MobileSmith (MOSTQ) 10-Q/A 9 Nov 16 2016 Q3 Quarterly report (amended) Financial data

Document and Entity Information

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2016	Nov. 08, 2016
Document And Entity Information
Entity Registrant Name	MobileSmith, Inc.
Entity Central Index Key	1,113,513
Document Type	10-Q
Document Period End Date	Sep. 30, 2016
Amendment Flag	false
Current Fiscal Year End Date	--12-31
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 Common Stock, Shares Outstanding		19,827,542
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2,016

CONDENSED CONSOLIDATED BALANCE

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($)	Sep. 30, 2016	Dec. 31, 2015
Current assets
Cash and cash equivalents	$ 392,759	$ 580,220
Restricted cash	73,143	124,988
Trade Accounts Receivable, Net of Allowance for Doubtful Accounts of $33,300 and $16,050, Respectively	231,855	183,350
Prepaid expenses and other current assets	66,253	69,552
Total current assets	764,010	958,110
Property and equipment, net	114,099	98,963
Capitalized software, net	301,143	390,518
Intangible assets, net	41,973	55,099
Other assets	0	6,264
Total Other Assets	457,215	550,844
TOTAL ASSETS	1,221,225	1,508,954
Current liabilities
Trade Accounts Payable	59,350	45,717
Accrued Expenses	136,653	247,858
Accrued interest	436,228	350,613
Capital Lease Obligations	36,203	30,877
Deferred revenue	1,361,565	1,007,970
Bank Loan	0	5,000,000
Convertible Notes Payable, Related Parties, Net of Discount	0	33,363,488
Convertible Notes Payable, Net of Discount	0	680,640
Total current liabilities	2,029,999	40,727,163
Long-term liabilities:
Bank Loan	5,000,000	0
Convertible Notes Payable, Related Parties, Net of Discount	37,829,008	0
Convertible Notes Payable, Net of Discount	680,640	0
Capital Lease Obligations and Other Notes Payable	73,356	83,761
Deferred Rent	45,599	53,592
Total long-term liabilities	43,628,603	137,353
Total liabilities	45,658,602	40,864,516
Commitments and Contingencies (Note 3)
Stockholders' deficit:
Preferred Stock, $0.001 Par Value, 5,000,000 Shares Authorized, No Shares Issued and Outstanding at September 30, 2016 and December 31, 2015	0	0
Common Stock, $0.001 Par Value, 100,000,000 and 45,000,000 Shares Authorized At September 30, 2016 and December 31, 2015, Respectively; 19,827,542 Shares Issued and Outstanding at September 30, 2016 and December 31, 2015	19,828	19,828
Additional paid-in capital	98,142,126	97,545,601
Accumulated deficit	(142,599,331)	(136,920,991)
Total stockholders' deficit	(44,437,377)	(39,355,562)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT	$ 1,221,225	$ 1,508,954

CONDENSED CONSOLIDATED BALANCE3

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($)	Sep. 30, 2016	Dec. 31, 2015
Statement of Financial Position [Abstract]
Allowance for Doubtful Accounts	$ 33,300	$ 16,050
Stockholders' equity:
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, authorized	5,000,000	5,000,000
Preferred stock, issued	0	0
Preferred stock, outstanding	0	0
Common stock, par value	$ 0.001	$ 0.001
Common stock, authorized	100,000,000	45,000,000
Common stock, issued	19,827,542	19,827,542
Common stock, outstanding	19,827,542	19,827,542

CONDENSED CONSOLIDATED STATEMEN

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
REVENUES:
Subscription and Support	$ 415,166	$ 463,291	$ 1,380,465	$ 1,237,024
Professional Services and Other	0	31,080	4,154	91,080
Total revenues	415,166	494,371	1,384,619	1,328,104
COST OF REVENUES
Subscription and Support	138,175	125,600	346,544	259,298
Professional Services and Other	11,418	46,697	67,660	70,242
Total Cost of Revenue	149,593	172,297	414,204	329,540
GROSS PROFIT	265,573	322,074	970,415	998,564
OPERATING EXPENSES:
Sales and marketing	288,129	307,857	849,303	867,153
Research and development	446,490	356,098	1,253,889	1,029,923
General and administrative	257,615	299,029	1,009,976	897,247
Total operating expenses	992,234	962,984	3,113,168	2,794,323
LOSS FROM OPERATIONS	(726,661)	(640,910)	(2,142,753)	(1,795,759)
OTHER INCOME (EXPENSE):
Other Income	153,918	594	165,486	2,084
Interest expense, net	(997,730)	(1,331,602)	(3,701,073)	(3,910,355)
Total Other Expense	(843,812)	(1,331,008)	(3,535,587)	(3,908,271)
NET LOSS	$ (1,570,473)	$ (1,971,918)	$ (5,678,340)	$ (5,704,030)
NET LOSS PER COMMON SHARE:
Basic and Fully Diluted	$ (.08)	$ (.10)	$ (.29)	$ (.29)
WEIGHTED-AVERAGE NUMBER OF SHARES USED IN COMPUTING NET LOSS PER COMMON SHARE:
Basic and fully diluted	19,827,542	19,827,542	19,827,542	19,827,542

