10-Q

Table Of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended March 31, 2015

Commission File Number: 0-21683

HOPTO INC.

(Exact name of registrant as specified in its charter)

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

1919 S. Bascom Avenue, Suite 600

Campbell, CA 95008
(Address of principal executive offices)

Registrant’s telephone number:

(800) 472-7466

(408) 688-2674

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 ☒ 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 Regulations S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes ☒ No [  ]

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

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes [  ] No ☒

As of May 11, 2015, there were issued and outstanding 117,428,986shares of the registrant’s common stock, par value $0.0001.

HOPTO INC.

FORM 10-Q

Table of Contents

PART I.	FINANCIAL INFORMATION	PAGE
Item 1.	Financial Statements	2
	Condensed Consolidated Balance Sheets as of March 31, 2015 (unaudited) and December 31, 2014	2
	Unaudited Condensed Consolidated Statements of Operations for the Three-Month Periods Ended March 31, 2015 and 2014	3
	Unaudited Condensed Consolidated Statements of Stockholders’ Deficit for the Three-Month Periods Ended March, 31 2015 and March 31, 2014	4
	Unaudited Condensed Consolidated Statements of Cash Flows for the Three-Month Periods Ended March 31, 2015 and 2014	5
	Notes to Unaudited Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	27
Item 4.	Controls and Procedures	27
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	28
Item 1A.	Risk Factors	28
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	28
Item 3.	Defaults Upon Senior Securities	28
Item 4.	Mine Safety Disclosures	28
Item 5.	Other Information	28
Item 6.	Exhibits	28
	Signatures	29

Forward-Looking Information

This report includes, in addition to historical information, "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. This act provides a "safe harbor" for forward-looking statements to encourage companies to provide prospective information about themselves so long as they identify these statements as forward-looking and provide meaningful cautionary statements identifying important factors that could cause actual results to differ from the projected results. All statements other than statements of historical fact we make in this report are forward-looking statements. In particular, the statements regarding industry prospects and our future results of operations or financial position are forward-looking statements. Such statements are based on management's current expectations and are subject to a number of uncertainties and risks that could cause actual results to differ significantly from those described in the forward-looking statements. Factors that may cause such a difference include the following:

● the success of our new products depends on a number of factors including market acceptance and our ability to manage the risks associated with product introduction;

● local, regional, national and international economic conditions and events, and the impact they may have on us and our customers;

● our revenue could be adversely impacted if any of our significant customers reduces its order levels or fails to order during a reporting period; and

● other factors, including, but not limited to, those set forth under Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2014 which was filed with the SEC on March 31, 2015, and in other documents we have filed with the SEC.

Statements included in this report are based upon information known to us as of the date that this report is filed with the SEC, and we assume no obligation to update or alter our forward-looking statements made in this report, whether as a result of new information, future events or otherwise, except as otherwise required by applicable federal securities laws.

PART I. FINANCIAL INFORMATION

ITEM 1. Financial Statements

HOPTO INC.

Condensed Consolidated Balance Sheets

	(Unaudited)
Assets	March 31, 2015			December 31, 2014
Current Assets:
Cash	$	1,971,800		$	1,557,100
Accounts receivable, net		454,000			2,211,300
Prepaid expenses		103,500			98,100
Total Current Assets		2,529,300			3,866,500
Capitalized software development costs, net		354,700			408,700
Property and equipment, net		335,100			362,500
Other assets		139,900			139,700
Total Assets	$	3,359,000		$	4,777,400
Liabilities and Stockholders’ Equity (Deficit)
Current Liabilities:
Accounts payable and accrued expenses	$	962,600		$	986,500
Deferred rent		47,900			44,500
Capital lease		7,800			7,700
Deferred revenue		2,505,400			2,859,300
Total Current Liabilities		3,523,700			3,898,000
Warrants liability		294,700			647,300
Deferred revenue		1,612,900			1,652,600
Capital lease		13,200			15,200
Deferred rent		144,600			158,200
Total Liabilities		5,589,100			6,371,300
Commitments and contingencies (Note 12)
Stockholders' Equity (Deficit):
Preferred stock, $0.01 par value, 5,000,000 shares authorized, no shares issued and outstanding		—			—
Common stock, $0.0001 par value, 195,000,000 shares authorized, 113,057,295 and 112,542,217 shares issued and outstanding at March 31, 2015 and December 31, 2014, respectively		11,300			11,200
Additional paid-in capital		75,227,400			74,600,700
Accumulated deficit		(77,468,800	)		(76,205,800	)
Total Stockholders' Deficit		(2,230,100	)		(1,593,900	)
Total Liabilities and Stockholders' Deficit	$	3,359,000		$	4,777,400

See accompanying notes to unaudited condensed consolidated financial statements

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 HOPTO INC.

Condensed Consolidated Statements of Operations

	Three Months Ended March 31,
	2015			2014
	(Unaudited)			(Unaudited)
Revenue	$	1,471,100		$	1,340,200
Costs of revenue		104,500			134,800
Gross profit		1,366,600			1,205,400
Operating expenses:
Selling and marketing		500,100			650,500
General and administrative		907,800			1,011,600
Research and development		1,164,900			1,348,000
Total operating expenses		2,572,800			3,010,100
Loss from operations		(1,206,200	)		(1,804,700	)
Other income (expense) - change in fair value of warrants liability		(55,100	)		1,133,700
Other expense, net		(600	)		(200	)
Loss before provision for income tax		(1,261,900	)		(671,200	)
Provision for income tax		1,100			1,300
Net loss	$	(1,263,000	)	$	(672,500	)
Loss per share – basic and diluted	$	(0.01	)	$	(0.01	)
Average weighted common shares outstanding – basic and diluted		112,803,553			110,283,363

See accompanying notes to unaudited condensed consolidated financial statements

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 HOPTO INC.

Condensed Consolidated Statements of Stockholders’ Equity (Deficit)

	Three Months Ended March 31,
	2015			2014
	(Unaudited)			(Unaudited)
Preferred stock – shares outstanding
Beginning balance		—			—
Ending balance		—			—
		—			—
Common stock – shares outstanding
Beginning balance		112,542,217			98,510,622
Private placement of stock and warrants		—			11,299,999
Employee stock option issuances		77,500			215,757
Exercise of warrants		—			1,000,000
Vesting of restricted stock awards		437,578			446,641
Ending balance		113,057,295			111,473,019
Common stock – amount
Beginning balance	$	11,200		$	9,800
Par value of shares issued in private placement		—			1,200
Exercise of employee stock options		—			—
Exercise of warrants		—			100
Vesting of restricted stock awards		100			—
Ending balance	$	11,300		$	11,100
Additional paid-in capital
Beginning balance	$	74,600,700		$	71,697,300
Stock-based compensation expense		222,200			169,700
Company payment of employee taxes for stock-based compensation		(6,500	)		—
Proceeds from exercise of employee stock options		3,800			43,600
Proceeds from exercise of warrants		—			260,000
Reclassification of warrants liability to equity (2014 Pipe)		407,300			—
Proceeds from private placement of common stock and warrants, net of par value of shares issued		—			3,388,800
Cost of private placement of common stock and warrants		—			(20,000	)
Allocation of proceeds from common stock and warrants to warrants liability		—			(1,356,000	)
Other Rounding		(100	)		(100	)
Ending balance	$	75,227,400		$	74,183,300
Accumulated deficit
Beginning balance	$	(76,205,800	)	$	(72,611,900	)
Net loss		(1,263,000	)		(672,500	)
Ending balance	$	(77,468,800	)	$	(73,284,400	)
Total Stockholders’ Equity (Deficit)	$	(2,230,100	)	$	910,000

See accompanying notes to unaudited condensed consolidated financial statements

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 HOPTO INC.

Condensed Consolidated Statements of Cash Flows

	Three Months Ended March 31,
	2015			2014
Cash Flows Provided By (Used In) Operating Activities:	(Unaudited)			(Unaudited)
Net Loss	$	(1,263,000	)	$	(672,500	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		86,500			121,300
Stock-based compensation expense		222,200			169,700
Company payments of employee taxes for stock-based compensation		(6,500	)		—
Revenue deferred to future periods		602,500			841,400
Recognition of deferred revenue		(996,100	)		(1,098,600	)
Changes to allowance for doubtful accounts		(9,700	)		(18,900	)
Change in fair value of derivative instruments – warrants		55,100			(1,133,700	)
Accretion of warrants liability for consulting services		(400	)		(49,800	)
Changes in severance liability		—			(46,200	)
Changes in deferred rent		(10,200	)		4,900
Interest accrued for capital lease		400			—
Changes in operating assets and liabilities:
Accounts receivable		1,767,000			213,300
Prepaid expenses		(5,400	)		(77,000	)
Accounts payable and accrued expenses		(23,900	)		(46,500	)
Other assets		(200	)		—
Net Cash Used in Operating Activities		418,300			(1,792,600	)
Cash Flows Used In Investing Activities:
Capital expenditures		(5,100	)		(23,700	)
Net Cash Used In Investing Activities		(5,100	)		(23,700	)
Cash Flows Provided By Financing Activities:
Payment of capital lease		(2,300	)		—
Proceeds from exercise of warrants		—			260,000
Proceeds from exercise of employee stock options		3,800			43,600
Proceeds from private placement of stock and warrants, net of issuance costs		—			3,370,000
Net Cash Provided By Financing Activities		1,500			3,673,600
Net Increase (Decrease) in Cash		414,700			1,857,300
Cash - Beginning of Period		1,557,100			2,430,700
Cash - End of Period	$	1,971,800		$	4,288,000

See accompanying notes to unaudited condensed consolidated financial statements

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HOPTO INC.

Notes to Unaudited Condensed Consolidated Financial Statements

1. Basis of Presentation

The unaudited condensed consolidated financial statements include the accounts of hopTo Inc. and its subsidiaries (collectively, “we”, “us” or “our”); significant intercompany accounts and transactions are eliminated upon consolidation. The unaudited condensed consolidated financial statements included herein have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) applicable to interim financial information and the rules and regulations promulgated by the Securities and Exchange Commission (the “SEC”). Accordingly, such unaudited condensed consolidated financial statements do not include all information and footnote disclosures required in annual financial statements.

The unaudited condensed consolidated financial statements included herein reflect all adjustments, which include only normal, recurring adjustments, that are, in our opinion, necessary to state fairly the results for the periods presented. This Quarterly Report on Form 10-Q should be read in conjunction with our audited consolidated financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2014 which was filed with the SEC on March 31, 2015 (“2014 10-K Report”). The interim results presented herein are not necessarily indicative of the results of operations that may be expected for the full fiscal year ending December 31, 2015 or any future period.

2. Significant Accounting Policies

Use of Estimates

The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. These estimates include: the amount of stock-based compensation expense; the allowance for doubtful accounts; the estimated lives, valuation, and amortization of intangible assets (including capitalized software); depreciation of long-lived assets; valuation of warrants; post-employment benefits, and accruals for liabilities. While we believe that such estimates are fair, actual results could differ materially from those estimates.

Revenue Recognition

We market and license our products indirectly through channel distributors, independent software vendors (“ISVs”), value-added resellers (“VARs”) (collectively, “resellers”) and directly to corporate enterprises, governmental and educational institutions and others. Our product licenses are perpetual. We also separately sell intellectual property licenses, maintenance contracts, which are comprised of license updates and customer service access, as well as other products and services.

Software license revenues are recognized when:

● Persuasive evidence of an arrangement exists, (i.e., when we sign a non-cancellable 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 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-cancellable contract, or a customer’s purchase order, and

● Collectability is probable. If collectability is not considered probable, revenue is recognized when the fee is collected.

Revenue recognized on software arrangements involving multiple deliverables is allocated to each deliverable based on vendor-specific objective evidence (“VSOE”) or third party evidence of the fair values of each deliverable; such deliverables include licenses for software products, maintenance, private labeling fees, and customer training. We limit our assessment of VSOE for each deliverable to either the price charged when the same deliverable is sold separately or the price established by management having the relevant authority to do so, for a deliverable not yet sold separately.

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If sufficient VSOE of the fair value does not exist so as to permit the allocation of revenue to the various elements of the arrangement, all revenue from the arrangement is deferred until such evidence exists or until all elements are delivered. If VSOE of the fair value does not exist, and the only undelivered element is maintenance, then we recognize revenue on a ratable basis. If VSOE of the fair value of all undelivered elements exists but does not exist for one or more delivered elements, then revenue is recognized using the residual method. Under the residual method, the fair value of the undelivered elements is deferred and the remaining portion of the arrangement fee is recognized as revenue.

Certain resellers (“stocking resellers”) purchase product licenses that they hold in inventory until they are resold to the ultimate end user (an “inventory stocking order”). At the time that a stocking reseller places an inventory stocking order, no product licenses are shipped by us to the stocking reseller; rather, the stocking reseller’s inventory is credited with the number of licenses purchased and the stocking reseller can resell (issue) any number of licenses from their inventory at any time. Upon receipt of an order to issue a license(s) from a stocking reseller’s inventory (a “draw down order”), we will ship the license(s) in accordance with the draw down order’s instructions. We defer recognition of revenue from inventory stocking orders until the underlying licenses are sold and shipped to the end user, as evidenced by the receipt and fulfillment of the stocking reseller’s draw down order, assuming all other revenue recognition criteria have been met.

There are no rights of return granted to resellers or other purchasers of our software products.

Revenue from maintenance contracts is recognized ratably over the related contract period, which generally ranges from one to five years.

All of our software licenses are denominated in U.S. dollars.

Deferred Rent

The lease for our office in Campbell, California, as amended, (See Note 6) contains free rent and predetermined fixed escalations in our minimum rent payments. We recognize rent expense related to this lease on a straight-line basis over the term of the lease. We record any difference between the straight-line rent amounts and amounts payable under the lease as part of deferred rent in current or long-term liabilities, as appropriate.

Incentives that we received upon entering into the lease agreement are recognized on a straight-line basis as a reduction to rent over the term of the lease. We record the unamortized portion of these incentives as a part of deferred rent in current or long-term liabilities, as appropriate.

Postemployment Benefits (Severance Liability)

Nonretirement postemployment benefits, including salary continuation, supplemental unemployment benefits, severance benefits, disability-related benefits and continuation of benefits such as health care benefits, are recognized as a liability and a loss when it is probable that the employee(s) will be entitled to such benefits and the amount can be reasonably estimated. The cost of termination benefits recognized as a liability and an expense includes the amount of any lump-sum payments and the present value of any expected future payments. There was no severance liability reported at March 31, 2015 or December 31, 2014.

Software Development Costs

We capitalize software development costs incurred from the time technological feasibility of the software is established until the software is available for general release, in accordance with GAAP. Such capitalized costs are subsequently amortized as costs of revenue over the shorter of three years or the remaining estimated useful life of the product.

Research and development costs and other computer software maintenance costs related to the software development are expensed as incurred.

Long-Lived Assets

Long-lived assets are assessed for possible impairment whenever events or changes in circumstances indicate that the carrying amounts may not be recoverable, whenever we have committed to a plan to dispose of the assets or, at a minimum, annually. Typically, for long-lived assets to be held and used, measurement of an impairment loss is based on the fair value of such assets, with fair value being determined based on appraisals, current market value, comparable sales value, and discounted future cash flows, among other variables, as appropriate. Assets to be held and used (which assets are affected by an impairment loss) are depreciated or amortized at their new carrying amount over their remaining estimated life; assets to be sold or otherwise disposed of are not subject to further depreciation or amortization. No such impairment charge was recorded during either of the three-month periods ended March 31, 2015 or 2014.

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Allowance for Doubtful Accounts

We maintain an allowance for doubtful accounts that reflects our best estimate of potentially uncollectible trade receivables. The allowance is based on assessments of the collectability of specific customer accounts and the general aging and size of the accounts receivable. We regularly review the adequacy of our allowance for doubtful accounts by considering such factors as historical experience, credit worthiness, and current economic conditions that may affect a customer’s ability to pay. We specifically reserve for those accounts deemed uncollectible. We also establish, and adjust, a general allowance for doubtful accounts based on our review of the aging and size of our accounts receivable.

The following table sets forth the details of the Allowance for Doubtful Accounts for the three-month periods ended March 31, 2015 and 2014:

	Beginning Balance		Charge Offs		Recoveries		Provision			Ending Balance
Three Months Ended March 31,
2015	$	32,600	$	—	$	—	$	(9,700	)	$	22,900
2014	$	42,000	$	—	$	—	$	(18,900	)	$	23,100

Concentration of Credit Risk

For the three-month periods ended March 31, 2015 and 2014, respectively, we considered the customers listed in the following table to be our most significant customers. The table sets forth the percentage of sales attributable to each customer during the periods presented, and the respective customer’s ending accounts receivable balance as a percentage of reported accounts receivable, net, as of March 31, 2015 and 2014.

	Three Months Ended March 31, 2015			As of March 31, 2015			Three Months Ended March 31, 2014			As of March 31, 2014
Customer	Sales			Accounts Receivable			Sales			Accounts Receivable
Alcatel-Lucent		-			-			8.0	%		26.0	%
Centric		1.7	%		3.1	%		6.0	%		9.0	%
Elosoft		10.1	%		0.6	%		6.0	%		9.0	%
Ericsson		-			0.2	%		4.1	%		8.0	%
GE		1.9	%		2.3	%		13.0	%		22.0	%
IDS		5.8	%		-			8.0	%		-
Raytheon		13.4	%		23.0	%		0.5	%		-
Uniface		18.8	%		40.9	%		3.0	%		3.4	%
Total		51.7	%		70.1	%		48.6	%		77.4	%

Derivative Financial Instruments

We currently do not have a material exposure to either commodity prices or interest rates; accordingly, we do not currently use derivative instruments to manage such risks. We evaluate all of our financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. All derivative financial instruments are recognized in the balance sheet at fair value. Changes in fair value are recognized in earnings if they are not eligible for hedge accounting or in other comprehensive income if they qualify for cash flow hedge accounting.

Fair Value of Financial Instruments

The fair value of our accounts receivable, accounts payable and accrued liabilities approximate their carrying amounts due to the relative short maturities of these items.

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The fair value of warrants at issuance and for those recorded as a liability at each reporting date are determined in accordance with the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) 820, “Fair Value Measurement,” which establishes a fair value hierarchy that prioritizes the assumptions (inputs) to valuation techniques used to price assets or liabilities that are measured at fair value. The hierarchy, as defined below, gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The guidance for fair value measurements requires that assets, liabilities and certain equity instruments measured at fair value be classified and disclosed in one of the following categories:

● Level 1: Defined as observable inputs, such as quoted (unadjusted) prices in active markets for identical assets or liabilities.

● Level 2: Defined as observable inputs other than quoted prices included in Level 1. This includes quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

● Level 3: Defined as unobservable inputs to the valuation methodology that are supported by little or no market activity and that are significant to the measurement of the fair value of the assets or liabilities. Level 3 assets and liabilities include those whose fair value measurements are determined using pricing models, discounted cash flow methodologies or similar valuation techniques, as well as significant management judgment or estimation.

As of March 31, 2015, all of our $294,700 Warrants Liability reported at fair value was categorized as Level 3 inputs (See Note 4).

Reclassification

Certain items have been reclassified in the 2014 financial statements to conform to the 2015 presentations.

