Cover
Cover - USD ($) | 12 Months Ended | ||
Dec. 31, 2021 | Mar. 09, 2022 | Jun. 30, 2021 | |
Cover [Abstract] | |||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Annual Report | true | ||
Document Transition Report | false | ||
Document Period End Date | Dec. 31, 2021 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2021 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity File Number | 000-14893 | ||
Entity Registrant Name | RESEARCH FRONTIERS INCORPORATED | ||
Entity Central Index Key | 0000793524 | ||
Entity Tax Identification Number | 11-2103466 | ||
Entity Incorporation, State or Country Code | DE | ||
Entity Address, Address Line One | 240 CROSSWAYS PARK DRIVE | ||
Entity Address, City or Town | WOODBURY | ||
Entity Address, State or Province | NY | ||
Entity Address, Postal Zip Code | 11797-2033 | ||
City Area Code | 516 | ||
Local Phone Number | 364-1902 | ||
Title of 12(b) Security | Common Stock, $0.0001 Par Value | ||
Trading Symbol | REFR | ||
Security Exchange Name | NASDAQ | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 65,419,119 | ||
Entity Common Stock, Shares Outstanding | 31,650,396 | ||
Auditor Firm ID | 596 | ||
Auditor Name | CohnReznick LLP | ||
Auditor Location | Melville, |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2021 | Dec. 31, 2020 |
Current assets: | ||
Cash and cash equivalents | $ 269,964 | $ 4,772,705 |
Marketable securities | 2,755,111 | |
Royalties receivable, net of reserves of $1,016,678 in 2021 and $972,202 in 2020 | 831,636 | 598,292 |
Prepaid expenses and other current assets | 92,931 | 56,512 |
Total current assets | 3,949,642 | 5,427,509 |
Fixed assets, net | 92,954 | 121,772 |
Operating lease ROU assets | 469,824 | 616,442 |
Deposits and other assets | 33,567 | 33,567 |
Total assets | 4,545,987 | 6,199,290 |
Current liabilities: | ||
Current portion of operating lease liability | 182,091 | 166,377 |
Accounts payable | 66,460 | 33,410 |
Accrued expenses and other | 49,385 | 26,279 |
Total current liabilities | 297,936 | 226,066 |
Operating lease liability, net of current portion | 464,128 | 646,219 |
Total liabilities | 762,064 | 872,285 |
Shareholders’ equity: | ||
Common stock, par value $0.0001 per share; authorized 100,000,000 shares, issued and outstanding 31,650,396 in 2021 and 31,575,786 in 2020 | 3,165 | 3,158 |
Additional paid-in capital | 123,467,886 | 123,164,623 |
Accumulated deficit | (119,687,128) | (117,840,776) |
Total shareholders’ equity | 3,783,923 | 5,327,005 |
Total liabilities and shareholders’ equity | $ 4,545,987 | $ 6,199,290 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) | Dec. 31, 2021 | Dec. 31, 2020 |
Statement of Financial Position [Abstract] | ||
Royalties receivables, reserves | $ 1,016,678 | $ 972,202 |
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 31,650,396 | 31,575,786 |
Common stock, shares outstanding | 31,650,396 | 31,575,786 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Income Statement [Abstract] | ||
Fee income | $ 1,263,034 | $ 828,450 |
Operating expenses | 2,521,849 | 2,777,535 |
Research and development | 580,000 | 628,304 |
Total expenses | 3,101,849 | 3,405,839 |
Operating loss | (1,838,815) | (2,577,389) |
PPP loan forgiveness | 202,052 | |
Net investment income (loss) | (7,537) | 34,473 |
Net loss | $ (1,846,352) | $ (2,340,864) |
Basic and diluted net loss per common share | $ (0.06) | $ (0.07) |
Weighted average number of common shares outstanding | 31,646,520 | 31,487,785 |
Consolidated Statements of Shar
Consolidated Statements of Shareholders' Equity - USD ($) | Common Stock [Member] | Additional Paid-in Capital [Member] | Retained Earnings [Member] | Total |
Beginning balance, value at Dec. 31, 2019 | $ 3,125 | $ 122,552,895 | $ (115,499,912) | $ 7,056,108 |
Beginning balance, shares at Dec. 31, 2019 | 31,254,262 | |||
Exercise of options and warrants | $ 33 | 284,174 | 284,207 | |
Exercise of options and warrants, shares | 321,524 | |||
Share-based compensation | 327,554 | 327,554 | ||
Net loss | (2,340,864) | (2,340,864) | ||
Ending balance, value at Dec. 31, 2020 | $ 3,158 | 123,164,623 | (117,840,776) | 5,327,005 |
Ending balance, shares at Dec. 31, 2020 | 31,575,786 | |||
Exercise of options | $ 7 | 86,255 | 86,262 | |
Exercise of options, shares | 74,610 | |||
Share-based compensation | 217,008 | 217,008 | ||
Net loss | (1,846,352) | (1,846,352) | ||
Ending balance, value at Dec. 31, 2021 | $ 3,165 | $ 123,467,886 | $ (119,687,128) | $ 3,783,923 |
Ending balance, shares at Dec. 31, 2021 | 31,650,396 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Cash flows from operating activities: | ||
Net loss | $ (1,846,352) | $ (2,340,864) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 10,136 | 67,082 |
Unrealized loss on marketable securities | 28,522 | |
Share-based compensation | 217,008 | 327,554 |
Bad debts | 44,476 | 81,367 |
Other income - PPP loan forgiveness | (202,052) | |
Change in assets and liabilities: | ||
Royalty receivables | (277,819) | (23,597) |
Prepaid expenses and other current assets | (36,420) | 2,323 |
Accounts payable and accrued expenses | 56,156 | (156,770) |
Deferred revenue | (7,734) | |
Net cash used in operating activities | (1,804,293) | (2,252,691) |
Cash flows from investing activities: | ||
Purchases of fixed assets | (1,077) | (56,536) |
Purchases of marketable securities | (3,433,633) | |
Sales of marketable securities | 650,000 | |
Proceeds from sale of fixed asset | 3,713 | |
Net cash used in investing activities | (2,784,710) | (52,823) |
Cash flows from financing activities: | ||
Net proceeds from exercise of options and warrants | 86,262 | 284,207 |
Proceeds from PPP loan | 202,052 | |
Net cash provided by financing activities | 86,262 | 486,259 |
Net decrease in cash and cash equivalents | (4,502,741) | (1,819,255) |
Cash and cash equivalents at beginning of year | 4,772,705 | 6,591,960 |
Cash and cash equivalents at end of year | $ 269,964 | $ 4,772,705 |
Business and Basis for Presenta
Business and Basis for Presentation | 12 Months Ended |
Dec. 31, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Business and Basis for Presentation | (1) Business and Basis for Presentation Research Frontiers Incorporated (“Research Frontiers” or the “Company”) operates in a single business segment which is engaged in the development and marketing of technology and devices to control the flow of light. Such devices, often referred to as “light valves” or suspended particle devices (“SPDs”), use colloidal particles that are either incorporated within a liquid suspension or a film, which is usually enclosed between two sheets of glass or plastic having transparent, electrically conductive coatings on the facing surfaces thereof. At least one of the two sheets is transparent. SPD technology, made possible by a flexible light-control film invented by Research Frontiers, allows the user to instantly and precisely control the shading of glass/plastic manually or automatically. SPD technology has numerous product applications, including SPD-Smart™ windows, sunshades, skylights and interior partitions for homes and buildings; automotive windows, sunroofs, sun visors, sunshades, rear-view mirrors, instrument panels and navigation systems; aircraft windows; museum display panels; eyewear products; and flat panel displays for electronic products. SPD-Smart light control film is now being developed for, or used in, architectural, automotive, marine, aerospace and appliance applications. The Company has primarily utilized its cash, cash equivalents, and investments generated from sales of our common stock, proceeds from the exercise of options and warrants, and royalty fees collected to fund its research and development of SPD light valves, for marketing initiatives, and for other working capital purposes. The Company’s working capital and capital requirements depend upon numerous factors, including the results of research and development activities, competitive and technological developments, the timing and cost of patent filings, and the development of new licensees and changes in the Company’s relationships with its existing licensees. The degree of dependence of the Company’s working capital requirements on each of the foregoing factors cannot be quantified; increased research and development activities and related costs would increase such requirements; the addition of new licensees may provide additional working capital or working capital requirements, and changes in relationships with existing licensees would have a favorable or negative impact depending upon the nature of such changes. We have incurred recurring losses since inception and expect to continue to incur losses as a result of costs and expenses related to our research and continued development of