liabilities | (200,095) | |||
Total Stockholders' Deficit | [5] | (84,189) | ||
Gross profit | 170,002 | |||
Total operating expenses | [6] | (108,103) | ||
(Loss) from operations | 278,105 | |||
Other Income | [7] | (202,898) | ||
Net Income (Loss) | 75,207 | |||
Adjustment [Member] | Products [Member] | ||||
Total revenue | [8] | 122,046 | ||
Total cost of revenue | [9] | 284,255 | ||
Adjustment [Member] | Contract Services [Member] | ||||
Total revenue | [10] | 47,957 | ||
Total cost of revenue | [11] | $ (284,254) | ||
[1] | The Company lost lens care customers in 2018 that had an impact on the realizable value of specific customer-inventory that was held in inventory and not reserved for at year-end. | |||
[2] | There was an error in the calculation of accumulated depreciation for specific property, plant and equipment. | |||
[3] | Accrued accounts payable invoices for goods received not invoiced were reconciled after year-end and subsequently reversed. Additionally, audit fees accrued in 2018 for the audit performed in 2019 was reversed, while legal fees that related to 2018 that were not booked were recorded in the above adjustments. | |||
[4] | An increase in deferred revenue contract liabilities was booked as a result of contract liabilities recognizedproper adoption of ASC 606 for contracts in-progress at year-end. | |||
[5] | Total Stockholders' Deficit increased due to a revaluation of opening contracts with the adoption of ASC Topic 606 on January 1, 2018 totaling $159,396 offset by the understatement of net earnings for the year ended December 31, 2018 of $75,207 as detailed below. | |||
[6] | Operating expenses decreased by $108,103 resulting primarily from a general reclassification of expenses to cost of revenues of $96,778 plus the net effect of corrections in accruals explained in the balance sheet section above. | |||
[7] | Other Income decreased primarily from the reclassification of sublease income totaling $205,788 to net out rent expenses in cost of revenues, offset by a small reclassification of interest expense to operating expense. | |||
[8] | Represents the reclassification of product revenues formerly included in contract services revenue segment on the Applied Nanotech, Inc. books in 2018. | |||
[9] | Cost of product revenues increased by $284,255 for the net effect of the $267,725 increase to the inventory reserve, the error found in the depreciation calculation of $33,045, a general reclassification of operating expenses to cost of revenues of $96,779, an increase associated with costs related to the product revenues reclass to the product segment identified in item (a) above of $78,466, offset by the reversal of the balance in goods received not invoiced of $191,760. | |||
[10] | With the proper recognition of contract services revenues with the adoption of ASC Topic 606, in-progress contract revenue was determined to be understated in 2018 by $170,003, offset by the reclassification noted in item (a) above of $122,046. | |||
[11] | Cost of contract services revenues decreased by $284,254 resulting from a reclass of $205,788 of sublease income from Other Income plus $78,466 in cost of revenues associated with the product revenues reclass to the product segment identified in item (a) above. |
Correction of Immaterial Erro_4
Correction of Immaterial Errors - Schedule of Error Corrections and Restatement Adjustments (Details) (Parenthetical) - USD ($) | 12 Months Ended | |||
Dec. 31, 2019 | Dec. 31, 2018 | Jan. 02, 2018 | ||
Impact of adoption for open contracts | $ 75,207 | |||
Changes in inventory reserves | 267,725 | |||
Depreciation | 33,045 | |||
Total cost of revenue | $ 2,112,109 | 3,451,970 | ||
Reversal of goods received balance | 191,760 | |||
Sublease income | 23,200 | |||
Total operating expenses | 1,354,984 | 1,089,178 | ||
Other Income | 66,096 | 62,465 | ||
Adjustment [Member] | ||||
Total operating expenses | [1] | (108,103) | ||
Other Income | [2] | (202,898) | ||
Products [Member] | ||||
Total cost of revenue | 1,200,168 | 2,609,872 | ||
Products [Member] | Adjustment [Member] | ||||
In-progress contract revenue | 122,046 | |||
Chnages in cost of product revenues | 96,779 | |||
Total cost of revenue | [3] | 284,255 | ||
Product Revenues [Member] | ||||
Total cost of revenue | 78,466 | |||
Contract Services [Member] | ||||
Total cost of revenue | $ 911,941 | 842,098 | ||
Sublease income | 205,788 | |||
Total operating expenses | 108,103 | |||
Other Income | 205,788 | |||
Contract Services [Member] | Adjustment [Member] | ||||
Chnages in cost of product revenues | 78,466 | |||
Total cost of revenue | [4] | (284,254) | ||
ASC 606 [Member] | ||||
Impact of adoption for open contracts | $ 159,396 | |||
In-progress contract revenue | $ 170,003 | |||
[1] | Operating expenses decreased by $108,103 resulting primarily from a general reclassification of expenses to cost of revenues of $96,778 plus the net effect of corrections in accruals explained in the balance sheet section above. | |||
