Document And Entity Information
Document And Entity Information - shares | 6 Months Ended | |
Jun. 30, 2015 | Aug. 13, 2015 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | BIO KEY INTERNATIONAL INC | |
Document Type | 10-Q | |
Current Fiscal Year End Date | --12-31 | |
Entity Common Stock, Shares Outstanding | 66,001,260 | |
Amendment Flag | false | |
Entity Central Index Key | 1,019,034 | |
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, 2015 | |
Document Fiscal Year Focus | 2,015 | |
Document Fiscal Period Focus | Q2 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Current Period Unaudited) - USD ($) | Jun. 30, 2015 | Dec. 31, 2014 |
ASSETS | ||
Cash and cash equivalents | $ 282,376 | $ 843,632 |
Accounts receivable, net of allowance for doubtful accounts of $20,526 at June 30, 2015 and December 31, 2014 | 133,985 | 625,341 |
Due from factor | 1,542,184 | 76,657 |
Inventory | 412,569 | 11,825 |
Prepaid expenses and other | 74,220 | 236,429 |
Total current assets | 2,445,334 | 1,793,884 |
Equipment and leasehold improvements, net | 84,317 | 103,509 |
Deposits and other assets | 8,712 | 8,712 |
Intangible assets—less accumulated amortization | 154,541 | 161,344 |
Total non-current assets | 247,570 | 273,565 |
TOTAL ASSETS | 2,692,904 | 2,067,449 |
LIABILITIES | ||
Accounts payable | 869,114 | 347,311 |
Accrued liabilities | 436,293 | 488,617 |
Deferred revenue | 601,751 | 429,233 |
Warrant liabilities | 28,974 | 43,227 |
Total current liabilities | 1,936,132 | 1,308,388 |
TOTAL LIABILITIES | 1,936,132 | 1,308,388 |
STOCKHOLDERS’ EQUITY | ||
Common stock — authorized, 170,000,000 shares; issued and outstanding; 66,001,260 of $.0001 par value at June 30, 2015 and December 31, 2014 | 6,600 | 6,600 |
Additional paid-in capital | 57,675,273 | 57,506,605 |
Accumulated deficit | (56,925,101) | (56,754,144) |
TOTAL STOCKHOLDERS’ EQUITY | 756,772 | 759,061 |
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ 2,692,904 | $ 2,067,449 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - USD ($) | Jun. 30, 2015 | Dec. 31, 2014 |
Allowance for doubtful accounts (in Dollars) | $ 20,526 | $ 20,526 |
Common stock, shares authorized | 170,000,000 | 170,000,000 |
Common stock, shares issued | 66,001,260 | 66,001,260 |
Common stock, shares outstanding | 66,001,260 | 66,001,260 |
Common stock, par value (in Dollars per share) | $ 0.0001 | $ 0.0001 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Revenues | ||||
Services | $ 255,269 | $ 281,711 | $ 505,622 | $ 530,942 |
License fees and other | 2,017,535 | 121,078 | 2,416,008 | 1,239,369 |
2,272,804 | 402,789 | 2,921,630 | 1,770,311 | |
Costs and other expenses | ||||
Cost of services | 56,905 | 113,105 | 123,968 | 152,280 |
Cost of license fees and other | 88,489 | 48,146 | 160,782 | 126,195 |
145,394 | 161,251 | 284,750 | 278,475 | |
Gross Profit | 2,127,410 | 241,538 | 2,636,880 | 1,491,836 |
Operating Expenses | ||||
Selling, general and administrative | 979,861 | 895,147 | 2,020,542 | 1,752,143 |
Research, development and engineering | 393,999 | 470,888 | 800,640 | 957,545 |
1,373,860 | 1,366,035 | 2,821,182 | 2,709,688 | |
Operating profit (loss) | 753,550 | (1,124,497) | (184,302) | (1,217,852) |
Other income (expenses) | ||||
Interest income | 2 | 2 | 4 | 3 |
Gain (loss) on derivative liabilities | (406) | 98,209 | 14,253 | (106,739) |
Income taxes | (912) | (912) | ||
Total other income (expenses) | (404) | 98,211 | 13,345 | (107,648) |
Net profit (loss) | $ 753,146 | $ (1,026,286) | $ (170,957) | $ (1,325,500) |
Basic and Diluted Earnings (Loss) per Common Share (in Dollars per share) | $ 0.01 | $ (0.02) | $ 0 | $ (0.02) |
Weighted Average Shares Outstanding: | ||||
Basic and diluted (in Shares) | 66,001,260 | 58,001,934 | 66,001,260 | 57,970,309 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 6 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
CASH FLOW FROM OPERATING ACTIVITIES: | ||
Net loss | $ (170,957) | $ (1,325,500) |
Adjustments to reconcile net loss to cash used in operating activities: | ||
Depreciation | 21,270 | 20,016 |
Amortization | ||
Intangible assets | 6,803 | 6,803 |
Loss (gain) on derivative liabilities | (14,253) | 106,739 |
Share-based and warrant compensation | 222,247 | 132,218 |
Exercise of stock options | 14,651 | |
Change in assets and liabilities: | ||
Accounts receivable trade | 491,356 | (100,794) |
Due from factor, net | (1,465,527) | (18,678) |
Inventory | (400,744) | (12,873) |
Prepaid expenses and other | 162,209 | (709) |
Accounts payable | 521,803 | (188,850) |
Accrued liabilities | (52,324) | 39,324 |
Deferred revenue | 172,518 | (22,436) |
Net cash used for operating activities | (505,599) | (1,350,089) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Capital expenditures | (2,078) | (5,501) |
Net cash used for investing activities | (2,078) | (5,501) |
CASH FLOW FROM FINANCING ACTIVITIES: | ||
Repurchase of outstanding warrants | (150,000) | |
Costs to issue common stock | (53,579) | |
Net cash used for financing activities | (53,579) | (150,000) |
NET DECREASE IN CASH AND CASH EQUIVALENTS | (561,256) | (1,505,590) |
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | 843,632 | 2,023,349 |
CASH AND CASH EQUIVALENTS, END OF PERIOD | $ 282,376 | $ 517,759 |
Note 1 - Nature of Business and
Note 1 - Nature of Business and Basis of Presentation | 6 Months Ended |
Jun. 30, 2015 | |
Disclosure Text Block [Abstract] | |
