Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2019 | May 15, 2019 | |
Document And Entity Information | ||
Entity Registrant Name | hopTo Inc. | |
Entity Central Index Key | 0001021435 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2019 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business Flag | true | |
Entity Emerging Growth Company | false | |
Entity Ex Transition Period | false | |
Entity Common Stock, Shares Outstanding | 9,804,400 | |
Trading Symbol | HPTO | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2019 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Mar. 31, 2019 | Dec. 31, 2018 |
Current assets | ||
Cash and cash equivalents | $ 1,002,700 | $ 892,500 |
Accounts receivable, net | 395,300 | 210,800 |
Prepaid expenses and other current assets | 69,100 | 79,000 |
Total current assets | 1,467,100 | 1,182,300 |
Property and equipment, net | 300 | 400 |
Other assets | 17,800 | 17,800 |
Total assets | 1,485,200 | 1,200,500 |
Current liabilities | ||
Accounts payable | 279,000 | 318,700 |
Accrued expenses | 126,400 | 121,600 |
Accrued wages | 173,600 | 145,800 |
Deposit liability | 12,100 | |
Deferred revenue | 1,331,500 | 1,300,300 |
Total current liabilities | 1,910,500 | 1,898,500 |
Long-term liabilities | ||
Deferred revenue | 456,000 | 491,500 |
Total liabilities | 2,366,500 | 2,390,000 |
Commitments and contingencies (Note 6) | ||
Stockholders' deficit | ||
Preferred stock, $0.01 par value, 5,000,000 shares authorized, no shares issued and outstanding as of March 31, 2019 (unaudited) or December 31, 2018 | ||
Common stock, $0.0001 par value, 195,000,000 shares authorized, 9,804,400 shares issued and outstanding as of March 31, 2019 (unaudited) and December 31, 2018, respectively | 1,000 | 1,000 |
Additional paid-in capital | 79,354,500 | 79,298,200 |
Accumulated deficit | (80,236,800) | (80,488,700) |
Total stockholders' deficit | (881,300) | (1,189,500) |
Total liabilities and stockholders' deficit | $ 1,485,200 | $ 1,200,500 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Mar. 31, 2019 | Dec. 31, 2018 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | ||
Preferred stock, shares outstanding | ||
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 195,000,000 | 195,000,000 |
Common stock, shares issued | 9,804,400 | 9,804,400 |
Common stock, shares outstanding | 9,804,400 | 9,804,400 |
Consolidated Statements of Oper
Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Income Statement [Abstract] | ||
Revenues | $ 1,053,800 | $ 822,300 |
Cost of revenues | 29,200 | 28,800 |
Gross profit | 1,024,600 | 793,500 |
Operating expenses: | ||
Selling and marketing | 117,000 | 101,600 |
General and administrative | 295,000 | 305,200 |
Research and development | 374,500 | 428,500 |
Total operating expenses | 786,500 | 835,300 |
Income (loss) from operations | 238,100 | (41,800) |
Other income (expense) | 13,800 | (800) |
Income (loss) before provision for income taxes | 251,900 | (42,600) |
Provision for income taxes | 1,000 | |
Net income (loss) | $ 251,900 | $ (43,600) |
Net income (loss) per share, basic | $ 0.03 | $ 0 |
Net income (loss) per share, diluted | $ 0.02 | $ 0 |
Weighted average number of common shares outstanding | ||
Basic | 9,804,400 | 9,804,400 |
Diluted | 10,301,148 | 9,804,400 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Deficit (Unaudited) - USD ($) | Common Stock [Member] | Additional Paid-In Capital [Member] | Accumulated Deficit [Member] | Total |
Beginning balance at Dec. 31, 2017 | $ 1,000 | $ 78,539,300 | $ (81,849,200) | $ (3,308,900) |
Beginning balance, shares at Dec. 31, 2017 | 9,804,400 | |||
Cumulative effect from change of accounting principal | 1,391,900 | 1,391,900 | ||
Net (Income) loss | (43,600) | (43,600) | ||
Ending balance at Mar. 31, 2018 | $ 1,000 | 78,539,300 | (80,500,900) | (1,960,600) |
Ending balance, shares at Mar. 31, 2018 | 9,804,400 | |||
Beginning balance at Dec. 31, 2018 | $ 1,000 | 79,298,200 | (80,488,700) | (1,189,500) |
Beginning balance, shares at Dec. 31, 2018 | 9,804,400 | |||
Contributed services | 56,300 | 56,300 | ||
Net (Income) loss | 251,900 | 251,900 | ||
Ending balance at Mar. 31, 2019 | $ 1,000 | $ 79,354,500 | $ (80,236,800) | $ (881,300) |
Ending balance, shares at Mar. 31, 2019 | 9,804,400 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Cash flows from operating activities | ||
Net income (loss) | $ 251,900 | $ (43,600) |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||
Depreciation | 100 | 9,000 |
Contributed services | 56,300 | |
Changes in allowance for doubtful accounts | 15,000 | (4,400) |
