| Summary of Significant Accounting Policies | (2) Summary of Significant Accounting
Policies (a) Cash and Cash Equivalents The Company considers
securities purchased with original maturities of three months or less to be cash equivalents. Cash equivalents consist of short-term
investments in money market accounts at December 31, 2016 and 2015. Cash and cash equivalents
are maintained at financial institutions and, at times, balances may exceed federally insured limits. We have never experienced
any losses related to these balances. FDIC insurance coverage is $250,000 per depositor at each financial institution, and our
non-interest bearing cash balances may again exceed federally insured limits. Amounts on deposit in excess of federally insured
limits at December 31, 2016 and 2015 is approximately $1.0 million and $5.0 million, respectively. (b) Short-term/Long-term Investments The Company
classifies investments in marketable securities as trading, available-for-sale or held-to-maturity at the time of purchase and
periodically re-evaluates such classifications. Trading securities are carried at fair value, with unrealized holding gains and
losses included in earnings. Held-to-maturity securities are recorded at cost and are adjusted for the amortization or accretion
of premiums or discounts over the life of the related security. Unrealized holding gains and losses on available-for-sale securities
are excluded from earnings and are reported as a separate component of accumulated other comprehensive income (loss) until realized.
In determining realized gains and losses, the cost of securities sold is based on the specific identification method. Interest
and dividends on the investments are accrued at the balance sheet date. At December 31, 2016 and 2015 all investments were classified
as held to maturity and consisted of the following:
December 31, 2016 December 31, 2015
Certificates of Deposit Maturity Value of Held to Maturity Value of Held to Maturity
Investment Date Investments (based on cost) Investments (based on cost)
$ 1,523,333 2/23/2017 $ 1,523,333 $ -
$ 1,503,525 8/27/2016 $ - $ 1,513,784
$ 1,523,333 $ 1,513,784 (c) Royalties Receivable Royalties receivable
from licensees are recorded at the amounts specified within the license agreements when the collectability of the receivable is
reasonably assured. The receivables do not bear interest. The allowance for doubtful accounts is the Company’s best estimate
of the amount of probable credit losses in the Company’s existing royalties receivable. The Company determines the allowance
based on historical write off experience. The Company reviews its allowance for doubtful accounts periodically. Past due accounts
are reviewed individually for collectability. Account balances are charged off against the allowance after all means of collection
have been exhausted and the potential for recovery is considered remote. As of December 31, 2016, four companies accounted for
28%, 21%, 13% and 10%, respectively, of the Company’s outstanding receivables. As of December 31, 2015, four companies accounted
for 21%, 15%, 12% and 11%, respectively, of the Company’s outstanding receivables. (d) Fixed Assets Fixed assets are
carried at cost. Depreciation and amortization are computed using the straight-line method over the estimated useful lives of the
assets. (e) Revenue Recognition/Fee Income The Company has
entered into a number of license agreements covering its light control technology. The Company receives minimum annual royalties
under certain license agreements and records fee income on a ratable basis each quarter. In instances when sales of licensed products
by its licensees exceed minimum annual royalties, the Company recognizes fee income as the amounts have been earned. Certain of
the fees are accrued by, or paid to, the Company in advance of the period in which they are earned resulting in deferred revenue.
Such excess amounts are recorded as deferred revenue and are typically recognized as fee income by year end. As of December 31,
2016 and December 31, 2015, there was no material impact on revenue as a result of recognizing deferred revenue in the consolidated
statement of operations. Fee income represents
amounts earned by the Company under various license and other agreements (note 7) relating to technology developed by the Company.
During 2016 three licensees accounted for 30%, 27%, and 15%, respectively of fee income recognized for the year. During 2015, three
licensees accounted for 33%, 15%, and 9%, respectively, of fee income recognized for the year. In addition, during the year ended
December 31, 2015, approximately 14% of revenues related to fees generated by a large architectural glass project. During 2014,
five licensees accounted for 36%, 11%, 9%, 9%, and 5%, respectively of fee income recognized during the year. (f) Basic and Diluted Loss Per Common
Share Basic earnings
(loss) per share excludes any dilution. It is based upon the weighted average number of common shares outstanding during the period.