Basis of Accounting [Text Block] | 1. NATURE OF BUSINESS AND BASIS OF PRESENTATION Nature of Business BIO-key International, Inc. was founded in 1993 as a fingerprint biometric technology company. Biometric technology is the science of analyzing specific human characteristics which are unique to each individual in order to identify a specific person from a broader population. We develop and market advanced fingerprint biometric identification and identity verification technologies, cryptographic authentication-transaction security technologies, as well as related identity management and credentialing software solutions. We sell our products and provide services primarily to commercial entities within highly regulated industries, like healthcare and financial services and the broader corporate enterprise. Basis of Presentation The accompanying unaudited interim condensed consolidated financial statements include the accounts of BIO-key International, Inc. and its wholly-owned subsidiary (collectively, the “Company”) and are stated in conformity with accounting principles generally accepted in the United States of America ("GAAP"), pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). The operating results for interim periods are not necessarily indicative of results that may be expected for any other interim period or for the full year. Pursuant to such rules and regulations, certain financial information and footnote disclosures normally included in the financial statements have been condensed or omitted. Significant intercompany accounts and transactions have been eliminated in consolidation. In the opinion of management, the accompanying unaudited interim consolidated financial statements contain all necessary adjustments, consisting only of those of a recurring nature, and disclosures to present fairly the Company’s financial position and the results of its operations and cash flows for the periods presented. The balance sheet at December 31, 2014 was derived from the audited financial statements, but does not include all of the disclosures required by accounting principles generally accepted in the United States of America. These unaudited interim condensed consolidated financial statements should be read in conjunction with the financial statements and the related notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014 (the “Form 10- K”), filed with the SEC on March 31, 2015. Recently Issued Accounting Pronouncements In January 2015, ASU No. 2015-01, “Income Statement – Extraordinary and Unusual Items (Subtopic 225-20): Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary items” (“ASU 2015-01”) was issued. ASU 2015-01 eliminates from GAAP the concept of extraordinary items. ASU 2015-01 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. A reporting entity may apply the amendments prospectively. A reporting entity also may apply the amendments retrospectively to all prior periods presented in the financial statements. Early adoption is permitted provided that the guidance is applied from the beginning of the fiscal year of adoption. The Company is currently evaluating the effects of adopting ASU 2014-15 on its consolidated financial statements but the adoption is not expected to have a significant impact. In April 2015, the FASB issued ASU 2015-03, “Interest-Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs.” ASU 2015-03 requires debt issuance costs related to a debt liability measured at amortized cost to be reported in the balance sheet as a direct deduction from the face amount of the debt liability. ASU 2015-03 is effective for interim and annual periods beginning January 1, 2016 with early adoption permitted, and is applied on a retrospective basis. The adoption of ASU 2015-03 is not expected to materially impact the Company’s consolidated financial statements. In July 2015 the FASB issued ASU No. 2015-11, "Inventory (Topic 330): Simplifying the Measurement of Inventory" ("ASU 2015-11"). The amendments in ASU 2015-11 clarifies the measurement of inventoty to be the lower of cost or realizable value and would only apply to inventory valued using the FIFO or avergae costing methods. ASU 2015-11 is effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. The reporting entity should apply the amendments prospectively with earlier application permitted as of the beginning as of the beginning of an interim or annual reporting period. The Company is currently evaluating the effects of adopting ASU 2015-11 on its consolidated financial statements. Management does not believe that any other recently issued, but not yet effective, accounting standard if currently adopted would have a material effect on the accompanying consolidated financial statements. |
Note 2 - Going Concern
Note 2 - Going Concern | 6 Months Ended |
Jun. 30, 2015 | |
Going Concern [Abstract] | |
Going Concern [Text Block] | 2. GOING CONCERN The Company has incurred significant losses to date and at June 30, 2015, had an accumulated deficit of approximately $57 million. In addition, broad commercial acceptance of the Company’s technology is critical to the Company’s success and ability to generate future revenues. At June 30, 2015, the Company’s total cash and cash equivalents were approximately $282,000, as compared to approximately $844,000 at December 31, 2014. The Company has financed itself in the past through access to the capital markets by issuing secured and convertible debt securities, convertible preferred stock, common stock, and through factoring receivables. The Company estimates that it currently requires approximately $460,000 per month to conduct operations, a monthly amount that it has been unable to achieve consistently through revenue generation. If the Company is unable to generate sufficient revenue to meet its goals, it will need to