Delaware
|
98-0513637
|
(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
|
16415 Addison Road, Suite 300
|
Addison, Texas 75001
|
(Address of principal executive offices)
|
|
(972) 865-6192
|
(Registrant’s telephone number, including area code)
|
|
Large accelerated filer
|
☐
|
|
Accelerated filer
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☐
|
|
|
|
|
|
|
|
|
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Non-accelerated filer
|
☐
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(Do not check if a smaller reporting company)
|
Smaller reporting company
|
☒
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Page
|
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PART I. FINANCIAL INFORMATION
|
|
||
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ITEM 1.
|
3
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||
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3
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||
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4
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||
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5
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||
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6
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||
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ITEM 2.
|
21
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||
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ITEM 3.
|
27
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||
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|
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ITEM 4.
|
27
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||
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PART II. OTHER INFORMATION
|
|
||
|
|
|
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ITEM 1.
|
28
|
||
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|
|
|
ITEM 1A.
|
28
|
||
|
|
|
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ITEM 2.
|
28
|
||
|
|
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ITEM 3.
|
29
|
||
|
|
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ITEM 4.
|
29
|
||
|
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ITEM 5.
|
29
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||
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ITEM 6.
|
30
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||
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SIGNATURES
|
31
|
June 30,
|
December 31,
|
|||||||
2016
|
2015
|
|||||||
(Unaudited)
|
(Audited)
|
|||||||
ASSETS
|
||||||||
Current Assets
|
||||||||
Cash and cash equivalents
|
$
|
2,220,950
|
$
|
8,295,310
|
||||
Accounts receivable, net
|
386,827
|
426,265
|
||||||
Inventories
|
581,979
|
484,695
|
||||||
Prepaid expenses and other current assets
|
686,580
|
543,949
|
||||||
Total Current Assets
|
3,876,336
|
9,750,219
|
||||||
PROPERTY AND EQUIPMENT, net
|
383,159
|
124,188
|
||||||
CAPITALIZED SOFTWARE, net
|
224,804
|
-
|
||||||
INVESTMENT
|
50,000
|
-
|
||||||
TOTAL ASSETS
|
$
|
4,534,299
|
$
|
9,874,407
|
||||
LIABILITIES
|
||||||||
Current Liabilities
|
||||||||
Accounts payable and accrued expenses
|
$
|
1,487,191
|
$
|
2,486,529
|
||||
Deferred revenues
|
1,855,462
|
2,028,120
|
||||||
Obligation under capital lease, current portion
|
43,825
|
9,010
|
||||||
Three Year, 50% notes payable
|
40,500
|
40,500
|
||||||
Notes payable, current portion
|
307,893
|
126,260
|
||||||
Total Current Liabilities
|
3,734,871
|
4,690,419
|
||||||
LONG-TERM LIABILITIES
|
||||||||
Deferred revenues
|
1,241,542
|
1,091,838
|
||||||
Obligation under capital lease
|
140,431
|
19,118
|
||||||
Convertible notes payable
|
30,000
|
30,000
|
||||||
Three Year, 50% notes payable, net of $7,668 discount, non-current portion
|
32,832
|
66,000
|
||||||
Notes payable, non-current portion
|
45,444
|
219,963
|
||||||
Total Liabilities
|
5,225,120
|
6,117,338
|
||||||
COMMITMENTS AND CONTINGENCIES
|
-
|
-
|
||||||
STOCKHOLDERS' EQUITY (DEFICIT)
|
||||||||
Series A Preferred stock, par value $0.0001 per share, 1,000,000 shares authorized;
100,000 shares issued and outstanding, respectively
|
10
|
10
|
||||||
Common stock, par value $0.0001 per share, 50,000,000 shares authorized;
8,888,975 and 8,362,903 issued and outstanding, respectively
|
886
|
837
|
||||||
Common stock to be issued, 159,170 and 260,206 shares, respectively
|
204,806
|
700,121
|
||||||
Additional paid-in-capital
|
34,404,671
|
33,043,232
|
||||||
Accumulated deficit
|
(35,301,194
|
)
|
(29,987,131
|
)
|
||||
Total Stockholders' Equity (Deficit)
|
(690,821
|
)
|
3,757,069
|
|||||
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT
|
$
|
4,534,299
|
$
|
9,874,407
|
||||
|
For the Three Months Ended
|
For the Six Months Ended
|
||||||||||||||
|
June 30,
|
June 30,
|
||||||||||||||
|
2016
|
2015
|
2016
|
2015
|
||||||||||||
REVENUES
|
||||||||||||||||
|
||||||||||||||||
Hardware, installation and other revenues
|
$
|
448,836
|
$
|
499,278
|
$
|
890,038
|
$
|
1,001,935
|
||||||||
Software license/subscription revenues
|
841,834
|
747,313
|
1,682,728
|
1,415,542
|
||||||||||||
|
||||||||||||||||
Total Revenues
|
1,290,670
|
1,246,591
|
2,572,766
|
2,417,477
|
||||||||||||
|
||||||||||||||||
COST OF REVENUES
|
||||||||||||||||
|
||||||||||||||||
Hardware and other costs
|
764,844
|
366,703
|
1,341,315
|
820,045
|
||||||||||||
Software license/subscriptions
|
354,393
|
321,494
|
721,062
|
625,186
|
||||||||||||
|
||||||||||||||||
Total Cost of Revenues
|
1,119,237
|
688,197
|
2,062,377
|
1,445,231
|
||||||||||||
|
||||||||||||||||
GROSS PROFIT
|
171,433
|
558,394
|
510,389
|
972,246
|
||||||||||||
|
||||||||||||||||
OPERATING EXPENSES
|
||||||||||||||||
|
||||||||||||||||
Research and development
|
517,754
|
459,547
|
902,860
|
945,167
|
||||||||||||
Sales and marketing
|
1,511,004
|
450,822
|
2,769,408
|
815,189
|
||||||||||||
General and administrative
|
1,190,715
|
589,214
|
2,104,975
|
1,004,418
|
||||||||||||
|
||||||||||||||||
Total Operating Expenses
|
3,219,473
|
1,499,583
|
5,777,243
|
2,764,774
|
||||||||||||
|
||||||||||||||||
LOSS FROM OPERATIONS
|
(3,048,040
|
)
|
(941,189
|
)
|
(5,266,854
|
)
|
(1,792,528
|
)
|
||||||||
|
||||||||||||||||
|
||||||||||||||||
Interest Expense
|
(35,930
|
)
|
(170,177
|
)
|
(47,209
|
)
|
(238,910
|
)
|
||||||||
|
||||||||||||||||
|
||||||||||||||||
NET LOSS BEFORE INCOME TAXES
|
(3,083,970
|
)
|
(1,111,366
|
)
|
(5,314,063
|
)
|
(2,031,438
|
)
|
||||||||
|
||||||||||||||||
INCOME TAXES
|
-
|
-
|
-
|
-
|
||||||||||||
|
||||||||||||||||
NET LOSS
|
$
|
(3,083,970
|
)
|
$
|
(1,111,366
|
)
|
$
|
(5,314,063
|
)
|
$
|
(2,031,438
|
)
|
||||
|
||||||||||||||||
Series B preferred stock dividend
|
-
|
(2,553
|
)
|
-
|
(17,943
|
)
|
||||||||||
Accretion of beneficial conversion feature on preferred shares dividends issued in kind
|
-
|
(23,625
|
)
|
-
|
(34,125
|
)
|
||||||||||
|
||||||||||||||||
NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS
|
$
|
(3,083,970
|
)
|
$
|
(1,137,544
|
)
|
$
|
(5,314,063
|
)
|
$
|
(2,083,506
|
)
|
||||
|
||||||||||||||||
LOSS PER COMMON SHARE - BASIC & DILUTED
|
$
|
(0.35
|
)
|
$
|
(0.28
|
)
|
$
|
(0.61
|
)
|
$
|
(0.51
|
)
|
||||
WEIGHTED AVERAGE NUMBER OF
CCOMMON SHARES OUTSTANDING - BASIC & DILUTED
|
8,795,815
|
4,055,284
|
8,677,420
|
4,049,121
|
|
For the Six Months Ended
|
|||||||
|
June 30,
|
|||||||
|
2016
|
2015
|
||||||
CASH FLOWS FROM OPERATING ACTIVITIES
|
||||||||
|
||||||||
Net loss
|
$
|
(5,314,063
|
)
|
$
|
(2,031,438
|
)
|
||
Adjustments to reconcile net loss to net cash used
in operating activities:
|
||||||||
Depreciation and amortization
|
42,160
|
26,907
|
||||||
Employee stock compensation
|
82,495
|
95,832
|
||||||
Stock issued for services
|
268,172
|
-
|
||||||
Capital contributed/co-founders' forfeiture of contractual compensation
|
25,000
|
39,500
|
||||||
Discount on three-year, 50% notes payable
|
7,332
|
33,756
|
||||||
Interest expense on beneficial conversion feature of convertible promissory notes
|
-
|
96,558
|
||||||
Amortization of endorser agreements
|
640,602
|
-
|
||||||
Valuation of warrants for services rendered
|
57,921
|
23,551
|
||||||
Bad debt expense
|
54,592
|
|||||||
Loss on asset disposals
|
2,396
|
1,780
|
||||||
Change in operating assets and liabilities:
|
||||||||
Accounts receivable
|
(15,154
|
)
|
1,024
|
|||||
Inventories
|
(97,284
|
)
|
(59,616
|
)
|
||||
Prepaid expenses and other current assets
|
(316,262
|
)
|
30,191
|
|||||
Deferred loan costs
|
-
|
50,000
|
||||||
Deferred revenues
|
(22,954
|
)
|
(466,662
|
)
|
||||
Accounts payable and accrued expenses
|
(1,002,054
|
)
|
843,326
|
|
||||
Net cash used in operating activities
|
(5,587,101
|
)
|
(1,315,291
|
)
|
||||
|
||||||||
CASH FLOWS FROM INVESTING ACTIVITIES
|
||||||||
|
||||||||
Investment
|
(50,000
|
)
|
-
|
|||||
Capitalized software costs
|
(224,805
|
)
|
-
|
|||||
Proceeds from asset disposals
|
19,950
|
4,000
|
||||||
Purchases of property and equipment
|
(120,439
|
)
|
(8,404
|
)
|
||||
Net cash used in investing activities
|
(375,294
|
)
|
(4,404
|
)
|
||||
|
||||||||