Loss on disposal of property and equipment | 700 | |
Changes in deferred rent | (17,000) | |
Changes in operating assets and liabilities: | ||
Accounts receivable | (199,500) | 195,200 |
Prepaid expenses and other current assets | 9,900 | (22,300) |
Accounts payable and accrued expenses | (19,200) | 85,700 |
Deferred revenue | (4,300) | (59,700) |
Net cash provided by operating activities | 110,200 | 143,600 |
Cash flows from investing activities | ||
Cash flows from financing activities | ||
Net change in cash | 110,200 | 143,600 |
Cash, beginning of the period | 892,500 | 1,015,400 |
Cash, end of the period | 1,002,700 | 1,159,000 |
Supplemental disclosure of cash flow information: | ||
Interest paid | ||
Income taxes paid |
Organization
Organization | 3 Months Ended |
Mar. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization | 1. Organization hopTo Inc., through subsidiaries (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, 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. |
Significant Accounting Policies
Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2019 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies | 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, 2018 which was filed with the SEC on April 1, 2019 (“2018 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, 2019 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 stock-based compensation expense, the allowance for doubtful accounts, depreciation of long-lived assets, and accruals of liabilities. Liquidity The Company has incurred significant net losses since inception. As of March 31, 2019, we had an accumulated deficit of $80,236,800 and a working capital deficit of $443,400, which includes deferred revenue of $1,331,500. Our ability to continue to generate net income and positive cash flows from operations is dependent on our ability to continue to generate revenue from our legacy GO-Global business, which in turn is subject to a variety of risks. The Company believes its current cash balances coupled with anticipated cash flow from operating activities will be sufficient to meet its working capital requirements for at least one year from the date of the issuance of the accompanying financial statements. The Company continues to control its cash expenses as a percentage of expected revenue on an annual basis and thus may use its cash balances in the short-term to invest in revenue growth. Based on current internal projections, the Company believes it has and/or will generate sufficient cash for its operational needs, for at least one year from the date of issuance of the accompanying financial statements. Management is focused on growing the Company’s existing product offering, as well as its customer base, to increase its revenues. The Company cannot give assurance that it can increase its cash balances or limit its cash consumption and thus maintain sufficient cash balances for its planned operations or future acquisitions. Future business demands may lead to cash utilization at levels greater than recently experienced. The Company may need to raise additional capital in the future. However, the Company cannot assure that it will be able to raise additional capital on acceptable terms, or at all. Subject to the foregoing, management believes that the Company has sufficient capital and liquidity to fund its operations for at least one year from the date of issuance of the accompanying financial statements. Revenue Recognition The Company markets and licenses its products indirectly through channel distributors, independent software vendors (“ISVs”), value-added resellers (“VARs”) (collectively, “resellers”) and directly to 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. The following is a summary of how the Company recognizes revenue for its different products and 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 Company portal. We recognize revenue upon delivery of these licenses. For stocking resellers who purchase licenses through inventory stocking orders with the intent to resell to an end-user, revenue is recognized when the resellers’ accounts have been credited, at their discretion, for the number of licenses purchased. ● Service Revenue The Company has maintenance contracts with certain of its customers. Revenue from maintenance contracts is recognized ratably over the related contract period, which generally ranges from one to five years. 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. The Company had no cash equivalents as of March 31, 2019 (unaudited) or December 31, 2018. 