obtain additional third-party financing to (i) conduct the sales, marketing and technical support necessary to execute its plan to substantially grow operations, increase revenue, and serve a significant customer base; and (ii) provide working capital. No assurance can be given that any form of additional financing will be available on terms acceptable to the Company, that adequate financing will be obtained by the Company, in order to meet its needs, or that such financing would not be dilutive to existing shareholders. The accompanying financial statements have been prepared in conformity with GAAP, which contemplate continuation of the Company as a going concern, and assumes continuity of operations, realization of assets and the satisfaction of liabilities and commitments in the normal course of business. The matters described in the preceding paragraphs raise substantial doubt about the Company’s ability to continue as a going concern. Recoverability of a major portion of the recorded asset amounts shown in the accompanying balance sheet is dependent upon the Company’s ability to meet its financing requirements on a continuing basis, and become profitable in its future operations. The accompanying consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded assets or the amounts and classification of liabilities that might be necessary should the Company be unable to continue in existence. |
Note 3 - Share Based Compensati
Note 3 - Share Based Compensation | 6 Months Ended |
Jun. 30, 2015 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Disclosure of Compensation Related Costs, Share-based Payments [Text Block] | 3. SHARE BASED COMPENSATION The following table presents share-based compensation expenses included in the Company’s unaudited condensed interim consolidated statements of operations: Three Months ended June 30, Three Months ended June 30, 2015 2014 Selling, general and administrative $ 28,760 $ 18,985 Research, development and engineering 5,611 27,460 $ 34,371 $ 46,445 Six Months ended June 30, Six Months ended June 30, 2015 2014 Selling, general and administrative $ 162,218 $ 93,826 Research, development and engineering 34,372 38,392 $ 196,590 $ 132,218 |
Note 4 - Factoring
Note 4 - Factoring | 6 Months Ended |
Jun. 30, 2015 | |
Factoring [Abstract] | |
Factoring [Text Block] | 4. FACTORING Due from factor consisted of the following as of: June 30, December 31, 2015 2014 Original invoice value $ 2,184,290 $ 306,625 Factored amount (315,739 ) (229,968 ) Due to factor (326,367 ) - Due from factor $ 1,542,184 $ 76,657 As of December 2011, the Company entered into a 24 month accounts receivable factoring arrangement with a financial institution (the “Factor”). Pursuant to the terms of the arrangement, the Company, from time to time, sells to the Factor certain of its accounts receivable balances on a non-recourse basis for credit approved accounts. The Factor remits 35% for foreign and 75% for domestic of the accounts receivable balance to the Company (the “Advance Amount”), with the remaining balance, less fees to be forwarded to the Company once the Factor collects the full accounts receivable balance from the customer. Factoring fees range from 2.75% to 21% of the face value of the invoice factored, and are determined by the number of days required for collection of the invoice. In April 2012, the terms were updated from monthly to quarterly, and the 24-month arrangement was extended to August 1, 2014. In July of 2014, the arrangement was extended to July 31, 2016. |
Note 5 - Inventory
Note 5 - Inventory | 6 Months Ended |
Jun. 30, 2015 | |
Inventory Disclosure [Abstract] | |
Inventory Disclosure [Text Block] | 5. INVENTORY Inventory is stated at the lower of cost, determined on a first in, first out basis, or market, and consists primarily of fabricated assemblies and finished goods. Inventory is comprised of the following as of: June 30, December 31, 2015 2014 Finished goods $ 40,588 $ 11,825 Fabricated assemblies 371,981 - Total inventory $ 412,569 $ 11,825 |
Note 6 - Earnings (Loss) Per Sh
Note 6 - Earnings (Loss) Per Share Common Stock ("EPS") | 6 Months Ended |
Jun. 30, 2015 | |
Earnings Per Share [Abstract] | |
Earnings Per Share [Text Block] | 6. EARNINGS (LOSS) PER SHARE COMMON STOCK (“EPS”) The Company’s basic EPS is calculated using net income (loss) available to common stockholders and the weighted-average number of shares outstanding during the reporting period. Diluted EPS includes the effect from potential issuance of common stock, such as stock issuable pursuant to the exercise of stock options and warrants and the assumed conversion of convertible notes and preferred stock. The reconciliation of the numerators of the basic and diluted EPS calculations was as follows for both of the following three and six month periods ended June 30: Three Months ended June 30, Six Months ended June 30, 2015 2014 2015 2014 Basic Numerator: Net income (loss) available to common stockholders $ 753,146 $ (1,026,286 ) $ (170,957 ) $ (1,325,500 ) Basic Denominator 66,001,260 58,001,934 66,001,260 57,970,309 Per Share Amount 0.01 (0.02 ) (0.00 ) (0.02 ) The following table sets forth the options and warrants which were excluded from the diluted per share calculation even though the exercise prices were less than the average market price of the common shares because the effect of including these potential shares was antidilutive for the three and six months ended June 30: Three Months ended June 30, Six Months ended June 30, 2015 2014 2015 2014 Stock options - 1,469,162 34,349 1,034,736 Warrants - 771,123 - - Total - 2,240,285 34,349 1,034,736 Items excluded from the diluted per share calculation because the exercise price was greater than the average market price of the common shares: Three Months ended June 30, Six Months ended June 30, 2015 2014 2015 2014 Stock options 3,475,000 205,000 3,087,500 205,000 Warrants 19,622,081 125,000 19,622,081 15,184,565 Total 23,097,081 330,000 22,709,581 15,389,565 |
