Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2019 | Aug. 12, 2019 | |
Document and Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Jun. 30, 2019 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q2 | |
Entity Registrant Name | KULR Technology Group, Inc. | |
Entity Current Reporting Status | Yes | |
Entity Central Index Key | 0001662684 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Common Stock, Shares Outstanding | 80,975,655 | |
Entity Emerging Growth Company | false | |
Entity Small Business | true | |
Entity Shell Company | false |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 |
Current Assets: | ||
Cash | $ 144,314 | $ 229,896 |
Accounts receivable | 62,475 | 112,224 |
Inventory | 8,304 | 9,594 |
Prepaid expenses | 41,410 | 27,033 |
Other current assets | 17,016 | 27,569 |
Deferred expenses | 92,516 | 0 |
Total Current Assets | 366,035 | 406,316 |
Property and equipment, net | 38,758 | 44,791 |
Deferred offering costs | 15,000 | |
Total Assets | 419,793 | 451,107 |
Current Liabilities: | ||
Accounts payable | 184,598 | 117,995 |
Accrued expenses and other current liabilities | 546,569 | 374,330 |
Accrued expenses and other current liabilities - related party | 58,919 | 83,919 |
Total Current Liabilities | 790,086 | 576,244 |
Commitments and contingencies (See Note 9) | ||
Stockholders' Deficiency: | ||
Common stock, $0.0001 par value, 500,000,000 shares authorized; 80,092,315 and 78,706,256 shares issued and outstanding at June 30, 2019 and December 31, 2018, respectively | 8,009 | 7,871 |
Additional paid-in capital | 7,225,363 | 6,283,548 |
Accumulated deficit | (7,603,668) | (6,416,559) |
Total Stockholders' Deficiency | (370,293) | (125,137) |
Total Liabilities and Stockholders' Deficiency | 419,793 | 451,107 |
Series A Preferred Stock [Member] | ||
Stockholders' Deficiency: | ||
Preferred stock | 0 | 0 |
Series B Preferred Stock [Member] | ||
Stockholders' Deficiency: | ||
Preferred stock | $ 3 | $ 3 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Jun. 30, 2019 | Dec. 31, 2018 |
Preferred Stock, Par Value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred Stock, Shares Authorized | 20,000,000 | 20,000,000 |
Common Stock, Par Value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common Stock, Shares Authorized | 500,000,000 | 500,000,000 |
Common Stock, Shares Issued | 80,092,315 | 78,706,256 |
Common Stock, Shares Outstanding | 80,092,315 | 78,706,256 |
Series A Preferred Stock [Member] | ||
Preferred Stock, Shares Authorized | 1,000,000 | 1,000,000 |
Preferred Stock, Shares Issued | 0 | 0 |
Preferred Stock, Shares Outstanding | 0 | 0 |
Series B Preferred Stock [Member] | ||
Preferred Stock, Shares Authorized | 31,000 | 31,000 |
Preferred Stock, Shares Issued | 30,858 | 30,858 |
Preferred Stock, Shares Outstanding | 30,858 | 30,858 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||
Revenue | $ 56,310 | $ 171,091 | $ 251,262 | $ 399,131 |
Cost of revenue | 28,550 | 33,470 | 90,067 | 183,417 |
Gross Profit | 27,760 | 137,621 | 161,195 | 215,714 |
Operating Expenses: | ||||
Research and development | 114,547 | 119,006 | 227,739 | 238,690 |
Selling, general and administrative | 534,262 | 663,018 | 1,119,753 | 1,447,258 |
Total Operating Expenses | 648,809 | 782,024 | 1,347,492 | 1,685,948 |
Loss From Operations | (621,049) | (644,403) | (1,186,297) | (1,470,234) |
Other Expense: | ||||
Interest expense, net | (367) | (219) | (812) | (233) |
Total Other Expense | (367) | (219) | (812) | (233) |
Net Loss | $ (621,416) | $ (644,622) | $ (1,187,109) | $ (1,470,467) |
Net Loss Per Share - Basic and Diluted (In dollars per share) | $ (0.01) | $ (0.01) | $ (0.01) | $ (0.02) |
Weighted Average Number of Common Shares Outstanding - Basic and Diluted (In dollars) | 79,918,048 | 77,385,972 | 79,365,031 | 77,303,030 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIENCY) - USD ($) | Series B Convertible Preferred Stock | Common Stock [Member] | Additional Paid-in Capital [Member] | Accumulated Deficit [Member] | Total |
Balance at Dec. 31, 2017 | $ 7,744 | $ 5,090,282 | $ (4,358,320) | $ 739,706 | |
Balance (shares) at Dec. 31, 2017 | 77,440,000 | ||||
Stock-based compensation | $ 0 | 182,957 | 0 | 182,957 | |
Stock-based compensation (in shares) | 0 | ||||
Net loss | $ 0 | 0 | (825,845) | (825,845) | |
Balance at Mar. 31, 2018 | $ 7,744 | 5,273,239 | (5,184,165) | 96,818 | |
Balance (shares) at Mar. 31, 2018 | 77,440,000 | ||||
Balance at Dec. 31, 2017 | $ 7,744 | 5,090,282 | (4,358,320) | 739,706 | |
Balance (shares) at Dec. 31, 2017 | 77,440,000 | ||||
Net loss | (1,470,467) | ||||
Balance at Jun. 30, 2018 | $ 7,744 | 5,398,074 | (5,828,787) | (422,969) | |
Balance (shares) at Jun. 30, 2018 | 77,440,000 | ||||
Balance at Mar. 31, 2018 | $ 7,744 | 5,273,239 | (5,184,165) | 96,818 | |
Balance (shares) at Mar. 31, 2018 | 77,440,000 | ||||
Stock-based compensation | $ 0 | 124,835 | 0 | 124,835 | |
Stock-based compensation (in shares) | 0 | ||||
Net loss | $ 0 | 0 | (644,622) | (644,622) | |
Balance at Jun. 30, 2018 | $ 7,744 | 5,398,074 | (5,828,787) | (422,969) | |
Balance (shares) at Jun. 30, 2018 | 77,440,000 | ||||
Balance at Dec. 31, 2018 | $ 3 | $ 7,871 | 6,283,548 | (6,416,559) | (125,137) |
Balance (shares) at Dec. 31, 2018 | 30,858 | 78,706,256 | |||
Stock-based compensation | $ 0 | $ 3 | 36,057 | 0 | 36,060 |
Stock-based compensation (in shares) | 0 | 25,000 | |||
Common stock issued for cash | $ 0 | $ 23 | 154,977 | 0 | 155,000 |
