Nano Magic (NMGX) 10-Q 14 Nov 17 2017 Q3 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2017	Nov. 13, 2017
Entity Registrant Name	PEN INC.
Entity Central Index Key	891,417
Document Type	10-Q
Document Period End Date	Sep. 30, 2017
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Trading Symbol	PENC
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2,017
Class A Common Stock [Member]
Entity Common Stock, Shares Outstanding		1,686,486
Class B Common Stock [Member]
Entity Common Stock, Shares Outstanding		1,420,176

Consolidated Balance Sheets

Consolidated Balance Sheets - USD ($)	Sep. 30, 2017	Dec. 31, 2016
CURRENT ASSETS:
Cash	$ 73,927	$ 189,128
Accounts receivable, net	819,306	722,845
Accounts receivable - related party	14,226	10,474
Inventory	1,133,502	1,035,499
Prepaid expenses and other current assets	42,314	75,080
Total Current Assets	2,083,275	2,033,026
OTHER ASSETS:
Property, plant and equipment, net	400,778	709,627
Other assets	89,325	51,078
Total Other Assets	490,103	760,705
Total Assets	2,573,378	2,793,731
CURRENT LIABILITIES:
Bank revolving line of credit	689,232	979,688
Current portion of notes payable	79,979	90,449
Accounts payable	1,606,816	1,078,527
Accounts payable - related parties	20,887	52,887
Deferred revenue	70,180
Accrued expenses	649,331	904,166
Total Current Liabilities	3,116,425	3,105,717
LONG-TERM LIABILITIES:
Notes payable, net of current portion	227,397	266,110
Total Long-Term Liabilities	227,397	266,110
Total Liabilities	3,343,822	3,371,827
STOCKHOLDERS' DEFICIT:
Preferred stock, $0.0001 par value, 20,000,000 shares authorized; no shares issued and outstanding
Additional paid-in capital	5,480,924	5,321,769
Accumulated deficit	(6,251,675)	(5,900,167)
Total Stockholders' Deficit	(770,444)	(578,096)
Total Liabilities and Stockholders' Deficit	2,573,378	2,793,731
Class A Common Stock [Member]
STOCKHOLDERS' DEFICIT:
Common stock value	165	136
Class B Common Stock [Member]
STOCKHOLDERS' DEFICIT:
Common stock value	142	140
Class Z Common Stock [Member]
STOCKHOLDERS' DEFICIT:
Common stock value		$ 26

Consolidated Balance Sheets (Pa

Consolidated Balance Sheets (Parenthetical) - $ / shares	Sep. 30, 2017	Dec. 31, 2016
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
Class A Common Stock [Member]
Common stock, par value	$ 0.0001	$ 0.0001
Common stock, shares authorized	7,200,000	7,200,000
Common stock, shares issued	1,648,708	1,367,431
Common stock, shares outstanding	1,648,708	1,367,431
Class B Common Stock [Member]
Common stock, par value	$ 0.0001	$ 0.0001
Common stock, shares authorized	2,500,000	2,500,000
Common stock, shares issued	1,420,176	1,402,104
Common stock, shares outstanding	1,420,176	1,402,104
Class Z Common Stock [Member]
Common stock, par value	$ 0.0001	$ 0.0001
Common stock, shares authorized	300,000	300,000
Common stock, shares issued	0	262,631
Common stock, shares outstanding	0	262,631

Consolidated Statements of Oper

Consolidated Statements of Operations (Unaudited) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
REVENUES:
Products (including related party sales of $26,093 and $52,328 and $138,004, and $148,624 for the three and nine months ended September 30, 2017 and 2016, respectively)	$ 1,772,960	$ 1,781,755	$ 5,523,785	$ 5,391,305
Contract services	255,301	225,083	723,435	804,522
Total Revenues	2,028,261	2,006,838	6,247,220	6,195,827
COST OF REVENUES:
Products	1,121,039	1,116,987	3,237,221	3,175,629
Contract services	274,240	258,768	787,443	864,905
Total Cost of Revenues	1,395,279	1,375,755	4,024,664	4,040,534
GROSS PROFIT	632,982	631,083	2,222,556	2,155,293
OPERATING EXPENSES:
Selling and marketing expenses	20,933	57,942	257,803	177,274
Salaries, wages and related benefits	253,615	375,794	820,051	1,241,033
Research and development	82,544	71,921	297,697	236,534
Professional fees	135,261	118,818	536,284	364,450
General and administrative expenses	188,760	242,380	653,008	738,909
Total Operating Expenses	681,113	866,855	2,564,843	2,758,200
LOSS FROM OPERATIONS	(48,131)	(235,772)	(342,287)	(602,907)
OTHER (EXPENSE) INCOME:
Interest expense	(20,124)	(26,000)	(54,038)	(82,270)
Loss on disposal of fixed assets	(122,050)		(122,050)
Other income, net	65,575	50,870	166,867	228,649
Total Other (Expense) Income	(76,599)	24,870	(9,221)	146,379
NET LOSS	$ (124,730)	$ (210,902)	$ (351,508)	$ (456,528)
NET LOSS PER COMMON SHARE:
Basic	$ (0.04)	$ (0.07)	$ (0.12)	$ (0.15)
Diluted	$ (0.04)	$ (0.07)	$ (0.12)	$ (0.15)
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic	3,062,759	3,020,062	3,051,826	3,006,837
Diluted	3,062,759	3,020,062	3,051,826	3,006,837

Consolidated Statements of Ope5

Consolidated Statements of Operations (Unaudited) (Parenthetical) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Income Statement [Abstract]
Sales revenue from related parties	$ 26,093	$ 52,328	$ 138,004	$ 148,624

Consolidated Statements of Cash

Consolidated Statements of Cash Flows (Unaudited) - USD ($)	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$ (351,508)	$ (456,528)
Adjustments to reconcile net loss to net cash provided by operating activities:
Change in inventory obsolescence reserve	50,390	34,184
Bad debt expense		12,034
Depreciation and amortization expense	100,325	136,598
Amortization of deferred lease incentives	5,346	9,623
Gain on sale of property and equipment, net	(527)	(21,866)
Gain on settlement of accounts payable		(33,511)
Gain on settlement of accrued salary		(36,973)
Loss on disposal of property and equipment	122,050
Stock-based compensation	140,160	151,856
Change in operating assets and liabilities:
Accounts receivable	(96,461)	452,113
Accounts receivable - related party	(3,752)	(28,352)
Inventory	(148,393)	(212,461)
Prepaid expenses and other assets	(5,481)	76,634
Accounts payable	545,714	41,557
Accounts payable - related parties	(32,000)	14,823
Accrued expenses	(112,462)	70,420
Deferred revenue	70,180	(21,692)
NET CASH PROVIDED BY OPERATING ACTIVITIES	283,581	188,459
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sales of property and equipment	87,000	21,866
Purchases of property, plant and equipment		(4,000)
NET CASH PROVIDED BY INVESTING ACTIVITIES	87,000	17,866
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from bank lines of credit	4,964,067	5,193,000
Repayment of bank lines of credit	(5,383,241)	(5,522,951)
Repayment of bank loans	(56,138)	(55,785)
Proceeds from sale of common stock		50,000
Payment of issuance costs related to sale of common stock		(2,000)
Repayment of loan to third party	(10,470)	(4,394)
NET CASH USED IN FINANCING ACTIVITIES	(485,782)	(342,130)
NET DECREASE IN CASH	(115,201)	(135,805)
CASH, beginning of period	189,128	262,519
CASH, end of period	73,927	126,714
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Interest	55,554	82,270
Income taxes
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
Reclassification of accrued salary to notes payable - long-term	17,425	51,239
Accrued director fees settled with common stock	$ 19,000