our SPD technology and our corporate general and administrative expenses. Our limited capital resources and operations to date have been substantially funded through sales of our common stock, exercise of options and warrants and royalty fees collected. As of December 31, 2021, we had working capital of approximately $ 3.7 3.0 3.8 119.7 385,000 In the event that we are unable to generate sufficient cash from our operating activities or raise additional funds, we may be required to delay, reduce or severely curtail our operations or otherwise impede our on-going business efforts, which could have a material adverse effect on our business, operating results, financial condition and long-term prospects. The Company may seek to obtain additional funding through future equity issuances. There can be no assurance as to the availability or terms upon which such financing and capital might be available. The eventual success of the Company and generation of positive cash flow will be dependent upon the commercialization of products using the Company’s technology by the Company’s licensees and payments of continuing royalties on account thereof. To date, the Company has not generated sufficient revenue from its licensees to fund its operations. Recent Global Events: On March 11, 2020, the World Health Organization declared the novel strain of coronavirus (“COVID-19”) a global pandemic and recommended containment and mitigation measures worldwide. As a result, the Company expects operations at its facility to continue to be affected in some capacity, as the COVID-19 virus continues to proliferate and the federal, state and local governments under which we operate continue to adopt new rules. The Company has put in place enhanced procedures, such as restricting international and domestic travel, adopting a variety of steps designed to ensure social distancing in our facilities, including working remotely where available, and increasing our cleaning and sanitizing procedures in our facilities, in an effort to protect its employees and communities. Revenues were negatively impacted in 2020 and 2021 due to delays in manufacture of products using our technology. Most of the products using our technology are manufactured by licensees overseas in Europe and Asia who have been similarly affected by the pandemic. The disruption caused by public health crises, such as COVID-19, could result in lower levels of sale activity for products using our technology resulting in lower level of royalties owed to us from the sale of these products. The duration of the potential business disruptions and related financial impact cannot be reasonably estimated at this time, but could materially adversely affect our business, financial condition, results of operations, and cash flows. Net of amounts previously reserved which were fully written off in 2020, the Company has increased its allowance for uncollectible royalty receivables in 2020 until the collectability from certain licensees can be better ascertained in the regions affected by COVID-19. In connection with the COVID-19 crisis, Congress passed, and the president signed, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) which, among other things, provides relief for businesses impacted by the pandemic. The Company applied for and received $ 202,052 in proceeds from the Paycheck Protection Program (“PPP Loan”) made available under the CARES Act. The PPP Loan is intended to offer businesses hurt by the COVID-19 pandemic economic assistance with the potential for the principal to be forgiven based on certain expenses incurred during the first 24 weeks after the issuance of the PPP Loan. The Company recorded $ 202,052 as other income for the year ended December 31, 2020 representing the PPP Loan which was expected to be forgiven in 2021. Final PPP Loan forgiveness was received in 2021. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2021 | |
Accounting Policies [Abstract] | |
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, 2021 and 2020. 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 0 4.5 (b) Marketable Securities 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 classification. 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 of 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 the securities sold is based on the specific identification method. Interest and dividends on the investments are accrued at the balance sheet date. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., the “exit price”) in an orderly transaction between market participants at the measurement date. Fair value measurements are broken down into three levels based on the reliability of inputs as follows: Level 1 inputs are quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. An active market for the asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis. Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar assets or liabilities in active markets, inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates and yield curves observable at commonly quoted intervals or current market) and contractual prices for the underlying financial instrument, as well as other relevant economic measures. Level 3 inputs are unobservable inputs for the asset or liability. Unobservable inputs are used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at the measurement date. At December 31, 2021 all investments are Level 1 and were classified as trading and consisted of the following: Schedule of Unrealized Loss on Investments December 31, 2021 Value of trading Investment Investments Mutual Funds Putnam Short Duration Bond $ 1,972,736 Putnam Ultra Short Duration Income 782,375 $ 2,755,111 Unrealized loss $ 28,522 (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 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 as well as the current status of the Company’s customers. 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, 2021, two companies accounted for 14 % and 11 % of the Company’s outstanding receivables. As of December 31, 2020, three companies accounted for 16 %, 11 % and 10 %, of the Company’s outstanding receivables. (d) Fixed Assets Fixed assets are carried at cost less accumulated depreciation and amortization. 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 recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers. The standard provides a single comprehensive revenue recognition model for all contracts with customers and supersedes existing revenue recognition guidance. The revenue standard contains principles that an entity will apply to determine the measurement of revenue and timing of when it is recognized. The underlying principle is that an entity will recognize revenue to depict the transfer of goods or services to customers at an amount that the entity expects to be entitled to in exchange for those goods or services. ASC 606 follows a five-step approach to determining revenue recognition including: 1) Identification of the contract; 2) Identification of the performance obligations; 3) Determination of the transaction price; 4) Allocation of the transaction price and 5) Recognition of revenue. The Company determined that its license agreements provide for three performance obligations which include: (i) the Grant of Use to its Patent Portfolio (“Grant of Use”), (ii) Stand-Ready Technical Support (“Technical Support”) including the transfer of trade secrets and other know-how, production of materials, scale-up support, analytical testing, etc., and (iii) access to new Intellectual Property (“IP”) that may be developed some time during the course of the contract period (“New Improvements”). Given the nature of IP development, such New Improvements are on an unspecified basis and can occur and be made available to licensees at any time during the contract period. When a contract includes more than one performance obligation, the Company needs to allocate the total consideration to each performance obligation based on its relative standalone selling price or estimate the standalone selling price if it is not observable. A standalone selling price is not available for our performance obligations since we do not sell any of the services separately and there is no competitor pricing that is available. As a consequence, the best method for determining standalone selling price of our Grant of Use performance obligation is through a comparison of the average royalty rate for comparable license agreements as compared to our license agreements. Comparable license agreements must consider several factors including: (i) the materials that are being licensed, (ii) the market application for the licensed materials, and (iii) the financial terms in the license agreements that can increase or decrease the