Common stock issued for cash (in shares) | 0 | 234,849 | |||
Net loss | $ 0 | $ 0 | 0 | (565,693) | (565,693) |
Balance at Mar. 31, 2019 | $ 3 | $ 7,897 | 6,474,582 | (6,982,252) | (499,770) |
Balance (shares) at Mar. 31, 2019 | 30,858 | 78,966,105 | |||
Balance at Dec. 31, 2018 | $ 3 | $ 7,871 | 6,283,548 | (6,416,559) | (125,137) |
Balance (shares) at Dec. 31, 2018 | 30,858 | 78,706,256 | |||
Net loss | (1,187,109) | ||||
Balance at Jun. 30, 2019 | $ 3 | $ 8,009 | 7,225,363 | (7,603,668) | (370,293) |
Balance (shares) at Jun. 30, 2019 | 30,858 | 80,092,315 | |||
Balance at Mar. 31, 2019 | $ 3 | $ 7,897 | 6,474,582 | (6,982,252) | (499,770) |
Balance (shares) at Mar. 31, 2019 | 30,858 | 78,966,105 | |||
Stock-based compensation | $ 0 | $ 0 | 7,593 | 0 | 7,593 |
Common stock issued for cash | 0 | $ 112 | 743,188 | 0 | 743,300 |
Common stock issued for cash (in shares) | 1,126,210 | ||||
Net loss | 0 | $ 0 | 0 | (621,416) | (621,416) |
Balance at Jun. 30, 2019 | $ 3 | $ 8,009 | $ 7,225,363 | $ (7,603,668) | $ (370,293) |
Balance (shares) at Jun. 30, 2019 | 30,858 | 80,092,315 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Cash Flows From Operating Activities: | ||
Net loss | $ (1,187,109) | $ (1,470,467) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation expense | 6,033 | 8,524 |
Write-down of inventory | 90 | |
Stock-based compensation | 93,111 | 307,792 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 49,749 | 32,862 |
Inventory | 1,200 | |
Prepaid expenses | (14,377) | 64,801 |
Other current assets | 10,553 | |
Deferred expenses | (92,516) | |
Accounts payable | 66,603 | 169,291 |
Accrued expenses and other current liabilities | 122,781 | 37,946 |
Accrued expenses and other current liabilities - related party | (25,000) | (92,038) |
Deferred revenue | 0 | 161,909 |
Total Adjustments | 218,227 | 691,087 |
Net Cash Used In Operating Activities | (968,882) | (779,380) |
Cash Flows From Investing Activities: | ||
Purchases of property and equipment | 0 | (8,350) |
Net Cash Used In Investing Activities | 0 | (8,350) |
Cash Flows From Financing Activities: | ||
Proceeds from sale of common stock | 898,300 | |
Payment of deferred offering costs | (15,000) | |
Net Cash Provided By Financing Activities | 883,300 | |
Net Decrease In Cash | (85,582) | (787,730) |
Cash - Beginning of Period | 229,896 | 895,761 |
Cash - End of Period | 144,314 | 108,031 |
Cash paid during the period for: | ||
Interest | $ 446 | 294 |
Income taxes | 2,400 | |
Non-cash investing and financing activities: | ||
Accrual of deferred offering costs | $ 30,000 |
Business Organization, Nature o
Business Organization, Nature of Operations and Basis of Presentation | 6 Months Ended |
Jun. 30, 2019 | |
Business Organization, Nature of Operations and Basis of Presentation | |
Business Organization, Nature of Operations and Basis of Presentation | Note 1 Business Organization, Nature of Operations and Basis of Presentation Organization and Operations KULR Technology Group, Inc., through its wholly-owned subsidiary, KULR Technology Corporation (collectively referred to as “KULR” or the “Company”), develops and commercializes high-performance thermal management technologies for electronics, batteries, and other components across a range of applications. Currently, the Company is focused on targeting the following applications: electric vehicles and autonomous driving systems (collectively referred to herein as “E-Mobility”); artificial intelligence and Cloud computing; energy storage; and 5G communication technologies. KULR provides heat management solutions to enhance the performance and safety of battery packs used in electric vehicles, communication devices aerospace and defense. Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10‑Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and disclosures required by U.S. GAAP for annual financial statements. In the opinion of management, such statements include all adjustments (consisting only of normal recurring items) which are considered necessary for a fair presentation of the condensed consolidated financial statements of the Company as of June 30, 2019 and for the three and six months then ended. The results of operations for the three and six months ended June 30, 2019 are not necessarily indicative of the operating results for the full year ending December 31, 2019 or any other period. These condensed consolidated financial statements should be read in conjunction with the Company’s audited financial statements and related disclosures as of December 31, 2018 and for the year then ended, which were filed with the Securities and Exchange Commission (“SEC”) on Form 10‑K on March 29, 2019. |
Going Concern and Management's
Going Concern and Management's Plans | 6 Months Ended |
Jun. 30, 2019 | |
Going Concern and Management's Plans | |