CASH FLOWS FROM FINANCING ACTIVITIES
|
||||||||
|
||||||||
Proceeds from notes payable
|
-
|
389,834
|
||||||
Proceeds from issuance of common stock for cash
|
-
|
617
|
||||||
Proceeds from common stock to be issued, net
|
-
|
3,960
|
||||||
Proceeds from the issuance of stock for warrant exercised
|
-
|
107,600
|
||||||
Proceeds received on convertible notes
|
-
|
514,315
|
||||||
Payments on notes payable
|
(63,273
|
)
|
(122,756
|
)
|
||||
Payments on three-year, 50% notes payable
|
(40,500
|
)
|
(15,000
|
)
|
||||
Payments on capitalized lease obligations
|
(8,192
|
)
|
(3,730
|
)
|
||||
|
||||||||
Net cash provided by (used in) financing activities
|
(111,965
|
)
|
874,840
|
|||||
|
||||||||
NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS
|
(6,074,360
|
)
|
(444,855
|
)
|
||||
|
||||||||
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR
|
8,295,310
|
587,459
|
||||||
|
||||||||
CASH AND CASH EQUIVALENTS, END OF YEAR
|
$
|
2,220,950
|
$
|
142,604
|
|
For the Six Months Ended
|
|||||||
|
June 30,
|
|||||||
|
2016
|
2015
|
||||||
SUPPLEMENTAL DISCLOSURES:
|
||||||||
|
||||||||
Cash paid for interest
|
$
|
49,223
|
$
|
37,989
|
||||
Cash paid for income tax
|
$
|
26,509
|
$
|
8,298
|
||||
|
||||||||
|
||||||||
NON-CASH INVESTING AND FINANCING ACTIVITIES:
|
||||||||
|
||||||||
Issuance of common stock for prior year warrant exercises
|
$
|
-
|
$
|
32,000
|
||||
Issuance of common stock for prior year stock subscriptions
|
$
|
211,257
|
$
|
20,000
|
||||
Insurance proceeds applied to outstanding bank loan
|
$
|
-
|
$
|
11,254
|
||||
Series B Preferred stock dividends
|
$
|
-
|
$
|
17,943
|
||||
Accretion of beneficial conversion feature on preferred shares dividends issued in kind
|
$
|
-
|
$
|
34,125
|
||||
Conversion of convertible notes into 325,000 and 200,000 shares of common stock, respectively
|
$
|
-
|
$
|
65,000
|
||||
Financing of prepaid insurance policy
|
-
|
43,045
|
Category
|
June 30, 2016
|
December 31, 2015
|
||||||
|
(Unaudited)
|
|||||||
Unrestricted
|
$
|
1,971,454
|
$
|
8,295,310
|
||||
Restricted
|
249,496
|
-
|
||||||
|
||||||||
Total Cash and cash equivalents
|
$
|
2,220,950
|
$
|
8,295,310
|
Category
|
June 30, 2016
|
December 31, 2015
|
||||||
|
(Unaudited)
|
|||||||
Trade receivables
|
$
|
1,474,483
|
$
|
1,360,929
|
||||
Other receivables
|
33,691
|
26,360
|
||||||
Elimination of unpaid deferred revenue
|
(1,033,347
|
)
|
(861,024
|
)
|
||||
Allowance for doubtful accounts
|
(88,000
|
)
|
(100,000
|
)
|
||||
|
||||||||
Accounts Receivable, net
|
$
|
386,827
|
$
|
426,265
|
Category
|
June 30, 2016
|
December 31, 2015
|
||||||
|
(Unaudited)
|
|||||||
Finished goods
|
$
|
601,979
|
$
|
504,695
|
||||
Obsolescence Allowance
|
(20,000
|
)
|
(20,000
|
)
|
||||
|
||||||||
Total Inventory, net
|
$
|
581,979
|
$
|
484,695
|
Category
|
June 30, 2016
|
December 31, 2015
|
||||||
|
(Unaudited)
|
|||||||
Prepaid Insurance
|
$
|
52,386
|
$
|
69,456
|
||||
Subscriptions
|
184,872
|
54,756
|
||||||
Vendor Prepayments
|
211,309
|
34,389
|
||||||
Deferred Valuation Expense Related To Endorser Agreements
|
148,500
|
353,802
|
||||||
Molds
|
57,967
|
-
|
||||||
Deferred Charges
|
31,546
|
31,546
|
||||||
|
||||||||
Total Prepaid Expenses and Other Assets
|
$
|
686,580
|
$
|
543,949
|
Classes of Depreciable Assets
|
June 30, 2016
|
December 31, 2015
|
||||||
|
(Unaudited)
|
|||||||
Fleet Vehicles
|
$
|
337,718
|
$
|
148,940
|
||||
Fleet Vehicles - Capitalized Lease
|
35,098
|
35,098
|
||||||
Furniture and Fixtures
|
14,204
|
10,467
|
||||||
Computer Hardware
|
145,400
|
86,508
|
||||||
Computer Software
|
36,935
|
36,935
|
||||||
Property and Equipment
|
$
|
569,355
|
$
|
317,948
|
||||
|
||||||||
Accumulated Depreciation
|
$
|
(186,196
|
)
|
$
|
(193,760
|
)
|
||
|
||||||||
Net Property and Equipment
|
$
|
383,159
|
$
|
124,188
|
|
June 30,
|
December 31,
|
||||||
|
2016
|
2015
|
||||||
|
(Unaudited)
|
|||||||
Loan Type
|
||||||||
Bank
|
$
|
491,743
|
$
|
310,894
|
||||
Insurance
|
45,851
|
63,457
|
||||||
Short-term notes
|
73,331
|
106,500
|
||||||
Total notes payable
|
610,925
|
480,851
|
||||||
Less: Current portion
|
(392,218
|
)
|
(175,770
|
)
|
||||
Long-term portion
|
$
|
218,707
|
$
|
305,081
|
|
June 30,
|
December 31,
|
||||||
|
2016
|
2015
|
||||||
|
(Unaudited)
|
|||||||
Total Convertible Notes Payable at beginning of period
|
$
|
30,000
|
$
|
398,786
|
||||
Plus: additional notes payable
|
-
|
526,315
|
||||||
Less: note conversions
|
-
|
(895,101
|
)
|
|||||
|
||||||||
Convertible notes payable, net, long-term portion
|
$
|
30,000
|
$
|
30,000
|
|
At June 30, 2016
|
At December 31, 2015
|
||||||||||||||
(Unaudited) | ||||||||||||||||
Common stock to be issued per:
|
# of Shares
|
$ Value
|
# of Shares
|
$ Value
|
||||||||||||
|
||||||||||||||||
A stock deposit received for common stock
|
-
|
$
|
3,000
|
-
|
$
|
3,000
|
||||||||||
Series B conversion
|
50,000
|
6
|
75,000
|
9
|
||||||||||||
Note conversion
|
9,170
|
32,000
|
45,206
|
238,997
|
||||||||||||
Consulting and Endorsement agreements
|
100,000
|
169,800
|
140,000
|
458,115
|
||||||||||||
|
||||||||||||||||
|
||||||||||||||||
Total number of shares and value
|
159,170
|
$
|
204,806
|
260,206
|
$
|
700,121
|
|
|
June 30, 2016
(Unaudited)
|
|
|
December 31, 2015
|
|
||
Convertible promissory notes outstanding
|
|
|
2,728
|
|
|
|
2,728
|
|
Warrants outstanding
|
|
|
4,552,126
|
|
|
|
4,575,098
|
|
Stock options outstanding
|
|
|
292,100
|
|
|
|
242,100
|
|
Preferred stock outstanding
|
|
|
2,000
|
|
|
|
2,000
|
|
Common stock to be issued
|
|
|
59,170
|
|
|
|
260,206
|
|
Total Common Stock Equivalents
|
|
|
4,908,124
|
|
|
|
5,082,132
|
|
Outstanding
|
Exercisable
|
|||||||||||||||||||||
Exercise Prices
|
Weighted Average Number
Outstanding at 6/30/16
|
Remaining
Life (in yrs.)
|
Weighted Average
Exercise Price
|
Number Exercisable
at 6/30/16
|
Weighted Average
Exercise Price
|
|||||||||||||||||
$
|
1.75 - 3.13
|
4,011,134
|
4.30
|
$
|
3.14
|
4,011,134
|
$
|
3.15
|
||||||||||||||
$
|
5.00
|
181,932
|
2.37
|
$
|
5.00
|
45,932
|
$
|
5.00
|
||||||||||||||
$
|
6.50- 9.50
|
284,068
|
4.02
|
$
|
7.55
|
284,068
|
$
|
7.55
|
||||||||||||||
$
|
10.00- 22.50
|
74,992
|
2.19
|
$
|
12.73
|
74,992
|
$
|
12.73
|
||||||||||||||
$
|
1.75 - 22.50
|
4,552,126
|
4.17
|
$
|
3.65
|
4,416,126
|
$
|
3.61
|
Risk-free interest rate
|
1.85
|
%
|
||
Expected life
|
10 years
|
|||
Expected volatility
|
120
|
%
|
||
Dividend yield
|
0.0
|
%
|
|
June 30, 2016
|
|||||||||||||||
|
Shares
|
Weighted Average
Exercise Price
|
Aggregate
Intrinsic Value
|
Weighted Average
Remaining
Contractual Life
|
||||||||||||
Outstanding at beginning of period
|
242,100
|
$
|
4.99
|
$
|
-
|
|||||||||||
Granted
|
60,000
|
$
|
1.68
|
$
|
-
|
|||||||||||
Exercised
|
–
|
$
|
0.00
|
$
|
-
|
|||||||||||
Forfeited/ Cancelled
|
(10,000
|
)
|
$
|
5.00
|
$
|
-
|
||||||||||
|
||||||||||||||||
Outstanding at period end
|
292,100
|
$
|
4.77
|
$
|
-
|
6.92
|
||||||||||
|
||||||||||||||||
Options vested and exercisable at period end
|
176,553
|
$
|
5.52
|
$
|
-
|
5.52
|
||||||||||
|
||||||||||||||||
Weighted average grant-date fair value of options granted during the period
|
$
|
1.63
|
Options Outstanding
|
Options Exercisable
|
||||||||||||||||||||||
Range of Exercise Prices
|
Options
Outstanding
|
Weighted Average
Remaining Contractual
Life (in years)
|
Weighted Average
Exercise Price
|
Number Outstanding
|
Weighted Average
Exercise Price
|
||||||||||||||||||
$
|
1.65 – $ 4.00
|
150,000
|
7.76
|
$
|
2.56
|
50,000
|
$
|
4.00
|
|||||||||||||||
$
|
4.50 – $ 21.00
|
142,100
|
6.00
|
$
|
7.10
|
126,553
|
$
|
6.13
|
|||||||||||||||
292,100
|
176,553
|
Non-vested Shares
|
Shares
|
Weighted Average
Grant-Date Fair Value
|
||||||
Non-vested at January 1, 2016
|
66.969
|
$
|
6.34
|
|||||
Granted
|
60,000
|
$
|
1.68
|
|||||
Forfeited
|
-
|
$
|
-
|
|||||
Vested
|
(11,422
|
)
|
$
|
12.40
|
||||
Non-vested
|
115,547
|
$
|
3.30
|
|
Payments Due by Period
|
|||||||||||||||||||
Contractual Obligations
|
Total
|
2016
|
2017-2018
|
2019-2020
|
After 2020
|
|||||||||||||||
|
||||||||||||||||||||
Debt Obligations
|
$
|
726,109
|
$
|
340,424
|
$
|
377,384
|
$
|
8,301
|
$
|
-
|
||||||||||
Capital Lease Obligations
|
185,022
|
23,427
|
96,667
|
64,928
|
-
|
|||||||||||||||
Operating Lease Obligations
|
610,989
|
94,688
|
309,119
|
207,182
|
-
|
|||||||||||||||
Total Obligations
|
$
|
1,522,120
|
$
|
458,539
|
$
|
783,170
|
$
|
280,411
|
$
|
-
|
·
|
We have incurred losses since our founding and could fail to obtain profitability;
|
·
|
We may require additional financing, which may not be available on favorable terms or at all;
|
·
|
The demand for and market acceptance of our services and products is subject to a high level of uncertainty due to law enforcement agencies’ reliance on traditional means of communication;
|
·
|
We sell primarily to governmental entities, which can be highly competitive, expensive and time consuming;
|
·
|
The possibility of undetected errors in our services;
|
·
|
The possibility of a breach that disrupts our services; and
|
·
|
The possibility of claims that our services infringe upon the intellectual property of third parties.
