Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Mar. 24, 2016 | Jun. 30, 2015 | |
Document and Entity Information [Abstract] | |||
Entity Registrant Name | ANDREA ELECTRONICS CORP | ||
Entity Central Index Key | 6,494 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2015 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2,015 | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Common Stock, Shares Outstanding | 64,416,035 | ||
Entity Public Float | $ 3,493,570 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Current assets: | ||
Cash | $ 5,592,554 | $ 3,574,530 |
Accounts receivable, net of allowance for doubtful accounts of $5,415 | 1,902,388 | 238,814 |
Inventories, net | 58,028 | 216,336 |
Prepaid expenses and other current assets | 60,086 | $ 60,578 |
Current portion of note receivable | 406,522 | |
Current assets from discontinued operations | 149,746 | $ 395,643 |
Total current assets | 8,169,324 | 4,485,901 |
Property and equipment, net | 86,960 | 93,972 |
Intangible assets, net | $ 345,359 | 374,157 |
Assets from discontinued operations | $ 22,927 | |
Long term note receivable | $ 103,709 | |
Other assets, net | 5,250 | $ 13,233 |
Total assets | 8,710,602 | 4,990,190 |
Current liabilities: | ||
Trade accounts payable | 2,149,532 | 493,600 |
Taxes Payable | 45,000 | 38,000 |
Accrued Series C Preferred Stock Dividends | 73,921 | 73,921 |
Short-term deferred revenue | 6,600 | 9,312 |
Other current liabilities | 1,640,833 | 464,476 |
Liabilities from discontinued operations | 40,075 | $ 151,294 |
Short-term advance from Revenue Sharing Agreement | 196,477 | |
Current portion of long-term debt | 1,900,775 | |
Total current liabilities | 6,053,213 | $ 1,230,603 |
Advance from Revenue Sharing Agreement | $ 115,590 | 3,500,000 |
Long-term debt | 909,875 | |
Total liabilities | $ 6,168,803 | $ 5,640,478 |
Series B Redeemable Convertible Preferred Stock, $.01 par value; authorized: 1,000 shares; issued and outstanding: 0 shares | ||
Commitments and contingencies | ||
Shareholders' equity (deficit): | ||
Preferred stock value | ||
Common stock, $.01 par value; authorized: 200,000,000 shares; issued and outstanding: 64,416,035 and 63,721,035 shares, respectively | $ 644,160 | $ 637,210 |
Additional paid-in capital | 77,727,552 | 77,586,585 |
Accumulated deficit | (75,838,986) | (78,883,156) |
Total shareholders' equity (deficit) | 2,541,799 | (650,288) |
Total liabilities and shareholders' equity (deficit) | 8,710,602 | 4,990,190 |
Series C Convertible Preferred Stock | ||
Shareholders' equity (deficit): | ||
Preferred stock value | 1 | 1 |
Series D Convertible Preferred Stock | ||
Shareholders' equity (deficit): | ||
Preferred stock value | $ 9,072 | $ 9,072 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Allowance for doubtful accounts | $ 5,415 | |
Series B Redeemable Convertible Preferred Stock, par value | $ 0.01 | $ 0.01 |
Series B Redeemable Convertible Preferred Stock, shares authorized | 1,000 | 1,000 |
Series B Redeemable Convertible Preferred Stock, shares issued | 0 | 0 |
Series B Redeemable Convertible Preferred Stock, shares outstanding | 0 | 0 |
Preferred stock, par value | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 2,497,500 | 2,497,500 |
Preferred stock, shares issued | ||
Preferred stock, shares outstanding | ||
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 200,000,000 | 200,000,000 |
Common stock, shares issued | 64,416,035 | 63,721,035 |
Common stock, shares outstanding | 64,416,035 | 63,721,035 |
Series C Convertible Preferred Stock | ||
Preferred stock, par value | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 1,500 | 1,500 |
Preferred stock, shares issued | 44.2 | 44.2 |
Preferred stock, shares outstanding | 44.2 | 44.2 |
Preferred stock, liquidation value | $ 442,314 | $ 442,314 |
Series D Convertible Preferred Stock | ||
Preferred stock, par value | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 2,500,000 | 2,500,000 |
Preferred stock, shares issued | 907,144 | 907,144 |
Preferred stock, shares outstanding | 907,144 | 907,144 |
Preferred stock, liquidation value | $ 907,144 | $ 907,144 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Revenues | ||
Net product revenues | $ 388,298 | $ 326,647 |
License revenues | 12,846,584 | 896,915 |
Total Revenues | 13,234,882 | 1,223,562 |
Cost of revenues | 117,035 | 198,750 |
Gross margin | 13,117,847 | 1,024,812 |
Patent Monetization Expenses | 8,216,749 | 1,687,802 |
Research and development expenses | 767,680 | 487,858 |
General, administrative and selling expenses | 1,446,205 | 1,162,782 |
Continuing operating income (loss) | 2,687,213 | (2,313,630) |
Interest expense, net | (65,006) | (274) |
Income (loss) from continuing operations before provision for income taxes | 2,622,207 | (2,313,904) |
Provision for income taxes | 154,513 | 214,136 |
Income (loss) from continuing operations | 2,467,694 | (2,528,040) |
Income (loss) from discontinued operations | 576,476 | (364,553) |
Net income (loss) | $ 3,044,170 | $ (2,892,593) |
Basic weighted average shares | 64,000,309 | 63,721,035 |
Basic net income (loss) per share from continuing operations | $ 0.04 | $ (0.04) |
Basic net income (loss) per share from discontinuing operations | 0.01 | (0.01) |
Basic net income (loss) per share | $ 0.05 | $ (0.05) |
Diluted weighted average shares | 71,929,978 | 63,721,035 |
Diluted net income (loss) per share from continuing operations | $ 0.03 | $ (0.04) |
Diluted net income (loss) per share from discontinuing operations | 0.01 | (0.01) |
Diluted net income (loss) per share | $ 0.04 | $ (0.05) |
Consolidated Statements of Shar
Consolidated Statements of Shareholders' Equity (Deficit) - USD ($) | Total | Series C Convertible Preferred Stock [Member] | Series D Convertible Preferred Stock [Member] | Common Stock | Additional Paid-In Capital | Accumulated Deficit |
Balance at Dec. 31, 2013 | $ 2,199,731 | $ 1 | $ 9,072 | $ 637,210 | $ 77,544,011 | $ (75,990,563) |
Balance (in shares) at Dec. 31, 2013 | 44,231,432 | 907,144 | 63,721,035 | |||
Stock-based Compensation Expense related to Stock Option Grants | 42,574 | $ 42,574 | ||||
Net income (loss) | (2,892,593) | $ (2,892,593) | ||||
Balance at Dec. 31, 2014 | (650,288) | $ 1 | $ 9,072 | $ 637,210 | $ 77,586,585 | $ (78,883,156) |
Balance (in shares) at Dec. 31, 2014 | 44,231,432 | 907,144 | 63,721,035 | |||
Stock-based Compensation Expense related to Stock Option Grants | 113,167 | 113,167 | ||||
Stock option exercises | 34,750 | $ 6,950 | $ 27,800 | |||
Stock option exercises, shares | 695,000 | |||||
Net income (loss) | 3,044,170 | $ 3,044,170 | ||||
Balance at Dec. 31, 2015 | $ 2,541,799 | $ 1 | $ 9,072 | $ 644,160 | $ 77,727,552 | $ (75,838.986) |
Balance (in shares) at Dec. 31, 2015 | 44,231,432 | 907,144 | 64,416,035 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Cash flows from operating activities: | ||
Net income (loss) | $ 3,044,170 | $ (2,892,593) |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||
Depreciation and amortization | 85,660 | 115,824 |
Stock based compensation | 113,167 | 42,574 |
Credit for inventory obsolescence | (94,925) | (158,274) |
Provision for income tax withholding | 115,513 | 176,136 |
PIK interest, net | 95,968 | $ 9,875 |
Gain on sale of Anti-Noise Products Division | (879,612) | |
Accrued interest on note receivable | (14,502) | |
Change in: | ||
Accounts receivable | (1,749,979) | $ (102,370) |
Inventories | 470,022 | 423,292 |
Prepaid expenses, other current assets and other assets | 8,475 | 15,265 |
Taxes payable | 7,000 | 38,000 |
Trade accounts payable | 1,548,704 | 259,392 |
(Repayments of) Advance from Revenue Sharing Agreement | (3,187,933) | 3,500,000 |
Short-term deferred revenue | (2,712) | (2,829) |
Other current liabilities | 1,172,366 | 346,861 |
Net cash provided by operating activities | 731,382 | 1,771,153 |
Cash flows from investing activities: | ||
Purchases of property and equipment | (18,443) | $ (4,952) |
Proceeds from the sale of the Anti-Noise Products Division | 300,000 | |
Repayments of note receivable | 104,271 | |
Purchases of patents and trademarks | (28,868) | $ (92,093) |
Net cash provided by (used) in investing activities | 356,960 | $ (97,045) |
Cash flows from financing activities: | ||
Proceeds from the exercise of stock options | 34,750 | |
Proceeds from long-term debt | 7,700,000 | $ 900,000 |
Payments of long-term notes and PIK interest | (6,805,068) | |
Net cash provided by financing activities | 929,682 | $ 900,000 |
Net increase in cash | 2,018,024 | 2,574,108 |
Cash, beginning of year | 3,574,530 | 1,000,422 |
Cash, end of year | 5,592,554 | 3,574,530 |
Cash paid for: | ||
Interest | 105,368 | 2,557 |
Income Taxes | 171,191 | $ 186,355 |
Non Cash Investing and Financing Activity: | ||
Note Receivable received in connection with the sale of the Anti-Noise Products Division | $ 600,000 |
Organization and Business
Organization and Business | 12 Months Ended |
Dec. 31, 2015 | |
Organization and Business [Abstract] | |
ORGANIZATION AND BUSINESS | 1. ORGANIZATION AND BUSINESS Andrea Electronics Corporation, incorporated in the State of New York in 1934, (together with its subsidiaries, “Andrea” or the “Company”) has been engaged in the electronic communications industry since its inception. Since the early 1990s, Andrea has been primarily focused on developing and manufacturing state-of-the-art microphone technologies and products for enhancing speech-based applications software and communications, primarily in the computer and business enterprise markets that require high quality, clear voice signals. Andrea’s technologies eliminate unwanted background noise to enable the optimum performance of various speech-based and audio applications. Andrea DSP Microphone and Audio Software Products and Andrea Anti-Noise Products have been designed for applications that are controlled by or depend on speech across a broad range of hardware and software platforms. These products incorporate Digital Signal Processing, Noise Cancellation, Active Noise Cancellation and Active Noise Reduction microphone technologies, and are designed to cancel background noise in a wide range of noisy environments, such as homes, offices, factories and automobiles. Andrea also manufactures a line of accessories for these products for the consumer and commercial markets in the United States as well as in Europe and Asia. The Company sold its Anti-Noise Products Division and certain related assets in April 2015. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2015 | |
Summary of Significant Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation The consolidated financial statements include the accounts of Andrea and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. Loss Per Share Basic income (loss) earnings per share is computed by dividing the net (loss) income by the weighted average number of common shares outstanding during the period. Diluted (loss) earnings adjusts basic (loss) earnings per share for the effects of convertible securities, stock options and other potentially dilutive financial instruments, only in the periods in which such effect is dilutive. Diluted earnings per share are based on the assumption that all dilutive convertible shares and stock options were converted or exercised. Dilution is computed by applying the treasury stock method for the outstanding options, and the if-converted method for the outstanding convertible instruments. Under the treasury stock method, options are assumed to be exercised at the beginning of the period (or at the time of issuance, if later) and as if funds obtained thereby were used to purchase common stock at the average market price during the period. Under the if-converted method, outstanding convertible instruments are assumed to be converted into common stock at the beginning of the period (or at the time of issuance, if later). Securities that could potentially dilute basic earnings per share (“EPS”) in the future that were not included in the computation of the diluted EPS because to do so would have been anti-dilutive for the periods presented, consist of the following: December 31, 2015 2014 Total potentially dilutive common shares as of: Stock options to purchase common stock (Note 12) 11,399,821 18,534,821 Series C Convertible Preferred Stock and related accrued dividends (Note 8) - 2,023,658 Series D Convertible Preferred Stock (Note 9) - 3,628,576 Total potentially dilutive common shares 11,399,821 24,187,055 December 31, 2015 2014 Numerator: Net income (loss) $ 3,044,170 $ (2,892,593 ) Denominator: Basic Weighted average shares 64,000,309 63,721,035 Effect of dilutive securities: Stock options 2,277,435 - Series C Convertible Preferred Stock and related accrued dividends (Note 8) 2,023,658 - Series D Convertible Preferred Stock (Note 9) 3,628,576 - Denominator for diluted income (loss) per share-adjusted weighted average shares after assumed conversions 71,929,978 63,721,035 Cash Cash includes cash and highly liquid investments with original maturities of three months or less. At times during the years ended December 31, 2015 and 2014, the Company had cash deposits in excess of the maximum amounts insured by the Federal Deposit Insurance Corporation insurance limits. At December 31, 2015, the Company’s cash was held at four financial institutions. Concentration of Risk The following customer accounted for 10% or more of Andrea’s consolidated total revenues during at least one of the periods presented below: December 31, 2015 2014 Customer A 81 % 72 % Customer B 13 % * ____________________ * Amounts are less than 10% Customer A accounted for approximately 6% and 67% of accounts receivable at December 31, 2015 and 2014, respectively. Customer B accounted for approximately 92% of accounts receivable at December 31, 2015. Allowance for Doubtful Accounts The Company performs on-going credit evaluations of its customers and adjusts credit limits based upon payment history and the customer’s current credit worthiness, as determined by the review of their current credit information. Collections and payments from customers are continuously monitored. The Company maintains an allowance for doubtful accounts, which is based upon historical experience as well as specific customer collection issues that have been identified. While such bad debt expenses have historically been within expectations and allowances established, the Company cannot guarantee that it will continue to experience the same credit loss rates that it has in the past. If the financial condition of customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required. Inventories Inventories are stated at the lower of cost (on a first-in, first-out) or market basis. The cost of inventory is based on the respective cost of materials. Andrea reviews its inventory reserve for obsolescence on a quarterly basis and establishes reserves on inventories based on the specific identification method as well as a general reserve. Andrea records charges in inventory reserves as part of cost of revenues. Property and Equipment Property and equipment is stated at cost less accumulated depreciation and amortization. Depreciation is provided on a straight-line basis over the estimated useful lives of the assets ranging from 3 to 10 years. Leasehold improvements are amortized on a straight-line basis over the shorter of the lives of the respective leases or the expected useful lives of those improvements. Expenditures for maintenance and repairs that do not materially prolong the normal useful life of an asset are charged to operations as incurred. Improvements that substantially extend the useful lives of the assets are capitalized. Upon sale or other disposition of assets, the cost and related accumulated depreciation and amortization are removed from the accounts and the resulting gain or loss, if any, is reflected in the statement of operations. Other Intangible Assets Andrea amortizes its core technology and patents and trademarks on a straight-line basis over their