0001144204-18-044583.txt : 20180814 0001144204-18-044583.hdr.sgml : 20180814 20180814151035 ACCESSION NUMBER: 0001144204-18-044583 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 57 CONFORMED PERIOD OF REPORT: 20180630 FILED AS OF DATE: 20180814 DATE AS OF CHANGE: 20180814 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Ideal Power Inc. CENTRAL INDEX KEY: 0001507957 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRICAL INDUSTRIAL APPARATUS [3620] IRS NUMBER: 141999058 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-36216 FILM NUMBER: 181016704 BUSINESS ADDRESS: STREET 1: 4120 FREIDRICH LANE STREET 2: SUITE 100 CITY: AUSTIN STATE: TX ZIP: 78744 BUSINESS PHONE: 512-264-1542 MAIL ADDRESS: STREET 1: 4120 FREIDRICH LANE STREET 2: SUITE 100 CITY: AUSTIN STATE: TX ZIP: 78744 FORMER COMPANY: FORMER CONFORMED NAME: Ideal Power Converters, Inc. DATE OF NAME CHANGE: 20101215 10-Q 1 tv500665_10q.htm FORM 10-Q

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

x   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

 For the quarterly period ended June 30, 2018

 

OR

 

¨   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from ______________ to _______________

 

Commission File Number 001-36216

 

IDEAL POWER INC.

(Exact name of registrant as specified in its charter)

 

Delaware   14-1999058
(State or other jurisdiction of   (I.R.S. Employer
incorporation or organization)   Identification No.)

 

4120 Freidrich Lane, Suite 100

Austin, Texas 78744

(Address of principal executive offices)

(Zip Code)

 

(512) 264-1542

(Registrant’s telephone number, including area code)

 

 (Former name, former address and former fiscal year, if changed since last report)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period than the registrant was required to submit and post such files). Yes x No ¨

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer  ¨   Accelerated filer ¨
     
Non-accelerated filer  ¨   Smaller reporting company  x
(Do not check if a smaller reporting company)    
  Emerging growth company  x

 

If an emerging growth company, indicate by check mark whether the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ¨

 

Indicate by check mark whether the issuer is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

 

As of August 10, 2018, the issuer had 14,000,342 shares of common stock, par value $.001, outstanding.

 

 

 

 

 

 

TABLE OF CONTENTS

 

PART I

  FINANCIAL INFORMATION    
         
Item 1.   Condensed Financial Statements   1
         
    Balance Sheets at June 30, 2018 (Unaudited) and December 31, 2017   1
    Statements of Operations for the three and six months ended June 30, 2018 and 2017 (Unaudited)   2
    Statements of Cash Flows for the six months ended June 30, 2018 and 2017 (Unaudited)   3
    Notes to Unaudited Financial Statements   4
         
Item 2.   Management’s Discussion and Analysis of Financial Condition and Results of Operations   11
         
Item 3.   Quantitative and Qualitative Disclosures About Market Risk   17
         
Item 4.   Controls and Procedures   17
         
PART II   OTHER INFORMATION    
         
Item 1.   Legal Proceedings   18
         
Item 1A.   Risk Factors   18
         
Item 2.   Unregistered Sales of Equity Securities and Use of Proceeds   18
         
Item 3.   Defaults Upon Senior Securities   18
         
Item 4.   Mine Safety Disclosures   18
         
Item 5.   Other Information   18
         
Item 6.   Exhibits   19
         
SIGNATURES   20

 

 

 

 

PART I - FINANCIAL INFORMATION

 

ITEM 1. CONDENSED FINANCIAL STATEMENTS

 

IDEAL POWER INC.

Balance Sheets

 

   June 30,
2018
   December 31,
2017
 
   (unaudited)     
ASSETS          
Current assets:          
Cash and cash equivalents  $6,980,213   $10,022,247 
Accounts receivable, net   170,792    221,084 
Inventories, net   239,407    251,363 
Prepayments and other current assets   503,808    283,208 
Total current assets   7,894,220    10,777,902 
           
Property and equipment, net   513,153    669,571 
Intangible assets, net   2,096,692    2,082,014 
Other assets   55,420    37,500 
Total assets  $10,559,485   $13,566,987 
           
LIABILITIES AND STOCKHOLDERS’ EQUITY          
Current liabilities:          
Accounts payable  $517,770   $449,475 
Accrued expenses   1,149,883    1,081,155 
Total current liabilities   1,667,653    1,530,630 
           
Other long-term liabilities   462,199    456,234 
Total liabilities   2,129,852    1,986,864 
           
Commitments and contingencies          
           
Stockholders’ equity:          
Preferred stock, $0.001 par value; 10,000,000 shares authorized; 1,518,430 shares issued and outstanding at June 30, 2018 and December 31, 2017, respectively   1,518    1,518 
Common stock, $0.001 par value; 50,000,000 shares authorized; 14,004,465 shares issued and 14,000,342 shares outstanding at June 30, 2018 and 13,998,465 shares issued and 13,996,121 shares outstanding at December 31, 2017, respectively   14,004    13,998 
Additional paid-in capital   67,711,659    67,081,359 
Treasury stock, at cost; 4,123 shares at June 30, 2018 and 2,344 shares at December 31, 2017   (9,677)   (7,489)
Accumulated deficit   (59,287,871)   (55,509,263)
Total stockholders’ equity   8,429,633    11,580,123 
Total liabilities and stockholders’ equity  $10,559,485   $13,566,987 

 

The accompanying notes are an integral part of these condensed financial statements.

 

-1

 

 

IDEAL POWER INC.

Statements of Operations

(unaudited)

 

   Three Months Ended
June 30,
   Six Months Ended
June 30,
 
   2018   2017   2018   2017 
Product revenue  $619,942   $253,370   $801,442   $529,040 
Cost of product revenue   584,800    764,609    919,763    1,475,539 
Gross profit (loss)   35,142    (511,239)   (118,321)   (946,499)
                     
Operating expenses:                    
Research and development   905,541    1,108,368    1,663,324    2,298,537 
General and administrative   817,672    1,170,415    1,709,660    2,076,378 
Sales and marketing   69,989    427,336    324,232    968,869 
Total operating expenses   1,793,202    2,706,119    3,697,216    5,343,784 
                     
Loss from operations   (1,758,060)   (3,217,358)   (3,815,537)   (6,290,283)
                     
Interest income, net   35,614    7,034    36,929    11,575 
                     
Net loss  $(1,722,446)  $(3,210,324)  $(3,778,608)  $(6,278,708)
                     
Net loss per share – basic and fully diluted  $(0.12)  $(0.23)  $(0.27)  $(0.50)
                     
Weighted average number of shares outstanding – basic and fully diluted   13,992,791    13,989,282    13,991,961    12,443,076 

 

The accompanying notes are an integral part of these condensed financial statements.

 

-2

 

 

IDEAL POWER INC.

Statements of Cash Flows

(unaudited)

 

   Six Months Ended
June 30,
 
   2018   2017 
Cash flows from operating activities:          
Net loss  $(3,778,608)  $(6,278,708)
Adjustments to reconcile net loss to net cash used in operating activities:          
Allowance for doubtful accounts   (98,337)   273,727 
Write-down of inventory   5,458    712,083 
Depreciation and amortization   216,920    224,926 
Write-off of capitalized patents   15,478    202,343 
Write-off of fixed assets   7,055    15,036 
Stock-based compensation   630,306    498,006 
Decrease (increase) in operating assets:          
Accounts receivable   148,629    (100,715)
Inventories   6,498    166,529 
Prepayments and other current assets   (238,520)   77,981 
Increase (decrease) in operating liabilities:          
Accounts payable   68,295    (133,783)
Accrued expenses   74,693    (5,627)
Net cash used in operating activities   (2,942,133)   (4,348,202)
           
Cash flows from investing activities:          
Purchase of property and equipment   (18,525)   (18,146)
Acquisition of intangible assets   (79,188)   (171,134)
Net cash used in investing activities   (97,713)   (189,280)
           
Cash flows from financing activities:          
Net proceeds from issuance of common stock   -    13,657,331 
Payment of taxes related to restricted stock vesting   (2,188)   - 
Exercise of options and warrants   -    11,143 
Net cash provided by (used in) financing activities   (2,188)   13,668,474 
           
Net increase (decrease) in cash and cash equivalents   (3,042,034)   9,130,992 
Cash and cash equivalents at beginning of period   10,022,247    4,204,916 
Cash and cash equivalents at end of period  $6,980,213   $13,335,908 

 

The accompanying notes are an integral part of these condensed financial statements.

 

-3

 

 

Ideal Power Inc.

Notes to Financial Statements

(unaudited)

 

Note 1 – Organization and Description of Business

 

Ideal Power Inc. (the “Company”) was incorporated in Texas on May 17, 2007 under the name Ideal Power Converters, Inc. The Company changed its name to Ideal Power Inc. on July 8, 2013 and re-incorporated in Delaware on July 15, 2013. With headquarters in Austin, Texas, it develops power conversion solutions with an initial focus on solar + storage, microgrid and stand-alone energy storage applications. The principal products of the Company are 30-kilowatt power conversion systems, including 2-port and multi-port products.

 

Since its inception, the Company has generated limited revenues from the sale of products and has financed its research and development efforts and operations through the sale of common stock and, prior to its initial public offering, the issuance of convertible debt. The Company’s continued operations are dependent upon its ability to obtain adequate sources of funding through future revenues, follow-on stock offerings, debt financing, co-development agreements, sale or licensing of developed intellectual property or other alternatives.

 

On April 16, 2018, the Company realigned into two operating divisions: Power Conversion Systems, to continue the commercialization of its Power Packing Switching Architecture™, or PPSA™, technology, and B-TRAN™, to develop its Bi-directional bi-polar junction TRANsistor (B-TRAN™) solid state switch technology.

 

Note 2 – Summary of Significant Accounting Policies

 

Basis of Presentation

 

The accompanying unaudited financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission for Form 10-Q. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. The Balance Sheet at December 31, 2017 has been derived from the Company’s audited financial statements.

 

In the opinion of management, these financial statements reflect all normal recurring, and other adjustments, necessary for a fair presentation. These financial statements should be read in conjunction with the audited financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017. Operating results for interim periods are not necessarily indicative of operating results for an entire fiscal year or any other future periods.

 

Recently Adopted Standards

 

In May 2014, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606), requiring an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The FASB issued several amendments to the standard, including clarification on accounting for licenses of intellectual property and identifying performance obligations. The standard replaced most existing revenue recognition guidance in U.S. GAAP when it became effective on January 1, 2018. The adoption of this standard did not have a material effect on the Company’s financial statements, nor required an adjustment to the opening balance of accumulated deficit at January 1, 2018, the date of initial adoption. See Note 12 for a discussion of the Company’s revenue recognition policy.

 

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230), in order to address eight specific cash flow issues with the objective of reducing the existing diversity in practice. The updated standard is effective for financial statements issued for annual periods beginning after December 15, 2017 and interim periods within those fiscal years. The adoption of the standard did not have a significant effect on the Company’s financial statements. 

 

In May 2017, the FASB issued ASU 2017-09, Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting. This ASU provides clarity and reduces both (1) diversity in practice and (2) cost and complexity when applying the guidance in Topic 718 to a change to the terms or conditions of a share-based payment award. The amendments in this ASU are effective for public entities for fiscal years and interim periods beginning after December 15, 2017. The ASU is applied prospectively on and after the effective date. The standard did not have a material effect on the Company’s financial statements.

 

-4

 

 

In July 2017, the FASB issued ASU 2017-11, Accounting for Certain Financial Instruments with Down Round Features and Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception. Part I of this ASU addresses the complexity of accounting for certain financial instruments with down round features. Per the ASU, a freestanding equity-linked financial instrument (or embedded conversion option) no longer would be accounted for as a derivative liability at fair value as a result of the existence of a down round feature. The ASU is effective for public entities for fiscal years beginning after December 15, 2018 and early adoption is permitted. The Company has elected to early adopt the ASU and will recognize the value of the effect of the down round provision, if and/or when triggered. The provision is associated with stock warrants issued as part of the Company's 2017 definitive securities purchase agreement, or the Private Placement. For more details regarding the 2017 Private Placement, see Note 9 and Note 11.

 

Recent Accounting Pronouncements

 

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), to increase transparency and comparability among organizations by requiring the recognition of lease assets and lease liabilities on the balance sheet. Most prominent among the amendments is the recognition of assets and liabilities by lessees for those leases classified as operating leases under previous U.S. GAAP. Under the new standard, disclosures are required to meet the objective of enabling users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases. The new standard will be effective for annual and interim periods beginning after December 15, 2018, with early adoption permitted. While the Company is continuing to assess the potential impact of this standard, it expects its lease commitment will be subject to the updated standard and recognized as a lease liability and right-of-use asset upon adoption.

 

Management does not believe that any other recently issued, but not yet effective, accounting standard, if adopted, would have a material impact on the Company’s financial statements.

  

Note 3 – Accounts Receivable

 

Accounts receivable, net consisted of the following:

 

   June 30,
2018
   December 31,
2017
 
   (unaudited)     
Trade receivables  $198,265   $378,894 
Other receivables   1,652    20,589 
    199,917    399,483 
Allowance for doubtful accounts   (29,125)   (178,399)
   $170,792   $221,084 

 

The Company had receivable balances from three customers that accounted for 70% of net trade receivables at June 30, 2018.

 

Activity in the allowance for doubtful accounts was as follows:

 

Balance at December 31, 2017  $(178,399)
Write offs   16,759 
Provisions   (29,485)
Recovery   162,000 
Balance at June 30, 2018  $(29,125)

 

-5

 

 

Note 4 – Inventories

 

Inventories, net consisted of the following:

 

   June 30,
2018
   December 31,
2017
 
   (unaudited)     
Raw materials  $197,779   $222,436 
Finished goods   182,529    149,370 
    380,308    371,806 
Reserve for obsolescence   (140,901)   (120,443)
   $239,407   $251,363 

 

Note 5 – Property and Equipment

 

Property and equipment, net consisted of the following:

 

   June 30,
2018
   December 31,
2017
 
    (unaudited)      
Machinery and equipment  $1,023,327   $1,013,133 
Building leasehold improvements   395,335    395,335 
Furniture, fixtures, software and computers   192,480    218,571 
    1,611,142    1,627,039 
Accumulated depreciation and amortization   (1,097,989)   (957,468)
   $513,153   $669,571 

 

Note 6 – Intangible Assets

 

Intangible assets, net consisted of the following:

 

   June 30,
2018
   December 31,
2017
 
    (unaudited)      
Patents  $1,617,978   $1,554,268 
Other intangible assets   732,175    732,175 
    2,350,153    2,286,443 
Accumulated amortization   (253,461)   (204,429)
   $2,096,692   $2,082,014 

 

Amortization expense amounted to $24,713 and $49,032 for the three and six months ended June 30, 2018, respectively, and $18,594 and $36,469 for the three and six months ended June 30, 2017, respectively. Amortization expense for the succeeding five years and thereafter is approximately $49,000 (2018), $99,000 (2019-2022) and $1,162,000 (thereafter).

 

At June 30, 2018 and December 31, 2017, the Company had capitalized $489,285 and $472,928, respectively, for costs related to patents that have not been awarded.

 

-6

 

 

Note 7 – Accrued Expenses

 

Accrued expenses consisted of the following:

 

   June 30,
2018
   December 31,
2017
 
    (unaudited)      
Accrued compensation  $403,744   $247,343 
Warranty reserve   492,132    426,115 
Other   254,007    407,697 
   $1,149,883   $1,081,155 

 

Note 8 – Commitments and Contingencies

 

Lease

 

The Company leases 14,782 square feet of office and laboratory space located in Austin, Texas. On April 20, 2018, the Company entered into an amendment to its existing operating lease which extended the lease term from May 31, 2018 to May 21, 2021. The annual base rent in the first year of the lease extension is $184,775 and increases by $7,391 in each succeeding year of the lease extension. In addition, the Company is required to pay its proportionate share of operating costs for the building under this triple net lease. Future minimum payments under the lease, as amended, are as follows:

 

Year Ended December 31,  Amount 
2018  $92,388 
2019   189,086 
2020   196,477 
2021   83,149 
   $561,100 

 

The Company incurred rent expense of $60,373 and $118,176 for the three and six months ended June 30, 2018, respectively, and $59,718 and $117,074 for the three and six months ended June 30, 2017, respectively.

 

License Agreement

 

In 2015, the Company entered into licensing agreements which expire on February 7, 2033. Per the agreements, the Company has an exclusive royalty-free license which enhances its intellectual property portfolio related to semiconductor power switches. The agreements include both fixed and variable payments. The variable payments are a function of the number of associated patent filings pending and patents issued under the agreements. The Company will pay $10,000 for each patent filing pending and $20,000 for each patent issued within 20 days of December 21, 2017 and each subsequent year of the agreement, up to a maximum of $100,000 per year (i.e. five issued patents). At June 30, 2018, two patents associated with the agreements had been issued and the corresponding long-term liability for the estimated present value of future payments under the licensing agreement is $462,199. The Company is accruing interest for future payments related to the issued patent associated with the agreement.

 

Legal Proceedings 

 

In 2017, the Company entered into arbitration with Libra Industries, Inc. (“Libra”), its prior contract manufacturer, with both parties asserting claims against the other party. At December 31, 2017, the Company recorded a $100,000 accrual for the arbitration based on an expired settlement offer made by the Company to Libra. On June 21, 2018, the arbitrator issued a final and binding award on all issues except as to attorney’s fees and costs. In the Final Award, the arbitrator denied Libra’s claims and awarded the Company $163,105 on it claims. On July 15, 2018, the arbitrator issued a Supplemental Final Award on Attorney’s Fees and Costs, awarding the Company an additional $165,346. As a result, during the three months ended June 30, 2018, the Company reversed the previously recorded $100,000 accrual resulting in a reduction to general and administrative expense and recognized the Final Award of $163,105 as a reduction in cost of product revenue and the Supplemental Final Award on Attorney’s Fees and Costs of $165,347 as a reduction in general and administrative expense. At June 30, 2018, the total award of $328,451 is included within prepayments and other current assets on the Company’s Balance Sheet. The Company received full payment on the total award on August 2, 2018.

