Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2015 | Aug. 12, 2015 | |
Entity Registrant Name | PEN INC. | |
Entity Central Index Key | 891,417 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2015 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Smaller Reporting Company | |
Trading Symbol | PENC | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2,015 | |
Common Class A [Member] | ||
Entity Common Stock, Shares Outstanding | 244,116,851 | |
Common Class B [Member] | ||
Entity Common Stock, Shares Outstanding | 251,126,667 | |
Class Z Commmon Stock [Member] | ||
Entity Common Stock, Shares Outstanding | 42,273,470 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Jun. 30, 2015 | Dec. 31, 2014 |
CURRENT ASSETS: | ||
Cash | $ 169,632 | $ 464,735 |
Accounts receivable, net | 1,350,441 | 1,032,995 |
Accounts receivable - related party | 9,980 | 38,246 |
Inventory | 1,215,810 | 1,557,100 |
Prepaid expenses and other current assets | 221,444 | 200,079 |
Total Current Assets | 2,967,307 | 3,293,155 |
OTHER ASSETS: | ||
Property, plant and equipment, net | 976,915 | 850,847 |
Intangible assets, net | 213,695 | 239,338 |
Other assets | 43,432 | 41,841 |
Total Other Assets | 1,234,042 | 1,132,026 |
TOTAL ASSETS | 4,201,349 | 4,425,181 |
CURRENT LIABILITIES: | ||
Bank revolving line of credit | 1,147,949 | $ 773,344 |
Current portion of notes payable | $ 74,380 | |
Convertible notes payable, net | $ 13,333 | |
Accounts payable | $ 1,185,922 | 1,426,465 |
Accrued expenses | 753,348 | 964,587 |
Deferred revenue | 29,335 | 28,790 |
Total Current Liabilities | 3,190,934 | $ 3,206,519 |
LONG-TERM LIABILITIES: | ||
Notes payable, net of current portion | 333,093 | |
Total Long-term Liabilities | 333,093 | |
Total Liabilities | $ 3,524,027 | $ 3,206,519 |
Commitments and Contingencies (See Note 13) | ||
STOCKHOLDERS' EQUITY: | ||
Preferred stock, $.0001 par value, 20,000,000 shares authorized; No shares issued and outstanding | ||
Additional paid-in capital | $ 4,866,661 | $ 4,640,278 |
Accumulated deficit | (4,242,889) | (3,474,919) |
Total Stockholders' Equity | 677,322 | 1,218,662 |
Total Liabilities and Stockholders' Equity | 4,201,349 | 4,425,181 |
Common Class A [Member] | ||
STOCKHOLDERS' EQUITY: | ||
Common stock value | 23,716 | 23,474 |
Common Class B [Member] | ||
STOCKHOLDERS' EQUITY: | ||
Common stock value | 25,107 | 25,102 |
Class Z Commmon Stock [Member] | ||
STOCKHOLDERS' EQUITY: | ||
Common stock value | $ 4,727 | $ 4,727 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Jun. 30, 2015 | Dec. 31, 2014 |
Preferred stock, par value | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 20,000,000 | 20,000,000 |
Preferred stock, shares issued | ||
Preferred stock, shares outstanding | ||
Common stock, par value | $ 0.0001 | |
Common stock, shares authorized | 1,800,000,000 | |
Common Class A [Member] | ||
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 1,300,000,000 | 1,300,000,000 |
Common stock, shares issued | 237,162,531 | 234,744,655 |
Common stock, shares outstanding | 237,162,531 | 234,744,655 |
Common Class B [Member] | ||
Common stock, par value | $ .0001 | $ .0001 |
Common stock, shares authorized | 400,000,000 | 400,000,000 |
Common stock, shares issued | 251,064,909 | 251,017,063 |
Common stock, shares outstanding | 251,064,909 | 251,017,063 |
Class Z Commmon Stock [Member] | ||
Common stock, par value | $ .0001 | $ .0001 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 47,273,470 | 47,273,470 |
Common stock, shares outstanding | 47,273,470 | 47,273,470 |
Consolidated Statements of Oper
Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
REVENUES: | ||||
Products (including related party sales of $32,291 and $24,367 for the three months ended June 30, 2015 and 2014, respectively, and $77,118 and $107,052 for the six months ended June 30, 2015 and 2014, respectively) | $ 1,862,133 | $ 2,867,962 | $ 4,299,447 | $ 5,639,373 |
Research and development services | 451,216 | 1,081,643 | ||
Total Revenues | 2,313,349 | $ 2,867,962 | 5,381,090 | $ 5,639,373 |
COST OF REVENUES: | ||||
Products | 1,078,428 | $ 1,381,527 | 2,485,147 | $ 2,831,668 |
Research and development services | 455,838 | 964,222 | ||
Total Cost of Revenues | 1,534,266 | $ 1,381,527 | 3,449,369 | $ 2,831,668 |
GROSS PROFIT | 779,083 | 1,486,435 | 1,931,721 | 2,807,705 |
OPERATING EXPENSES: | ||||
Selling and marketing expenses | 48,902 | 70,512 | 131,111 | 144,029 |
Salaries, wages and related benefits | 599,609 | 441,367 | 1,187,439 | 874,719 |
Research and development | 250,353 | 144,634 | 445,555 | 295,369 |
Professional fees | 163,499 | 147,250 | 344,051 | 318,722 |
General and administrative expenses | 247,175 | 190,018 | 513,570 | 356,523 |
Total Operating Expenses | 1,309,538 | 993,781 | 2,621,726 | 1,989,362 |
(LOSS) INCOME FROM OPERATIONS | (530,455) | 492,654 | (690,005) | 818,343 |
OTHER INCOME (EXPENSES): | ||||
Interest expenses | (36,355) | (10,091) | (64,084) | (17,424) |
Other income, net | 516 | (12,137) | 7,347 | (12,124) |
Total Other Income/(Expense) | (35,839) | (22,228) | (56,737) | (29,548) |
(Loss) Income before income taxes | (566,294) | 470,426 | (746,742) | 788,795 |
Income tax benefit (expense) | (16,284) | (168,019) | (21,228) | (215,627) |
NET (LOSS) INCOME | $ (582,578) | 302,407 | $ (767,970) | 573,168 |
Net income attributable to former non-controlling interest | (43,902) | (83,208) | ||
NET (LOSS) INCOME ATTRIBUTABLE TO PEN INC. | $ (582,578) | $ 258,505 | $ (767,970) | $ 489,960 |
NET (LOSS) INCOME PER COMMON SHARE: | ||||
Basic | $ 0 | $ 0 | $ 0 | $ 0 |
Diluted | $ 0 | $ 0 | $ 0 | $ 0 |
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: | ||||
Basic | 535,438,342 | 325,641,762 | 534,830,851 | 325,641,762 |
Diluted | 535,438,342 | 325,641,762 | 534,830,851 | 325,641,762 |
Consolidated Statements of Ope5
Consolidated Statements of Operations (Parenthetical) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Income Statement [Abstract] | ||||
Sales revenue from related parties | $ 32,291 | $ 24,367 | $ 77,118 | $ 107,052 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 6 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net (loss) income | $ (767,970) | $ 573,168 |
Change in inventory obsolescence reserve | $ (6,650) | $ 12,914 |
Bad debt expense | ||
Depreciation and amortization expense | $ 127,167 | $ 84,366 |
Amortization of deferred lease incentives | $ (3,208) | $ (6,415) |
Change in value of stock appreciation rights | ||
Change in value of equity credits | ||
Stock-based compensation | $ 89,620 | |
Change in operating assets and liabilities: | ||
Accounts receivable | (317,446) | $ (149,159) |
Accounts receivable related party | 28,266 | 11,265 |
Inventory | 347,940 | 315,031 |
Prepaid expenses and other assets | (22,956) | 4,614 |
Accounts payable | (240,543) | (456,597) |
Accrued expenses | $ (42,584) | 13,593 |
Income taxes payable | $ 215,627 | |
Deferred revenue | $ 545 | |
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES | (807,819) | $ 618,407 |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Purchases of property and equipment | (227,592) | (7,058) |
NET CASH USED IN INVESTING ACTIVITIES | (227,592) | $ (7,058) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Proceeds from bank line of credit | 4,257,500 | |
Repayment of bank lines of credit | (3,882,895) | $ (483,469) |
Proceeds from bank loan | 371,901 | |
Repayment of bank loans | (6,198) | $ (60,000) |
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES | 740,308 | (543,469) |
NET (DECREASE) INCREASE IN CASH | (295,103) | 67,880 |
CASH, beginning of year | 464,735 | 100,367 |
CASH, end of period | 169,632 | 168,247 |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | ||
Interest | 64,010 | $ 14,889 |
Income taxes | 4,944 | |
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||
Common stock issued for convertible notes and accrued interest | 13,725 | |
Common stock issued for accrued expenses | 123,285 | |
Reclassification of accrued salary to notes payable - long-term | $ 41,770 | |
Value of equity credits forfeited at original purchase price in exchange for cancellation of receivables | $ 13,706 |
Organization and Basis of Prese
Organization and Basis of Presentation | 6 Months Ended |
Jun. 30, 2015 | |
Accounting Policies [Abstract] | |
Organization and Basis of Presentation | NOTE 1 ORGANIZATION AND BASIS OF PRESENTATION Organization PEN Inc. (we, us, our, PEN or the Company), a Delaware company, develops and sells a portfolio of nano-layer coatings, nano-based cleaners, and nano-composite products based on its proprietary technology and performs nanotechnology research and development focused on generating revenues through performing research services. Through our wholly-owned subsidiary, Nanofilm, Ltd., we develop, manufacture and sell products based on technology which permits the fabrication of oriented, ultra-thin films of organic or polymeric crystals, and also produces a line of personal lens cleaners and accessories. These products are marketed internationally primarily to customers in the eyeglass industry. Through our wholly-owned subsidiary, Applied Nanotech, Inc., we primarily conduct research and development services for governmental and private customers. On August 27, 2014 (the Effective Date), Applied Nanotech Holdings, Inc., a Texas corporation (Applied Nanotech), together with its wholly-owned direct subsidiaries, PEN and NanoMerger Sub Inc., a Delaware corporation (Merger Sub), completed a combination (the Combination) with NanoHolding Inc. (Nano). The Combination included three parts: (i) a redomestication of Applied Nanotech from Texas to Delaware by way of Applied Nanotechs merger into PEN, (ii) a subsequent merger of Nano into Merger Sub, with Merger Sub (n/k/a Nanofilm Holdings Inc.) the surviving entity, and (iii) a subsequent exchange of 100% of Carl Zeiss, Inc.s interest in Nanofilm Ltd., Nanos wholly-owned subsidiary (Nanofilm), for stock in PEN. Nanofilm is a company formed under the laws of the Ohio on June 14, 1995 as a limited liability company. Immediately prior to the effective date, outstanding convertible notes of Applied Nanotech were converted into common stock, for which an aggregate of 32,379,288 shares of PEN Class A common stock were issued, and 11,164,620 shares of PEN Class A common stock were issued to directors of the Company in payment of accrued fees. PEN also issued 1,500,000 shares of Class A common stock in satisfaction of a note held by the former CFO of the Company. Accordingly, immediately prior the Effective Date, the Company had 203,363,059 PEN Class A shares outstanding. On the Effective Date, the merger was accounted for as a reverse merger and recapitalization of Nano (See Note 3). On the Effective Date, the pre-merger shares of Nano were exchanged for an aggregate of 27,670,187 shares of Class A common stock of PEN and 250,698,105 shares of Class B common stock of PEN. Additionally, the Class Z member interests of Nanofilm (the non-controlling interests) were exchanged for 47,273,470 Class Z shares of PEN. The effect of these exchanges is reflected retroactively in the accompanying consolidated financial statements for all periods presented. On December 17, 2014, the Company formed a new wholly-owned subsidiary, PEN Technology LLC, a Florida limited liability company and on December 19, 2014, Nanofilm Holdings Inc. was merged into PEN. Basis of Presentation The Companys consolidated financial statements include the financial statements of its wholly-owned subsidiaries, Applied Nanotech, Inc., EZ Diagnostix, Inc. (inactive), PEN Technology LLC, and Nanofilm, Ltd. On December 19, 2014, EZ Diagnostix was merged into Applied Nanotech, Inc. All significant intercompany accounts and transactions have been eliminated in consolidation. The consolidated financial statements for the three and six months ended June 30, 2015 and 2014 have been prepared by us without audit pursuant to the rules and regulations of the Securities and Exchange Commission. In the opinion of management, all adjustments necessary to present fairly our financial position, results of operations, and cash flows as of June 30, 2015 and 2014, and for the periods then ended, have been made. Those adjustments consist of normal and recurring adjustments. The Companys historical results of operations include an allocation of the net income of Nanofilm, Ltd. to the 14.5% non-controlling interest of Nanofilm, Ltd. up to the effective date of the merger when the holder of that non-controlling interest exchanged its membership interest for shares of PEN Inc. resulting in Nanofilm, Ltd. becoming a wholly-owned subsidiary of the Company. Basis of Presentation (continued) Certain information and note disclosures normally included in our annual financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. The unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements as of and for the year ended December 31, 2014 and footnotes thereto included in the Companys Annual Report on Form 10-K filed with the SEC on April 10, 2015. The results of operations for the three and six months ended June 30, 2015 are not necessarily indicative of the results to be expected for the full year. