Document And Entity Information
Document And Entity Information - shares | 3 Months Ended | |
Mar. 31, 2021 | May 17, 2021 | |
Document Information Line Items | ||
Entity Registrant Name | ONDAS HOLDINGS INC. | |
Trading Symbol | ONDS | |
Document Type | 10-Q | |
Current Fiscal Year End Date | --12-31 | |
Entity Common Stock, Shares Outstanding | 26,672,040 | |
Amendment Flag | false | |
Entity Central Index Key | 0001646188 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Document Period End Date | Mar. 31, 2021 | |
Document Fiscal Year Focus | 2021 | |
Document Fiscal Period Focus | Q1 | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Entity Shell Company | false | |
Entity Ex Transition Period | false | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Entity File Number | 000-56004 | |
Entity Incorporation, State or Country Code | NV | |
Entity Tax Identification Number | 47-2615102 | |
Entity Address, Address Line One | 61 Old South Road | |
Entity Address, Address Line Two | #495 | |
Entity Address, City or Town | Nantucket | |
Entity Address, State or Province | MA | |
Entity Address, Postal Zip Code | 02554 | |
City Area Code | (888) | |
Local Phone Number | 350-9994 | |
Title of 12(b) Security | Common Stock par value $0.0001 | |
Security Exchange Name | NASDAQ | |
Entity Interactive Data Current | Yes |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) | Mar. 31, 2021 | Dec. 31, 2020 |
Current Assets: | ||
Cash and cash equivalents | $ 24,026,187 | $ 26,060,733 |
Accounts receivable, net | 19,226 | 47,645 |
Inventory, net | 1,152,247 | 1,152,105 |
Other current assets | 1,003,482 | 629,030 |
Total current assets | 26,201,142 | 27,889,513 |
Property and equipment, net | 196,223 | 163,084 |
Other Assets: | ||
Intangible assets, net | 332,603 | 379,530 |
Lease deposits | 118,577 | 28,577 |
Deferred offering costs | 99,958 | |
Operating lease right of use assets | 51,065 | |
Total other assets | 551,138 | 459,172 |
Total assets | 26,948,503 | 28,511,769 |
Current Liabilities: | ||
Accounts payable | 1,934,803 | 2,368,203 |
Operating lease liabilities | 56,168 | |
Accrued expenses and other current liabilities | 2,181,299 | 2,832,780 |
Secured promissory note, net of debt discount of $59,914 and $120,711, respectively | 7,064,364 | 7,003,568 |
Deferred revenue | 56,184 | 165,035 |
Notes payable | 104,343 | 59,550 |
Total current liabilities | 11,340,993 | 12,485,304 |
Long-Term Liabilities: | ||
Notes payable | 861,748 | 906,541 |
Accrued interest | 36,829 | 36,329 |
Total long-term liabilities | 898,577 | 942,870 |
Total liabilities | 12,239,570 | 13,428,174 |
Commitments and Contingencies | ||
Stockholders’ Equity | ||
Preferred stock, value | ||
Common stock - par value $0.0001; 116,666,667 shares authorized; 26,672,040 and 26,540,769 issued and outstanding, respectively March 31, 2021 and December 31, 2020, respectively | 2,667 | 2,654 |
Additional paid in capital | 83,093,932 | 80,330,488 |
Accumulated deficit | (68,387,666) | (65,249,547) |
Total stockholders’ equity | 14,708,933 | 15,083,595 |
Total liabilities and stockholders’ equity | 26,948,503 | 28,511,769 |
Series A Preferred Stock | ||
Stockholders’ Equity | ||
Preferred stock, value |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parentheticals) - USD ($) | Mar. 31, 2021 | Dec. 31, 2020 |
Secured promissory note, net of debt discount (in Dollars) | $ 59,914 | $ 120,711 |
Preferred stock, par value (in Dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 5,000,000 | 10,000,000 |
Preferred stock, shares issued | ||
Preferred stock, shares outstanding | ||
Common stock, par value (in Dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 116,666,667 | 116,666,667 |
Common stock, shares issued | 26,672,040 | 26,540,769 |
Common stock, shares outstanding | 26,672,040 | 26,540,769 |
Series A Preferred Stock | ||
Preferred stock, par value (in Dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Income Statement [Abstract] | ||
Revenues, net | $ 1,164,764 | $ 200,198 |
Cost of goods sold | 555,350 | 181,092 |
Gross profit | 609,414 | 19,106 |
Operating expenses: | ||
General and administration | 2,408,854 | 908,587 |
Sales and marketing | 187,372 | 549,018 |
Research and development | 894,576 | 892,929 |
Total operating expenses | 3,490,802 | 2,350,534 |
Operating loss | (2,881,388) | (2,331,428) |
Other income (expense) | ||
Other income (expense) | (34,176) | 9,013 |
Interest income | 32 | 92 |
Interest expense | (222,587) | (484,962) |
Total other income (expense) | (256,731) | (475,857) |
Loss before provision for income taxes | (3,138,119) | (2,807,285) |
Provision for income taxes | ||
Net loss | $ (3,138,119) | $ (2,807,285) |
Net loss per share - basic and diluted (in Dollars per share) | $ (0.12) | $ (0.14) |
Weighted average number of common shares outstanding, basic and diluted (in Shares) | 26,672,040 | 19,756,154 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT) - USD ($) | Common Stock | Additional Paid in Capital | Accumulated Deficit | Total |
Balance at Dec. 31, 2019 | $ 1,976 | $ 39,339,449 | $ (51,771,667) | $ (12,430,242) |
Balance (in Shares) at Dec. 31, 2019 | 19,756,154 | |||
Stock-based compensation | 25,599 | 25,599 | ||
Forgiveness of accrued officers’ salary | 150,002 | 150,002 | ||
Net loss | (2,807,285) | (2,807,285) | ||
Balance at Mar. 31, 2020 | $ 1,976 | 39,515,050 | (54,578,952) | (15,061,926) |
Balance (in Shares) at Mar. 31, 2020 | 19,756,154 | |||
Balance at Dec. 31, 2020 | $ 2,654 | 80,330,488 | (65,249,547) | 15,083,595 |
Balance (in Shares) at Dec. 31, 2020 | 26,540,769 | |||
Stock-based compensation | 1,348,462 | 1,348,462 | ||
Shares issued for extension of debt | $ 13 | 1,279,879 | 1,279,892 | |
Shares issued for extension of debt (in Shares) | 131,271 | |||
Forgiveness of accrued officers’ salary | 135,103 | 135,103 | ||
Net loss | (3,138,119) | (3,138,119) | ||
Balance at Mar. 31, 2021 | $ 2,667 | $ 83,093,932 | $ (68,387,666) | $ 14,708,933 |
Balance (in Shares) at Mar. 31, 2021 | 26,672,040 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
CASH FLOWS FROM OPERATING ACTIVITES | ||
Net loss | $ (3,138,119) | $ (2,807,285) |
Adjustments to reconcile net loss to net cash flows used in operating activities: | ||
Depreciation | 25,142 | 24,648 |
Amortization of deferred financing costs | 60,797 | 159,378 |
Amortization of intangible assets | 12,750 | 640 |
Amortization of right of use asset | 51,065 | 66,079 |
Loss on Intellectual Property | 34,178 | |
Stock-based compensation | 1,348,462 | 25,599 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 28,419 | 14,446 |
Inventory | (142) | (132,891) |
Other current assets | (374,452) | 51,299 |
Accounts payable | (433,400) | 547,420 |
Deferred revenue | (108,851) | (53,091) |
Operating lease liability | (56,168) | (115,160) |
Accrued expenses and other current liabilities | (515,880) | 245,164 |
Net cash flows used in operating activities | (3,066,199) | (1,973,754) |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Patent costs | (24,499) | |
Purchase of equipment | (58,281) | |
Proceeds from sub-lease deposit | 19,331 | |
Security deposit | (90,000) | 2,775 |
Net cash flows used in investing activities | (148,281) | (2,393) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Proceeds from exercise of warrants | 1,279,892 | |
Payments for deferred offering costs | (99,958) | |
Net cash flows provided by financing activities | 1,179,934 | |
Decrease in cash and cash equivalents | (2,034,546) | (1,976,147) |
Cash and cash equivalent, beginning of period | 26,060,733 | 2,153,028 |
Cash and cash equivalents, end of period | 24,026,187 | 176,881 |
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: | ||
Cash paid for interest | 11,705 | 3,187 |
Cash paid for income taxes | ||
SUPPLEMENTAL SCHEDULE OF NON-CASH FINANCING ACTIVITIES: | ||
Forgiveness of accrued officers salary | $ 135,103 | $ 150,002 |
DESCRIPTION OF BUSINESS AND BAS
DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION | 3 Months Ended |
Mar. 31, 2021 | |
Description of Business and Basis of Presentation [Abstract] | |
DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION | NOTE 1 – DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION The Company Ondas Holdings Inc. (“Ondas Holdings,” the “Company,” “we,” or “our”) was originally incorporated in Nevada on December 22, 2014 under the name of Zev Ventures Incorporated. On September 28, 2018, we acquired Ondas Networks, Inc., a Delaware corporation (“Ondas Networks”), changed our name to Ondas Holdings Inc., and Ondas Networks, became our sole focus and wholly owned subsidiary. The corporate headquarters for Ondas Holdings is located in Nantucket, MA and the offices and facilities for Ondas Networks are located in Sunnyvale, California. We have two wholly owned subsidiaries: (i) Ondas Networks, our operating company, originally incorporated in Delaware on February 16, 2006 under the name Full Spectrum Inc., subsequently changed to Ondas Networks Inc. on August 10, 2018, and (ii) FS Partners (Cayman) Limited, a Cayman Islands limited liability company (“FS Partners”). We have one majority owned subsidiary, Full Spectrum Holding Limited, a Cayman Islands limited liability company (“FS Holding”), which owned 100% of Ondas Network Limited, organized in Chengdu Province, China. FS Partners and Ondas Network Limited were both formed for the purpose of operating in China. As of December 31, 2019, we revised our business strategy, and discontinued all operations in China. On June 2, 2020, Ondas Network Limited was deregistered by the authority of the Chengdu High-Tech Zone, Market Supervision Administration. Both FS Partners and FS Holdings had no operations during 2020 and we are in the process of dissolving them and expect the process to be completed by the end of 2021. Business Activity Ondas Networks provides wireless connectivity solutions enabling mission-critical Industrial Internet applications and services. We refer to these applications as the Mission-Critical Internet of Things (“MC-IoT”). The Company’s wireless networking products are applicable to a wide range of MC-IoT applications which are most often located at the very edge of large industrial networks. We design, develop, manufacture, sell and support FullMAX, our patented, Software Defined Radio (“SDR”) platform for secure, licensed, private, wide-area broadband networks. Our customers install FullMAX systems in order to upgrade and expand their legacy wide-area network (“WAN”) infrastructure. Our MC-IoT intellectual property has been adopted by the Institute of Electrical and Electronics Engineers (“IEEE”), the leading worldwide standards body in data networking protocols, and forms the core of the IEEE 802.16s standard. We sell our products and services globally through a direct sales force and value-added sales partners to critical infrastructure providers including major rail operators, commercial and industrial drone operators, electric and gas utilities, water and wastewater utilities, oil and gas producers and pipeline operators, and for other critical infrastructure applications in areas such as homeland security and defense, and transportation. Our business consists of a single segment of products and services all of which are sold and provided in the United States and certain international markets. Liquidity We have incurred losses since inception and have funded our operations primarily through debt and the sale of capital stock. On March 31, 2021, we had stockholders’ equity of approximately $14,709,000, net short and long-term borrowings outstanding of approximately $7,169,000 and $862,000, respectively, cash of approximately $24,026,000 and working capital of approximately $14,860,000. In December 2020, the Company completed a registered public offering of its common stock, generating net proceeds of approximately $31,254,000. We believe the funds raised in the December 2020 equity offering, in addition to growth in revenue expected as the Company executes its business plan, will fund its operations for at least the next twelve months from the issuance date of these financial statements. Our future capital requirements will depend upon many factors, including progress with developing, manufacturing and marketing our technologies, the time and costs involved in preparing, filing, prosecuting, maintaining and enforcing patent claims and other proprietary rights, our ability to establish collaborative arrangements, marketing activities and competing technological and market developments, including regulatory changes and overall economic conditions in our target markets. Our ability to generate revenue and achieve profitability requires us to successfully market and secure purchase orders for our products from customers currently identified in our sales pipeline as well as new customers. We also will be required to efficiently manufacture and deliver equipment on those purchase orders. These activities, including our planned research and development efforts, will require significant uses of working capital. There can be no assurance that we will generate revenue and cash as expected in our current business plan. We may seek additional funds through equity or debt offerings and/or borrowings under additional notes payable, lines of credit or other sources. We do not know whether additional financing will be available on commercially acceptable terms or at all, when needed. If adequate funds are not available or are not available on commercially acceptable terms, our ability to fund our operations, support the growth of our business or otherwise respond to competitive pressures could be significantly delayed or limited, which could materially adversely affect our business, financial condition or results of operations. COVID-19 In December 2019, a novel strain of coronavirus (“COVID-19”) was identified in Wuhan, China, and has subsequently spread to other regions of the world, and has resulted in increased travel restrictions, business disruptions and emergency quarantine measures across the world including the United States. The Comp any’s business, financial condition and results of operations were impacted from the COVID-19 pandemic for the three months ended March 31, 2021 and the year ended December 31, 2020 as follows: ● sales and marketing efforts were disrupted as our business development team was unable to travel to visit customers and customers were unable to receive visitors for on-location meetings; ● field activity for testing and deploying our wireless systems was delayed due to the inability for our field service team to install and test equipment for our customers In the first quarter of 2020, we reduced our business activity to critical operations only, and furloughed 80% of our workforce. Per orders issued by the Health Officer of the County of Santa Clara, our corporate offices and facilities were closed, except for functions related to the support of remote workers and product support related to the essential transportation sector. On During 2020, in response to COVID-19 employee furloughs, Eric A. Brock, the Company’s Chief Executive Officer and Stewart W. Kantor, the Company’s Chief Financial Officer, accepted a pay reduction of 90% for the period from March 21 to May 19, 2020 and a 35% pay reduction from May 20 to December 15, 2020. Mr. Brock and Mr. Kantor’s salaries were returned to 100% effective December 16, 2020. The Company expects its business, financial condition and results of operations will be impacted from the COVID-19 pandemic during 2021, primarily due to the slowdown of customer activity during 2020 and 2021. Further, the COVID-19 pandemic is ongoing and remains an unknown risk for the foreseeable future. The extent to which the coronavirus may impact our business will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of the coronavirus. As a result, the Company is unable to reasonably estimate the full extent of the impact from the COVID-19 pandemic on its future business, financial condition and results of operations. In addition, if the Company were to experience any new impact to its operations or incur additional unanticipated costs and expenses as a result of the COVID-19 pandemic, such operational delays and unanticipated costs and expenses there could be a further adverse impact on the Company’s business, financial condition and results of operations during 2021. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended |
Mar. 31, 2021 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of the Company’s financial statements for interim periods in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”). The information included in this quarterly report on Form 10-Q should be read in conjunction with the audited consolidated financial statements and the accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 (“2020 Form 10-K”). The Company’s accounting policies are described in the “ Notes to Consolidated Financial Statements Principles of Consolidation The consolidated financial statements include the accounts of the Company and our wholly owned subsidiaries, Ondas Networks and FS Partners, and our majority owned subsidiary, FS Holding. All significant inter-company accounts and transactions between these entities have been eliminated in these unaudited condensed consolidated financial statements. Use of Estimates The process of preparing financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of assets and liabilities at the date of the financial statements. Such management estimates include those relating to revenue recognition, inventory write-downs to reflect net realizable value, assumptions used in the valuation of stock-based awards and valuation allowances against deferred tax assets. Actual results could differ from those estimates. Cash and Cash Equivalents The Company considers all highly liquid instruments purchased with an original maturity of three months or less to be cash equivalents. On March 31, 2021 and December 31, 2020, we had no cash equivalents. The Company periodically monitors its positions with, and the credit quality of the financial institutions with which it invests. Periodically, throughout the three months ended, and as of March 31, 2021, the Company has maintained balances in excess of federally insured limits. As of March 31, 2021, the Company was approximately $23,750,000 in excess of federally insured limits. Inventory Inventories, which consist solely of raw materials, work in process and finished goods, are stated at the lower of cost (first-in, first-out) or net realizable value, net of reserves for obsolete inventory. We continually analyze our slow-moving and excess inventories. Based on historical and projected sales volumes and anticipated selling prices, we established reserves. Inventory that is in excess of current and projected use is reduced by an allowance to a level that approximates its estimate of future demand. Products that are determined to be obsolete are written down to net realizable value. As of March 31, 2021 and December 31, 2020, we determined that no such reserves were necessary. Inventory consists of the following: March 31, December 31, Raw Material $ 1,010,642 $ 911,753 Work in Process 32,357 172,207 Finished Goods 109,248 68,145 TOTAL INVENTORY, NET $ 1,152,247 $ 1,152,105 Fair Value of Financial Instruments Our financial instruments consist primarily of receivables, accounts payable, accrued expenses and short- and long-term debt. The carrying amount of receivables, accounts payable and accrued expenses approximates our fair value because of the short-term maturity of such instruments. We have categorized our assets and liabilities that are valued at fair value on a recurring basis into a three-level fair value hierarchy in accordance with U.S. GAAP. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets and liabilities (Level 1) and lowest priority to unobservable inputs (Level 3). Assets and liabilities recorded in the balance sheets at fair value are categorized based on a hierarchy of inputs, as follows: Level 1 Unadjusted quoted prices in active markets for identical assets or liabilities. Level 2 Quoted prices for similar assets or liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument. Level 3 Unobservable inputs for the asset or liability. The Company had no financial instruments that are required to be valued at fair value as of March 31, 2021 and December 31, 2020. Deferred Offering Costs The Company capitalizes certain legal, professional accounting and other third-party fees that are directly associated with in-process equity financings as deferred offering costs until such financings are consummated. After consummation of equity financings, these costs are recorded in stockholders’ equity (deficit) as a reduction of additional paid-in capital generated as a result of the offering. Should the planned equity financings be abandoned, the deferred offering costs are expensed immediately as a charge to other income (expense) in the consolidated statement of operations. Revenue Recognition The Company is engaged in the development, marketing and sale of wireless radio systems for secure, wide area mission-critical, business-to business networks. We generate revenue primarily through from the sale of our FullMAX System and the delivery of related services, along with non-recurring engineering (“NRE”) development projects with certain customers. On April 23, 2020, effective April 24, 2020, the Company and Siemens Mobility, Inc. (“Siemens”) (the “Parties”) entered into a Joint Development Agreement (the “JDA”) and a Brand Label and Master Purchase Agreement (the “BLA”). The JDA calls for the joint development of (i) a dual-mode 900 MHz over-the-air ATCS compatible, MC-IoT capable base station radio and (ii) a dual-purpose 900 MHz, over-the-air advanced train control system (“ATCS”) compatible, MC-IoT capable wayside radio. The BLA calls for the purchase by Siemens of certain products developed under the JDA to create a Siemens-branded portfolio of wireless radio communication systems to the North American Rail Market. As of March 31, 2021 the ATCS joint development program was 97.5% completed. On January 29, 2021 (effective date), the Company and Siemens signed a letter of intent to start negotiations to enter into a definitive agreement for the development a new product for the global rail market. Preliminary and other work on this project began in the first quarter of 2021 with 11% being completed as of March 31, 2021. On March 11, 2021, the Company received a purchase order from AURA Network System (“AURA”) to develop a radio system capable of performing Base Station and Mobile Remote functions in support of AURA’s C2 UAS system. As of March 31, 2021, 67% of the project was completed. Collaboration Arrangements Within the Scope of ASC 808, Collaborative Arrangements The Company’s development revenue includes contracts where the Company and the customer work cooperatively to develop software and hardware applications. The Company analyzes these contracts to assess whether such arrangements involve joint operating activities performed by parties that are both active participants in the activities and exposed to significant risks and rewards dependent on the commercial success of such activities and are therefore within the scope of ASC Topic 808, Collaborative Arrangements (“ASC 808”). This assessment is performed throughout the life of the arrangement based on changes in the responsibilities of all parties in the arrangement. For collaboration arrangements that are deemed to be within the scope of ASC 808, the Company first determines which elements of the collaboration are deemed to be within the scope of ASC 808 and those that are more reflective of a vendor-customer relationship and therefore within the scope of ASC 606, Revenue from Contracts with Customers (“ASC 606”). The Company’s policy is generally to recognize amounts received from collaborators in connection with joint operating activities that are within the scope of ASC 808 as a reduction in research and development expense. As of March 31, 2021, the Company has not identified any contracts with its customers that meet the criteria of ASC 808. Arrangements Within the Scope of ASC 606, Revenue from Contracts with Customers Under ASC 606, the Company recognizes revenue when the customer obtains control of promised products or services, in an amount that reflects the consideration which is expected to be received in exchange for those products or services. The Company recognizes revenue following the five-step model prescribed under ASC 606: (i) identify contract(s) with a customer; (ii) identify the performance obligation(s) in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligation(s) in the contract; and (v) recognize revenue when (or as) the Company satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that the entity will collect the consideration it is entitled to in exchange for the products or services it transfers to the customer. At contract inception, once the contract is determined to be within the scope of ASC 606, the Company assesses the products or services promised within each contract and determines those that are performance obligations and assesses whether each promised product or service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied. To the extent the transaction price includes variable consideration, we estimate the amount of variable consideration that should be included in the transaction price utilizing the expected value method. Variable consideration is included in the transaction price if, in our judgment, it is probable that a significant future reversal of cumulative revenue under the contract will not occur. Estimates of variable consideration and determination of whether to include estimated amounts in the transaction price are based largely on an assessment of our anticipated performance and all information (historical, current and forecasted) that is reasonably available. Sales and other taxes collected on behalf of third parties are excluded from revenue. For the three months ended March 31, 2021 and 2020, none of our contracts with customers included variable consideration. Contracts that are modified to account for changes in contract specifications and requirements are assessed to determine if the modification either creates new or changes the existing enforceable rights and obligations. Generally, contract modifications are for products or services that are not distinct from the existing contract due to the inability to use, consume or sell the products or services on their own to generate economic benefits and are accounted for as if they were part of that existing contract. The effect of a contract modification on the transaction price and measure of progress for the performance obligation to which it relates, is recognized as an adjustment to revenue (either as an increase in or a reduction of revenue) on a cumulative catch-up basis. For the three months ended March 31, 2021 and March 31, 2020, there were no modifications to contract specifications. The Company is engaged in the development, marketing and sale of wireless radio systems for secure, wide area mission-critical, business-to-business networks. We generate revenue primarily from the sale of our FullMAX System and the delivery of related services, along with non-recurring engineering (“NRE”) development projects with certain customers. Product revenue is comprised of sales of the Company’s software defined base station and remote radios, its network management and monitoring system, and accessories. The Company’s software and hardware is sold with a limited one-year basic warranty included in the price. The limited one-year basic warranty is an assurance-type warranty, is not a separate performance obligation, and thus no transaction price is allocated to it. The nature of tasks under the limited one-year basic warranty only provide for remedying defective product(s) covered by the warranty. Product revenue is generally recognized when the customer obtains control of our product, which occurs at a point in time, and may be upon shipment or upon delivery based on the contractual shipping terms of a contract, or upon installation when the combined performance obligation is not distinct within the context of the contract. Service revenue is comprised of separately priced extended warranty sales, network support and maintenance, remote monitoring, as well as ancillary services directly related to the sale of the Company’s wireless communications products including wireless network design, systems engineering, radio frequency planning, software configuration, product training, installation, and onsite support. The extended warranty we sell provides a level of assurance beyond the coverage for defects that existed at the time of a sale or against certain types of covered damage. The extended warranty includes 1) factory hardware repair or replacement of the base station and remote radios, at our election, 2) software upgrades, bug fixes and new features of the radio software and network management systems (“NMS”), 3) deployment and network architecture support, and 4) technical support by phone and email. Ancillary service revenues are recognized at the point in time when those services have been provided to the customer and the performance obligation has been satisfied. With respect to extended warranty sales and remote monitoring, the Company applies the input method using straight-line recognition. Development revenue is comprised primarily of non-recurring engineering service contracts to develop software and hardware applications for various customers. A significant portion of this revenue is generated through three contracts with two customers whereby the Company is to develop such applications to interoperate within the customers infrastructure. For these contracts, the Company and the customers work cooperatively, whereby the customers’ involvement is to provide technical specifications for the product design, as well as, to review and approve the project progress at various markers based on predetermined milestones. The products developed are not able to be sold to any other customer and are based in part upon existing Company and customer technology. Development revenue is recognized as services are provided over the life of the contract as the Company has an enforceable right to payment for services completed to date and there is no alternative use of the product. If the customer contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. We enter into certain contracts within our service revenues that have multiple performance obligations, one or more of which may be delivered subsequent to the delivery of other performance obligations. We allocate the transaction price based on the estimated relative standalone selling prices of the promised products or services underlying each performance obligation. We determine standalone selling prices based on the price at which the performance obligation is sold separately. If the standalone selling price is not observable through past transactions, we estimate the standalone selling price considering available information such as market conditions and internally approved pricing guidelines related to the performance obligations. Revenue is then allocated to the performance obligations using the relative selling prices of each of the performance obligations in the contract. Our payment terms vary and range from Net 15 to Net 30 days from the date of the invoices for product and services related revenue. Our payment terms for the majority of our development related revenue carry milestone related payment obligations which span the contract life. For milestone-based contracts, the customer reviews the completed milestone and once approved, makes payment pursuant to the applicable contract. These contracts are also assessed to determine whether they are collaborative arrangements within ASC 808. As of March 31, 2021, the Company notes that no current contracts fall under the guidance within ASC 808 and will continue to be accounted for in accordance with ASC 606. Disaggregation of Revenue The following tables present our disaggregated revenues by Type of Revenue and Timing of Revenue: Three Months Ended 2021 2020 Type of Revenue Product revenue $ 17,600 $ 15,272 Service revenue 8,210 2,764 Development revenue 1,138,140 182,162 Other revenue 814 - Total revenue $ 1,164,764 $ 200,198 Three Months Ended 2021 2020 Timing of Revenue Revenue recognized point in time $ 18,414 $ 15,272 Revenue recognized over time 1,146,350 184,926 Total revenue $ 1,164,764 $ 200,198 Contract Assets and Liabilities We recognize a receivable or contract asset when we perform a service or transfer a good in advance of receiving consideration. A receivable is recorded when our right to consideration is unconditional and only the passage of time is required before payment of that consideration is due. A contract asset is recorded when our right to consideration in exchange for goods or services that we have transferred or provided to a customer is conditional on something other than the passage of time. Contract asset on March 31, 2021 was $484,048 and is included in other current assets in the Company’s unaudited condensed consolidated balance sheet. We did not have any contract assets recorded at December 31, 2020. We recognize a contract liability when we receive consideration, or if we have the unconditional right to receive consideration, in advance of satisfying the performance obligation. A contract liability is our obligation to transfer goods or services to a customer for which we have received consideration, or an amount of consideration is due from the customer. The table below details the activity in our contract liabilities during the three months ended March 31, 2021, and the year ended December 31, 2020, which is included in accrued expenses and other current liabilities in the Company’s unaudited condensed consolidated balance sheet. Three Months Ended Year Ended December 31, 2020 Balance at beginning of period $ 165,035 $ 378,850 Additions 550,000 1,058,850 Transfer to revenue (658,851 ) (1,267,665 ) Balance at end of period $ 56,184 $ 165,035 Warranty Reserve For our software and hardware products, we provide a limited one-year assurance-type warranty and for our development service, we provide no warranties. The assurance-type warranty covers defects in material and workmanship only. If a software or hardware component is determined to be defective after being tested by the Company within the one-year, the Company will repair, replace or refund the price of the covered hardware and/or software to the customer (not including any shipping, handling, delivery or installation charges). We estimate, based upon a review of historical warranty claim experience, the costs that may be incurred under our warranties and record a liability in the amount of such estimate at the time a product is sold. Factors that affect our warranty liability include the number of units sold, historical and anticipated rates of warranty claims, and cost per claim. We periodically assess the adequacy of our recorded warranty liability and adjust the accrual as claims data and historical experience warrants. The Company has assessed the costs of fulfilling its existing assurance-type warranties and has determined that the estimated outstanding warranty obligation on March 31, 2021 or December 31, 2020 are immaterial to the Company’s financial statements. Leases Under Topic 842, operating lease expense is generally recognized evenly over the term of the lease. During the three months ended March 31, 2021, the Company had one operating lease consisting of office space in Sunnyvale, CA (the “Gibraltar Lease”) and for the year ended December 31, 2020, the Company had operating leases primarily consisting of two office space leases in Sunnyvale, California (the “North Pastoria Lease” and the Gibraltar Lease) (collectively, the “Sunnyvale Leases”). On December 31, 2020, the North Pastoria Lease expired. The Gibraltar Lease expired on February 28, 2021 and was verbally extended to March 31, 2021 under the same terms. On January 22, 2021, we entered into a 24-month lease (effective April 1, 2021) with the owner and landlord (the “2021 Gibraltar Lease”), wherein the base rate is $45,000 per month and including a security deposit in the amount of $90,000. On January 24, 2020, the Company and a third party (the “Sublessee”) entered into a Sublease agreement (the “Sublease”) on the North Pastoria Lease, wherein the Sublessee occupied the premises through December 31, 2020. The Sublessee made rent payments of approximately $9,666 and management fee payments of approximately $457 per month beginning February 1, 2020, and a one-time security deposit of $19,332. Sublease rental income for the period from February 1 through December 31, 2020 was $111,349. On December 31, 2020, $10,122 of the security deposit was applied to the December 2020 amount due and the balance was refunded on January 19, 2021. We determine if an arrangement is a lease, or contains a lease, at the inception of the arrangement. If we determine the arrangement is a lease, or contains a lease, at lease inception, we then determine whether the lease is an operating lease or finance lease. Operating and finance leases result in recording a right-of-use (“ROU”) asset and lease liability on our consolidated balance sheets. