UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

 

For the Quarterly Period Ended SeptemberJune 30, 20222023

 

Commission File Number: 0-21683

 

hopTo Inc.

(Exact name of registrant as specified in its charter)

 

Delaware 13-3899021
(State of incorporation) (IRS Employer Identification No.)

 

189 North Main St., Suite 102

Concord, NH 03301

(Address of principal executive offices)

 

Registrant’s telephone number:

(800) 472-7466

(408) 688-2674

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class Trading Symbol Name of each exchange on which registered
Common HPTO OTC Market

 

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

 

Yes ☒ No ☐

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulations S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

 

Yes ☒ No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

 Large accelerated filer☐Accelerated filer☐
 Non-accelerated filer☐Smaller reporting company☒
 Emerging growth company☐  

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

 

As of November 15, 2022,August 21, 2023, there were issued and outstanding 18,826,34218,976,165 shares of the registrant’s common stock, par value $0.0001.

 

 
 

 

Table of Contents

 

  PAGE
PART I.FINANCIAL INFORMATION 
Item 1.Financial Statements3
Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations1311
Item 3.Quantitative and Qualitative Disclosures About Market Risk1917
Item 4.Controls and Procedures1917
   
PART II.OTHER INFORMATION 
Item 1.Legal Proceedings1917
Item 1A.Risk Factors1917
Item 2.Unregistered Sales of Equity Securities and Use of Proceeds1917
Item 3.Defaults Upon Senior Securities1917
Item 4.Mine Safety Disclosures1917
Item 5.Exhibits1917
 Signatures2018

 

2
 

 

PART I. FINANCIAL INFORMATION

 

ITEM 1. Financial Statements

 

hopTo Inc.

Consolidated Balance Sheets

(unaudited)

 

 June 30, December 31, 
 September 30, December 31,  2023  2022 
 2022 2021      
Assets                
                
Current assets                
Cash and cash equivalents $4,821,400  $4,755,300  $5,627,700  $5,037,300 
Marketable securities  314,200   417,600   -   318,700 
Accounts receivable, net  364,200   558,600   499,700   511,200 
Prepaid expenses and other current assets  309,100   52,700   124,300   102,600 
Total current assets  5,808,900   5,784,200   6,251,700   5,969,800 
                
Right-of-use assets  59,200   -   36,400   51,600 
Property and equipment, net  6,100   8,200   3,700   5,300 
Other assets  22,900   17,800   22,800   22,900 
Total assets $5,897,100  $5,810,200  $6,314,600  $6,049,600 
                
Liabilities and Stockholders Equity        
Liabilities and Stockholder’s Equity        
                
Current liabilities                
Accounts payable $246,200  $260,800  $215,200  $234,200 
Accrued expenses  81,000   64,200   116,300   61,800 
Accrued wages  137,700   108,900   285,400   150,000 
Lease liabilities - current  10,200   - 
Deferred revenue - current  1,126,200   1,033,800 
Lease liabilities- current  10,300   10,300 
Deferred revenue- current  1,476,500   1,206,100 
Total current liabilities  1,601,300   1,467,700   2,103,700   1,662,400 
Long-term liabilities                
Lease liabilities  48,600   -   25,700   40,900 
Deferred revenue  305,300   373,900   203,700   264,800 
Total liabilities  1,955,200   1,841,600   2,333,100   1,968,100 
                
Commitments and contingencies  -   -   -   - 
                
Stockholders’ equity                
Preferred stock, $0.01 par value, 5,000,000 shares authorized, no shares issued and outstanding as of September 30, 2022 or December 31, 2021  -   - 
Common stock, $0.0001 par value, 195,000,000 shares authorized, 18,826,342 and 18,850,675 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively  1,900   1,900 
Preferred stock, $0.01 par value, 5,000,000 shares authorized, no shares issued and outstanding as of June 30, 2023 and December 31, 2022  -   - 
Common stock, $0.0001 par value, 195,000,000 shares authorized, 18,976,165 and 18,826,342 shares issued and outstanding as of June 30, 2023 and December 31, 2022  1,900   1,900 
Additional paid-in capital  82,145,100   82,155,200   82,145,100   82,145,100 
Accumulated deficit  (78,205,100)  (78,188,500)  (78,165,500)  (78,065,500)
Total stockholders’ equity  3,941,900   3,968,600   3,981,500   4,081,500 
Total liabilities and stockholders’ equity $5,897,100  $5,810,200  $6,314,600  $6,049,600 

 

See accompanying notes to unaudited consolidated financial statements

 

3
 

 

hopTo Inc.

Consolidated Statements of Operations

(unaudited)

 

  2022  2021  2022  2021 
  For the Three Months Ended  For the Nine Months Ended 
  September 30,  September 30,  September 30,  September 30, 
  2022  2021  2022  2021 
             
Revenues:                
Software licenses $135,500  $167,600  $449,000  $541,800 
Software service fees  823,800   730,100   2,380,100   2,072,100 
Other  20,900   21,700   62,900   64,800 
Total revenue  980,200   919,400   2,892,000   2,678,700 
                 
Cost of revenue:                
Software service costs  13,500   13,500   40,500   40,500 
Software product costs  36,300   22,600   135,500   85,300 
Total cost of revenue  49,800   36,100   176,000   125,800 
                 
Gross profit  930,400   883,300   2,716,000   2,552,900 
                 
Operating expenses:                
Selling and marketing  248,600   152,000   687,600   448,100 
General and administrative  429,900   162,400   800,700   576,800 
Research and development  379,000   354,300   1,142,500   1,081,900 
Total operating expenses  1,057,500   668,700   2,630,800   2,106,800 
                 
Income from operations  (127,100)  214,600   85,200  446,100 
                 
Other income (loss):                
Unrealized gain (loss) in marketable securities  (17,800)  146,800   (103,300)  173,400 
Interest and other income  500   -   1,500   269,800 
Other income (loss)  (17,300)  146,800   (101,800)  443,200 
Income before provision for income taxes  (144,400)  361,400   (16,600)  889,300 
Provision for income taxes  -   -   -   - 
Net income (loss) $(144,400) $361,400  $(16,600) $889,300 
                 
Net income (loss) per share, basic $(0.01) $0.02  $(0.00) $0.05 
Net income (loss) per share, diluted $(0.01) $0.02  $(0.00) $0.05 
                 
Weighted average number of common shares outstanding                
Basic  18,846,664   18,850,675   18,848,658   18,850,675 
Diluted  18,846,664   19,092,182   18,848,658   19,092,981 

