MobileSmith (MOSTQ) 10-K 20 Mar 15 2014 FY Annual report Financial data

Document_and_Entity_Informatio

Document and Entity Information (USD $)	12 Months Ended
	Dec. 31, 2014	Mar. 19, 2015	Jun. 30, 2014
Document And Entity Information
Entity Registrant Name	MobileSmith, Inc.
Entity Central Index Key	1113513
Document Type	10-K
Document Period End Date	31-Dec-14
Amendment Flag	FALSE
Current Fiscal Year End Date	-19
Is Entity a Well-known Seasoned Issuer?	No
Is Entity a Voluntary Filer?	No
Is Entity's Reporting Status Current?	Yes
Entity Filer Category	Smaller Reporting Company
Entity Public Float			$11,700,000
Entity Common Stock, Shares Outstanding		19,827,542
Document Fiscal Period Focus	FY
Document Fiscal Year Focus	2014

CONSOLIDATED_BALANCE_SHEETS

CONSOLIDATED BALANCE SHEETS (USD $)	Dec. 31, 2014	Dec. 31, 2013
ASSETS
Cash and Cash Equivalents	$320,286	$223,514
Restricted Cash	125,000	131,757
Trade Accounts Receivable, Net of Allowance for Doubtful Accounts of $22,000 and Zero, Respectively	193,907	48,885
Prepaid Expenses and Other Current Assets	64,973	97,957
Total Current Assets	704,166	502,113
Property and Equipment, Net	116,567	140,383
Capitalized Software, Net	507,217	636,061
Intangible Assets, Net	72,604	138,992
Other Assets	21,312	15,370
Total Other Assets	717,700	930,806
Total Assets	1,421,866	1,432,919
LIABILITIES AND STOCKHOLDERS' DEFICIT
Trade Accounts Payable	94,862	58,901
Accrued Expenses	106,668	267,425
Accrued Interest	501,957	290,560
Capital Lease Obligations and Bank Loans	28,378	5,026,113
Deferred Revenue	579,264	163,868
Total Current Liabilities	1,311,129	5,806,867
Long-term Liabilities:
Bank Loan	5,000,000	0
Convertible Notes Payable, Related Parties, Net of Discount	25,985,330	23,512,836
Convertible Notes Payable, Net of Discount	680,640	730,770
Capital Lease Obligations	114,637	142,986
Deferred Rent	61,010	25,314
Total Long-term Liabilities	31,841,617	24,411,906
Total Liabilities	33,152,746	30,218,773
Commitments and Contingencies (Note 6)
Stockholders' deficit:
Preferred Stock, $0.001 par value, 5,000,000 shares authorized, no shares issued and outstanding at December 31, 2014 and December 31, 2013	0	0
Common Stock, $0.001 par value, 45,000,000 shares authorized, 19,827,542 shares issued and outstanding at December 31, 2014 and December 31, 2013	19,828	19,828
Additional Paid-in Capital	97,453,374	93,059,983
Accumulated Deficit	-129,204,082	-121,865,665
Total Stockholders' Deficit	-31,730,880	-28,785,854
Total Liabilities and Stockholders' Deficit	$1,421,866	$1,432,919

CONSOLIDATED_BALANCE_SHEETS_Pa

CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)	Dec. 31, 2014	Dec. 31, 2013
Stockholders' equity:
Preferred stock, par value	$0.00	$0.00
Preferred stock, authorized	5,000,000	5,000,000
Preferred stock, issued	0	0
Preferred stock, outstanding	0	0
Common stock, par value	$0.00	$0.00
Common stock, authorized	45,000,000	45,000,000
Common stock, issued	19,827,542	19,827,542
Common stock, outstanding	19,827,542	19,827,542

CONSOLIDATED_STATEMENTS_OF_OPE

CONSOLIDATED STATEMENTS OF OPERATIONS (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
REVENUES:
Subscription and Support	$819,626	$339,039
Professional Services and Other	59,460	0
Total revenues	879,086	339,039
COST OF REVENUES
Subscription and Support	456,382	428,253
Professional Services and Other	19,104	0
Total Cost of Revenue	475,486	428,253
GROSS PROFIT (LOSS)	403,600	-89,214
OPERATING EXPENSES:
Sales and Marketing	962,123	892,679
Research and Development	1,167,263	951,653
General and Administrative	1,354,449	1,631,818
Impairment of Long Lived Assets, Net	66,186	137,903
Total Operating Expenses	3,550,021	3,614,053
LOSS FROM OPERATIONS	-3,146,421	-3,703,267
OTHER INCOME (EXPENSE):
Other Income	6,482	60,519
Interest expense, net	-4,418,468	-2,299,447
Gain (Loss) on Debt Extinguishment	50,129	-21,793,055
Gain on Reversal of a Liability	169,861	125,358
Change in market value of settlement related financial instrument	0	147,500
Total other expense	-4,191,996	-23,759,125
LOSS FROM CONTINUING OPERATIONS	-7,338,417	-27,462,392
Income (loss) from Discontinued Operations	0	-52,154
Impairment of Assets of Discontinued Operations	0	-14,654
NET LOSS	($7,338,417)	($27,529,200)
NET LOSS PER COMMON SHARE:
Basic and fully diluted from continuing operations	($0.37)	($1.50)
Basic and fully diluted from discontinued operations	$0	$0
WEIGHTED-AVERAGE NUMBER OF SHARES USED IN COMPUTING NET LOSS PER COMMON SHARE:
Basic and fully diluted	19,827,542	18,356,639

CONSOLIDATED_STATEMENTS_OF_CAS

CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss	($7,338,417)	($27,529,200)
Adjustments to Reconcile Net Loss to Net Cash Used in Operating Activities:
Depreciation and Amortization	164,252	153,966
Bad Debt Expense	22,000	0
Amortization of Debt Discount	1,899,060	208,680
Share-based Compensation	76,825	62,988
Impairment of Long Lived Assets	66,186	156,531
Loss (gain) On Debt Extinguishment	-50,129	21,793,055
Change in Fair Value of Financial Instrument	0	-147,500
Changes in assets and liabilities:
Accounts Receivable	-167,022	-12,835
Prepaid Expenses and Other Assets	27,042	2,783
Accounts Payable	35,961	-158,273
Deferred Revenue	415,396	74,894
Accrued and Other Expenses	86,336	212,959
Net Cash Used in Operating Activities	-4,762,510	-5,181,952
CASH FLOWS FROM INVESTING ACTIVITIES:
Payments to Acquire Property, Plant and Equipment	-11,391	-83,142
Payments to Acquire Intangible Assets	0	-24,440
Investment in Internally Developed Software	0	-164,797
Net cash used in investing activities	-11,391	-272,379
CASH FLOWS FROM FINANCING ACTIVITIES:
Restricted cash used to pay interest expense	131,757	202,233
Deposit of cash to restricted account	-125,000	-202,887
Repayment of Bank Loan	-5,000,000	0
Proceeds from Bank Loan	5,000,000	0
Proceeds from Issuance of Long Term Debt	4,890,000	5,665,000
Repayments of debt borrowings	-26,084	-44,959
Net cash provided by financing activities	4,870,673	5,619,387
NET INCREASE IN CASH AND CASH EQUIVALENTS	96,772	165,056
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD	223,514	58,458
CASH AND CASH EQUIVALENTS, END OF PERIOD	320,286	223,514
Supplemental disclosures of cash flow information:
Cash paid during the period for: Interest	2,249,503	2,021,735
Financed Purchase of Office Furniture	0	40,000
The Company Recorded Debt Discount Associated with Beneficial Conversion Feature	4,316,566	2,130,074
The Company Issued 1,475,000 of Common Shares to Settle the Financial Liability	$0	$1,917,500

Statements_of_Stockholders_Def

Statements of Stockholders Deficit (USD $)	Common Stock	Additional Paid-In Capital	Retained Earnings / Accumulated Deficit	Total
Beginning Balance, amount at Dec. 31, 2012	$18,353	$67,157,841	($94,336,465)	($27,160,271)
Beginning Balance, shares at Dec. 31, 2012	18,352,542
Equity-based compensation		62,988		62,988
Beneficial Conversion Feature Recorded as a Result of Issuance of June 27, 2013 Debt Modification and Subsequent Issuance of Convertible Debt		23,923,129		23,923,129
Issuance of Shares Related to Class Action Settlement, shares	1,475,000
Issuance of Shares Related to Class Action Settlement	1,475	1,916,025		1,917,500
Net loss			-27,529,200	-27,529,200
Ending Balance, amount at Dec. 31, 2013	19,828	93,059,983	-121,865,665	-28,785,854
Ending Balance, shares at Dec. 31, 2013	19,827,542
Equity-based compensation		76,825		76,825
Beneficial Conversion Feature Recorded as a Result of Issuance of Convertible Debt		2,695,714		2,695,714
Non-cash Capital Contribution from Related Parties from the Extinguishment of Related Party Debt Resulting from May 12, 2014 Debt Modification		1,620,852		1,620,852
Net loss			-7,338,417	-7,338,417
Ending Balance, amount at Dec. 31, 2014	$19,828	$97,453,374	($129,204,082)	($31,730,880)
Ending Balance, shares at Dec. 31, 2014	19,827,542