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. For purposes of calculating operating lease ROU assets and operating lease liabilities, we use the non-cancellable lease term plus options to extend that we are reasonably certain to take. Lease expense for operating lease payments is recognized on a straight-line basis over the lease term. Our leases generally do not provide an implicit rate. As such, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. This rate is generally consistent with the interest rate we pay on borrowings under our credit facilities, as this rate approximates our collateralized borrowing capabilities over a similar term of the lease payments. We have elected not to recognize ROU assets and lease liabilities that arise from short-term (12 months or less) leases for any class of underlying assets. We have elected not to separate lease and non-lease components for any class of underlying asset. Lease Costs Three Months Ended 2021 2020 Components of total lease costs: Operating lease expense $ 80,627 $ 83,255 Short-term lease costs (1) - 4,250 Sublease rental income - (19,332 ) Total lease costs $ 80,627 $ 68,173 (1) Represents short-term leases which are immaterial. Lease Positions as of March 31, 2021 and December 31, 2020 ROU lease assets and lease liabilities for our operating leases were recorded in the unaudited condensed consolidated balance sheet as follows: As of As of Assets: Operating lease assets $ - $ 51,065 Total lease assets $ - $ 51,065 Liabilities: Operating lease liabilities, current $ - $ 56,168 Operating lease liabilities, net of current - - Total lease liabilities $ - $ 56,168 Other Information Three Months Ended 2021 2020 Operating cash flows for operating leases $ 85,730 $ 132,791 Weighted average remaining lease term (in years) – operating lease - 0.8 Weighted average discount rate – operating lease 14 % 14 % Net Loss Per Common Share Basic net loss per share is computed by dividing net loss by the weighted average shares of common stock outstanding for each period. Diluted net loss per share is the same as basic net loss per share since the Company has net losses for each period presented. The following potentially dilutive securities for the three months ended March 31, 2021 and 2020 have been excluded from the computation of diluted net loss per share because the effect of their inclusion would have been anti-dilutive. Three months ended 2021 2020 Warrants to purchase common stock 593,006 1,590,473 Options to purchase common stock 1,701,639 231,542 Restricted stock purchase offers 640,805 126,160 Total potentially dilutive securities 2,935,450 1,948,175 Concentration of Customers Because we have only recently invested in our customer service and support organization, a small number of customers have accounted for a substantial amount of our revenue. The table below sets forth the Company’s customers that accounted for greater than 10% of its revenues for the three month periods ended March 31, 2021 and 2020, respectively: Three Months Ended Customer 2021 2020 A 18 % 91 % B 81 % - % Customer A accounted for 92% of the Company’s accounts receivable balance at March 31, 2021. Recently Adopted Accounting Pronouncements In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which removes certain exceptions for recognizing deferred taxes for investments, performing intraperiod tax allocation and calculating income taxes in interim periods. ASU 2019-12 is applicable to all entities subject to income taxes. ASU 2019-12 provides guidance to minimize complexity in certain areas by introducing a policy election to not allocate consolidated income taxes when a member of a consolidated tax return is not subject to income tax and guides whether to relate a step-up tax basis to a business combination or separate transaction. ASU 2019-12 changes the current guidance of making an intraperiod allocation, determining when a tax liability is recognized after a foreign entity investor transitions to or from equity method of accounting, accounting for tax law changes and year-to-date losses in interim periods, and determining how to apply income tax guidance to franchise taxes. The amendments ASU 2019-12 are effective for all public business entities for fiscal years beginning after December 15, 2020 and include interim periods. The guidance is effective for all other entities for fiscal years beginning after December 15, 2021 and for interim periods beginning after December 15, 2022. Early adoption is permitted. The adoption of this pronouncement had no impact on our accompanying consolidated financial statements. In June 2016, FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which replaces the incurred loss methodology with an expected loss methodology that is referred to as the current expected credit loss (“CECL”) methodology. The CECL model utilizes a lifetime expected credit loss measurement objective for the recognition of credit losses for loans and other receivables at the time the financial asset is originated or acquired. The expected credit losses are adjusted each period for changes in expected lifetime credit losses. This model replaces the multiple existing impairment models previously used under U.S. generally accepted accounting principles, which generally require that a loss be incurred before it is recognized. The new standard also applies to financial assets arising from revenue transactions such as contract assets and accounts receivables. For public business entities that meet the definition of an SEC filer, excluding entities eligible to be SRCs as defined by the SEC, ASU No. 2016-13 is effective for fiscal years beginning after Dec. 15, 2019. All other entities, ASU No. 2016-13 is effective for fiscal years beginning after Dec. 15, 2022. The adoption of this pronouncement had no impact on our accompanying consolidated financial statements. In November 2019, the FASB issued ASU 2019-11, Codification Improvements to Topic 326, Financial Instruments-Credit Losses, which amends certain aspects of the Board’s new credit loss standard (ASC 326). ASU 2019-11 is applicable to companies that hold financial assets in the scope of the credit losses standard. FASB permits to include the following in estimate if expected credit losses: expected recoveries of financial assets previously written off and expected recoveries of financial assets with credit deterioration. The scope of guidance related to expected recoveries includes purchased financial assets with credit deterioration. ASU 2019-11 permits entities to record negative allowance when measuring expected credit losses for a purchased credit deteriorated financial asset and expected recoveries cannot exceed the aggregate amount previously written off or expected to be written off. When discounted cash flow method is not being used to estimate expected credit losses, expected recoveries cannot include any amounts in an acceleration of the noncredit discount. An entity may include increases in expected cash flows after acquisition. Early adoption is not permitted. The adoption of this pronouncement had no impact on our accompanying consolidated financial statements. Recently Issued Accounting Pronouncements In May 2021, the Financial Accounting Standards Board (“FASB”) issued accounting standards update (“ASU”) 2021-04—Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options, to clarify and reduce diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options (for example, warrants) that remain equity classified after modification or exchange. The amendments in this ASU are effective for public and nonpublic entities for fiscal years beginning after December 15, 2021, and interim periods with fiscal years beginning after December 15, 2021. Early adoption is permitted, including adoption in an interim period. The Company is currently evaluating the effects of the adoption of ASU No. 2021-04 on its consolidated financial statements. In August 2020, the FASB issued ASU No. 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”), which simplifies an issuer’s accounting for convertible instruments by reducing the number of accounting models that require separate accounting for embedded conversion features. ASU 2020-06 also simplifies the settlement assessment that entities are required to perform to determine whether a contract qualifies for equity classification and makes targeted improvements to the disclosures for convertible instruments and earnings-per-share (EPS) guidance. This update will be effective for the Company’s fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. Entities can elect to adopt the new guidance through either a modified retrospective method of transition or a fully retrospective method of transition. The Company is currently evaluating the impact of the pending adoption of the new standard on its financial statements and intends to adopt the standard as of January 1, 2024. Reclassification Certain amounts reported in the prior year financial statements have been reclassified to conform to the current year presentation. |
OTHER CURRENT ASSETS
OTHER CURRENT ASSETS | 3 Months Ended |
Mar. 31, 2021 | |
Other Current assets [Abstract] | |
OTHER CURRENT ASSETS | NOTE 3 – OTHER CURRENT ASSETS Other current assets consist of the following: March 31, December 31, Prepaid insurance $ 463,331 $ 623,627 Other prepaid expenses 56,102 5,403 Contract assets 484,049 - Total other current assets $ 1,003,482 $ 629,030 |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 3 Months Ended |
Mar. 31, 2021 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | NOTE 4 – PROPERTY AND EQUIPMENT Property and equipment consist of the following: March 31, December 31, Vehicle $ 149,916 $ 149,916 Computer Equipment 162,514 112,615 Furniture and fixtures 94,053 94,053 Software 61,287 61,287 Leasehold improvements 28,247 28,247 Test Equipment 33,777 25,395 529,794 471,513 Less: accumulated depreciation (333,571 ) (308,429 ) Total property and equipment, net $ 196,223 $ 163,084 Depreciation expense for the three months ended March 31, 2021 and 2020 was $25,142 and $24,648, respectively. |
INTANGIBLE ASSETS
INTANGIBLE ASSETS | 3 Months Ended |
Mar. 31, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
INTANGIBLE ASSETS | NOTE 5 – INTANGIBLE ASSETS On March 31, 2021, our intangible assets included patent costs totaling $124,532 (of which $91,781 represents patent pending costs which are not subject to amortization) less accumulated amortization of patent costs of $10,511 and license costs totaling $241,909 less accumulated amortization of license costs of $23,328. On December 31, 2020, our intangible assets included patent costs totaling $158,710 (of which $133,112 represents patent pending costs which are not subject to amortization) less accumulated amortization of patent costs of $3,809 and license costs totaling $241,909 less accumulated amortization of license costs of $17,280. Amortization expense for the three months ended March 31, 2021 and 2020 was $12,750 and $640, respectively. Estimated amortization expense for the next five years for the patent and license costs currently being amortized is as follows: Year Ending December 31, Estimated Amortization 2021 (9 months) $ 20,600 2022 $ 27,029 2023 $ 27,029 2024 $ 26,752 2025 $ 26,752 |
ACCRUED EXPENSES AND OTHER CURR
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | 3 Months Ended |
Mar. 31, 2021 | |
Disclosure Text Block Supplement [Abstract] | |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | NOTE 6 – ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES Accrued expenses and other current liabilities consist of the following: March 31, December 31, 2020 Accrued payroll and other benefits $ 1,470,070 $ 2,125,981 D&O insurance financing payable 310,446 479,712 Accrued interest 193,453 44,579 Accrued professional fees 91,922 115,000 Other accrued expenses 115,408 67,508 Total accrued expenses and other current liabilities $ 2,181,299 $ 2,832,780 |
SECURED PROMISSORY NOTES
SECURED PROMISSORY NOTES | 3 Months Ended |
Mar. 31, 2021 | |
Investments, Debt and Equity Securities [Abstract] | |
SECURED PROMISSORY NOTES | NOTE 7 – SECURED PROMISSORY NOTES Steward Capital Holdings LP On March 9, 2018, we entered into a loan and security agreement (the “Agreement”) with Steward Capital Holdings LP (the “Steward Capital”) wherein Steward Capital made available to us a loan in the aggregate principal amount of up to $10,000,000 (the “Loan”). On March 9, 2018, the Company and Steward Capital, pursuant to the Agreement, entered into a Secured Term Promissory Note for $5,000,000, having a maturity date of September 9, 2019 (“Tranche A”). The Note bears interest at a per annum rate equal to the greater of (a) 11.25% or (b) 11.25% plus the Prime Rate, less 3.25%. The Agreement also includes payments of $25,000 in loan commitment fees and $100,000 (1%) of the funding in loan facility charges. The loan commitment fees and $50,000 in loan facility charges associated with Tranche A were recorded as debt discount and amortized over the life of the Loan. There is also an end of term charge of $250,000. The end of term charge was being recorded as accreted costs over the term of the Loan. The Note is secured by substantially all of the assets of the Company. On October 9, 2018, the Company and Steward Capital, pursuant to the Agreement, entered into a second Secured Term Promissory Note for $5,000,000 having a maturity date of April 9, 2020 (the “Second Note”) to complete the Agreement for $10,000,000. The Second Note bears interest at a per annum rate equal to the greater of (a) 11.25% or (b) 11.25% plus the Prime Rate, less 3.25%. Pursuant to the terms of the Agreement, the Company is required to pay a $50,000 loan facility charge. On June 18, 2019, the Company and Steward Capital entered into a letter of agreement to amend the Agreement (the “First Amendment”) to (i) extend and amend the maturity date, as defined in Section 1.1 of the Agreement, to read in its entirety “means September 9, 2020” (the “Maturity Date”); (ii) waive the repayment requirement to Steward Capital under Section 2.3 of the Agreement, in connection with the then proposed public offering of the Company as described in the Company’s Registration Statement on Form S-1, as amended, originally filed on April 12, 2019, and (iii) waive the restriction by Steward Capital on the prepayment of Indebtedness under Section 7.4 of the Agreement. In connection with the waivers, extension and amendment, the Company agreed to pay to Steward Capital, upon the earlier of (a) the completion of the public offering as set forth in Section 2.3 of the Agreement and (b) ten (10) days following the Company’s receipt of Steward’s written demand therefor, a fee equal to three percent (3%) of the current outstanding principal balance of the Loan (as defined in the Agreement), neither of which have occurred at the time of this filing. The Company concluded that the modifications created by the First Amendment resulted in a troubled debt restructuring under Accounting Standard Codification—Debt (Topic 470) as it was determined that a concession was granted by Steward Capital. However, as the future payments to be made subsequent to the modification are greater than the carrying value at the time of the modification, no gain or loss was required to be recognized on the troubled debt restructuring. As the difference between the effective interest rate method and the straight-line method is deemed immaterial, the Company will continue to amortize the deferred loan costs using the straight-line method over the remaining term of the Loan. On October 28, 2019, the Company and Steward Capital entered into a letter of agreement to amend the Agreement, as amended (the “Second Amendment”) wherein the parties agreed to (i) extend and amend the due date for all accrued and unpaid interest starting September 2, 2019 to the Maturity Date and (ii) extend and amend the due date for the 3% fee payable to Steward Capital in connection with the First Amendment and waiver dated June 2019 to be payable on the Maturity Date. In connection with the extensions and amendments, the Company issued Steward Capital 120,000 shares of the Company’s common stock valued at $300,000 on December 15, 2019. The value was recorded as debt discount and amortized over the life of the Loan. The Company concluded that the modifications created by the Second Amendment resulted in a troubled debt restructuring under Accounting Standard Codification—Debt (Topic 470) as it was determined that a concession was granted by Steward Capital. However, as the future payments to be made subsequent to the modification are greater than the carrying value at the time of the modification, no gain or loss was required to be recognized on the troubled debt restructuring. As the difference between the effective interest rate method and the straight-line method is deemed immaterial, the Company will continue to amortize the deferred loan costs using the straight-line method over the remaining term of the Loan. On September 4, 2020, the Company and Steward Capital entered into the Second Amendment to the Loan and Security Agreement (the “Second Amendment”) to (i) extend the Maturity Date to September 9, 2021 (the “Extended Maturity Date”) and agree to convert all accrued interest into the note, resulting in a new principal balance of $11,254,236, (ii) make all accrued and unpaid interest from September 9, 2020 through the date of maturity due on the Extended Maturity Date, (iii) on or before October 1, 2020, Company shall issue 40,000 shares of Company’s stock to Steward valued at $9.75 per share, or total of $390,000 (issued on September 30, 2020) and (iv) make the fee of 3% of the outstanding principal balance of the loan, or $300,000 (as defined in the First Amendment) due at the updated maturity date of September 9, 2021. The Company concluded that the modifications created by the Second Amendment resulted in a troubled debt restructuring under Accounting Standard Codification—Debt (Topic 470) as it was determined that a concession was granted by Steward Capital. However, as the future payments to be made subsequent to the modification are greater than the carrying value at the time of the modification, no gain or loss was required to be recognized on the troubled debt restructuring. On December 9, 2020, the Company made a $5,000,000 payment to Steward Capital, applying $4,679,958 to principal and $320,042 to accrued interest. On March 31, 2021, the principal balance was $7,064,364, net of debt discount of $59,914 and accreted cost of $550,000. On December 31, 2020, the principal balance was $7,003,568, net of debt discount of $120,711 and accreted cost of $550,000. On March 31, 2021 and December 31, 2020, accrued interest was $193,453 and $44,579, respectively, and included in accrued expenses and other current liabilities in the balance sheet in the accompanying consolidated financial statements. Interest expense for the three months ended March 31, 2021 and 2020 was $148,874 and $314,375, respectively. The Agreement also contains covenants which included certain restrictions with respect to subsequent indebtedness, liens, loans and investments, asset sales and share repurchases and other restricted payments, subject to certain exceptions. The Agreement also contained financial reporting obligations. An event of default under the Agreement includes, but is not limited to, breach of covenants, insolvency, and occurrence of any default under any agreement or obligation of the Company. In addition, the Agreement contained a customary material adverse effect clause which states that in the event of a material adverse effect, an event of default would occur, and the lender has the option to accelerate and demand payment of all or any part of the loan. A material adverse effect is defined in the Agreement as a material change in our business, operations, properties, assets or financial condition or a material impairment of its ability to perform all obligations under its Agreement. On April 14, 2021, the Company requested Steward Capital’s waiver of Section 7 (Covenants of Borrower), in connection with a proposed acquisition (See Note 12. Subsequent Events). In connection with the waiver, the Company agreed to, upon consummation of the proposed acquisition, pay Steward Capital an additional $280,000 and upon the consummation of the proposed acquisition, Steward and the Company shall amend the Agreement to modify the defined term “collateral” to include the intellectual property of the acquired company. |
