Commission File Number: 0-25203
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OmniComm Systems, Inc.
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(Exact name of registrant as specified in its Charter)
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Delaware
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11-3349762
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(State or other jurisdiction of Incorporation or organization)
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(IRS Employer Identification Number)
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2101 W. Commercial Blvd. Suite 3500, Ft. Lauderdale, FL
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33309
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Address of principal executive offices
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Zip Code
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954.473.1254
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(Registrant’s Telephone Number including area code)
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Large accelerated filer
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[ ]
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Accelerated filer
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[ ]
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Non-accelerated filer
(Do not check if smaller reporting company)
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[ ]
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Smaller reporting company
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[√]
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PART I. FINANCIAL INFORMATION
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3
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ITEM 1. FINANCIAL STATEMENTS
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3
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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37
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
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56
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ITEM 4. CONTROLS AND PROCEDURES
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57
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PART II OTHER INFORMATION
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57
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ITEM 1. LEGAL PROCEEDINGS.
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57
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ITEM 1A. RISK FACTORS.
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57
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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
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57
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ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
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57
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ITEM 4. MINE SAFETY DISCLOSURES.
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57
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ITEM 5. OTHER INFORMATION.
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57
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ITEM 6. EXHIBITS
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58
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SIGNATURES
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59
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Exhibit 31.1*
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60
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Exhibit 31.2*
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61
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EXHIBIT 32.1**
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62
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Exhibit 101.INS XBRL Instance Document***
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Exhibit 101.SCH XBRL Taxonomy Extension Schema Document***
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Exhibit 101.CAL XBRL Taxonomy Extension Calculation Document***
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Exhibit 101.DEF XBRL Taxonomy Extension Definition Document***
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Exhibit 101.LAB XBRL Taxonomy Extension Label Document***
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Exhibit 101.PRE XBRL Taxonomy Extension Presentation Document***
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* Filed herewith
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**Furnished herewith
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*** In accordance with Rule 406T of Regulation S-T, the information in Exhibit 101 is furnished and deemed not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of Section 18 of the Exchange Act of 1934, and otherwise is not subject to liability under these sections and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, except as expressly set forth by specific reference in such filing.
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September 30, 2012
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December 31, 2011
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|||||||
(unaudited)
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||||||||
ASSETS
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||||||||
CURRENT ASSETS
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||||||||
Cash
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$ | 805,546 | $ | 1,302,287 | ||||
Accounts receivable, net of allowance for doubtful accounts of $269,207 and $142,444, respectively
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1,291,938 | 1,283,944 | ||||||
Prepaid expenses
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167,392 | 157,363 | ||||||
Total current assets
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2,264,876 | 2,743,594 | ||||||
Property and equipment, net
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501,633 | 766,207 | ||||||
Other assets
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||||||||
Intangible assets, net
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-0- | 232,117 | ||||||
Other assets
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50,673 | 33,669 | ||||||
TOTAL ASSETS
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$ | 2,817,182 | $ | 3,775,587 | ||||
LIABILITIES AND SHAREHOLDERS' (DEFICIT)
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||||||||
CURRENT LIABILITIES
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||||||||
Accounts payable and accrued expenses
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$ | 1,913,548 | $ | 1,460,835 | ||||
Notes payable, current portion
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634,486 | 214,300 | ||||||
Notes payable, related parties, current portion
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20,000 | -0- | ||||||
Deferred revenue, current portion
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3,907,430 | 4,293,316 | ||||||
Convertible notes payable, related parties, current portion, net of discount of $-0- and $-0-, respectively
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3,020,000 | -0- | ||||||
Convertible notes payable, current portion
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175,000 | 75,000 | ||||||
Patent settlement liability, current portion
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962,500 | 925,000 | ||||||
Conversion feature liability, related parties
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2,221,496 | 740,218 | ||||||
Conversion feature liability
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48,840 | 18,693 | ||||||
Warrant liability, related parties
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4,806,206 | 1,506,287 | ||||||
Warrant liability
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179,337 | 186,421 | ||||||
Total current liabilities
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17,888,843 | 9,420,070 | ||||||
LONG TERM LIABILITIES
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||||||||
Notes payable, long term, net of current portion
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17,500 | 569,486 | ||||||
Notes payable, related parties, long term, net of current portion, net of discount of $775,429 and $1,132,144, respectively
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3,691,450 | 3,354,735 | ||||||
Deferred revenue, long term, net of current portion
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867,349 | 584,608 | ||||||
Convertible notes payable, related parties, net of current portion
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6,420,000 | 9,440,000 | ||||||
Convertible notes payable, net of current portion
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50,000 | 150,000 | ||||||
Patent settlement liability, long term, net of current portion
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1,284,190 | 1,455,247 | ||||||
TOTAL LIABILITIES
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30,219,332 | 24,974,146 | ||||||
COMMITMENTS AND CONTINGENCIES (See Note 11)
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||||||||
SHAREHOLDERS' (DEFICIT)
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||||||||
Preferred stock, $0.001 par value, 10,000,000 shares authorized 3,722,500 shares undesignated
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-0- | -0- | ||||||
Series B convertible preferred stock - 230,000 shares authorized, -0- and -0- issued and outstanding, respectively at $0.001 par value; liquidation preference $-0- and $-0-, respectively
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-0- | -0- | ||||||
Series C convertible preferred stock - 747,500 shares authorized, -0- and -0- issued and outstanding, respectively at $0.001 par value; liquidation preference $-0- and $-0-, respectively
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-0- | -0- | ||||||
Series A convertible preferred stock - 5,000,000 shares authorized, 4,125,224 and 4,125,224 issued and outstanding, respectively at $0.001 par value; liquidation preference $4,125,224 and $4,125,224, respectively
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4,125 | 4,125 | ||||||
Series D preferred stock - 250,000 shares authorized, 250,000 and 250,000 issued and outstanding, respectively at $0.001 par value
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250 | 250 | ||||||
Common stock - 250,000,000 shares authorized, 86,556,495 and 86,481,495 issued and outstanding, respectively, at $0.001 par value
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86,556 | 86,482 | ||||||
Additional paid in capital - preferred
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4,717,804 | 4,717,804 | ||||||
Additional paid in capital - common
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36,619,235 | 36,572,099 | ||||||
Accumulated other comprehensive (loss)
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(64,300 | ) | (53,714 | ) | ||||
Accumulated deficit
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(68,765,820 | ) | (62,525,605 | ) | ||||
TOTAL SHAREHOLDERS' (DEFICIT)
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(27,402,150 | ) | (21,198,559 | ) | ||||
TOTAL LIABILITIES AND SHAREHOLDERS' (DEFICIT)
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$ | 2,817,182 | $ | 3,775,587 |
For the nine months ended
September 30, |
For the three months ended
September 30, |
|||||||||||||||
2012
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2011
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2012
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2011
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Revenues
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$ | 11,317,590 | $ | 9,952,782 | $ | 3,894,656 | $ | 3,293,405 | ||||||||
Reimbursable revenues
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579,898 | 50,721 | 163,664 | 43,911 | ||||||||||||
Total revenues
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11,897,488 | 10,003,503 | 4,058,320 | 3,337,316 | ||||||||||||
Cost of goods sold
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2,020,507 | 1,390,239 | 690,763 | 488,693 | ||||||||||||
Reimbursable expenses - cost of goods sold
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397,817 | 114,358 | 50,289 | 71,932 | ||||||||||||
Total cost of sales
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2,418,324 | 1,504,597 | 741,052 | 560,625 | ||||||||||||
Gross margin
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9,479,164 | 8,498,906 | 3,317,268 | 2,776,691 | ||||||||||||
Operating expenses
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||||||||||||||||
Salaries, benefits and related taxes
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6,374,375 | 6,018,625 | 2,086,203 | 1,830,261 | ||||||||||||
Rent and occupancy expenses
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649,424 | 689,836 | 226,979 | 238,819 | ||||||||||||
Consulting services
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144,496 | 230,630 | 77,060 | 77,775 | ||||||||||||
Legal and professional fees
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236,967 | 299,349 | 39,512 | 58,554 | ||||||||||||
Travel
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292,323 | 340,154 | 86,240 | 92,950 | ||||||||||||
Telephone and internet
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111,921 | 155,289 | 38,317 | 39,066 | ||||||||||||
Selling, general and administrative
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698,512 | 647,109 | 232,371 | 132,385 | ||||||||||||
Bad debt expense
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126,763 | -0- | 42,619 | -0- | ||||||||||||
Depreciation expense
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308,666 | 355,554 | 75,912 | 113,834 | ||||||||||||
Amortization expense
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232,117 | 348,175 | -0- | 116,058 | ||||||||||||
Total operating expenses
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9,175,564 | 9,084,721 | 2,905,213 | 2,699,702 | ||||||||||||
Operating income/(loss)
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303,600 | (585,815 | ) | 412,055 | 76,989 | |||||||||||
Other income/(expense)
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||||||||||||||||
Interest expense
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(89,537 | ) | (668,680 | ) | (28,649 | ) | (120,674 | ) | ||||||||
Interest expense, related parties
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(1,573,444 | ) | (1,099,578 | ) | (527,442 | ) | (374,362 | ) | ||||||||
Interest income
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225 | 4,625 | 17 | -0- | ||||||||||||
Change in derivative liabilities
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(4,804,260 | ) | (2,041,161 | ) | (4,215,476 | ) | 923,590 | |||||||||
Loss on sale of property and equipment
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(22,106 | ) | -0- | -0- | -0- | |||||||||||
Transaction gain/(loss)
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6 | 9,772 | 973 | 4,856 | ||||||||||||
Income/(loss) before income taxes
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(6,185,516 | ) | (4,380,837 | ) | (4,358,522 | ) | 510,399 | |||||||||
Income taxes
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(54,699 | ) | -0- | (54,699 | ) | -0- | ||||||||||
Net income/(loss)
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(6,240,215 | ) | (4,380,837 | ) | (4,413,221 | ) | 510,399 | |||||||||
Preferred stock dividends
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||||||||||||||||
Preferred stock dividends in arrears | ||||||||||||||||
Series A preferred
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(177,528 | ) | (153,850 | ) | (51,989 | ) | (51,847 | ) | ||||||||
Total preferred stock dividends
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(177,528 | ) | (153,850 | ) | (51,989 | ) | (51,847 | ) | ||||||||
Net income/(loss) attributable to common stockholders
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$ | (6,417,743 | ) | $ | (4,534,687 | ) | $ | (4,465,210 | ) | $ | 458,552 | |||||
Net income/(loss) per share
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||||||||||||||||
Basic and diluted
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$ | (0.07 | ) | $ | (0.05 | ) | $ | (0.05 | ) | $ | 0.01 | |||||
Weighted average number of shares outstanding
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||||||||||||||||
Basic and diluted
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86,496,550 | 86,299,810 | 86,526,332 | 86,481,495 |
For the nine months ended September 30, | For the three months ended September 30, | |||||||||||||||
2012
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2011
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2012 | 2011 | |||||||||||||
Net income/(loss) attributable to common stockholders
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$ | (6,417,743 | ) | $ | (4,534,687 | ) | $ | (4,465,210 | ) | $ | 458,552 | |||||
Other comprehensive income/(loss):
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||||||||||||||||
Change in foreign currency translation adjustment
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(10,586 | ) | (22,790 | ) | (3,398 | ) | (11,276 | ) | ||||||||
Other comprehensive income/(loss)
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(10,586 | ) | (22,790 | ) | (3,398 | ) | (11,276 | ) | ||||||||
Comprehensive income/(loss):
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$ | (6,428,329 | ) | $ | (4,557,477 | ) | $ | (4,468,608 | ) | $ | 447,276 |
Preferred Stock | Common Stock | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
5% Series A Convertible
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8% Series B Convertible
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8% Series C Convertible | Series D Preferred Stock | Additional |
Additional
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Accumulated | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Number
of shares
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$ 0.001
Par value
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Number
of shares
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$ 0.001Par value
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Number
of shares
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$ 0.001
Par value