Note 7 - Stockholders' Equity
Note 7 - Stockholders' Equity | 6 Months Ended |
Jun. 30, 2015 | |
Stockholders' Equity Note [Abstract] | |
Stockholders' Equity Note Disclosure [Text Block] | 7. STOCKHOLDERS’ EQUITY Derivative Liabilities In connection with the issuances of equity instruments or debt, the Company may issue options or warrants to purchase common stock. In certain circumstances, these options or warrants may be classified as liabilities, rather than as equity. In addition, the equity instrument or debt may contain embedded derivative instruments, such as conversion options or listing requirements, which in certain circumstances may be required to be bifurcated from the associated host instrument and accounted for separately as a derivative liability instrument. The Company accounts for derivative liability instruments under the provisions of FASB ASC 815, “Derivatives and Hedging.” Securities Purchase Agreements dated October 25, 2013 and November 8, 2013 Pursuant to a series of Private Investors Securities Purchase Agreements (the “PI SPA”), on October 25, 2013 and November 8, 2013, the Company issued to certain private investors an aggregate of 12,323,668 units consisting of 12,323,668 post split shares of common stock (the “Shares”) and warrants to purchase an additional 12,323,668 post-split shares of common stock (the “Warrants”) for an aggregate purchase price of $3,697,100. The warrants are immediately exercisable at an exercise price of $0.50 per post-split share, have a term of three years, and were exercisable on a cashless basis if at any time following the nine month anniversary of the issuance date, there is not an effective registration statement covering the public resale of the shares of Common Stock underlying the warrants. The Company filed a registration statement on November 22, 2013 and such registration was declared effective on December 31, 2013. In connection with the share issuances described above, and pursuant to a placement agency letter agreement, the Company paid the placement agent cash commissions equal to 8% of the gross proceeds of the offering, reimbursed the placement agent for its reasonable out of pocket expenses, and issued to the placement agent warrants (the “Placement Agent Warrants”) to purchase an aggregate of 985,893 post split shares of common stock. The Placement Agent Warrants have substantially the same terms as the warrants issued to the investors, except the Placement Agent Warrants are immediately exercisable on a cashless basis. The cashless exercise features contained in the warrants are considered to be derivatives and the Company recorded warrant liabilities on the consolidated balance sheet. The Company initially recorded the warrant liabilities equal to their estimated fair value of $325,891. Such amount was also recorded as a reduction of additional paid-in capital. The Company is required to mark-to-market the warrant liabilities at the end of each reporting period. For the quarter ended June 30, 2015, the Company recorded a loss on the change in fair value of the cashless exercise features of $406. For the six months ended June 30, 2015, the Company recorded a net gain on the change in fair value of the cashless exercise feature of $14,253. As of June 30, 2015, the fair value of the cashless exercise features was $28,974. The fair value of the cashless exercise features was $43,227 as of December 31, 2014. Securities Purchase Agreement dated November 13, 2014 Pursuant to a Securities Purchase Agreement, dated November 13, 2014, by and between the Company and a number of private and institutional investors (the “November 2014 Private Investor SPA”), the Company issued to certain private investors 7,974,999 post split shares of common stock and warrants to purchase an additional 11,962,501 post split shares of common stock for aggregate gross proceeds of $1,595,000. In addition, for each share purchased in this offering, the investors surrendered to the Company for cancellation a warrant to acquire one share of our common stock which we previously issued in a private placement transaction in November 2013. This resulted in the cancellation of warrants to purchase an aggregate of 7,974,999 post split shares of common stock. The common stock has a purchase price reset feature. If at any time prior to the two year anniversary of the effective date of the registration statement covering the public resale of such shares, the Company sells or issues shares of common stock or securities that are convertible into common stock at a price lower than $0.20 per share, the Company will be required to issue additional shares of common stock for no additional consideration. Based on an evaluation as discussed in FASB ASC 815-15, “Embedded Derivatives” and FASB ASC 815-40-15, “Contracts in Entity’s Own Equity - Scope and Scope Exceptions,” the Company determined that the purchase price reset feature in the common stock issued was not considered indexed to its own stock because neither the occurrence of a sale of equity securities by the issuer at market nor the issuance of another equity contract with a lower strike price is an input to the fair value of a fixed-for-fixed option or forward on equity