Recent Accounting Pronouncements

In April 2015, FASB issued Accounting Standards Update (“ASU”) No. 2015-05 “Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement”. The objective of ASU 2015-05 is to provide guidance to reporting entities in the accounting for fees paid in a cloud computing arrangement. Specifically, if a cloud computing arrangement includes a software license, then the entity should account for the software license element of the arrangement consistent with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the entity should account for the arrangement as a service contract. The guidance will not change GAAP for an entity’s accounting for service contracts. The amendments in this ASU are effective for annual periods beginning after December 15, 2015, including interim periods within those annual periods. Early adoption is permitted. We are currently evaluating this ASU in order to determine whether or not its adoption will have a material impact on our results of operations, cash flows or financial position.

In August 2014, FASB issued ASU No. 2014-15 “Preparation of Financial Statements - Going Concern (Subtopic 205-40)”. Under U.S. GAAP, continuation of a reporting entity as a going concern is presumed as the basis for preparing financial statements unless and until the entity's liquidation becomes imminent. Preparation of financial statements under this presumption is commonly referred to as the going concern basis of accounting. If and when an entity's liquidation becomes imminent, financial statements should be prepared under the liquidation basis of accounting in accordance with Subtopic 205-30, Presentation of Financial Statements-Liquidation Basis of Accounting. Even when an entity's liquidation is not imminent, there may be conditions or events that raise substantial doubt about the entity's ability to continue as a going concern. In those situations, financial statements should continue to be prepared under the going concern basis of accounting, but the amendments in the update should be followed to determine whether to disclose information about the relevant conditions and events. The amendments in this ASU are effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. Early application is permitted. We will evaluate the going concern considerations in this ASU, however, at the current period, we do not believe that the Company has met conditions which would subject its consolidated financial statements to additional disclosure.

In June 2014, FASB issued ASU No. 2014-12 “Compensation – Stock Compensation (Topic 718)” (“ASU 2014-12”). The objective of ASU 2014-12 is to resolve the diverse accounting treatment being applied in practice by reporting entities in the accounting for share-based payment awards that require a specific performance target to be achieved in order for employees to become eligible to vest in the awards, particularly those awards whose terms may provide that the performance target could be achieved after the employee completes the requisite service period. That is, the employee would be eligible to vest in the award regardless of whether the employee is rendering service on the date the performance target is achieved. ASU 2014-12 is effective for annual periods and interim periods within those annual periods beginning after December 15, 2015, and earlier adoption is permitted. The share-based payment awards we currently have outstanding which have performance targets do not contain clauses wherein the performance target could be achieved after the employee completes the requisite service period; accordingly, adoption of ASU 2014-12 did not have a material impact on our results of operations, cash flows or financial position.

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In May 2014, FASB issued ASU No. 2014-09 “Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-09”). ASU 2014-09 is the end result of a joint project initiated by FASB and the International Accounting Standards Board (“IASB”). IASB is the body that sets International Financial Reporting Standards (“IFRS”). The goal of FASB’s and IASB’s joint project was to clarify the principles for recognizing revenue and to develop a common revenue standard for U.S. GAAP and under IFRS. Specifically, ASU 2014-09:

1. Removes inconsistencies and weaknesses in revenue requirements.

2. Provides a more robust framework for addressing revenue issues.

3. Improves comparability of revenue recognition practices across entities, industries, jurisdictions, and capital markets.

4. Provides more useful information to users of financial statements through improved disclosure requirements.

5. Simplifies the preparation of financial statements by reducing the number of requirements to which an entity must refer.

The core principle of ASU 2014-09 is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 is effective for annual reporting periods beginning after December 15, 2016, including interim periods within such annual period. FASB is considering a one year deferral of ASU 2014-09. Early adoption is not permitted. We are currently evaluating this ASU in order to determine whether or not its adoption will have a material impact on our results of operations, cash flows or financial position.

In April 2014, FASB issued ASU No. 2014-08 “Presentation of Financial Statements (Topic 205) and Property, Plant and Equipment (Topic 360)” (“ASU 2014-08”). The objective of ASU 2014-08 is to address issues in Subtopic 205-20, “Presentation of Financial Statements – Discontinued Operations”, that give rise to complexity and difficulties in practice. Generally, ASU 2014-08 is effective for discontinued operations that occur within annual periods beginning on or after December 31, 2014, and interim periods within those years. Early adoption is permitted, but only for discontinued operations that have not been reported in financial statements previously issued or available for issuance. We currently have no discontinued operations to report; consequently, adoption of ASU 2014-08 did not have a material impact on our results of operations, cash flows or financial position.

3. Property and Equipment

Property and equipment was:

	March 31, 2015		December 31, 2014
Equipment	$	311,500	$	306,400
Furniture		233,900		233,900
Leasehold improvements		167,600		167,600
		713,000		707,900
Less: accumulated depreciation and amortization		377,900		345,400
	$	335,100	$	362,500

Aggregate property and equipment depreciation and amortization expense was $32,500 and $53,300 during the three-month periods ended March 31, 2015 and 2014, respectively.

4. Liability Attributable to Warrants

On January 7, 2014, we entered into a securities purchase agreement (the “SPA”) with a limited number of institutional investors, pursuant to which we issued and sold for cash an aggregate 11,299,999 shares of our common stock at a purchase price of $0.30 per share (See Note 11). We also issued warrants to the investors for no additional consideration to purchase an aggregate 5,650,001 shares of our common stock at an exercise price of $0.40 per share from January 7, 2014 through January 7, 2019.

Under certain conditions of the SPA that were to expire no later than January 7, 2015, we could have been required to issue a variable number of additional warrants to the investors at a below-market value exercise price. Accordingly, we have concluded that the warrants issued to the investors are not indexed to our common stock; therefore, the fair value of these warrants was recorded as a liability of $1,356,000 on January 7, 2014 on our Balance Sheet. Since these conditions did not occur as of January 7, 2015, we have reclassified the warrant from liability to equity.

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Using a binomial pricing model, we calculated the fair value of the warrants issued to the investors on January 7, 2015 to be $407,300. We used the following assumptions in the binomial pricing model to derive the fair value: estimated volatility 113%; annualized forfeiture rate 0%; expected term 4.1 years; estimated exercise factor 3.5; risk free interest rate 1.20; and dividends 0.

Changes in fair value of the warrants liability are recognized in other income (expense), except for changes in the fair value of the warrants issued to ipCapital, which are recognized as a component of general and administrative expense in the condensed consolidated statement of operations.

We used the exercise price of the warrants, as well as the fair market value of our common stock, to determine the fair value of our warrants. The exercise price for warrants issued in conjunction with the 2011 Transaction, including those issued to the placement agent, was either $0.20 or $0.26 per share, and was $0.26 per share for the warrants issued to ipCapital.

The fair market value of our common stock was $0.17 and $0.20 per share as of March 31, 2015 and 2014, respectively. We used a binomial pricing model to determine the fair value of our warrants liability as of March 31, 2015 and December 31, 2014, the balance sheet dates, using the following assumptions:

	Estimated Volatility			Annualized Forfeiture Rate		Expected Term (Years)		Estimated Exercise Factor		Risk-Free Interest Rate			Dividends
2011 Transaction
March 31, 2015		110	%		—		1.44		3.5		0.40	%		—
December 31, 2014		104	%		—		1.69		3.5		0.56	%		—
2014 Transaction
March 31, 2015		—			—		—		—		—			—
December 31, 2014		114	%		—		4.08		3.5		1.35	%		—
ipCapital
March 31, 2015		107	%		—		1.56		4.0		0.44	%		—
December 31, 2014		105	%		—		1.81		4.0		0.61	%		—

The following table is a reconciliation of the warrants liability measured at fair value using significant unobservable inputs (Level 3) for the three months ended March 31, 2015:

Warrants liability – December 31, 2014 fair value	$	647,300
Change in fair value of warrant liability recorded in other income		55,100
Change in fair value of warrant liability recorded in general and administrative expense		(400	)
Reclassification of 2014 PIPE Warrant to Equity		(407,300	)
Warrants liability – March 31, 2015 fair value	$	294,700

The following tables reconcile the total number of warrants outstanding for the periods indicated:

For the Three-Month Period Ended March 31, 2015 

	Beginning Outstanding		Issued		Exercised		Ending Outstanding
2011 Transaction		10,302,500		—		—		10,302,500
2014 Transaction		5,650,001		—		—		5,650,001
Exercise Agreement		4,500,000		—		—		4,500,000
ipCapital		400,000		—		—		400,000
Consultant Warrant (1)		169,273		—		—		169,273
Offer to Exercise		152,500		—		—		152,500
Total		21,174,274		—		—		21,174,274

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For the Three-Month Period Ended March 31, 2014 

	Beginning Outstanding		Issued		Exercised		Ending Outstanding
2011 Transaction		11,302,500		—		1,000,000		10,302,500
2014 Transaction		—		5,650,001		—		5,650,001
Exercise Agreement		4,500,000		—		—		4,500,000
ipCapital		400,000		—		—		400,000
Consultant Warrant (1)		312,500		—		—		312,500
Offer to Exercise		152,500		—		—		152,500
Total		16,667,500		5,650,001		1,000,000		21,317,501

(1) On February 11, 2014, we served notice to a former investor relations firm that we were cancelling our consulting agreement with them, with such cancellation to be effective April 11, 2014. Under the terms of the agreement, 169,273 of the warrants that had been issued to such firm will have vested as of the effective cancellation date, and 143,227 will ultimately be forfeited.

5. Severance Liability

During 2012, we entered into a separation agreement and a release with our former Chief Executive Officer and member of our board of directors, and in 2013 we entered into a separation agreement and a release with a former vice president level employee. Under the terms of these agreements and releases, we agreed to provide each individual with salary continuation and medical coverage payments for predetermined lengths of time. In addition, we agreed to provide the former Chief Executive Officer with certain stock option benefits including the grant of an additional stock option, accelerated vesting of all then-outstanding options previously granted to him, and an extension of the post-employment exercise period for all of his options, including the newly granted one. All costs associated with the modification of his options and the costs of the new option grant were immediately recognized upon his separation.

In July of 2014 we agreed to provide a terminated employee a lump sum salary payment and 4 months of medical coverage payments which ended December 31, 2014. 

As of December 31, 2014 and March 31, 2015, $0 remained outstanding associated with the severance liabilities. During the three-month period ended March 31, 2014, we made total payments of $47,700 to individuals whom these severance amounts were due.

6. Deferred Rent

We amended our office lease during 2013. On February 1, 2014, we moved our corporate offices to a different building within the same office complex owned and operated by our landlord in Campbell, California, where our corporate offices had been located prior to February 1, 2014. Since the new space is controlled by the same landlord, we considered the lease amendment to be a modification to our preexisting lease; accordingly, we are amortizing the remaining balance in deferred rent immediately prior to February 1, 2014 over the remaining term of the modified amended lease. Additionally, our landlord provided us with $103,400 of leasehold improvements on the new space that we are amortizing over the remaining term of the amended lease. All of the prior leasehold improvements that had not been previously amortized were accelerated and recognized in their entirety from the time of the amendment through January 2014, prior to the move.

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As of March 31, 2015 deferred rent was:

Component	Current Liabilities		Long-Term Liabilities		Total
Deferred rent expense	$	8,200	$	42,000	$	50,200
Deferred rent benefit		39,700		102,600		142,300
	$	47,900	$	144,600	$	192,500

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As of December 31, 2014 deferred rent was:

Component	Current Liabilities		Long-Term Liabilities		Total
Deferred rent expense	$	4,800	$	45,700	$	50,500
Deferred rent benefit		39,700		112,500		152,200
	$	44,500	$	158,200	$	202,700

Deferred rent expense represents the remaining balance of the aggregate free rent we received from our landlord and escalations that are being recognized over the life of the lease as a component of rent expense. Deferred rent benefit relates to the unamortized portion of the leasehold improvements provided to us by our landlord (i.e., incentives) that we are recognizing on a straight-line basis as a reduction to rent expense over the term of the lease.

7. Stock-Based Compensation

The following table summarizes the stock-based compensation expense, net of amounts capitalized, we recorded in our Unaudited Condensed Consolidated Statements of Operations for the three-month periods ended March 31, 2015 and 2014, respectively, by classification:

	Three Months Ended March 31,
Statement of Operations Classification	2015		2014
Costs of revenue	$	3,000	$	(600	)
Selling and marketing expense		29,300		5,900
General and administrative expense		168,100		137,200
Research and development expense		21,800		27,200
	$	222,200	$	169,700

The following table presents summaries of the status and activity of our stock option awards for the three-month period ended March 31, 2015.

	Number of Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Terms (Years)		Aggregate Intrinsic Value
Outstanding – December 31, 2014		10,287,999		$	0.18
Granted		—			—
Exercised		(77,500	)		0.05
Forfeited or expired		—			—
Outstanding – March 31, 2015		10,210,499		$	0.18		7.07	$	194,100

Of the options outstanding as of March 31, 2015, 6,859,298 were vested, 3,304,385 were estimated to vest in future periods and 46,816 were estimated to be forfeited prior to their vesting. As of March 31, 2015, there was approximately $332,000 of total unrecognized compensation cost, net of estimated forfeitures, related to unvested stock options. Such cost is expected to be recognized over a weighted-average period of approximately ten months.

All options are exercisable immediately upon grant. Options vest ratably, generally over a 33-month period commencing in the fourth month after the grant date. We have the right to repurchase common stock issued upon the exercise of an option upon an optionee’s termination of service to us prior to full vesting at the option’s exercise price.

The following table presents summaries of the status and activity of our restricted stock awards for the three-month period ended March 31, 2015. We include the common stock underlying the restricted stock award in shares outstanding once such common stock has vested and the restriction has been removed (“releases” or “released”).The common stock vests ratably, generally over a 33-month period commencing in the fourth month after the award date.

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	Number of Shares			Weighted Average Grant Date Fair Value		Weighted Average Remaining Recognition Period (Years)		Unrecognized Compensation Cost Remaining
Unreleased – December 31, 2014		4,314,983		$	0.18
Awarded		225,000			0.16
Released		(437,578	)		0.20
Forfeited		(80,221	)		0.17
Unreleased – March 31, 2015		4,022,184		$	0.17		2.27	$	580,900

As of March 31, 2015, there was approximately $580,900 of total unrecognized compensation cost, net of estimated forfeitures, related to unreleased restricted stock awards. That cost is expected to be recognized over a weighted-average period of approximately twenty-six months.

8. Revenue

Revenue for the three-month periods ended March 31, 2015 and 2014 was:

					2015 Over (Under) 2014
Revenue	2015		2014		Dollars			Percent
Software Licenses
Windows	$	614,000	$	510,100	$	103,900			20.4	%
UNIX/Linux		170,000		104,000		66,000			63.5	%
		784,000		614,100		169,900			27.7	%
Software Service Fees
Windows		485,800		511,800		(26,000	)		-5.1	%
UNIX/Linux		188,300		198,200		(9,900	)		-5.0	%
		674,100		710,000		(35,900	)		-5.1	%
Other		13,000		16,100		(3,100	)		-19.3	%
Total Revenue	$	1,471,100	$	1,340,200	$	130,900			9.8	%

9. Cost of Revenue

Cost of revenue for the three-month periods ended March 31, 2015 and 2014 was:

					2015 Over (Under) 2014
	2015		2014		Dollars			Percent
Software service costs	$	41,700	$	60,500	$	(18,800	)		-31.1	%
Software product costs		62,800		74,300		(11,500	)		-15.5	%
	$	104,500	$	134,800	$	(30,300	)		-22.5	%

10. Capitalized Software Development Costs

Capitalized software development costs consisted of the following:

	March 31, 2015			December 31, 2014
Software development costs	$	1,135,900		$	1,135,900
Accumulated amortization		(781,200	)		(727,200	)
	$	354,700		$	408,700

Amortization of capitalized software development costs is a component of costs of revenue. Capitalized software development costs amortization aggregated $54,000 and $68,000 during the three-month periods ended March 31, 2015, and 2014, respectively.

We recorded $0 capitalized software development costs during the three-month periods ended March 31, 2015 and 2014.

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11. Stockholders’ Equity

2014 Private Placement

During the three-month period ended March 31, 2014, we issued and sold for cash an aggregate 11,299,999 shares of our common stock at a purchase price of $0.30 per share in the 2014 private placement that resulted in gross proceeds of $3,390,000 (See Note 4).

The 2014 private placement was recorded into the financial statements as follows:

Gross cash proceeds	$	3,390,000
Less: gross proceeds allocated to warrants liability – investors		(1,356,000	)
Gross proceeds allocated to additional paid-in capital and common stock		2,034,000
Less: cash issuance costs – legal fees		(20,000	)
Recorded in additional paid-in capital and common stock	$	2,014,000

In conjunction with the 2014 private placement, we recorded a warrants liability of $1,356,000 as of January 7, 2014 on our Balance Sheet. Certain conditions under the SPA which expired on January 7, 2015 would have required us to issue additional warrants at below-market value exercise price (see Note 4). These conditions did not occur and ended as of January 7, 2015. Therefore, we have reclassified the related liability to equity as of January 7, 2015 on our Balance Sheet.

Accounting fees associated with the 2014 private placement, which aggregated approximately $9,600, were deemed immaterial and were charged to operating expense during the three-month period ended March 31, 2014.

Stock Repurchase Program

During each of the three-month periods ended March 31, 2015 and 2014, we did not repurchase any of our common stock under the terms of our Board-approved $1,000,000 stock repurchase program (“stock repurchase program”). As of March 31, 2015, approximately $782,600 remained available for future purchases under this program. We are not obligated to repurchase any specific number of shares and the stock repurchase program may be suspended or terminated at our discretion.

12. Commitments and Contingencies

On February 1, 2014, we relocated our corporate offices to a larger suite within our landlord’s office complex in Campbell, California. We are currently leasing 10,659 square feet under a five-year lease that, unless renewed, will expire in October 2018. The following table sets forth the minimum lease payments we will be required to make throughout the remainder of the lease:

Year	Amount
Remainder of 2015	$	338,800
2016		464,200
2017		478,100
2018		366,600
	$	1,647,700

13. Supplemental Disclosure of Cash Flow Information

We disbursed $300 for the payment of interest expense during the three-month periods ended March 31, 2015. Such disbursement was for capital lease payments. We did not disburse any cash for the payment of interest expense during the three-month period ended March 31, 2014. We disbursed $480 for the payment of income taxes during the three-month period ended March 31, 2014. Such disbursement was made for the payment of foreign income taxes related to the operation of our Israeli subsidiary, GraphOn Research Labs, Ltd. We did not disburse any cash for the payment of income taxes during the three-month period ended March 31, 2014.

During the three-month period ended March 31, 2015 we reduced our warrants liability by $55,100, which was recorded in the Condensed Consolidated Statement of Operations. Such reduction reflected the aggregate fair value adjustments we recorded during such period and in addition to reclassified our 2014 PIPE warrant to equity. No cash was disbursed in conjunction with these items (See Note 4).