 

-7

 

 

On April 11, 2018, the Company received $203,121 pursuant to a Judgment of Garnishment dated March 23, 2018 and related to the non-payment of an overdue accounts receivable balance by a former customer of the Company. The judgment included the past due balance of $162,000 plus late fees and recovery of legal costs. At March 31, 2018, the Company had fully reserved the $162,000 balance in its allowance for doubtful accounts. The Company did not reverse the allowance for doubtful accounts at March 31,2018 as the funds could be subject to clawback during the quarter ending June 30, 2018 if the former customer filed for bankruptcy. The former customer did not file for bankruptcy during the quarter ended June 30, 2018 and, as a result, the Company reversed the allowance for doubtful accounts of $162,000 with a corresponding reduction in sales and marketing expense, recognized interest income of $35,064 associated with late fees and a reduction in general and administrative expense of $6,057 for the partial recovery of legal fees.

 

Note 9 — Common Stock

 

On March 3, 2017, the Company closed on a definitive securities purchase agreement, or Private Placement, to sell the Company’s common stock and preferred stock together with warrants to purchase shares of common stock. In the Private Placement, each share of common stock or preferred stock was sold together with a warrant to purchase one share of common stock at a collective price of $2.535. Investors purchased an aggregate of 5,220,826 shares of common stock and 708,430 shares of preferred stock together with warrants to purchase 5,929,256 shares of common stock in the Private Placement for aggregate gross proceeds of $15 million. Net cash proceeds were $13.7 million after offering fees and expenses, including the placement agent fee of $1.1 million.

 

Note 10 — Equity Incentive Plan

 

On May 17, 2013, the Company adopted the 2013 Equity Incentive Plan (the “Plan”) and reserved shares of common stock for issuance under the Plan. The Plan is administered by the Compensation Committee of the Company’s Board of Directors. At June 30, 2018, 424,963 shares of common stock were available for issuance under the Plan.

 

During the six months ended June 30, 2018, the Company granted 122,039 stock options to Board members and 300,000 stock options to its Chief Executive Officer under the Plan. The estimated fair value of these stock options, calculated using the Black-Scholes option valuation model, was $330,713, of which $270,712 was recognized during the six months ended June 30, 2018.

 

During the six months ended June 30, 2018, the Company also granted 117,500 restricted stock units and 12,000 performance stock units to employees. The estimated fair value of these awards, based on the Company’s stock price on the date of grant, was $158,110, of which $19,923 was recognized during the six months ended June 30, 2018.

 

A summary of the Company’s stock option activity and related information is as follows:

 

   Stock
Options
   Weighted
Average
Exercise
Price
  

Weighted
Average
Remaining

Life
(in years)

 
Outstanding at December 31, 2017   1,232,236   $6.44    6.8 
Granted   422,039   $1.31      
Forfeited/Expired/Exchanged   (124,728)  $5.23      
Outstanding at June 30, 2018   1,529,547   $5.12    7.3 
Exercisable at June 30, 2018   1,264,680   $5.12    7.2 

 

At June 30, 2018, there was $689,640 of unrecognized compensation cost related to non-vested equity awards granted under the Plan. That cost is expected to be recognized over a weighted average period of 0.7 years.

 

-8

 

 

Note 11 — Warrants

 

In connection with the Private Placement, investors received warrants to purchase 5,929,256 shares of common stock. The warrants have an exercise price of $2.41 per share and will expire three years from the date of issuance. The placement agent also received 237,170 warrants to purchase shares of common stock as part of its placement agent fee. The placement agent warrant has an exercise price of $2.89 per share and also has a three-year term. The warrants contain a provision to protect investors from potential future dilutive events, or a down-round provision. The Company elected to early adopt ASU 2017-11 and will recognize the value of the effect of the down-round provision if and/or when triggered. The Company had 7,481,079 warrants outstanding at both June 30, 2018 and December 31, 2017 with a weighted average exercise price of $2.79 per share. At June 30, 2018 all warrants are exercisable, although for the Company’s two largest beneficial owners their warrants may be exercised only to the extent that the total number of shares of common stock then beneficially owned by these shareholders does not exceed 9.99% of the outstanding shares of the Company’s common stock.

 

Note 12 — Revenue

 

Revenue Recognition

 

Revenue is recognized in accordance with ASC Topic 606 upon transfer of control of promised products or services to customers in an amount that reflects the consideration we expect to receive in exchange for those products or services. We enter into contracts that typically are for products only although contracts could include various combinations of products and services, which are generally distinct and accounted for as separate performance obligations. Revenue is recognized net of taxes collected from customers, which are subsequently remitted to governmental authorities. The Company generally sells its products FOB shipping and recognizes revenue when products are shipped. Revenue from services, which consist of commissioning services, if any, is recognized as services are performed.

 

The Company had revenue from two customers which accounted for 48% and 12% of net revenue for the six months ended June 30, 2018 and revenue from three customers which accounted for 18%, 13% and 13% of net revenue for the six months ended June 30, 2017.

 

Deferred Revenues

 

We record deferred revenues when cash payments are received in advance of our performance. Based on our review of customer credit, we may require full or partial payment before the products or services are delivered to the customer.

 

Activity in the deferred revenue account was as follows:

 

Balance at December 31, 2017  $- 
Deferral of revenue   50,070 
Recognition of unearned revenue   (42,850)
Balance June 30, 2018  $7,220 

 

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS AND OTHER INFORMATION

CONTAINED IN THIS REPORT

 

This report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and the provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements give our current expectations or forecasts of future events. You can identify these statements by the fact that they do not relate strictly to historical or current facts. You can find many (but not all) of these statements by looking for words such as "approximates," "believes," "hopes," "expects," "anticipates," "estimates," "projects," "intends," "plans," "would," "should," "could," "may" or other similar expressions in this report. In particular, these include statements relating to future actions, prospective products, applications, customers, technologies, future performance or results of anticipated products, expenses, and financial results. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our historical experience and our present expectations or projections. Factors that could cause actual results to differ from those discussed in the forward-looking statements include, but are not limited to:

 

our history of losses;

 

our ability to achieve profitability;

 

our limited operating history;

 

our ability to successfully market and sell our products;

 

the size and growth of markets for our current and future products;

 

our expectations regarding the growth and expansion of our customer base;

 

regulatory developments that may affect our business;

 

our ability to successfully develop new technologies, including our bi-directional bipolar junction transistor, or B-TRAN™;

 

our expectations regarding the completion of testing of new products under development and the timing of the introduction of those new products;

 

the expected performance of new and existing products, including future products incorporating our B-TRAN™;

 

the performance of third-party manufacturers who supply and manufacture our products;

 

our expectations of the reliability of our products over the applicable warranty term and the future costs associated with warranty claims;

 

our ability to cost effectively manage product life cycles, inclusive of product launches and end of product life situations;

 

the rate and degree of market acceptance for our current and future products;

 

our ability to successfully obtain certification for our products, including in new markets, and the timing of the receipt of any necessary certifications;

 

our ability to successfully license our technology;

 

our ability to obtain, maintain, defend and enforce intellectual property rights protecting our current and future products;

 

our expectations regarding the decline in prices of battery energy storage systems;

 

our ability to manage our cost structure;

 

general economic conditions and events and the impact they may have on us and our potential customers;

 

our ability to obtain adequate financing in the future, as and when we need it;

 

our success at managing the risks involved in the foregoing items; and

 

other factors discussed in this report.

 

The forward-looking statements are based upon management’s beliefs and assumptions and are made as of the date of this report. We undertake no obligation to publicly update or revise any forward-looking statements included in this report. You should not place undue reliance on these forward-looking statements.

 

Unless otherwise stated or the context otherwise requires, the terms “Ideal Power,” “we,” “us,” “our” and the “Company” refer to Ideal Power Inc.

 

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ITEM 2.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q as well as our audited 2017 financial statements and related notes included in our Annual Report on Form 10-K. In addition to historical information, the discussion and analysis here and throughout this Form 10-Q contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors, including, but not limited, to those set forth under “Risk Factors” in Part II, Item 1A of this report.

 

OVERVIEW

 

Ideal Power is located in Austin, Texas. We design, market and sell electrical power conversion products using our proprietary technology called Power Packet Switching Architecture™, or PPSA™. PPSA™ is a power conversion technology that improves upon existing power conversion technologies in key product metrics, such as size and weight while providing built-in isolation and bi-directional and multi-port capabilities. PPSA™ utilizes standardized hardware with application specific embedded software. Our products are designed to be used in both on-grid and off-grid applications.

 

We sell our products primarily to systems integrators as part of a larger turn-key systems which enable end users to manage their electricity consumption by reducing demand charges or fossil fuel consumption, integrating renewable energy sources and forming their own microgrid. Our products are made by contract manufacturers to our specifications, enabling us to scale production to meet demand on a cost-effective basis without requiring significant expenditures on manufacturing facilities and equipment. As our products establish a foothold in key power conversion markets, we may begin to focus on licensing our proprietary PPSA™-based product designs to OEMs to reach more markets and customers. We may seek to build a portfolio of relationships that generate license fees and royalties from OEMs for sales of their products which integrate PPSA™.

 

On April 16, 2018, the Company realigned into two separate operating divisions: Power Conversion Systems to focus on its PPSA™ technology and B-TRAN to develop its bi-directional bi-polar junction transistor (B-TRAN™) solid state switch technology.

 

We were founded on May 17, 2007. To date, operations have been funded primarily through the sale of common stock and, prior to our initial public offering, the issuance of convertible debt. Total revenue generated from inception to date as of June 30, 2018 amounted to $14.0 million with approximately 19% of that revenue coming from government grants. We may pursue additional research and development grants, if and when available, for the purpose of developing new products and improving current products. 

 

Power Conversion Systems Division

 

Our Technology

 

PPSA™ uses indirect power flow in which power flows through input switches and is temporarily stored in our proprietary AC link inductor. Our proprietary fast switching algorithms enable the transfer of quantum packets of power between ports in our system. As the AC link becomes charged, it disconnects from its input switches, resonates without being connected to either the input or output switches, and then reconnects to its output switches when it reaches the correct voltage and frequency for the application. PPSA™ is a power conversion technology that differentiates itself from traditional power conversion technology in key product metrics, such as size and weight while providing built-in isolation and bi-directional and multi-port capabilities. At June 30, 2018, we had been granted 38 US patents and five foreign patents related to PPSA™.

 

Products

 

We currently sell three power conversion systems, or PCS, utilizing our patented PPSA™ technology. These products are described as follows:

 

  The 30kW Stabiliti™ series has two product offerings, two-port (AC-DC) and multi-port (AC-DC-DC) models, which are both UL1741 Supplement A, or UL1741 SA, certified. These products are intended to be used for the commercial and industrial stand-alone energy storage, electric vehicle fast charging and microgrid markets, including solar plus storage microgrids. They are bi-directional and operate in both grid-tied and grid-forming modes with near seamless transfer between operating modes. Grid-forming mode provides customers the ability to form and manage a microgrid. The products operate in both 50Hz and 60Hz environments.

 

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  The 30kW SunDial Plus™, which is also UL1741 SA certified, is intended to be used for the commercial and industrial grid-tied solar plus storage market. The SunDial™ Plus is a PV string inverter with a second DC port to connect batteries to a solar PV array. This product includes a built-in 6 string PV combiner and DC disconnects and is grid-tied, AC export only. The product operates in both 50Hz and 60Hz environments.

 

Business Strategy

 

Our business strategy is to promote and expand the uses of PPSA™ initially through product development and product sales. To bring our products to market, we plan to seek out best-in-class partners who will distribute, white-label or integrate our innovative products into higher value systems resulting in multiple strategic sales channels for our PPSA™-based products and product designs. As our products gain broader acceptance in the power conversion market, we intend to license our proprietary PPSA™-based product designs to OEMs within our target markets, as well as license our technologies for other markets which we do not plan to enter directly. The basis for this approach is the belief that OEMs may achieve higher product margins and gain more market share by providing PPSA™-based products, which are differentiated from the traditional product offerings in the industry, to their customers. We believe such strategic relationships with key OEM licensees would enable us to reap the benefits of PPSA™ and gain market share more quickly than by strictly manufacturing and distributing our products.

 

Target Markets

 

Currently, our primary target markets are solar + storage and, to a lesser extent, microgrids. We also intend to be opportunistic with regard to other markets, including the stand-alone energy storage and electric vehicle fast charging markets.

 

Solar + Storage and Microgrid Markets

 

Solar PV has one of the lowest levelized costs of energy for new electrical generation capacity and we expect this to remain true in the near term. We expect distributed PV to continue to be a high growth business as system costs have fallen dramatically over the past several years. Accordingly, we expect the economics of generating PV for local consumption to remain strong for several more years, especially given the investment tax credit, or ITC, extension passed by Congress and signed into law in 2015 for solar energy production. Our SunDial™ Plus product was launched to directly address this market. One shortcoming of distributed, behind-the-meter PV systems is that they require connection to the utility power grid in order to operate. For example, a business with PV on its roof will not, in most cases, benefit from the ability to generate power should the utility power grid go down. Another shortcoming of distributed PV systems is the instability they cause on the local power lines. Utility power grids were not designed to manage power inflow from the end of the lines. As a result, distributed generation sources can lead to wide swings in line voltages when clouds pass and power output falls off, requiring the utility to ramp up its power generation to make up for the shortfall in solar. We believe the proliferation of PV, its intermittency and the elimination of net metering in many states may drive growth in the solar + storage market.

 

Whether for emergency backup power or for baseload generation in remote locations with weak or no electric grids, microgrids are an emerging business case for solar paired with energy storage. A distributed PV system connected to a battery energy storage system, or BESS that includes one of our Stabiliti™ multi-port PCS enable a business to benefit from the ability to form and manage a local microgrid powered by the PV system and BESS even when the utility power grid is down. This capability is attractive to electricity consumers who need to power critical loads even in a blackout. In remote locations where there is no reliable electric grid or a dependence on diesel generators, which may be as diverse as a military battlefield or remote tropical island resort, or in locations where local electric rates are high due to aging and inefficient generation technology, a trend towards self-generation microgrids is developing. These sites can use solar, batteries and other forms of generation all brought together by one or more of our Stabiliti™ PCS to form and manage a microgrid using maximum solar generation for lowest cost. As such, we believe our products may become increasingly attractive to co-locate BESS with distributed PV.

  

According to its research, IHS Markit Technology believes that systems will be deployed in two principal configurations. One configuration is to have separate BESS and PV systems tied together through the AC wiring, which is supported by our legacy products. A second, emerging configuration is to place the BESS and the PV system behind a single PCS with two DC inputs. Our Stabiliti™ and SunDial™ Plus were designed specifically to enable this configuration which we believe is the lower cost and more efficient configuration. By tying the solar and batteries together as a DC-coupled system, the batteries become eligible for ITC and accelerated depreciation further enhancing the project economics.

 

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Stand-Alone Storage Market

 

The stand-alone energy storage market is served by BESS. BESS are racks of batteries coupled with a system controller and a power conversion system, such as those manufactured by us, to enable electric power to be captured, stored, and used in conjunction with electric power grids. These systems can be large, megawatt-scale systems operated by utilities to better manage their system resources, or smaller kilowatt-scale systems used by businesses and designed to enable these businesses to manage their power use and mitigate utility imposed "peak demand charges", which are charges utilities levy on their business customers for delivery of power at peak usage times of the day, such as mid-afternoons in the summer. The growth of peak demand charges has been substantial over the past decade and now can make up 50% or more of a commercial utility bill in certain markets. This is a trend that is likely to continue as more intermittent resources are added to the utility power grid causing grid instability. Utilities and aggregators of distributed generation resources are also expected to adopt BESS due to the proliferation of renewables and to take advantage of additional value streams such as energy arbitrage, frequency regulation and ancillary services, infrastructure upgrade deferral and locational capacity.

 

There are strong economic incentives available to commercial and industrial consumers in major US markets such as California and New York in the form of reduced time-of-use and/or demand charges for installing a BESS and managing when power is drawn from the grid or reducing peak consumption. There is also strong regulatory support for such systems. For example, California has issued a mandate for over 1,800 megawatts of new energy storage to be installed by 2020. Other states, including New York and Massachusetts, have also issued mandates for energy storage and we expect this trend to continue.

 

We expect the cost of commercial and industrial BESS to continue to decline due primarily to lower battery costs and, as a result, expect significant expansion in the addressable market for these systems. We also believe the combination of lower BESS costs, third-party financing, increases in utility demand charges, and the entrance of large, established companies to the BESS space may contribute to accelerating market growth for stand-alone energy storage.

 

Other Markets

 

In addition to the markets discussed above, we may also have opportunities for market expansion into electric vehicle fast chargers in certain applications where our products’ compact size and multi-port capabilities can unlock value for the system integrator particularly in locations where battery storage is coupled with the charging system to eliminate demand charges or expand the charging systems response capabilities. During the quarter ended June 30, 2018, one of our customers received certification for an electric vehicle fast charger utilizing our two-port Stabiliti™ product and has plans to utilize our multi-port Stabiliti™ product in an electric vehicle fast charger with buffer storage. Another customer is developing an electric vehicle fast charger utilizing our multi-port Stabiliti™ product for an electric vehicle fast charger with buffer storage. We may have additional opportunities for growth in this market in the future.

 

Although our technology may be suitable for other vertical markets within the global power conversion market landscape, we do not currently offer products for sale directly to other power conversion markets such as the variable-frequency drive, uninterruptible power supply, rail, wind or electric vehicle traction drive markets.

  

We plan to continue to monitor all power conversion markets for opportunities to create solutions for customers and unlock the broader value of our patented technology.

 

Future Innovations

 

Our existing products incorporate multiple insulated gate bipolar transistors, or IGBTs, which are power switches used in the process to convert power from one current form to another. IGBTs switch power in only one direction (DC to AC or AC to DC) and require the use of a blocking diode to prevent power from flowing back through the system. To enable our existing products to perform bi-directional power conversion, for each IGBT and diode used in our products, we must include a second IGBT and diode. These additional components have slight voltage drops that affect the electrical efficiency of our products and generate heat that must be dissipated. We have patented and are developing a new, highly efficient power switch called a B-TRAN™ that we believe will allow us to substitute one B-TRAN™ for two pairs of IGBTs and diodes used in our current products. Based on third party device software simulations and initial prototype testing, we believe that the B-TRANs™ can significantly improve electrical efficiency in our power converters. The higher efficiency would substantially reduce the heat generated by the operation of our products. As a result, products incorporating B-TRANs™ will require less space for heat dissipation which would allow us to increase power density, or power per pound, and reduce material costs.