  2023  2022  2023  2022 
  For the Three Months Ended  For the Six Months Ended 
  June 30,  June 30,  June 30,  June 30, 
  2023  2022  2023  2022 
             
Revenues:                
Software licenses $98,400  $132,000  $236,600  $313,500 
Software service fees  930,100   808,600   1,814,000   1,556,300 
Other  29,900   21,000   50,900   42,000 
Total revenue  1,058,400   961,600   2,101,500   1,911,800 
                 
Cost of revenue:                
Software service costs  27,700   13,500   45,600   27,000 
Software product costs  51,100   35,300   109,000   99,200 
Total cost of revenue  78,800   48,800   154,600   126,200 
                 
Gross profit  979,600   912,800   1,946,900   1,785,600 
                 
Operating expenses:                
Selling and marketing  357,500   315,900   668,400   439,000 
General and administrative  382,400   165,900   627,500   370,800 
Research and development  416,300   380,800   812,900   763,500 
Total operating expenses  1,156,200   862,600   2,108,800   1,573,300 
                 
Income from operations  (176,600)  50,200   (161,900)  212,300 
                 
Other income (loss):                
Unrealized gain (loss) in marketable securities  -   (29,800)  17,700   (85,500)
Interest and other income  42,000   900   44,200   1,000 
Other income (loss)  42,000   (28,900)  61,900   (84,500)
Income (loss) before provision for income taxes  (134,600)  21,300   (100,000)  127,800 
Provision for income taxes  -   -   -   - 
Net income (loss) $(134,600) $21,300  $(100,000) $127,800 
                 
Net income (loss) per share, basic $(0.01) $0.00  $(0.01) $0.01 
Net income (loss) per share, diluted $(0.01) $0.00  $(0.01) $0.01 
                 
Weighted average number of common shares outstanding                
Basic  18,901,253   18,846,664   18,863,797   18,848,658 
Diluted  18,901,253   19,089,238   18,863,797   19,901,102 

 

See accompanying notes to unaudited consolidated financial statements

 

4
 

 

hopTo Inc.

Consolidated Statements of Stockholders’ Equity

(unaudited)

 

                Shares  Amount   Capital  Deficit  Total 
 Common Stock  Additional Paid-In  Accumulated     Common Stock  Additional Paid-In  Accumulated    
 Shares  Amount  Capital  Deficit  Total  Shares  Amount   Capital  Deficit  Total 
                      
Balance at December 31, 2020  18,850,675  $1,900  $82,155,200  $(79,240,700) $2,916,400 
Net income  -   -   -   379,200   379,200 
Balance at March 31, 2021 (unaudited)  18,850,675  $1,900  $82,155,200  $(78,861,500) $3,295,600 
Net income  -   -   -   148,700   148,700 
Balance at June 30, 2021 (unaudited)  18,850,675  $1,900  $82,155,200  $(78,712,800) $3,444,300 
Net income  -   -   -   361,400   361,400 
Balance at September 30, 2021 (unaudited)  18,850,675  $1,900  $82,155,200  $(78,351,400) $3,805,700 
                    
Balance at December, 2021  18,850,675  $1,900  $82,155,200  $(78,188,500) $3,968,600 
Balance at December 31, 2021  18,850,675  $1,900  $82,155,200  $(78,188,500) $3,968,600 
Net income  -   -   -   106,500   106,500   -   -   -   106,500   106,500 
Balance at March 31, 2022 (unaudited)  18,850,675  $1,900  $82,155,200  $(78,082,000) $4,075,100   18,850,675  $1,900  $82,155,200  $(78,082,000) $4,075,100 
Purchase of hopTo treasury stock  (24,333)  -   (10,100)  -   (10,100)  (24,333)  -   (10,100)  -   (10,100)
Net income  -   -   -   21,300   21,300   -   -   -   21,300   21,300 
Balance at June 30, 2022 (unaudited)  18,826,342  $1,900  $82,145,100  $(78,060,700) $4,086,300   18,826,342  $1,900  $82,145,100  $(78,060,700) $4,086,300 
Beginning balance, value  18,826,342  $1,900  $82,145,100  $(78,060,700) $4,086,300 
                    
Balance at December, 2022  18,826,342  $1,900  $82,145,100  $(78,065,500) $4,081,500 
Net income  -   -   -   34,600   34,600 
Balance at March 31, 2023 (unaudited)  18,826,342  $1,900  $82,145,100  $(78,030,900) $4,116,100 
Balance  18,826,342  $1,900  $82,145,100  $(78,030,900) $4,116,100 
Warrant shares exercised  149,823   -   -   -   - 
Net loss  -   -   -   (144,400)  (144,400)  -   -   -   (134,600)  (134,600)
Balance at September 30, 2022 (unaudited)  18,826,342  $1,900  $82,145,100  $(78,205,100) $3,941,900 
Ending balance, value  18,826,342  $1,900  $82,145,100  $(78,205,100) $3,941,900 
Net Income (loss)  -   -   -   (134,600)  (134,600)
Balance at Jun 30, 2023 (unaudited)  18,976,165  $1,900  $82,145,100  $(78,165,500) $3,981,500 
Balance  18,976,165  $1,900  $82,145,100  $(78,165,500) $3,981,500 

 

See accompanying notes to unaudited consolidated financial statements

 

5
 

hopTo Inc.

Consolidated Statements of Cash Flows

(unaudited)

 

  2022  2021 
  For the Nine Months Ended 
  September 30,  September 30, 
  2022  2021 
       
Cash flows from operating activities        
Net income (loss) $(16,600) $889,300 
Adjustments to reconcile net income (loss) to net cash provided by operating activities:        
Depreciation  2,100   800 
Changes in allowance for doubtful accounts  2,000   5,400 
Unrealized (gain) loss from marketable securities  103,400   (173,400)
Gain on sale of patents  -   (269,800)
         
Changes in operating assets and liabilities:        
Accounts receivable  192,400   (45,000)
Prepaid expenses and other current assets  (261,500)  1,200
Accounts payable and accrued expenses  31,000   (60,500)
Lease liabilities  (400)  - 
Deferred revenue  23,800   (139,200)
Net cash provided by operating activities  76,200   208,800 
         
Cash flows from investing activities        
Purchase of marketable securities  -   (290,500)
Purchase of hopTo common stock  (10,100)  - 
Proceeds from sale of patents  -   269,800 
Purchase of property and equipment  -   (3,400)
Net cash used by investing activities  (10,100)  (24,100)
         
         
Net change in cash  66,100   184,700 
Cash and cash equivalents, beginning of the period  4,755,300   4,375,300 
Cash and cash equivalents, end of the period $4,821,400  $4,560,000 

