Document And Entity Information
Document And Entity Information - shares | 6 Months Ended | |
Jun. 30, 2018 | Aug. 10, 2018 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Jun. 30, 2018 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q2 | |
Entity Registrant Name | Ideal Power Inc. | |
Entity Central Index Key | 1,507,957 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Smaller Reporting Company | |
Trading Symbol | IPWR | |
Entity Common Stock, Shares Outstanding | 14,000,342 |
Balance Sheets
Balance Sheets - USD ($) | Jun. 30, 2018 | Dec. 31, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 6,980,213 | $ 10,022,247 |
Accounts receivable, net | 170,792 | 221,084 |
Inventories, net | 239,407 | 251,363 |
Prepayments and other current assets | 503,808 | 283,208 |
Total current assets | 7,894,220 | 10,777,902 |
Property and equipment, net | 513,153 | 669,571 |
Intangible assets, net | 2,096,692 | 2,082,014 |
Other assets | 55,420 | 37,500 |
Total assets | 10,559,485 | 13,566,987 |
Current liabilities: | ||
Accounts payable | 517,770 | 449,475 |
Accrued expenses | 1,149,883 | 1,081,155 |
Total current liabilities | 1,667,653 | 1,530,630 |
Other long-term liabilities | 462,199 | 456,234 |
Total liabilities | 2,129,852 | 1,986,864 |
Commitments and contingencies | ||
Stockholders' equity: | ||
Preferred stock, $0.001 par value; 10,000,000 shares authorized; 1,518,430 shares issued and outstanding at June 30, 2018 and December 31, 2017, respectively | 1,518 | 1,518 |
Common stock, $0.001 par value; 50,000,000 shares authorized; 14,004,465 shares issued and 14,000,342 shares outstanding at June 30, 2018 and 13,998,465 shares issued and 13,996,121 shares outstanding at December 31, 2017, respectively | 14,004 | 13,998 |
Additional paid-in capital | 67,711,659 | 67,081,359 |
Treasury stock, at cost; 4,123 shares at June 30, 2018 and 2,344 shares at December 31, 2017 | (9,677) | (7,489) |
Accumulated deficit | (59,287,871) | (55,509,263) |
Total stockholders' equity | 8,429,633 | 11,580,123 |
Total liabilities and stockholders' equity | $ 10,559,485 | $ 13,566,987 |
Balance Sheets (Parenthetical)
Balance Sheets (Parenthetical) - $ / shares | Jun. 30, 2018 | Dec. 31, 2017 |
Preferred Stock, Par or Stated Value Per Share | $ 0.001 | $ 0.001 |
Preferred Stock, Shares Authorized | 10,000,000 | 10,000,000 |
Preferred Stock, Shares Issued | 1,518,430 | 1,518,430 |
Preferred Stock, Shares Outstanding | 1,518,430 | 1,518,430 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 50,000,000 | 50,000,000 |
Common stock, shares, issued | 14,004,465 | 13,998,465 |
Common stock, shares, outstanding | 14,000,342 | 13,996,121 |
Treasury stock, shares | 4,123 | 2,344 |
Statements of Operations
Statements of Operations - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Product revenue | $ 619,942 | $ 253,370 | $ 801,442 | $ 529,040 |
Cost of product revenue | 584,800 | 764,609 | 919,763 | 1,475,539 |
Gross profit (loss) | 35,142 | (511,239) | (118,321) | (946,499) |
Operating expenses: | ||||
Research and development | 905,541 | 1,108,368 | 1,663,324 | 2,298,537 |
General and administrative | 817,672 | 1,170,415 | 1,709,660 | 2,076,378 |
Sales and marketing | 69,989 | 427,336 | 324,232 | 968,869 |
Total operating expenses | 1,793,202 | 2,706,119 | 3,697,216 | 5,343,784 |
Loss from operations | (1,758,060) | (3,217,358) | (3,815,537) | (6,290,283) |
Interest income, net | 35,614 | 7,034 | 36,929 | 11,575 |
Net loss | $ (1,722,446) | $ (3,210,324) | $ (3,778,608) | $ (6,278,708) |
Net loss per share – basic and fully diluted | $ (0.12) | $ (0.23) | $ (0.27) | $ (0.50) |
Weighted average number of shares outstanding – basic and fully diluted | 13,992,791 | 13,989,282 | 13,991,961 | 12,443,076 |
Statements of Cash Flows
Statements of Cash Flows - USD ($) | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Cash flows from operating activities: | ||
Net loss | $ (3,778,608) | $ (6,278,708) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Allowance for doubtful accounts | (98,337) | 273,727 |
Write-down of inventory | 5,458 | 712,083 |
Depreciation and amortization | 216,920 | 224,926 |
Write-off of capitalized patents | 15,478 | 202,343 |
Write-off of fixed assets | 7,055 | 15,036 |
Stock-based compensation | 630,306 | 498,006 |
Decrease (increase) in operating assets: | ||
Accounts receivable | 148,629 | (100,715) |
Inventories | 6,498 | 166,529 |
Prepayments and other current assets | (238,520) | 77,981 |
Increase (decrease) in operating liabilities: | ||
Accounts payable | 68,295 | (133,783) |
Accrued expenses | 74,693 | (5,627) |
Net cash used in operating activities | (2,942,133) | (4,348,202) |
Cash flows from investing activities: | ||
Purchase of property and equipment | (18,525) | (18,146) |
Acquisition of intangible assets | (79,188) | (171,134) |
Net cash used in investing activities | (97,713) | (189,280) |
Cash flows from financing activities: | ||
Net proceeds from issuance of common stock | 0 | 13,657,331 |
Payment of taxes related to restricted stock vesting | (2,188) | 0 |
Exercise of options and warrants | 0 | 11,143 |
Net cash provided by (used in) financing activities | (2,188) | 13,668,474 |
Net increase (decrease) in cash and cash equivalents | (3,042,034) | 9,130,992 |
Cash and cash equivalents at beginning of period | 10,022,247 | 4,204,916 |
Cash and cash equivalents at end of period | $ 6,980,213 | $ 13,335,908 |
Organization and Description of