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2015 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Use of estimates The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates for the six months ended June 30, 2015 and 2014 include estimates for allowance for doubtful accounts on accounts receivable, the estimates for obsolete inventory, the useful life of property and equipment, assumptions used in assessing impairment of long-term assets, the fair value of assets acquired and liabilities assumed in the merger, estimates of current and deferred income taxes and deferred tax valuation allowances, the fair value of non-cash equity transactions, and the fair value of equity incentives. Fair value of financial instruments and fair value measurements The Company adopted the guidance of Accounting Standards Codification (ASC) 820 for fair value measurements which clarifies the definition of fair value, prescribes methods for measuring fair value, and establishes a fair value hierarchy to classify the inputs used in measuring fair value as follows: Level 1-Inputs are unadjusted quoted prices in active markets for identical assets or liabilities available at the measurement date. Level 2-Inputs are quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, inputs other than quoted prices that are observable, and inputs derived from or corroborated by observable market data. Level 3-Inputs are unobservable inputs which reflect the reporting entitys own assumptions on what assumptions the market participants would use in pricing the asset or liability based on the best available information. The carrying amounts reported in the consolidated balance sheets for cash and cash equivalents, accounts receivable, loans and lines of credit, accounts payable, accrued expenses, and other payables approximate their fair market value based on the short-term maturity of these instruments. The Company analyzes all financial and non-financial instruments with features of both liabilities and equity under the FASBs accounting standard for such instruments. Under this standard, financial and non-financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company accounts for three instruments at fair value using level 3 valuation. At June 30, 2015 At December 31, 2014 Description Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 Intangible assets - - $ 213,695 - - $ 239,338 Stock Appreciation Rights Plan A - - $ 46,146 - - $ 46,146 Equity Credits Issued - - $ 25,178 - - $ 25,178 Fair value of financial instruments and fair value measurements (continued) A rollforward of the level 3 valuation of these three financial instruments is as follows: Intangible Assets Stock Appreciation Rights Plan A Equity Credits Issued Balance at December 31, 2014 $ 239,338 $ 46,146 $ 25,178 Amortization of intangible assets (25,643 ) - - Change in fair value included in net loss - - - Balance at June 30, 2015 $ 213,695 $ 46,146 $ 25,178 ASC 825-10 Financial Instruments, allows entities to voluntarily choose to measure certain financial assets and liabilities at fair value (fair value option). The fair value option may be elected on an instrument-by-instrument basis and is irrevocable, unless a new election date occurs. If the fair value option is elected for an instrument, unrealized gains and losses for that instrument should be reported in earnings at each subsequent reporting date. The Company did not elect to apply the fair value option to any outstanding instruments. Cash and cash equivalents For purposes of the consolidated statements of cash flows, the Company considers all highly liquid instruments with a maturity of three months or less at the purchase date and money market accounts to be cash equivalents. Accounts receivable The Company recognizes an allowance for losses on accounts receivable in an amount equal to the estimated probable losses net of recoveries. The allowance is based on an analysis of historical bad debt experience, current receivables aging, and expected future write-offs, as well as an assessment of specific identifiable customer accounts considered at risk or uncollectible. The expense associated with the allowance for doubtful accounts is recognized as general and administrative expense. Inventory Inventory is stated at the lower of cost or market. Cost is determined using the first-in, first-out (FIFO) method. At June 30, 2015 and December 31, 2014, inventory consisted of the following: June 30, 2015 December 31, 2014 Raw materials $ 901,630 $ 953,566 Finished goods 596,732 813,352 1,498,362 1,766,918 Less: reserve for obsolescence (282,552 ) (209,818 ) Total $ 1,215,810 $ 1,557,100 Property and equipment Property and equipment are stated at cost and are depreciated using the straight-line method over their estimated useful lives, which range from three to ten years. Leasehold improvements are depreciated over the shorter of the useful life or lease term including scheduled renewal terms. Maintenance and repairs are charged to expense as incurred. When assets are retired or disposed of, the cost and accumulated depreciation are removed from the accounts, and any resulting gains or losses are included in income in the year of disposition. The Company examines the possibility of decreases in the value of these assets when events or changes in circumstances reflect the fact that their recorded value may not be recoverable. Intangible assets Intangible assets, consisting of patents, patent pending technologies and other technologies being amortized on a straight-line method over the estimated useful life of 5 years. Impairment of long-lived assets In accordance with ASC Topic 360, the Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable, or at least annually. The Company recognizes an impairment loss when the sum of expected undiscounted future cash flows is less than the carrying amount of the asset. The amount of impairment is measured as the difference between the assets estimated fair value and its book value. The Company did not record any impairment charge for the six months ended June 30, 2015 and 2014. Revenue recognition Pursuant to the guidance of ASC Topic 605, the Company recognizes sales when persuasive evidence of an arrangement exists, delivery has occurred or services have been provided, the purchase price is fixed or determinable and collectability is reasonably assured. Types of Revenue: ● Net product sales by our subsidiary Nanofilm. ● Reimbursements under agreements to perform research and development for government agencies and others by our subsidiary, Applied Nanotech. We do not perform research contracts that are contingent upon successful results. Larger projects are sometimes broken down in phases to allow the customer to determine at the end of each phase if they wish to move to the next phase. The agreements with federal government agencies generally provide that, upon completion of a technology development program, the funding agency is granted a royalty-free license to use any technology developed during the course of the program for its own purposes, but not any preexisting technology that we use in connection with the program. We retain all other rights to use, develop, and commercialize the technology. Agreements with nongovernmental entities generally allow the entity the first opportunity to license the technology from us upon completion of the project. ● Product sales and other miscellaneous revenues from our subsidiary, Applied Nanotech such as the sale of conductive inks and thermal management materials. Revenue Recognition Criteria: ● Net product sales by our subsidiary Nano, are recognized when the product is shipped to the customer and title is transferred. ● Revenue from research and development government contracts is recognized when it is earned pursuant to the terms of the contract. These projects are usually billed monthly based on costs, hours, or some other measure of activity during the month and revenue is recognized as services are provided. If there is substantive acceptance terms then revenue will not be recognized until acceptance occurs. The recognition of revenue may not correspond with the billings allowable under the contract. To the extent that billings exceed revenue earned, a portion of the revenue is deferred until such time as it is earned. ● Revenue from research and development non-governmental contracts is recognized when it is earned pursuant to the terms of the contract. Each contract is unique and tailored to the needs of the customer and goals of the project. Some contracts may call for a monthly payment for a fixed period of time. Other contracts may be for a fixed dollar amount with an unspecified time period, although there is frequently a targeted completion date. These contracts generally involve some sort of up-front payment. Some contracts may call for the delivery of samples, or may call for the transfer of equipment or other items developed during the project to the customer. These projects are usually billed monthly based on costs, hours, or some other measure of activity during the month and revenue is recognized as services are provided. If there is substantive acceptance terms then revenue will not be recognized until acceptance occurs. ● Revenue from other product sales is recognized at the time the product shipped. The Companys subsidiary Applied Nanotechs primary business is research and development and the licensing of its technology, not the sale of products. Product sales are generally insignificant in number, and are generally limited to the sale of conductive inks, thermal management materials, samples, proofs of concepts, prototypes, or other items resulting from its research. ● Other miscellaneous revenue is recognized as deemed appropriate given the facts of the situation and is generally not material. Sales incentives and consideration paid to customers The Company accounts for certain promotional costs such as sales incentives and cooperative advertising as a reduction of sales. For the three months ended June 30, 2015 and 2014 and for the six months ended June 30, 2015 and 2014, the Company recorded approximately $26,225 and $35,010 and $81,693 and $65,508, respectively, as a reduction of sales related to these costs. Cost of sales Cost of sales includes inventory costs, materials and supplies costs, internal labor and related benefits, subcontractor costs, depreciation, overhead and shipping and handling costs incurred. Shipping and handling costs Shipping and handling costs incurred relating to the purchase of inventory are included in inventory which is charged to cost of sales as product are sold. Shipping and handling costs charged to customers are included in sales. For the three months ended June 30, 2015 and 2014 and for the six months ended June 30, 2015 and 2014, shipping and handling costs incurred for product shipped to customers are included in cost of sales and amounted to $50,384 and $56,923, and $102,022 and $109,908, respectively. Research and development Research and development costs incurred in the development of the Companys products and under other Company sponsored research and development projects are expensed as incurred. Costs such as direct labor, direct costs, and other allocated costs incurred to perform research and development service pursuant to government and private research projects are in included in cost of sales. For the three months ended June 30, 2015 and 2014 and for the six months ended June 30, 2015 and 2014, research and development costs incurred in the development of the Companys products were $250,353 and $144,634, and $445,555 and $295,369, respectively, and are included in operating expenses on the accompanying consolidated statements of operations. Advertising costs The Company participates in various