 

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B-TRAN Division

 

Our Technology

 

In 2016, one of our semiconductor fabricators successfully tested single-sided B-TRAN™ silicon dies and the results were consistent with third party simulations that predict significant performance and efficiency improvements over conventional power switches such as SCRs, IGBTs and MOSFETs. In the second half of 2017, we shifted our focus to de-risking the proof of concept phase of the B-TRAN™ development timeline, as this phase of development was taking longer than anticipated due to the complexity of manufacturing complicated, two-sided power semiconductor devices. To facilitate this, we engaged a second semiconductor fabricator, on a parallel path, to produce, on an accelerated schedule, a B-TRAN™ that is less complex to manufacture for proof of concept and initial testing. In the first quarter of 2018, we successfully completed proof of concept testing of double-sided B-TRAN™ prototypes, validating the ability to make B-TRAN™ semiconductor power switches using conventional silicon semiconductor fabrication equipment and processes. Test results on the standard double-sided prototypes measured B-TRAN™ electrical losses at less than 40% that of conventional power switches such as silicon IGBTs.

 

In the second quarter of 2018, a domestic semiconductor fabricator was qualified and engaged for development runs on the standard version of the B-TRAN™. As a result, we now have the next run of devices with two fabricators in process. These runs incorporate the results of prior runs and testing into the B-TRAN™ design and their manufacturing process. With the double-sided transistor behavior and low conduction losses confirmed and corrections and improvements in the manufacturing process implemented, the next goal is the completion of the fabrication of prototype engineering samples for engineering evaluation and evaluation by potential customers and partners. These samples will include a packaging design based on our previous work and a driver. We have completed the first design for the driver with a prototype driver already built and tested for basic functionality. The coupling of device samples with a driver will form the basis of an intelligent module required for potential customer and partner evaluation.

 

At June 30, 2018, we have 31 US and eight foreign issued patents covering the operation, control and manufacturing of the B-TRAN™ device.

 

Products

 

As our B-TRAN™ technology is currently under development, we do not yet offer commercial B-TRAN™ products.

 

Business Strategy and Target Markets

 

We plan to first utilize the B-TRAN™ in our own power conversion products and then introduce it into the multi-billion dollar power semiconductor market utilizing a licensing model. We believe our new B-TRAN™ technology can potentially address a significant portion of the power semiconductor market that currently relies on power semiconductor devices such as IGBTs. Potential addressable markets for B-TRAN™-based products include solar photovoltaic inverters, microgrid power conversion systems, electric vehicle drivetrains, bi-directional energy storage, solid-state DC and AC contactors and breakers, variable frequency drives and other power conversion and control applications that could benefit from B-TRAN™’s enhanced switching performance.

 

Critical Accounting Policies

 

There have been no significant changes during the six months ended June 30, 2018 to the critical accounting policies disclosed in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the fiscal year ended December 31, 2017.

 

Results of Operations

 

Comparison of the three months ended June 30, 2018 to the three months ended June 30, 2017

 

Revenues.   Revenues for the three months ended June 30, 2018 of $619,942 were $366,572, or 145%, higher than the $253,370 we earned in revenues for the three months ended June 30, 2017 due to higher sales of our Sun Dial™ Plus product.

 

Cost of Revenues.   Cost of revenues decreased for the three months ended June 30, 2018 to $584,800 compared to $764,609 for the three months ended June 30, 2017. Cost of revenues for the three months ended June 30, 2018 was impacted by higher unit sales volumes, higher manufacturing costs and a $78,105 unfavorable adjustment to the Company’s first-generation and second-generation product warranty accruals less a $163,105 favorable award related to arbitration between the Company and its former contract manufacturer. Cost of revenues for the three months ended June 30, 2017 was impacted by the non-cash write-down of inventory of $358,988 and an unfavorable $98,457 adjustment to the Company's first-generation product warranty accruals.

 

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Gross Profit (Loss).   Gross profit for the three months ended June 30, 2018 was $35,142 compared to a gross loss of $511,239 for the three months ended June 30, 2017.

 

Research and Development Expenses.   Research and development expenses decreased by $202,827, or 18%, to $905,541 in the three months ended June 30, 2018 from $1,108,368 in the three months ended June 30, 2017. The decrease was due primarily to lower personnel costs.

 

General and Administrative Expenses.   General and administrative expenses decreased by $352,743, or 30%, to $817,672 in the three months ended June 30, 2018 from $1,170,415 in the three months ended June 30, 2017. The decrease was primarily due to lower patent write-offs of $197,179 and lower legal fees of $135,777. In the three months ended June 30, 2017, we abandoned certain patent filings to focus on filings with the highest strategic value. In the three months ended June 30, 2018, we recovered $171,404 in legal expenses related to the resolution of legal proceedings in our favor.

 

Sales and Marketing Expenses.   Sales and marketing expenses decreased by $357,347, or 84%, to $69,989 in the three months ended June 30, 2018 from $427,336 in the three months ended June 30, 2017. In the three months ended June 30, 2018, we recovered $162,000 related to a receivable we fully reserved in the three months ended June 30, 2017.

 

Loss from Operations.   Our loss from operations for the three months ended June 30, 2018 was $1,758,060 compared to $3,217,358 loss from operations for the three months ended June 30, 2017.

 

Interest Income, net.    Net interest income was $35,614 for the three months ended June 30, 2018 compared to $7,034 for the three months ended June 30, 2017. The increase was the result of late fees associated with the recovery of a delinquent customer receivable.

 

Net Loss.   Our net loss for the three months ended June 30, 2018 was $1,722,446 as compared to a net loss of $3,210,324 for the three months ended June 30, 2017. The decrease is attributable to reduced operating expenses as the result of cost reduction activities, the favorable resolution of legal proceedings and higher non-cash charges associated with inventory write-downs, patent impairments and bad debt expense in 2017.

 

Comparison of the six months ended June 30, 2018 to the six months ended June 30, 2017

 

Revenues.   Revenues for the six months ended June 30, 2018 of $801,442 were $272,402, or 51%, higher than the $529,040 we earned in revenues for the six months ended June 30, 2017 due to higher sales of our Sun Dial™ Plus product.

 

Cost of Revenues.   Cost of revenues decreased by $555,776, or 38%, to $919,763 for the six months ended June 30, 2018 compared to $1,475,539 for the six months ended June 30, 2017. The decrease was due primarily to a non-cash write-down of inventory of $708,204 in the six months ended June 30, 2017 partially offset by higher sales volumes.

 

Gross Loss.   Gross loss for the six months ended June 30, 2018 was $118,321 compared to a gross loss of $946,499 for the six months ended June 30, 2017. The gross loss in the six months ended June 30, 2018 was due to higher manufacturing costs, as the Company expedited production to meet the growth in customer orders, as well as a net $100,000 unfavorable adjustment to the Company’s warranty accrual.

 

Research and Development Expenses.   Research and development expenses decreased by $635,213, or 28%, to $1,663,324 in the six months ended June 30, 2018 from $2,298,537 in the six months ended June 30, 2017. The decrease was due primarily to lower personnel costs and other cost reduction activities described below.

 

General and Administrative Expenses.   General and administrative expenses decreased by $366,718, or 18%, to $1,709,660 in the six months ended June 30, 2018 from $2,076,378 in the six months ended June 30, 2017. The decrease was primarily due to lower patent write-offs of $186,865, as we abandoned certain patent filings in 2017 to focus on filings with the highest strategic value, lower legal and consulting fees of $93,670 and other cost reduction activities.

 

Sales and Marketing Expenses.   Sales and marketing expenses decreased by $644,637, or 67%, to $324,232 in the six months ended June 30, 2018 from $968,869 in the six months ended June 30, 2017. The decrease was due to a $372,064 decline in bad debt expense and lower professional fees of $238,531 and personnel costs of $131,434, partially offset by higher stock-based compensation costs of $162,914 due to significant forfeitures in 2017. In the six months ended June 30, 2018, we recovered $162,000 related to a receivable we fully reserved in the six months ended June 30, 2017.

 

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Loss from Operations.   Our loss from operations for the six months ended June 30, 2018 was $3,815,537 compared to $6,290,283 loss from operations for the six months ended June 30, 2017.

 

Interest Income, net.    Net interest income was $36,929 for the six months ended June 30, 2018 compared to $11,575 for the six months ended June 30, 2017. The increase was the result of late fees associated with the recovery of a delinquent customer receivable.

 

Net Loss.   Our net loss for the six months ended June 30, 2018 was $3,778,608 as compared to a net loss of $6,278,708 for the six months ended June 30, 2017. The decrease is attributable to reduced operating expenses as the result of cost reduction activities, the favorable resolution of legal proceedings and higher non-cash charges associated with inventory write-downs, patent impairments and bad debt expense in 2017.

 

Liquidity and Capital Resources

 

We do not currently generate enough revenue to sustain our operations. We have funded our operations through the sale of common stock and, prior to our initial public offering, the issuance of convertible debt.

 

At June 30, 2018, we had cash and cash equivalents of $6,980,213. Our net working capital and long-term debt at June 30, 2017 were $6,226,567 and $0, respectively.

 

Operating activities in the six months ended June 30, 2018 resulted in cash outflows of $2,942,133, which were due primarily to the net loss for the period of $3,778,608, partly offset by non-cash items of $776,880, related primarily to stock-based compensation of $630,306 and, depreciation and amortization of $216,920. Operating activities in the six months ended June 30, 2017 resulted in cash outflows of $4,348,202, which were due primarily to the net loss for the period of $6,278,708, partly offset by non-cash items of $1,926,121, related primarily to inventory write-downs of $712,083, stock-based compensation of $498,006, bad debt expense of $273,727, depreciation and amortization of $224,926 and patent impairments of $202,343.

 

Investing activities in the six months ended June 30, 2018 and 2017 resulted in cash outflows of $97,713 and $189,280, respectively, for the acquisition of fixed assets and intangible assets.

 

In the second quarter of 2017, we began implementing a cost reduction plan with the goal of reducing our cash outflows for operating and investing activities. This plan included the simplification of our product roadmap to focus on our 30kW SunDial™ Plus and Stabilti™ products for the solar plus storage and microgrid markets and eliminate activities that did not present significant near-term revenue opportunities. In addition, we discontinued our legacy products, including our 125kW product, and postponed our development and certification efforts related to other applications and international markets.

 

Financing activities in the six months ended June 30, 2018 were not significant. Financing activities in the six months ended June 30, 2017 resulted in cash inflows of $13,668,474 related primarily to our Private Placement net proceeds of $13,657,331. In the Private Placement, each share of common stock or preferred stock was sold together with a warrant to purchase one share of common stock at a collective price of $2.535. Investors purchased an aggregate of 5,220,826 shares of common stock and 708,430 shares of preferred stock together with warrants to purchase 5,929,256 shares of common stock in the Private Placement for aggregate gross proceeds of $15.0 million. Net cash proceeds are after offering fees and expenses, including the placement agent fee of $1.1 million.

 

Off-Balance Sheet Transactions

 

We do not have any off-balance sheet transactions.

 

Trends, Events and Uncertainties

 

There are no material changes from trends, events or uncertainties disclosed in our 2017 Annual Report on Form 10-K.

 

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

As a smaller reporting company we are not required to provide this information.

 

ITEM 4. CONTROLS AND PROCEDURES

 

Evaluation of Disclosure Controls and Procedures

 

Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Securities Exchange Act of 1934, as amended, is accumulated and communicated to the issuer’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Our management, with the participation of our Chief Executive Officer (principal executive officer) and our Chief Financial Officer (principal financial and accounting officer), has concluded that, as of June 30, 2018, our disclosure controls and procedures are effective.

 

Changes in Internal Control over Financial Reporting

 

There have been no material changes in our internal controls over financial reporting that occurred during the quarter ended June 30, 2018 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

 

Limitations on the Effectiveness of Controls

 

Control systems, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control systems’ objectives are being met. Further, the design of any system of controls must reflect the fact that there are resource constraints, and the benefits of all controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of error or mistake. Control systems can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.

 

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PART II - OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS

 

There are no material changes from the legal proceedings disclosed in our 2017 Annual Report on Form 10-K except as follows:

 

On June 21, 2018, an arbitrator issued a final and binding award on all issues except as to attorney’s fees and costs, related to arbitration between us and Libra Industries, Inc. (Libra), our prior contract manufacturer, and. In the Final Award, the arbitrator denied Libra’s claims and awarded us $163,105 for our claims. On July 15, 2018, the arbitrator issued a Supplemental Final Award on Attorney’s Fees and Costs, awarding us an additional $165,346. We received full payment of the award, totaling $328,451, on August 2, 2018.

 

On April 11, 2018, we received $203,121 pursuant to a Judgment of Garnishment dated March 23, 2018 and related to the non-payment of an overdue accounts receivable balance by a former customer. The judgment included the past due balance of $162,000 plus late fees and partial recovery of legal costs.

 

ITEM 1A. RISK FACTORS

 

There are no material changes from the risk factors disclosed in our 2017 Annual Report on Form 10-K except as follows:

 

Our actions to separate our business into two divisions may result in additional costs.

 

As discussed above in “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Overview,” we realigned our business into two separate operating divisions. Our Power Conversion Systems division focuses on our PPSA™ technology, while our B-TRAN division focuses on our B-TRAN™ solid state switch technology. We took several corporate actions in connection with the creation of these two operating divisions, including reassigning our former president and chief executive officer, R. Daniel Brdar, to the position of B-TRAN Chief Commercial Officer and hiring Dr. Lon E. Bell as our president and chief executive officer in addition to his role as chairman of our board of directors. This separation may result in additional costs and expenses and may cause logistical and operational complexities that will divert management’s attention both during and after separation. We cannot assure you that the separation of our business into two divisions will not have a material adverse impact on our results of operations.

 

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

 

On March 3, 2017, we closed on a definitive securities purchase agreement to sell to certain accredited investors shares of our common stock and preferred stock together with warrants to purchase shares of common stock, or the Private Placement. We filed with the SEC a Registration Statement on Form S-3 (Registration No. 333-217088) covering the resale of the registrable securities on March 31, 2017, and it was declared effective on April 21, 2017.

 

Net cash proceeds were $13.7 million after offering fees and expenses We have utilized, and expect to continue to utilize, net proceeds from the offering for working capital and general corporate purposes.

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

 

Not applicable.

 

ITEM 4. MINE SAFETY DISCLOSURES

 

Not applicable.

 

ITEM 5. OTHER INFORMATION

 

Not applicable.

 

-18

 

 

ITEM 6. EXHIBITS

 

Exhibit
Number
  Document
     
10.1*   Amendment No. 1 to lease effective April 17, 2018, by and between Ideal Power Inc. and Agellan Commercial REIT US L.P. (Exhibit 10.1 of the Company’s Current Report on Form 8-K filed with the SEC on April 26, 2018)
     
31.1   Certification of Principal Executive Officer pursuant to Exchange Act Rule, 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002**
     
31.2   Certification of Principal Financial Officer pursuant to Exchange Act Rule, 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002**
     
32.1   Certification pursuant to 18 U.S.C. 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002***
     
101.INS   XBRL Instant Document **
     
101.SCH   XBRL Taxonomy Extension Schema Document **
     
101.CAL   XBRL Taxonomy Extension Calculation Linkbase Document **
     
101.DEF   XBRL Taxonomy Extension Definition Linkbase Document **
     
10.LAB   XBRL Taxonomy Extension Label Linkbase Document **
     
101.PRE   XBRL Taxonomy Extension Presentation Linkbase Document **

 

* Incorporated herein by reference to the indicated filing
** Filed herewith
*** Furnished herewith

 

-19

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant, has duly, caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

Dated August 14, 2018 IDEAL POWER INC.
   
  By: /s/ Lon E. Bell
    Lon E. Bell
    Chief Executive Officer
     
  By: /s/ Timothy W. Burns
    Timothy W. Burns
    Chief Financial Officer

 

-20

 

EX-31.1 2 tv500665_ex31-1.htm EXHIBIT 31.1

Exhibit 31.1

 

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO SECTION 302(a) OF THE SARBANES-OXLEY ACT OF 2002

 

I, Lon E. Bell, certify that:

 

1.I have reviewed this quarterly report on Form 10-Q of Ideal Power Inc.;

 

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15-d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

 

  Date: August 14, 2018  
     
  /s/ Lon E. Bell  
  Lon E. Bell  
  Chief Executive Officer (Principal Executive Officer)  

 

 

 

EX-31.2 3 tv500665_ex31-2.htm EXHIBIT 31.2

Exhibit 31.2

 

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

PURSUANT TO SECTION 302(a) OF THE SARBANES-OXLEY ACT OF 2002

 

I, Timothy W. Burns, certify that:

 

1.I have reviewed this quarterly report on Form 10-Q of Ideal Power Inc.;

 

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15-d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

 

  Date: August 14, 2018  
     
  /s/ Timothy W. Burns  
  Timothy W. Burns  
  Chief Financial Officer (Principal Financial and  
  Accounting Officer)  

 

 

 

EX-32.1 4 tv500665_ex32-1.htm EXHIBIT 32.1

Exhibit 32.1

 

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the periodic report of Ideal Power Inc. (the “Company”) on Form 10-Q for the quarter ended June30, 2018 as filed with the Securities and Exchange Commission (the “Report”), we, Lon E. Bell, Chief Executive Officer (Principal Executive Officer) and Timothy W. Burns, Chief Financial Officer (Principal Financial and Accounting Officer) of the Company, hereby certify as of the date hereof, solely for purposes of Title 18, Chapter 63, Section 1350 of the United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of our knowledge:

 

(1)The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, and

 

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company at the dates and for the periods indicated.

