hopTo Inc. - Quarter Report: 2010 March (Form 10-Q)

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Delaware	13-3899021
(State or jurisdiction of	(IRS Employer
incorporation or organization)	Identification No.)

 

 

 

 

 

Large accelerated filer	[   ]		Accelerated filer	[   ]
Non-accelerated filer	[   ]		Smaller reporting company	[X]

 

 

 

 

 

 

 

PART I.		FINANCIAL INFORMATION		PAGE
Item 1.		Financial Statements
		Condensed Consolidated Balance Sheets as of March 31, 2010 (unaudited) and December 31, 2009		2
		Unaudited Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2010 and 2009		3
		Unaudited Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2010 and 2009		4
		Notes to Unaudited Condensed Consolidated Financial Statements		5
Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations		11
Item 3.		Quantitative and Qualitative Disclosures About Market Risk		16
Item 4T.		Controls and Procedures		16
PART II.		OTHER INFORMATION
Item 1.		Legal Proceedings		17
Item 1A.		Risk Factors		17
Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds		17
Item 3.		Defaults Upon Senior Securities		17
Item 4.		Reserved		17
Item 5.		Other Information		17
Item 6.		Exhibits		17
		Signatures		17

 

 

 

GraphOn Corporation
Condensed Consolidated Balance Sheets
	March 31, 2010		December 31, 2009
Assets	(Unaudited)
Current Assets:
Cash	$             2,590,700		$             2,852,900
Accounts receivable, net	539,100		839,600
Prepaid expenses	134,300		64,500
Total Current Assets	3,264,100		3,757,000
Patents, net	393,600		511,700
Property and equipment, net	127,500		127,100
Other assets	16,300		14,800
Total Assets	$             3,801,500		$             4,410,600
Liabilities and Stockholders’ Equity
Current Liabilities:
Accounts payable and accrued expenses	$                818,300		$                986,200
Deferred revenue	1,869,200		1,862,600
Total Current Liabilities	2,687,500		2,848,800
Deferred revenue	792,300		836,200
Total Liabilities	3,479,800		3,685,000
Commitments and contingencies
Stockholders' Equity:
Common stock, $0.0001 par value, 195,000,000 shares authorized, 45,898,292 shares issued and outstanding at March 31, 2010, and 46,834,292 shares issued and 46,284,292 shares outstanding at December 31, 2009	4,600		4,600
Additional paid-in capital	58,849,100		58,861,500
Accumulated deficit	(58,532,000)		(58,092,400)
Common stock held in treasury, at cost, 0 and 550,000 shares, respectively	—		(48,100)
Total Stockholders' Equity	321,700		725,600
Total Liabilities and Stockholders' Equity	$             3,801,500		$             4,410,600

GraphOn Corporation
Condensed Consolidated Statements of Operations
	Three Months Ended March 31,
	2010		2009
	(Unaudited)		(Unaudited)
Revenue	$    1,881,500		$    1,409,100
Costs of revenue	262,200		132,900
Gross profit	1,619,300		1,276,200
Operating expenses:
Selling and marketing	509,800		489,000
General and administrative	792,800		760,000
Research and development	758,400		788,100
Total operating expenses	2,061,000		2,037,100
Loss from operations	(441,700)		(760,900)
Other income (expense), net	2,700		(7,700)
Loss before provision for income tax	(439,000)		(768,600)
Provision for income tax	600		—
Net loss	$      (439,600)		$      (768,600)
Loss per share – basic and diluted	$            (0.01)		$            (0.02)
Average weighted common shares outstanding – basic and diluted	45,955,003		47,135,625

GraphOn Corporation
Condensed Consolidated Statements of Cash Flows
		Three Months Ended March 31,
		2010		2009
		(Unaudited)		(Unaudited)
Cash Flows Provided By (Used In) Operating Activities:
Net Loss		$          (439,600)		$        (768,600)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization		140,600		141,600
Stock-based compensation expense		30,300		51,600
Loss on derivative instruments – warrants liability		—		13,700
Changes in operating assets and liabilities:
Accounts receivable		300,500		374,400
Prepaid expenses		(69,800)		(51,100)
Accounts payable and accrued expenses		(167,900)		92,500
Deferred revenue		(37,300)		6,200
Net Cash Used In Operating Activities		(243,200)		(139,700)
Cash Flows Used In Investing Activities:
Purchases of equipment		(22,900)		—
Other assets		(1,500)		—
Net Cash Used In Investing Activities		(24,400)		—
Cash Flows Provided By Financing Activities:
Proceeds from sale of common stock - employee stock purchase plan		400		800
Proceeds from exercise of stock options		5,000		—
Net Cash Provided By Financing Activities		5,400		800
Net Decrease in Cash		(262,200)		(138,900)
Cash - Beginning of Period		2,852,900		3,742,200
Cash - End of Period		$           2,590,700		$          3,603,300

 

 

 

 

 

 

Persuasive evidence of an arrangement exists, (i.e., when the Company signs a non-cancelable license agreement wherein the customer acknowledges an unconditional obligation to pay, or upon receipt of the customer’s purchase order), and

Delivery has occurred or services have been rendered and there are no uncertainties surrounding product acceptance (i.e., when title and risk of loss have been transferred to the customer, which generally occurs when the media containing the licensed program(s) is provided to a common carrier or, in the case of electronic delivery, when the customer is given access to the licensed program(s)), and

The price to the customer is fixed or determinable, as typically evidenced in a signed non-cancelable contract, or a customer’s purchase order, and

Collectibility is probable.  If collectibility is not considered probable, revenue is recognized when the fee is collected.