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14. Earnings (Loss) Per Share

Earnings or loss per share is calculated by dividing the net income or loss for the period by the weighted average number of shares of common stock outstanding during the period. Diluted earnings or loss per share (“Diluted EPS”) is calculated by dividing the net income or loss for the period by the total of the weighted average number of shares of common stock outstanding during the period plus the effects of any dilutive securities. Diluted EPS considers the impact of potentially dilutive securities except in periods in which there is a loss because the inclusion of such potential shares of common stock would have an anti-dilutive effect. During all periods presented in our Condensed Consolidated Statements of Operations, potentially dilutive securities included shares of common stock potentially issuable upon exercise of stock options, release of unvested restricted stock awards and exercise of warrants. Diluted EPS excludes the impact of potential issuance of shares of common stock related to our stock options in periods in which the exercise price of the stock option is greater than the average market price of our common stock during such periods.

For the three-month periods ended March 31, 2015 and 2014, 35,406,957 and 35,557,372 shares of common stock equivalents, respectively, were excluded from the computation of dilutive loss per share since their effect would be anti-dilutive.

15. Segment Information

The Company’s operations have historically been conducted and reported in two segments, GO-Global and hopTo, each representing a specific product line and dedicated operating resources. During the fourth quarter of 2014, the Company developed its hopTo Work product and go to market strategy, and beginning in January of 2015, it reorganized to a functional organization structure with consolidated decision authority over engineering, product management, sales and marketing resources. Resources in these functional departments are now shared for the development, sales and support of both the GO-Global and hopTo products. The GO-Global and hopTo Work products also have similar target customers, distribution channels, and common reseller partners.

Beginning with the three-month period ended March 31, 2015, the Company will no longer report financial results in two segments. Software revenue and services revenue for the hopTo Work product will be included in the Windows software and Windows services revenue, respectively.

Revenue by country for the three-month periods ended March 31, 2015 and 2014 was as follows:

	Three Months Ended March 31,
Revenue by Country	2015		2014
United States	$	751,400	$	551,000
Germany		67,100		96,400
Brazil		169,500		157,000
Other Countries		483,100		535,800
Total	$	1,471,100	$	1,340,200

16. Related Party Transactions

Tamalpais Partners LLC

Steven Ledger, former Chairman of our Board of Directors, is the founder and managing partner of Tamalpais Partners LLC, (“Tamalpais”) a business consulting firm. On March 17, 2014, contemporaneous with Mr. Ledger’s resignation from our board, we mutually agreed with Mr. Ledger to terminate our consulting agreement with Tamalpais. We paid Tamalpais $0 and $12,000 for the three-month periods ended March 31, 2015 and 2014, respectively, for services rendered to us under the terms of this consulting agreement. No amounts were due Tamalpais at either March 31, 2015 or 2014.

When he resigned as our Chairman, we entered into a short-term consulting agreement with Mr. Ledger that was separate from the terminated agreement with Tamalpais. Under that exclusive consulting agreement, Mr. Ledger began providing consulting services to our Board of Directors for a term that commenced upon his resignation, which ended on August 15, 2014. The consulting agreement also provided that Mr. Ledger’s then currently unvested options to purchase our common stock granted during his term as a director would continue to vest during the term of the consulting agreement in accordance with their original terms. In addition, the agreement provided that the period in which to exercise such options was extended through the end of 2014. Mr. Ledger will also be reimbursed for his reasonable expenses incurred in connection with rendering services to our Board of Directors in accordance with our expense reimbursement policies. The consulting agreement also contains confidentiality, mutual non-disparagement and independent contractor-related provisions.

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ipCapital Group, Inc.

On October 11, 2011, we engaged ipCapital Group, Inc. (“ipCapital”), an affiliate of John Cronin, who is one of our directors, to assist us in the execution of our strategic decision to significantly strengthen, grow and commercially exploit our intellectual property assets. Our engagement agreement with ipCapital, which has been amended three times, affords us the right to request ipCapital to perform a number of diverse services, employing its proprietary processes and methodologies, to facilitate our ability to identify and extract from our current intellectual property base new inventions, potential patent applications, and marketing and licensing opportunities.

For the three-month periods ended March 31, 2015 and 2014, there were no services performed, additional charges incurred or payments made to ipCapital under the agreement.

In addition to the fees we agreed to pay ipCapital for its services, we issued ipCapital a five-year warrant to purchase up to 400,000 shares of our common stock at an initial price of $0.26 per share. Half of the warrant (200,000 shares) has a time-based vesting condition, with such vesting to occur in three equal annual installments. The vesting installments occurred on October 11, 2012 and October 11, 2013, and October 11, 2014, respectively. The remaining 200,000 shares became fully vested upon the completion to our satisfaction of all services that we requested from ipCapital under the engagement agreement, prior to the signing of the amendments. Such performance was deemed satisfactory during 2012. We believe that these fees, together with the issuance of the warrant, constitute no greater compensation than we would be required to pay an unaffiliated person for performing substantially similar services.

The exercise price of the warrant issued to ipCapital could be reset to below-market value. Consequently, we have concluded that such warrant is not indexed to our common stock and should be recorded as a liability. We recognize the warrants liability over their vesting period, and in accordance with the liability method of accounting, we re-measure the fair value of the accrued warrants at each balance sheet date and recognize the change in fair value as general and administrative compensation expense. (See Note 4). We recognized $400 and $49,800 as a component of general and administrative expense during the three-month periods ended March 31, 2015 and 2014, respectively, resulting from the change in fair value.

ipCapital Licensing Company I, LLC

On February 4, 2013, we entered into an IP Brokerage agreement with ipCapital Licensing Company I, LLC (“ipCLC”). John Cronin is a partner at ipCLC. Pursuant to the agreement, we have engaged ipCLC, on a no-retainer basis, to identify and present us with candidates who may be seeking to acquire a certain limited group of our patents unrelated to our current business strategy. If during the applicable term we enter into an agreement with any candidate presented by ipCLC to acquire or otherwise exploit the covered patents, we will pay ipCLC a fee of ten percent (10%) of the royalties, fees, and other consideration paid over the life of the agreement.

The agreement is effective as of February 4, 2013, and will end 18 months after we or ipCLC serve 60 days written notice of termination to the other party (with earlier termination possible in the event of a material breach). The agreement provides for customary confidentiality undertakings, limitations on ipCLC’s total liability and mutual indemnification provisions.

We paid no compensation to ipCLC under the terms of the IP Brokerage Agreement for the periods ending March 31, 2015 and 2014, respectively and no amounts were due ipCLC under its terms as of March 31, 2015.

We believe the terms of the agreement are fair and reasonable to us and are at least as favorable as those that could be obtained on an arms’ length basis.

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ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Introduction

We are developers of software productivity products for mobile devices such as tablets and smartphones, and application publishing software solutions. Our newest product, which is called hopTo, will be marketed to both consumers and businesses. hopTo provides mobile end users with a productivity workspace for their mobile devices that allows them to manage, share, view, and edit their documents, regardless of where they are stored. We launched the first public release of hopTo through Apple’s App Store on April 15, 2013 and the first commercial version of hopTo on November 14, 2013. This release was targeted at Apple’s tablet devices, the iPad and the iPad Mini. Future releases will be targeted at other devices such as Apple’s iPhone, as well as competing devices such as those based on Google’s Android platform. From the initial launch through 2014, we made hopTo available for free. On November 10, 2014, we launched the first version of hopTo Work, a version of the hopTo workspace made available to businesses for a fee. hopTo Work expands upon the core capabilities of hopTo by providing mobile access to applications that businesses rely on for their daily operations. On March 24, 2015, we launched version 2.0 of hopTo Work which included availability of the product on Google’s Android Platform.

In addition to hopTo, we also sell a family of products under the brand name GO-Global, which is a software application publishing business and is our sole revenue source at this time. GO-Global is an application access solution for use and/or resale by independent software vendors (ISVs), corporate enterprises, governmental and educational institutions, and others, who wish to take advantage of cross-platform remote access and Web-enabled access to their existing software applications, as well as those who are deploying secure, private cloud environments.  

Over the years, we have also made significant investments in intellectual property (IP). We have filed many patents designed to protect the new technologies embedded in hopTo, and we plan to continue to aggressively invest in the creation and protection of new IP as we continue to develop hopTo and other products.

Corporate Background

We are a Delaware corporation, founded in May 1996. Our headquarters are located at 1919 S. Bascom Avenue, Suite 600, Campbell, California, 95008, our toll-free phone number is 1-800-472-7466, and our phone number for local and international calls is 408-688-2674. We have an office in Concord, New Hampshire, and we have remote employees located in various states, as well as internationally in the United Kingdom and Israel. Our corporate Internet Website is http://www.hopto.com. The information on our website is not part of this quarterly report.

Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and any amendments to such reports filed with or furnished to the SEC under sections 13(a) or 15(d) of the Securities Exchange Act of 1934 are made available free of charge on our corporate Internet Website (click “Investors” on our home page, click “Financial Reporting” and then click “SEC Filings”) as soon as reasonably practicable after such reports are electronically filed with or furnished to the SEC.

The hopTo Opportunity

The adoption of mobile devices, such as smartphones and tablets, in the workplace has revealed the need for a mobile application and content access platform that addresses a range of mobile productivity challenges for professional/consumer users (“prosumers”), small and home offices (“SOHO”), small- to medium-sized businesses (“SMB” or “SMBs”), and Enterprise organizations. We believe a mobile platform that addresses this need will become a critical asset for any size organization, IT department, and for the most productive end user experience.

Focusing more specifically on the larger SMB/Enterprise business markets, adoption of mobile devices is reshaping how organizations deliver, secure, and manage applications and content on these devices. This has also introduced challenges for organizations to integrate the devices into daily workflows and manage security on both company-owned and employee-owned devices.

From a workflow standpoint, we believe business users want mobile solutions that enable them to replace or extend their traditional desktop PC environment with mobile devices, which is often easier said than done. PC users have enjoyed a rich ecosystem of applications and technologies that has been growing for over 30 years, and have come to expect an exceptional level of power and flexibility to get their work done. Many solutions have been developed to meet this challenge but generally have failed, in particular for the iOS and Android devices that dominate both the consumer and business markets.

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The hopTo Work Product

In March, 2014, we announced our hopTo Work product which was subsequently released on November 11, 2014. hopTo Work builds upon the hopTo product (discussed below), bringing its core mobile productivity features to SMB/Enterprise users, with additional security and manageability functions. It targets Information Technology (“IT”) departments that are concerned with protecting and managing access to sensitive data, controlling access to business applications, compliance with internal policies and, in some cases, government regulations.

With hopTo Work, IT departments will be able to more easily and safely address these concerns while integrating mobile technology into their networks and user workflows. The initial version of hopTo Work leverages a customer’s existing Microsoft RDS infrastructure – a significant portion of Microsoft’s on-premise customer base – which enables an IT department to have a mobile access for end users in minutes.

It will further enable business users to make a smooth and simple transition from PCs to mobile devices for all or part of their work. As with the original prosumer/SOHO version of hopTo, the premise of hopTo Work is that mobile users in SMB/Enterprise businesses using devices such as the Apple iPad would like to travel with just their tablets but still have the benefits of secure access and editing capabilities for documents in their corporate cloud or network storage, personal cloud storage, and on their Windows computers. In addition, hopTo Work delivers the capability to mobilize Windows applications that businesses and organizations rely on for their daily operation.

hopTo Work is designed not only to assist users in performing operations on their iPads that typically require a Mac or Windows PC, but to do so within the data protection and access control policies of their IT organizations. Our view is that current solutions are limited because of the need to install special applications and procedures that are a hindrance to user productivity. We address these issues with the following features:

● The ability to access and manage all of the user’s files and documents, no matter where they are stored. This includes enterprise document management systems, enterprise-class network servers and cloud storage services, or the user’s PC.

● The ability to view, create, edit, manage, and share files through a native touch-screen mobile device interface rather than apps designed for legacy PC desktops with keyboards and mice.

● The ability to access Windows applications and use them in a touch-friendly manner consistent with end user expectations for mobile devices.

● The ability to multitask, which means working with multiple documents and applications at the same time, side-by-side. The iPad is inherently a single document environment, which we believe is a major shortcoming for most users.

● The ability to view, create, and edit Microsoft Office documents that are 100% compatible with Microsoft Office, thus allowing users to collaborate with other users who are using Microsoft Office on a Mac or a Windows PC.

● The ability to address the problems of document sprawl, giving users easy access to manage, search, and browse the data they need across storage devices and cloud services, but without allowing sensitive documents to leave the corporate network undetected.

● The ability for IT departments to implement a “bring-your-own-device” (BYOD) solution that integrates mobile device use into daily workflows and enhances user productivity without compromising security, requiring additional server infrastructure, or putting an additional burden on the user experience.

● The ability for IT departments to grant and revoke access to anyone for any data anywhere. Employees must have the ability to access corporate internal data (documents, file and applications) efficiently but without jeopardizing security.

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hopTo Work Target Markets

We view hopTo Work, with its additional application mobilization, security and manageability features, as a product that appeals to the SMB and Enterprise markets. We expect sales strategies for the hopTo Work versions of the product to involve a combination of strategic partnerships with various relevant enterprise software companies, a sales partner channel, and a direct sales team, just to name a few. hopTo Work is a paid offering that is currently sold on a perpetual license plus maintenance model. Other models such as subscription based pricing might be made available in the future based on market requirements.

The hopTo Consumer Product

hopTo also offers a comprehensive productivity workspace for mobile devices (currently for the Apple iPad) that empowers mobile users by offering them functionalities similar to what they’ve come to expect from their PCs. For example, hopTo aggregates files and documents from multiple storage silos (such as Box, Dropbox, Google Drive, Microsoft OneDrive, or the user’s PC) into a single touch-friendly workspace. From within this workspace, users are able to search for documents in the workspace (which includes their cloud storage silos and their PC), view, edit, and share their documents, and import photos from their iPad camera roll or Google Image from Web.

hopTo provides powerful document editing capabilities that leverage legacy Windows applications, such as Microsoft Office, to give users a rich, native editing feature set. Its high degree of compatibility with Microsoft Office enables easy collaboration with other users running Microsoft Office on Mac or Windows PCs. hopTo is unique in that it both leverages legacy applications for document editing and provides a touch-friendly user experience that, in our view, none of our competitors have achieved, and which mobile users will view as highly desirable.

The first commercially available version of hopTo was released on November 14, 2013, through the Apple App Store. hopTo currently runs on the Apple iPad family of devices, and we may make it available for other devices, such as the Apple iPhone and for devices based on the Google Android platform. This product is targeted at users who are transitioning from PC to mobile—to provide access to their content regardless of where it’s stored, along with rich document editing capabilities, multitasking, file management, and more. The hopTo product is currently offered free of charge. Based on usage patterns and market acceptance we may, at some point in the future, decide to charge fees for this offering.

Our Intellectual Property

We believe that intellectual property (“IP”) is a business tool that potentially maximizes our competitive advantages and product differentiation, grows revenue opportunities, encourages collaboration with key business partners, and protects our long-term growth opportunities. Strategic IP development is therefore a critical component of our overall business strategy. It is a business function that consistently interacts with our research and development, product development, and marketing initiatives to generate further value from those operations.

We rely primarily on trade secret protection, copyright law, confidentiality, and proprietary information agreements to protect our proprietary technology and registered trademarks. Despite our precautions, it may be possible for unauthorized third parties to copy portions of our products, or to obtain information we regard as proprietary. The loss of any material trade secret, trademark, trade name or copyright could have a material adverse effect on our results of operations and financial condition. We intend to defend our proprietary technology rights; however, we cannot give any assurance that our efforts to protect our proprietary technology rights will be successful.

We also currently hold rights to patents. We regularly file patent applications to protect innovations arising from our research, development and design, and are currently pursuing additional patent applications.

We do not believe our products infringe on the rights of any third parties, but we can give no assurance that third parties will not assert infringement claims against us in the future, or that any such assertion will not result in costly litigation or require us to obtain a license to proprietary technology rights of such parties.

ipCapital Group, Inc.

On October 11, 2011, we engaged ipCapital Group, Inc., (“ipCapital”) an affiliate of John Cronin, who is one of our directors, to assist us in the execution of our strategic decision to significantly strengthen, grow and commercially exploit our intellectual property assets. Our engagement agreement with ipCapital, which has been amended three times, affords us the right to request ipCapital to perform a number of diverse services, employing its proprietary processes and methodologies, to facilitate our ability to identify and extract from our current intellectual property base new inventions, potential patent applications, and marketing and licensing opportunities.

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As a result of ipCapital’s work under the engagement agreement, as amended, as of May 8, 2015, 173 new patent applications have been filed. Of these 173 applications, 20 patents have been granted by the USPTO. We have also received notice from the USPTO that 5 additional patent applications have been allowed and will ultimately issue as US patents in the next 60-90 days. We expect to file more applications in 2015.

ipCapital Licensing Company I, LLC

On February 4, 2013, we entered into an IP Brokerage agreement with ipCapital Licensing Company I, LLC (“ipCLC”). John Cronin is a partner at ipCLC. Pursuant to the agreement, we have engaged ipCLC, on a no-retainer basis, to identify and present us with candidates who may be seeking to acquire a certain limited group of our patents unrelated to our current business strategy. If during the applicable term we enter into an agreement with any candidate presented by ipCLC to acquire or otherwise exploit the covered patents, we will pay ipCLC a fee of ten percent (10%) of the royalties, fees, and other consideration paid over the life of the agreement.

Our GO-Global Software Products

Our GO-Global product offerings, which currently are our only revenue source, can be categorized into product families as follows:

● GO-Global for Windows: Allows access to Windows-based applications from remote locations and a variety of connections, including the Internet and dial-up connections. The Windows applications run on a central computer server along with GO-Global Windows Host software. This allows the applications to be accessed remotely via GO-Global Client software, or a Web browser, over many types of data connections, regardless of the bandwidth or operating system. Web-enabling is achieved without modifying the underlying application’s code or requiring costly add-ons.

● GO-Global for UNIX: Allows access to UNIX and Linux-based applications from remote locations and a variety of connections, including the Internet and dial-up connections. The UNIX/Linux applications run on a central computer server along with the GO-Global for UNIX Host software. This allows the applications to be accessed and run remotely via GO-Global Client software or a Web browser without having to modify the application’s code or requiring costly add-ons.

● GO-Global Client: We offer a range of GO-Global Client software that allows remote application access from a wide variety of local, remote and mobile platforms, including Windows, Linux, UNIX, Apple OS X and iOS, and Google Android. We plan to continue to develop GO-Global Client software for new portable and mobile devices.

Critical Accounting Policies

We believe that several accounting policies are important to understanding our historical and future performance. We refer to these policies as “critical” because these specific areas require us to make judgments and estimates about matters that are uncertain at the time we make the estimates. Actual results may differ from these estimates. For a summary of our critical accounting policies, please refer to our 2014 10-K Report and Note 2 to our Notes to Unaudited Condensed Consolidated Financial Statements.

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Results of Operations for the Three-Month Periods Ended March 31, 2015 and 2014

The following operating results should be read in conjunction with our critical accounting policies.