LONG-TERM NOTES PAYABLE
LONG-TERM NOTES PAYABLE | 3 Months Ended |
Mar. 31, 2021 | |
Debt Disclosure [Abstract] | |
LONG-TERM NOTES PAYABLE | NOTE 8 – LONG-TERM NOTES PAYABLE Convertible Promissory Notes On September 14, 2017, the Company and an individual entered into a convertible promissory note with unilateral conversion preferences by the individual (the “Convertible Promissory Note”). On July 11, 2018, the Company’s Board approved certain changes to the Convertible Promissory Note wherein the conversion feature was changed from unilateral to mutual between the individual and the Company. On both March 31, 2021 and December 31, 2020, the total outstanding balance of the Convertible Promissory Note (the “Note”) was $300,000. The maturity date of the Note is based on the payment of 0.6% of quarterly gross revenue until 1.5 times the amount of the Note is paid. Accrued interest on March 31, 2021 and December 31, 2020 was $36,829 and $36,329, respectively. Interest expense for the three months ended March 31, 2021 and 2020 was $3,750. On September 27, 2019, the holder of the Note was granted a warrant to purchase 46,893 shares of common stock of the Company. The fair value of this warrant was recorded as financing costs in the accompanying consolidated financial statements. Paycheck Protection Program Loan On May 4, 2020, the Company applied for a loan pursuant to the Paycheck Protection Program under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), as administered by the U.S. Small Business Administration (the “SBA”). The loan, in the principal amount of $666,091 (the “PPP Loan”), was disbursed by Wells Fargo Bank, National Association (“Lender”) on May 6, 2020, pursuant to a Paycheck Protection Program Promissory Note and Agreement (the “Note and Agreement”). The program was later amended by the Paycheck Protection Flexibility Act of 2020 whereby debtors were granted a minimum maturity date of the five-year anniversary of the funding date and a deferral of ten months from the end of the covered period. The PPP Loan bears interest at a fixed rate of 1.00% per annum. Monthly principal and interest payments, less the amount of any potential forgiveness (discussed below), will commence after the sixteen-month anniversary of the funding date. The Company did not provide any collateral or guarantees for the PPP Loan, nor did the Company pay any facility charge to obtain the PPP Loan. The Note and Agreement provides for customary events of default, including those relating to failure to make payment, bankruptcy, breaches of representations and material adverse effects. The Company may prepay the principal of the PPP Loan at any time without incurring any prepayment charges. All or a portion of the PPP Loan may be forgiven by the SBA upon application to the Lender by the Company within 10 months after the last day of the covered period. The Lender will have 90 days to review borrower’s forgiveness application and the SBA will have an additional 60 days to review the Lender’s decision as to whether the borrower’s loan may be forgiven. Under the CARES Act, loan forgiveness is available for the sum of documented payroll costs, covered rent payments, and covered utilities, and certain covered mortgage interest payments during the twenty-four-week period beginning on the date of the first disbursement of the PPP Loan. For purposes of the CARES Act, payroll costs exclude compensation of an individual employee earning more than $100,000, prorated annually. Not more than 40% of the forgiven amount may be for non-payroll costs. Forgiveness is reduced if full-time headcount declines, or if salaries and wages for employees with salaries of $100,000 or less annually are reduced by more than 25%. Although the Company currently believes that its use of the PPP Loan will meet the conditions for forgiveness of the PPP Loan, the Company cannot assure that the PPP Loan will be forgiven, in whole or in part. On May 4, 2021, the Company submitted an application to the lender with supporting detail requesting forgiveness of the loan. However, no determination had been made at the time of the filing of this Form 10-Q. The Company has recorded $104,343 in current liabilities and $561,748 in long-term liabilities in the Company’s accompanying consolidated balance sheet. Accrued interest on March 31, 2021 and December 31, 2020 was $6,027 and $4,362, and interest expense for the three months ended March 31, 2021 and 2020 was $1,665 and $0. Future maturities of the loan payable, if not forgiven, are as follows: Year ending December 31, 2021 $ 59,550 2022 179,845 2023 181,652 2024 183,477 2025 61,567 $ 666,091 |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 3 Months Ended |
Mar. 31, 2021 | |
Stockholders' Equity Note [Abstract] | |
STOCKHOLDERS’ EQUITY | NOTE 9 – STOCKHOLDERS’ EQUITY Preferred Stock On March 31, 2021, the Company had 10,000,000 shares of preferred stock, par value $0.0001, authorized, of which 5,000,000 shares are designated as Series A Convertible Preferred Stock (“Series A Preferred”) and 5,000,000 shares are non-designated (“blank check”) shares. As of March 31, 2021 and December 31, 2020, the Company had no preferred stock outstanding. Certificate of Designation Series A Preferred Stock On August 14, 2020, the Company filed a Certificate of Designation with the State of Nevada to designated 5,000,000 shares of the Company’s preferred stock as Series A Preferred. Shares of Series A Preferred rank pari passu with the Company’s common stock, except that holders of Series A Preferred shall have certain liquidation preferences as set forth in the Certificate of Designation and the holders of the Series A Preferred are not entitled to vote on any matters presented to the stockholder of the Company. The Certificate of Designation became effective on the Closing Date. The Series A Preferred is convertible at a holder’s election any time beginning nine months from the 2020 Closing into shares of the Company’s common stock at an initial conversion price equal to the Purchase Price, subject to certain adjustments described below, so that, initially, each share of Series A Preferred shall be convertible into one (1) share of the Company’s common stock. Also, the Series A Preferred will be automatically converted into the Company’s common stock (a “Mandatory Conversion”), at the then applicable conversion price, in the event of an equity offering of shares of the Company’s common stock resulting in the Company uplisting to a national securities exchange (provided that if the per share offering price in such offering is less than the then applicable conversion price for the Series A Preferred, the Series A Preferred will automatically convert based on the offering price in such offering). In the event of any stock split, stock dividend, or stock combination, the number of shares deliverable and the conversion price of the Series A Preferred will be appropriately adjusted. In the event a Mandatory Conversion is triggered, if the offering price on the date such Mandatory Conversion is triggered is less than a 25% premium $6.00, the Company will issue additional shares of the Company’s common stock for each outstanding share of Series A Preferred to ensure the effective conversion price equals a 25% discount to $6.00. Also, for a period of one year from the date of the Purchase Agreements, if the Company undertakes an underwritten public equity offering, the holders of Series A Preferred will enter into a lock-up agreement with respect to the sale of the Series A Preferred and the Company’s common stock underlying such Series A Preferred as may be reasonably requested by the Company or the Company’s underwriter for such public equity offering. Common Stock On March 31, 2021, the Company had 116,666,667 shares of common stock, par value $0.0001 (the “Common Stock”) authorized for issuance, of which 26,672,040 shares of our Common Stock were issued and outstanding. On March 28, 2021, the lock-up period terminated for an aggregate of 8,142,894 shares of Common Stock, pursuant to lock-up agreements entered into in connection with the Company’s acquisition of Ondas Networks, as amended. Reverse Stock Split On November 3, 2020, the Board of Directors of the Company approved a one-for-three reverse stock split of the Company’s authorized and outstanding common stock, effective November 13, 2020 (the “Reverse Stock Split”). On November 12, 2020, Company filed a Certificate of Change to the Company’s Articles of Incorporation with the Secretary of State of the State of Nevada to effect the Reverse Stock Split. The Reverse Stock Split became effective at 5:31 p.m., Eastern Time, on November 13, 2020. No fractional shares will be issued as a result of the Reverse Stock Split. Any fractional shares that would result from the Reverse Stock Split will be rounded up to the nearest whole share. Following the Reverse Stock Split, the Company has 116,666,667 shares of Common Stock authorized. On November 16, 2020, the Company’s Common Stock began trading on the OTCQB on a split-adjusted basis under the current trading symbol “ONDS” and the new CUSIP number 68236H 204. Form S-3 On January 29, 2021, the Company filed a shelf Registration Statement on Form S-3 for up to $150,000,000 with the SEC (the “Form S-3”) for shares of its Common Stock; shares of its preferred stock, which the Company may issue in one or more series or classes; debt securities, which the company may issue in one or more series; warrants to purchase its Common Stock, preferred stock or debt securities; and units. The Form S-3 was declared effective by the SEC on February 5, 2021. Warrants to Purchase Common Stock We use the Black-Sholes-Morton option model (the “Black-Scholes Model”) to determine the fair value of warrants to purchase Common Stock of the Company (“Warrants”). The Black-Scholes Model is an acceptable model in accordance with the GAAP. The Black-Scholes Model requires the use of a number of assumptions including volatility of the stock price, the weighted average risk-free interest rate, and the weighted average term of the Warrant. The risk-free interest rate assumption is based upon observed interest rates on zero coupon U.S. Treasury bonds whose maturity period is appropriate for the term of the Warrants. Estimated volatility is a measure of the amount by which our stock price is expected to fluctuate each year during the expected life of the award. Our estimated volatility is an average of the historical volatility of peer entities whose stock prices were publicly available over a period equal to the expected life of the awards. We used the historical volatility of peer entities due to the lack of sufficient historical data of our stock price. No Warrants were issued during the three months ended March 31, 2021 or 2020. As of March 31, 2021, we had Warrants outstanding to purchase an aggregate of 1,748,532 shares of Common Stock with a weighted-average contractual remaining life of approximately 2.1 years, and exercise prices ranging from $0.03 to $9.75 per share, resulting in a weighted average exercise price of $9.11 per share. During the three months ended March 2021, certain warrant holders exercised their right to purchase an aggregate of 131,271 shares of the Company’s Common Stock at an exercise price of $9.75 totaling $1,279,892, all of which was received by the Company in January and March 2021. Equity Incentive Plan In September 2018, our Board approved, and our stockholders adopted, the 2018 Equity Incentive Plan (the “2018 Plan”) pursuant to which 3,333,334 shares of our Common Stock has been reserved for issuance to employees, including officers, directors and consultants. The 2018 Plan shall be administered by the Board, provided however, that the Board may delegate such administration to the compensation committee of the Board (the “Compensation Committee”). Subject to the provisions of the 2018 Plan, the Board and/or the Compensation Committee shall have authority to grant, in its discretion, incentive stock options, or non-statutory options, stock awards or restricted stock purchase offers (“Equity Awards”). Stock Options to Purchase Common Stock On January 25, 2021, the Compensation Committee of the Board granted an aggregate of 90,000 stock options to purchase shares of the Company’s Common Stock (the “Options”) to certain non-employee directors for services prior to December 31, 2020, as a result we recognized $514,866 as stock-based compensation expense for the year ended December 31, 2020. The 10-year Options have an exercise price of $12.72 per share and a grant date fair value of $5.72 per share. In January 2020, pursuant to the terms of a Severance Agreement, a stock option to purchase 6,542 shares of the Company’s Common Stock (the “Option”) (valued at $15,479), was granted to a former employee pursuant to the 2018 Plan. On May 6, 2020, the Option was, by mutual consent, changed to a Warrant, which Warrant is included in the discussion of Warrants above. On February 15, 2021 the Company entered into an agreement with a service provider wherein stock options to purchase 25,000 shares of common stock were granted and vest on the six-month anniversary of the date of the agreement. The 10-year options have an exercise price of $12.92 per share and a grant date fair value of $5.82 per share. In addition, on January 25, 2021, the Compensation Committee approved 30,000 stock options, which are immediately exercisable, pursuant to the 2018 Plan, at an exercise price of $12.72 per share with a ten year term, The assumptions used in the Black-Scholes Model are set forth in the table below. Three months ended, 31-Mar-21 Stock price $ 12.92 Risk-free interest rate 0.57 % Volatility 52.80 % Expected life in years 10 Dividend yield 0.00 % A summary of our Option activity and related information follows: Weighted Weighted Average Number of Average Remaining Shares Under Exercise Contractual Option Price Life Balance on December 31, 2020 568,006 $ 7.39 9.4 Granted 25,000 $ 12.92 0.2 Expired - - Terminated - - Canceled - - Balance on March 31, 2021 593,006 $ 7.63 9.2 Vested and Exercisable at March 31, 2021 401,589 $ 7.71 9.3 At March 31, 2021, total unrecognized estimated compensation expense related to non-vested Options issued prior to that date was approximately $282,000, which is expected to be recognized over a weighted-average period of 0.7 years. For the three months ended March 31, 2021 and 2020, $97,162 and $15,479, respectively, was recorded in stock-based compensation in the accompanying unaudited condensed consolidated financial statements. At March 31, 2021, no Options had been exercised. Restricted Stock Units On June 3, 2020, the Company entered into an agreement wherein restricted stock units (“RSU(s)”) for the issuance of 1,000,000 shares of the Company’s Common Stock, with deferred distribution, was granted and issued to Thomas V. Bushey, the Company’s President, pursuant to the 2018 Plan. Stock-based compensation expense for the year ended December 31, 2020 was $3,150,000. Non-vested RSUs as of December 31, 2020 totaled 625,0000 During 2018, the Company entered into an agreement wherein RSUs for the issuance of 126,160 shares of the Company’s Common Stock (the “2018 RSUs”), with deferred distribution, was promised to a consultant pursuant to the 2018 Plan (the “RSU Agreement”). On September 21, 2020, the Company executed the RSU Agreement with the consultant. The 2018 RSUs vested upon the issuance of the RSU Agreement: however, the underlying shares of the Company’s Common Stock will not be issued and delivered to the consultant until December 1, 2021, at the request of the consultant. Stock-based compensation expense for the three months ended March 31, 2021 and 2020 was $0 and $10,120, respectively. The grant-date fair value for the RSU is $0.64 per share. The vesting period of the RSU was 2.0 years. On January 25, 2021, the Compensation Committee of the Board of Directors of the Company approved the 2021 Director Compensation Policy (the “Policy”). The Policy is applicable to all directors that are not employees or compensated consultants of the Company. Pursuant to the Policy, the annual equity award to non-employee directors will be restricted stock units representing $60,000. The company recognized stock-based compensation of $90,000 for the three months ended March 31, 2021. Vesting period is one year. As of March 31, 2021 the unrecognized compensation expense was $270,000. In addition, on January 25, 2021, the Compensation Committee approved the following grants: (a) for Messrs. Cohen, Reisfield and Silverman (i) 5,000 restricted stock units pursuant to the 2018 Plan, and (b) for Mr. Seidl and Ms. Sood (i) 5,000 restricted stock units pursuant to the 2018 Plan, and (ii) 10,000 restricted stock units pursuant to the 2018 Plan. Each restricted stock unit represents a contingent right to receive one share of common stock of the Company. The 5,000 restricted stock units granted to each of Messrs. Cohen, Reisfield, Silverman and Seidl and Ms. Sood vest in four successive equal quarterly installments with the first vesting date commencing on the first day of the next calendar quarter, provided that such director is a director of the Company on the applicable vesting dates. The 10,000 restricted stock units granted to Mr. Seidl and Ms. Sood vest in eight successive equal quarterly installments with the first vesting date commencing on the first day of the next calendar quarter, provided that such director is a director of the Company on the applicable vesting dates. All restricted stock units granted to these directors shall vest in full immediately upon a change in control. The company recognized stock-based compensation of $111,300 for the three months ended March 31, 2021. As of March 31, 2021, the unrecognized compensation expense was $461,100. The Company recognizes RSU expense over the period of vesting or period that services will be provided. RSUs issued for past service are recognized as expense in the period in which they are granted. Compensation associated with shares of Common Stock issued or to be issued to consultants and other non-employees is recognized over the expected service period beginning on the measurement date, which is generally the time the Company and the service provider enter into a commitment whereby the Company agrees to grant shares in exchange for the services to be provided. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 3 Months Ended |