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Number
of shares
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$ 0.001
Par value
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paid in
capital
preferred
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Number
of shares
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$ 0.001
Par value
|
paid in
capital
common
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Accumulated
deficit
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other
comprehensive
income (loss)
|
Treasury
stock
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Total
shareholders'
(deficit)
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|||||||||||||||||||||||||||||||||||||||||||||||||
Balances at December 31, 2010
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4,125,224 | $ | 4,125 | -0- | $ | -0- | -0- | $ | -0- | 250,000 | $ | 250 | $ | 4,717,804 | 86,081,495 | $ | 86,082 | $ | 36,906,356 | $ | (59,001,262 | ) | $ | (24,298 | ) | $ | (503,086 | ) | $ | (17,814,029 | ) | |||||||||||||||||||||||||||||||||
Employee stock option expense
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129,229 | 129,229 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Treasury stock retired
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(503,086 | ) | 503,086 | -0- | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Foreign currency
translation adjustment
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(29,416 | ) | (29,416 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock in lieu of salary
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400,000 | 400 | 39,600 | 40,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net loss for the year ended December 31, 2011
|
-0- | -0- | -0- | -0- | -0- | -0- | -0- | -0- | -0- | -0- | -0- | -0- | (3,524,343 | ) | -0- | -0- | (3,524,343 | ) | ||||||||||||||||||||||||||||||||||||||||||||||
Balances at December 31, 2011
|
4,125,224 | 4,125 | -0- | -0- | -0- | -0- | 250,000 | 250 | 4,717,804 | 86,481,495 | 86,481 | 36,572,099 | (62,525,605 | ) | (53,714 | ) | -0- | (21,198,559 | ) | |||||||||||||||||||||||||||||||||||||||||||||
Employee stock option expense
|
47,211 | 47,211 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Foreign currency
translation adjustment
|
(10,586 | ) | (10,586 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock, employee stock option exercise
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75,000 | 75 | (75 | ) | -0- | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net loss for the nine months ended September 30, 2012
|
-0- | -0- | -0- | -0- | -0- | -0- | -0- | -0- | -0- | -0- | -0- | -0- | (6,240,215 | ) | -0- | -0- | (6,240,215 | ) | ||||||||||||||||||||||||||||||||||||||||||||||
Balances at September 30, 2012
|
4,125,224 | $ | 4,125 | -0- | $ | -0- | -0- | $ | -0- | 250,000 | $ | 250 | $ | 4,717,804 | 86,556,495 | $ | 86,556 | $ | 36,619,235 | $ | (68,765,820 | ) | $ | (64,300 | ) | $ | -0- | $ | (27,402,150 | ) |
For the nine months ended September 30,
|
||||||||
2012
|
2011
|
|||||||
CASH FLOWS FROM OPERATING ACTIVITIES
|
||||||||
Net loss
|
$ | (6,240,215 | ) | $ | (4,380,837 | ) | ||
Adjustment to reconcile net loss to net cash (used in) operating activities
|
||||||||
Change in derivative liabilities
|
4,804,260 | 2,041,161 | ||||||
Loss from sale of property and equipment, net
|
14,606 | -0- | ||||||
Interest expense from derivative instruments
|
356,715 | 596,122 | ||||||
Common stock issued in lieu of salary
|
-0- | 40,000 | ||||||
Employee stock option expense
|
47,211 | 111,548 | ||||||
Depreciation and amortization
|
540,783 | 703,729 | ||||||
Changes in operating assets and liabilities
|
||||||||
Accounts receivable
|
(134,757 | ) | 163,918 | |||||
Provision for doubtful accounts
|
126,763 | -0- | ||||||
Prepaid expenses
|
(10,029 | ) | (51,592 | ) | ||||
Other assets
|
(17,004 | ) | (206 | ) | ||||
Accounts payable and accrued expenses
|
452,712 | 602,714 | ||||||
Patent settlement liability
|
(133,557 | ) | (104,572 | ) | ||||
Deferred revenue
|
(103,145 | ) | (979,271 | ) | ||||
Net cash (used in) operating activities
|
(295,657 | ) | (1,257,286 | ) | ||||
CASH FLOWS FROM INVESTING ACTIVITIES
|
||||||||
Proceeds from sale of property and equipment
|
50,000 | -0- | ||||||
Purchase of property and equipment
|
(108,698 | ) | (71,374 | ) | ||||
Net cash provided by/(used in) investing activities
|
(58,698 | ) | (71,374 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES
|
||||||||
Repayments of notes payable
|
(131,800 | ) | (212,500 | ) | ||||
Proceeds from notes payable, related parties
|
-0- | 438,000 | ||||||
Net cash provided by / (used in) financing activities
|
(131,800 | ) | 225,500 | |||||
Effect of exchange rate changes on cash and cash equivalents
|
(10,586 | ) | (22,790 | ) | ||||
Net decrease in cash and cash equivalents
|
(496,741 | ) | (1,125,950 | ) | ||||
Cash and cash equivalents at beginning of period
|
1,302,287 | 1,213,397 | ||||||
Cash and cash equivalents at end of period
|
$ | 805,546 | $ | 87,447 | ||||
Supplemental disclosures of cash flow information:
|
||||||||
Cash paid during the period for:
|
||||||||
Income taxes
|
$ | 54,699 | $ | -0- | ||||
Interest
|
$ | 1,242,079 | $ | 598,945 | ||||
Non-cash transactions
|
||||||||
Notes payable issued in exchange for existing notes payable
|
$ | -0- | $ | 2,866,879 | ||||
Notes payable issued for matured convertible notes payable
|
$ | -0- | $ | 45,000 |
For the nine months ended
|
||||||||
Revenue activity
|
September 30, 2012
|
September 30, 2011
|
||||||
Set-up fees
|
$ | 4,085,437 | $ | 2,495,415 | ||||
Change orders
|
202,498 | 251,961 | ||||||
Maintenance
|
3,928,079 | 4,119,880 | ||||||
Software licenses
|
2,525,933 | 2,163,071 | ||||||
Professional services
|
638,302 | 520,930 | ||||||
Hosting
|
517,239 | 452,246 | ||||||
Total
|
$ | 11,897,488 | $ | 10,003,503 |
For the three months ended
|
||||||||
Revenue activity
|
September 30, 2012
|
September 30, 2011
|
||||||
Set-up fees
|
$ | 1,458,304 | $ | 909,152 | ||||
Change orders
|
48,417 | 91,058 | ||||||
Maintenance
|
1,307,547 | 1,355,249 | ||||||
Software licenses
|
847,297 | 545,665 | ||||||
Professional services
|
213,187 | 278,227 | ||||||
Hosting
|
183,568 | 157,965 | ||||||
Total
|
$ | 4,058,320 | $ | 3,337,316 |
For the periods ended
|
||||||||
September 30, 2012
|
December 31, 2011
|
|||||||
Beginning of period
|
$ | 142,444 | $ | 269,869 | ||||
Bad debt expense
|
126,763 | (119,889 | ) | |||||
Write-offs
|
-0- | (7,536 | ) | |||||
End of period
|
$ | 269,207 | $ | 142,444 |
Revenues
|
Accounts receivable
|
|||||||||||||||
For the period ended
|
Number of customers
|
Percentage of total revenues
|
Number of customers
|
Percentage of
accounts receivable
|
||||||||||||
September 30, 2012
|
2 | 38 | % | 1 | 13 | % | ||||||||||
December 31, 2011
|
1 | 21 | % | 3 | 59 | % | ||||||||||
September 30, 2011
|
1 | 21 | % | 1 | 25 | % |
European revenues
For the nine months ended
|
|||||||||||||
September 30, 2012 |
September 30, 2011
|
||||||||||||
European revenues
|
% of Total revenues
|
European revenues
|
% of Total revenues
|
||||||||||
$ |
1,157,462
|
10 | % | $ | 1,811,378 | 18 | % |
Anti-dilutive security
|
September 30, 2012
|
September 30, 2011
|
||||||
Convertible preferred stock
|
2,750,149 | 2,750,149 | ||||||
Employee stock options
|
10,502,500 | 11,450,500 | ||||||
Warrants
|
44,089,580 | 52,195,758 | ||||||
Convertible notes
|
24,620,000 | 24,620,000 | ||||||
Shares issuable for accrued interest
|
559,280 | 1,979,552 | ||||||
Total
|
82,521,509 | 92,995,959 |
For the nine months ended
|
||||||||||||||||||||||||
September 30, 2012
|
September 30, 2011
|
|||||||||||||||||||||||
Income (loss)
numerator |
Shares
denominator |
Per-share
amount |
Income (loss)
numerator |
Shares
denominator |
Per-share
amount |
|||||||||||||||||||
Basic EPS
|
$ | (6,417,743 | ) | 86,496,550 | $ | (0.07 | ) | $ | (4,534,687 | ) | 86,299,810 | $ | (0.05 | ) | ||||||||||
Effect of dilutive securities
|
||||||||||||||||||||||||
None
|
-0- | -0- | -0- | -0- | -0- | -0- | ||||||||||||||||||
Diluted EPS
|
$ | (6,417,743 | ) | 86,496,550 | $ | (0.07 | ) | $ | (4,534,687 | ) | 86,299,810 | $ | (0.05 | ) |
For the three months ended
|
||||||||||||||||||||||||
September 30, 2012
|
September 30, 2011
|
|||||||||||||||||||||||
Income (loss)
numerator |
Shares
denominator |
Per-share
amount |
Income (loss)
numerator |
Shares
denominator |
Per-share
amount |
|||||||||||||||||||
Basic EPS
|
$ | (4,465,210 | ) | 86,526,332 | $ | (0.05 | ) | $ | 458,552 | 86,481,495 | $ | 0.01 | ||||||||||||
Effect of dilutive securities
|
||||||||||||||||||||||||
None
|
-0- | -0- | -0- | -0- | -0- | -0- | ||||||||||||||||||
Diluted EPS
|
$ | (4,465,210 | ) | 86,526,332 | $ | (0.05 | ) | $ | 458,552 | 86,481,495 | $ | 0.01 |
September 30, 2012
|
December 31, 2011
|
||||||||||||||||||||||||
Cost
|
Accumulated depreciation
|
Net book value
|
Cost
|
Accumulated depreciation
|
Net book value
|
Estimated useful life
|
|||||||||||||||||||
Computer & office equipment
|
$ | 1,485,357 | $ | 1,141,486 | $ | 343,871 | $ | 1,550,907 | $ | 1,094,152 | $ | 456,755 |
5 Years
|
||||||||||||
Leasehold improvements
|
80,351 | 65,955 | 14,396 | 75,476 | 60,785 | 14,691 |
5 Years
|
||||||||||||||||||
Computer software
|
1,499,677 | 1,378,347 | 121,330 | 1,477,539 | 1,207,662 | 269,877 |
3 Years
|
||||||||||||||||||
Office furniture
|
110,338 | 88,302 | 22,036 | 107,389 | 82,505 | 24,884 |
5 Years
|
||||||||||||||||||
Total
|
$ | 3,175,723 | $ | 2,674,090 | $ | 501,633 | $ | 3,211,311 | $ | 2,445,104 | $ | 766,207 |
September 30, 2012
|
December 31, 2011
|
|||||||||||||||||||||||||
Asset
|
Cost
|
Accumulated amortization
|
Net book value
|
Cost
|
Accumulated amortization
|
Net book value
|
Estimated useful life
|
|||||||||||||||||||
Customer lists
|
$ | 1,392,701 | $ | 1,392,701 | $ | -0- | $ | 1,392,701 | $ | 1,160,584 | $ | 232,117 |
3 Years
|
|||||||||||||
$ | 1,392,701 | $ | 1,392,701 | $ | -0- | $ | 1,392,701 | $ | 1,160,584 | $ | 232,117 |
Account
|
September 30, 2012
|
December 31, 2011
|
||||||
Accounts payable
|
$ | 616,594 | $ | 672,516 | ||||
Accrued payroll and related costs
|
535,357 | 176,900 | ||||||
Other accrued expenses
|
156,038 | 70,047 | ||||||
Accrued interest
|
605,559 | 541,372 | ||||||
Total accounts payable and accrued expenses
|
$ | 1,913,548 | $ | 1,460,835 |
Ending
principal |
Non related party
|
Related party
|
||||||||||||||||||||||||
Origination
date |
Maturity
date |
Interest
rate |
September 30,
2012 |
Current
|
Long
term |
Current
|
Long
term |
|||||||||||||||||||
2/1/2011
|
4/1/2013
|
12 | % | $ | 137,500 | $ | 137,500 | $ | -0- | $ | -0- | $ | -0- | |||||||||||||
4/1/2011
|
10/1/2012
|
12 | % | 45,000 | 45,000 | -0- | -0- | -0- | ||||||||||||||||||
12/31/2011
|
4/1/2013
|
12 | % | 20,000 | -0- | -0- | 20,000 | -0- | ||||||||||||||||||
4/1/2012
|
1/1/2014
|
12 | % | 17,500 | -0- | 17,500 | -0- | -0- | ||||||||||||||||||
12/16/2010
|
12/16/2012
|
12 | % | 20,000 | 20,000 | -0- | -0- | -0- | ||||||||||||||||||
12/31/2010
|
1/1/2013
|
10 | % | 308,561 | 308,561 | -0- | -0- | -0- | ||||||||||||||||||
12/31/2010
|
1/1/2013
|
10 | % | 123,425 | 123,425 | -0- | -0- | -0- | ||||||||||||||||||
3/31/2011
|
4/1/2014
|
12 | % | 2,866,879 | -0- | -0- | -0- | 2,866,879 | ||||||||||||||||||
12/31/2011
|
1/1/2015
|
12 | % | 1,600,000 | -0- | -0- | -0- | 1,600,000 | ||||||||||||||||||
Discount on note payable
|
-0- | -0- | -0- | (775,429 | ) | |||||||||||||||||||||
Total
|
$ | 5,138,865 | $ | 634,486 | $ | 17,500 | $ | 20,000 | $ | 3,691,450 |
Ending
principal |
Non related party
|
Related party
|
||||||||||||||||||||||||
Origination
date |
Maturity
date |
Interest
rate |
December 31,
2011 |
Current
|
Long
term |
Current
|
Long
term |
|||||||||||||||||||
12/31/2010
|
7/1/2012
|
12 | % | $ | 51,800 | $ | 51,800 | $ | -0- | $ | -0- | $ | -0- | |||||||||||||
12/31/2010
|
7/1/2012
|
12 | % | 60,000 | 60,000 | -0- | -0- | -0- | ||||||||||||||||||
2/1/2011
|
4/1/2013
|
12 | % | 137,500 | -0- | 137,500 | -0- | -0- | ||||||||||||||||||
4/1/2011
|
10/1/2012
|
12 | % | 45,000 | 45,000 | -0- | -0- | -0- | ||||||||||||||||||
12/31/2011
|
4/1/2013
|
12 | % | 20,000 | -0- | -0- | -0- | 20,000 | ||||||||||||||||||
12/31/2010
|
4/1/2012
|
12 | % | 37,500 | 37,500 | -0- | -0- | -0- | ||||||||||||||||||
12/16/2010
|
12/16/2012
|
12 | % | 20,000 | 20,000 | -0- | -0- | -0- | ||||||||||||||||||
12/31/2010
|
1/1/2013
|
10 | % | 308,561 | -0- | 308,561 | -0- | -0- | ||||||||||||||||||
12/31/2010
|
1/1/2013
|
10 | % | 123,425 | -0- | 123,425 | -0- | -0- | ||||||||||||||||||
3/31/2011
|
4/1/2014
|
12 | % | 2,866,879 | -0- | -0- | -0- | 2,866,879 | ||||||||||||||||||
12/31/2011
|
1/1/2015
|
12 | % | 1,600,000 | -0- | -0- | -0- | 1,600,000 | ||||||||||||||||||
Discount on note payable | -0- | -0- | -0- | (1,132,144 | ) | |||||||||||||||||||||
Total
|
$ | 5,270,665 | $ | 214,300 | $ | 569,486 | $ | -0- | $ | 3,354,735 |
i.
|
Promissory Note issued on April 13, 2010 for $450,000 with a maturity date of December 31, 2010.
|
ii.
|
Promissory Note issued on June 29, 2010 for $115,000 with a maturity date of December 31, 2010.
|
iii.
|
Promissory Note issued on September 30, 2010 for $695,000 with a maturity date of December 31, 2010.
|
iv.
|
Promissory Note issued on December 31, 2010 for $1,197,500 with a maturity date of December 31, 2011.
|
v.
|
Promissory Note issued on December 31, 2010 for $409,379 with a maturity date of April 01, 2012.
|
i.
|
Promissory Note issued on August 16, 2011 for $80,000 with a maturity date of January 01, 2013.
|
ii.
|
Promissory Note issued on August 19, 2011 for $15,000 with a maturity date of January 01, 2013.
|
iii.
|
Promissory Note issued on August 25, 2011 for $35,000 with a maturity date of January 01, 2013.
|
iv.
|
Promissory Note issued on September 02, 2011 for $32,000 with a maturity date of January 01, 2013.
|
v.
|
Promissory Note issued on September 15, 2011 for $80,000 with a maturity date of January 01, 2013.
|
vi.
|
Promissory Note issued on September 28, 2011 for $100,000 with a maturity date of January 01, 2013.
|
i.
|
Promissory Note issued on May 13, 2011 for $96,000 with a maturity date of January 01, 2013;
|
ii.
|
Promissory Note issued on September 30, 2011 for $342,000 with a maturity date of April 01, 2014;
|
iii.
|
Promissory Note issued on October 05, 2011 for $130,000 with a maturity date of April 01, 2014;
|
iv.
|
Promissory Note issued on October 28, 2011 for $123,000 with a maturity date of April 01, 2014;
|
v.
|
Promissory Note issued on October 31, 2011 for $82,000 with a maturity date of April 01, 2014;
|
vi.
|
Promissory Note issued on November 23, 2011 for $60,000 with a maturity date of January 1, 2013; and
|
vii.
|
Accrued and unpaid interest in the amount of $767,000.
|
Carrying amount
|
||||||||||||||||||||||||||||||||||||||||||||||
Short term
|
Long term
|
|||||||||||||||||||||||||||||||||||||||||||||
Date of
issuance
|
Maturity
date
|
Interest
rate |
Original
principal |
Principal at September 30,
|
Allocated
discount |
Total
discount amortized |
Discount at September 30,
|
Carrying amount at September 30,
|
Related
|
Non
related |
Related
|
Non
related |
||||||||||||||||||||||||||||||||||
August 1, 1999 | June 30, 2004 | 10 | % | $ | 862,500 | $ | 75,000 | $ | -0- | $ | -0- | $ | -0- | $ | 75,000 | $ | -0- | $ | 75,000 | $ | -0- | $ | -0- | |||||||||||||||||||||||
August 29, 2008
|
August 29, 2013
|
10 | % | 2,270,000 | 1,920,000 | 2,052,080 | 2,052,080 | -0- | 1,920,000 | 1,920,000 | -0- | -0- | -0- | |||||||||||||||||||||||||||||||||
December 16, 2008
|
December 16, 2013
|
12 | % | 5,075,000 | 4,980,000 | 1,370,250 | 1,370,250 | -0- | 4,980,000 | -0- | -0- | 4,980,000 | -0- | |||||||||||||||||||||||||||||||||
September 30, 2009
|
April 1, 2013
|
12 | % | 1,400,000 | 1,200,000 | 526,400 | 526,400 | -0- | 1,200,000 | 1,100,000 | 100,000 | -0- | -0- | |||||||||||||||||||||||||||||||||
December 31, 2009
|
October 1, 2013
|
12 | % | 1,490,000 | 1,490,000 | 935,720 | 935,720 | -0- | 1,490,000 | -0- | -0- | 1,440,000 | 50,000 | |||||||||||||||||||||||||||||||||
Total
|
$ | 11,097,500 | $ | 9,665,000 | $ | 4,884,450 | $ | 4,884,450 | $ | -0- | $ | 9,665,000 | $ | 3,020,000 | $ | 175,000 | $ | 6,420,000 | $ | 50,000 |
Carrying amount
|
||||||||||||||||||||||||||||||||||||||||||||||
Short term
|
Long term
|
|||||||||||||||||||||||||||||||||||||||||||||
Date of
issuance |
Maturity
date |
Interest
rate |
Original
principal |
Principal at December 31,
|
Allocated
discount |
Total
discount |
Discount at December 31,
|
Carrying amount at December 31,
|
Related
|
Non
related |
Related
|
Non
related |
||||||||||||||||||||||||||||||||||
August 1, 1999
|
June 30, 2004
|
10 | % | $ | 862,500 | $ | 75,000 | $ | -0- | $ | -0- | $ | -0- | $ | 75,000 | $ | -0- | $ | 75,000 | $ | -0- | $ | -0- | |||||||||||||||||||||||
August 29, 2008
|
August 29, 2013
|
10 | % | 2,270,000 | 1,920,000 | 2,052,080 | 2,052,080 | -0- | 1,920,000 | -0- | -0- | 1,920,000 | -0- | |||||||||||||||||||||||||||||||||
December 16, 2008
|
December 16, 2013
|
12 | % | 5,075,000 | 4,980,000 | 1,370,250 | 1,370,250 | -0- | 4,980,000 | -0- | -0- | 4,980,000 | -0- | |||||||||||||||||||||||||||||||||
September 30, 2009
|
April 1, 2013
|
12 | % | 1,400,000 | 1,200,000 | 526,400 | 526,400 | -0- | 1,200,000 | -0- | -0- | 1,100,000 | 100,000 | |||||||||||||||||||||||||||||||||
December 31, 2009
|
October 1, 2013
|
12 | % | 1,490,000 | 1,490,000 | 935,720 | 935,720 | -0- | 1,490,000 | -0- | -0- | 1,440,000 | 50,000 | |||||||||||||||||||||||||||||||||
Total
|
$ | 11,097,500 | $ | 9,665,000 | $ | 4,884,450 | $ | 4,884,450 | $ | -0- | $ | 9,665,000 | $ | -0- | $ | 75,000 | $ | 9,440,000 | $ | 150,000 |
2012
|
$ | 75,000 | ||
2013
|
9,590,000 | |||
2014
|
-0- | |||
2015
|
-0- | |||
Total
|
$ | 9,665,000 |
|
·
|
Level 1: Observable inputs such as quoted prices for identical assets or liabilities in active markets;
|
|
·
|
Level 2: Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly such as quoted prices for similar assets or liabilities or market-corroborated inputs; and
|
|
·
|
Level 3: Unobservable inputs for which there is little or no market data, which require the reporting entity to develop its own assumptions about how market participants would price the assets or liabilities.
|
|
|
|
A.
|
Market approach - Uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities
|
|
B.
|
Income approach - Uses valuation techniques to convert future amounts to a single present amount based on current market expectations about those future amounts, including present value techniques, option-pricing models and excess earnings method
|
|
C.