estimated useful lives that range from 10 to 20 years. Long-Lived Assets Andrea accounts for its long-lived assets in accordance with Statement of Financial Accounting Standards Board (“FASB”) Accounting Standard Codification (“ASC”) 360 “Plant, Property and Equipment, ” for purposes of determining and measuring impairment of its long-lived assets (primarily intangible assets) other than goodwill. Andrea’s policy is to review the value assigned to its long lived assets to determine if they have been permanently impaired by adverse conditions which may affect Andrea whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. If Andrea identifies a permanent impairment such that the carrying amount of Andrea’s long lived assets is not recoverable using the sum of an undiscounted cash flow projection (gross margin dollars from product sales), the impaired asset is adjusted to its estimated fair value, based on an estimate of future discounted cash flows which becomes the new cost basis for the impaired asset. Considerable management judgment is necessary to estimate undiscounted future operating cash flows and fair values and, accordingly, actual results could vary significantly from such estimates. No impairment charges were recognized during the years ended December 31, 2015 and 2014. Revenue Recognition Non software-related revenue, which is generally comprised of microphones and microphone connectivity product revenues, is recognized when title and risk of loss pass to the customer, which is generally upon shipment. With respect to licensing revenues, Andrea recognizes revenue in accordance with ASC 985, “Software” and ASC 605 “Revenue Recognition.” License revenue is recognized based on the terms and conditions of individual contracts. In addition, fee based services, which are short-term in nature, are generally performed on a time-and-material basis under separate service arrangements and the corresponding revenue is generally recognized as the services are performed. Income Taxes Andrea accounts for income taxes in accordance with ASC 740, “Income Taxes” (“ASC 740”). ASC 740 requires an asset and liability approach for financial accounting and reporting for income taxes and establishes for all entities a minimum threshold for financial statement recognition of the benefit of tax positions, and requires certain expanded disclosures. The provision for income taxes is based upon income or loss after adjustment for those permanent items that are not considered in the determination of taxable income. Deferred income taxes represent the tax effects of differences between the financial reporting and tax bases of the Company’s assets and liabilities at the enacted tax rates in effect for the years in which the differences are expected to reverse. The Company evaluates the recoverability of deferred tax assets and establishes a valuation allowance when it is more likely than not that some portion or all of the deferred tax assets will not be realized. As of December 31, 2015 the Company has recorded a full valuation allowance. Andrea expects it will reduce its valuation allowance in future periods to the extent that it can demonstrate its ability to utilize the assets. Management makes judgments as to the interpretation of the tax laws that might be challenged upon an audit and cause changes to previous estimates of tax liability. In management’s opinion, adequate provisions for income taxes have been made for all years. If actual taxable income by tax jurisdiction varies from estimates, additional allowances or reversals of reserves may be necessary. Income tax expense consists of taxes payable for the period, withholding of income tax as mandated by the foreign jurisdiction in which the revenues are earned withholding of income tax as mandated by the foreign jurisdiction in which the revenues are earned and the change during the period in deferred tax assets and liabilities. The Company has identified its federal tax return and its state tax return in New York as "major" tax jurisdictions. Based on the Company's evaluation, it has been concluded that there are no significant uncertain tax positions requiring recognition in the Company's condensed consolidated interim financial statements. The Company's evaluation was performed for tax years ended 2012 through 2015. The Company believes that its income tax positions and deductions will be sustained on audit and does not anticipate any adjustments that will result in a material change to its financial position Stock-Based Compensation At December 31, 2015, Andrea had two stock-based employee compensation plans, which are described more fully in Note 11. Andrea accounts for stock based compensation in accordance with ASC 718, “Compensation – Stock Compensation” (“ASC 718”). ASC 718 establishes accounting for stock-based awards exchanged for employee services. Under the provisions of ASC 718, share-based compensation cost is measured at the grant date, based on the fair value of the award, and is recognized as expense over the employee’s requisite service period (generally the vesting period of the equity grant). The fair value of the Company’s common stock options are estimated using the Black Scholes option-pricing model with the following assumptions: expected volatility, dividend rate, risk free interest rate and the expected life. The Company expenses stock-based compensation by using the straight-line method. In accordance with ASC 718, excess tax benefits realized from the exercise of stock-based awards are classified in cash flows from financing activities. The future realization of the reserved deferred tax assets related to these tax benefits associated with the exercise of stock options will result in a credit to additional paid in capital if the related tax deduction reduces taxes payable. The Company has elected the “with and without approach” regarding ordering of windfall tax benefits to determine whether the windfall tax benefit did reduce taxes payable in the current year. Under this approach, the windfall tax benefit would be recognized in additional paid-in-capital only if an incremental tax benefit is realized after considering all other benefits presently available. Research and Development Andrea expenses all research and development costs as incurred. Advertising Expenses In accordance with ASC 720 all media costs of newspaper and magazine advertisements as well as trade show costs are expensed as incurred. Total advertising and marketing expenses for the years ended December 31, 2015 and 2014 were approximately $11,000 and $2,000, respectively and are included in general, administrative and selling expenses. Fair Value of Financial Instruments ASC 820 defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles, and expands disclosures about payments to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 applies to all assets and liabilities that are measured and reported on a fair value basis. The Company will apply the provisions of ASC 820 to nonfinancial assets and liabilities. Andrea calculates the fair value of financial instruments and includes this additional information in the notes to consolidated financial statements when the fair value is different than the book value of those financial instruments. When the book value approximates fair value, no additional disclosure is made. Andrea uses quoted market prices whenever available to calculate these fair values. When quoted market prices are not available, Andrea uses standard pricing models for various types of financial instruments which take into account the present value of estimated future cash flows. As of December 31, 2015 and 2014, the carrying value of all financial instruments approximated fair value. Use of Estimates The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Management bases its estimates on historical experience and on various assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. The most significant estimates, among other things, are used in accounting for allowances for bad debts, inventory valuation and obsolescence, product warranty, depreciation, deferred income taxes, expected realizable values for assets (primarily intangible assets), contingencies, revenue recognition as well as the recording and presentation of the Company’s convertible preferred stock. Estimates and assumptions are periodically reviewed and the effects of any material revisions are reflected in the consolidated financial statements in the period that they are determined to be necessary. Actual results could differ from those estimates and assumptions. Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update ("ASU") No. 2014-09, "Revenue from Contracts with Customers" (Topic 606), which supersedes the revenue recognition requirements in ASC Topic 605, "Revenue Recognition," and most industry-specific guidance. This ASU is based on the principle that revenue is recognized to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The ASU also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments, and assets recognized from costs incurred to obtain or fulfill a contract. The amendments in the ASU must be applied using one of two retrospective methods and are effective for annual and interim periods beginning after December 15, 2016. On July 9, 2015, the FASB modified ASU 2014-09 to be effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. As modified, the FASB permits the adoption of the new revenue standard early, but not before the annual periods beginning after December 15, 2016. A public organization would apply the new revenue standard to all interim reporting periods within the year of adoption. The Company will evaluate the effects, if any, that adoption of this guidance will have on its financial statements. In November 2015, the FASB issued ASU No. 2015-17, “Balance Sheet Classification of Deferred Taxes” (“ASU 2015-17”). The standard requires that deferred tax assets and liabilities be classified as noncurrent in a classified statement of financial position. ASU 2015-17 is effective for fiscal years and interim periods within those years, beginning after December 15, 2016. Early adoption is permitted. ASU 2015-17 may be applied either prospectively, for all deferred tax assets and liabilities, or retrospectively. The Company is currently evaluating the impact this standard will have on its financial statements. In January 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842).” This standard requires that a lessee recognize the assets and liabilities that arise from operating leases. A lessee should recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. In transition, lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. ASU 2016-02 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018. The Company is currently evaluating the impact the adoption of this new standard will have on its financial statements. Reclassifications Certain prior year amounts have been reclassified to conform to the current year presentation. These reclassifications had no effect on previously reported net loss. Subsequent Events The Company evaluates events that occurred after the balance sheet date but before the financial statements are issued. Based upon the evaluation, other than Note 11, the Company did not identify any recognized or non-recognized subsequent events that would have required adjustment or disclosure in the consolidated financial statements. |
Intangible Assets
Intangible Assets | 12 Months Ended |
Dec. 31, 2015 | |
Intangible Assets [Abstract] | |
INTANGIBLE ASSETS | 3. INTANGIBLE ASSETS Intangible assets, net, consists of the following: December 31, 2015 2014 Core Technology $ 8,567,448 $ 8,567,448 Patents and trademarks 861,241 832,373 9,428,689 9,399,821 Less: accumulated amortization (9,083,330 ) (9,025,664 ) $ 345,359 $ 374,157 The changes in the carrying amount of intangible assets during the years ended December 31, 2015 and 2014 were as follows: Patents and Trademarks Balance as of January 1, 2014 $ 326,109 Additions during the period 92,093 Amortization (44,045 ) Balance as of December 31, 2014 $ 374,157 Additions during the period 28,868 Amortization (57,666 ) Balance as of December 31, 2015 $ 345,359 Andrea accounts for its long-lived assets in accordance with ASC 360 “Property, Plant and Equipment” for purposes of determining and measuring impairment of its long-lived assets (primarily intangible assets) other than goodwill. Andrea’s policy is to periodically review the value assigned to its long-lived assets to determine if they have been permanently impaired by adverse conditions which may affect Andrea. If Andrea identifies a permanent impairment such that the carrying amount of Andrea’s long lived assets are not recoverable using the sum of an undiscounted cash flow projection (gross margin dollars from product revenues), a new cost basis for the impaired asset will be established. If required, an impairment charge is recorded based on an estimate of future discounted cash flows. This new cost basis will be net of any recorded impairment. At December 31, 2015 and 2014, Andrea concluded that there were no long-lived assets that required to be tested for recoverability. Amortization expense was $57,666 and $44,045 for the years ended December 31, 2015 and 2014, respectively. Patents and trademarks, once issued are amortized on a straight-line basis over periods ranging from 10 to 20 years. Assuming no changes in the Company's intangible assets, estimated amortization expense for each of the five succeeding fiscal years ending December 31 is expected to be approximately $48,000, $44,000, $41,000, $34,000 and $22,000, respectively. |
Inventories, Net
Inventories, Net | 12 Months Ended |
Dec. 31, 2015 | |
Inventories, net [Abstract] | |
INVENTORIES, net | 4. INVENTORIES, net Inventories, net, consist of the following: December 31, 2015 2014 Raw materials $ 21,253 $ 15,852 Finished goods 152,050 330,240 173,303 346,092 Less: reserve for obsolescence (115,275 ) (129,756 ) $ 58,028 $ 216,336 |
Property and Equipment, Net
Property and Equipment, Net | 12 Months Ended |
Dec. 31, 2015 | |
Property and Equipment, Net [Abstract] | |
PROPERTY AND EQUIPMENT, net | 5. PROPERTY AND EQUIPMENT, net Property and equipment, net, consists of the following: December 31, 2015 2014 Information Technology Equipment $ 258,715 $ 240,272 Furniture and fixtures 87,958 87,958 Tools, molds and testing equipment 189,333 189,333 536,006 517,563 Less: accumulated depreciation and amortization (449,046 ) (423,591 ) $ 86,960 $ 93,972 Depreciation and amortization of property and equipment from continuing operations was $25,455 and $54,286 for the years ended December 31, 2015 and 2014, respectively. |
Revenue Sharing, Note Purchase
Revenue Sharing, Note Purchase Agreement, and Long-Term Debt | 12 Months Ended |
Dec. 31, 2015 | |
Revenue Sharing Note Purchase Agreement and Long-Term Debt [Abstract] | |