Organization and Basis of Prese

Organization and Basis of Presentation	9 Months Ended
	Sep. 30, 2017
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 corporation, develops and sells a portfolio of nano-layer coatings, nano-based cleaners, and nano-composite products based on its proprietary technology, and performs nanotechnology product research and development generating revenues through performing contract services. Through our wholly-owned subsidiary, PEN Brands LLC, formerly known as Nanofilm, Ltd., we develop, manufacture and sell consumer and institutional products using nanotechnology to deliver unique performance attributes at the surfaces of a wide variety of substrates. These products are marketed internationally primarily to customers in the optical industry. On May 2, 2017, Nanofilm, Ltd. changed its name to PEN Brands LLC. Through our wholly-owned subsidiary, Applied Nanotech, Inc., we primarily perform design and development services for ourselves and for governmental and private customers. Basis of Presentation The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) for interim financial information. Accordingly, they do not include all the information and disclosures required by US GAAP for annual financial statements. In the opinion of management, such statements include all adjustments (consisting only of normal recurring items) which are considered necessary for a fair presentation of the unaudited consolidated financial statements of the Company as of September 30, 2017 and for the three and nine months ended September 30, 2017 and 2016. The results of operations for the three and nine months ended September 30, 2017 are not necessarily indicative of the operating results for the full year ending December 31, 2017 or any other period. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related disclosures of the Company as of December 31, 2016 and for the year then ended, which were filed with the Securities and Exchange Commission on Form 10-K on March 29, 2017. Going Concern These consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. As reflected in the consolidated financial statements filed with our Form 10-K on March 29, 2017, the Company had a net loss of $556,001 and $1,869,247 for the years ended December 31, 2016 and 2015. Additionally, the Company had a net loss of $124,730 and $351,508 for the three and nine months ended September 30, 2017. Furthermore, the Company had an accumulated deficit, a stockholders’ deficit and a working capital deficit of $6,251,675, $770,444 and $1,033,150, respectively, at September 30, 2017. These factors raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the financial statements are issued. Management cannot provide assurance that the Company will ultimately achieve profitable operations or become cash flow positive, or raise additional debt and/or equity capital. During 2016 and continuing in the first three quarters of 2017, management has taken measures to reduce operating expenses. Although the Company has historically raised capital from sales of equity and from the issuance of promissory notes, there is no assurance that it will be able to continue to do so. If the Company is unable to raise additional capital or secure additional lending in the near future, management expects that the Company will need to curtail its operations. These unaudited consolidated financial statements do not include any adjustments related to the recoverability and classification of assets or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

Summary of Significant Accounti

Summary of Significant Accounting Policies	9 Months Ended
	Sep. 30, 2017
Accounting Policies [Abstract]
Summary of Significant Accounting Policies	NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation The Company’s consolidated financial statements include the financial statements of its wholly-owned subsidiaries, Applied Nanotech, Inc., PEN Brands LLC and PEN Technology LLC. On December 15, 2016, PEN Technology LLC was merged into PEN Brands LLC. All significant intercompany accounts and transactions have been eliminated in consolidation. Use of Estimates The preparation of consolidated financial statements in conformity with US GAAP 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 three and nine months ended September 30, 2017 and 2016 include estimates for allowance for doubtful accounts on accounts receivable, the estimates for obsolete inventory, the estimates for cooperative advertising liability, the useful life of property and equipment, assumptions used in assessing impairment of long-term assets, 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 entity’s 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 Financial Accounting Standards Board (“FASB”) 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 September 30, 2017 At December 31, 2016 Description Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 Stock Appreciation Rights Plan A - - $ 54,538 - - $ 53,108 Equity Credits Issued - - $ 2,278 - - $ 2,278 A rollforward of the level 3 valuation of these three financial instruments is as follows: Stock Appreciation Rights Plan A Equity Credits Issued Balance at December 31, 2016 $ 53,108 $ 2,278 Change in fair value included in net loss 1,430 - Balance at September 30, 2017 $ 54,538 $ 2,278 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. The cash balance included $10,003 which is restricted in its use as it serves as collateral for a credit card. 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 net realizable value. Cost is determined using the first-in, first-out (FIFO) method. At September 30, 2017 and December 31, 2016, inventory consisted of the following: September 30, 2017 December 31, 2016 Raw materials $ 660,800 $ 927,833 Work in process 136 - Finished goods 753,983 338,643 1,414,919 1,266,528 Less: reserve for obsolescence (281,417 ) (231,027 ) Inventory, net $ 1,133,502 $ 1,035,499 Effective January 1, 2017, the Company adopted FASB Accounting Standards Update (“ASU”) No. 2015-11, “Simplifying the Measurement of Inventory,” (“ASU 2015-11”) which requires an entity to measure most inventory at the lower of cost and net realizable value, thereby simplifying the current guidance under which an entity must measure inventory at the lower of cost or market. The adoption of this standard did not have a material impact on the Company’s unaudited consolidated financial statements. 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 other income or expense 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. 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 asset’s estimated fair value and its book value. The Company did not record any impairment charge for the three and nine months ended September 30, 2017 and 2016. 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 PEN Brands LLC. ● Reimbursements under agreements to perform contract services related to new products and product development for government agencies and others by our subsidiary, Applied Nanotech. We do not perform 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, graphene foils and thermal management materials. Revenue recognition criteria: ● Net product sales by our subsidiary PEN Brands LLC, are recognized when the product is shipped to the customer and title is transferred. ● Revenue from contract services performed under 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 it is earned. ● Revenue from contract services performed under 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 are 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 Company’s subsidiary Applied Nanotech’s primary business is contract services, not the sale of products. Product sales are generally insignificant in number, and are generally limited to the sale of conductive inks, graphene foils, thermal management materials, samples, proofs of concepts, prototypes, or other items resulting from its contract services. ● 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 September 30, 2017 and 2016 the Company recorded $29,526 and $40,471, respectively and $103,031 and $106,262 for the nine months ended September 2017 and 2016 respectively, as a reduction of sales related to these costs. The Company has recently become aware of industry trends related to cooperative advertising, such that, during the quarter ended September 30, 2017, management now believes it has sufficient data and experience to effect a change in accounting estimate. As a result, the Company recorded a one-time adjustment to reduce its cooperative advertising liability by approximately $346,000 to $100,000 as of September 30, 2017 with a corresponding $346,000 increase to product revenue for the three and nine months ended September 30, 2017. 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 incurred for product shipped to customers are included in cost of sales. For the three months ended September 30, 2017 and 2016 shipping and handle costs amounted to $39,102 and $46,255, respectively, and were $136,260 and $140,059 for the nine months ended September 30, 2017 and 2016, respectively. Research and Development Research and development costs incurred in the development of the Company’s 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. Research and development costs incurred in the development of the Company’s products for the three months ended September 30, 2017 and 2016 were $82,544 and $71,921, respectively, and were $297,697 and $236,534 for the nine months ended September 30, 2017 and 2016, respectively, and are included in operating expenses on the accompanying unaudited consolidated statements of operations. Advertising Costs The Company participates in various advertising programs. All costs related to advertising of the Company’s products are expensed in the period incurred. Advertising costs charged to operations for the three months ended September 30, 2017 and 2016 were $0 and $5,193, respectively, and were $14,626 and $23,624 for the nine months ended September 30, 2017 and 2016, respectively, and are included in selling and marketing on the unaudited consolidated accompanying statements of operations. These costs are included in sales and marketing on the consolidated accompanying statements of operations. These advertising expenses do not 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”. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial reporting and tax bases of assets and liabilities using enacted tax rates that will be in effect in the year in which the differences are expected to reverse. The Company records a valuation allowance to offset deferred tax assets if based on the weight of available evidence, it is more-likely-than-not that some portion, or all, of the deferred tax assets will not be realized. The effect on deferred taxes of a change in tax rates is recognized as income or loss in the period that includes the enactment date. The Company follows the accounting guidance for uncertainty in income taxes using the provisions of 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. 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. 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 loss per common share is computed by dividing net loss available to common shareholders by the weighted average number of shares of common shares outstanding during the period. Diluted net loss per common share is computed by dividing net loss by the weighted average number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during each period. As of September 30, 2017, and December 31, 2016, 37,778 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 and warrants (using the treasury stock method). . September 30, 2017 December 31, 2016 Stock options 20,370 20,483 Stock warrants 712 712 Restricted Stock 37,778 37,778 Total 58,860 58,973 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 8 and 9). Net loss per share for each class of common stock is as follows: Net (loss) income per common shares outstanding: Three Months Ended September 30, 2017 Three Months Ended September 30, 2016 Nine Months Ended September 30, 2017 Nine Months Ended September 30, 2016 Class A common stock $ (0.11 ) $ (0.07 ) $ (0.13 ) $ (0.15 ) Class B common stock $ (0.11 ) $ (0.07 ) $ (0.12 ) $ (0.15 ) Class Z common stock $ - $ (0.07 ) $ - $ (0.15 ) Weighted average shares outstanding: Class A common stock 1,645,033 1,358,234 1,502,367 1,346,656 Class B common stock 1,417,726 1,399,197 1,411,890 1,399,550 Class Z common stock - 262,631 137,569 262,631 Total weighted average shares outstanding 3,062,759 3,020,062 3,051,826 3,006,837 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 Company’s chief operating decision maker for making operating decisions and assessing performance as the source for determining the Company’s reportable segments. The Company’s 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 consumer and institutional products using nanotechnology to deliver unique performance attributes at the surfaces of a wide variety of substrates (the “Product segment”) and (ii) nanotechnology design and development services for our future products and for government and private entities and sales of products developed for third parties (the “Contract services segment”). Recently Issued Accounting Pronouncements In March 2016, the FASB issued ASU No. 2016-09 (“ASU 2016-09”) to amend the accounting guidance for share-based payment accounting. The areas for simplification in ASU 2016-09 involve several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. ASU 2016-09 is effective for annual periods beginning after December 15, 2016. The adoption of this standard did not have a material impact on the Company’s unaudited consolidated financial statements. In May 2017, the FASB issued ASU No. 2017-09, “Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting” (“ASU 2017-09”). ASU 2017-09 provides clarity on the accounting for modifications of stock-based awards. ASU 2017-09 requires adoption on a prospective basis in the annual and interim periods beginning after December 15, 2017 for share-based payment awards modified on or after the adoption date. The Company is currently evaluating the effect that adopting this new accounting guidance will have on its unaudited consolidated financial statements and related disclosures. In July 2017, the FASB issued ASU No. 2017-11, “Earnings Per Share (Topic 260) and Derivatives and Hedging (Topic 815) - Accounting for Certain Financial Instruments with Down Round Features,” (“ASU 2017-11”). Equity-linked instruments, such as warrants and convertible instruments may contain down round features that result in the strike price being reduced on the basis of the pricing of future equity offerings. Under ASU 2017-11, a down round feature will no longer require a freestanding equity-linked instrument (or embedded conversion option) to be classified as a liability that is remeasured at fair value through the income statement (i.e. marked-to-market). However, other features of the equity-linked instrument (or embedded conversion option) must still be evaluated to determine whether liability or equity classification is appropriate. Equity classified instruments are not marked-to-market. For earnings per share (“EPS”) reporting, the ASU requires companies to recognize the effect of the down round feature only when it is triggered by treating it as a dividend and as a reduction of income available to common shareholders in basic EPS. The amendments in this ASU are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted, including adoption in any interim period. The Company is currently evaluating the effect that adopting this new accounting guidance will have on its unaudited consolidated financial statements. 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. Reclassifications Certain prior period amounts in the unaudited consolidated financial statements have been reclassified for comparative purposes to conform to the fiscal 2017 presentation. These reclassifications have no impact on the previously reported net loss.