advertising programs. All costs related to advertising of the Companys products are expensed in the period incurred. For the three months ended June 30, 2015 and 2014 and for the six months ended June 30, 2015 and 2014, advertising costs charged to operations were $17,218 and $53,783, and $34,768 and $92,114, respectively and are included in sales and marketing on the consolidated accompanying statements of operations. These advertising expenses do not in include cooperative advertising and sales incentives which have been deducted from sales. Federal and state income taxes The Company accounts for income tax using the liability method prescribed by ASC 740, Income Taxes Prior to the February 24, 2014, the Companys subsidiary, Nanofilm, operated as a limited liability company and passed all income and loss to each member based on their proportionate interest in Nanofilm. After February 24, 2014, the date on which Nanofilm reorganized by creating a corporation parent, NanoHolding Inc., approximately 85.5% of the net income (loss) of Nanofilm, was passed through to the majority member, NanoHolding Inc. After the effective date of the merger, 100% of the net income (loss) of Nanofilm is passed through to the Company. The Company follows the accounting guidance for uncertainty in income taxes using the provisions of Accounting Standards Codification (ASC) 740 Income Taxes Stock-based compensation Stock-based compensation is accounted for based on the requirements of the Share-Based Payment Topic of ASC 718 which requires recognition in the financial statements of the cost of employee and director services received in exchange for an award of equity instruments over the period the employee or director is required to perform the services in exchange for the award (presumptively, the vesting period). The ASC also requires measurement of the cost of employee and director services received in exchange for an award based on the grant-date fair value of the award. Stock-based compensation (continued) Pursuant to ASC Topic 505-50, for share-based payments to consultants and other third-parties, compensation expense is determined at the measurement date. The expense is recognized over the service period of the award. Until the measurement date is reached, the total amount of compensation expense remains uncertain. The Company initially records compensation expense based on the fair value of the award at the reporting date. Income (loss) per share of common stock ASC 260 Earnings Per Share, requires dual presentation of basic and diluted earnings per share (EPS) with a reconciliation of the numerator and denominator of the basic EPS computation to the numerator and denominator of the diluted EPS computation. Basic EPS excludes dilution. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity. Basic net income (loss) per common share is computed by dividing net income (loss) available to common shareholders by the weighted average number of shares of common shares outstanding during the period. Diluted net income per common share is computed by dividing net income by the weighted average number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during each period. As of June 30, 2015 and December 31, 2014, 6,800,000 contingently issuable common shares that are issuable based on certain market conditions (see Note 8) are not included in the potential dilutive shares in calculating the diluted EPS. Additionally, potentially dilutive common shares consist of common stock options (using the treasury stock method). These common stock equivalents may be dilutive in the future . June 30, 2015 December 31, 2014 Total stock options 2,078,833 4,357,528 Additionally, there are an unknown quantity of common stock equivalents that result from a potential conversion of equity credits and stock appreciation rights (See Notes 10, 11 and 13). Net loss per share for each class of common stock is as follows: Net (loss) income per common shares outstanding: Three Months ended June 30, 2015 Three Months ended June 30, 2014 Six Months ended June 30, 2015 Six Months ended June 30, 2014 Class A common stock $ (0.00 ) $ 0.01 $ 0.00 $ 0.01 Class B common stock $ (0.00 ) $ 0.00 $ 0.00 $ 0.00 Class Z common stock $ (0.00 ) $ 0.01 $ 0.00 $ 0.01 Weighted average shares outstanding Class A common stock 237,117,840 27,670,187 236,525,250 27,670,187 Class B common stock 251,047,032 250,698,105 251,032,131 250,698,105 Class Z common stock 47,273,470 47,273,470 47,273,470 47,273,470 Total weighted average shares outstanding 535,438,342 325,641,762 534,830,851 325,641,762 Segment reporting The Company uses the management approach in determining reportable operating segments. The management approach considers the internal organization and reporting used by the Companys chief operating decision maker for making operating decisions and assessing performance as the source for determining the Companys reportable segments. The Companys chief operating decision maker is the Chairman and chief executive officer (CEO) of the Company, who reviews operating results to make decisions about allocating resources and assessing performance for the entire Company. The Company classified the reportable operating segments into (i) the development, manufacture and sale of personal lens cleaners and accessories and ultra-thin films of organic or polymeric crystals (the Product Segment) and (ii) the performance of nanotechnology research and development services for government and private entities and any related sales of related products. Reclassification Certain reclassifications have been made in prior years consolidated financial statements to conform to the current years financial presentation. The reclassifications are primarily within operating expenses to reflect research and development as a separate line item. Recent accounting pronouncements In April 2015, the FASB issued ASU 2015-03, Imputation of Interest In June 2014, the FASB issued ASU 2014-12, Compensation - Stock Compensation There are no other recently issued accounting standards that apply to us or that are expected to have a material impact on our results of operations, financial condition, or cash flows. |
Acquisition
Acquisition | 6 Months Ended |
Jun. 30, 2015 | |
Business Combinations [Abstract] | |
Acquisition | NOTE 3 - ACQUISITION Effective August 27, 2014, pursuant to the reverse merger and recapitalization as discussed in Note 1, the Company and Nano merged. Both Nano and Applied Nanotech were interested in the Combination because of the opportunity to commercialize new products enabled by nanotechnology. The fact that Applied Nanotech was public will facilitate access to growth capital. The strong intellectual property portfolio of Applied Nanotech, combined with the experience of the Nano team, is to be the platform for the Company to expand its product offerings and commercialize the acquired technologies. On the Effective Date, the merger was accounted for as a reverse merger and recapitalization of Nano using the acquisition method in accordance with ASC 805-10 and related subsections since the shareholders of Nano and its subsidiary, the legal acquiree, owned 61.6% of the aggregate outstanding common shares of PEN immediately following the completion of the merger, had its current officers assume all corporate and day-to-day management offices of PEN, including chief executive officer and chief financial officer, and board members of Nano control a majority of the board after the Combination. Accordingly, Nano was deemed to be the accounting acquirer in the transaction and, consequently, the transaction is treated as a reverse merger with Nano as the acquiring company. Accordingly, the assets and liabilities and the historical operations that will be reflected in the PEN consolidated financial statements after the Effective Date are those of Nano and Subsidiary and are recorded at the historical cost basis of Nano. Applied Nanotechs assets and liabilities are recorded at their fair values as of the effective date and the results of operations of Applied Nanotech are consolidated with results of operations of Nano starting on the Effective Date. The following unaudited pro forma consolidated results of operations have been prepared as if the acquisition of Applied Nanotech had occurred as of the beginning of the following period: Three Months Ended June 30, 2014 Six Months Ended June 30, 2014 Net Revenues $ 3,428,658 $ 7,082,501 Net Loss $ (1,153,995 ) $ (1,324,714 ) Net Loss per Share $ (0.00 ) $ (0.00 ) Pro forma data does not purport to be indicative of the results that would have been obtained had these events actually occurred at the beginning of the periods presented and is not intended to be a projection of future results. |
Bank Loans and Lines of Revolvi
Bank Loans and Lines of Revolving Credit Facility | 6 Months Ended |
Jun. 30, 2015 | |
Debt Disclosure [Abstract] | |
Bank Loans and Lines of Revolving Credit Facility | NOTE 4 BANK LOANS AND LINES OF REVOLVING CREDIT FACILITY In April 2014, Nanofilm entered into a $1,500,000 revolving credit line agreement (the Revolving Note) with Mackinac Commercial Credit, LLC (the Lender). The unpaid principal balance of this Revolving Note is payable on demand, is secured by all of Nanofilms assets, and bears interest computed at a rate of interest (the Effective Rate) which is equal to 7.0% above the LIBOR Rate, as defined, payable monthly. Nanofilm will pay to Lender a late charge of 5.0% of any monthly payment not received by Lender within 10 calendar days after its due date. The Company may, at any time or from time to time upon three business days written notice to Lender, prepay the Note in whole provided that (i) if Borrower prepays the Revolving Note in full and terminates the Revolving Note, or (ii) Lender terminates the Revolving Note after default, then Borrower will pay a termination premium equal to 2.0% of the maximum loan amount. Without the Lenders consent, so long as the obligation remains outstanding, in addition to other covenants as defined in the Revolving Note, Nanofilm shall not a) merge or consolidate with any other company, except for the Combination and shall not suffer a change of control; b) make an capital expenditures, as defined, materially affecting the business; c) declare or pay cash dividends upon any of its stock, or distribute any of its property, make any loans, make investments, redeem, retire or acquire any of its stock, d) become liable for the indebtedness of anyone else, as defined, and e) incur indebtedness, other than trade payables. On May 1, 2015 Nanofilm entered into an amendment to the Loan and Security Agreement with the Lender to extend the outside maturity date to April 4, 2016 and to permit advances against an expanded borrowing base. The borrowing base was increased by $450,000 through October 31, 2015, with this amount reducing by $7,500 monthly thereafter. In addition, the Company guaranteed Nanofilms obligations to the Lender. At June 30, 2015, the Company had $1,147,949 in borrowings outstanding under the Revolving Note with $802,051 available for borrowing under such note. The weighted average interest rate during the period was approximately 6.8%. |
Notes Payable
Notes Payable | 6 Months Ended |
Jun. 30, 2015 | |
Debt Disclosure [Abstract] | |
Notes Payable | NOTE 5 NOTES PAYABLE On February 10, 2015, Nanofilm entered into a promissory note (the Equipment Note) with KeyBank, N.A. (the Bank) to borrow up to $373,000. Nanofilm may obtain one or more advances not to exceed $373,000. The unpaid principal balance of this Equipment Note is payable in 60 equal monthly installments payments of principal and interest through June 10, 2020. The Equipment Note is secured by certain equipment, as defined in the Equipment Note, and bears interest computed at a rate of interest of 4.35% per annum based on a year of 360 days. At June 30, 2015, the principal amount due under the Equipment Note amounted to $365,703. On June 3, 2015, in connection with a severance package offered to three employees, the Company entered into three promissory note agreements with such employees which obligates the Company to pay these employees accrued and unpaid deferred salary in an aggregate amount of $41,770. The principal amounts due under these notes shall bear interest at the minimum rate of interest applicable under the internal revenue code (approximately 2.5% at June 30, 2015). All principal and interest payable under two of these notes aggregating $27,420 are due June 3, 2025 and all principal and interest payable under one of these notes amounting to $14,350 are due June 3, 2020. |