Revenue

Revenue for the three-month periods ended March 31, 2015 and 2014 was:

					2015 Over (Under) 2014
Revenue	2015		2014		Dollars			Percent
Software Licenses
Windows	$	614,000	$	510,100	$	103,900			20.4	%
UNIX/Linux		170,000		104,000		66,000			63.5	%
		784,000		614,100		169,900			27.7	%
Software Service Fees
Windows		485,800		511,800		(26,000	)		-5.1	%
UNIX/Linux		188,300		198,200		(9,900	)		-5.0	%
		674,100		710,000		(35,900	)		-5.1	%
Other		13,000		16,100		(3,100	)		-19.3	%
Total Revenue	$	1,471,100	$	1,340,200	$	130,900			9.8	%

Revenue

Our software revenue is currently almost entirely related to our GO-Global product line, and historically has been primarily derived from product licensing fees and service fees from maintenance contracts. The majority of this revenue has been earned, and continues to be earned, from a limited number of significant customers, most of whom are resellers. Many of our resellers (a “stocking reseller”) purchase software licenses that they hold in inventory until they are resold to the ultimate end user. We defer recognition of revenue from these sales (on our Condensed Consolidated Balance Sheet under the caption “Deferred Revenue”) until the stocking reseller sells the underlying software licenses to the ultimate end user. Consequently, if any of our significant stocking resellers materially change the rate at which they resell our software licenses to the ultimate end user, our software licenses revenue could be materially impacted.

When a software license is sold directly to an end user by us, or by one of our resellers who does not stock licenses into inventory, revenue is recognized immediately upon shipment, assuming all other criteria for revenue recognition are met. Consequently, if any significant end user customer substantially changes its order level, or fails to order during the reporting period, whether the order is placed directly with us or through one of our non-stocking resellers, our software licenses revenue could be materially impacted.

Almost all stocking resellers maintain inventories of our Windows products; few stocking resellers maintain inventories of our UNIX products.

Software Licenses

The increase in Windows software licenses revenue was primarily due to higher license purchases from certain of our OEM partners during the three month period ending March 31, 2015.

Software licenses revenue from our UNIX/Linux products increased primarily due to increased revenue from certain of our U.S government customers which was partially offset by lower aggregate revenue from our resellers and end users, particularly our European telecommunications customers. During 2013, we learned that one of our significant European telecommunications customers, Ericsson, would no longer be ordering product licenses from us as their technology no longer utilized our GO-Global product.

We have implemented plans to stabilize the GO-Global revenue and we expect that revenue in 2015 from GO-Global product licenses will approximate that of 2014.

We anticipate generating revenue from hopTo Work during 2015.

Software Service Fees

The slight decrease in software service fees revenue attributable to our Windows products during the three-month period ended March 31, 2015, as compared to the same period of the prior year, was primarily due to the timing of customer renewals of maintenance contacts.

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The decrease in service fees revenue attributable to our UNIX products for the three-month period ended March 31, 2015, as compared with the same period of the prior year, was primarily the result of the low level of our UNIX product sales throughout the current and prior year and a decrease in maintenance contract renewals. The majority of this decrease was attributable to our European telecommunications customers, including Ericsson, as discussed above.

We expect that software service fees for 2015 will approximate those for 2014, as we expect that increases in revenue from Windows maintenance contracts will be offset by the decline in revenue from UNIX maintenance contracts.

Other

The decrease in other revenue was primarily due to a decrease in in professional services, which was partially offset by an increase and private labeling fees. Private labeling fees and professional services fees do not comprise a material portion of our revenue streams, nor do we anticipate that they will, and they can vary from period to period.

Costs of Revenue

Costs of revenue are comprised primarily of software service costs, which represent the costs of customer service, and software product costs, which are primarily comprised of the amortization of capitalized software development costs, and costs associated with licenses for third party software included in our product offerings. We incur no shipping or packaging costs as all of our deliveries are made via electronic means over the Internet.

Under accounting principles generally accepted in the United States (“GAAP”), development costs for new product development, after technological feasibility is established, are recorded as “capitalized software” on our Condensed Consolidated Balance Sheet. Such capitalized costs are subsequently amortized as cost of revenue (software product costs) over the shorter of three years or the remaining estimated life of the product. We recorded $0 capitalized software development costs during the three-month periods ended March 31, 2014 and 2013.

Amortization of capitalized software development costs was $54,000 and $68,000 during the three-month periods ended March 31, 2015 and 2014, respectively.

Cost of revenue was 7.1% and 10.1% of total revenue for the three-month periods ended March 31, 2015 and 2014, respectively.

Cost of revenue for the three-month periods ended March 31, 2015 and 2014 was:

					2015 Over (Under) 2014
	2015		2014		Dollars			Percent
Software service costs	$	41,700	$	60,500	$	(18,800	)		-31.1	%
Software product costs		62,800		74,300		(11,500	)		-15.5	%
	$	104,500	$	134,800	$	(30,300	)		-22.5	%

The decrease in software service costs was primarily due to lower customer support costs associated with GoGlobal upon release of the commercial version of hopTo and hopTo Work, we began charging costs associated with supporting the product to costs of revenue. We expect software service costs for 2015 to be slightly higher than those for 2014 as we expect an increase in the level of effort required to support the hopTo Work product as the customer base grows. This may require expansion of our customer support team.

The decrease in software product costs was primarily due to decreased costs in the software development cost in both Go Global and hopTo Work. Upon release of the commercial version of hopTo in late 2013, we began charging certain costs associated with it, including amortization of capitalized software development costs, and the costs of third party software we have licensed into hopTo, to cost of revenue.

We expect that software costs of revenue for 2015 will be lower than 2014 levels, due to these items.

Selling and Marketing Expenses

Selling and marketing expenses primarily consist of employee costs, outside services, advertising, public relations and travel and entertainment expense.

Selling and marketing expenses for the three-month period ended March 31, 2015 decreased by $150,400, or 23.1%, to $500,100, from $650,500 for the same period of 2014, and represented approximately 34.0% and 48.5% of revenue during these periods, respectively.

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The decrease in selling and marketing expenses was mainly due to a decrease in advertising and promotional costs associated with our hopTo product as we have transitioned from consumer oriented product to a product targeted at businesses.

We currently expect our full-year 2015 selling and marketing expenses to be higher than those for 2014 as we expect to continue to invest advertising and promotional resources into both our hopTo and GO-Global product lines.

General and Administrative Expenses

General and administrative expenses primarily consist of employee costs, depreciation and amortization, legal, accounting, other professional services (including those related to our patents), rent, travel and entertainment and insurance. Certain costs associated with being a publicly held corporation are also included in general and administrative expenses, as well as bad debts expense.

General and administrative expenses decreased by $103,800, or 10.3%, to $907,800, for the three-month period ended March 31, 2015, from $1,011,600 for the same period of 2014, and represented approximately 61.7% and 75.5% of revenue during these periods, respectively.

The decrease in general and administrative expense was primarily due to decreased legal expenses associated with activity related to our patents and other administrative matters.

We expect that general and administrative expense for 2015 will approximate 2014 levels.   

Research and Development Expenses

Research and development expenses consist primarily of employee costs, payments to contract programmers, travel and entertainment for all our engineers, and all rent for our leased engineering facilities.

Research and development expenses decreased by $183,100, or 13.6%, to $1,164,900, for the three-month period ended March 31, 2015, from $1,348,000 for the same period of 2014, and represented approximately 79.2% and 100.6% of revenue for these periods, respectively.

During the three-month periods ended March 31, 2015 and 2014, we capitalized $0 of software development costs.

The decrease in research and development expense is primarily due to lower employee costs associated with lower headcount as a result of reorganization of our hopTo team which was implemented during the three month period ended June 30, 2014.

We anticipate adding additional staff to our product development team during 2015 in order to fully execute our hopTo development plan however we anticipate that 2015 research and development expenses will approximate those for 2014.

Other Income (Expense) - Change in Fair Value of Warrants Liability

During the three-month period ended March 31, 2015, we reported non-cash loss related to the change in fair value of our Warrants Liability of $55,100, and during the same period of the prior year, we reported non-cash expense of $1,133,700 related to the change in fair value of our Warrants Liability. Such changes result from price changes in the market value for our common stock and can vary from period to period due to the exercise and/or issuance of warrants accounted for under the liability method. For further information regarding our Warrants Liability, see Note 4 to the Notes to Unaudited Condensed Consolidated Financial Statements.

Net Loss

Based on the foregoing, we reported net losses of $1,263,000 and $672,500 for the three-month periods ended March 31, 2015 and 2014, respectively.

Liquidity and Capital Resources

Our reported net loss for the three-month period ended March 31, 2015 of $1,263,000 included three significant non-cash items: depreciation and amortization of $86,500, which was primarily related to amortization of our capitalized software development costs; stock-based compensation expense of $222,200; and a loss in the change in value of our warrants liability of $55,100.

We invested $5,100 in capital expenditures during the three-month period ended March 31, 2015, primarily related to our new products development team, located in our office in Campbell, California.

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We are aggressively looking at ways to improve our revenue stream through the development, marketing and sale of new products. We have also streamlined our GO-Global operations in order to align its cost structure with its sales. Should business combination opportunities present themselves to us, and should such opportunities appear to make financial sense and add value for our shareholders, we will consider those opportunities.

We believe that as a result of the expected introduction of new products slated for 2015, our revenue will increase. During 2015, we expect to continue to prioritize the investment of our resources into the development of various new products, and we expect that certain of these investments may ultimately be capitalized as software development costs. Further, due to our expected investments in new products and continued investments in intellectual property, we expect our cash outflow from operations to increase. Based on our cash on hand as of March 31, 2015, the anticipation of continued revenue from our legacy GO-Global business and the anticipation of revenue from our hopTo Work product, we believe that we will have sufficient capital resources to support our operational plans for the next twelve months; however; implementation of our business plans for hopTo Work for the next twelve months will require capital from issuances of debt or equity, or significant revenue from our recently launched hopTo Work product.

There can be no assurance of new revenue from new or existing product lines or additional capital from debt or equity issuances.  In addition, issuances of new capital stock would dilute existing stockholders and may give the purchasers of new capital stock additional rights, preferences and privileges relative to existing stockholders.  There can be no assurance that additional capital necessary for full execution of our hopTo business strategy will be available on a timely basis, on reasonable terms or at all.

Cash

As of March 31, 2015, our cash balance was $1,971,800, as compared with $1,557,100 as of December 31, 2014, an increase of $414,700, or 26.6%. The increase primarily resulted from the cash provided by the payment received for a $1.5 million stocking order from one of our Go-Global ISV resellers. Such receipts were partially offset by the cash we used in our operations.

Accounts Receivable, net

At March 31, 2015 and December 31, 2014, we reported accounts receivable, net, of $454,000 and $2,211,300, respectively. Such amounts were reported net of the allowance for doubtful accounts, which allowances totaled $22,900 and $32,600 at March 31, 2015 and December 31, 2014, respectively. The decrease in accounts receivable, net, was mainly due to lower sales during the three-month period ended March 31, 2015, as compared with the three-month period ended December 31, 2014. We collect the significant majority of our quarter-end accounts receivable during the subsequent quarter; accordingly, increases or decreases in accounts receivable from one period to the next tends to be indicative of the trend in our sales from one period to the next. From time to time, we could have individually significant accounts receivable balances due us from one or more of our significant customers. If the financial condition of any of these significant customers should deteriorate, our operating results could be materially affected.

Stock Repurchase Program

As of March 31, 2015, we had purchased 1,424,000 shares of our common stock for $217,400 under terms of our Board-approved stock repurchase program, which was established on January 8, 2008. Under this program, the Board approved up to $1,000,000 to be used in repurchasing our stock; however, we are not obligated to repurchase any specific number of shares and the program may be suspended or terminated at our discretion. During each of the three-month periods ended March 31, 2015 and 2014, no repurchases were made. As of March 31, 2015, $782,600 remains available for stock purchases under this program.

Working Capital

As of March 31, 2015, we had current assets of $2,529,300 and current liabilities of $3,523,700, which netted to a working capital deficit of $994,400. Included in current liabilities was the current portion of deferred revenue of $2,505,400.

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ITEM 3. Quantitative and Qualitative Disclosures About Market Risk

Not applicable.

ITEM 4. Controls and Procedures

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934) as of the end of the period covered by this report. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of March 31, 2015.

There has not been any change in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) during the quarter ended March 31, 2015 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

ITEM 1. Legal Proceedings

Not Applicable 

ITEM 1A. Risk Factors

There have been no material changes in our risk factors from those set forth under Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2014, which was filed with the Securities and Exchange Commission on March 31, 2015.

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds

We did not sell any unregistered securities during the quarter ended March 31, 2015.

ITEM 3. Defaults Upon Senior Securities

Not applicable

ITEM 4. Mine Safety Disclosures

Not applicable

ITEM 5. Other Information

Not applicable

ITEM 6. Exhibits

Exhibit Number	Exhibit Description
31.1	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished, not filed)
32.2	Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished, not filed)
101*	The following financial information from hopTo Inc.’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2015, formatted in eXtensible Business Reporting Language (XBRL): (i) Condensed Consolidated Balance Sheets as of March 31, 2015 (unaudited) and December 31, 2014, (ii) Unaudited Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2015 and 2014, (iii) Unaudited Condensed Statements of Stockholder’s Deficit for the Three Months Ended March 31, 2015 and 2014, (iv) Unaudited Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2015 and 2014, (v) Notes to Unaudited Condensed Consolidated Financial Statements.

* Furnished, not filed          

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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.

		hopTo Inc.
		(Registrant)
Date:	May 15, 2015		Date:	May 15, 2015
By:	/s/ Eldad Eilam		By:	/s/ Jean-Louis Casabonne
	Eldad Eilam			Jean-Louis Casabonne
	Chief Executive Officer			Chief Financial Officer
	(Principal Executive Officer)			(Principal Financial Officer and
				Principal Accounting Officer)

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EX-31.1

Exhibit 31.1

I, Eldad Eilam, certify that:

1. I have reviewed this quarterly report on Form 10-Q of hopTo Inc. (“registrant”);

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 15d-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 person 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: May 15, 2015

/s/ Eldad Eilam

Eldad Eilam

Chief Executive Officer

EX-31.2

Exhibit 31.2

I, Jean-Louis Casabonne, certify that:

1. I have reviewed this quarterly report on Form 10-Q of hopTo Inc. (“registrant”);

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 15d-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 person 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: May 15, 2015

/s/ Jean-Louis Casabonne

Jean-Louis Casabonne

Chief Financial Officer

EX-32.1

Exhibit 32.1

(a) Certification of Quarterly Report by Chief Executive Officer.

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 Quarterly Report of hopTo Inc. (the “Company”) on Form 10-Q for the period ended March 31, 2015 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Eldad Eilam, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) 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.

/s/ Eldad Eilam

Eldad Eilam

Chief Executive Officer

May 15, 2015

EX-32.2

Exhibit 32.2

(b) Certification of Quarterly Report by Chief Financial Officer.

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 Quarterly Report of hopTo Inc. (the “Company”) on Form 10-Q for the period ended March 31, 2015 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Jean-Louis Casabonne, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) 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.

/s/ Jean-Louis Casabonne

Jean-Louis Casabonne

Chief Financial Officer

May 15, 2015

XML

Note 3 - Property and Equipment (Details) - Property and Equipment (USD $)	Mar. 31, 2015	Dec. 31, 2014
Property, Plant and Equipment [Line Items]
Property and Equipment	$ 713,000	$ 707,900
Less: accumulated depreciation and amortization	377,900	345,400
	335,100	362,500
Equipment [Member]
Property, Plant and Equipment [Line Items]
Property and Equipment	311,500	306,400
Furniture and Fixtures [Member]
Property, Plant and Equipment [Line Items]
Property and Equipment	233,900	233,900
Leasehold Improvements [Member]
Property, Plant and Equipment [Line Items]
Property and Equipment	$ 167,600	$ 167,600

XML

Note 10 - Capitalized Software Development Costs (Details) - Summary of Capitalized Software (USD $)	Mar. 31, 2015	Dec. 31, 2014
Summary of Capitalized Software [Abstract]
Software development costs	$ 1,135,900	$ 1,135,900
Accumulated amortization	(781,200)	(727,200)
	$ 354,700	$ 408,700

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Note 7 - Stock-Based Compensation (Details) - Stock-Based Compensation Expense (USD $)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Compensation expense	$ 222,200	$ 169,700
Costs of Revenue [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Compensation expense	3,000	(600)
Selling and Marketing Expense [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Compensation expense	29,300	5,900
General and Administrative Expense [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Compensation expense	168,100	137,200
Research and Development Expense [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Compensation expense	$ 21,800	$ 27,200

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Note 11 - Stockholders' Equity (Details) (USD $)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Dec. 31, 2014	Jan. 07, 2014
Note 11 - Stockholders' Equity (Details) [Line Items]
Share Price (in Dollars per share)	$ 0.17	$ 0.20
Proceeds from Issuance of Private Placement		$ 3,370,000
Warrants and Rights Outstanding	294,700		647,300
Stock Repurchased During Period, Shares (in Shares)	0	0
Stock Repurchase Program, Authorized Amount	1,000,000
Stock Repurchase Program, Remaining Authorized Repurchase Amount	782,600
2014 Private Placement [Member]
Note 11 - Stockholders' Equity (Details) [Line Items]
Stock Issued During Period, Shares, New Issues (in Shares)		11,299,999
Share Price (in Dollars per share)		$ 0.30
Proceeds from Issuance of Private Placement		3,390,000
Warrants and Rights Outstanding				1,356,000
Professional Fees		$ 9,600

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Note 6 - Deferred Rent (Details) - Deferred Rent (USD $)	Mar. 31, 2015	Dec. 31, 2014	Mar. 31, 2014
Deferred Revenue Arrangement [Line Items]
Current Liabilities	$ 47,900	$ 44,500	$ 44,500
Long-Term Liabilities	144,600	158,200	158,200
Total	192,500		202,700
Deferred rent expense [Member]
Deferred Revenue Arrangement [Line Items]
Current Liabilities	8,200		4,800
Long-Term Liabilities	42,000		45,700
Total	50,200		50,500
Deferred rent benefit [Member]
Deferred Revenue Arrangement [Line Items]
Current Liabilities	39,700		39,700
Long-Term Liabilities	102,600		112,500
Total	$ 142,300		$ 152,200

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Note 12 - Commitments and Contingencies (Tables)

3 Months Ended

Mar. 31, 2015

Commitments and Contingencies Disclosure [Abstract]

Schedule of Future Minimum Rental Payments for Operating Leases [Table Text Block]

Year	Amount
Remainder of 2015	$	338,800
2016		464,200
2017		478,100
2018		366,600
	$	1,647,700

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Note 12 - Commitments and Contingencies (Details)	3 Months Ended
	Mar. 31, 2015
Note 12 - Commitments and Contingencies (Details) [Line Items]
Lessee Leasing Arrangements, Operating Leases, Term of Contract	5 years
Campbell Facility [Member]
Note 12 - Commitments and Contingencies (Details) [Line Items]
Area of Real Estate Property	10,659

XML

Note 3 - Property and Equipment (Tables)

3 Months Ended

Mar. 31, 2015

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment [Table Text Block]

	March 31, 2015		December 31, 2014
Equipment	$	311,500	$	306,400
Furniture		233,900		233,900
Leasehold improvements		167,600		167,600
		713,000		707,900
Less: accumulated depreciation and amortization		377,900		345,400
	$	335,100	$	362,500