|
·
|
Improve communication between and among law enforcement officers and agencies by allowing law enforcement officers to compile and share information, in real-time, via a common database accessible by all such officers on the COPsync Network, regardless of agency jurisdiction;
|
·
|
Allow officers to query, in real time, various local, state and federal law enforcement databases, including (i) the FBI Criminal Justice Information Service (CJIS) database, (ii) the law enforcement telecommunications system databases for the States of Texas, Mississippi and Massachusetts, (iii) the historical databases of our agency subscribers who have provided us with such access, (iv) certain Department of Homeland Security’s El Paso Intelligence Center (EPIC) information relating to persons crossing the United States – Mexico border, and (v) our COPsync Network database which is populated with non-adjudicated law enforcement information created by our law enforcement officer subscribers. As we continue to expand the scope of our operations to states other than noted above, we anticipate that we will be granted access to the law enforcement telecommunications databases in those states as well, subject to approvals from the applicable governing state and municipal agencies and the “siloed” law enforcement databases of law enforcement records management system (“RMS”) vendors;
|
·
|
Allow dispatchers and officers to send, in real-time, BOLO (be on the lookout) and other alerts of child kidnappings, robberies, car thefts, police pursuits, and other crimes in progress to all officers on the COPsync Network, regardless of agency jurisdiction;
|
·
|
Allow officers to write citations, offense and crash reports and the like and electronically transmit, in real-time or near real-time, the information in those reports to the COPsync database and local court and agency databases; and
|
·
|
Inform officers of outstanding Texas Class C misdemeanor warrants, in real-time, at the point of a traffic stop and allow the officers to issue a warning with respect to those warrants or, as a future enhancement, collect payment for those warrants using a credit card, through a specific feature enhancement to the COPsync Network often referred to as the WARRANTsync system.
|
For the three months ended June 30,
|
For the six months ended June 30,
|
|||||||||||||||||||||||||||||||
2016
|
2015
|
2016
|
2015
|
|||||||||||||||||||||||||||||
$ | % | $ | % | $ | % | $ | % | |||||||||||||||||||||||||
Hardware, installation and other revenues
|
||||||||||||||||||||||||||||||||
Revenues
|
$
|
448,836
|
100
|
%
|
$
|
499,278
|
100
|
%
|
$
|
890,038
|
100
|
%
|
$
|
1,001,935
|
100
|
%
|
||||||||||||||||
Cost of Revenues-hardware & other external costs
|
595,100
|
133
|
%
|
323,585
|
65
|
%
|
1,037,948
|
117
|
%
|
717,132
|
75
|
%
|
||||||||||||||||||||
Cost of Revenues-internal costs
|
169,744
|
37
|
%
|
43,118
|
8
|
%
|
303,367
|
33
|
%
|
102,913
|
6
|
%
|
||||||||||||||||||||
Total Gross Profit (Loss)
|
$
|
(316,008
|
)
|
(70
|
)%
|
$
|
132,495
|
27
|
%
|
$
|
(451,277
|
)
|
(50
|
)%
|
$
|
181,890
|
19
|
%
|
||||||||||||||
Software license/subscription revenues
|
||||||||||||||||||||||||||||||||
Revenues
|
$
|
841,834
|
100
|
%
|
$
|
747,313
|
100
|
%
|
$
|
1,682,728
|
100
|
%
|
$
|
1,415,542
|
100
|
%
|
||||||||||||||||
Cost of Revenues-internal costs
|
354,393
|
42
|
%
|
321,494
|
43
|
%
|
721,062
|
42
|
%
|
625,186
|
44
|
%
|
||||||||||||||||||||
Total Gross Profit
|
$
|
487,441
|
58
|
%
|
$
|
425,819
|
57
|
%
|
$
|
961,666
|
58
|
%
|
$
|
790,356
|
56
|
%
|
||||||||||||||||
Total Company
|
||||||||||||||||||||||||||||||||
Revenues
|
$
|
1,290,670
|
100
|
%
|
$
|
1,246,591
|
100
|
%
|
$
|
2,572,766
|
100
|
%
|
$
|
2,417,477
|
100
|
%
|
||||||||||||||||
Cost of Revenues
|
1,119,237
|
87
|
%
|
688,197
|
55
|
%
|
2,062,377
|
80
|
%
|
1,445,231
|
66
|
%
|
||||||||||||||||||||
Total Gross Profit
|
$
|
171,433
|
13
|
%
|
$
|
558,394
|
45
|
%
|
$
|
510,389
|
20
|
%
|
$
|
972,246
|
34
|
%
|
Exhibit Number
|
|
Description
|
|
31.1*
|
|
|
|
|
|
|
|
31.2*
|
|
|
|
|
|
|
|
32*
|
|
|
|
|
|
|
|
101.1
|
|
|
101.INS (XBRL Instance Document)
|
|
|
|
|
|
|
|
101.SCH (XBRL Taxonomy Extension Schema Document)
|
|
|
|
|
|
|
|
101.CAL (XBRL Calculation Linkbase Documents)
|
|
|
|
|
|
|
|
101.DEF (XBRL Taxonomy Definition Linkbase Document)
|
|
|
|
|
|
|
|
101.LAB (XBRL Taxonomy Label Linkbase Document)
|
|
|
|
|
|
|
|
101.PRE (XBRL Taxonomy Presentation Linkbase Document)
|
* | Filed herewith. |
|
COPSYNC, INC.
|
|
|
|
|
|
|
Date: August 15, 2016
|
By:
|
/s/ Barry W. Wilson
|
|
|
|
Barry W. Wilson
|
|
|
|
Chief Financial Officer and
Duly Authorized Officer
|
|
|
|
|
|
|
|
|
|
Date: August 15, 2016
|
By:
|
/s/ RONALD A. WOESSNER
|
|
|
|
Ronald A. Woessner
|
|
|
|
Chief Executive Officer
|
|
|
|
|
|
|
|
|
|
Date: August 15, 2016
|
By:
|
/s/ BARRY W. WILSON
|
|
|
|
Barry W. Wilson
|
|
|
|
Chief Financial Officer
|
|
|
|
|
|
|
|
|
|
Date: August 15, 2016
|
By:
|
/s/ RONALD A. WOESSNER
|
|
|
|
Ronald A. Woessner
|
|
|
|
Chief Executive Officer
|
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ BARRY W. WILSON
|
|
|
|
Barry W. Wilson
|
|
|
|
Chief Financial Officer
|
|
Document And Entity Information - shares |
6 Months Ended | |
---|---|---|
Jun. 30, 2016 |
Aug. 09, 2016 |
|
Document and Entity Information [Abstract] | ||
Entity Registrant Name | COPsync, Inc. | |
Document Type | 10-Q | |
Current Fiscal Year End Date | --12-31 | |
Entity Common Stock, Shares Outstanding | 8,888,975 | |
Amendment Flag | false | |
Entity Central Index Key | 0001383154 | |
Entity Current Reporting Status | Yes | |
Entity Voluntary Filers | No | |
Entity Filer Category | Smaller Reporting Company | |
Entity Well-known Seasoned Issuer | No | |
Document Period End Date | Jun. 30, 2016 | |
Document Fiscal Year Focus | 2016 | |
Document Fiscal Period Focus | Q2 |
Condensed Balance Sheets (Parentheticals) - USD ($) |
6 Months Ended | 12 Months Ended |
---|---|---|
Jun. 30, 2016 |
Dec. 31, 2015 |
|
Common stock, par value (in Dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 50,000,000 | 50,000,000 |
Common stock, shares issued | 8,888,975 | 8,362,903 |
Common stock, shares outstanding | 8,888,975 | 8,362,903 |
Common stock to be issued | 159,170 | 260,206 |
Other Current Liabilities [Member] | ||
Notes payable | 50.00% | 50.00% |
Notes payable, year | 3 years | 3 years |
Other Noncurrent Liabilities [Member] | ||
Notes payable | 50.00% | 50.00% |
Notes payable, year | 3 years | 3 years |
Notes payable, discount (in Dollars) | $ 7,668 | |
Series A Preferred Stock [Member] | ||
Preferred stock, par value (in Dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 1,000,000 | 1,000,000 |
Preferred stock, shares issued | 100,000 | 100,000 |
Preferred stock, shares outstanding | 100,000 | 100,000 |
Condensed Statements of Operations (Unaudited) - USD ($) |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
REVENUES | ||||
Hardware, installation and other revenues | $ 448,836 | $ 499,278 | $ 890,038 | $ 1,001,935 |
Software license/subscription revenues | 841,834 | 747,313 | 1,682,728 | 1,415,542 |
Total Revenues | 1,290,670 | 1,246,591 | 2,572,766 | 2,417,477 |
COST OF REVENUES | ||||
Hardware and other costs | 764,844 | 366,703 | 1,341,315 | 820,045 |
Software license/subscriptions | 354,393 | 321,494 | 721,062 | 625,186 |
Total Cost of Revenues | 1,119,237 | 688,197 | 2,062,377 | 1,445,231 |
GROSS PROFIT | 171,433 | 558,394 | 510,389 | 972,246 |
OPERATING EXPENSES | ||||
Research and development | 517,754 | 459,547 | 902,860 | 945,167 |
Sales and marketing | 1,511,004 | 450,822 | 2,769,408 | 815,189 |
General and administrative | 1,190,715 | 589,214 | 2,104,975 | 1,004,418 |
Total Operating Expenses | 3,219,473 | 1,499,583 | 5,777,243 | 2,764,774 |
LOSS FROM OPERATIONS | (3,048,040) | (941,189) | (5,266,854) | (1,792,528) |
Interest Expense | (35,930) | (170,177) | (47,209) | (238,910) |
NET LOSS BEFORE INCOME TAXES | (3,083,970) | (1,111,366) | (5,314,063) | (2,031,438) |
INCOME TAXES | 0 | 0 | 0 | 0 |
NET LOSS | (3,083,970) | (1,111,366) | (5,314,063) | (2,031,438) |
Series B preferred stock dividend | 0 | (2,553) | 0 | (17,943) |
Accretion of beneficial conversion feature on preferred shares dividends issued in kind | 0 | (23,625) | 0 | (34,125) |
NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS | $ (3,083,970) | $ (1,137,544) | $ (5,314,063) | $ (2,083,506) |
LOSS PER COMMON SHARE - BASIC & DILUTED (in Dollars per share) | $ (0.35) | $ (0.28) | $ (0.61) | $ (0.51) |
WEIGHTED AVERAGE NUMBER OF CCOMMON SHARES OUTSTANDING - BASIC & DILUTED (in Shares) | 8,795,815 | 4,055,284 | 8,677,420 | 4,049,121 |
Condensed Statements of Cash Flows (Unaudited) (Parentheticals) |
6 Months Ended |
---|---|
Jun. 30, 2015
shares
| |
Conversion of convertible notes into shares of common stock | 325,000 |
NOTE 1 - BASIS OF FINANCIAL STATEMENT PRESENTATION |
6 Months Ended |
---|---|
Jun. 30, 2016 | |
Disclosure Text Block [Abstract] | |
Basis of Accounting [Text Block] | NOTE 1 – BASIS OF FINANCIAL STATEMENT PRESENTATION These interim condensed financial statements of COPsync, Inc. (the "Company") are unaudited, but reflect, in the opinion of management, all normal recurring adjustments necessary to present fairly the financial position of the Company as of June 30, 2016, and its results of operations and cash flows for the three and six months ended June 30, 2016. Certain information and footnote disclosures normally included in the audited financial statements have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission. Because all the disclosures required by accounting principles generally accepted in the United States are not included, these interim condensed financial statements should be read in conjunction with the audited financial statements and notes thereto in the Company’s Annual Report on Form 10-K as of and for the year ended December 31, 2015. The results for the three and six months ended June 30, 2016 are not necessarily indicative of the results to be expected for the entire fiscal year ending December 31, 2016, or any other period. The year-end condensed balance sheet data as of December 31, 2015, was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States. |
NOTE 2 - NATURE OF ORGANIZATION AND LIQUIDITY AND MANAGEMENT PLANS |
6 Months Ended |
---|---|
Jun. 30, 2016 | |
Disclosure Text Block [Abstract] | |
Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block] | NOTE 2 – NATURE OF ORGANIZATION AND LIQUIDITY AND MANAGEMENT PLANS The Company sells the COPsync Network service, which is a real-time, in-car information sharing, communication and data interoperability network for law enforcement agencies. The COPsync Network service enables patrol officers to collect, report and share critical data in real-time at the point of incident and obtain instant access to various local, state and federal law enforcement databases. The COPsync Network service also eliminates manual processes and increases officer productivity by enabling officers to electronically write tickets, process DUI and other arrests and document accidents and other incidents. The Company has designed the COPsync Network to be “vendor neutral,” meaning it can be used with products and services offered by other law enforcement technology vendors. Additionally, the COPsync Network system architecture is designed to scale nationwide. In addition to the Company’s core COPsync Network service, the Company offers three complementary service/product offerings. These offerings are: COPsync911, an emergency threat notification service; VidTac, an in-vehicle software-driven video camera system for law enforcement and fire departments; and COURTsync, a court security and efficiency application, which includes WARRANTsync, a statewide misdemeanor warrant clearing database. The Company offers the COPsync911 threat alert, first introduced in the second quarter of 2013, for use in schools, hospitals, day care facilities, governmental office buildings and other facilities with a high level of concern about safety and security. When used in schools, for example, the COPsync911 service enables school personnel to instantly and silently send emergency alerts directly to the five closest law enforcement officers in their patrol vehicles, and to the local 911 dispatch center, with the mere click of a screen icon located on every Windows-based computer or any handheld device within the facility. A text alert is also sent to the cell phones of all law enforcement officers in the area and to all teachers, administrators, and other staff at the school, alerting them of potential