[2] | Other Income decreased primarily from the reclassification of sublease income totaling $205,788 to net out rent expenses in cost of revenues, offset by a small reclassification of interest expense to operating expense. | |||
[3] | Cost of product revenues increased by $284,255 for the net effect of the $267,725 increase to the inventory reserve, the error found in the depreciation calculation of $33,045, a general reclassification of operating expenses to cost of revenues of $96,779, an increase associated with costs related to the product revenues reclass to the product segment identified in item (a) above of $78,466, offset by the reversal of the balance in goods received not invoiced of $191,760. | |||
[4] | Cost of contract services revenues decreased by $284,254 resulting from a reclass of $205,788 of sublease income from Other Income plus $78,466 in cost of revenues associated with the product revenues reclass to the product segment identified in item (a) above. |
Accounts Receivable (Details Na
Accounts Receivable (Details Narrative) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Receivables [Abstract] | ||
Bad debt expenses | $ 0 | $ 34,977 |
Accounts Receivable - Schedule
Accounts Receivable - Schedule of Accounts Receivable (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Receivables [Abstract] | ||
Accounts receivable | $ 164,960 | $ 321,224 |
Less: allowance for doubtful accounts | (13,960) | (13,670) |
Accounts receivable, net | $ 151,290 | $ 307,554 |
Inventory (Details Narrative)
Inventory (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Inventory Disclosure [Abstract] | ||
Excess write-downs related to inventory obsolescence | $ 160,439 | $ 267,724 |
Inventory - Schedule of Invento
Inventory - Schedule of Inventory (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 663,932 | $ 823,283 |
Finished goods | 335,762 | 389,716 |
Inventory, gross | 999,694 | 1,212,999 |
Less: reserve for obsolescence | (577,072) | (653,197) |
Inventory, net | $ 422,622 | $ 559,802 |
Property and Equipment (Details
Property and Equipment (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation and amortization expense | $ 84,547 | $ 97,710 |
Proceed from sale of equipment |
Property and Equipment - Schedu
Property and Equipment - Schedule of Property and Equipment (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Property and equipment, gross | $ 3,330,011 | $ 3,318,882 |
Less accumulated depreciation | (3,108,446) | (3,023,899) |
Property and equipment, net | 221,565 | 294,983 |
Machinery and Equipment [Member] | ||
Property and equipment, gross | 2,729,308 | 2,729,308 |
Furniture and Office Equipment [Member] | ||
Property and equipment, gross | 589,860 | 578,731 |
Leasehold Improvements [Member] | ||
Property and equipment, gross | $ 10,843 | $ 10,843 |
Minimum [Member] | ||
Property plant and equipment Useful Life | 3 years | |
Minimum [Member] | Machinery and Equipment [Member] | ||
Property plant and equipment Useful Life | 5 years | |
Minimum [Member] | Furniture and Office Equipment [Member] | ||
Property plant and equipment Useful Life | 3 years | |
Minimum [Member] | Leasehold Improvements [Member] | ||
Property plant and equipment Useful Life | 2 years | |
Maximum [Member] | ||
Property plant and equipment Useful Life | 10 years | |
Maximum [Member] | Machinery and Equipment [Member] | ||
Property plant and equipment Useful Life | 10 years | |
Maximum [Member] | Furniture and Office Equipment [Member] | ||
Property plant and equipment Useful Life | 7 years | |
Maximum [Member] | Leasehold Improvements [Member] | ||
Property plant and equipment Useful Life | 15 years |
Operating Lease Right-Of-Use _3
Operating Lease Right-Of-Use Assets (Details Narrative) | Dec. 10, 2018USD ($)ft² | Sep. 20, 2017USD ($)ft² | Jun. 21, 2020USD ($) | Dec. 31, 2019 | Jun. 21, 2019ft² |
Lease office space, area | ft² | 1,200 | ||||
Operating lease, description | Extended through December 31, 2020. | ||||
Operating lease payments, monthly | $ | $ 1,529 | ||||
Operating lease, average remaining lease term | 24 years 3 months 19 days | ||||
Operating lease, average discount rate | 8.50% | ||||
Three-Year Lease Agreement [Member] | |||||
Operating lease term | 3 years | ||||
Lease office space, area | ft² | 22,172 | ||||
Operating lease, description | Beginning September 20, 2017 and ending September 20, 2020 | ||||
Operating lease payments, monthly | $ | $ 8,688 | ||||
Five-Year Lease Agreement [Member] | |||||
Operating lease term | 5 years | ||||
Lease office space, area | ft² | 3,742 | ||||
Operating lease, description | Beginning January 2019 and ending February 29, 2024 | ||||
Operating lease payments, monthly | $ | $ 3,472 | ||||
Increasing percentage in monthly payments | 3.00% |
Operating Lease Right-Of-Use _4