Organization and Description of Business | 6 Months Ended |
Jun. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Description of Business | Note 1 – Organization and Description of Business Ideal Power Inc. (the “Company”) was incorporated in Texas on May 17, 2007 under the name Ideal Power Converters, Inc. The Company changed its name to Ideal Power Inc. on July 8, 2013 and re-incorporated in Delaware on July 15, 2013. With headquarters in Austin, Texas, it develops power conversion solutions with an initial focus on solar + storage, microgrid and stand-alone energy storage applications. The principal products of the Company are 30-kilowatt power conversion systems, including 2-port and multi-port products. Since its inception, the Company has generated limited revenues from the sale of products and has financed its research and development efforts and operations through the sale of common stock and, prior to its initial public offering, the issuance of convertible debt. The Company’s continued operations are dependent upon its ability to obtain adequate sources of funding through future revenues, follow-on stock offerings, debt financing, co-development agreements, sale or licensing of developed intellectual property or other alternatives. On April 16, 2018, the Company realigned into two operating divisions: Power Conversion Systems, to continue the commercialization of its technology, and B-TRAN™, to develop its Bi-directional bi-polar junction TRANsistor (B-TRAN™) solid state switch technology. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2018 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Note 2 – Summary of Significant Accounting Policies Basis of Presentation The accompanying unaudited financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission for Form 10-Q. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. The Balance Sheet at December 31, 2017 has been derived from the Company’s audited financial statements. In the opinion of management, these financial statements reflect all normal recurring, and other adjustments, necessary for a fair presentation. These financial statements should be read in conjunction with the audited financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017. Operating results for interim periods are not necessarily indicative of operating results for an entire fiscal year or any other future periods. Recently Adopted Standards In May 2014, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606), requiring an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The FASB issued several amendments to the standard, including clarification on accounting for licenses of intellectual property and identifying performance obligations. The standard replaced most existing revenue recognition guidance in U.S. GAAP when it became effective on January 1, 2018. The adoption of this standard did not have a material effect on the Company’s financial statements, nor required an adjustment to the opening balance of accumulated deficit at January 1, 2018, the date of initial adoption. See Note 12 for a discussion of the Company’s revenue recognition policy. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230), in order to address eight specific cash flow issues with the objective of reducing the existing diversity in practice. The updated standard is effective for financial statements issued for annual periods beginning after December 15, 2017 and interim periods within those fiscal years. The adoption of the standard did not have a significant effect on the Company’s financial statements. In May 2017, the FASB issued ASU 2017-09, Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting. This ASU provides clarity and reduces both (1) diversity in practice and (2) cost and complexity when applying the guidance in Topic 718 to a change to the terms or conditions of a share-based payment award. The amendments in this ASU are effective for public entities for fiscal years and interim periods beginning after December 15, 2017. The ASU is applied prospectively on and after the effective date. The standard did not have a material effect on the Company’s financial statements. In July 2017, the FASB issued ASU 2017-11, Accounting for Certain Financial Instruments with Down Round Features and Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception. Part I of this ASU addresses the complexity of accounting for certain financial instruments with down round features. Per the ASU, a freestanding equity-linked financial instrument (or embedded conversion option) no longer would be accounted for as a derivative liability at fair value as a result of the existence of a down round feature. The ASU is effective for public entities for fiscal years beginning after December 15, 2018 and early adoption is permitted. The Company has elected to early adopt the ASU and will recognize the value of the effect of the down round provision, if and/or when triggered. The provision is associated with stock warrants issued as part of the Company's 2017 definitive securities purchase agreement, or the Private Placement. For more details regarding the 2017 Private Placement, see Note 9 and Note 11. Recent Accounting Pronouncements In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), to increase transparency and comparability among organizations by requiring the recognition of lease assets and lease liabilities on the balance sheet. Most prominent among the amendments is the recognition of assets and liabilities by lessees for those leases classified as operating leases under previous U.S. GAAP. Under the new standard, disclosures are required to meet the objective of enabling users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases. The new standard will be effective for annual and interim periods beginning after December 15, 2018, with early adoption permitted. While the Company is continuing to assess the potential impact of this standard, it expects its lease commitment will be subject to the updated standard and recognized as a lease liability and right-of-use asset upon adoption. Management does not believe that any other recently issued, but not yet effective, accounting standard, if adopted, would have a material impact on the Company’s financial statements. |