danger. VidTac is a software-driven video system for law enforcement. Traditional in-vehicle video systems are “hardware centric” DVR-based systems. The video capture, compression and encryption of the video stream is performed by the DVR. A software-driven video system like VidTac is less expensive than a DVR-based system and eliminates the need for an agency to purchase a second DVR computer that needs to be replaced every three to four years as new patrol vehicles are placed into service. The COURTsync system is designed to enable judges and court personnel to instantly send emergency alerts directly to the closest law enforcement officers in their patrol vehicles and to the local 911dispatch center, from any computer within the facility. Court personnel are also able to query federal law enforcement databases and databases pertaining to officer safety and dangerous persons. Additionally, COURTsync utilizes our WARRANTsync system to give patrol officers utilizing our COPsync Network access to Class C warrant information from the court, enabling them to collect warrant fees for the court. The WARRANTsync system, which is a feature set of the COURTsync system is designed to be a Texas statewide misdemeanor warrant-clearing database. It enables law enforcement officers in the field to receive notice of outstanding warrants in real-time at the point of a traffic stop. The WARRANTsync system enables the offender to pay the outstanding warrant fees and costs using a credit card. Following payment, the offender is given a receipt and the transaction is complete. This product could be viewed as an enhancement feature to the core COPsync Network service since all COPsync Network users receive the outstanding warrant notice. In addition to Texas, the Company sells its products in twelve other states. At June 30, 2016, the Company had cash and cash equivalents of $2,220,950, working capital of $141,465 and an accumulated deficit of $35,301,194. The following factors are helping the Company manage its liquidity: (1) The Company recorded approximately $1,408,000 and $2,548,000 in sales bookings during the three-month and six-month periods ended June 30, 2016, compared to approximately $1,452,000 and $1,903,000 during the comparable periods in 2015. Of the total sales bookings for the first six months ended June 30, 2016, approximately $1,358,000 remains unpaid. (2) On July 1, 2016, the Company filed with the Securities and Exchange Commission a Form S-3 Registration Statement which registered the offer and sale of up to $25 million of securities which may be issued by the Company from time to time in indeterminate amounts and at indeterminate times. (3) The Company will consider on a case-by-case basis additional credit facilities or equity or debt financings to leverage its recurring revenue streams and support additional growth. |
NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICES |
6 Months Ended |
---|---|
Jun. 30, 2016 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies [Text Block] | NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICES Basis of Presentation The accompanying condensed financial statements include the accounts of the Company, are prepared in accordance with accounting principles generally accepted in the United States and are prepared on the accrual method of accounting. There have been no significant changes to the summary of significant accounting policies disclosed in Note 2 to the financial statements as of December 31, 2015 included in the Form 10-K filed on March 30, 2016. Capitalized Software The Company began capitalizing its software development costs during the second quarter of 2016. See Note 10 – Capitalized Software for further information. |
NOTE 4 - RECENT ACCOUNTING STANDARDS AND PRONOUNCEMENTS |
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Jun. 30, 2016 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
New Accounting Pronouncements and Changes in Accounting Principles [Text Block] | NOTE 4 – RECENT ACCOUNTING STANDARDS AND PRONOUNCEMENTS The Company has implemented all new accounting pronouncements that are in effect and that may impact our audited financial statements. Revenue Recognition In May 2014, the FASB issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (ASU 2014-09), which supersedes most current revenue recognition guidance under U.S. GAAP. The core principle of ASU 2014-09 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services. ASU 2014-09 defines a five step process to achieve this core principle and, in doing so, more judgement and estimates may be required within the revenue recognition process than are required under existing U.S. GAAP. The standard is effective for us beginning in 2018, and requires using either of the following transition methods: (i) a full retrospective approach reflecting the application of the standard in each prior reporting period with the option to elect certain practical expedients, or (ii) a retrospective approach with the cumulative effect of initially adopting ASU 2014-09 recognized at the date of adoption (which includes additional footnote disclosures). We are currently evaluating the impact of our pending adoption of ASU 2014-09 on our financial statements and have not yet determined the method by which we will adopt the standard in 2018. Going Concern On August 27, 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements - Going Concern (subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern, which is intended to define management’s responsibility to evaluate whether there is substantial doubt about the Company’s ability to continue as a going concern and to provide related footnote disclosures. This standard will be effective for the Company for the year ending on December 31, 2016. Early application is permitted. The Company is currently evaluating the impact of ASU No. 2014-15. Recently Issued Accounting Pronouncement In February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-02 Leases (Topic). This ASU requires a lessee to recognize a right-of-use asset and a lease liability under most operating leases in its balance sheet. For public companies, the ASU is effective for annual and interim periods beginning after December 15, 2018. Early adoption is permitted. The Company is currently evaluating the effects that the adoption of ASU 2016-02 will have on the financial position, results of operations or cash flows. In April 2015, the FASB issued ASU No. 2015-03, Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs (“ASU 2015-03”). The amendments in ASU 2015-03 require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in ASU 2015-03. ASU 2015-03 is effective for us on January 1, 2016. The Company does not believe this new pronouncement has any application to its financial statements at this time. |
NOTE 5 - CASH AND CASH EQUIVALENTS |
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Jun. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash and Cash Equivalents [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash and Cash Equivalents Disclosure [Text Block] | NOTE 5 – CASH AND CASH EQUIVALENTS The Company's cash and cash equivalents, at June 30, 2016 and December 31, 2015, respectively, consisted of the following:
During the second quarter of 2016, the Company was requested to pay-off the balance of a lease agreement involving an equipment financing company owned by one of the Company’s outside directors (See Notes 12 and 21). The total balance of the agreement was $241,238, inclusive of principal totaling $219,262, $21,976 for interest on future lease payments called for under the agreement and miscellaneous processing fees. To facilitate this request, the Company secured a bank loan to fund the pay-off. The new loan is a one-year interest only note that requires a restricted balance for principal plus interest of $249,496. |
NOTE 6 - ACCOUNTS RECEIVABLE |
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Jun. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans, Notes, Trade and Other Receivables Disclosure [Text Block] | NOTE 6 – ACCOUNTS RECEIVABLE The Company's accounts receivable, net, at June 30, 2016 and December 31, 2015, respectively, consisted of the following:
Accounts receivable is derived principally by revenue earned from end-users, which are local and state governmental agencies. The Company performs periodic credit evaluations of its customers, and does not require collateral. Our trade receivables increased by approximately $113,000 principally due to one reseller’s increased sales volume. At June 30, 2016, the Company considers it has a concentration of credit risk involving a single customer who owes the Company an account balance equivalent to 43% of the Company’s Accounts Receivable, net. The Company is discussing various payment plans with the customer and believes this matter will be successfully resolved by the end of 2016. The Company’s other receivables generally consist of miscellaneous receivable activities. The elimination of the unpaid deferred revenue represents those invoices issued for products and/or services not yet paid by the customer or services completed by the Company. The elimination is made to prevent the “gross-up” effect on the Company’s balance sheet between accounts receivable and deferred revenues. The Company’s allowance for doubtful accounts is based upon a review of outstanding receivables. Delinquent receivables are written-off based on individual credit evaluations and specific circumstances of the customer. At June 30, 2016, the $88,000 allowance consisted of a $78,000 specific reserve following a customer specific review of total receivables, and a $10,000 general, or non-specific, allowance, compared to a $90,000 specific and $10,000 general allowances at December 31, 2015. The decrease in the specific allowance relates to certain accounts where their previous outstanding receivable balances were written-off to the allowance for doubtful accounts in the second quarter of 2016. As of December 31, 2015, the Company established a $10,000 general allowance, which is directed towards receivables that are over sixty days of age and may be at risk of collection. |
NOTE 7 - INVENTORY |
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Jun. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Text Block] | NOTE 7 – INVENTORY The Company's inventory, at June 30, 2016 and December 31, 2015, respectively, consisted of the following:
The approximate $97,000 increase in inventory in the first six months of 2016 is due to an increase in on-hand general equipment and supplies, partially offset by a reduction in the Company’s VidTac finished goods inventory. Total inventory at June 30, 2016 and December 31, 2015 included hardware consisting of computer laptops, printers and ancillary parts, such as electronic components, connectors, adapters and cables, as well as the Company’s proprietary VidTac product and its related components. The Company attempts to procure hardware as a result of receiving a customer order. Accordingly, the hardware is procured, delivered to the Company, prepared for installation and then transported by the Company to the customer site for installation. Beginning in 2016, the Company has begun to procure certain inventory items on a stock basis so the Company can quickly install the equipment for a new contract. Additionally, the various components of hardware are all considered finished goods because the individual items may be, and are, sold in a package, or on an individual basis, normally at the same pricing structure. With respect to the Company’s VidTac product, a manufacturing agreement was executed in 2012 with a single contract manufacturer and calls for the Company to periodically place a demand purchase order for a fixed number of finished units to be manufactured and delivered as finished goods. The Company’s purchase orders placed with the contract manufacturer are non-cancellable; however, there are some relief provisions: (1) the Company may change the original requested delivery dates if the Company gives sufficient advance notice to the contract manufacturer; and (2) should the Company elect to cancel a purchase order in total or in part, it would be financially responsible for any materials that could not be returned by the contract manufacturer to its source suppliers. When the VidTac product is recorded into finished goods, it consists of a kit consisting of four basic components. It is inventoried as a single unit of inventory. If a single component fails or needs to be replaced, the Company will replace with a new unit and inventory the components, which would still be considered finished goods. Should a component need to be repaired, it is returned to the contracted manufacturer for analysis and repair. The repaired component is then shipped to the Company and inventoried as a finished goods component. |