Dilutive earnings (loss) per share reflects the potential dilution that would occur if securities or other contracts to issue common
stock were exercised or converted into common stock. The Company’s dilutive loss per share equals basic loss per share for
each of the years in the three-year period ended December 31, 2016 because all common stock equivalents ( i.e., (g) Research and Development Costs Research and development
costs are charged to expense as incurred. (h) Patent Costs The Company expenses
costs relating to the development or acquisition of patents due to the uncertainty of the recoverability of these items. (i) Use of Estimates The preparation
of the Company’s consolidated financial statements requires management of the Company to make a number of estimates and assumptions
relating to the reported amount of assets and liabilities and the disclosure of contingent assets and liabilities at the date of
the consolidated financial statements and the reported amounts of revenues and expenses during this period. Actual results could
differ from those estimates. (j) Income Taxes Income taxes are
accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective
tax bases and operating loss and tax credit carry-forwards. Deferred tax assets and liabilities are measured using enacted tax
rates expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized
in income in the period that includes the enactment date. In accordance with
ASC Topic 740 (FIN 48), we recognize tax benefits only for tax positions that are more likely than not to be sustained upon examination
by tax authorities. The amount recognized is measured as the largest amount of benefit that is greater than 50 percent likely to
be realized upon ultimate settlement. Unrecognized tax benefits are tax benefits claimed in tax returns that do not meet these
recognition and measurement standards. We classify accrued interest and penalties related to any unrecognized tax benefits in our
income tax provision. At December 31, 2016 and 2015, we do not have accrued interest and penalties related to any unrecognized
tax benefits. We do not believe we have any uncertain tax positions as of December 31, 2016 and 2015. The tax years subject
to examination by major tax jurisdictions include the years 2012 and forward by the U.S. Internal Revenue Service and certain states.
The Company is not currently being audited by any tax jurisdiction. (k) Equity-Based Compensation We recognize all
stock-based compensation as an expense in the financial statements and such costs are measured at the fair value of the award at
the date of grant. In addition to reflecting compensation expense for new share-based payment awards, expense is also recognized
to reflect the remaining vesting period of awards that had been granted in prior periods. Tax benefits related to stock option
exercises are reflected as financing cash inflows instead of operating cash inflows. The exercise price
for stock options granted are generally set at the average for the high and low trading prices of the Company’s common stock
on the trading date immediately prior to the date of grant, and the related number of shares granted are fixed at the date of grant. In order to determine
the fair value of stock options on the date of grant, the Company uses the Black-Scholes option-pricing model. Inherent in this
model are assumptions related to expected stock-price volatility, option term, risk-free interest rate and dividend yield. While
the risk-free interest rate and dividend yield are less subjective assumptions that are based on factual data derived from public
sources, the expected stock-price volatility and option term assumptions require a greater level of judgment. In connection with
the employee stock options and restricted stock grants, the Company charged $67,531, $715,009, and $1,010,489 to operations during
the years ended December 31, 2016, 2015, and 2014, respectively. As of December 31, 2016 these awards were fully vested. In lieu
of higher cash compensation, the Company has granted warrants and non-employee options to consultants. These warrants and non-employee
options vested ratably over various terms ranging from 24 to 59 months. Non-employee options covering 24,000 shares were granted
to consultants during 2014. These non-employee options are valued at fair value at the time that the related services are provided
using the Black Scholes method and marked to market quarterly using the Black Scholes method. The Company incurred a charge to
operations of $10,007 and $32,428, for 2015 and 2014, respectively in connection with these warrants and non-employee options.
There were no such charges for the year ended December 31, 2016. (l) Restricted Stock Compensation cost
for restricted stock is measured using the quoted market price of the Company’s common stock at the date the common stock
is granted. The compensation cost is recognized over the period between the issue date and the date any restrictions lapse. Restricted
stock is included in total common shares outstanding upon the lapse of any restrictions. (m) Impairment of Long-Lived Assets The Company reviews
long-lived assets to determine whether an event or change in circumstances indicates the carrying value of the asset may not be
recoverable. The Company bases its evaluation on such impairment indicators as the nature of the assets, the future economic benefit
of the assets and any historical or future profitability measurements, as well as other external market conditions or factors that
may be present. (n) Fair Value Measurements The fair value
of a financial instrument is the amount at which the instrument could be exchanged in a current transaction between willing parties.