Accounts Receivable
Accounts Receivable | 6 Months Ended |
Jun. 30, 2018 | |
Receivables [Abstract] | |
Loans, Notes, Trade and Other Receivables Disclosure [Text Block] | Note 3 – Accounts Receivable Accounts receivable, net consisted of the following: June 30, December 31, (unaudited) Trade receivables $ 198,265 $ 378,894 Other receivables 1,652 20,589 199,917 399,483 Allowance for doubtful accounts (29,125 ) (178,399 ) $ 170,792 $ 221,084 The Company had receivable balances from three customers that accounted for 70% of net trade receivables at June 30, 2018. Activity in the allowance for doubtful accounts was as follows: Balance at December 31, 2017 $ (178,399 ) Write offs 16,759 Provisions (29,485 ) Recovery 162,000 Balance at June 30, 2018 $ (29,125 ) |
Inventories
Inventories | 6 Months Ended |
Jun. 30, 2018 | |
Inventory Disclosure [Abstract] | |
Inventories | Note 4 – Inventories Inventories, net consisted of the following: June 30, 2018 December 31, 2017 (unaudited) Raw materials $ 197,779 $ 222,436 Finished goods 182,529 149,370 380,308 371,806 Reserve for obsolescence (140,901 ) (120,443 ) $ 239,407 $ 251,363 |
Property and Equipment
Property and Equipment | 6 Months Ended |
Jun. 30, 2018 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | Note 5 – Property and Equipment Property and equipment, net consisted of the following: June 30, 2018 December 31, 2017 (unaudited) Machinery and equipment $ 1,023,327 $ 1,013,133 Building leasehold improvements 395,335 395,335 Furniture, fixtures, software and computers 192,480 218,571 1,611,142 1,627,039 Accumulated depreciation and amortization (1,097,989 ) (957,468 ) $ 513,153 $ 669,571 |
Intangible Assets
Intangible Assets | 6 Months Ended |
Jun. 30, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets | Note 6 – Intangible Assets Intangible assets, net consisted of the following: June 30, 2018 December 31, 2017 (unaudited) Patents $ 1,617,978 $ 1,554,268 Other intangible assets 732,175 732,175 2,350,153 2,286,443 Accumulated amortization (253,461 ) (204,429 ) $ 2,096,692 $ 2,082,014 Amortization expense amounted to $24,713 and $49,032 for the three and six months ended June 30, 2018, respectively, and $18,594 and $36,469 for the three and six months ended June 30, 2017, respectively. Amortization expense for the succeeding five years and thereafter is approximately $49,000 (2018), $99,000 (2019-2022) and $1,162,000 (thereafter). At June 30, 2018 and December 31, 2017, the Company had capitalized $489,285 and $472,928, respectively, for costs related to patents that have not been awarded. |
Accrued Expenses
Accrued Expenses | 6 Months Ended |
Jun. 30, 2018 | |
Accounts Payable and Accrued Liabilities, Current [Abstract] | |
Accrued Expenses | Note 7 – Accrued Expenses Accrued expenses consisted of the following: June 30, 2018 December 31, 2017 (unaudited) Accrued compensation $ 403,744 $ 247,343 Warranty reserve 492,132 426,115 Other 254,007 407,697 $ 1,149,883 $ 1,081,155 |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 8 – Commitments and Contingencies Lease The Company leases 14,782 square feet of office and laboratory space located in Austin, Texas. On April 20, 2018, the Company entered into an amendment to its existing operating lease which extended the lease term from May 31, 2018 to May 21, 2021. The annual base rent in the first year of the lease extension is $184,775 and increases by $7,391 in each succeeding year of the lease extension. In addition, the Company is required to pay its proportionate share of operating costs for the building under this triple net lease. Future minimum payments under the lease, as amended, are as follows: Year Ended December 31, Amount 2018 $ 92,388 2019 189,086 2020 196,477 2021 83,149 $ 561,100 The Company incurred rent expense of $60,373 and $118,176 for the three and six months ended June 30, 2018, respectively, and $59,718 and $117,074 for the three and six months ended June 30, 2017, respectively. License Agreement In 2015, the Company entered into licensing agreements which expire on February 7, 2033. Per the agreements, the Company has an exclusive royalty-free license which enhances its intellectual property portfolio related to semiconductor power switches. The agreements include both fixed and variable payments. The variable payments are a function of the number of associated patent filings pending and patents issued under the agreements. The Company will pay $10,000 for each patent filing pending and $20,000 for each patent issued within 20 days of December 21, 2017 and each subsequent year of the agreement, up to a maximum of $100,000 per year (i.e. five issued patents). At June 30, 2018, two