Operating Lease Right-Of-Use Assets - Schedule of Supplemental Information to Leases (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Leases [Abstract] | ||
Total operating lease ROU assets | $ 257,523 | |
Operating lease liabilities (current) | 131,835 | |
Operating lease liabilities (noncurrent) | 136,624 | |
Total operating lease liabilities | 268,459 | |
Cost of product revenue | 124,617 | |
Cost of contract services | 46,339 | |
Sublease (income) | (23,200) | |
Net operating lease cost | $ 147,756 |
Operating Lease Right-Of-Use _5
Operating Lease Right-Of-Use Assets - Schedule of Future Minimum Lease Payments (Details) | Dec. 31, 2019USD ($) |
Leases [Abstract] | |
2020 | $ 140,161 |
2021 | 46,085 |
2022 | 48,841 |
2023 | 50,315 |
2024 | 8,427 |
Undiscounted Cash Flows | 293,829 |
Less: imputed interest | (25,370) |
Total | $ 268,459 |
Bank Loans and Lines of Revol_2
Bank Loans and Lines of Revolving Credit Facility (Details Narrative) - USD ($) | Jan. 31, 2019 | Apr. 30, 2014 | Dec. 31, 2019 | Dec. 31, 2018 |
Revolving credit facility | $ 330,892 | |||
Payments of line of credit | 508,859 | 2,773,335 | ||
Line of credit balance outstanding | 0 | 330,892 | ||
Line of credit, accrued interest | $ 0 | 2,475 | ||
Amount available on line of credit | $ 1,176,440 | |||
Line of credit, weighted average interest rate | 7.90% | 8.50% | ||
Lender [Member] | ||||
Payments of line of credit | $ 172,101 | |||
Cash collateral account | 234,841 | |||
Outstanding principal amount | $ 22,260 | |||
Revolving Credit Line Agreement [Member] | Mackinac Commercial Credit, LLC [Member] | ||||
Revolving credit facility | $ 1,500,000 | |||
Revolving Credit Line Agreement [Member] | Mackinac Commercial Credit, LLC [Member] | Prime Rate [Member] | ||||
Percentage of effective interest rate | 3.00% |
Notes Payable (Details Narrativ
Notes Payable (Details Narrative) - USD ($) | Jun. 18, 2019 | Feb. 10, 2015 | Jan. 31, 2017 | Dec. 31, 2019 | Dec. 31, 2018 | Nov. 30, 2015 | Jun. 30, 2015 |
Current portion of notes payable | $ 52,641 | $ 73,562 | |||||
Notes payable, long term portion | 122,170 | 129,798 | |||||
Departing Employee [Member] | |||||||
Proceeds from notes payable | $ 17,425 | ||||||
Debt maturity year | Due in January 2027 | ||||||
Equipment Note [Member] | |||||||
Debt installments payments ending date | Apr. 10, 2022 | ||||||
Debt instrument interest rate | 6.29% | ||||||
Principal amount | 115,926 | 134,944 | |||||
Current portion of notes payable | 48,641 | 73,562 | |||||
Notes payable, long term portion | 67,285 | $ 60,563 | |||||
Subsidiary Nano Magic LLC [Member] | Equipment Note [Member] | |||||||
Proceeds from notes payable | $ 373,000 | ||||||
Advances not to exceed | $ 373,000 | ||||||
Debt installments equal monthly payments | Equipment Note is payable in 60 equal monthly installments payments | ||||||
Debt installments payments ending date | Jun. 10, 2020 | ||||||
Nanofilm Ltd [Member] | Equipment Note [Member] | |||||||
Debt instrument interest rate | 4.35% | ||||||
Four Employees [Member] | June and November 2015 [Member] | Three Promissory Note [Member] | |||||||
Debt principal and interest payable amount | $ 37,469 | ||||||
Debt maturity year | 2025 | ||||||
Four Employees [Member] | Four Promissory Note Agreements [Member] | |||||||
Accrued and unpaid deferred salary | $ 51,808 | $ 51,808 | |||||
Four Employees [Member] | Four Promissory Note Agreements [Member] | June and November 2015 [Member] | Minimum [Member] | |||||||
Debt instruments interest rate at period | 3.00% | ||||||
Four Employees [Member] | Two Promissory Note Agreements [Member] | June and November 2015 [Member] | |||||||
Debt principal and interest payable amount | $ 18,350 | ||||||
Debt maturity year | 2020 | ||||||
Reclassification of accrued salary to notes payable - long-term | $ 51,808 |
Notes Payable - Schedule of Fut
Notes Payable - Schedule of Future Payments of Notes Payable (Details) | Dec. 31, 2019USD ($) |
Debt Disclosure [Abstract] | |
2020 | $ 52,641 |
2021 | 48,641 |
2022 | 18,644 |
2023 | |
Thereafter | 58,885 |
Total | $ 174,811 |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Accounts payable and advances from related parties | $ 140,000 | $ 140,000 |
Ron Berman [Member] | ||
Legal and consulting fees | 94,100 | 18,750 |
Tom Berman [Member] | ||
Legal and consulting fees | 90,600 | 36,425 |
Directors and Executives [Member] | ||
Accounts payable and advances from related parties | 159,887 | 159,887 |
Accrued payroll | $ 16,000 | $ 16,000 |
Stockholders' Deficit (Details
Stockholders' Deficit (Details Narrative) - USD ($) | Dec. 31, 2019 | Dec. 18, 2019 | Dec. 10, 2019 | Oct. 31, 2019 | Oct. 24, 2019 | Oct. 09, 2019 | Sep. 06, 2019 | Jul. 24, 2019 | Jun. 27, 2019 | May 10, 2019 | Apr. 24, 2019 | Apr. 03, 2019 | Mar. 22, 2019 | Feb. 28, 2019 | Jan. 31, 2019 | Dec. 05, 2018 | Oct. 15, 2018 | May 23, 2018 | Feb. 28, 2018 | May 23, 2017 | Dec. 11, 2015 | Aug. 27, 2014 | Oct. 31, 2018 | Apr. 03, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | Jan. 26, 2016 | Nov. 30, 2015 |