REVENUE SHARING, NOTE PURCHASE AGREEMENT, AND LONG-TERM DEBT | 6. REVENUE SHARING, NOTE PURCHASE AGREEMENT, AND LONG-TERM DEBT Revenue Sharing and Note Purchase Agreement On December 24, 2014, the Company entered into an Amended and Restated Revenue Sharing and Note Purchase Agreement (the “Revenue Sharing Agreement”), with AND34 Funding LLC (“AND34”) (acting as the “Revenue Participants,” the “Note Purchasers,” and the “Collateral Agent”), which was retroactively effective as of February 14, 2014. Under the Revenue Sharing Agreement, the Company granted AND34 a perpetual predetermined share in the rights of the Company’s specified future revenues from patents currently owned by the Company (the “Patents”) in exchange for $3,500,000, which was recorded as an “Advance from Revenue Sharing Agreement.” on the accompanying consolidated balance sheet. The advance will be repaid over the period in which the Company generates any future monetization revenues in excess of any of the outstanding long-term debt and accrued interest to AND34. Under the terms of the Revenue Sharing Agreement with AND34, Andrea has agreed to issue and sell to AND34 Notes up to an aggregate outstanding amount of $10,700,000 during the four years after the closing date or such greater amount as AND34 may agree in its sole discretion. The proceeds of the Notes will be used to pay certain initial expenses related to the agreement, and going forward will be used for expenses of the Company incurred in pursuing patent monetization. AND34’s rights to the Company’s monetization revenues from the Patents and the Notes are secured by the Patents. Any Monetization Revenues (as defined in the Revenue Sharing Agreement) will first be applied 100% to the payment of accrued and unpaid interest on, and then to repay outstanding principal of, the Notes. After the Notes are paid in full, the Monetization Revenues will be allocated amongst the Revenue Participants and the Company in accordance with certain predetermined percentages (based on aggregate amounts received by the Revenue Participants) ranging from 100% to the Revenue Participants (such percentage to be allocated to the Revenue Participants until they have received Monetization Revenues of $3,500,000 to repay the Advance from Revenue Sharing Agreement) to ultimately 20% to the Revenue Participants. Monetization Revenues is defined in the Revenue Sharing Agreement to include, but is not limited to, amounts that the Company receives from third parties with respect to the Patents, which may include new license revenues, certain product revenue, payments and judgments. Monetization Revenues and associated expenses are included in the Company’s Patent Monetization Segment (Note 13). The Revenue Sharing Agreement contains many stipulations between the parties regarding the handling of various matters related to the monetization of the Patents. The Revenue Participants and the Company will account for the tax treatment as set forth in the Revenue Sharing Agreement. Following an Event of Default under the Revenue Sharing Agreement, the Note Purchasers and Revenue Participants may proceed to protect and enforce their rights by suit or other appropriate proceeding, either for specific performance or the exercise of any power granted under the Revenue Sharing Agreement or ancillary documents including the Notes. Advance from Revenue Sharing Agreement December 31, 2015 2014 Advance from Revenue Sharing Agreement $ 312,067 $ 3,500,000 Less: short-term Advance from Revenue Sharing Agreement (196,477 ) - Long-term Advance from Revenue Sharing Agreement, net of short-term Advance from Revenue Sharing Agreement $ 115,590 $ 3,500,000 Amounts reported as short-term Advance from the Revenue Sharing Agreement reflect amount expected to be paid in the next twelve months. Long-term debt December 31, 2015 2014 Note Payable $ 1,900,000 $ 900,000 PIK interest 775 9,875 Total long-term debt 1,900,775 909,875 Less: current maturities of long-term debt (1,900,775 ) - Long-term debt, net of current maturities $ - $ 909,875 The unpaid principal amount of the Notes (including any PIK Interest) will have an interest rate equal to LIBOR (as defined in the Revenue Sharing Agreement) plus 2% per annum, (3% at December 31, 2015 and 2014); provided that upon and during the continuance of an Event of Default (as set forth in the Revenue Sharing Agreement), the interest rate will increase an additional 2% per annum. Interest may be paid in cash at the option of the Company and otherwise shall be paid by increasing the principal amount of the Notes by the amount of such interest (“PIK Interest”). The principal balance of the Notes and all unpaid interest thereon will be due the earlier of receipt of Monetization Revenues or on June 30, 2020. The Company may prepay the Notes from time to time in whole or in part, without penalty or premium. During the years ended December 31, 2015 and December 31, 2014, $7,700,000 and $900,000, respectively, of notes payable were issued to AND34. Amounts reported as current maturities of long-term debt reflect amount expected to be paid in the next twelve months. |
Other Current Liabilities
Other Current Liabilities | 12 Months Ended |
Dec. 31, 2015 | |
Other Current Liabilities [Abstract] | |
OTHER CURRENT LIABILITIES | 7. OTHER CURRENT LIABILITIES Other current liabilities consist of the following: December 31, 2015 2014 Accrued payroll and related expenses $ 347,798 $ 19,161 Accrued patent monetization expenses 1,230,314 415,000 Accrued professional and other service fees 62,721 30,315 $ 1,640,833 $ 464,476 |
Series C Convertible Preferred
Series C Convertible Preferred Stock | 12 Months Ended |
Dec. 31, 2015 | |
Series C Convertible Preferred Stock [Abstract] | |
SERIES C CONVERTIBLE PREFERRED STOCK | 8. SERIES C CONVERTIBLE PREFERRED STOCK On October 10, 2000, Andrea issued and sold in a private placement $7,500,000 of Series C Redeemable Convertible Preferred Stock (the “Series C Preferred Stock”). Each of these shares of Series C Preferred Stock had a stated value of $10,000 plus a $1,671 increase in the stated value, which sum is convertible into Common Stock at a conversion price of $0.2551. On February 17, 2004, Andrea announced that it had entered into an Exchange and Termination Agreement and an Acknowledgment and Waiver Agreement, which eliminated the dividend of 5% per annum on the stated value. The additional amount of $1,671 represents the 5% per annum from October 10, 2000 through February 17, 2004. The shares of Series C Preferred Stock are subject to antidilution provisions, which are triggered in the event of certain stock splits, recapitalizations, or other dilutive transactions. In addition, issuances of common stock at a price below the conversion price then in effect (currently $0.2551), or the issuance of warrants, options, rights, or convertible securities which have an exercise price or conversion price less than that conversion price, other than for certain previously outstanding securities and certain “excluded securities” (as defined in the certificate of amendment), require the adjustment of the conversion price to that lower price at which shares of common stock have been issued or may be acquired. In the event that Andrea issues securities in the future which have a conversion price or exercise price which varies with the market price and the terms of such variable price are more favorable than the conversion price in the Series C Preferred Stock, the purchasers may elect to substitute the more favorable variable price when making conversions of the Series C Preferred Stock. In accordance with Sub Topic 815-40, Andrea evaluated the Series C Preferred Stock and concluded that it is not indexed to the Company’s stock because of the conversion price adjustment feature described above. Accordingly, under the provisions of ASC 815, “Derivatives and Hedging” (“ASC 815”), Andrea evaluated the Series C Preferred Stock embedded conversion feature. The Company has concluded that the embedded conversion feature would be classified in shareholders’ equity if it were a freestanding instrument as the Series C Preferred Stock is more akin to equity and as such it should not be bifurcated from the Series C instrument and accounted for separately. As of December 31, 2015, there were 44.231432 shares of Series C Preferred Stock outstanding, which were convertible into 2,023,658 shares of Common Stock and remaining accrued dividends of $73,921. |
Series D Convertible Preferred
Series D Convertible Preferred Stock | 12 Months Ended |
Dec. 31, 2015 | |
Series D Convertible Preferred Stock [Abstract] | |
SERIES D CONVERTIBLE PREFERRED STOCK | 9. SERIES D CONVERTIBLE PREFERRED STOCK On February 17, 2004, Andrea entered into a Securities Purchase Agreement (including a Registration Rights Agreement) with certain holders of the Series C Preferred Stock and other investors (collectively, the “Buyers”) pursuant to which the Buyers agreed to invest a total of $2,500,000. In connection with this agreement, on February 23, 2004, the Buyers purchased, for a purchase price of $1,250,000, an aggregate of 1,250,000 shares of a new class of preferred stock, the Series D Preferred Stock, convertible into 5,000,000 shares of Common Stock (an effective conversion price of $0.25 per share) and Common Stock warrants exercisable for an aggregate of 2,500,000 shares of Common Stock. These warrants were exercisable at any time after August 17, 2004, at an exercise price of $0.38 per share. On February 23, 2009, these warrants expired without being exercised. In addition, on June 4, 2004, the Buyers purchased for an additional $1,250,000, an additional 1,250,000 shares of Series D Preferred Stock convertible into 5,000,000 shares of Common Stock (an effective conversion price of $0.25 per share) and Common Stock warrants exercisable for an aggregate of 2,500,000 shares of Common Stock. The warrants were exercisable at any time after December 4, 2004 and before June 4, 2009 at an exercise price of $0.17 per share. On June 4, 2009, these warrants expired without being exercised. The shares of Series D Preferred Stock are also subject to antidilution provisions, which are triggered in the event of certain stock splits, recapitalizations, or other dilutive transactions. In addition, issuances of common stock at a price below the conversion price then in effect (currently $0.25), or the issuance of warrants, options, rights, or convertible securities which have an exercise price or conversion price less than that conversion price, other than for certain previously outstanding securities and certain “excluded securities” (as defined in the certificate of amendment), require the adjustment of the conversion price to that lower price at which shares of common stock have been issued or may be acquired. In the event that Andrea issues securities in the future which have a conversion price or exercise price which varies with the market price and the terms of such variable price are more favorable than the conversion price in the Series D Preferred Stock, the purchasers may elect to substitute the more favorable variable price when making conversions of the Series D Preferred Stock. In addition, the Company is required to use its best efforts to secure the inclusion for quotation on the Over the Counter Bulletin Board for the common stock issuable under the Series D Preferred Stock and to arrange for at least two market makers to register with the Financial Industry Regulatory Authority. In the event that the holder of the Series D Preferred Stock is unable to convert these securities into Andrea Common Stock, the Company shall pay to each such holder a Registration Delay Payment. This payment is to be paid in cash and is equal to the product of (i) the stated value of such Preferred Shares multiplied by (ii) the product of (1) .0005 multiplied by (2) the number of days that sales cannot be made pursuant to the Registration Statement (excluding any days during that may be considered grace periods as defined by the Registration Rights Agreement). In accordance with Sub Topic 815-40, Andrea evaluated the Series D Preferred Stock and concluded that it is not considered to be indexed to the Company’s stock because of the conversion price adjustment feature described above. Accordingly, under the provisions of ASC 815, Andrea evaluated the Series D Preferred Stock embedded conversion feature. The Company has concluded that the embedded conversion feature would be classified in shareholders’ equity if it were a freestanding instrument as the Series D Preferred Stock is more akin to equity and as such it should not be bifurcated from the Series D instrument and accounted for separately. As of December 31, 2015, there were 907,144 shares of Series D Preferred Stock outstanding which were convertible into 3,628,576 shares of Common Stock. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2015 | |
Income Taxes [Abstract] | |
INCOME TAXES | 10. INCOME TAXES The Company accounts for income taxes in accordance with ASC 740 which prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC 740 also provides guidance on de-recognition, classification, interest and penalties, accounting in interim period, disclosure and transition. There were no unrecognized tax benefits as of January 1, 2014 and during the years ended December 31, 2015 and 2014. The Company has identified its federal tax return and its state tax return in New York as "major" tax jurisdictions, as defined in ASC 740. Based on the Company's evaluation, it has been concluded that there are no significant uncertain tax positions requiring recognition in the Company's consolidated financial statements. The Company's evaluation was performed for tax years ended 2012 through 2015. The Company believes that its income tax positions and deductions will be sustained on audit and does not anticipate any adjustments that will result in a material change to its consolidated financial position. The Company's policy for recording interest and penalties associated with audits is to record such items as a component of income tax expense. There were no amounts accrued for penalties or interest as of or during the year ended December 31, 2015. For the year ended December 31, 2015, the Company determined that, more likely than not, its deferred tax assets would be not be realized and, accordingly, increased the valuation allowance. The increase in the valuation allowance is included in the income tax provision in the accompanying consolidated statement of operations for the year ended December 31, 2015. Management is currently unaware of any issues under review that could result in significant payments, accruals or material deviations from its position. The provision for income tax consists of the following: For the Years Ended December 31, 2015 2014 Current: Federal $ 8,141 $ 38,000 Foreign 146,372 176,136 State and Local - - Total Current 154,513 214,136 Deferred Federal (1,269,000 ) (1,003,000 ) Foreign - - State and Local (187,000 ) (147,000 ) Adjustment to valuation allowance related to net deferred tax assets 1,456,000 1,150,000 Total Deferred - - Provision for income taxes $ 154,513 $ 214,136 The provision for income taxes for the year ended December 31, 2015 of approximately $154,000. Approximately $146,000 is a result of certain licensing revenues that are subject to withholding of income tax as mandated by the foreign jurisdiction in which the revenues are earned while approximately $8,000 is the result of certain alternative minimum taxes. The provision related to foreign taxes is deductible, while the provision relating to alternative minimum taxes is able to be offset by future tax benefits. Since the Company records a full valuation against deferred tax assets, the provision relating to alternative minimum taxes of approximately $8,000 will not be reduced by such future tax benefits. The provision for income taxes for the year ended December 31, 2014 of approximately $214,000. Approximately $176,000 is a result of certain licensing revenues that are subject to withholding of income tax as mandated by the foreign jurisdiction in which the revenues are earned while approximately $38,000 is the result of certain alternative minimum taxes. Income (loss) before income taxes is comprised of the following: For the Years Ended December 31, 2015 2014 Foreign $ 2,466,823 $ (3,568,897 ) Domestic 731,860 890,440 Net income (loss) before income taxes $ 3,198,683 $ (2,678,457 ) A reconciliation between the effective rate for income taxes and the amount computed by applying the statutory Federal income tax rate to income (loss) before provision for income taxes is as follows: For the Years Ended December 31, 2015 2014 Tax provision at statutory rate 34 % (34 )% State and local taxes 5 % (5 )% Foreign taxes 5 % 7 % Foreign tax deduction 1 % - % Incentive Stock Option Expense (1 )% - % Change in valuation allowance for net deferred tax assets (39 )% 40 % 5 % 8 % The components of temporary differences that give rise to significant portions of the deferred tax asset, net, are as follows: For the Years Ended December 31, 2015 2014 Deferred tax assets: Accrued expenses $ 361,000 $ 35,000 Allowance for doubtful accounts 6,000 7,000 Deferred Revenue 2,000 3,000 Reserve for obsolescence 72,000 109,000 Expense associated with non-qualified stock options 115,000 100,000 Revenue Sharing Agreement 681,000 1,781,000 General business credit 1,258,000 1,156,000 NOL carryforward 15,139,000 12,987,000 17,634,000 16,178,000 Less: valuation allowance (17,634,000 ) (16,178,000 ) Deferred tax asset, net $ - $ - The change in the valuation allowance for deferred tax assets are summarized as follows: For the Years Ended December 31, 2015 2014 Beginning Balance $ 16,178,000 $ 15,028,000 Change in Allowance 1,456,000 1,150,000 Ending Balance $ 17,634,000 $ 16,178,000 As of December 31, 2015, Andrea had net operating loss and credit carryforwards of approximately $38.8 million expiring in varying amounts beginning in 2018 through 2033. Andrea has General Business Credits of approximately $1.3 million expiring in varying amounts beginning in 2016 through 2030. The Company has elected the “with and without approach” regarding ordering of windfall tax benefits to determine whether the windfall tax benefit did reduce taxes payable in the current year. Under this approach the windfall tax benefit would be recognized in additional paid-in-capital only if an incremental tax benefit is realized after considering all other benefits presently available. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2015 | |