Convertible Notes Payable
Convertible Notes Payable | 6 Months Ended |
Jun. 30, 2015 | |
Debt Disclosure [Abstract] | |
Convertible Notes Payable | NOTE 6 CONVERTIBLE NOTES PAYABLE On February 7, 2015, the Company issued 208,681 shares of Class A common stock upon the automatic conversion in accordance with its terms of $10,000 of principal amount of convertible promissory notes, and accrued interest of $392 (See note 8). Upon conversion, the Company reclassified $3,333 of the conversion premium to additional paid-in capital. At June 30, 2015 and December 31, 2014, aggregate convertible notes payable consisted of the following: June 30, 2015 December 31, 2014 Convertible notes payable $ - $ 10,000 Put premium - 3,333 Total $ - $ 13,333 |
Related Party Transactions
Related Party Transactions | 6 Months Ended |
Jun. 30, 2015 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | NOTE 7 RELATED PARTY TRANSACTIONS Sales to related party During the three and six months ended June 30, 2015 and 2014, the Company engaged in certain sales transactions with a company which is a shareholder and related to a director of the Company. These transactions were conducted during the normal course of the Companys business on terms consistent with similar transactions with unrelated parties. Sales to the related party totaled $32,291 and $24,367 for the three months ended June 30, 2015 and 2014 and totaled $77,118 and $107,052 for the six months ended June 30, 2015 and 2014, respectively. Accounts receivable from the related party totaled $9,980 and $38,246 at June 30, 2015 and December 31, 2014, respectively. Other A board member is a principal in an investment advisory firm which the Company paid $36,000 and $23,000 in fees and expenses during the three months ended June 30, 2015 and 2014 and $72,000 and $90,000 in fees and expenses during the six months ended June 30, 2015 and 2014, respectively. |
Stockholders' Equity
Stockholders' Equity | 6 Months Ended |
Jun. 30, 2015 | |
Equity [Abstract] | |
Stockholders' Equity | NOTE 8 - STOCKHOLDERS EQUITY Description of Preferred and Common Stock The Company is authorized to issue up to a total of 1,820,000,000 shares of capital stock, consisting of 20,000,000 shares of Preferred Stock, par value $0.0001 per share (preferred stock), 1,300,000,000 shares of Class A Common Stock, par value $0.0001 per share (Class A common stock), 400,000,000 shares of Class B Common Stock, par value $0.0001 per share (Class B common stock), and 100,000,000 shares of Class Z Common Stock, par value $0.0001 per share (Class Z common stock). Preferred Stock The preferred stock may be issued in one or more series. The Companys board of directors are authorized to issue the shares of preferred stock in such series and to fix from time to time before issuance thereof the number of shares to be included in any such series and the designation, powers, preferences and relative, participating, optional or other rights, and the qualifications, limitations or restrictions thereof, of such series. Common Stock General The rights of each share of Class A common stock, each share of Class B common stock and each share of Class Z common stock are the same with respect to dividends, distributions and rights upon liquidation. Class A Common Stock Holders of the Class A common stock are entitled to one vote per share in the election of directors and other matters submitted to a vote of the stockholders. Class B Common Stock Conversion Rights Voting Rights Class Z Common Stock Conversion Rights Voting Rights Other Rights Issuances of Common Stock Common stock issued In connection with a Stock Grant Agreement In connection with a Stock Grant Agreement with the former chief financial officer of Applied Nanotech dated in March 2014, the Company issued 889,580 shares on January 31, 2015 and 1,200,000 shares of Class A common stock in February 2015 for an aggregate of 2,089,580 shares of Class A common stock in satisfaction of amounts due of $123,285 pursuant to the Stock Grant Agreement. These shares were valued on the date of grant at $0.059 per share based on the quoted trading price for a total value of $123,285. In connection with these shares, during the year ended December 31, 2014, the Company recorded compensation expense of $123,285 and at December 31, 2014, included $123,285 in accrued expenses on the accompanying unaudited consolidated balance sheet. Upon issuance of these shares in 2015, the accrued interest was relieved and recorded as equity. Common stock issued for convertible debt and interest On February 7, 2015, the Company issued 208,681 shares of Class A common stock upon the automatic conversion in accordance with its terms of $10,000 of principal amount of a convertible promissory note, and accrued interest on that note of $392 (see note 6). Upon conversion, the Company reclassified $3,333 of the conversion premium to additional paid-in capital. Common shares issued for services On May 4, 2015, the Company issued an aggregate of 119,615 shares of Class A common stock and 47,876 shares of Class B common stock to the Companys directors as partial payment for their service on the Companys board. These shares are valued were valued on the date of grant of May 4, 2015 at $0.0418 per share based on the quoted price of the stock for a total value of $7,000. Stock Options Stock options outstanding are to purchase Class A common stock, Stock option activities for the six months ended June 30, 2015 are summarized as follows: Number of Options Weighted Average Exercise Price Weighted Average Remaining Contractual Term (Years) Aggregate Intrinsic Value Balance Outstanding December 31, 2014 4,357,528 $ 0.50 - $ - Exercised - - - - Forfeited (2,278,695 ) (0.51 ) - - Balance Outstanding June 30, 2015 2,078,833 $ 0.49 4.52 $ - Exercisable, June 30, 2015 2,078,833 $ 0.49 4.52 $ - Contingently issuable Class A common shares On August 27, 2014, the Company entered into a Restricted Stock Agreement with Dr. Zvi Yaniv, the former Chief Operating Officer and President, of Applied Nanotech, and a current employee of the Company granting Dr. Yaniv 6,800,000 shares of Class A common stock, subject to forfeiture. All these shares become vested and not subject to forfeiture on the earlier of a change of control of us, Dr. Yanivs death, or if more than 180 days after closing, the average trading price of the shares during a measurement period of ten consecutive trading days reaches certain price thresholds. At a $0.10 price, one million of the shares vest, with additional tranches of one million shares vesting if the price reaches $0.15, $0.20, $0.25 and $0.30. The last 1.8 million shares vest at a $0.35 price threshold. Any shares that have not vested five years after the Effective Date will be forfeited. We also entered into a Piggyback Registration Rights Agreement that will allow Dr. Yaniv, subject to other customary terms and conditions, to register shares that are no longer subject to forfeiture if we are registering our shares. Pursuant to ASC 718-10 and related subsections, these shares were valued on the date of grant of August 27, 2014 at $0.0729 per shares for a total value of $495,720. The Company estimates the fair value of the awards with market conditions using a Binomial simulation, which utilizes several assumptions including the risk-free interest rate, the volatility of the Companys stock and the exercise behavior of award recipients. The grant-date fair value of $495,720 of the awards will be recognized over the requisite service period of 3 years, which represents the derived service period for the stock grant as determined by the Binomial simulation. For the three and six months ended June 30, 2015, in connection with the amortization of the fair value of this stock grant, the Company recorded stock-based compensation of $41,310 and $82,620, respectively. |
Concentrations
Concentrations | 6 Months Ended |
Jun. 30, 2015 | |
Risks and Uncertainties [Abstract] | |
Concentrations | NOTE 9 CONCENTRATIONS Concentrations of credit risk Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of trade accounts receivable and cash deposits and investments in cash equivalent instruments. The Company places its cash in banks at levels that, at times, may exceed federally insured limits. There were no balances in excess of FDIC insured levels as of June 30, 2015 and December 31, 2014. The Company has not experienced any losses in such accounts through March 31, 2015. Customer concentrations Customer concentrations for the six months ended June 30, 2015 and 2014 are as follows: Revenues For the six months ended June 30, 2015 2014 Customer A 27 % 22 % Customer B 0 % 29 % Customer C 9 % 11 % Total 36 % 62 % Accounts Receivable As of June 30, As of December 31, 2015 2014 Customer A 17 % 31 % Customer C 12 % 10 % Total 29 % 41 % A reduction in sales from or loss of such customers would have a material adverse effect on our consolidated results of operations and financial condition. Geographic concentrations of sales For the six months ended June 30, 2015 and 2014, total sales in the United States represent approximately 92% and 89% of total consolidated revenues, respectively. No other geographical area accounting for more than 10% of total sales during the six months ended June 30, 2015 and 2014. Vendor concentrations For the six months ended June 30, 2015, the Company purchased 53% of its inventory from three suppliers (29%, 13% and 11%, respectively). For the six months ended June 30, 2014, the Company purchased 47% of its inventory from three suppliers (25%, 12% and 10%, respectively). |
Equity Credits
Equity Credits | 6 Months Ended |
Jun. 30, 2015 | |
Equity Credits | |
Equity Credits | NOTE 10 EQUITY CREDITS During 1997, Nanofilm established The Equity Credit Incentive Program Under the terms of the Plan, when the Company completes a registered offering of its common stock, the equity credit participants will have the option to convert the equity credits into Class A common shares of the Company, or in the case of our President, into shares of Class B common stock. |
Stock Appreciation Plan
Stock Appreciation Plan | 6 Months Ended |
Jun. 30, 2015 | |
Stock Appreciation Plan | |
Stock Appreciation Plan | NOTE 11 STOCK APPRECIATION PLAN From June 1, 1988, until December 31, 1997, when the plan was terminated, Nanofilm had in place a Stock Appreciation Rights Plan A (the Plan), intended to provide employees, directors, members of a technical advisory board and certain independent contractors selected by the Board with equity-like participation in the growth of Nanofilm. The maximum number of stock appreciation rights that could be granted by the Board was 1,000,000. There were 235,782 fully vested stock appreciation rights (SARS) outstanding under the terms of the Plan at June 30, 2015 and December 31, 2014. The SARS unit value is based on the book value of the Company as of the last fiscal year end multiplied by a SARS multiplier stipulated in the SARS plan. However, in the event of an initial public offering (IPO) of Nano, the SARS are redeemable based on a value equal to offering price of the stock in an IPO times the total outstanding shares of the Company just subsequent to the completion of the IPO, multiplied by the SARS multiplier. The SARS multiplier is to be adjusted, as the Board determines, to reflect changes in the capitalization of Nanofilm. Generally, the SARS are redeemable in cash, at their then fair value as computed pursuant to the Plan, in the event of termination of employment or business relationship, death, permanent and total disability, or sale of Nano (as defined).. Upon an IPO, SARS are to be redeemed by applying 70% of the redemption value to purchase common shares, with the remaining 30% being distributed in cash to the participant. The August 2014 Combination does not qualify as an IPO under the Plan; however, a future underwritten registered offering may qualify. The accrued redemption value associated with the stock appreciation rights amounted to $46,146 and $46,146, at June 30, 2015 and December 31, 2014, respectively. If the Company completes an IPO, the value of SARS calculated based on the IPO formula may cause a material increase in the value of the liability. |
Segment Reporting
Segment Reporting | 6 Months Ended |
Jun. 30, 2015 | |
Segment Reporting [Abstract] | |