  2023  2022 
  For the Six Months Ended 
  June 30,  June 30, 
  2023  2022 
       
Cash flows from operating activities        
Net income (loss) $(100,000) $127,800 
Adjustments to reconcile net income to net cash provided by and used in operating activities:        
Depreciation  1,600   1,300 
Changes in allowance for doubtful accounts  (800)  1,100 
Realized (gain) loss from marketable securities  (17,700)  85,500 
         
Changes in operating assets and liabilities:        
Accounts receivable  12,300   52,800 
Prepaid expenses and other current assets  (21,600)  (46,500)
Accounts payable and accrued expenses  170,900   26,500 
Lease liabilities  -   (400)
Deferred revenue  209,300   213,900 
Net cash provided by operating activities  254,000   462,000 
         
Cash flows from investing activities        
Purchase of hopTo common stock  -   (10,100)
Proceeds from sale of marketable securities  336,400   - 
Net cash provided (used) by investing activities  336,400   (10,100)
         
Net change in cash  590,400   451,900 
Cash and cash equivalents, beginning of the period  5,037,300   4,755,300 
Cash and cash equivalents, end of the period $5,627,700  $5,207,200 

 

See accompanying notes to unaudited consolidated financial statements

 

6
 

 

hopTo Inc.

Notes to Unaudited Consolidated Financial Statements

 

1. Organization

 

hopTo Inc., a Delaware corporation, through its wholly-owned subsidiary GraphOn Corporation (collectively, “we”, “us,” “our” or the “Company”) are developers of application publishing software which includes application virtualization software and cloud computing software for multiple computer operating systems including Windows, UNIX and several Linux-based variants.

 

The Company sells a family of products under the brand name GO-Global, which is a software application publishing business and is the Company’s sole revenue source at this time. GO-Global is an application access solution for use and/or resale by independent software vendors, hosting service providers, corporate enterprises, governmental and educational institutions, and others, who wish to take advantage of cross-platform remote access and Web-enabled access to their existing software applications, as well as those who are deploying secure, private cloud environments.

 

2.Significant Accounting Policies

 

Basis of Presentation

 

The unaudited consolidated financial statements include the accounts of hopTo Inc. and its wholly-owned subsidiaries. All significant intercompany accounts and transactions are eliminated upon consolidation. The unaudited consolidated financial statements included herein have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) applicable to interim financial information and the rules and regulations promulgated by the Securities and Exchange Commission (the “SEC”). Accordingly, such unaudited consolidated financial statements do not include all information and footnote disclosures required in annual financial statements.

 

The unaudited consolidated financial statements included herein reflect all adjustments, which include only normal, recurring adjustments, that are, in our opinion, necessary to state fairly the results for the periods presented. This Quarterly Report on Form 10-Q should be read in conjunction with our audited consolidated financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2021,2022, which was filed with the SEC on March 31, April 14, 2023 (“2022 (“2021 10-K Report”). The interim results presented herein are not necessarily indicative of the results of operations that may be expected for the full fiscal year ending December 31, 2022,2023, or any future period.

 

Certain prior year information has been reclassified to conform to current year presentation.

 

Use of Estimates

 

The preparation of financial statements in conformity with 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 financial statements, and the reported amounts of revenues and expenses during the reported periods. Amounts could materially change in the future. These significant estimates include the valuation of the allowances for doubtful accounts, depreciation of long-lived assets, timing of revenue recognized over time, allowances for deferred tax assets and accruals of liabilities.

 

7
 

 

Revenue Recognition

 

The Company markets and licenses its products indirectly through channel distributors, value-added resellers, independent software vendors (“ISVs”), hosting service providers, corporate enterprises, governmental and educational institutions and others. Our product licenses are perpetual. We also separately sell intellectual property licenses, maintenance contracts, which are comprised of license updates and customer service access, as well as other products and services.

 

The Company recognizes revenue in accordance with Accounting Standards Codification (“ASC”) 606, “Revenue from Contracts with Customers.” Revenues under ASC 606 are recognized when the promised goods or services are transferred to customers in an amount that reflects the consideration to which the Company expects to be entitled to in exchange for those goods or services.

 

Product Sales

 

All of our licenses are delivered to the customer electronically. The Company sends the license key to the customer to download the related software from the Company portal. We recognize revenue upon delivery of these licenses.

 

Services Revenue

 

The Company has maintenance contracts that entitle customers to support and certain updates to the product. Revenue from maintenance contracts is recognized ratably over the related contract period, which generally ranges from one to five years.

 

Subscription Revenue

 

The Company sells subscription licenses that provide the customer with the right to use the software, maintenance and support and certain updates to the product. Subscription licenses are delivered electronically by either the Company’s cloud licensing server or by sending a term license key to the customer to download the related software from the Company portal. Revenue from subscription licenses is recognized ratably over the related contract period, which generally ranges from one month to one year.

 

The Company’s product sales by geographic area are presented in Note 5.

 

Cash and Cash Equivalents

 

The Company considers all highly liquid holdings with maturities of three months or less at the time of purchase to be cash equivalents.

 

Allowance for Doubtful Accounts

 

We maintain an allowance for doubtful accounts that reflects our best estimate of potentially uncollectible trade receivables. The allowance is based on assessments of the collectability of specific customer accounts and the general aging and size of the accounts receivable. We regularly review the adequacy of our allowance for doubtful accounts by considering such factors as historical experience, credit worthiness, and current economic conditions that may affect a customer’s ability to pay. We specifically reserve for those accounts deemed uncollectible. We also establish, and adjust, a general allowance for doubtful accounts based on our review of the aging and size of our accounts receivable. As of SeptemberJune 30, 20222023 and December 31, 2021,2022, the allowance for doubtful accounts totaled $9,0004,800 and $7,0005,600, respectively.

 

8
 

Concentration of Credit Risk

 

For the ninesix months ended SeptemberJune 30, 2023 and June 30, 2022, the Company had one reseller comprising 13.4%, and two resellers each comprising 12.3% of total sales. For the same periods ended September 30, 2021, the Company had threefour resellers comprising 24.513.7%,13.6%, 14.612.2% and 13.511.4%, four resellers comprising 12.1%,11.8%, 10.6% and 10.1%, respectively, of total sales.

 

As of SeptemberJune 30, 20222023 and December 31, 2021,2022, the Company hashad three resellers comprising 28.923.0%, 25.721.3%, and 13.812.8% and, four resellers comprising 39.718.5%, 15.018.3%, 11.917.4%, and 11.7%, 27.816.0%, respectively, of net accounts receivable.