risk/reward nature of the agreement. Based on the royalty rate comparison referred to above, any pricing above and beyond the average royalty rate would relate to the Technical Support and New Improvements performance obligations. The Company focuses a significant portion of its time and resources to provide the Technical Support and New Improvements services to its licensees, which further supports the conclusions reached using the royalty rate analysis. The Technical Support and New Improvements performance obligations are co-terminus over the term of the license agreement. For purposes of determining the transaction price, and recognizing revenue, the Company combined the Technical Support and New Improvements performance obligations because they have the same pattern of transfer and the same term. We maintain a staff of scientists and other professionals whose primary job responsibilities throughout the year are: (i) being available to respond to Technical Support needs of our licensees, and (ii) developing improvements to our technology which are offered to our licensees as New Improvements. Since the costs incurred to satisfy the Technical Support and New Improvements performance obligations are incurred evenly throughout the year, the value of the Technical Support and New Improvements services are recognized throughout the initial contract period as these performance obligations are satisfied. If the agreement is not terminated at the end of the initial contract period, it will renew on the same terms as the initial contract for a one-year period. Consequently, any fees or minimum annual royalty obligations relating to this renewal contract will be allocated similarly to the initial contract over the additional one-year period. We recognize revenue when or as the performance obligations in the contract are satisfied. For performance obligations that are fulfilled at a point in time, revenue is recognized at the fulfillment of the performance obligation. Since the IP is determined to be a functional license, the value of the Grant of Use is recognized in the first period of the contract term in which the license agreement is in force. The value of the Technical Support and New Improvements obligations is allocated throughout the contract period based on the satisfaction of its performance obligations. If the agreement is not terminated at the end of the contract period, it will renew on the same terms as the original agreement for a one-year period. Consequently, any fees or minimum annual royalties (“MAR”) relating to this renewal contract will be allocated similarly over that additional year. The Company’s license agreements have a variable royalty fee structure (meaning that royalties are a fixed percentage of sales that vary from period to period) and frequently include a minimum annual royalty commitment. In instances when sales of licensed products by its licensees exceed the MAR, the Company recognizes fee income as the amounts have been earned. Typically, the royalty rate for such sales is 10 15 Because of the immediate recognition of the Grant of Use performance obligation: (i) the first period of the contract term will generally have a higher percent allocation of the transaction price under ASC 606 and (ii) the remaining periods will have less of the transaction price recognized under ASC 606. After the initial period in the contract term, the revenue for the remaining periods will be based on the satisfaction of the technical support and New Improvements obligations. Since most of our license agreements start as of January 1st, the revenue recognized for the contract under ASC 606 in our first quarter will tend to be higher subsequent quarters in the fiscal year. Certain of the contract 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 recognized as revenue in future periods as earned. The Company operates in a single business segment which is engaged in the development and marketing of technology and devices to control the flow of light. Our revenue source comes from the licensing of this technology and all of these license agreements have similar terms and provisions. The majority of the Company’s licensing fee income comes from the activities of several licensees participating in the automotive market. The Company currently believes that the automotive market will be the largest source of its royalty income over the next several years. The Company’s royalty income from this market may be influenced by numerous factors including various trends affecting demand in the automotive industry and the rate of introduction of new technology in OEM product lines. In addition to these macro factors, the Company’s royalty income from the automotive market could also be influenced by specific factors such as whether the Company’s SPD-SmartGlass technology appears as standard equipment or as an option on a particular vehicle, the number of additional vehicle models that SPD-SmartGlass appears on, the size of each window on a vehicle and the number of windows on a vehicle that use SPD SmartGlass, fluctuations in the total number of vehicles produced by a manufacturer, and in the percentage of cars within each model produced with SPD-SmartGlass, and changes in pricing or exchange rates. As of December 31, 2021, the Company has four license agreements that are in their initial multiyear term (“Initial Term”) with continuing performance obligations going forward. The Initial Term of three of these agreements will end as of December 31, 2022 and one will end as of December 31, 2024, The Company currently expects all four of these agreements will renew annually at the end of the Initial Term. As of December 31, 2021, the aggregate amount of the revenue to be recognized upon the satisfaction of the remaining performance obligations for the four license agreements is $ 273,000 . The revenue for these remaining performance obligations for each of the four license agreements is expected to be recognized evenly throughout their remaining period of the Initial Term. For the years ended December 31, 2021 and 2020, the Company entered into a number of license agreements covering its light control technology. The Company received minimum annual royalties under certain license agreements and recorded fee income based on ASC 606 revenue recognition each quarter. In instances when sales of licensed products by its licensees exceed minimum annual royalties, the Company recognized additional 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 when earned. As of December 31, 2021 and 2020, there was no balance in deferred revenue. Fee income represents amounts earned by the Company under various license and other agreements relating to technology developed by the Company. During 2021, four licensees accounted for 20 18 18 12 18 16 12 12 12 (f) Basic and Diluted Loss Per Common Share Basic loss per share excludes any dilution. It is based upon the weighted average number of common shares outstanding during the period. Dilutive 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 two-year period ended December 31, 2021 because all potentially dilutive securities ( i.e ., 2,599,701 and 2,697,251 for 2021 and 2020, respectively. (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 carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to be recovered or settled. In accordance with ASC Topic 740, 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 The tax years subject to examination by major tax jurisdictions include the years 2016 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 consolidated 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. The exercise prices 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 numbers 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 employee and director stock options, the Company charged to compensation expense $ 217,008 327,554 (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 vesting period for such shares. Restricted stock is included in total common shares outstanding upon the lapse of any vesting conditions. (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. There was no impairment of long-lived assets recorded during 2021 and 2020. (n) Fair Value Measurements As of December 31, 2021 and 2020, the fair value of the Company’s financial assets and non-warrant liabilities including cash and cash equivalents, marketable securities, royalties receivable, accounts payable and accrued expenses approximated carrying value due to the short-term maturity of these instruments. (o) Recent Accounting Pronouncements New Accounting Standards The Company believes that no new accounting standards that are not yet effective will have a material effect on the Company’s consolidated financial statements. |