The carrying amounts of all financial instruments classified as a current asset or current liability are deemed to approximate
fair value because of the short maturity of those instruments. Accounting Standards
Codification (“ASC”) Topic 820 “Fair Value Measurements and Disclosures” (“ASC Topic 820”)
establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosures about fair
value measurements. ASC Topic 820 applies other previously issued accounting pronouncements that require or permit fair value measurements
but does not require any new fair value measurements. ASC Topic 820 defines
fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between
market participants at the measurement date. ASC Topic 820 establishes a fair value hierarchy that distinguishes between (1) market
participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity’s
own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable
inputs). We value financial
instruments using a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include:
Level 1, defined as observable inputs such as quoted prices in active markets for identical assets or liabilities; Level 2, defined
as inputs other than quoted prices for similar assets or liabilities in active markets that are either directly or indirectly observable;
and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop
its own assumptions. As of December
31, 2016 and 2015, the fair value of the Company's financial assets and liabilities including cash and cash equivalents, royalty
receivables and accounts payable approximated carrying value due to the short maturity of these instruments. (o) Recent Accounting Pronouncements New Accounting Standards In May 2014, the
FASB and the International Accounting Standards Board (IASB) jointly issued ASU No. 2014-09, Revenue from Contracts with Customers
(Topic 606), which clarifies the principles for recognizing revenue and develops a common revenue standard for GAAP and International
Financial Reporting Standards (IFRS). The core principle of the guidance is that an entity should recognize revenue to depict the
transfer of promised 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 and services. In July 2015, the FASB approved a deferral of the ASU effective date from
annual and interim periods beginning after December 15, 2016 to annual and interim periods beginning after December 15, 2017. The
Company is in the initial stages of evaluating the effect of the standard on the Company’s financial statements and continue
to evaluate the available transition methods. In November 2015,
the FASB issued Accounting Standard Update (ASU) No. 2015-17, Income Taxes (Topic 740), Balance Sheet Classification of Deferred
Taxes. The amendments under the new guidance require that deferred tax liabilities and assets be classified as noncurrent in a
classified statement of financial position. The guidance is effective for financial statements issued for annual periods beginning
after December 15, 2016, and interim periods within those annual periods. In January 2016,
the FASB issued ASU 2016-01, “Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial
Assets and Financial Liabilities,” which amends the guidance in U.S. GAAP on the classification and measurement of financial
instruments. Changes to the current guidance primarily affects the accounting for equity investments, financial liabilities under
the fair value option, and the presentation and disclosure requirements for financial instruments. In addition, the ASU clarifies
guidance related to the valuation allowance assessment when recognizing deferred tax assets resulting from unrealized losses on
available-for-sale debt securities. The new standard is effective for fiscal years and interim periods beginning after December
15, 2017, and upon adoption, an entity should apply the amendments by means of a cumulative-effect adjustment to the balance sheet
at the beginning of the first reporting period in which the guidance is effective. Early adoption is not permitted except for the
provision to record fair value changes for financial liabilities under the fair value option resulting from instrument-specific
credit risk in other comprehensive income. The Company does not expect the application of this guidance to have a significant impact
on its financial position or results of operations. In
February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Updated (“ASU”)
No. 2016-02, Leases. ASU 2016-02 requires lessees to apply a modified retrospective transition approach for leases existing at,
or entered into after, the beginning of the earliest comparative period presented in the financial statements. Early adoption of
the new guidance is permitted. While not yet in a position to assess the full impact of this application of the new standard, the
Company expects that the impact of recording the lease liabilities and the corresponding right to use assets will have an impact
on its total asset and liabilities with a minimal impact on equity. In March 2016,
the FASB issued ASU 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting,
which will change certain aspects of accounting for share-based payments to employees. ASU 2016-09 is effective for fiscal years
(and interim reporting periods within those years) beginning after December 15, 2016. The Company does not expect the application
of this guidance to have a significant impact on its financial position or results of operations. In June 2016 the
FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments"
(ASU 2016-13), that requires entities to use a new impairment model based on expected losses. Under this new model an entity would
recognize an impairment allowance equal to its current estimate of credit losses on financial assets measured at amortized cost.
ASU 2016-13 is effective for us beginning January 1, 2020 with early adoption permitted January 1, 2019. We are currently evaluating
new processes to calculate credit losses in accordance with ASU 2016-13 that, once completed, will determine the impact on our
consolidated financial statements which at the date of adoption will increase the allowance for credit losses with a resulting
negative adjustment to retained earnings. In August 2016,
the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-15, Statement
of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, which addresses eight specific cash flow
issues with the objective of reducing diversity in how certain cash receipts and cash payments are presented and classified in
the statement of cash flows. ASU 2016-15 is effective for public business entities for fiscal years beginning after December 15,
2017, and interim periods within those fiscal years. The Company is currently evaluating the impact of the provisions of ASU 2016-15. |