patents associated with the agreements had been issued and the corresponding long-term liability for the estimated present value of future payments under the licensing agreement is $462,199. The Company is accruing interest for future payments related to the issued patent associated with the agreement. Legal Proceedings In 2017, the Company entered into arbitration with Libra Industries, Inc. ( ), its prior contract manufacturer, with both parties asserting claims against the other party. At December 31, 2017, the Company recorded a $100,000 accrual for the arbitration based on an expired settlement offer made by the Company to Libra. On June 21, 2018, the arbitrator issued a final and binding award on all issues except as to attorney’s fees and costs. In the Final Award, the arbitrator denied Libra’s claims and awarded the Company $163,105 on it claims. On July 15, 2018, the arbitrator issued a Supplemental Final Award on Attorney’s Fees and Costs, awarding the Company an additional $165,346. As a result, during the three months ended June 30, 2018, the Company reversed the previously recorded $100,000 accrual resulting in a reduction to general and administrative expense and recognized the Final Award of $163,105 as a reduction in cost of product revenue and the Supplemental Final Award on Attorney’s Fees and Costs of $165,347 as a reduction in general and administrative expense. At June 30, 2018, the total award of $328,451 is included within prepayments and other current assets on the Company’s Balance Sheet. The Company received full payment on the total award on August 2, 2018. On April 11, 2018, the Company received $203,121 pursuant to a Judgment of Garnishment dated March 23, 2018 and related to the non-payment of an overdue accounts receivable balance by a former customer of the Company. The judgment included the past due balance of $162,000 plus late fees and recovery of legal costs. At March 31, 2018, the Company had fully reserved the $162,000 balance in its allowance for doubtful accounts. The Company did not reverse the allowance for doubtful accounts at March 31,2018 as the funds could be subject to clawback during the quarter ending June 30, 2018 if the former customer filed for bankruptcy. The former customer did not file for bankruptcy during the quarter ended June 30, 2018 and, as a result, the Company reversed the allowance for doubtful accounts of $162,000 with a corresponding reduction in sales and marketing expense, recognized interest income of $35,064 associated with late fees and a reduction in general and administrative expense of $6,057 for the partial recovery of legal fees. |
Common Stock
Common Stock | 6 Months Ended |
Jun. 30, 2018 | |
Stockholders' Equity Note [Abstract] | |
Common Stock | Note 9 — Common Stock On March 3, 2017, the Company closed on a definitive securities purchase agreement, or Private Placement, to sell the Company’s common stock and preferred stock together with warrants to purchase shares of common stock. In the Private Placement, each share of common stock or preferred stock was sold together with a warrant to purchase one share of common stock at a collective price of $2.535. Investors purchased an aggregate of 5,220,826 shares of common stock and 708,430 shares of preferred stock together with warrants to purchase 5,929,256 shares of common stock in the Private Placement for aggregate gross proceeds of $15 million. Net cash proceeds were $13.7 million after offering fees and expenses, including the placement agent fee of $1.1 million. |
Equity Incentive Plan
Equity Incentive Plan | 6 Months Ended |
Jun. 30, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Disclosure of Compensation Related Costs, Share-based Payments | Note 10 — Equity Incentive Plan On May 17, 2013, the Company adopted the 2013 Equity Incentive Plan (the “Plan”) and reserved shares of common stock for issuance under the Plan. The Plan is administered by the Compensation Committee of the Company’s Board of Directors. At June 30, 2018, 424,963 shares of common stock were available for issuance under the Plan. During the six months ended June 30, 2018, the Company granted 122,039 stock options to Board members and 300,000 stock options to under the Plan. The estimated fair value of these stock options, calculated using the Black-Scholes option valuation model, was $330,713, of which $270,712 was recognized during the six months ended June 30, 2018. During the six months ended June 30, 2018, the Company also granted 117,500 restricted stock units and 12,000 performance stock units to employees. The estimated fair value of these awards, based on the Company’s stock price on the date of grant, was $158,110, of which $19,923 was recognized during the six months ended June 30, 2018. A summary of the Company’s stock option activity and related information is as follows: Stock Options Weighted Average Exercise Price Weighted Average Remaining Life (in years) Outstanding at December 31, 2017 1,232,236 $ 6.44 6.8 Granted 422,039 $ 1.31 Forfeited/Expired/Exchanged (124,728 ) $ 5.23 Outstanding at June 30, 2018 1,529,547 $ 5.12 7.3 Exercisable at June 30, 2018 1,264,680 $ 5.12 7.2 At June 30, 2018, there was $689,640 of unrecognized compensation cost related to non-vested equity awards granted under the Plan. That cost is expected to be recognized over a weighted average period of 0.7 years. |
Warrants
Warrants | 6 Months Ended |
Jun. 30, 2018 | |
Warrants and Rights Note Disclosure [Abstract] | |