XML

Note 7 - Stock-Based Compensation (Details) - Unreleased Restricted Stock Awards (Restricted Stock [Member], USD $)	3 Months Ended
	Mar. 31, 2015
Restricted Stock [Member]
Note 7 - Stock-Based Compensation (Details) - Unreleased Restricted Stock Awards [Line Items]
Unreleased – December 31, 2014	4,314,983
Unreleased – December 31, 2014	$ 0.18
Awarded	225,000
Awarded	$ 0.16
Released	(437,578)
Released	$ 0.20
Forfeited	(80,221)
Forfeited	$ 0.17
Unreleased – March 31, 2015	4,022,184
Unreleased – March 31, 2015	$ 0.17
Unreleased – March 31, 2015	2 years 98 days
Unreleased – March 31, 2015	$ 580,900

XML

Note 4 - Liability Attributable to Warrants (Details) - Reconciliation of Warrants Liability Measured at Fair Value (Warrant Liabilities [Member], USD $)	3 Months Ended
	Mar. 31, 2015
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Warrants liability	$ 647,300
Change in fair value of warrant liability recorded in other income	55,100
Reclassification of 2014 PIPE Warrant to Equity	(407,300)
Warrants liability	294,700
General and Administrative Expense [Member]
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Change in fair value of warrant liability recorded in general and administrative expense	$ (400)

XML

Note 2 - Significant Accounting Policies (Details) - Concentration of Credit Risk (Customer Concentration Risk [Member])	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Alcatel [Member] | Sales Revenue, Net [Member]
Concentration Risk [Line Items]
Customer		8.00%
Alcatel [Member] | Accounts Receivable [Member]
Concentration Risk [Line Items]
Customer		26.00%
Centric [Member] | Sales Revenue, Net [Member]
Concentration Risk [Line Items]
Customer	1.70%	6.00%
Centric [Member] | Accounts Receivable [Member]
Concentration Risk [Line Items]
Customer	3.10%	9.00%
Elosoft [Member] | Sales Revenue, Net [Member]
Concentration Risk [Line Items]
Customer	10.10%	6.00%
Elosoft [Member] | Accounts Receivable [Member]
Concentration Risk [Line Items]
Customer	0.60%	9.00%
Ericsson [Member] | Sales Revenue, Net [Member]
Concentration Risk [Line Items]
Customer		4.10%
Ericsson [Member] | Accounts Receivable [Member]
Concentration Risk [Line Items]
Customer	0.20%	8.00%
GE [Member] | Sales Revenue, Net [Member]
Concentration Risk [Line Items]
Customer	1.90%	13.00%
GE [Member] | Accounts Receivable [Member]
Concentration Risk [Line Items]
Customer	2.30%	22.00%
IDS LLC [Member] | Sales Revenue, Net [Member]
Concentration Risk [Line Items]
Customer	5.80%	8.00%
Raytheon [Member] | Sales Revenue, Net [Member]
Concentration Risk [Line Items]
Customer	13.40%	0.50%
Raytheon [Member] | Accounts Receivable [Member]
Concentration Risk [Line Items]
Customer	23.00%
Uniface [Member] | Sales Revenue, Net [Member]
Concentration Risk [Line Items]
Customer	18.80%	3.00%
Uniface [Member] | Accounts Receivable [Member]
Concentration Risk [Line Items]
Customer	40.90%	3.40%
Sales Revenue, Net [Member]
Concentration Risk [Line Items]
Customer	51.70%	48.60%
Accounts Receivable [Member]
Concentration Risk [Line Items]
Customer	70.10%	77.40%

XML

Note 9 - Cost of Revenue (Details) - Summary of the Cost of Revenues (USD $)	3 Months Ended		12 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Dec. 31, 2014
Note 9 - Cost of Revenue (Details) - Summary of the Cost of Revenues [Line Items]
Software service costs	$ 104,500	$ 134,800	$ 134,800
Software service costs- 2015 Over (Under) 2014 - Dollars	(30,300)
Software service costs- 2015 Over (Under) 2014 - Percent	(22.50%)
Software Service Costs [Member]
Note 9 - Cost of Revenue (Details) - Summary of the Cost of Revenues [Line Items]
Software service costs	41,700		60,500
Software service costs- 2015 Over (Under) 2014 - Dollars	(18,800)
Software service costs- 2015 Over (Under) 2014 - Percent	(31.10%)
Software Product Costs [Member]
Note 9 - Cost of Revenue (Details) - Summary of the Cost of Revenues [Line Items]
Software service costs	62,800		74,300
Software service costs- 2015 Over (Under) 2014 - Dollars	$ (11,500)
Software service costs- 2015 Over (Under) 2014 - Percent	(15.50%)

XML

Note 15 - Segment Information (Details)	12 Months Ended
	Dec. 31, 2014
Segment Reporting [Abstract]
Number of Reportable Segments	2

XML

Note 7 - Stock-Based Compensation (Details) (USD $)	3 Months Ended
	Mar. 31, 2015
Note 7 - Stock-Based Compensation (Details) [Line Items]
Share Based Compensation Arrangement By Share Based Payment Award Options Vested Outstanding Number (in Shares)	6,859,298
Share Based Compensation Arrangement By Share Based Payment Award Options Expected To Vest Outstanding Number (in Shares)	3,304,385
Share Based Compensation Arrangement By Share Based Payment Award Options Expected To Be Forfeited (in Shares)	46,816
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition	26 months
Employee Stock Option [Member]
Note 7 - Stock-Based Compensation (Details) [Line Items]
Employee Service Share-based Compensation, Nonvested Awards, Compensation Not yet Recognized, Stock Options (in Dollars)	332,000
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition	10 months
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period	33 months
Restricted Stock [Member]
Note 7 - Stock-Based Compensation (Details) [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period	33 months
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized (in Dollars)	580,900

XML

Note 3 - Property and Equipment

3 Months Ended

Mar. 31, 2015

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment Disclosure [Text Block]

3. Property and Equipment

Property and equipment was:

	March 31, 2015		December 31, 2014
Equipment	$	311,500	$	306,400
Furniture		233,900		233,900
Leasehold improvements		167,600		167,600
		713,000		707,900
Less: accumulated depreciation and amortization		377,900		345,400
	$	335,100	$	362,500

Aggregate property and equipment depreciation and amortization expense was $32,500 and $53,300 during the three-month periods ended March 31, 2015 and 2014, respectively.

XML

Note 15 - Segment Information (Details) - Revenue by Country (USD $)	3 Months Ended		12 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Dec. 31, 2014
Note 15 - Segment Information (Details) - Revenue by Country [Line Items]
Revenue by location	$ 1,471,100	$ 1,340,200	$ 1,340,200
UNITED STATES
Note 15 - Segment Information (Details) - Revenue by Country [Line Items]
Revenue by location	751,400	551,000
GERMANY
Note 15 - Segment Information (Details) - Revenue by Country [Line Items]
Revenue by location	67,100	96,400
BRAZIL
Note 15 - Segment Information (Details) - Revenue by Country [Line Items]
Revenue by location	169,500	157,000
Other Countries [Member]
Note 15 - Segment Information (Details) - Revenue by Country [Line Items]
Revenue by location	$ 483,100	$ 535,800

XML

Note 4 - Liability Attributable to Warrants (Details) - Reconciliation of Warrants Outstanding by Period	3 Months Ended
	Mar. 31, 2014		Mar. 31, 2015		Dec. 31, 2014	Dec. 31, 2013
Class of Warrant or Right [Line Items]
Beginning Outstanding	16,667,500				21,174,274
Issued	5,650,001
Exercised	1,000,000
Ending Outstanding	21,317,501		21,174,274		21,174,274
2011 Transaction [Member]
Class of Warrant or Right [Line Items]
Beginning Outstanding	11,302,500				10,302,500
Exercised	1,000,000
Ending Outstanding	10,302,500		10,302,500		10,302,500
2014 Transaction [Member]
Class of Warrant or Right [Line Items]
Beginning Outstanding					5,650,001
Issued	5,650,001
Ending Outstanding	5,650,001		5,650,001		5,650,001
Exercise Agreement [Member]
Class of Warrant or Right [Line Items]
Beginning Outstanding					4,500,000	4,500,000
Ending Outstanding	4,500,000		4,500,000		4,500,000	4,500,000
ipCapital Group Inc [Member]
Class of Warrant or Right [Line Items]
Beginning Outstanding					400,000	400,000
Ending Outstanding	400,000		400,000		400,000	400,000
Genesis Select Consulting Agreement [Member]
Class of Warrant or Right [Line Items]
Beginning Outstanding	312,500	[1]	169,273	[1]
Issued		[1]		[1]
Exercised		[1]		[1]
Ending Outstanding	312,500	[1]	169,273	[1]
Offer to Exercise [Member]
Class of Warrant or Right [Line Items]
Beginning Outstanding					152,500	152,500
Ending Outstanding	152,500		152,500		152,500	152,500

[1] On February 11, 2014, we served notice to a former investor relations firm that we were cancelling our consulting agreement with them, with such cancellation to be effective April 11, 2014. Under the terms of the agreement, 169,273 of the warrants that had been issued to such firm will have vested as of the effective cancellation date, and 143,227 will ultimately be forfeited.

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Note 8 - Revenue (Tables)

3 Months Ended

Mar. 31, 2015

Revenue [Abstract]

Revenue Recognition, Multiple-deliverable Arrangements [Table Text Block]

					2015 Over (Under) 2014
Revenue	2015		2014		Dollars			Percent
Software Licenses
Windows	$	614,000	$	510,100	$	103,900			20.4	%
UNIX/Linux		170,000		104,000		66,000			63.5	%
		784,000		614,100		169,900			27.7	%
Software Service Fees
Windows		485,800		511,800		(26,000	)		-5.1	%
UNIX/Linux		188,300		198,200		(9,900	)		-5.0	%
		674,100		710,000		(35,900	)		-5.1	%
Other		13,000		16,100		(3,100	)		-19.3	%
Total Revenue	$	1,471,100	$	1,340,200	$	130,900			9.8	%

XML

Note 7 - Stock-Based Compensation (Tables)

3 Months Ended

Mar. 31, 2015

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Schedule of Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Table Text Block]

	Three Months Ended March 31,
Statement of Operations Classification	2015		2014
Costs of revenue	$	3,000	$	(600	)
Selling and marketing expense		29,300		5,900
General and administrative expense		168,100		137,200
Research and development expense		21,800		27,200
	$	222,200	$	169,700

Schedule of Share-based Compensation, Stock Options, Activity [Table Text Block]

	Number of Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Terms (Years)		Aggregate Intrinsic Value
Outstanding – December 31, 2014		10,287,999		$	0.18
Granted		—			—
Exercised		(77,500	)		0.05
Forfeited or expired		—			—
Outstanding – March 31, 2015		10,210,499		$	0.18		7.07	$	194,100

Nonvested Restricted Stock Shares Activity [Table Text Block]

	Number of Shares			Weighted Average Grant Date Fair Value		Weighted Average Remaining Recognition Period (Years)		Unrecognized Compensation Cost Remaining
Unreleased – December 31, 2014		4,314,983		$	0.18
Awarded		225,000			0.16
Released		(437,578	)		0.20
Forfeited		(80,221	)		0.17
Unreleased – March 31, 2015		4,022,184		$	0.17		2.27	$	580,900

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Note 11 - Stockholders' Equity (Details) - The 2014 Private Placement (USD $)	3 Months Ended
	Mar. 31, 2014
Note 11 - Stockholders' Equity (Details) - The 2014 Private Placement [Line Items]
Gross proceeds from private placement	$ 3,370,000
2014 Private Placement [Member] | Common Stock Including Additional Paid in Capital [Member]
Note 11 - Stockholders' Equity (Details) - The 2014 Private Placement [Line Items]
Gross proceeds from private placement	2,034,000
2014 Private Placement [Member]
Note 11 - Stockholders' Equity (Details) - The 2014 Private Placement [Line Items]
Gross proceeds from private placement	3,390,000
Less: cash issuance costs – legal fees	(20,000)
Recorded in additional paid-in capital and common stock	2,014,000
Less: gross proceeds allocated to warrants liability – investors	$ (1,356,000)

XML

Note 5 - Severance Liability (Details) (Employee Severance [Member], USD $)	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2015	Dec. 31, 2014
Employee Severance [Member]
Note 5 - Severance Liability (Details) [Line Items]
Restructuring Reserve, Current		$ 0	$ 0
Payments for Restructuring	$ 47,700

XML

Note 9 - Cost of Revenue (Tables)

3 Months Ended

Mar. 31, 2015

Cost of Revenue [Abstract]

Scheudle of Cost of Revenue [Table Text Block]

					2015 Over (Under) 2014
	2015		2014		Dollars			Percent
Software service costs	$	41,700	$	60,500	$	(18,800	)		-31.1	%
Software product costs		62,800		74,300		(11,500	)		-15.5	%
	$	104,500	$	134,800	$	(30,300	)		-22.5	%

XML

Note 10 - Capitalized Software Development Costs (Tables)

3 Months Ended

Mar. 31, 2015

Research and Development [Abstract]

Schedule Of Capitalized Software [Table Text Block]

	March 31, 2015			December 31, 2014
Software development costs	$	1,135,900		$	1,135,900
Accumulated amortization		(781,200	)		(727,200	)
	$	354,700		$	408,700

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Note 2 - Significant Accounting Policies

3 Months Ended

Mar. 31, 2015

Accounting Policies [Abstract]

Significant Accounting Policies [Text Block]

2. Significant Accounting Policies

Use of Estimates

The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. These estimates include: the amount of stock-based compensation expense; the allowance for doubtful accounts; the estimated lives, valuation, and amortization of intangible assets (including capitalized software); depreciation of long-lived assets; valuation of warrants; post-employment benefits, and accruals for liabilities. While we believe that such estimates are fair, actual results could differ materially from those estimates.

Revenue Recognition

We market and license our products indirectly through channel distributors, independent software vendors (“ISVs”), value-added resellers (“VARs”) (collectively, “resellers”) and directly to corporate enterprises, governmental and educational institutions and others. Our product licenses are perpetual. We also separately sell intellectual property licenses, maintenance contracts, which are comprised of license updates and customer service access, as well as other products and services.

Software license revenues are recognized when:

● Persuasive evidence of an arrangement exists, (i.e., when we sign a non-cancellable 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 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-cancellable contract, or a customer’s purchase order, and

● Collectability is probable. If collectability is not considered probable, revenue is recognized when the fee is collected.

Revenue recognized on software arrangements involving multiple deliverables is allocated to each deliverable based on vendor-specific objective evidence (“VSOE”) or third party evidence of the fair values of each deliverable; such deliverables include licenses for software products, maintenance, private labeling fees, and customer training. We limit our assessment of VSOE for each deliverable to either the price charged when the same deliverable is sold separately or the price established by management having the relevant authority to do so, for a deliverable not yet sold separately.

If sufficient VSOE of the fair value does not exist so as to permit the allocation of revenue to the various elements of the arrangement, all revenue from the arrangement is deferred until such evidence exists or until all elements are delivered. If VSOE of the fair value does not exist, and the only undelivered element is maintenance, then we recognize revenue on a ratable basis. If VSOE of the fair value of all undelivered elements exists but does not exist for one or more delivered elements, then revenue is recognized using the residual method. Under the residual method, the fair value of the undelivered elements is deferred and the remaining portion of the arrangement fee is recognized as revenue.

Certain resellers (“stocking resellers”) purchase product licenses that they hold in inventory until they are resold to the ultimate end user (an “inventory stocking order”). At the time that a stocking reseller places an inventory stocking order, no product licenses are shipped by us to the stocking reseller; rather, the stocking reseller’s inventory is credited with the number of licenses purchased and the stocking reseller can resell (issue) any number of licenses from their inventory at any time. Upon receipt of an order to issue a license(s) from a stocking reseller’s inventory (a “draw down order”), we will ship the license(s) in accordance with the draw down order’s instructions. We defer recognition of revenue from inventory stocking orders until the underlying licenses are sold and shipped to the end user, as evidenced by the receipt and fulfillment of the stocking reseller’s draw down order, assuming all other revenue recognition criteria have been met.

There are no rights of return granted to resellers or other purchasers of our software products.

Revenue from maintenance contracts is recognized ratably over the related contract period, which generally ranges from one to five years.

All of our software licenses are denominated in U.S. dollars.

Deferred Rent

The lease for our office in Campbell, California, as amended, (See Note 6) contains free rent and predetermined fixed escalations in our minimum rent payments. We recognize rent expense related to this lease on a straight-line basis over the term of the lease. We record any difference between the straight-line rent amounts and amounts payable under the lease as part of deferred rent in current or long-term liabilities, as appropriate.

Incentives that we received upon entering into the lease agreement are recognized on a straight-line basis as a reduction to rent over the term of the lease. We record the unamortized portion of these incentives as a part of deferred rent in current or long-term liabilities, as appropriate.

Postemployment Benefits (Severance Liability)

Nonretirement postemployment benefits, including salary continuation, supplemental unemployment benefits, severance benefits, disability-related benefits and continuation of benefits such as health care benefits, are recognized as a liability and a loss when it is probable that the employee(s) will be entitled to such benefits and the amount can be reasonably estimated. The cost of termination benefits recognized as a liability and an expense includes the amount of any lump-sum payments and the present value of any expected future payments. There was no severance liability reported at March 31, 2015 or December 31, 2014.

Software Development Costs

We capitalize software development costs incurred from the time technological feasibility of the software is established until the software is available for general release, in accordance with GAAP. Such capitalized costs are subsequently amortized as costs of revenue over the shorter of three years or the remaining estimated useful life of the product.

Research and development costs and other computer software maintenance costs related to the software development are expensed as incurred.

Long-Lived Assets

Long-lived assets are assessed for possible impairment whenever events or changes in circumstances indicate that the carrying amounts may not be recoverable, whenever we have committed to a plan to dispose of the assets or, at a minimum, annually. Typically, for long-lived assets to be held and used, measurement of an impairment loss is based on the fair value of such assets, with fair value being determined based on appraisals, current market value, comparable sales value, and discounted future cash flows, among other variables, as appropriate. Assets to be held and used (which assets are affected by an impairment loss) are depreciated or amortized at their new carrying amount over their remaining estimated life; assets to be sold or otherwise disposed of are not subject to further depreciation or amortization. No such impairment charge was recorded during either of the three-month periods ended March 31, 2015 or 2014.

Allowance for Doubtful Accounts

We maintain an allowance for doubtful accounts that reflects our best estimate of potentially uncollectible trade receivables. The allowance is based on assessments of the collectability of specific customer accounts and the general aging and size of the accounts receivable. We regularly review the adequacy of our allowance for doubtful accounts by considering such factors as historical experience, credit worthiness, and current economic conditions that may affect a customer’s ability to pay. We specifically reserve for those accounts deemed uncollectible. We also establish, and adjust, a general allowance for doubtful accounts based on our review of the aging and size of our accounts receivable.

The following table sets forth the details of the Allowance for Doubtful Accounts for the three-month periods ended March 31, 2015 and 2014:

	Beginning Balance		Charge Offs		Recoveries		Provision			Ending Balance
Three Months Ended March 31,
2015	$	32,600	$	—	$	—	$	(9,700	)	$	22,900
2014	$	42,000	$	—	$	—	$	(18,900	)	$	23,100

Concentration of Credit Risk

For the three-month periods ended March 31, 2015 and 2014, respectively, we considered the customers listed in the following table to be our most significant customers. The table sets forth the percentage of sales attributable to each customer during the periods presented, and the respective customer’s ending accounts receivable balance as a percentage of reported accounts receivable, net, as of March 31, 2015 and 2014.