CONDENSED CONSOLIDATED STATEME5

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) - USD ($)	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$ (5,678,340)	$ (5,704,030)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	123,324	121,685
Bad Debt Expense (Gain on Reversal of Bad Debt)	33,300	(10,500)
Amortization of Debt Discount	1,248,736	1,750,296
Share Based Compensation	63,309	63,925
Impairment of long lived assets	8,356	0
Changes in assets and liabilities:
Accounts Receivable	(81,805)	(644,305)
Prepaid Expenses and Other Assets	9,563	4,235
Accounts Payable	13,633	(42,827)
Deferred revenue	353,595	600,870
Accrued and other expenses	(33,583)	(147,659)
Net Cash Used in Operating Activities	(3,939,912)	(4,008,310)
CASH FLOWS FROM INVESTING ACTIVITIES:
Payments to Acquire Property, Plant and Equipment	(26,483)	(10,340)
Net Cash Used in Investing Activities	(26,483)	(10,340)
CASH FLOWS FROM FINANCING ACTIVITIES:
Restricted cash used to pay interest expense	166,610	146,083
Deposit of Cash to Restricted Account	(114,765)	(97,388)
Proceeds from Issuance of Long Term Debt	3,750,000	3,750,000
Repayments of debt borrowings	(22,911)	(21,057)
Net cash provided by financing activities	3,778,934	3,777,638
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	(187,461)	(241,012)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD	580,220	320,286
CASH AND CASH EQUIVALENTS, END OF PERIOD	392,759	79,274
Supplemental disclosures of cash flow information:
Cash paid during the period for: Interest	2,397,504	2,289,464
The Company Recorded Debt Discount Associated with Beneficial Conversion Feature	533,216	0
Financed purchase of a vehicle	$ 18,365	$ 0

CONDENSED CONSOLIDATED STATEME6

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT (Unaudited) - 9 months ended Sep. 30, 2016 - USD ($)	Common Stock	Additional Paid-In Capital	Accumulated Deficit	Total
Beginning Balance, shares at Dec. 31, 2015	19,827,542
Beginning Balance, amount at Dec. 31, 2015	$ 19,828	$ 97,545,601	$ (136,920,991)	$ (39,355,562)
Equity-Based Compensation		63,309		63,309
Beneficial Conversion Feature Recorded as a Result of Issuance of Convertible Debt		533,216		533,216
Net loss			(5,678,340)	(5,678,340)
Ending Balance, shares at Sep. 30, 2016	19,827,542
Ending Balance, amount at Sep. 30, 2016	$ 19,828	$ 98,142,126	$ (142,599,331)	$ (44,437,377)