Warrants | Note 11 — Warrants In connection with the Private Placement, investors received warrants to purchase 5,929,256 shares of common stock. The warrants have an exercise price of $2.41 per share and will expire three years from the date of issuance. The placement agent also received 237,170 warrants to purchase shares of common stock as part of its placement agent fee. The placement agent warrant has an exercise price of $2.89 per share and also has a three-year term. The warrants contain a provision to protect investors from potential future dilutive events, or a down-round provision. The Company elected to early adopt ASU 2017-11 and will recognize the value of the effect of the down-round provision if and/or when triggered. The Company had 7,481,079 warrants outstanding at both June 30, 2018 and December 31, 2017 with a weighted average exercise price of $2.79 per share. At June 30, 2018 all warrants are exercisable, although for the Company’s two largest beneficial owners their warrants may be exercised only to the extent that the total number of shares of common stock then beneficially owned by these shareholders does not exceed 9.99% of the outstanding shares of the Company’s common stock. |
Revenue
Revenue | 6 Months Ended |
Jun. 30, 2018 | |
Revenue from Contract with Customer [Abstract] | |
Revenue | Note 12 — Revenue Revenue Recognition Revenue is recognized in accordance with ASC Topic 606 upon transfer of control of promised products or services to customers in an amount that reflects the consideration we expect to receive in exchange for those products or services. We enter into contracts that typically are for products only although contracts could include various combinations of products and services, which are generally distinct and accounted for as separate performance obligations. Revenue is recognized net of taxes collected from customers, which are subsequently remitted to governmental authorities. The Company generally sells its products FOB shipping and recognizes revenue when products are shipped. Revenue from services, which consist of commissioning services, if any, is recognized as services are performed. The Company had revenue from two customers which accounted for 48% and 12% of net revenue for the six months ended June 30, 2018 and revenue from three customers which accounted for 18%, 13% and 13% of net revenue for the six months ended June 30, 2017. Deferred Revenues We record deferred revenues when cash payments are received in advance of our performance. Based on our review of customer credit, we may require full or partial payment before the products or services are delivered to the customer. Activity in the deferred revenue account was as follows: Balance at December 31, 2017 $ - Deferral of revenue 50,070 Recognition of unearned revenue (42,850 ) Balance June 30, 2018 $ 7,220 |
Summary of Significant Accoun18
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2018 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying unaudited financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission for Form 10-Q. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. The Balance Sheet at December 31, 2017 has been derived from the Company’s audited financial statements. In the opinion of management, these financial statements reflect all normal recurring, and other adjustments, necessary for a fair presentation. These financial statements should be read in conjunction with the audited financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017. Operating results for interim periods are not necessarily indicative of operating results for an entire fiscal year or any other future periods. |
Recently Adopted Standards and Recent Accounting Pronouncements | Recently Adopted Standards In May 2014, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606), requiring an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The FASB issued several amendments to the standard, including clarification on accounting for licenses of intellectual property and identifying performance obligations. The standard replaced most existing revenue recognition guidance in U.S. GAAP when it became effective on January 1, 2018. The adoption of this standard did not have a material effect on the Company’s financial statements, nor required an adjustment to the opening balance of accumulated deficit at January 1, 2018, the date of initial adoption. See Note 12 for a discussion of the Company’s revenue recognition policy. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230), in order to address eight specific cash flow issues with the objective of reducing the existing diversity in practice. The updated standard is effective for financial statements issued for annual periods beginning after December 15, 2017 and interim periods within those fiscal years. The adoption of the standard did not have a significant effect on the Company’s financial statements. In May 2017, the FASB issued ASU 2017-09, Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting. This ASU provides clarity and reduces both (1) diversity in practice and (2) cost and complexity when applying the guidance in Topic 718 to a change to the terms or conditions of a share-based payment award. The amendments in this ASU are effective for public entities for fiscal years and interim periods beginning after December 15, 2017. The ASU is applied prospectively on and after the effective date. The