Fixed Assets
Fixed Assets | 12 Months Ended |
Dec. 31, 2021 | |
Property, Plant and Equipment [Abstract] | |
Fixed Assets | (3) Fixed Assets Fixed assets and their estimated useful lives as of December 31, 2021 and 2020 are as follows: Schedule of Fixed Assets 2021 2020 Estimated useful life Equipment and furniture $ 1,391,094 $ 1,390,017 5 Trade show materials 775,654 775,654 5 Autos 53,764 53,764 5 Life of lease or estimated Leasehold improvements 584,967 584,967 life of asset if shorter 2,805,479 2,804,402 Less accumulated depreciation and amortization (2,712,525 ) (2,682,630 ) $ 92,954 $ 121,772 |
Accrued Expenses and Other
Accrued Expenses and Other | 12 Months Ended |
Dec. 31, 2021 | |
Payables and Accruals [Abstract] | |
Accrued Expenses and Other | (4) Accrued Expenses and Other Accrued expenses consist of the following at December 31, 2021 and 2020: Schedule of Accrued Expenses and Other 2021 2020 Payroll, bonuses and related benefits $ 45,725 $ 15,121 Professional services 3,300 10,800 Other 360 358 Accrued expenses $ 49,385 $ 26,279 |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2021 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | (5) Income Taxes Since inception, the Company has incurred losses from operations and as a result has not recorded income tax expense. Benefits related to net operating loss carryforwards and deferred items have been fully reserved because it is not more likely than not that the Company will achieve profitable operations. The difference between the total income taxes at the federal statutory rate for each of the years ended December 31, 2021 and 2020 and the fact that no income tax benefit was recorded in each of these years is attributable to the change in the valuation allowance recorded in each year. The tax effects of temporary differences that give rise to significant portions of the deferred tax assets at December 31, 2021 and 2020 are presented below: Schedule of Deferred Tax Assets 2021 2020 Deferred tax assets: Depreciation $ 106,000 $ 117,000 Allowance for bad debts 218,000 202,000 Net operating loss carryforwards 14,114,000 14,755,000 Stock option expense 355,000 403,000 Research and other credits 945,000 952,000 Other temporary differences 15,000 15,000 Total gross deferred tax assets 15,753,000 16,444,000 Less valuation allowance (15,753,000 ) (16,444,000 ) Deferred tax assets, net $ - $ - The reconciliation of the income tax expense (benefit) computed at the federal statutory tax rates to income tax expense (benefit) is as follows: Schedule of Reconciliation Income Tax Expenses Benefit 2021 2020 Income tax provision at federal statutory rate $ (388,000 ) $ (485,000 ) Permanent differences - (43,000 ) Expired carryforwards and other 1,079,000 1,211,000 Valuation allowance (691,000 ) (683,000 ) Total income tax provision $ - $ - In assessing the realizability of deferred tax assets, the Company considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon future taxable income during the period in which those temporary differences become deductible. The Company considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. Based upon its historical operating losses, utilization of deferred tax assets cannot currently be determined. Accordingly, the Company has recorded a full valuation allowance against the deferred tax assets due to the uncertainty regarding the future utilization of the deferred tax assets for all periods presented. At December 31, 2021, the Company had net operating loss carryforwards for federal income tax purposes of approximately $ 65,953,000 57,118,000 expire in varying amounts from 2022 through 2037. 8,835,000 80 945,000 |
Shareholders_ Equity
Shareholders’ Equity | 12 Months Ended |
Dec. 31, 2021 | |
Equity [Abstract] | |
Shareholders’ Equity | (6) Shareholders’ Equity (a) Common Stock and Warrants During 2021, the Company received proceeds of $ 86,262 74,610 284,207 321,524 (b) Options and Warrants (i) Employee Options In 2019, the shareholders approved the Company’s 2019 Equity Incentive Plan, which provides for the granting of both incentive stock options at the fair market value at the date of grant and nonqualified stock options at the fair market value at the date of grant to employees or non-employees who, in the determination of the Board of Directors, have made or may make significant contributions to the Company in the future. The Company may also award stock appreciation rights, restricted stock, or restricted stock units under this plan. The Company initially reserved 1,400,000 485,500 At the discretion of the Board of Directors, options expire in ten years or less from the date of grant and are generally fully exercisable upon grant but in some cases may be subject to vesting in the future. Full payment of the exercise price may be made in cash or in shares of common stock valued at the fair market value thereof on the date of exercise, or by agreeing with the Company to cancel a portion of the exercised options. The Company granted 198,000 217,008 199,000 327,554 Schedule of Assumptions Used to Value Options Granted to Employees 2021 2020 Fair value on grant date $ 1.10 $ 1.65 Expected dividend yield - - Expected volatility 79 % 73 % Risk free interest rate 1.26 % 0.36 % Expected term of the option 5 5 Activity for stock options is summarized below: All options are exercisable at December 31, 2021. Schedule of Option Activity Number of Shares Weighted Average Weighted Average Remaining Contractual Term Aggregate Intrinsic Subject to Option Exercise Price (Years) Value Balance at January 1, 2020 1,548,351 $ 3.68 6.9 $ 603,683 Granted 199,000 $ 2.79 Cancelled - Exercised (450,091 ) $ 2.09 Balance at December 31, 2020 1,297,260 $ 4.09 5.8 $ 142,885 Granted 198,000 $ 1.72 Cancelled (155,050 ) $ 5.38 Exercised (140,500 ) $ 2.48 Balance at December 31, 2021 1,199,710 $ 3.67 5.7 $ 21,870 (ii) Warrants and Non-Employee Options Activity in warrants is summarized below: Schedule of Warrant Activity Number of Shares Underlying Weighted Average Warrants Granted Exercise Price Balance at January 1, 2020 1,483,143 $ 2.13 Exercised (83,152 ) 3.42 Terminated - Issued - Balance at December 31, 2020 1,399,991 $ 2.27 Exercised - Terminated - Issued - Balance at December 31, 2021 1,399,991 $ 2.27 In lieu of cash compensation, the Company has granted warrants to investors and non-employee options to consultants. These warrants and non-employee options vested ratably over various terms ranging from 12 59 1,399,991 Warrants and non-employee options generally expire in five years (c) Restricted Stock Grants During 2021 and 2020, the Company did not issue restricted stock to its directors and employees. |
License and Other Agreements
License and Other Agreements | 12 Months Ended |
Dec. 31, 2021 | |
License And Other Agreements | |
License and Other Agreements | (7) License and Other Agreements The Company has entered into a number of license agreements covering various products using the Company’s SPD technology. Some of these license agreements are limited to specific countries and/or markets. Licensees of Research Frontiers who incorporate SPD technology into end products pay Research Frontiers an earned royalty of 5 15 On March 14, 2019, the Company suspended its VariGuard SmartGlass business unit activities. Instead, the Company licensed a new entity to pursue the business opportunities previously pursued by the Company’s VariGuard SmartGlass business unit. This new licensee continues to use the VariGuard SmartGlass name. In addition to other employees at VariGuard SmartGlass Inc., one of the Company’s officers (Michael R. LaPointe) and one former officer (Seth L. Van Voorhees) are shareholders of VariGuard SmartGlass Inc. and, as consequence, this transaction is a related party relationship which has been reviewed and approved by the Company’s Board of Directors pursuant to the requirements of Delaware corporate law and the Company’s Code of Ethics. Mr. LaPointe also remains a full-time employee at the Company. In October 2021, the Company entered into an amendment to the license agreement with VariGuard modifying its scope and terms. |
Commitments
Commitments | 12 Months Ended |