Bank Loans and Lines of Revolvi

Bank Loans and Lines of Revolving Credit Facility	9 Months Ended
	Sep. 30, 2017
Debt Disclosure [Abstract]
Bank Loans and Lines of Revolving Credit Facility	NOTE 3 – BANK LOANS AND LINES OF REVOLVING CREDIT FACILITY In April 2014, our subsidiary, PEN Brands LLC entered into a $1,500,000 revolving credit line agreement (the “Revolving Note”) with Mackinac Commercial Credit, LLC (the “Lender”) with draws limited to a borrowing base as defined in the Revolving Note. The unpaid principal balance of this Revolving Note is payable on demand, is secured by all of PEN Brands LLC’s 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. PEN Brands LLC 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 if (i) 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. On May 1, 2015, PEN Brands LLC and the Lender entered into an amendment to the Loan and Security Agreement extending the outside maturity date to April 4, 2016 and permitting 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, PEN Inc., the parent company, guaranteed PEN Brands LLC’s obligations to the Lender. On April 4, 2016, the maturity date under the Loan & Security Agreement between PEN Brands LLC and the Lender was automatically extended for a one-year renewal term. Without the Lender’s consent, so long as the obligation remains outstanding, in addition to other covenants as defined in the Revolving Note, PEN Brands LLC shall not a) merge or consolidate with any other company, except for the combination that closed in August 2014 and shall not suffer a change of control; b) make any 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 April 3, 2017, PEN Brands LLC and the Lender executed a second amendment to the Revolving Note that extended the maturity date to April 4, 2018, with a one-year renewal option. The second amendment also reduced the interest rate to 3.0% above the Prime Rate, as reported in the Wall Street Journal. At September 30, 2017 and December 31, 2016, the Company had $689,232 and $979,688, respectively, which includes accrued interest of $10,324 and $17,494, respectively, in amounts outstanding under the Revolving Note with availability of up to $810,768 as of September 30, 2017, depending on the borrowing base at the time of the request for the advance. The weighted average interest rate during the nine months ended September 30, 2017 and 2016 was approximately 6.8% and 8.1%, respectively. See Note 12 – Subsequent Events for additional details on the Revolving Note.

Notes Payable

Notes Payable	9 Months Ended
	Sep. 30, 2017
Debt Disclosure [Abstract]
Notes Payable	NOTE 4 – NOTES PAYABLE In January 2017, we issued a promissory note in the principal amount of $17,425 to a departing employee representing the amount of his accrued and unpaid salary. The note does not bear interest and is due in January 2027.

Related Party Transactions

Related Party Transactions	9 Months Ended
	Sep. 30, 2017
Related Party Transactions [Abstract]
Related Party Transactions	NOTE 5 – RELATED PARTY TRANSACTIONS Sales to Related Party During the three and nine months ended September 30, 2017 and 2016, the Company engaged in certain sales transactions with a company which is a shareholder and related to a director of the Company. Sales to the related party totaled $26,093 and $52,328 for the three months ended September 30, 2017 and 2016, respectively. and totaled $138,004 and $148,624 for the nine months ended September 30, 2017 and 2016. Accounts receivable from the related party totaled $14,227 at September 30, 2017 and $10,474 at December 31, 2016. As of May 23, 2017, that director no longer served on the Company’s Board and the shareholder was no longer an affiliate. Other A board member is a principal in DHJH Holdings LLC, the firm that provided the services of the Company’s chief financial officer from May 2016 through February 2017. The Company recognized no fees and expenses during the three months ended September 30, 2017 and 2016 and $0 and $13,195 in fees and expenses during the nine months ended September 30, 2017 and 2016, respectively. As of September 30, 2017, the Company included the following within accounts payable-related parties: $1,000 of director fees and $19,887 due to certain of the Company’s executives.