NOTE 8 - PREPAID EXPENSES AND OTHER ASSETS |
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Jun. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure Text Block Supplement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Current Assets [Text Block] | NOTE 8 – PREPAID EXPENSES AND OTHER ASSETS The Company's prepaid expenses and other assets consisted of the following at June 30, 2016 and December 31, 2015, respectively:
Prepaid insurance pertains to various business insurance policies, the fees of which have been financed by a third-party service provider and are being paid over an eleven-month period. This prepayment is amortized ratably over the twelve-month insurance coverage period. Subscriptions principally pertain to prepaid software support and web-hosting services provided by third-party service providers. The balance can fluctuate period-over-period based upon the timing between payment and amortization activities. The prepayments are amortized into expense over the life of the specific service period. Vendor prepayments principally consist of a personnel search firm and a consultant for advisory services. These prepayments will be charged to operating expenses in fiscal year 2016 as the services are performed and as production of VidTac commences. Deferred valuation expense relates to an endorsement agreement the Company entered into in January 2016 with an endorser who agreed to assist the Company with its brand recognition and sales efforts for COPsync products in pre-designated geographical areas. The agreement requires six quarterly payments of $250,000 and the grant of 100,000 shares of the Company’s common stock which was granted at signing and an additional 100,000 shares to be granted six months after signing. The non-cash value of the endorsement agreement totaled $206,000 and was determined by using the stock price on the date of the agreement. This amount is being amortized to non-cash consulting expense over the service period or six months. Deferred charges pertain to off-the-shelf computer aided dispatch systems (“CAD”), purchased from an outside software services company and yet to-be delivered to one contracted customer. The Company expects to complete and deliver these services in fiscal year 2016, at which time these deferred charges will be matched against the applicable revenues. |
NOTE 9 - PROPERTY AND EQUIPMENT |
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Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment Disclosure [Text Block] | NOTE 9 – PROPERTY AND EQUIPMENT The Company’s property and equipment at June 30, 2016 and December 31, 2015 was:
The increase of approximately $251,000 relates to the acquisition of ten vehicles and computer equipment and office furniture. Offsetting this increase was a loss of $2,396 resulting from the disposition of five vehicles. Depreciation expense for quarters ended June 30, 2016 and 2015 was $26,637 and $13,280, respectively, and for the six months ended June 30, 2016 and 2015, $42,160 and $26,907, respectively. |
NOTE 10 - CAPITALIZED SOFTWARE |
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Jun. 30, 2016 | |
Research and Development [Abstract] | |
Research, Development, and Computer Software Disclosure [Text Block] | NOTE 10 – CAPITALIZED SOFTWARE In the second quarter of 2016, the Company capitalized developmental software in accordance with ASC 730 – Research & Development and ASC 985 –Software. Within that accounting guidance, companies may elect to capitalize certain portions of their R&D expenses relating to the development of new products or services. R&D expenses are capitalized as follows: 1) All R&D costs incurred in developing a new product or service must be expensed as incurred until “technological feasibility” has been achieved; that is, until R&D efforts substantiate the new product or service can, in fact, be made; 2) Upon achieving “technological feasibility”, the Company capitalizes all incurred costs until the product is ready for production and or for sale; 3) Once the product/service is ready for production or for sale, then all future costs, (maintenance & support) are expensed as incurred; and 4) The capitalized costs are then amortized over the future beneficial life cycle of the product/service. All costs incurred to establish the technological feasibility of a computer software product to be sold, leased, or otherwise marketed are research and development costs. Those costs are charged to expense when incurred as required by Subtopic 730-10. The technological feasibility of a computer software product is established when the Company has completed all planning, designing, coding, and testing activities that are necessary to establish that the product can be produced to meet its design specifications including functions, features, and technical performance requirements. Based upon the accounting guidance, the Company has concluded that at different points in time during the second quarter of 2016, three projects now meet the requirements for achieving “technological feasibility” per “ACS 985-25-2-a-1-3” and has elected to begin capitalizing the R&D expenses incurred for the time-period between that date of achieving “technological feasibility” and the anticipated date when the respective projects conclude with the product or service being ready for production or for sale. The incurred costs for each of these projects are derived from both in-house and outside work efforts. The outside work efforts are represented by third-party programming service providers, one of which has been a long-time Company vendor. For purposes of this procedure and for the second quarter of 2016, the Company has elected to capture and capitalize the applicable costs paid to third-party service providers. The Company elected this treatment because it could not cost-effectively capture in-house costs during the second quarter of 2016. In the future, and if the Company is in a position to cost-effectively capture the related in-house expenses, the Company may capture these in-house costs as well. Management believes a three-year period, representing the future beneficial life cycle of the product/service, is a reasonable period of time upon which to amortize the capitalized costs, commencing when the respective project arrives at a point where the product/service is ready for production/sale. For the three-month and six-month periods ended June 30, 2016, the Company capitalized $224,804 in developmental software costs. Total estimated cost for the project is $1,186,000. |
NOTE 11 - INVESTMENTS |
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Jun. 30, 2016 | |
Investments Schedule [Abstract] | |
Investment [Text Block] | NOTE 11 – INVESTMENTS The Company loaned $50,000 to GTX Corp pursuant to a convertible promissory note on February 8, 2016. Both principal and interest are due on February 8, 2017 and bears interest at 8% per annum. The note has an optional conversion feature that converts the note into 5,000,000 shares of GTX Corp’s common stock at $0.01 per share at the Company’s option. The Company’s intent is to hold the instrument until maturity. The convertible note is accounted for under the cost method of accounting. |
NOTE 12 - NOTES PAYABLE |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Text Block] | NOTE 12 – NOTES PAYABLE The following table summarizes notes payable at June 30, 2016 and December 31, 2015, respectively, including the three-year, 50% notes payable:
During the six months ended June 30, 2016, the Company had increases in notes payable for financing of general liability insurance of $32,000 and car loans of $213,017 related to the purchase of eight vehicles. During the six months ended June 30, 2016, the Company paid a bank loan for $219,264 with the proceeds from a new bank loan. The new loan in the amount of $241,238 is a one-year interest only note and under applicable accounting standards requires a restricted balance for principal and interest. During the first six months of 2016, the Company made total principal payments of $111,965. |
NOTE 13 - CONVERTIBLE NOTES PAYABLE |
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Convertible Note Payable [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Convertible Note Payable [Text Block] | NOTE 13 - CONVERTIBLE NOTES PAYABLE The Company’s total convertible notes payable at June 30, 2016 was $30,000. The following table shows the components of convertible notes payable at June 30, 2016 and December 31, 2015, respectively:
The outstanding convertible note is convertible into shares of Company common stock at the option of the Payee at $11.00 per share. Unless earlier converted, the note is due on April 1, 2018. |
NOTE 14 - PREFERRED STOCK |
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Jun. 30, 2016 | |
Disclosure Text Block Supplement [Abstract] | |
Preferred Stock [Text Block] | NOTE 14– PREFERRED STOCK Preferred Stock Series A The Company issued a total of 100,000 shares of its Series A Preferred Stock in April 2008 as partial consideration for its acquisition of a 100% ownership interest in PostInk Technology, LP (“PostInk”). Each share of Series A Preferred Stock is convertible into one share of common stock, but has voting rights on a basis of 15 votes per share, after adjusting for the Company’s reverse stock split in October 2015. These shares are held by the former general partner of PostInk, which is owned by the co-founders of the Company. Upon the occurrence of certain events, each share of the Company’s Series A Preferred Stock shall automatically be converted into fully-paid non-assessable shares of common stock at the then effective conversion rate for such share. The events that may trigger this automatic conversion event are as follows: 1) immediately prior to the closing of firm commitment initial public offering, or 2) upon the receipt of the Company of a written request for such conversion from the holders of at least a majority of the Series A Preferred stock then outstanding, or if later, the effective date for conversion specified in such requests. Series B Preferred Stock During 2009 and 2010, the Company completed a private placement of its Series B Convertible Preferred Stock and warrants to purchase its common stock in which the Company raised $1,500,000 in gross proceeds. As a result, the Company issued 375,000 shares of the Company’s Series B Preferred Stock and granted warrants to purchase an aggregate of 60,000 shares of its common stock. For the quarters ended June 30, 2016 and 2015, gross dividends on the Series B Preferred Stock were $0 and $26,178, respectively. For the six months ended June 30, 2016 and 2015, gross dividends on the Series B Preferred Stock were $0 and $52,068. Effective October 28, 2015, the Company entered into an agreement with the Series B stockholders (the “Conversion Agreement”) whereby they agreed to convert their shares of Series B Preferred Stock into shares of the Company’s common stock pursuant to the terms of the Series B Preferred Stock, exercise their warrants at an exercise price reduced from $10.00 per share to $6.25 per share in full for cash, terminate the Investors’ Rights Agreement and waive any rights they may have under such agreement. In return, the Company agreed to amend their warrants to reduce the exercise price from $10.00 per share to $6.25 per share, issue the Series B stockholders an additional aggregate 60,000 shares of the Company’s common stock, pay aggregate accrued dividends of up to approximately $680,000 in cash within 30 days of the Company’s listing on The NASDAQ Capital Market and grant the Series B stockholders certain board and board observer rights. On November 13, 2015 we issued 225,000 shares of our common stock, in the aggregate, upon the conversion of the Series B Preferred Stock and the exercise of Series B Warrants held by ten persons. Additionally, we issued an additional 60,000 shares of our common stock, in the aggregate, to the same ten persons upon such conversion. 50,000 shares of common stock, attributable to the conversion of Series B Preferred Stock, remain to be issued as of the date of this report, pending receipt of certain Series B certificates. |
NOTE 15 - COMMON STOCK |
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Jun. 30, 2016 | |