Going Concern and Management's Plans | Note 2 Going Concern and Management’s Plans The Company has not yet achieved profitability and expects to continue to incur cash outflows from operations. It is expected that its research and development and general and administrative expenses will continue to increase and, as a result, the Company will eventually need to generate significant product revenues to achieve profitability. These conditions indicate that there is substantial doubt about the Company’s ability to continue as a going concern within one year after the financial statement issuance date. The Company is currently funding its operations on a month-to-month basis by means of private placements. Although the Company’s management believes that it has access to capital resources, there are currently no commitments in place for new financing at this time and there is no assurance that the Company will be able to obtain funds on commercially acceptable terms, if at all. If the Company is unable to obtain adequate funds on reasonable terms, it may be required to significantly curtail or discontinue operations or obtain funds by entering into financing agreements on unattractive terms. The Company’s operating needs include the planned costs to operate its business, including amounts required to fund working capital and capital expenditures. The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with U.S. GAAP, which contemplate continuation of the Company as a going concern and the realization of assets and satisfaction of liabilities in the normal course of business. The unaudited condensed consolidated financial statements do not include any adjustment that might become necessary should the Company be unable to continue as a going concern. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2019 | |
Summary of Significant Accounting Policies. | |
Summary of Significant Accounting Policies | Note 3 Summary of Significant Accounting Policies Since the date of the Annual Report on Form 10‑K for the year ended December 31, 2018, there have been no material changes to the Company’s significant accounting policies, except as disclosed in this note. Concentrations Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash and accounts receivable. A significant portion of the Company’s cash is held at one major financial institution. The Company has not experienced any losses in such accounts. Cash held in US bank institutions is currently insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000 at each institution. There were no uninsured cash balances as of June 30, 2019 and December 31, 2018. Customer concentrations are as follows: Revenues Accounts Receivable For the Three Months Ended For the Six Months Ended As of As of June 30, June 30, June 30, 2019 December 31, 2018 2019 2018 2019 2018 Customer A * 21 % * 37 % * * Customer B * * * 27 % * * Customer C * 70 % * 30 % * 63 % Customer D 17 % * * * 16 % 37 % Customer E 64 % * 14 % * 68 % * Customer F 18 % * * * 16 % * Customer G * * 47 % * * * Total 99 % 91 % 61 % 94 % 100 % 100 % * There is no assurance the Company will continue to receive significant revenues from any of these customers. A reductions or delay in operating activity from any of the Company’s significant customers, or a delay or default in payment by any significant customer, or termination of agreements with significant customers, could materially harm the Company’s business and prospects. Because of the Company’s significant customer concentrations, its gross profit and operating income could fluctuate significantly due to changes in political, environmental, or economic conditions, or the loss of, reduction of business from, or less favorable terms with any of the Company’s significant customers. Revenue Recognition The Company recognizes revenue in accordance with Accounting Standards Codification (“ASC”) Topic 606, “Revenue from Contracts with Customers” (“ASC 606”). The core principle of ASC 606 requires that an entity recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. ASC 606 defines a five-step process to achieve this core principle and, in doing so, it is possible more judgment and estimates may be required within the revenue recognition process, including identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. The following five steps are applied to achieve that core principle: · Step 1: Identify the contract with the customer; · Step 2: Identify the performance obligations in the contract; · Step 3: Determine the transaction price; · Step 4: Allocate the transaction price to the performance obligations in the contract; and · Step 5: Recognize revenue when the company satisfies a performance obligation. The Company recognizes revenue primarily from the following different types of contracts: · Product sales – Revenue is recognized at the point the customer obtains control of the goods and the Company satisfies its performance obligation, which is generally at the time it ships the product to the customer. · Contract services – Revenue is recognized at the point in time that the Company satisfies its performance obligation under the contract, which is generally at the time it delivers a report to the customer. The following table summarizes our revenue recognized in our condensed consolidated statements of operations: For the Three Months Ended For the Six Months Ended June 30, June 30, 2019 2018 2019 2018 Product sales $ 52,310 $ 134,791 $ 221,750 $ 253,143 Contract services 4,000 36,300 29,512 145,988 Total revenue $ 56,310 $ 171,091 $ 251,262 $ 399,131 As of June 30, 2019 and December 31, 2018, the Company did not have any contract assets or contract liabilities from contracts with customers. The contract liabilities represent payments received from customers for which the Company had not yet satisfied its performance obligation under the contract. During the three and six months ended June 30, 2019 and 2018, there was no revenue recognized from performance obligations satisfied (or partially satisfied) in previous periods. Net Loss Per Common Share Basic net loss per common share is computed by dividing net