Stockholders' Equity

Stockholders' Equity	9 Months Ended
	Sep. 30, 2017
Equity [Abstract]
Stockholders' Equity	NOTE 6 - STOCKHOLDERS’ EQUITY Description of Preferred and Common Stock On December 11, 2015, the Board of Directors of the Company approved a reverse stock split of the issued and outstanding shares of the Company’s common stock at the ratio of 1-for-180 (the “Reverse Stock Split”) and authorized an amendment of the Company’s Amended and Restated Certificate of Incorporation, as amended, to effect the Reverse Stock Split, to reduce the number of authorized shares of common stock, and to set a par value of $0.0001 per share after the Reverse Stock Split. On January 26, 2016, each one hundred eighty (180) shares of the Company’s (i) Class A Common Stock (“Class A common stock”), (iii) Class B Common Stock and (iii) Class Z Common Stock, then issued and outstanding were automatically combined into one (1) validly issued, fully paid and non-assessable share of Class A Common Stock, Class B Common Stock and Class Z Common Stock, respectively, without any further action by the Company or the holder. Additionally, the authorized number of shares of common stock were reduced to 10,000,000 comprised of 7,200,000 shares of Class A Common Stock, 2,500,000 shares of Class B Common Stock (“Class B common stock”), and 300,000 shares of Class Z Common Stock (“Class Z common stock”). The par value of each class of common stock remained the same at $0.0001 per common share. All share and per share data in the accompanying unaudited consolidated financial statements have been retroactively restated to reflect the effect of the Reverse Stock Split and authorized shares. The Company is also authorized to issue 20,000,000 shares of Preferred Stock, par value $0.0001 per share (“preferred stock”). Preferred Stock The preferred stock may be issued in one or more series. The Company’s 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 for Services On February 24, 2017, the Company issued an aggregate of 3,846 shares of Class A common stock and 2,564 shares of Class B common stock to the Company’s directors as payment for their service on the Company’s board. These shares were valued on the date of grant at $1.56 per share based on the quoted price of the stock for a total value of $10,000 recognized as stock-based compensation expense. On April 28, 2017, the Company issued an aggregate of 10,000 shares of Class A common stock and 12,308 shares of Class B common stock to the Company’s directors as payment for their service on the Company’s board. The shares issued included 4,617 Class A and 3,078 Class B shares as compensation for attendance at the meeting on that date and the rest were issued in payment of $19,000 in accrued director fees from a prior year. These shares are valued were valued on the date of grant of April 28, 2017 at $1.30 per share based on the quoted price of the stock for a total value of $29,000 with $10,000 recognized as stock-based compensation expense. On July 28, 2017, the Company issued an aggregate of 4,800 shares of Class A common stock and 3,200 shares of Class B common stock to the Company’s directors as payment for their service on the Company’s board. These shares were valued on the date of grant at $1.25 per share based on the quoted closing price of the stock for a total value of $10,000 recognized as stock-based compensation expense. Stock Options Stock options outstanding are to purchase Class A common stock. Stock option activities for the nine months ended September 30, 2017 are summarized as follows: Number of Options Weighted Average Exercise Price Weighted Average Remaining Contractual Term (Years) Aggregate Intrinsic Value Outstanding December 31, 2016 20,483 $ 41.77 Exercised - - Expired (113 ) 230.40 Outstanding September 30, 2017 20,370 $ 40.72 3.26 $ - Exercisable September 30, 2017 10,370 $ 77.28 2.72 $ - 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 37,778 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 the Company, Dr. Yaniv’s 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 an $18.00 price, 5,554 shares vest, with additional tranches of 5,556 shares vesting if the price reaches $27.00, $36.00, $45.00 and $54.00. The last 10,000 shares vest at a $63.00 price threshold. Any shares that have not vested five years after the effective date will be forfeited. The Company 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 the Company is registering its shares. Pursuant to ASC 718-10 and related subsections, these shares were valued on the date of grant of August 27, 2014 at $13.12 per share 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 Company’s 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 method. For the three months ended September 30, 2017 and 2016, in connection with the amortization of the fair value of this stock grant, the Company recorded stock-based compensation of $27,540 and $41,310 respectively, and $110,160 and $123,930, for the nine months ended September 30, 2017 and 2016, respectively. At September 30, 2017, there is no unamortized stock-based compensation expense to be recognized in future periods. Conversion of Class Z Common Stock On May 23, 2017, Zeiss converted 262,631 shares of Class Z common stock into 262,631 shares of Class A common stock. Immediately thereafter, Zeiss sold 262,631 shares of Class A common stock to certain buyers which included the Company’s Chief Executive Officer for an aggregate of $100,000. In addition, pursuant to the certificate of incorporation, Zeiss’ Board representation automatically terminated and, as a result, Zeiss ceased to be a related party as of May 23, 2017.

Concentrations

Concentrations	9 Months Ended
	Sep. 30, 2017
Risks and Uncertainties [Abstract]
Concentrations	NOTE 7 – 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. Lender Concentration The Company relies primarily on one lender under a $1,500,000 Revolving Note. Customer Concentrations Customer concentrations for the nine months ended September 30, 2017 and 2016 are as follows: Revenues For the Nine Months Ended September 30, 2017 2016 Customer A 32 % 32 % Customer B 12 % 14 % Total 44 % 46 % Accounts Receivable As of September 30, As of December 31, 2017 2016 Customer A 43 % 14 % Customer B 14 % 16 % Customer C * % 15 % Total 57 % 45 % *Less than 10% 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 nine months ended September 30, 2017 and 2016, total sales in the United States represent approximately 88% and 91% of total consolidated revenues, respectively. No other geographical area accounting for more than 10% of total sales during the nine months ended September 30, 2017 and 2016. Vendor Concentrations Vendor concentrations for inventory purchases for the nine months ended September 30, 2017 and 2016 are: For the Nine Months Ended September 30, 2017 2016 Vendor A 26 % 31 % Vendor B * % 11 % Vendor C 12 % * % Total 38 % 42 % *Less than 10%

Equity Credits

Equity Credits	9 Months Ended
	Sep. 30, 2017
Equity [Abstract]
Equity Credits	NOTE 8 – EQUITY CREDITS In 1997, PEN Brands LLC established The Equity Credit Incentive Program. This program enabled select employees the opportunity to purchase equity credits that increase in value based upon an increase in PEN Brands LLC’s revenue over a base year of 1996. Eligible credits can be redeemed after two years at the equity credit value for that year. Under certain circumstances, the equity credits are convertible into PEN Brands LLC equity on a one-for-one basis. During the three months ended September 30, 2017, no equity credits were forfeited and no units were redeemed. As of September 30, 2017 and December 31, 2016, 8,250 equity credits were issued and outstanding with an aggregate redemption value of $2,278. At September 30, 2017 and December 31, 2016, $2,278 was accrued, and included in accrued expenses, representing the redemption value associated with the equity credits outstanding. 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	9 Months Ended
	Sep. 30, 2017
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Stock Appreciation Plan	NOTE 9 – STOCK APPRECIATION PLAN From June 1, 1988, until December 31, 1997, when the plan was terminated, PEN Brands LLC 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 PEN Brands LLC. 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 September 30, 2017 and December 31, 2016. 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 PEN Brands, 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 PEN Brands LLC. 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 PEN Brands (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 business combination completed in August 2014 did 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 $54,538 and $53,108, at September 30, 2017 and December 31, 2016, 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	9 Months Ended
	Sep. 30, 2017
Segment Reporting [Abstract]
Segment Reporting	NOTE 10 – SEGMENT REPORTING The Company’s 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 Company’s internal organization. The Company’s two reportable segments for the three and nine months ended September 30, 2017 and 2016 were the Product segment and ii) the Contract services segment (formerly the research and development segment). The Company’s 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 Company’s management organization structure as of September 30, 2017 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 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 segment’s 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 nine months ended September 30, 2017 and 2016 was as follows: Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 Revenues: Product segment $ 1,772,960 $ 1,781,755 $ 5,523,785 $ 5,391,305 Contract services segment 255,301 225,083 723,435 804,522 Total segment and consolidated revenues $ 2,028,261 $ 2,006,838 $ 6,247,220 $ 6,195,827 Gross profit: Product segment $ 651,921 $ 664,768 $ 2,286,564 $ 2,215,676 Contract services segment (18,939 ) (33,685 ) (64,008 ) (60,383 ) Total segment and consolidated gross profit $ 632,982 $ 631,083 $ 2,222,556 $ 2,155,293 Income (loss) from operations: Product segment $ 224,228 $ 108,634 $ 535,846 $ 409,115 Contract services segment (73,449 ) (91,391 ) (219,084 ) (248,765 ) Total segment income 150,779 17,243 316,762 160,350 Unallocated costs (198,910 ) (253,015 ) (659,049 ) (763,257 ) Total consolidated loss from operations $ (48,131 ) $ (235,772 ) $ (342,287 ) $ (602,907 ) Depreciation and amortization: Product segment $ 28,769 $ 34,516 $ 89,795 $ 103,546 Contract services segment 2,679 7,826 10,530 33,052 Total segment depreciation and amortization 31,448 42,342 100,325 136,598 Unallocated depreciation - - - - Total consolidated depreciation and amortization $ 31,448 $ 42,342 $ 100,325 $ 136,598 Capital additions: Product segment $ - $ - $ - $ 4,000 Contract services segment - - - - Total segment capital additions - - - 4,000 Unallocated capital additions - - - - Total consolidated capital additions $ - $ - $ - $ 4,000 September 30, 2017 December 31, 2016 Segment total assets: Product segment $ 2,330,603 $ 2,577,034 Contract services segment 169,937 146,193 Corporate 72,838 70,504 Total consolidated total assets $ 2,573,378 $ 2,793,731

Commitments and Contingencies

Commitments and Contingencies	9 Months Ended
	Sep. 30, 2017
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies	NOTE 11 - 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 Company’s board of directors (See Note 8). 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 9). Litigation The Company may be, from time to time, subject to various administrative, regulatory, and other legal proceedings arising in the ordinary course of business. We are not currently a defendant in any proceedings. Our policy is to accrue costs for contingent liabilities, including legal proceedings or unasserted claims that may result in legal proceedings, when a liability is probable and the amount can be reasonably estimated. On September 20, 2017, the Company entered into a three-year lease agreement for 22,172 square feet of office space in Brooklyn Heights, Ohio beginning September 20, 2017 and ending September 20, 2020. Monthly lease payments amount to $8,688 for a total of approximately $312,768 for the total term of the lease.