Reverse stock split | Ratio of 1-for-180 | |||||||||||||||||||||||||||
Common stock, par value | $ 0.0001 | |||||||||||||||||||||||||||
Common stock description | On January 26, 2016, each one hundred eighty (180) shares of the Company's (i) Class A Common Stock ("Class A common stock"), (iii) Class B Common Stock and (iii) Class Z Common Stock, then issued and outstanding were automatically combined into one validly issued, fully paid and non-assessable share of Class A Common Stock, Class B Common Stock and Class Z Common Stock, respectively, without any further action by the Company or the holder. | |||||||||||||||||||||||||||
Excess stock shares authorized | 10,000,000 | |||||||||||||||||||||||||||
Preferred stock, shares authorized | 100,000 | 100,000 | 100,000 | 20,000,000 | ||||||||||||||||||||||||
Preferred stock, par value | $ 0.0001 | $ 0.0001 | $ 0.0001 | $ 0.0001 | ||||||||||||||||||||||||
Common stock conversion basis description | The rights of each share of Class A common stock, each share of Class B common stock and each share of Class Z common stock are the same with respect to dividends, distributions and rights upon liquidation. | |||||||||||||||||||||||||||
Number of shares issued for services, value | $ 126,604 | $ 50,741 | ||||||||||||||||||||||||||
Number of shares issued, value | $ 1,102,022 | $ 295,426 | ||||||||||||||||||||||||||
Number of grants option purchased | 550,000 | 550,847 | ||||||||||||||||||||||||||
Number of stock options exercised | ||||||||||||||||||||||||||||
compensation expense related to option award | $ 59,091 | |||||||||||||||||||||||||||
Number of unvested shares | 325,000 | 325,000 | ||||||||||||||||||||||||||
Number of unvested shares values | $ 153,635 | $ 153,635 | ||||||||||||||||||||||||||
Weighted average exercise price | ||||||||||||||||||||||||||||
2015 Equity Incentive Plan [Member] | ||||||||||||||||||||||||||||
Reserved shares of common stock | 111,111 | |||||||||||||||||||||||||||
Warrant [Member] | ||||||||||||||||||||||||||||
Warrant exercise price | $ 1.50 | $ 1.50 | $ 2.81 | |||||||||||||||||||||||||
Warrants outstanding and exercisable warrants | 2,817,463 | 712 | ||||||||||||||||||||||||||
Warrants, weighted average remaining contractual term | 33 years 7 months 17 days | 31 months | ||||||||||||||||||||||||||
Tranche 1 [Member] | ||||||||||||||||||||||||||||
Number of stock options, vested | 50,000 | |||||||||||||||||||||||||||
Stock options vesting period, description | The date of grant | |||||||||||||||||||||||||||
Tranche 2 [Member] | ||||||||||||||||||||||||||||
Number of stock options, vested | 75,000 | |||||||||||||||||||||||||||
Stock options vesting period, description | December 31, 2019 | |||||||||||||||||||||||||||
Tranche 3 [Member] | ||||||||||||||||||||||||||||
Number of stock options, vested | 100,000 | |||||||||||||||||||||||||||
Stock options vesting period, description | June 30, 2020 | |||||||||||||||||||||||||||
Tranche 4 [Member] | ||||||||||||||||||||||||||||
Number of stock options, vested | 125,000 | |||||||||||||||||||||||||||
Stock options vesting period, description | December 31, 2020 | |||||||||||||||||||||||||||
Tranche 5 [Member] | ||||||||||||||||||||||||||||
Number of stock options, vested | 100,000 | |||||||||||||||||||||||||||
Stock options vesting period, description | If the Bonus Cap is reached for 2019 | |||||||||||||||||||||||||||
Tranche 6 [Member] | ||||||||||||||||||||||||||||
Number of stock options, vested | 100,000 | |||||||||||||||||||||||||||
Stock options vesting period, description | If the Bonus Cap is reached for 2020 | |||||||||||||||||||||||||||
Two Consultants [Member] | ||||||||||||||||||||||||||||
Number of grants option purchased | 10,000 | |||||||||||||||||||||||||||
Tom Berman [Member] | ||||||||||||||||||||||||||||
Number of stock options, vested | 125,000 | |||||||||||||||||||||||||||
Employees [Member] | 2015 Equity Incentive Plan [Member] | ||||||||||||||||||||||||||||
Number of common stock issued during period, shares | 102,500 | |||||||||||||||||||||||||||
Class A Common Stock [Member] | ||||||||||||||||||||||||||||
Common stock, par value | $ 0.0001 | $ 0.0001 | $ 0.0001 | $ 0.0001 | ||||||||||||||||||||||||
Common stock, shares authorized | 7,200,000 | 7,200,000 | 7,200,000 | 7,200,000 | ||||||||||||||||||||||||
Common stock voting rights | Holders of the Class A common stock are entitled to one vote per share in the election of directors and other matters submitted to a vote of the stockholders. | |||||||||||||||||||||||||||
Number of common stock issued during period, shares | 1,436,052 | |||||||||||||||||||||||||||
Number of shares converted | 262,631 | |||||||||||||||||||||||||||
Class A Common Stock [Member] | 2015 Equity Incentive Plan [Member] | ||||||||||||||||||||||||||||