loss by the weighted average number of vested common shares outstanding during the period. Diluted net loss per common share is computed by dividing net loss by the weighted average number of common and dilutive common-equivalent shares outstanding during each period. Dilutive common-equivalent shares consist of shares of non-vested restricted stock, if not anti-dilutive. The following shares were excluded from the calculation of weighted average dilutive common shares because their inclusion would have been anti-dilutive: For the Three Months Ended For the Six Months Ended June 30, June 30, 2019 2018 2019 2018 Non-vested restricted stock — 54,028 — 136,970 Series B Convertible Preferred Stock 1,542,900 — 1,542,900 — Options 300,000 — 300,000 — Total 1,842,900 54,028 1,842,900 136,970 Operating Leases The Company leases properties under operating leases. For leases in effect upon adoption of Accounting Standards Update (“ASU”) 2016‑02, “Leases (Topic 842)” at January 1, 2019 and for any leases commencing thereafter, the Company recognizes a liability to make lease payments, the “lease liability”, and an asset representing the right to use the underlying asset during the lease term, the “right-of-use asset”. The lease liability is measured at the present value of the remaining lease payments, discounted at the Company’s incremental borrowing rate. The right-of-use asset is measured at the amount of the lease liability adjusted for the remaining balance of any lease incentives received, any cumulative prepaid or accrued rent if the lease payments are uneven throughout the lease term, any unamortized initial direct costs, and any impairment of the right-of-use-asset. Operating lease expense consists of a single lease cost calculated so that the remaining cost of the lease is allocated over the remaining lease term on a straight-line basis, variable lease payments not included in the lease liability, and any impairment of the right-of-use asset. The Company evaluated their operating leases and elected to apply the short-term lease measurement and recognition exemption in which the right of use assets and lease liabilities are not recognized for short-term leases. |
Deferred Expenses
Deferred Expenses | 6 Months Ended |
Jun. 30, 2019 | |
Deferred Expenses | |
Deferred Expenses | Note 4 Deferred Expenses Deferred expenses consist of labor and materials that are attributable to customer contracts that the Company has not completed its performance obligation under the contract and, as a result, has not recognized revenue. As of June 30, 2019, deferred expenses were $92,516, which consisted of labor and materials, totaling $43,843 and $48,673, respectively. As of December 31, 2018, there were no deferred expenses. |
Accrued Expenses and Other Curr
Accrued Expenses and Other Current Liabilities | 6 Months Ended |
Jun. 30, 2019 | |
Accrued Expenses and Other Current Liabilities | |
Accrued Expenses and Other Current Liabilities | Note 5 Accrued Expenses and Other Current Liabilities As of June 30, 2019 and December 31, 2018, accrued expenses and other current liabilities consisted of the following: June 30, December 31, 2019 2018 (unaudited) Payroll and vacation $ 388,894 $ 252,043 Legal and professional fees 29,745 47,502 Travel expenses 55,226 48,248 Payroll and income tax payable 10,792 12,678 Research and development expenses — 2,850 Credit card payable 4,475 4,586 Accrued issuable equity 49,459 3,960 Rent 176 176 Other 7,802 2,287 Total accrued expenses and other current liabilities $ 546,569 $ 374,330 The Company has agreed to issue an aggregate of 43,895 shares of common stock and warrants to purchase 75,000 shares of common stock for consulting fees. As of June 30, 2019, the stock and warrants had not been issued and, as a result, $49,459 of accrued issuable equity at fair value was included within accrued expenses and other current liabilities. |
Related Party Transactions
Related Party Transactions | 6 Months Ended |
Jun. 30, 2019 | |
Related Party Transactions | |
Related Party Transactions | Note 6 Related Party Transactions Accrued Expenses and Other Current Liabilities Accrued expenses and other current liabilities – related parties consist of a liability of $58,919 and $83,919 as of June 30, 2019 and December 31, 2018, respectively, to Energy Science Laboratories, Inc. (“ESLI”), a company controlled by the Company’s Chief Technology Officer (“CTO”), in connection with consulting services provided to the Company associated with the development of the Company’s CFV thermal management solutions. |
Stockholders' Deficiency
Stockholders' Deficiency | 6 Months Ended |
Jun. 30, 2019 | |
Stockholders' Deficiency | |
Stockholders' Deficiency | Note 7 Stockholders’ Deficiency Common Stock During the six months ended June 30, 2019, the Company sold an aggregate of 1,361,059 shares of common stock at $0.66 per share to accredited investors for aggregate gross cash proceeds of $898,300. Stock-Based Compensation During the three and six months ended June 30, 2019, the Company recognized stock-based compensation expense of $45,171 and $93,111 (which includes the issuance of 25,000 shares of immediately-vested common stock for legal fees of $36,060), respectively, and during the three and six months ended June 30, 2018, the Company recognized stock-based compensation expense of $124,835 and $307,792, respectively, related to restricted common stock, stock options and warrants, which are included within general and administrative expenses on the condensed consolidated statements of operations. As of June 30, 2019, there was $137,003 of unrecognized stock-based compensation expense that will be recognized over the weighted average remaining vesting period of 2.5 years. |