Subsequent Events

Subsequent Events	9 Months Ended
	Sep. 30, 2017
Subsequent Events [Abstract]
Subsequent Events	NOTE 12 - SUBSEQUENT EVENTS Sale of Fixed Assets Subsequent to September 30, 2017, the Company entered into an asset purchase agreement (the “Asset Purchase Agreement”) in which certain machinery and equipment of the Company has been sold to a third party for aggregate gross proceeds of $85,000. Amended Loan Agreement On October 17, 2017, pursuant to the terms of the Revolving Note, the gross proceeds of $85,000 in connection with the Asset Purchase agreement were applied to decrease the borrowing base of the Revolving Note. In connection with the sale of fixed assets, the Company amended the Revolving Note to establish a cash collateral account to be no less than $85,000. Pursuant to this amendment, the Company entered into a loan agreement with two Company directors in the aggregate principal amount of $85,000 in order to fund the cash collateral provision pursuant to the amended loan agreement. The loan bears no interest and is due when cash flow permits, or if earlier, upon the payment or refinancing of the loan from the Lender to PEN Brands.

Summary of Significant Accoun19

Summary of Significant Accounting Policies (Policies)	9 Months Ended
	Sep. 30, 2017
Accounting Policies [Abstract]
Principles of Consolidation	Principles of Consolidation The Company’s consolidated financial statements include the financial statements of its wholly-owned subsidiaries, Applied Nanotech, Inc., PEN Brands LLC and PEN Technology LLC. On December 15, 2016, PEN Technology LLC was merged into PEN Brands LLC. All significant intercompany accounts and transactions have been eliminated in consolidation.
Use of Estimates	Use of Estimates The preparation of consolidated financial statements in conformity with US GAAP 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 three and nine months ended September 30, 2017 and 2016 include estimates for allowance for doubtful accounts on accounts receivable, the estimates for obsolete inventory, the estimates for cooperative advertising liability, the useful life of property and equipment, assumptions used in assessing impairment of long-term assets, 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 entity’s 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 Financial Accounting Standards Board (“FASB”) 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 September 30, 2017 At December 31, 2016 Description Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 Stock Appreciation Rights Plan A - - $ 54,538 - - $ 53,108 Equity Credits Issued - - $ 2,278 - - $ 2,278 A rollforward of the level 3 valuation of these three financial instruments is as follows: Stock Appreciation Rights Plan A Equity Credits Issued Balance at December 31, 2016 $ 53,108 $ 2,278 Change in fair value included in net loss 1,430 - Balance at September 30, 2017 $ 54,538 $ 2,278 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. The cash balance included $10,003 which is restricted in its use as it serves as collateral for a credit card.
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 net realizable value. Cost is determined using the first-in, first-out (FIFO) method. At September 30, 2017 and December 31, 2016, inventory consisted of the following: September 30, 2017 December 31, 2016 Raw materials $ 660,800 $ 927,833 Work in process 136 - Finished goods 753,983 338,643 1,414,919 1,266,528 Less: reserve for obsolescence (281,417 ) (231,027 ) Inventory, net $ 1,133,502 $ 1,035,499 Effective January 1, 2017, the Company adopted FASB Accounting Standards Update (“ASU”) No. 2015-11, “Simplifying the Measurement of Inventory,” (“ASU 2015-11”) which requires an entity to measure most inventory at the lower of cost and net realizable value, thereby simplifying the current guidance under which an entity must measure inventory at the lower of cost or market. The adoption of this standard did not have a material impact on the Company’s unaudited consolidated financial statements.
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 other income or expense 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.
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 asset’s estimated fair value and its book value. The Company did not record any impairment charge for the three and nine months ended September 30, 2017 and 2016.
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 PEN Brands LLC. ● Reimbursements under agreements to perform contract services related to new products and product development for government agencies and others by our subsidiary, Applied Nanotech. We do not perform 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, graphene foils and thermal management materials. Revenue recognition criteria: ● Net product sales by our subsidiary PEN Brands LLC, are recognized when the product is shipped to the customer and title is transferred. ● Revenue from contract services performed under 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 it is earned. ● Revenue from contract services performed under 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 are 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 Company’s subsidiary Applied Nanotech’s primary business is contract services, not the sale of products. Product sales are generally insignificant in number, and are generally limited to the sale of conductive inks, graphene foils, thermal management materials, samples, proofs of concepts, prototypes, or other items resulting from its contract services. ● 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 September 30, 2017 and 2016 the Company recorded $29,526 and $40,471, respectively and $103,031 and $106,262 for the nine months ended September 2017 and 2016 respectively, as a reduction of sales related to these costs. The Company has recently become aware of industry trends related to cooperative advertising, such that, during the quarter ended September 30, 2017, management now believes it has sufficient data and experience to effect a change in accounting estimate. As a result, the Company recorded a one-time adjustment to reduce its cooperative advertising liability by approximately $346,000 to $100,000 as of September 30, 2017 with a corresponding $346,000 increase to product revenue for the three and nine months ended September 30, 2017.
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 incurred for product shipped to customers are included in cost of sales. For the three months ended September 30, 2017 and 2016 shipping and handle costs amounted to $39,102 and $46,255, respectively, and were $136,260 and $140,059 for the nine months ended September 30, 2017 and 2016, respectively.
Research and Development	Research and Development Research and development costs incurred in the development of the Company’s 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. Research and development costs incurred in the development of the Company’s products for the three months ended September 30, 2017 and 2016 were $82,544 and $71,921, respectively, and were $297,697 and $236,534 for the nine months ended September 30, 2017 and 2016, respectively, and are included in operating expenses on the accompanying unaudited consolidated statements of operations.
Advertising Costs	Advertising Costs The Company participates in various advertising programs. All costs related to advertising of the Company’s products are expensed in the period incurred. Advertising costs charged to operations for the three months ended September 30, 2017 and 2016 were $0 and $5,193, respectively, and were $14,626 and $23,624 for the nine months ended September 30, 2017 and 2016, respectively, and are included in selling and marketing on the unaudited consolidated accompanying statements of operations. These costs are included in sales and marketing on the consolidated accompanying statements of operations. These advertising expenses do not 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”. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial reporting and tax bases of assets and liabilities using enacted tax rates that will be in effect in the year in which the differences are expected to reverse. The Company records a valuation allowance to offset deferred tax assets if based on the weight of available evidence, it is more-likely-than-not that some portion, or all, of the deferred tax assets will not be realized. The effect on deferred taxes of a change in tax rates is recognized as income or loss in the period that includes the enactment date. The Company follows the accounting guidance for uncertainty in income taxes using the provisions of 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.
Loss Per Share of Common Stock	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 loss per common share is computed by dividing net loss available to common shareholders by the weighted average number of shares of common shares outstanding during the period. Diluted net loss per common share is computed by dividing net loss by the weighted average number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during each period. As of September 30, 2017, and December 31, 2016, 37,778 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 and warrants (using the treasury stock method). . September 30, 2017 December 31, 2016 Stock options 20,370 20,483 Stock warrants 712 712 Restricted Stock 37,778 37,778 Total 58,860 58,973 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 8 and 9). Net loss per share for each class of common stock is as follows: Net (loss) income per common shares outstanding: Three Months Ended September 30, 2017 Three Months Ended September 30, 2016 Nine Months Ended September 30, 2017 Nine Months Ended September 30, 2016 Class A common stock $ (0.11 ) $ (0.07 ) $ (0.13 ) $ (0.15 ) Class B common stock $ (0.11 ) $ (0.07 ) $ (0.12 ) $ (0.15 ) Class Z common stock $ - $ (0.07 ) $ - $ (0.15 ) Weighted average shares outstanding: Class A common stock 1,645,033 1,358,234 1,502,367 1,346,656 Class B common stock 1,417,726 1,399,197 1,411,890 1,399,550 Class Z common stock - 262,631 137,569 262,631 Total weighted average shares outstanding 3,062,759 3,020,062 3,051,826 3,006,837
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 Company’s chief operating decision maker for making operating decisions and assessing performance as the source for determining the Company’s reportable segments. The Company’s 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 consumer and institutional products using nanotechnology to deliver unique performance attributes at the surfaces of a wide variety of substrates (the “Product segment”) and (ii) nanotechnology design and development services for our future products and for government and private entities and sales of products developed for third parties (the “Contract services segment”).
Recently Issued Accounting Pronouncements	Recently Issued Accounting Pronouncements In March 2016, the FASB issued ASU No. 2016-09 (“ASU 2016-09”) to amend the accounting guidance for share-based payment accounting. The areas for simplification in ASU 2016-09 involve several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. ASU 2016-09 is effective for annual periods beginning after December 15, 2016. The adoption of this standard did not have a material impact on the Company’s unaudited consolidated financial statements. In May 2017, the FASB issued ASU No. 2017-09, “Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting” (“ASU 2017-09”). ASU 2017-09 provides clarity on the accounting for modifications of stock-based awards. ASU 2017-09 requires adoption on a prospective basis in the annual and interim periods beginning after December 15, 2017 for share-based payment awards modified on or after the adoption date. The Company is currently evaluating the effect that adopting this new accounting guidance will have on its unaudited consolidated financial statements and related disclosures. In July 2017, the FASB issued ASU No. 2017-11, “Earnings Per Share (Topic 260) and Derivatives and Hedging (Topic 815) - Accounting for Certain Financial Instruments with Down Round Features,” (“ASU 2017-11”). Equity-linked instruments, such as warrants and convertible instruments may contain down round features that result in the strike price being reduced on the basis of the pricing of future equity offerings. Under ASU 2017-11, a down round feature will no longer require a freestanding equity-linked instrument (or embedded conversion option) to be classified as a liability that is remeasured at fair value through the income statement (i.e. marked-to-market). However, other features of the equity-linked instrument (or embedded conversion option) must still be evaluated to determine whether liability or equity classification is appropriate. Equity classified instruments are not marked-to-market. For earnings per share (“EPS”) reporting, the ASU requires companies to recognize the effect of the down round feature only when it is triggered by treating it as a dividend and as a reduction of income available to common shareholders in basic EPS. The amendments in this ASU are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted, including adoption in any interim period. The Company is currently evaluating the effect that adopting this new accounting guidance will have on its unaudited consolidated financial statements. 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.
Reclassifications	Reclassifications Certain prior period amounts in the unaudited consolidated financial statements have been reclassified for comparative purposes to conform to the fiscal 2017 presentation. These reclassifications have no impact on the previously reported net loss.