Segment Reporting | NOTE 12 SEGMENT REPORTING The Companys principal operating segments coincide with the types of products to be sold. The products from which revenues are derived are consistent with the reporting structure of the Companys internal organization. The Companys two reportable segments for the three months ended March 31, 2014 were i) the Product Segment and ii) the Research and Development Segment. For the 2014 period, the Company only operated in the Product Segment. The Companys chief operating decision-maker has been identified as the Chairman and CEO, who reviews operating results to make decisions about allocating resources and assessing performance for the entire Company. Segment information is presented based upon the Companys management organization structure as of June 30, 2015 and the distinctive nature of each segment. Future changes to this internal financial structure may result in changes to the reportable segments disclosed. There are no inter-segment revenue transactions and, therefore, revenues are only to external customers. As the Company primarily generates its revenues from customers in the United States, no geographical segments are presented. Segment operating profit is determined based upon internal performance measures used by the chief operating decision-maker. The Company derives the segment results from its internal management reporting system. The accounting policies the Company uses to derive reportable segment results are the same as those used for external reporting purposes. Management measures the performance of each reportable segment based upon several metrics, including net revenues, gross profit and operating income (loss). Management uses these results to evaluate the performance of, and to assign resources to, each of the reportable segments. The Company manages certain operating expenses separately at the corporate level and does not allocate such expenses to the segments. Segment income from operations excludes interest income/expense and other income or expenses and income taxes according to how a particular reportable segments management is measured. Management does not consider impairment charges, and unallocated costs in measuring the performance of the reportable segments. Segment information available with respect to these reportable business segments for the three and six months ended June 30, 2015 and 2014 was as follows: Three Months Ended June 30, Six Months Ended June 30, 2015 2014 2015 2014 Revenues: Product segment $ 1,862,133 $ 2,867,962 $ 4,299,447 $ 5,639,373 Research and development segment 451,216 - 1,081,643 - Total segment and consolidated revenues 2,313,349 2,867,962 5,381,090 5,639,373 Gross profit: Product segment 783,705 1,486,435 1,814,300 2,807,705 Research and development segment (4,622 ) - 117,421 - Total segment and consolidated gross profit 779,083 1,486,435 1,931,721 2,807,705 Income (loss) from operations Product segment $ 71,518 $ 492,654 $ 329,786 $ 818,343 Research and development segment (232,956 ) - (298,921 ) - Total segment income (loss) (161,438 ) 492,654 30,865 818,343 Unallocated costs (369,017 ) - (720,870 ) - Total consolidated (loss) income from operations $ (530,455 ) $ 492,654 $ (690,005 ) $ 818,343 Depreciation and amortization: Product segment $ 37,857 $ 42,183 $ 75,714 $ 84,366 Research and development segment 12,926 - 25,810 - Total segment depreciation and amortization 50,783 42,183 101,524 84,366 Unallocated depreciation 12,821 - 25,643 - Total consolidated depreciation and amortization 63,604 42,183 127,167 84,366 Capital additions: Product segment $ 193,895 $ 4,544 $ 224,206 $ 7,058 Research and development segment 3,386 - 3,386 - Total segment capital additions 197,281 4,544 227,592 7,058 Unallocated capital additions - - - - Total consolidated capital additions $ 197,281 $ 4,544 $ 227,592 $ 7,058 June 30, 2015 December 31, 2014 Segment tangible assets: Product segment $ 899,143 $ 750,651 Research and development segment 77,772 100,196 Total consolidated tangible assets $ 976,915 $ 850,847 |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | NOTE 13 - COMMITMENTS AND CONTINCENGIES Equity Credits Equity credits may become convertible into an unknown amount of capital stock of the Company to be determined by the Companys board of directors (See Note 10). Stock Appreciation Rights If the Company completes an IPO, the value of stock appreciation rights calculated based on the IPO formula may cause a material increase in the value of the liability (See Note 11). Placement Agency Agreement On March 4, 2015, the Company entered into an 18-month placement agency agreement with INTL FCStone Securities Inc. (INTL) to assist the Company in exploring a capital raise. Under the terms of the engagement, the Company paid them $50,000. Their fee if a transaction closes is a minimum of $250,000 (inclusive of the $50,000 which was already paid). If the Company is paid money in connection with a transaction that fails to close, the Company will owe INTL 30% of that payment (net of any expenses the Company incurs). |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2015 | |
Subsequent Events [Abstract] | |
Subsequent Events | NOTE 14 - SUBSEQUENT EVENTS On July 30, 2015, the Company issued an aggregate of 154,320 shares of Class A common stock and 61,728 shares of Class B common stock to the Companys directors as partial payment for their service on the Companys board. These shares were valued on the date of grant of July 30, 2015 at $0.0324 per share based on the quoted price of the stock for a total value of $7,000. |
Summary of Significant Accoun21
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2015 | |
Accounting Policies [Abstract] | |
Use of estimates | Use of estimates The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates for the six months ended June 30, 2015 and 2014 include estimates for allowance for doubtful accounts on accounts receivable, the estimates for obsolete inventory, the useful life of property and equipment, assumptions used in assessing impairment of long-term assets, the fair value of assets acquired and liabilities assumed in the merger, estimates of current and deferred income taxes and deferred tax valuation allowances, the fair value of non-cash equity transactions, and the fair value of equity incentives. |
Fair value of Financial Instruments and Fair Value Measurements | Fair value of financial instruments and fair value measurements The Company adopted the guidance of Accounting Standards Codification (ASC) 820 for fair value measurements which clarifies the definition of fair value, prescribes methods for measuring fair value, and establishes a fair value hierarchy to classify the inputs used in measuring fair value as follows: Level 1-Inputs are unadjusted quoted prices in active markets for identical assets or liabilities available at the measurement date. Level 2-Inputs are quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, inputs other than quoted prices that are observable, and inputs derived from or corroborated by observable market data. Level 3-Inputs are unobservable inputs which reflect the reporting entitys own assumptions on what assumptions the market participants would use in pricing the asset or liability based on the best available information. The carrying amounts reported in the consolidated balance sheets for cash and cash equivalents, accounts receivable, loans and lines of credit, accounts payable, accrued expenses, and other payables approximate their fair market value based on the short-term maturity of these instruments. The Company analyzes all financial and non-financial instruments with features of both liabilities and equity under the FASBs accounting standard for such instruments. Under this standard, financial and non-financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company accounts for three instruments at fair value using level 3 valuation. At June 30, 2015 At December 31, 2014 Description Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 Intangible assets - - $ 213,695 - - $ 239,338 Stock Appreciation Rights Plan A - - $ 46,146 - - $ 46,146 Equity Credits Issued - - $ 25,178 - - $ 25,178 A rollforward of the level 3 valuation of these three financial instruments is as follows: Intangible Assets Stock Appreciation Rights Plan A Equity Credits Issued Balance at December 31, 2014 $ 239,338 $ 46,146 $ 25,178 Amortization of intangible assets (25,643 ) - - Change in fair value included in net loss - - - Balance at June 30, 2015 $ 213,695 $ 46,146 $ 25,178 ASC 825-10 Financial Instruments, allows entities to voluntarily choose to measure certain financial assets and liabilities at fair value (fair value option). The fair value option may be elected on an instrument-by-instrument basis and is irrevocable, unless a new election date occurs. If the fair value option is elected for an instrument, unrealized gains and losses for that instrument should be reported in earnings at each subsequent reporting date. The Company did not elect to apply the fair value option to any outstanding instruments. |
Cash and Cash Equivalents | Cash and cash equivalents For purposes of the consolidated statements of cash flows, the Company considers all highly liquid instruments with a maturity of three months or less at the purchase date and money market accounts to be cash equivalents. |
Accounts Receivable | Accounts receivable The Company recognizes an allowance for losses on accounts receivable in an amount equal to the estimated probable losses net of recoveries. The allowance is based on an analysis of historical bad debt experience, current receivables aging, and expected future write-offs, as well as an assessment of specific identifiable customer accounts considered at risk or uncollectible. The expense associated with the allowance for doubtful accounts is recognized as general and administrative expense. |
Inventory | Inventory Inventory is stated at the lower of cost or market. Cost is determined using the first-in, first-out (FIFO) method. At June 30, 2015 and December 31, 2014, inventory consisted of the following: June 30, 2015 December 31, 2014 Raw materials $ 901,630 $ 953,566 Finished goods 596,732 813,352 1,498,362 1,766,918 Less: reserve for obsolescence (282,552 ) (209,818 ) Total $ 1,215,810 $ 1,557,100 |
Property and Equipment | Property and equipment Property and equipment are stated at cost and are depreciated using the straight-line method over their estimated useful lives, which range from three to ten years. Leasehold improvements are depreciated over the shorter of the useful life or lease term including scheduled renewal terms. Maintenance and repairs are charged to expense as incurred. When assets are retired or disposed of, the cost and accumulated depreciation are removed from the accounts, and any resulting gains or losses are included in income in the year of disposition. The Company examines the possibility of decreases in the value of these assets when events or changes in circumstances reflect the fact that their recorded value may not be recoverable. |
Intangible Assets | Intangible assets Intangible assets, consisting of patents, patent pending technologies and other technologies being amortized on a straight-line method over the estimated useful life of 5 years. |
Impairment of Long-Lived Assets | Impairment of long-lived assets In accordance with ASC Topic 360, the Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable, or at least annually. The Company recognizes an impairment loss when the sum of expected undiscounted future cash flows is less than the carrying amount of the asset. The amount of impairment is measured as the difference between the assets estimated fair value and its book value. The Company did not record any impairment charge for the six months ended June 30, 2015 and 2014. |