Dec. 31, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments | (8) Commitments The Company has an employment agreement with its chief executive officer which provides for an annual base salary of $ 600,000 one year The Company has a defined contribution profit sharing (401k) plan covering employees who have completed one year of service. Contributions are made at the discretion of the Company. The Company did not make any contributions to this plan for 2021 or 2020. The Company determines if an arrangement is a lease at its inception. This determination generally depends on whether the arrangement conveys the right to control the use of an identified fixed asset explicitly or implicitly for a period of time in exchange for consideration. Control of an underlying asset is conveyed if the Company obtains the rights to direct the use of, and to obtain substantially all of the economic benefits from the use of, the underlying asset. Lease expense for variable leases and short-term leases is recognized when the obligation is incurred. The Company has operating leases for certain facilities, vehicles and equipment with a weighted average remaining lease term of 3.2 years as of December 31, 2021. Operating leases are included in right of use lease assets, other current liabilities and long-term lease liabilities on the consolidated balance sheet. Right of use lease assets and liabilities are recognized at each lease’s commencement date based on the present value of its lease payments over its respective lease term. The Company does not have an established incremental borrowing rate as it does not have any debt. The Company uses the stated borrowing rate for a lease when readily determinable. When the interest rate implicit in its lease agreements is not readily determinable, the Company uses an interest rate based on the marketplace for public debt. The weighted average discount rate associated with operating leases as of December 31, 2021 is 5.5 %. Subsequent to the Company’s adoption of the new lease accounting guidance on January 1, 2019, the Company recorded new right of use lease assets of approximately $ 900,000 1.1 Maturities of operating lease liabilities as of December 31, 2021 were as follows: Schedule of Minimum Annual Future Rental Commitments December 31, 2021 Year 1 $ 213,000 Years 2-3 439,000 Years 4-5 56,000 Thereafter - Total lease payments 708,000 Less: imputed lease interest (61,781 ) Present value of lease liabilities $ 646,219 |
Rights Plan
Rights Plan | 12 Months Ended |
Dec. 31, 2021 | |
Rights Plan | |
Rights Plan | (9) Rights Plan In February 2013, the Company’s Board of Directors adopted a Stockholders’ Rights Plan (the “Rights Plan”) and declared a dividend distribution of one right (a “Right”) for each outstanding share of Company common stock to stockholders of record at the close of business on March 3, 2003 (“Record Time”) and authorized the issuance of one Right in respect of each share of Common Stock issued after the Record Time and prior to the Separation Time. “Separation Time” shall mean the earlier of the Close of Business on the tenth Business Day (or such later date as the Board of Directors may from time to time fix by resolution adopted prior to the Separation Time that otherwise would have occurred) following but not including (i) the date on which any Person commences a tender or exchange offer that, if consummated, would result in such Person’s becoming an Acquiring Person, and (ii) the date of the first event causing a Flip-in Date to occur; provided that if any tender or exchange offer referred to in clause (i) of this paragraph is cancelled, terminated or otherwise withdrawn prior to the Separation Time without the purchase of any shares of Common Stock pursuant thereto, such offer shall be deemed, for purposes of this paragraph, never to have been made. Subject to certain exceptions listed in the Rights Plan, if a person or group has acquired beneficial ownership of, or commences a tender or exchange offer for, 15 80 40 50 80 40 February 11, 2023 .0001 The above description highlights some of the features of the Company’s Rights Plan and is not a complete description of the Rights Plan. A more detailed description and copy of the Rights Plan has been filed with the SEC and is available from the Company upon request. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2021 | |
Accounting Policies [Abstract] | |
Cash and Cash Equivalents | (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, 2021 and 2020. 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 0 4.5 |
Marketable Securities | (b) Marketable Securities 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 classification. 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 of 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 the securities sold is based on the specific identification method. Interest and dividends on the investments are accrued at the balance sheet date. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., the “exit price”) in an orderly transaction between market participants at the measurement date. Fair value measurements are broken down into three levels based on the reliability of inputs as follows: Level 1 inputs are quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. An active market for the asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis. Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar assets or liabilities in active markets, inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates and yield curves observable at commonly quoted intervals or current market) and contractual prices for the underlying financial instrument, as well as other relevant economic measures. Level 3 inputs are unobservable inputs for the asset or liability. Unobservable inputs are used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at the measurement date. At December 31, 2021 all investments are Level 1 and were classified as trading and consisted of the following: Schedule of Unrealized Loss on Investments December 31, 2021 Value of trading Investment Investments Mutual Funds Putnam Short Duration Bond $ 1,972,736 Putnam Ultra Short Duration Income 782,375 $ 2,755,111 Unrealized loss $ 28,522 |
Royalties Receivable | (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 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 as well as the current status of the Company’s customers. 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, 2021, two companies accounted for 14 % and 11 % of the Company’s outstanding receivables. As of December 31, 2020, three companies accounted for 16 %, 11 % and 10 %, of the Company’s outstanding receivables. |
Fixed Assets | (d) Fixed Assets Fixed assets are carried at cost less accumulated depreciation and amortization. Depreciation and amortization are computed using the straight-line method over the estimated useful lives of the assets. |
Revenue Recognition/Fee Income | (e) Revenue Recognition/Fee Income The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers. The standard provides a single comprehensive revenue recognition model for all contracts with customers and supersedes existing revenue recognition guidance. The revenue standard contains principles that an entity will apply to determine the measurement of revenue and timing of when it is recognized. The underlying principle is that an entity will recognize revenue to depict the transfer of goods or services to customers at an amount that the entity expects to be entitled to in exchange for those goods or services. ASC 606 follows a five-step approach to determining revenue recognition including: 1) Identification of the contract; 2) Identification of the performance obligations; 3) Determination of the transaction price; 4) Allocation of the transaction price and 5) Recognition of revenue. The Company determined that its license agreements provide for three performance obligations which include: (i) the Grant of Use to its Patent Portfolio (“Grant of Use”), (ii) Stand-Ready Technical Support (“Technical Support”) including the transfer of trade secrets and other know-how, production of materials, scale-up support, analytical testing, etc., and (iii) access to new Intellectual Property (“IP”) that may be developed some time during the course of the contract period (“New Improvements”). Given the nature of IP development, such New Improvements are on an unspecified basis and can occur and be made available to licensees at any time during the contract period. When a contract includes more than one performance obligation, the Company needs to allocate the total consideration to each performance obligation based on its relative standalone selling price or estimate the standalone selling price if it is not observable. A standalone selling price is not available for our performance obligations since we do not sell any of the services separately and there is no competitor pricing that is available. As a consequence, the best method for determining standalone selling price of our Grant of Use performance obligation is through a comparison of the average royalty rate for comparable license agreements as compared to our license agreements. Comparable license agreements must consider several factors including: (i) the materials that are being licensed, (ii) the market application for the