	Three Months Ended March 31, 2015			As of March 31, 2015			Three Months Ended March 31, 2014			As of March 31, 2014
Customer	Sales			Accounts Receivable			Sales			Accounts Receivable
Alcatel-Lucent		-			-			8.0	%		26.0	%
Centric		1.7	%		3.1	%		6.0	%		9.0	%
Elosoft		10.1	%		0.6	%		6.0	%		9.0	%
Ericsson		-			0.2	%		4.1	%		8.0	%
GE		1.9	%		2.3	%		13.0	%		22.0	%
IDS		5.8	%		-			8.0	%		-
Raytheon		13.4	%		23.0	%		0.5	%		-
Uniface		18.8	%		40.9	%		3.0	%		3.4	%
Total		51.7	%		70.1	%		48.6	%		77.4	%

Derivative Financial Instruments

We currently do not have a material exposure to either commodity prices or interest rates; accordingly, we do not currently use derivative instruments to manage such risks. We evaluate all of our financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. All derivative financial instruments are recognized in the balance sheet at fair value. Changes in fair value are recognized in earnings if they are not eligible for hedge accounting or in other comprehensive income if they qualify for cash flow hedge accounting.

Fair Value of Financial Instruments

The fair value of our accounts receivable, accounts payable and accrued liabilities approximate their carrying amounts due to the relative short maturities of these items.

The fair value of warrants at issuance and for those recorded as a liability at each reporting date are determined in accordance with the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) 820, “Fair Value Measurement,” which establishes a fair value hierarchy that prioritizes the assumptions (inputs) to valuation techniques used to price assets or liabilities that are measured at fair value. The hierarchy, as defined below, gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The guidance for fair value measurements requires that assets, liabilities and certain equity instruments measured at fair value be classified and disclosed in one of the following categories:

● Level 1: Defined as observable inputs, such as quoted (unadjusted) prices in active markets for identical assets or liabilities.

● Level 2: Defined as observable inputs other than quoted prices included in Level 1. This includes quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

● Level 3: Defined as unobservable inputs to the valuation methodology that are supported by little or no market activity and that are significant to the measurement of the fair value of the assets or liabilities. Level 3 assets and liabilities include those whose fair value measurements are determined using pricing models, discounted cash flow methodologies or similar valuation techniques, as well as significant management judgment or estimation.

As of March 31, 2015, all of our $294,700 Warrants Liability reported at fair value was categorized as Level 3 inputs (See Note 4).

Reclassification

Certain items have been reclassified in the 2014 financial statements to conform to the 2015 presentations.

Recent Accounting Pronouncements

In April 2015, FASB issued Accounting Standards Update (“ASU”) No. 2015-05 “Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement”. The objective of ASU 2015-05 is to provide guidance to reporting entities in the accounting for fees paid in a cloud computing arrangement. Specifically, if a cloud computing arrangement includes a software license, then the entity should account for the software license element of the arrangement consistent with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the entity should account for the arrangement as a service contract. The guidance will not change GAAP for an entity’s accounting for service contracts. The amendments in this ASU are effective for annual periods beginning after December 15, 2015, including interim periods within those annual periods. Early adoption is permitted. We are currently evaluating this ASU in order to determine whether or not its adoption will have a material impact on our results of operations, cash flows or financial position.

In August 2014, FASB issued ASU No. 2014-15 “Preparation of Financial Statements - Going Concern (Subtopic 205-40)”. Under U.S. GAAP, continuation of a reporting entity as a going concern is presumed as the basis for preparing financial statements unless and until the entity's liquidation becomes imminent. Preparation of financial statements under this presumption is commonly referred to as the going concern basis of accounting. If and when an entity's liquidation becomes imminent, financial statements should be prepared under the liquidation basis of accounting in accordance with Subtopic 205-30, Presentation of Financial Statements-Liquidation Basis of Accounting. Even when an entity's liquidation is not imminent, there may be conditions or events that raise substantial doubt about the entity's ability to continue as a going concern. In those situations, financial statements should continue to be prepared under the going concern basis of accounting, but the amendments in the update should be followed to determine whether to disclose information about the relevant conditions and events. The amendments in this ASU are effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. Early application is permitted. We will evaluate the going concern considerations in this ASU, however, at the current period, we do not believe that the Company has met conditions which would subject its consolidated financial statements to additional disclosure.

In June 2014, FASB issued ASU No. 2014-12 “Compensation – Stock Compensation (Topic 718)” (“ASU 2014-12”). The objective of ASU 2014-12 is to resolve the diverse accounting treatment being applied in practice by reporting entities in the accounting for share-based payment awards that require a specific performance target to be achieved in order for employees to become eligible to vest in the awards, particularly those awards whose terms may provide that the performance target could be achieved after the employee completes the requisite service period. That is, the employee would be eligible to vest in the award regardless of whether the employee is rendering service on the date the performance target is achieved. ASU 2014-12 is effective for annual periods and interim periods within those annual periods beginning after December 15, 2015, and earlier adoption is permitted. The share-based payment awards we currently have outstanding which have performance targets do not contain clauses wherein the performance target could be achieved after the employee completes the requisite service period; accordingly, adoption of ASU 2014-12 did not have a material impact on our results of operations, cash flows or financial position.

In May 2014, FASB issued ASU No. 2014-09 “Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-09”). ASU 2014-09 is the end result of a joint project initiated by FASB and the International Accounting Standards Board (“IASB”). IASB is the body that sets International Financial Reporting Standards (“IFRS”). The goal of FASB’s and IASB’s joint project was to clarify the principles for recognizing revenue and to develop a common revenue standard for U.S. GAAP and under IFRS. Specifically, ASU 2014-09:

1. Removes inconsistencies and weaknesses in revenue requirements.

2. Provides a more robust framework for addressing revenue issues.

3. Improves comparability of revenue recognition practices across entities, industries, jurisdictions, and capital markets.

4. Provides more useful information to users of financial statements through improved disclosure requirements.

5. Simplifies the preparation of financial statements by reducing the number of requirements to which an entity must refer.

The core principle of ASU 2014-09 is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 is effective for annual reporting periods beginning after December 15, 2016, including interim periods within such annual period. FASB is considering a one year deferral of ASU 2014-09. Early adoption is not permitted. We are currently evaluating this ASU in order to determine whether or not its adoption will have a material impact on our results of operations, cash flows or financial position.

In April 2014, FASB issued ASU No. 2014-08 “Presentation of Financial Statements (Topic 205) and Property, Plant and Equipment (Topic 360)” (“ASU 2014-08”). The objective of ASU 2014-08 is to address issues in Subtopic 205-20, “Presentation of Financial Statements – Discontinued Operations”, that give rise to complexity and difficulties in practice. Generally, ASU 2014-08 is effective for discontinued operations that occur within annual periods beginning on or after December 31, 2014, and interim periods within those years. Early adoption is permitted, but only for discontinued operations that have not been reported in financial statements previously issued or available for issuance. We currently have no discontinued operations to report; consequently, adoption of ASU 2014-08 did not have a material impact on our results of operations, cash flows or financial position.

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Note 11 - Stockholders' Equity (Tables)

3 Months Ended

Mar. 31, 2015

Stockholders' Equity Note [Abstract]

Schedule of Stockholders Equity [Table Text Block]

Gross cash proceeds	$	3,390,000
Less: gross proceeds allocated to warrants liability – investors		(1,356,000	)
Gross proceeds allocated to additional paid-in capital and common stock		2,034,000
Less: cash issuance costs – legal fees		(20,000	)
Recorded in additional paid-in capital and common stock	$	2,014,000

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Note 4 - Liability Attributable to Warrants (Details) (USD $)	0 Months Ended	3 Months Ended	12 Months Ended	0 Months Ended	3 Months Ended
	Jan. 07, 2014	Mar. 31, 2015	Dec. 31, 2014	Apr. 11, 2014	Mar. 31, 2014
Note 4 - Liability Attributable to Warrants (Details) [Line Items]
Share Price		$ 0.17			0.20
Warrants and Rights Outstanding (in Dollars)		$ 294,700	647,300
Securities Purchase Agreement [Member] | Common Stock [Member]
Note 4 - Liability Attributable to Warrants (Details) [Line Items]
Stock Issued During Period, Shares, New Issues (in Shares)	11,299,999
Share Price	$ 0.30
Securities Purchase Agreement [Member]
Note 4 - Liability Attributable to Warrants (Details) [Line Items]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights (in Shares)	5,650,001
Class of Warrant or Right, Exercise Price of Warrants or Rights	$ 0.40
Warrants and Rights Outstanding (in Dollars)	1,356,000
Class of Warrant or Right, Fair Value (in Dollars)	$ 407,300
Fair Value Assumptions, Expected Volatility Rate		113.00%
Fair Value Assumptions, Annualized Forfeiture Rate		0.00%
Fair Value Assumption, Exercise Factor		3.5
Fair Value Assumptions, Risk Free Interest Rate		1.20%
Fair Value Assumptions, Weighted Average Expected Dividend		$ 0
Exercise Agreement [Member]
Note 4 - Liability Attributable to Warrants (Details) [Line Items]
Fair Value Assumptions, Expected Term		4 years 36 days
2011 Transaction [Member] | Minimum [Member]
Note 4 - Liability Attributable to Warrants (Details) [Line Items]
Class of Warrant or Right, Exercise Price of Warrants or Rights		$ 0.20
2011 Transaction [Member] | Maximum [Member]
Note 4 - Liability Attributable to Warrants (Details) [Line Items]
Class of Warrant or Right, Exercise Price of Warrants or Rights		$ 0.26
ipCapital Group Inc [Member]
Note 4 - Liability Attributable to Warrants (Details) [Line Items]
Class of Warrant or Right, Exercise Price of Warrants or Rights		$ 0.26
Fair Value Assumptions, Expected Volatility Rate		107.00%	105.00%
Fair Value Assumptions, Expected Term		1 year 204 days	1 year 295 days
Fair Value Assumption, Exercise Factor		4.0	4.0
Fair Value Assumptions, Risk Free Interest Rate		0.44%	0.61%
Genesis Select Consulting Agreement [Member]
Note 4 - Liability Attributable to Warrants (Details) [Line Items]
Class of Warrant or Right Shares Vested (in Shares)				169,273
Class of Warrant or Right, Shares Canceled (in Shares)				143,227
Common Stock [Member]
Note 4 - Liability Attributable to Warrants (Details) [Line Items]
Stock Issued During Period, Shares, New Issues (in Shares)					11,299,999

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Note 10 - Capitalized Software Development Costs (Details) (USD $)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Research and Development [Abstract]
Capitalized Computer Software, Amortization	$ 54,000	$ 68,000
Capitalized Computer Software, Additions	$ 0	$ 0

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Condensed Consolidated Balance Sheets (Current Period Unaudited) (USD $)	Mar. 31, 2015	Dec. 31, 2014
Current Assets:
Cash	$ 1,971,800	$ 1,557,100
Accounts receivable, net	454,000	2,211,300
Prepaid expenses	103,500	98,100
Total Current Assets	2,529,300	3,866,500
Capitalized software development costs, net	354,700	408,700
Property and equipment, net	335,100	362,500
Other assets	139,900	139,700
Total Assets	3,359,000	4,777,400
Current Liabilities:
Accounts payable and accrued expenses	962,600	986,500
Deferred rent	47,900	44,500
Capital lease	7,800	7,700
Deferred revenue	2,505,400	2,859,300
Total Current Liabilities	3,523,700	3,898,000
Warrants liability	294,700	647,300
Deferred revenue	1,612,900	1,652,600
Capital lease	13,200	15,200
Deferred rent	144,600	158,200
Total Liabilities	5,589,100	6,371,300
Commitments and contingencies (Note 12)
Stockholders' Equity (Deficit):
Preferred stock, $0.01 par value, 5,000,000 shares authorized, no shares issued and outstanding	0	0
Common stock, $0.0001 par value, 195,000,000 shares authorized, 113,057,295 and 112,542,217 shares issued and outstanding at March 31, 2015 and December 31, 2014, respectively	11,300	11,200
Additional paid-in capital	75,227,400	74,600,700
Accumulated deficit	(77,468,800)	(76,205,800)
Total Stockholders' Deficit	(2,230,100)	(1,593,900)
Total Liabilities and Stockholders' Deficit	$ 3,359,000	$ 4,777,400

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Note 6 - Deferred Rent (Details) (USD $)	Mar. 31, 2015
Deferred Revenue Disclosure [Abstract]
Leasehold Improvements, Gross	$ 103,400

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Condensed Consolidated Statements of Cash Flows (Unaudited) (USD $)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Net Loss	$ (1,263,000)	$ (672,500)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	86,500	121,300
Stock-based compensation expense	222,200	169,700
Company payments of employee taxes for stock-based compensation	(6,500)
Revenue deferred to future periods	602,500	841,400
Recognition of deferred revenue	(996,100)	(1,098,600)
Changes to allowance for doubtful accounts	(9,700)	(18,900)
Change in fair value of derivative instruments – warrants	55,100	(1,133,700)
Accretion of warrants liability for consulting services	(400)	(49,800)
Changes in severance liability		(46,200)
Changes in deferred rent	(10,200)	4,900
Interest accrued for capital lease	400
Changes in operating assets and liabilities:
Accounts receivable	1,767,000	213,300
Prepaid expenses	(5,400)	(77,000)
Accounts payable and accrued expenses	(23,900)	(46,500)
Other assets	(200)
Net Cash Used in Operating Activities	418,300	(1,792,600)
Cash Flows Used In Investing Activities:
Capital expenditures	(5,100)	(23,700)
Net Cash Used In Investing Activities	(5,100)	(23,700)
Cash Flows Provided By Financing Activities:
Payment of capital lease	(2,300)
Proceeds from exercise of warrants		260,000
Proceeds from exercise of employee stock options	3,800	43,600
Proceeds from private placement of stock and warrants, net of issuance costs		3,370,000
Net Cash Provided By Financing Activities	1,500	3,673,600
Net Increase (Decrease) in Cash	414,700	1,857,300
Cash - Beginning of Period	1,557,100	2,430,700
Cash - End of Period	$ 1,971,800	$ 4,288,000

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Note 13 - Supplemental Disclosure of Cash Flow Information (Details) (USD $)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Note 13 - Supplemental Disclosure of Cash Flow Information (Details) [Line Items]
Interest Paid	$ 300	$ 0
Income Taxes Paid		0
Warrants Liability, Period Increase (Decrease)	(55,100)
2014 Transaction [Member]
Note 13 - Supplemental Disclosure of Cash Flow Information (Details) [Line Items]
Payments for Repurchase of Warrants	0
Foreign Tax Authority [Member]
Note 13 - Supplemental Disclosure of Cash Flow Information (Details) [Line Items]
Income Taxes Paid	$ 480

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Note 2 - Significant Accounting Policies (Details) (USD $)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Dec. 31, 2014
Note 2 - Significant Accounting Policies (Details) [Line Items]
Minimum Number of Delivered Elements for Which Evidence Does Not Exist	1
Other Employee Related Liabilities	$ 0		$ 0
Useful Life Software Development Cost Maximum	3 years
Impairment of Long-Lived Assets Held-for-use	0	0
Warrants and Rights Outstanding	294,700		647,300
Minimum [Member]
Note 2 - Significant Accounting Policies (Details) [Line Items]
Maintenance Contract Period	1 year
Maximum [Member]
Note 2 - Significant Accounting Policies (Details) [Line Items]
Maintenance Contract Period	5 years
Fair Value, Inputs, Level 3 [Member]
Note 2 - Significant Accounting Policies (Details) [Line Items]
Warrants and Rights Outstanding	$ 294,700

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Note 16 - Related Party Transactions

3 Months Ended

Mar. 31, 2015

Related Party Transactions [Abstract]

Related Party Transactions Disclosure [Text Block]

16. Related Party Transactions

Tamalpais Partners LLC

Steven Ledger, former Chairman of our Board of Directors, is the founder and managing partner of Tamalpais Partners LLC, (“Tamalpais”) a business consulting firm. On March 17, 2014, contemporaneous with Mr. Ledger’s resignation from our board, we mutually agreed with Mr. Ledger to terminate our consulting agreement with Tamalpais. We paid Tamalpais $0 and $12,000 for the three-month periods ended March 31, 2015 and 2014, respectively, for services rendered to us under the terms of this consulting agreement. No amounts were due Tamalpais at either March 31, 2015 or 2014.

When he resigned as our Chairman, we entered into a short-term consulting agreement with Mr. Ledger that was separate from the terminated agreement with Tamalpais. Under that exclusive consulting agreement, Mr. Ledger began providing consulting services to our Board of Directors for a term that commenced upon his resignation, which ended on August 15, 2014. The consulting agreement also provided that Mr. Ledger’s then currently unvested options to purchase our common stock granted during his term as a director would continue to vest during the term of the consulting agreement in accordance with their original terms. In addition, the agreement provided that the period in which to exercise such options was extended through the end of 2014. Mr. Ledger will also be reimbursed for his reasonable expenses incurred in connection with rendering services to our Board of Directors in accordance with our expense reimbursement policies. The consulting agreement also contains confidentiality, mutual non-disparagement and independent contractor-related provisions.

ipCapital Group, Inc.

On October 11, 2011, we engaged ipCapital Group, Inc. (“ipCapital”), an affiliate of John Cronin, who is one of our directors, to assist us in the execution of our strategic decision to significantly strengthen, grow and commercially exploit our intellectual property assets. Our engagement agreement with ipCapital, which has been amended three times, affords us the right to request ipCapital to perform a number of diverse services, employing its proprietary processes and methodologies, to facilitate our ability to identify and extract from our current intellectual property base new inventions, potential patent applications, and marketing and licensing opportunities.

For the three-month periods ended March 31, 2015 and 2014, there were no services performed, additional charges incurred or payments made to ipCapital under the agreement.

In addition to the fees we agreed to pay ipCapital for its services, we issued ipCapital a five-year warrant to purchase up to 400,000 shares of our common stock at an initial price of $0.26 per share. Half of the warrant (200,000 shares) has a time-based vesting condition, with such vesting to occur in three equal annual installments. The vesting installments occurred on October 11, 2012 and October 11, 2013, and October 11, 2014, respectively. The remaining 200,000 shares became fully vested upon the completion to our satisfaction of all services that we requested from ipCapital under the engagement agreement, prior to the signing of the amendments. Such performance was deemed satisfactory during 2012. We believe that these fees, together with the issuance of the warrant, constitute no greater compensation than we would be required to pay an unaffiliated person for performing substantially similar services.