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 March 31, 2019 and December 31, 2018, the allowance for doubtful accounts totaled $18,600 and $3,600, respectively. Concentration of Credit Risk For the three months ended March 31, 2019, the Company had 3 customers comprising 24.9%, 14.6% and 11.0%, respectively, of total revenues. For the three months ended March 31, 2018, the Company had 2 customers comprising 14.8% and 14.2%, respectively, of total revenues. A loss of one of these customers could potentially have a significant negative impact on the Company’s financial statements. As of March 31, 2019, the Company has 2 customers comprising 56.5% and 15.9%, respectively, of net accounts receivable. As of December 31, 2018, the Company has 3 customers comprising 32.1%, 15.4% and 10.8%, respectively, of net accounts receivable. 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 reflect per share amounts that would have resulted if diluted potential common stock had been converted to common stock. Dilutive common share equivalents as of March 31, 2019, representing 511,801 of outstanding in-the-money warrants, were included in the computation of diluted net income per share using the Treasury Stock Method. During the three months ended March 31, 2019 and 2018, the Company had total common stock equivalents of 106,077 and 1,012,619, respectively, which were excluded from the computation of net income (loss) 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. Recently Adopted Accounting Pronouncements Leases In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-02, “Leases (Topic 842),” which requires lessees to recognize a right-of-use asset and a lease liability for most leases on the balance sheet as well as other qualitative and quantitative disclosures. ASU 2016-02 is to be applied using a modified retrospective method and was effective for the Company on January 1, 2019. In July 2018, the FASB issued ASU 2018-11, “Leases (Topic 842),” which provides an optional transition method allowing entities to recognize a cumulative-effect adjustment to the opening balance of stockholders’ equity in the period of adoption, with no restatement of comparative prior periods required. The Company adopted the standard using this optional transition method. The Company also made an accounting policy to exclude leases with an initial term of 12 months or less from the balance sheet as permitted under the new guidance. The Company assessed the impact that the new lease recognition standard had on its consolidated financial statements. As of the adoption date of January 1, 2019, the Company has only one lease, which was for its office space it leases under a month-to-month arrangement for a monthly amount of $4,000, which can be cancelled at any time by either party with a six-month advance notice. As management has elected a policy to exclude leases with an initial term of 12 months of less from the balance sheet presentation required under Topic 842, the office lease has been excluded from balance sheet presentation as it has an original term of 12 months or less. The rent associated with the lease continues to be expensed as incurred. Rent expense for the three months ended March 31, 2019 and 2018, amounted to $12,000 and $12,000, respectively. |
Property and Equipment
Property and Equipment | 3 Months Ended |
Mar. 31, 2019 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | 3. Property and Equipment Property and equipment consisted of the following. March 31, 2019 December 31, 2018 (Unaudited) Equipment $ 154,300 $ 154,300 Furniture and fixtures 1,600 1,600 155,900 155,900 Less: accumulated depreciation (155,600 ) (155,500 ) $ 300 $ 400 Depreciation expense amounted to $100 and $9,000 for the three months ended March 31, 2019 and 2018, respectively. |
Stockholders' Equity
Stockholders' Equity | 3 Months Ended |
Mar. 31, 2019 | |
Equity [Abstract] | |