Commitments and Contingencies [Abstract] | |
COMMITMENTS AND CONTINGENCIES | 11. COMMITMENTS AND CONTINGENCIES Leases In May 2015, Andrea entered into a new lease for its new corporate headquarters located in Bohemia, New York, where Andrea leases space for research and development, sales and executive offices from an unrelated party. The lease is for approximately 3,000 square feet and expires in October 2020. The rent expense under this operating lease was $13,125 for the year ended December 31, 2015. The monthly rent under this lease is $2,625 with annual escalations of 3.5%. Andrea’s previous corporate headquarters were located in Bohemia, New York. The lease from an unrelated party, which expired in May 2015, was for approximately 11,000 square feet and housed Andrea’s warehousing, sales and executive offices. Rent expense under Andrea’s previous operating lease was $37,676 and $99,718 for the years ended December 31, 2015 and 2014, respectively. As of December 31, 2015, the minimum annual future lease payments, under this lease and all other noncancellable operating leases, are as follows: 2016 54,365 2017 44,124 2018 38,700 2019 39,912 2020 30,856 Total $ 207,95 Employment Agreements In August 2014, the Company entered into an employment agreement with Mr. Andrea. The effective date of the employment agreement is August 1, 2014 and expires July 31, 2016 and is subject to renewal as approved by the Compensation Committee of the Board of Directors. Pursuant to his employment agreement, Mr. Andrea will receive an annual base salary of $300,000. The employment agreement provides for quarterly bonuses equal to 5% of the Company’s pre-bonus net after tax quarterly earnings for a total quarterly bonus amount not to exceed $12,500; and annual bonuses equal to 9% of the Company’s annual pre-bonus net after tax earnings in excess of $300,000 up to $3,000,000, and 3% of the Company’s annual pre-bonus adjusted net after tax earnings in excess of $3,000,000. Adjustments to net after tax earnings shall be made to remove the impact of change in recognition of accumulated deferred tax asset value. All bonuses shall be payable as soon as the Company’s cash flow permits. All bonus determinations or any additional bonus in excess of the above will be made in the sole discretion of the Compensation Committee. Mr. Andrea is also entitled to a change in control payment equal to three times the three year average of the cash incentive compensation paid or accrued as of the date of termination, continuation of health and medical benefits for three years and immediate vesting of all stock options in the event of a change in control during the term of his agreement and subsequent termination of his employment within two years following the change of control. In the event of his termination without cause or resignation with the Company’s consent, Mr. Andrea is entitled to a severance payment equal to six months of his base salary, plus the six months prorated portion of his most recent annual and quarterly bonuses, and a continuation of health insurance coverage for Mr. Andrea, his spouse and his dependents for 12 months. At December 31, 2015, the future minimum cash commitments under this agreement aggregate $398,863. In November 1999, as amended August 2008, the Company entered into a change in control agreement with the Chief Financial Officer, Corisa L. Guiffre. This agreement provides for a change in control payment equal to three times her average annual compensation for the five preceding taxable years, with continuation of health and medical benefits for three years in the event of a change in control of the Company, as defined in the agreement, and subsequent termination of employment other than for cause. Legal Proceedings In December 2010, Audrey Edwards, Executrix of the Estate of Leon Leroy Edwards, filed a law suit in the Superior Court of Providence County, Rhode Island, against 3M Company and over 90 other defendants, including the Company, alleging that the Company processed, manufactured, designed, tested, packaged, distributed, marketed or sold asbestos containing products that contributed to the death of Leon Leroy Edwards. The Company received service of process in April 2011. The Company has retained legal counsel and has filed a response to the compliant. The Company believes the lawsuit is without merit and intends to file a Motion for Summary Judgment to that affect. Accordingly, the Company does not believe the lawsuit will have a material adverse effect on the Company’s financial position or results of operations. In July 2014, Andrea filed three complaints with the United States District Court for the Eastern District of New York, alleging patent infringement against Acer Inc. and related entities ("Acer"), Lenovo Group Ltd. and related entities ("Lenovo"), and Toshiba Corp. and related entities ("Toshiba"), and requesting monetary and injunctive relief. Acer, Lenovo, and Toshiba answered Andrea's complaints on October 20, 2014. Lenovo also asserted counterclaims which Andrea answered on November 10, 2014. Andrea also filed First Amended Complaints in these actions on November 10, 2014 which Acer, Lenovo, and Toshiba answered on November 24, 2014. Lenovo also asserted counterclaims which Andrea answered on December 15, 2014. All of these cases were stayed on March 23, 2015 due to Andrea’s complaint with the International Trade Commission (“ITC”) against these parties. Andrea and Acer settled their disputes and filed a stipulation of dismissal which was granted on January 19, 2016. In January 2015, Andrea filed seven complaints with the United States District Court for the Eastern District of New York, alleging patent infringement against Acer, ASUSTeK Computer Inc. and related entities ("Asus"), Dell Inc. ("Dell"), Hewlett-Packard Co. ("HP"), Lenovo, Realtek Semiconductor Corp. ("Realtek"), and Toshiba, and requesting monetary and injunctive relief. Lenovo answered Andrea's complaint on February 10, 2015. Lenovo also asserted counterclaims which Andrea answered on March 3, 2015. The other defendants have not yet answered Andrea's complaint. All of these cases except for the case against Realtek were also stayed on March 23, 2015 due to Andrea’s complaint with the ITC against these parties. In October 2015, Andrea and Realtek reached a settlement agreement, resolving all disputes between the parties, and as a part of that agreement, Andrea and Realtek agreed to move for dismissal of Andrea’s action against Realtek in the Eastern District of New York. Andrea and Realtek’s stipulation of dismissal was granted on December 22, 2015. Andrea and Acer settled their disputes and filed a stipulation of dismissal which was granted on January 27, 2016. Andrea and HP settled their disputes and filed a stipulation of dismissal which was granted on February 5, 2016. Andrea and Asus settled their disputes and filed a stipulation of dismissal which was granted on February 23, 2016. In February 2015, Andrea filed a complaint with the ITC, alleging patent infringement and unfair competition against Acer, Asus, Dell, HP, Lenovo, Realtek, and Toshiba (the “ITC Respondents”), and requesting injunctive relief. The ITC instituted an investigation on March 12, 2015. The ITC Respondents answered Andrea's complaint on April 6, 2015. On July 2, 2015, Conexant Systems, Inc. (“Conexant”) filed a motion to intervene in the Investigation. On July 14, 2015, Waves Audio, Ltd. (“Waves”) filed a motion to intervene in the investigation. The Administrative Law Judge (“ALJ”) granted Conexant and Waves’ motions to intervene on August 7, 2015. In October 2015, Andrea and Realtek reached a settlement agreement, resolving all disputes between the parties, and as a part of that agreement, Andrea and Realtek moved to partially terminate the ITC Investigation with respect to certain of Andrea’s claims pertaining to Realtek and its products. That motion was granted by the ALJ on November 6, 2015. The ITC chose not to review the ALJ’s initial determination granting that motion. Andrea and Acer settled their disputes and filed a motion to terminate Acer from the investigation, which was granted by the ALJ on November 25, 2015. The ITC chose not to review the ALJ’s initial determination granting that motion. Andrea and HP settled their disputes and filed a motion to terminate HP from the investigation, which was granted by the ALJ on January 12, 2016. The ITC chose not to review the ALJ’s initial determination granting that motion. Andrea and Asus settled their disputes and filed a motion to terminate Asus from the investigation, which was granted by the ALJ on February 4, 2016. The ITC chose not to review the ALJ’s initial determination granting that motion. Andrea and Lenovo settled their disputes and filed a motion to terminate Lenovo from the investigation, which was granted by the ALJ on February 23, 2016. The ITC has not yet decided whether to review the ALJ’s initial determination granting that motion. Andrea and Conexant settled their disputes and filed a motion to terminate Conexant from the investigation, which was granted by the ALJ on March 7, 2016. The ITC has not yet decided whether to review the ALJ’s initial determination granting that motion. Andrea and Waves settled their disputes and filed a motion to terminate Waves and Dell from the investigation, which was granted by the ALJ as to Waves only on March 18, 2016. The ITC has not yet decided whether to review the ALJ’s initial determination partially granting that motion. Andrea and Toshiba settled their disputes and filed a motion to terminate Toshiba from the investigation, which was granted by the ALJ on March 18, 2016. The ITC has not yet decided whether to review the ALJ’s initial determination granting that motion. Andrea filed a motion to terminate Dell from the investigation on March 25, 2016, which has not yet been ruled upon by the ALJ. In July 2015, Realtek filed six (6) petitions for inter partes review of the Andrea patents asserted in the District Court and ITC litigation proceedings with the United States Patent and Trademark Office (“PTO”). Also in July 2015, Realtek filed a Complaint with the United States District Court for the Northern District of California, alleging breach of contract and seeking declaratory judgment against Andrea. In October 2015, Andrea and Realtek reached a settlement agreement, resolving all disputes between the parties, and as a part of that agreement, Andrea and Realtek agreed to move for termination of those proceedings. Andrea and Realtek have since filed motions to terminate all six (6) inter partes review proceedings, and on November 3, 2015, the PTO granted all six (6) of those motions and terminated all six (6) of the inter partes reviews of Andrea’s patents. In January 2016, Waves filed three (3) petitions for inter partes review of certain Andrea patents asserted in the District Court and ITC litigation proceedings with the PTO. Andrea and Waves have since filed motions to terminate all three (3) inter partes review proceedings. The PTO has not yet ruled on those motions. |
Stock Plans and Stock-Based Com
Stock Plans and Stock-Based Compensation | 12 Months Ended |
Dec. 31, 2015 | |
Stock Plans and Stock-Based Compensation [Abstract] | |
STOCK PLANS AND STOCK-BASED COMPENSATION | 12. STOCK PLANS AND STOCK-BASED COMPENSATION In 1998, the Board adopted the 1998 Stock Option Plan (“1998 Plan”), which was subsequently approved by the shareholders. The 1998 Plan, as amended, authorizes the granting of awards, the exercise of which would allow up to an aggregate of 6,375,000 shares of Andrea’s Common Stock to be acquired by the holders of those awards. The awards can take the form of stock options, stock appreciation rights, restricted stock, deferred stock, stock reload options or other stock-based awards. Awards may be granted to key employees, officers, directors and consultants. No further awards will be granted under the 1998 Plan. In October 2006, the Board adopted the Andrea Electronics Corporation 2006 Equity Compensation Plan (“2006 Plan”), which was subsequently approved by the shareholders. The 2006 Plan, as amended, authorizes the granting of awards, the exercise of which would allow up to an aggregate of 18,000,000 shares of Andrea’s Common Stock to be acquired by the holders of those awards. The awards can take the form of stock options, stock appreciation rights, restricted stock or other stock-based awards. Awards may be granted to key employees, officers, directors and consultants. At December 31, 2015, there were 1,677,436 shares available for further issuance under the 2006 Plan. The stock option awards granted under these plans have been granted with an exercise price equal to the market price of the Company’s stock at the date of grant; with vesting periods of up to four years and 10-year contractual terms. The fair values of each stock option grant is estimated on the date of grant using the Black-Scholes option-pricing model that uses the weighted-average assumptions noted in the following table. Expected volatilities are based on implied volatilities from historical volatility of the Company’s stock. The expected term of options granted represents the period of time that options granted are expected to be outstanding. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. During the year ended December 31, 2015, Andrea granted 600,000 shares of common stock options with a weighted average fair market fair of $0.06 per share. The grants provide for up to a three-year vesting period, a weighted average exercise price of $0.06 per share, which was the fair market value of the Company’s common stock at the date of grant and a weighted average expected life of 8 years. The fair values of the 600,000 stock options granted was $38,000 which was estimated on the date of grant using the Black-Scholes option-pricing model that uses the following weighted-average assumptions for the year ended December 31, 2015: During the year ended December 31, 2014, Andrea granted 2,200,000 shares of common stock options with a weighted average fair market fair of $0.08 per share. The grants provide for up to a three-year vesting period, a weighted average exercise price of $0.08 per share, which was the fair market value of the Company’s common stock at the date of grant and a weighted average expected life of 8 years. The fair values of the 2,200,000 stock options granted was $185,000 which was estimated on the date of grant using the Black-Scholes option-pricing model that uses the following weighted-average assumptions for the year ended December 31, 2014: December 31, December 31, 2015 2014 Expected life in years (based on simplified method) 8 years 8 years Risk-free interest rates 2.04 % 2.10 % Volatility (based on historical volatility) 205.3 % 203.0 % Dividend yield 0 % 0 % Option activity during 2015 is summarized as follows: Options Outstanding Options Exercisable Weighted Weighted Weighted Weighted Average Weighted Weighted Average Average Average Remaining Average Average Remaining Options Exercise Fair Contractual Options Exercise Fair Contractual Outstanding Price Value Life Exercisable Price Value Life At January 1, 2015 18,534,821 $ 0.08 $ 0.08 3.92 years 16,317,821 $ 0.08 $ 0.08 3.13 years Cancelled/Expired (1,510,000 ) $ 0.05 $ 0.05 Exercised (695,000 ) $ 0.05 $ 0.05 Granted 600,000 $ 0.06 $ 0.06 At December 31, 2015 16,929,821 $ 0.09 $ 0.08 3.56 years 14,895,122 $ 0.09 $ 0.08 2.85 years During the year ended December 31, 2015, 782,301 options vested with a weighted average exercise price of $0.09 and a weighted average fair value of $0.09 per option. Based on the December 31, 2015, fair market value of the Company’s common stock of $0.07 per share, the aggregate intrinsic value of the 16,929,821 options outstanding and 14,895,122 shares exercisable is $151,900 and $146,900, respectively. The aggregate intrinsic value of options exercised was $14,250 for the years ended December 31, 2015. Total compensation expense recognized related to stock option awards was $113,167 and $42,574 for the year ended December 31, 2015 and 2014, respectively. In the accompanying consolidated statement of operations for the year ended December 31, 2014, $91,774 of expense is included in general, administrative and selling expenses and $21,393 is included in research and development expenses. In the accompanying consolidated statement of operations for the year ended December 31, 2014, $36,382 of expense is included in general, administrative and selling expenses and $6,192 is included in research and development expenses. As of December 31, 2015, there was $79,010 of total unrecognized compensation cost related to nonvested share-based compensation arrangements granted under the 2006 Plan. This unrecognized compensation cost is expected to be recognized over the next 3 years ($56,404 in 2016, $20,660 in 2017 and $1,946 in 2018). |
Segment Information
Segment Information | 12 Months Ended |
Dec. 31, 2015 | |
Segment Information [Abstract] | |
SEGMENT INFORMATION | 13. SEGMENT INFORMATION Andrea follows the provisions of ASC 280 “Segment Reporting” (“ASC 280”). Reportable operating segments are determined based on Andrea’s management approach. The management approach, as defined by ASC 280, is based on the way that the chief operating decision-maker organizes the segments within an enterprise for making operating decisions and assessing performance. While Andrea’s results of operations are primarily reviewed on a consolidated basis, the chief operating decision-maker manages the enterprise in two segments: (i) Patent Monetization; and (ii) Andrea DSP Microphone and Audio Software Products. Patent Monetization includes Monetization Revenues (as defined in our Revenue Sharing Agreement). Andrea DSP Microphone and Audio Software Products primarily include products based on the use of some, or all, of the following technologies: Andrea Digital Super Directional Array microphone technology (“DSDA”), Andrea Direction Finding and Tracking Array microphone technology (“DFTA”), Andrea PureAudio noise filtering technology, and Andrea EchoStop, an advanced acoustic echo cancellation technology. The following represents selected consolidated financial information for Andrea’s segments for the years ended December 31, 2015 and 2014: Andrea DSP Microphone and Patent Audio Software 2015 Twelve Month Segment Data Monetization Products Total 2015 Net product revenues $ - $ 388,298 $ 388,298 License revenues 12,104,958 741,626 12,846,584 Income (loss) from operations 3,595,645 (908,432 ) 2,687,213 Depreciation and amortization 28,835 54,286 83,121 Purchases of property and equipment - 18,443 18,443 Purchases of patents and trademarks 14,434 14,434 28,868 Assets 2,278,587 6,282,269 8,560,856 Total long lived assets 172,677 259,642 432,319 Andrea DSP Microphone and Patent Audio Software 2014 Twelve Month Segment Data Monetization Products Total 2014 Net product revenues $ - $ 326,647 $ 326,647 License revenues 4,557 892,358 896,915 Loss (income) from operations 2,463,461 (149,831 ) 2,313,630 Depreciation and amortization 22,023 40,597 62,620 Purchases of patents and trademarks 46,047 46,046 92,093 Assets 187,078 4,384,542 4,571,620 Total long lived assets 187,078 281,051 468,129 Management of Andrea assesses assets and non-operating income statement data on a consolidated basis only. International revenues are based on the country in which the end-user is located. For the years ended December 31, 2015 and 2014, and as of each respective year-end, total revenues and accounts receivable by geographic area are as follows: Geographic Data 2015 2014 Total Revenues: United States $ 2,498,721 $ 191,103 Foreign (1) 10,736,161 1,032,459 $ 13,234,882 $ 1,223,562 Accounts receivable: United States $ 1,788,500 $ 40,546 Foreign 113,888 198,268 $ 1,902,388 $ 238,814 (1) Total revenue from the People’s Republic of China and Singapore represented 81% and 84% of total revenues for the year ended December 31, 2015 and 2014, respectively. |
Sale of Andrea Anti-Noise Produ
Sale of Andrea Anti-Noise Products Division | 12 Months Ended |
Dec. 31, 2015 | |
Sale of Andrea Anti-Noise Products Division [Abstract] | |
Sale of Andrea Anti-Noise Products Division | 14. SALE OF ANDREA ANTI-NOISE PRODUCTS DIVISION On April 2, 2015, Andrea Electronics Corporation consummated the transactions contemplated by the Asset Purchase Agreement, by and between Andrea Electronics Corporation and Andrea Communications LLC dated March 27, 2015. Under the Asset Purchase Agreement, the Company sold its Anti-Noise Products Division (the “Division”) and certain related assets for a selling price of $900,000 which included a cash payment of $300,000 and a note receivable of $600,000 payable in 18 equal monthly installments of $34,757 including interest at a rate of 3.25% per annum beginning in October 2015. In addition, under the Asset Purchase Agreement the Company is entitled to receive an additional $100,000 in the event that the revenues derived from Andrea Communications LLC’s operation of the Division exceed certain thresholds over a specified time period, as defined in the Asset Purchase Agreement. Accordingly, the results of operations, the assets and liabilities of the Division are presented as discontinued operations for both current and prior periods. The following table reflects the results of the discontinued operations of the Division’s business segment for the years ended December 31, 2015 and 2014 and as of December 31, 2015 and December 31, 2014, respectively: December 31, 2015 December 31, 2014 Operations Net Revenues $ 662,135 1,563,014 Cost of Sales 596,565 951,530 Gross margin 65,570 611,484 Research and Development Expenses 18,746 240,382 General, administrative and selling expenses 349,960 735,655 Gain on sale of Anti-Noise Products Division (879,612 ) - Income (loss) from discontinued operations $ 576,476 $ (364,553 ) December 31, 2015 December 31, 2014 Assets Accounts Receivable, net $ 27,303 $ 56,411 Inventories, net 122,443 339,232 Property and equipment, net - 22,927 Assets from discontinued operations $ 149,746 $ 418,570 Liabilities Trade accounts payable $ - $ 107,228 Other current liabilities 40,075 44,066 Liabilities from discontinued operations $ 40,075 $ 151,294 The assets that were sold consisted of property and equipment, resulting in a gain on sale of approximately $880,000. |
Summary of Significant Accoun21
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2015 | |
Summary of Significant Accounting Policies [Abstract] | |
Principles of Consolidation | Principles of Consolidation The consolidated financial statements include the accounts of Andrea and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. |
Loss Per Share | Loss Per Share Basic income (loss) earnings per share is computed by dividing the net (loss) income by the weighted average number of common shares outstanding during the period. Diluted (loss) earnings adjusts basic (loss) earnings per share for the effects of convertible securities, stock options and other potentially dilutive financial instruments, only in the periods in which such effect is dilutive. Diluted earnings per share are based on the assumption that all dilutive convertible shares and stock options were converted or exercised. Dilution is computed by applying the treasury stock method for the outstanding options, and the if-converted method for the outstanding convertible instruments. Under the treasury stock method, options are assumed to be exercised at the beginning of the period (or at the time of issuance, if later) and as if funds obtained thereby were used to purchase common stock at the average market price during the period. Under the if-converted method, outstanding convertible instruments are assumed to be converted into common stock at the beginning of the period (or at the time of issuance, if later). Securities that could potentially dilute basic earnings per share (“EPS”) in the future that were not included in the computation of the diluted EPS because to do so would have been anti-dilutive for the periods presented, consist of the following: December 31, 2015 2014 Total potentially dilutive common shares as of: Stock options to purchase common stock (Note 12) 11,399,821 18,534,821 Series C Convertible Preferred Stock and related accrued dividends (Note 8) - 2,023,658 Series D Convertible Preferred Stock (Note 9) - 3,628,576 Total potentially dilutive common shares 11,399,821 24,187,055 December 31, 2015 2014 Numerator: Net income (loss) $ 3,044,170 $ (2,892,593 ) Denominator: Basic Weighted average shares 64,000,309 63,721,035 Effect of dilutive securities: Stock options 2,277,435 - Series C Convertible Preferred Stock and related accrued dividends (Note 8) 2,023,658 - Series D Convertible Preferred Stock (Note 9) 3,628,576 - Denominator for diluted income (loss) per share-adjusted weighted average shares after assumed conversions 71,929,978 63,721,035 |
Cash | Cash Cash includes cash and highly liquid investments with original maturities of three months or less. At times during the years ended December 31, 2015 and 2014, the Company had cash deposits in excess of the maximum amounts insured by the Federal Deposit Insurance Corporation insurance limits. At December 31, 2015, the Company’s cash was held at four financial institutions. |
Concentration of Risk | Concentration of Risk The following customer accounted for 10% or more of Andrea’s consolidated total revenues during at least one of the periods presented below: December 31, 2015 2014 Customer A 81 % 72 % Customer B 13 % * ____________________ * Amounts are less than 10% Customer A accounted for approximately 6% and 67% of accounts receivable at December 31, 2015 and 2014, respectively. Customer B accounted for approximately 92% of accounts receivable at December 31, 2015. |
Allowance for Doubtful Accounts | Allowance for Doubtful Accounts The Company performs on-going credit evaluations of its customers and adjusts credit limits based upon payment history and the customer’s current credit worthiness, as determined by the review of their current credit information. Collections and payments from customers are continuously monitored. The Company maintains an allowance for doubtful accounts, which is based upon historical experience as well as specific customer collection issues that have been identified. While such bad debt expenses have historically been within expectations and allowances established, the Company cannot guarantee that it will continue to experience the same credit loss rates that it has in the past. If the financial condition of customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required. |
Inventories | Inventories Inventories are stated at the lower of cost (on a first-in, first-out) or market basis. The cost of inventory is based on the respective cost of materials. Andrea reviews its inventory reserve for obsolescence on a quarterly basis and establishes reserves on inventories based on the specific identification method as well as a general reserve. Andrea records charges in inventory reserves as part of cost of revenues. |
Property and Equipment | Property and Equipment Property and equipment is stated at cost less accumulated depreciation and amortization. Depreciation is provided on a straight-line basis over the estimated useful lives of the assets ranging from 3 to 10 years. Leasehold improvements are amortized on a straight-line basis over the shorter of the lives of the respective leases or the expected useful lives of those improvements. Expenditures for maintenance and repairs that do not materially prolong the normal useful life of an asset are charged to operations as incurred. Improvements that substantially extend the useful lives of the assets are capitalized. Upon sale or other disposition of assets, the cost and related accumulated depreciation and amortization are removed from the accounts and the resulting gain or loss, if any, is reflected in the statement of operations. |
Other Intangible Assets | Other Intangible Assets Andrea amortizes its core technology and patents and trademarks on a straight-line basis over their estimated useful lives that range from 10 to 20 years. |
Long-Lived Assets | Long-Lived Assets Andrea accounts for its long-lived assets in accordance with Statement of Financial Accounting Standards Board (“FASB”) Accounting Standard Codification (“ASC”) 360 “Plant, Property and Equipment, ” for purposes of determining and measuring impairment of its long-lived assets (primarily intangible assets) other than goodwill. Andrea’s policy is to review the value assigned to its long lived assets to determine if they have been permanently impaired by adverse conditions which may affect Andrea whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. If Andrea identifies a permanent impairment such that the carrying amount of Andrea’s long lived assets is not recoverable using the sum of an undiscounted cash flow projection (gross margin dollars from product sales), the impaired asset is adjusted to its estimated fair value, based on an estimate of future discounted cash flows which becomes the new cost basis for the impaired asset. Considerable management judgment is necessary to estimate undiscounted future operating cash flows and fair values and, accordingly, actual results could vary significantly from such estimates. No impairment charges were recognized during the years ended December 31, 2015 and 2014. |
Revenue Recognition | Revenue Recognition Non software-related revenue, which is generally comprised of microphones and microphone connectivity product revenues, is recognized when title and risk of loss pass to the customer, which is generally upon shipment. With respect to licensing revenues, Andrea recognizes revenue in accordance with ASC 985, “Software” and ASC 605 “Revenue Recognition.” License revenue is recognized based on the terms and conditions of individual contracts. In addition, fee based services, which are short-term in nature, are generally performed on a time-and-material basis under separate service arrangements and the corresponding revenue is generally recognized as the services are performed. |