Mar. 31, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE 10 – COMMITMENTS AND CONTINGENCIES Legal Proceedings We may be involved in legal proceedings, claims and assessments arising in the ordinary course of business. Such matters are subject to many uncertainties, and outcomes are not predictable with assurance. There are no such loss contingencies that are included in the financial statements as of March 31, 2021. Operating Leases On October 30, 2018, Ondas Networks entered into a Sublease with Texas Instruments Sunnyvale Incorporated, regarding the sublease of approximately 21,982 square feet of rentable space at 165 Gibraltar Court, Sunnyvale, CA 94089 (the “Gibraltar Sublease”), constituting the entire first floor of the premises (except the lobby and two stairwells), as defined under that certain Lease dated April 12, 2004, as amended by the First Lease Amendment dated March 15, 2005, a Second Amendment to Lease dated November 30, 2005, and a Third Amendment to Lease dated November 30, 2010 between Gibraltar Sunnyvale Holdings LLC and Texas Instruments Sunnyvale Incorporated. The Sublease began on November 1, 2018 and ended on February 28, 2021 at a base monthly rent of $28,577. A security deposit of $28,577 was paid upon execution of the Sublease. Rent expense for three months ended March 31, 2021 and 2020 was $80,627 and $83,255, respectively. The lease for our offices and facilities for Ondas Networks at 165 Gibraltar Court, Sunnyvale, CA expired on February 28, 2021 and was verbally extended to March 31, 2021 under the same terms. On January 22, 2021, we entered into a 24-month lease (effective April 1, 2021) with Google LLC, the owner and landlord, wherein the base rate is $45,000 per month and including a security deposit in the amount of $90,000. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 3 Months Ended |
Mar. 31, 2021 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | NOTE 11 – RELATED PARTY TRANSACTIONS Eric A. Brock, the Company’s Chief Executive Officer On August 14, 2020, pursuant to the terms of the Series A Preferred Stock Offering, Mr. Brock purchased 52,500 shares of Series A Preferred totaling $315,000 (the “Series A Shares”). O n December 8, 2020, the Series A Shares mandatorily converted into an aggregate of 66,676 shares of Common Stock, which includes an aggregate of 13,084 shares of Common Stock in connection with a 25% premium. and an aggregate of 842 shares of Common Stock in lieu of declaring a dividend on shares of Series A Convertible Preferred Stock. See NOTE 9 for details. ● During the year ended December 31, 2020, we accrued $131,494 for salary owed during 2020 to Mr. Brock, which amount remains outstanding on December 31, 2020. On January 29, 2021, we paid Mr. Brock $64,344. The balance of $67,150 was paid on April 15, 2021. Stewart W. Kantor, the Company’s President and Chief Financial Officer ● During year ended December 31, 2020, we accrued $2,956 for salary owed during 2020 to Mr. Kantor. As of December 31, 2020, the accrued balance was $274,831. On January 29, 2021, the Company paid Mr. Kantor $137,416. The balance of $137,415 was paid on April 15, 2021. Thomas V. Bushey, the Company’s Former President ● On January 19, 2021, Mr. Bushey resigned as the Company’s President. Mr. Bushey will continue to serve on the Company’s Board, and as a consultant to the Company. Pursuant to the terms of a Separation Agreement and General Release (the “Separation Agreement”) dated January 19, 2021 (the “Effective Date”), between Mr. Bushey and the Company, Mr. Bushey agreed to waive his entitlement to accrued salary in the amount of $125,256 and accrued vacation in the amount of $9,847 as of the Effective Date. ● On January 19, 2021, Mr. Bushey received 500,000 RSU Shares (375,000 RSU Shares vested as of December 31, 2020 and 125,000 RSU Shares on which the Compensation Committee accelerated vesting), which RSU Shares will be issued on June 3, 2022 pursuant to Mr. Bushey’s deferral election. ● As part of the Separation Agreement, Mr. Bushey and the Company entered into a Consulting Agreement dated January 19, 2021 (the “Consulting Agreement”). Pursuant to the Consulting Agreement, Mr. Bushey will provide services to the Company at the direction of the Company’s Chief Executive Officer. The Consulting Agreement terminates on July 19, 2021, unless terminated earlier by the Company for cause, or through the mutual agreement of the parties. Mr. Bushey will be paid $7,500 per month for these services. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 3 Months Ended |
Mar. 31, 2021 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 12 – SUBSEQUENT EVENTS American Robotics Acquisition Merger Agreement On May 17, 2021, the Company entered into an Agreement and Plan of Merger (the “ Agreement Merger Sub I Merger Sub II Merger Subs American Robotics The Agreement provides that, upon the terms and subject to the conditions set forth in the Agreement, American Robotics will merge with and into Merger Sub I (“ Merger I Merger II Mergers The Agreement provides that the Company will acquire American Robotics in exchange for (a) cash consideration in an amount equal to (i) $7,500,000, less Cash Consideration If American Robotics’ PPP loans are not forgiven by the U.S. Small Business Administration (the “ SBA Each of the Company, the Merger Subs, and American Robotics has provided customary representations, warranties and covenants in the Agreement. The completion of the Mergers is subject to various closing conditions, including (a) the requisite regulatory approvals being obtained; (b) the absence of any applicable order (whether temporary, preliminary or permanent) in effect which prohibits the consummation of the Mergers; (c) the absence of any law of any governmental authority of competent jurisdiction prohibiting the consummation of the Mergers; (d) American Robotics obtaining the Requisite Company Vote (as defined in the Agreement); and (e) the Company obtaining stockholder approval of the issuance of securities in the Mergers. The Agreement contains customary termination rights for both the Company and American Robotics. Both the Company and American Robotics have the right to terminate the Agreement if the Closing does not occur on or before September 30, 2021. Also on the closing date of the Mergers, the Company expects to enter into employment agreements and issue up to 1,375,000 restricted stock units under the Company’s incentive stock plan to key members of American Robotics’ management. Lock-Up and Registration Rights Agreement In connection with the Mergers, on May 17, 2021, the Company entered into a lock-up and registration rights agreement, by and among the Company and the directors and officers of American Robotics (the “ Registration Rights Agreement Promissory Note On April 22, 2021, the Company made a loan to American Robotics in the aggregate amount of $2.0 million. The note carries interest at a rate of 2% per annum. The principal and any accrued and unpaid interest shall be due on April 22, 2022. Steward Capital Waiver On April 14, 2021, the Company requested Steward Capital’s waiver of Section 7 (Covenants of Borrower), in connection with the currently proposed acquisition of American Robotics by the Company. In connection with the waiver, the Company agreed to upon consummation of the proposed acquisition, pay Steward Capital an additional $280,000 and upon the consummation of the proposed acquisition, Steward and the Company shall amend the Agreement to modify the defined term “collateral” to include the intellectual property of American Robotics. Consulting Agreement On April 1, 2021 the company entered into a consulting agreement with a vendor to perform strategic analysis and business development services to the Company. As part of the compensation for services provided, the Company granted non-statutory options under 2018 Plan to purchase 50,000 shares of common stock of the Company at a per share exercise price equal to $8.72. The options shall vest on September 30, 2021, and shall be exercisable for a period of 5 years following the grant date of the options. Related Party Transaction On April 15, 2021, 2020 accrued payroll balances in the amounts of $67,150 and $137,415 were paid to Company’s officers Eric A. Brock and Stewart W. Kantor, respectively. PPP Loan On May 4, 2021, the Company submitted an application to the lender with supporting detail requesting forgiveness of the PPP loan. However, no determination had been made at the time of the filing of this Form 10-Q. |
Accounting Policies, by Policy
Accounting Policies, by Policy (Policies) | 3 Months Ended |
Mar. 31, 2021 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of the Company’s financial statements for interim periods in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”). The information included in this quarterly report on Form 10-Q should be read in conjunction with the audited consolidated financial statements and the accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 (“2020 Form 10-K”). The Company’s accounting policies are described in the “ Notes to Consolidated Financial Statements |
Principles of Consolidation | Principles of Consolidation The consolidated financial statements include the accounts of the Company and our wholly owned subsidiaries, Ondas Networks and FS Partners, and our majority owned subsidiary, FS Holding. All significant inter-company accounts and transactions between these entities have been eliminated in these unaudited condensed consolidated financial statements. |
Use of Estimates | Use of Estimates The process of preparing financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of assets and liabilities at the date of the financial statements. Such management estimates include those relating to revenue recognition, inventory write-downs to reflect net realizable value, assumptions used in the valuation of stock-based awards and valuation allowances against deferred tax assets. Actual results could differ from those estimates. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid instruments purchased with an original maturity of three months or less to be cash equivalents. On March 31, 2021 and December 31, 2020, we had no cash equivalents. The Company periodically monitors its positions with, and the credit quality of the financial institutions with which it invests. Periodically, throughout the three months ended, and as of March 31, 2021, the Company has maintained balances in excess of federally insured limits. As of March 31, 2021, the Company was approximately $23,750,000 in excess of federally insured limits. |
Inventory | Inventory Inventories, which consist solely of raw materials, work in process and finished goods, are stated at the lower of cost (first-in, first-out) or net realizable value, net of reserves for obsolete inventory. We continually analyze our slow-moving and excess inventories. Based on historical and projected sales volumes and anticipated selling prices, we established reserves. Inventory that is in excess of current and projected use is reduced by an allowance to a level that approximates its estimate of future demand. Products that are determined to be obsolete are written down to net realizable value. As of March 31, 2021 and December 31, 2020, we determined that no such reserves were necessary. Inventory consists of the following: March 31, December 31, Raw Material $ 1,010,642 $ 911,753 Work in Process 32,357 172,207 Finished Goods 109,248 68,145 TOTAL INVENTORY, NET $ 1,152,247 $ 1,152,105 |
Fair Value of Financial Instruments | Fair Value of Financial Instruments Our financial instruments consist primarily of receivables, accounts payable, accrued expenses and short- and long-term debt. The carrying amount of receivables, accounts payable and accrued expenses approximates our fair value because of the short-term maturity of such instruments. We have categorized our assets and liabilities that are valued at fair value on a recurring basis into a three-level fair value hierarchy in accordance with U.S. GAAP. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets and liabilities (Level 1) and lowest priority to unobservable inputs (Level 3). Assets and liabilities recorded in the balance sheets at fair value are categorized based on a hierarchy of inputs, as follows: Level 1 Unadjusted quoted prices in active markets for identical assets or liabilities. Level 2 Quoted prices for similar assets or liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument. Level 3 Unobservable inputs for the asset or liability. The Company had no financial instruments that are required to be valued at fair value as of March 31, 2021 and December 31, 2020. |
Deferred Offering Costs | Deferred Offering Costs The Company capitalizes certain legal, professional accounting and other third-party fees that are directly associated with in-process equity financings as deferred offering costs until such financings are consummated. After consummation of equity financings, these costs are recorded in stockholders’ equity (deficit) as a reduction of additional paid-in capital generated as a result of the offering. Should the planned equity financings be abandoned, the deferred offering costs are expensed immediately as a charge to other income (expense) in the consolidated statement of operations. |