licensed materials, and (iii) the financial terms in the license agreements that can increase or decrease the risk/reward nature of the agreement. Based on the royalty rate comparison referred to above, any pricing above and beyond the average royalty rate would relate to the Technical Support and New Improvements performance obligations. The Company focuses a significant portion of its time and resources to provide the Technical Support and New Improvements services to its licensees, which further supports the conclusions reached using the royalty rate analysis. The Technical Support and New Improvements performance obligations are co-terminus over the term of the license agreement. For purposes of determining the transaction price, and recognizing revenue, the Company combined the Technical Support and New Improvements performance obligations because they have the same pattern of transfer and the same term. We maintain a staff of scientists and other professionals whose primary job responsibilities throughout the year are: (i) being available to respond to Technical Support needs of our licensees, and (ii) developing improvements to our technology which are offered to our licensees as New Improvements. Since the costs incurred to satisfy the Technical Support and New Improvements performance obligations are incurred evenly throughout the year, the value of the Technical Support and New Improvements services are recognized throughout the initial contract period as these performance obligations are satisfied. If the agreement is not terminated at the end of the initial contract period, it will renew on the same terms as the initial contract for a one-year period. Consequently, any fees or minimum annual royalty obligations relating to this renewal contract will be allocated similarly to the initial contract over the additional one-year period. We recognize revenue when or as the performance obligations in the contract are satisfied. For performance obligations that are fulfilled at a point in time, revenue is recognized at the fulfillment of the performance obligation. Since the IP is determined to be a functional license, the value of the Grant of Use is recognized in the first period of the contract term in which the license agreement is in force. The value of the Technical Support and New Improvements obligations is allocated throughout the contract period based on the satisfaction of its performance obligations. If the agreement is not terminated at the end of the contract period, it will renew on the same terms as the original agreement for a one-year period. Consequently, any fees or minimum annual royalties (“MAR”) relating to this renewal contract will be allocated similarly over that additional year. The Company’s license agreements have a variable royalty fee structure (meaning that royalties are a fixed percentage of sales that vary from period to period) and frequently include a minimum annual royalty commitment. In instances when sales of licensed products by its licensees exceed the MAR, the Company recognizes fee income as the amounts have been earned. Typically, the royalty rate for such sales is 10 15 Because of the immediate recognition of the Grant of Use performance obligation: (i) the first period of the contract term will generally have a higher percent allocation of the transaction price under ASC 606 and (ii) the remaining periods will have less of the transaction price recognized under ASC 606. After the initial period in the contract term, the revenue for the remaining periods will be based on the satisfaction of the technical support and New Improvements obligations. Since most of our license agreements start as of January 1st, the revenue recognized for the contract under ASC 606 in our first quarter will tend to be higher subsequent quarters in the fiscal year. Certain of the contract 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 recognized as revenue in future periods as earned. The Company operates in a single business segment which is engaged in the development and marketing of technology and devices to control the flow of light. Our revenue source comes from the licensing of this technology and all of these license agreements have similar terms and provisions. The majority of the Company’s licensing fee income comes from the activities of several licensees participating in the automotive market. The Company currently believes that the automotive market will be the largest source of its royalty income over the next several years. The Company’s royalty income from this market may be influenced by numerous factors including various trends affecting demand in the automotive industry and the rate of introduction of new technology in OEM product lines. In addition to these macro factors, the Company’s royalty income from the automotive market could also be influenced by specific factors such as whether the Company’s SPD-SmartGlass technology appears as standard equipment or as an option on a particular vehicle, the number of additional vehicle models that SPD-SmartGlass appears on, the size of each window on a vehicle and the number of windows on a vehicle that use SPD SmartGlass, fluctuations in the total number of vehicles produced by a manufacturer, and in the percentage of cars within each model produced with SPD-SmartGlass, and changes in pricing or exchange rates. As of December 31, 2021, the Company has four license agreements that are in their initial multiyear term (“Initial Term”) with continuing performance obligations going forward. The Initial Term of three of these agreements will end as of December 31, 2022 and one will end as of December 31, 2024, The Company currently expects all four of these agreements will renew annually at the end of the Initial Term. As of December 31, 2021, the aggregate amount of the revenue to be recognized upon the satisfaction of the remaining performance obligations for the four license agreements is $ 273,000 . The revenue for these remaining performance obligations for each of the four license agreements is expected to be recognized evenly throughout their remaining period of the Initial Term. For the years ended December 31, 2021 and 2020, the Company entered into a number of license agreements covering its light control technology. The Company received minimum annual royalties under certain license agreements and recorded fee income based on ASC 606 revenue recognition each quarter. In instances when sales of licensed products by its licensees exceed minimum annual royalties, the Company recognized additional 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 when earned. As of December 31, 2021 and 2020, there was no balance in deferred revenue. Fee income represents amounts earned by the Company under various license and other agreements relating to technology developed by the Company. During 2021, four licensees accounted for 20 18 18 12 18 16 12 12 12 |
Basic and Diluted Loss Per Common Share | (f) Basic and Diluted Loss Per Common Share Basic loss per share excludes any dilution. It is based upon the weighted average number of common shares outstanding during the period. Dilutive 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 two-year period ended December 31, 2021 because all potentially dilutive securities ( i.e ., 2,599,701 and 2,697,251 for 2021 and 2020, respectively. |
Research and Development Costs | (g) Research and Development Costs Research and development costs are charged to expense as incurred. |
Patent Costs | (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. |
Use of Estimates | (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. |
Income Taxes | (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 carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to be recovered or settled. In accordance with ASC Topic 740, 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 The tax years subject to examination by major tax jurisdictions include the years 2016 and forward by the U.S. Internal Revenue Service and certain states. The Company is not currently being audited by any tax jurisdiction. |
Equity-Based Compensation | (k) Equity-Based Compensation We recognize all stock-based compensation as an expense in the consolidated 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. The exercise prices 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 numbers 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 employee and director stock options, the Company charged to compensation expense $ 217,008 327,554 |
Restricted Stock | (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 vesting period for such shares. Restricted stock is included in total common shares outstanding upon the lapse of any vesting conditions. |