Leases
Leases | 6 Months Ended |
Jun. 30, 2019 | |
Leases | |
Leases | Note 8 Leases The Company has two operating leases for real estate which have remaining terms that are less than one year. The Company elected not to recognize short-term leases on the balance sheet and all costs were recognized as selling, general and administrative expenses on the condensed consolidated statements of operations. For the three and six months ended June 30, 2019, operating lease expense was $40,103 and $80,488, respectively. For the three and six months ended June 30, 2018, operating lease expense was $31,505 and $46,666, respectively. As of June 30, 2019, the Company does not have any financing leases. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2019 | |
Commitments and Contingencies. | |
Commitments and Contingencies | Note 9 Commitments and Contingencies Patent License Agreement On March 21, 2018, the Company entered into an agreement with the National Renewable Energy Laboratory (“NREL”) granting the Company an exclusive license to commercialize its patented Internal Short Circuit technology. The agreement shall be effective for as long as the licensed patents are enforceable, subject to certain early termination provisions specified in the agreement. In consideration, the Company agreed to pay to NREL the following: (i) a cash payment of $12,000 payable over one year, (ii) royalties ranging from 1.5% to 3.75% on the net sales price of the licensed products, as defined in the agreement, with minimum annual royalty payments ranging from $0 to $7,500. In addition, the Company shall use commercially reasonable efforts to bring the licensed products to market through a commercialization program that requires that certain milestones be met, as specified in the agreement. For the three and six months ended June 30, 2019, the Company recorded royalties of $690 that were included within cost of revenues. There were no sales of the licensed products during 2018, such that no royalties were earned during the three and six months ended June 30, 2018. Securities Purchase Agreement On April 2, 2019, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with the stockholders (the “Sellers”) holding 100% of the ownership interest in TECHTOM Co., Ltd. (“TECHTOM”), a Japanese limited liability company, pursuant to which the Company agreed to purchase from the Sellers, subject to the satisfaction of certain closing conditions, all ownership interests in TECHTOM and any and all claims, notes and other liabilities owed by TECHTOM to the Sellers (the “Acquisition”). On July 5, 2019, the Company entered into a Rescission and Termination Agreement (the “Termination Agreement”) with the Sellers (each Seller, individually, and the Company, a “Party” or collectively, the “Parties”) holding 100% of the ownership interest in TECHTOM to terminate the Purchase Agreement. Pursuant to the Termination Agreement, each of the Parties mutually agreed (i) to rescind and terminate the Purchase Agreement, relieving each Party of their respective duties and obligations arising under the Purchase Agreement; and (ii) to a general release of all other respective Parties from all claims arising out of the Purchase Agreement or the Termination Agreement. Each Party is responsible for all costs and expenses incurred by such Party in connection with the Purchase Agreement or the Termination Agreement. |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2019 | |
Subsequent Events | |
Subsequent Events | Note 10 Subsequent Events Common Stock On July 8, 2019, the Company issued 25,000 shares of common stock at $0.66 per share in connection with services provided. On July 9, 2019, the Company issued an aggregate of 39,790 shares of common stock at $0.66 per share in connection with services provided. Registration Statement On July 11, 2019, the Company filed a shelf registration statement on Form S-3 with the United States Securities and Exchange Commission (“SEC”). The shelf registration was declared effective by the SEC, on August 1, 2019. The registration statement will allow the Company to issue, from time to time at prices and on terms to be determined at or prior to the time of the offering, shares of its common stock, shares of our preferred stock or warrants, either individually or in units, with a total value of up to $50,000,000. Series B Convertible Preferred Stock Subsequent to June 30, 2019, holders of Series B Convertible Preferred Stock converted an aggregate of 16,371 shares of Series B Convertible Preferred Stock into an aggregate of 818,550 shares of common stock. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2019 | |
Summary of Significant Accounting Policies. | |