1_SUMMARY_OF_BUSINESS_AND_DESC

1. SUMMARY OF BUSINESS AND DESCRIPTION OF GOING CONCERN	12 Months Ended
	Dec. 31, 2014
Summary Of Business And Description Of Going Concern
1. SUMMARY OF BUSINESS AND DESCRIPTION OF GOING CONCERN	Description of Business and Going Concern
	MobileSmith, Inc. (referred to herein as the “Company,” “us,” “we,” or “our”) was incorporated as Smart Online, Inc. in the State of Delaware in 1993. The Company changed its name to MobileSmith, Inc. effective July 1, 2013. The Company develops and markets software products and services tailored to users of mobile devices. The Company’s flagship product is the MobileSmith® Platform (the “Platform”). The Platform is an innovative app development platform that enables organizations to rapidly create, deploy, and manage custom, native smartphone and tablet apps deliverable across iOS and Android mobile platforms.
	These consolidated financial statements include accounts of the Company and its wholly-owned subsidiary, which was created to explore the concept of a consumer targeted mobile app development platform.  From time to time, the Company may create additional wholly-owned subsidiaries in order to test various new services as a part of its research and development process.  This subsidiary has not had material activity in 2014.
	The Company’s principal products and services include:
	●	Subscription to its Software as a Service (“SaaS”) cloud based mobile app development platform to  customers who design and build their own apps;
	●	Dedicated internal and secure mobile development platform for the U.S. Department of Defense and related contractors;
	●	Custom mobile application design and development services;
	●	Mobile application marketing services; and
	●	Mobile strategy implementation consulting.
	The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. During the years ended December 31, 2014 and 2013, the Company incurred net losses, as well as negative cash flows, and at December 31, 2014 and 2013, had deficiencies in working capital. These factors indicate that the Company may be unable to continue as a going concern. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts or classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
	The Company’s continuation as a going concern depends upon its ability to generate sufficient cash flows to meet its obligations on a timely basis, to obtain additional financing as may be required, and ultimately to attain profitable operations and positive cash flows. Since November 2007, the Company has been funding its operations, in part, from the proceeds of the issuance of notes under a convertible secured subordinated note facility which was established in 2007 as well as an unsecured convertible subordinated note facility established in 2014. As of December 31, 2014, the Company had $31,055,000 of face value outstanding under these facilities and the Company is entitled to sell to the investors additional notes under these facilities in an amount not exceeding $42,045,000 when requested to by the Company, subject to the terms and conditions specified in these facilities. There can be no assurance that the Company will in fact be able to raise additional capital through these facilities or even from other sources on commercially acceptable terms or at all.

2_SIGNIFICANT_ACCOUNTING_POLIC

2. SIGNIFICANT ACCOUNTING POLICIES	12 Months Ended
	Dec. 31, 2014
Accounting Policies [Abstract]
2. SIGNIFICANT ACCOUNTING POLICIES	Use of Estimates
	The preparation of financial statements in conformity with accounting principles generally accepted in the United States (“US GAAP”) requires management to make estimates and assumptions in the Company’s financial statements and notes thereto. Significant estimates and assumptions made by management include the determination of the best estimate of selling price of the deliverables included in multiple-deliverable revenue arrangements, deferral of certain revenues, share-based compensation, allowance for accounts receivable, estimated useful lives of property, equipment, recoverability of capitalized software asset and other long lived assets and fair value of convertible debt including loss on debt extinguishment. Actual results could differ from those estimates.
	Fair Value of Financial Instruments
	US GAAP requires disclosures of fair value information about financial instruments, whether or not recognized in the balance sheet, for which it is practicable to estimate that value. Due to the short period of time to maturity, the carrying amounts of cash equivalents, accounts receivable, accounts payable, accrued liabilities, and notes payable reported in the financial statements approximate the fair value.
	Cash and Cash Equivalents
	All highly liquid investments with an original maturity of three months or less are considered to be cash equivalents.  The Federal Deposit Insurance Corporation (FDIC) covers $250,000 for substantially all depository accounts. The Company from time to time may have amounts on deposit in excess of the insured limits. As of December 31, 2014, the Company did not exceed these insured amounts.
	Revenue Recognition
	The Company derives revenue primarily from subscription services charged to customers accessing the Platform and, to a much lesser degree, professional services provided in connection with subscription services.
	The Company recognizes revenues when the following criteria have been met:
	●	persuasive evidence of an arrangement exists;
	●	delivery has occurred;
	●	the fees are fixed or determinable; and
	●	collection is considered reasonably assured.
	Subscription Revenues
	Subscription revenues are recognized ratably over the contract term of the arrangement beginning on the date that our service is made available to the customer. Amounts that have been invoiced are recorded in revenue or deferred revenue, depending on whether the revenue recognition criteria have been met.
	Software Revenue
	Sale of software takes place when the Company sells perpetual license to the Platform through installation in a private cloud.  Revenue recognition begins when all elements of the agreement, besides post-contract customer support, are delivered (including installation).  The software revenue is recognized ratably over the period of post-contract customer support in accordance with ASC 985-605.
	Professional Services Revenues
	Professional services revenues consist of fees for professional services, which relate to app design and development, training, system implementation and data integration, mobile application marketing services, and mobile strategy implementation consulting. These revenues are recognized as the services are rendered for time and material contracts and when the milestones are achieved and accepted by the customer for fixed-fee contracts.
	Multiple-Element Arrangements
	The Company evaluates each element in a multiple-element arrangement to determine whether it represents a separate unit of accounting. In order to account for deliverables in a multiple-deliverable arrangement as separate units of accounting, the deliverables must have standalone value upon delivery.
	In determining whether professional service revenues have standalone value, the Company considers availability of professional services from other vendors, the nature of the Company’s professional services, and whether the Company sells professional services to customers without the subscription.
	When multiple deliverables are included in an arrangement are separable into different units of accounting, the arrangement consideration is allocated to the identified separate units of accounting based on their relative selling price. Multiple-deliverable arrangements accounting guidance provides a hierarchy to use when determining the relative selling price for each unit of accounting.
	Vendor-specific objective evidence (“VSOE”) of selling price, based on the price at which the item is regularly sold by the vendor on a standalone basis, should be used if it exists.
	If VSOE of selling price is not available, third-party evidence (“TPE”) of selling price is used to establish the selling price if it exists. If VSOE of selling price and TPE of selling price are not available, then the best estimate of selling price (“BESP”) is to be used. VSOE and TPE do not currently exist for any of the Company’s deliverables. Accordingly, the Company uses its BESP to determine the relative selling price.
	The Company determines its BESP for its deliverables based on its overall pricing objectives, taking into consideration market conditions and entity-specific factors. The Company evaluates its BESP by reviewing historical data related to sales of its deliverables. Total consideration under the contract is allocated to each of the separate units of accounting through application of the relative selling price method.
	DeferredRevenue
	Deferred revenue consists of billings or payments received prior to the date when revenue is recognized.
	Cost of Revenues
	Cost of revenues includes salaries of customer product teams, costs of infrastructure that supports the Platform and amortization charges for the Platform.
	Concentration of Credit Risk
	Financial instruments that potentially subject the Company to concentration of credit risk consist primarily of cash and accounts receivable. The Company places its cash and cash equivalents on deposit with financial institutions in the United States. The Federal Deposit Insurance Corporation covers $250,000 for substantially all depository accounts. The Company from time to time may have amounts on deposit in excess of the insured limits.
	Allowance for Doubtful Accounts
	The Company maintains an allowance for doubtful accounts for estimated losses resulting from the inability or failure of its customers to make required payments. The need for an allowance for doubtful accounts is evaluated based on specifically identified amounts that management believes to be potentially uncollectible. If actual collections experience changes, revisions to the allowance may be required.
	Property and Equipment
	The Company records property and equipment at cost and provides for depreciation and amortization using the straight-line method for financial reporting purposes over the estimated useful lives. The estimated useful lives by asset classification are as follows:
	Computer hardware and office equipment	5 years
	Computer software	5 years
	Furniture and fixtures	5 years
	Leasehold improvements	Shorter of the estimated useful life or the lease term
	Software Development Costs
	The Company capitalized certain costs of development and subsequent enhancement of the Platform through the middle of 2013. The Company started capitalizing software development costs when technological feasibility of the Platform or its enhancements had been established. The Company expensed costs associated with preliminary project stage and research activities. The Company’s policy provided for the capitalization of certain payroll, benefits, and other payroll-related costs for employees who were directly associated with development.
	During 2012, the Platform was substantially completed. During 2013, the Company’s development efforts became more driven by market requirements and rapidly changing customers’ needs. As a result, the Company’s development team adopted the Agile iterative approach to software development. Due to Agile’s short development cycles and focus on rapid production, the Company ceased capitalizing software development costs mid-way through 2013 as the documentation produced under the Agile method did not meet requirements necessary to establish technological feasibility. No development costs were capitalized in 2014 and the Company does not expect to capitalize substantial development costs in the future.
	Intangible Assets
	Intangible assets consist of the perpetual license for critical Platform software, costs associated with the Company’s patent filings and other acquired intangible assets. The Company also owns several copyrights and trademarks related to products, names, and logos used throughout its non-acquired product lines.
	Impairment of Long-LivedAssets
	The Company evaluates the recoverability of its long-lived assets every reporting period or whenever events and circumstances indicate that the value may be impaired.
	During 2014, the Company recorded a loss on impairment of intangible assets in the amount of $66,186, of which $48,883 related to impairment of two of the patents, which had been abandoned and $17,304 related to impairment of previously capitalized software app blocks, which were replaced with new functionality in our Platform.
	During 2013, the Company recorded an impairment and disposal of fixed assets charge of $118,302, net of recoveries, including a $14,654 charge for impairment of fixed assets associated with the discontinued operations. With respect to the charge related to impairment of old furniture and equipment, the furniture and equipment was written off with minimal recoveries.  In addition to furniture and equipment, during 2013 the Company recorded an impairment charge of approximately $37,682 related to impairment of previously capitalized software app blocks, which were replaced with new functionality in our Platform.
	Discontinued Operations
	In May 2013, the Company’s management decided to discontinue the Company’s legacy business of domain hosting and e-commerce effective July 31, 2013. Results of legacy operations are presented as discontinued operations in the Statements of Operations. The Company has impaired all remaining assets associated with the legacy business, which included a number of servers, and recorded an impairment charge in the amount of approximately $14,654.
	Advertising Costs
	Advertising costs consist primarily of industry related tradeshows and marketing campaigns. Advertising costs are expensed as incurred, or the first time the advertising takes place, applied consistently based on the nature of the advertising activity. The amounts related to advertising during 2014 and 2013 were $284,677 and $227,933, respectively.
	Share-Based Compensation
	The Company measures share-based compensation cost at the grant date based on the fair value of the award. The Company recognizes compensation cost on a straight-line basis over the requisite service period. The requisite service period is generally three years. The compensation cost is recognized net of estimated forfeiture activity.
	The fair value of option grants under the Company’s equity compensation plan during the year ended December 31, 2013 was estimated using the following weighted-average assumptions:
	Dividend yield		0	%
	Expected volatility		188	%
	Risk-free interest rate		1.43	%
	Expected lives (years)		4
	The Company did not grant share-based compensation in 2014.
	Net Loss PerShare
	Basic net loss per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the periods. Diluted net loss per share is computed using the weighted average number of common and dilutive common equivalent shares outstanding during the periods. Shares of common stock issuable upon conversion of Convertible Subordinated Promissory Notes (the “Notes”) and exercise of share-based awards are excluded from the calculation of the weighted average number, because the effect of the conversion and exercise would be anti-dilutive.
	Recently Issued Accounting Pronouncements
The Company evaluates new significant accounting pronouncements at each reporting period. For the year ended December 31, 2014, the Company did not adopt any new pronouncement that had or is expected to have a material effect on the Company’s presentation of its consolidated financial statements.
In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2014-9 Revenue from Contracts with Customers (Topic 606). This guidance requires an entity to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This guidance is effective for annual reporting periods beginning after December 15, 2016 and early adoption is not permitted. The Company will adopt this standard in fiscal year 2017 and is currently assessing its impact.
In August of 2014, the FASB issued ASU 2014-15 Presentation of Financial Statements – Going Concern (Subtopic 205-40).  This ASU defines management’s responsibility to evaluate whether there is substantial doubt about an organization’s ability to continue as a going concern and provides guidance on required financial statement footnote disclosures. The ASU is effective for annual periods ending after December 15, 2016.  The Company will adopt the ASU in fiscal year 2016.
Fair Value Measurements
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The value hierarchy prescribed by the accounting literature contains three levels as follows:
Level 1 – Quoted prices in active markets for identical assets or liabilities.
Level 2 – Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimations.
Settlement Related Financial Instrument Liability
In connection with the Company’s Class Action lawsuit settlement approved by the United States District Court for the Middle District of North Carolina on July 1, 2011 (see Note 6, “Commitments and Contingencies – Legal Proceedings”), the Company was required to issue 1,475,000 shares of common stock to the Class Action class. The Company issued the required 1,475,000 shares on December 30, 2013. Prior to the issuance of these shares, this obligation was accounted for as a financial instrument liability on the Company’s balance sheet with changes reflected on the Statements of Operations as losses or gains, as applicable. The value of the liability was determined to be a Level 1 measurement in accordance with the fair value hierarchy prescribed by ASC 820 Fair Value Measurements and Disclosures.