 

 

 

 

 

 

 

 

 

		2010		2009
Costs of revenue		$           1,400		$           2,400
Selling and marketing		8,900		4,400
General and administrative		10,100		25,300
Research and development		9,900		19,500
		$         30,300		$         51,600

		Estimated Volatility		Annualized Forfeiture Rate		Expected Option Term (Years)		Estimated Exercise Factor		Risk-Free Interest Rate		Dividends
2010		175%		2%		10.0		20%		3.72%		—
2009		180%		4%		7.5		10%		2.24%		—

 

 

 

 

 

 

	Number of Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value
Outstanding – December 31, 2009	7,047,450		$         0.32
Granted	1,049,166		$         0.06
Exercised	(83,333)		$         0.06
Forfeited or expired	—		—
Outstanding – March 31, 2010	8,013,283		$         0.28		5.85		$     47,002

 

 

 

 

 

Revenue		2010		2009		2010 Over (Under) 2009 Dollars
Product Licenses
Windows		$       528,300		$       436,600		$            91,700
Unix		368,500		326,200		42,300
		896,800		762,800		134,000
Intellectual property licenses		400,000		—		400,000
Service Fees
Windows		305,600		283,700		21,900
Unix		271,900		287,600		(15,700)
		577,500		571,300		6,200
Other		7,200		75,000		(67,800)
Total Revenue		$    1,881,500		$    1,409,100		$           472,400

 

 

	March 31, 2010		December 31, 2009
Patents	$         2,839,000		$              2,839,000
Accumulated amortization	(2,445,400)		(2,327,300)
	$            393,600		$                 511,700

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

		Three Months Ended March 31,
Revenue		2010		2009
Software		$      1,481,500		$      1,409,100
Intellectual Property		400,000		—
Consolidated Revenue		$      1,881,500		$      1,409,100

		Three Months Ended March 31,
Loss From Operations		2010		2009
Software		$       (428,300)		$       (479,000)
Intellectual Property		(13,400)		(281,900)
Consolidated Loss From Operations		$       (441,700)		$       (760,900)

 

 

Long-Lived Assets		Cost Basis		Accumulated Depreciation /Amortization		Net, as Reported
Software		$    1,315,800		$  (1,180,700)		$       135,100
Intellectual Property		2,839,000		(2,445,400)		393,600
Unallocated		8,700		—		8,700
		$    4,163,500		$  (3,626,100)		$       537,400

 

 

 

 

 

 

our history of operating losses, and expectation that those losses will continue;

our substantial accumulated deficit;

that a significant portion of our operating revenue has been and continues to be earned from a very limited number of significant customers;

that our stock price has been volatile; and

other factors, including those set forth under Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2009, which was filed with the Securities and Exchange Commission (“SEC”) on March 31, 2010, and in other documents we have filed with the SEC.

 

 

 

 

 

 

 

 

 

 

 

Revenue		2010		2009		2010 Over (Under) 2009 Dollars
Product Licenses
Windows		$       528,300		$       436,600		$         91,700
Unix		368,500		326,200		42,300
		896,800		762,800		134,000
Intellectual property licenses		400,000		—		400,000
Service Fees
Windows		305,600		283,700		21,900
Unix		271,900		287,600		(15,700)
		577,500		571,300		6,200
Other		7,200		75,000		(67,800)
Total Revenue		$    1,881,500		$    1,409,100		$           472,400

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

		Three Months Ended March 31,
Loss From Operations		2010		2009
Software		$       (428,300)		$       (479,000)
Intellectual Property		(13,400)		(281,900)
Consolidated Loss From Operations		$       (441,700)		$       (760,900)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

	March 31, 2010		December 31, 2009
Software Segment	$           1,315,800		$                  1,285,300
Accumulated depreciation/amortization	(1,180,700)		(1,158,200)
	135,100		127,100
Intellectual Property Segment	2,839,000		2,839,000
Accumulated depreciation/amortization	(2,445,400)		(2,327,300)
	393,600		511,700
Unallocated	8,700		14,800
Total Long-Lived, net	$              537,400		$                  653,300

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

		GraphOn Corporation
		(Registrant)
Date:	May 13, 2010		Date:	May 13, 2010
By:	/s/ Robert Dilworth		By:	/s/ William Swain
	Robert Dilworth			William Swain
	Chief Executive Officer and			Chief Financial Officer
	Chairman of the Board			(Principal Financial Officer and
	(Principal Executive Officer)			Principal Accounting Officer)

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