 

For the purposes of this description, “sales” refers to the dollar value of orders received from these customers and partners in the period indicated. The sales values do not necessarily equal recognized revenue for these periods due to our revenue recognition policies which require deferral of revenue associated with prepaid software service fees. The loss of one of these resellers would not have a material impact as the Company could take over the end customer relationship.

 

Basic and Diluted Earnings Per Share

 

In accordance with ASC 260, “Earnings Per Share,” the basic income (loss) per common share is computed by dividing the net income (loss) available to common stockholders by the weighted average common shares outstanding during the period. Diluted income (loss) per share reflects per share amounts that would have resulted if diluted potential common stock had been converted to common stock. DilutiveThe company had no dilutive common share equivalents as of SeptemberJune 30, 2022 and December 31, 2021, representing2023, compared to 248,216 of outstanding in-the-money warrants, were included in the computation of diluted net income per share using the Treasury Stock Method.Method during December 31,2022. During the three months ended SeptemberJune 30, 20222023 and 2021,2022, the Company had total common stock equivalents of 3,2000 and 65,2173,200, respectively, which were excluded from the computation of net income per share because they are anti-dilutive.

 

Fair Value of Financial Instruments

 

The Company’s financial instruments consist of cash and cash equivalents, accounts receivable, accounts payable, and accrued expenses. The carrying amount of these financial instruments approximates fair value due to the nature of the accounts and their short-term maturities.

 

9

3. Recently Adopted Accounting Pronouncements

The FASB issues ASUs to amend the authoritative literature in ASC. There have been several ASUs to date, including those above, that amend the original text of ASC. Management believes that those issued to date either (i) provide supplemental guidance, (ii) are technical corrections, (iii) are not applicable to us or (iv) are not expected to have a significant impact our financial statements.

Right-of-use Assets (ROU) and Lease Liabilities

On January 1, 2022, the Company adopted Accounting Standards Update No. 2016-02, Leases (Topic 842) (ASU 2016-02), which establishes ASC 842 and supersedes the lease accounting guidance under ASC 840. The standard generally requires lessees to recognize operating and finance lease liabilities and corresponding right-of-use (ROU) assets on the balance sheet and provide enhanced disclosures on the amount, timing, and uncertainty of cash flows arising from lease arrangements. The Company adopted ASC 842 using the modified retrospective approach. The Company elected the package of practical expedients available for existing contracts, which allowed the Company to carry forward our historical assessments of lease identification, lease classification, and initial direct costs. The Company also elected a policy to not apply the recognition requirements of ASC 842 for short-term leases with a term of 12 months of less

As of January 1, 2022, the effective date, the Company identified one operating lease arrangement relating to the Company’s headquarters facility. The adoption of ASC 842 resulted in a recognition of an ROU asset and lease liability of $73,800 on the Company’s balance sheet relating to the leases as of January 1, 2022. The adoption of the standard did not have a material effect on the Company’s consolidated statements of operations and consolidated statements of cash flows.

Schedule of Operating Lease

       
  September 30,
2022		  December 31,
2021		 
Operating lease:        
Operating lease right-of-use asset $59,200  $         - 
         
Operating lease liability, current portion $10,200  $- 
Operating lease liability, net of current portion  48,600   - 
Total operating lease liabilities $58,800  $- 
         
Weighted-average remaining lease term  1.9 years     
weighted-average discount rate  0.41%    

3.Property and Equipment

 

Property and equipment consisted of the following.

Schedule of Property and Equipment

         
  September 30,  December 31, 
  2022  2021 
       
Equipment $164,100  $164,100 
Furniture and fixtures  1,600   1,600 
         
Property and equipment gross  165,700   165,700 
         
Less: accumulated depreciation  (159,600)  (157,500)
         
Property and equipment net $6,100  $8,200 

  June 30,  December 31, 
  2023  2022 
       
Equipment $162,400  $164,100 
Furniture and fixtures  1,600   1,600 
Property and equipment gross  164,000   165,700 
         
Less: accumulated depreciation  (160,300)  (160,400)
Property and equipment net $3,700  $5,300 

 

Depreciation expense amounted to $2,1001,600 and $8001,300 for the ninesix months ended SeptemberJune 30, 20222023 and 2021,2022, respectively.

 

109
 

4. Stockholders’ Equity

 

Stock-Based Compensation Plans

The following summarizes the stock option activity for the nine months ended September 30, 2022:

Schedule of Share-based Compensation, Stock Options, Activity

        Weighted- 
        Average 
     Weighted-  Remaining 
     Average  Contractual 
     Exercise  Life 
  Options  Price  (Years) 
          
Outstanding at December 31, 2021  4,939  $3.86   1.59 
Granted  -         
Forfeited/cancelled  (1,739)        
Outstanding at September 30, 2022  3,200  $4.27   1.60 
             
Vested and expected to vest at September 30, 2022  3,200  $4.27   1.60 
             
Exercisable at September 30, 2022  3,200  $4.27   1.60 

The following table summarizes information about options outstanding and exercisable as of September 30, 2022:

Schedule of Share-based Compensation, Shares Authorized Under Stock Option Plans, by Exercise Price Range

   Options Outstanding  Options Exercisable 
         Weighted-     Weighted- 
Range of     Average  Average     Average 
Exercise  Number  Remaining  Exercise  Number  Exercise 
Price  of Shares  Life (Years)  Price  of Shares  Price 
                 
$2.00 - 4.00   1,667   2.20  $2.06   1,667  $2.06 
 4.20 - 6.68   1,533   0.94   6.68   1,533   6.68 
     3,200           3,200     

11

Shares of Common Stock Issued

 

During the three and nine-monthsix-month periods ending SeptemberJune 30, 20222023, the Company issued 0 and 149,216 shares and for the same periods ending 2021,2022, the Company did not issue any shares of common stock.

 

Warrants

 

As of SeptemberJune 30, 20222023 and December 31, 2021,2022, the Company had 0 and 248,216 warrants outstanding. TheThere were 149,216 shares of warrants outstanding at Septemberexercised during the three-month periods ending June 30, 2022 are all exercisable at $2023 and the remaining 0.0198,393 and have an expiration dateshares were expired as of were expired on May 20, 2023.