Revenue Recognition | Revenue recognition Pursuant to the guidance of ASC Topic 605, the Company recognizes sales when persuasive evidence of an arrangement exists, delivery has occurred or services have been provided, the purchase price is fixed or determinable and collectability is reasonably assured. Types of Revenue: ● Net product sales by our subsidiary Nanofilm. ● Reimbursements under agreements to perform research and development for government agencies and others by our subsidiary, Applied Nanotech. We do not perform research contracts that are contingent upon successful results. Larger projects are sometimes broken down in phases to allow the customer to determine at the end of each phase if they wish to move to the next phase. The agreements with federal government agencies generally provide that, upon completion of a technology development program, the funding agency is granted a royalty-free license to use any technology developed during the course of the program for its own purposes, but not any preexisting technology that we use in connection with the program. We retain all other rights to use, develop, and commercialize the technology. Agreements with nongovernmental entities generally allow the entity the first opportunity to license the technology from us upon completion of the project. ● Product sales and other miscellaneous revenues from our subsidiary, Applied Nanotech such as the sale of conductive inks and thermal management materials. Revenue Recognition Criteria: ● Net product sales by our subsidiary Nano, are recognized when the product is shipped to the customer and title is transferred. ● Revenue from research and development government contracts is recognized when it is earned pursuant to the terms of the contract. These projects are usually billed monthly based on costs, hours, or some other measure of activity during the month and revenue is recognized as services are provided. If there is substantive acceptance terms then revenue will not be recognized until acceptance occurs. The recognition of revenue may not correspond with the billings allowable under the contract. To the extent that billings exceed revenue earned, a portion of the revenue is deferred until such time as it is earned. ● Revenue from research and development non-governmental contracts is recognized when it is earned pursuant to the terms of the contract. Each contract is unique and tailored to the needs of the customer and goals of the project. Some contracts may call for a monthly payment for a fixed period of time. Other contracts may be for a fixed dollar amount with an unspecified time period, although there is frequently a targeted completion date. These contracts generally involve some sort of up-front payment. Some contracts may call for the delivery of samples, or may call for the transfer of equipment or other items developed during the project to the customer. These projects are usually billed monthly based on costs, hours, or some other measure of activity during the month and revenue is recognized as services are provided. If there is substantive acceptance terms then revenue will not be recognized until acceptance occurs. ● Revenue from other product sales is recognized at the time the product shipped. The Companys subsidiary Applied Nanotechs primary business is research and development and the licensing of its technology, not the sale of products. Product sales are generally insignificant in number, and are generally limited to the sale of conductive inks, thermal management materials, samples, proofs of concepts, prototypes, or other items resulting from its research. ● Other miscellaneous revenue is recognized as deemed appropriate given the facts of the situation and is generally not material. |
Sales Incentives and Consideration Paid to Customers | Sales incentives and consideration paid to customers The Company accounts for certain promotional costs such as sales incentives and cooperative advertising as a reduction of sales. For the three months ended June 30, 2015 and 2014 and for the six months ended June 30, 2015 and 2014, the Company recorded approximately $26,225 and $35,010 and $81,693 and $65,508, respectively, as a reduction of sales related to these costs. |
Cost of Sales | Cost of sales Cost of sales includes inventory costs, materials and supplies costs, internal labor and related benefits, subcontractor costs, depreciation, overhead and shipping and handling costs incurred. |
Shipping and Handling Costs | Shipping and handling costs Shipping and handling costs incurred relating to the purchase of inventory are included in inventory which is charged to cost of sales as product are sold. Shipping and handling costs charged to customers are included in sales. For the three months ended June 30, 2015 and 2014 and for the six months ended June 30, 2015 and 2014, shipping and handling costs incurred for product shipped to customers are included in cost of sales and amounted to $50,384 and $56,923, and $102,022 and $109,908, respectively. |
Research and Development | Research and development Research and development costs incurred in the development of the Companys products and under other Company sponsored research and development projects are expensed as incurred. Costs such as direct labor, direct costs, and other allocated costs incurred to perform research and development service pursuant to government and private research projects are in included in cost of sales. For the three months ended June 30, 2015 and 2014 and for the six months ended June 30, 2015 and 2014, research and development costs incurred in the development of the Companys products were $250,353 and $144,634, and $445,555 and $295,369, respectively, and are included in operating expenses on the accompanying consolidated statements of operations. |
Advertising Costs | Advertising costs The Company participates in various advertising programs. All costs related to advertising of the Companys products are expensed in the period incurred. For the three months ended June 30, 2015 and 2014 and for the six months ended June 30, 2015 and 2014, advertising costs charged to operations were $17,218 and $53,783, and $34,768 and $92,114, respectively and are included in sales and marketing on the consolidated accompanying statements of operations. These advertising expenses do not in include cooperative advertising and sales incentives which have been deducted from sales. |
Federal and State Income Taxes | Federal and state income taxes The Company accounts for income tax using the liability method prescribed by ASC 740, Income Taxes Prior to the February 24, 2014, the Companys subsidiary, Nanofilm, operated as a limited liability company and passed all income and loss to each member based on their proportionate interest in Nanofilm. After February 24, 2014, the date on which Nanofilm reorganized by creating a corporation parent, NanoHolding Inc., approximately 85.5% of the net income (loss) of Nanofilm, was passed through to the majority member, NanoHolding Inc. After the effective date of the merger, 100% of the net income (loss) of Nanofilm is passed through to the Company. The Company follows the accounting guidance for uncertainty in income taxes using the provisions of Accounting Standards Codification (ASC) 740 Income Taxes |
Stock-Based Compensation | Stock-based compensation Stock-based compensation is accounted for based on the requirements of the Share-Based Payment Topic of ASC 718 which requires recognition in the financial statements of the cost of employee and director services received in exchange for an award of equity instruments over the period the employee or director is required to perform the services in exchange for the award (presumptively, the vesting period). The ASC also requires measurement of the cost of employee and director services received in exchange for an award based on the grant-date fair value of the award. Pursuant to ASC Topic 505-50, for share-based payments to consultants and other third-parties, compensation expense is determined at the measurement date. The expense is recognized over the service period of the award. Until the measurement date is reached, the total amount of compensation expense remains uncertain. The Company initially records compensation expense based on the fair value of the award at the reporting date. |
Income (Loss) Per Share of Common Stock | Income (loss) per share of common stock ASC 260 Earnings Per Share, requires dual presentation of basic and diluted earnings per share (EPS) with a reconciliation of the numerator and denominator of the basic EPS computation to the numerator and denominator of the diluted EPS computation. Basic EPS excludes dilution. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity. Basic net income (loss) per common share is computed by dividing net income (loss) available to common shareholders by the weighted average number of shares of common shares outstanding during the period. Diluted net income per common share is computed by dividing net income by the weighted average number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during each period. As of June 30, 2015 and December 31, 2014, 6,800,000 contingently issuable common shares that are issuable based on certain market conditions (see Note 8) are not included in the potential dilutive shares in calculating the diluted EPS. Additionally, potentially dilutive common shares consist of common stock options (using the treasury stock method). These common stock equivalents may be dilutive in the future . June 30, 2015 December 31, 2014 Total stock options 2,078,833 4,357,528 Additionally, there are an unknown quantity of common stock equivalents that result from a potential conversion of equity credits and stock appreciation rights (See Notes 10, 11 and 13). Net loss per share for each class of common stock is as follows: Net (loss) income per common shares outstanding: Three Months ended June 30, 2015 Three Months ended June 30, 2014 Six Months ended June 30, 2015 Six Months ended June 30, 2014 Class A common stock $ (0.00 ) $ 0.01 $ 0.00 $ 0.01 Class B common stock $ (0.00 ) $ 0.00 $ 0.00 $ 0.00 Class Z common stock $ (0.00 ) $ 0.01 $ 0.00 $ 0.01 Weighted average shares outstanding Class A common stock 237,117,840 27,670,187 236,525,250 27,670,187 Class B common stock 251,047,032 250,698,105 251,032,131 250,698,105 Class Z common stock 47,273,470 47,273,470 47,273,470 47,273,470 Total weighted average shares outstanding 535,438,342 325,641,762 534,830,851 325,641,762 |
Segment Reporting | Segment reporting The Company uses the management approach in determining reportable operating segments. The management approach considers the internal organization and reporting used by the Companys chief operating decision maker for making operating decisions and assessing performance as the source for determining the Companys reportable segments. The Companys chief operating decision maker is the Chairman and chief executive officer (CEO) of the Company, who reviews operating results to make decisions about allocating resources and assessing performance for the entire Company. The Company classified the reportable operating segments into (i) the development, manufacture and sale of personal lens cleaners and accessories and ultra-thin films of organic or polymeric crystals (the Product Segment) and (ii) the performance of nanotechnology research and development services for government and private entities and any related sales of related products. |
Reclassification | Reclassification Certain reclassifications have been made in prior years consolidated financial statements to conform to the current years financial presentation. The reclassifications are primarily within operating expenses to reflect research and development as a separate line item. |
Recent accounting pronouncements | Recent accounting pronouncements In April 2015, the FASB issued ASU 2015-03, Imputation of Interest In June 2014, the FASB issued ASU 2014-12, Compensation - Stock Compensation There are no other recently issued accounting standards that apply to us or that are expected to have a material impact on our results of operations, financial condition, or cash flows. |
Summary of Significant Accoun22
Summary of Significant Accounting Policies (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Accounting Policies [Abstract] | |
Schedule of Reconciliation of Fair Value of Level 3 Valuation of Financial Instruments | The Company accounts for three instruments at fair value using level 3 valuation. At June 30, 2015 At December 31, 2014 Description Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 Intangible assets - - $ 213,695 - - $ 239,338 Stock Appreciation Rights Plan A - - $ 46,146 - - $ 46,146 Equity Credits Issued - - $ 25,178 - - $ 25,178 |
Schedule of Reconciliation of Fair Value of Asset Liabilities Measured Recurring Basis | A rollforward of the level 3 valuation of these three financial instruments is as follows: Intangible Assets Stock Appreciation Rights Plan A Equity Credits Issued Balance at December 31, 2014 $ 239,338 $ 46,146 $ 25,178 Amortization of intangible assets (25,643 ) - - Change in fair value included in net loss - - - Balance at June 30, 2015 $ 213,695 $ 46,146 $ 25,178 |