|
Cost approach - Based on the amount that currently would be required to replace the service capacity of an asset (replacement cost)
|
Fair value at
September 30,
|
Quoted prices in active markets for identical assets/ liabilities
|
Significant other observable inputs
|
Significant
unobservable inputs
|
|||||||||||||
|
2012
|
(Level 1)
|
(Level 2)
|
(Level 3)
|
||||||||||||
Derivatives: (1) (2)
|
||||||||||||||||
Conversion feature liability
|
$ | 2,270,336 | $ | -0- | $ | -0- | $ | 2,270,336 | ||||||||
Warrant liability
|
4,985,543 | -0- | -0- | 4,985,543 | ||||||||||||
Total of derivative liabilities
|
$ | 7,255,879 | $ | -0- | $ | -0- | $ | 7,255,879 |
(1) The fair value of the derivative instruments was estimated using the Black Scholes option pricing model with the following assumptions for the nine months ended September 30, 2012
|
(2) The fair value at the measurement date is equal to their carrying value on the balance sheet
|
Significant valuation assumptions of derivative instruments at September 30, 2012
|
|||||
Risk free interest rate |
0.18%
|
to | 0.38% | ||
Dividend yield | 0.00% | ||||
Expected volatility | 216.4% | to | 267.5% | ||
Expected life (range in years)
|
|||||
Conversion feature liability
|
0.50
|
to | 1.21 | ||
Warrant liability
|
0.17
|
to | 3.50 |
|
Fair value at
December 31,
2011 |
Quoted prices in active markets for identical assets/ liabilities
(Level 1) |
Significant other observable inputs
(Level 2) |
Significant
unobservable inputs
(Level 3)
|
||||||||||||
Derivatives: (1) (2)
|
||||||||||||||||
Conversion feature liability
|
$ | 758,911 | $ | -0- | $ | -0- | $ | 758,911 | ||||||||
Warrant liability
|
1,692,708 | -0- | -0- | 1,692,708 | ||||||||||||
Total of derivative liabilties
|
$ | 2,451,619 | $ | -0- | $ | -0- | $ | 2,451,619 |
(1) The fair value of the derivative instruments was estimated using the Black Scholes option pricing model with the following assumptions for the year ended December 31, 2011
|
(2) The fair value at the measurement date is equal to their carrying value on the balance sheet
|
Significant valuation assumptions of derivative instruments at December 31, 2011
|
|||||
Risk free interest rate
|
0.11%
|
to | 0.39% | ||
Dividend yield
|
0.00% | ||||
Expected volatility
|
179.7%
|
to | 261.0% | ||
Expected life (range in years)
|
|||||
Conversion feature liability
|
1.25
|
to | 1.96 | ||
Warrant liability
|
0.16
|
to | 4.25 |
Other income
for the nine months ended |
||||||||
September 30, 2012
|
September 30, 2011
|
|||||||
The net amount of total gains/(losses) for the period included in earnings attributable to the unrealized gain or loss from changes in derivative liabilities at the reporting date
|
$ | (4,804,260 | ) | $ | (2,041,161 | ) | ||
Total unrealized gains/(losses) included in earnings
|
$ | (4,804,260 | ) | $ | (2,041,161 | ) | ||
Level 3 financial assets and financial liabilities at fair value
|
||||||||||||||||||||||||
Balance,
beginning |
Net realized
gains/(losses) |
Net unrealized
(gains)/losses |
Net
purchases, |
Net transfers
in and/or out |
Balance,
end of |
|||||||||||||||||||
Period ended September 30, 2012
|
||||||||||||||||||||||||
Derivatives:
|
||||||||||||||||||||||||
Conversion feature liability
|
$ | 758,911 | $ | -0- | $ | 1,511,425 | $ | -0- | $ | -0- | $ | 2,270,336 | ||||||||||||
Warrant liability
|
1,692,708 | -0- | 3,292,835 | -0- | -0- | 4,985,543 | ||||||||||||||||||
Total of derivative liabilties
|
$ | 2,451,619 | $ | -0- | $ | 4,804,260 | $ | -0- | $ | -0- | $ | 7,255,879 |
Level 3 financial assets and financial liabilities at fair value
|
||||||||||||||||||||||||
Balance,
beginning |
Net realized
gains/(losses) |
Net unrealized
(gains)/losses |
Net
purchases, |
Net transfers
in and/or out |
Balance,
end of |
|||||||||||||||||||
Year ended December 31, 2011
|
||||||||||||||||||||||||
Derivatives:
|
||||||||||||||||||||||||
Conversion feature liability
|
$ | 92,206 | $ | -0- | $ | 666,705 | $ | -0- | $ | -0- | $ | 758,911 | ||||||||||||
Warrant liability
|
261,148 | -0- | 4,700 | 1,426,860 | -0- | 1,692,708 | ||||||||||||||||||
Total of derivative liabilties
|
$ | 353,354 | $ | -0- | $ | 671,405 | $ | 1,426,860 | $ | -0- | $ | 2,451,619 |
2012
|
$ | 81,596 | ||
2013
|
387,648 | |||
2014
|
324,456 | |||
2015
|
289,386 | |||
2016
|
212,028 | |||
2017
|
45,713 | |||
Total
|
$ | 1,340,827 |
2012
|
$ | 625,000 | ||
2013
|
450,000 | |||
2014
|
450,000 | |||
2015
|
450,000 | |||
2016
|
450,000 | |||
2017
|
450,000 | |||
Total
|
$ | 2,875,000 |
|
·
|
On February 14, 2008, $150,000 principal amount promissory note. This note was convertible at the option of the holder into any New Securities (“New Securities”) we issue before maturity of this promissory note on the same terms and conditions of the sale of the New Securities. This convertible note carried an interest rate of 10% per annum and was due on December 31, 2009. On December 16, 2008, Mr. Wit agreed to convert this convertible note into a private placement of convertible debentures, which convertible debentures were due on December 16, 2010. Mr. Wit waived his anti-dilution rights relating to the outstanding debenture and warrants issued in this transaction as part of the terms and conditions of a secured convertible debenture financing the Company completed in September 2009. In addition, Mr. Wit agreed to extend the maturity date of the convertible debenture he was issued by three years to December 16, 2013.
|
|
·
|
On June 10, 2008, $210,000 principal amount convertible note and common stock purchase warrants to purchase an aggregate of 264,706 shares of our common stock. We received net proceeds of $210,000. This note was convertible at the option of the holder into any securities we issue (“New Securities”) before maturity of the convertible debenture on the same terms and conditions of the sale of the New Securities. This convertible debenture, which carried an interest rate of 10% per annum, was due on June 10, 2009. On August 29, 2008, Mr. Wit agreed to convert this convertible debenture into a private placement of convertible debentures that originally matured on August 29, 2010. Mr. Wit waived his anti-dilution rights relating to the outstanding debenture and warrants issued in this transaction as part of the terms and conditions of a secured convertible debenture financing the Company completed in September 2009. In addition, Mr. Wit agreed to extend the maturity date of convertible debenture he was issued by three years to August 29, 2013.
|
|
·
|
On June 10, 2008, $300,000 principal amount convertible note. This note was convertible at the option of the holder into any New Securities (“New Securities”) we issue before maturity of this promissory note on the same terms and conditions of the sale of the New Securities. This convertible note carried an interest rate of 10% per annum and was originally due on June 30, 2010. On August 29, 2008, Mr. Wit agreed to convert this convertible note into a private placement of convertible debentures, which convertible debentures that originally matured on August 29, 2010. Mr. Wit waived his anti-dilution rights relating to the outstanding debenture and warrants issued in this transaction as part of the terms and conditions of a secured convertible debenture financing the Company completed in September 2009. In addition, Mr. Wit agreed to extend the maturity date of convertible debenture he was issued by three years to August 29, 2013.
|
|
·
|
During August 2008, $1,260,000 principal amount convertible note that is part of a private placement of Convertible Debentures that originally matured in August 29, 2010. Mr. Wit waived his anti-dilution rights relating to the outstanding debenture and warrants issued in this transaction as part of the terms and conditions of a Secured Convertible Debenture financing the Company completed in September 2009. In addition, Mr. Wit agreed to extend the maturity date of convertible debenture he was issued by three years to August 29, 2013.
|
|
·
|
From September 2008 to December 2008, $4,200,000 principal amount convertible notes. These notes were convertible at the option of the holder into any New Securities (“New Securities”) we issue before maturity of the Convertible Note on the same terms and conditions of the sale of the New Securities. These convertible notes carried an interest rate of 12% per annum and were due on December 31, 2009. On December 16, 2008, Mr. Wit agreed to convert these convertible notes into a private placement of convertible debentures, which convertible debentures originally matured on December 16, 2010. Mr. Wit waived his anti-dilution rights relating to the outstanding debenture and warrants issued in this transaction as part of the terms and conditions of a secured convertible debenture financing the Company completed in September 2009. In addition, Mr. Wit agreed to extend the maturity date of convertible debenture he was issued by three years to December 16, 2013.
|
|
·
|
From July 2009 to September 2009, Mr. Wit invested $1,100,000 which amount was aggregated under the terms of one convertible note dated September 30, 2009. This note was convertible at the option of the holder into any new securities we issue before maturity of this promissory note on the same terms and conditions of the sale of any new securities issued. This convertible note carried an interest rate of 12% per annum and was due on December 31, 2009. On September 30, 2009, Mr. Wit agreed to convert this Convertible Note into a private placement of secured convertible debentures bearing interest at a rate of 12% per annum, which Secured Convertible Debentures were due on March 30, 2011 which were convertible into 4,400,000 shares of common stock and received 4,400,000 warrants to purchase common stock of the Company. On March 30, 2011, Mr. Wit extended the maturity date of his convertible note until April 1, 2013 in accordance with the terms of Amendment Number One To Securities Purchase Agreement. The Company also extended the expiration date of the 4,400,000 warrants issued with convertible note by two years to September 30, 2015.
|
|
·
|
From October 2009 to December 2009, Mr. Wit invested $1,440,000 which amount was aggregated under the terms of one convertible note dated December 31, 2009. This note was convertible at the option of the holder into any new securities we issued before the maturity of this promissory note on the same terms and conditions of the sale of any new securities issued. This convertible note carried an interest rate of 12% per annum and was due on December 31, 2009. On December 31, 2009, Mr. Wit agreed to convert this Convertible Note into a private placement of unsecured convertible debentures bearing interest at a rate of 12% per annum, which Convertible Debentures were due on June 30, 2011. Mr. Wit extended the maturity date of his convertible note until October 1, 2013 in accordance with the terms of Amendment Number One To Securities Purchase Agreement. The Company also extended the expiration date of the 5,760,000 warrants issued with convertible note by two years to December 31, 2015.
|
|
·
|
On September 30, 2010, $1,000,000 principal amount promissory note with a maturity date of December 31, 2011. This note carries an interest rate of 12% per annum. The promissory note was comprised of the following amounts received on the following dates: (i) principal amount of $50,000 received on July 6, 2010, (ii) principal amount of $65,000 received on July 14, 2010, (iii) principal amount of $175,000 received on July 15, 2010, (iv) principal amount of $140,000 received on July 30, 2010, (v) principal amount of $400,000 received on August 12, 2010, (vi) principal amount of $90,000 received on August 27, 2010, and (vii) principal amount of $80,000 received on August 31, 2010. On November 30, 2010, the note was converted by Mr. Wit into 250,000 shares of the Company’s Series D Preferred Stock.
|
|
·
|
On April 13, 2010, $450,000 principal amount promissory note with a maturity date of December 31, 2011. This note carries an interest rate of 12% per annum and was consolidated on March 31, 2011 into a new note with a principal amount of $2,866,879.
|
|
·
|
On June 29, 2010, $115,000 principal amount promissory note with a maturity date of December 31, 2011. This note carries an interest rate of 12% per annum and was consolidated on March 31, 2011 into a new note with a principal amount of $2,866,879.
|
|
·
|
On September 30, 2010, $695,000 principal amount promissory note with a maturity date of December 31, 2011. This note carries an interest rate of 12% per annum. The promissory note was comprised of the following amounts received on the following dates: (i) principal amount of $120,000 received on August 31, 2010, (ii) principal amount of $50,000 received on September 7, 2010, (iii) principal amount of $200,000 received on September 15, 2010, (iv) principal amount of $90,000 received on September 22, 2010, (v) principal amount of $200,000 received on September 29, 2010, and (vi) principal amount of $35,000 received on September 30, 2010. This note was consolidated on March 31, 2011 into a new note with a principal amount of $2,866,879.
|
|
·
|
On December 31, 2010, $1,197,500 principal amount promissory note with a maturity date of December 31, 2011. The note carries an interest rate of 12% per annum. The promissory note is comprised of the following amounts received on the following dates: (i) principal amount of $150,000 received on October 15, 2010, (ii) principal amount of $140,000 received on October 26, 2010, (iii) principal amount of $200,000 received on October 28, 2010, (iv) principal amount of $43,500 received on November 2, 2010, (v) principal amount of $200,000 received on November 10, 2010, (vi) principal amount of $32,000 received on November 22, 2010, (vii) principal amount of $37,000 received on November 29, 2010, (viii) principal amount of $160,000 received on November 30, 2010, (ix) principal amount of $25,000 received on December 2, 2010, (x) principal amount of $50,000 received on December 8, 2010, (xi) principal amount of $10,000 received on December 9, 2010, (xii) principal amount of $40,000 received on December 15, 2010, and (xiii) principal amount of $110,000 received on December 16, 2010. This note was consolidated on March 31, 2011 into a new note with a principal amount of $2,866,879.
|
|
·
|
On December 31, 2010, $409,379 principal amount promissory note with a maturity date of April 1, 2012. The note carries and interest rate of 12% per annum. The note is comprised of accrued and unpaid interest owed as of December 31, 2010 on various notes held by Mr. Wit that were converted into the principal amount owed under this note payable. This note was consolidated on March 31, 2011 into a new note with a principal amount of $2,866,879.
|
|
·
|
On March 31, 2011, the Company issued a note payable in the principal amount of $2,866,879 and warrants to purchase 11,467,517 shares of common stock of the Company at an exercise price of $0.25 per share with an expiration date of March 31, 2016 to our Chief Executive Officer and Director, Cornelis F. Wit. The note accrues interest at a rate of 12% per annum and has a maturity date of April 1, 2014. The Promissory Note replaced the following Promissory Notes that had been previously issued:
|
i.
|
Promissory Note issued on April 13, 2010 for $450,000 with a maturity date of December 31, 2011.
|
ii.
|
Promissory Note issued on June 29, 2010 for $115,000 with a maturity date of December 31, 2011.
|
iii.
|
Promissory Note issued on September 30, 2010 for $695,000 with a maturity date of December 31, 2011.
|
iv.
|
Promissory Note issued on December 31, 2010 for $1,197,500 with a maturity date of December 31, 2011.
|
v.
|
Promissory Note issued on December 31, 2010 for $409,379 with a maturity date of April 01, 2012.
|
|
·
|
On May 13, 2011, the Company issued a note payable in the principal amount of $96,000 to our Chief Executive Officer and Director, Cornelis F. Wit. The note accrues interest at a rate of 12% per annum and has a maturity date of January 1, 2013. This note was consolidated on December 31, 2011 into a new note with a principal amount of $1,600,000.
|
|
·
|
On September 2, 2011, the Company issued a note payable in the principal amount of $50,000 to our Chief Executive Officer and Director, Cornelis F. Wit. The note bore interest at a rate of 12% per annum and had a maturity date of January 1, 2013. This note was repaid in full on September 7, 2011.
|
|
·
|
On September 30, 2011, the Company issued a promissory note in the principal amount of $342,000 to our Chief Executive Officer and Director, Cornelis F. Wit. The note carries an interest rate of 12% per annum and is due on April 1, 2014. The promissory note consolidates the principal amounts owed under the following promissory notes originally issued during 2011. This note was consolidated on December 31, 2011 into a new note with a principal amount of $1,600,000.
|
i.
|
Promissory Note issued on August 16, 2011 for $80,000 with a maturity date of January 01, 2013.
|
ii.
|
Promissory Note issued on August 19, 2011 for $15,000 with a maturity date of January 01, 2013.
|
iii.
|
Promissory Note issued on August 25, 2011 for $35,000 with a maturity date of January 01, 2013.
|
iv.
|
Promissory Note issued on September 02, 2011 for $32,000 with a maturity date of January 01, 2013.
|
v.
|
Promissory Note issued on September 15, 2011 for $80,000 with a maturity date of January 01, 2013.
|
vi.
|
Promissory Note issued on September 28, 2011 for $100,000 with a maturity date of January 01, 2013.
|
|
·
|
On October 5, 2011, the Company issued a note payable in the principal amount of $130,000 to our Chief Executive Officer and Director, Cornelis F. Wit. The note accrues interest at a rate of 12% per annum and had a maturity date of April 1, 2014. This note was consolidated on December 31, 2011 into a new note with a principal amount of $1,600,000.
|
|
·
|
On October 28, 2011, the Company issued a note payable in the principal amount of $123,000 to our Chief Executive Officer and Director, Cornelis F. Wit. The note accrues interest at a rate of 12% per annum and had a maturity date of April 1, 2014. This note was consolidated on December 31, 2011 into a new note with a principal amount of $1,600,000.
|
|
·
|
On October 31, 2011, the Company issued a note payable in the principal amount of $82,000 to our Chief Executive Officer and Director, Cornelis F. Wit. The note accrues interest at a rate of 12% per annum and had a maturity date of April 1, 2014. This note was consolidated on December 31, 2011 into a new note with a principal amount of $1,600,000.
|
|
·
|
On November 23, 2011, the Company issued a note payable in the principal amount of $60,000 to our Chief Executive Officer and Director, Cornelis F. Wit. The note accrues interest at a rate of 12% per annum and had a maturity date of January 1, 2013. This note was consolidated on December 31, 2011 into a new note with a principal amount of $1,600,000.
|
|
·
|
On December 1, 2011, the Company issued a note payable in the principal amount of $150,000 to our Chief Executive Officer and Director, Cornelis F. Wit. The note bore interest at a rate of 12% per annum and had a maturity date of January 1, 2013. This note was repaid in full on December 27, 2011.
|
|
·
|
On December 31, 2011, the Company issued a promissory note in the principal amount of $1,600,000 and warrants to purchase 6,400,000 shares of common stock of the Company at an exercise price of $0.25 per share with an expiration date of December 31, 2015 to our Chief Executive Officer and Director, Cornelis F. Wit. The note carries an interest rate of 12% per annum and is due on January 1, 2015. The promissory note consolidates the amounts owed as detailed below:
|
i.
|
Promissory Note issued on May 13, 2011 for $96,000 with a maturity date of January 01, 2013;
|
ii.
|
Promissory Note issued on September 30, 2011 for $342,000 with a maturity date of April 01, 2014;
|
iii.
|
Promissory Note issued on October 05, 2011 for $130,000 with a maturity date of April 01, 2014;
|
iv.
|
Promissory Note issued on October 28, 2011 for $123,000 with a maturity date of April 01, 2014;
|
v.
|
Promissory Note issued on October 31, 2011 for $82,000 with a maturity date of April 01, 2014;
|
vi.
|
Promissory Note issued on November 23, 2011 for $60,000 with a maturity date of January 1, 2013; and
|
vii.
|
Accrued and unpaid interest in the amount of $767,000.