3_PROPERTY_AND_EQUIPMENT_AND_C

3. PROPERTY AND EQUIPMENT AND CAPITALIZED SOFTWARE	12 Months Ended
	Dec. 31, 2014
Property, Plant and Equipment [Abstract]
3. PROPERTY AND EQUIPMENT AND CAPITALIZED SOFTWARE
		December 31,			December 31,
		2014			2013
	Computer hardware	$	67,890		$	57,585
	Computer software		37,884			37,884
	Furniture and fixtures		78,918			78,405
	Office equipment		7,832			7,832
	Leasehold improvements		34,162			34,162
			226,686			215,868
	Less accumulated depreciation		(110,119	)		(75,485	)
	Property and equipment, net	$	116,567		$	140,383
	Capitalized software consists of the following:
		December 31,			December 31,
		2014			2013
	Capitalized software	$	768,535		$	793,094
	Less accumulated amortization		(261,318	)		(157,033	)
	Capitalized software, net	$	507,217		$	636,061
	During the years ended December 31, 2014 and 2013, the Company recorded depreciation and amortization expense related to its property, equipment and capitalized software of $146,747 and $138,461, respectively.
	The Company also recorded an impairment charge of zero and $118,302 for its old equipment, furniture and leasehold improvements and an impairment charge of $17,304 and $38,299 related to capitalized software during years ended December 31, 2014 and 2013, respectively.

4_INTANGIBLE_ASSETS

4. INTANGIBLE ASSETS	12 Months Ended
	Dec. 31, 2014
Goodwill and Intangible Assets Disclosure [Abstract]
4. INTANGIBLE ASSETS	The following table summarizes information about the Company’s intangible assets:
			31-Dec-14								31-Dec-13
		Asset Category		Gross		Accumulated			Net			Gross		Accumulated		Net
				Carrying		Amortization			Carrying			Carrying		Amortization		Carrying
				Amount					Amount			Amount				Amount
	Acquired license and costs			$	108,534		$	43,930	$	64,604		$	108,534	$	28,425	$	80,109
	Patent development and application costs				-			-		-			48,883		-		48,883
	Other				10,000			2,000		8,000			10,000		-		10,000
	Total			$	118,534		$	45,930	$	72,604		$	167,417	$	28,425	$	138,992
	For the years ended December 31, 2014 and 2013, the aggregate amortization expense on the above intangibles was  $17,505 and $15,505, respectively.
	During 2014, the Company abandoned two of its patents and impaired patent development and application costs previously capitalized. The Company recorded an impairment charge of $48,883, which was included in Impairment of Long Lived Assets in the Consolidated Statement of Operations.
	The following table presents the estimated future amortization expense related to intangible assets held at December 31, 2014:
	Year ending December 31:
	2015		17,505
	2016		17,505
	2017		17,505
	2018		17,505
	2019		2,584
		$	72,604