shares. As such, the purchase price reset feature should be bifurcated from the common stock and accounted for as a derivative liability. The Company valued the purchase price reset feature using a Monte Carlo simulation at the date of issuance, December 31, 2014, and June 30, 2015, and determined that the purchase price reset feature had no value as the calculated price of the common stock was not below $0.20 per share. The warrants have a term of five years and an exercise price of $0.30 per post-split share. Warrants to purchase 5,981,251 post-split shares of common stock were immediately exercisable. The remaining warrants to purchase 5,981,250 post-split shares of common stock became exercisable on the completion of a 1 - for - 2 reverse split of the Company's common stock in February 2015. The warrants have customary anti-dilution protections including a “full ratchet” anti-dilution adjustment provision which are triggered in the event the Company sells or grants any additional shares of common stock, options ,warrants or other securities that are convertible into common stock at a price lower than $0.30 per share, The anti-dilution adjustment provision is not triggered by certain “exempt issuances” which among other issuances, includes the issuance of shares of common stock, options or other securities to officers, employees, directors, consultants or service providers. The warrants are exercisable on a cashless basis if at any time there is no effective registration statement covering the resale of the shares of common stock underlying the warrants. See below. Based on an evaluation as discussed in FASB ASC 815-15, “Embedded Derivatives” and FASB ASC 815-40-15, “Contracts in Entity’s Own Equity - Scope and Scope Exceptions,” the Company determined that the full ratchet anti-dilution feature in the warrants issued were not considered indexed to its own stock because neither the occurrence of a sale of equity securities by the issuer at market nor the issuance of another equity contract with a lower strike price is an input to the fair value of a fixed-for-fixed option or forward on equity shares. As such, the full ratchet anti-dilution feature should be bifurcated from the warrants and accounted for as a derivative liability. The Company did not value the derivative liability. One of the key determinants of the Company’s decision to not value the derivative liability was the high likelihood that a future financing would not occur that would trigger the down round feature. Whether a future equity financing would occur would be determined by the cash needs of the Company and management’s willingness to trigger the down round feature. The Company’s reasons were as follows: 1. The Company’s cash position. 2. The stock price of the Company’s common stock. Under GAAP, the Company is required to mark-to-market the derivative liability at the end of each reporting period. The Company did not value the derivative liability at the date of issuance, December 31, 2014 or June 30, 2015. At such dates, the Company determined that it was highly unlikely that an equity financing would occur. Such conclusion was based upon the discussion noted above. The Company filed a registration statement on Form S-1 with the SEC to register the public resale of 13,956,250 of the shares of common stock issued in the November 2014 Private Investor SPA. The registration statement was declared effective on January 29, 2015. Post reverse split, the Company filed a registration statement on Form S-1 with the SEC to register the balance of the shares of common stock issued under the November 2014 Private Investor SPA which was declared effective on May 4, 2015. Warrants On March 9, 2015, the Company issued a warrant to purchase 575,000 shares of common stock to an independent contractor which vests 25% every three months and is exercisable at a strike price of $0.21 per share through March 8, 2020. Share based expense related to the value of the stock warrants is recorded over the requisite service period, which is generally the vesting period for each tranche. Stock warrants issued by the Company are valued using the Black-Scholes option-pricing model. For the three and six months ended June 30, 2015, the Company recorded an expense of $25,657 related to the stock warrants. Issuances of Stock Options During the three and six months ended June 30, 2015, the Company granted 0 and 75,000 stock options to new employees. The options are exercisable for a term of seven years and vest in equal installments over a three-year period commencing on the date of grant. The options are exercisable at $0.20 per share. The fair value of the options was estimated on the date of grant at $12,047 using the Black-Scholes option-pricing model with the following assumptions: risk free interest rate – 1.5%, expected life of options in years – 5.5, expected dividends – 0, volatility of stock price – 118%. |
Note 8 - Segment Information
Note 8 - Segment Information | 6 Months Ended |
Jun. 30, 2015 | |
Segment Reporting [Abstract] | |
Segment Reporting Disclosure [Text Block] | 8. SEGMENT INFORMATION The Company has determined that its continuing operations are one discrete segment consisting of biometric products. Geographically, North American sales accounted for approximately 19% and 62% of the Company’s total sales for the three months ended June 30, 2015 and 2014, respectively, and were approximately 26% and 29% of the Company’s total sales for the six months ended June 30, 2015 and 2014, respectively. |
Note 9 - Fair Values of Financi
Note 9 - Fair Values of Financial Instruments | 6 Months Ended |