Income Taxes | Income Taxes Andrea accounts for income taxes in accordance with ASC 740, “Income Taxes” (“ASC 740”). ASC 740 requires an asset and liability approach for financial accounting and reporting for income taxes and establishes for all entities a minimum threshold for financial statement recognition of the benefit of tax positions, and requires certain expanded disclosures. The provision for income taxes is based upon income or loss after adjustment for those permanent items that are not considered in the determination of taxable income. Deferred income taxes represent the tax effects of differences between the financial reporting and tax bases of the Company’s assets and liabilities at the enacted tax rates in effect for the years in which the differences are expected to reverse. The Company evaluates the recoverability of deferred tax assets and establishes a valuation allowance when it is more likely than not that some portion or all of the deferred tax assets will not be realized. As of December 31, 2015 the Company has recorded a full valuation allowance. Andrea expects it will reduce its valuation allowance in future periods to the extent that it can demonstrate its ability to utilize the assets. Management makes judgments as to the interpretation of the tax laws that might be challenged upon an audit and cause changes to previous estimates of tax liability. In management’s opinion, adequate provisions for income taxes have been made for all years. If actual taxable income by tax jurisdiction varies from estimates, additional allowances or reversals of reserves may be necessary. Income tax expense consists of taxes payable for the period, withholding of income tax as mandated by the foreign jurisdiction in which the revenues are earned withholding of income tax as mandated by the foreign jurisdiction in which the revenues are earned and the change during the period in deferred tax assets and liabilities. The Company has identified its federal tax return and its state tax return in New York as "major" tax jurisdictions. Based on the Company's evaluation, it has been concluded that there are no significant uncertain tax positions requiring recognition in the Company's condensed consolidated interim financial statements. The Company's evaluation was performed for tax years ended 2012 through 2015. The Company believes that its income tax positions and deductions will be sustained on audit and does not anticipate any adjustments that will result in a material change to its financial position |
Stock-Based Compensation | Stock-Based Compensation At December 31, 2015, Andrea had two stock-based employee compensation plans, which are described more fully in Note 11. Andrea accounts for stock based compensation in accordance with ASC 718, “Compensation – Stock Compensation” (“ASC 718”). ASC 718 establishes accounting for stock-based awards exchanged for employee services. Under the provisions of ASC 718, share-based compensation cost is measured at the grant date, based on the fair value of the award, and is recognized as expense over the employee’s requisite service period (generally the vesting period of the equity grant). The fair value of the Company’s common stock options are estimated using the Black Scholes option-pricing model with the following assumptions: expected volatility, dividend rate, risk free interest rate and the expected life. The Company expenses stock-based compensation by using the straight-line method. In accordance with ASC 718, excess tax benefits realized from the exercise of stock-based awards are classified in cash flows from financing activities. The future realization of the reserved deferred tax assets related to these tax benefits associated with the exercise of stock options will result in a credit to additional paid in capital if the related tax deduction reduces taxes payable. The Company has elected the “with and without approach” regarding ordering of windfall tax benefits to determine whether the windfall tax benefit did reduce taxes payable in the current year. Under this approach, the windfall tax benefit would be recognized in additional paid-in-capital only if an incremental tax benefit is realized after considering all other benefits presently available. |
Research and Development | Research and Development Andrea expenses all research and development costs as incurred. |
Advertising Expenses | Advertising Expenses In accordance with ASC 720 all media costs of newspaper and magazine advertisements as well as trade show costs are expensed as incurred. Total advertising and marketing expenses for the years ended December 31, 2015 and 2014 were approximately $11,000 and $2,000, respectively and are included in general, administrative and selling expenses. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments ASC 820 defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles, and expands disclosures about payments to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 applies to all assets and liabilities that are measured and reported on a fair value basis. The Company will apply the provisions of ASC 820 to nonfinancial assets and liabilities. Andrea calculates the fair value of financial instruments and includes this additional information in the notes to consolidated financial statements when the fair value is different than the book value of those financial instruments. When the book value approximates fair value, no additional disclosure is made. Andrea uses quoted market prices whenever available to calculate these fair values. When quoted market prices are not available, Andrea uses standard pricing models for various types of financial instruments which take into account the present value of estimated future cash flows. As of December 31, 2015 and 2014, the carrying value of all financial instruments approximated fair value. |
Use of Estimates | Use of Estimates The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Management bases its estimates on historical experience and on various assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. The most significant estimates, among other things, are used in accounting for allowances for bad debts, inventory valuation and obsolescence, product warranty, depreciation, deferred income taxes, expected realizable values for assets (primarily intangible assets), contingencies, revenue recognition as well as the recording and presentation of the Company’s convertible preferred stock. Estimates and assumptions are periodically reviewed and the effects of any material revisions are reflected in the consolidated financial statements in the period that they are determined to be necessary. Actual results could differ from those estimates and assumptions. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update ("ASU") No. 2014-09, "Revenue from Contracts with Customers" (Topic 606), which supersedes the revenue recognition requirements in ASC Topic 605, "Revenue Recognition," and most industry-specific guidance. This ASU is based on the principle that revenue is recognized to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The ASU also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments, and assets recognized from costs incurred to obtain or fulfill a contract. The amendments in the ASU must be applied using one of two retrospective methods and are effective for annual and interim periods beginning after December 15, 2016. On July 9, 2015, the FASB modified ASU 2014-09 to be effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. As modified, the FASB permits the adoption of the new revenue standard early, but not before the annual periods beginning after December 15, 2016. A public organization would apply the new revenue standard to all interim reporting periods within the year of adoption. The Company will evaluate the effects, if any, that adoption of this guidance will have on its financial statements. In November 2015, the FASB issued ASU No. 2015-17, “Balance Sheet Classification of Deferred Taxes” (“ASU 2015-17”). The standard requires that deferred tax assets and liabilities be classified as noncurrent in a classified statement of financial position. ASU 2015-17 is effective for fiscal years and interim periods within those years, beginning after December 15, 2016. Early adoption is permitted. ASU 2015-17 may be applied either prospectively, for all deferred tax assets and liabilities, or retrospectively. The Company is currently evaluating the impact this standard will have on its financial statements. In January 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842).” This standard requires that a lessee recognize the assets and liabilities that arise from operating leases. A lessee should recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. In transition, lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. ASU 2016-02 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018. The Company is currently evaluating the impact the adoption of this new standard will have on its financial statements. |
Reclassifications | Reclassifications Certain prior year amounts have been reclassified to conform to the current year presentation. These reclassifications had no effect on previously reported net loss. |
Subsequent Events | Subsequent Events The Company evaluates events that occurred after the balance sheet date but before the financial statements are issued. Based upon the evaluation, other than Note 11, the Company did not identify any recognized or non-recognized subsequent events that would have required adjustment or disclosure in the consolidated financial statements. |
Summary of Significant Accoun22
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Summary of Significant Accounting Policies [Abstract] | |
Summary of Antidilutive securities excluded from computation of earnings per share | December 31, 2015 2014 Total potentially dilutive common shares as of: Stock options to purchase common stock (Note 12) 11,399,821 18,534,821 Series C Convertible Preferred Stock and related accrued dividends (Note 8) - 2,023,658 Series D Convertible Preferred Stock (Note 9) - 3,628,576 Total potentially dilutive common shares 11,399,821 24,187,055 |
Schedule of computation of computation of the diluted earnings per share | December 31, 2015 2014 Numerator: Net income (loss) $ 3,044,170 $ (2,892,593 ) Denominator: Basic Weighted average shares 64,000,309 63,721,035 Effect of dilutive securities: Stock options 2,277,435 - Series C Convertible Preferred Stock and related accrued dividends (Note 8) 2,023,658 - Series D Convertible Preferred Stock (Note 9) 3,628,576 - Denominator for diluted income (loss) per share-adjusted weighted average shares after assumed conversions 71,929,978 63,721,035 |
Summary of Concentration of credit risk, Customer as a percentage of revenues | December 31, 2015 2014 Customer A 81 % 72 % Customer B 13 % * ____________________ * Amounts are less than 10% |
Intangible Assets (Tables)
Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Intangible Assets [Abstract] | |
Summary of Intangible assets | December 31, 2015 2014 Core Technology $ 8,567,448 $ 8,567,448 Patents and trademarks 861,241 832,373 9,428,689 9,399,821 Less: accumulated amortization (9,083,330 ) (9,025,664 ) $ 345,359 $ 374,157 |
Schedule of changes in the carrying amount of intangible assets | Patents and Trademarks Balance as of January 1, 2014 $ 326,109 Additions during the period 92,093 Amortization (44,045 ) Balance as of December 31, 2014 $ 374,157 Additions during the period 28,868 Amortization (57,666 ) Balance as of December 31, 2015 $ 345,359 |
Inventories, Net (Tables)
Inventories, Net (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Inventories, net [Abstract] | |
Summary of Inventories, net | December 31, 2015 2014 Raw materials $ 21,253 $ 15,852 Finished goods 152,050 330,240 173,303 346,092 Less: reserve for obsolescence (115,275 ) (129,756 ) $ 58,028 $ 216,336 |
Property and Equipment, Net (Ta
Property and Equipment, Net (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Property and Equipment, Net [Abstract] | |
PROPERTY AND EQUIPMENT, net | December 31, 2015 2014 Information Technology Equipment $ 258,715 $ 240,272 Furniture and fixtures 87,958 87,958 Tools, molds and testing equipment 189,333 189,333 536,006 517,563 Less: accumulated depreciation and amortization (449,046 ) (423,591 ) $ 86,960 $ 93,972 |
Revenue Sharing, Note Purchas26
Revenue Sharing, Note Purchase Agreement, and Long-Term Debt (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Revenue Sharing Note Purchase Agreement and Long-Term Debt [Abstract] | |
Schedule of advance from revenue sharing agreement | December 31, 2015 2014 Advance from Revenue Sharing Agreement $ 312,067 $ 3,500,000 Less: short-term Advance from Revenue Sharing Agreement (196,477 ) - Long-term Advance from Revenue Sharing Agreement, net of short-term Advance from Revenue Sharing Agreement $ 115,590 $ 3,500,000 |
Schedule of long-term debt | December 31, 2015 2014 Note Payable $ 1,900,000 $ 900,000 PIK interest 775 9,875 Total long-term debt 1,900,775 909,875 Less: current maturities of long-term debt (1,900,775 ) - Long-term debt, net of current maturities $ - $ 909,875 |
Other Current Liabilities (Tabl
Other Current Liabilities (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Other Current Liabilities [Abstract] | |
Summary of other current liabilities | December 31, 2015 2014 Accrued payroll and related expenses $ 347,798 $ 19,161 Accrued patent monetization expenses 1,230,314 415,000 Accrued professional and other service fees 62,721 30,315 $ 1,640,833 $ 464,476 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Income Taxes [Abstract] | |
Schedule of provision for income tax | For the Years Ended December 31, 2015 2014 Current: Federal $ 8,141 $ 38,000 Foreign 146,372 176,136 State and Local - - Total Current 154,513 214,136 Deferred Federal (1,269,000 ) (1,003,000 ) Foreign - - State and Local (187,000 ) (147,000 ) Adjustment to valuation allowance related to net deferred tax assets 1,456,000 1,150,000 Total Deferred - - Provision for income taxes $ 154,513 $ 214,136 |
Schedule of income (loss) before income taxes | For the Years Ended December 31, 2015 2014 Foreign $ 2,466,823 $ (3,568,897 ) Domestic 731,860 890,440 Net income (loss) before income taxes $ 3,198,683 $ (2,678,457 ) |
Schedule of effective income tax rate reconciliation | For the Years Ended December 31, 2015 2014 Tax provision at statutory rate 34 % (34 )% State and local taxes 5 % (5 )% Foreign taxes 5 % 7 % Foreign tax deduction 1 % - % Incentive Stock Option Expense (1 )% - % Change in valuation allowance for net deferred tax assets (39 )% 40 % 5 % 8 % |
Schedule of components of temporary differences of deferred tax asset, net | For the Years Ended December 31, 2015 2014 Deferred tax assets: Accrued expenses $ 361,000 $ 35,000 Allowance for doubtful accounts 6,000 7,000 Deferred Revenue 2,000 3,000 Reserve for obsolescence 72,000 109,000 Expense associated with non-qualified stock options 115,000 100,000 Revenue Sharing Agreement 681,000 1,781,000 General business credit 1,258,000 1,156,000 NOL carryforward 15,139,000 12,987,000 17,634,000 16,178,000 Less: valuation allowance (17,634,000 ) (16,178,000 ) Deferred tax asset, net $ - $ - |
Schedule of change in valuation allowance for deferred tax assets | 2015 2014 Beginning Balance $ 16,178,000 $ 15,028,000 Change in Allowance 1,456,000 1,150,000 Ending Balance $ 17,634,000 $ 16,178,000 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Commitments and Contingencies [Abstract] | |
Summary of minimum annual future lease payments under operating leases | 2016 54,365 2017 44,124 2018 38,700 2019 39,912 2020 30,856 Total $ 207,957 |
Stock Plans and Stock-Based C30
Stock Plans and Stock-Based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Stock Plans and Stock-Based Compensation [Abstract] | |
Schedule of estimated on the date of grant using the Black-Scholes option-pricing model | December 31, December 31, 2015 2014 Expected life in years (based on simplified method) 8 years 8 years Risk-free interest rates 2.04 % 2.10 % Volatility (based on historical volatility) 205.3 % 203.0 % Dividend yield 0 % 0 % |