standard did not have a material effect on the Company’s financial statements. In July 2017, the FASB issued ASU 2017-11, Accounting for Certain Financial Instruments with Down Round Features and Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception. Part I of this ASU addresses the complexity of accounting for certain financial instruments with down round features. Per the ASU, a freestanding equity-linked financial instrument (or embedded conversion option) no longer would be accounted for as a derivative liability at fair value as a result of the existence of a down round feature. The ASU is effective for public entities for fiscal years beginning after December 15, 2018 and early adoption is permitted. The Company has elected to early adopt the ASU and will recognize the value of the effect of the down round provision, if and/or when triggered. The provision is associated with stock warrants issued as part of the Company's 2017 definitive securities purchase agreement, or the Private Placement. For more details regarding the 2017 Private Placement, see Note 9 and Note 11. Recent Accounting Pronouncements In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), to increase transparency and comparability among organizations by requiring the recognition of lease assets and lease liabilities on the balance sheet. Most prominent among the amendments is the recognition of assets and liabilities by lessees for those leases classified as operating leases under previous U.S. GAAP. Under the new standard, disclosures are required to meet the objective of enabling users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases. The new standard will be effective for annual and interim periods beginning after December 15, 2018, with early adoption permitted. While the Company is continuing to assess the potential impact of this standard, it expects its lease commitment will be subject to the updated standard and recognized as a lease liability and right-of-use asset upon adoption. Management does not believe that any other recently issued, but not yet effective, accounting standard, if adopted, would have a material impact on the Company’s financial statements. |
Accounts Receivable (Tables)
Accounts Receivable (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Receivables [Abstract] | |
Schedule of accounts receivable, net | Accounts receivable, net consisted of the following: June 30, December 31, (unaudited) Trade receivables $ 198,265 $ 378,894 Other receivables 1,652 20,589 199,917 399,483 Allowance for doubtful accounts (29,125 ) (178,399 ) $ 170,792 $ 221,084 |
Allowance for Credit Losses on Financing Receivables [Table Text Block] | Activity in the allowance for doubtful accounts was as follows: Balance at December 31, 2017 $ (178,399 ) Write offs 16,759 Provisions (29,485 ) Recovery 162,000 Balance at June 30, 2018 $ (29,125 ) |
Inventories (Tables)
Inventories (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Inventory Disclosure [Abstract] | |
Schedule of Net Inventory | Inventories, net consisted of the following: June 30, 2018 December 31, 2017 (unaudited) Raw materials $ 197,779 $ 222,436 Finished goods 182,529 149,370 380,308 371,806 Reserve for obsolescence (140,901 ) (120,443 ) $ 239,407 $ 251,363 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property and Equipment, Net | Property and equipment, net consisted of the following: June 30, 2018 December 31, 2017 (unaudited) Machinery and equipment $ 1,023,327 $ 1,013,133 Building leasehold improvements 395,335 395,335 Furniture, fixtures, software and computers 192,480 218,571 1,611,142 1,627,039 Accumulated depreciation and amortization (1,097,989 ) (957,468 ) $ 513,153 $ 669,571 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of intangible assets, net | Intangible assets, net consisted of the following: June 30, 2018 December 31, 2017 (unaudited) Patents $ 1,617,978 $ 1,554,268 Other intangible assets 732,175 732,175 2,350,153 2,286,443 Accumulated amortization (253,461 ) (204,429 ) $ 2,096,692 $ 2,082,014 |
Accrued Expenses (Tables)
Accrued Expenses (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Accounts Payable and Accrued Liabilities, Current [Abstract] | |
Schedule of Accrued Expenses | Accrued expenses consisted of the following: June 30, 2018 December 31, 2017 (unaudited) Accrued compensation $ 403,744 $ 247,343 Warranty reserve 492,132 426,115 Other 254,007 407,697 $ 1,149,883 $ 1,081,155 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Future Minimum Rental Payments for Operating Leases | Future minimum payments under the lease, as amended, are as follows: Year Ended December 31, Amount 2018 $ 92,388 2019 189,086 2020 196,477 2021 83,149 $ 561,100 |
Equity Incentive Plan (Tables)
Equity Incentive Plan (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Share-based Compensation, Stock Options, Activity | A summary of the Company’s stock option activity and related information is as follows: Stock Options Weighted Average Exercise Price Weighted Average Remaining Life (in years) Outstanding at December 31, 2017 1,232,236 $ 6.44 6.8 Granted 422,039 $ 1.31 Forfeited/Expired/Exchanged (124,728 ) $ 5.23 Outstanding at June 30, 2018 1,529,547 $ 5.12 7.3 Exercisable at June 30, 2018 1,264,680 $ 5.12 7.2 |
Revenue (Tables)
Revenue (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Revenue from Contract with Customer [Abstract] | |