Jun. 30, 2015 | |
Fair Value Disclosures [Abstract] | |
Fair Value Disclosures [Text Block] | 9. FAIR VALUES OF FINANCIAL INSTRUMENTS Cash and cash equivalents, accounts receivable, accounts payable, accrued liabilities, and notes payable, are carried at, or approximate, fair value because of their short-term nature. The fair value of the warrant liabilities were measured using the following assumptions: Risk-free interest rate 0.40 % – 0.42 % Expected term 1.32 – 1.36 Expected dividends 0 Volatility of stock price 78.5 % – 78.9 % The warrant liabilities are considered Level 3 liabilities on the fair value hierarchy as the determination of fair value includes various assumptions about future activities and the Company’s stock prices and utilizes historical volatility as inputs. Warrant issued under PI SPA Fair value at January 1, 2015 $ 43,227 Gain on derivative (14,253 ) Balance, June 30, 2015 $ 28,974 |
Note 10 - Major Customers and A
Note 10 - Major Customers and Accounts Receivables | 6 Months Ended |
Jun. 30, 2015 | |
Risks and Uncertainties [Abstract] | |
Concentration Risk Disclosure [Text Block] | 10. MAJOR CUSTOMERS AND ACCOUNTS RECEIVABLE For the three months ended June 30, 2015 and 2014, one customer accounted for 81%, and two customers accounted for 55% of revenue, respectively. For the six months ended June 30, 2015 and 2014, one customer accounted for 63%, and two customers accounted for 73% of revenue, respectively. At June 30, 2015, four customers accounted for 52% of accounts receivable. At December 31, 2014, one customer accounted for 62% of accounts receivable. |
Note 11 - Contingency
Note 11 - Contingency | 6 Months Ended |
Jun. 30, 2015 | |
Disclosure Text Block Supplement [Abstract] | |
Commitments Disclosure [Text Block] | 11. CONTINGENCY On or about March 13, 2014, LifeSouth Community Blood Centers, Inc. filed a lawsuit against us the Company in the Superior Court of Monmouth County, New Jersey (MON-L-1042-14) alleging a breach of a license agreement and seeking return of all amounts paid under the license in the amount of $718,500. The Company has denied all claims and asserted a counterclaim against LifeSouth for non-payment of support and maintenance service fees. Discovery has commenced and is proceeding. The Company has filed a motion seeking summary judgment in its favor with respect to all claims. |
Note 12 - Subsequent Events
Note 12 - Subsequent Events | 6 Months Ended |
Jun. 30, 2015 | |
Subsequent Events [Abstract] | |
Subsequent Events [Text Block] | 12. SUBSEQUENT EVENTS The Company has reviewed subsequent events through the date of filing. |
Note 3 - Share Based Compensa18
Note 3 - Share Based Compensation (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Table Text Block] | Three Months ended June 30, Three Months ended June 30, 2015 2014 Selling, general and administrative $ 28,760 $ 18,985 Research, development and engineering 5,611 27,460 $ 34,371 $ 46,445 Six Months ended June 30, Six Months ended June 30, 2015 2014 Selling, general and administrative $ 162,218 $ 93,826 Research, development and engineering 34,372 38,392 $ 196,590 $ 132,218 |
Note 4 - Factoring (Tables)
Note 4 - Factoring (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Factored Accounts Receivable [Member] | |
Note 4 - Factoring (Tables) [Line Items] | |
Schedule of Accounts, Notes, Loans and Financing Receivable [Table Text Block] | June 30, December 31, 2015 2014 Original invoice value $ 2,184,290 $ 306,625 Factored amount (315,739 ) (229,968 ) Due to factor (326,367 ) - Due from factor $ 1,542,184 $ 76,657 |
Note 5 - Inventory (Tables)
Note 5 - Inventory (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventory, Current [Table Text Block] | June 30, December 31, 2015 2014 Finished goods $ 40,588 $ 11,825 Fabricated assemblies 371,981 - Total inventory $ 412,569 $ 11,825 |
Note 6 - Earnings (Loss) Per 21
Note 6 - Earnings (Loss) Per Share Common Stock ("EPS") (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Share, Basic and Diluted [Table Text Block] | Three Months ended June 30, Six Months ended June 30, 2015 2014 2015 2014 Basic Numerator: Net income (loss) available to common stockholders $ 753,146 $ (1,026,286 ) $ (170,957 ) $ (1,325,500 ) Basic Denominator 66,001,260 58,001,934 66,001,260 57,970,309 Per Share Amount 0.01 (0.02 ) (0.00 ) (0.02 ) |
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share [Table Text Block] | Three Months ended June 30, Six Months ended June 30, 2015 2014 2015 2014 Stock options - 1,469,162 34,349 1,034,736 Warrants - 771,123 - - Total - 2,240,285 34,349 1,034,736 Three Months ended June 30, Six Months ended June 30, 2015 2014 2015 2014 Stock options 3,475,000 205,000 3,087,500 205,000 Warrants 19,622,081 125,000 19,622,081 15,184,565 Total 23,097,081 330,000 22,709,581 15,389,565 |
Note 9 - Fair Values of Finan22
Note 9 - Fair Values of Financial Instruments (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Fair Value Disclosures [Abstract] | |
Fair Value Inputs, Assets, Quantitative Information [Table Text Block] | Risk-free interest rate 0.40 % – 0.42 % Expected term 1.32 – 1.36 Expected dividends 0 Volatility of stock price 78.5 % – 78.9 % |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Table Text Block] | Warrant issued under PI SPA Fair value at January 1, 2015 $ 43,227 Gain on derivative (14,253 ) Balance, June 30, 2015 $ 28,974 |
Note 2 - Going Concern (Details
Note 2 - Going Concern (Details) - USD ($) | 6 Months Ended | |||
Jun. 30, 2015 | Dec. 31, 2014 | Jun. 30, 2014 | Dec. 31, 2013 | |
Going Concern [Abstract] | ||||