Stockholders' Equity | 4. Stockholders’ Equity Stock-Based Compensation Plans In November 2012, the Company’s 2012 Equity Incentive Plan (the “12 Plan”) was approved by the stockholders. Pursuant to the terms of the 12 Plan, stock options, stock appreciation rights, restricted stock and restricted stock units (sometimes referred to individually or collectively as “awards”) may be granted to officers and other employees, non-employee directors and independent consultants and advisors who render services to the Company. The Company is authorized to issue options to purchase up to 643,797 shares of common stock, stock appreciation rights, or restricted stock in accordance with the terms of the 12 Plan. In the case of a restricted stock award, the entire number of shares subject to such award would be issued at the time of the grant and subject to vesting provisions based on time or other conditions specified by the Board or an authorized committee of the Board. For awards based on time, should the grantee’s service to the Company end before full vesting occurred, all unvested shares would be forfeited and returned to the Company. In the case of awards granted with vesting provisions based on specific performance conditions, if those conditions were not met, then all shares would be forfeited and returned to the Company. Until forfeited, all shares issued under a restricted stock award would be considered outstanding for dividend, voting and other purposes. Under the 12 Plan, the exercise price of non-qualified stock options granted is to be no less than 100% of the fair market value of the Company’s common stock on the date the option is granted. The exercise price of incentive stock options granted is to be no less than 100% of the fair market value of the Company’s common stock on the date the option is granted provided, however, that if the recipient of the incentive stock option owns greater than 10% of the voting power of all shares of the Company’s capital stock then the exercise price will be no less than 110% of the fair market value of the Company’s common stock on the date the option is granted. The purchase price of the restricted stock issued under the 12 Plan shall also not be less than 100% of the fair market value of the Company’s common stock on the date the restricted stock is granted. All options granted under the 12 Plan are immediately exercisable by the optionee; however, there is a vesting period for the options. The options (and the shares of common stock issuable upon exercise of such options) vest, ratably, over a 33-month period; however, no options (and the underlying shares of common stock) vest until after three months from the date of the option grant. The exercise price is immediately due upon exercise of the option. The maximum term of options issued under the 12 Plan is ten years. Shares issued upon exercise of options are subject to the Company’s repurchase, which right lapses as the shares vest. The 12 Plan will terminate no later than November 7, 2022. As of March 31, 2019, 411,593 shares of common stock remained available for issuance under the 12 Plan. The following summarizes the stock option activity for the three months ended March 31, 2019. Weighted- Average Weighted- Remaining Average Contractual Exercise Life Options Price (Years) Outstanding at December 31, 2018 117,675 $ 2.57 2.28 Granted - Forfeited/cancelled (11,598 ) Exercised - Outstanding at March 31, 2019 (unaudited) 106,077 $ 2.77 2.29 Vested and expected to vest at March 31, 2019 (unaudited) 106,077 $ 2.77 2.29 Exercisable at March 31, 2019 (unaudited) 106,077 $ 2.77 2.29 The following table summarizes information about options outstanding and exercisable as of March 31, 2019. Options Outstanding Options Exercisable Weighted Weighted Weighted Range of Average Average Average Exercise Number Remaining Exercise Number Exercise Price of Shares Life (Years) Price of Shares Price $ 0.75 - 1.00 27,527 1.31 $ 0.82 27,527 $ 0.82 2.00 - 4.00 63,684 2.62 3.21 63,684 3.21 4.20 - 6.68 14,866 2.65 4.46 14,866 4.46 106,077 106,077 Warrants As of March 31, 2019 and December 31, 2018, the Company had 511,801 and 622,912 warrants outstanding, respectively. The warrants outstanding at March 31, 2019 are all exercisable at $0.01 and have an expiration date of May 20, 2023. |
Sales by Geographical Location
Sales by Geographical Location | 3 Months Ended |
Mar. 31, 2019 | |
Segment Reporting [Abstract] | |
Sales by Geographical Location | 5. Sales by Geographical Location Revenue by country for the three months ended March 31, 2019 and 2018 was as follows. Three Months Ended 2019 2018 Revenue by Country United States $ 334,700 $ 309,200 Japan 57,900 42,700 Brazil 146,000 171,800 The Netherlands 262,900 31,700 Other Countries 252,300 266,900 Total 1,053,800 822,300 |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 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 three months ended March 31, 2019 and 2018, the Company contributed a total of $12,200 and $13,400, 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. |
Related Party Transactions
Related Party Transactions | 3 Months Ended |