 

 

  Date: August 14, 2018  
     
  /s/ Lon E. Bell  
  Lon E. Bell  
  Chief Executive Officer (Principal Executive Officer)  
     
     
  /s/ Timothy W. Burns  
  Timothy W. Burns  
  Chief Financial Officer (Principal Financial and  
  Accounting Officer)  

 

 

 

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font-size: 10pt; line-height: normal;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); letter-spacing: 0px; top: 0px;;display:inline;">Finished goods</div></div></td><td style="background: #ffffff;border-bottom: none;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; line-height: normal; background: none;"><div style="white-space: pre-wrap; font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); background: none; text-decoration: none; letter-spacing: 0px; top: 0px;;display:inline;">&#160;</div></div></td><td style="background: #ffffff;border-bottom: solid #000000 1.0pt;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;"><div style="font-family: &quot;times new roman&quot;, serif; 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font-size: 10pt; line-height: normal; background: none;"><div style="white-space: pre-wrap; font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); background: none; text-decoration: none; letter-spacing: 0px; top: 0px;;display:inline;">&#160;</div></div></td><td style="background: #ffffff;border-bottom: none;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; line-height: normal; background: none;"><div style="white-space: pre-wrap; font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); background: none; text-decoration: none; letter-spacing: 0px; top: 0px;;display:inline;">&#160;</div></div></td><td style="background: #ffffff;border-bottom: solid #000000 1.0pt;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; line-height: normal; background: none;"><div style="white-space: pre-wrap; font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); background: none; text-decoration: none; letter-spacing: 0px; top: 0px;;display:inline;">&#160;</div></div></td><td style="background: #ffffff;border-bottom: solid #000000 1.0pt;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; text-align: right; line-height: normal;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); letter-spacing: 0px; top: 0px;;display:inline;">149,370</div></div></td><td style="background: #ffffff;border-bottom: none;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; line-height: normal; background: none;"><div style="white-space: pre-wrap; font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); background: none; text-decoration: none; letter-spacing: 0px; top: 0px;;display:inline;">&#160;</div></div></td></tr><tr><td style="background: #cceeff;border-bottom: none;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; line-height: normal; background: none;"><div style="white-space: pre-wrap; font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); background: none; text-decoration: none; letter-spacing: 0px; top: 0px;;display:inline;">&#160;</div></div></td><td style="background: #cceeff;border-bottom: none;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; line-height: normal; background: none;"><div style="white-space: pre-wrap; font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); background: none; text-decoration: none; letter-spacing: 0px; top: 0px;;display:inline;">&#160;</div></div></td><td style="background: #cceeff;border-bottom: none;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; line-height: normal; background: none;"><div style="white-space: pre-wrap; font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); background: none; text-decoration: none; letter-spacing: 0px; top: 0px;;display:inline;">&#160;</div></div></td><td style="background: #cceeff;border-bottom: none;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; text-align: right; line-height: normal;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); letter-spacing: 0px; top: 0px;;display:inline;">380,308</div></div></td><td style="background: #cceeff;border-bottom: none;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; line-height: normal; background: none;"><div style="white-space: pre-wrap; font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); background: none; text-decoration: none; letter-spacing: 0px; top: 0px;;display:inline;">&#160;</div></div></td><td style="background: #cceeff;border-bottom: none;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; line-height: normal; background: none;"><div style="white-space: pre-wrap; font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); background: none; text-decoration: none; letter-spacing: 0px; top: 0px;;display:inline;">&#160;</div></div></td><td style="background: #cceeff;border-bottom: none;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; line-height: normal; background: none;"><div style="white-space: pre-wrap; font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); background: none; text-decoration: none; letter-spacing: 0px; top: 0px;;display:inline;">&#160;</div></div></td><td style="background: #cceeff;border-bottom: none;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;"><div style="font-family: &quot;times new roman&quot;, serif; 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font-size: 10pt; line-height: normal;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); letter-spacing: 0px; top: 0px;;display:inline;">Reserve for obsolescence</div></div></td><td style="background: #ffffff;border-bottom: none;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; line-height: normal; background: none;"><div style="white-space: pre-wrap; font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); background: none; text-decoration: none; letter-spacing: 0px; top: 0px;;display:inline;">&#160;</div></div></td><td style="background: #ffffff;border-bottom: solid #000000 1.0pt;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; line-height: normal; background: none;"><div style="white-space: pre-wrap; font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); background: none; text-decoration: none; letter-spacing: 0px; top: 0px;;display:inline;">&#160;</div></div></td><td style="background: #ffffff;border-bottom: solid #000000 1.0pt;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; text-align: right; line-height: normal;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); letter-spacing: 0px; top: 0px;;display:inline;">(140,901</div></div></td><td style="background: #ffffff;border-bottom: none;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; line-height: normal;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); letter-spacing: 0px; top: 0px;;display:inline;">)</div></div></td><td style="background: #ffffff;border-bottom: none;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; line-height: normal; background: none;"><div style="white-space: pre-wrap; font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); background: none; text-decoration: none; letter-spacing: 0px; top: 0px;;display:inline;">&#160;</div></div></td><td style="background: #ffffff;border-bottom: solid #000000 1.0pt;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;"><div style="font-family: &quot;times new roman&quot;, serif; 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font-size: 10pt; line-height: normal;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); letter-spacing: 0px; top: 0px;;display:inline;">)</div></div></td></tr><tr><td style="background: #cceeff;border-bottom: none;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; line-height: normal; background: none;"><div style="white-space: pre-wrap; font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); background: none; text-decoration: none; letter-spacing: 0px; top: 0px;;display:inline;">&#160;</div></div></td><td style="background: #cceeff;border-bottom: none;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; line-height: normal; background: none;"><div style="white-space: pre-wrap; font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); background: none; text-decoration: none; letter-spacing: 0px; top: 0px;;display:inline;">&#160;</div></div></td><td style="background: #cceeff;border-bottom: double #000000 2.5pt;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; line-height: normal;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); letter-spacing: 0px; top: 0px;;display:inline;">$</div></div></td><td style="background: #cceeff;border-bottom: double #000000 2.5pt;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;"><div style="font-family: &quot;times new roman&quot;, serif; 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font-size: 10pt; line-height: normal; background: none;"><div style="white-space: pre-wrap; font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); background: none; text-decoration: none; letter-spacing: 0px; top: 0px;;display:inline;">&#160;</div></div></td><td style="background: #cceeff;border-bottom: solid #000000 1.0pt;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; line-height: normal; background: none;"><div style="white-space: pre-wrap; font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); background: none; text-decoration: none; letter-spacing: 0px; top: 0px;;display:inline;">&#160;</div></div></td><td style="background: #cceeff;border-bottom: solid #000000 1.0pt;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;"><div style="font-family: &quot;times new roman&quot;, serif; 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font-size: 10pt; line-height: normal; background: none;"><div style="white-space: pre-wrap; font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); background: none; text-decoration: none; letter-spacing: 0px; top: 0px;;display:inline;">&#160;</div></div></td><td style="background: #ffffff;border-bottom: none;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; line-height: normal; background: none;"><div style="white-space: pre-wrap; font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); background: none; text-decoration: none; letter-spacing: 0px; top: 0px;;display:inline;">&#160;</div></div></td><td style="background: #ffffff;border-bottom: none;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; line-height: normal; background: none;"><div style="white-space: pre-wrap; font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); background: none; text-decoration: none; letter-spacing: 0px; top: 0px;;display:inline;">&#160;</div></div></td><td style="background: #ffffff;border-bottom: none;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; text-align: right; line-height: normal;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); letter-spacing: 0px; top: 0px;;display:inline;">1,611,142</div></div></td><td style="background: #ffffff;border-bottom: none;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;"><div style="font-family: &quot;times new roman&quot;, serif; 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font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); background: none; text-decoration: none; letter-spacing: 0px; top: 0px;;display:inline;">&#160;</div></div></td><td style="background: #cceeff;border-bottom: solid #000000 1.0pt;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; line-height: normal; background: none;"><div style="white-space: pre-wrap; font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); background: none; text-decoration: none; letter-spacing: 0px; top: 0px;;display:inline;">&#160;</div></div></td><td style="background: #cceeff;border-bottom: solid #000000 1.0pt;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;"><div style="font-family: &quot;times new roman&quot;, serif; 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font-size: 10pt; line-height: normal;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); letter-spacing: 0px; top: 0px;;display:inline;">$</div></div></td><td style="background: #ffffff;border-bottom: double #000000 2.5pt;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; text-align: right; line-height: normal;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); letter-spacing: 0px; top: 0px;;display:inline;">513,153</div></div></td><td style="background: rgb(255, 255, 255); border-width: initial; border-style: none; border-color: initial; padding: 0pt 0px 1.5pt; vertical-align: bottom;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; line-height: normal; background: none;"><div style="white-space: pre-wrap; font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); background: none; text-decoration: none; letter-spacing: 0px; top: 0px;;display:inline;">&#160;</div></div></td><td style="background: #ffffff;border-bottom: none;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; line-height: normal; background: none;"><div style="white-space: pre-wrap; font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); background: none; text-decoration: none; letter-spacing: 0px; top: 0px;;display:inline;">&#160;</div></div></td><td style="background: #ffffff;border-bottom: double #000000 2.5pt;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; line-height: normal;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); letter-spacing: 0px; top: 0px;;display:inline;">$</div></div></td><td style="background: #ffffff;border-bottom: double #000000 2.5pt;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; text-align: right; line-height: normal;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); letter-spacing: 0px; top: 0px;;display:inline;">669,571</div></div></td><td style="background: rgb(255, 255, 255); border-width: initial; border-style: none; border-color: initial; padding: 0pt 0px 1.5pt; vertical-align: bottom;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; line-height: normal; background: none;"><div style="white-space: pre-wrap; font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); background: none; text-decoration: none; letter-spacing: 0px; top: 0px;;display:inline;">&#160;</div></div></td></tr></table></div><table border="0" style="width:100%; table-layout:fixed;" cellspacing="0" cellpadding="0"><tr><td></td></tr></table> <div style="font-family: 'times new roman', 'serif';font-size: 10pt;margin-bottom: 0;margin-top: 0;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); letter-spacing: 0px; top: 0px;;display:inline;"><div style="font-weight:bold;display:inline;">Note 6 &#8211; Intangible Assets</div></div></div><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; margin-bottom: 0px; margin-top: 0px; text-indent: 0.5in; background: none;"><div style="white-space: pre-wrap; font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); background: none; text-decoration: none; letter-spacing: 0px; 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color: rgb(0, 0, 0); letter-spacing: 0px; top: 0px;;display:inline;">Accrued expenses consisted of the following:</div></div><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; margin-bottom: 0px; margin-top: 0px; text-indent: 0.25in; background: none;"><div style="white-space: pre-wrap; font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); background: none; text-decoration: none; letter-spacing: 0px; top: 0px;;display:inline;">&#160;</div></div><div style="text-align:left;"><table style="border: none;border-collapse: collapse;margin-bottom: .001pt;margin-left: 0.25in;width: 96%;"><tr><td style="border-bottom: none;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; line-height: normal; background: none;"><div style="white-space: pre-wrap; font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); background: none; text-decoration: none; letter-spacing: 0px; top: 0px;;display:inline;">&#160;</div></div></td><td style="border-bottom: none;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; line-height: normal; background: none;"><div style="white-space: pre-line; font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); background: none; text-decoration: none; letter-spacing: 0px; top: 0px;;display:inline;"><div style="font-weight:bold;display:inline;">&#160;</div></div></div></td><td colspan="2" style="border-bottom: solid #000000 1.0pt;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;"><div style="font-family: &quot;times new roman&quot;, serif; 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font-size: 10pt; line-height: normal; background: none;"><div style="white-space: pre-line; font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); background: none; text-decoration: none; letter-spacing: 0px; top: 0px;;display:inline;"><div style="font-weight:bold;display:inline;">&#160;</div></div></div></td><td style="background: #ffffff;border-bottom: none;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; line-height: normal; background: none;"><div style="white-space: pre-line; font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); background: none; text-decoration: none; letter-spacing: 0px; top: 0px;;display:inline;"><div style="font-weight:bold;display:inline;">&#160;</div></div></div></td><td style="background: #ffffff;border-bottom: none;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;"><div style="font-family: &quot;times new roman&quot;, serif; 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font-size: 10pt; line-height: normal; background: none;"><div style="white-space: pre-wrap; font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); background: none; text-decoration: none; letter-spacing: 0px; top: 0px;;display:inline;">&#160;</div></div></td><td style="background: #ffffff;border-bottom: none;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; line-height: normal; background: none;"><div style="white-space: pre-wrap; font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); background: none; text-decoration: none; letter-spacing: 0px; top: 0px;;display:inline;">&#160;</div></div></td><td style="background: #ffffff;border-bottom: none;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;"><div style="font-family: &quot;times new roman&quot;, serif; 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font-size: 10pt; line-height: normal; background: none;"><div style="white-space: pre-wrap; font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); background: none; text-decoration: none; letter-spacing: 0px; top: 0px;;display:inline;">&#160;</div></div></td><td style="background: #ffffff;border-bottom: none;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; line-height: normal; background: none;"><div style="white-space: pre-wrap; font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); background: none; text-decoration: none; letter-spacing: 0px; top: 0px;;display:inline;">&#160;</div></div></td><td style="background: #ffffff;border-bottom: none;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;"><div style="font-family: &quot;times new roman&quot;, serif; 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font-size: 10pt; line-height: normal;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); letter-spacing: 0px; top: 0px;;display:inline;">Other</div></div></td><td style="background: #cceeff;border-bottom: none;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; line-height: normal; background: none;"><div style="white-space: pre-wrap; font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); background: none; text-decoration: none; letter-spacing: 0px; top: 0px;;display:inline;">&#160;</div></div></td><td style="background: #cceeff;border-bottom: solid #000000 1.0pt;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; line-height: normal; background: none;"><div style="white-space: pre-wrap; font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); background: none; text-decoration: none; letter-spacing: 0px; top: 0px;;display:inline;">&#160;</div></div></td><td style="background: #cceeff;border-bottom: solid #000000 1.0pt;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; text-align: right; line-height: normal;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); letter-spacing: 0px; top: 0px;;display:inline;">254,007</div></div></td><td style="background: #cceeff;border-bottom: none;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; line-height: normal; background: none;"><div style="white-space: pre-wrap; font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); background: none; text-decoration: none; letter-spacing: 0px; top: 0px;;display:inline;">&#160;</div></div></td><td style="background: #cceeff;border-bottom: none;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; line-height: normal; background: none;"><div style="white-space: pre-wrap; font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); background: none; text-decoration: none; letter-spacing: 0px; top: 0px;;display:inline;">&#160;</div></div></td><td style="background: #cceeff;border-bottom: solid #000000 1.0pt;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; line-height: normal; background: none;"><div style="white-space: pre-wrap; font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); background: none; text-decoration: none; letter-spacing: 0px; top: 0px;;display:inline;">&#160;</div></div></td><td style="background: #cceeff;border-bottom: solid #000000 1.0pt;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; text-align: right; line-height: normal;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); letter-spacing: 0px; top: 0px;;display:inline;">407,697</div></div></td><td style="background: #cceeff;border-bottom: none;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; line-height: normal; background: none;"><div style="white-space: pre-wrap; font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); background: none; text-decoration: none; letter-spacing: 0px; top: 0px;;display:inline;">&#160;</div></div></td></tr><tr><td style="background: #ffffff;border-bottom: none;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; line-height: normal; background: none;"><div style="white-space: pre-wrap; font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); background: none; text-decoration: none; letter-spacing: 0px; top: 0px;;display:inline;">&#160;</div></div></td><td style="background: #ffffff;border-bottom: none;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; line-height: normal; background: none;"><div style="white-space: pre-wrap; font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); background: none; text-decoration: none; letter-spacing: 0px; top: 0px;;display:inline;">&#160;</div></div></td><td style="background: #ffffff;border-bottom: double #000000 2.5pt;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; line-height: normal;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); letter-spacing: 0px; top: 0px;;display:inline;">$</div></div></td><td style="background: #ffffff;border-bottom: double #000000 2.5pt;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; text-align: right; line-height: normal;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); letter-spacing: 0px; top: 0px;;display:inline;">1,149,883</div></div></td><td style="background: rgb(255, 255, 255); border-width: initial; border-style: none; border-color: initial; padding: 0pt 0px 1.5pt; vertical-align: bottom;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; line-height: normal; background: none;"><div style="white-space: pre-wrap; font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); background: none; text-decoration: none; letter-spacing: 0px; top: 0px;;display:inline;">&#160;</div></div></td><td style="background: #ffffff;border-bottom: none;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;"><div style="font-family: &quot;times new roman&quot;, serif; 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Per the agreements, the Company has an exclusive royalty-free license which enhances its intellectual property portfolio related to semiconductor power switches. The agreements include both fixed and variable payments. The variable payments are a function of the number of associated patent filings pending and patents issued under the agreements. The Company will pay $10,000 for each patent filing pending and $20,000 for each patent issued within 20 days of December 21, 2017 and each subsequent year of the agreement, up to a maximum of $100,000 per year (i.e. five issued patents). At June&#160;30,&#160;2018, two patents associated with the agreements had been issued and the corresponding long-term liability for the estimated present value of future payments under the licensing agreement is $462,199. 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(</div>&#8220;Libra&#8221;<div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); letter-spacing: 0px; top: 0px;;display:inline;">), its prior contract manufacturer, with both parties asserting claims against the other party. At December 31, 2017, the Company recorded a $100,000 accrual for the arbitration based on an expired settlement offer made by the Company to Libra. On June 21, 2018, the arbitrator issued a&#160;final and binding award on all issues except as to attorney&#8217;s fees and costs. In the Final Award, the arbitrator denied Libra&#8217;s claims and awarded the Company $163,105 on it claims. On July 15, 2018, the arbitrator issued a Supplemental Final Award on Attorney&#8217;s Fees and Costs, awarding the Company an additional $165,346. As a result, during the three months ended June 30, 2018, the Company reversed the previously recorded $100,000 accrual resulting in a reduction to general and administrative expense and recognized the Final Award of $163,105 as a reduction in cost of product revenue and the Supplemental Final Award on Attorney&#8217;s Fees and Costs of $165,347 as a reduction in general and administrative expense. At June 30, 2018, the total award of $328,451 is included within prepayments and other current assets on the Company&#8217;s Balance Sheet. 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The judgment included the past due balance of $162,000 plus late fees and recovery of legal costs. At March 31, 2018, the Company had fully reserved the $162,000 balance in its allowance for doubtful accounts. The Company did not reverse the allowance for doubtful accounts at March 31,2018 as the funds could be subject to clawback during the quarter ending June 30, 2018 if the former customer filed&#160;for bankruptcy. 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In the Private Placement, each share of common stock or preferred stock was sold together with a warrant to purchase one share of common stock at a collective price of $2.535. Investors purchased an aggregate of 5,220,826 shares of common stock and 708,430 shares of preferred stock together with warrants to purchase 5,929,256 shares of common stock in the Private Placement for aggregate gross proceeds of $15 million. 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font-size: 10pt; line-height: normal; background: none; margin-bottom: 0px; margin-top: 0px;"><div style="white-space: pre-wrap; font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); background: none; text-decoration: none; letter-spacing: 0px; top: 0px;;display:inline;">&#160;</div></div></td><td style="background: #cceeff;border-bottom: none;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;width: 1.0%;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; line-height: normal; background: none; margin-bottom: 0px; margin-top: 0px;"><div style="white-space: pre-wrap; font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); background: none; text-decoration: none; letter-spacing: 0px; top: 0px;;display:inline;">&#160;</div></div></td><td style="background: #cceeff;border-bottom: none;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;width: 10.0%;"><div style="font-family: &quot;times new roman&quot;, serif; 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font-size: 10pt; line-height: normal; background: none; margin-bottom: 0px; margin-top: 0px;"><div style="white-space: pre-wrap; font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); background: none; text-decoration: none; letter-spacing: 0px; top: 0px;;display:inline;">&#160;</div></div></td><td style="background: #ffffff;border-bottom: none;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; text-align: right; line-height: normal;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); letter-spacing: 0px; top: 0px;;display:inline;">422,039</div></div></td><td style="background: #ffffff;border-bottom: none;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; line-height: normal; background: none; margin-bottom: 0px; margin-top: 0px;"><div style="white-space: pre-wrap; font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); background: none; text-decoration: none; letter-spacing: 0px; top: 0px;;display:inline;">&#160;</div></div></td><td style="background: #ffffff;border-bottom: none;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; line-height: normal; background: none; margin-bottom: 0px; margin-top: 0px;"><div style="white-space: pre-wrap; font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); background: none; text-decoration: none; letter-spacing: 0px; top: 0px;;display:inline;">&#160;</div></div></td><td style="background: #ffffff;border-bottom: none;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; line-height: normal;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); letter-spacing: 0px; top: 0px;;display:inline;">$</div></div></td><td style="background: #ffffff;border-bottom: none;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; text-align: right; line-height: normal;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); letter-spacing: 0px; top: 0px;;display:inline;">1.31</div></div></td><td style="background: #ffffff;border-bottom: none;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; line-height: normal; background: none; 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font-size: 10pt; line-height: normal; background: none; margin-bottom: 0px; margin-top: 0px;"><div style="white-space: pre-wrap; font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); background: none; text-decoration: none; letter-spacing: 0px; top: 0px;;display:inline;">&#160;</div></div></td><td style="background: #ffffff;border-bottom: none;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; text-align: right; line-height: normal; background: none; margin-bottom: 0px; margin-top: 0px;"><div style="white-space: pre-wrap; font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); background: none; text-decoration: none; letter-spacing: 0px; top: 0px;;display:inline;">&#160;</div></div></td><td style="background: #ffffff;border-bottom: none;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;"><div style="font-family: &quot;times new roman&quot;, serif; 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font-size: 10pt; line-height: normal;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); letter-spacing: 0px; top: 0px;;display:inline;">$</div></div></td><td style="background: #ffffff;border-bottom: none;border-left: none;border-right: none;border-top: none;padding-bottom: 2.5pt;padding-left: 0;padding-right: 0;padding-top: 0;vertical-align: bottom;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; text-align: right; line-height: normal;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); letter-spacing: 0px; top: 0px;;display:inline;">5.12</div></div></td><td style="background: #ffffff;border-bottom: none;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; line-height: normal; background: none; 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font-size: 10pt; color: rgb(0, 0, 0); letter-spacing: 0px; top: 0px;;display:inline;">-</div></div></td><td style="background: #cceeff;border-bottom: none;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; line-height: normal; background: none; margin-bottom: 0px; margin-top: 0px;"><div style="white-space: pre-wrap; font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); background: none; text-decoration: none; letter-spacing: 0px; top: 0px;;display:inline;">&#160;</div></div></td></tr><tr><td style="background: #ffffff;border-bottom: none;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;width: 83.0%;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; line-height: normal;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); letter-spacing: 0px; top: 0px;;display:inline;">Deferral of revenue</div></div></td><td style="background: #ffffff;border-bottom: none;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;width: 1.0%;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; line-height: normal; background: none; margin-bottom: 0px; margin-top: 0px;"><div style="white-space: pre-wrap; font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); background: none; text-decoration: none; letter-spacing: 0px; top: 0px;;display:inline;">&#160;</div></div></td><td style="background: #ffffff;border-bottom: none;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;width: 1.0%;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; line-height: normal; background: none; margin-bottom: 0px; margin-top: 0px;"><div style="white-space: pre-wrap; font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); background: none; text-decoration: none; letter-spacing: 0px; top: 0px;;display:inline;">&#160;</div></div></td><td style="background: #ffffff;border-bottom: none;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;width: 14.0%;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; text-align: right; line-height: normal;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); letter-spacing: 0px; top: 0px;;display:inline;">50,070</div></div></td><td style="background: #ffffff;border-bottom: none;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;width: 1.0%;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; line-height: normal; background: none; margin-bottom: 0px; margin-top: 0px;"><div style="white-space: pre-wrap; font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); background: none; text-decoration: none; letter-spacing: 0px; top: 0px;;display:inline;">&#160;</div></div></td></tr><tr><td style="background: #cceeff;border-bottom: none;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; line-height: normal;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); letter-spacing: 0px; top: 0px;;display:inline;">Recognition of unearned revenue</div></div></td><td style="background: #cceeff;border-bottom: none;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; line-height: normal; background: none; margin-bottom: 0px; margin-top: 0px;"><div style="white-space: pre-wrap; font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); background: none; text-decoration: none; letter-spacing: 0px; top: 0px;;display:inline;">&#160;</div></div></td><td style="background: #cceeff;border-bottom: solid #000000 1.0pt;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; line-height: normal; background: none; margin-bottom: 0px; margin-top: 0px;"><div style="white-space: pre-wrap; font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); background: none; text-decoration: none; letter-spacing: 0px; top: 0px;;display:inline;">&#160;</div></div></td><td style="background: #cceeff;border-bottom: solid #000000 1.0pt;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; text-align: right; line-height: normal;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); letter-spacing: 0px; top: 0px;;display:inline;">(42,850</div></div></td><td style="background: #cceeff;border-bottom: none;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; line-height: normal;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); letter-spacing: 0px; top: 0px;;display:inline;">)</div></div></td></tr><tr><td style="background: #ffffff;border-bottom: none;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; line-height: normal;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); letter-spacing: 0px; top: 0px;;display:inline;">Balance June 30, 2018</div></div></td><td style="background: #ffffff;border-bottom: none;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; line-height: normal; background: none; margin-bottom: 0px; margin-top: 0px;"><div style="white-space: pre-wrap; font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); background: none; text-decoration: none; letter-spacing: 0px; top: 0px;;display:inline;">&#160;</div></div></td><td style="background: #ffffff;border-bottom: double #000000 2.5pt;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; line-height: normal; background: none; margin-bottom: 0px; margin-top: 0px;">$&#160;</div></td><td style="background: rgb(255, 255, 255); border-bottom: 2.5pt double rgb(0, 0, 0); border-left: none; border-right: none; border-top: none; padding: 0pt 0px 1.5pt; vertical-align: bottom;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; text-align: right; line-height: normal;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); letter-spacing: 0px; top: 0px;;display:inline;">7,220</div></div></td><td style="background: rgb(255, 255, 255); border-width: initial; border-style: none; border-color: initial; padding: 0pt 0px 1.5pt; vertical-align: bottom;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; line-height: normal; background: none; margin-bottom: 0px; margin-top: 0px;"><div style="white-space: pre-wrap; font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); background: none; text-decoration: none; letter-spacing: 0px; top: 0px;;display:inline;">&#160;</div></div></td></tr></table></div><table border="0" style="width:100%; table-layout:fixed;" cellspacing="0" cellpadding="0"><tr><td></td></tr></table> <div style="font-family: 'times new roman', 'serif';font-size: 10pt;margin-bottom: 0;margin-top: 0;text-indent: 0.25in;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); letter-spacing: 0px; top: 0px;;display:inline;">Activity in the deferred revenue account was as follows:</div></div><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; margin-bottom: 0px; margin-top: 0px; background: none;"><div style="white-space: pre-wrap; font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); background: none; text-decoration: none; letter-spacing: 0px; top: 0px;;display:inline;">&#160;</div></div><div style="text-align:left;"><table style="border: none;border-collapse: collapse;margin-bottom: .001pt;width: 85%;"><tr><td style="background: #cceeff;border-bottom: none;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; line-height: normal;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); letter-spacing: 0px; top: 0px;;display:inline;">Balance at December 31, 2017</div></div></td><td style="background: #cceeff;border-bottom: none;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; line-height: normal; background: none; margin-bottom: 0px; margin-top: 0px;"><div style="white-space: pre-wrap; font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); background: none; text-decoration: none; letter-spacing: 0px; top: 0px;;display:inline;">&#160;</div></div></td><td style="background: #cceeff;border-bottom: none;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; line-height: normal; background: none;">$</div></td><td style="background: #cceeff;border-bottom: none;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; text-align: right; line-height: normal;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); letter-spacing: 0px; top: 0px;;display:inline;">-</div></div></td><td style="background: #cceeff;border-bottom: none;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; line-height: normal; background: none; margin-bottom: 0px; margin-top: 0px;"><div style="white-space: pre-wrap; font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); background: none; text-decoration: none; letter-spacing: 0px; top: 0px;;display:inline;">&#160;</div></div></td></tr><tr><td style="background: #ffffff;border-bottom: none;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;width: 83.0%;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; line-height: normal;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); letter-spacing: 0px; top: 0px;;display:inline;">Deferral of revenue</div></div></td><td style="background: #ffffff;border-bottom: none;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;width: 1.0%;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; line-height: normal; background: none; margin-bottom: 0px; margin-top: 0px;"><div style="white-space: pre-wrap; font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); background: none; text-decoration: none; letter-spacing: 0px; top: 0px;;display:inline;">&#160;</div></div></td><td style="background: #ffffff;border-bottom: none;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;width: 1.0%;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; line-height: normal; background: none; margin-bottom: 0px; margin-top: 0px;"><div style="white-space: pre-wrap; font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); background: none; text-decoration: none; letter-spacing: 0px; top: 0px;;display:inline;">&#160;</div></div></td><td style="background: #ffffff;border-bottom: none;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;width: 14.0%;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; text-align: right; line-height: normal;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); letter-spacing: 0px; top: 0px;;display:inline;">50,070</div></div></td><td style="background: #ffffff;border-bottom: none;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;width: 1.0%;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; line-height: normal; background: none; margin-bottom: 0px; margin-top: 0px;"><div style="white-space: pre-wrap; font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); background: none; text-decoration: none; letter-spacing: 0px; top: 0px;;display:inline;">&#160;</div></div></td></tr><tr><td style="background: #cceeff;border-bottom: none;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; line-height: normal;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); letter-spacing: 0px; top: 0px;;display:inline;">Recognition of unearned revenue</div></div></td><td style="background: #cceeff;border-bottom: none;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; line-height: normal; background: none; margin-bottom: 0px; margin-top: 0px;"><div style="white-space: pre-wrap; font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); background: none; text-decoration: none; letter-spacing: 0px; top: 0px;;display:inline;">&#160;</div></div></td><td style="background: #cceeff;border-bottom: solid #000000 1.0pt;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; line-height: normal; background: none; margin-bottom: 0px; margin-top: 0px;"><div style="white-space: pre-wrap; font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); background: none; text-decoration: none; letter-spacing: 0px; top: 0px;;display:inline;">&#160;</div></div></td><td style="background: #cceeff;border-bottom: solid #000000 1.0pt;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; text-align: right; line-height: normal;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); letter-spacing: 0px; top: 0px;;display:inline;">(42,850</div></div></td><td style="background: #cceeff;border-bottom: none;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; line-height: normal;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); letter-spacing: 0px; top: 0px;;display:inline;">)</div></div></td></tr><tr><td style="background: #ffffff;border-bottom: none;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; line-height: normal;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); letter-spacing: 0px; top: 0px;;display:inline;">Balance June 30, 2018</div></div></td><td style="background: #ffffff;border-bottom: none;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; line-height: normal; background: none; margin-bottom: 0px; margin-top: 0px;"><div style="white-space: pre-wrap; font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); background: none; text-decoration: none; letter-spacing: 0px; top: 0px;;display:inline;">&#160;</div></div></td><td style="background: #ffffff;border-bottom: double #000000 2.5pt;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; line-height: normal; background: none; margin-bottom: 0px; margin-top: 0px;">$&#160;</div></td><td style="background: rgb(255, 255, 255); border-bottom: 2.5pt double rgb(0, 0, 0); border-left: none; border-right: none; border-top: none; padding: 0pt 0px 1.5pt; vertical-align: bottom;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; text-align: right; line-height: normal;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); letter-spacing: 0px; top: 0px;;display:inline;">7,220</div></div></td><td style="background: rgb(255, 255, 255); border-width: initial; border-style: none; border-color: initial; padding: 0pt 0px 1.5pt; vertical-align: bottom;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; line-height: normal; background: none; margin-bottom: 0px; margin-top: 0px;"><div style="white-space: pre-wrap; font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); background: none; text-decoration: none; letter-spacing: 0px; top: 0px;;display:inline;">&#160;</div></div></td></tr></table></div><table border="0" style="width:100%; table-layout:fixed;" cellspacing="0" cellpadding="0"><tr><td></td></tr></table> <div style="font-family: 'times new roman', 'serif';font-size: 10pt;margin-bottom: 0;margin-top: 0;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); letter-spacing: 0px; top: 0px;;display:inline;"><div style="text-decoration:underline;display:inline;">Basis of Presentation</div></div></div><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; margin-bottom: 0px; margin-top: 0px; text-indent: 0.5in; background: none;"><div style="white-space: pre-wrap; font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); background: none; text-decoration: none; letter-spacing: 0px; top: 0px;;display:inline;">&#160;</div></div><div style="font-family: 'times new roman', 'serif';font-size: 10pt;margin-bottom: 0;margin-top: 0;text-indent: 0.25in;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); letter-spacing: 0px; top: 0px;;display:inline;">The accompanying unaudited financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission for Form 10-Q. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. The Balance Sheet at December&#160;31, 2017 has been derived from the Company&#8217;s audited financial statements.</div></div><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; margin-bottom: 0px; margin-top: 0px; text-indent: 0.25in; background: none;"><div style="white-space: pre-wrap; font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); background: none; text-decoration: none; letter-spacing: 0px; top: 0px;;display:inline;">&#160;</div></div><div style="font-family: 'times new roman', 'serif';font-size: 10pt;margin-bottom: 0;margin-top: 0;text-indent: 0.25in;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); letter-spacing: 0px; top: 0px;;display:inline;">In the opinion of management, these financial statements reflect all normal recurring, and other adjustments, necessary for a fair presentation. These financial statements should be read in conjunction with the audited financial statements included in the Company&#8217;s Annual Report on Form 10-K for the year ended December&#160;31, 2017. 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font-size: 10pt; line-height: normal; background: none;"><div style="white-space: pre-wrap; font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); background: none; text-decoration: none; letter-spacing: 0px; top: 0px;;display:inline;">&#160;</div></div></td><td style="background: #cceeff;border-bottom: none;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; line-height: normal; background: none;"><div style="white-space: pre-wrap; font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); background: none; text-decoration: none; letter-spacing: 0px; top: 0px;;display:inline;">&#160;</div></div></td><td style="background: #cceeff;border-bottom: none;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; line-height: normal; background: none;"><div style="white-space: pre-wrap; font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); background: none; text-decoration: none; letter-spacing: 0px; top: 0px;;display:inline;">&#160;</div></div></td><td style="background: #cceeff;border-bottom: none;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; text-align: right; line-height: normal;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); letter-spacing: 0px; top: 0px;;display:inline;">2,350,153</div></div></td><td style="background: #cceeff;border-bottom: none;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;"><div style="font-family: &quot;times new roman&quot;, serif; 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font-size: 10pt; line-height: normal; background: none;"><div style="white-space: pre-wrap; font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); background: none; text-decoration: none; letter-spacing: 0px; top: 0px;;display:inline;">&#160;</div></div></td><td style="border-bottom: none;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; line-height: normal; background: none;"><div style="white-space: pre-line; font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); background: none; text-decoration: none; letter-spacing: 0px; top: 0px;;display:inline;"><div style="font-weight:bold;display:inline;">&#160;</div></div></div></td><td colspan="2" style="border-bottom: solid #000000 1.0pt;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;"><div style="font-family: &quot;times new roman&quot;, serif; 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font-size: 10pt; line-height: normal; background: none;"><div style="white-space: pre-line; font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); background: none; text-decoration: none; letter-spacing: 0px; top: 0px;;display:inline;"><div style="font-weight:bold;display:inline;">&#160;</div></div></div></td><td colspan="2" style="border-bottom: solid #000000 1.0pt;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; text-align: center; line-height: normal;"><div style="font-size: 10pt; color: rgb(0, 0, 0); letter-spacing: 0px; top: 0px;;display:inline;"><div style="font-weight:bold;display:inline;">December 31,</div><br/><div style="font-weight:bold;display:inline;">&#8206;</div><div style="font-weight:bold;display:inline;">2017</div></div></div></td><td style="border-bottom: none;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; line-height: normal; background: none;"><div style="white-space: pre-line; font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); background: none; text-decoration: none; letter-spacing: 0px; top: 0px;;display:inline;"><div style="font-weight:bold;display:inline;">&#160;</div></div></div></td></tr><tr><td style="background: #ffffff;border-bottom: none;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; line-height: normal; background: none;"><div style="white-space: pre-line; font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); background: none; text-decoration: none; letter-spacing: 0px; top: 0px;;display:inline;"><div style="font-weight:bold;display:inline;">&#160;</div></div></div></td><td style="background: #ffffff;border-bottom: none;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; line-height: normal; background: none;"><div style="white-space: pre-line; font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); background: none; text-decoration: none; letter-spacing: 0px; top: 0px;;display:inline;"><div style="font-weight:bold;display:inline;">&#160;</div></div></div></td><td style="background: #ffffff;border-bottom: none;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; line-height: normal; background: none;"><div style="white-space: pre-line; font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); background: none; text-decoration: none; letter-spacing: 0px; top: 0px;;display:inline;"><div style="font-weight:bold;display:inline;">&#160;</div></div></div></td><td style="background: #ffffff;border-bottom: none;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; text-align: center; line-height: normal;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); letter-spacing: 0px; top: 0px;;display:inline;"><div style="font-weight:bold;display:inline;">(unaudited)</div></div></div></td><td style="background: #ffffff;border-bottom: none;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; line-height: normal; background: none;"><div style="white-space: pre-line; font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); background: none; text-decoration: none; letter-spacing: 0px; top: 0px;;display:inline;"><div style="font-weight:bold;display:inline;">&#160;</div></div></div></td><td style="background: #ffffff;border-bottom: none;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; line-height: normal; background: none;"><div style="white-space: pre-line; font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); background: none; text-decoration: none; letter-spacing: 0px; top: 0px;;display:inline;"><div style="font-weight:bold;display:inline;">&#160;</div></div></div></td><td style="background: #ffffff;border-bottom: none;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; line-height: normal; background: none;"><div style="white-space: pre-line; font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); background: none; text-decoration: none; letter-spacing: 0px; top: 0px;;display:inline;"><div style="font-weight:bold;display:inline;">&#160;</div></div></div></td><td style="background: #ffffff;border-bottom: none;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; text-align: right; line-height: normal; background: none;"><div style="white-space: pre-line; font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); background: none; text-decoration: none; letter-spacing: 0px; top: 0px;;display:inline;"><div style="font-weight:bold;display:inline;">&#160;</div></div></div></td><td style="background: #ffffff;border-bottom: none;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; line-height: normal; background: none;"><div style="white-space: pre-line; font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); background: none; text-decoration: none; letter-spacing: 0px; top: 0px;;display:inline;"><div style="font-weight:bold;display:inline;">&#160;</div></div></div></td></tr><tr><td style="background: #cceeff;border-bottom: none;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;width: 66.0%;"><div style="font-family: &quot;times new roman&quot;, serif; 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font-size: 10pt; color: rgb(0, 0, 0); letter-spacing: 0px; top: 0px;;display:inline;"><div style="font-weight:bold;display:inline;">Note 1 &#8211; Organization and Description of Business</div></div></div><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; margin-bottom: 0px; margin-top: 0px; text-indent: 0.25in; background: none;"><div style="white-space: pre-wrap; font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); background: none; text-decoration: none; letter-spacing: 0px; top: 0px;;display:inline;">&#160;</div></div><div style="font-family: 'times new roman', 'serif';font-size: 10pt;margin-bottom: 0;margin-top: 0;text-indent: 0.25in;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); letter-spacing: 0px; top: 0px;;display:inline;">Ideal Power Inc. (the &#8220;Company&#8221;) was incorporated in Texas on May 17, 2007 under the name Ideal Power Converters, Inc. The Company changed its name to Ideal Power Inc. on July 8, 2013 and re-incorporated in Delaware on July&#160;15, 2013. With headquarters in Austin, Texas, it develops power conversion solutions with an initial focus on solar + storage, microgrid and stand-alone energy storage applications. The principal products of the Company are 30-kilowatt power conversion systems, including 2-port and multi-port products.</div></div><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; margin-bottom: 0px; margin-top: 0px; text-indent: 0.25in; background: none;"><div style="white-space: pre-wrap; font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); background: none; text-decoration: none; letter-spacing: 0px; top: 0px;;display:inline;">&#160;</div></div><div style="font-family: 'times new roman', 'serif';font-size: 10pt;margin-bottom: 0;margin-top: 0;text-indent: 0.25in;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); letter-spacing: 0px; top: 0px;;display:inline;">Since its inception, the Company has generated limited revenues from the sale of products and has financed its research and development efforts and operations through the sale of common stock and, prior to its initial public offering, the issuance of convertible debt. 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Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. The Balance Sheet at December&#160;31, 2017 has been derived from the Company&#8217;s audited financial statements.</div></div><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; margin-bottom: 0px; margin-top: 0px; text-indent: 0.25in; background: none;"><div style="white-space: pre-wrap; font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); background: none; text-decoration: none; letter-spacing: 0px; top: 0px;;display:inline;">&#160;</div></div><div style="font-family: 'times new roman', 'serif';font-size: 10pt;margin-bottom: 0;margin-top: 0;text-indent: 0.25in;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); letter-spacing: 0px; top: 0px;;display:inline;">In the opinion of management, these financial statements reflect all normal recurring, and other adjustments, necessary for a fair presentation. These financial statements should be read in conjunction with the audited financial statements included in the Company&#8217;s Annual Report on Form 10-K for the year ended December&#160;31, 2017. 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The FASB issued several amendments to the standard, including clarification on accounting for licenses of intellectual property and identifying performance obligations. The standard replaced most existing revenue recognition guidance in U.S. GAAP when it became effective on January 1, 2018. The adoption of this standard did not have a material effect on the Company&#8217;s financial statements, nor required an adjustment to the opening balance of accumulated deficit at January 1, 2018, the date of initial adoption. 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style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; line-height: normal; background: none; margin-bottom: 0px; margin-top: 0px;"><div style="white-space: pre-wrap; font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); background: none; text-decoration: none; letter-spacing: 0px; top: 0px;;display:inline;">&#160;</div></div></td></tr><tr><td style="background: #cceeff;border-bottom: none;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;width: 61.0%;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; line-height: normal;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); letter-spacing: 0px; top: 0px;;display:inline;">Outstanding at December 31, 2017</div></div></td><td style="background: #cceeff;border-bottom: none;border-left: none;border-right: 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style="white-space: pre-wrap; font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); background: none; text-decoration: none; letter-spacing: 0px; top: 0px;;display:inline;">&#160;</div></div></td><td style="background: #cceeff;border-bottom: none;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;width: 1.0%;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; line-height: normal; background: none; margin-bottom: 0px; margin-top: 0px;"><div style="white-space: pre-wrap; font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); background: none; text-decoration: none; letter-spacing: 0px; top: 0px;;display:inline;">&#160;</div></div></td><td style="background: #cceeff;border-bottom: none;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 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style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); letter-spacing: 0px; top: 0px;;display:inline;">6.8</div></div></td><td style="background: #cceeff;border-bottom: none;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;width: 1.0%;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; line-height: normal; background: none; margin-bottom: 0px; margin-top: 0px;"><div style="white-space: pre-wrap; font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); background: none; text-decoration: none; letter-spacing: 0px; top: 0px;;display:inline;">&#160;</div></div></td></tr><tr><td style="background: #ffffff;border-bottom: none;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;"><div style="font-family: 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0;padding-top: 0pt;vertical-align: bottom;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; line-height: normal; background: none; margin-bottom: 0px; margin-top: 0px;"><div style="white-space: pre-wrap; font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); background: none; text-decoration: none; letter-spacing: 0px; top: 0px;;display:inline;">&#160;</div></div></td><td style="background: #ffffff;border-bottom: none;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; text-align: right; line-height: normal;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); letter-spacing: 0px; top: 0px;;display:inline;">422,039</div></div></td><td style="background: #ffffff;border-bottom: none;border-left: 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0;padding-top: 0pt;vertical-align: bottom;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; text-align: right; line-height: normal; background: none; margin-bottom: 0px; margin-top: 0px;"><div style="white-space: pre-wrap; font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); background: none; text-decoration: none; letter-spacing: 0px; top: 0px;;display:inline;">&#160;</div></div></td><td style="background: #ffffff;border-bottom: none;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; line-height: normal; background: none; margin-bottom: 0px; margin-top: 0px;"><div style="white-space: pre-wrap; font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); background: none; text-decoration: none; letter-spacing: 0px; top: 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color: rgb(0, 0, 0); background: none; text-decoration: none; letter-spacing: 0px; top: 0px;;display:inline;">&#160;</div></div></td><td style="background: #cceeff;border-bottom: solid #000000 1.0pt;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; line-height: normal; background: none; margin-bottom: 0px; margin-top: 0px;"><div style="white-space: pre-wrap; font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); background: none; text-decoration: none; letter-spacing: 0px; top: 0px;;display:inline;">&#160;</div></div></td><td style="background: #cceeff;border-bottom: solid #000000 1.0pt;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; text-align: right; line-height: normal;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); letter-spacing: 0px; top: 0px;;display:inline;">(124,728</div></div></td><td style="background: #cceeff;border-bottom: none;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; line-height: normal;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; color: rgb(0, 0, 0); letter-spacing: 0px; top: 0px;;display:inline;">)</div></div></td><td style="background: #cceeff;border-bottom: none;border-left: none;border-right: none;border-top: none;padding-bottom: 0pt;padding-left: 0;padding-right: 0;padding-top: 0pt;vertical-align: bottom;"><div style="font-family: &quot;times new roman&quot;, serif; font-size: 10pt; 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Document And Entity Information - shares
6 Months Ended
Jun. 30, 2018
Aug. 10, 2018
Document Information [Line Items]    
Document Type 10-Q  
Amendment Flag false  
Document Period End Date Jun. 30, 2018  
Document Fiscal Year Focus 2018  
Document Fiscal Period Focus Q2  
Entity Registrant Name Ideal Power Inc.  
Entity Central Index Key 0001507957  
Current Fiscal Year End Date --12-31  
Entity Filer Category Smaller Reporting Company  
Trading Symbol IPWR  
Entity Common Stock, Shares Outstanding   14,000,342
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Balance Sheets - USD ($)
Jun. 30, 2018
Dec. 31, 2017
Current assets:    
Cash and cash equivalents $ 6,980,213 $ 10,022,247
Accounts receivable, net 170,792 221,084
Inventories, net 239,407 251,363
Prepayments and other current assets 503,808 283,208
Total current assets 7,894,220 10,777,902
Property and equipment, net 513,153 669,571
Intangible assets, net 2,096,692 2,082,014
Other assets 55,420 37,500
Total assets 10,559,485 13,566,987
Current liabilities:    
Accounts payable 517,770 449,475
Accrued expenses 1,149,883 1,081,155
Total current liabilities 1,667,653 1,530,630
Other long-term liabilities 462,199 456,234
Total liabilities 2,129,852 1,986,864
Commitments and contingencies
Stockholders' equity:    
Preferred stock, $0.001 par value; 10,000,000 shares authorized; 1,518,430 shares issued and outstanding at June 30, 2018 and December 31, 2017, respectively 1,518 1,518
Common stock, $0.001 par value; 50,000,000 shares authorized; 14,004,465 shares issued and 14,000,342 shares outstanding at June 30, 2018 and 13,998,465 shares issued and 13,996,121 shares outstanding at December 31, 2017, respectively 14,004 13,998
Additional paid-in capital 67,711,659 67,081,359
Treasury stock, at cost; 4,123 shares at June 30, 2018 and 2,344 shares at December 31, 2017 (9,677) (7,489)
Accumulated deficit (59,287,871) (55,509,263)
Total stockholders' equity 8,429,633 11,580,123
Total liabilities and stockholders' equity $ 10,559,485 $ 13,566,987
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Balance Sheets (Parenthetical) - $ / shares
Jun. 30, 2018
Dec. 31, 2017
Preferred Stock, Par or Stated Value Per Share $ 0.001 $ 0.001
Preferred Stock, Shares Authorized 10,000,000 10,000,000
Preferred Stock, Shares Issued 1,518,430 1,518,430
Preferred Stock, Shares Outstanding 1,518,430 1,518,430
Common stock, par value (in dollars per share) $ 0.001 $ 0.001
Common stock, shares authorized 50,000,000 50,000,000
Common stock, shares, issued 14,004,465 13,998,465
Common stock, shares, outstanding 14,000,342 13,996,121
Treasury stock, shares 4,123 2,344
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Statements of Operations - USD ($)
3 Months Ended 6 Months Ended
Jun. 30, 2018
Jun. 30, 2017
Jun. 30, 2018
Jun. 30, 2017
Product revenue $ 619,942 $ 253,370 $ 801,442 $ 529,040
Cost of product revenue 584,800 764,609 919,763 1,475,539
Gross profit (loss) 35,142 (511,239) (118,321) (946,499)
Operating expenses:        
Research and development 905,541 1,108,368 1,663,324 2,298,537
General and administrative 817,672 1,170,415 1,709,660 2,076,378
Sales and marketing 69,989 427,336 324,232 968,869
Total operating expenses 1,793,202 2,706,119 3,697,216 5,343,784
Loss from operations (1,758,060) (3,217,358) (3,815,537) (6,290,283)
Interest income, net 35,614 7,034 36,929 11,575
Net loss $ (1,722,446) $ (3,210,324) $ (3,778,608) $ (6,278,708)
Net loss per share – basic and fully diluted $ (0.12) $ (0.23) $ (0.27) $ (0.50)
Weighted average number of shares outstanding – basic and fully diluted 13,992,791 13,989,282 13,991,961 12,443,076
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Statements of Cash Flows - USD ($)
6 Months Ended
Jun. 30, 2018
Jun. 30, 2017
Cash flows from operating activities:    
Net loss $ (3,778,608) $ (6,278,708)
Adjustments to reconcile net loss to net cash used in operating activities:    
Allowance for doubtful accounts (98,337) 273,727
Write-down of inventory 5,458 712,083
Depreciation and amortization 216,920 224,926
Write-off of capitalized patents 15,478 202,343
Write-off of fixed assets 7,055 15,036
Stock-based compensation 630,306 498,006
Decrease (increase) in operating assets:    
Accounts receivable 148,629 (100,715)
Inventories 6,498 166,529
Prepayments and other current assets (238,520) 77,981
Increase (decrease) in operating liabilities:    
Accounts payable 68,295 (133,783)
Accrued expenses 74,693 (5,627)
Net cash used in operating activities (2,942,133) (4,348,202)
Cash flows from investing activities:    
Purchase of property and equipment (18,525) (18,146)
Acquisition of intangible assets (79,188) (171,134)
Net cash used in investing activities (97,713) (189,280)
Cash flows from financing activities:    
Net proceeds from issuance of common stock 0 13,657,331
Payment of taxes related to restricted stock vesting (2,188) 0
Exercise of options and warrants 0 11,143
Net cash provided by (used in) financing activities (2,188) 13,668,474
Net increase (decrease) in cash and cash equivalents (3,042,034) 9,130,992
Cash and cash equivalents at beginning of period 10,022,247 4,204,916
Cash and cash equivalents at end of period $ 6,980,213 $ 13,335,908
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Organization and Description of Business
6 Months Ended
Jun. 30, 2018
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Organization and Description of Business
Note 1 – Organization and Description of Business
 