Schedule of inventory | At June 30, 2015 and December 31, 2014, inventory consisted of the following: June 30, 2015 December 31, 2014 Raw materials $ 901,630 $ 953,566 Finished goods 596,732 813,352 1,498,362 1,766,918 Less: reserve for obsolescence (282,552 ) (209,818 ) Total $ 1,215,810 $ 1,557,100 |
Schedule of Anti-dilutive Per Share Information | Potentially dilutive common shares were excluded from the computation of diluted shares outstanding as they would have an anti-dilutive impact on the Companys net losses and consisted of the following: June 30, 2015 December 31, 2014 Total stock options 2,078,833 4,357,528 |
Schedule of Reconciliation of Basic and Diluted Net Income Loss | Net loss per share for each class of common stock is as follows: Net (loss) income per common shares outstanding: Three Months ended June 30, 2015 Three Months ended June 30, 2014 Six Months ended June 30, 2015 Six Months ended June 30, 2014 Class A common stock $ (0.00 ) $ 0.01 $ 0.00 $ 0.01 Class B common stock $ (0.00 ) $ 0.00 $ 0.00 $ 0.00 Class Z common stock $ (0.00 ) $ 0.01 $ 0.00 $ 0.01 Weighted average shares outstanding Class A common stock 237,117,840 27,670,187 236,525,250 27,670,187 Class B common stock 251,047,032 250,698,105 251,032,131 250,698,105 Class Z common stock 47,273,470 47,273,470 47,273,470 47,273,470 Total weighted average shares outstanding 535,438,342 325,641,762 534,830,851 325,641,762 |
Acquisition (Tables)
Acquisition (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Business Combinations [Abstract] | |
Schedule Pro Forma Consolidated Results of Operations | The following unaudited pro forma consolidated results of operations have been prepared as if the acquisition of Applied Nanotech had occurred as of the beginning of the following period: Three Months Ended June 30, 2014 Six Months Ended June 30, 2014 Net Revenues $ 3,428,658 $ 7,082,501 Net Loss $ (1,153,995 ) $ (1,324,714 ) Net Loss per Share $ (0.00 ) $ (0.00 ) |
Convertible Notes Payable (Tabl
Convertible Notes Payable (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Debt Disclosure [Abstract] | |
Schedule of Convertible Notes Payable | At June 30, 2015 and December 31, 2014, aggregate convertible notes payable consisted of the following: June 30, 2015 December 31, 2014 Convertible notes payable $ - $ 10,000 Put premium - 3,333 Total $ - $ 13,333 |
Stockholder's Equity (Tables)
Stockholder's Equity (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of Stock Option Plan Activity | Stock options outstanding are to purchase Class A common stock, Stock option activities for the six months ended June 30, 2015 are summarized as follows: Number of Options Weighted Average Exercise Price Weighted Average Remaining Contractual Term (Years) Aggregate Intrinsic Value Balance Outstanding December 31, 2014 4,357,528 $ 0.50 - $ - Exercised - - - - Forfeited (2,278,695 ) (0.51 ) - - Balance Outstanding June 30, 2015 2,078,833 $ 0.49 4.52 $ - Exercisable, June 30, 2015 2,078,833 $ 0.49 4.52 $ - |
Concentration (Tables)
Concentration (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Risks and Uncertainties [Abstract] | |
Schedule of Revenue Percentage | Customer concentrations for the six months ended June 30, 2015 and 2014 are as follows: Revenues For the six months ended June 30, 2015 2014 Customer A 27 % 22 % Customer B 0 % 29 % Customer C 9 % 11 % Total 36 % 62 % |
Schedule of Accounts Receivable Percentage | Accounts Receivable As of June 30, As of December 31, 2015 2014 Customer A 17 % 31 % Customer C 12 % 10 % Total 29 % 41 % |
Segment Reporting (Tables)
Segment Reporting (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Segment Reporting [Abstract] | |
Segment Information Available With Respect To Reportable Business Segments | Segment information available with respect to these reportable business segments for the three and six months ended June 30, 2015 and 2014 was as follows: Three Months Ended June 30, Six Months Ended June 30, 2015 2014 2015 2014 Revenues: Product segment $ 1,862,133 $ 2,867,962 $ 4,299,447 $ 5,639,373 Research and development segment 451,216 - 1,081,643 - Total segment and consolidated revenues 2,313,349 2,867,962 5,381,090 5,639,373 Gross profit: Product segment 783,705 1,486,435 1,814,300 2,807,705 Research and development segment (4,622 ) - 117,421 - Total segment and consolidated gross profit 779,083 1,486,435 1,931,721 2,807,705 Income (loss) from operations Product segment $ 71,518 $ 492,654 $ 329,786 $ 818,343 Research and development segment (232,956 ) - (298,921 ) - Total segment income (loss) (161,438 ) 492,654 30,865 818,343 Unallocated costs (369,017 ) - (720,870 ) - Total consolidated (loss) income from operations $ (530,455 ) $ 492,654 $ (690,005 ) $ 818,343 Depreciation and amortization: Product segment $ 37,857 $ 42,183 $ 75,714 $ 84,366 Research and development segment 12,926 - 25,810 - Total segment depreciation and amortization 50,783 42,183 101,524 84,366 Unallocated depreciation 12,821 - 25,643 - Total consolidated depreciation and amortization 63,604 42,183 127,167 84,366 Capital additions: Product segment $ 193,895 $ 4,544 $ 224,206 $ 7,058 Research and development segment 3,386 - 3,386 - Total segment capital additions 197,281 4,544 227,592 7,058 Unallocated capital additions - - - - Total consolidated capital additions $ 197,281 $ 4,544 $ 227,592 $ 7,058 June 30, 2015 December 31, 2014 Segment tangible assets: Product segment $ 899,143 $ 750,651 Research and development segment 77,772 100,196 Total consolidated tangible assets $ 976,915 $ 850,847 |
Organization and Basis of Pre28
Organization and Basis of Presentation (Details Narrative) - shares | Aug. 28, 2014 | Aug. 27, 2014 | Aug. 26, 2014 | Jun. 30, 2015 | Dec. 31, 2014 |
Common Class A [Member] | |||||
Common stock outstanding | 237,162,531 | 234,744,655 | |||
Common Class A [Member] | Former Directors [Member] | |||||
Number of stock issued during period for payment of accrued fees to directors | 11,164,620 | ||||
Common Class A [Member] | Former CFO [Member] | |||||
Number of stock issued during period to former CFO | 1,500,000 | ||||
Common Class B [Member] | |||||
Common stock outstanding | 251,064,909 | 251,017,063 | |||
Class Z Commmon Stock [Member] | |||||
Common stock outstanding | 47,273,470 | 47,273,470 | |||
Common Class A [Member] | |||||
Common stock outstanding | 203,363,059 | ||||
Nanofilm Ltd [Member] | |||||
Percentage of ownership equity | 100.00% | ||||
Percentage of non controlling interest of net income loss | 14.50% | ||||
Applied Nanotech, Inc [Member] | |||||
Outstanding Convertible note converted into common stock | 32,379,288 | ||||
Nano [Member] | Common Class A [Member] | |||||
Number of stock shares exchanged during period | 27,670,187 | ||||
Nano [Member] | Common Class B [Member] | |||||
Number of stock shares exchanged during period | 250,698,105 | ||||
Nano [Member] | Class Z Commmon Stock [Member] | |||||
Number of stock shares exchanged during period | 47,273,470 |
Summary of Significant Accoun29
Summary of Significant Accounting Policies (Details Narrative) - USD ($) | Feb. 24, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | Dec. 31, 2014 |
Sales incentives and cooperative advertising reduction of sales | $ 26,225 | $ 35,010 | $ 81,693 | $ 65,508 | ||
Shipping and handling costs | 50,384 | 56,923 | 102,022 | 109,908 | ||
Research and development expense | 250,353 | 144,634 | 445,555 | 295,369 | ||
Advertising expense | $ 17,218 | $ 53,783 | $ 34,768 | $ 92,114 | ||
Potential non contingent dilutive common shares consist of common stock options | 6,800,000 | 6,800,000 | ||||
Minimum [Member] | ||||||
Estimated useful lives for property and equipment | 3 years | |||||
Maximum [Member] | ||||||
Estimated useful lives for property and equipment | 10 years | |||||
Nanofilm Ltd [Member] | ||||||
Percentage of net income loss | 85.50% | |||||
Percentage of net income loss after effective date of merger | 100.00% | |||||
Pending Technologies [Member] | ||||||
Estimated useful life of intangible assets | 5 years | |||||
Patents [Member] | ||||||
Estimated useful life of intangible assets | 5 years | |||||
Other Technologies [Member] | ||||||
Estimated useful life of intangible assets | 5 years |
Summary of Significant Accoun30
Summary of Significant Accounting Policies - Schedule of Reconciliation of Fair Value of Level 3 Valuation of Financial Instruments (Details) - USD ($) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2015 | Dec. 31, 2014 | |
Level 1 [Member] | ||
Intangible assets | ||
Stock Appreciation Rights Plan A | ||
Equity Credits Issued | ||
Level 2 [Member] | ||
Intangible assets | ||
Stock Appreciation Rights Plan A | ||
Equity Credits Issued | ||
Level 3 [Member] | ||
Intangible assets | $ 213,695 | $ 239,338 |
Stock Appreciation Rights Plan A | 46,146 | 46,146 |
Equity Credits Issued | $ 25,178 | $ 25,178 |
Summary of Significant Accoun31
Summary of Significant Accounting Policies - Schedule of Reconciliation of Fair Value of Asset Liabilities Measured Recurring Basis (Details) | 6 Months Ended |
Jun. 30, 2015USD ($) | |
Intangible Assets [Member] | |
Balance | $ 239,338 |
Amortization of intangible assets | $ (25,643) |
Change in fair value included in net loss | |
Balance | $ 213,695 |
Stock Appreciation Rights Plan A [Member] | |
Balance | $ 46,146 |
Amortization of intangible assets | |
Change in fair value included in net loss | |
Balance | $ 46,146 |
Equity Credits Issued [Member] | |
Balance | $ 25,178 |
Amortization of intangible assets | |
Change in fair value included in net loss | |
Balance | $ 25,178 |
Summary of Significant Accoun32
Summary of Significant Accounting Policies - Schedule of inventory (Details) - USD ($) | Jun. 30, 2015 | Dec. 31, 2014 |
Summary Of Significant Accounting Policies - Schedule Of Inventory Details | ||
Raw materials | $ 901,630 | $ 953,566 |
Finished goods | 596,732 | 813,352 |
Inventory gross | 1,498,362 | 1,766,918 |
Less: reserve for obsolescence | (282,552) | (209,818) |
Total | $ 1,215,810 | $ 1,557,100 |
Summary of Significant Accoun33
Summary of Significant Accounting Policies - Schedule of Anti-dilutive Per Share Information (Details) - shares | 6 Months Ended | 12 Months Ended |
Jun. 30, 2015 | Dec. 31, 2014 | |
Stock Option [Member] | ||
Total stock options | 2,078,833 | 4,357,528 |
Summary of Significant Accoun34
Summary of Significant Accounting Policies - Schedule of Reconciliation of Basic and Diluted Net Income Loss (Details) - $ / shares | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Weighted average shares outstanding | 535,438,342 | 325,641,762 | 534,830,851 | 325,641,762 |
Common Class A [Member] | ||||
Net loss per common shares outstanding | $ 0 | $ 0.01 | $ 0 | $ 0.01 |
Weighted average shares outstanding | 237,117,840 | 27,670,187 | 236,525,250 | 27,670,187 |
Common Class B [Member] | ||||
Net loss per common shares outstanding | $ 0 | $ 0 | $ 0 | $ 0 |
Weighted average shares outstanding | 251,047,032 | 250,698,105 | 251,032,131 | 250,698,105 |
Class Z Commmon Stock [Member] | ||||
Net loss per common shares outstanding | $ 0 | $ 0.01 | $ 0 | $ 0.01 |
Weighted average shares outstanding | 47,273,470 | 47,273,470 | 47,273,470 | 47,273,470 |
Acquisition (Details Narrative)
Acquisition (Details Narrative) | Aug. 27, 2014 |
Nano [Member] | |
Percentage of owned outstanding common share | 61.60% |
Acquisition - Schedule Pro Form
Acquisition - Schedule Pro Forma Consolidated Results of Operations (Details) - Jun. 30, 2014 - USD ($) | Total | Total |
Acquisition - Schedule Pro Forma Consolidated Results Of Operations Details | ||
Net Revenues | $ 3,428,658 | $ 7,082,501 |
Net Loss | $ (1,153,995) | $ (1,324,714) |
Net Loss per Share | $ 0 | $ 0 |
Bank Loans and Lines of Revol37
Bank Loans and Lines of Revolving Credit Facility (Details Narrative) - USD ($) | May. 01, 2015 | Apr. 30, 2014 | Jun. 30, 2015 |
Revolving credit facility | $ 1,500,000 | $ 1,147,949 | |
Percentage of effective interest rate | 7.00% | ||
Percentage of monthly payment to lender | 5.00% | ||
Percentage of termination premium equal to maximum loan amount | 2.00% | ||
Debt maturity date | Apr. 4, 2016 | ||
Maximum borrowing capacity of line of credit | $ 802,051 | ||
Long term debt weighted average interest rate | 6.80% | ||
October 31, 2015 [Member] | |||
Proceeds from loan | $ 450,000 | ||
Debt periodic payament | $ 7,500 |
Notes Payable (Details Narrativ