|
Cumulative arrearage as of
|
Cumulative arrearage per share as of
|
|||||||||||||||
Series of preferred stock
|
September 30,
2012 |
December 31,
2011
|
September 30,
2012 |
December 31,
2011
|
||||||||||||
Series A
|
$ | 2,122,189 | $ | 1,944,661 | $ | 0.51 | $ | 0.47 | ||||||||
Series B
|
609,887 | 609,887 | $ | 3.05 | $ | 3.05 | ||||||||||
Series C
|
1,472,093 | 1,472,093 | $ | 4.37 | $ | 4.37 | ||||||||||
Total preferred stock arrearage
|
$ | 4,204,169 | $ | 4,026,641 |
Dividends accreted
nine months ended September 30, |
Dividends per share
nine months ended September 30, |
|||||||||||||||
2012
|
2011
|
2012
|
2011
|
|||||||||||||
Preferred stock dividends in arrears Series A
|
$ | 177,528 | $ | 153,850 | $ | 0.04 | $ | 0.04 | ||||||||
Preferred stock dividends in arrears Series B
|
$ | -0- | $ | -0- | $ | 0.00 | $ | 0.00 | ||||||||
Preferred stock dividends in arrears Series C
|
$ | -0- | $ | -0- | $ | 0.00 | $ | 0.00 |
September 30, 2012 Warrants outstanding |
September 30, 2012 Warrants exercisable
|
||||||||||||||||||||||
Range of exercise price |
Number outstanding
at September 30, 2012
|
Weighted average
remaining contractual life |
Weighted Average
exercise price |
Number exercisable
at September 30, 2012
|
Weighted average
exercise price |
||||||||||||||||||
$ | 0.25 | – | 0.60 | 44,089,580 | 2.52 | $ | 0.36 | 44,089,580 | $ | 0.36 |
December 31, 2011 Warrants Outstanding |
December 31, 2011Warrants Exercisable
|
||||||||||||||||||||||
Range of exercise price |
Number outstanding
at December 31, 2011
|
Weighted average
remaining contractual life |
Weighted Average
exercise price |
Number exercisable
at December 31, 2011
|
Weighted average
exercise price |
||||||||||||||||||
$ | 0.25 | – | 0.60 | 58,595,758 | 1.94 | $ | 0.38 | 58,595,758 | $ | 0.38 |
Warrants
|
||||
Balance at December 31, 2011
|
58,595,758 | |||
Issued
|
-0- | |||
Exercised
|
-0- | |||
Expired/forfeited
|
(14,506,178 | ) | ||
Balance at September 30, 2012
|
44,089,580 | |||
Warrants exercisable at September 30, 2012
|
44,089,580 | |||
Weighted average fair value of warrants granted during 2012
|
n/a |
Foreign currency translation
|
Accumulated other comprehensive gain
(loss)
|
|||||||
Balance December 31, 2010
|
$ | (24,298 | ) | $ | (24,298 | ) | ||
2011 Activity
|
(29,416 | ) | (29,416 | ) | ||||
Balance at December 31, 2011
|
(53,714 | ) | (53,714 | ) | ||||
2012 Activity
|
(10,586 | ) | (10,586 | ) | ||||
Balance at September 30, 2012
|
$ | (64,300 | ) | $ | (64,300 | ) |
Number of shares
|
Weighted average exercise price
(per share)
|
Weighted average remaining contractual term
(in years)
|
Aggregate intrinsic value
|
|||||||||||||
Outstanding at December 31, 2010
|
11,822,000 | $ | 0.39 | 3.21 | $ | -0- | ||||||||||
Granted
|
1,686,000 | 0.12 | ||||||||||||||
Exercised
|
-0- | -0- | ||||||||||||||
Forfeited/cancelled/expired
|
(2,350,000 | ) | 0.30 | |||||||||||||
Outstanding at December 31, 2011
|
11,158,000 | 0.37 | 2.52 | $ | -0- | |||||||||||
Granted
|
325,000 | 0.11 | ||||||||||||||
Exercised
|
(265,000 | ) | 0.20 | |||||||||||||
Forfeited/cancelled/expired
|
(715,500 | ) | 0.47 | |||||||||||||
Outstanding at September 30, 2012
|
10,502,500 | $ | 0.36 | 1.88 | $ | 42,648 | ||||||||||
Vested and exercisable at September 30, 2012
|
9,084,083 | $ | 0.40 | 1.55 | $ | 5,028 |
Number of options
vested
|
Fair value of options
vested
|
|||||||
Fair value of options vested during the nine months ended September 30, 2012
|
691,333 | $ | 70,383 | |||||
Fair value of options vested during the nine months ended September 30, 2011
|
1,307,500 | $ | 303,673 |
Awards breakdown by price range at September 30, 2012
|
||||||||||||||||||||||||||
Outstanding
|
Vested
|
|||||||||||||||||||||||||
Strike price
range ($)
|
Outstanding stock options
|
Weighted average remaining contractual life
|
Weighted average outstanding strike price
|
Vested stock options
|
Weighted average remaining vested contractual life
|
Weighted average vested strike price
|
||||||||||||||||||||
0.00
|
to | 0.20 | 3,328,500 | 3.22 | $ | 0.15 | 1,910,083 | 2.66 | $ | 0.17 | ||||||||||||||||
0.21
|
to | 0.29 | 2,700,000 | 1.36 | 0.26 | 2,700,000 | 1.36 | 0.26 | ||||||||||||||||||
0.30
|
to | 0.49 | 755,000 | 1.05 | 0.45 | 755,000 | 1.05 | 0.45 | ||||||||||||||||||
0.50
|
to | 0.70 | 3,719,000 | 1.22 | 0.60 | 3,719,000 | 1.22 | 0.60 | ||||||||||||||||||
0.00
|
to | 0.70 | 10,502,500 | 1.88 | $ | 0.36 | 9,084,083 | 1.55 | $ | 0.40 |
Awards breakdown by price range at December 31, 2011
|
||||||||||||||||||||||||||
Outstanding
|
Vested
|
|||||||||||||||||||||||||
Strike price
range ($)
|
Outstanding stock options
|
Weighted average remaining contractual life
|
Weighted average outstanding strike price
|
Vested stock options
|
Weighted average remaining vested contractual life
|
Weighted average vested strike price
|
||||||||||||||||||||
0.00 |
to
|
0.20 | 3,376,000 | 3.75 | $ | 0.15 | 1,547,500 | 3.02 | $ | 0.20 | ||||||||||||||||
0.21 |
to
|
0.29 | 2,785,000 | 2.08 | 0.26 | 2,785,000 | 2.08 | 0.26 | ||||||||||||||||||
0.30 |
to
|
0.49 | 875,000 | 1.90 | 0.45 | 875,000 | 1.90 | 0.45 | ||||||||||||||||||
0.50 |
to
|
0.70 | 4,122,000 | 1.94 | 0.60 | 4,122,000 | 1.94 | 0.60 | ||||||||||||||||||
0.00 |
to
|
0.70 | 11,158,000 | 2.52 | $ | 0.37 | 9,329,500 | 2.16 | $ | 0.42 |
Stock option assumptions for the
nine months ended
|
||||||||
Stock option assumptions
|
September 30, 2012
|
September 30, 2011
|
||||||
Risk-free interest rate
|
0.37 | % | 0.38 | % | ||||
Expected dividend yield
|
0.0 | % | 0.0 | % | ||||
Expected volatility
|
186.6 | % | 146.8 | % | ||||
Expected life of options (in years)
|
5 | 5 |
Weighted average grant date fair value
|
||||||||
2012
|
2011
|
|||||||
Stock options granted during the nine month period ended September 30,
|
$ | 0.10 | $ | 0.11 | ||||
Stock options vested during the nine month period ended September 30,
|
$ | 0.10 | $ | 0.23 | ||||
Stock options forfeited during the nine month period ended September 30,
|
$ | 0.33 | $ | 0.17 |
Shares underlying stock options
|
Weighted average grant date fair value
|
|||||||
Nonvested shares at January 1, 2012
|
1,828,500 | $ | 0.10 | |||||
Nonvested shares at September 30, 2012
|
1,418,417 | $ | 0.09 |
September 30, 2012
|
September 30, 2011
|
|||||||
Statutory rate applied to loss before income taxes
|
$ | (2,327,610 | ) | $ | (1,648,509 | ) | ||
Increase (decrease) in income taxes results from:
|
||||||||
Current tax expense (benefit) | 54,699 | -0- | ||||||
Non deductible expenses
|
1,961,459 | 1,034,385 | ||||||
Change in deferred assets
|
62,632 | 45,545 | ||||||
Change in valuation allowance
|
303,519 | 568,579 | ||||||
Income tax expense (benefit)
|
$ | 54,699 | $ | -0- |
September 30, 2012
|
September 30, 2011
|
|||||||
Current tax expense (benefit):
|
$ | 54,699 | $ | -0- | ||||
Bad debt allowance
|
(47,701 | ) | -0- | |||||
Operating loss carryforward
|
(318,450 | ) | (614,124 | ) | ||||
Patent litigation settlement
|
62,632 | 45,545 | ||||||
Deferred tax expense (benefit):
|
(303,519 | ) | (568,579 | ) | ||||
Valuation allowance
|
303,519 | 568,579 | ||||||
Total tax expense (benefit)
|
$ | 54,699 | $ | -0- |
September 30, 2012
|
December 31, 2011
|
|||||||
Amortization of intangibles
|
$ | 283,698 | $ | 283,698 | ||||
Bad debt allowance
|
100,330 | 52,629 | ||||||
Patent litigation liability accrual
|
401,020 | 463,652 | ||||||
Operating loss carryforwards
|
17,238,505 | 16,920,055 | ||||||
Gross deferred tax assets
|
18,023,553 | 17,720,034 | ||||||
Valuation allowance
|
(18,023,553 | ) | (17,720,034 | ) | ||||
Net deferred tax asset
|
$ | -0- | $ | -0- |
·
|
Stimulating demand by providing clinical trial sponsors with high value eClinical applications and services;
|
·
|
Continued emphasis on expanding our business model by offering our software solutions on a licensed basis in addition to our existing hosted-services solutions;
|
·
|
An emphasis on penetrating the Phase I trial market with our dedicated Phase I solution, TrialOne;
|
·
|
Expanding our penetration of the large pharmaceutical sponsor market;
|
·
|
Broadening our eClinical suite of services and software applications on an organic R & D basis and on a selective basis via the acquisition or licensing of complementary solutions;
|
·
|
Expanding our business development efforts in Europe to capitalize on our operational and clinical capabilities vis-à-vis our competition in that geographic market;
|
·
|
Providing our services to small and midsize pharmaceutical, biotechnology, medical device companies and CROs; and
|
·
|
Emphasizing low operating costs.
|
2012
|
% of
Revenues |
2011
|
% of
Revenues |
$
Change
|
%
Change
|
|||||||||||||||||||
Total revenues
|
$ | 11,897,488 | $ | 10,003,503 | $ | 1,893,985 | 18.9 | % | ||||||||||||||||
Cost of sales
|
2,418,324 | 20.3 | % | 1,504,597 | 15.0 | % | 913,727 | 60.7 | % | |||||||||||||||
Gross margin
|
9,479,164 | 79.7 | % | 8,498,906 | 85.0 | % | 980,258 | 11.5 | % | |||||||||||||||
Salaries, benefits and related taxes
|
6,374,375 | 53.6 | % | 6,018,625 | 60.2 | % | 355,750 | 5.9 | % | |||||||||||||||
Rent
|
649,424 | 5.5 | % | 689,836 | 6.9 | % | (40,412 | ) | -5.9 | % | ||||||||||||||
Consulting
|
144,496 | 1.2 | % | 230,630 | 2.3 | % | (86,134 | ) | -37.3 | % | ||||||||||||||
Legal and professional fees
|
236,967 | 2.0 | % | 299,349 | 3.0 | % | (62,382 | ) | -20.8 | % | ||||||||||||||
Other expenses
|
1,071,790 | 9.0 | % | 1,199,172 | 12.0 | % | (127,382 | ) | -10.6 | % | ||||||||||||||
Selling, general and administrative
|
698,512 | 5.9 | % | 647,109 | 6.5 | % | 51,403 | 7.9 | % | |||||||||||||||
Total operating expenses
|
9,175,564 | 77.1 | % | 9,084,721 | 90.8 | % | 90,843 | 1.0 | % | |||||||||||||||
Operating income/(loss)
|
303,600 | 2.6 | % | (585,815 | ) | -5.9 | % | 889,415 | 151.8 | % | ||||||||||||||
Interest expense
|
(1,662,981 | ) | -14.0 | % | (1,768,258 | ) | -17.7 | % | 105,277 | -6.0 | % | |||||||||||||
Interest income
|
225 | 0.0 | % | 4,625 | 0.0 | % | (4,400 | ) | -95.1 | % | ||||||||||||||
Transaction gain/(loss)
|
6 | 0.0 | % | 9,772 | 0.1 | % | (9,766 | ) | -99.9 | % | ||||||||||||||
Loss on sale of property and equipment
|
(22,106 | ) | -0.2 | % | -0- | 0.0 | % | (22,106 | ) | n/a | ||||||||||||||
Change in derivatives
|
(4,804,260 | ) | -40.4 | % | (2,041,161 | ) | -20.4 | % | (2,763,099 | ) | -135.4 | % | ||||||||||||
(Loss) before income taxes and benefits
|
(6,185,516 | ) | -52.0 | % | (4,380,837 | ) | -43.8 | % | (1,804,679 | ) | -41.2 | % | ||||||||||||
Income tax expense (benefit)
|
(54,699 | ) | -0.5 | % | -0- | 0.0 | % | (54,699 | ) | n/a | ||||||||||||||
Net loss
|
(6,240,215 | ) | (4,380,837 | ) | (1,859,378 | ) | -42.4 | % | ||||||||||||||||
Total preferred stock dividends
|
(177,528 | ) | -1.5 | % | (153,850 | ) | -1.5 | % | (23,678 | ) | -15.4 | % | ||||||||||||
Net loss attributable to common stockholders
|
$ | (6,417,743 | ) | -53.9 | % | $ | (4,534,687 | ) | -45.3 | % | $ | (1,883,056 | ) | -41.5 | % | |||||||||
Net loss per share, basic and diluted
|
$ | (0.07 | ) | $ | (0.05 | ) | ||||||||||||||||||
Weighted average number of shares outstanding
|
86,496,550 | 86,299,810 |
For the nine months ended
|
||||||||||||||||||||||||
Revenue activity
|
September 30, 2012
|
September 30, 2011
|
$ Change
|
% Change
|
||||||||||||||||||||
Set-up fees
|
$ | 4,085,437 | 34.3 | % | $ | 2,495,415 | 24.9 | % | $ | 1,590,022 | 63.7 | % | ||||||||||||
Change orders
|
202,498 | 1.7 | % | 251,961 | 2.5 | % | (49,463 | ) | -19.6 | % | ||||||||||||||
Maintenance
|
3,928,079 | 33.0 | % | 4,119,880 | 41.3 | % | (191,801 | ) | -4.7 | % | ||||||||||||||
Software licenses
|
2,525,933 | 21.2 | % | 2,163,071 | 21.6 | % | 362,862 | 16.8 | % | |||||||||||||||
Professional services
|
638,302 | 5.4 | % | 520,930 | 5.2 | % | 117,372 | 22.5 | % | |||||||||||||||
Hosting
|
517,239 | 4.3 | % | 452,246 | 4.5 | % | 64,993 | 14.4 | % | |||||||||||||||
Total
|
$ | 11,897,488 | 100.0 | % | $ | 10,003,503 | 100.0 | % | $ | 1,893,985 | 18.9 | % |
For the nine months ended
|
||||||||||||||||
September 30, 2012
|
September 30, 2011
|
Change
|
% Change
|
|||||||||||||
OmniComm corporate operations
|
$ | 4,948,201 | $ | 4,033,199 | $ | 915,002 | 22.7 | % | ||||||||
New Jersey operations office
|
216,996 | 638,603 | (421,607 | ) | -66.0 | % | ||||||||||
OmniComm Europe, GmbH
|
753,657 | 735,992 | 17,665 | 2.4 | % | |||||||||||
OmniComm Ltd.
|
404,010 | 499,283 | (95,273 | ) | -19.1 | % | ||||||||||
Employee stock option expense
|
51,511 | 111,548 | (60,037 | ) | -53.8 | % | ||||||||||
Total salaries and related expenses
|
$ | 6,374,375 | $ | 6,018,625 | $ | 355,750 | 5.9 | % |
For the nine months ended | ||||||||||||||||
September 30, 2012
|
September 30, 2011
|
Change
|
% Change
|
|||||||||||||
Corporate office
|
$ | 238,780 | $ | 244,483 | $ | (5,703 | ) | -2.3 | % | |||||||
Co location and disaster recovery facilities
|
243,193 | 277,055 | (33,862 | ) | -12.2 | % | ||||||||||
New Jersey operations office
|
59,699 | 58,122 | 1,577 | 2.7 | % | |||||||||||
OmniComm Europe, GmbH
|
38,855 | 55,975 | (17,120 | ) | -30.6 | % | ||||||||||
OmniComm Ltd.