Mar. 31, 2019 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | 7. Related Party Transactions The Company’s Chief Executive Officer and Interim Chief Financial Officer has served in these executive roles providing management services to the Company since September 2018, however, does not currently receive a salary or other forms of compensation. During the three months ended March 31, 2019, the Company has recorded an expense and contributed capital of $56,300 for contributed services based on the estimated market rate for these services. |
Significant Accounting Polici_2
Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2019 | |
Accounting Policies [Abstract] | |
Basis of Presentation | 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, 2018 which was filed with the SEC on April 1, 2019 (“2018 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, 2019 or any future period. Certain prior year information has been reclassified to conform to current year presentation. |
Use of Estimates | 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 stock-based compensation expense, the allowance for doubtful accounts, depreciation of long-lived assets, and accruals of liabilities. |
Liquidity | Liquidity The Company has incurred significant net losses since inception. As of March 31, 2019, we had an accumulated deficit of $80,236,800 and a working capital deficit of $443,400, which includes deferred revenue of $1,331,500. Our ability to continue to generate net income and positive cash flows from operations is dependent on our ability to continue to generate revenue from our legacy GO-Global business, which in turn is subject to a variety of risks. The Company believes its current cash balances coupled with anticipated cash flow from operating activities will be sufficient to meet its working capital requirements for at least one year from the date of the issuance of the accompanying financial statements. The Company continues to control its cash expenses as a percentage of expected revenue on an annual basis and thus may use its cash balances in the short-term to invest in revenue growth. Based on current internal projections, the Company believes it has and/or will generate sufficient cash for its operational needs, for at least one year from the date of issuance of the accompanying financial statements. Management is focused on growing the Company’s existing product offering, as well as its customer base, to increase its revenues. The Company cannot give assurance that it can increase its cash balances or limit its cash consumption and thus maintain sufficient cash balances for its planned operations or future acquisitions. Future business demands may lead to cash utilization at levels greater than recently experienced. The Company may need to raise additional capital in the future. However, the Company cannot assure that it will be able to raise additional capital on acceptable terms, or at all. Subject to the foregoing, management believes that the Company has sufficient capital and liquidity to fund its operations for at least one year from the date of issuance of the accompanying financial statements. |
Revenue Recognition | Revenue Recognition The Company markets and licenses its products indirectly through channel distributors, independent software vendors (“ISVs”), value-added resellers (“VARs”) (collectively, “resellers”) and directly to 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. The following is a summary of how the Company recognizes revenue for its different products and 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 Company portal. We recognize revenue upon delivery of these licenses. For stocking resellers who purchase licenses through inventory stocking orders with the intent to resell to an end-user, revenue is recognized when the resellers’ accounts have been credited, at their discretion, for the number of licenses purchased. ● Service Revenue The Company has maintenance contracts with certain of its customers. Revenue from maintenance contracts is recognized ratably over the related contract period, which generally ranges from one to five years. The Company’s product sales by geographic area are presented in Note 5. |
Cash and Cash equivalents | 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. The Company had no cash equivalents as of March 31, 2019 (unaudited) or December 31, 2018. |
Allowance for Doubtful Accounts | 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 March 31, 2019 and December 31, 2018, the allowance for doubtful accounts totaled $18,600 and $3,600, respectively. |