5_DEBT

5. DEBT	12 Months Ended
	Dec. 31, 2014
Debt Disclosure [Abstract]
5. DEBT	The table below summarizes the Company’s debt at December 31, 2014 and December 31, 2013:
	Debt Description		December 31,			December 31,
			2014			2013		Maturity	Rate
	Bank Loan		$	5,000,000		$	5,000,000	16-Jun		3.85	%
	Capital lease obligations - Noteholder lease			113,093			132,321	19-Aug		8	%
	Capital lease obligations - Office furniture			29,922			36,778	18-Sep		9.75	%
	Convertible notes - related parties, net of discount of $4,338,901 and $1,921,394, respectively			25,985,330			23,512,836	16-Nov		8	%
	Convertible notes, net of discount of $50,129 and zero, respectively			680,640			730,770	16-Nov		8	%
	Total debt			31,808,985			29,412,705
	Less:  current portion of long term debt
	Capital lease obligations			28,378			26,113
	Bank Loan			-			5,000,000
	Total current portion of long term debt			28,378			5,026,113
	Debt - long term		$	31,780,607		$	24,386,592
	Convertible Notes Overview
	Since November 14, 2007 and through December 10, 2014, the Company financed its working capital deficiency primarily through the issuance of its notes (the “2007 NPA Notes”) under the Convertible Secured Subordinated Note Purchase Agreement, dated November 14, 2007, as amended (as so amended, the “2007 NPA”).   On December 11, 2014 the Company entered into an unsecured Convertible Subordinated Note Purchase Agreement (the “2014 NPA”) with Union Bancaire Privée, UBP SA ("UBP").
	During 2014, the Company raised gross proceeds of $4,390,000 from the private placement to UBP of 2007 NPA Notes  under its existing 2007 NPA program and $500,000 from the private placement to UBP under 2014 NPA (the “2014 NPA Note”).
	The table below summarizes convertible notes issued as of December 31, 2014 by type:
	Convertible Notes Type:		Balance
	2007 NPA notes, net of discount		$	26,165,970
	2014 NPA notes			500,000
	Total convertible notes		$	26,665,970
	Convertible notes issued under 2014 NPA
	The aggregate principal amount of convertible unsecured subordinated promissory notes (the “2014 NPA Notes”) that may be issued under the 2014 NPA is $40.0 million.  The 2014 NPA Notes are convertible into shares of the Company’s common stock, par value $0.001 per share, and are subordinated to the $5.0 million outstanding under the Company’s Loan and Security Agreement (the “LSA”) with Comerica Bank and to any convertible secured subordinated promissory notes outstanding under the Company’s existing 2007 NPA program.
	The 2014 NPA Notes have the following terms:
	●	a maturity date of the earlier of (i) November 14, 2016, (ii) a Change of Control (as defined in the 2014 NPA), or (iii) when, upon or after the occurrence of an Event of Default (as defined in the 2014 NPA), other than for a bankruptcy related, such amounts are declared due and payable by at least two-thirds of the aggregate outstanding principal amount of the 2014 NPA Notes;
	●	an interest rate of 8% per year, with accrued interest payable in cash in quarterly installments commencing on the third month anniversary of the date of issuance of the 2014 NPA Note with the final installment payable on the maturity date of the note;
	●	a conversion price per share that is fixed at $1.43;
	●	optional conversion upon noteholder request; provided that, if at the time of any such request, the Company does not have a sufficient number of shares of common stock authorized to allow for such conversion, the noteholder may only convert that portion of their Notes outstanding for which the Company has a sufficient number of authorized shares of common stock.  To the extent multiple noteholders under the 2014 NPA, the 2007 NPA, or both, request conversion of its notes on the same date, any limitations on conversion shall be applied on a pro rata basis. In such case, the noteholder may request that the Company call a special meeting of its stockholders specifically for the purpose of increasing the number of shares of common stock authorized to cover conversions of the remaining portion of the notes outstanding as well as the maximum issuances contemplated pursuant to the Company’s 2004 Equity Compensation Plan, within 90 calendar days after the Company’s receipt of such request; and
	●	may not be prepaid without the consent of holders of at least two-thirds of the aggregate outstanding principal amount of 2014 NPA Notes.
	Convertible notes issued under 2007 NPA
	During 2014 and 2013, several modifications were made to the 2007 NPA.  Two modifications had material impact on the Company’s financial statements:
	2013 modification of 2007 NPA
	On June 26, 2013, the Company entered into the Sixth Amendment and Agreement to Join as a Party to the 2007 NPA, Fourth Amendment to 2007 NPA Notes and Fifth Amendment and Agreement to Join as a Party to the Registration Rights Agreement (the “Sixth Amendment to 2007 NPA”), with the holders of a majority of the aggregate outstanding principal amount of the 2007 NPA Notes , and an additional purchaser of the 2007 NPA Notes, Grasford Investments Ltd. (“Grasford”) (collectively, the “2007 NPA Noteholders”).  The Sixth Amendment to 2007 NPA applied to $23,075,000 of 2007 NPA Notes outstanding as of the date of the modification and to all future 2007 NPA Notes. As amended by the Sixth Amendment to 2007 NPA, the convertible instrument had the following terms:
	●	a maturity date of November 14, 2016;
	●	an interest rate of 8% per year payable in quarterly installments;
	●	optional conversion upon the noteholder request;
	●	the borrowing facility commitment was increased by $10 million to $33.3 million;
	●	a conversion price that is the greater of (i) 80% of the lowest closing price of the Company’s shares of common stock in the 12-month period immediately preceding the date of conversion or (ii) $0.50; and
	●	if at the time of any requested conversion the Company does not have a sufficient number of shares of its common stock authorized to allow for such conversion, the 2007 NPA noteholders may request that the Company call a special meeting of the stockholders specifically for the purpose of increasing the number of shares of common stock authorized to cover the remaining portion of the 2007 NPA Notes outstanding; and
	●	the Company is not permitted to prepay the 2007 NPA Notes without approval of the holders of at least a majority of the principal amount of the 2007 NPA Notes then outstanding.
	The Sixth Amendment to 2007 NPA was accounted for as debt extinguishment. The total value of the convertible instrument immediately after the modification was determined to be $44,868,055, of which $21,793,055 was allocated to the intrinsic value of the embedded conversion feature of the instrument immediately after the modification (beneficial conversion feature) in accordance with ASC 470 “Debt” and recorded as part of additional paid-in capital.
	The difference between the fair value of the new convertible instrument and the carrying value of the previously outstanding 2007 NPA Notes, in the amount of $21,793,055, was recognized as loss on extinguishment of debt in the Statements of Operations.
	2014 modification of 2007 NPA
	On May 12, 2014, the Company entered into the Seventh Amendment to 2007 NPA and the Fifth Amendment to 2007 NPA Notes (the “Seventh Amendment to 2007 NPA”), with the holders of a majority of the aggregate outstanding principal amount of the 2007 NPA. The Seventh Amendment to 2007 NPA applied to all of the 2007 NPA Notes outstanding as of May 12, 2014, or $28,205,000, and will apply to any future 2007 NPA Notes issued by the Company.  As amended, the 2007 NPA Notes have the following terms:
	●	a maturity date of the earlier of (i) November 14, 2016, (ii) a Change of Control (as defined in the amended 2007 NPA), or (iii) when, upon or after the occurrence of an Event of Default (as defined in the amended 2007 NPA) such amounts are declared due and payable by a 2007 NPA Noteholder or made automatically due and payable in accordance with the terms of the 2007 NPA;
	●	an interest rate of 8% per year;
	●	a total borrowing commitment of $33.3 million;
	●	a conversion price that is fixed at $1.43; and
	●	optional conversion upon 2007 NPA Noteholder request, provided that, if at the time of any such request, the Company does not have a sufficient number of shares of common stock authorized to allow for such conversion, as well as the issuance of the maximum amount of common stock permitted under the Company’s 2004 Equity Compensation Plan, the 2007 NPA Noteholder may request that the Company call a special meeting of its stockholders specifically for the purpose of increasing the number of shares of common stock authorized to cover the remaining portion of the Notes outstanding as well as the maximum issuances permitted under the 2004 Equity Compensation Plan.
	The 2014 modification of the aggregate principal balance of 2007 NPA Notes issued prior to the 2013 modification dated June 28, 2013, or $23,075,000, was accounted for as debt extinguishment in accordance with provisions of ASC 470 “Debt”.  The fair value of the new debt was determined to be $21,404,018.  The difference between the carrying value of the debt balance prior to the 2014 modification and the fair value of the new debt was recorded as debt discount in the amount of $1,670,982 and will be charged to interest expense over the remaining life of the debt.  $22,344,231 of the modified $23,075,000 balance was related party debt and $730,769 was non-related party debt.  For the related party portion of the debt, the Company recorded a capital contribution in the amount of $1,620,852 with a charge to Additional Paid-in Capital; the non-related party debt modification resulted in a $50,129 gain on extinguishment of debt.
	The 2014 modification of the aggregate principal balance of 2007 NPA Notes issued after 2013 modification, but prior to the 2014 modification, or $5,130,000, with a net carrying amount of $922,202 immediately prior to the 2014 modification, resulted in a troubled debt restructuring treatment where no gain or loss was recognized due to the fact that the carrying amount of the debt balance was less than total future cash payments  specified by the terms of the debt remaining unsettled after the modification.
	Fair Value of Convertible Notes under 2013 modification
	The modified note facility was recorded at fair value of $44,868,055. The Company used a binomial model to determine the fair value of the instrument. The binomial model method uses significant unobservable inputs and falls within the Level III measurement method under Fair Value Hierarchy under ASC 820 “Fair Value Measurements.”
	The significant unobservable inputs and information used to develop those inputs include the following:
	●	the volatility of stock price was determined to be 47% and was based on the Company’s historical volatility;
	●	the risk free rate of 1.41%;
	●	the credit spread over the risk free rate was determined to be approximately 20%, which was derived from a combination of the credit spread of CCC rated bonds with added premium for lack of marketability of the convertible instrument;
	●	the nodes of the binomial model were extended for 3 years, which approximates the time period until maturity of the convertible instrument; and
	●	the conversion ratio varied from approximately 1.39 to .56 shares per dollar, depending on the node of the conversion tree. The conversion ratio varied due to projected change in value of the stock driven by historical volatility of 47%.
	Fair Value of Convertible Notes under 2014 modification
	The modified convertible debt instrument with a face value of $23,075,000, accounted for as debt extinguishment, was recorded with a fair value of $21,404,018. The Company used a binomial model to determine the fair value of the instrument. The binomial model method uses significant unobservable inputs and falls within the Level III measurement method in accordance with the Fair Value Hierarchy under ASC 820 “Fair Value Measurements.”
	The significant unobservable inputs and information used to develop those inputs include the following:
	●	volatility of stock price was determined to be 47% and was based on the Company’s historical volatility;
●	risk free rate of 1.41%;
●	credit spread over the risk free rate was determined to be approximately 20%, which was derived from a combination of the credit spread of CCC rated bonds with added premium for lack of marketability of the convertible instrument;
●	nodes of the binomial model were extended for 2.5 years, which approximates the  time period until maturity of the convertible instrument;
●	conversion price was fixed at $1.43 per share.
Related Party Convertible Notes under 2007 and 2014 NPAs
Grasford, the Company’s largest stockholder, owns $13,826,282 in face value amount of 2007 NPA Notes as of December 31, 2014. Grasford is controlled by Avy Lugassy, one of the Company’s principal shareholder .
UBP owns $15,767,180 in combined face value amount of 2007 and 2014 NPA Notes as of December 31, 2014 and is considered a significant beneficial owner.
Crystal Management owns $730,769 in face value amount of 2007 NPA Notes as of December 31, 2014. Crystal Management is controlled by Doron Roethler, the second largest shareholder of the Company.
Interest expense for 2014 for convertible notes was $4,196,918, including amortization of discount of $1,899,060.
Interest expense for 2013 for convertible notes was $2,084,303, including amortization of discount of $208,680.
IDB Credit Facility and Comerica LSA
The Company had an outstanding promissory note with Israel Discount Bank (“IDB”)  dated December 6, 2010 that had a maturity date of May 31, 2014 (the “IDB Credit Facility”).  Borrowings under the IDB Credit Facility were guaranteed by Atlas Capital SA (“Atlas”) and subsequent to the merger between Atlas and Mirelis InvesTrust SA (“Mirelis”), by Mirelis. The IDB Credit Facility was further secured by an extended irrevocable standby letter of credit (“SBLC”) issued by UBS Private Bank with an expiration date of November 30, 2015.  The Company received confirmation that it will not be required to re-pay any fees associated with previous or future guarantees of the Company's bank loan through issuance of the SBLC by UBS.  As such, the Company reversed previously accrued fees associated with the issuance of the SBLC in the IDB transaction and recorded a $169,861 gain on reversal of previously recorded liabilities.
On June 9, 2014, the Company refinanced the IDB Credit Facility with a new financial institution by entering into the LSA with Comerica. The Company borrowed the entire amount available under the LSA ($5,000,000) and used those proceeds to repay the IDB Credit Facility in full.
The LSA with Comerica has the following terms:
	●		a maturity date of June 9, 2016;
	●		a variable interest rate at prime plus 0.6% (3.85% on the date of execution) payable quarterly;
	●		secured by substantially all of the assets of the Company, including the Company’s intellectual property;
	●		secured by an extended irrevocable SBLC issued by UBS AG (Geneva, Switzerland) (“UBS AG”) with an initial term expiring on May 31, 2015, which term is automatically renewable for one year periods, unless notice of non-renewal is given by UBS AG at least 45 days prior to the then current expiration date; and
	●		acceleration of payment of all amounts due thereunder upon the occurrence and continuation of certain events of default, including but not limited to, failure by the Company to perform its obligations, observe the covenants made by it under the LSA, failure to renew the UBS AG SBLC, and insolvency of the Company.
This transaction was accounted for under the guidance of ASC 470 “Debt” as debt extinguishment.  The $12,500 in bank fees that the Company paid to Comerica in connection with entering into the LSA was recorded as loss on extinguishment in the current period.  The approximately $30,000 in legal fees were deferred as deferred financing costs and are charged to interest expense over the life of the LSA.
Capital Leases
On September 4, 2009, the Company entered into a sale transaction whereby it sold its computer equipment, furniture, fixtures and certain personal property located at its former principal executive offices in Durham, North Carolina (collectively, the “Equipment”) on an “as-is, where-is” basis to the holders of the Company’s Notes, on a ratable basis in proportion to their respective holdings of Notes, for $200,000 (“Purchase Price”). The Purchase Price was paid through a $200,000 reduction, on a ratable basis, in the outstanding aggregate principal amount of the Notes. The Purchase Price represented the fair market value of the Equipment based on an independent appraisal.
The payments on the lease are made monthly. The balance of the lease as of December 31, 2014 was $113,087.
In September 2013 the Company purchased furniture for its new office by execution of a five year non-cancellable lease, which is accounted for as a capital lease. The unpaid balance on the lease as of December 31, 2014 is $30,228.
The table below details future payments under capital leases:
Year:
2015		$	39,259
2016			39,259
2017			39,259
2018			34,189
2019			19,412
			171,378
Less amount representing interest			(28,363	)
Capital lease obligations		$	143,015