|
75,862 | 69,149 | 6,713 | 9.7 | % | |||||||||||
Straight-line rent expense
|
(6,965 | ) | (14,948 | ) | 7,983 | -53.4 | % | |||||||||
Total
|
$ | 649,424 | $ | 689,836 | $ | (40,412 | ) | -5.9 | % |
For the nine months ended | ||||||||||||||||
Expense Category
|
September 30, 2012
|
September 30, 2011
|
Change
|
% Change
|
||||||||||||
Sales and marketing
|
$ | 19,278 | $ | 1,395 | $ | 17,883 | 1281.9 | % | ||||||||
Product development
|
125,218 | 229,235 | (104,017 | ) | -45.4 | % | ||||||||||
Total
|
$ | 144,496 | $ | 230,630 | $ | (86,134 | ) | -37.3 | % |
For the nine months ended | ||||||||||||||||
Expense Category
|
September 30, 2012
|
September 30, 2011
|
Change
|
% Change
|
||||||||||||
Audit and related
|
$ | 50,916 | $ | 95,705 | $ | (44,789 | ) | -46.8 | % | |||||||
Accounting services
|
99,759 | 113,053 | (13,294 | ) | -11.8 | % | ||||||||||
Miscellaneous
|
-0- | 17,076 | (17,076 | ) | -100.0 | % | ||||||||||
Legal- employment related
|
59,310 | 56,288 | 3,022 | 5.4 | % | |||||||||||
Legal- financial related
|
6,807 | 16,357 | (9,550 | ) | -58.4 | % | ||||||||||
General legal
|
20,175 | 870 | 19,305 | 2218.5 | % | |||||||||||
Total
|
$ | 236,967 | $ | 299,349 | $ | (62,382 | ) | -20.8 | % |
For the nine months ended
|
||||||||||||
Debt Description
|
September 30, 2012
|
September 30, 2011
|
Change $
|
|||||||||
Accretion of discount from derivatives
|
$ | 356,715 | $ | 596,122 | $ | (239,407 | ) | |||||
August 2008 convertible notes
|
144,132 | 143,606 | 526 | |||||||||
December 2008 convertible notes
|
448,609 | 446,972 | 1,637 | |||||||||
Sept 2009 secured convertible debentures
|
108,099 | 113,556 | (5,457 | ) | ||||||||
Dec 2009 convertible debentures
|
134,222 | 133,733 | 489 | |||||||||
General interest
|
67,016 | 53,242 | 13,774 | |||||||||
Related party notes payable
|
404,188 | 281,027 | 123,161 | |||||||||
Total
|
$ | 1,662,981 | $ | 1,768,258 | $ | (105,277 | ) |
Series of preferred stock
|
Cumulative arrearage
|
|||
Series A
|
$ | 2,122,189 | ||
Series B
|
609,887 | |||
Series C
|
1,472,093 | |||
Total preferred stock arrearages
|
$ | 4,204,169 |
2012
|
% of
Revenues |
2011
|
% of
Revenues |
$
Change
|
%
Change
|
|||||||||||||||||||
Total revenues
|
$ | 4,058,320 | $ | 3,337,316 | $ | 721,004 | 21.6 | % | ||||||||||||||||
Cost of sales
|
741,052 | 18.3 | % | 560,625 | 16.8 | % | 180,427 | 32.2 | % | |||||||||||||||
Gross margin
|
3,317,268 | 81.7 | % | 2,776,691 | 83.2 | % | 540,577 | 19.5 | % | |||||||||||||||
Salaries, benefits and related taxes
|
2,086,203 | 51.4 | % | 1,830,261 | 54.8 | % | 255,942 | 14.0 | % | |||||||||||||||
Rent
|
226,979 | 5.6 | % | 238,819 | 7.2 | % | (11,840 | ) | -5.0 | % | ||||||||||||||
Consulting
|
77,060 | 1.9 | % | 77,775 | 2.3 | % | (715 | ) | -0.9 | % | ||||||||||||||
Legal and professional fees
|
39,512 | 1.0 | % | 58,554 | 1.8 | % | (19,042 | ) | -32.5 | % | ||||||||||||||
Other expenses
|
243,088 | 6.0 | % | 361,908 | 10.8 | % | (118,821 | ) | -32.8 | % | ||||||||||||||
Selling, general and administrative
|
232,371 | 5.7 | % | 132,385 | 4.0 | % | 99,986 | 75.5 | % | |||||||||||||||
Total operating expenses
|
2,905,213 | 71.6 | % | 2,699,702 | 80.9 | % | 205,510 | 7.6 | % | |||||||||||||||
Operating income (loss)
|
412,055 | 10.2 | % | 76,989 | 2.3 | % | 335,067 | 435.2 | % | |||||||||||||||
Interest expense
|
(556,091 | ) | -13.7 | % | (495,036 | ) | -14.8 | % | (61,055 | ) | 12.3 | % | ||||||||||||
Transaction gain/(loss)
|
17 | 0.0 | % | -0- | 0.0 | % | 17 | n/a | ||||||||||||||||
Other comprehensive income
|
973 | 0.0 | % | 4,856 | 0.1 | % | (3,883 | ) | -80.0 | % | ||||||||||||||
Change in derivatives
|
(4,215,476 | ) | -103.9 | % | 923,590 | 27.7 | % | (5,139,066 | ) | n/m | ||||||||||||||
Gain/(loss) before income taxes and dividends
|
(4,358,522 | ) | -107.4 | % | 510,399 | 15.3 | % | (4,868,920 | ) | n/m | ||||||||||||||
Income tax expense (benefit)
|
(54,699 | ) | -1.3 | % | -0- | 0.0 | % | (54,699 | ) | n/a | ||||||||||||||
Net income/(loss)
|
(4,413,221 | ) | -108.7 | % | 510,399 | 15.3 | % | (4,923,619 | ) | n/m | ||||||||||||||
Total preferred stock dividends
|
(51,989 | ) | -1.3 | % | (51,847 | ) | -1.6 | % | (142 | ) | 0.3 | % | ||||||||||||
Net income (loss) attributable to common stockholders
|
$ | (4,465,210 | ) | -110.0 | % | $ | 458,552 | 13.7 | % | $ | (4,923,761 | ) | n/m | |||||||||||
Net income (loss) per share, basic and diluted
|
$ | (0.05 | ) | $ | 0.01 | |||||||||||||||||||
Weighted average number of shares outstanding
|
86,526,332 | 86,481,495 |
For the three months ended
|
||||||||||||||||||||||||
Revenue activity
|
September 30, 2012
|
September 30, 2011
|
$ Change
|
% Change
|
||||||||||||||||||||
Set-up fees
|
$ | 1,458,304 | 35.9 | % | $ | 909,152 | 27.2 | % | $ | 549,152 | 60.4 | % | ||||||||||||
Change orders
|
48,417 | 1.2 | % | 91,058 | 2.7 | % | (42,641 | ) | -46.8 | % | ||||||||||||||
Maintenance
|
1,307,547 | 32.2 | % | 1,355,249 | 40.7 | % | (47,702 | ) | -3.5 | % | ||||||||||||||
Software licenses
|
847,297 | 20.9 | % | 545,665 | 16.4 | % | 301,632 | 55.3 | % | |||||||||||||||
Professional services
|
213,187 | 5.3 | % | 278,227 | 8.3 | % | (65,040 | ) | -23.4 | % | ||||||||||||||
Hosting
|
183,568 | 4.5 | % | 157,965 | 4.7 | % | 25,603 | 16.2 | % | |||||||||||||||
Total
|
$ | 4,058,320 | 100.0 | % | $ | 3,337,316 | 100.0 | % | $ | 721,004 | 21.6 | % |
For the three months ended
|
||||||||||||||||
September 30, 2012
|
September 30, 2011
|
Change
|
% Change
|
|||||||||||||
OmniComm corporate operations
|
$ | 1,642,137 | $ | 1,372,321 | $ | 269,816 | 19.7 | % | ||||||||
New Jersey operations office
|
49,344 | 101,452 | (52,108 | ) | -51.4 | % | ||||||||||
OmniComm Europe, GmbH
|
247,746 | 211,739 | 36,007 | 17.0 | % | |||||||||||
OmniComm Ltd.
|
129,192 | 123,320 | 5,872 | 4.8 | % | |||||||||||
Employee stock option expense
|
17,784 | 21,429 | (3,645 | ) | -17.0 | % | ||||||||||
Total salaries and related expenses
|
$ | 2,086,203 | $ | 1,830,261 | $ | 255,942 | 14.0 | % |
For the three months ended
|
||||||||||||
September 30, 2012
|
September 30, 2011
|
Change
|
||||||||||
Corporate office
|
$ | 82,172 | $ | 81,490 | $ | 683 | ||||||
Co location and disaster recovery facilities
|
84,606 | 106,103 | (21,497 | ) | ||||||||
New Jersey operations office
|
20,296 | 19,482 | 814 | |||||||||
OmniComm Europe, GmbH
|
19,797 | 11,635 | 8,162 | |||||||||
OmniComm Ltd.
|
25,094 | 23,268 | 1,826 | |||||||||
Straight-line rent expense
|
(4,986 | ) | (3,159 | ) | (1,827 | ) | ||||||
Total
|
$ | 226,979 | $ | 238,819 | $ | (11,840 | ) |
For the three months ended
|
||||||||||||
Expense Category
|
September 30, 2012
|
September 30, 2011
|
Change
|
|||||||||
Sales and marketing
|
$ | 9,104 | $ | 495 | $ | 8,609 | ||||||
Product development
|
67,956 | 77,280 | (9,324 | ) | ||||||||
Total
|
$ | 77,060 | $ | 77,775 | $ | (715 | ) |
For the three months ended
|
||||||||||||
Expense Category
|
September 30, 2012
|
September 30, 2011
|
Change
|
|||||||||
Audit and related
|
$ | 4,737 | $ | 10,059 | $ | (5,322 | ) | |||||
Accounting services
|
23,579 | 28,034 | (4,455 | ) | ||||||||
Miscellaneous
|
-0- | 879 | (879 | ) | ||||||||
Legal- employment related
|
6,677 | 15,726 | (9,049 | ) | ||||||||
Legal- financial related
|
2,332 | -0- | 2,332 | |||||||||
General legal
|
2,187 | 3,856 | (1,669 | ) | ||||||||
Total
|
$ | 39,512 | $ | 58,554 | $ | (19,042 | ) |
For the three months ended
|
||||||||||||
Debt Description
|
September 30, 2012
|
September 30, 2011
|
Change $
|
|||||||||
Accretion of discount from derivatives
|
$ | 118,905 | $ | 98,238 | $ | 20,667 | ||||||
August 2008 convertible notes
|
48,395 | 48,395 | -0- | |||||||||
December 2008 convertible notes
|
150,628 | 150,628 | -0- | |||||||||
Sept 2009 secured convertible debentures
|
36,296 | 36,296 | -0- | |||||||||
Dec 2009 convertible debentures
|
45,067 | 45,067 | -0- | |||||||||
General interest
|
21,087 | 17,899 | 3,188 | |||||||||
Related party notes payable
|
135,713 | 98,513 | 37,200 | |||||||||
Total
|
$ | 556,091 | $ | 495,036 | $ | 61,055 |
Liquidity and Capital Resources
|
September 30, 2012
|
December 31, 2011
|
Change
|
||||||||||
Cash
|
$ | 805,546 | $ | 1,302,287 | $ | (496,741 | ) | |||||
Accounts Receivable, net of allowance for doubtful accounts
|
1,291,938 | 1,283,944 | 7,994 | |||||||||
Prepaids
|
167,392 | 157,363 | 10,029 | |||||||||
Current Assets
|
2,264,876 | 2,743,594 | (478,718 | ) | ||||||||
Accounts payable and accrued expenses
|
1,913,548 | 1,460,835 | 452,713 | |||||||||
Notes payable, current portion
|
634,486 | 214,300 | 420,186 | |||||||||
Notes payable, related parties, current portion
|
20,000 | -0- | 20,000 | |||||||||
Patent litigation settlement liability, current portion
|
962,500 | 925,000 | 37,500 | |||||||||
Deferred revenue, current portion
|
3,907,430 | 4,293,316 | (385,886 | ) | ||||||||
Convertible notes payable, current portion, net of discount
|
175,000 | 75,000 | 100,000 | |||||||||
Convertible notes payable, related parties, current portion, net of discount
|
3,020,000 | -0- | 3,020,000 | |||||||||
Conversion feature liability, related parties
|
2,221,496 | 740,218 | 1,481,278 | |||||||||
Conversion feature liability
|
48,840 | 18,693 | 30,147 | |||||||||
Warrant liability, related parties
|
4,806,206 | 1,506,287 | 3,299,919 | |||||||||
Warrant liability
|
179,337 | 186,421 | (7,084 | ) | ||||||||
Current liabilities
|
17,888,843 | 9,420,070 | 8,468,773 | |||||||||
Working Capital (Deficit)
|
$ | (15,623,967 | ) | $ | (6,676,476 | ) | $ | (8,947,491 | ) |
September 30, 2012
|
September 30, 2011
|
|||||||
Net cash (used in) operating activities
|
$ | (295,657 | ) | $ | (1,257,286 | ) | ||
Net cash (used in) investing activities
|
(58,698 | ) | (71,374 | ) | ||||
Net cash provided by / (used in) financing activities
|
(131,800 | ) | 225,500 | |||||
Net (decrease) in cash and cash equivalents
|
(496,741 | ) | (1,125,951 | ) | ||||
Changes in working capital accounts
|
180,982 | (369,009 | ) | |||||
Effect of non-cash transactions on cash and cash equivalents
|
$ | 5,763,575 | $ | 3,492,560 |
Contractual obligations
|
Payments due by period
|
|||||||||||||||||||
Total
|
Less than 1 year
|
1-2 Years
|
2-3 Years
|
3-5 Years
|
||||||||||||||||
Promissory notes (1)
|
$ | 5,138,865 | $ | 654,486 | (2) | $ | 2,884,379 | (3) | $ | 1,600,000 | (4) | $ | -0- | |||||||
Convertible notes
|
9,665,000 | 3,195,000 | (5) | 6,470,000 | (6) | -0- | -0- | |||||||||||||
Operating lease obligations (7)
|
1,340,828 | 373,742 | 342,109 | 301,639 | 323,338 | |||||||||||||||
Patent licensing fees (8)
|
2,762,500 | 962,500 | 450,000 | 450,000 | 900,000 | |||||||||||||||
Total
|
$ | 18,907,193 | $ | 5,185,728 | $ | 10,146,488 | $ | 2,351,639 | $ | 1,223,338 |
1. Amounts do not include interest to be paid.
|
|||||||||||||
2. Includes $45,000 of 12% notes payable that mature in October 2012, $20,000 of 12% notes payable that mature in December 2012, $431,986 of 10% notes payable that mature in January 2013, and $157,500 of 12% notes payable that mature in April 2013.
|
|||||||||||||
3. Includes $17,500 of 12% notes payable that mature in January 2014 and $2,866,879 of 12% notes payable that mature in April 2014.
|
|||||||||||||
4. Includes $1,600,000 of 12% notes payable that mature in January 2015.
|
|||||||||||||
5. Includes $75,000 of 10% convertible notes currently in default and due that are convertible into shares of common stock at the option of the holder at a conversion rate of $1.25 per share, $1,200,000 of 12% Convertible Notes that mature in April 2013, and $1,920,000 of 10% Convertible Notes that mature in August 2013.
|
|||||||||||||
6. Includes $1,490,000 in 12% Convertible Notes that mature in October 2013 and $4,980,000 in 12% Convertible Notes that mature in December 2013.
|
|||||||||||||
7. Includes office lease obligations for our headquarters in Fort Lauderdale, our regional operating office in New Jersey, our R & D office in England, our European headquarters in Bonn, Germany and lease obligations for co-location and disaster recovery computer service centers in Cincinnati, Ohio and Fort Lauderdale, Florida.
|
|||||||||||||
8. Relates to guaranteed minimum payments owed in connection with our settlement of a patent infringement lawsuit brought against the Company by DataSci, LLC.
|
|
·
|
$75,000 of 10% convertible notes currently in default and due that are convertible into shares of common stock at the option of the debenture holder at a conversion rate of $1.25 per share;
|
|
·
|
$45,000 of 12% notes payable that mature in October 2012;
|
|
·
|
$20,000 of notes payable that mature in December 2012;
|
|
·
|
$431,986 of 10% notes payable that mature in January 2013;
|
|
·
|
$1,200,000 of 12% convertible notes that are convertible into shares of common stock at the option of the debenture holder at a conversion rate of $0.25 per share that mature in April 2013;
|
|
·
|
$157,500 of 12% notes payable that mature in April 2013; and
|
|
·
|
$1,920,000 of 10% Convertible Notes that mature in August 2013.
|
EXHIBIT NO.
|
DESCRIPTION
|
31.1*
|
Certification of Principal Executive Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
31.2*
|
Certification of Principal Financial and Accounting Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
32.1**
|
Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002.
|
101.INS***
|
XBRL Instance Document
|
101.SCH***
|
XBRL Taxonomy Extension Schema Document
|
101.CAL***
|
XBRL Taxonomy Extension Calculation Document
|
101.DEF***
|
XBRL Taxonomy Extension Definition Document
|
101.LAB***
|
XBRL Taxonomy Extension Label Document
|
101.PRE***
|
XBRL Taxonomy Extension Presentation Document
|
* Filed herewith
|
** Furnished herewith
|
***
|
In accordance with Rule 406T of Regulation S-T, the information in Exhibit 101 is furnished and deemed not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of Section 18 of the Exchange Act of 1934, and otherwise is not subject to liability under these sections and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, except as expressly set forth by specific reference in such filing.
|
OMNICOMM SYSTEMS, INC.