Concentrations | Concentrations Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash and accounts receivable. A significant portion of the Company’s cash is held at one major financial institution. The Company has not experienced any losses in such accounts. Cash held in US bank institutions is currently insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000 at each institution. There were no uninsured cash balances as of June 30, 2019 and December 31, 2018. Customer concentrations are as follows: Revenues Accounts Receivable For the Three Months Ended For the Six Months Ended As of As of June 30, June 30, June 30, 2019 December 31, 2018 2019 2018 2019 2018 Customer A * 21 % * 37 % * * Customer B * * * 27 % * * Customer C * 70 % * 30 % * 63 % Customer D 17 % * * * 16 % 37 % Customer E 64 % * 14 % * 68 % * Customer F 18 % * * * 16 % * Customer G * * 47 % * * * Total 99 % 91 % 61 % 94 % 100 % 100 % * There is no assurance the Company will continue to receive significant revenues from any of these customers. A reductions or delay in operating activity from any of the Company’s significant customers, or a delay or default in payment by any significant customer, or termination of agreements with significant customers, could materially harm the Company’s business and prospects. Because of the Company’s significant customer concentrations, its gross profit and operating income could fluctuate significantly due to changes in political, environmental, or economic conditions, or the loss of, reduction of business from, or less favorable terms with any of the Company’s significant customers. |
Revenue Recognition | Revenue Recognition The Company recognizes revenue in accordance with Accounting Standards Codification (“ASC”) Topic 606, “Revenue from Contracts with Customers” (“ASC 606”). The core principle of ASC 606 requires that an entity recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. ASC 606 defines a five-step process to achieve this core principle and, in doing so, it is possible more judgment and estimates may be required within the revenue recognition process, including identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. The following five steps are applied to achieve that core principle: · Step 1: Identify the contract with the customer; · Step 2: Identify the performance obligations in the contract; · Step 3: Determine the transaction price; · Step 4: Allocate the transaction price to the performance obligations in the contract; and · Step 5: Recognize revenue when the company satisfies a performance obligation. The Company recognizes revenue primarily from the following different types of contracts: · Product sales – Revenue is recognized at the point the customer obtains control of the goods and the Company satisfies its performance obligation, which is generally at the time it ships the product to the customer. · Contract services – Revenue is recognized at the point in time that the Company satisfies its performance obligation under the contract, which is generally at the time it delivers a report to the customer. The following table summarizes our revenue recognized in our condensed consolidated statements of operations: For the Three Months Ended For the Six Months Ended June 30, June 30, 2019 2018 2019 2018 Product sales $ 52,310 $ 134,791 $ 221,750 $ 253,143 Contract services 4,000 36,300 29,512 145,988 Total revenue $ 56,310 $ 171,091 $ 251,262 $ 399,131 As of June 30, 2019 and December 31, 2018, the Company did not have any contract assets or contract liabilities from contracts with customers. The contract liabilities represent payments received from customers for which the Company had not yet satisfied its performance obligation under the contract. During the three and six months ended June 30, 2019 and 2018, there was no revenue recognized from performance obligations satisfied (or partially satisfied) in previous periods. |
Net Loss Per Common Share | Net Loss Per Common Share Basic net loss per common share is computed by dividing net loss by the weighted average number of vested common shares outstanding during the period. Diluted net loss per common share is computed by dividing net loss by the weighted average number of common and dilutive common-equivalent shares outstanding during each period. Dilutive common-equivalent shares consist of shares of non-vested restricted stock, if not anti-dilutive. The following shares were excluded from the calculation of weighted average dilutive common shares because their inclusion would have been anti-dilutive: For the Three Months Ended For the Six Months Ended June 30, June 30, 2019 2018 2019 2018 Non-vested restricted stock — 54,028 — 136,970 Series B Convertible Preferred Stock 1,542,900 — 1,542,900 — Options 300,000 — 300,000 — Total 1,842,900 54,028 1,842,900 136,970 |
Operating Leases | Operating Leases The Company leases properties under operating leases. For leases in effect upon adoption of Accounting Standards Update (“ASU”) 2016‑02, “Leases (Topic 842)” at January 1, 2019 and for any leases commencing thereafter, the Company recognizes a liability to make lease payments, the “lease liability”, and an asset representing the right to use the underlying asset during the lease term, the “right-of-use asset”. The lease liability is measured at the present value of the remaining lease payments, discounted at the Company’s incremental borrowing rate. The right-of-use asset is measured at the amount of the lease liability adjusted for the remaining balance of any lease incentives received, any cumulative prepaid or accrued rent if the lease payments are uneven throughout the lease term, any unamortized initial direct costs, and any impairment of the right-of-use-asset. Operating lease expense consists of a single lease cost calculated so that the remaining cost of the lease is allocated over the remaining lease term on a straight-line basis, variable lease payments not included in the lease liability, and any impairment of the right-of-use asset. The Company evaluated their operating leases and elected to apply the short-term lease measurement and recognition exemption in which the right of use assets and lease liabilities are not recognized for short-term leases. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Summary of Significant Accounting Policies. | |