Impairment of Long-Lived Assets | (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. There was no impairment of long-lived assets recorded during 2021 and 2020. |
Fair Value Measurements | (n) Fair Value Measurements As of December 31, 2021 and 2020, the fair value of the Company’s financial assets and non-warrant liabilities including cash and cash equivalents, marketable securities, royalties receivable, accounts payable and accrued expenses approximated carrying value due to the short-term maturity of these instruments. |
Recent Accounting Pronouncements | (o) Recent Accounting Pronouncements New Accounting Standards The Company believes that no new accounting standards that are not yet effective will have a material effect on the Company’s consolidated financial statements. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Accounting Policies [Abstract] | |
Schedule of Unrealized Loss on Investments | At December 31, 2021 all investments are Level 1 and were classified as trading and consisted of the following: Schedule of Unrealized Loss on Investments December 31, 2021 Value of trading Investment Investments Mutual Funds Putnam Short Duration Bond $ 1,972,736 Putnam Ultra Short Duration Income 782,375 $ 2,755,111 Unrealized loss $ 28,522 |
Fixed Assets (Tables)
Fixed Assets (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Fixed Assets | Fixed assets and their estimated useful lives as of December 31, 2021 and 2020 are as follows: Schedule of Fixed Assets 2021 2020 Estimated useful life Equipment and furniture $ 1,391,094 $ 1,390,017 5 Trade show materials 775,654 775,654 5 Autos 53,764 53,764 5 Life of lease or estimated Leasehold improvements 584,967 584,967 life of asset if shorter 2,805,479 2,804,402 Less accumulated depreciation and amortization (2,712,525 ) (2,682,630 ) $ 92,954 $ 121,772 |
Accrued Expenses and Other (Tab
Accrued Expenses and Other (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Payables and Accruals [Abstract] | |
Schedule of Accrued Expenses and Other | Accrued expenses consist of the following at December 31, 2021 and 2020: Schedule of Accrued Expenses and Other 2021 2020 Payroll, bonuses and related benefits $ 45,725 $ 15,121 Professional services 3,300 10,800 Other 360 358 Accrued expenses $ 49,385 $ 26,279 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Income Tax Disclosure [Abstract] | |
Schedule of Deferred Tax Assets | The tax effects of temporary differences that give rise to significant portions of the deferred tax assets at December 31, 2021 and 2020 are presented below: Schedule of Deferred Tax Assets 2021 2020 Deferred tax assets: Depreciation $ 106,000 $ 117,000 Allowance for bad debts 218,000 202,000 Net operating loss carryforwards 14,114,000 14,755,000 Stock option expense 355,000 403,000 Research and other credits 945,000 952,000 Other temporary differences 15,000 15,000 Total gross deferred tax assets 15,753,000 16,444,000 Less valuation allowance (15,753,000 ) (16,444,000 ) Deferred tax assets, net $ - $ - |
Schedule of Reconciliation Income Tax Expenses Benefit | The reconciliation of the income tax expense (benefit) computed at the federal statutory tax rates to income tax expense (benefit) is as follows: Schedule of Reconciliation Income Tax Expenses Benefit 2021 2020 Income tax provision at federal statutory rate $ (388,000 ) $ (485,000 ) Permanent differences - (43,000 ) Expired carryforwards and other 1,079,000 1,211,000 Valuation allowance (691,000 ) (683,000 ) Total income tax provision $ - $ - |
Shareholders_ Equity (Tables)
Shareholders’ Equity (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Equity [Abstract] | |
Schedule of Assumptions Used to Value Options Granted to Employees | Schedule of Assumptions Used to Value Options Granted to Employees 2021 2020 Fair value on grant date $ 1.10 $ 1.65 Expected dividend yield - - Expected volatility 79 % 73 % Risk free interest rate 1.26 % 0.36 % Expected term of the option 5 5 |
Schedule of Option Activity | All options are exercisable at December 31, 2021. Schedule of Option Activity Number of Shares Weighted Average Weighted Average Remaining Contractual Term Aggregate Intrinsic Subject to Option Exercise Price (Years) Value Balance at January 1, 2020 1,548,351 $ 3.68 6.9 $ 603,683 Granted 199,000 $ 2.79 Cancelled - Exercised (450,091 ) $ 2.09 Balance at December 31, 2020 1,297,260 $ 4.09 5.8 $ 142,885 Granted 198,000 $ 1.72 Cancelled (155,050 ) $ 5.38 Exercised (140,500 ) $ 2.48 Balance at December 31, 2021 1,199,710 $ 3.67 5.7 $ 21,870 |
Schedule of Warrant Activity | Activity in warrants is summarized below: Schedule of Warrant Activity Number of Shares Underlying Weighted Average Warrants Granted Exercise Price Balance at January 1, 2020 1,483,143 $ 2.13 Exercised (83,152 ) 3.42 Terminated - Issued - Balance at December 31, 2020 1,399,991 $ 2.27 Exercised - Terminated - Issued - Balance at December 31, 2021 1,399,991 $ 2.27 |
Commitments (Tables)
Commitments (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Minimum Annual Future Rental Commitments | Maturities of operating lease liabilities as of December 31, 2021 were as follows: Schedule of Minimum Annual Future Rental Commitments December 31, 2021 Year 1 $ 213,000 Years 2-3 439,000 Years 4-5 56,000 Thereafter - Total lease payments 708,000 Less: imputed lease interest (61,781 ) Present value of lease liabilities $ 646,219 |
Business and Basis for Presen_2
Business and Basis for Presentation (Details Narrative) - USD ($) | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Short-term Debt [Line Items] | |||
Working capital | $ 3,700,000 | ||
Cash and cash equivalents and marketable securities | 3,000,000 | ||
Shareholders' equity | 3,783,923 | $ 5,327,005 | $ 7,056,108 |
Accumulated deficit | 119,687,128 | 117,840,776 | |
Non-recurring cash expenses per quarter | 385,000 | ||
Proceeds from Issuance of Debt | 202,052 | ||
Other Income | 202,052 | ||
PPP Loan [Member] | |||
Short-term Debt [Line Items] | |||
Proceeds from Issuance of Debt | $ 202,052 | ||
Other Income | $ 202,052 |
Schedule of Unrealized Loss on
Schedule of Unrealized Loss on Investments (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Debt Securities, Held-to-maturity, Allowance for Credit Loss [Line Items] | ||
Marketable securities | $ 2,755,111 | |
Unrealized loss on marketable securities | 28,522 | |
Putnam Short Duration Bond [Member] | ||
Debt Securities, Held-to-maturity, Allowance for Credit Loss [Line Items] | ||
Marketable securities | 1,972,736 | |
Putnam Ultra Short Duration Income [Member] | ||
Debt Securities, Held-to-maturity, Allowance for Credit Loss [Line Items] | ||
Marketable securities | $ 782,375 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Product Information [Line Items] | ||
FDIC insurance coverage | $ 250,000 | |
Amounts on deposit in excess of federally insured limits | 0 | $ 4,500,000 |
Revenue from Contract with Customer, Excluding Assessed Tax | $ 1,263,034 | 828,450 |
Recognized benefit measured | greater than 50 percent | |
Share based compensation | $ 217,008 | 327,554 |
Employees And Directors [Member] | ||
Product Information [Line Items] | ||
Share based compensation | $ 217,008 | $ 327,554 |
Options and Warrants [Member] | ||
Product Information [Line Items] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 2,599,701 | 2,697,251 |
License Agreement [Member] | ||
Product Information [Line Items] | ||
Revenue from Contract with Customer, Excluding Assessed Tax | $ 273,000 | |
Revenue Benchmark [Member] | License Agreement [Member] | Minimum [Member] | ||
Product Information [Line Items] | ||
Royalty rate on selling price | 10.00% | |
Revenue Benchmark [Member] | License Agreement [Member] | Maximum [Member] | ||
Product Information [Line Items] | ||
Royalty rate on selling price | 15.00% | |
Company One [Member] | Revenue Benchmark [Member] | Customer Concentration Risk [Member] | ||
Product Information [Line Items] | ||
Concentration risk percentage | 14.00% | 16.00% |
Company Two [Member] | Revenue Benchmark [Member] | Customer Concentration Risk [Member] | ||
Product Information [Line Items] | ||
Concentration risk percentage | 11.00% | 11.00% |
Company Three [Member] | Revenue Benchmark [Member] | Customer Concentration Risk [Member] | ||
Product Information [Line Items] | ||
Concentration risk percentage | 10.00% | |
License One [Member] | Revenue Benchmark [Member] | Customer Concentration Risk [Member] | ||
Product Information [Line Items] | ||
Concentration risk percentage | 20.00% | 18.00% |
License Two [Member] | Revenue Benchmark [Member] | Customer Concentration Risk [Member] | ||
Product Information [Line Items] | ||
Concentration risk percentage | 18.00% | 16.00% |
License Three [Member] | Revenue Benchmark [Member] | Customer Concentration Risk [Member] | ||