Notes Payable (Details Narrative) - USD ($) | Jun. 03, 2015 | May. 01, 2015 | Feb. 10, 2015 | Jun. 30, 2015 | Jun. 30, 2014 |
Debt installments payments ending date | Apr. 4, 2016 | ||||
Principal amount due under the Equipment Note | $ 371,901 | ||||
Accrued and unpaid deferred salary | $ 41,770 | ||||
Debt instruments interest rate | 2.50% | ||||
Promissory Note One [Member] | |||||
Debt installments payments ending date | Jun. 3, 2025 | ||||
Interest payable | $ 27,420 | ||||
Promissory Note Two [Member] | |||||
Debt installments payments ending date | Jun. 3, 2020 | ||||
Interest payable | $ 14,350 | ||||
Nanofilm Ltd [Member] | |||||
Proceeds from notes payable | $ 373,000 | ||||
Advances not to exceed | $ 373,000 | ||||
Debt instalments equal monthly payments | Equipment Note is payable in 60 equal monthly installments payments | ||||
Debt installments payments ending date | Jun. 10, 2020 | ||||
Debt instruments interest rate | 4.35% | ||||
Principal amount due under the Equipment Note | $ 365,703 |
Convertible Notes Payable (Deta
Convertible Notes Payable (Details Narrative) - USD ($) | Feb. 07, 2015 | Jun. 30, 2015 |
Common Class A [Member] | ||
Number of shares issued for conversion | $ 208,681 | |
Number of shares issued for conversion, shares | 10,000 | |
Convertible promissory notes and accrued interest | $ 392 | |
Convertible Notes Payable [Member] | ||
Conversion premium to additional paid-in capital | $ 3,333 | |
Convertible Notes Payable [Member] | Common Class A [Member] | ||
Convertible promissory notes and accrued interest | $ 392 |
Convertible Notes Payable - Sch
Convertible Notes Payable - Schedule of Convertible Notes Payable (Details) - USD ($) | Jun. 30, 2015 | Dec. 31, 2014 |
Debt Disclosure [Abstract] | ||
Convertible notes payable | $ 10,000 | |
Put premium | 3,333 | |
Total | $ 13,333 |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | Dec. 31, 2014 | |
Related Party Transactions [Abstract] | |||||
Sales to the related party | $ 32,291 | $ 24,367 | $ 77,118 | $ 107,052 | |
Accounts receivable - related party | 9,980 | 9,980 | $ 38,246 | ||
Fees and expenses to board member | $ 36,000 | $ 23,000 | $ 72,000 | $ 90,000 |
Stockholders' Equity (Details N
Stockholders' Equity (Details Narrative) - USD ($) | May. 04, 2015 | Feb. 07, 2015 | Aug. 27, 2014 | Feb. 28, 2015 | Jan. 31, 2015 | Mar. 31, 2014 | Jun. 30, 2015 | Jun. 30, 2015 | Jun. 30, 2014 | Dec. 31, 2014 |
Capital stock authorized shares | 1,820,000,000 | 1,820,000,000 | ||||||||
Preferred stock, par value | $ 0.0001 | $ 0.0001 | $ 0.0001 | |||||||
Preferred stock, shares authorized | 20,000,000 | 20,000,000 | 20,000,000 | |||||||
Common stock, par value | $ 0.0001 | $ 0.0001 | ||||||||
Common stock, shares authorized | 1,800,000,000 | 1,800,000,000 | ||||||||
Common stock voting rights | Holders of PEN Class B common stock are entitled to 100 votes per share in the election of directors and other matters submitted to a vote of the stockholders. | |||||||||
Accrued expenses | $ 753,348 | $ 753,348 | $ 964,587 | |||||||
Share based compensation amount | $ 41,310 | 82,620 | ||||||||
Fair value of granted stock on the quoted trading price | 123,285 | |||||||||
Dr Zvi Yaniv [Member] | ||||||||||
Equity issuance price per share | $ 0.0729 | |||||||||
Number of shares issued for forfeiture | 6,800,000 | |||||||||
Expected vested exercise price description | the average trading price of the shares during a measurement period of ten consecutive trading days reaches certain price thresholds. At a $0.10 price, one million of the shares vest, with additional tranches of one million shares vesting if the price reaches $0.15, $0.20, $0.25 and $0.30. The last 1.8 million shares vest at a $0.35 price threshold. | |||||||||
Fair value of granted stock on the quoted trading price | $ 495,720 | |||||||||
Fair value recognized over the requisite service period | 3 years | |||||||||
Convertible Notes Payable [Member] | ||||||||||
Conversion premium to additional paid-in capital | $ 3,333 | |||||||||
Applied Nanotech, Inc [Member] | Chief Financial Officer [Member] | ||||||||||
Accrued expenses | 123,285 | |||||||||
Share based compensation amount | $ 123,285 | |||||||||
Common Class A [Member] | ||||||||||
Common stock, par value | $ 0.0001 | $ 0.0001 | $ 0.0001 | |||||||
Common stock, shares authorized | 1,300,000,000 | 1,300,000,000 | 1,300,000,000 | |||||||
Number of shares issued for conversion | $ 208,681 | |||||||||
Number of shares issued for conversion, shares | 10,000 | |||||||||
Convertible promissory notes and accrued interest | $ 392 | |||||||||
Common Class A [Member] | Convertible Notes Payable [Member] | ||||||||||
Convertible promissory notes and accrued interest | $ 392 | |||||||||
Common Class A [Member] | Former CFO [Member] | Applied Nanotech, Inc [Member] | ||||||||||
Number of stock issued during period | 2,089,580 | 1,200,000 | 889,580 | |||||||
Accrued expenses | $ 123,285 | $ 123,285 | $ 123,285 | |||||||
Equity issuance price per share | $ 0.059 | $ 0.059 | $ 0.059 | |||||||
Number of shares issued during period for related parties, value | $ 123,285 | $ 123,285 | $ 123,285 | |||||||
Common Class A [Member] | Directors [Member] | ||||||||||
Equity issuance price per share | $ 0.0418 | |||||||||
Number of stock shares issued for service | 119,615 | |||||||||
Number of stock shares issued for service, value | $ 7,000 | |||||||||
Common Class B [Member] | ||||||||||
Common stock, par value | $ .0001 | $ .0001 | $ .0001 | |||||||
Common stock, shares authorized | 400,000,000 | 400,000,000 | 400,000,000 | |||||||
Common Class B [Member] | Directors [Member] | ||||||||||
Equity issuance price per share | $ 0.0418 | |||||||||
Number of stock shares issued for service | 47,876 | |||||||||
Number of stock shares issued for service, value | $ 7,000 | |||||||||
Class Z Commmon Stock [Member] | ||||||||||
Common stock, par value | $ .0001 | $ .0001 | $ .0001 | |||||||
Common stock, shares authorized | 100,000,000 | 100,000,000 | 100,000,000 |
Stockholder's Equity - Schedule
Stockholder's Equity - Schedule of Stock Option Plan Activity (Details) - 6 months ended Jun. 30, 2015 - Stock Option [Member] - USD ($) None in scaling factor is -9223372036854775296 | Total |
Shares Outstanding, Beginning balance | 4,357,528 |
Shares, Exercised | |
Shares, Forfeited | (2,278,695) |
Shares Outstanding, Ending balance | 2,078,833 |
Shares Exercisable | 2,078,833 |
Weighted-Average Exercise Price, Outstanding, Beginning | $ 0.50 |
Weighted-Average Exercise Price, Exercised | |
Weighted-Average Exercise Price, Forfeited | $ (0.51) |
Weighted-Average Exercise Price, Outstanding, Ending | 0.49 |
Weighted-Average Exercise Price, Exercisable | $ 0.49 |
Weighted-Average Remaining Contractual Terms (Years), Outstanding | 4 years 6 months 7 days |
Weighted-Average Remaining Contractual Terms (Years), Exercisable | 4 years 6 months 7 days |
Aggregate Intrinsic Value, Share Outstanding | |
Aggregate Intrinsic Value, Share Exercisable |
Concentrations (Details Narrati
Concentrations (Details Narrative) | 6 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Percentage of sales | 36.00% | 62.00% |
Percentage of vendor concentration risk | 53.00% | 47.00% |
Supplier One [Member] | ||
Percentage of vendor concentration risk | 29.00% | 25.00% |
Supplier Two [Member] | ||
Percentage of vendor concentration risk | 13.00% | 12.00% |
Supplier Three [Member] | ||
Percentage of vendor concentration risk | 11.00% | 10.00% |
United States [Member] | ||
Percentage of sales | 92.00% | 89.00% |
Other Geographical Area [Member] | Maximum [Member] | ||
Percentage of sales | 10.00% | 10.00% |
Concentrations - Schedule of Sa
Concentrations - Schedule of Sales Percentage (Details) | 6 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Percentage of revenues | 36.00% | 62.00% |
Customer A [Member] | ||
Percentage of revenues | 27.00% | 22.00% |
Customer B [Member] | ||
Percentage of revenues | 0.00% | 29.00% |
Customer C [Member] | ||
Percentage of revenues | 9.00% | 11.00% |
Concentrations - Schedule of Ac
Concentrations - Schedule of Accounts Receivable (Details) | Jun. 30, 2015 | Dec. 31, 2014 |
Percentage of accounts receivable | 29.00% | 41.00% |
Customer A [Member] | ||
Percentage of accounts receivable | 17.00% | 31.00% |
Customer C [Member] | ||
Percentage of accounts receivable | 12.00% | 10.00% |
Equity Credits (Details Narrati
Equity Credits (Details Narrative) - USD ($) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2015 | Dec. 31, 2014 | |
Equity Credits | ||
Maximum number of credits available for issuance | 385,000 | |
Number equity issued and outstanding under credit | 77,700 | 77,700 |
Issued and outstanding per credit | $ 0.3240 | $ 0.3240 |
Equity credits outstanding | $ 25,178 | $ 25,178 |
Stock Appriciation Plan (Detail
Stock Appriciation Plan (Details Narrative) - USD ($) | 6 Months Ended | |
Jun. 30, 2015 | Dec. 31, 2014 | |
Stock Appriciation Plan Details Narrative | ||
Maximum number of stock appreciation granted by board | 1,000,000 | |
Vested stock outstanding | 235,782 | 235,782 |
Percentage of redemption value to purchase common shares | 70.00% | |
Percentage of remaining distributed in cash to the participant | 30.00% | |
Accrued redemption value associated with the stock appreciation rights amount | $ 46,146 | $ 46,146 |
Segment Reporting - Segment Inf
Segment Reporting - Segment Information Available With Respect To Reportable Business Segments (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | Dec. 31, 2014 | |
Total segment and consolidated revenues | $ 1,862,133 | $ 2,867,962 | $ 4,299,447 | $ 5,639,373 | |
Total segment and consolidated gross profit | 779,083 | 1,486,435 | 1,931,721 | 2,807,705 | |
Total consolidated income (loss) from operations | (530,455) | 492,654 | (690,005) | 818,343 | |
Total consolidated tangible assets | 976,915 | 976,915 | $ 850,847 | ||
Total Segment [Member] | |||||
Total segment and consolidated revenues | 2,313,349 | 2,867,962 | 5,381,090 | 5,639,373 | |
Total segment and consolidated gross profit | 779,083 | 1,486,435 | 1,931,721 | 2,807,705 | |
Total segment income (loss) from operations | (161,438) | $ 492,654 | 30,865 | $ 818,343 | |
Unallocated costs | (369,017) | (720,870) | |||
Total consolidated income (loss) from operations | (530,455) | $ 492,654 | (690,005) | $ 818,343 | |
Total segment depreciation and amortization | 50,783 | $ 42,183 | 101,524 | $ 84,366 | |
Unallocated depreciation | 12,821 | 25,643 | |||
Total consolidated depreciation and amortization | 63,604 | $ 42,183 | 127,167 | $ 84,366 | |
Total segment capital additions | $ 197,281 | $ 4,544 | $ 227,592 | $ 7,058 | |
Unallocated capital additions | |||||
Total consolidated capital additions | $ 197,281 | $ 4,544 | $ 227,592 | $ 7,058 | |
Total consolidated tangible assets | 976,915 | 976,915 | 850,847 | ||
Product Segment [Member] | |||||
Total segment and consolidated revenues | 1,862,133 | 2,867,962 | 4,299,447 | 5,639,373 | |
Total segment and consolidated gross profit | 783,705 | 1,486,435 | 1,814,300 | 2,807,705 | |
Total segment income (loss) from operations | 71,518 | 492,654 | 329,786 | 818,343 | |
Total segment depreciation and amortization | 37,857 | 42,183 | 75,714 | 84,366 | |
Total segment capital additions | 193,895 | $ 4,544 | 224,206 | $ 7,058 | |
Total consolidated tangible assets | 899,143 | 899,143 | 750,651 | ||
Research and Development Segment [Member] | |||||
Total segment and consolidated revenues | 451,216 | 1,081,643 | |||
Total segment and consolidated gross profit | (4,622) | 117,421 | |||
Total segment income (loss) from operations | (232,956) | (298,921) | |||
Total segment depreciation and amortization | 12,926 | 25,810 | |||
Total segment capital additions | 3,386 | 3,386 | |||
Total consolidated tangible assets | $ 77,772 | $ 77,772 | $ 100,196 |
Commitments and Contingencies (
Commitments and Contingencies (Details Narrative) - Mar. 04, 2015 - USD ($) | Total |
Placement agency fee | $ 50,000 |
Transaction cost | $ 250,000 |
INTL FCStone Securities Inc [Member] | |
Percentage of owe payment of expense | 30.00% |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) - Jul. 30, 2015 - Subsequent Event [Member] - USD ($) | Total |
quoted price of stock total value | $ 7,000 |
Common Class A [Member] | |
Stock issued during period for service | 154,320 |
Sale of stock price per share | $ 0.0324 |
Common Class B [Member] | |
Stock issued during period for service | 61,728 |
Sale of stock price per share | $ 0.0324 |