Summary of Significant Accoun20

Summary of Significant Accounting Policies (Tables)	9 Months Ended
	Sep. 30, 2017
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 September 30, 2017 At December 31, 2016 Description Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 Stock Appreciation Rights Plan A - - $ 54,538 - - $ 53,108 Equity Credits Issued - - $ 2,278 - - $ 2,278
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: Stock Appreciation Rights Plan A Equity Credits Issued Balance at December 31, 2016 $ 53,108 $ 2,278 Change in fair value included in net loss 1,430 - Balance at September 30, 2017 $ 54,538 $ 2,278
Schedule of Inventory	Cost is determined using the first-in, first-out (FIFO) method. At September 30, 2017 and December 31, 2016, inventory consisted of the following: September 30, 2017 December 31, 2016 Raw materials $ 660,800 $ 927,833 Work in process 136 - Finished goods 753,983 338,643 1,414,919 1,266,528 Less: reserve for obsolescence (281,417 ) (231,027 ) Inventory, net $ 1,133,502 $ 1,035,499
Schedule of Anti-dilutive Per Share Information	These common stock equivalents may be dilutive in the future . September 30, 2017 December 31, 2016 Stock options 20,370 20,483 Stock warrants 712 712 Restricted Stock 37,778 37,778 Total 58,860 58,973
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 September 30, 2017 Three Months Ended September 30, 2016 Nine Months Ended September 30, 2017 Nine Months Ended September 30, 2016 Class A common stock $ (0.11 ) $ (0.07 ) $ (0.13 ) $ (0.15 ) Class B common stock $ (0.11 ) $ (0.07 ) $ (0.12 ) $ (0.15 ) Class Z common stock $ - $ (0.07 ) $ - $ (0.15 ) Weighted average shares outstanding: Class A common stock 1,645,033 1,358,234 1,502,367 1,346,656 Class B common stock 1,417,726 1,399,197 1,411,890 1,399,550 Class Z common stock - 262,631 137,569 262,631 Total weighted average shares outstanding 3,062,759 3,020,062 3,051,826 3,006,837

Stockholder's Equity (Tables)

Stockholder's Equity (Tables)	9 Months Ended
	Sep. 30, 2017
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 nine months ended September 30, 2017 are summarized as follows: Number of Options Weighted Average Exercise Price Weighted Average Remaining Contractual Term (Years) Aggregate Intrinsic Value Outstanding December 31, 2016 20,483 $ 41.77 Exercised - - Expired (113 ) 230.40 Outstanding September 30, 2017 20,370 $ 40.72 3.26 $ - Exercisable September 30, 2017 10,370 $ 77.28 2.72 $ -

Concentrations (Tables)

Concentrations (Tables)	9 Months Ended
	Sep. 30, 2017
Concentration Risk, Customer	Customer concentrations for the nine months ended September 30, 2017 and 2016 are as follows: Revenues For the Nine Months Ended September 30, 2017 2016 Customer A 32 % 32 % Customer B 12 % 14 % Total 44 % 46 % Accounts Receivable As of September 30, As of December 31, 2017 2016 Customer A 43 % 14 % Customer B 14 % 16 % Customer C * % 15 % Total 57 % 45 % *Less than 10%
Vendor Concentrations [Member]
Concentration Risk, Customer	Vendor concentrations for inventory purchases for the nine months ended September 30, 2017 and 2016 are: For the Nine Months Ended September 30, 2017 2016 Vendor A 26 % 31 % Vendor B * % 11 % Vendor C 12 % * % Total 38 % 42 % *Less than 10%

Segment Reporting (Tables)

Segment Reporting (Tables)	9 Months Ended
	Sep. 30, 2017
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 nine months ended September 30, 2017 and 2016 was as follows: Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 Revenues: Product segment $ 1,772,960 $ 1,781,755 $ 5,523,785 $ 5,391,305 Contract services segment 255,301 225,083 723,435 804,522 Total segment and consolidated revenues $ 2,028,261 $ 2,006,838 $ 6,247,220 $ 6,195,827 Gross profit: Product segment $ 651,921 $ 664,768 $ 2,286,564 $ 2,215,676 Contract services segment (18,939 ) (33,685 ) (64,008 ) (60,383 ) Total segment and consolidated gross profit $ 632,982 $ 631,083 $ 2,222,556 $ 2,155,293 Income (loss) from operations: Product segment $ 224,228 $ 108,634 $ 535,846 $ 409,115 Contract services segment (73,449 ) (91,391 ) (219,084 ) (248,765 ) Total segment income 150,779 17,243 316,762 160,350 Unallocated costs (198,910 ) (253,015 ) (659,049 ) (763,257 ) Total consolidated loss from operations $ (48,131 ) $ (235,772 ) $ (342,287 ) $ (602,907 ) Depreciation and amortization: Product segment $ 28,769 $ 34,516 $ 89,795 $ 103,546 Contract services segment 2,679 7,826 10,530 33,052 Total segment depreciation and amortization 31,448 42,342 100,325 136,598 Unallocated depreciation - - - - Total consolidated depreciation and amortization $ 31,448 $ 42,342 $ 100,325 $ 136,598 Capital additions: Product segment $ - $ - $ - $ 4,000 Contract services segment - - - - Total segment capital additions - - - 4,000 Unallocated capital additions - - - - Total consolidated capital additions $ - $ - $ - $ 4,000 September 30, 2017 December 31, 2016 Segment total assets: Product segment $ 2,330,603 $ 2,577,034 Contract services segment 169,937 146,193 Corporate 72,838 70,504 Total consolidated total assets $ 2,573,378 $ 2,793,731

Organization and Basis of Pre24

Organization and Basis of Presentation (Details Narrative) - USD ($)	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016	Dec. 31, 2015
Accounting Policies [Abstract]
Net loss	$ 124,730	$ 210,902	$ 351,508	$ 456,528	$ 556,001	$ 1,869,247
Accumulated deficit	6,251,675		6,251,675		5,900,167
Stockholders' deficit	770,444		770,444		$ 578,096
Working capital deficit	$ 1,033,150		$ 1,033,150