Revenue Recognition | Revenue Recognition The Company is engaged in the development, marketing and sale of wireless radio systems for secure, wide area mission-critical, business-to business networks. We generate revenue primarily through from the sale of our FullMAX System and the delivery of related services, along with non-recurring engineering (“NRE”) development projects with certain customers. On April 23, 2020, effective April 24, 2020, the Company and Siemens Mobility, Inc. (“Siemens”) (the “Parties”) entered into a Joint Development Agreement (the “JDA”) and a Brand Label and Master Purchase Agreement (the “BLA”). The JDA calls for the joint development of (i) a dual-mode 900 MHz over-the-air ATCS compatible, MC-IoT capable base station radio and (ii) a dual-purpose 900 MHz, over-the-air advanced train control system (“ATCS”) compatible, MC-IoT capable wayside radio. The BLA calls for the purchase by Siemens of certain products developed under the JDA to create a Siemens-branded portfolio of wireless radio communication systems to the North American Rail Market. As of March 31, 2021 the ATCS joint development program was 97.5% completed. On January 29, 2021 (effective date), the Company and Siemens signed a letter of intent to start negotiations to enter into a definitive agreement for the development a new product for the global rail market. Preliminary and other work on this project began in the first quarter of 2021 with 11% being completed as of March 31, 2021. On March 11, 2021, the Company received a purchase order from AURA Network System (“AURA”) to develop a radio system capable of performing Base Station and Mobile Remote functions in support of AURA’s C2 UAS system. As of March 31, 2021, 67% of the project was completed. Collaboration Arrangements Within the Scope of ASC 808, Collaborative Arrangements The Company’s development revenue includes contracts where the Company and the customer work cooperatively to develop software and hardware applications. The Company analyzes these contracts to assess whether such arrangements involve joint operating activities performed by parties that are both active participants in the activities and exposed to significant risks and rewards dependent on the commercial success of such activities and are therefore within the scope of ASC Topic 808, Collaborative Arrangements (“ASC 808”). This assessment is performed throughout the life of the arrangement based on changes in the responsibilities of all parties in the arrangement. For collaboration arrangements that are deemed to be within the scope of ASC 808, the Company first determines which elements of the collaboration are deemed to be within the scope of ASC 808 and those that are more reflective of a vendor-customer relationship and therefore within the scope of ASC 606, Revenue from Contracts with Customers (“ASC 606”). The Company’s policy is generally to recognize amounts received from collaborators in connection with joint operating activities that are within the scope of ASC 808 as a reduction in research and development expense. As of March 31, 2021, the Company has not identified any contracts with its customers that meet the criteria of ASC 808. Arrangements Within the Scope of ASC 606, Revenue from Contracts with Customers Under ASC 606, the Company recognizes revenue when the customer obtains control of promised products or services, in an amount that reflects the consideration which is expected to be received in exchange for those products or services. The Company recognizes revenue following the five-step model prescribed under ASC 606: (i) identify contract(s) with a customer; (ii) identify the performance obligation(s) in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligation(s) in the contract; and (v) recognize revenue when (or as) the Company satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that the entity will collect the consideration it is entitled to in exchange for the products or services it transfers to the customer. At contract inception, once the contract is determined to be within the scope of ASC 606, the Company assesses the products or services promised within each contract and determines those that are performance obligations and assesses whether each promised product or service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied. To the extent the transaction price includes variable consideration, we estimate the amount of variable consideration that should be included in the transaction price utilizing the expected value method. Variable consideration is included in the transaction price if, in our judgment, it is probable that a significant future reversal of cumulative revenue under the contract will not occur. Estimates of variable consideration and determination of whether to include estimated amounts in the transaction price are based largely on an assessment of our anticipated performance and all information (historical, current and forecasted) that is reasonably available. Sales and other taxes collected on behalf of third parties are excluded from revenue. For the three months ended March 31, 2021 and 2020, none of our contracts with customers included variable consideration. Contracts that are modified to account for changes in contract specifications and requirements are assessed to determine if the modification either creates new or changes the existing enforceable rights and obligations. Generally, contract modifications are for products or services that are not distinct from the existing contract due to the inability to use, consume or sell the products or services on their own to generate economic benefits and are accounted for as if they were part of that existing contract. The effect of a contract modification on the transaction price and measure of progress for the performance obligation to which it relates, is recognized as an adjustment to revenue (either as an increase in or a reduction of revenue) on a cumulative catch-up basis. For the three months ended March 31, 2021 and March 31, 2020, there were no modifications to contract specifications. The Company is engaged in the development, marketing and sale of wireless radio systems for secure, wide area mission-critical, business-to-business networks. We generate revenue primarily from the sale of our FullMAX System and the delivery of related services, along with non-recurring engineering (“NRE”) development projects with certain customers. Product revenue is comprised of sales of the Company’s software defined base station and remote radios, its network management and monitoring system, and accessories. The Company’s software and hardware is sold with a limited one-year basic warranty included in the price. The limited one-year basic warranty is an assurance-type warranty, is not a separate performance obligation, and thus no transaction price is allocated to it. The nature of tasks under the limited one-year basic warranty only provide for remedying defective product(s) covered by the warranty. Product revenue is generally recognized when the customer obtains control of our product, which occurs at a point in time, and may be upon shipment or upon delivery based on the contractual shipping terms of a contract, or upon installation when the combined performance obligation is not distinct within the context of the contract. Service revenue is comprised of separately priced extended warranty sales, network support and maintenance, remote monitoring, as well as ancillary services directly related to the sale of the Company’s wireless communications products including wireless network design, systems engineering, radio frequency planning, software configuration, product training, installation, and onsite support. The extended warranty we sell provides a level of assurance beyond the coverage for defects that existed at the time of a sale or against certain types of covered damage. The extended warranty includes 1) factory hardware repair or replacement of the base station and remote radios, at our election, 2) software upgrades, bug fixes and new features of the radio software and network management systems (“NMS”), 3) deployment and network architecture support, and 4) technical support by phone and email. Ancillary service revenues are recognized at the point in time when those services have been provided to the customer and the performance obligation has been satisfied. With respect to extended warranty sales and remote monitoring, the Company applies the input method using straight-line recognition. Development revenue is comprised primarily of non-recurring engineering service contracts to develop software and hardware applications for various customers. A significant portion of this revenue is generated through three contracts with two customers whereby the Company is to develop such applications to interoperate within the customers infrastructure. For these contracts, the Company and the customers work cooperatively, whereby the customers’ involvement is to provide technical specifications for the product design, as well as, to review and approve the project progress at various markers based on predetermined milestones. The products developed are not able to be sold to any other customer and are based in part upon existing Company and customer technology. Development revenue is recognized as services are provided over the life of the contract as the Company has an enforceable right to payment for services completed to date and there is no alternative use of the product. If the customer contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. We enter into certain contracts within our service revenues that have multiple performance obligations, one or more of which may be delivered subsequent to the delivery of other performance obligations. We allocate the transaction price based on the estimated relative standalone selling prices of the promised products or services underlying each performance obligation. We determine standalone selling prices based on the price at which the performance obligation is sold separately. If the standalone selling price is not observable through past transactions, we estimate the standalone selling price considering available information such as market conditions and internally approved pricing guidelines related to the performance obligations. Revenue is then allocated to the performance obligations using the relative selling prices of each of the performance obligations in the contract. Our payment terms vary and range from Net 15 to Net 30 days from the date of the invoices for product and services related revenue. Our payment terms for the majority of our development related revenue carry milestone related payment obligations which span the contract life. For milestone-based contracts, the customer reviews the completed milestone and once approved, makes payment pursuant to the applicable contract. These contracts are also assessed to determine whether they are collaborative arrangements within ASC 808. As of March 31, 2021, the Company notes that no current contracts fall under the guidance within ASC 808 and will continue to be accounted for in accordance with ASC 606. Disaggregation of Revenue The following tables present our disaggregated revenues by Type of Revenue and Timing of Revenue: Three Months Ended 2021 2020 Type of Revenue Product revenue $ 17,600 $ 15,272 Service revenue 8,210 2,764 Development revenue 1,138,140 182,162 Other revenue 814 - Total revenue $ 1,164,764 $ 200,198 Three Months Ended 2021 2020 Timing of Revenue Revenue recognized point in time $ 18,414 $ 15,272 Revenue recognized over time 1,146,350 184,926 Total revenue $ 1,164,764 $ 200,198 Contract Assets and Liabilities We recognize a receivable or contract asset when we perform a service or transfer a good in advance of receiving consideration. A receivable is recorded when our right to consideration is unconditional and only the passage of time is required before payment of that consideration is due. A contract asset is recorded when our right to consideration in exchange for goods or services that we have transferred or provided to a customer is conditional on something other than the passage of time. Contract asset on March 31, 2021 was $484,048 and is included in other current assets in the Company’s unaudited condensed consolidated balance sheet. We did not have any contract assets recorded at December 31, 2020. We recognize a contract liability when we receive consideration, or if we have the unconditional right to receive consideration, in advance of satisfying the performance obligation. A contract liability is our obligation to transfer goods or services to a customer for which we have received consideration, or an amount of consideration is due from the customer. The table below details the activity in our contract liabilities during the three months ended March 31, 2021, and the year ended December 31, 2020, which is included in accrued expenses and other current liabilities in the Company’s unaudited condensed consolidated balance sheet. Three Months Ended Year Ended December 31, 2020 Balance at beginning of period $ 165,035 $ 378,850 Additions 550,000 1,058,850 Transfer to revenue (658,851 ) (1,267,665 ) Balance at end of period $ 56,184 $ 165,035 Warranty Reserve For our software and hardware products, we provide a limited one-year assurance-type warranty and for our development service, we provide no warranties. The assurance-type warranty covers defects in material and workmanship only. If a software or hardware component is determined to be defective after being tested by the Company within the one-year, the Company will repair, replace or refund the price of the covered hardware and/or software to the customer (not including any shipping, handling, delivery or installation charges). We estimate, based upon a review of historical warranty claim experience, the costs that may be incurred under our warranties and record a liability in the amount of such estimate at the time a product is sold. Factors that affect our warranty liability include the number of units sold, historical and anticipated rates of warranty claims, and cost per claim. We periodically assess the adequacy of our recorded warranty liability and adjust the accrual as claims data and historical experience warrants. The Company has assessed the costs of fulfilling its existing assurance-type warranties and has determined that the estimated outstanding warranty obligation on March 31, 2021 or December 31, 2020 are immaterial to the Company’s financial statements. |
Leases | Leases Under Topic 842, operating lease expense is generally recognized evenly over the term of the lease. During the three months ended March 31, 2021, the Company had one operating lease consisting of office space in Sunnyvale, CA (the “Gibraltar Lease”) and for the year ended December 31, 2020, the Company had operating leases primarily consisting of two office space leases in Sunnyvale, California (the “North Pastoria Lease” and the Gibraltar Lease) (collectively, the “Sunnyvale Leases”). On December 31, 2020, the North Pastoria Lease expired. The Gibraltar Lease expired on February 28, 2021 and was verbally extended to March 31, 2021 under the same terms. On January 22, 2021, we entered into a 24-month lease (effective April 1, 2021) with the owner and landlord (the “2021 Gibraltar Lease”), wherein the base rate is $45,000 per month and including a security deposit in the amount of $90,000. On January 24, 2020, the Company and a third party (the “Sublessee”) entered into a Sublease agreement (the “Sublease”) on the North Pastoria Lease, wherein the Sublessee occupied the premises through December 31, 2020. The Sublessee made rent payments of approximately $9,666 and management fee payments of approximately $457 per month beginning February 1, 2020, and a one-time security deposit of $19,332. Sublease rental income for the period from February 1 through December 31, 2020 was $111,349. On December 31, 2020, $10,122 of the security deposit was applied to the December 2020 amount due and the balance was refunded on January 19, 2021. We determine if an arrangement is a lease, or contains a lease, at the inception of the arrangement. If we determine the arrangement is a lease, or contains a lease, at lease inception, we then determine whether the lease is an operating lease or finance lease. Operating and finance leases result in recording a right-of-use (“ROU”) asset and lease liability on our consolidated balance sheets. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. For purposes of calculating operating lease ROU assets and operating lease liabilities, we use the non-cancellable lease term plus options to extend that we are reasonably certain to take. Lease expense for operating lease payments is recognized on a straight-line basis over the lease term. Our leases generally do not provide an implicit rate. As such, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. This rate is generally consistent with the interest rate we pay on borrowings under our credit facilities, as this rate approximates our collateralized borrowing capabilities over a similar term of the lease payments. We have elected not to recognize ROU assets and lease liabilities that arise from short-term (12 months or less) leases for any class of underlying assets. We have elected not to separate lease and non-lease components for any class of underlying asset. Lease Costs Three Months Ended 2021 2020 Components of total lease costs: Operating lease expense $ 80,627 $ 83,255 Short-term lease costs (1) - 4,250 Sublease rental income - (19,332 ) Total lease costs $ 80,627 $ 68,173 (1) Represents short-term leases which are immaterial. Lease Positions as of March 31, 2021 and December 31, 2020 ROU lease assets and lease liabilities for our operating leases were recorded in the unaudited condensed consolidated balance sheet as follows: As of As of Assets: Operating lease assets $ - $ 51,065 Total lease assets $ - $ 51,065 Liabilities: Operating lease liabilities, current $ - $ 56,168 Operating lease liabilities, net of current - - Total lease liabilities $ - $ 56,168 Other Information Three Months Ended 2021 2020 Operating cash flows for operating leases $ 85,730 $ 132,791 Weighted average remaining lease term (in years) – operating lease - 0.8 Weighted average discount rate – operating lease 14 % 14 % |
Net Loss Per Common Share | Net Loss Per Common Share Basic net loss per share is computed by dividing net loss by the weighted average shares of common stock outstanding for each period. Diluted net loss per share is the same as basic net loss per share since the Company has net losses for each period presented. The following potentially dilutive securities for the three months ended March 31, 2021 and 2020 have been excluded from the computation of diluted net loss per share because the effect of their inclusion would have been anti-dilutive. Three months ended 2021 2020 Warrants to purchase common stock 593,006 1,590,473 Options to purchase common stock 1,701,639 231,542 Restricted stock purchase offers 640,805 126,160 Total potentially dilutive securities 2,935,450 1,948,175 |
Concentration of Customers | Concentration of Customers Because we have only recently invested in our customer service and support organization, a small number of customers have accounted for a substantial amount of our revenue. The table below sets forth the Company’s customers that accounted for greater than 10% of its revenues for the three month periods ended March 31, 2021 and 2020, respectively: Three Months Ended Customer 2021 2020 A 18 % 91 % B 81 % - % Customer A accounted for 92% of the Company’s accounts receivable balance at March 31, 2021. |