 

5.Sales by Geographical Location

 

Revenue by country for the three and ninesix months ended SeptemberJune 30, 20222023 and 20212022 was as follows:follow :

 

Schedule of Revenue by Country

  2022  2021  2022  2021 
  Three Months Ended  Nine Months Ended 
  2022  2021  2022  2021 
Revenue by Country                
United States $388,900  $379,300  $1,180,000  $1,091,500 
Brazil  256,500   174,600   736,400   600,200 
Japan  53,000   115,800   162,300   298,700 
                 
Other Countries  281,800   249,700   813,300   688,300  
Total $980,200  $919,400   2,892,000   2,678,700 

  2023  2022  2023  2022 
  Three Months Ended  Six Months Ended 
  2023  2022  2023  2022 
Revenue by Country                
United States $441,800   388,900   859,500   779,500 
Brazil  291,100   256,500   573,100   467,500 
Japan  81,200   53,000   175,200   125,900 
Other Countries  244,300   263,200   493,700   538,900 
Total $1,058,400  $961,600   2,101,500   1,911,800 

 

6.Commitments and Contingencies

 

Profit Sharing Plans

 

The Company has adopted a 401(k) plan to provide retirement benefits for employees under which the Company makes discretionary matching contributions. During the threesix months ended SeptemberJune 30, 20222023 and 2021,2022, the Company contributed a total of $600 each of these same periods. During the nine months ended September 30, 2022 and 2021, the Company contributed a total of $16,0009,400 and $18,00015,400, respectively.

 

Contingencies

 

During the ordinary course of business, the Company is subject to various potential claims and litigation. Management is not aware of any outstanding litigation which would have a significant impact on the Company’s financial statements.

 

Lease

 

Supplemental balance sheet information related to leases as of June 30, 2023 is as follows: 

Schedule of Operating Leases Future Minimum Lease Payments

     
Future minimum lease payments:    
2023  15,500 
2024  20,700 
Thereafter  - 
Total future minimum lease payments $36,200 
Less: Lease imputed interest  200 
Total $36,000 

The Company leases its’ headquarters office in Concord, New Hampshire under a thirty-six-month noncancelable operating lease agreement which will expire on August 31, 2024. The terms of certain lease agreement provide for increasing rental payments at fixed twelve-month intervals.

 

Supplemental balance sheet information related to leases as of September 30, 2022 is as follows:

Schedule of Operating Leases Future Minimum Lease Payments

Future minimum lease payments:   
2022 $7,700 
2023  30,700 
2024  20,700 
Total future minimum lease payments $59,100 
Less: Lease imputed interest  300 
Total $58,800 

1210
 

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

Forward-Looking Information

 

This report includes, in addition to historical information, “forward-looking statements”. All statements other than statements of historical fact we make in this report are forward-looking statements. In particular, the statements regarding industry prospects and our expectations regarding future results of operations or financial position (including those described in this Management’s Discussion and Analysis of Financial Condition and Results of Operations) are forward-looking statements. Such statements are based on management’s current expectations and are subject to a number of uncertainties and risks that could cause actual results to differ significantly from those described in the forward-looking statements. Factors that may cause such a difference include the following:

 

 ●the success of products depends on a number of factors including market acceptance and our ability to manage the risks associated with product introduction;
 ●local, regional, national and international economic conditions and events, and the impact they may have on us and our customers;
 ●our revenue could be adversely impacted if any of our significant customers reduces its order levels or fails to order during a reporting period; customer demand is based on many factors out of our control;
 ●as a result of the new revenue recognition standards, if any significant end user customer or reseller substantially changes its order level, or fails to order during the reporting period, whether the order is placed directly with us or through one of our non-stocking resellers, our software licenses revenue could be materially impacted; and
 ●other factors, including, but not limited to, those set forth under Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2021 which was filed with the Securities and Exchange Commission (the “SEC”) on March 31, 2022, and in other documents we have filed with the SEC.

 

Statements included in this report are based upon information known to us as of the date that this report is filed with the SEC, and we assume no obligation to update or alter our forward-looking statements made in this report, whether as a result of new information, future events or otherwise, except as otherwise required by applicable federal securities laws.

 

Introduction

 

hopTo, Inc., through its wholly owned subsidiary GraphOn Corporation (collectively, “we”, “us,” “our” or the “Company”), is a developer of application publishing software which includes application virtualization software and cloud computing software for multiple computer operating systems including Windows, UNIX and several Linux-based variants. Our application publishing software solutions are sold under the brand name GO-Global, which is our sole revenue source. GO-Global is an application access solution for use by independent software vendors (“ISVs”), corporate enterprises, governmental and educational institutions, and others who wish to take advantage of cross-platform remote access and Web-enabled access to their existing software applications, as well as those who are deploying secure, private cloud environments.

 

Critical Accounting Policies

 

We believe that several accounting policies are important to understanding our historical and future performance. We refer to these policies as “critical” because these specific areas require us to make judgments and estimates about matters that are uncertain at the time when we make the estimates. Actual results may differ from these estimates. For a summary of our critical accounting policies, please refer to our 20212022 10-K Report and Note 2 to our unaudited consolidated financial Statements included under Item 1 – Financial Statements in this Form 10-Q.

 

1311
 

 

Results of Operations for the Three-Month Periods Ended SeptemberJune 30, 20222023 and 20212022

 

The following are the results of our operations for the three months ended SeptemberJune 30, 20222023 as compared to the three months ended SeptemberJune 30, 2021.2022.

 

  For the Three Months Ended    
  June 30,  June 30,    
  2023  2022  $ Change 
  (unaudited)  (unaudited)    
          
Revenues $1,058,400  $961,600  $96,800 
Cost of revenues  78,800   48,800   30,000 
Gross profit  979,600   912,800   66,800 
             
Operating expenses:            
Selling and marketing  357,500   315,900   41,600 
General and administrative  382,400   165,900   216,500 
Research and development  416,300   380,800   35,500 
Total operating expenses  1,156,200   862,600   293,600 
             
Income from operations  (176,600)  50,200   (226,800)
             
Other income (loss):            
Unrealized gain on marketable securities  -   (29,800)  29,900 
Interest and other income  42,000   900   41,000 
Other income (loss)  42,000   (28,900)  70,900 
Income (loss) before provision for income taxes  (134,600)  21,300   (155,900)
Net income (loss) $(134,600) $21,300  $(155,900)

 

  For the Three Months Ended    
  September 30,  September 30,    
  2022  2021  $ Change 
  (unaudited)  (unaudited)    
          
Revenues $980,200  $919,400  $60,800
Cost of revenues  49,800   36,100   13,700 
Gross profit  930,400   883,300   47,100
             
Operating expenses:            
Selling and marketing  248,600   152,000   96,600 
General and administrative  429,900   162,400   267,500 
Research and development  379,000   354,300   24,700 
Total operating expenses  1,057,500   668,700   388,800 
             
Income from operations  (127,100)  214,600   (341,700)
             
Other income (loss):            
Unrealized gain on marketable securities  (17,800)  146,800   (164,600)
Interest and other income  500   -   500 
Other income (loss)  (17,300)  146,800   (164,100)
Income before provision for income taxes  (144,400)  361,400   (505,800)
Net income (loss) $(144,400) $361,400  $(505,800)

Revenues

 

Our software revenue is entirely related to our GO-Global product line, and historically has been primarily derived from product licensing fees and service fees from maintenance contracts. The majority of this revenue has been earned, and continues to be earned, from a limited number of significant customers, most of whom are resellers. Many of our resellers purchase software licenses that they hold in inventory until they are resold to the ultimate end user (a “stocking reseller”).