Summary of Significant Accoun25

Summary of Significant Accounting Policies (Details Narrative) - USD ($)	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016
Restricted cash	$ 10,003		$ 10,003
Sales incentives and cooperative advertising reduction of sales	29,526	$ 40,471	103,031	$ 106,262
Product revenue	1,772,960	1,781,755	5,523,785	5,391,305
Shipping and handling costs	39,102	46,255	136,260	140,059
Research and development expense	82,544	71,921	297,697	236,534
Advertising expense	0	$ 5,193	$ 14,626	$ 23,624
Contingently issuable common stock shares			37,778		37,778
Minimum [Member]
Estimated useful lives for property and equipment			3 years
Cooperative advertising liability	346,000		$ 346,000
Maximum [Member]
Estimated useful lives for property and equipment			10 years
Cooperative advertising liability	100,000		$ 100,000
Product revenue	$ 346,000		$ 346,000

Summary of Significant Accoun26

Summary of Significant Accounting Policies - Schedule of Reconciliation of Fair Value of Level 3 Valuation of Financial Instruments (Details) - USD ($)	9 Months Ended	12 Months Ended
	Sep. 30, 2017	Dec. 31, 2016
Level 1 [Member]
Stock appreciation rights Plan A
Equity credits issued
Level 2 [Member]
Stock appreciation rights Plan A
Equity credits issued
Level 3 [Member]
Stock appreciation rights Plan A	54,538	53,108
Equity credits issued	$ 2,278	$ 2,278

Summary of Significant Accoun27

Summary of Significant Accounting Policies - Schedule of Reconciliation of Fair Value of Asset Liabilities Measured Recurring Basis (Details)	9 Months Ended
	Sep. 30, 2017USD ($)
Stock Appreciation Rights Plan A [Member]
Balance	$ 53,108
Change in fair value included in net income (loss)	1,430
Balance	54,538
Equity Credits Issued [Member]
Balance	2,278
Change in fair value included in net income (loss)
Balance	$ 2,278

Summary of Significant Accoun28

Summary of Significant Accounting Policies - Schedule of Inventory (Details) - USD ($)	Sep. 30, 2017	Dec. 31, 2016
Accounting Policies [Abstract]
Raw materials	$ 660,800	$ 927,833
Work in process	136
Finished goods	753,983	338,643
Inventory, gross	1,414,919	1,266,528
Less: reserve for obsolescence	(281,417)	(231,027)
Inventory, net	$ 1,133,502	$ 1,035,499

Summary of Significant Accoun29

Summary of Significant Accounting Policies - Schedule of Anti-dilutive Per Share Information (Details) - shares	9 Months Ended	12 Months Ended
	Sep. 30, 2017	Dec. 31, 2016
Total stock options	58,860	58,973
Restricted Stock [Member]
Total stock options	37,778	37,778
Stock Options [Member]
Total stock options	20,370	20,483
Stock Warrants [Member]
Total stock options	712	712

Summary of Significant Accoun30

Summary of Significant Accounting Policies - Schedule of Reconciliation of Basic and Diluted Net Income Loss (Details) - $ / shares	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Total weighted average shares outstanding	3,062,759	3,020,062	3,051,826	3,006,837
Class A Common Stock [Member]
Net income (loss) per common shares outstanding	$ (0.11)	$ (0.07)	$ (0.13)	$ (0.15)
Total weighted average shares outstanding	1,645,033	1,358,234	1,502,367	1,346,656
Class B Common Stock [Member]
Net income (loss) per common shares outstanding	$ (0.11)	$ (0.07)	$ (0.12)	$ (0.15)
Total weighted average shares outstanding	1,417,726	1,399,197	1,411,890	1,399,550
Class Z Common Stock [Member]
Net income (loss) per common shares outstanding		$ (0.07)		$ (0.15)
Total weighted average shares outstanding		262,631	137,569	262,631

Bank Loans and Lines of Revol31

Bank Loans and Lines of Revolving Credit Facility (Details Narrative) - USD ($)	Apr. 03, 2017	Oct. 31, 2015	May 01, 2015	Apr. 30, 2014	Sep. 30, 2017	Dec. 31, 2016	Jun. 30, 2016
Revolving credit facility					$ 689,232	$ 979,688
Accrued interest					$ 10,324	$ 17,494
Long term debt weighted average interest rate					6.80%		8.10%
PEN Brands LLC [Member]
Percentage of effective interest rate	3.00%
Debt maturity date	Apr. 4, 2018
Mackinac Commercial Credit, LLC [Member] | Loan and Security Agreement [Member]
Debt maturity date			Apr. 4, 2016
Increase in borrowing base amount		$ 450,000
Borrowing periodic payment		$ 7,500
Revolving Credit Line Agreement [Member]
Available borrowing capacity					$ 810,768
Revolving Credit Line Agreement [Member] | Mackinac Commercial Credit, LLC [Member]
Revolving credit facility				$ 1,500,000
Percentage of effective interest rate				7.00%
Percentage of late charge of any monthly payment not received				5.00%
Percentage of termination premium equal to maximum loan amount				2.00%

Notes Payable (Details Narrativ

Notes Payable (Details Narrative) - Departing Employee [Member]	1 Months Ended
	Jan. 31, 2017USD ($)
Proceeds from notes payable	$ 17,425
Debt instruments interest rate	0.00%
Debt maturity year	due in January 2027

Related Party Transactions (Det

Related Party Transactions (Details Narrative) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016
Sales to the related party	$ 26,093	$ 52,328	$ 138,004	$ 148,624
Accounts receivable - related party	14,227		14,227		$ 10,474
DHJH Holdings LLC [Member] | May 2016 through February 2017 [Member]
Fees and expenses to board member			0	$ 13,195
Director [Member]
Payment to related party	1,000		1,000
Executives [Member]
Payment to related party	$ 19,887		$ 19,887

Stockholders' Equity (Details N

Stockholders' Equity (Details Narrative) - USD ($)	Jul. 28, 2017	May 23, 2017	Apr. 28, 2017	Feb. 24, 2017	Jan. 26, 2016	Dec. 11, 2015	Aug. 27, 2014	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016
Reverse stock split					each one hundred eighty (180) shares	ratio of 1-for-180
Common stock, par value					$ 0.0001	$ 0.0001
Excess stock shares authorized					10,000,000
Common stock, shares authorized					10,000,000
Preferred stock, shares authorized					20,000,000			20,000,000		20,000,000		20,000,000
Preferred stock, par value					$ 0.0001			$ 0.0001		$ 0.0001		$ 0.0001
Common stock conversion basis description										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.
Share based compensation amount								$ 27,540	$ 41,310	$ 110,160	$ 123,930
Dr Zvi Yaniv [Member]
Number of restricted shares issued							37,778
Expected vested exercise price description							All these shares become vested and not subject to forfeiture on the earlier of a change of control of the Company, Dr. Yaniv’s 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 an $18.00 price, 5,554 shares vest, with additional tranches of 5,556 shares vesting if the price reaches $27.00, $36.00, $45.00 and $54.00. The last 10,000 shares vest at a $63.00 price threshold.Any shares that have not vested five years after the effective date will be forfeited. The Company 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 the Company is registering its shares. Pursuant to ASC 718-10 and related subsections, these shares were valued on the date of grant of August 27, 2014 at $13.12 per share for a total value of $495,720.
Shares vesting period							5 years
Shares granted price per share							$ 13.12
Fair value of shares recognized							$ 495,720
Stock option services period							3 years
Restricted Stock Agreement [Member]
Unamortized stock-based compensation expense to be recognized in future periods
Chief Executive Officer [Member]
Number of shares sold, shares		262,631
Number of shares sold, value		$ 100,000
Class A Common Stock [Member]
Common stock voting rights										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.
Number of shares converted		262,631
Class B Common Stock [Member]
Common stock conversion basis description										Shares of Class B common stock can be converted, one-for-one, into shares of Class A common stock at any time at the option of the holder.
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.
Class Z Common Stock [Member]
Common stock conversion basis description										Conversion Rights. Shares of Class Z common stock can be converted, one-for-one, into shares of Class A common stock at any time at the option of the holder.
Common stock voting rights										Holders of PEN Class Z common stock do not vote in the election of directors or otherwise, but they do have the right to designate a director to the PEN Board, have anti-dilution rights described below and have consent rights with respect to certain amendments to PEN’s certificate of incorporation.
Number of shares converted		262,631
Class A Common Stock [Member]
Common stock, par value					$ 0.0001			$ 0.0001		$ 0.0001		$ 0.0001
Common stock, shares authorized					7,200,000			7,200,000		7,200,000		7,200,000
Class A Common Stock [Member] | Directors [Member]
Number of stock shares issued for service	4,800		10,000	3,846
Number of shares issued as compensation			4,617
Class B Common Stock [Member]
Common stock, par value					$ 0.0001			$ 0.0001		$ 0.0001		$ 0.0001
Common stock, shares authorized					2,500,000			2,500,000		2,500,000		2,500,000
Class B Common Stock [Member] | Directors [Member]
Number of stock shares issued for service	3,200		12,308	2,564
Number of shares issued as compensation			3,078
Class Z Common Stock [Member]
Common stock, par value					$ 0.0001			$ 0.0001		$ 0.0001		$ 0.0001
Common stock, shares authorized					300,000			300,000		300,000		300,000
Class A And B Common Stock [Member] | Directors [Member]
Shares issued price per share	$ 1.25		$ 1.30	$ 1.56
Number of stock shares issued for service, value	$ 10,000		$ 29,000	$ 10,000
Accrued director fees			19,000
Share based compensation amount			$ 10,000