Retained Earnings (Accumulated Deficit) | $ (56,925,101) | $ (56,754,144) | ||
Cash and Cash Equivalents, at Carrying Value | 282,376 | $ 843,632 | $ 517,759 | $ 2,023,349 |
Operational Costs | $ 460,000 |
Note 3 - Share Based Compensa24
Note 3 - Share Based Compensation (Details) - Share-based Compensation Expenses for Continuing Operations - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||||
Share-based compensation expenses | $ 34,371 | $ 46,445 | $ 196,590 | $ 132,218 |
Selling, General and Administrative Expenses [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||||
Share-based compensation expenses | 28,760 | 18,985 | 162,218 | 93,826 |
Research and Development Expense [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||||
Share-based compensation expenses | $ 5,611 | $ 27,460 | $ 34,372 | $ 38,392 |
Note 4 - Factoring (Details)
Note 4 - Factoring (Details) - Dec. 31, 2011 | Total |
Note 4 - Factoring (Details) [Line Items] | |
Factoring Arrangement Term | 24 months |
Foreign [Member] | |
Note 4 - Factoring (Details) [Line Items] | |
Percentage of Accounts Receivable Remitted by Factor | 35.00% |
UNITED STATES | |
Note 4 - Factoring (Details) [Line Items] | |
Percentage of Accounts Receivable Remitted by Factor | 75.00% |
Minimum [Member] | |
Note 4 - Factoring (Details) [Line Items] | |
Factoring Fees, Percent | 2.75% |
Maximum [Member] | |
Note 4 - Factoring (Details) [Line Items] | |
Factoring Fees, Percent | 21.00% |
Note 4 - Factoring (Details) -
Note 4 - Factoring (Details) - Due from Factor - USD ($) | Jun. 30, 2015 | Dec. 31, 2014 |
Due from Factor [Abstract] | ||
Original invoice value | $ 2,184,290 | $ 306,625 |
Factored amount | (315,739) | (229,968) |
Due to factor | (326,367) | |
Due from factor | $ 1,542,184 | $ 76,657 |
Note 5 - Inventory (Details) -
Note 5 - Inventory (Details) - Components of Inventory - USD ($) | Jun. 30, 2015 | Dec. 31, 2014 |
Components of Inventory [Abstract] | ||
Finished goods | $ 40,588 | $ 11,825 |
Fabricated assemblies | 371,981 | |
Total inventory | $ 412,569 | $ 11,825 |
Note 6 - Earnings (Loss) Per 28
Note 6 - Earnings (Loss) Per Share Common Stock ("EPS") (Details) - Reconciliation of Numerator of Basic and Diluted EPS Calculations - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Basic Numerator: | ||||
Net income (loss) available to common stockholders | $ 753,146 | $ (1,026,286) | $ (170,957) | $ (1,325,500) |
Basic Denominator | 66,001,260 | 58,001,934 | 66,001,260 | 57,970,309 |
Per Share Amount | $ 0.01 | $ (0.02) | $ 0 | $ (0.02) |
Note 6 - Earnings (Loss) Per 29
Note 6 - Earnings (Loss) Per Share Common Stock ("EPS") (Details) - Securities Excluded from the Diluted Per Share Calculation - shares | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Exercise Price Less Than Market Price of Common Shares [Member] | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Anti-dilutive Securities | 2,240,285 | 34,349 | 1,034,736 | |
Exercise Price Less Than Market Price of Common Shares [Member] | Employee Stock Option [Member] | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Anti-dilutive Securities | 1,469,162 | 34,349 | 1,034,736 | |
Exercise Price Less Than Market Price of Common Shares [Member] | Warrant [Member] | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Anti-dilutive Securities | 771,123 | |||
Exercise Price Greater Than Average Market Price of Common Shares [Member] | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Anti-dilutive Securities | 23,097,081 | 330,000 | 22,709,581 | 15,389,565 |
Exercise Price Greater Than Average Market Price of Common Shares [Member] | Employee Stock Option [Member] | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Anti-dilutive Securities | 3,475,000 | 205,000 | 3,087,500 | 205,000 |
Exercise Price Greater Than Average Market Price of Common Shares [Member] | Warrant [Member] | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Anti-dilutive Securities | 19,622,081 | 125,000 | 19,622,081 | 15,184,565 |
Note 7 - Stockholders' Equity (
Note 7 - Stockholders' Equity (Details) - USD ($) | Mar. 09, 2015 | Nov. 13, 2014 | Nov. 08, 2013 | Feb. 28, 2015 | Jan. 29, 2015 | Jun. 30, 2015 | Jun. 30, 2015 | Dec. 31, 2014 |
Note 7 - Stockholders' Equity (Details) [Line Items] | ||||||||
Stock Issued During Period, Shares, New Issues | 13,956,250 | |||||||
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | 575,000 | |||||||
Class of Warrant or Right, Exercise Price of Warrants or Rights (in Dollars per share) | $ 0.21 | |||||||
Class of Warrant or Right, Vesting Percentage | 25.00% | |||||||
Class of Warrant or Right, Non-employee Compensation Expense (in Dollars) | $ 25,657 | $ 25,657 | ||||||
New Employees [Member] | ||||||||
Note 7 - Stockholders' Equity (Details) [Line Items] | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | 0 | 75,000 | ||||||
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Term | 7 years | |||||||
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period | 3 years | |||||||
Share-based Compensation Arrangements by Share-based Payment Award, Options, Grants in Period, Weighted Average Exercise Price (in Dollars per share) | $ 0.20 | |||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Intrinsic Value (in Dollars) | $ 12,047 | $ 12,047 | ||||||
Fair Value Assumptions, Risk Free Interest Rate | 1.50% | |||||||
Fair Value Assumptions, Expected Term | 5 years 6 months | |||||||
Fair Value Assumptions, Expected Dividend Rate | 0.00% | |||||||
Fair Value Assumptions, Expected Volatility Rate | 118.00% | |||||||
Private Investor SPA [Member] | ||||||||
Note 7 - Stockholders' Equity (Details) [Line Items] | ||||||||