Number of grants option purchased | 10,000 | |||||||||||||||||||||||||||
Class A Common Stock [Member] | Warrant [Member] | ||||||||||||||||||||||||||||
Warrant exercise price | $ 0.03 | |||||||||||||||||||||||||||
Number of stock options exercised | 550,847 | |||||||||||||||||||||||||||
Exercise price of option | $ 1 | |||||||||||||||||||||||||||
Expiration date for exercise of options | Jun. 30, 2019 | |||||||||||||||||||||||||||
Warrants outstanding and exercisable warrants | 550,847 | |||||||||||||||||||||||||||
Warrants, weighted average remaining contractual term | 6 months | |||||||||||||||||||||||||||
Weighted average exercise price | $ 1.50 | |||||||||||||||||||||||||||
Intrinsic value for warrants | ||||||||||||||||||||||||||||
Class A Common Stock [Member] | PEN Comeback, LLC [Member] | ||||||||||||||||||||||||||||
Shares issued price per share | $ 0.03 | |||||||||||||||||||||||||||
Number of shares sold, shares | 272,059 | 165,441 | 88,235 | 216,912 | 441,860 | 523,266 | 232,558 | 325,581 | 590,847 | |||||||||||||||||||
Sale of stock, price per share | $ 0.65 | $ 0.65 | $ 0.65 | $ 0.65 | $ 0.40 | $ 0.40 | $ 0.40 | $ 0.40 | $ 0.50 | |||||||||||||||||||
Proceeds from private placement | $ 176,838 | $ 117,537 | $ 57,353 | $ 140,993 | $ 176,744 | $ 209,302 | $ 93,023 | $ 130,232 | $ 295,423 | |||||||||||||||||||
Warrant exercise price | $ 1.50 | $ 1.50 | $ 1.50 | $ 1.50 | $ 1.50 | $ 1.50 | $ 1.50 | $ 1.50 | ||||||||||||||||||||
Warrants issued to purchase the additional shares | 272,055 | 165,441 | 88,235 | 216,906 | 441,860 | 523,266 | 325,581 | 325,581 | ||||||||||||||||||||
Warrant expiration, description | The right to purchase warrant shares expires four years from date of issue. Aggregate proceeds from the sales of the warrants were $0.03 per warrant for an aggregate of $8,162. | At the same time PEN Comeback 2 bought 165,441 warrants to purchase up to 165,441 additional shares and the partnership bought 13 warrants to purchase up to 13 additional shares, all at a warrant exercise price of $1.50. | The right to purchase warrant shares expires four years from date of issue. | The right to purchase warrant shares expires four years from date of issue. | The right to purchase warrant shares expires on the earlier of (1) 45 days after the day that Nano Magic shares have been trading at or above 120% of the exercise price for a period of 90 days, or (2) four years from date of issue. | The right to purchase warrant shares expires on the earlier of (1) 45 days after the day that Nano Magic shares have been trading at or above 120% of the exercise price for a period of 90 days, or (2) four years from date of issue. | The right to purchase warrant shares expires on the earlier of (1) 45 days after the day that Nano Magic shares have been trading at or above 120% of the exercise price for a period of 90 days, or (2) four years from date of issue. | The right to purchase warrant shares expires on the earlier of (1) 45 days after the day that Nano Magic shares have been trading at or above 120% of the exercise price for a period of 90 days, or (2) four years from date of issue. | ||||||||||||||||||||
Proceeds from warrants exercise | $ 8,162 | $ 4,963 | $ 2,647 | $ 6,507 | $ 13,256 | $ 15,698 | $ 6,977 | $ 9,767 | ||||||||||||||||||||
Number of stock options exercised | 550,847 | |||||||||||||||||||||||||||
Exercise price of option | $ 1 | |||||||||||||||||||||||||||
Expiration date for exercise of options | Jun. 30, 2019 | |||||||||||||||||||||||||||
Class A Common Stock [Member] | Rickert Family Partnership [Member] | ||||||||||||||||||||||||||||
Number of shares sold, shares | 15,384 | |||||||||||||||||||||||||||
Class A Common Stock [Member] | Dr. Zvi Yaniv [Member] | ||||||||||||||||||||||||||||
Number of restricted shares issued | 37,778 | |||||||||||||||||||||||||||
Class A Common Stock [Member] | Directors [Member] | ||||||||||||||||||||||||||||
Number of shares issued for services | 20,688 | 23,331 | 18,750 | 19,998 | 18,180 | 4,443 | 30,000 | 20,000 | ||||||||||||||||||||
Shares issued price per share | $ 0.58 | $ 0.60 | $ 0.64 | $ 0.60 | $ 0.55 | $ 0.40 | $ 0.50 | |||||||||||||||||||||
Number of shares issued for services, value | $ 12,000 | $ 14,000 | $ 12,000 | $ 12,000 | $ 10,000 | $ 12,000 | $ 10,000 | |||||||||||||||||||||
Number of common stock issued during period, shares | 1,774 | 5,043 | ||||||||||||||||||||||||||
Class A Common Stock [Member] | Three Employees [Member] | 2015 Equity Plan [Member] | ||||||||||||||||||||||||||||
Shares issued price per share | $ 0.65 | $ 0.65 | ||||||||||||||||||||||||||
Number of common stock issued during period, shares | 35,000 | |||||||||||||||||||||||||||
Number of shares issued, value | $ 22,750 | |||||||||||||||||||||||||||
Class A Common Stock [Member] | Tom Berman [Member] | ||||||||||||||||||||||||||||
Shares issued price per share | $ 0.55 | |||||||||||||||||||||||||||