Deferred Revenue, by Arrangement, Disclosure | Activity in the deferred revenue account was as follows: Balance at December 31, 2017 $ - Deferral of revenue 50,070 Recognition of unearned revenue (42,850 ) Balance June 30, 2018 $ 7,220 |
Accounts Receivable (Details Te
Accounts Receivable (Details Textual) | 6 Months Ended |
Jun. 30, 2018 | |
Accounts Receivable [Member] | |
Concentration Risk, Percentage | 70.00% |
Accounts Receivable - Accounts
Accounts Receivable - Accounts receivable, net (Details) - USD ($) | Jun. 30, 2018 | Dec. 31, 2017 |
Trade receivables | $ 198,265 | $ 378,894 |
Other receivables | 1,652 | 20,589 |
Gross accounts receivable | 199,917 | 399,483 |
Allowance for doubtful accounts | (29,125) | (178,399) |
Net accounts receivable | $ 170,792 | $ 221,084 |
Accounts Receivable - Activity
Accounts Receivable - Activity in the allowance for doubtful accounts (Details) - USD ($) | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Balance at December 31, 2017 | $ (178,399) | |
Write offs | 16,759 | |
Provisions | 98,337 | $ (273,727) |
Recovery | 162,000 | |
Balance at March 31, 2018 | $ (29,125) |
Inventories - Inventories, net
Inventories - Inventories, net (Details) - USD ($) | Jun. 30, 2018 | Dec. 31, 2017 |
Inventory [Line Items] | ||
Raw materials | $ 197,779 | $ 222,436 |
Finished goods | 182,529 | 149,370 |
Gross inventory | 380,308 | 371,806 |
Reserve for obsolescence | (140,901) | (120,443) |
Net inventory | $ 239,407 | $ 251,363 |
Property and Equipment - Proper
Property and Equipment - Property and equipment (Details) - USD ($) | Jun. 30, 2018 | Dec. 31, 2017 |
Property, Plant and Equipment [Line Items] | ||
Gross property and equipment | $ 1,611,142 | $ 1,627,039 |
Accumulated depreciation and amortization | (1,097,989) | (957,468) |
Net property and equipment | 513,153 | 669,571 |
Machinery and equipment | ||
Property, Plant and Equipment [Line Items] | ||
Gross property and equipment | 1,023,327 | 1,013,133 |
Building leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Gross property and equipment | 395,335 | 395,335 |
Furniture, fixtures, software and computers | ||
Property, Plant and Equipment [Line Items] | ||
Gross property and equipment | $ 192,480 | $ 218,571 |
Intangible Assets (Details Text
Intangible Assets (Details Textual) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | |
Finite-Lived Intangible Assets [Line Items] | |||||
Amortization expense | $ 24,713 | $ 18,594 | $ 49,032 | $ 36,469 | |
Amortization expense for 2018 | 49,000 | 49,000 | |||
Amortization expense for 2019 | 99,000 | 99,000 | |||
Amortization expense for 2020 | 99,000 | 99,000 | |||
Amortization expense for 2021 | 99,000 | 99,000 | |||
Amortization expense for 2022 | 99,000 | 99,000 | |||
Amortization expense for thereafter | $ 1,162,000 | 1,162,000 | |||
Patents | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Capitalized costs for costs related to patents that have not been awarded | $ 489,285 | $ 472,928 |
Intangible Assets - Schedule of
Intangible Assets - Schedule of Net Intangible Assets (Details) - USD ($) | Jun. 30, 2018 | Dec. 31, 2017 |
Finite-Lived Intangible Assets [Line Items] | ||
Gross intangible assets | $ 2,350,153 | $ 2,286,443 |
Accumulated amortization | (253,461) | (204,429) |
Intangible assets, net | 2,096,692 | 2,082,014 |
Patents | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross intangible assets | 1,617,978 | 1,554,268 |
Other intangible assets | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross intangible assets | $ 732,175 | $ 732,175 |
Accrued Expenses - Accrued Expe
Accrued Expenses - Accrued Expenses Schedule (Details) - USD ($) | Jun. 30, 2018 | Dec. 31, 2017 |
Accrued compensation | $ 403,744 | $ 247,343 |
Warranty reserve | 492,132 | 426,115 |
Other | 254,007 | 407,697 |
Accrued expenses | $ 1,149,883 | $ 1,081,155 |
Commitments and Contingencies35
Commitments and Contingencies (Details Textual) | Jul. 15, 2018USD ($) | Apr. 11, 2018USD ($) | Jun. 21, 2018USD ($) | Jun. 30, 2018USD ($) | Jun. 30, 2017USD ($) | Jun. 30, 2018USD ($) | Jun. 30, 2017USD ($) | Dec. 31, 2015USD ($) | Apr. 20, 2018USD ($)a | Mar. 21, 2018USD ($) | Dec. 31, 2017USD ($) |
Other Commitments [Line Items] | |||||||||||
Rent expense | $ 60,373 | $ 59,718 | $ 118,176 | $ 117,074 | |||||||
Payment for each patent issued | 79,188 | $ 171,134 | |||||||||
Loss Contingency Accrual | 328,451 | 328,451 | $ 100,000 | ||||||||
Litigation Settlement, Amount Awarded from Other Party | $ 163,105 | ||||||||||
Loss Contingency Accrual, Provision | 100,000 | ||||||||||
Loss Contingency Accrual, Payments | 163,105 | ||||||||||
Loss Contingency Accrual, Period Increase (Decrease) | 165,347 | ||||||||||
Proceeds from Legal Settlements | $ 203,121 | ||||||||||
Proceeds from Customers | $ 162,000 | ||||||||||
Allowance For Doubtful Accounts Receivable Reserve Reversed | 162,000 | 162,000 | |||||||||
Loss Contingency Accrual Payments 1 | 35,064 | ||||||||||
Loss Contingency Accrual Payments 2 | 6,057 | ||||||||||
Allowance for Doubtful Accounts Receivable, Reserved | $ 162,000 | ||||||||||
Subsequent Event [Member] | |||||||||||
Other Commitments [Line Items] | |||||||||||
Additional Litigation Settlement Amount Awarded From Other Party | $ 165,346 | ||||||||||
Licensing agreements | |||||||||||
Other Commitments [Line Items] | |||||||||||
Long-term liability for estimated present value of future payments under licensing agreement | 462,199 | 462,199 | |||||||||
Loss Contingency Accrual | $ 100,000 | $ 100,000 | |||||||||