1. DESCRIPTION OF BUSINESS AND

1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION	9 Months Ended
	Sep. 30, 2016
Accounting Policies [Abstract]
1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION	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 software products and services and targets businesses who need to connect with their stakeholders (customers, employees, broader public) through a variety of mobile devices and do so within the fastest time to market possible, while by-passing the need to write a single line of code. 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 without writing a single line of code. These condensed 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. The subsidiary has not had material activity in 2016. 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 Company prepared the accompanying unaudited condensed consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Pursuant to these rules and regulations, the Company has condensed or omitted certain information and footnote disclosures it normally includes in its audited annual consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). In management’s opinion, the Company has made all adjustments (consisting only of normal, recurring adjustments, except as otherwise indicated) necessary to fairly present its financial position, results of operations, cash flows, and stockholders’ deficit as of September 30, 2016. The Company’s interim period operating results do not necessarily indicate the results that may be expected for any other interim period or for the full fiscal year. These condensed consolidated financial statements and accompanying notes should be read in conjunction with the audited annual consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015 on file with the SEC (the “Annual Report”). Except as otherwise noted, there have been no material changes to the Company’s significant accounting policies as compared to the significant accounting policies described in the Annual Report. The accompanying condensed 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 nine months ended September 30, 2016 and 2015, the Company incurred net losses as well as negative cash flows from operations. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying condensed consolidated 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. Recently Issued Accounting Pronouncements The Company evaluates new significant accounting pronouncements at each reporting period. For the period ended September 30, 2016, 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 condensed consolidated financial statements. In March 2016, the Financial Accounting Stndards Board (FASB), issued a new accounting standard intended to simplify various aspects related to how share-based payments are accounted for and presented in the financial statements. The new guidance includes provisions to reduce the complexity related to income taxes, statement of cash flows, and forfeitures when accounting for share-based payment transactions. The new standard is effective for annual periods beginning after December 15, 2016, and interim periods within annual periods beginning after December 15, 2017. Early adoption is permitted. The Company is currently evaluating the impact that this new standard will have on its condensed consolidated financial statements and related disclosures. In August 2016, the FASB issued new guidance to address how specific cash receipts and payments are classified in cash flow statements, to reduce diversity in practice. The new standard is effective for annual periods beginning after December 15, 2017, and for interim periods within fiscal years beginning after December 15, 2018. Early adoption is permitted. The Accounting Standards Update (ASU) calls for application of retrospective transition method to each period presented. The Company is currently evaluating the impact of ASU and plans to adopt its provisions for the annual period ending December 31, 2016.

2. DEBT

2. DEBT	9 Months Ended
	Sep. 30, 2016
Debt Disclosure [Abstract]
2. DEBT	The table below summarizes the Company’s debt outstanding at September 30, 2016 and December 31, 2015: Debt Description September 30, December 31, 2016 2015 Maturity Rate Comerica Bank Loan and Security Agreement $ 5,000,000 $ 5,000,000 June 2018 3.85 % Capital lease obligations - Noteholder lease 75,526 92,270 August 2019 8.00 % Capital lease obligations - office furniture 16,201 22,368 August 2018 9.80 % Capital lease obligations - vehicle 17,832 — July 2021 5.59 % Convertible notes - related parties, net of discount of $1,295,223 and $2,010,743, respectively 37,829,008 33,363,488 November 2018 8.00 % Convertible notes, net of discount of $50,129 680,640 680,640 November 2018 8.00 % Total debt 43,619,207 39,158,766 Less: current portion of long-term debt Capital lease obligations 36,203 30,877 Comerica Bank LSA — 5,000,000 Convertible notes - related parties, net of discount of $2,010,743 — 33,363,488 Convertible notes, net of discount of $50,129 — 680,640 Total current portion of long-term debt 36,203 39,075,005 Debt - long-term $ 43,583,004 $ 83,761 Convertible Notes During the nine months ended September 30, 2016, the Company privately placed $3,750,000 in principal amount of additional unsecured Convertible Subordinated Notes unsecured Convertible Subordinated Note Purchase Agreement dated December 10, 2014 On May 17, 2016, the Company and the holders of the majority of the aggregate outstanding principal amount of 2014 NPA Notes and holders of the majority of the aggregate outstanding principal amount of the Secured Promissory Notes (the “2007 NPA Notes”) under the Convertible Secured Subordinated Note Purchase Agreement dated November 14, 2007 (the "2007 NPA”) agreed to extend to November 14, 2018 the maturity date of the 2014 NPA Notes and the 2007 NPA Notes. Except as so extended, all of the terms relating to the outstanding 2007 Notes and the 2014 Notes continue in full force and effect. The Company is entitled to utilize the amounts available for future borrowing under each of the 2007 Note Purchase Agreement and the 2014 Note Purchase Agreement through November 14, 2018. As a result of modification, any unamortized discount will be amortized into interest expense through the new maturity date of November 14, 2018. The market value of the Company’s common stock on the date of each issuance of the 2014 NPA Notes to UBP was higher than the conversion price, which resulted in a beneficial conversion feature totaling $533,216 and corresponding debt discount, which is being amortized into interest expense through the maturity of the Notes. The table below summarizes convertible notes issued as of September 30, 2016 by type: Convertible Notes Type: Balance 2007 NPA notes, net of discount $ 29,547,833 2014 NPA notes, net of discount 8,961,815 Total convertible notes, net of discount $ 38,509,648 Comerica LSA On May 24, 2016, the Company and Comerica Bank entered into First Amendment to Loan and Security Agreement with Comerica Bank dated June 9, 2014, extending to June 6, 2018 the maturity date of the outstanding loan thereunder, which was originally scheduled to become due on June 6, 2016.