Ideal Power Inc. (the “Company”) was incorporated in Texas on May 17, 2007 under the name Ideal Power Converters, Inc. The Company changed its name to Ideal Power Inc. on July 8, 2013 and re-incorporated in Delaware on July 15, 2013. With headquarters in Austin, Texas, it develops power conversion solutions with an initial focus on solar + storage, microgrid and stand-alone energy storage applications. The principal products of the Company are 30-kilowatt power conversion systems, including 2-port and multi-port products.
 
Since its inception, the Company has generated limited revenues from the sale of products and has financed its research and development efforts and operations through the sale of common stock and, prior to its initial public offering, the issuance of convertible debt. The Company’s continued operations are dependent upon its ability to obtain adequate sources of funding through future revenues, follow-on stock offerings, debt financing, co-development agreements, sale or licensing of developed intellectual property or other alternatives.
 
On April 16, 2018, the Company realigned into two operating divisions: Power Conversion Systems, to continue the commercialization of its
Power Packing Switching Architecture™, or PPSA™,
technology, and B-TRAN™, to develop its Bi-directional bi-polar junction TRANsistor (B-TRAN™) solid state switch technology.
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Summary of Significant Accounting Policies
6 Months Ended
Jun. 30, 2018
Accounting Policies [Abstract]  
Summary of Significant Accounting Policies
Note 2 – Summary of Significant Accounting Policies
 
Basis of Presentation
 
The accompanying unaudited financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission for Form 10-Q. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. The Balance Sheet at December 31, 2017 has been derived from the Company’s audited financial statements.
 
In the opinion of management, these financial statements reflect all normal recurring, and other adjustments, necessary for a fair presentation. These financial statements should be read in conjunction with the audited financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017. Operating results for interim periods are not necessarily indicative of operating results for an entire fiscal year or any other future periods.
 
Recently Adopted Standards
 
In May 2014, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606), requiring an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The FASB issued several amendments to the standard, including clarification on accounting for licenses of intellectual property and identifying performance obligations. The standard replaced most existing revenue recognition guidance in U.S. GAAP when it became effective on January 1, 2018. The adoption of this standard did not have a material effect on the Company’s financial statements, nor required an adjustment to the opening balance of accumulated deficit at January 1, 2018, the date of initial adoption. See Note 12 for a discussion of the Company’s revenue recognition policy.
 
In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230), in order to address eight specific cash flow issues with the objective of reducing the existing diversity in practice. The updated standard is effective for financial statements issued for annual periods beginning after December 15, 2017 and interim periods within those fiscal years. The adoption of the standard did not have a significant effect on the Company’s financial statements. 
 
In May 2017, the FASB issued ASU 2017-09, Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting. This ASU provides clarity and reduces both (1) diversity in practice and (2) cost and complexity when applying the guidance in Topic 718 to a change to the terms or conditions of a share-based payment award. The amendments in this ASU are effective for public entities for fiscal years and interim periods beginning after December 15, 2017. The ASU is applied prospectively on and after the effective date. The standard did not have a material effect on the Company’s financial statements.
  