|
|||
By:
|
/s/Cornelis F. Wit
|
||
Cornelis F Wit, Chief Executive Officer
|
|||
By:
|
/s/Thomas E. Vickers
|
||
Thomas E. Vickers, Chief Accounting and Financial Officer
|
|||
|
o
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designated 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;
|
|
o
|
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;
|
|
o
|
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;
|
|
o
|
Disclosed in this report any changes 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
|
|
o
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designated 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;
|
|
o
|
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;
|
|
o
|
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;
|
|
o
|
Disclosed in this report any changes 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
|
Note 2 - Summary of Significant Accounting Policies (Detail) - Allowance For Doubtful Account Summary (USD $)
|
3 Months Ended | 12 Months Ended |
---|---|---|
Sep. 30, 2012
|
Dec. 31, 2011
|
|
Beginning of period | $ 142,444 | $ 269,869 |
Bad debt expense | 126,763 | (119,889) |
Write-offs | 0 | (7,536) |
End of period | $ 269,207 | $ 142,444 |
Note 9 - Convertible Notes Payable (Detail) - Convertible Debt Maturity Payments (USD $)
|
Sep. 30, 2012
|
---|---|
Total | $ 9,665,000 |
Convertible Debt [Member]
|
|
2012 | 75,000 |
2013 | 9,590,000 |
2014 | 0 |
2015 | $ 0 |
Note 6 - Intangible Assets, At Cost (Detail) - Intangible Assets (USD $)
|
9 Months Ended | |
---|---|---|
Sep. 30, 2012
|
Dec. 31, 2011
|
|
Cost | $ 1,392,701 | $ 1,392,701 |
Accumulated Amortization | 1,392,701 | 1,160,584 |
Net Book Value | 0 | 232,117 |
Customer Lists [Member]
|
||
Cost | 1,392,701 | 1,392,701 |
Accumulated Amortization | 1,392,701 | 1,160,584 |
Net Book Value | $ 0 | $ 232,117 |
Estimated Useful Lives | 3 years |
Note 14 - Employee Equity Incentive Plans (Detail) - Vested Shares (USD $)
|
9 Months Ended | |
---|---|---|
Sep. 30, 2012
|
Sep. 30, 2011
|
|
Number of options vested | 691,333 | 1,307,500 |
Fair value of options vested (in Dollars) | $ 70,383 | $ 303,673 |
Note 10 - Fair Value Measurement (Detail) - Fair Value Of Liabilities Measured On A Recurring Basis (USD $)
|
Dec. 31, 2012
|
Sep. 30, 2012
|
||||||
---|---|---|---|---|---|---|---|---|
Derivatives: (1) (2) | ||||||||
Fair Value | $ 2,451,619 | [1],[2] | $ 7,255,879 | [1],[2] | ||||
Conversion Feature Liability [Member] | Fair Value, Inputs, Level 1 [Member]
|
||||||||
Derivatives: (1) (2) | ||||||||
Fair Value | 0 | [1],[2] | 0 | [1],[2] | ||||
Conversion Feature Liability [Member] | Fair Value, Inputs, Level 2 [Member]
|
||||||||
Derivatives: (1) (2) | ||||||||
Fair Value | 0 | [1],[2] | 0 | [1],[2] | ||||
Conversion Feature Liability [Member] | Fair Value, Inputs, Level 3 [Member]
|
||||||||
Derivatives: (1) (2) | ||||||||
Fair Value | 758,911 | [1],[2] | 2,270,336 | [1],[2] | ||||
Conversion Feature Liability [Member]
|
||||||||
Derivatives: (1) (2) | ||||||||
Fair Value | 758,911 | [1],[2] | 2,270,336 | [1],[2] | ||||
Warrant Liability [Member] | Fair Value, Inputs, Level 1 [Member]
|
||||||||
Derivatives: (1) (2) | ||||||||
Fair Value | 0 | [1],[2] | 0 | [1],[2] | ||||
Warrant Liability [Member] | Fair Value, Inputs, Level 2 [Member]
|
||||||||
Derivatives: (1) (2) | ||||||||
Fair Value | 0 | [1],[2] | 0 | [1],[2] | ||||
Warrant Liability [Member] | Fair Value, Inputs, Level 3 [Member]
|
||||||||
Derivatives: (1) (2) | ||||||||
Fair Value | 1,692,708 | [1],[2] | 4,985,543 | [1],[2] | ||||
Warrant Liability [Member]
|
||||||||
Derivatives: (1) (2) | ||||||||
Fair Value | 1,692,708 | [1],[2] | 4,985,543 | [1],[2] | ||||
Fair Value, Inputs, Level 1 [Member]
|
||||||||
Derivatives: (1) (2) | ||||||||
Fair Value | 0 | [1],[2] | 0 | [1],[2] | ||||
Fair Value, Inputs, Level 2 [Member]
|
||||||||
Derivatives: (1) (2) | ||||||||
Fair Value | 0 | [1],[2] | 0 | [1],[2] | ||||
Fair Value, Inputs, Level 3 [Member]
|
||||||||
Derivatives: (1) (2) | ||||||||
Fair Value | $ 2,451,619 | [1],[2] | $ 7,255,879 | [1],[2] | ||||
|
Note 15 - Income Taxes (Detail) - Deferred Income Taxes (USD $)
|
Sep. 30, 2012
|
Dec. 31, 2011
|
---|---|---|
Amortization of intangibles | $ 283,698 | $ 283,698 |
Bad debt allowance | 100,330 | 52,629 |
Patent litigation liability accrual | 401,020 | 463,652 |
Operating loss carryforwards | 17,238,505 | 16,920,055 |
Gross deferred tax assets | 18,023,553 | 17,720,034 |
Valuation allowance | (18,023,553) | (17,720,034) |
Net deferred tax asset | $ 0 | $ 0 |
Note 5 - Property and Equipment, Net (Detail) - Property And Equipment (USD $)
|
9 Months Ended | |
---|---|---|
Sep. 30, 2012
|
Dec. 31, 2011
|
|
Cost | $ 3,175,723 | $ 3,211,311 |
Accumulated Depreciation | 2,674,090 | 2,445,104 |
Net Book Value | 501,633 | 766,207 |
Computer And Office Equipment [Member]
|
||
Cost | 1,485,357 | 1,550,907 |
Accumulated Depreciation | 1,141,486 | 1,094,152 |
Net Book Value | 343,871 | 456,755 |
Estimated Useful Lives | 5 years | |
Leasehold Improvements [Member]
|
||
Cost | 80,351 | 75,476 |
Accumulated Depreciation | 65,955 | 60,785 |
Net Book Value | 14,396 | 14,691 |
Estimated Useful Lives | 5 years | |
Software [Member]
|
||
Cost | 1,499,677 | 1,477,539 |
Accumulated Depreciation | 1,378,347 | 1,207,662 |
Net Book Value | 121,330 | 269,877 |
Estimated Useful Lives | 3 years | |
Furniture and Fixtures [Member]
|
||
Cost | 110,338 | 107,389 |
Accumulated Depreciation | 88,302 | 82,505 |
Net Book Value | $ 22,036 | $ 24,884 |
Estimated Useful Lives | 5 years |
Note 13 - Stockholders' (Deficit) (Tables)
|
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2012
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Dividends Payable [Table Text Block] |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Stockholders' Equity Note, Warrants or Rights [Table Text Block] |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Share-based Compensation, Activity [Table Text Block] |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accumulated Other Comprehensive Income (Loss) [Table Text Block] |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Warrant [Member]
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Share-based Compensation, Activity [Table Text Block] |
|
Note 14 - Employee Equity Incentive Plans (Detail) - Weighted Average Grant Date Fair Value Activity (USD $)
|
9 Months Ended | |
---|---|---|
Sep. 30, 2012
|
Sep. 30, 2011
|
|
Stock options granted during the nine month period ended September 30, | $ 0.10 | $ 0.11 |
Stock options vested during the nine month period ended September 30, | $ 0.10 | $ 0.23 |
Stock options forfeited during the nine month period ended September 30, | $ 0.33 | $ 0.17 |
Note 10 - Fair Value Measurement (Detail) - Other Income (USD $)
|
9 Months Ended | |
---|---|---|
Sep. 30, 2012
|
Sep. 30, 2011
|
|
The net amount of total gains/(losses) for the period included in earnings attributable to the unrealized gain or loss from changes in derivative liabilities at the reporting date | $ (4,804,260) | $ (2,041,161) |
Total unrealized gains/(losses) included in earnings | $ (4,804,260) | $ (2,041,161) |
Note 15 - Income Taxes (Detail) - A Reconciliation of Income Tax Expense (USD $)
|
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2012
|
Sep. 30, 2011
|
Sep. 30, 2012
|
Sep. 30, 2011
|
|
Statutory rate applied to loss before income taxes | $ (2,327,610) | $ (1,648,509) | ||
Current tax expense (benefit) | 54,699 | 0 | ||
Non deductible expenses | 1,961,459 | 1,034,385 | ||
Change in deferred assets | 62,632 | 45,545 | ||
Change in valuation allowance | 303,519 | 568,579 | ||
Income tax expense (benefit) | $ 54,699 | $ 0 | $ 54,699 | $ 0 |
Note 15 - Income Taxes (Detail) - The Components of Income Tax Expense (Benefit) (USD $)
|
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2012
|
Sep. 30, 2011
|
Sep. 30, 2012
|
Sep. 30, 2011
|
|
Current tax expense (benefit): | $ 54,699 | $ 0 | ||
Deferred tax expense (benefit) | (303,519) | (568,579) | ||
Valuation allowance | 303,519 | 568,579 | ||
Total tax expense (benefit) | 54,699 | 0 | 54,699 | 0 |
Bad Debt Allowance [Member]
|
||||
Deferred tax expense (benefit) | (47,701) | 0 | ||
Operating Loss Carryforward [Member]
|
||||
Deferred tax expense (benefit) | (318,450) | (614,124) | ||
Patent Litigation Settlement [Member]
|
||||
Deferred tax expense (benefit) | $ 62,632 | $ 45,545 |
Note 14 - Employee Equity Incentive Plans (Detail) - Stock Options Oustanding (USD $)
|
9 Months Ended | 12 Months Ended |
---|---|---|
Sep. 30, 2012
|
Dec. 31, 2011
|
|
Range 0 - .20 [Member] | Minimum [Member]
|
||
Strike price range ($) | $ 0.00 | $ 0.00 |
Range 0 - .20 [Member] | Maximum [Member]
|
||
Strike price range ($) | $ 0.20 | $ 0.20 |
Range 0 - .20 [Member] | Outstanding [Member]
|
||
Outstanding stock options (in Shares) | 3,328,500 | 3,376,000 |
Weighted average remaining contractual life | 3 years 80 days | 3 years 9 months |
Weighted average outstanding strike price | $ 0.15 | $ 0.15 |
Range 0 - .20 [Member] | Vested [Member]
|
||
Vested stock options (in Shares) | 1,910,083 | 1,547,500 |
Weighted average remaining vested contractual life | 2 years 240 days | 3 years 7 days |
Weighted average vested strike price | $ 0.17 | $ 0.20 |
Range .21-.29 [Member] | Minimum [Member]
|
||
Strike price range ($) | $ 0.21 | $ 0.21 |
Range .21-.29 [Member] | Maximum [Member]
|
||
Strike price range ($) | $ 0.29 | $ 0.29 |
Range .21-.29 [Member] | Outstanding [Member]
|
||
Outstanding stock options (in Shares) | 2,700,000 | 2,785,000 |
Weighted average remaining contractual life | 1 year 131 days | 2 years 29 days |
Weighted average outstanding strike price | $ 0.26 | $ 0.26 |
Range .21-.29 [Member] | Vested [Member]
|
||
Vested stock options (in Shares) | 2,700,000 | 2,785,000 |
Weighted average remaining vested contractual life | 1 year 131 days | 2 years 29 days |
Weighted average vested strike price | $ 0.26 | $ 0.26 |
Range .30 -.49 [Member] | Minimum [Member]
|
||
Strike price range ($) | $ 0.30 | $ 0.30 |
Range .30 -.49 [Member] | Maximum [Member]
|
||
Strike price range ($) | $ 0.49 | $ 0.49 |
Range .30 -.49 [Member] | Outstanding [Member]
|
||
Outstanding stock options (in Shares) | 755,000 | 875,000 |
Weighted average remaining contractual life | 1 year 18 days | 1 year 328 days |
Weighted average outstanding strike price | $ 0.45 | $ 0.45 |
Range .30 -.49 [Member] | Vested [Member]
|
||
Vested stock options (in Shares) | 755,000 | 875,000 |
Weighted average remaining vested contractual life | 1 year 18 days | 1 year 328 days |
Weighted average vested strike price | $ 0.45 | $ 0.45 |
Range .50 -.70 [Member] | Minimum [Member]
|
||
Strike price range ($) | $ 0.50 | $ 0.50 |
Range .50 -.70 [Member] | Maximum [Member]
|
||
Strike price range ($) | $ 0.70 | $ 0.70 |
Range .50 -.70 [Member] | Outstanding [Member]
|
||
Outstanding stock options (in Shares) | 3,719,000 | 4,122,000 |
Weighted average remaining contractual life | 1 year 80 days | 1 year 343 days |
Weighted average outstanding strike price | $ 0.60 | $ 0.60 |
Range .50 -.70 [Member] | Vested [Member]
|
||
Vested stock options (in Shares) | 3,719,000 | 4,122,000 |
Weighted average remaining vested contractual life | 1 year 80 days | 1 year 343 days |
Weighted average vested strike price | $ 0.60 | $ 0.60 |
Minimum [Member]
|
||
Strike price range ($) | $ 0.00 | $ 0.00 |
Maximum [Member]
|
||
Strike price range ($) | $ 0.70 | $ 0.70 |
Outstanding [Member]
|
||
Outstanding stock options (in Shares) | 10,502,500 | 11,158,000 |
Weighted average remaining contractual life | 1 year 321 days | 2 years 189 days |
Weighted average outstanding strike price | $ 0.36 | $ 0.37 |
Vested [Member]
|
||
Vested stock options (in Shares) | 9,084,083 | 9,329,500 |
Weighted average remaining vested contractual life | 1 year 200 days | 2 years 58 days |
Weighted average vested strike price | $ 0.40 | $ 0.42 |
Note 4 - Earnings (Loss) Per Share (Tables)
|
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2012
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share [Table Text Block] |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Calculation of Numerator and Denominator in Earnings Per Share [Table Text Block] |
|
Note 8 - Notes Payable (Detail) (USD $)
|
9 Months Ended | |||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2012
|
Dec. 31, 2011
|
Dec. 01, 2011
|
Nov. 23, 2011
|
Oct. 31, 2011
|
Oct. 28, 2011
|
Oct. 05, 2011
|
Dec. 31, 2010
|
Sep. 30, 2010
|
Jun. 29, 2010
|
Apr. 13, 2010
|
Sep. 30, 2011
Promissory Note 1 [Member]
|
Sep. 30, 2011
Promissory Note 2 [Member]
|
Sep. 30, 2011
Promissory Note 3 [Member]
|
Sep. 30, 2011
Promissory Note 4 [Member]
|
Sep. 30, 2011
Promissory Note 5 [Member]
|
Sep. 30, 2011
Promissory Note 6 [Member]
|
Sep. 30, 2012
Note Payable 10 [Member]
|
Dec. 31, 2011
Note Payable 10 [Member]
|
Mar. 31, 2011
Note Payable 10 [Member]
|
Sep. 30, 2012
Note Payable 11 [Member]
|
Dec. 31, 2011
Note Payable 11 [Member]
|
May 13, 2011
Note Payable 11 [Member]
|
Sep. 30, 2011
Note Payable 12 [Member]
|
Dec. 31, 2010
Note Payable Maturing April 1, 2012 [Member]
|
Dec. 31, 2011
Consolidated Note [Member]
|
Sep. 02, 2011
Note Payable CEO [Member]
|
Dec. 31, 2011
Promissory Note Maturing January 1, 2013 [Member]
|
Dec. 31, 2011
Promissory Note Maturing April 1, 2014 [Member]
|
Dec. 31, 2011
Promissory Note $130,000 Maturing April 2014 [Member]
|
Dec. 31, 2011
Promissory Note $123,000 Maturing April 1, 2014 [Member]
|
Dec. 31, 2011
Promissory Note $82,000 Maturing April 1, 2014 [Member]
|
Dec. 31, 2011
Promissory Note $60,000 Maturing January 1, 2013 [Member]
|
Dec. 31, 2011
Net of Warrants [Member]
|
|
Notes Payable | $ 5,138,865 | $ 5,270,665 | $ 150,000 | $ 60,000 | $ 82,000 | $ 123,000 | $ 130,000 | $ 1,197,500 | $ 695,000 | $ 115,000 | $ 450,000 | $ 80,000 | $ 15,000 | $ 35,000 | $ 32,000 | $ 80,000 | $ 100,000 | $ 2,866,879 | $ 2,866,879 | $ 1,688,018 | $ 1,600,000 | $ 1,600,000 | $ 96,000 | $ 342,000 | $ 409,379 | $ 1,600,000 | $ 50,000 | $ 96,000 | $ 342,000 | $ 130,000 | $ 123,000 | $ 82,000 | $ 60,000 | $ 1,352,001 |
Debt Instrument, Face Amount | 2,866,879 | |||||||||||||||||||||||||||||||||
Class of Warrant or Right, Number of Securities Called by Warrants or Rights (in Shares) | 6,400,000 | 11,467,517 | ||||||||||||||||||||||||||||||||
Investment Warrants, Exercise Price (in Dollars per share) | $ 0.25 | |||||||||||||||||||||||||||||||||
Debt Instrument, Interest Rate, Stated Percentage | 12.00% | 12.00% | 12.00% | 12.00% | 12.00% | 12.00% | 12.00% | 12.00% | 12.00% | 12.00% | 12.00% | 12.00% | 12.00% | |||||||||||||||||||||
Derivative Liabilities | 247,999 | 1,178,861 | ||||||||||||||||||||||||||||||||
Debt Instrument, Convertible, Remaining Discount Amortization Period | 36 months | |||||||||||||||||||||||||||||||||
Class of Warrant or Right, Exercise Price of Warrants or Rights (in Dollars per Item) | 0.25 | |||||||||||||||||||||||||||||||||
Interest Payable | $ 767,000 |
Note 15 - Income Taxes (Detail) (USD $)
|
6 Months Ended |
---|---|
Jun. 30, 2012
|
|
Operating Loss Carryforwards | $ 48,083,003 |
Valuation Allowance, Deferred Tax Asset, Change in Amount | $ 313,440 |
Note 9 - Convertible Notes Payable (Detail) (USD $)
|
9 Months Ended | 6 Months Ended | 12 Months Ended | 1 Months Ended | 9 Months Ended | 33 Months Ended | 12 Months Ended | 30 Months Ended | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2012
|
Sep. 30, 2011
|
Dec. 31, 2011
|
Dec. 01, 2011
|
Nov. 23, 2011
|
Oct. 31, 2011
|
Oct. 28, 2011
|
Oct. 05, 2011
|
Mar. 30, 2011
Extended Maturity [Member]
Convertible Note Payable 4 [Member]
|
Jun. 30, 2012
Extended Maturity [Member]
Convertible Note Payable 5 [Member]
|
Mar. 30, 2011
Director [Member]
Convertible Note Payable 4 [Member]
|
Jun. 30, 2012
Director [Member]
Convertible Note Payable 5 [Member]
|
Jun. 30, 2012
Convertible Note Payable 1 [Member]
|
Dec. 31, 1999
Convertible Note Payable 1 [Member]
|
Jun. 30, 2004
Convertible Note Payable 1 [Member]
|
Mar. 30, 2011
Convertible Note Payable 4 [Member]
|
Sep. 30, 2009
Convertible Note Payable 4 [Member]
|
Jun. 30, 2012
Convertible Note Payable 4 [Member]
|
Dec. 31, 2009
Convertible Note Payable 5 [Member]
|
Jun. 30, 2012
Convertible Note Payable 5 [Member]
|
|
Debt Instrument, Interest Rate, Stated Percentage | 12.00% | 12.00% | 12.00% | 12.00% | 12.00% | 12.00% | 10.00% | 12.00% | 12.00% | |||||||||||
Convertible Notes Payable | $ 9,665,000 | $ 1,200,000 | $ 1,490,000 | $ 1,100,000 | $ 1,440,000 | $ 862,500 | $ 1,400,000 | $ 1,490,000 | ||||||||||||
Debt Issuance Cost | 119,625 | |||||||||||||||||||
Proceeds from Issuance of Debt | 742,875 | 1,490,000 | ||||||||||||||||||
Debt Instrument, Convertible, Conversion Price (in Dollars per share) | $ 1.25 | $ 0.25 | $ 0.25 | |||||||||||||||||
Debt Conversion, Converted Instrument, Amount | 787,500 | |||||||||||||||||||
Debt Conversion, Converted Instrument, Shares Issued (in Shares) | 1,495,179 | |||||||||||||||||||
Long-term Debt, Gross | 75,000 | |||||||||||||||||||
Interest Payable | 767,000 | 100,358 | ||||||||||||||||||
Class of Warrant or Right, Number of Securities Called by Warrants or Rights (in Shares) | 6,400,000 | 5,600,000 | 5,960,000 | |||||||||||||||||
Class of Warrant or Right, Exercise Price of Warrants or Rights (in Dollars per Item) | 0.25 | 0.25 | 0.25 | |||||||||||||||||
Proceeds from Issuance of Secured Debt | 1,400,000 | |||||||||||||||||||
Repayments of Notes Payable | $ 131,800 | $ 212,500 | $ 200,000 | |||||||||||||||||
Investment Warrants, Exercise Price (in Dollars per share) | $ 0.25 | $ 0.25 |
Note 13 - Stockholders' (Deficit) (Detail) - Accumulated Other Comprehensive Gain (Loss) (USD $)
|
3 Months Ended | 9 Months Ended | 12 Months Ended | 9 Months Ended | 12 Months Ended | 9 Months Ended | 12 Months Ended | ||||
---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2012
|
Sep. 30, 2011
|
Sep. 30, 2012
|
Sep. 30, 2011
|
Dec. 31, 2011
|
Sep. 30, 2012
Foreign Currency Translation [Member]
|
Dec. 31, 2011
Foreign Currency Translation [Member]
|
Dec. 31, 2010
Foreign Currency Translation [Member]
|
Sep. 30, 2012
Accumulated Other Comprehensive Gain (Loss) [Member]
|
Dec. 31, 2011
Accumulated Other Comprehensive Gain (Loss) [Member]
|
Dec. 31, 2010
Accumulated Other Comprehensive Gain (Loss) [Member]
|
|
Balance | $ (64,300) | $ (53,714) | $ (24,298) | $ (64,300) | $ (53,714) | $ (24,298) | |||||
Activity | $ (3,398) | $ (11,276) | $ (10,586) | $ (22,790) | $ (29,416) | $ (10,586) | $ (29,416) | $ (10,586) | $ (29,416) |
Note 11 - Commitments and Contingencies (Detail) - Minimum Royalty Payments Per Year (USD $)
|
Sep. 30, 2012
|
---|---|
2012 | $ 625,000 |
2013 | 450,000 |
2014 | 450,000 |
2015 | 450,000 |
2016 | 450,000 |
2017 | 450,000 |
Total | $ 2,875,000 |
Note 6 - Intangible Assets, At Cost (Detail) (USD $)
|
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2012
|
Sep. 30, 2011
|
Sep. 30, 2012
|
Sep. 30, 2011
|
|
Amortization of Intangible Assets | $ 0 | $ 116,058 | $ 232,117 | $ 348,175 |
Note 2 - Summary of Significant Accounting Policies
|
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Significant Accounting Policies [Text Block] |
NOTE
2: SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF
PRESENTATION AND PRINCIPLES OF CONSOLIDATION
The
Company’s accounts include those of all its
wholly-owned subsidiaries, which are more fully described in
the Company’s 2011 Annual Report filed on Form 10-K
with the Securities and Exchange Commission, and have been
prepared in conformity with (i) accounting principles
generally accepted in the United States of America; and (ii)
the rules and regulations of the United States Securities and
Exchange Commission. All significant intercompany
accounts and transactions between the Company and its
subsidiaries have been eliminated in consolidation.