Stockholders' Equity Note [Abstract] | |
Stockholders' Equity Note Disclosure [Text Block] | NOTE 15 – COMMON STOCK During the six months ended June 30, 2016, the Company issued 526,072 shares of common stock as described below: (1) The Company issued 140,000 shares related to endorsement agreements (80,000 shares at $2.50 per share, 35,000 shares at $2.61 per share and 25,000 shares at $6.20), 25,000 shares to a previous holder of our Series B Preferred Stock, whose Series B certificate we received, and 53,215 shares for note conversion (5,000 shares at $8.50 per share and 48,215 shares at $3.50). All shares were recorded in common stock to be issued at December 31, 2015. (2) The Company issued 207,857 shares to consultants for services (42,857 shares at $2.09, 100,000 shares at $2.06 and 65,000 shares at $1.88). (3) The Company issued 30,000 shares for advisory services. These shares are expected to be cancelled in the third quarter of 2016. |
NOTE 16 - COMMON STOCK TO BE ISSUED |
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Common Stock To Be Isssued [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Common Stock To Be Isssued [Text Block] | NOTE 16 – COMMON STOCK TO BE ISSUED The following table provides a reconciliation of the transactions, number of shares and associated values for the common stock to be issued at June 30, 2016 and December 31, 2015, respectively.
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NOTE 17 - BASIC AND FULLY DILUTED LOSS PER SHARE |
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Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Text Block] | NOTE 17– BASIC AND FULLY DILUTED LOSS PER SHARE The computations of basic loss per share of common stock are based upon the weighted average number of shares of common stock outstanding during the period covered by the financial statements. Common stock equivalents that would arise from issuance of shares of common stock to be issued under subscriptions and other obligations of the Company, the exercise of stock options and warrants, conversion of convertible preferred stock and dividends on those shares of preferred stock or the conversion of convertible promissory notes were excluded from the loss per share attributable to common stockholders as their value is anti-dilutive. The Company's common stock equivalents, at June 30, 2016 and December 31, 2015, respectively, which are not included in the calculation of fully diluted loss per share because they are anti-dilutive, consisted of the following:
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NOTE 18 - OUTSTANDING WARRANTS |
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Disclosure Text Block Supplement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shareholders' Equity and Share-based Payments [Text Block] | NOTE 18 – OUTSTANDING WARRANTS A summary of the status of the Company’s outstanding warrants at June 30, 2016, is as follows:
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NOTE 19 - EMPLOYEE OPTIONS |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Text Block] | NOTE 19 – EMPLOYEE OPTIONS The Company provides a stock-based compensation plan, the 2009 Long Term Incentive Plan (the “Plan”) that was adopted by the Board of Directors on September 2, 2009 and approved by stockholders on July 27, 2009. Under the Plan, the Company can grant nonqualified options to employees, officers, outside directors and consultants of the Company or incentive stock options to employees of the Company. At June 30, 2016, there were 400,000 shares of common stock authorized for issuance under the Plan, which was increased at the Company’s annual meeting of stockholders on July 28, 2016. See Note 22 – Subsequent Events, for further information. The outstanding options have a term of ten years and vest primarily over periods ranging from three to five years. As of June 30, 2016, options to purchase 292,100 shares of the Company’s common stock were outstanding under the plan, of which options to purchase 176,553 shares were exercisable. Share-based compensation expense is based upon the estimated grant date fair value of the portion of share-based payment awards that are ultimately expected to vest during the period. The grant date fair value of stock-based awards to employees and directors is calculated using the Black-Scholes option pricing model. Forfeitures of share-based payment awards are reported when actual forfeiture occurs. For the quarter ending June 30, 2016, the Company estimated the fair value of the stock options based on the following weighted average assumptions:
For the six months ended June 30, 2016 and 2015, the Company recorded share-based compensation expense of $82,495 and $95,832, respectively. For the six months ended June 30, 2016, the Company granted options to purchase 60,000 shares of its common stock with a weighted average exercise price of $1.68 per share to the Company’s five outside directors, who each receive options as part of their annual compensation for serving on the Company’s Board of Directors. The total value of these 60,000 stock options in the aggregate, utilizing the Black Scholes valuation method, was $97,648. The term of the stock options was ten years and vesting of the stock options was for a three-year period, with 33% vesting on the one-year anniversary of the grant date, and the remainder vesting ratably over the next eight quarters. The summary activity for the three months ended June 30, 2016 under the Company’s 2009 Long Term Incentive Plan, as amended is as follows:
The following table summarizes significant ranges of outstanding and exercisable options as of June 30, 2016:
A summary of the status of the Company’s non-vested option shares as of June 30, 2016 is as follows:
The Company’s stockholders approved a repricing of the exercise price of certain of the Company’s outstanding options at the Company’s annual meeting of stockholder on July 28, 2016. See Note 22 – Subsequent Events, for further information. As of June 30, 2016, there was approximately $380,750 of total unrecognized compensation cost related to non-vested share-based compensation arrangements. The Company expects to recognize the unrecognized compensation cost over a weighted average period of 2.5 years. |
NOTE 20 - COMMITMENTS AND CONTINGENCIES |
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Commitments and Contingencies Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Text Block] | NOTE 20 – COMMITMENTS AND CONTINGENCIES The following table summarizes the Company’s obligations to make future payments pursuant to certain contracts or arrangements as of June 30, 2016, as well as an estimate of the timing in which these obligations are expected to be satisfied:
Compensation See Item 11, “Employment Contracts, Termination of Employment and Change in Control,” contained in the Company’s Form 10-K/A for the year ended December 31, 2015 and filed on April 29, 2016, which discusses the employment agreements involving Mr. Russell Chaney and Mr. Shane Rapp, co-founders of the Company. One element contained in those discussions involves the voluntary elections by Mr. Chaney and Mr. Rapp to forego certain specified salary increases until the Company be profitable or the Company secures sufficient funding to sustain operations. The value of each person’s foregone salary for the six months ended June 30, 2016 and 2015 totaled $20,000 for Mr. Chaney and $5,000 for Mr. Rapp and was recorded as contributed capital in Additional Paid-in Capital on the Company’s Balance Sheet. Litigation The Company is not currently involved in any material legal proceedings. From time-to-time the Company anticipates it will be involved in legal proceedings, claims, and litigation arising in the ordinary course of business and otherwise. The ultimate costs to resolve any such matters could have a material adverse effect on the Company’s financial statements. The Company could be forced to incur material expenses with respect to these legal proceedings, and in the event there is an outcome in any that is adverse to it, the Company’s financial position and prospects could be harmed. |
NOTE 21 - RELATED PARTY TRANSACTIONS |
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Jun. 30, 2016 | |
Related Party Transactions [Abstract] | |
Related Party Transactions Disclosure [Text Block] | NOTE 21 – RELATED PARTY TRANSACTIONS On December 22, 2014, the Company executed a forty-eight-month capital lease agreement with a third-party service provider owned by one of the Company’s outside directors for the lease of two vehicles. The agreement requires monthly payments of $873 totaling $35,098 over the life of the lease and has a minimal buy-out option at the end of the lease. Accordingly, both a lease property asset and obligation in the amount of $35,098 was reported as of December 31, 2014, with lease payments beginning in January 2015. At June 30, 2016, the lease property asset and obligation values were $17,548 and $23,385, respectively. In November 2013, the Company executed two short-term notes payable totaling $313,477 with an equipment financing company owned by one of the Company’s outside directors for the specific purpose of financing the purchase of certain third-party equipment to be sold to contracted customers. Both notes were to mature in May 2014, bore interest at 16% annually, were payable upon maturity, and were collateralized by the third-party equipment being procured. The maturity dates for both notes were formally extended until June 25, 2015. On September 1, 2015, a new agreement was executed between the parties that restructured the arrangement into a rental agreement, consisting of: a total value of $322,305, inclusive of principal and interest; a term of 48 months, monthly payments of $5,465; a buy-out amount of $65,576; and a $60,000 cash payment upon signing. During the second quarter of 2016, the Company paid off this note through the execution of a $241,238 note payable to Provident Bank. In June 2016, the Company executed a four-year capitalized lease with a third party service provider (owned by one of the Company’s outside directors) for four vehicles. The principal value of the lease is $164,320, plus interest at a rate of 9.74% per annum. The monthly lease payments are $4,125. (See Note 12 – Notes Payable) |
NOTE 22 - SUBSEQUENT EVENTS |
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Jun. 30, 2016 | |
Subsequent Events [Abstract] | |
Subsequent Events [Text Block] | NOTE 22 – SUBSEQUENT EVENTS During the third quarter of 2016, the Company began serving as a sales agent for Smart Beacon—a LifeWatch, Inc. technology—a wearable alert device which allows the user to contact emergency services in case of an emergency. On July 28, 2016, the Company’s stockholders approved the following: (1) A one-time repricing of all of the Company’s outstanding stock options granted prior to December 1, 2015 (a total of 237,900 shares of stock) that were outstanding on July 28, 2016 to the greater of (i) the closing price of one share of the Company’s common stock on the date of the annual meeting or (ii) $2.22. The Company expects to reprice the options during the third quarter of 2016. (2) The following amendments to the Plan, which: (a) Increased the number of authorized shares available for issuance under the Plan to 1.8 million shares, an increase of 1.4 million shares; (b) Increased the number of shares that may be granted as stock options to any one individual to 900,000, an increase of 860,000 shares; and (c) Increased the number of automatic stock option issued to outside Board members upon their initial election or appointment to the Board to 20,000 shares and annually thereafter to 10,000 shares, provided the Board member has served on the Board at least six months. (3) The 2016 COPsync, Inc. Employee Stock Purchase Plan, which authorizes the sale of up to 942,000 shares of the Company’s common stock. |
Accounting Policies, by Policy (Policies) |
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Jun. 30, 2016 | |
Accounting Policies [Abstract] | |
Basis of Accounting, Policy [Policy Text Block] | Basis of Presentation The accompanying condensed financial statements include the accounts of the Company, are prepared in accordance with accounting principles generally accepted in the United States and are prepared on the accrual method of accounting. There have been no significant changes to the summary of significant accounting policies disclosed in Note 2 to the financial statements as of December 31, 2015 included in the Form 10-K filed on March 30, 2016.