6_COMMITMENTS_AND_CONTINGENCIE

6. COMMITMENTS AND CONTINGENCIES	12 Months Ended
	Dec. 31, 2014
Commitments and Contingencies Disclosure [Abstract]
6. COMMITMENTS AND CONTINGENCIES	Operating Leases
	On July 29, 2013, the Company signed a 65-month lease for new office space in Raleigh, North Carolina, effective October 30, 2013. The landlord built the space to the Company’s specifications and provided the Company with five months free rent as an incentive. Rent expense is being recognized over the entire 65-month term of the lease on a straight-line basis. The lease contains an option to renew for two, three-year terms. Monthly rent is approximately $13,000 per month.
	In addition, on July 17, 2013, the Company leased a vehicle for a period of 36-months with monthly payments of $300. The vehicle is mostly used for transporting equipment to and from tradeshows that often take place within reasonable driving distance from the Company’s office.
	The table below summarizes the Company’s future obligations under the new office and vehicle leases:
	Year:
	2015		162,528
	2016		165,678
	2017		167,786
	2018		172,418
	2019		44,082
	Total	$	712,492
	Rent expense for the years ended December 31, 2014 and 2013 was $155,472 and $194,371, respectively.
	Legal Proceedings
	On June 18, 2010, the Company entered into a Stipulation and Agreement of Settlement (the “Stipulation”) with the lead plaintiff in the securities Class Action lawsuit involving the Company in the case captioned Mary Jane Beauregard vs. Smart Online, Inc., et al., filed in the United States District Court for the Middle District of North Carolina (the “District Court”). The Stipulation provided for the settlement of the Class Action. The District Court issued an order preliminarily approving the settlement on January 13, 2011. The final settlement hearing was held on May 11, 2011.
	As a result from the settlement, the Company made cash payments to lead plaintiff and Nouri parties and was required to issue 1,475,000 shares of the Company’s common stock to the class.  On July 1, 2011, the Company recorded the Class Action obligation as a financial instrument liability.
	On December 30, 2013, the Company issued the required 1,475,000 settlement shares, which were purchased from the Settlement Fund by Grasford at $.50 per share, in accordance with the terms of an agreement reached among lead plaintiff, the Company and Grasford, designee of Atlas Capital S.A – a class member entitled to 53.7% of the Settlement Fund.
	The Company may be subject to legal proceedings and litigation arising in the ordinary course of business, including, but not limited to, certain pending patent and privacy matters, including class action lawsuits, as well as inquiries investigations, audits and other regulatory proceedings.
	The Company will record a liability when it believes that it is both probable that a loss has been incurred and the amount can be reasonably estimated. The Company periodically evaluates developments in its legal matters that could affect the amount of liability that it has previously accrued, if any, and makes adjustments as appropriate. Significant judgment is required to determine both the likelihood of there being, and the estimated amount of, a loss related to such matters, and the Company’s judgment may be incorrect. The outcome of any proceeding is not determinable in advance. Until the final resolution of any such matters that the Company may be required to accrue for, there may be an exposure to loss in excess of the amount accrued, and such amounts could be material.

7_STOCKHOLDERS_EQUITY

7. STOCKHOLDERS EQUITY	12 Months Ended
	Dec. 31, 2014
Equity [Abstract]
7. STOCKHOLDERS EQUITY	Common Stock
	The Company is authorized to issue 45,000,000 shares of common stock, $0.001 par value per share. As of December 31, 2014, the Company had 19,827,542 shares of common stock outstanding. Holders of the Company’s shares of common stock are entitled to one vote for each share held.
	Preferred Stock
	The Board of Directors is authorized, without further stockholder approval, to issue up to 5,000,000 shares of $0.001 par value preferred stock in one or more series and to fix the rights, preferences, privileges, and restrictions applicable to such shares, including dividend rights, conversion rights, terms of redemption, and liquidation preferences, and to fix the number of shares constituting any series and the designations of such series. There were no shares of preferred stock outstanding at December 31, 2014 and 2013.
	Equity Compensation Plans
	2004 Equity Compensation Plan
	The Company adopted its 2004 Equity Compensation Plan (the “2004 Plan”) as of March 31, 2004. The 2004 Plan provides for the grant of incentive stock options, non-statutory stock options, restricted stock, and other direct stock awards to employees (including officers) and directors of the Company as well as to certain consultants and advisors. The total number of shares of common stock reserved for issuance under the 2004 Plan is 5,000,000 shares, subject to adjustment in the event of a stock split, stock dividend, recapitalization, or similar capital change.
	2001 Equity Compensation Plan
	The Company adopted the 2001 Equity Compensation Plan (the “2001 Plan”) as of May 31, 2001. The 2001 Plan provided for the grant of incentive stock options, non-statutory stock options, restricted stock, and other direct stock awards to employees (including officers) and directors of the Company as well as to certain consultants and advisors. The total number of shares of common stock reserved for issuance under the 2001 Plan is 795,000 shares, subject to adjustment in the event of a stock split, stock dividend, recapitalization, or similar change. The Company cannot make any further grants under the 2001 Plan.
	The exercise price for incentive stock options granted under the above plans is required to be no less than the fair market value of the common stock on the date the option is granted, except for options granted to 10% stockholders, which are required to have an exercise price of not less than 110% of the fair market value of the common stock on the date the option is granted. Incentive stock options typically have a maximum term of 10 years, except for option grants to 10% stockholders, which are subject to a maximum term of five years. Non-statutory stock options have a term determined by either the Board of Directors or the Compensation Committee of the Board of Directors. Options granted under the plans are not transferable, except by will and the laws of descent and distribution.
	A summary of the status of the stock option issuances as of December 31, 2014 and 2013, and changes during the periods ended on these dates is as follows:
							Weighted
					Weighted		Average		Aggregate
		Number of			Average		Remaining		Intrinsic
		Shares			Exercise Price		Contractual Term		Value
	Outstanding, December 31, 2012		450,900		$	2.02
	Cancelled		(187,900	)		1.51
	Issued		267,378			1.62
	Outstanding, December 31, 2013		530,378			1.99
	Cancelled		(126,717	)		3.72
	Issued		-			-
	Outstanding, December 31, 2014		403,661		$	1.45		4.5	$	7,353
	Vested and exercisable, December 31, 2014		226,502		$	1.34		5.08	$	7,066
	At December 31, 2014, $146,136 of unvested expense remains to be recorded related to all options outstanding.
	Exercise prices for options outstanding as of December 31, 2014 ranged between $.90 and $1.95.

8_INCOME_TAXES

8. INCOME TAXES	12 Months Ended
	Dec. 31, 2014
Income Tax Disclosure [Abstract]
8. INCOME TAXES	The Company accounts for income taxes under the asset and liability method in accordance with the requirements of US GAAP. Under the asset and liability method, deferred income taxes are recognized for the tax consequences of “temporary differences” by applying enacted statutory tax rates applicable to future years to differences between the financial statement carrying amounts and the tax bases of existing assets and liabilities.
	The balances of deferred tax assets and liabilities are as follows:
		December 31,			December 31,
		2014			2013
	Net current deferred income tax assets related to:
	Allowance for doubtful accounts	$	84,000		$	75,000
	Depreciation and amortization		140,000			137,000
	Impairment charges		18,000			-
	Stock-based expenses		91,000			91,000
	Accrued liabilities – litigation expenses		-			12,000
	Other liabilities		11,000			62,000
	Other		7,000			7,000
	Net operating loss carryforwards		31,580,000			28,601,000
	Total		31,931,000			28,985,000
	Less: valuation allowance		(31,931,000	)		(28,985,000	)
	Net current deferred income tax	$	-		$	-
	Under US GAAP, a valuation allowance is provided when it is more likely than not that the deferred tax asset will not be realized.
	Total income tax expense  related to continuing operations differs from expected income tax expense (computed by applying the U.S. federal corporate income tax rate of 34% to profit (loss) before taxes) as follows:
		Year Ended			Year Ended
		December 31,			December 31,
		2014			2013
	Tax benefit computed at statutory rate of 34%	$	(2,495,000	)	$	(9,337,000	)
	State income tax benefit, net of federal effect		(334,000	)		(1,251,000	)
	Permanent differences
	Stock based compensation		30,000			24,000
	Loss on debt extinguishment		-			8,402,000
	Debt discount amortization		732,000			-
	Other		(18,000	)		3,000
	Expiration of net operating losses carryforwards		-			939,000
	Change due to increase in NOL carryforwards from 15 to 20 years		(861,000	)		-
	Change in valuation allowance - continuing operations		2,946,000			1,220,000
	Totals	$	-		$	-
	Total income tax expense  related to discontinued operations differs from expected income tax expense (computed by applying the combined  U.S. federal and state corporate income tax rate of 38.55% to profit (loss) before taxes) as follows:
		Year Ended			Year Ended
		December 31,			December 31,
		2014			2013
	Tax expense (benefit) from discontinued operations	$	-		$	(26,000	)
	Change in valuation allowance - discontinued operations		-			26,000
	Net income tax expense, discontinued operations	$	-		$	-
	As of December 31, 2014, the Company had U.S. federal net operating loss (“NOL”) carryforwards of approximately $82 million, which expire between 2018 and 2034. For state tax purposes, the NOL carryforwards expire between 2015 and 2030. In accordance with Section 382 of the Internal Revenue Code of 1986, as amended, a change in equity ownership of greater than 50% of the Company within a three-year period can result in an annual limitation on the Company’s ability to utilize its NOL carryforwards that were created during tax periods prior to the change in ownership.
	The Company has reviewed its tax positions and has determined that it has no significant uncertain tax positions at December 31, 2014.