Product Information [Line Items] | ||
Concentration risk percentage | 18.00% | 12.00% |
License Four [Member] | Revenue Benchmark [Member] | Customer Concentration Risk [Member] | ||
Product Information [Line Items] | ||
Concentration risk percentage | 12.00% | 12.00% |
License Five [Member] | Revenue Benchmark [Member] | Customer Concentration Risk [Member] | ||
Product Information [Line Items] | ||
Concentration risk percentage | 12.00% |
Schedule of Fixed Assets (Detai
Schedule of Fixed Assets (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Property, Plant and Equipment [Line Items] | ||
Fixed assets, gross | $ 2,805,479 | $ 2,804,402 |
Less accumulated depreciation and amortization | (2,712,525) | (2,682,630) |
Fixed assets, net | 92,954 | 121,772 |
Equipment And Furniture [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Fixed assets, gross | $ 1,391,094 | 1,390,017 |
Estimated useful life | 5 years | |
Trade Show Materials [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Fixed assets, gross | $ 775,654 | 775,654 |
Estimated useful life | 5 years | |
Autos [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Fixed assets, gross | $ 53,764 | 53,764 |
Estimated useful life | 5 years | |
Leasehold Improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Fixed assets, gross | $ 584,967 | $ 584,967 |
Schedule of Accrued Expenses an
Schedule of Accrued Expenses and Other (Details) - USD ($) | Dec. 31, 2021 | Dec. 31, 2020 |
Payables and Accruals [Abstract] | ||
Payroll, bonuses and related benefits | $ 45,725 | $ 15,121 |
Professional services | 3,300 | 10,800 |
Other | 360 | 358 |
Accrued expenses | $ 49,385 | $ 26,279 |
Schedule of Deferred Tax Assets
Schedule of Deferred Tax Assets (Details) - USD ($) | Dec. 31, 2021 | Dec. 31, 2020 |
Income Tax Disclosure [Abstract] | ||
Depreciation | $ 106,000 | $ 117,000 |
Allowance for bad debts | 218,000 | 202,000 |
Net operating loss carryforwards | 14,114,000 | 14,755,000 |
Stock option expense | 355,000 | 403,000 |
Research and other credits | 945,000 | 952,000 |
Other temporary differences | 15,000 | 15,000 |
Total gross deferred tax assets | 15,753,000 | 16,444,000 |
Less valuation allowance | (15,753,000) | (16,444,000) |
Deferred tax assets, net |
Schedule of Reconciliation Inco
Schedule of Reconciliation Income Tax Expenses Benefit (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | ||
Income tax provision at federal statutory rate | $ (388,000) | $ (485,000) |
Permanent differences | (43,000) | |
Expired carryforwards and other | 1,079,000 | 1,211,000 |
Valuation allowance | (691,000) | (683,000) |
Total income tax provision |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Operating Loss Carryforwards [Line Items] | ||
Net operating loss carry-forward | $ 65,953,000 | |
Net operating loss carry-forward with expiration | $ 57,118,000 | |
Net operating loss carry-forward expiration description | expire in varying amounts from 2022 through 2037. | |
Income tax percentage | 80.00% | |
Research and other credit carry-forwards | $ 945,000 | $ 952,000 |
Tax Year 2018 To 2021 [Member] | ||
Operating Loss Carryforwards [Line Items] | ||
Net operating loss carry-forward | $ 8,835,000 |
Schedule of Assumptions Used to
Schedule of Assumptions Used to Value Options Granted to Employees (Details) - $ / shares | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Equity [Abstract] | ||
Fair value on grant date | $ 1.10 | $ 1.65 |
Expected dividend yield | ||
Expected volatility | 79.00% | 73.00% |
Risk free interest rate | 1.26% | 0.36% |
Expected term of the option | 5 years | 5 years |
Schedule of Option Activity (De
Schedule of Option Activity (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Option Indexed to Issuer's Equity [Line Items] | |||
Number of Shares Subject to Option, Granted | 198,000 | 199,000 | |
Equity Option [Member] | |||
Option Indexed to Issuer's Equity [Line Items] | |||
Number of Shares Subject to Option, Beginning | 1,297,260 | 1,548,351 | |
Weighted Average Exercise Price, Beginning | $ 4.09 | $ 3.68 | |
Weighted Average Remaining Contractual Term (Years), Beginning | 5 years 8 months 12 days | 5 years 9 months 18 days | 6 years 10 months 24 days |
Aggregate Intrinsic Value, Beginning | $ 142,885 | $ 603,683 | |
Number of Shares Subject to Option, Granted | 198,000 | 199,000 | |
Weighted Average Exercise Price, Granted | $ 1.72 | $ 2.79 | |
Number of Shares Subject to Option, Cancelled | (155,050) | ||
Number of Shares Subject to Option, Exercised | (140,500) | (450,091) | |
Weighted Average Exercise Price, Exercised | $ 2.48 | $ 2.09 | |
Weighted Average Exercise Price, Cancelled | $ 5.38 | ||
Number of Shares Subject to Option, Ending | 1,199,710 | 1,297,260 | 1,548,351 |
Weighted Average Exercise Price, Ending | $ 3.67 | $ 4.09 | $ 3.68 |
Aggregate Intrinsic Value, Ending | $ 21,870 | $ 142,885 | $ 603,683 |
Schedule of Warrant Activity (D
Schedule of Warrant Activity (Details) - $ / shares | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Equity [Abstract] | ||
Number of Shares Underlying Warrants and Non-Employee Options Granted, Beginning | 1,399,991 | 1,483,143 |
Weighted Average Exercise Price, Beginning | $ 2.27 | $ 2.13 |
Number of Shares Underlying Warrants and Non-Employee Options Granted, Exercised | (83,152) | |
Weighted Average Exercise Price, Exercised | $ 3.42 | |
Number of Shares Underlying Warrants and Non-Employee Options Granted, Terminated | ||
Number of Shares Underlying Warrants and Non-Employee Options Granted, Issued | ||
Number of Shares Underlying Warrants and Non-Employee Options Granted, Ending | 1,399,991 | 1,399,991 |
Weighted Average Exercise Price, Ending | $ 2.27 | $ 2.27 |
Shareholders_ Equity (Details N
Shareholders’ Equity (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Net proceeds from exercise of options and warrants | $ 86,262 | $ 284,207 |
Number of options granted | 198,000 | 199,000 |
Share based compensation | $ 217,008 | $ 327,554 |
2019 Equity Incentive Plan [Member] | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Shares of common stock reserved for issuance | 1,400,000 | |
Shares available for issuance | 485,500 | |
Options and Warrants [Member] | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Net proceeds from exercise of options and warrants | $ 86,262 | $ 284,207 |
Number of shares issued during the period | 74,610 | 321,524 |
Warrant [Member] | Non- Employee Stock Option [Member] | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Warrants issued | 1,399,991 | |
Option expiration period | 5 years | |
Warrant [Member] | Non- Employee Stock Option [Member] | Minimum [Member] | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Warrants and non-employee options vested term | 12 months | |
Warrant [Member] | Non- Employee Stock Option [Member] | Maximum [Member] | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Warrants and non-employee options vested term | 59 months |
License and Other Agreements (D
License and Other Agreements (Details Narrative) | 12 Months Ended |
Dec. 31, 2021 | |
Minimum [Member] | |
Royalty earned percentage | 5.00% |
Maximum [Member] | |
Royalty earned percentage | 15.00% |
Schedule of Minimum Annual Futu
Schedule of Minimum Annual Future Rental Commitments (Details) | Dec. 31, 2021USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
Year 1 | $ 213,000 |
Years 2-3 | 439,000 |
Years 4-5 | 56,000 |
Thereafter | |
Total lease payments | 708,000 |
Less: imputed lease interest | (61,781) |
Present value of lease liabilities | $ 646,219 |
Commitments (Details Narrative)
Commitments (Details Narrative) - USD ($) | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Jan. 02, 2019 | |
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items] | |||
Lease expiration term | 1 year | ||
Operating Lease, Weighted Average Remaining Lease Term | 3 years 2 months 12 days | ||
Operating Lease, Weighted Average Discount Rate, Percent | 5.50% | ||
Right of use lease assets | $ 469,824 | $ 616,442 | |
Lease liabilities | 646,219 | ||
Accounting Standards Update 2016-02 [Member] | |||
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items] | |||
Right of use lease assets | $ 900,000 | ||
Lease liabilities | $ 1,100,000 | ||
Chief Executive Officer [Member] | |||
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items] | |||
Annual base salary | $ 600,000 |
Rights Plan (Details Narrative)
Rights Plan (Details Narrative) | 12 Months Ended |
Dec. 31, 2021USD ($)$ / shares | |
Rights Plan | |
Percentage of acquisition threshold | 15.00% |
Value of stock covered by each right | $ | $ 80 |
Exercise price of rights | $ 40 |
Threshold for change in control | 50.00% |
Rights plan expire date | Feb. 11, 2023 |
Redemption price | $ 0.0001 |