Warrants issued to purchase the additional shares | 550,000 | |||||||||||||||||||||||||||
Option vesting description | The option vests over time, each tranche exercisable for 4 years after vesting. | |||||||||||||||||||||||||||
Class A Common Stock [Member] | Chief Executive Officer [Member] | ||||||||||||||||||||||||||||
Number of shares sold, shares | 262,631 | |||||||||||||||||||||||||||
Number of shares sold, value | $ 100,000 | |||||||||||||||||||||||||||
Class B Common Stock [Member] | ||||||||||||||||||||||||||||
Common stock, par value | $ 0.0001 | $ 0.0001 | $ 0.0001 | $ 0.0001 | ||||||||||||||||||||||||
Common stock, shares authorized | 2,500,000 | 2,500,000 | 2,500,000 | 2,500,000 | ||||||||||||||||||||||||
Common stock conversion basis description | Shares of Class B common stock can be converted, one-for-one, into shares of Class A common stock at any time at the option of the holder. | |||||||||||||||||||||||||||
Common stock voting rights | Holders of Nano Magic Class B common stock are entitled to 100 votes per share in the election of directors and other matters submitted to a vote of the stockholders. | |||||||||||||||||||||||||||
Class B Common Stock [Member] | Directors [Member] | ||||||||||||||||||||||||||||
Number of shares issued for services | 2,962 | |||||||||||||||||||||||||||
Number of common stock issued during period, shares | 6,746 | 3,362 | ||||||||||||||||||||||||||
Class Z Common Stock [Member] | ||||||||||||||||||||||||||||
Common stock, par value | $ 0.0001 | $ 0.0001 | $ 0.0001 | $ 0.0001 | ||||||||||||||||||||||||
Common stock, shares authorized | 300,000 | 300,000 | 300,000 | 300,000 | ||||||||||||||||||||||||
Class Z Common Stock [Member] | ||||||||||||||||||||||||||||
Common stock conversion basis description | Shares of Class Z common stock can be converted, one-for-one, into shares of Class A common stock at any time at the option of the holder. | |||||||||||||||||||||||||||
Common stock voting rights | Holders of PEN Class Z common stock do not vote in the election of directors or otherwise, but they do have the right to designate a director to the PEN Board, have anti-dilution rights described below and have consent rights with respect to certain amendments to PEN's certificate of incorporation. | |||||||||||||||||||||||||||
Number of shares converted | 262,631 | |||||||||||||||||||||||||||
Class A and Class B Common Stock [Member] | Directors [Member] | ||||||||||||||||||||||||||||
Shares issued price per share | $ 1.35 | $ 1.19 | ||||||||||||||||||||||||||
Number of shares issued for services, value | $ 10,000 | $ 10,000 |
Stockholders' Deficit - Schedul
Stockholders' Deficit - Schedule of Fair Value of Option Award Valuation Assumptions (Details) | 12 Months Ended |
Dec. 31, 2019$ / shares | |
Equity [Abstract] | |
Exercise price per option | $ 0.55 |
Weighted average fair value per option at grant date | $ 0.47 |
Expected term | 5 years |
Expected volatility | 141.00% |
Expected dividend yield | 0.00% |
Risk-free interest rate | 1.66% |
Stockholders' Deficit - Sched_2
Stockholders' Deficit - Schedule of Stock Option Plan Activity (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Equity [Abstract] | ||
Number of Options, Outstanding, Beginning balance | 559,573 | 19,120 |
Number of Options, Exercised | ||
Number of Options, Forfeited or expired | (654,071) | (10,394) |
Number of Options, Granted | 550,000 | 550,847 |
Number of Options, Outstanding, Ending balance | 455,502 | 559,573 |
Number of Options, Exercisable, Ending balance | 130,502 | |
Weighted-Average Exercise Price, Outstanding, Beginning balance | $ 1.91 | $ 29.38 |
Weighted-Average Exercise Price, Exercised | ||
Weighted-Average Exercise Price, Forfeited or expired | 44.34 | |
Weighted-Average Exercise Price, Granted | 0.55 | 1 |
Weighted-Average Exercise Price, Outstanding, Ending balance | 1.24 | $ 1.91 |
Weighted-Average Exercise Price, Exercisable Ending balance | $ 2.95 | |
Weighted-Average Remaining Contractual Terms (Years), Outstanding, Beginning | 1 year 11 months 8 days | 2 years 9 months 25 days |
Weighted-Average Remaining Contractual Terms (Years), Outstanding, Ending | 4 years 2 months 19 days | 1 year 11 months 8 days |
Weighted Average Remaining Contractual Term (Years), Exercisable | 4 years 1 month 20 days | |
Aggregate Intrinsic Value, Share Outstanding, Ending balance | $ 18,000 | |
Aggregate Intrinsic Value, Share Exercisable | $ 5,000 |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) | 12 Months Ended |
Dec. 31, 2019USD ($)$ / shares | |
Income Tax Disclosure [Abstract] | |
Net operating loss carryforward | $ | $ 10,699,000 |
Tax loss carryforwards expiration, description | The potential tax benefit arising from tax loss carryforwards prior to 2017 will expire between 2020 and 2037, while the potential tax benefits arising after 2017 currently have no expiration date. |
Ownership changes | $ / shares | $ 0.50 |