Summary of stock option activity | Options Outstanding Options Exercisable Weighted Weighted Weighted Weighted Average Weighted Weighted Average Average Average Remaining Average Average Remaining Options Exercise Fair Contractual Options Exercise Fair Contractual Outstanding Price Value Life Exercisable Price Value Life At January 1, 2015 18,534,821 $ 0.08 $ 0.08 3.92 years 16,317,821 $ 0.08 $ 0.08 3.13 years Cancelled/Expired (1,510,000 ) $ 0.05 $ 0.05 Exercised (695,000 ) $ 0.05 $ 0.05 Granted 600,000 $ 0.06 $ 0.06 At December 31, 2015 16,929,821 $ 0.09 $ 0.08 3.56 years 14,895,122 $ 0.09 $ 0.08 2.85 years |
Segment Information (Tables)
Segment Information (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Segment Information [Abstract] | |
Summary of consolidated financial information for Andrea's segments | Andrea DSP Microphone and Patent Audio Software 2015 Twelve Month Segment Data Monetization Products Total 2015 Net product revenues $ - $ 388,298 $ 388,298 License revenues 12,104,958 741,626 12,846,584 Income (loss) from operations 3,595,645 (908,432 ) 2,687,213 Depreciation and amortization 28,835 54,286 83,121 Purchases of property and equipment - 18,443 18,443 Purchases of patents and trademarks 14,434 14,434 28,868 Assets 2,278,587 6,282,269 8,560,856 Total long lived assets 172,677 259,642 432,319 Andrea DSP Microphone and Patent Audio Software 2014 Twelve Month Segment Data Monetization Products Total 2014 Net product revenues $ - $ 326,647 $ 326,647 License revenues 4,557 892,358 896,915 Loss (income) from operations 2,463,461 (149,831 ) 2,313,630 Depreciation and amortization 22,023 40,597 62,620 Purchases of patents and trademarks 46,047 46,046 92,093 Assets 187,078 4,384,542 4,571,620 Total long lived assets 187,078 281,051 468,129 |
Summary of net revenues by geographic area | Geographic Data 2015 2014 Total Revenues: United States $ 2,498,721 $ 191,103 Foreign (1) 10,736,161 1,032,459 $ 13,234,882 $ 1,223,562 Accounts receivable: United States $ 1,788,500 $ 40,546 Foreign 113,888 198,268 $ 1,902,388 $ 238,814 |
Sale of Andrea Anti-Noise Pro32
Sale of Andrea Anti-Noise Products Division (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Sale of Andrea Anti-Noise Products Division [Abstract] | |
Schedule of discontinued operations of the Division's business segment | December 31, 2015 December 31, 2014 Operations Net Revenues $ 662,135 1,563,014 Cost of Sales 596,565 951,530 Gross margin 65,570 611,484 Research and Development Expenses 18,746 240,382 General, administrative and selling expenses 349,960 735,655 Gain on sale of Anti-Noise Products Division (879,612 ) - Income (loss) from discontinued operations $ 576,476 $ (364,553 ) December 31, 2015 December 31, 2014 Assets Accounts Receivable, net $ 27,303 $ 56,411 Inventories, net 122,443 339,232 Property and equipment, net - 22,927 Assets from discontinued operations $ 149,746 $ 418,570 Liabilities Trade accounts payable $ - $ 107,228 Other current liabilities 40,075 44,066 Liabilities from discontinued operations $ 40,075 $ 151,294 |
Summary of Significant Accoun33
Summary of Significant Accounting Policies (Details) - shares | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Summary of Antidilutive securities excluded from computation of earnings per share | ||
Total potentially dilutive common shares | 11,399,821 | 24,187,055 |
Stock options to purchase common stock [Member] | ||
Summary of Antidilutive securities excluded from computation of earnings per share | ||
Total potentially dilutive common shares | 11,399,821 | 18,534,821 |
Series C Convertible Preferred Stock and related accrued dividends [Member] | ||
Summary of Antidilutive securities excluded from computation of earnings per share | ||
Total potentially dilutive common shares | 2,023,658 | |
Series D Convertible Preferred Stock [Member] | ||
Summary of Antidilutive securities excluded from computation of earnings per share | ||
Total potentially dilutive common shares | 3,628,576 |
Summary of Significant Accoun34
Summary of Significant Accounting Policies (Details 1) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Numerator: | ||
Net income (loss) | $ 3,044,170 | $ (2,892,593) |
Denominator: | ||
Basic Weighted average shares | 64,000,309 | 63,721,035 |
Effect of dilutive securities: | ||
Denominator for diluted income (loss) per share-adjusted weighted average shares after assumed conversions | 71,929,978 | 63,721,035 |
Stock options [Member] | ||
Effect of dilutive securities: | ||
Stock options | 2,277,435 | |
Series C Convertible Preferred Stock and related accrued dividends [Member] | ||
Effect of dilutive securities: | ||
Convertible Preferred Stock | 2,023,658 | |
Series D Convertible Preferred Stock [Member] | ||
Effect of dilutive securities: | ||
Convertible Preferred Stock | 3,628,576 |
Summary of Significant Accoun35
Summary of Significant Accounting Policies (Details 2) - Revenue [Member] | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | ||
Customer A [Member] | |||
Summary of Concentration of credit risk, Customer as a percentage of revenues | |||
Concentration risk percentage | 81.00% | 72.00% | |
Customer B [Member] | |||
Summary of Concentration of credit risk, Customer as a percentage of revenues | |||
Concentration risk percentage | 13.00% | [1] | |
[1] | Amounts are less than 10% |
Summary of Significant Accoun36
Summary of Significant Accounting Policies (Details Textual) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Summary of significant accounting policies (Textual) | ||
Impairment charges | ||
Advertising Expense | $ 11,000 | $ 2,000 |
Underlying asset lease term, Description | A term of 12 months or less | |
Minimum [Member] | ||
Summary of significant accounting policies (Textual) | ||
Estimated useful life of property and equipment | 3 years | |
Minimum [Member] | Patents and trademarks [Member] | ||
Summary of significant accounting policies (Textual) | ||
Estimated useful life of intangible assets | 10 years | |
Maximum [Member] | ||
Summary of significant accounting policies (Textual) | ||
Estimated useful life of property and equipment | 10 years | |
Maximum [Member] | Patents and trademarks [Member] | ||
Summary of significant accounting policies (Textual) | ||
Estimated useful life of intangible assets | 20 years | |
Net revenue [Member] | ||
Summary of significant accounting policies (Textual) | ||
Concentration Risk, Customer | 10% or more | 10% or more |
Customer A [Member] | Accounts Receivable [Member] | ||
Summary of significant accounting policies (Textual) | ||
Concentration risk percentage | 6.00% | 67.00% |
Customer B [Member] | Accounts Receivable [Member] | ||
Summary of significant accounting policies (Textual) | ||
Concentration risk percentage | 92.00% |
Intangible Assets (Details)
Intangible Assets (Details) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 |
Summary of finite lived Intangible assets | |||
Intangible assets, Gross | $ 9,428,689 | $ 9,399,821 | |
Less: accumulated amortization | (9,083,330) | (9,025,664) | |
Intangible assets, net | 345,359 | 374,157 | $ 326,109 |
Core Technology [Member] | |||
Summary of finite lived Intangible assets | |||
Intangible assets, Gross | 8,567,448 | 8,567,448 | |
Patents and trademarks [Member] | |||
Summary of finite lived Intangible assets | |||
Intangible assets, Gross | $ 861,241 | $ 832,373 |
Intangible Assets (Details 1)
Intangible Assets (Details 1) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Summary of changes the carrying amount of finite lived intangible assets of Patents and Trademarks | ||
Balance | $ 374,157 | $ 326,109 |
Additions during the period | 28,868 | 92,093 |
Amortization | (57,666) | (44,045) |
Ending balance | $ 345,359 | $ 374,157 |
Intangible Assets (Details Text
Intangible Assets (Details Textual) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Intangible assets (Textual) | ||
Amortization | $ (57,666) | $ (44,045) |
Estimated amortization expense of intangible assets, Year one | 48,000 | |
Estimated amortization expense of intangible assets, Year Two | 44,000 | |
Estimated amortization expense of intangible assets, Year Three | 41,000 | |
Estimated amortization expense of intangible assets, Year Four | 34,000 | |
Estimated amortization expense of intangible assets, Year Five | $ 22,000 | |
Patents and trademarks [Member] | Maximum [Member] | ||
Intangible assets (Textual) | ||
Estimated useful life of intangible assets | 20 years | |
Patents and trademarks [Member] | Minimum [Member] | ||
Intangible assets (Textual) | ||
Estimated useful life of intangible assets | 10 years |
Inventories, net (Details)
Inventories, net (Details) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
INVENTORIES, net | ||
Raw materials | $ 21,253 | $ 15,852 |
Finished goods | 152,050 | 330,240 |
Inventories, Gross | 173,303 | 346,092 |
Less: reserve for obsolescence | (115,275) | (129,756) |
Inventories, net | $ 58,028 | $ 216,336 |
Property and Equipment, Net (De
Property and Equipment, Net (Details) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Property, Plant and Equipment [Line Items] | ||
Property and equipment, Gross | $ 536,006 | $ 517,563 |
Less: accumulated depreciation and amortization | (449,046) | (423,591) |
Property and equipment, net | 86,960 | 93,972 |
Information Technology Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, Gross | 258,715 | 240,272 |
Furniture and fixtures [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, Gross | 87,958 | 87,958 |
Tools, molds and testing equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, Gross | $ 189,333 | $ 189,333 |
Property and Equipment, Net (42
Property and Equipment, Net (Details Textual) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Property and equipment, net (Textual) | ||
Depreciation and amortization of property and equipment | $ 85,660 | $ 115,824 |
Property, Plant and Equipment [Member] | ||
Property and equipment, net (Textual) | ||
Depreciation and amortization of property and equipment | $ 25,455 | $ 54,286 |
Revenue Sharing, Note Purchas43
Revenue Sharing, Note Purchase Agreement, and Long-Term Debt (Details) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Revenue Sharing Note Purchase Agreement and Long-Term Debt [Abstract] | ||
Advance from Revenue Sharing Agreement | $ 312,067 | $ 3,500,000 |
Less: short-term Advance from Revenue Sharing Agreement | 196,477 | |
Long-term Advance from Revenue Sharing Agreement, net of short-term Advance from Revenue Sharing Agreement | $ 115,590 | $ 3,500,000 |
Revenue Sharing, Note Purchas44
Revenue Sharing, Note Purchase Agreement, and Long-Term Debt (Details 1) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Revenue Sharing Note Purchase Agreement and Long-Term Debt [Abstract] | ||
Note Payable | $ 1,900,000 | $ 900,000 |
PIK interest | $ 775 | 9,875 |
Total long-term debt | $ 909,875 | |
Less: current maturities of long-term debt | $ (1,900,775) | |
Long-term debt, net of current maturities | $ 909,875 |
Revenue Sharing, Note Purchas45
Revenue Sharing, Note Purchase Agreement, and Long-Term Debt (Details Textual) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Revenue Sharing and Note Purchase Agreement (Textual) | ||
Advance from Revenue Sharing Agreement | $ 115,590 | $ 3,500,000 |
Aggregate outstanding amount of note issued for sale | $ 10,700,000 | |
Percentage of revenue applied for payment of accrued and unpaid interest | 100.00% | |
Interest rate | 3.00% | 3.00% |
Increase interest rate | 2.00% | |
Maturity date for notes | Jun. 30, 2020 | |
Notes payable issued to AND34 | $ 1,900,000 | $ 900,000 |
Maximum [Member] | ||
Revenue Sharing and Note Purchase Agreement (Textual) | ||
Percentage of revenue allocated to revenue participants | 100.00% | |
Minimum [Member] | ||
Revenue Sharing and Note Purchase Agreement (Textual) | ||
Percentage of revenue allocated to revenue participants | 20.00% | |
London Interbank Offered Rate (LIBOR) [Member] | ||
Revenue Sharing and Note Purchase Agreement (Textual) | ||
Interest rate | 2.00% | |
Description of interest rate | The unpaid principal amount of the Notes (including any PIK Interest) will have an interest rate equal to LIBOR (as defined in the Revenue Sharing Agreement) plus 2% per annum, (3% at December 31, 2015 and 2014); provided that upon and during the continuance of an Event of Default (as set forth in the Revenue Sharing Agreement), the interest rate will increase an additional 2% per annum. |
Other Current Liabilities (Deta
Other Current Liabilities (Details) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Other Current Liabilities | ||
Accrued payroll and related expenses | $ 347,798 | $ 19,161 |
Accrued patent monetization expenses expenses | 1,230,314 | 415,000 |
Accrued professional and other service fees | 62,721 | 30,315 |
Other current liabilities, Total | $ 1,640,833 | $ 464,476 |
Series C Convertible Preferre47
Series C Convertible Preferred Stock (Details) - USD ($) | 1 Months Ended | 12 Months Ended | |
Oct. 10, 2000 | Dec. 31, 2015 | Dec. 31, 2014 | |
Series C Convertible Preferred Stock (Textual) | |||
Accrued Series C Preferred Stock Dividends | $ 73,921 | $ 73,921 | |
Series C Convertible Preferred Stock [Member] | |||
Series C Convertible Preferred Stock (Textual) | |||
Proceed from issuance of private placement | $ 7,500,000 | ||
Preferred Stock, value stated | 10,000 | ||
Increase in stated value of preferred stock | $ 1,671 | ||
Additional increase per annum value of preferred stock | 5.00% | ||
Preferred stock, conversion price | $ 0.2551 | $ 0.2551 | |
Description of additional stated value | Additional amount of $1,671 represents the 5% per annum from October 10, 2000 through February 17, 2004. | ||
Number of common stock shares conversion of preferred stock | 2,023,658 |
Series D Convertible Preferre48
Series D Convertible Preferred Stock (Details) - USD ($) | 1 Months Ended | 12 Months Ended | |||
Jun. 04, 2004 | Feb. 23, 2004 | Dec. 31, 2015 | Dec. 31, 2014 | Feb. 17, 2004 | |
Series D Convertible Preferred Stock (Textual) | |||||
Investment amount under agreement | $ 2,500,000 | ||||
Preferred stock, shares outstanding | |||||
Series D convertible preferred stock [Member] | |||||
Series D Convertible Preferred Stock (Textual) | |||||
Shares purchased under agreement amount | $ 1,250,000 | $ 1,250,000 | |||
Shares purchased under agreement shares | 1,250,000 | 1,250,000 | |||
Number of common stock for exercise of warrant | 2,500,000 | 2,500,000 | |||
Conversion price | $ 0.25 | $ 0.25 | $ 0.25 | ||
Description of registration delay payment | This payment is to be paid in cash and is equal to the product of (i) the stated value of such Preferred Shares multiplied by (ii) the product of (1) .0005 multiplied by (2) the number of days that sales cannot be made pursuant to the Registration Statement (excluding any days during that may be considered grace periods as defined by the Registration Rights Agreement). | ||||
Preferred stock, shares outstanding | 907,144 | ||||
Number of common stock shares conversion of preferred stock | 5,000,000 | 5,000,000 | 3,628,576 | ||
Exercise warrant, period | Warrants were exercisable at any time after December 4, 2004 and before June 4, 2009. | Warrants were exercisable at any time after August 17, 2004. | |||
Warrants, exercise price | $ 0.17 | $ 0.38 | |||
Warrants expiration date | Jun. 4, 2009 | Feb. 23, 2009 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Current: | ||
Federal | $ 8,141 | $ 38,000 |
Foreign | $ 146,372 | $ 176,136 |
State and Local | ||
Total Current | $ 154,513 | $ 214,136 |
Deferred | ||
Federal | $ (1,269,000) | $ (1,003,000) |
Foreign | ||
State and Local | $ (187,000) | $ (147,000) |
Adjustment to valuation allowance related to net deferred tax assets | $ 1,456,000 | $ 1,150,000 |
Total Deferred | ||
Provision for income taxes | $ 154,513 | $ 214,136 |
Income Taxes (Details 1)
Income Taxes (Details 1) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Schedule of income (loss) before income taxes | ||