UNAUDITED
FINANCIAL STATEMENTS
The
accompanying unaudited condensed consolidated financial
statements of the Company have been prepared in accordance
with accounting principles generally accepted in the United
States of America for interim financial information, pursuant
to the rules and regulations of the Securities and Exchange
Commission. Pursuant to such rules and regulations, certain
financial information and footnote disclosures normally
included in the consolidated financial statements have been
condensed or omitted. The results for the periods indicated
are unaudited, but reflect all adjustments (consisting only
of normally recurring adjustments) which management considers
necessary for a fair presentation of operating
results.
The
operating results for the three and nine month periods ended
September 30, 2012 are not necessarily indicative of the
results that may be expected for the year-ended
December 31, 2012. These unaudited condensed
consolidated financial statements should be read in
conjunction with the consolidated financial statements and
footnotes thereto included in the Company’s Annual
Report on Form 10-K for the year-ended December 31,
2011.
ESTIMATES
IN FINANCIAL STATEMENTS
The
preparation of the unaudited condensed consolidated financial
statements in conformity with generally accepted accounting
principles requires management to make estimates and
assumptions that affect the amounts reported in the financial
statements and footnotes thereto. Significant
estimates incorporated in our financial statements include
the recorded allowance for doubtful accounts, the estimate of
the appropriate amortization period of our intangible assets,
the evaluation of whether our intangible assets have suffered
any impairment, the allocation of revenues under
multiple-element customer contracts, royalty-based patent
liabilities, the value of derivatives associated with debt
issued by the Company and the valuation of any corresponding
discount to the issuance of our debt. Actual
results may differ from those estimates.
RECLASSIFICATIONS
Certain
reclassifications have been made in the 2011 financial
statements to conform to the 2012
presentation. These reclassifications did not have
any effect on our net loss or shareholders’
deficit.
FOREIGN
CURRENCY TRANSLATION
The
financial statements of the Company’s foreign
subsidiaries are translated in accordance with ASC 830-30,
Foreign
Currency Matters—Translation of Financial
Statements. The reporting currency for the Company is
the U.S. dollar. The functional currencies of the
Company’s subsidiaries, OmniComm Europe GmbH in Germany
and OmniComm Ltd., in the United Kingdom, are the Euro and
British Pound Sterling, respectively. Accordingly, the
assets and liabilities of the Company’s foreign
subsidiaries are translated into U.S. dollars using the
exchange rate in effect at each balance sheet date. Revenue
and expense accounts of the Company’s foreign
subsidiaries are translated using an average rate of exchange
during the period. Foreign currency translation adjustments
are accumulated as a component of other comprehensive income
(loss) as a separate component of stockholders’ equity.
Gains and losses arising from transactions denominated in
foreign currencies are primarily related to intercompany
accounts that have been determined to be temporary in nature
and accordingly, are recorded directly to the statement of
operations. We record translation gains and losses
in accumulated other comprehensive income as a component of
stockholders’ equity. We recorded translation losses of
$10,586 and $22,790 for the nine month periods ended
September 30, 2012 and September 30, 2011.
REVENUE
RECOGNITION POLICY
The
Company derives revenues from software licenses and services
of its EDC products and services which can be purchased on a
stand-alone basis. License revenues are derived principally
from the sale of term licenses for the following software
products offered by the Company: TrialMaster,
TrialOne and eClinical Suite
(the “EDC
Software”). Service revenues are derived
principally from the Company's delivery of the hosted
solutions of its TrialMaster
and eClinical
Suite software products, and consulting services and
customer support, including training, for all of the
Company's products.
The
Company recognizes revenues when all of the following
conditions are satisfied: (1) there is persuasive
evidence of an arrangement; (2) the product or service
has been provided to the customer; (3) the collection of
fees is probable; and (4) the amount of fees to be paid
by the customer is fixed or determinable.
The
Company operates in one reportable segment which is the
delivery of EDC Software and services to clinical trial
sponsors. The Company segregates its revenues
based on the activity cycle used to generate its
revenues. Accordingly, revenues are currently
generated through four main activities. These activities
include hosted applications, licensing, professional services
and maintenance-related services.
Hosted
Application Revenues
The
Company offers its TrialMaster
and eClinical
Suite software products as hosted application
solutions delivered through a standard Web-browser, with
customer support and training services. The Company's TrialOne
solution is presently available only on a licensed basis. To
date, hosted applications revenues have been primarily
related to TrialMaster.
Revenues
resulting from TrialMaster
and eClinical
Suite application hosting services consist of three
components of services for each clinical trial: the first
component is comprised of application set up, including
design of electronic case report forms and edit checks,
installation and server configuration of the
system. The second component involves application
hosting and related support services as well as billable
change orders which consist of amounts billed to customers
for functionality changes made. The third stage involves
services required to close out, or lock, the database for the
clinical trial.
Fees
charged and costs incurred for the trial system design, set
up and implementation are amortized and recognized ratably
over the estimated hosting period. Work performed
outside the original scope of work is contracted for
separately as an additional fee and is generally recognized
ratably over the remaining term of the hosting period. Fees
for the first and third stages of the service are billed
based upon milestones. Revenues earned upon
completion of a contractual milestone are deferred and
recognized over the estimated remaining hosting
period. Fees for application hosting and
related services in the second stage are generally billed
quarterly in advance. Revenues resulting from
hosting services for the eClinical
Suite products consist of installation and server
configuration, application hosting and related support
services. Services for this offering are generally charged as
a fixed fee payable on a quarterly or annual basis. Revenues
are recognized ratably over the period of the service.
Licensing
Revenues
The
Company's software license revenues are earned from the sale
of off-the-shelf software. From time-to-time a
client might require significant modification or
customization subsequent to delivery to the
customer. The Company generally enters into
software term licenses for its EDC Software products with its
customers for three to five year periods, although
customers have entered into both longer and shorter term
license agreements. These arrangements typically
include multiple elements: software license, consulting
services and customer support. The Company bills its
customers in accordance with the terms of the underlying
contract. Generally, the Company bills license fees in
advance for each billing cycle of the license term, which
typically is either on a quarterly or annual basis. Payment
terms are generally net 30 days.
In
the past the Company has sold perpetual licenses for EDC
Software products in certain situations to existing customers
with the option to purchase customer support, and may, in the
future, do so for new customers based on customer
requirements or market conditions. The Company has
established vendor specific objective evidence of fair value
for the customer support. Accordingly, license revenues are
recognized upon delivery of the software and when all other
revenue recognition criteria are met. Customer support
revenues are recognized ratably over the term of the
underlying support arrangement. The Company
generates customer support and maintenance revenues from its
perpetual license customer base.
Professional
Services
The
Company may also enter into arrangements to provide
consulting services separate from a license arrangement. In
these situations, revenue is recognized on a
time-and-materials basis. Professional services can be deemed
to be as essential to the functionality of the software at
inception and typically are for initial trial configuration,
implementation planning, loading of software, building simple
interfaces and running test data and documentation of
procedures. Subsequent additions or extensions to
license terms do not generally include additional
professional services.
Pass-through
Revenue and Expense
The Company accounts for pass-through
revenue and expense in accordance with ASC 605-45, Principal Agent
Considerations. In accordance with ASC 605-45,
Principal Agent Consideration, these amounts are recorded as
revenue in the statement of operations with a corresponding
expense recorded in cost of goods
sold. Pass-through revenues and expenses include
amounts associated with third-party services provided to our
customers by our service and product
partners. These third-party services are primarily
comprised of Interactive Voice and Web Response software
services (IVR and IWR), travel and shipping that are incurred
on our clients’ behalf.
Maintenance
Revenues
Maintenance
includes telephone-based help desk support and software
maintenance. The Company generally bundles customer support
with the software license for the entire term of the
arrangement. As a result, the Company generally recognizes
revenues for both maintenance and software licenses ratably
over the term of the software license and support
arrangement. The Company allocates the revenues recognized
for these arrangements to the different elements based on
management's estimate of the relative fair value of each
element. The Company generally invoices each of
the elements based on separately quoted amounts and thus has
a fairly accurate estimate of the relative fair values of
each of the invoiced revenue elements.
The
fees associated with each business activity for the periods
ended September 30, 2012 and September 30, 2011, respectively
are:
COST OF
REVENUES
Cost
of revenues primarily consists of costs related to hosting,
maintaining and supporting the Company’s application
suite and delivering professional services and support. These
costs include salaries, benefits, bonuses and stock-based
compensation for the Company’s professional services
staff. Cost of revenues also includes outside service
provider costs. Cost
of revenues is expensed as incurred.
CASH AND
CASH EQUIVALENTS
Cash
equivalents consist of highly liquid, short-term investments
with maturities of 90 days or less. The carrying
amount reported in the accompanying consolidated balance
sheets approximates fair value.
ACCOUNTS
RECEIVABLE
Accounts
receivable are judged as to collectability by management and
an allowance for bad debts is established as necessary. The
allowance is based on an evaluation of the collectability of
accounts receivable and prior bad debt
experience. The Company had recorded an allowance
for uncollectible accounts receivable of $269,207 as of
September 30, 2012 and $142,444 as of December 31, 2011,
respectively.
The
following table summarizes activity in the Company's
allowance for doubtful accounts for the periods
presented.
CONCENTRATION
OF CREDIT RISK
Cash
and cash equivalents and restricted cash are deposited with
major financial institutions and, at times, such balances
with any one financial institution may be in excess of
FDIC-insured limits. As of September 30, 2012, no funds were
deposited in excess of FDIC-insured
limits. Management believes the risk in these
situations to be minimal.
Except
as follows, the Company has no significant off-balance-sheet
risk or credit risk concentrations. Financial instruments
that subject the Company to potential credit risks are
principally cash equivalents and accounts receivable.
Concentrated credit risk with respect to accounts receivable
is limited to creditworthy customers. The Company's customers
are principally located in the United States and
Europe. The Company is directly affected by
the overall financial condition of the pharmaceutical,
biotechnology and medical device industries and management
believes that credit risk exists and that any credit risk the
Company faces has been adequately reserved for as of
September 30, 2012. The Company maintains an
allowance for doubtful accounts based on accounts past due
according to contractual terms and historical collection
experience. Actual losses when incurred are charged to the
allowance. The Company's losses related to collection of
accounts receivable have consistently been within
management's expectations. As of September 30,
2012, the Company believes no additional credit risk exists
beyond the amounts provided for in our allowance for
uncollectible accounts. The Company evaluates its
allowance for uncollectable accounts on a monthly basis based
on a specific review of receivable agings and the period that
any receivables are beyond the standard payment terms. The
Company does not require collateral from its customers in
order to mitigate credit risk.
One
customer accounted for 21% of our revenues during the nine
month period ended September 30, 2012 or approximately
$2,442,000 and one accounted for 17% or approximately
$2,043,000. One customer accounted for 21% of our revenues
during the nine month period ended September 30, 2011 or
approximately $2,092,000. The following table
summarizes the number of customers who individually comprise
greater than 10% of total revenue and/or total accounts
receivable and their aggregate percentage of the Company's
total revenue and gross accounts receivable for the nine
month periods presented.
Subsequent
to two acquisitions completed in fiscal 2009, the
Company’s European operations have become a more
material portion of its overall revenues. The
table below provides revenues from European customers for the
nine month periods ended September 30, 2012 and September 30,
2011, respectively.
The
Company serves all of its hosting customers from third-party
web hosting facilities located in the United States. The
Company does not control the operation of these facilities,
and they are vulnerable to damage or interruption. The
Company maintains redundant systems that can be used to
provide service in the event the third-party web hosting
facilities become unavailable, although in such
circumstances, the Company's service may be interrupted
during the transition.
PROPERTY
AND EQUIPMENT
Property
and equipment are recorded at cost. Additions and
betterments are capitalized; maintenance and repairs are
expensed as incurred. Depreciation is calculated
using the straight-line method over the asset’s
estimated useful life, which is 5 years for leasehold
improvements, computers, equipment and furniture and 3 years
for software. Gains or losses on disposal are
charged to operations.
ASSET
IMPAIRMENT
Acquisitions
and Intangible Assets
We
account for acquisitions in accordance with ASC 805, Business
Combinations (“ASC 805”) and ASC 350,
Intangibles-
Goodwill and Other (“ASC 350”). The
acquisition method of accounting requires that assets
acquired and liabilities assumed be recorded at their fair
values on the date of a business acquisition. Our
consolidated financial statements and results of operations
reflect an acquired business from the completion date of an
acquisition.
The
judgments that we make in determining the estimated fair
value assigned to each class of assets acquired and
liabilities assumed, as well as asset lives, can materially
impact net income in periods following an asset acquisition.
We generally use either the income, cost or market approach
to aid in our conclusions of such fair values and asset
lives. The income approach presumes that the value of an
asset can be estimated by the net economic benefit to be
received over the life of the asset, discounted to present
value. The cost approach presumes that an investor would pay
no more for an asset than its replacement or reproduction
cost. The market approach estimates value based on what other
participants in the market have paid for reasonably similar
assets. Although each valuation approach is considered in
valuing the assets acquired, the approach ultimately selected
is based on the characteristics of the asset and the
availability of information.
Long-lived
Assets
We
review long-lived assets for impairment whenever events or
changes in circumstances indicate that the related carrying
amounts may not be recoverable. Determining whether an
impairment has occurred typically requires various estimates
and assumptions, including determining which cash flows are
directly related to the potentially impaired asset, the
useful life over which cash flows will occur, their amount
and the asset’s residual value, if any. In turn,
measurement of an impairment loss requires a determination of
fair value, which is based on the best information available.
We use quoted market prices when available and independent
appraisals and management estimates of future operating cash
flows, as appropriate, to determine fair value.
FAIR
VALUE MEASUREMENT
OmniComm’s
capital structure includes the use of warrants and
convertible debt features that are classified as derivative
financial instruments. Derivative
financial instruments are recognized as either assets or
liabilities and are measured at fair value under ASC
815 Derivatives
and Hedging. ASC 815
requires that changes in the fair value of derivative
financial instruments with no hedging designation be
recognized as gains/(losses) in the earnings
statement. The fair value measurement is
determined in accordance with ASC 820 Fair
Value Measurements and Disclosures.
DEFERRED
REVENUE
Deferred
revenue represents cash advances and amounts in accounts
receivable as of the balance sheet date received in excess of
revenue earned on on-going contracts. Payment
terms vary with each contract but may include an initial
payment at the time the contract is executed, with future
payments dependent upon the completion of certain contract
phases or targeted milestones. In the event of
contract cancellation, the Company is generally entitled to
payment for all work performed through the point of
cancellation. As of September 30, 2012, the
Company had $4,774,779 in deferred revenues relating to
contracts for services to be performed over periods ranging
from one month to five years. The Company had
$3,907,430 in deferred revenues that are expected to be
recognized in the next twelve fiscal months.
ADVERTISING
Advertising
costs are expensed as incurred. Advertising costs
were $191,894 and $203,655 for the nine month periods ended
September 30, 2012 and September 30, 2011, respectively and
are included under selling, general and administrative
expenses on our consolidated financial statements.
RESEARCH
AND DEVELOPMENT EXPENSES
Software
development costs are included in research and development
and are expensed as incurred. ASC 985.20,
Software Industry Costs of Software to Be Sold, Leased or
Marketed, requires the capitalization of certain
development costs of software to be sold once technological
feasibility is established, which the Company defines as
completion to the point of marketability. The
capitalized cost is then amortized on a straight-line basis
over the estimated product life. To date, the
period between achieving technological feasibility and the
general availability of such software has been short and
software development costs qualifying for capitalization have
been immaterial. Accordingly, the Company has not
capitalized any software development costs under ASC
985.20. During the nine month periods ended
September 30, 2012 and September 30, 2011 we spent
approximately $1,867,778 and $1,894,690 respectively, on
research and development activities, which include costs
associated with the development of our software products and
services for our clients’ projects and which are
primarily comprised of salaries and related expenses for our
software developers and consulting fees paid to third-party
consultants. Research and development costs are
primarily included under Salaries, benefits and related taxes
in our Statement of Operations.