Schedules of concentrations of credit risk | Customer concentrations are as follows: Revenues Accounts Receivable For the Three Months Ended For the Six Months Ended As of As of June 30, June 30, June 30, 2019 December 31, 2018 2019 2018 2019 2018 Customer A * 21 % * 37 % * * Customer B * * * 27 % * * Customer C * 70 % * 30 % * 63 % Customer D 17 % * * * 16 % 37 % Customer E 64 % * 14 % * 68 % * Customer F 18 % * * * 16 % * Customer G * * 47 % * * * Total 99 % 91 % 61 % 94 % 100 % 100 % * There is no assurance the Company will continue to receive significant revenues from any of these customers. A reductions or delay in operating activity from any of the Company’s significant customers, or a delay or default in payment by any significant customer, or termination of agreements with significant customers, could materially harm the Company’s business and prospects. Because of the Company’s significant customer concentrations, its gross profit and operating income could fluctuate significantly due to changes in political, environmental, or economic conditions, or the loss of, reduction of business from, or less favorable terms with any of the Company’s significant customers. |
Schedule of revenue from external customers by products and services | The following table summarizes our revenue recognized in our condensed consolidated statements of operations: For the Three Months Ended For the Six Months Ended June 30, June 30, 2019 2018 2019 2018 Product sales $ 52,310 $ 134,791 $ 221,750 $ 253,143 Contract services 4,000 36,300 29,512 145,988 Total revenue $ 56,310 $ 171,091 $ 251,262 $ 399,131 |
Schedules of weighted average dilutive common shares because their inclusion would have been anti-dilutive | The following shares were excluded from the calculation of weighted average dilutive common shares because their inclusion would have been anti-dilutive: For the Three Months Ended For the Six Months Ended June 30, June 30, 2019 2018 2019 2018 Non-vested restricted stock — 54,028 — 136,970 Series B Convertible Preferred Stock 1,542,900 — 1,542,900 — Options 300,000 — 300,000 — Total 1,842,900 54,028 1,842,900 136,970 |
Accrued Expenses and Other Cu_2
Accrued Expenses and Other Current Liabilities (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Accrued Expenses and Other Current Liabilities | |
Schedule of accrued expenses and other current liabilities | As of June 30, 2019 and December 31, 2018, accrued expenses and other current liabilities consisted of the following: June 30, December 31, 2019 2018 (unaudited) Payroll and vacation $ 388,894 $ 252,043 Legal and professional fees 29,745 47,502 Travel expenses 55,226 48,248 Payroll and income tax payable 10,792 12,678 Research and development expenses — 2,850 Credit card payable 4,475 4,586 Accrued issuable equity 49,459 3,960 Rent 176 176 Other 7,802 2,287 Total accrued expenses and other current liabilities $ 546,569 $ 374,330 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Additional Information (Details) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 | |
Summary of Significant Accounting Policies. | |||||
Cash, FDIC Insured Amount | $ 250,000 | $ 250,000 | |||
Revenue Recognized | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Customer concentrations (Details) | 3 Months Ended | 6 Months Ended | ||||||||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 | ||||||
Revenues [Member] | ||||||||||
Concentration Risk, Percentage | 99.00% | 91.00% | 61.00% | 94.00% | ||||||
Accounts Receivable [Member] | ||||||||||
Concentration Risk | 100.00% | 100.00% | 100.00% | |||||||
Customer A [Member] | Revenues [Member] | ||||||||||
Concentration Risk, Percentage | 21.00% | [1] | 37.00% | |||||||
Customer A [Member] | Accounts Receivable [Member] | ||||||||||
Concentration Risk | [1] | [1] | ||||||||
Customer B [Member] | Revenues [Member] | ||||||||||
Concentration Risk, Percentage | [1] | 27.00% | ||||||||
Customer B [Member] | Accounts Receivable [Member] | ||||||||||
Concentration Risk | [1] | |||||||||
Customer C [Member] | Revenues [Member] | ||||||||||
Concentration Risk, Percentage | [1] | 70.00% | 30.00% | |||||||
Customer C [Member] | Accounts Receivable [Member] | ||||||||||
Concentration Risk | [1] | 63.00% | ||||||||
Customer D [Member] | Revenues [Member] | ||||||||||
Concentration Risk, Percentage | [1] | 17.00% | ||||||||
Customer D [Member] | Accounts Receivable [Member] | ||||||||||
Concentration Risk | 16.00% | [1] | 16.00% | [1] | 37.00% | |||||
Customer E [Member] | Revenues [Member] | ||||||||||
Concentration Risk, Percentage | 64.00% | [1] | 14.00% | |||||||
Customer E [Member] | Accounts Receivable [Member] | ||||||||||
Concentration Risk | [1] | 68.00% | 68.00% | |||||||
Customer F [Member] | Revenues [Member] | ||||||||||
Concentration Risk, Percentage | [1] | 18.00% | ||||||||
Customer F [Member] | Accounts Receivable [Member] | ||||||||||
Concentration Risk | 16.00% | 16.00% | [1] | |||||||
Customer G [Member] | Revenues [Member] | ||||||||||
Concentration Risk, Percentage | 47.00% | |||||||||
Customer G [Member] | Accounts Receivable [Member] | ||||||||||