 

When a software license is sold directly to an end user by us, or by one of our resellers who does not stock licenses into inventory, revenue is recognized immediately upon shipment, assuming all other criteria for revenue recognition are met. Consequently, if any significant end user customer substantially changes its order level, or fails to order during the reporting period, whether the order is placed directly with us or through one of our non-stocking resellers, our software licenses revenue could be materially impacted.

 

Almost all stocking resellers maintain inventories of our Windows products; few stocking resellers maintain inventories of our UNIX products.

 

1412
 

 

The following is a summary of our revenues by category for the three months ended SeptemberJune 30, 20222023 and 2021.2022.

 

 For the Three Months Ended     For the Three Months Ended    
 September 30, September 30,     June 30, June 30,    
 2022 2021 $ Change  2023 2022 $ Change 
Revenue                        
Software Licenses                        
Windows $134,000  $151,700  $(17,700) $94,000  $122,400  $(28,400)
UNIX/Linux  1,500   15,900   (14,400)  4,400   9,600   (5,200)
Total  135,500   167,600   (32,100)  98,400   132,000   (33,600)
                        
Software Service Fees                        
Windows  795,200   684,500   110,700   903,000   776,600   126,400 
UNIX/Linux  28,600   45,600   (17,000)  27,100   32,000   (4,900)
Total  823,800   730,100   93,700   930,100   808,600   121,500 
                        
Other  20,900   21,700   (800)  29,900   21,000   8,900 
 $980,200  $919,400  $60,800 $1,058,400  $961,600  $96,800 

 

Software Licenses

 

Windows software licenses revenue decreased by $17,000$28,400 or 11.7%23.2% to $134,000$94.000 during the three months ended SeptemberJune 30, 2022,2023, from $151,700$122,400 for the same period in 2021.2022. The decrease was primarily due to lower level of new standard Window licenses orders sold for the three months ended September 30, 2022.June 30,2023.

 

Software licenses revenue from our UNIX/Linux products decreased by $14,100$5,200 or 90.6%54.2% to $1,500$4.400 for the three months ended SeptemberJune 30, 20222023 from $15,900$9,600 for the same periods of 2021.2022. The decrease was primarily due to lower revenue from stocking order licenses and lower standard license sale.during the three months ended June 30, 2023

 

Software Service Fees

 

Service fees attributable to our Windows product service increased by $110,700$126,400 or 16.2%16.3% to $795,200$903,000 during three months ended SeptemberJune 30, 2022,2023, from $684,500$776,600 for the same period in 2021.2022. The increase was due to an increase in subscriptions and maintenance renewals from existing customers.customers and higher subscription license orders.

 

Service fees revenue attributable to our UNIX products decreased by $17,000$4,900 or 37.3%15.3% to $28,600$27,100 during the three months ended SeptemberJune 30, 2022,2023, from $45,600$32,000 for the same period in 2021.2022. The decrease was primarily the result of the lower level of UNIX product sales throughout the prior year and an expiration of a long-term maintenance contract.

 

Cost of Revenues

 

Cost of revenue is comprised primarily of software service costs, which represent the costs of customer service. Also included in cost of revenue are software product costs, which are primarily comprised of the amortization of capitalized software development costs and costs associated with licenses to third party software included in our product offerings, and the required import tax withholdings from Brazil resellers. We incur no significant shipping or packaging costs as virtually all of our deliveries are made via electronic means over the Internet.

 

Cost of revenue for the three months ended SeptemberJune 30, 20222023 increased by $13,700,$30,000, or 38.0%61.5%, to $49,800$78,800 for the three months ended SeptemberJune 30, 20222023 from $36,100$48,800 for the same period in 2021.2022. Cost of revenue 5.6%7.4% of total revenue for the three months ended SeptemberJune 30, 20222023 and 5.1% for the same period in 2021.2022. The increase was due to some increase in personnel costs and combined with import tax withholdings associated with higher revenue from Brazil resellers for the three-month period ended SeptemberJune 30, 2022.2023.

 

Selling and Marketing Expenses

 

Selling and marketing expenses primarily consisted of employee, outside services and travel and entertainment expenses.

 

Selling and marketing expenses increased by $96,600,$41,600, or 63.3%13.2%, to $248,600for$357,500 for the three months ended SeptemberJune 30, 20222023 from $152,000$315,900 for the same period in 2021.2022. Selling and marketing expenses represented approximately 25.4%33.8% and 16.5%32.9% of total revenue for the three months ended SeptemberJune 30 2023 and 2022, and 2021, respectively.

The increase in selling and marketing expenses was primarily due to an increase in consulting services as we continue to expand our sales and marketing initiatives for the three months ended SeptemberJune 30, 2022.2023.

 

1513
 

General and Administrative Expenses

 

General and administrative expenses primarily consist of employee costs, legal, accounting, other professional services (including those related to our patents), rent, travel and entertainment and insurance. Certain costs associated with being a publicly held corporation are also included in general and administrative expenses, as well as bad debt expense.

 

General and administrative expenses decreasedincreased by $267,500,$216,500, or 164.7%130.5%, to $429,900$382,400 for the three months ended SeptemberJune 30, 20222023 from $162,400$165,900 for the same period in 2021.2022. General and administrative expenses represented approximately 43.9%36.1% and 17.7%17.3% of total revenue for the three months ended SeptemberJune 30, 20222023 and 2021,2022, respectively.

 

The increase in general and administrative expense was primarily due increase into employee related expenses and board of director fees granted during the three months ended SeptemberJune 30, 2022, that were not paid in the prior year period.2023.

 

Research and Development Expenses

 

Research and development expenses consist primarily of employee costs, payments to contract programmers, software subscriptions, travel and entertainment for our engineers, and all rent for our leased engineering facilities.