Stockholder's Equity - Schedule

Stockholder's Equity - Schedule of Stock Option Plan Activity (Details) - Stock Option [Member]	9 Months Ended
	Sep. 30, 2017USD ($)$ / sharesshares
Number of Options Shares Outstanding, Beginning balance | shares	20,483
Number of Options Shares Exercised | shares
Number of Options Shares, Expired | shares	(113)
Number of Options Shares Outstanding, Ending balance | shares	20,370
Number of Options Shares Exercisable Ending balance | shares	10,370
Weighted-Average Exercise Price, Outstanding, Beginning balance | $ / shares	$ 41.77
Weighted-Average Exercise Price, Exercised | $ / shares
Weighted-Average Exercise Price, Expired | $ / shares	230.40
Weighted-Average Exercise Price, Outstanding, Ending balance | $ / shares	40.72
Weighted-Average Exercise Price, Exercisable Ending balance | $ / shares	$ 77.28
Weighted-Average Remaining Contractual Terms (Years), Outstanding	3 years 3 months 4 days
Weighted-Average Remaining Contractual Terms (Years), Exercisable	2 years 8 months 19 days
Aggregate Intrinsic Value, Share Outstanding | $
Aggregate Intrinsic Value, Share Exercisable | $

Concentrations (Details Narrati

Concentrations (Details Narrative) - USD ($)	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Percentage of sales	10.00%	10.00%
United States [Member] | Sales Revenue, Net [Member]
Percentage of sales	88.00%	91.00%
Other Geographical Area [Member] | Sales Revenue, Net [Member] | Maximum [Member]
Percentage of sales	10.00%	10.00%
One Lender [Member]
Revolving note value	$ 1,500,000

Concentrations - Concentration

Concentrations - Concentration Risk, Customer (Details)	9 Months Ended				12 Months Ended
	Sep. 30, 2017		Sep. 30, 2016		Dec. 31, 2016
Percentage of revenues	10.00%		10.00%
Vendor Concentrations [Member]
Percentage of revenues	38.00%		42.00%
Revenues [Member]
Percentage of revenues	44.00%		46.00%
Accounts Receivable [Member]
Percentage of revenues	57.00%				45.00%
Customer A [Member] | Revenues [Member]
Percentage of revenues	32.00%		32.00%
Customer A [Member] | Accounts Receivable [Member]
Percentage of revenues	43.00%				14.00%
Customer B [Member] | Revenues [Member]
Percentage of revenues	12.00%		14.00%
Customer B [Member] | Accounts Receivable [Member]
Percentage of revenues	14.00%				16.00%
Customer C [Member] | Accounts Receivable [Member]
Percentage of revenues	0.00%	[1]			15.00%
Vendor A [Member] | Vendor Concentrations [Member]
Percentage of revenues	26.00%		31.00%
Vendor B [Member] | Vendor Concentrations [Member]
Percentage of revenues	0.00%	[1]	11.00%
Vendor C [Member] | Vendor Concentrations [Member]
Percentage of revenues	12.00%		0.00%	[1]
[1]	Less than 10%

Concentrations - Concentratio38

Concentrations - Concentration Risk, Customer (Details) (Parenthetical)	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Risks and Uncertainties [Abstract]
Concentration risk, percentage	10.00%	10.00%

Equity Credits (Details Narrati

Equity Credits (Details Narrative) - USD ($)	9 Months Ended	12 Months Ended
	Sep. 30, 2017	Dec. 31, 2016
Equity [Abstract]
Number of equity credits shares issued and outstanding	8,250	8,250
Stock redeemed value	$ 2,278	$ 2,278
Equity credits outstanding	$ 2,278	$ 2,278

Stock Appreciation Plan (Detail

Stock Appreciation Plan (Details Narrative) - USD ($)	9 Months Ended
	Sep. 30, 2017	Dec. 31, 2016
Vested stock outstanding	235,782	235,782
Accrued redemption value associated with stock appreciation rights amount	$ 54,538	$ 53,108
Stock Appreciation Rights (SARs) [Member]
Maximum number of stock appreciation granted by board	1,000,000
Percentage of redemption value to purchase common shares	70.00%
Percentage of remaining distributed in cash to participant	30.00%

Segment Reporting (Details Narr

Segment Reporting (Details Narrative) - ReportableSegments	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Segment Reporting [Abstract]
Number of reportable segments	2	2	2	2

Segment Reporting - Segment Inf

Segment Reporting - Segment Information Available with Respect to Reportable Business Segments (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016
Total segment and consolidated revenues	$ 1,772,960	$ 1,781,755	$ 5,523,785	$ 5,391,305
Total segment and consolidated gross profit	632,982	631,083	2,222,556	2,155,293
Total consolidated loss from operations	(48,131)	(235,772)	(342,287)	(602,907)
Total consolidated total assets	400,778		400,778		$ 709,627
Product Segment [Member]
Total segment and consolidated revenues	1,772,960	1,781,755	5,523,785	5,391,305
Total segment and consolidated gross profit	651,921	664,768	2,286,564	2,215,676
Total segment income	224,228	108,634	535,846	409,115
Total segment depreciation and amortization	28,769	34,516	89,795	103,546
Total segment capital additions				4,000
Total consolidated total assets	2,330,603		2,330,603		2,577,034
Contract Services Segment [Member]
Total segment and consolidated revenues	255,301	225,083	723,435	804,522
Total segment and consolidated gross profit	(18,939)	(33,685)	(64,008)	(60,383)
Total segment income	(73,449)	(91,391)	(219,084)	(248,765)
Total segment depreciation and amortization	2,679	7,826	10,530	33,052
Total segment capital additions
Total consolidated total assets	169,937		169,937		146,193
Total Segment [Member]
Total segment and consolidated revenues	2,028,261	2,006,838	6,247,220	6,195,827
Total segment and consolidated gross profit	632,982	631,083	2,222,556	2,155,293
Total segment income	150,779	17,243	316,762	160,350
Unallocated expenses	(198,910)	(253,015)	(659,049)	(763,257)
Total consolidated loss from operations	(48,131)	(235,772)	(342,287)	(602,907)
Total segment depreciation and amortization	31,448	42,342	100,325	136,598
Unallocated depreciation
Total consolidated depreciation and amortization	31,448	42,342	100,325	136,598
Total segment capital additions				4,000
Unallocated capital additions
Total consolidated capital additions				$ 4,000
Total consolidated total assets	2,573,378		2,573,378		2,793,731
Corporate [Member]
Total consolidated total assets	$ 72,838		$ 72,838		$ 70,504

Commitments and Contingencies (

Commitments and Contingencies (Details Narrative)	9 Months Ended
	Sep. 30, 2017USD ($)ft²
Commitments and Contingencies Disclosure [Abstract]
Lease term	3 years
Area of land | ft²	22,172
Monthly lease payments	$ 8,688
Total term of lease	$ 312,768

Subsequent Events (Details Narr

Subsequent Events (Details Narrative) - USD ($)	Oct. 17, 2017	Sep. 30, 2017	Sep. 30, 2016
Proceeds from sale of fixed assets		$ 87,000	$ 21,866
Gross proceeds from revolving line of credit		4,964,067	$ 5,193,000
Subsequent Event [Member] | Asset Purchase Agreement [Member]
Proceeds from sale of fixed assets		$ 85,000
Subsequent Event [Member] | Amended Loan Agreement [Member]
Gross proceeds from revolving line of credit	$ 85,000
Subsequent Event [Member] | Amended Loan Agreement [Member] | Minimum [Member]
Line of credit collateral amount	$ 85,000