The exercise price of the warrant issued to ipCapital could be reset to below-market value. Consequently, we have concluded that such warrant is not indexed to our common stock and should be recorded as a liability. We recognize the warrants liability over their vesting period, and in accordance with the liability method of accounting, we re-measure the fair value of the accrued warrants at each balance sheet date and recognize the change in fair value as general and administrative compensation expense. (See Note 4). We recognized $400 and $49,800 as a component of general and administrative expense during the three-month periods ended March 31, 2015 and 2014, respectively, resulting from the change in fair value.

ipCapital Licensing Company I, LLC

On February 4, 2013, we entered into an IP Brokerage agreement with ipCapital Licensing Company I, LLC (“ipCLC”). John Cronin is a partner at ipCLC. Pursuant to the agreement, we have engaged ipCLC, on a no-retainer basis, to identify and present us with candidates who may be seeking to acquire a certain limited group of our patents unrelated to our current business strategy. If during the applicable term we enter into an agreement with any candidate presented by ipCLC to acquire or otherwise exploit the covered patents, we will pay ipCLC a fee of ten percent (10%) of the royalties, fees, and other consideration paid over the life of the agreement.

The agreement is effective as of February 4, 2013, and will end 18 months after we or ipCLC serve 60 days written notice of termination to the other party (with earlier termination possible in the event of a material breach). The agreement provides for customary confidentiality undertakings, limitations on ipCLC’s total liability and mutual indemnification provisions.

We paid no compensation to ipCLC under the terms of the IP Brokerage Agreement for the periods ending March 31, 2015 and 2014, respectively and no amounts were due ipCLC under its terms as of March 31, 2015.

We believe the terms of the agreement are fair and reasonable to us and are at least as favorable as those that could be obtained on an arms’ length basis.

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Note 2 - Significant Accounting Policies (Details) - Allowance for Doubtful Accounts (USD $)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Allowance for Doubtful Accounts [Abstract]
Beginning Balance	$ 32,600	$ 42,000
Provision	(9,700)	(18,900)
Ending Balance	$ 22,900	$ 23,100

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Note 2 - Significant Accounting Policies (Tables)

3 Months Ended

Mar. 31, 2015

Accounting Policies [Abstract]

Allowance for Credit Losses on Financing Receivables [Table Text Block]

	Beginning Balance		Charge Offs		Recoveries		Provision			Ending Balance
Three Months Ended March 31,
2015	$	32,600	$	—	$	—	$	(9,700	)	$	22,900
2014	$	42,000	$	—	$	—	$	(18,900	)	$	23,100

Schedules of Concentration of Risk, by Risk Factor [Table Text Block]

	Three Months Ended March 31, 2015			As of March 31, 2015			Three Months Ended March 31, 2014			As of March 31, 2014
Customer	Sales			Accounts Receivable			Sales			Accounts Receivable
Alcatel-Lucent		-			-			8.0	%		26.0	%
Centric		1.7	%		3.1	%		6.0	%		9.0	%
Elosoft		10.1	%		0.6	%		6.0	%		9.0	%
Ericsson		-			0.2	%		4.1	%		8.0	%
GE		1.9	%		2.3	%		13.0	%		22.0	%
IDS		5.8	%		-			8.0	%		-
Raytheon		13.4	%		23.0	%		0.5	%		-
Uniface		18.8	%		40.9	%		3.0	%		3.4	%
Total		51.7	%		70.1	%		48.6	%		77.4	%

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Note 1 - Basis of Presentation

3 Months Ended

Mar. 31, 2015

Disclosure Text Block [Abstract]

Business Description and Basis of Presentation [Text Block]

1. Basis of Presentation

The unaudited condensed consolidated financial statements include the accounts of hopTo Inc. and its subsidiaries (collectively, “we”, “us” or “our”); significant intercompany accounts and transactions are eliminated upon consolidation. The unaudited condensed consolidated financial statements included herein have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) applicable to interim financial information and the rules and regulations promulgated by the Securities and Exchange Commission (the “SEC”). Accordingly, such unaudited condensed consolidated financial statements do not include all information and footnote disclosures required in annual financial statements.

The unaudited condensed consolidated financial statements included herein reflect all adjustments, which include only normal, recurring adjustments, that are, in our opinion, necessary to state fairly the results for the periods presented. This Quarterly Report on Form 10-Q should be read in conjunction with our audited consolidated financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2014 which was filed with the SEC on March 31, 2015 (“2014 10-K Report”). The interim results presented herein are not necessarily indicative of the results of operations that may be expected for the full fiscal year ending December 31, 2015 or any future period.

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Condensed Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) (USD $)	Mar. 31, 2015	Dec. 31, 2014
Preferred stock par value (in Dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized	5,000,000	5,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock par value (in Dollars per share)	$ 0.0001	$ 0.0001
Common stock, shares authorized	195,000,000	195,000,000
Common stock, shares issued	113,057,295	112,542,217
Common stock, shares outstanding	113,057,295	112,542,217

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Note 11 - Stockholders' Equity

3 Months Ended

Mar. 31, 2015

Stockholders' Equity Note [Abstract]

Stockholders' Equity Note Disclosure [Text Block]

11. Stockholders’ Equity

2014 Private Placement

During the three-month period ended March 31, 2014, we issued and sold for cash an aggregate 11,299,999 shares of our common stock at a purchase price of $0.30 per share in the 2014 private placement that resulted in gross proceeds of $3,390,000 (See Note 4).

The 2014 private placement was recorded into the financial statements as follows:

Gross cash proceeds	$	3,390,000
Less: gross proceeds allocated to warrants liability – investors		(1,356,000	)
Gross proceeds allocated to additional paid-in capital and common stock		2,034,000
Less: cash issuance costs – legal fees		(20,000	)
Recorded in additional paid-in capital and common stock	$	2,014,000

In conjunction with the 2014 private placement, we recorded a warrants liability of $1,356,000 as of January 7, 2014 on our Balance Sheet. Certain conditions under the SPA which expired on January 7, 2015 would have required us to issue additional warrants at below-market value exercise price (see Note 4). These conditions did not occur and ended as of January 7, 2015. Therefore, we have reclassified the related liability to equity as of January 7, 2015 on our Balance Sheet.

Accounting fees associated with the 2014 private placement, which aggregated approximately $9,600, were deemed immaterial and were charged to operating expense during the three-month period ended March 31, 2014.

Stock Repurchase Program

During each of the three-month periods ended March 31, 2015 and 2014, we did not repurchase any of our common stock under the terms of our Board-approved $1,000,000 stock repurchase program (“stock repurchase program”). As of March 31, 2015, approximately $782,600 remained available for future purchases under this program. We are not obligated to repurchase any specific number of shares and the stock repurchase program may be suspended or terminated at our discretion.

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Document And Entity Information	3 Months Ended
	Mar. 31, 2015	May 11, 2015
Document and Entity Information [Abstract]
Entity Registrant Name	hopTo Inc.
Document Type	10-Q
Current Fiscal Year End Date	--12-31
Entity Common Stock, Shares Outstanding		117,428,986
Amendment Flag	false
Entity Central Index Key	0001021435
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Filer Category	Smaller Reporting Company
Entity Well-known Seasoned Issuer	No
Document Period End Date	Mar. 31, 2015
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	Q1

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Note 12 - Commitments and Contingencies

3 Months Ended

Mar. 31, 2015

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies Disclosure [Text Block]

12. Commitments and Contingencies

On February 1, 2014, we relocated our corporate offices to a larger suite within our landlord’s office complex in Campbell, California. We are currently leasing 10,659 square feet under a five-year lease that, unless renewed, will expire in October 2018. The following table sets forth the minimum lease payments we will be required to make throughout the remainder of the lease:

Year	Amount
Remainder of 2015	$	338,800
2016		464,200
2017		478,100
2018		366,600
	$	1,647,700

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Condensed Consolidated Statements of Operations (Unaudited) (USD $)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Revenue	$ 1,471,100	$ 1,340,200
Costs of revenue	104,500	134,800
Gross profit	1,366,600	1,205,400
Operating expenses:
Selling and marketing	500,100	650,500
General and administrative	907,800	1,011,600
Research and development	1,164,900	1,348,000
Total operating expenses	2,572,800	3,010,100
Loss from operations	(1,206,200)	(1,804,700)
Other income (expense) - change in fair value of warrants liability	(55,100)	1,133,700
Other expense, net	(600)	(200)
Loss before provision for income tax	(1,261,900)	(671,200)
Provision for income tax	1,100	1,300
Net loss	$ (1,263,000)	$ (672,500)
Loss per share – basic and diluted (in Dollars per share)	$ (0.01)	$ (0.01)
Average weighted common shares outstanding – basic and diluted (in Shares)	112,803,553	110,283,363

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Note 6 - Deferred Rent

3 Months Ended

Mar. 31, 2015

Deferred Revenue Disclosure [Abstract]

Deferred Revenue Disclosure [Text Block]

6. Deferred Rent

We amended our office lease during 2013. On February 1, 2014, we moved our corporate offices to a different building within the same office complex owned and operated by our landlord in Campbell, California, where our corporate offices had been located prior to February 1, 2014. Since the new space is controlled by the same landlord, we considered the lease amendment to be a modification to our preexisting lease; accordingly, we are amortizing the remaining balance in deferred rent immediately prior to February 1, 2014 over the remaining term of the modified amended lease. Additionally, our landlord provided us with $103,400 of leasehold improvements on the new space that we are amortizing over the remaining term of the amended lease. All of the prior leasehold improvements that had not been previously amortized were accelerated and recognized in their entirety from the time of the amendment through January 2014, prior to the move.

As of March 31, 2015 deferred rent was:

Component	Current Liabilities		Long-Term Liabilities		Total
Deferred rent expense	$	8,200	$	42,000	$	50,200
Deferred rent benefit		39,700		102,600		142,300
	$	47,900	$	144,600	$	192,500

As of December 31, 2014 deferred rent was:

Component	Current Liabilities		Long-Term Liabilities		Total
Deferred rent expense	$	4,800	$	45,700	$	50,500
Deferred rent benefit		39,700		112,500		152,200
	$	44,500	$	158,200	$	202,700

Deferred rent expense represents the remaining balance of the aggregate free rent we received from our landlord and escalations that are being recognized over the life of the lease as a component of rent expense. Deferred rent benefit relates to the unamortized portion of the leasehold improvements provided to us by our landlord (i.e., incentives) that we are recognizing on a straight-line basis as a reduction to rent expense over the term of the lease.

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Note 5 - Severance Liability

3 Months Ended

Mar. 31, 2015

Restructuring and Related Activities [Abstract]

Restructuring and Related Activities Disclosure [Text Block]

5. Severance Liability

During 2012, we entered into a separation agreement and a release with our former Chief Executive Officer and member of our board of directors, and in 2013 we entered into a separation agreement and a release with a former vice president level employee. Under the terms of these agreements and releases, we agreed to provide each individual with salary continuation and medical coverage payments for predetermined lengths of time. In addition, we agreed to provide the former Chief Executive Officer with certain stock option benefits including the grant of an additional stock option, accelerated vesting of all then-outstanding options previously granted to him, and an extension of the post-employment exercise period for all of his options, including the newly granted one. All costs associated with the modification of his options and the costs of the new option grant were immediately recognized upon his separation.

In July of 2014 we agreed to provide a terminated employee a lump sum salary payment and 4 months of medical coverage payments which ended December 31, 2014. 

As of December 31, 2014 and March 31, 2015, $0 remained outstanding associated with the severance liabilities. During the three-month period ended March 31, 2014, we made total payments of $47,700 to individuals whom these severance amounts were due.

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Accounting Policies, by Policy (Policies)

3 Months Ended

Mar. 31, 2015

Accounting Policies [Abstract]

Use of Estimates, Policy [Policy Text Block]

Use of Estimates

The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. These estimates include: the amount of stock-based compensation expense; the allowance for doubtful accounts; the estimated lives, valuation, and amortization of intangible assets (including capitalized software); depreciation of long-lived assets; valuation of warrants; post-employment benefits, and accruals for liabilities. While we believe that such estimates are fair, actual results could differ materially from those estimates.

Revenue Recognition, Policy [Policy Text Block]

Revenue Recognition

We market and license our products indirectly through channel distributors, independent software vendors (“ISVs”), value-added resellers (“VARs”) (collectively, “resellers”) and directly to corporate enterprises, governmental and educational institutions and others. Our product licenses are perpetual. We also separately sell intellectual property licenses, maintenance contracts, which are comprised of license updates and customer service access, as well as other products and services.

Software license revenues are recognized when:

● Persuasive evidence of an arrangement exists, (i.e., when we sign a non-cancellable 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 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-cancellable contract, or a customer’s purchase order, and

● Collectability is probable. If collectability is not considered probable, revenue is recognized when the fee is collected.

Revenue recognized on software arrangements involving multiple deliverables is allocated to each deliverable based on vendor-specific objective evidence (“VSOE”) or third party evidence of the fair values of each deliverable; such deliverables include licenses for software products, maintenance, private labeling fees, and customer training. We limit our assessment of VSOE for each deliverable to either the price charged when the same deliverable is sold separately or the price established by management having the relevant authority to do so, for a deliverable not yet sold separately.

If sufficient VSOE of the fair value does not exist so as to permit the allocation of revenue to the various elements of the arrangement, all revenue from the arrangement is deferred until such evidence exists or until all elements are delivered. If VSOE of the fair value does not exist, and the only undelivered element is maintenance, then we recognize revenue on a ratable basis. If VSOE of the fair value of all undelivered elements exists but does not exist for one or more delivered elements, then revenue is recognized using the residual method. Under the residual method, the fair value of the undelivered elements is deferred and the remaining portion of the arrangement fee is recognized as revenue.

Certain resellers (“stocking resellers”) purchase product licenses that they hold in inventory until they are resold to the ultimate end user (an “inventory stocking order”). At the time that a stocking reseller places an inventory stocking order, no product licenses are shipped by us to the stocking reseller; rather, the stocking reseller’s inventory is credited with the number of licenses purchased and the stocking reseller can resell (issue) any number of licenses from their inventory at any time. Upon receipt of an order to issue a license(s) from a stocking reseller’s inventory (a “draw down order”), we will ship the license(s) in accordance with the draw down order’s instructions. We defer recognition of revenue from inventory stocking orders until the underlying licenses are sold and shipped to the end user, as evidenced by the receipt and fulfillment of the stocking reseller’s draw down order, assuming all other revenue recognition criteria have been met.

There are no rights of return granted to resellers or other purchasers of our software products.

Revenue from maintenance contracts is recognized ratably over the related contract period, which generally ranges from one to five years.

All of our software licenses are denominated in U.S. dollars.

Deferred Rent [Policy Text Block]

Deferred Rent

The lease for our office in Campbell, California, as amended, (See Note 6) contains free rent and predetermined fixed escalations in our minimum rent payments. We recognize rent expense related to this lease on a straight-line basis over the term of the lease. We record any difference between the straight-line rent amounts and amounts payable under the lease as part of deferred rent in current or long-term liabilities, as appropriate.

Incentives that we received upon entering into the lease agreement are recognized on a straight-line basis as a reduction to rent over the term of the lease. We record the unamortized portion of these incentives as a part of deferred rent in current or long-term liabilities, as appropriate.

Postemployment Benefit Plans, Policy [Policy Text Block]

Postemployment Benefits (Severance Liability)

Nonretirement postemployment benefits, including salary continuation, supplemental unemployment benefits, severance benefits, disability-related benefits and continuation of benefits such as health care benefits, are recognized as a liability and a loss when it is probable that the employee(s) will be entitled to such benefits and the amount can be reasonably estimated. The cost of termination benefits recognized as a liability and an expense includes the amount of any lump-sum payments and the present value of any expected future payments. There was no severance liability reported at March 31, 2015 or December 31, 2014.

Research, Development, and Computer Software, Policy [Policy Text Block]

Software Development Costs

We capitalize software development costs incurred from the time technological feasibility of the software is established until the software is available for general release, in accordance with GAAP. Such capitalized costs are subsequently amortized as costs of revenue over the shorter of three years or the remaining estimated useful life of the product.

Research and development costs and other computer software maintenance costs related to the software development are expensed as incurred.

Impairment or Disposal of Long-Lived Assets, Policy [Policy Text Block]

Long-Lived Assets

Long-lived assets are assessed for possible impairment whenever events or changes in circumstances indicate that the carrying amounts may not be recoverable, whenever we have committed to a plan to dispose of the assets or, at a minimum, annually. Typically, for long-lived assets to be held and used, measurement of an impairment loss is based on the fair value of such assets, with fair value being determined based on appraisals, current market value, comparable sales value, and discounted future cash flows, among other variables, as appropriate. Assets to be held and used (which assets are affected by an impairment loss) are depreciated or amortized at their new carrying amount over their remaining estimated life; assets to be sold or otherwise disposed of are not subject to further depreciation or amortization. No such impairment charge was recorded during either of the three-month periods ended March 31, 2015 or 2014.

Receivables, Trade and Other Accounts Receivable, Allowance for Doubtful Accounts, Policy [Policy Text Block]

Allowance for Doubtful Accounts

We maintain an allowance for doubtful accounts that reflects our best estimate of potentially uncollectible trade receivables. The allowance is based on assessments of the collectability of specific customer accounts and the general aging and size of the accounts receivable. We regularly review the adequacy of our allowance for doubtful accounts by considering such factors as historical experience, credit worthiness, and current economic conditions that may affect a customer’s ability to pay. We specifically reserve for those accounts deemed uncollectible. We also establish, and adjust, a general allowance for doubtful accounts based on our review of the aging and size of our accounts receivable.

The following table sets forth the details of the Allowance for Doubtful Accounts for the three-month periods ended March 31, 2015 and 2014:

	Beginning Balance		Charge Offs		Recoveries		Provision			Ending Balance
Three Months Ended March 31,
2015	$	32,600	$	—	$	—	$	(9,700	)	$	22,900
2014	$	42,000	$	—	$	—	$	(18,900	)	$	23,100

Concentration Risk, Credit Risk, Policy [Policy Text Block]

Concentration of Credit Risk

For the three-month periods ended March 31, 2015 and 2014, respectively, we considered the customers listed in the following table to be our most significant customers. The table sets forth the percentage of sales attributable to each customer during the periods presented, and the respective customer’s ending accounts receivable balance as a percentage of reported accounts receivable, net, as of March 31, 2015 and 2014.

	Three Months Ended March 31, 2015			As of March 31, 2015			Three Months Ended March 31, 2014			As of March 31, 2014
Customer	Sales			Accounts Receivable			Sales			Accounts Receivable
Alcatel-Lucent		-			-			8.0	%		26.0	%
Centric		1.7	%		3.1	%		6.0	%		9.0	%
Elosoft		10.1	%		0.6	%		6.0	%		9.0	%
Ericsson		-			0.2	%		4.1	%		8.0	%
GE		1.9	%		2.3	%		13.0	%		22.0	%
IDS		5.8	%		-			8.0	%		-
Raytheon		13.4	%		23.0	%		0.5	%		-
Uniface		18.8	%		40.9	%		3.0	%		3.4	%
Total		51.7	%		70.1	%		48.6	%		77.4	%

Derivatives, Policy [Policy Text Block]

Derivative Financial Instruments

We currently do not have a material exposure to either commodity prices or interest rates; accordingly, we do not currently use derivative instruments to manage such risks. We evaluate all of our financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. All derivative financial instruments are recognized in the balance sheet at fair value. Changes in fair value are recognized in earnings if they are not eligible for hedge accounting or in other comprehensive income if they qualify for cash flow hedge accounting.