Foreign | $ 2,466,823 | $ (3,568,897) |
Domestic | 731,860 | 890,440 |
Net income (loss) before income taxes | $ 3,198,683 | $ (2,678,457) |
Income Taxes (Details 2)
Income Taxes (Details 2) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Schedule of reconciliation between effective income taxes rate and statutory federal tax rate | ||
Tax provision at statutory rate | 34.00% | (34.00%) |
State and local taxes | 5.00% | (5.00%) |
Foreign taxes | 5.00% | 7.00% |
Foreign tax deduction | 1.00% | |
Incentive Stock Option Expense | (1.00%) | |
Change in valuation allowance for net deferred tax assets | (39.00%) | 40.00% |
Effective income tax rate | 5.00% | 8.00% |
Income Taxes (Details 3)
Income Taxes (Details 3) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 |
Deferred tax assets: | |||
Accrued expenses | $ 361,000 | $ 35,000 | |
Allowance for doubtful accounts | 6,000 | 7,000 | |
Deferred Revenue | 2,000 | 3,000 | |
Reserve for obsolescence | 72,000 | 109,000 | |
Expense associated with non-qualified stock options | 115,000 | 100,000 | |
Revenue Sharing Agreement | 681,000 | 1,781,000 | |
General business credit | 1,258,000 | 1,156,000 | |
NOL carryforward | 15,139,000 | 12,987,000 | |
Deferred tax assets | 17,634,000 | 16,178,000 | |
Less: valuation allowance | $ (17,634,000) | $ (16,178,000) | $ (15,028,000) |
Deferred tax asset, net |
Income Taxes (Details 4)
Income Taxes (Details 4) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Income Taxes [Abstract] | ||
Beginning Balance | $ 16,178,000 | $ 15,028,000 |
Change in Allowance | (1,456,000) | (1,150,000) |
Ending Balance | $ 17,634,000 | $ 16,178,000 |
Income Taxes (Details Textual)
Income Taxes (Details Textual) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Income Taxes (Textual) | ||
Provision for income taxes | $ 154,513 | $ 214,136 |
Income tax by foreign jurisdiction for licensing revenues | 146,372 | 176,136 |
Alternative minimum tax | 8,000 | 38,000 |
Operating loss and credit carryforwards, Net | 38,800,000 | |
General business credit | $ 1,258,000 | $ 1,156,000 |
Operating loss and credit carryforwards expiration, Description | Andrea had net operating loss and credit carryforwards of approximately $38.8 million expiring in varying amounts beginning in 2018 through 2033. | |
General business credits expiration, Description | Andrea General Business Credits of approximately $1.3 million expiring in varying amounts beginning in 2016 through 2030. |
Commitments and Contingencies55
Commitments and Contingencies (Details) | Dec. 31, 2015USD ($) |
Summary of minimum annual future lease payments | |
2,016 | $ 54,365 |
2,017 | 44,124 |
2,018 | 38,700 |
2,019 | 39,912 |
2,020 | 30,856 |
Total | $ 207,957 |
Commitments and Contingencies56
Commitments and Contingencies (Details Textual) | Aug. 01, 2014USD ($) | May. 31, 2015SquareFoot | Dec. 31, 2010Segment | Dec. 31, 2015USD ($)SquareFoot | Dec. 31, 2014USD ($) |
Commitments and contingencies (Textual) | |||||
Lease expiration date | Oct. 31, 2020 | May 31, 2015 | |||
Area of warehousing, sales and executive offices (In Square feet) | SquareFoot | 3,000 | 11,000 | |||
Rent expense under operating lease | $ 37,676 | $ 99,718 | |||
Number of defendants | Segment | 90 | ||||
Operating lease , Rental expenses | 13,125 | ||||
Lease and rental expense, Description | The monthly rent under this lease is $2,625 with annual escalations of 3.5%. | ||||
Douglas J Andrea [Member] | |||||
Commitments and contingencies (Textual) | |||||
Term of employment agreement, Description | The effective date of the employment agreement is August 1, 2014 and expires July 31, 2016 and is subject to renewal as approved by the Compensation Committee of the Board of Directors. | ||||
Base salary | $ 300,000 | ||||
Percentage of quarterly bonus | 5.00% | ||||
Maximum quarterly bonus | $ 12,500 | ||||
Percentage of annual bonus | 9.00% | ||||
Annual pre-bonus net after tax earnings, Minimum | $ 300,000 | ||||
Annual pre-bonus net after tax earnings, Maximum | $ 3,000,000 | ||||
Percentage of adjusted pre-annual bonus | 3.00% | ||||
Annual pre-bonus adjusted net after tax earnings, Maximum | $ 3,000,000 | ||||
Description of employment agreement with Mr. Andrea | Mr. Andrea is also entitled to a change in control payment equal to three times the three year average of the cash incentive compensation paid or accrued as of the date of termination, continuation of health and medical benefits for three years and immediate vesting of all stock options in the event of a change in control during the term of his agreement and subsequent termination of his employment within two years following the change of control. In the event of his termination without cause or resignation with the Company's consent, Mr. Andrea is entitled to a severance payment equal to six months of his base salary, plus the six months prorated portion of his most recent annual and quarterly bonuses, and a continuation of health insurance coverage for Mr. Andrea, his spouse and his dependents for 12 months. | ||||
Future minimum cash commitments | $ 398,863 |
Stock Plans and Stock-Based C57
Stock Plans and Stock-Based Compensation (Details) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Stock Plans and Stock-Based Compensation [Abstract] | ||
Expected life in years (based on simplified method) | 8 years | 8 years |
Risk-free interest rates | 2.04% | 2.10% |
Volatility (based on historical volatility) | 205.30% | 203.00% |
Dividend yield | 0.00% | 0.00% |
Stock Plans and Stock-Based C58
Stock Plans and Stock-Based Compensation (Details 1) - $ / shares | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Summary of stock options activity | ||
Options Outstanding, Beginning balance | 18,534,821 | |
Options Outstanding, Ending balance | 16,929,821 | 18,534,821 |
Options Outstanding, Weighted Average Exercise Price, Beginning balance | $ 0.08 | |
Options Outstanding, Weighted Average Exercise Price, Ending balance | 0.09 | $ 0.08 |
Options Outstanding, Weighted Average Fair Value, Beginning balance | 0.08 | |
Options Outstanding, Weighted Average Fair Value, Ending balance | $ 0.08 | $ 0.08 |
Options Exercisable, Beginning balance | 16,317,821 | |
Options Exercisable, Ending balance | 14,895,122 | 16,317,821 |
Options Exercisable, Weighted Average Exercise Price, Beginning balance | $ 0.08 | |
Options Exercisable, Weighted Average Exercise Price, Ending balance | 0.09 | $ 0.08 |
Options Exercisable Weighted Average Fair Value, Beginning balance | 0.08 | |
Options Exercisable Weighted Average Fair Value, Ending balance | $ 0.08 | $ 0.08 |
Options [Member] | ||
Summary of stock options activity | ||
Options Outstanding, Beginning balance | 18,534,821 | |
Options Outstanding, Cancelled/Expired | (1,510,000) | |
Options Outstanding, Exercised | (695,000) | |
Options Outstanding, Granted | 600,000 | 2,200,000 |
Options Outstanding, Ending balance | 16,929,821 | 18,534,821 |
Options Outstanding, Weighted Average Exercise Price, Beginning balance | $ 0.08 | |
Options Outstanding, Weighted Average Exercise Price, Cancelled/Expired | 0.05 | |
Options Outstanding, Weighted Average Exercise Price, Exercised | 0.05 | |
Options Outstanding, Weighted Average Exercise Price, Granted | 0.06 | |
Options Outstanding, Weighted Average Exercise Price, Ending balance | 0.09 | $ 0.08 |
Options Outstanding, Weighted Average Fair Value, Beginning balance | 0.08 | |
Options Outstanding, Weighted Average Fair Value, Cancelled/Expired | 0.05 | |
Options Outstanding, Weighted Average Fair Value, Exercised | 0.05 | |
Options Outstanding, Weighted average fair value of option, Granted | 0.06 | |
Options Outstanding, Weighted Average Fair Value, Ending balance | $ 0.08 | $ 0.08 |
Options Outstanding, Weighted Average Remaining Contractual Life, Beginning balance | 3 years 11 months 1 day | |
Options Outstanding, Weighted Average Remaining Contractual Life, Ending balance | 3 years 6 months 22 days | |
Options Exercisable, Beginning balance | 16,317,821 | |
Options Exercisable, Ending balance | 14,895,122 | 16,317,821 |
Options Exercisable, Weighted Average Exercise Price, Beginning balance | $ 0.08 | |
Options Exercisable, Weighted Average Exercise Price, Ending balance | 0.09 | $ 0.08 |
Options Exercisable Weighted Average Fair Value, Beginning balance | 0.08 | |
Options Exercisable Weighted Average Fair Value, Ending balance | $ 0.08 | $ 0.08 |
Options Exercisable, Weighted Average Remaining Contractual Life, Beginning balance | 3 years 1 month 17 days | |
Options Exercisable, Weighted Average Remaining Contractual Life, Ending balance | 2 years 10 months 6 days |
Stock Plans and Stock-Based C59
Stock Plans and Stock-Based Compensation (Details Textual) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Stock Plans and Stock-Based Compensation (Textual) | ||
Options vested | 782,301 | |
Weighted average exercise price, Vested | $ 0.09 | |
Weighted average fair value of option | 0.09 | |
Common stock fair value | $ 0.07 | |
Stock option outstanding | 16,929,821 | 18,534,821 |
Stock option shares exercisable | 14,895,122 | 16,317,821 |
Option outstanding, Aggregate intrinsic value | $ 151,900 | |
Option exercisable, Aggregate intrinsic value | 146,900 | |
Option exercised, Aggregate intrinsic value | 14,250,000 | |
Stock options exercise price | $ 0.08 | |
Total unrecognized compensation cost related to nonvested share-based compensation arrangements | 79,010 | |
Total compensation expense recognized related to stock option awards | $ 113,167 | $ 42,574 |
Unrecognized compensation cost is expected to be recognized period | 3 years | |
Douglas J Andrea [Member] | ||
Stock Plans and Stock-Based Compensation (Textual) | ||
Stock options grants | 600,000 | 2,200,000 |
Stock options vesting period | 3 years | 3 years |
Weighted average fair value of option granted | $ 0.06 | $ 0.08 |
Weighted average exercise price | $ 0.06 | $ 0.08 |
Weighted average expected life | 8 years | 8 years |
Options fair value on the date of grant | $ 38,000 | $ 185,000 |
2,016 | ||
Stock Plans and Stock-Based Compensation (Textual) | ||
Total unrecognized compensation cost related to nonvested share-based compensation arrangements | 56,404 | |
2,017 | ||
Stock Plans and Stock-Based Compensation (Textual) | ||
Total unrecognized compensation cost related to nonvested share-based compensation arrangements | 20,660 | |
2,018 | ||
Stock Plans and Stock-Based Compensation (Textual) | ||
Total unrecognized compensation cost related to nonvested share-based compensation arrangements | $ 1,946 | |
1998 Stock Option Plan [Member] | ||
Stock Plans and Stock-Based Compensation (Textual) | ||
Permissible limit of common stock to be acquired by the holders of awards | 6,375,000 | |
Stock options vesting period | 4 years | |
Stock options contractual term | 10 years | |
2006 Equity Compensation Plan [Member] | ||
Stock Plans and Stock-Based Compensation (Textual) | ||
Permissible limit of common stock to be acquired by the holders of awards | 18,000,000 | |
Shares available for further issuance | 1,677,436 | |
Stock options vesting period | 4 years | |
Stock options contractual term | 10 years | |
General, administrative and selling expenses [Member] | ||
Stock Plans and Stock-Based Compensation (Textual) | ||
Total compensation expense recognized related to stock option awards | $ 91,774 | 36,382 |
Research and development expenses [Member] | ||
Stock Plans and Stock-Based Compensation (Textual) | ||
Total compensation expense recognized related to stock option awards | $ 21,393 | $ 6,192 |
Segment Information (Details)
Segment Information (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Summary of consolidated financial information for Andrea's segments | ||
Net product revenues | $ 388,298 | $ 326,647 |
License revenues | 12,846,584 | 896,915 |
Income (loss) from operations | 2,687,213 | (2,313,630) |
Depreciation and amortization | 85,660 | 115,824 |
Purchases of property and equipment | 18,443 | 4,952 |
Purchases of patents and trademarks | 28,868 | 92,093 |
Assets | 8,710,602 | 4,990,190 |
Total long lived assets | $ 432,319 | $ 468,129 |
Patent Monetization [Member] | ||
Summary of consolidated financial information for Andrea's segments | ||
Net product revenues | ||
License revenues | $ 12,104,958 | $ 4,557 |
Income (loss) from operations | 3,595,645 | 2,463,461 |
Depreciation and amortization | $ 28,835 | 22,023 |
Purchases of property and equipment | ||
Purchases of patents and trademarks | $ 14,434 | 46,047 |
Assets | 2,278,587 | 187,078 |
Total long lived assets | 172,677 | 187,078 |
Andrea DSP Microphone and Audio Software Products [Member] | ||
Summary of consolidated financial information for Andrea's segments | ||
Net product revenues | 388,298 | 326,647 |
License revenues | 741,626 | 892,358 |
Income (loss) from operations | (908,432) | (149,831) |
Depreciation and amortization | 54,286 | 40,597 |
Purchases of property and equipment | 18,443 | |
Purchases of patents and trademarks | 14,434 | 46,046 |
Assets | 6,282,269 | 4,384,542 |
Total long lived assets | $ 259,642 | $ 281,051 |
Segment Information (Details 1)
Segment Information (Details 1) - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | ||
Summary of net revenues and accounts receivable by geographic area | |||
Total Revenues | $ 13,234,882 | $ 1,223,562 | |
Accounts receivable | 1,902,388 | 238,814 | |
United States [Member] | |||
Summary of net revenues and accounts receivable by geographic area | |||
Total Revenues | 2,498,721 | 191,103 | |
Accounts receivable | 1,788,500 | 40,546 | |
Foreign [Member] | |||
Summary of net revenues and accounts receivable by geographic area | |||
Total Revenues | [1] | 10,736,161 | 1,032,459 |
Accounts receivable | $ 113,888 | $ 198,268 | |
[1] | Total revenue from the People's Republic of China and Singapore represented 81% and 84% of total revenues for the year ended December 31, 2015 and 2014, respectively. |
Segment Information (Details Te
Segment Information (Details Textual) - Segment | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Segment Information (Textual) | ||
Number of operating segments | 2 | |
Peoples Republic of China and Singapore [Member] | ||
Segment Information (Textual) | ||
Net revenues from foreign country as a percentage of total net revenues | 81.00% | 84.00% |
Sale of Andrea Anti-Noise Pro63
Sale of Andrea Anti-Noise Products Division (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Operations | ||
Income (loss) from discontinued operations | $ 576,476 | $ (364,553) |
Andrea Anti-Noise Products [Member] | ||
Operations | ||
Net Revenues | 662,135 | 1,563,014 |
Cost of Sales | 596,565 | 951,530 |
Gross margin | 65,570 | 611,484 |
Research and Development Expenses | 18,746 | 240,382 |
General, administrative and selling expenses | 349,960 | $ 735,655 |
Gain on sale of Anti-Noise Products Division | (879,612) | |
Income (loss) from discontinued operations | 576,476 | $ (364,553) |
Assets | ||
Accounts Receivable, net | 27,303 | 56,411 |
Inventories, net | $ 122,443 | 339,232 |
Property and equipment, net | 22,927 | |
Assets from discontinued operations | $ 149,746 | 418,570 |
Liabilities | ||
Trade accounts payable | 107,228 | |
Other current liabilities | $ 40,075 | 44,066 |
Liabilities from discontinued operations | $ 40,075 | $ 151,294 |
Sale of Andrea Anti-Noise Pro64
Sale of Andrea Anti-Noise Products Division (Details Textual) | Apr. 02, 2015USD ($)Installments | Dec. 31, 2015 | Dec. 31, 2014 |
Sale of Andrea Anti-Noise Products Division (Textual) | |||
Interest rate | 3.00% | 3.00% | |
Andrea Anti-Noise Products [Member] | |||
Sale of Andrea Anti-Noise Products Division (Textual) | |||
Sale of property and equipment and intangible assets | $ 900,000 | ||
Additional amount receive | 100,000 | ||
Gain on sale of property plant and equipment | 880,000 | ||
Cash payment | 300,000 | ||
Note receivable | 600,000 | ||
Payable under eighteen installment | $ 34,757 | ||
Number of installment | Installments | 18 | ||
Interest rate | 3.25% |