Concentration of Credit Risk | Concentration of Credit Risk For the three months ended March 31, 2019, the Company had 3 customers comprising 24.9%, 14.6% and 11.0%, respectively, of total revenues. For the three months ended March 31, 2018, the Company had 2 customers comprising 14.8% and 14.2%, respectively, of total revenues. A loss of one of these customers could potentially have a significant negative impact on the Company’s financial statements. As of March 31, 2019, the Company has 2 customers comprising 56.5% and 15.9%, respectively, of net accounts receivable. As of December 31, 2018, the Company has 3 customers comprising 32.1%, 15.4% and 10.8%, respectively, of net accounts receivable. |
Basic and Diluted Earnings Per Share | 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 reflect per share amounts that would have resulted if diluted potential common stock had been converted to common stock. Dilutive common share equivalents as of March 31, 2019, representing 511,801 of outstanding in-the-money warrants, were included in the computation of diluted net income per share using the Treasury Stock Method. During the three months ended March 31, 2019 and 2018, the Company had total common stock equivalents of 106,077 and 1,012,619, respectively, which were excluded from the computation of net income (loss) per share because they are anti-dilutive. |
Fair Value of Financial Instruments | 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. |
Recently Adopted Accounting Pronouncements | Recently Adopted Accounting Pronouncements Leases In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-02, “Leases (Topic 842),” which requires lessees to recognize a right-of-use asset and a lease liability for most leases on the balance sheet as well as other qualitative and quantitative disclosures. ASU 2016-02 is to be applied using a modified retrospective method and was effective for the Company on January 1, 2019. In July 2018, the FASB issued ASU 2018-11, “Leases (Topic 842),” which provides an optional transition method allowing entities to recognize a cumulative-effect adjustment to the opening balance of stockholders’ equity in the period of adoption, with no restatement of comparative prior periods required. The Company adopted the standard using this optional transition method. The Company also made an accounting policy to exclude leases with an initial term of 12 months or less from the balance sheet as permitted under the new guidance. The Company assessed the impact that the new lease recognition standard had on its consolidated financial statements. As of the adoption date of January 1, 2019, the Company has only one lease, which was for its office space it leases under a month-to-month arrangement for a monthly amount of $4,000, which can be cancelled at any time by either party with a six-month advance notice. As management has elected a policy to exclude leases with an initial term of 12 months of less from the balance sheet presentation required under Topic 842, the office lease has been excluded from balance sheet presentation as it has an original term of 12 months or less. The rent associated with the lease continues to be expensed as incurred. Rent expense for the three months ended March 31, 2019 and 2018, amounted to $12,000 and $12,000, respectively. |
Property and Equipment (Tables)
Property and Equipment (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property and Equipment | Property and equipment consisted of the following. March 31, 2019 December 31, 2018 (Unaudited) Equipment $ 154,300 $ 154,300 Furniture and fixtures 1,600 1,600 155,900 155,900 Less: accumulated depreciation (155,600 ) (155,500 ) $ 300 $ 400 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Equity [Abstract] | |
Schedule of Share-based Compensation, Activity | The following summarizes the stock option activity for the three months ended March 31, 2019. Weighted- Average Weighted- Remaining Average Contractual Exercise Life Options Price (Years) Outstanding at December 31, 2018 117,675 $ 2.57 2.28 Granted - Forfeited/cancelled (11,598 ) Exercised - Outstanding at March 31, 2019 (unaudited) 106,077 $ 2.77 2.29 Vested and expected to vest at March 31, 2019 (unaudited) 106,077 $ 2.77 2.29 Exercisable at March 31, 2019 (unaudited) 106,077 $ 2.77 2.29 |