In July 2017, the FASB issued ASU 2017-11, Accounting for Certain Financial Instruments with Down Round Features and Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception. Part I of this ASU addresses the complexity of accounting for certain financial instruments with down round features. Per the ASU, a freestanding equity-linked financial instrument (or embedded conversion option) no longer would be accounted for as a derivative liability at fair value as a result of the existence of a down round feature. The ASU is effective for public entities for fiscal years beginning after December 15, 2018 and early adoption is permitted. The Company has elected to early adopt the ASU and will recognize the value of the effect of the down round provision, if and/or when triggered. The provision is associated with stock warrants issued as part of the Company's 2017 definitive securities purchase agreement, or the Private Placement. For more details regarding the 2017 Private Placement, see Note 9 and Note 11.
 
Recent Accounting Pronouncements
 
In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), to increase transparency and comparability among organizations by requiring the recognition of lease assets and lease liabilities on the balance sheet. Most prominent among the amendments is the recognition of assets and liabilities by lessees for those leases classified as operating leases under previous U.S. GAAP. Under the new standard, disclosures are required to meet the objective of enabling users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases. The new standard will be effective for annual and interim periods beginning after December 15, 2018, with early adoption permitted. While the Company is continuing to assess the potential impact of this standard, it expects its lease commitment will be subject to the updated standard and recognized as a lease liability and right-of-use asset upon adoption.
 
Management does not believe that any other recently issued, but not yet effective, accounting standard, if adopted, would have a material impact on the Company’s financial statements.
XML 18 R8.htm IDEA: XBRL DOCUMENT v3.10.0.1
Accounts Receivable
6 Months Ended
Jun. 30, 2018
Receivables [Abstract]  
Loans, Notes, Trade and Other Receivables Disclosure [Text Block]
Note 3 – Accounts Receivable
 
Accounts receivable, net consisted of the following:
 
  
June 30,
2018
  
December 31,
2017
 
  
(unaudited)
    
Trade receivables $198,265  $378,894 
Other receivables  1,652   20,589 
   199,917   399,483 
Allowance for doubtful accounts  (29,125)  (178,399)
  $170,792  $221,084 
 
The Company had receivable balances from three customers that accounted for 70% of net trade receivables at June 30, 2018.
 
Activity in the allowance for doubtful accounts was as follows:
 
Balance at December 31, 2017 $(178,399)
Write offs  16,759 
Provisions  (29,485)
Recovery  162,000 
Balance at June 30, 2018 $(29,125)
XML 19 R9.htm IDEA: XBRL DOCUMENT v3.10.0.1
Inventories
6 Months Ended
Jun. 30, 2018
Inventory Disclosure [Abstract]  
Inventories
Note 4 – Inventories
 
Inventories, net consisted of the following:
 
 
 
June 30,

2018
 
 
December 31,

2017
 
 
 
(unaudited)
 
 
 
 
Raw materials
 
$
197,779
 
 
$
222,436
 
Finished goods
 
 
182,529
 
 
 
149,370
 
 
 
 
380,308
 
 
 
371,806
 
Reserve for obsolescence
 
 
(140,901
)
 
 
(120,443
)
 
 
$
239,407
 
 
$
251,363
 
XML 20 R10.htm IDEA: XBRL DOCUMENT v3.10.0.1
Property and Equipment
6 Months Ended
Jun. 30, 2018
Property, Plant and Equipment [Abstract]  
Property and Equipment
Note 5 – Property and Equipment
 
Property and equipment, net consisted of the following:
 
 
 
June 30,

2018
 
 
December 31,

2017
 
 
 
 
(unaudited)
 
 
 
 
 
Machinery and equipment
 
$
1,023,327
 
 
$
1,013,133
 
Building leasehold improvements
 
 
395,335
 
 
 
395,335
 
Furniture, fixtures, software and computers
 
 
192,480
 
 
 
218,571
 
 
 
 
1,611,142
 
 
 
1,627,039
 
Accumulated depreciation and amortization
 
 
(1,097,989
)
 
 
(957,468
)
 
 
$
513,153
 
 
$
669,571
 
XML 21 R11.htm IDEA: XBRL DOCUMENT v3.10.0.1
Intangible Assets
6 Months Ended
Jun. 30, 2018
Goodwill and Intangible Assets Disclosure [Abstract]  
Intangible Assets
Note 6 – Intangible Assets
 
Intangible assets, net consisted of the following:
 
 
 
June 30,

2018
 
 
December 31,

2017
 
 
 
 
(unaudited)
 
 
 
 
 
Patents
 
$
1,617,978
 
 
$
1,554,268
 
Other intangible assets
 
 
732,175
 
 
 
732,175
 
 
 
 
2,350,153
 
 
 
2,286,443
 
Accumulated amortization
 
 
(253,461
)
 
 
(204,429
)
 
 
$
2,096,692
 
 
$
2,082,014
 
 
Amortization expense amounted to $24,713 and $49,032 for the three and six months ended June 30, 2018, respectively, and $18,594 and $36,469 for the three and six months ended June 30, 2017, respectively. Amortization expense for the succeeding five years and thereafter is approximately $49,000 (2018), $99,000 (2019-2022) and $1,162,000 (thereafter).
 
At June 30, 2018 and December 31, 2017, the Company had capitalized $489,285 and $472,928, respectively, for costs related to patents that have not been awarded.
XML 22 R12.htm IDEA: XBRL DOCUMENT v3.10.0.1
Accrued Expenses
6 Months Ended
Jun. 30, 2018
Accounts Payable and Accrued Liabilities, Current [Abstract]  
Accrued Expenses
Note 7 – Accrued Expenses
 
Accrued expenses consisted of the following:
 
 
 
June 30,

2018
 
 
December 31,

2017
 
 
 
 
(unaudited)
 
 
 
 
 
Accrued compensation
 
$
403,744
 
 
$
247,343
 
Warranty reserve
 
 
492,132
 
 
 
426,115
 
Other
 
 
254,007
 
 
 
407,697
 
 
 
$
1,149,883
 
 
$
1,081,155
 
XML 23 R13.htm IDEA: XBRL DOCUMENT v3.10.0.1
Commitments and Contingencies
6 Months Ended
Jun. 30, 2018
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies
Note 8 – Commitments and Contingencies
 
Lease
 
The Company leases 14,782 square feet of office and laboratory space located in Austin, Texas. On April 20, 2018, the Company entered into an amendment to its existing operating lease which extended the lease term from May 31, 2018 to May 21, 2021. The annual base rent in the first year of the lease extension is $184,775 and increases by $7,391 in each succeeding year of the lease extension. In addition, the Company is required to pay its proportionate share of operating costs for the building under this triple net lease. Future minimum payments under the lease, as amended, are as follows:
 
Year Ended December 31,
 
Amount
 
2018
 
$
92,388
 
2019
 
 
189,086
 
2020
 
 
196,477
 
2021
 
 
83,149
 
 
 
$
561,100
 
 
The Company incurred rent expense of $60,373 and $118,176 for the three and six months ended June 30, 2018, respectively, and $59,718 and $117,074 for the three and six months ended June 30, 2017, respectively.
 
License Agreement
 
In 2015, the Company entered into licensing agreements which expire on February 7, 2033. Per the agreements, the Company has an exclusive royalty-free license which enhances its intellectual property portfolio related to semiconductor power switches. The agreements include both fixed and variable payments. The variable payments are a function of the number of associated patent filings pending and patents issued under the agreements. The Company will pay $10,000 for each patent filing pending and $20,000 for each patent issued within 20 days of December 21, 2017 and each subsequent year of the agreement, up to a maximum of $100,000 per year (i.e. five issued patents). At June 30, 2018, two patents associated with the agreements had been issued and the corresponding long-term liability for the estimated present value of future payments under the licensing agreement is $462,199. The Company is accruing interest for future payments related to the issued patent associated with the agreement.
 
Legal Proceedings
 
 
In 2017, the Company entered into arbitration with Libra Industries, Inc. (
“Libra”
), its prior contract manufacturer, with both parties asserting claims against the other party. At December 31, 2017, the Company recorded a $100,000 accrual for the arbitration based on an expired settlement offer made by the Company to Libra. On June 21, 2018, the arbitrator issued a final and binding award on all issues except as to attorney’s fees and costs. In the Final Award, the arbitrator denied Libra’s claims and awarded the Company $163,105 on it claims. On July 15, 2018, the arbitrator issued a Supplemental Final Award on Attorney’s Fees and Costs, awarding the Company an additional $165,346. As a result, during the three months ended June 30, 2018, the Company reversed the previously recorded $100,000 accrual resulting in a reduction to general and administrative expense and recognized the Final Award of $163,105 as a reduction in cost of product revenue and the Supplemental Final Award on Attorney’s Fees and Costs of $165,347 as a reduction in general and administrative expense. At June 30, 2018, the total award of $328,451 is included within prepayments and other current assets on the Company’s Balance Sheet. The Company received full payment on the total award on August 2, 2018.
  
On April 11, 2018, the Company received $203,121 pursuant to a Judgment of Garnishment dated March 23, 2018 and related to the non-payment of an overdue accounts receivable balance by a former customer of the Company. The judgment included the past due balance of $162,000 plus late fees and recovery of legal costs. At March 31, 2018, the Company had fully reserved the $162,000 balance in its allowance for doubtful accounts. The Company did not reverse the allowance for doubtful accounts at March 31,2018 as the funds could be subject to clawback during the quarter ending June 30, 2018 if the former customer filed for bankruptcy. The former customer did not file for bankruptcy during the quarter ended June 30, 2018 and, as a result, the Company reversed the allowance for doubtful accounts of $162,000 with a corresponding reduction in sales and marketing expense, recognized interest income of $35,064 associated with late fees and a reduction in general and administrative expense of $6,057 for the partial recovery of legal fees.
XML 24 R14.htm IDEA: XBRL DOCUMENT v3.10.0.1
Common Stock
6 Months Ended
Jun. 30, 2018
Stockholders' Equity Note [Abstract]  
Common Stock
Note 9 — Common Stock
 
On March 3, 2017, the Company closed on a definitive securities purchase agreement, or Private Placement, to sell the Company’s common stock and preferred stock together with warrants to purchase shares of common stock. In the Private Placement, each share of common stock or preferred stock was sold together with a warrant to purchase one share of common stock at a collective price of $2.535. Investors purchased an aggregate of 5,220,826 shares of common stock and 708,430 shares of preferred stock together with warrants to purchase 5,929,256 shares of common stock in the Private Placement for aggregate gross proceeds of $15 million. Net cash proceeds were $13.7 million after offering fees and expenses, including the placement agent fee of $1.1 million.
XML 25 R15.htm IDEA: XBRL DOCUMENT v3.10.0.1
Equity Incentive Plan
6 Months Ended
Jun. 30, 2018
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Disclosure of Compensation Related Costs, Share-based Payments
Note 10 — Equity Incentive Plan
 
On May 17, 2013, the Company adopted the 2013 Equity Incentive Plan (the “Plan”) and reserved shares of common stock for issuance under the Plan. The Plan is administered by the Compensation Committee of the Company’s Board of Directors. At June 30, 2018, 424,963 shares of common stock were available for issuance under the Plan.
 
During the six months ended June 30, 2018, the Company granted 122,039 stock options to Board members and 300,000 stock options to
its Chief Executive Officer
under the Plan. The estimated fair value of these stock options, calculated using the Black-Scholes option valuation model, was $330,713, of which $270,712 was recognized during the six months ended June 30, 2018.
 
During the six months ended June 30, 2018, the Company also granted 117,500 restricted stock units and 12,000 performance stock units to employees. The estimated fair value of these awards, based on the Company’s stock price on the date of grant, was $158,110, of which $19,923 was recognized during the six months ended June 30, 2018.
 
A summary of the Company’s stock option activity and related information is as follows:
 
 
 
Stock

Options
 
 
Weighted

Average

Exercise

Price
 
 
Weighted

Average

Remaining
Life

(in years)
 
Outstanding at December 31, 2017
 
 
1,232,236
 
 
$
6.44
 
 
 
6.8
 
Granted
 
 
422,039
 
 
$
1.31
 
 
 
 
 
Forfeited/Expired/Exchanged
 
 
(124,728
)
 
$
5.23
 
 
 
 
 
Outstanding at June 30, 2018
 
 
1,529,547
 
 
$
5.12
 
 
 
7.3
 
Exercisable at June 30, 2018
 
 
1,264,680
 
 
$
5.12
 
 
 
7.2
 
 
At June 30, 2018, there was $689,640 of unrecognized compensation cost related to non-vested equity awards granted under the Plan. That cost is expected to be recognized over a weighted average period of 0.7 years.
XML 26 R16.htm IDEA: XBRL DOCUMENT v3.10.0.1
Warrants
6 Months Ended
Jun. 30, 2018
Warrants and Rights Note Disclosure [Abstract]  
Warrants
Note 11 — Warrants
 
In connection with the Private Placement, investors received warrants to purchase 5,929,256 shares of common stock. The warrants have an exercise price of $2.41 per share and will expire three years from the date of issuance. The placement agent also received 237,170 warrants to purchase shares of common stock as part of its placement agent fee. The placement agent warrant has an exercise price of $2.89 per share and also has a three-year term. The warrants contain a provision to protect investors from potential future dilutive events, or a down-round provision. The Company elected to early adopt ASU 2017-11 and will recognize the value of the effect of the down-round provision if and/or when triggered. The Company had 7,481,079 warrants outstanding at both June 30, 2018 and December 31, 2017 with a weighted average exercise price of $2.79 per share. At June 30, 2018 all warrants are exercisable, although for the Company’s two largest beneficial owners their warrants may be exercised only to the extent that the total number of shares of common stock then beneficially owned by these shareholders does not exceed 9.99% of the outstanding shares of the Company’s common stock.
XML 27 R17.htm IDEA: XBRL DOCUMENT v3.10.0.1
Revenue
6 Months Ended
Jun. 30, 2018
Revenue from Contract with Customer [Abstract]  
Revenue
Note 12 — Revenue
 
Revenue Recognition
 
Revenue is recognized in accordance with ASC Topic 606 upon transfer of control of promised products or services to customers in an amount that reflects the consideration we expect to receive in exchange for those products or services. We enter into contracts that typically are for products only although contracts could include various combinations of products and services, which are generally distinct and accounted for as separate performance obligations. Revenue is recognized net of taxes collected from customers, which are subsequently remitted to governmental authorities. The Company generally sells its products FOB shipping and recognizes revenue when products are shipped. Revenue from services, which consist of commissioning services, if any, is recognized as services are performed.
 
The Company had revenue from two customers which accounted for 48% and 12% of net revenue for the six months ended June 30, 2018 and revenue from three customers which accounted for 18%, 13% and 13% of net revenue for the six months ended June 30, 2017.
 
Deferred Revenues
 
We record deferred revenues when cash payments are received in advance of our performance. Based on our review of customer credit, we may require full or partial payment before the products or services are delivered to the customer.
 
Activity in the deferred revenue account was as follows:
 
Balance at December 31, 2017
 
$
-
 
Deferral of revenue
 
 
50,070
 
Recognition of unearned revenue
 
 
(42,850
)
Balance June 30, 2018
 
7,220
 
XML 28 R18.htm IDEA: XBRL DOCUMENT v3.10.0.1
Summary of Significant Accounting Policies (Policies)
6 Months Ended
Jun. 30, 2018
Accounting Policies [Abstract]  
Basis of Presentation
Basis of Presentation
 
The accompanying unaudited financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission for Form 10-Q. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. The Balance Sheet at December 31, 2017 has been derived from the Company’s audited financial statements.
 
In the opinion of management, these financial statements reflect all normal recurring, and other adjustments, necessary for a fair presentation. These financial statements should be read in conjunction with the audited financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017. Operating results for interim periods are not necessarily indicative of operating results for an entire fiscal year or any other future periods.
Recently Adopted Standards and Recent Accounting Pronouncements
Recently Adopted Standards
 
In May 2014, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606), requiring an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The FASB issued several amendments to the standard, including clarification on accounting for licenses of intellectual property and identifying performance obligations. The standard replaced most existing revenue recognition guidance in U.S. GAAP when it became effective on January 1, 2018. The adoption of this standard did not have a material effect on the Company’s financial statements, nor required an adjustment to the opening balance of accumulated deficit at January 1, 2018, the date of initial adoption. See Note 12 for a discussion of the Company’s revenue recognition policy.
 
In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230), in order to address eight specific cash flow issues with the objective of reducing the existing diversity in practice. The updated standard is effective for financial statements issued for annual periods beginning after December 15, 2017 and interim periods within those fiscal years. The adoption of the standard did not have a significant effect on the Company’s financial statements. 
 
In May 2017, the FASB issued ASU 2017-09, Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting. This ASU provides clarity and reduces both (1) diversity in practice and (2) cost and complexity when applying the guidance in Topic 718 to a change to the terms or conditions of a share-based payment award. The amendments in this ASU are effective for public entities for fiscal years and interim periods beginning after December 15, 2017. The ASU is applied prospectively on and after the effective date. The standard did not have a material effect on the Company’s financial statements.
  
In July 2017, the FASB issued ASU 2017-11, Accounting for Certain Financial Instruments with Down Round Features and Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception. Part I of this ASU addresses the complexity of accounting for certain financial instruments with down round features. Per the ASU, a freestanding equity-linked financial instrument (or embedded conversion option) no longer would be accounted for as a derivative liability at fair value as a result of the existence of a down round feature. The ASU is effective for public entities for fiscal years beginning after December 15, 2018 and early adoption is permitted. The Company has elected to early adopt the ASU and will recognize the value of the effect of the down round provision, if and/or when triggered. The provision is associated with stock warrants issued as part of the Company's 2017 definitive securities purchase agreement, or the Private Placement. For more details regarding the 2017 Private Placement, see Note 9 and Note 11.
 
Recent Accounting Pronouncements
 
In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), to increase transparency and comparability among organizations by requiring the recognition of lease assets and lease liabilities on the balance sheet. Most prominent among the amendments is the recognition of assets and liabilities by lessees for those leases classified as operating leases under previous U.S. GAAP. Under the new standard, disclosures are required to meet the objective of enabling users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases. The new standard will be effective for annual and interim periods beginning after December 15, 2018, with early adoption permitted. While the Company is continuing to assess the potential impact of this standard, it expects its lease commitment will be subject to the updated standard and recognized as a lease liability and right-of-use asset upon adoption.
 