Stock Issued During Period, Shares, New Issues | 12,323,668 | |||||||
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | 11,962,501 | |||||||
Stock Issued During Period, Value, New Issues (in Dollars) | $ 1,595,000 | $ 3,697,100 | ||||||
Class of Warrant or Right, Exercise Price of Warrants or Rights (in Dollars per share) | $ 0.30 | |||||||
Term of Warrant | 5 years | 3 years | ||||||
Warrant Exercisable on Cashless Basis Period Following Anniversary of Issuance Date | 9 months | |||||||
Stock Issued During Period, Shares, Conversion of Convertible Securities | 1 | |||||||
Class of Warrant or Right, Number of Securities Cancelled | 7,974,999 | |||||||
Stock Issued During Period, Shares, Reverse Stock Splits | 2 | |||||||
Common Stock [Member] | Private Investor SPA [Member] | ||||||||
Note 7 - Stockholders' Equity (Details) [Line Items] | ||||||||
Stock Issued During Period, Shares, New Issues | 7,974,999 | 12,323,668 | ||||||
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | 5,981,251 | 5,981,250 | ||||||
Warrant [Member] | ||||||||
Note 7 - Stockholders' Equity (Details) [Line Items] | ||||||||
Class of Warrant or Right, Vesting Period | 3 months | |||||||
Warrant [Member] | Private Investor SPA [Member] | ||||||||
Note 7 - Stockholders' Equity (Details) [Line Items] | ||||||||
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | 12,323,668 | |||||||
Class of Warrant or Right, Exercise Price of Warrants or Rights (in Dollars per share) | $ 0.50 | |||||||
Placement Agent Warrants [Member] | ||||||||
Note 7 - Stockholders' Equity (Details) [Line Items] | ||||||||
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | 985,893 | |||||||
Commissions and Fees, Percent of Gross Proceeds | 8.00% | |||||||
Warrants Issued under PISPA [Member] | ||||||||
Note 7 - Stockholders' Equity (Details) [Line Items] | ||||||||
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Liability, Issuances (in Dollars) | $ 43,227 | |||||||
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Liability, Gain (Loss) Included in Earnings (in Dollars) | $ (14,253) | |||||||
Fair Value, Measurement with Unobservable Inputs Reconciliations, Recurring Basis, Liability Value (in Dollars) | 28,974 | 28,974 | ||||||
Maximum [Member] | ||||||||
Note 7 - Stockholders' Equity (Details) [Line Items] | ||||||||
Debt Instrument, Convertible, Conversion Price (in Dollars per share) | $ 0.20 | |||||||
Fair Value, Inputs, Level 3 [Member] | Warrants Issued under PISPA [Member] | ||||||||
Note 7 - Stockholders' Equity (Details) [Line Items] | ||||||||
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Liability, Issuances (in Dollars) | $ 325,891 | |||||||
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Liability, Gain (Loss) Included in Earnings (in Dollars) | (406) | 14,253 | ||||||
Fair Value, Inputs, Level 3 [Member] | Placement Agent Warrants [Member] | ||||||||
Note 7 - Stockholders' Equity (Details) [Line Items] | ||||||||
Fair Value, Measurement with Unobservable Inputs Reconciliations, Recurring Basis, Liability Value (in Dollars) | $ 28,974 | $ 28,974 | $ 43,227 |
Note 8 - Segment Information (D
Note 8 - Segment Information (Details) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Note 8 - Segment Information (Details) [Line Items] | ||||
Number of Reportable Segments | 1 | |||
Sales Revenue, Net [Member] | Geographic Concentration Risk [Member] | North America [Member] | ||||
Note 8 - Segment Information (Details) [Line Items] | ||||
Concentration Risk, Percentage | 19.00% | 62.00% | 26.00% | 29.00% |
Note 9 - Fair Values of Finan32
Note 9 - Fair Values of Financial Instruments (Details) - Fair Value Measurement of Warrant Liabilities and Derivative Liabilities - 6 months ended Jun. 30, 2015 - Warrant and Derivative Liabilities [Member] | Total |
Fair Value Inputs, Assets, Quantitative Information [Line Items] | |
Expected dividends | 0.00% |
Minimum [Member] | |
Fair Value Inputs, Assets, Quantitative Information [Line Items] | |
Risk-free interest rate | 0.40% |
Expected term | 1 year 116 days |
Volatility of stock price | 78.50% |
Maximum [Member] | |
Fair Value Inputs, Assets, Quantitative Information [Line Items] | |
Risk-free interest rate | 0.42% |
Expected term | 1 year 131 days |
Volatility of stock price | 78.90% |
Note 9 - Fair Values of Finan33
Note 9 - Fair Values of Financial Instruments (Details) - Fair Value Measurements Using Significant Unobservable Inputs - Warrants Issued under PISPA [Member] - USD ($) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2015 | Dec. 31, 2014 | |
Warrant issued under PI SPA | ||
Fair value at January 1, 2015 | $ 43,227 | |
Gain on derivative | $ (14,253) | |
Balance, June 30, 2015 | $ 28,974 |
Note 10 - Major Customers and34
Note 10 - Major Customers and Accounts Receivables (Details) - Customer Concentration Risk [Member] | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | Dec. 31, 2014 | |
Sales Revenue, Goods, Net [Member] | |||||
Note 10 - Major Customers and Accounts Receivables (Details) [Line Items] | |||||
Concentration Risk, Number of Major Customers | 1 | 2 | 1 | 2 | |
Concentration Risk, Percentage | 81.00% | 55.00% | 63.00% | 73.00% | |
Accounts Receivable [Member] | |||||
Note 10 - Major Customers and Accounts Receivables (Details) [Line Items] | |||||
Concentration Risk, Number of Major Customers | 4 | 1 | |||
Concentration Risk, Percentage | 52.00% | 62.00% |
Note 11 - Contingency (Details)
Note 11 - Contingency (Details) | Mar. 13, 2014USD ($) |
LifeSouth [Member] | |
Note 11 - Contingency (Details) [Line Items] | |
Loss Contingency, Damages Sought, Value | $ 718,500 |