EMPLOYEE
EQUITY INCENTIVE PLANS
The
OmniComm Systems, Inc. 2009 Equity Incentive Plan (the
“2009 Plan”) was approved at our Annual Meeting
of Shareholders on July 10, 2009. The 2009 Plan
provides for the issuance of up to 7,500,000 shares to
employees, directors and key consultants in accordance with
the terms of the 2009 Plan documents. The
predecessor plan, the OmniComm Systems, Inc., 1998 Stock
Incentive Plan (the “1998 Plan”) expired on
December 31, 2008. The 1998 Plan provided for the
issuance of up to 12,500,000 shares in accordance with the
terms of the 1998 Plan document. Each plan is more
fully described in “Note 14, Employee Equity Incentive
Plans.” The Company accounts for its
employee equity incentive plans under ASC 718,
Compensation – Stock Compensation which
addresses the accounting for transactions in which an entity
exchanges its equity instruments for goods or services, with
a primary focus on transactions in which an entity obtains
employee services in share-based payment transactions.
ASC
718 requires companies to estimate the fair value of
share-based payment awards on the date of grant using an
option-pricing model. The value of the portion of the award
that is ultimately expected to vest is recognized as expense
over the requisite service periods in the Company’s
consolidated statements of operations. The Company currently
uses the Black Scholes option pricing model to determine
grant date fair value.
EARNINGS
PER SHARE
The
Company accounts for Earnings per Share using ASC 260 –
Earnings per Share. Unlike diluted earnings per
share, basic earnings per share excludes any dilutive effects
of options, warrants, and convertible securities.
INCOME
TAXES
The
Company accounts for income taxes in accordance with ASC 740, Income
Taxes. ASC 740 has as its basic objective
the recognition of current and deferred income tax assets and
liabilities based upon all events that have been recognized
in the financial statements as measured by the provisions of
the enacted tax laws.
Valuation
allowances are established when necessary to reduce deferred
tax assets to the estimated amount to be
realized. Income tax expense represents the tax
payable for the current period and the change during the
period in the deferred tax assets and liabilities.
IMPACT
OF NEW ACCOUNTING STANDARDS
During
the first nine months of 2012, we adopted the following new
accounting pronouncements:
In
May 2011, the FASB issued ASU No. 2011-04, Amendments to
Achieve Common Fair Value Measurement and Disclosure
Requirements in U.S. GAAP and IFRSs (“ASU
2011-04”). ASU 2011-04 amends ASC 820, Fair Value
Measurements (“ASC 820”), providing a
consistent definition and measurement of fair value, as well
as similar disclosure requirements between U.S. GAAP and
International Financial Reporting Standards. ASU
2011-04 changes certain fair value measurement principles,
clarifies the application of existing fair value measurement
and expands the ASC 820 disclosure requirements, particularly
for Level 3 fair value measurements. Our adoption
of these new provisions of ASU 2011-04 on January 1, 2012 did
not have an impact on our consolidated financial
statements.
In
June 2011, the FASB issued ASU No. 2011-05, Presentation of
Comprehensive Income (“ASU
2011-05”). ASU 2011-05 requires the
presentation of comprehensive income in either a continuous
statement of comprehensive income or two separate but
consecutive statements. We adopted the provisions
of ASU 2011-05 on January 1, 2012 and have elected to present
two separate consecutive statements in our consolidated
financial statements.
In
December 2011, FASB issued Accounting Standards Update
2011-11, Balance Sheet -
Disclosures about Offsetting Assets and Liabilities
("ASU 2011-11"). ASU 2011-11 enhances the disclosure
requirements relating to the offsetting of assets and
liabilities on an entity's balance sheet. The update requires
enhanced disclosures regarding assets and liabilities that
are presented net or gross in the statement of financial
position when the right of offset exists, or that are subject
to an enforceable master netting arrangement. The new
disclosure requirements relating to this update are
retrospective and effective for annual and interim periods
beginning on or after January 1, 2013. The update only
requires additional disclosures, as such, we do not expect
that the adoption of this standard will have a material
impact on our results of operations, cash flows or financial
condition.
On
January 1, 2012, FASB Accounting Standards Update No.
2011-08, Testing Goodwill
for Impairment ("ASU 2011-08") became effective. This
standard gives an entity the option of either performing Step
One of the goodwill impairment test or performing a
qualitative assessment to determine whether performing Step
One of the goodwill impairment test is necessary. An entity
may choose to perform the qualitative assessment for some or
all of its reporting units or an entity may bypass the
qualitative assessment for any reporting unit in any period
and proceed directly to Step One of the impairment test. Our
adoption of ASU 2011-08 did not have an impact on our
financial statements.
In
July 2012, FASB issued Accounting Standards Update 2012-02,
Balance
Sheet- Intangibles- Goodwill and Other (Topic 350): Testing
Indefinite-Lived Intangible Assets for Impairment
(“ASU 2012-02”). ASU 2012-002 is an
Amendment to FASB Accounting Standards Update
2011-08. The objective of the amendments in this
Update is to reduce the cost and complexity of performing
an impairment test for indefinite-lived intangible assets
by simplifying how an entity tests those assets for
impairment and to improve consistency in impairment testing
guidance among long-lived asset categories. The amendments
permit an entity first to assess qualitative factors to
determine whether it is more likely than not that an
indefinite-lived intangible asset is impaired as a basis
for determining whether it is necessary to perform the
quantitative impairment test in accordance with Subtopic
350-30, Intangibles—Goodwill and Other—General
Intangibles Other than Goodwill. The more-likely-than-not
threshold is defined as having a likelihood of more than 50
percent. The amendments are effective for annual and
interim impairment tests performed for fiscal years
beginning after September 15, 2012. Early adoption is
permitted, including for annual and interim impairment
tests performed as of a date before July 27, 2012, if a
public entity’s financial statements for the most
recent annual or interim period have not yet been issued
or, for nonpublic entities, have not yet been made
available for issuance.
Accounting
standards-setting organizations frequently issue new or
revised accounting rules. We regularly review all new
pronouncements to determine their impact, if any, on our
financial statements.
|
Note 12 - Related Party Transactions (Detail) (USD $)
|
3 Months Ended | 9 Months Ended | 3 Months Ended | 6 Months Ended | 9 Months Ended | 12 Months Ended | 3 Months Ended | 3 Months Ended | 6 Months Ended | 3 Months Ended | 3 Months Ended | 3 Months Ended | 3 Months Ended | 3 Months Ended | 3 Months Ended | 3 Months Ended | 3 Months Ended | 15 Months Ended | 21 Months Ended | 18 Months Ended | 12 Months Ended | 15 Months Ended | 9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2012
|
Sep. 30, 2011
|
Sep. 30, 2012
|
Sep. 30, 2011
|
Dec. 31, 2011
|
Dec. 01, 2011
|
Nov. 23, 2011
|
Oct. 31, 2011
|
Oct. 28, 2011
|
Oct. 05, 2011
|
Dec. 31, 2011
Accrued and Unpaid Interest [Member]
|
Sep. 30, 2010
Maturing December 31, 2011 [Member]
Chief Executive Officer [Member]
Issued September 30, 2010 [Member]
Principal Amount Received August 31, 2010 [Member]
|
Sep. 30, 2010
Maturing December 31, 2011 [Member]
Chief Executive Officer [Member]
Issued September 30, 2010 [Member]
|
Sep. 30, 2012
Montero [Member]
|
Sep. 30, 2012
Board of Directors Chairman [Member]
|
Feb. 14, 2008
Chief Executive Officer [Member]
Issued Feb 14, 2010 [Member]
|
Jun. 10, 2008
Chief Executive Officer [Member]
Issued June 10, 2008 [Member]
|
Jun. 10, 2008
Chief Executive Officer [Member]
Issued June 10, 2008 2 [Member]
|
Aug. 31, 2008
Chief Executive Officer [Member]
Extended Maturity [Member]
|
Dec. 31, 2008
Chief Executive Officer [Member]
Issued December 2008 [Member]
|
Sep. 30, 2009
Chief Executive Officer [Member]
Aggregated September 30, 2009 [Member]
|
Dec. 31, 2009
Chief Executive Officer [Member]
Aggregated December 31, 2009 [Member]
|
Sep. 30, 2010
Chief Executive Officer [Member]
Issued September 30, 2010 [Member]
Principal Amount Received July 6, 2010 [Member]
|
Sep. 30, 2010
Chief Executive Officer [Member]
Issued September 30, 2010 [Member]
Principal Amount Received July 14, 2010 [Member]
|
Sep. 30, 2010
Chief Executive Officer [Member]
Issued September 30, 2010 [Member]
Principal Amount Received July 15, 2010 [Member]
|
Sep. 30, 2010
Chief Executive Officer [Member]
Issued September 30, 2010 [Member]
Principal Amount Received July 30, 2010 [Member]
|
Sep. 30, 2010
Chief Executive Officer [Member]
Issued September 30, 2010 [Member]
Principal Amount Received August 12, 2010 [Member]
|
Sep. 30, 2010
Chief Executive Officer [Member]
Issued September 30, 2010 [Member]
Principal Amount Received August 27, 2010 [Member]
|
Sep. 30, 2010
Chief Executive Officer [Member]
Issued September 30, 2010 [Member]
Principal Amount Received August 31, 2010 [Member]
|
Sep. 30, 2010
Chief Executive Officer [Member]
Issued September 30, 2010 [Member]
Principal Amount Received September 7, 2010 [Member]
|
Sep. 30, 2010
Chief Executive Officer [Member]
Issued September 30, 2010 [Member]
Principal Amount Received September 15, 2010 [Member]
|
Sep. 30, 2010
Chief Executive Officer [Member]
Issued September 30, 2010 [Member]
Principal Amount Received September 22, 2010 [Member]
|
Sep. 30, 2010
Chief Executive Officer [Member]
Issued September 30, 2010 [Member]
Principal Amount Received September 29, 2010 [Member]
|
Sep. 30, 2010
Chief Executive Officer [Member]
Issued September 30, 2010 [Member]
Principal Amount Received September 30, 2010 [Member]
|
Mar. 31, 2011
Chief Executive Officer [Member]
Issued September 30, 2010 [Member]
|
Sep. 30, 2010
Chief Executive Officer [Member]
Issued September 30, 2010 [Member]
|
Apr. 13, 2010
Chief Executive Officer [Member]
Issued April 13, 2010 [Member]
|
Jun. 29, 2010
Chief Executive Officer [Member]
Issued June 29, 2010 [Member]
|
Dec. 31, 2010
Chief Executive Officer [Member]
Issued December 31, 2010 [Member]
Principal Amount Received October 15, 2010 [Member]
|
Dec. 31, 2010
Chief Executive Officer [Member]
Issued December 31, 2010 [Member]
Principal Amount Received October 26, 2010 [Member]
|
Dec. 31, 2010
Chief Executive Officer [Member]
Issued December 31, 2010 [Member]
Principal Amount Received October 28, 2010 [Member]
|
Dec. 31, 2010
Chief Executive Officer [Member]
Issued December 31, 2010 [Member]
Principal Amount Received November 2, 2010 [Member]
|
Dec. 31, 2010
Chief Executive Officer [Member]
Issued December 31, 2010 [Member]
Principal Amount Received November 10, 2010 [Member]
|
Dec. 31, 2010
Chief Executive Officer [Member]
Issued December 31, 2010 [Member]
Principal Amount Received November 22, 2010 [Member]
|
Dec. 31, 2010
Chief Executive Officer [Member]
Issued December 31, 2010 [Member]
Principal Amount Received November 29, 2010 [Member]
|
Dec. 31, 2010
Chief Executive Officer [Member]
Issued December 31, 2010 [Member]
Principal Amount Received November 30, 2010 [Member]
|
Dec. 31, 2010
Chief Executive Officer [Member]
Issued December 31, 2010 [Member]
Principal Amount Received December 2, 2010 [Member]
|
Dec. 31, 2010
Chief Executive Officer [Member]
Issued December 31, 2010 [Member]
Principal Amount Received December 8, 2010 [Member]
|
Dec. 31, 2010
Chief Executive Officer [Member]
Issued December 31, 2010 [Member]
Principal Amount Received December 9, 2010 [Member]
|
Dec. 31, 2010
Chief Executive Officer [Member]
Issued December 31, 2010 [Member]
Principal Amount Received December 15, 2010 [Member]
|
Dec. 31, 2010
Chief Executive Officer [Member]
Issued December 31, 2010 [Member]
Principal Amount Received December 16, 2010 [Member]
|
Mar. 31, 2011
Chief Executive Officer [Member]
Issued December 31, 2010 [Member]
|
Dec. 31, 2010
Chief Executive Officer [Member]
Issued December 31, 2010 [Member]
|
Mar. 31, 2011
Chief Executive Officer [Member]
Issued December 31, 2010 2 [Member]
|
Dec. 31, 2010
Chief Executive Officer [Member]
Issued December 31, 2010 2 [Member]
|
Mar. 31, 2011
Chief Executive Officer [Member]
Issued March 31, 2011 [Member]
|
Dec. 31, 2011
Chief Executive Officer [Member]
Issued May 13, 2011 [Member]
|
May 13, 2011
Chief Executive Officer [Member]
Issued May 13, 2011 [Member]
|
Sep. 02, 2011
Chief Executive Officer [Member]
Issued September 2, 2011 [Member]
|
Dec. 31, 2011
Chief Executive Officer [Member]
Issued September 30, 2011 [Member]
|
Sep. 30, 2011
Chief Executive Officer [Member]
Issued September 30, 2011 [Member]
|
Dec. 31, 2011
Chief Executive Officer [Member]
Issued October 5, 2011 [Member]
|
Oct. 05, 2011
Chief Executive Officer [Member]
Issued October 5, 2011 [Member]
|
Dec. 31, 2011
Chief Executive Officer [Member]
Issued October 28, 2011 [Member]
|
Oct. 28, 2011
Chief Executive Officer [Member]
Issued October 28, 2011 [Member]
|
Dec. 31, 2011
Chief Executive Officer [Member]
Issued October 31, 2011 [Member]
|
Oct. 31, 2011
Chief Executive Officer [Member]
Issued October 31, 2011 [Member]
|
Dec. 31, 2011
Chief Executive Officer [Member]
Issued November 23, 2011 [Member]
|
Nov. 23, 2011
Chief Executive Officer [Member]
Issued November 23, 2011 [Member]
|
Dec. 01, 2011
Chief Executive Officer [Member]
Issued December 1, 2011 [Member]
|
Dec. 31, 2011
Chief Executive Officer [Member]
Issued December 31, 2011 [Member]
|
Sep. 30, 2012
Chief Executive Officer [Member]
|
Nov. 30, 2010
Chief Executive Officer [Member]
|
Dec. 31, 2011
Chief Executive Officer 2 [Member]
Issued September 30, 2010 [Member]
|
Dec. 31, 2011
Chief Executive Officer 2 [Member]
Issued April 13, 2010 [Member]
|
Dec. 31, 2011
Chief Executive Officer 2 [Member]
Issued June 29, 2010 [Member]
|
Dec. 31, 2011
Chief Executive Officer 2 [Member]
Issued December 31, 2010 [Member]
|
Mar. 31, 2012
Chief Executive Officer 2 [Member]
Issued December 31, 2010 2 [Member]
|
Sep. 30, 2011
Chief Executive Officer 5 [Member]
Issued September 2, 2011 [Member]
|
Sep. 30, 2011
Chief Executive Officer 5 [Member]
Issued August 16, 2011 [Member]
|
Sep. 30, 2011
Chief Executive Officer 5 [Member]
Issued August 19, 2011 [Member]
|
Sep. 30, 2011
Chief Executive Officer 5 [Member]
Issued August 25, 2011 [Member]
|
Sep. 30, 2011
Chief Executive Officer 5 [Member]
Issued September 15, 2011 [Member]
|
Sep. 30, 2011
Chief Executive Officer 5 [Member]
Issued September 28, 2011 [Member]
|
|
Common Stock, Shares, Outstanding (in Shares) | 86,556,495 | 86,556,495 | 86,081,495 | 6,523,411 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity Method Investment, Ownership Percentage | 7.50% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Notes Payable, Related Parties | $ 80,000 | $ 1,000,000 | $ 20,000 | $ 150,000 | $ 50,000 | $ 65,000 | $ 175,000 | $ 140,000 | $ 400,000 | $ 90,000 | $ 120,000 | $ 50,000 | $ 200,000 | $ 90,000 | $ 200,000 | $ 35,000 | $ 695,000 | $ 450,000 | $ 115,000 | $ 150,000 | $ 140,000 | $ 200,000 | $ 43,500 | $ 200,000 | $ 32,000 | $ 37,000 | $ 160,000 | $ 25,000 | $ 50,000 | $ 10,000 | $ 40,000 | $ 110,000 | $ 1,197,500 | $ 409,379 | $ 2,866,879 | $ 96,000 | $ 50,000 | $ 342,000 | $ 130,000 | $ 123,000 | $ 82,000 | $ 60,000 | $ 150,000 | $ 1,600,000 | $ 13,126,879 | |||||||||||||||||||||||||||||||||||||||
Debt Instrument, Interest Rate, Stated Percentage | 12.00% | 12.00% | 12.00% | 12.00% | 12.00% | 12.00% | 12.00% | 12.00% | 10.00% | 10.00% | 10.00% | 12.00% | 12.00% | 12.00% | 12.00% | 12.00% | 12.00% | 12.00% | 12.00% | 12.00% | 12.00% | 12.00% | 12.00% | 12.00% | 12.00% | 12.00% | 12.00% | 12.00% | 12.00% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Convertible Notes Payable | 9,665,000 | 9,665,000 | 210,000 | 300,000 | 1,260,000 | 4,200,000 | 1,100,000 | 1,440,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class of Warrant or Right, Number of Securities Called by Warrants or Rights (in Shares) | 6,400,000 | 264,706 | 4,400,000 | 11,467,517 | 6,400,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Proceeds from Issuance of Debt | 210,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Conversion, Converted Instrument, Rate | 12.00% | 12.00% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Warrants and Rights Outstanding | 4,400,000 | 5,760,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Convertible Preferred Stock, Shares Issued upon Conversion (in Shares) | 250,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Conversion, Converted Instrument, Amount | 2,866,879 | 2,866,879 | 2,866,879 | 2,866,879 | 2,866,879 | 1,600,000 | 1,600,000 | 1,600,000 | 1,600,000 | 1,600,000 | 1,600,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class of Warrant or Right, Exercise Price of Warrants or Rights (in Dollars per Item) | 0.25 | 0.25 | 0.25 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Conversion, Original Debt, Amount | 0 | 2,866,879 | 767,000 | 96,000 | 342,000 | 130,000 | 123,000 | 82,000 | 60,000 | 695,000 | 450,000 | 115,000 | 1,197,500 | 409,379 | 32,000 | 80,000 | 15,000 | 35,000 | 80,000 | 100,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest Expense, Related Party | $ 527,442 | $ 374,362 | $ 1,573,444 | $ 1,099,578 |