Management does not believe that any other recently issued, but not yet effective, accounting standard, if adopted, would have a material impact on the Company’s financial statements.
XML 29 R19.htm IDEA: XBRL DOCUMENT v3.10.0.1
Accounts Receivable (Tables)
6 Months Ended
Jun. 30, 2018
Receivables [Abstract]  
Schedule of accounts receivable, net
Accounts receivable, net consisted of the following:
 
  
June 30,
2018
  
December 31,
2017
 
  
(unaudited)
    
Trade receivables $198,265  $378,894 
Other receivables  1,652   20,589 
   199,917   399,483 
Allowance for doubtful accounts  (29,125)  (178,399)
  $170,792  $221,084 
Allowance for Credit Losses on Financing Receivables [Table Text Block]
Activity in the allowance for doubtful accounts was as follows:
 
Balance at December 31, 2017 $(178,399)
Write offs  16,759 
Provisions  (29,485)
Recovery  162,000 
Balance at June 30, 2018 $(29,125)
XML 30 R20.htm IDEA: XBRL DOCUMENT v3.10.0.1
Inventories (Tables)
6 Months Ended
Jun. 30, 2018
Inventory Disclosure [Abstract]  
Schedule of Net Inventory
Inventories, net consisted of the following:
 
 
 
June 30,

2018
 
 
December 31,

2017
 
 
 
(unaudited)
 
 
 
 
Raw materials
 
$
197,779
 
 
$
222,436
 
Finished goods
 
 
182,529
 
 
 
149,370
 
 
 
 
380,308
 
 
 
371,806
 
Reserve for obsolescence
 
 
(140,901
)
 
 
(120,443
)
 
 
$
239,407
 
 
$
251,363
 
XML 31 R21.htm IDEA: XBRL DOCUMENT v3.10.0.1
Property and Equipment (Tables)
6 Months Ended
Jun. 30, 2018
Property, Plant and Equipment [Abstract]  
Schedule of Property and Equipment, Net
Property and equipment, net consisted of the following:
 
 
 
June 30,

2018
 
 
December 31,

2017
 
 
 
 
(unaudited)
 
 
 
 
 
Machinery and equipment
 
$
1,023,327
 
 
$
1,013,133
 
Building leasehold improvements
 
 
395,335
 
 
 
395,335
 
Furniture, fixtures, software and computers
 
 
192,480
 
 
 
218,571
 
 
 
 
1,611,142
 
 
 
1,627,039
 
Accumulated depreciation and amortization
 
 
(1,097,989
)
 
 
(957,468
)
 
 
$
513,153
 
 
$
669,571
 
XML 32 R22.htm IDEA: XBRL DOCUMENT v3.10.0.1
Intangible Assets (Tables)
6 Months Ended
Jun. 30, 2018
Goodwill and Intangible Assets Disclosure [Abstract]  
Schedule of intangible assets, net
Intangible assets, net consisted of the following:
 
 
 
June 30,

2018
 
 
December 31,

2017
 
 
 
 
(unaudited)
 
 
 
 
 
Patents
 
$
1,617,978
 
 
$
1,554,268
 
Other intangible assets
 
 
732,175
 
 
 
732,175
 
 
 
 
2,350,153
 
 
 
2,286,443
 
Accumulated amortization
 
 
(253,461
)
 
 
(204,429
)
 
 
$
2,096,692
 
 
$
2,082,014
 
XML 33 R23.htm IDEA: XBRL DOCUMENT v3.10.0.1
Accrued Expenses (Tables)
6 Months Ended
Jun. 30, 2018
Accounts Payable and Accrued Liabilities, Current [Abstract]  
Schedule of Accrued Expenses
Accrued expenses consisted of the following:
 
 
 
June 30,

2018
 
 
December 31,

2017
 
 
 
 
(unaudited)
 
 
 
 
 
Accrued compensation
 
$
403,744
 
 
$
247,343
 
Warranty reserve
 
 
492,132
 
 
 
426,115
 
Other
 
 
254,007
 
 
 
407,697
 
 
 
$
1,149,883
 
 
$
1,081,155
 
XML 34 R24.htm IDEA: XBRL DOCUMENT v3.10.0.1
Commitments and Contingencies (Tables)
6 Months Ended
Jun. 30, 2018
Commitments and Contingencies Disclosure [Abstract]  
Schedule of Future Minimum Rental Payments for Operating Leases Future minimum payments under the lease, as amended, are as follows:
 
Year Ended December 31,
 
Amount
 
2018
 
$
92,388
 
2019
 
 
189,086
 
2020
 
 
196,477
 
2021
 
 
83,149
 
 
 
$
561,100
 
XML 35 R25.htm IDEA: XBRL DOCUMENT v3.10.0.1
Equity Incentive Plan (Tables)
6 Months Ended
Jun. 30, 2018
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Share-based Compensation, Stock Options, Activity
A summary of the Company’s stock option activity and related information is as follows:
 
 
 
Stock

Options
 
 
Weighted

Average

Exercise

Price
 
 
Weighted

Average

Remaining
Life

(in years)
 
Outstanding at December 31, 2017
 
 
1,232,236
 
 
$
6.44
 
 
 
6.8
 
Granted
 
 
422,039
 
 
$
1.31
 
 
 
 
 
Forfeited/Expired/Exchanged
 
 
(124,728
)
 
$
5.23
 
 
 
 
 
Outstanding at June 30, 2018
 
 
1,529,547
 
 
$
5.12
 
 
 
7.3
 
Exercisable at June 30, 2018
 
 
1,264,680
 
 
$
5.12
 
 
 
7.2
 
XML 36 R26.htm IDEA: XBRL DOCUMENT v3.10.0.1
Revenue (Tables)
6 Months Ended
Jun. 30, 2018
Revenue from Contract with Customer [Abstract]  
Deferred Revenue, by Arrangement, Disclosure
Activity in the deferred revenue account was as follows:
 
Balance at December 31, 2017
 
$
-
 
Deferral of revenue
 
 
50,070
 
Recognition of unearned revenue
 
 
(42,850
)
Balance June 30, 2018
 
7,220
 
XML 37 R27.htm IDEA: XBRL DOCUMENT v3.10.0.1
Accounts Receivable (Details Textual)
6 Months Ended
Jun. 30, 2018
Accounts Receivable [Member]  
Concentration Risk, Percentage 70.00%
XML 38 R28.htm IDEA: XBRL DOCUMENT v3.10.0.1
Accounts Receivable - Accounts receivable, net (Details) - USD ($)
Jun. 30, 2018
Dec. 31, 2017
Trade receivables $ 198,265 $ 378,894
Other receivables 1,652 20,589
Gross accounts receivable 199,917 399,483
Allowance for doubtful accounts (29,125) (178,399)
Net accounts receivable $ 170,792 $ 221,084
XML 39 R29.htm IDEA: XBRL DOCUMENT v3.10.0.1
Accounts Receivable - Activity in the allowance for doubtful accounts (Details) - USD ($)
6 Months Ended
Jun. 30, 2018
Jun. 30, 2017
Balance at December 31, 2017 $ (178,399)  
Write offs 16,759  
Provisions 98,337 $ (273,727)
Recovery 162,000  
Balance at March 31, 2018 $ (29,125)  
XML 40 R30.htm IDEA: XBRL DOCUMENT v3.10.0.1
Inventories - Inventories, net (Details) - USD ($)
Jun. 30, 2018
Dec. 31, 2017
Inventory [Line Items]    
Raw materials $ 197,779 $ 222,436
Finished goods 182,529 149,370
Gross inventory 380,308 371,806
Reserve for obsolescence (140,901) (120,443)
Net inventory $ 239,407 $ 251,363
XML 41 R31.htm IDEA: XBRL DOCUMENT v3.10.0.1
Property and Equipment - Property and equipment (Details) - USD ($)
Jun. 30, 2018
Dec. 31, 2017
Property, Plant and Equipment [Line Items]    
Gross property and equipment $ 1,611,142 $ 1,627,039
Accumulated depreciation and amortization (1,097,989) (957,468)
Net property and equipment 513,153 669,571
Machinery and equipment    
Property, Plant and Equipment [Line Items]    
Gross property and equipment 1,023,327 1,013,133
Building leasehold improvements    
Property, Plant and Equipment [Line Items]    
Gross property and equipment 395,335 395,335
Furniture, fixtures, software and computers    
Property, Plant and Equipment [Line Items]    
Gross property and equipment $ 192,480 $ 218,571
XML 42 R32.htm IDEA: XBRL DOCUMENT v3.10.0.1
Intangible Assets (Details Textual) - USD ($)
3 Months Ended 6 Months Ended 12 Months Ended
Jun. 30, 2018
Jun. 30, 2017
Jun. 30, 2018
Jun. 30, 2017
Dec. 31, 2017
Finite-Lived Intangible Assets [Line Items]          
Amortization expense $ 24,713 $ 18,594 $ 49,032 $ 36,469  
Amortization expense for 2018 49,000   49,000    
Amortization expense for 2019 99,000   99,000    
Amortization expense for 2020 99,000   99,000    
Amortization expense for 2021 99,000   99,000    
Amortization expense for 2022 99,000   99,000    
Amortization expense for thereafter $ 1,162,000   1,162,000    
Patents          
Finite-Lived Intangible Assets [Line Items]          
Capitalized costs for costs related to patents that have not been awarded     $ 489,285   $ 472,928
XML 43 R33.htm IDEA: XBRL DOCUMENT v3.10.0.1
Intangible Assets - Schedule of Net Intangible Assets (Details) - USD ($)
Jun. 30, 2018
Dec. 31, 2017
Finite-Lived Intangible Assets [Line Items]    
Gross intangible assets $ 2,350,153 $ 2,286,443
Accumulated amortization (253,461) (204,429)
Intangible assets, net 2,096,692 2,082,014
Patents    
Finite-Lived Intangible Assets [Line Items]    
Gross intangible assets 1,617,978 1,554,268
Other intangible assets    
Finite-Lived Intangible Assets [Line Items]    
Gross intangible assets $ 732,175 $ 732,175
XML 44 R34.htm IDEA: XBRL DOCUMENT v3.10.0.1
Accrued Expenses - Accrued Expenses Schedule (Details) - USD ($)
Jun. 30, 2018
Dec. 31, 2017
Accrued compensation $ 403,744 $ 247,343
Warranty reserve 492,132 426,115
Other 254,007 407,697
Accrued expenses $ 1,149,883 $ 1,081,155
XML 45 R35.htm IDEA: XBRL DOCUMENT v3.10.0.1
Commitments and Contingencies (Details Textual)
1 Months Ended 3 Months Ended 6 Months Ended 12 Months Ended
Jul. 15, 2018
USD ($)
Apr. 11, 2018
USD ($)
Jun. 21, 2018
USD ($)
Jun. 30, 2018
USD ($)
Jun. 30, 2017
USD ($)
Jun. 30, 2018
USD ($)
Jun. 30, 2017
USD ($)
Dec. 31, 2015
USD ($)
Apr. 20, 2018
USD ($)
a
Mar. 21, 2018
USD ($)
Dec. 31, 2017
USD ($)
Other Commitments [Line Items]                      
Rent expense       $ 60,373 $ 59,718 $ 118,176 $ 117,074        
Payment for each patent issued           79,188 $ 171,134        
Loss Contingency Accrual       328,451   328,451         $ 100,000
Litigation Settlement, Amount Awarded from Other Party     $ 163,105                
Loss Contingency Accrual, Provision       100,000              
Loss Contingency Accrual, Payments       163,105              
Loss Contingency Accrual, Period Increase (Decrease)       165,347              
Proceeds from Legal Settlements   $ 203,121                  
Proceeds from Customers   $ 162,000                  
Allowance For Doubtful Accounts Receivable Reserve Reversed       162,000   162,000          
Loss Contingency Accrual Payments 1       35,064              
Loss Contingency Accrual Payments 2       6,057              
Allowance for Doubtful Accounts Receivable, Reserved                   $ 162,000  
Subsequent Event [Member]                      
Other Commitments [Line Items]                      
Additional Litigation Settlement Amount Awarded From Other Party $ 165,346                    
Licensing agreements                      
Other Commitments [Line Items]                      
Long-term liability for estimated present value of future payments under licensing agreement       462,199   462,199          
Loss Contingency Accrual       $ 100,000   $ 100,000          
Licensing agreements | Patents                      
Other Commitments [Line Items]                      
Payable for each patent filing pending               $ 10,000      
Payment for each patent issued               $ 20,000      
Period between December 21, 2017 and issuance of patent               20 days      
Office and laboratory space                      
Other Commitments [Line Items]                      
Square fee of office and laboratory space leased (in sq ft) | a                 14,782    
Annual base rent in first year                 $ 184,775    
Increase in base rent each succeeding year                 $ 7,391    
XML 46 R36.htm IDEA: XBRL DOCUMENT v3.10.0.1
Commitments and Contingencies - Future minimum payments (Details)
Jun. 30, 2018
USD ($)
2018 $ 92,388
2019 189,086
2020 196,477
2021 83,149
Total $ 561,100
XML 47 R37.htm IDEA: XBRL DOCUMENT v3.10.0.1
Common Stock (Details Textual) - USD ($)
6 Months Ended
Mar. 03, 2017
Jun. 30, 2018
Jun. 30, 2017
Proceeds from Issuance of Common Stock   $ 0 $ 13,657,331
Class of Warrant or Right, Number of Securities Called by Warrants or Rights 5,929,256    
Private Placement [Member]      
Proceeds from Issuance of Common Stock $ 13,700,000    
Sale of Stock, Price Per Share $ 2.535    
Proceeds from Issuance or Sale of Equity $ 15,000,000    
Payments of Stock Issuance Costs $ 1,100,000    
Common Stock [Member] | Private Placement [Member]      
Sale of Stock, Number of Shares Issued in Transaction 5,220,826    
Preferred Stock [Member] | Private Placement [Member]      
Sale of Stock, Number of Shares Issued in Transaction 708,430    
XML 48 R38.htm IDEA: XBRL DOCUMENT v3.10.0.1
Equity Incentive Plan (Details Textual)
6 Months Ended
Jun. 30, 2018
USD ($)
shares
EmployeeStockOption [member]  
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]  
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | shares 122,039
Restricted Stock Units (RSUs) [Member]  
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]  
Stock Issued During Period, Shares, Employee Stock Ownership Plan | shares 117,500
Stock Issued During Period, Value, Employee Stock Ownership Plan | $ $ 158,110
Performance Shares [Member]  
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]  
Stock Issued During Period, Shares, Employee Stock Ownership Plan | shares 12,000
Stock Issued During Period, Value, Employee Stock Ownership Plan | $ $ 19,923
2013 Equity Incentive Plan  
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]  
Unrecognized compensation cost related to non-vested share-based compensation arrangements | $ $ 689,640
Weighted average period for recognition 8 months 12 days
2013 Equity Incentive Plan | EmployeeStockOption [member]  
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]  
Value of options granted | $ $ 330,713
Compensation expense associated with grants | $ $ 270,712
Equity Incentive Plan [Member]  
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]  
Shares of common stock available for issuance under the Plan (in shares) | shares 424,963
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | shares 422,039
XML 49 R39.htm IDEA: XBRL DOCUMENT v3.10.0.1
Equity Incentive Plan - Summary of Stock Option Activity and Related Information (Details) - Equity Incentive Plan [Member] - $ / shares
6 Months Ended 12 Months Ended
Jun. 30, 2018
Dec. 31, 2017
Stock Options    
Outstanding at January 1 (in shares) 1,232,236  
Granted (in shares) 422,039  
Forfeited/Expired/Exchanged (in shares) (124,728)  
Outstanding at June 30 (in shares) 1,529,547 1,232,236
Exercisable at June 30 (in shares) 1,264,680  
Weighted Average Exercise Price    
Outstanding at January 1 (in dollars per share) $ 6.44  
Granted (in dollars per share) 1.31  
Forfeited/Expired/Exchanged (in dollars per share) 5.23  
Outstanding at June 30 (in dollars per share) 5.12 $ 6.44
Exercisable at June 30 (in dollars per share) $ 5.12  
Weighted Average Remaining Life (in years)    
Outstanding (in years) 7 years 3 months 18 days 6 years 9 months 18 days
Exercisable at June 30 (in years) 7 years 2 months 12 days  
XML 50 R40.htm IDEA: XBRL DOCUMENT v3.10.0.1
Warrants (Details Textual) - $ / shares
6 Months Ended
Jun. 30, 2018
Dec. 31, 2017
Class of Warrant or Right [Line Items]    
Class of Warrant or Right, Exercise Price of Warrants or Rights $ 2.79 $ 2.79
Convertible Preferred Stock Maximum Beneficial Ownership Percentage 9.99%  
Class of Warrant or Right, Outstanding 7,481,079 7,481,079
Placement Agent Warrant [Member]    
Class of Warrant or Right [Line Items]    
Class of Warrant or Right, Exercise Price of Warrants or Rights $ 2.89  
Class Of Warrant Or Number Of Securities 237,170  
Private Placement [Member]    
Class of Warrant or Right [Line Items]    
Class of Warrant or Right, Exercise Price of Warrants or Rights $ 2.41  
Class Of Warrant Or Right, Expiration Period Of Warrants Or Rights 3 years  
Class Of Warrant Or Number Of Securities 5,929,256  
XML 51 R41.htm IDEA: XBRL DOCUMENT v3.10.0.1
Revenue (Details Textual) - Sales Revenue, Net [Member]
6 Months Ended
Jun. 30, 2018
Jun. 30, 2017
Customer A [Member]    
Concentration Risk, Percentage 48.00% 18.00%
Customer B [Member]    
Concentration Risk, Percentage 48.00% 13.00%
Customer C [Member]    
Concentration Risk, Percentage 12.00% 13.00%
XML 52 R42.htm IDEA: XBRL DOCUMENT v3.10.0.1
Revenue - Activity in the deferred revenue account (Details)
6 Months Ended
Jun. 30, 2018
USD ($)
Balance at December 31, 2017 $ 0
Deferral of revenue 50,070
Recognition of unearned revenue (42,850)
Balance at June 30, 2018 $ 7,220
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