9_MAJOR_CUSTOMERS_AND_CONCENTR

9. MAJOR CUSTOMERS AND CONCENTRATION OF CREDIT RISK	12 Months Ended
	Dec. 31, 2014
Notes to Financial Statements
9. MAJOR CUSTOMERS AND CONCENTRATION OF CREDIT RISK	A customer that individually generates more than 10% of revenue is considered a major customer.
	For the year ended December 31, 2014, one customer accounted for 20% of the Company’s revenue. Two customers accounted for 79% of net accounts receivable balance as of December 31, 2014.
	For the year ended December 31, 2013, two major customers accounted for a combined 23% of the Company’s revenue. Three customers accounted for 58% of accounts receivable balance as of December 31, 2013.

10_EMPLOYEE_BENEFIT_PLAN

10. EMPLOYEE BENEFIT PLAN	12 Months Ended
	Dec. 31, 2014
Compensation and Retirement Disclosure [Abstract]
10. EMPLOYEE BENEFIT PLAN	All full time employees who meet certain age and length of service requirements are eligible to participate in the Company’s 401(k) Plan. The plan provides for contributions by the Company in such amounts as the Board of Directors may annually determine, as well as a 401(k) option under which eligible participants may defer a portion of their salaries. The Company contributed a total of $23,236 and $21,032 to the plan during 2014 and 2013, respectively.

11_SUBSEQUENT_EVENTS

11. SUBSEQUENT EVENTS	12 Months Ended
	Dec. 31, 2014
Subsequent Events [Abstract]
11. SUBSEQUENT EVENTS	Subsequent to December 31, 2014, the Company sold two 2014 NPA Notes to UBP in the total amount of $1,700,000 on the same terms as the currently outstanding 2014 NPA Note. The notes mature on November 14, 2016.

2_SIGNIFICANT_ACCOUNTING_POLIC1

2. SIGNIFICANT ACCOUNTING POLICIES (Policies)	12 Months Ended
	Dec. 31, 2014
Notes to Financial Statements
Use of Estimates	The preparation of financial statements in conformity with accounting principles generally accepted in the United States (“US GAAP”) requires management to make estimates and assumptions in the Company’s financial statements and notes thereto. Significant estimates and assumptions made by management include the determination of the best estimate of selling price of the deliverables included in multiple-deliverable revenue arrangements, deferral of certain revenues, share-based compensation, allowance for accounts receivable, estimated useful lives of property, equipment, recoverability of capitalized software asset and other long lived assets and fair value of convertible debt including loss on debt extinguishment. Actual results could differ from those estimates.
Fair Value of Financial Instruments	US GAAP requires disclosures of fair value information about financial instruments, whether or not recognized in the balance sheet, for which it is practicable to estimate that value. Due to the short period of time to maturity, the carrying amounts of cash equivalents, accounts receivable, accounts payable, accrued liabilities, and notes payable reported in the financial statements approximate the fair value.
Cash and Cash Equivalents	All highly liquid investments with an original maturity of three months or less are considered to be cash equivalents.  The Federal Deposit Insurance Corporation (FDIC) covers $250,000 for substantially all depository accounts. The Company from time to time may have amounts on deposit in excess of the insured limits. As of December 31, 2014, the Company did not exceed these insured amounts.
Revenue Recognition	The Company derives revenue primarily from subscription services charged to customers accessing the Platform and, to a much lesser degree, professional services provided in connection with subscription services.
	The Company recognizes revenues when the following criteria have been met:
	●	persuasive evidence of an arrangement exists;
	●	delivery has occurred;
	●	the fees are fixed or determinable; and
	●	collection is considered reasonably assured.
Subscription Revenues	Subscription revenues are recognized ratably over the contract term of the arrangement beginning on the date that our service is made available to the customer. Amounts that have been invoiced are recorded in revenue or deferred revenue, depending on whether the revenue recognition criteria have been met.
Software Revenues	Sale of software takes place when the Company sells perpetual license to the Platform through installation in a private cloud.  Revenue recognition begins when all elements of the agreement, besides post-contract customer support, are delivered (including installation).  The software revenue is recognized ratably over the period of post-contract customer support in accordance with ASC 985-605.
Professional Services Revenues	Professional services revenues consist of fees for professional services, which relate to app design and development, training, system implementation and data integration, mobile application marketing services, and mobile strategy implementation consulting. These revenues are recognized as the services are rendered for time and material contracts and when the milestones are achieved and accepted by the customer for fixed-fee contracts.
Multiple-Element Arrangements	The Company evaluates each element in a multiple-element arrangement to determine whether it represents a separate unit of accounting. In order to account for deliverables in a multiple-deliverable arrangement as separate units of accounting, the deliverables must have standalone value upon delivery.
	In determining whether professional service revenues have standalone value, the Company considers availability of professional services from other vendors, the nature of the Company’s professional services, and whether the Company sells professional services to customers without the subscription.
	When multiple deliverables are included in an arrangement are separable into different units of accounting, the arrangement consideration is allocated to the identified separate units of accounting based on their relative selling price. Multiple-deliverable arrangements accounting guidance provides a hierarchy to use when determining the relative selling price for each unit of accounting.
	Vendor-specific objective evidence (“VSOE”) of selling price, based on the price at which the item is regularly sold by the vendor on a standalone basis, should be used if it exists.
	If VSOE of selling price is not available, third-party evidence (“TPE”) of selling price is used to establish the selling price if it exists. If VSOE of selling price and TPE of selling price are not available, then the best estimate of selling price (“BESP”) is to be used. VSOE and TPE do not currently exist for any of the Company’s deliverables. Accordingly, the Company uses its BESP to determine the relative selling price.
	The Company determines its BESP for its deliverables based on its overall pricing objectives, taking into consideration market conditions and entity-specific factors. The Company evaluates its BESP by reviewing historical data related to sales of its deliverables. Total consideration under the contract is allocated to each of the separate units of accounting through application of the relative selling price method.
Deferred Revenue	Deferred revenue consists of billings or payments received prior to the date when revenue is recognized.
Cost of Revenues	Cost of revenues includes salaries of customer product teams, costs of infrastructure that supports the Platform and amortization charges for the Platform.
Concentration of Credit Risk	Financial instruments that potentially subject the Company to concentration of credit risk consist primarily of cash and accounts receivable. The Company places its cash and cash equivalents on deposit with financial institutions in the United States. The Federal Deposit Insurance Corporation covers $250,000 for substantially all depository accounts. The Company from time to time may have amounts on deposit in excess of the insured limits.
Allowance for Doubtful Accounts	The Company maintains an allowance for doubtful accounts for estimated losses resulting from the inability or failure of its customers to make required payments. The need for an allowance for doubtful accounts is evaluated based on specifically identified amounts that management believes to be potentially uncollectible. If actual collections experience changes, revisions to the allowance may be required.
Property and Equipment	The Company records property and equipment at cost and provides for depreciation and amortization using the straight-line method for financial reporting purposes over the estimated useful lives. The estimated useful lives by asset classification are as follows:
	Computer hardware and office equipment	5 years
	Computer software	5 years
	Furniture and fixtures	5 years
	Leasehold improvements	Shorter of the estimated useful life or the lease term
Software Development	The Company capitalized certain costs of development and subsequent enhancement of the Platform through the middle of 2013. The Company started capitalizing software development costs when technological feasibility of the Platform or its enhancements had been established. The Company expensed costs associated with preliminary project stage and research activities. The Company’s policy provided for the capitalization of certain payroll, benefits, and other payroll-related costs for employees who were directly associated with development.
	During 2012, the Platform was substantially completed. During 2013, the Company’s development efforts became more driven by market requirements and rapidly changing customers’ needs. As a result, the Company’s development team adopted the Agile iterative approach to software development. Due to Agile’s short development cycles and focus on rapid production, the Company ceased capitalizing software development costs mid-way through 2013 as the documentation produced under the Agile method did not meet requirements necessary to establish technological feasibility. No development costs were capitalized in 2014 and the Company does not expect to capitalize substantial development costs in the future.
Intangible Assets	Intangible assets consist of the perpetual license for critical Platform software, costs associated with the Company’s patent filings and other acquired intangible assets. The Company also owns several copyrights and trademarks related to products, names, and logos used throughout its non-acquired product lines.
Impairment of Long-Lived Assets	The Company evaluates the recoverability of its long-lived assets every reporting period or whenever events and circumstances indicate that the value may be impaired.
	During 2014, the Company recorded a loss on impairment of intangible assets in the amount of $66,186, of which $48,883 related to impairment of two of the patents, which had been abandoned and $17,304 related to impairment of previously capitalized software app blocks, which were replaced with new functionality in our Platform.
	During 2013, the Company recorded an impairment and disposal of fixed assets charge of $118,302, net of recoveries, including a $14,654 charge for impairment of fixed assets associated with the discontinued operations. With respect to the charge related to impairment of old furniture and equipment, the furniture and equipment was written off with minimal recoveries.  In addition to furniture and equipment, during 2013 the Company recorded an impairment charge of approximately $37,682 related to impairment of previously capitalized software app blocks, which were replaced with new functionality in our Platform.
Discontinued operations	In May 2013, the Company’s management decided to discontinue the Company’s legacy business of domain hosting and e-commerce effective July 31, 2013. Results of legacy operations are presented as discontinued operations in the Statements of Operations. The Company has impaired all remaining assets associated with the legacy business, which included a number of servers, and recorded an impairment charge in the amount of approximately $14,654.
Advertising Costs	Advertising costs consist primarily of industry related tradeshows and marketing campaigns. Advertising costs are expensed as incurred, or the first time the advertising takes place, applied consistently based on the nature of the advertising activity. The amounts related to advertising during 2014 and 2013 were $284,677 and $227,933, respectively.
Share Based Compensation	The Company measures share-based compensation cost at the grant date based on the fair value of the award. The Company recognizes compensation cost on a straight-line basis over the requisite service period. The requisite service period is generally three years. The compensation cost is recognized net of estimated forfeiture activity.
	The fair value of option grants under the Company’s equity compensation plan during the year ended December 31, 2013 was estimated using the following weighted-average assumptions:
	Dividend yield		0	%
	Expected volatility		188	%
	Risk-free interest rate		1.43	%
	Expected lives (years)		4
	The Company did not grant share-based compensation in 2014.
Net Loss Per Share	Basic net loss per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the periods. Diluted net loss per share is computed using the weighted average number of common and dilutive common equivalent shares outstanding during the periods. Shares of common stock issuable upon conversion of Convertible Subordinated Promissory Notes (the “Notes”) and exercise of share-based awards are excluded from the calculation of the weighted average number, because the effect of the conversion and exercise would be anti-dilutive.
Recently Issued Accounting Pronouncements	The Company evaluates new significant accounting pronouncements at each reporting period. For the year ended December 31, 2014, the Company did not adopt any new pronouncement that had or is expected to have a material effect on the Company’s presentation of its consolidated financial statements.
	In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2014-9 Revenue from Contracts with Customers (Topic 606). This guidance requires an entity to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This guidance is effective for annual reporting periods beginning after December 15, 2016 and early adoption is not permitted. The Company will adopt this standard in fiscal year 2017 and is currently assessing its impact.
	In August of 2014, the FASB issued ASU 2014-15 Presentation of Financial Statements – Going Concern (Subtopic 205-40).  This ASU defines management’s responsibility to evaluate whether there is substantial doubt about an organization’s ability to continue as a going concern and provides guidance on required financial statement footnote disclosures. The ASU is effective for annual periods ending after December 15, 2016.  The Company will adopt the ASU in fiscal year 2016.
Fair Value Measurement	Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The value hierarchy prescribed by the accounting literature contains three levels as follows:
	Level 1 – Quoted prices in active markets for identical assets or liabilities.
	Level 2 – Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
	Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimations.
Settlement Related Financial Instrument Liability	In connection with the Company’s Class Action lawsuit settlement approved by the United States District Court for the Middle District of North Carolina on July 1, 2011 (see Note 6, “Commitments and Contingencies – Legal Proceedings”), the Company was required to issue 1,475,000 shares of common stock to the Class Action class. The Company issued the required 1,475,000 shares on December 30, 2013. Prior to the issuance of these shares, this obligation was accounted for as a financial instrument liability on the Company’s balance sheet with changes reflected on the Statements of Operations as losses or gains, as applicable. The value of the liability was determined to be a Level 1 measurement in accordance with the fair value hierarchy prescribed by ASC 820 Fair Value Measurements and Disclosures.