Schedule of Share-based Compensation, Shares Authorized Under Stock Option Plans, by Exercise Price Range | The following table summarizes information about options outstanding and exercisable as of March 31, 2019. Options Outstanding Options Exercisable Weighted Weighted Weighted Range of Average Average Average Exercise Number Remaining Exercise Number Exercise Price of Shares Life (Years) Price of Shares Price $ 0.75 - 1.00 27,527 1.31 $ 0.82 27,527 $ 0.82 2.00 - 4.00 63,684 2.62 3.21 63,684 3.21 4.20 - 6.68 14,866 2.65 4.46 14,866 4.46 106,077 106,077 |
Sales by Geographical Location
Sales by Geographical Location (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Segment Reporting [Abstract] | |
Schedule of Revenue by Country | Revenue by country for the three months ended March 31, 2019 and 2018 was as follows. Three Months Ended 2019 2018 Revenue by Country United States $ 334,700 $ 309,200 Japan 57,900 42,700 Brazil 146,000 171,800 The Netherlands 262,900 31,700 Other Countries 252,300 266,900 Total 1,053,800 822,300 |
Significant Accounting Polici_3
Significant Accounting Policies (Details Narrative) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2019USD ($)Customershares | Mar. 31, 2018USD ($)shares | Dec. 31, 2018USD ($) | |
Accumulated deficit | $ (80,236,800) | $ (80,488,700) | |
Working capital deficit | 443,400 | ||
Deferred revenue | 1,331,500 | 1,300,300 | |
Cash equivalents | |||
Allowance for doubtful accounts | $ 18,600 | $ 3,600 | |
Number of customers | Customer | 3 | ||
Number of common shares equivalents of outstanding in money warrants | shares | 511,801 | ||
Shares of common stock equivalents were excluded from the computation of diluted earnings per share since its effect would be antidilutive | shares | 106,077 | 1,012,619 | |
Rent expense | $ 12,000 | $ 12,000 | |
January 1, 2019 [Member] | |||
Rent expense | $ 4,000 | ||
Revenues [Member] | Customer One [Member] | |||
Concentration of credit risk percentage | 24.90% | 14.80% | |
Revenues [Member] | Customer Two [Member] | |||
Concentration of credit risk percentage | 14.60% | 14.20% | |
Revenues [Member] | Customer Three [Member] | |||
Concentration of credit risk percentage | 11.00% | ||
Accounts Receivable [Member] | Customer One [Member] | |||
Concentration of credit risk percentage | 56.50% | 32.10% | |
Accounts Receivable [Member] | Customer Two [Member] | |||
Concentration of credit risk percentage | 15.90% | 15.40% | |
Accounts Receivable [Member] | Customer Three [Member] | |||
Concentration of credit risk percentage | 10.80% |
Property and Equipment (Details
Property and Equipment (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation | $ 100 | $ 9,000 |
Property and Equipment - Schedu
Property and Equipment - Schedule of Property and Equipment (Details) - USD ($) | Mar. 31, 2019 | Dec. 31, 2018 |
Property and equipment gross | $ 155,900 | $ 155,900 |
Less: accumulated depreciation and amortization | (155,600) | (155,500) |
Property and equipment net | 300 | 400 |
Equipment [Member] | ||
Property and equipment gross | 154,300 | 154,300 |
Furniture and Fixtures [Member] | ||
Property and equipment gross | $ 1,600 | $ 1,600 |
Stockholders' Equity (Details N
Stockholders' Equity (Details Narrative) - $ / shares | 3 Months Ended | |
Mar. 31, 2019 | Dec. 31, 2018 | |
Note 9 - Stockholders' Equity (Details) [Line Items] | ||
Warrants outstanding | 511,801 | 622,912 |
Warrants expiration date | May 20, 2023 | |
2012 Equity Incentive Plan [Member] | ||
Note 9 - Stockholders' Equity (Details) [Line Items] | ||
Share-based compensation arrangement by share-based payment award, number of shares authorized | 643,797 | |
Plan terminate term | The 12 Plan will terminate no later than November 7, 2022. | |
Share-based compensation arrangement by share-based payment award, number of shares available for grant | 411,593 | |
Warrants outstanding exercisable price | $ 0.01 | |
Restricted Stock [Member] | 2012 Equity Incentive Plan [Member] | Minimum [Member] | ||
Note 9 - Stockholders' Equity (Details) [Line Items] | ||
Share-based compensation arrangement by share-based payment award, purchase price of common stock, percent | 100.00% | |
Non Qualified Stock Options [Member] | 2012 Equity Incentive Plan [Member] | Minimum [Member] | ||
Note 9 - Stockholders' Equity (Details) [Line Items] | ||
Share-based compensation arrangement by share-based payment award, purchase price of common stock, percent | 10.00% | |
Incentive Stock Options [Member] | 2012 Equity Incentive Plan [Member] | Minimum [Member] | ||
Note 9 - Stockholders' Equity (Details) [Line Items] | ||
Share-based compensation arrangement by share-based payment award, purchase price of common stock, percent | 100.00% | |
Incentive Stock Options [Member] | 2012 Equity Incentive Plan [Member] | Minimum [Member] | If Recipient Owns Greater Than Ten Percent Voting Power [Member] | ||