Income Taxes - Schedule of Effe
Income Taxes - Schedule of Effective Statutory Rate of Income Taxes (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | ||
Income tax provision (benefit) at U.S. statutory rate of 21% | $ (203,000) | $ 5,000 |
Non-deductible expenses | ||
Other | 12,000 | (8,000) |
Change in valuation allowance | 191,000 | 3,000 |
Revaluation of deferred tax assets under U.S. tax act | ||
Total provision for income tax |
Income Taxes - Schedule of Ef_2
Income Taxes - Schedule of Effective Statutory Rate of Income Taxes (Details) (Parenthetical) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | ||
Statutory income tax rate | 21.00% | 21.00% |
Income Taxes - Schedule of Comp
Income Taxes - Schedule of Components of Deferred Tax Assets and Liabilities (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Income Tax Disclosure [Abstract] | ||
Net operating loss carry forwards | $ 2,247,000 | $ 2,046,000 |
Stock-based compensation | 1,000 | 1,000 |
Allowance for inventory obsolescence | 125,000 | 141,000 |
Accrued compensation | 34,000 | 28,000 |
Other | 32,000 | 32,000 |
Total deferred tax assets | 2,439,000 | 2,248,000 |
Valuation allowance | (2,439,000) | (2,248,000) |
Net deferred tax asset |
Commitments and Contingencies (
Commitments and Contingencies (Details Narrative) | 12 Months Ended |
Dec. 31, 2019USD ($) | |
Commitments and Contingencies Disclosure [Abstract] | |
Litigation settlement |
Concentrations (Details Narrati
Concentrations (Details Narrative) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Product Revenues [Member] | Two Customer Member] | ||
Percentage of sales | 51.00% | |
Product Revenues [Member] | No Customer Member] | ||
Percentage of sales | 10.00% | |
Product Revenues [Member] | Account Receivable [Member] | ||
Percentage of sales | 0.00% | 0.00% |
Contract Services Revenues [Member] | Account Receivable [Member] | ||
Percentage of sales | 0.00% | 0.00% |
Contract Services Revenues [Member] | Three Customer Member] | ||
Percentage of sales | 99.00% | 67.00% |
United States [Member] | Sales Revenue, Net [Member] | ||
Percentage of sales | 83.00% | 93.00% |
No Other Geographical Area [Member] | Sales Revenue, Net [Member] | ||
Percentage of sales | 10.00% | 10.00% |
Concentrations - Schedule of Co
Concentrations - Schedule of Concentration Risk, Customer (Details) | 12 Months Ended | |||
Dec. 31, 2019 | Dec. 31, 2018 | |||
Customer Concentration Risk [Member] | Product Revenues [Member] | ||||
Percentage of revenues | 0.00% | [1] | 51.00% | |
Customer Concentration Risk [Member] | Product Revenues [Member] | Customer A [Member] | ||||
Percentage of revenues | 0.00% | [1] | 40.00% | |
Customer Concentration Risk [Member] | Product Revenues [Member] | Customer B [Member] | ||||
Percentage of revenues | 0.00% | [1] | 11.00% | |
Customer Concentration Risk [Member] | Contract Services Revenues [Member] | ||||
Percentage of revenues | 99.00% | 67.00% | ||
Customer Concentration Risk [Member] | Contract Services Revenues [Member] | Customer C [Member] | ||||
Percentage of revenues | 46.00% | 9.00% | [1] | |
Customer Concentration Risk [Member] | Contract Services Revenues [Member] | Customer D [Member] | ||||
Percentage of revenues | 36.00% | 41.00% | ||
Customer Concentration Risk [Member] | Contract Services Revenues [Member] | Customer E [Member] | ||||
Percentage of revenues | 17.00% | 17.00% | ||
Vendor Concentrations [Member] | ||||
Percentage of revenues | 0.00% | 53.00% | ||
Vendor Concentrations [Member] | Vendor A [Member] | ||||
Percentage of revenues | 0.00% | [1] | 22.00% | |
Vendor Concentrations [Member] | Vendor B [Member] | ||||
Percentage of revenues | 0.00% | [1] | 21.00% | |
Vendor Concentrations [Member] | Vendor C [Member] | ||||
Percentage of revenues | 0.00% | [1] | 10.00% | |
[1] | Less than 10% |
Equity Credits (Details Narrati
Equity Credits (Details Narrative) - shares | Dec. 31, 2019 | Dec. 31, 2018 |
Equity [Abstract] | ||
Equity credits outstanding |
Stock Appreciation Rights Plan
Stock Appreciation Rights Plan (Details Narrative) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Vested stock outstanding | 235,782 | 235,782 |
Accrued redemption value associated with stock appreciation rights amount | $ 42,823 | $ 54,290 |
Stock Appreciation Rights (SARs) [Member] | ||
Maximum number of stock appreciation granted by board | 1,000,000 |
Segment Reporting (Details Narr
Segment Reporting (Details Narrative) - Segment | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Segment Reporting [Abstract] | ||
Number of reportable segments | 2 | 2 |
Segment Reporting - Segment Inf
Segment Reporting - Segment Information Available with Respect to Reportable Business Segments (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Total segment and consolidated revenues | $ 2,436,010 | $ 4,500,755 |
Total segment and consolidated cost of revenues | 2,112,109 | 3,451,970 |