 

Research and development expenses increased by $24,700,$35,500, or 7.0%9.3% to $379,000$416,300 for the three months ended SeptemberJune 30, 20222023 from $354,300$380,800 for the same period in 2021.2022. This represented approximately 38.7%39.3% and 38.5%39.6% of total revenue for the three months ended SeptemberJune 30, 20222023 and 2021,2022, respectively.

 

The increase in research and development expense was primarily due to an increase in wagespersonnel and software subscriptions during the three months ended SeptemberJune 30, 2022.2023.

 

Other Income

 

Other income decreasedincreased by $164,100$70,900 for the three months ended SeptemberJune 30, 2022,2023, compared to the same periods in 2021.2022. The decreaseincrease primarily due to a decline in the value of marketable securities relative tointerest earned for the three months ended September 30,2021.June 30,2023, compared to an unrealized loss from a marketable securities account during the same periods in 2022.

 

Results of Operations for the Nine-MonthSix-Month Periods Ended SeptemberJune 30, 20222023 and 20212022

 

 For the Nine Months Ended     For the Six Months Ended    
 September 30, September 30,     June 30, June 30,    
 2022 2021 $ Change  2023  2022  $ Change 
 (Unaudited) (Unaudited)    (Unaudited) (Unaudited)   
              
Revenues $2,892,000  $2,678,700  $213,300  $2,101,500  $1,911,800  $189,700 
Cost of revenues  176,000   125,800   50,200   154,600   126,200   28,400 
Gross profit  2,716,000   2,552,900   163,100   1,946,900   1,785,600   161,300 
                        
Operating expenses:                        
Selling and marketing  687,600   448,100   239,500   668,400   439,000   229,400 
General and administrative  800,700   576,800   223,900   627,500   370,800   256,700 
Research and development  1,142,500   1,081,900   60,600   812,900   763,500   49,400 
Total operating expenses  2,630,800   2,106,800   524,000   2,108,800   1,573,300   535,500 
                        
Income from operations  85,200  446,100   (360,900)  (161,900)  212,300   (374,200)
                        
Other income:                        
Unrealized gain on marketable securities  (103,300)  173,400   (276,700)
Realized gain on marketable securities  17,700   (85,500)  103,200 
Interest and other income  1,500   269,800   (268,300)  44,200   1,000   43,200 
  (101,800)  443,200   (545,000)  61,900   (84,500)  146,400 
Income before provision for income taxes  (16,600)  889,300   (905,900)
Income (loss) before provision for income taxes  (100,000)  127,800   (227,800)
Provision for income taxes  -   -   -   -   -   - 
Net income (loss) $(16,600) $889,300  $(905,900) $(100,000) $127,800  $(227,800)

 

1614
 

Revenues

 

The following is a summary of our revenues by category for the ninesix months ended SeptemberJune 30, 20222023 and 2021.2022.

 

 For the Nine Months Ended     For the Six Months Ended    
 September 30, September 30,     June 30, June 30,    
 2022 2021 $ Change  2023  2022  $ Change 
Revenue                   
Software Licenses                        
Windows $433,500  $502,900  $(69,400) $222,700  $299,500  $(76,800)
UNIX/Linux  15,500   38,900   (23,400)  13,900   14,000   (100)
Total  449,000   541,800   (92,800)  236,600   313,500   (76,900)
                        
Software Service Fees                        
Windows  2,286,400   1,932,300   354,100   1,760,100   1,491,200   268,900 
UNIX/Linux  93,700   139,700   (46,000)  53,900   65,100   (11,200)
Total  2,380,100   2,072,000   308,100   1,814,000   1,556,300   257,700 
                        
Other  62,900   64,900   (2,000)  50,900   42,000   8,900 
 $2,892,000  $2,678,700  $213,300  $2,101,500  $1,911,800  $189,700 

 

Software Licenses

 

Windows software licenses revenue decreased by $69,400$76,800 or 13.8%25.6% to $433,500$222,700 during the ninesix months ended SeptemberJune 30, 2022,2023, from $502,900$299,500 for the same period in 2021.2022. The decrease for the ninesix months ended September 30,2022June 30,2023 was due to lower license orders from standard licenses, offset by increase of stocking orders.licenses.

 

Software licenses revenue from our UNIX/Linux products decreased by $23,400$100 or 60.2%0.7% to $15,500$13,900 for the ninesix months ended SeptemberJune 30, 20222023 from $38,900$14,000 for the same period of 2021. The decrease was primarily due to lower revenue from standard order licenses during the nine months ended September 30,2022.2022.

 

Software Service Fees

 

Service fees attributable to our Windows product service increased by $354,100$268,800 or 18.3%18.0% to $2,286,400$1,760,100 during the ninesix months ended SeptemberJune 30, 2022,2023, from $1,932,300$1,491,200 for the same period in 2021.2022. The increase was due to an increase in maintenance renewals from existing customers and higher subscription license orders.

 

Service fees revenue attributable to our UNIX products decreased by $46,000$11,200 or 32.9%17.2% to $93,700$53.900 during the ninesix months ended SeptemberJune 30, 2022,2023, from $139,700$65,100 for the same period in 2021.2022. The decrease was primarily the result of the lower level of UNIX product sales throughout the prior year and an expiration of a long-term maintenance contract.

 

Other

 

Other revenue consists of private labeling fees, professional services, and other non-recurring revenues. Other revenue decreasedincreased by $2,000$8,900 or 3.1%21,2% for the ninesix months ended SeptemberJune 30, 2022,2023, compared to the same period in 2021.2022. The increase was primarily due to an increase in professional service revenue.

 

Cost of Revenues

 

Cost of revenue is comprised primarily of software service costs, which represent the costs of customer service. Also included in cost of revenue are software product costs, which are primarily comprised of the amortization of capitalized software development costs and costs associated with licenses to third party software included in our product offerings, and the required import tax withholdings from Brazil resellers. We incur no significant shipping or packaging costs as virtually all of our deliveries are made via electronic means over the Internet.

 

Cost of revenue for the ninesix months ended SeptemberJune 30, 2022 increased by $50,200,$28,400, or 39.9%22.5%, to $176,000$154,600 for the ninesix months ended SeptemberJune 30, 20222023 from $125,800$126,200 for the same period in 2021.2022. Cost of revenue represented 6.3%7.4% and 4.7%6.6% of total revenue for the ninesix months ended SeptemberJune 30, 20222023 and 2021,2022, respectively. The primarily increase was due to increase in personnel expense and import tax withholdings associated with higher revenue from Brazil resellers for the nine-monthsix-month period ended SeptemberJune 30, 2022.2023.

 

1715
 

 

Selling and Marketing Expenses

 

Selling and marketing expenses primarily consisted of employee, outside services and travel and entertainment expenses.