Note 9 - Stockholders' Equity (Details) [Line Items] | ||
Share-based compensation arrangement by share-based payment award, purchase price of common stock, percent | 110.00% |
Stockholders' Equity - Schedule
Stockholders' Equity - Schedule of Share-based Compensation, Stock Options, Activity (Details) - Stock Option Plans [Member] | 3 Months Ended |
Mar. 31, 2019$ / sharesshares | |
Options Outstanding, Beginning Balance | shares | 117,675 |
Options Outstanding, Granted | shares | |
Options Outstanding, Forfeited/cancelled | shares | (11,598) |
Options Outstanding, Exercised | shares | |
Options Outstanding, Ending Balance | shares | 106,077 |
Vested and expected to vest at March 31, 2019 (unaudited) | shares | 106,077 |
Exercisable at March 31, 2019 (unaudited) | shares | 106,077 |
Weighted Average Exercise Price, Outstanding Beginning Balance | $ / shares | $ 2.57 |
Weighted Average Exercise Price, Granted | $ / shares | |
Weighted Average Exercise Price, Forfeited or expired | $ / shares | |
Weighted Average Exercise Price, Exercised | $ / shares | |
Weighted Average Exercise Price, Outstanding Ending Balance | $ / shares | 2.77 |
Vested and expected to vest at March 31, 2019 (unaudited) | $ / shares | 2.77 |
Exercisable at March 31, 2019 (unaudited) | $ / shares | $ 2.77 |
Weighted Average Remaining Contractual Life (Years) Outstanding, Beginning Balance | 2 years 3 months 11 days |
Weighted Average Remaining Contractual Life (Years) Outstanding, Ending Balance | 2 years 3 months 15 days |
Weighted Average Remaining Contractual Life (Years), Vested and expected to vest at March 31, 2019 (unaudited) | 2 years 3 months 15 days |
Weighted Average Remaining Contractual Life (Years) Exercisable, Ending Balance | 2 years 3 months 15 days |
Stockholders' Equity - Schedu_2
Stockholders' Equity - Schedule of Share-based Compensation, Shares Authorized under Stock Option Plans, by Exercise Price Range (Details) - $ / shares | 3 Months Ended | |
Mar. 31, 2019 | Dec. 31, 2019 | |
Exercise Price Range 1 [Member] | ||
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | ||
Exercise Price Range, Lower Range Limit | $ 0.75 | |
Exercise Price Range, Upper Range Limit | $ 1 | |
Options Outstanding, Number of shares | 27,527 | |
Options Outstanding, Weighted Average Remaining Contractual Life (Years) | 1 year 3 months 22 days | |
Options Outstanding, Weighted Average Exercise Price | $ 0.82 | |
Options Exercisable, Number of shares | 27,527 | |
Options Exercisable, Weighted Average Exercise Price | $ 0.82 | |
Exercise Price Range 2 [Member] | ||
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | ||
Exercise Price Range, Lower Range Limit | 2 | |
Exercise Price Range, Upper Range Limit | $ 4 | |
Options Outstanding, Number of shares | 63,684 | |
Options Outstanding, Weighted Average Remaining Contractual Life (Years) | 2 years 7 months 13 days | |
Options Outstanding, Weighted Average Exercise Price | $ 3.21 | |
Options Exercisable, Number of shares | 63,684 | |
Options Exercisable, Weighted Average Exercise Price | $ 3.21 | |
Exercise Price Range 3 [Member] | ||
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | ||
Exercise Price Range, Lower Range Limit | 4.20 | |
Exercise Price Range, Upper Range Limit | $ 6.68 | |
Options Outstanding, Number of shares | 14,866 | |
Options Outstanding, Weighted Average Remaining Contractual Life (Years) | 2 years 7 months 24 days | |
Options Outstanding, Weighted Average Exercise Price | $ 4.46 | |
Options Exercisable, Number of shares | 14,866 | |
Options Exercisable, Weighted Average Exercise Price | $ 4.46 |
Sales by Geographical Locatio_2
Sales by Geographical Location - Schedule of Revenue by Country (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Revenue by country | $ 1,053,800 | $ 822,300 |
United States [Member] | ||
Revenue by country | 334,700 | 309,200 |
Japan [Member] | ||
Revenue by country | 57,900 | 42,700 |
Brazil [Member] | ||
Revenue by country | 146,000 | 171,800 |
The Netherlands [Member] | ||
Revenue by country | 262,900 | 31,700 |
Other Countries [Member] | ||
Revenue by country | $ 252,300 | $ 266,900 |
Commitments and Contingencies (
Commitments and Contingencies (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Profit sharing plans | $ 12,200 | $ 13,400 |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) | 3 Months Ended |
Mar. 31, 2019USD ($) | |
Chief Executive Officer and Interim Chief Financial Officer [Member] | |
Expense and contributed capital for contributed services | $ 56,300 |