Fair Value of Financial Instruments, Policy [Policy Text Block]

Fair Value of Financial Instruments

The fair value of our accounts receivable, accounts payable and accrued liabilities approximate their carrying amounts due to the relative short maturities of these items.

The fair value of warrants at issuance and for those recorded as a liability at each reporting date are determined in accordance with the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) 820, “Fair Value Measurement,” which establishes a fair value hierarchy that prioritizes the assumptions (inputs) to valuation techniques used to price assets or liabilities that are measured at fair value. The hierarchy, as defined below, gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The guidance for fair value measurements requires that assets, liabilities and certain equity instruments measured at fair value be classified and disclosed in one of the following categories:

● Level 1: Defined as observable inputs, such as quoted (unadjusted) prices in active markets for identical assets or liabilities.

● Level 2: Defined as observable inputs other than quoted prices included in Level 1. This includes quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

● Level 3: Defined as unobservable inputs to the valuation methodology that are supported by little or no market activity and that are significant to the measurement of the fair value of the assets or liabilities. Level 3 assets and liabilities include those whose fair value measurements are determined using pricing models, discounted cash flow methodologies or similar valuation techniques, as well as significant management judgment or estimation.

As of March 31, 2015, all of our $294,700 Warrants Liability reported at fair value was categorized as Level 3 inputs (See Note 4).

Reclassification, Policy [Policy Text Block]

Reclassification

Certain items have been reclassified in the 2014 financial statements to conform to the 2015 presentations.

New Accounting Pronouncements, Policy [Policy Text Block]

Recent Accounting Pronouncements

In April 2015, FASB issued Accounting Standards Update (“ASU”) No. 2015-05 “Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement”. The objective of ASU 2015-05 is to provide guidance to reporting entities in the accounting for fees paid in a cloud computing arrangement. Specifically, if a cloud computing arrangement includes a software license, then the entity should account for the software license element of the arrangement consistent with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the entity should account for the arrangement as a service contract. The guidance will not change GAAP for an entity’s accounting for service contracts. The amendments in this ASU are effective for annual periods beginning after December 15, 2015, including interim periods within those annual periods. Early adoption is permitted. We are currently evaluating this ASU in order to determine whether or not its adoption will have a material impact on our results of operations, cash flows or financial position.

In August 2014, FASB issued ASU No. 2014-15 “Preparation of Financial Statements - Going Concern (Subtopic 205-40)”. Under U.S. GAAP, continuation of a reporting entity as a going concern is presumed as the basis for preparing financial statements unless and until the entity's liquidation becomes imminent. Preparation of financial statements under this presumption is commonly referred to as the going concern basis of accounting. If and when an entity's liquidation becomes imminent, financial statements should be prepared under the liquidation basis of accounting in accordance with Subtopic 205-30, Presentation of Financial Statements-Liquidation Basis of Accounting. Even when an entity's liquidation is not imminent, there may be conditions or events that raise substantial doubt about the entity's ability to continue as a going concern. In those situations, financial statements should continue to be prepared under the going concern basis of accounting, but the amendments in the update should be followed to determine whether to disclose information about the relevant conditions and events. The amendments in this ASU are effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. Early application is permitted. We will evaluate the going concern considerations in this ASU, however, at the current period, we do not believe that the Company has met conditions which would subject its consolidated financial statements to additional disclosure.

In June 2014, FASB issued ASU No. 2014-12 “Compensation – Stock Compensation (Topic 718)” (“ASU 2014-12”). The objective of ASU 2014-12 is to resolve the diverse accounting treatment being applied in practice by reporting entities in the accounting for share-based payment awards that require a specific performance target to be achieved in order for employees to become eligible to vest in the awards, particularly those awards whose terms may provide that the performance target could be achieved after the employee completes the requisite service period. That is, the employee would be eligible to vest in the award regardless of whether the employee is rendering service on the date the performance target is achieved. ASU 2014-12 is effective for annual periods and interim periods within those annual periods beginning after December 15, 2015, and earlier adoption is permitted. The share-based payment awards we currently have outstanding which have performance targets do not contain clauses wherein the performance target could be achieved after the employee completes the requisite service period; accordingly, adoption of ASU 2014-12 did not have a material impact on our results of operations, cash flows or financial position.

In May 2014, FASB issued ASU No. 2014-09 “Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-09”). ASU 2014-09 is the end result of a joint project initiated by FASB and the International Accounting Standards Board (“IASB”). IASB is the body that sets International Financial Reporting Standards (“IFRS”). The goal of FASB’s and IASB’s joint project was to clarify the principles for recognizing revenue and to develop a common revenue standard for U.S. GAAP and under IFRS. Specifically, ASU 2014-09:

1. Removes inconsistencies and weaknesses in revenue requirements.

2. Provides a more robust framework for addressing revenue issues.

3. Improves comparability of revenue recognition practices across entities, industries, jurisdictions, and capital markets.

4. Provides more useful information to users of financial statements through improved disclosure requirements.

5. Simplifies the preparation of financial statements by reducing the number of requirements to which an entity must refer.

The core principle of ASU 2014-09 is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 is effective for annual reporting periods beginning after December 15, 2016, including interim periods within such annual period. FASB is considering a one year deferral of ASU 2014-09. Early adoption is not permitted. We are currently evaluating this ASU in order to determine whether or not its adoption will have a material impact on our results of operations, cash flows or financial position.

In April 2014, FASB issued ASU No. 2014-08 “Presentation of Financial Statements (Topic 205) and Property, Plant and Equipment (Topic 360)” (“ASU 2014-08”). The objective of ASU 2014-08 is to address issues in Subtopic 205-20, “Presentation of Financial Statements – Discontinued Operations”, that give rise to complexity and difficulties in practice. Generally, ASU 2014-08 is effective for discontinued operations that occur within annual periods beginning on or after December 31, 2014, and interim periods within those years. Early adoption is permitted, but only for discontinued operations that have not been reported in financial statements previously issued or available for issuance. We currently have no discontinued operations to report; consequently, adoption of ASU 2014-08 did not have a material impact on our results of operations, cash flows or financial position.

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Note 13 - Supplemental Disclosure of Cash Flow Information

3 Months Ended

Mar. 31, 2015

Supplemental Cash Flow Elements [Abstract]

Cash Flow, Supplemental Disclosures [Text Block]

13. Supplemental Disclosure of Cash Flow Information

We disbursed $300 for the payment of interest expense during the three-month periods ended March 31, 2015. Such disbursement was for capital lease payments. We did not disburse any cash for the payment of interest expense during the three-month period ended March 31, 2014. We disbursed $480 for the payment of income taxes during the three-month period ended March 31, 2014. Such disbursement was made for the payment of foreign income taxes related to the operation of our Israeli subsidiary, GraphOn Research Labs, Ltd. We did not disburse any cash for the payment of income taxes during the three-month period ended March 31, 2014.

During the three-month period ended March 31, 2015 we reduced our warrants liability by $55,100, which was recorded in the Condensed Consolidated Statement of Operations. Such reduction reflected the aggregate fair value adjustments we recorded during such period and in addition to reclassified our 2014 PIPE warrant to equity. No cash was disbursed in conjunction with these items (See Note 4).

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Note 9 - Cost of Revenue

3 Months Ended

Mar. 31, 2015

Cost of Revenue [Abstract]

Cost Of Revenue [Text Block]

9. Cost of Revenue

Cost of revenue for the three-month periods ended March 31, 2015 and 2014 was:

					2015 Over (Under) 2014
	2015		2014		Dollars			Percent
Software service costs	$	41,700	$	60,500	$	(18,800	)		-31.1	%
Software product costs		62,800		74,300		(11,500	)		-15.5	%
	$	104,500	$	134,800	$	(30,300	)		-22.5	%

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Note 14 - Earnings (Loss) Per Share (Details) (Equity Option [Member])	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Equity Option [Member]
Note 14 - Earnings (Loss) Per Share (Details) [Line Items]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	35,406,957	35,557,372

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Note 7 - Stock-Based Compensation

3 Months Ended

Mar. 31, 2015

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

7. Stock-Based Compensation

The following table summarizes the stock-based compensation expense, net of amounts capitalized, we recorded in our Unaudited Condensed Consolidated Statements of Operations for the three-month periods ended March 31, 2015 and 2014, respectively, by classification:

	Three Months Ended March 31,
Statement of Operations Classification	2015		2014
Costs of revenue	$	3,000	$	(600	)
Selling and marketing expense		29,300		5,900
General and administrative expense		168,100		137,200
Research and development expense		21,800		27,200
	$	222,200	$	169,700

The following table presents summaries of the status and activity of our stock option awards for the three-month period ended March 31, 2015.

	Number of Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Terms (Years)		Aggregate Intrinsic Value
Outstanding – December 31, 2014		10,287,999		$	0.18
Granted		—			—
Exercised		(77,500	)		0.05
Forfeited or expired		—			—
Outstanding – March 31, 2015		10,210,499		$	0.18		7.07	$	194,100

Of the options outstanding as of March 31, 2015, 6,859,298 were vested, 3,304,385 were estimated to vest in future periods and 46,816 were estimated to be forfeited prior to their vesting. As of March 31, 2015, there was approximately $332,000 of total unrecognized compensation cost, net of estimated forfeitures, related to unvested stock options. Such cost is expected to be recognized over a weighted-average period of approximately ten months.

All options are exercisable immediately upon grant. Options vest ratably, generally over a 33-month period commencing in the fourth month after the grant date. We have the right to repurchase common stock issued upon the exercise of an option upon an optionee’s termination of service to us prior to full vesting at the option’s exercise price.

The following table presents summaries of the status and activity of our restricted stock awards for the three-month period ended March 31, 2015. We include the common stock underlying the restricted stock award in shares outstanding once such common stock has vested and the restriction has been removed (“releases” or “released”).The common stock vests ratably, generally over a 33-month period commencing in the fourth month after the award date.

	Number of Shares			Weighted Average Grant Date Fair Value		Weighted Average Remaining Recognition Period (Years)		Unrecognized Compensation Cost Remaining
Unreleased – December 31, 2014		4,314,983		$	0.18
Awarded		225,000			0.16
Released		(437,578	)		0.20
Forfeited		(80,221	)		0.17
Unreleased – March 31, 2015		4,022,184		$	0.17		2.27	$	580,900

As of March 31, 2015, there was approximately $580,900 of total unrecognized compensation cost, net of estimated forfeitures, related to unreleased restricted stock awards. That cost is expected to be recognized over a weighted-average period of approximately twenty-six months.

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Note 8 - Revenue

3 Months Ended

Mar. 31, 2015

Revenue [Abstract]

Revenue [Text Block]

8. Revenue

Revenue for the three-month periods ended March 31, 2015 and 2014 was:

					2015 Over (Under) 2014
Revenue	2015		2014		Dollars			Percent
Software Licenses
Windows	$	614,000	$	510,100	$	103,900			20.4	%
UNIX/Linux		170,000		104,000		66,000			63.5	%
		784,000		614,100		169,900			27.7	%
Software Service Fees
Windows		485,800		511,800		(26,000	)		-5.1	%
UNIX/Linux		188,300		198,200		(9,900	)		-5.0	%
		674,100		710,000		(35,900	)		-5.1	%
Other		13,000		16,100		(3,100	)		-19.3	%
Total Revenue	$	1,471,100	$	1,340,200	$	130,900			9.8	%

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Note 10 - Capitalized Software Development Costs

3 Months Ended

Mar. 31, 2015

Research and Development [Abstract]

Research, Development, and Computer Software Disclosure [Text Block]

10. Capitalized Software Development Costs

Capitalized software development costs consisted of the following:

	March 31, 2015			December 31, 2014
Software development costs	$	1,135,900		$	1,135,900
Accumulated amortization		(781,200	)		(727,200	)
	$	354,700		$	408,700

Amortization of capitalized software development costs is a component of costs of revenue. Capitalized software development costs amortization aggregated $54,000 and $68,000 during the three-month periods ended March 31, 2015, and 2014, respectively.

We recorded $0 capitalized software development costs during the three-month periods ended March 31, 2015 and 2014.

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Note 16 - Related Party Transactions (Details) (USD $)	3 Months Ended		0 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Feb. 04, 2013	Oct. 11, 2011
Note 16 - Related Party Transactions (Details) [Line Items]
Fair Value Adjustment of Warrants	$ 55,100	$ (1,133,700)
General and Administrative Expense [Member] | ipCapital Group Inc [Member]
Note 16 - Related Party Transactions (Details) [Line Items]
Fair Value Adjustment of Warrants	400	49,800
Tamalpais Partners LLC [Member]
Note 16 - Related Party Transactions (Details) [Line Items]
Related Party Transaction, Expenses from Transactions with Related Party	0	12,000
Due to Related Parties	0	0
ipCapital Group Inc [Member]
Note 16 - Related Party Transactions (Details) [Line Items]
Related Party Transaction, Expenses from Transactions with Related Party	0	0
Number Of Directors Provide Assistance In Execution Of Entity Strategic Decision				1
Term Of Warrants	5 years
Class of Warrant or Right, Number of Securities Called by Warrants or Rights (in Shares)	400,000
Class of Warrant or Right, Exercise Price of Warrants or Rights (in Dollars per share)	$ 0.26
Number Of Warrants To Vest (in Shares)	200,000
Number Of Vesting Installments	3
Remaining Warrants To Vest (in Shares)	200,000
ipCapital Licensing Company I, LLC [Member]
Note 16 - Related Party Transactions (Details) [Line Items]
Related Party Transaction, Expenses from Transactions with Related Party	0	0
Due to Related Parties	$ 0
Percentage Of Royalty Fees And Other Consideration Paid As Fees			10.00%
Period Of Agreement			18 months
Number Of Days Of Written Notice Of Termination			60 days

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Note 15 - Segment Information (Tables)

3 Months Ended

Mar. 31, 2015

Segment Reporting [Abstract]

Schedule of Revenue from External Customers Attributed to Foreign Countries by Geographic Area [Table Text Block]

	Three Months Ended March 31,
Revenue by Country	2015		2014
United States	$	751,400	$	551,000
Germany		67,100		96,400
Brazil		169,500		157,000
Other Countries		483,100		535,800
Total	$	1,471,100	$	1,340,200

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Note 8 - Revenue (Details) - Summary of Revenues (USD $)	3 Months Ended		12 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Dec. 31, 2014
Software Service Fees
Other	$ 13,000		$ 16,100
Other	(3,100)
Other	(19.30%)
Total Revenue	1,471,100	1,340,200	1,340,200
Total Revenue	130,900
Total Revenue	9.80%
Windows [Member] | Software Licenses [Member]
Software Licenses
Revenue	614,000		510,100
Revenue- 2015 Over (Under) 2014 - Dollars	103,900
Revenue- 2015 Over (Under) 2014 - Percent	20.40%
Software Service Fees
Software Service Fees	485,800		511,800
Software Service Fees- 2015 Over (Under) 2014 - Dollars	(26,000)
Software Service Fees- 2015 Over (Under) 2014 - Percent	(5.10%)
Unix / Linux [Member] | Software Licenses [Member]
Software Licenses
Revenue	170,000		104,000
Revenue- 2015 Over (Under) 2014 - Dollars	66,000
Revenue- 2015 Over (Under) 2014 - Percent	63.50%
Software Service Fees
Software Service Fees	188,300		198,200
Software Service Fees- 2015 Over (Under) 2014 - Dollars	(9,900)
Software Service Fees- 2015 Over (Under) 2014 - Percent	(5.00%)
Software Licenses [Member]
Software Licenses
Revenue	784,000		614,100
Revenue- 2015 Over (Under) 2014 - Dollars	169,900
Revenue- 2015 Over (Under) 2014 - Percent	27.70%
Software Service Fees
Software Service Fees	674,100		710,000
Software Service Fees- 2015 Over (Under) 2014 - Dollars	$ (35,900)
Software Service Fees- 2015 Over (Under) 2014 - Percent	(5.10%)

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Note 15 - Segment Information

3 Months Ended

Mar. 31, 2015

Segment Reporting [Abstract]

Segment Reporting Disclosure [Text Block]

15. Segment Information

The Company’s operations have historically been conducted and reported in two segments, GO-Global and hopTo, each representing a specific product line and dedicated operating resources. During the fourth quarter of 2014, the Company developed its hopTo Work product and go to market strategy, and beginning in January of 2015, it reorganized to a functional organization structure with consolidated decision authority over engineering, product management, sales and marketing resources. Resources in these functional departments are now shared for the development, sales and support of both the GO-Global and hopTo products. The GO-Global and hopTo Work products also have similar target customers, distribution channels, and common reseller partners.

Beginning with the three-month period ended March 31, 2015, the Company will no longer report financial results in two segments. Software revenue and services revenue for the hopTo Work product will be included in the Windows software and Windows services revenue, respectively.

Revenue by country for the three-month periods ended March 31, 2015 and 2014 was as follows:

	Three Months Ended March 31,
Revenue by Country	2015		2014
United States	$	751,400	$	551,000
Germany		67,100		96,400
Brazil		169,500		157,000
Other Countries		483,100		535,800
Total	$	1,471,100	$	1,340,200

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Note 4 - Liability Attributable to Warrants (Tables)

3 Months Ended

Mar. 31, 2015

Warrants Liability [Abstract]

Fair Value, Assets and Liabilities Measured on Nonrecurring Basis, Valuation Techniques [Table Text Block]

	Estimated Volatility			Annualized Forfeiture Rate		Expected Term (Years)		Estimated Exercise Factor		Risk-Free Interest Rate			Dividends
2011 Transaction
March 31, 2015		110	%		—		1.44		3.5		0.40	%		—
December 31, 2014		104	%		—		1.69		3.5		0.56	%		—
2014 Transaction
March 31, 2015		—			—		—		—		—			—
December 31, 2014		114	%		—		4.08		3.5		1.35	%		—
ipCapital
March 31, 2015		107	%		—		1.56		4.0		0.44	%		—
December 31, 2014		105	%		—		1.81		4.0		0.61	%		—

Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Table Text Block]

Warrants liability – December 31, 2014 fair value	$	647,300
Change in fair value of warrant liability recorded in other income		55,100
Change in fair value of warrant liability recorded in general and administrative expense		(400	)
Reclassification of 2014 PIPE Warrant to Equity		(407,300	)
Warrants liability – March 31, 2015 fair value	$	294,700

Schedule of Stockholders' Equity Note, Warrants or Rights [Table Text Block]

	Beginning Outstanding		Issued		Exercised		Ending Outstanding
2011 Transaction		10,302,500		—		—		10,302,500
2014 Transaction		5,650,001		—		—		5,650,001
Exercise Agreement		4,500,000		—		—		4,500,000
ipCapital		400,000		—		—		400,000
Consultant Warrant (1)		169,273		—		—		169,273
Offer to Exercise		152,500		—		—		152,500
Total		21,174,274		—		—		21,174,274

	Beginning Outstanding		Issued		Exercised		Ending Outstanding
2011 Transaction		11,302,500		—		1,000,000		10,302,500
2014 Transaction		—		5,650,001		—		5,650,001
Exercise Agreement		4,500,000		—		—		4,500,000
ipCapital		400,000		—		—		400,000
Consultant Warrant (1)		312,500		—		—		312,500
Offer to Exercise		152,500		—		—		152,500
Total		16,667,500		5,650,001		1,000,000		21,317,501