 

Selling and marketing expenses increased by $239,500,$229,400, or 53.4%52.3%, to $687,600$668,400 for the ninesix months ended SeptemberJune 30, 20222023 from $448,100$439,000 for the same period in 2021.2022. Selling and marketing expenses represented approximately 23.8%31.8% and 16.7%23.5% of total revenue for the ninesix months ended SeptemberJune 2023 and 2022, and 2021, respectively. The increase in selling and marketing expenses was due to an increase in employeepersonnel related expenses and consulting services as we continue to expand our sales and marketing initiatives.

 

General and Administrative Expenses

 

General and administrative expenses primarily consist of employee costs, legal, accounting, board fees, other professional services (including those related to our patents), rent, travel and entertainment and insurance. Certain costs associated with being a publicly held corporation are also included in general and administrative expenses, as well as bad debt expense.

 

General and administrative expenses increaseddecreased by $223,900,$256,700, or 38.8%69.2%, to $800,700$627,500 for the ninesix months ended SeptemberJune 30, 20222023 from $576,800$370,800 for the same period in 2021.2022. General and administrative expenses represented approximately 27.7%29.9% and 21.5%19.4% of total revenue for the ninesix months ended SeptemberJune 30, 20222023 and 2021,2022, respectively.

 

The increase in general and administrative expense was primarily due to increase of employeein personnel related fees and board of director fees paid that were not paid in the prior year period.expenses.

 

Research and Development Expenses

 

Research and development expenses consist primarily of employee costs, payments to contract programmers, software subscriptions, travel and entertainment for our engineers, and all rent for our leased engineering facilities.

 

Research and development expenses increased by $60,600,$49,400 or 5.6%6.5% to $1,142,500$812,900 for the ninesix months ended SeptemberJune 30, 20222023 from $1,081,900$763,500 for the same period in 2021.2022. This represented approximately 39.5%38.7% and 40.4%39.9% of total revenue for the ninesix months ended SeptemberJune 30, 20222023 and 2021,2022, respectively.

 

The increase in research and development expense was primarily due to increase in wagespersonnel related expenses and software subscriptions.

 

Other Income (Expense)

 

Other income decreasedincreased by $545,000$146,400 for the ninesix months ended SeptemberJune 30, 2022,2023, compare to the same periods in 20212022 was primarily related to income earned for the six month ended June 30,2023 while during prior year for the same periods, the Company had unrealized losses from the sale of certain patents and unrealized gain ofa marketable securities during the prior year.account.

 

Liquidity and Capital Resources

 

As of SeptemberJune 30, 2022,2023, we had cash of $4,821,400$5,627,700 and a working capital position of $4,207,600$4,148,000 as compared to cash of $4,755,300$5,037,300 and a working capital position of $4,316,500$4,307,400 at December 31, 2021.2022. The increase in cash as of SeptemberJune 30, 20222023 was primarily the result of cash provided by operations during the period.and cash provided by investing activities. We expect our results from operations and capital resources will be sufficient to fund our operations for at least the next 12 months.

 

The following is a summary of our cash flows from operating, investing and financing activities for the ninesix months ended SeptemberJune 30, 20222023 and 2021.2022.

 

 For the Nine Months Ended  For the Three Months Ended 
 September 30, September 30,  June 30, June 30, 
 2022  2021  2023  2022 
Cash flows provided by operating activities $76,200  $208,800  $254,000  $462,000 
Cash flows used in investing activities $(10,100) $(24,100)
Cash flows provided (used) by investing activities $336,400  $(10,100)
Cash flows provided by financing activities $-  $-  $-  $- 

 

Net cash flows provided by operating activities for the ninesix months ended SeptemberJune 30, 20222023 was $76,200$254,000 while net cash flows provided for the nine monthssame periods ended September 30,2021June 30,2022 was $208,800.$462,000. The decrease in cash flows used inprovided by operating activities is the result of annet loss, increase in accounts receivable and deferred revenue and offset by decrease in prepaid assetsaccrued expenses and change in value in marketable securities compared to the prior year period.

 

The Company had net cash flows of $10,100 used in$336,400 provided by investing activities from the proceeds of the sale of marketable securities for the ninesix months ended SeptemberJune 30, 2022,2023, while the Company had net cash flowsoutflows of $24,100$10,100 used in marketable securities for the same periods ended SeptemberJune 30, 2021. The Company expended $10,100 on the repurchase of 24,333 shares of treasury stock during the nine months ended September 30,2022.2022.

 

1816
 

ITEM 3. Quantitative and Qualitative Disclosures About Market Risk

 

Not applicable.

 

ITEM 4. Controls and Procedures

 

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934) as of the end of the period covered by this report. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of SeptemberJune 30, 2022.2023.

 

There has not been any change in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) during the quarter ended SeptemberJune 30, 20222023 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

PART II. OTHER INFORMATION

 

ITEM 1. Legal Proceedings

 

Not applicable

 

ITEM 1A. Risk Factors

 

There have been no material changes in our risk factors from those set forth under Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2021,2022, which was filed with the Securities and Exchange Commission on March 31, 2022.April 14, 2023.

The coronavirus pandemic could adversely affect our results of operations.

The recent coronavirus pandemic throughout the United States and the world has resulted in the United States and other countries halting or sharply curtailing the movement of people, goods and services. All of this has caused extended shutdowns of businesses and the prolonged economic impact remains uncertain. At this point, we believe the conditions will have a material adverse effect on our business but given the rapidly changing developments we cannot accurately predict what effects these conditions will have on our business, which will depend on, among other factors, the ultimate geographic spread of the virus, the duration of the outbreak and travel restrictions and business closures imposed by the United States and various other governments.

 

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

None.

 

ITEM 3. Defaults Upon Senior Securities

 

Not applicable

 

ITEM 4. Mine Safety Disclosures

 

Not applicable

 

ITEM 5. Exhibits

 

Exhibit NumberExhibit Description
31 Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32 Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS Inline XBRL Instance Document
101.SCH Inline XBRL Taxonomy Extension Schema
101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase
101.DEF Inline XBRL Taxonomy Extension Definition Linkbase
101.LAB Inline XBRL Taxonomy Extension Label Linkbase
101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase
104 Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

1917
 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

 hopTo Inc.
 (Registrant)
   
 Date:November 14, 2022August 21, 2023
   
 By:/s/ Jonathon R. Skeels
  Jonathon R. Skeels
  Chief Executive Officer (Principal Executive Officer) and
  Interim Chief Financial Officer
  (Principal Financial Officer and
  Principal Accounting Officer)

 

2018