2_SIGNIFICANT_ACCOUNTING_POLIC2

2. SIGNIFICANT ACCOUNTING POLICIES (Tables)	12 Months Ended
	Dec. 31, 2014
Accounting Policies [Abstract]
Schedule of useful life	Computer hardware and office equipment	5 years
	Computer software	5 years
	Furniture and fixtures	5 years
	Leasehold improvements	Shorter of the estimated useful life or the lease term
Schedule of fair value assumptions for option grants	Dividend yield		0	%
	Expected volatility		188	%
	Risk-free interest rate		1.43	%
	Expected lives (years)		4

3_PROPERTY_AND_EQUIPMENT_AND_C1

3. PROPERTY AND EQUIPMENT AND CAPITALIZED SOFTWARE (Tables)	12 Months Ended
	Dec. 31, 2014
Property, Plant and Equipment [Abstract]
Property and equipment		December 31,			December 31,
		2014			2013
	Computer hardware	$	67,890		$	57,585
	Computer software		37,884			37,884
	Furniture and fixtures		78,918			78,405
	Office equipment		7,832			7,832
	Leasehold improvements		34,162			34,162
			226,686			215,868
	Less accumulated depreciation		(110,119	)		(75,485	)
	Property and equipment, net	$	116,567		$	140,383
Capitalized software		December 31,			December 31,
		2014			2013
	Capitalized software	$	768,535		$	793,094
	Less accumulated amortization		(261,318	)		(157,033	)
	Capitalized software, net	$	507,217		$	636,061

4_INTANGIBLE_ASSETS_Tables

4. INTANGIBLE ASSETS (Tables)	12 Months Ended
	Dec. 31, 2014
Goodwill and Intangible Assets Disclosure [Abstract]
Schedule of intangible assets			31-Dec-14								31-Dec-13
		Asset Category		Gross		Accumulated			Net			Gross		Accumulated		Net
				Carrying		Amortization			Carrying			Carrying		Amortization		Carrying
				Amount					Amount			Amount				Amount
	Acquired license and costs			$	108,534		$	43,930	$	64,604		$	108,534	$	28,425	$	80,109
	Patent development and application costs				-			-		-			48,883		-		48,883
	Other				10,000			2,000		8,000			10,000		-		10,000
	Total			$	118,534		$	45,930	$	72,604		$	167,417	$	28,425	$	138,992
Schedule of estimated future amortization expense related to intangible assets	Year ending December 31:
	2015		17,505
	2016		17,505
	2017		17,505
	2018		17,505
	2019		2,584
		$	72,604

5_DEBT_Tables

5. DEBT (Tables)	12 Months Ended
	Dec. 31, 2014
Debt Disclosure [Abstract]
Company's debt	Debt Description	December 31,			December 31,
		2014			2013		Maturity	Rate
	Bank Loan	$	5,000,000		$	5,000,000	16-Jun		3.85	%
	Capital lease obligations - Noteholder lease		113,093			132,321	19-Aug		8	%
	Capital lease obligations - Office furniture		29,922			36,778	18-Sep		9.75	%
	Convertible notes - related parties, net of discount of $4,338,901 and $1,921,394, respectively		25,985,330			23,512,836	16-Nov		8	%
	Convertible notes, net of discount of $50,129 and zero, respectively		680,640			730,770	16-Nov		8	%
	Total debt		31,808,985			29,412,705
	Less:  current portion of long term debt
	Capital lease obligations		28,378			26,113
	Bank Loan		-			5,000,000
	Total current portion of long term debt		28,378			5,026,113
	Debt - long term	$	31,780,607		$	24,386,592
	Convertible Notes Type:	Balance
	2007 NPA notes, net of discount	$	26,165,970
	2014 NPA notes		500,000
	Total convertible notes	$	26,665,970
Schedule of future payments under capital leases	Year:
	2015	$	39,259
	2016		39,259
	2017		39,259
	2018		34,189
	2019		19,412
			171,378
	Less amount representing interest		(28,363	)
	Capital lease obligations	$	143,015

6_COMMITMENTS_AND_CONTINGENCIE1

6. COMMITMENTS AND CONTINGENCIES (Tables)	12 Months Ended
	Dec. 31, 2014
Commitments and Contingencies Disclosure [Abstract]
Company's future obligation under the new office and vehicle leases	Year:
	2015		162,528
	2016		165,678
	2017		167,786
	2018		172,418
	2019		44,082
	Total	$	712,492

7_STOCKHOLDERS_EQUITY_Tables

7. STOCKHOLDERS EQUITY (Tables)	12 Months Ended
	Dec. 31, 2014
Equity [Abstract]
Schedule of Stock Options Outstanding							Weighted
					Weighted		Average		Aggregate
		Number of			Average		Remaining		Intrinsic
		Shares			Exercise Price		Contractual Term		Value
	Outstanding, December 31, 2012		450,900		$	2.02
	Cancelled		(187,900	)		1.51
	Issued		267,378			1.62
	Outstanding, December 31, 2013		530,378			1.99
	Cancelled		(126,717	)		3.72
	Issued		-			-
	Outstanding, December 31, 2014		403,661		$	1.45		4.5	$	7,353
	Vested and exercisable, December 31, 2014		226,502		$	1.34		5.08	$	7,066

8_INCOME_TAXES_Tables

8. INCOME TAXES (Tables)	12 Months Ended
	Dec. 31, 2014
Income Tax Disclosure [Abstract]
Schedule of deferred tax assets and liabilities		December 31,			December 31,
		2014			2013
	Net current deferred income tax assets related to:
	Allowance for doubtful accounts	$	84,000		$	75,000
	Depreciation and amortization		140,000			137,000
	Impairment charges		18,000			-
	Stock-based expenses		91,000			91,000
	Accrued liabilities – litigation expenses		-			12,000
	Other liabilities		11,000			62,000
	Other		7,000			7,000
	Net operating loss carryforwards		31,580,000			28,601,000
	Total		31,931,000			28,985,000
	Less: valuation allowance		(31,931,000	)		(28,985,000	)
	Net current deferred income tax	$	-		$	-
Schedule of income tax reconciliation		Year Ended			Year Ended
		December 31,			December 31,
		2014			2013
	Tax benefit computed at statutory rate of 34%	$	(2,495,000	)	$	(9,337,000	)
	State income tax benefit, net of federal effect		(334,000	)		(1,251,000	)
	Permanent differences
	Stock based compensation		30,000			24,000
	Loss on debt extinguishment		-			8,402,000
	Debt discount amortization		732,000			-
	Other		(18,000	)		3,000
	Expiration of net operating losses carryforwards		-			939,000
	Change due to increase in NOL carryforwards from 15 to 20 years		(861,000	)		-
	Change in valuation allowance - continuing operations		2,946,000			1,220,000
	Totals	$	-		$	-
Schedule discontinued operations tax expense		Year Ended			Year Ended
		December 31,			December 31,
		2014			2013
	Tax expense (benefit) from discontinued operations	$	-		$	(26,000	)
	Change in valuation allowance - discontinued operations		-			26,000
	Net income tax expense, discontinued operations	$	-		$	-