Concentration Risk | ||||||||||
[1] | Less than 10% |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies- condensed consolidated statements of operations: (Details) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 | |
Total revenue | $ 56,310 | $ 171,091 | $ 251,262 | $ 399,131 | |
Contract with Customer, Liability, Revenue Recognized | 0 | 0 | 0 | 0 | $ 0 |
Product sales [Member] | |||||
Total revenue | 52,310 | 134,791 | 221,750 | 253,143 | |
Contract services [Member] | |||||
Total revenue | $ 4,000 | $ 36,300 | $ 29,512 | $ 145,988 |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - weighted average dilutive common shares (Details) - Earnings per share diluted [Member] - shares | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 1,842,900 | 54,028 | 1,842,900 | 136,970 |
Non-vested restricted stock | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 0 | 54,028 | 136,970 | |
Series B Convertible Preferred Stock | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 1,542,900 | 0 | 1,542,900 | |
Options | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 300,000 | 0 | 300,000 |
Deferred Expenses (Details)
Deferred Expenses (Details) - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 |
Deferred Expenses | ||
Deferred expenses | $ 92,516 | $ 0 |
Deferred expenses for labor | 43,843 | |
Deferred expenses for materials | $ 48,673 |
Accrued Expenses and Other Cu_3
Accrued Expenses and Other Current Liabilities (Details) - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 |
Accrued Expenses and Other Current Liabilities | ||
Payroll and vacation | $ 388,894 | $ 252,043 |
Legal and professional fees | 29,745 | 47,502 |
Travel expenses | 55,226 | 48,248 |
Payroll and income tax payable | 10,792 | 12,678 |
Research and development expenses | 0 | 2,850 |
Credit card payable | 4,475 | 4,586 |
Accrued issuable equity | 49,459 | 3,960 |
Rent | 176 | 176 |
Other | 7,802 | 2,287 |
Total accrued expenses and other current liabilities | $ 546,569 | $ 374,330 |
Accrued Expenses and Other Cu_4
Accrued Expenses and Other Current Liabilities - Additional Information (Details) - USD ($) | 6 Months Ended | |
Jun. 30, 2019 | Dec. 31, 2018 | |
Accrued Expenses and Other Current Liabilities | ||
Accrued issuable Equity | $ 49,459 | $ 3,960 |
Issuable Equity, Accrued | 43,895 | |
Warrants not issued during the period, issued for services | 75,000 |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 |
Related Party Transaction [Line Items] | ||
Due to Other Related Parties, Current | $ 58,919 | $ 83,919 |
Chief Technology Officer CTO [Member] | ||
Related Party Transaction [Line Items] | ||
Due to Other Related Parties, Current | $ 58,919 | $ 83,919 |
Stockholders' Deficiency (Detai
Stockholders' Deficiency (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Sale of Stock, Price Per Share | $ 0.66 | $ 0.66 | ||
Sale of Stock, Number of Shares Issued in Transaction | 1,361,059 | |||
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized | $ 137,003 | $ 137,003 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period | 2 years 6 months | |||
Gross cash proceeds | $ 898,300 | |||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested, Number of Shares | 25,000 | |||
Legal Fees | $ 36,060 | |||
General and Administrative Expense [Member] | ||||
Stock Issued During Period, Value, Issued for Services | $ 124,835 | $ 307,792 | ||
Allocated Share-based Compensation Expense | $ 45,171 | $ 93,111 |
Leases (Details)
Leases (Details) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019USD ($) | Jun. 30, 2018USD ($) | Jun. 30, 2019USD ($) | Jun. 30, 2018USD ($) | |
Leases | ||||
Property Subject to or Available for Operating Lease, Number of Units | 2 | 2 | ||
Operating Lease, Weighted Average Remaining Lease Term | 1 year | 1 year | ||
Operating Lease, Expense | $ 40,103 | $ 31,505 | $ 80,488 | $ 46,666 |
Commitments and Contingencies (
Commitments and Contingencies (Details) - USD ($) | Jul. 05, 2019 | Mar. 21, 2018 | Jun. 30, 2019 | Jun. 30, 2019 | Apr. 02, 2019 |
Royalty Expense | $ 690 | $ 690 | |||
License [Member] | |||||
Consideration Cash Payment | $ 12,000 | ||||
Minimum [Member] | |||||
Royalty Rate | 1.50% | ||||
Payments for Royalties | $ 0 | ||||
Maximum [Member] | |||||
Royalty Rate | 3.75% | ||||
Payments for Royalties | $ 7,500 | ||||
TECHTOM | |||||
Ownership interest (as a percent) | 100.00% | ||||
Ownership interest terminated | 100.00% |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) | Aug. 01, 2019 | Jul. 09, 2019 | Jul. 08, 2019 | Jul. 01, 2019 | Jun. 30, 2019 |
Subsequent Event [Line Items] | |||||
Sale of Stock, Price Per Share | $ 0.66 | ||||
Sale of Stock, Number of Shares Issued in Transaction | 1,361,059 | ||||
Subsequent Events | |||||
Subsequent Event [Line Items] | |||||
Proceeds from Issuance or Sale of Equity | $ 50,000,000 | ||||
Subsequent Events | Common Stock [Member] | |||||
Subsequent Event [Line Items] | |||||
Sale of Stock, Price Per Share | $ 0.66 | ||||
Sale of Stock, Number of Shares Issued in Transaction | 25,000 | ||||
Conversion of Stock, Shares Issued | 818,550 | ||||
Subsequent Events | Common Stock [Member] | Private Placement [Member] | |||||
Subsequent Event [Line Items] | |||||
Sale of Stock, Price Per Share | $ 0.66 | ||||
Sale of Stock, Number of Shares Issued in Transaction | 39,790 | ||||
Subsequent Events | Series B Convertible Preferred Stock | |||||
Subsequent Event [Line Items] | |||||
Conversion of Stock, Shares Converted | 16,371 |