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Research, Development, and Computer Software, Policy [Policy Text Block] | Capitalized Software The Company began capitalizing its software development costs during the second quarter of 2016. See Note 10 – Capitalized Software for further information.
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NOTE 5 - CASH AND CASH EQUIVALENTS (Tables) |
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Schedule of Cash and Cash Equivalents [Table Text Block] | The Company's cash and cash equivalents, at June 30, 2016 and December 31, 2015, respectively, consisted of the following:
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NOTE 6 - ACCOUNTS RECEIVABLE (Tables) |
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Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accounts, Notes, Loans and Financing Receivable [Table Text Block] | The Company's accounts receivable, net, at June 30, 2016 and December 31, 2015, respectively, consisted of the following:
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NOTE 7 - INVENTORY (Tables) |
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Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Inventory, Current [Table Text Block] | The Company's inventory, at June 30, 2016 and December 31, 2015, respectively, consisted of the following:
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NOTE 8 - PREPAID EXPENSES AND OTHER ASSETS (Tables) |
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Disclosure Text Block Supplement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Table Text Block] | The Company's prepaid expenses and other assets consisted of the following at June 30, 2016 and December 31, 2015, respectively:
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NOTE 9 - PROPERTY AND EQUIPMENT (Tables) |
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Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Table Text Block] | The Company’s property and equipment at June 30, 2016 and December 31, 2015 was:
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NOTE 12 - NOTES PAYABLE (Tables) |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Debt [Table Text Block] | The following table summarizes notes payable at June 30, 2016 and December 31, 2015, respectively, including the three-year, 50% notes payable:
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NOTE 13 - CONVERTIBLE NOTES PAYABLE (Tables) |
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Convertible Note Payable [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Convertible Debt [Table Text Block] | The Company’s total convertible notes payable at June 30, 2016 was $30,000. The following table shows the components of convertible notes payable at June 30, 2016 and December 31, 2015, respectively:
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NOTE 16 - COMMON STOCK TO BE ISSUED (Tables) |
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Common Stock To Be Isssued [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Common Stock to Be Issued [Table Text Block] | The following table provides a reconciliation of the transactions, number of shares and associated values for the common stock to be issued at June 30, 2016 and December 31, 2015, respectively.
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NOTE 17 - BASIC AND FULLY DILUTED LOSS PER SHARE (Tables) |
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Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share [Table Text Block] | The Company's common stock equivalents, at June 30, 2016 and December 31, 2015, respectively, which are not included in the calculation of fully diluted loss per share because they are anti-dilutive, consisted of the following:
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NOTE 18 - OUTSTANDING WARRANTS (Tables) |
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Schedule of Warrants or Rights, Shares Authorized, by Exercise Price Range [Table Text Block] | A summary of the status of the Company’s outstanding warrants at June 30, 2016, is as follows:
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NOTE 19 - EMPLOYEE OPTIONS (Tables) |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions [Table Text Block] | For the quarter ending June 30, 2016, the Company estimated the fair value of the stock options based on the following weighted average assumptions:
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Schedule of Share-based Compensation, Stock Options, Activity [Table Text Block] | The summary activity for the three months ended June 30, 2016 under the Company’s 2009 Long Term Incentive Plan, as amended is as follows:
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Schedule of Share-based Compensation, Shares Authorized under Stock Option Plans, by Exercise Price Range [Table Text Block] | The following table summarizes significant ranges of outstanding and exercisable options as of June 30, 2016:
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Schedule of Nonvested Share Activity [Table Text Block] | A summary of the status of the Company’s non-vested option shares as of June 30, 2016 is as follows:
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NOTE 20 - COMMITMENTS AND CONTINGENCIES (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Future Minimum Rental Payments for Operating Leases [Table Text Block] | The following table summarizes the Company’s obligations to make future payments pursuant to certain contracts or arrangements as of June 30, 2016, as well as an estimate of the timing in which these obligations are expected to be satisfied:
|
NOTE 2 - NATURE OF ORGANIZATION AND LIQUIDITY AND MANAGEMENT PLANS (Details) - USD ($) |
1 Months Ended | 3 Months Ended | 6 Months Ended | |||||
---|---|---|---|---|---|---|---|---|
Jul. 31, 2016 |
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2012 |
|
NOTE 2 - NATURE OF ORGANIZATION AND LIQUIDITY AND MANAGEMENT PLANS (Details) [Line Items] | ||||||||
Cash and Cash Equivalents, at Carrying Value | $ 2,220,950 | $ 142,604 | $ 2,220,950 | $ 142,604 | $ 8,295,310 | $ 587,459 | $ 2,220,950 | |
Working Capital | 141,465 | 141,465 | ||||||
Retained Earnings (Accumulated Deficit) | (35,301,194) | (35,301,194) | $ (29,987,131) | |||||
Deferred Revenue, Additions | 1,408,000 | $ 1,452,000 | 2,548,000 | $ 1,903,000 | ||||
Deferred Revenue | $ 1,358,000 | $ 1,358,000 | ||||||
Subsequent Event [Member] | ||||||||
NOTE 2 - NATURE OF ORGANIZATION AND LIQUIDITY AND MANAGEMENT PLANS (Details) [Line Items] | ||||||||
Securities, To be Issued | $ 25,000,000 |
NOTE 5 - CASH AND CASH EQUIVALENTS (Details) |
6 Months Ended |
---|---|
Jun. 30, 2016
USD ($)
| |
Loans Payable [Member] | |
NOTE 5 - CASH AND CASH EQUIVALENTS (Details) [Line Items] | |
Repayments of Debt | $ 241,238 |
Notes Payable to Banks [Member] | Cash [Member] | |
NOTE 5 - CASH AND CASH EQUIVALENTS (Details) [Line Items] | |
Debt Instrument, Collateral Amount | 249,496 |
Principal [Member] | Loans Payable [Member] | |
NOTE 5 - CASH AND CASH EQUIVALENTS (Details) [Line Items] | |
Repayments of Debt | 219,262 |
Interest [Member] | Loans Payable [Member] | |
NOTE 5 - CASH AND CASH EQUIVALENTS (Details) [Line Items] | |
Repayments of Debt | $ 21,976 |
NOTE 5 - CASH AND CASH EQUIVALENTS (Details) - Schedule of Cash and Cash Equivalents - USD ($) |
Jun. 30, 2016 |
Dec. 31, 2015 |
Jun. 30, 2015 |
Dec. 31, 2014 |
Dec. 31, 2012 |
---|---|---|---|---|---|
Schedule of Cash and Cash Equivalents [Abstract] | |||||
Unrestricted | $ 1,971,454 | $ 8,295,310 | |||
Restricted | 249,496 | 0 | |||
Total Cash and cash equivalents | $ 2,220,950 | $ 8,295,310 | $ 142,604 | $ 587,459 | $ 2,220,950 |
NOTE 6 - ACCOUNTS RECEIVABLE (Details) - USD ($) |
6 Months Ended | |
---|---|---|
Jun. 30, 2016 |
Dec. 31, 2015 |
|
NOTE 6 - ACCOUNTS RECEIVABLE (Details) [Line Items] | ||
Increase (Decrease) in Other Receivables | $ (113,000) | |
Allowance for Doubtful Accounts Receivable, Current | $ 88,000 | $ 100,000 |
Single Customer [Member] | Accounts Receivable [Member] | Credit Concentration Risk [Member] | ||
NOTE 6 - ACCOUNTS RECEIVABLE (Details) [Line Items] | ||
Concentration Risk, Percentage | 43.00% | |
Specific Reserve Following a Customer Specific Review of Total Receivables [Member] | ||
NOTE 6 - ACCOUNTS RECEIVABLE (Details) [Line Items] | ||
Allowance for Doubtful Accounts Receivable, Current | $ 78,000 | 90,000 |
General, or Non-Specific, Allowance [Member] | ||
NOTE 6 - ACCOUNTS RECEIVABLE (Details) [Line Items] | ||
Allowance for Doubtful Accounts Receivable, Current | $ 10,000 | $ 10,000 |
NOTE 6 - ACCOUNTS RECEIVABLE (Details) - Schedule of Accounts, Notes, Loans and Financing Receivable - USD ($) |
Jun. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Schedule of Accounts, Notes, Loans and Financing Receivable [Abstract] | ||
Trade receivables | $ 1,474,483 | $ 1,360,929 |
Other receivables | 33,691 | 26,360 |
Elimination of unpaid deferred revenue | (1,033,347) | (861,024) |
Allowance for doubtful accounts | (88,000) | (100,000) |
Accounts Receivable, net | $ 386,827 | $ 426,265 |
NOTE 7 - INVENTORY (Details) - USD ($) |
6 Months Ended | |
---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Inventory Disclosure [Abstract] | ||
Increase (Decrease) in Inventories | $ 97,284 | $ 59,616 |
NOTE 7 - INVENTORY (Details) - Schedule of Inventory, Current - USD ($) |