Recently Adopted Accounting Pronouncements | Recently Adopted Accounting Pronouncements In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which removes certain exceptions for recognizing deferred taxes for investments, performing intraperiod tax allocation and calculating income taxes in interim periods. ASU 2019-12 is applicable to all entities subject to income taxes. ASU 2019-12 provides guidance to minimize complexity in certain areas by introducing a policy election to not allocate consolidated income taxes when a member of a consolidated tax return is not subject to income tax and guides whether to relate a step-up tax basis to a business combination or separate transaction. ASU 2019-12 changes the current guidance of making an intraperiod allocation, determining when a tax liability is recognized after a foreign entity investor transitions to or from equity method of accounting, accounting for tax law changes and year-to-date losses in interim periods, and determining how to apply income tax guidance to franchise taxes. The amendments ASU 2019-12 are effective for all public business entities for fiscal years beginning after December 15, 2020 and include interim periods. The guidance is effective for all other entities for fiscal years beginning after December 15, 2021 and for interim periods beginning after December 15, 2022. Early adoption is permitted. The adoption of this pronouncement had no impact on our accompanying consolidated financial statements. In June 2016, FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which replaces the incurred loss methodology with an expected loss methodology that is referred to as the current expected credit loss (“CECL”) methodology. The CECL model utilizes a lifetime expected credit loss measurement objective for the recognition of credit losses for loans and other receivables at the time the financial asset is originated or acquired. The expected credit losses are adjusted each period for changes in expected lifetime credit losses. This model replaces the multiple existing impairment models previously used under U.S. generally accepted accounting principles, which generally require that a loss be incurred before it is recognized. The new standard also applies to financial assets arising from revenue transactions such as contract assets and accounts receivables. For public business entities that meet the definition of an SEC filer, excluding entities eligible to be SRCs as defined by the SEC, ASU No. 2016-13 is effective for fiscal years beginning after Dec. 15, 2019. All other entities, ASU No. 2016-13 is effective for fiscal years beginning after Dec. 15, 2022. The adoption of this pronouncement had no impact on our accompanying consolidated financial statements. |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements In May 2021, the Financial Accounting Standards Board (“FASB”) issued accounting standards update (“ASU”) 2021-04—Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options, to clarify and reduce diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options (for example, warrants) that remain equity classified after modification or exchange. The amendments in this ASU are effective for public and nonpublic entities for fiscal years beginning after December 15, 2021, and interim periods with fiscal years beginning after December 15, 2021. Early adoption is permitted, including adoption in an interim period. The Company is currently evaluating the effects of the adoption of ASU No. 2021-04 on its consolidated financial statements. In August 2020, the FASB issued ASU No. 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”), which simplifies an issuer’s accounting for convertible instruments by reducing the number of accounting models that require separate accounting for embedded conversion features. ASU 2020-06 also simplifies the settlement assessment that entities are required to perform to determine whether a contract qualifies for equity classification and makes targeted improvements to the disclosures for convertible instruments and earnings-per-share (EPS) guidance. This update will be effective for the Company’s fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. Entities can elect to adopt the new guidance through either a modified retrospective method of transition or a fully retrospective method of transition. The Company is currently evaluating the impact of the pending adoption of the new standard on its financial statements and intends to adopt the standard as of January 1, 2024. |
Reclassification | Reclassification Certain amounts reported in the prior year financial statements have been reclassified to conform to the current year presentation. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Accounting Policies [Abstract] | |
Schedule of inventory | March 31, December 31, Raw Material $ 1,010,642 $ 911,753 Work in Process 32,357 172,207 Finished Goods 109,248 68,145 TOTAL INVENTORY, NET $ 1,152,247 $ 1,152,105 |
Schedule of disaggregation of revenue | Three Months Ended 2021 2020 Type of Revenue Product revenue $ 17,600 $ 15,272 Service revenue 8,210 2,764 Development revenue 1,138,140 182,162 Other revenue 814 - Total revenue $ 1,164,764 $ 200,198 Three Months Ended 2021 2020 Timing of Revenue Revenue recognized point in time $ 18,414 $ 15,272 Revenue recognized over time 1,146,350 184,926 Total revenue $ 1,164,764 $ 200,198 |
Schedule of deferred revenue | Three Months Ended Year Ended December 31, 2020 Balance at beginning of period $ 165,035 $ 378,850 Additions 550,000 1,058,850 Transfer to revenue (658,851 ) (1,267,665 ) Balance at end of period $ 56,184 $ 165,035 |
Schedule of lease costs | Three Months Ended 2021 2020 Components of total lease costs: Operating lease expense $ 80,627 $ 83,255 Short-term lease costs (1) - 4,250 Sublease rental income - (19,332 ) Total lease costs $ 80,627 $ 68,173 |
Schedule of ROU lease assets and lease liabilities | As of As of Assets: Operating lease assets $ - $ 51,065 Total lease assets $ - $ 51,065 Liabilities: Operating lease liabilities, current $ - $ 56,168 Operating lease liabilities, net of current - - Total lease liabilities $ - $ 56,168 |
Schedule of other Information | Three Months Ended 2021 2020 Operating cash flows for operating leases $ 85,730 $ 132,791 Weighted average remaining lease term (in years) – operating lease - 0.8 Weighted average discount rate – operating lease 14 % 14 % |
Schedule of net loss per share | Three months ended 2021 2020 Warrants to purchase common stock 593,006 1,590,473 Options to purchase common stock 1,701,639 231,542 Restricted stock purchase offers 640,805 126,160 Total potentially dilutive securities 2,935,450 1,948,175 |
Schedule of concentration of customers | Three Months Ended Customer 2021 2020 A 18 % 91 % B 81 % - % |
OTHER CURRENT ASSETS (Tables)
OTHER CURRENT ASSETS (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Other Current assets [Abstract] | |
Schedule of other current assets | March 31, December 31, Prepaid insurance $ 463,331 $ 623,627 Other prepaid expenses 56,102 5,403 Contract assets 484,049 - Total other current assets $ 1,003,482 $ 629,030 |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property and equipment | March 31, December 31, Vehicle $ 149,916 $ 149,916 Computer Equipment 162,514 112,615 Furniture and fixtures 94,053 94,053 Software 61,287 61,287 Leasehold improvements 28,247 28,247 Test Equipment 33,777 25,395 529,794 471,513 Less: accumulated depreciation (333,571 ) (308,429 ) Total property and equipment, net $ 196,223 $ 163,084 |
INTANGIBLE ASSETS (Tables)
INTANGIBLE ASSETS (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of estimated amortization expense | Year Ending December 31, Estimated Amortization 2021 (9 months) $ 20,600 2022 $ 27,029 2023 $ 27,029 2024 $ 26,752 2025 $ 26,752 |
ACCRUED EXPENSES AND OTHER CU_2
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Disclosure Text Block Supplement [Abstract] | |
Schedule of accrued expenses and other current liabilities | March 31, December 31, 2020 Accrued payroll and other benefits $ 1,470,070 $ 2,125,981 D&O insurance financing payable 310,446 479,712 Accrued interest 193,453 44,579 Accrued professional fees 91,922 115,000 Other accrued expenses 115,408 67,508 Total accrued expenses and other current liabilities $ 2,181,299 $ 2,832,780 |
LONG-TERM NOTES PAYABLE (Tables
LONG-TERM NOTES PAYABLE (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Debt Disclosure [Abstract] | |
Schedule of future maturities of the loan payable | Year ending December 31, 2021 $ 59,550 2022 179,845 2023 181,652 2024 183,477 2025 61,567 $ 666,091 |
STOCKHOLDERS' EQUITY (Tables)
STOCKHOLDERS' EQUITY (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Stockholders' Equity Note [Abstract] | |
Schedule of assumptions used in Black-Scholes Model | Three months ended, 31-Mar-21 Stock price $ 12.92 Risk-free interest rate 0.57 % Volatility 52.80 % Expected life in years 10 Dividend yield 0.00 % |
Schedule of stock option activity | Weighted Weighted Average Number of Average Remaining Shares Under Exercise Contractual Option Price Life Balance on December 31, 2020 568,006 $ 7.39 9.4 Granted 25,000 $ 12.92 0.2 Expired - - Terminated - - Canceled - - Balance on March 31, 2021 593,006 $ 7.63 9.2 Vested and Exercisable at March 31, 2021 401,589 $ 7.71 9.3 |
DESCRIPTION OF BUSINESS AND B_2
DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION (Details) - USD ($) | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2020 | Dec. 31, 2020 | Aug. 10, 2018 | |
Accounting Policies [Abstract] | ||||
Ownership percentage | 100.00% | |||
Stockholders' deficit | $ 14,709,000 | |||
Short-term borrowings outstanding | 7,169,000 | |||
Long-term borrowings outstanding | 862,000 | |||
Cash | 24,026,000 | |||
Working capital deficit | 14,860,000 | |||
Net proceeds from public offering | $ 31,254,000 | |||
Percentage of workforce | 80.00% | |||
Description of business activity | On May 13, 2020, we reopened our offices and facilities and as of December 31, 2020 we had no employees remaining on furlough. | |||
Employee reduction, description | During 2020, in response to COVID-19 employee furloughs, Eric A. Brock, the Company’s Chief Executive Officer and Stewart W. Kantor, the Company’s Chief Financial Officer, accepted a pay reduction of 90% for the period from March 21 to May 19, 2020 and a 35% pay reduction from May 20 to December 15, 2020. Mr. Brock and Mr. Kantor’s salaries were returned to 100% effective December 16, 2020. |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) | 1 Months Ended | 3 Months Ended |
Jan. 24, 2020 | Mar. 31, 2021 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) [Line Items] | ||
Federally insured limits | $ 23,750,000 | |
Percentage of program | 97.50% | |
Contract asset | $ 484,048 | |
Base rate per month | 45,000 | |
Security deposit amount | $ 90,000 | |
Sublease agreement, description | the Company and a third party (the “Sublessee”) entered into a Sublease agreement (the “Sublease”) on the North Pastoria Lease, wherein the Sublessee occupied the premises through December 31, 2020. The Sublessee made rent payments of approximately $9,666 and management fee payments of approximately $457 per month beginning February 1, 2020, and a one-time security deposit of $19,332. Sublease rental income for the period from February 1 through December 31, 2020 was $111,349. On December 31, 2020, $10,122 of the security deposit was applied to the December 2020 amount due and the balance was refunded on January 19, 2021. | |
Revenues, percentage | 10.00% | |
Customer A [Member] | Accounts Receivable [Member] | ||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) [Line Items] | ||
Concentration percentage | 92.00% |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - Schedule of inventory - USD ($) | Mar. 31, 2021 | Dec. 31, 2020 |
Schedule of inventory [Abstract] | ||
Raw Material | $ 1,010,642 | $ 911,753 |
Work in Process | 32,357 | 172,207 |
Finished Goods | 109,248 | 68,145 |
TOTAL INVENTORY, NET | $ 1,152,247 | $ 1,152,105 |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - Schedule of disaggregation of revenue - USD ($) | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Type of Revenue | ||
Total revenue | $ 1,164,764 | $ 200,198 |
Timing of Revenue | ||
Total revenue | 1,164,764 | 200,198 |
Product revenue [Member] | ||
Type of Revenue | ||
Total revenue | 17,600 | 15,272 |
Service revenue [Member] | ||
Type of Revenue | ||
Total revenue | 8,210 | 2,764 |
Development revenue [Member] | ||
Type of Revenue | ||
Total revenue | 1,138,140 | 182,162 |
Other revenue [Member] | ||
Type of Revenue | ||
Total revenue | 814 | |
Revenue recognized over time [Member] | ||
Timing of Revenue | ||
Total revenue | 1,146,350 | 184,926 |
Revenue recognized point in time [Member] | ||
Timing of Revenue | ||
Total revenue | $ 18,414 | $ 15,272 |
SUMMARY OF SIGNIFICANT ACCOUN_6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - Schedule of deferred revenue - USD ($) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2021 | Dec. 31, 2020 | |
Schedule of deferred revenue [Abstract] | ||
Balance at beginning of period | $ 165,035 | $ 378,850 |
Additions | 550,000 | 1,058,850 |
Transfer to revenue | (658,851) | (1,267,665) |
Balance at end of period | $ 56,184 | $ 165,035 |
SUMMARY OF SIGNIFICANT ACCOUN_7
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - Schedule of lease costs - USD ($) | 3 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2020 | ||
Components of total lease costs: | |||
Operating lease expense | $ 80,627 | $ 83,255 | |
Short-term lease costs | [1] | 4,250 | |
Sublease rental income | (19,332) | ||
Total lease costs | $ 80,627 | $ 68,173 | |
[1] | Represents short-term leases which are immaterial. |
SUMMARY OF SIGNIFICANT ACCOUN_8
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - Schedule of ROU lease assets and lease liabilities - USD ($) | Mar. 31, 2021 | Dec. 31, 2020 |
Assets: | ||
Operating lease assets | $ 51,065 | |
Total lease assets | 51,065 | |
Liabilities: | ||
Operating lease liabilities, current | 56,168 | |
Operating lease liabilities, net of current | ||
Total lease liabilities | $ 56,168 |
SUMMARY OF SIGNIFICANT ACCOUN_9
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - Schedule of other Information - USD ($) | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Schedule of other Information [Abstract] | ||
Operating cash flows for operating leases | $ 85,730 | $ 132,791 |
Weighted average remaining lease term (in years) - operating lease | 9 months 18 days | |
Weighted average discount rate – operating lease | 14.00% | 14.00% |
SUMMARY OF SIGNIFICANT ACCOU_10
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - Schedule of net loss per share - shares | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - Schedule of net loss per share [Line Items] | ||
Total potentially dilutive securities | 2,935,450 | 1,948,175 |
Warrants to purchase common stock [Member] | ||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - Schedule of net loss per share [Line Items] | ||
Total potentially dilutive securities | 593,006 | 1,590,473 |
Options to purchase common stock [Member] | ||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - Schedule of net loss per share [Line Items] | ||
Total potentially dilutive securities | 1,701,639 | 231,542 |
Restricted stock purchase offers [Member] | ||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - Schedule of net loss per share [Line Items] | ||
Total potentially dilutive securities | 640,805 | 126,160 |
SUMMARY OF SIGNIFICANT ACCOU_11
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - Schedule of concentration of customers | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Customer A [Member] | ||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - Schedule of concentration of customers [Line Items] | ||
Concentration percentage | 18.00% | 91.00% |
Customer B [Member] | ||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - Schedule of concentration of customers [Line Items] | ||
Concentration percentage | 81.00% |
OTHER CURRENT ASSETS (Details)
OTHER CURRENT ASSETS (Details) - Schedule of other current assets - USD ($) | Mar. 31, 2021 | Dec. 31, 2020 |
Schedule of other current assets [Abstract] | ||
Prepaid insurance | $ 463,331 | $ 623,627 |
Other prepaid expenses | 56,102 | 5,403 |
Contract assets | 484,049 | |
Total other current assets | $ 1,003,482 | $ 629,030 |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation expense | $ 25,142 | $ 24,648 |
PROPERTY AND EQUIPMENT (Detai_2
PROPERTY AND EQUIPMENT (Details) - Schedule of property and equipment - USD ($) | Mar. 31, 2021 | Dec. 31, 2020 |
Property, Plant and Equipment [Line Items] | ||
Property and equipment gross | $ 529,794 | $ 471,513 |
Less: accumulated depreciation | (333,571) | (308,429) |
Total property and equipment, net | 196,223 | 163,084 |
Vehicle [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment gross | 149,916 | 149,916 |
Computer equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment gross | 162,514 | 112,615 |
Furniture and fixtures [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment gross | 94,053 | 94,053 |
Software [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment gross | 61,287 | 61,287 |
Leasehold Improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment gross | 28,247 | 28,247 |
Test equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment gross | $ 33,777 | $ 25,395 |
INTANGIBLE ASSETS (Details)
INTANGIBLE ASSETS (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2020 | Dec. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |||
Patent costs | $ 124,532 | $ 158,710 | |
Finite-lived patents, gross | 91,781 | 133,112 | |
Accumulated amortization of patent costs | 10,511 | 3,809 | |
License costs | 241,909 | 241,909 | |
Accumulated amortization of license costs | 23,328 | $ 17,280 | |
Amortization expense | $ 12,750 | $ 640 |
INTANGIBLE ASSETS (Details) - S
INTANGIBLE ASSETS (Details) - Schedule of estimated amortization expense | Mar. 31, 2021USD ($) |
Schedule of estimated amortization expense [Abstract] | |
2021 (9 months) | $ 20,600 |
2022 | 27,029 |
2023 | 27,029 |
2024 | 26,752 |
2025 | $ 26,752 |
ACCRUED EXPENSES AND OTHER CU_3
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Details) - Schedule of accrued expenses and other current liabilities - USD ($) | Mar. 31, 2021 | Dec. 31, 2020 |
Schedule of accrued expenses and other current liabilities [Abstract] | ||
Accrued payroll and other benefits | $ 1,470,070 | $ 2,125,981 |
D&O insurance financing payable | 310,446 | 479,712 |
Accrued interest | 193,453 | 44,579 |
Accrued professional fees | 91,922 | 115,000 |
Other accrued expenses | 115,408 | 67,508 |
Total accrued expenses and other current liabilities | $ 2,181,299 | $ 2,832,780 |
SECURED PROMISSORY NOTES (Detai
SECURED PROMISSORY NOTES (Details) - USD ($) | Dec. 09, 2020 | Oct. 09, 2018 | Sep. 04, 2020 | Oct. 28, 2019 | Jun. 18, 2019 | Mar. 09, 2018 | Mar. 31, 2021 | Mar. 31, 2020 | Dec. 31, 2020 | Apr. 14, 2021 | Dec. 15, 2019 |
SECURED PROMISSORY NOTES (Details) [Line Items] | |||||||||||
Aggregate principal amount | $ 7,064,364 | $ 7,003,568 | |||||||||
Debt discount | $ 59,914 | $ 120,711 | |||||||||
Outstanding principal, percentage | 3.00% | ||||||||||
Common stock share value (in Shares) | 26,672,040 | 26,540,769 | |||||||||
Common stock issued | $ 2,667 | $ 2,654 | |||||||||
Accreted costs | 550,000 | 550,000 | |||||||||
Accrued interest | 193,453 | $ 44,579 | |||||||||
Interest expenses | 148,874 | $ 314,375 | |||||||||
Steward Capital [Member] | |||||||||||
SECURED PROMISSORY NOTES (Details) [Line Items] | |||||||||||
Paid amount | $ 5,000,000 | ||||||||||
Principal value | 4,679,958 | ||||||||||
Accrued interest | $ 320,042 | ||||||||||
Steward Capital [Member] | Subsequent Event [Member] | |||||||||||
SECURED PROMISSORY NOTES (Details) [Line Items] | |||||||||||
Additional consummation of the proposed acquisition | $ 280,000 | ||||||||||
Steward Capital Holdings LP [Member] | |||||||||||
SECURED PROMISSORY NOTES (Details) [Line Items] | |||||||||||