Licensing agreements | Patents | |||||||||||
Other Commitments [Line Items] | |||||||||||
Payable for each patent filing pending | $ 10,000 | ||||||||||
Payment for each patent issued | $ 20,000 | ||||||||||
Period between December 21, 2017 and issuance of patent | 20 days | ||||||||||
Office and laboratory space | |||||||||||
Other Commitments [Line Items] | |||||||||||
Square fee of office and laboratory space leased (in sq ft) | a | 14,782 | ||||||||||
Annual base rent in first year | $ 184,775 | ||||||||||
Increase in base rent each succeeding year | $ 7,391 |
Commitments and Contingencies -
Commitments and Contingencies - Future minimum payments (Details) | Jun. 30, 2018USD ($) |
2,018 | $ 92,388 |
2,019 | 189,086 |
2,020 | 196,477 |
2,021 | 83,149 |
Total | $ 561,100 |
Common Stock (Details Textual)
Common Stock (Details Textual) - USD ($) | Mar. 03, 2017 | Jun. 30, 2018 | Jun. 30, 2017 |
Proceeds from Issuance of Common Stock | $ 0 | $ 13,657,331 | |
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | 5,929,256 | ||
Private Placement [Member] | |||
Proceeds from Issuance of Common Stock | $ 13,700,000 | ||
Sale of Stock, Price Per Share | $ 2.535 | ||
Proceeds from Issuance or Sale of Equity | $ 15,000,000 | ||
Payments of Stock Issuance Costs | $ 1,100,000 | ||
Common Stock [Member] | Private Placement [Member] | |||
Sale of Stock, Number of Shares Issued in Transaction | 5,220,826 | ||
Preferred Stock [Member] | Private Placement [Member] | |||
Sale of Stock, Number of Shares Issued in Transaction | 708,430 |
Equity Incentive Plan (Details
Equity Incentive Plan (Details Textual) | 6 Months Ended |
Jun. 30, 2018USD ($)shares | |
EmployeeStockOption [member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | shares | 122,039 |
Restricted Stock Units (RSUs) [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Stock Issued During Period, Shares, Employee Stock Ownership Plan | shares | 117,500 |
Stock Issued During Period, Value, Employee Stock Ownership Plan | $ | $ 158,110 |
Performance Shares [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Stock Issued During Period, Shares, Employee Stock Ownership Plan | shares | 12,000 |
Stock Issued During Period, Value, Employee Stock Ownership Plan | $ | $ 19,923 |
2013 Equity Incentive Plan | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Unrecognized compensation cost related to non-vested share-based compensation arrangements | $ | $ 689,640 |
Weighted average period for recognition | 8 months 12 days |
2013 Equity Incentive Plan | EmployeeStockOption [member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Value of options granted | $ | $ 330,713 |
Compensation expense associated with grants | $ | $ 270,712 |
Equity Incentive Plan [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Shares of common stock available for issuance under the Plan (in shares) | shares | 424,963 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | shares | 422,039 |
Equity Incentive Plan - Summary
Equity Incentive Plan - Summary of Stock Option Activity and Related Information (Details) - Equity Incentive Plan [Member] - $ / shares | 6 Months Ended | 12 Months Ended |
Jun. 30, 2018 | Dec. 31, 2017 | |
Stock Options | ||
Outstanding at January 1 (in shares) | 1,232,236 | |
Granted (in shares) | 422,039 | |
Forfeited/Expired/Exchanged (in shares) | (124,728) | |
Outstanding at June 30 (in shares) | 1,529,547 | 1,232,236 |
Exercisable at June 30 (in shares) | 1,264,680 | |
Weighted Average Exercise Price | ||
Outstanding at January 1 (in dollars per share) | $ 6.44 | |
Granted (in dollars per share) | 1.31 | |
Forfeited/Expired/Exchanged (in dollars per share) | 5.23 | |
Outstanding at June 30 (in dollars per share) | 5.12 | $ 6.44 |
Exercisable at June 30 (in dollars per share) | $ 5.12 | |
Weighted Average Remaining Life (in years) | ||
Outstanding (in years) | 7 years 3 months 18 days | 6 years 9 months 18 days |
Exercisable at June 30 (in years) | 7 years 2 months 12 days |
Warrants (Details Textual)
Warrants (Details Textual) - $ / shares | 6 Months Ended | |
Jun. 30, 2018 | Dec. 31, 2017 | |
Class of Warrant or Right [Line Items] | ||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ 2.79 | $ 2.79 |
Convertible Preferred Stock Maximum Beneficial Ownership Percentage | 9.99% | |
Class of Warrant or Right, Outstanding | 7,481,079 | 7,481,079 |
Placement Agent Warrant [Member] | ||
Class of Warrant or Right [Line Items] | ||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ 2.89 | |
Class Of Warrant Or Number Of Securities | 237,170 | |
Private Placement [Member] | ||
Class of Warrant or Right [Line Items] | ||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ 2.41 | |
Class Of Warrant Or Right, Expiration Period Of Warrants Or Rights | 3 years | |
Class Of Warrant Or Number Of Securities | 5,929,256 |
Revenue (Details Textual)
Revenue (Details Textual) - Sales Revenue, Net [Member] | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Customer A [Member] | ||
Concentration Risk, Percentage | 48.00% | 18.00% |
Customer B [Member] | ||
Concentration Risk, Percentage | 48.00% | 13.00% |
Customer C [Member] | ||
Concentration Risk, Percentage | 12.00% | 13.00% |
Revenue - Activity in the defer
Revenue - Activity in the deferred revenue account (Details) | 6 Months Ended |
Jun. 30, 2018USD ($) | |
Balance at December 31, 2017 | $ 0 |
Deferral of revenue | 50,070 |
Recognition of unearned revenue | (42,850) |
Balance at June 30, 2018 | $ 7,220 |