Jun. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Schedule of Inventory, Current [Abstract] | ||
Finished goods | $ 601,979 | $ 504,695 |
Obsolescence Allowance | (20,000) | (20,000) |
Total Inventory, net | $ 581,979 | $ 484,695 |
NOTE 8 - PREPAID EXPENSES AND OTHER ASSETS (Details) - Endorsement Agreement [Member] |
6 Months Ended |
---|---|
Jun. 30, 2016
USD ($)
shares
| |
NOTE 8 - PREPAID EXPENSES AND OTHER ASSETS (Details) [Line Items] | |
Other Commitments, Description | Company entered into in January 2016 with an endorser who agreed to assist the Company with its brand recognition and sales efforts for COPsync products in pre-designated geographical areas. The agreement requires six quarterly payments of $250,000 and the grant of 100,000 shares of the Company’s common stock which was granted at signing and an additional 100,000 shares to be granted six months after signing. The non-cash value of the endorsement agreement totaled $206,000 and was determined by using the stock price on the date of the agreement. This amount is being amortized to non-cash consulting expense over the service period or six months. |
Payments to Suppliers | $ | $ 250,000 |
Other Commitment | $ | $ 206,000 |
Stock Issued for Endorsement Agreements [Member] | |
NOTE 8 - PREPAID EXPENSES AND OTHER ASSETS (Details) [Line Items] | |
Stock Issued During Period, Shares, Other | shares | 100,000 |
Stock to be Issued for Consulting and Endorsement Agreements [Member] | |
NOTE 8 - PREPAID EXPENSES AND OTHER ASSETS (Details) [Line Items] | |
Stock Issued During Period, Shares, Other | shares | 100,000 |
NOTE 8 - PREPAID EXPENSES AND OTHER ASSETS (Details) - Schedule of Prepaid Expenses and Other Assets - USD ($) |
Jun. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Schedule of Prepaid Expenses and Other Assets [Abstract] | ||
Prepaid Insurance | $ 52,386 | $ 69,456 |
Subscriptions | 184,872 | 54,756 |
Vendor Prepayments | 211,309 | 34,389 |
Deferred Valuation Expense Related To Endorser Agreements | 148,500 | 353,802 |
Molds | 57,967 | 0 |
Deferred Charges | 31,546 | 31,546 |
Total Prepaid Expenses and Other Assets | $ 686,580 | $ 543,949 |
NOTE 9 - PROPERTY AND EQUIPMENT (Details) - USD ($) |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Property, Plant and Equipment [Abstract] | ||||
Property, Plant and Equipment, Additions | $ 251,000 | |||
Gain (Loss) on Disposition of Property Plant Equipment, Excluding Oil and Gas Property and Timber Property | (2,396) | |||
Depreciation | $ 26,637 | $ 13,280 | $ 42,160 | $ 26,907 |
NOTE 9 - PROPERTY AND EQUIPMENT (Details) - Property, Plant and Equipment - USD ($) |
Jun. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Gross | $ 569,355 | $ 317,948 |
Accumulated Depreciation | (186,196) | (193,760) |
Net Property and Equipment | 383,159 | 124,188 |
Automobiles [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Gross | 337,718 | 148,940 |
Assets Held under Capital Leases [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Gross | 35,098 | 35,098 |
Furniture and Fixtures [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Gross | 14,204 | 10,467 |
Computer Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Gross | 145,400 | 86,508 |
Software and Software Development Costs [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Gross | $ 36,935 | $ 36,935 |
NOTE 10 - CAPITALIZED SOFTWARE (Details) - USD ($) |
3 Months Ended | 6 Months Ended |
---|---|---|
Jun. 30, 2016 |
Jun. 30, 2016 |
|
Research and Development [Abstract] | ||
Capitalized Computer Software, Additions | $ 224,804 | $ 224,804 |
Research and Development Arrangement, Contract to Perform for Others, Costs Incurred, Gross | $ 1,186,000 |
NOTE 11 - INVESTMENTS (Details) |
6 Months Ended |
---|---|
Jun. 30, 2016
USD ($)
$ / shares
| |
NOTE 11 - INVESTMENTS (Details) [Line Items] | |
Debt Instrument, Convertible, Conversion Price (in Dollars per share) | $ 11.00 |
CTX Corp [Member] | |
NOTE 11 - INVESTMENTS (Details) [Line Items] | |
Payments to Acquire Notes Receivable (in Dollars) | $ | $ 50,000 |
Debt Instrument, Interest Rate, Stated Percentage | 8.00% |
Debt Instrument, Convertible, Number of Equity Instruments | 5,000,000 |
Debt Instrument, Convertible, Conversion Price (in Dollars per share) | $ 0.01 |
NOTE 12 - NOTES PAYABLE (Details) |
6 Months Ended |
---|---|
Jun. 30, 2016
USD ($)
| |
NOTE 12 - NOTES PAYABLE (Details) [Line Items] | |
Repayments of Bank Debt | $ 219,264 |
Notes Payable, Other Payables [Member] | |
NOTE 12 - NOTES PAYABLE (Details) [Line Items] | |
Debt Instrument, Increase (Decrease), Other, Net | 32,000 |
Notes Payable, Other Payables [Member] | Automobiles [Member] | |
NOTE 12 - NOTES PAYABLE (Details) [Line Items] | |
Debt Instrument, Increase (Decrease), Other, Net | 213,017 |
Notes Payable to Banks [Member] | |
NOTE 12 - NOTES PAYABLE (Details) [Line Items] | |
Repayments of Bank Debt | 111,965 |
Debt Instrument, Face Amount | $ 241,238 |
NOTE 12 - NOTES PAYABLE (Details) - Schedule of Debt - USD ($) |
Jun. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Loan Type | ||
Notes Payable | $ 610,925 | $ 480,851 |
Less: Current portion | (392,218) | (175,770) |
Long-term portion | 218,707 | 305,081 |
Notes Payable to Banks [Member] | ||
Loan Type | ||
Notes Payable | 491,743 | 310,894 |
Loans Payable [Member] | ||
Loan Type | ||
Notes Payable | 73,331 | 106,500 |
Insurance Coverage [Member] | Notes Payable, Other Payables [Member] | ||
Loan Type | ||
Notes Payable | $ 45,851 | $ 63,457 |
NOTE 13 - CONVERTIBLE NOTES PAYABLE (Details) - USD ($) |
Jun. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Convertible Note Payable [Abstract] | ||
Convertible Notes Payable | $ 30,000 | $ 398,786 |
Debt Instrument, Convertible, Conversion Price | $ 11.00 |
NOTE 13 - CONVERTIBLE NOTES PAYABLE (Details) - Schedule of Convertible Notes Payable - USD ($) |
6 Months Ended | 12 Months Ended | |
---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Dec. 31, 2015 |
|
Schedule of Convertible Notes Payable [Abstract] | |||
Total Convertible Notes Payable at beginning of period | $ 30,000 | $ 398,786 | |
Plus: additional notes payable | 0 | 526,315 | |
Less: note conversions | 0 | $ (65,000) | (895,101) |
Convertible notes payable, net, long-term portion | $ 30,000 | $ 30,000 |
NOTE 19 - EMPLOYEE OPTIONS (Details) - Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions |
6 Months Ended |
---|---|
Jun. 30, 2016 | |
NOTE 19 - EMPLOYEE OPTIONS (Details) - Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions [Line Items] | |
Expected life | 10 years |
Minimum [Member] | |
NOTE 19 - EMPLOYEE OPTIONS (Details) - Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions [Line Items] | |
Risk-free interest rate | 1.85% |
Expected volatility | 120.00% |
Dividend yield | 0.00% |
NOTE 19 - EMPLOYEE OPTIONS (Details) - Summary of Stock Option Activity - USD ($) |
6 Months Ended | |
---|---|---|
Jun. 30, 2016 |
Dec. 31, 2015 |
|
Summary of Stock Option Activity [Abstract] | ||
Options (in Shares) | 292,100 | 242,100 |
Weighted average exercise price | $ 4.77 | $ 4.99 |
Aggregate Intrinsic Value (in Dollars) | $ 0 | $ 0 |
Weighted Average Remaining Contractual Life | 6 years 335 days | |
Options vested and exercisable at period end (in Shares) | 176,553 | |
Options vested and exercisable at period end | $ 5.52 | |
Options vested and exercisable at period end | 5 years 189 days | |
Weighted average grant-date fair value of options granted during the period | $ 1.63 | |
Granted (in Shares) | 60,000 | |
Granted | $ 1.68 | |
Exercised | $ 0.00 | |
Exercised (in Shares) | 0 | |
Forfeited/ Cancelled (in Shares) | (10,000) | |
Forfeited/ Cancelled | $ 5.00 |
NOTE 19 - EMPLOYEE OPTIONS (Details) - Summary of Non-vested Shares |
6 Months Ended |
---|---|
Jun. 30, 2016
$ / shares
shares
| |
Summary of Non-vested Shares [Abstract] | |
Non-vested at January 1, 2016 | shares | 66.969 |
Non-vested at January 1, 2016 | $ / shares | $ 6.34 |
Granted | shares | 60,000 |
Granted | $ / shares | $ 1.68 |
Vested | shares | (11,422) |
Vested | $ / shares | $ 12.40 |
Non-vested | shares | 115,547 |
Non-vested | $ / shares | $ 3.30 |
NOTE 20 - COMMITMENTS AND CONTINGENCIES (Details) - USD ($) |
6 Months Ended | |
---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
|
NOTE 20 - COMMITMENTS AND CONTINGENCIES (Details) [Line Items] | ||
Capital contributed through forfeiture of conractual compensation | $ 25,000 | $ 39,500 |
Board of Directors Chairman [Member] | ||
NOTE 20 - COMMITMENTS AND CONTINGENCIES (Details) [Line Items] | ||
Capital contributed through forfeiture of conractual compensation | $ 20,000 | $ 5,000 |
NOTE 20 - COMMITMENTS AND CONTINGENCIES (Details) - Schedule of Future Minimum Rental Payments for Operating Leases |
Jun. 30, 2016
USD ($)
|
---|---|
Schedule of Future Minimum Rental Payments for Operating Leases [Abstract] | |
Debt Obligations | $ 726,109 |
Debt Obligations | 340,424 |
Debt Obligations | 377,384 |
Debt Obligations | 8,301 |
Capital Lease Obligations | 185,022 |
Capital Lease Obligations | 23,427 |
Capital Lease Obligations | 96,667 |
Capital Lease Obligations | 64,928 |
Operating Lease Obligations | 610,989 |
Operating Lease Obligations | 94,688 |
Operating Lease Obligations | 309,119 |
Operating Lease Obligations | 207,182 |
Operating Lease Obligations | 0 |
Total Obligations | 1,522,120 |
Total Obligations | 458,539 |
Total Obligations | 783,170 |
Total Obligations | $ 280,411 |
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