2_SIGNIFICANT_ACCOUNTING_POLIC3

2. SIGNIFICANT ACCOUNTING POLICIES (Details)	12 Months Ended
	Dec. 31, 2014
Computer hardware
Life	5 years
Office equipment
Life	5 years
Computer software
Life	5 years
Furniture and fixtures
Life	5 years
Leasehold improvements
Life	Shorter of the estimated useful life or the lease term

2_SIGNIFICANT_ACCOUNTING_POLIC4

2. SIGNIFICANT ACCOUNTING POLICIES (Details 1)	12 Months Ended
	Dec. 31, 2013
Significant Accounting Policies Details 1
Dividend yield	0.00%
Expected volatility	188.00%
Risk free interest rate	1.43%
Expected lives (years)	4 years

2_SIGNIFICANT_ACCOUNTING_POLIC5

2. SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
Significant Accounting Policies Details Narrative
Advertising Costs	$284,677	$227,933

3_PROPERTY_AND_EQUIPMENT_AND_C2

3. PROPERTY AND EQUIPMENT AND CAPITALIZED SOFTWARE (Details) (USD $)	Dec. 31, 2014	Dec. 31, 2013
Property gross	$226,686	$215,868
Less accumulated depreciation	-110,119	-75,485
Property and equipment, net	116,567	140,383
Computer hardware
Property gross	67,890	57,585
Computer software
Property gross	37,884	37,884
Furniture and fixtures
Property gross	78,918	78,405
Office equipment
Property gross	7,832	7,832
Leasehold improvements
Property gross	$34,162	$34,162

3_PROPERTY_AND_EQUIPMENT_AND_C3

3. PROPERTY AND EQUIPMENT AND CAPITALIZED SOFTWARE (Details 1) (USD $)	Dec. 31, 2014	Dec. 31, 2013
Property And Equipment And Capitalized Software Details 1
Capitalized software	$768,535	$793,094
Less accumulated amortization	-261,318	-157,033
Capitalized software, net	$507,217	$636,061

3_PROPERTY_AND_EQUIPMENT_AND_C4

3. PROPERTY AND EQUIPMENT AND CAPITALIZED SOFTWARE (Details Narrative) (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
Depreciation and amortization expense	$146,747	$138,461
Old equipment, furniture and leasehold improvements
Impairment	0	118,302
Capitalized software
Impairment	$17,304	$38,299

4_INTANGIBLE_ASSETS_Details

4. INTANGIBLE ASSETS (Details) (USD $)	Dec. 31, 2014	Dec. 31, 2013
INTANGIBLE ASSETS gross carrying amount	$118,534	$167,417
Accumulated amortization INTANGIBLE ASSETS	45,930	28,425
INTANGIBLE ASSETS, net carrying amount	72,604	138,992
Acquired license and costs
INTANGIBLE ASSETS gross carrying amount	108,534	108,534
Accumulated amortization INTANGIBLE ASSETS	43,930	28,425
INTANGIBLE ASSETS, net carrying amount	64,604	80,109
Patent development and application costs
INTANGIBLE ASSETS gross carrying amount	0	48,883
Accumulated amortization INTANGIBLE ASSETS	0	0
INTANGIBLE ASSETS, net carrying amount	0	48,883
Other
INTANGIBLE ASSETS gross carrying amount	10,000	10,000
Accumulated amortization INTANGIBLE ASSETS	2,000	0
INTANGIBLE ASSETS, net carrying amount	$8,000	$10,000

4_INTANGIBLE_ASSETS_Details_1

4. INTANGIBLE ASSETS (Details 1) (USD $)	Dec. 31, 2014	Dec. 31, 2013
Year ending December 31:
2015	$17,505
2016	17,505
2017	17,505
2018	17,505
2019	2,584
Thereafter	72,604
Total	$72,604	$138,992

4_INTANGIBLE_ASSETS_Details_Na

4. INTANGIBLE ASSETS (Details Narrative) (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
Intangible Assets Details Narrative
Intangible asset aggregate amortization expense	$17,505	$15,505

5_DEBT_Details

5. DEBT (Details) (USD $)	Dec. 31, 2014		Dec. 31, 2013
Debt Details
Bank Loan	$5,000,000	[1]	$5,000,000	[1]
Capital lease obligations - Noteholder lease	113,093	[2]	132,321	[2]
Capital lease obligations - Office furniture	29,922	[3]	36,778	[3]
Convertible notes - related parties, net of discount of $4,338,901 and $1,921,394, respectively	25,985,330	[4]	23,512,836	[4]
Convertible notes, net of discount of $50,129 and zero, respectively	680,640		730,770
Total debt	31,808,985		29,412,705
Less: current portion of long term debt
Capital lease obligations	28,378		26,113
Bank Loan	0		5,000,000
Total current portion of long term debt	28,378		5,026,113
Debt - long term	$31,780,607		$24,386,592
[1]	Maturity June-16; Rate: 3.85%
[2]	Maturity August-19; Rate: 8.00%
[3]	Maturity September-18; Rate: 9.75%
[4]	Maturity November-16; Rate: 8.00%

5_DEBT_Details_1

5. DEBT (Details 1) (USD $)	Dec. 31, 2014
Convertible Notes	$26,665,970
2007 NPA
Convertible Notes	26,165,970
2014 NPA
Convertible Notes	$500,000

5_DEBT_Details_2

5. DEBT (Details 2) (USD $)	Dec. 31, 2014
Commitments and Contingencies Disclosure [Abstract]
2015	$39,259
2016	39,259
2017	39,259
2018	34,189
2019	19,412
Capital Leases, Future Minimum Payments Due	171,378
Less amount representing interest	-28,363
Capital lease obligations	$143,015

6_COMMITMENTS_AND_CONTINGENCIE2

6. COMMITMENTS AND CONTINGENCIES (Details 1) (USD $)	Dec. 31, 2014
Commitments and Contingencies Disclosure [Abstract]
2015	$162,528
2016	165,678
2017	167,786
2018	172,418
2019	44,082
Total	$712,492

7_STOCKHOLDERS_EQUITY_Details

7. STOCKHOLDERS' EQUITY (Details) (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
Stockholders Equity Details
Number of Shares Outstanding, Beginning	530,378	450,900
Number of Shares Cancelled	-126,717	-187,900
Number of Shares Issued	0	267,378
Number of Shares Outstanding, Ending	403,661	530,378
Stock Options Vested and Exercisable Number of Shares	226,502
Weighted Average Exercise Price Outstanding, Beginning	$1.99	$2.02
Weighted Average Exercise Price Cancelled	$3.72	$1.51
Weighted Average Exercise Price Issued		$1.62
Weighted Average Exercise Price Outstanding, Ending	$1.45	$1.99
Weighted Average Exercise Price Vested and exercisable, Ending	$1.34
Weighted Average Remaining Contractual Life (in years) Outstanding	4 years 6 months 2 days
Weighted Average Remaining Contractual Life (in years) Vested and expected to vest	5 years 1 month
Aggregate Intrinsic Value Outstanding	$7,353
Aggregate Intrinsic Value vested and expected to vest	$7,066

8_INCOME_TAXES_Details

8. INCOME TAXES (Details) (USD $)	Dec. 31, 2014	Dec. 31, 2013
Net current deferred income tax assets related to:
Allowance for doubtful accounts	$84,000	$75,000
Depreciation and amortization	140,000	137,000
Impairment charges	18,000	0
Stock-based expenses	91,000	91,000
Accrued liabilities - litigation expenses	0	12,000
Other liabilities	11,000	62,000
Other	7,000	7,000
Net operating loss carryforwards	31,580,000	28,601,000
Total	31,931,000	28,985,000
Less valuation allowance	-31,931,000	-28,985,000
Net current deferred income tax	$0	$0

8_INCOME_TAXES_Details_1

8. INCOME TAXES (Details 1) (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
Income Tax Disclosure [Abstract]
Tax benefit computed at statutory rate of 34%	($2,495,000)	($9,337,000)
State income tax benefit, net of federal effect	-334,000	-1,251,000
Permanent differences:
Stock based compensation	30,000	24,000
Loss on debt extinguishment	0	8,402,000
Debt discount amortization	732,000	0
Other	-18,000	3,000
Expiration of net operating loss carryforwards	0	939,000
Change due to increase in NOL carryforwards from 15 to 20 years	-861,000	0
Change in valuation allowance - continuing operations	2,946,000	1,220,000
Totals	0	0
Tax expense (benefit) from discontinued operations	0	-26,000
Change in valuation allowance - discontinued operations	0	26,000
Net income tax expense, discontinued operations	$0	$0

8_INCOME_TAXES_Details_Narrati

8. INCOME TAXES (Details Narrative) (USD $)	12 Months Ended
	Dec. 31, 2014
Income Taxes Details Narrative
Federal net operating loss carryforward	$82,000,000
Carryforward expiration	Expire between 2018 and 2034

9_MAJOR_CUSTOMERS_AND_CONCENTR1

9. MAJOR CUSTOMERS AND CONCENTRATION OF CREDIT RISK (Details Narrative)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
One Customer
% Concentration	20.00%
Two customers Revenue
% Concentration		23.00%
Two customers Accounts receivable
% Concentration	79.00%
Three customers accounts receivable
% Concentration		58.00%