Total segment and consolidated gross profit | $ 323,901 | $ 1,048,785 |
Total gross margin | 13.30% | 23.33% |
Total segment operating expenses | $ 985,694 | $ 1,129,341 |
Total segment income (loss) | (661,792) | (80,556) |
Unallocated costs | (369,291) | 40,163 |
Total consolidated loss from operations | (1,031,083) | (40,393) |
Total segment depreciation and amortization | 84,547 | 97,710 |
Unallocated depreciation | ||
Total consolidated depreciation and amortization | 84,547 | 97,710 |
Total segment capital additions | 11,129 | 3,917 |
Unallocated capital additions | ||
Total consolidated capital additions | 11,129 | 3,917 |
Total consolidated total assets | 1,320,087 | 1,599,387 |
Product Segment [Member] | ||
Total segment and consolidated revenues | 1,539,191 | 3,170,210 |
Total segment and consolidated cost of revenues | 1,200,168 | 2,609,872 |
Total segment and consolidated gross profit | $ 339,023 | $ 560,338 |
Total gross margin | 22.00% | 17.70% |
Total segment operating expenses | $ 770,667 | $ 928,720 |
Total segment income (loss) | (431,644) | (368,382) |
Total segment depreciation and amortization | 83,281 | 97,286 |
Total segment capital additions | 9,400 | |
Total consolidated total assets | 1,132,858 | 1,436,588 |
Contract Services Segment [Member] | ||
Total segment and consolidated revenues | 896,819 | 1,330,545 |
Total segment and consolidated cost of revenues | 911,941 | 842,098 |
Total segment and consolidated gross profit | $ (15,122) | $ 488,447 |
Total gross margin | (1.70%) | 36.70% |
Total segment operating expenses | $ 215,026 | $ 200,621 |
Total segment income (loss) | (230,148) | 287,826 |
Total segment depreciation and amortization | 1,266 | 424 |
Total segment capital additions | 1,729 | 3,917 |
Total consolidated total assets | 176,568 | 137,189 |
Corporate [Member] | ||
Total consolidated total assets | $ 10,661 | $ 25,610 |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) - USD ($) | May 08, 2020 | Mar. 26, 2020 | Mar. 24, 2020 | Feb. 24, 2020 | Feb. 12, 2020 | Jan. 22, 2020 | Dec. 18, 2019 | Oct. 24, 2019 | Jul. 24, 2019 | Apr. 24, 2019 | Apr. 03, 2019 | Feb. 28, 2019 | Dec. 05, 2018 | Oct. 15, 2018 | Dec. 31, 2019 | Dec. 31, 2018 |
Number of shares issued, value | $ 1,102,022 | $ 295,426 | ||||||||||||||
Number of shares issued for services, value | $ 126,604 | $ 50,741 | ||||||||||||||
Class A Common Stock [Member] | Directors [Member] | ||||||||||||||||
Number of shares issued for services | 20,688 | 23,331 | 18,750 | 19,998 | 18,180 | 4,443 | 30,000 | 20,000 | ||||||||
Number of shares issued for services, value | $ 12,000 | $ 14,000 | $ 12,000 | $ 12,000 | $ 10,000 | $ 12,000 | $ 10,000 | |||||||||
Shares price per share | $ 0.58 | $ 0.60 | $ 0.64 | $ 0.60 | $ 0.55 | $ 0.40 | $ 0.50 | |||||||||
Subsequent Event [Member] | Paycheck Protection Program Loan [Member] | ||||||||||||||||
Loan obtained | $ 130,000 | |||||||||||||||
Subsequent Event [Member] | Class A Common Stock [Member] | Directors [Member] | ||||||||||||||||
Number of shares issued for services | 21,048 | |||||||||||||||
Number of shares issued for services, value | $ 12,000 | |||||||||||||||
Shares price per share | $ 0.57 | |||||||||||||||
Subsequent Event [Member] | Private Placement [Member] | Class A Common Stock [Member] | ||||||||||||||||
Number of shares sold, shares | 36,765 | |||||||||||||||
Sale of stock, price per share | $ 0.65 | |||||||||||||||
Proceeds from private placement | $ 23,897 | |||||||||||||||
Number of warrants purchase | 36,758 | |||||||||||||||
Warrant exercise price | $ 1.50 | |||||||||||||||
Proceeds from warrants exercise | $ 1,103 | |||||||||||||||
Warrant expiration, description | The right to purchase warrant shares expires four years from date of issue. | |||||||||||||||
Subsequent Event [Member] | Private Placement [Member] | Class A Common Stock [Member] | PEN Comeback 2, LLC [Member] | ||||||||||||||||
Number of shares sold, shares | 551,600 | 205,883 | 198,530 | |||||||||||||
Sale of stock, price per share | $ 0.65 | $ 0.65 | $ 0.65 | |||||||||||||
Proceeds from private placement | $ 516,177 | $ 133,824 | $ 129,044 | |||||||||||||
Number of warrants purchase | 794,110 | 198,516 | 198,516 | |||||||||||||
Warrant exercise price | $ 1.50 | $ 1.50 | $ 1.50 | |||||||||||||
Proceeds from warrants exercise | $ 23,823 | $ 6,176 | $ 5,955 | |||||||||||||
Warrant expiration, description | The right to purchase warrant shares expires four years from date of issue. | The right to purchase warrant shares expires four years from date of issue. | The right to purchase warrant shares expires four years from date of issue. | |||||||||||||
Number of shares issued, value | $ 242,518 | |||||||||||||||
Subsequent Event [Member] | Private Placement [Member] | Class A Common Stock [Member] | PEN Comeback 2, LLC [Member] | Investor [Member] | ||||||||||||||||
Number of warrants purchase | 205,868 |