Agreement, description | On October 28, 2019, the Company and Steward Capital entered into a letter of agreement to amend the Agreement, as amended (the “Second Amendment”) wherein the parties agreed to (i) extend and amend the due date for all accrued and unpaid interest starting September 2, 2019 to the Maturity Date and (ii) extend and amend the due date for the 3% fee payable to Steward Capital in connection with the First Amendment and waiver dated June 2019 to be payable on the Maturity Date. | ||||||||||
Common stock share value (in Shares) | 120,000 | ||||||||||
Common stock issued | $ 300,000 | ||||||||||
Steward Capital Holdings LP [Member] | Secured Term Promissory Note [Member] | Loan and Security Agreement [Member] | |||||||||||
SECURED PROMISSORY NOTES (Details) [Line Items] | |||||||||||
Aggregate principal amount | $ 10,000,000 | $ 10,000,000 | |||||||||
Secured term promissory note | $ 5,000,000 | $ 5,000,000 | |||||||||
Line of credit interest rate description | The Second Note bears interest at a per annum rate equal to the greater of (a) 11.25% or (b) 11.25% plus the Prime Rate, less 3.25%. | The Note bears interest at a per annum rate equal to the greater of (a) 11.25% or (b) 11.25% plus the Prime Rate, less 3.25%. | |||||||||
Payment of loan commitment fees | $ 25,000 | ||||||||||
Funding in loan facility charges | $ 100,000 | ||||||||||
Percentage of loan facility | 1.00% | ||||||||||
Debt discount | $ 50,000 | ||||||||||
Debt principal and interest outstanding amount | $ 250,000 | ||||||||||
Funding in loan facility charges | $50,000 | ||||||||||
Steward Capital Holdings LP [Member] | Loan and Security Agreement [Member] | |||||||||||
SECURED PROMISSORY NOTES (Details) [Line Items] | |||||||||||
Agreement, description | On September 4, 2020, the Company and Steward Capital entered into the Second Amendment to the Loan and Security Agreement (the “Second Amendment”) to (i) extend the Maturity Date to September 9, 2021 (the “Extended Maturity Date”) and agree to convert all accrued interest into the note, resulting in a new principal balance of $11,254,236, (ii) make all accrued and unpaid interest from September 9, 2020 through the date of maturity due on the Extended Maturity Date, (iii) on or before October 1, 2020, Company shall issue 40,000 shares of Company’s stock to Steward valued at $9.75 per share, or total of $390,000 (issued on September 30, 2020) and (iv) make the fee of 3% of the outstanding principal balance of the loan, or $300,000 (as defined in the First Amendment) due at the updated maturity date of September 9, 2021. |
LONG-TERM NOTES PAYABLE (Detail
LONG-TERM NOTES PAYABLE (Details) - USD ($) | May 04, 2020 | Sep. 27, 2019 | Mar. 31, 2021 | Mar. 31, 2020 | Dec. 31, 2020 |
Convertible Promissory Notes [Member] | |||||
LONG-TERM NOTES PAYABLE (Details) [Line Items] | |||||
Convertible promissory note | $ 300,000 | $ 300,000 | |||
Description of payment of quarterly gross revenue | The maturity date of the Note is based on the payment of 0.6% of quarterly gross revenue until 1.5 times the amount of the Note is paid. | The maturity date of the Note is based on the payment of 0.6% of quarterly gross revenue until 1.5 times the amount of the Note is paid. | |||
Accrued interest | $ 36,829 | $ 36,329 | |||
Interest expense | 3,750 | $ 3,750 | |||
Warrants to purchase shares of common stock (in Shares) | 46,893 | ||||
Paycheck Protection Program Loan [Member] | |||||
LONG-TERM NOTES PAYABLE (Details) [Line Items] | |||||
Principal amount | $ 666,091 | ||||
Interest rate per annum | 1.00% | ||||
Description of paycheck protection program loan | For purposes of the CARES Act, payroll costs exclude compensation of an individual employee earning more than $100,000, prorated annually. Not more than 40% of the forgiven amount may be for non-payroll costs. Forgiveness is reduced if full-time headcount declines, or if salaries and wages for employees with salaries of $100,000 or less annually are reduced by more than 25%. | ||||
Stewart [Member] | |||||
LONG-TERM NOTES PAYABLE (Details) [Line Items] | |||||
Accrued interest | 6,027 | 4,362 | |||
Current liabilities | 104,343 | ||||
Long-term liabilities | $ 561,748 | ||||
Interest expense | $ 1,665 | $ 0 |
LONG-TERM NOTES PAYABLE (Deta_2
LONG-TERM NOTES PAYABLE (Details) - Schedule of future maturities of the loan payable | Mar. 31, 2021USD ($) |
Schedule of future maturities of the loan payable [Abstract] | |
2021 | $ 59,550 |
2022 | 179,845 |
2023 | 181,652 |
2024 | 183,477 |
2025 | 61,567 |
Total | $ 666,091 |
STOCKHOLDERS' EQUITY (Details)
STOCKHOLDERS' EQUITY (Details) - USD ($) | Jan. 19, 2021 | Nov. 03, 2020 | Aug. 14, 2020 | Jun. 03, 2020 | Feb. 15, 2021 | Jan. 25, 2021 | Jan. 25, 2021 | Mar. 31, 2021 | Mar. 31, 2020 | Dec. 31, 2020 | Dec. 31, 2018 | Mar. 28, 2021 | Jan. 29, 2021 | Nov. 12, 2020 | Jan. 31, 2020 |
STOCKHOLDERS' EQUITY (Details) [Line Items] | |||||||||||||||
Preferred stock, authorized | 5,000,000 | 10,000,000 | |||||||||||||
Preferred stock, par value (in Dollars per share) | $ 0.0001 | $ 0.0001 | |||||||||||||
Certificate of designation series A preferred stock | 5,000,000 | ||||||||||||||
Conversion trigger, percentage | 25.00% | ||||||||||||||
Conversion trigger, per share (in Dollars per share) | $ 6 | ||||||||||||||
Effective interest rate | 25.00% | ||||||||||||||
Effective conversion price (in Dollars) | $ 6 | ||||||||||||||
Common stock, authorized | 116,666,667 | 116,666,667 | |||||||||||||
Common stock, par value (in Dollars per share) | $ 0.0001 | $ 0.0001 | |||||||||||||
Common stock, shares issued | 26,672,040 | 26,540,769 | |||||||||||||
Common stock, shares outstanding | 26,672,040 | 26,540,769 | |||||||||||||
Aggregate of shares | 8,142,894 | ||||||||||||||
Reverse stock split, description | On November 3, 2020, the Board of Directors of the Company approved a one-for-three reverse stock split of the Company’s authorized and outstanding common stock, effective November 13, 2020 (the “Reverse Stock Split”). | ||||||||||||||
shares issued | 116,666,667 | ||||||||||||||
Capital value (in Dollars) | $ 150,000,000 | ||||||||||||||
Number of warrants to purchase of common stock | 131,271 | ||||||||||||||
weighted-average contractual remaining life | 2 years 1 month 6 days | ||||||||||||||
Warrants exercise price (in Dollars per share) | $ 9.75 | ||||||||||||||
Warrants value (in Dollars) | $ 1,279,892 | ||||||||||||||
Stock options to purchase of common stock | 593,006 | 568,006 | |||||||||||||
Stock options exercise price (in Dollars per share) | $ 7.63 | $ 7.39 | |||||||||||||
Compensation, description | the Compensation Committee approved the following grants: (a) for Messrs. Cohen, Reisfield and Silverman (i) 5,000 restricted stock units pursuant to the 2018 Plan, and (b) for Mr. Seidl and Ms. Sood (i) 5,000 restricted stock units pursuant to the 2018 Plan, and (ii) 10,000 restricted stock units pursuant to the 2018 Plan. Each restricted stock unit represents a contingent right to receive one share of common stock of the Company. The 5,000 restricted stock units granted to each of Messrs. Cohen, Reisfield, Silverman and Seidl and Ms. Sood vest in four successive equal quarterly installments with the first vesting date commencing on the first day of the next calendar quarter, provided that such director is a director of the Company on the applicable vesting dates. The 10,000 restricted stock units granted to Mr. Seidl and Ms. Sood vest in eight successive equal quarterly installments with the first vesting date commencing on the first day of the next calendar quarter, provided that such director is a director of the Company on the applicable vesting dates. All restricted stock units granted to these directors shall vest in full immediately upon a change in control. The company recognized stock-based compensation of $111,300 for the three months ended March 31, 2021. As of March 31, 2021, the unrecognized compensation expense was $461,100. | ||||||||||||||
Stock compensation expense (in Dollars) | $ 97,162 | $ 15,479 | |||||||||||||
Non vested restricted shares | 6,250,000 | ||||||||||||||
Other Comprehensive Loss, Held-to-maturity Security, Adjustment from AOCI for Accretion of Noncredit Portion of OTTI, after Tax (in Dollars) | $ 3 | ||||||||||||||
2018 Equity Incentive Plan [Member] | |||||||||||||||
STOCKHOLDERS' EQUITY (Details) [Line Items] | |||||||||||||||
Common stock reserved for issuance | 3,333,334 | ||||||||||||||
Preferred Stock [Member] | |||||||||||||||
STOCKHOLDERS' EQUITY (Details) [Line Items] | |||||||||||||||
Preferred stock, authorized | 10,000,000 | ||||||||||||||
Preferred stock, par value (in Dollars per share) | $ 0.0001 | ||||||||||||||
Warrant [Member] | |||||||||||||||
STOCKHOLDERS' EQUITY (Details) [Line Items] | |||||||||||||||
Number of warrants to purchase of common stock | 1,748,532 | ||||||||||||||
Warrants exercise price (in Dollars per share) | $ 9.11 | ||||||||||||||
Warrant [Member] | Minimum [Member] | |||||||||||||||
STOCKHOLDERS' EQUITY (Details) [Line Items] | |||||||||||||||
Warrants exercise price (in Dollars per share) | 0.03 | ||||||||||||||
Warrant [Member] | Maximum [Member] | |||||||||||||||
STOCKHOLDERS' EQUITY (Details) [Line Items] | |||||||||||||||
Warrants exercise price (in Dollars per share) | $ 9.75 | ||||||||||||||
Stock Options [Member] | |||||||||||||||
STOCKHOLDERS' EQUITY (Details) [Line Items] | |||||||||||||||
Stock options to purchase of common stock | 25,000 | 90,000 | 90,000 | 6,542 | |||||||||||
Stock-based compensation expense (in Dollars) | $ 514,866 | ||||||||||||||
Options term | 10 years | 10 years | 10 years | ||||||||||||
Stock options exercise price (in Dollars per share) | $ 12.92 | $ 12.72 | $ 12.72 | ||||||||||||
Weighted average grant-date fair value (in Dollars per share) | $ 5.82 | $ 5.72 | |||||||||||||
Stock option values (in Dollars) | $ 15,479 | ||||||||||||||
Number of shares approved by compensation committee | 30,000 | ||||||||||||||
Unrecognized compensation expense (in Dollars) | $ 282,000 | ||||||||||||||
Weighted-average contractual remaining life | 8 months 12 days | ||||||||||||||
Thomas Bushey [Member] | |||||||||||||||
STOCKHOLDERS' EQUITY (Details) [Line Items] | |||||||||||||||
Recognized stock based compensation (in Dollars) | $ 1,050,000 | ||||||||||||||
Restricted Stock Units (RSUs) [Member] | |||||||||||||||
STOCKHOLDERS' EQUITY (Details) [Line Items] | |||||||||||||||
weighted-average contractual remaining life | 1 year 3 months | ||||||||||||||
Weighted average grant-date fair value (in Dollars per share) | $ 0.64 | ||||||||||||||
Unrecognized compensation expense (in Dollars) | $ 5,250,000 | ||||||||||||||
Stock compensation expense (in Dollars) | $ 3,150,000 | ||||||||||||||
Restricted stock purchase | 1,000,000 | 126,160 | |||||||||||||
Weighted average grant-date fair value of exercise price (in Dollars per share) | $ 8.40 | ||||||||||||||
Vesting period | 2 years | 2 years | |||||||||||||
Restricted Stock Units (RSUs) [Member] | Thomas Bushey [Member] | |||||||||||||||
STOCKHOLDERS' EQUITY (Details) [Line Items] | |||||||||||||||
Description of restricted stock units | Effective January 19, 2021, (i) Mr. Bushey received 500,000 RSU Shares (375,000 RSU Shares vested as of December 31, 2020 and 125,000 RSU Shares on which the Compensation Committee accelerated vesting), which RSU Shares will be issued on June 3, 2022 pursuant to Mr. Bushey’s deferral election, and (ii) 500,000 RSU shares were canceled. | ||||||||||||||
Consultant [Member] | Restricted Stock Units (RSUs) [Member] | |||||||||||||||
STOCKHOLDERS' EQUITY (Details) [Line Items] | |||||||||||||||
Stock compensation expense (in Dollars) | $ 0 | $ 10,120 | |||||||||||||
Director [Member] | |||||||||||||||
STOCKHOLDERS' EQUITY (Details) [Line Items] | |||||||||||||||
Stock compensation expense (in Dollars) | 270,000 | ||||||||||||||
Recognized stock based compensation (in Dollars) | $ 90,000 | ||||||||||||||
Vesting period | 1 year | ||||||||||||||
Director [Member] | Restricted Stock Units (RSUs) [Member] | |||||||||||||||
STOCKHOLDERS' EQUITY (Details) [Line Items] | |||||||||||||||
Stock Issued During Period, Value, Restricted Stock Award, Forfeitures (in Dollars) | $ 60,000 | ||||||||||||||
Series A Convertible Preferred Stock [Member] | |||||||||||||||
STOCKHOLDERS' EQUITY (Details) [Line Items] | |||||||||||||||
Preferred stock, authorized | 5,000,000 | 5,000,000 | |||||||||||||
Preferred stock, par value (in Dollars per share) | $ 0.0001 | $ 0.0001 | |||||||||||||
Preferred shares designated | 5,000,000 | 5,000,000 |
STOCKHOLDERS' EQUITY (Details)
STOCKHOLDERS' EQUITY (Details) - Schedule of assumptions used in Black-Scholes Model | 3 Months Ended |
Mar. 31, 2021$ / shares | |
Schedule of assumptions used in Black-Scholes Model [Abstract] | |
Stock price (in Dollars per share) | $ 12.92 |
Risk-free interest rate | 0.57% |
Volatility | 52.80% |
Expected life in years | 10 years |
Dividend yield | 0.00% |
STOCKHOLDERS' EQUITY (Details_2
STOCKHOLDERS' EQUITY (Details) - Schedule of stock option activity | 3 Months Ended |
Mar. 31, 2021$ / sharesshares | |
Schedule of stock option activity [Abstract] | |
Number of Shares Under Option, beginning | 568,006 |
Weighted Average Exercise Price, beginning (in Dollars per share) | $ / shares | $ 7.39 |
Weighted Average Remaining Contractual Life, beginning | 9 years 4 months 24 days |
Number of Shares Under Option, Granted | 25,000 |
Weighted Average Exercise Price, Granted (in Dollars per share) | $ / shares | $ 12.92 |
Weighted Average Remaining Contractual Life, Granted | 2 months 12 days |
Number of Shares Under Option, Expired | |
Expired | |
Number of Shares Under Option, Terminated | |
Terminated | |
Number of Shares Under Option, Canceled | |
Canceled | |
Number of Shares Under Option, ending | 593,006 |
Weighted Average Exercise Price, ending (in Dollars per share) | $ / shares | $ 7.63 |
Weighted Average Remaining Contractual Life, ending | 9 years 2 months 12 days |
Number of Shares Under Option, Vested and Exercisable | 401,589 |
Weighted Average Exercise Price, Vested and Exercisable (in Dollars per share) | $ / shares | $ 7.71 |
Weighted Average Remaining Contractual Life, Vested and Exercisable | 9 years 3 months 18 days |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details) | 1 Months Ended | 3 Months Ended | ||
Jan. 22, 2021USD ($) | Mar. 31, 2021USD ($) | Mar. 31, 2020USD ($) | Oct. 30, 2018m² | |
COMMITMENTS AND CONTINGENCIES (Details) [Line Items] | ||||
Sublease description | The Sublease began on November 1, 2018 and ended on February 28, 2021 at a base monthly rent of $28,577. | |||
Monthly rent | $ 28,577 | |||
Security Deposits | $ 90,000 | 28,577 | ||
Rent expense | $ 83,255 | |||
Rent per month | $ 45,000 | |||
Gibraltar Sublease [Member] | ||||
COMMITMENTS AND CONTINGENCIES (Details) [Line Items] | ||||
Area of square feet (in Square Meters) | m² | 21,982 | |||
Rent expense | $ 80,627 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) - USD ($) | 3 Months Ended | |||
Mar. 31, 2021 | Apr. 15, 2021 | Jan. 29, 2021 | Dec. 31, 2020 | |
Eric A. Brock [Member] | ||||
RELATED PARTY TRANSACTIONS (Details) [Line Items] | ||||
Description of related party transaction | On August 14, 2020, pursuant to the terms of the Series A Preferred Stock Offering, Mr. Brock purchased 52,500 shares of Series A Preferred totaling $315,000 (the “Series A Shares”). On December 8, 2020, the Series A Shares mandatorily converted into an aggregate of 66,676 shares of Common Stock, which includes an aggregate of 13,084 shares of Common Stock in connection with a 25% premium. and an aggregate of 842 shares of Common Stock in lieu of declaring a dividend on shares of Series A Convertible Preferred Stock. See NOTE 9 for details. ●During the year ended December 31, 2020, we accrued $131,494 for salary owed during 2020 to Mr. Brock, which amount remains outstanding on December 31, 2020. On January 29, 2021, we paid Mr. Brock $64,344. The balance of $67,150 was paid on April 15, 2021. | |||
Stewart G. Kantor [Member] | ||||
RELATED PARTY TRANSACTIONS (Details) [Line Items] | ||||
Accrued salary | $ 2,956 | |||
Accrued balance | $ 137,415 | $ 137,416 | $ 274,831 | |
Thomas V. Bushey [Member] | ||||
RELATED PARTY TRANSACTIONS (Details) [Line Items] | ||||
Description of related party transaction | ● | |||
Accrued salary | 125,256 | |||
Aaccrued vacation | $ 9,847 | |||
Payment for service | $ 7,500 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) - Subsequent Event [Member] - USD ($) | 1 Months Ended | ||||
May 17, 2021 | Apr. 22, 2021 | Apr. 01, 2021 | Apr. 15, 2021 | Apr. 14, 2021 | |
SUBSEQUENT EVENTS (Details) [Line Items] | |||||
Subsequent event, description | the company entered into a consulting agreement with a vendor to perform strategic analysis and business development services to the Company. As part of the compensation for services provided, the Company granted non-statutory options under 2018 Plan to purchase 50,000 shares of common stock of the Company at a per share exercise price equal to $8.72. The options shall vest on September 30, 2021, and shall be exercisable for a period of 5 years following the grant date of the options. | ||||
Steward Capital [Member] | |||||
SUBSEQUENT EVENTS (Details) [Line Items] | |||||
Additonal consummation of the proposed acquisition | $ 280,000 | ||||
Eric Brock [Member] | |||||
SUBSEQUENT EVENTS (Details) [Line Items] | |||||
Accrued payroll | $ 67,150 | ||||
Stewart Kantor [Member] | |||||
SUBSEQUENT EVENTS (Details) [Line Items] | |||||
Accrued payroll | $ 137,415 | ||||
American Robotics Acquisition [Member] | |||||
SUBSEQUENT EVENTS (Details) [Line Items] | |||||
Cash consideration | $ 7,500,000 | ||||
Shares validly issued, fully paid and non-assessable shares (in Shares) | 6,750,000 | ||||
Shares exercisable (in Shares) | 1,875,000 | ||||
Per warrant price (in Dollars per share) | $ 0.0001 | ||||
Aggregate amount | $ 2,000,000 | ||||
Interest rate | 2.00% | ||||
American Robotics Acquisition [Member] | Restricted Stock Units (RSUs) [Member] | |||||
SUBSEQUENT EVENTS (Details) [Line Items] | |||||
Shares issued (in Shares) | 1,375,000 | ||||
Restricted Stock UnitS (RSUs) [Member] | |||||
SUBSEQUENT EVENTS (Details) [Line Items] | |||||
Common stock par value per share (in Dollars per share) | $ 0.0001 | ||||
Warrant Exercisable, description | Each Warrant shall be exercisable in three equal annual installments commencing on the one year anniversary of the closing date of the Mergers and shall have a term of ten years. |