3. COMMITMENTS AND CONTINGENCIE

3. COMMITMENTS AND CONTINGENCIES	9 Months Ended
	Sep. 30, 2016
Commitments and Contingencies Disclosure [Abstract]
3. COMMITMENTS AND CONTINGENCIES	Aggregate future lease commitments The Company leases computers, office equipment, office furniture and company vehicle under capital lease agreements that expire through July 2021. Total amount financed under these capital leases at September 30, 2016 was $109,559. This obligation is included within the Company’s total debt. The table below summarizes Company’s future obligations under its capital leases: Year: 2016 $ 10,692 2017 43,477 2018 38,407 2019 23,631 2020 4,219 Thereafter 2,461 122,877 Lease amount representing interest (13,328 ) Capital lease obligations $ 109,559 The Company leases its office space in Raleigh, North Carolina pursuant to a lease with an initial term that expires in March 2019. The lease contains an option to renew for two additional three-year lease terms. The table below summarizes the Company’s future obligation under its office lease: Year: 2016 $ 41,381 2017 167,786 2018 172,418 2019 44,082 Total $ 425,667 Legal Proceedings From time to time, the Company may be subject to routine litigation, claims or disputes in the ordinary course of business. The Company defends itself vigorously in all such matters. In the opinion of management, no pending or known threatened claims, actions or proceedings against the Company are expected to have a material adverse effect on its financial position, results of operations or cash flows. However, the company cannot predict with certainty the outcome or effect of any such litigation or investigatory matters or any other pending litigations or claims. There can be no assurance as to the ultimate outcome of any such lawsuits and investigations. 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.

4. EQUITY COMPENSATION

4. EQUITY COMPENSATION	9 Months Ended
	Sep. 30, 2016
Equity [Abstract]
4. EQUITY COMPENSATION	In May 2016, the Company’s shareholders voted to increase the number of authorized shares of Common Stock from 45 million to 100 million shares. The increase became effective on June 7, 2016. In May 2016, the Company’s shareholders approved the adoption of the MobileSmith Inc. 2016 Equity Compensation Plan for officers, directors, employees and consultants, initially reserving for issuance thereunder 15,000,000 shares of Common Stock. As of September 30, 2016, options to purchase 468,860 shares of Common Stock were granted under 2016 Equity Compensation Plan. Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Term Aggregate Intrinsic Value Outstanding, December 31, 2015 361,349 $ 1.44 Cancelled (122,983 ) 1.55 Issued 468,860 1.50 Outstanding, September 30, 2016 707,226 1.46 5.27 $ 13,113 Vested and exercisable, September 30, 2016 206,230 $ 1.36 2.38 $ 13,113 Aggregate intrinsic value represents the difference between the closing price of the Company’s common stock at September 30, 2016 and the exercise price of outstanding, in-the-money stock options. The closing price of the common stock at September 30, 2016, as reported on the OTCQB Venture Marketplace, was $1.25 per share. At September 30, 2016, $264,886 unvested expense has yet to be recorded related to outstanding stock options.

5. MAJOR CUSTOMERS AND CONCENTR

5. MAJOR CUSTOMERS AND CONCENTRATION	9 Months Ended
	Sep. 30, 2016
Risks and Uncertainties [Abstract]
5. MAJOR CUSTOMERS AND CONCENTRATION	For the nine months ended September 30, 2016, one major customer accounted for 16% of total revenues and three customers accounted for 67% of the accounts receivable balance. For the nine months ended September 30, 2015, two major customers accounted for 31% of total revenues and three customers accounted for 81% of the accounts receivable balance.

6. SUBSEQUENT EVENTS

6. SUBSEQUENT EVENTS	9 Months Ended
	Sep. 30, 2016
Subsequent Events [Abstract]
6. SUBSEQUENT EVENTS	On October 21, 2016, the Company issued one 2014 NPA Note to UBP in the principal amount of $900,000 on the same terms as the currently outstanding 2014 NPA Notes. The note matures on November 14, 2018.

2. DEBT (Tables)

2. DEBT (Tables)	9 Months Ended
	Sep. 30, 2016
Debt Disclosure [Abstract]
Company's debt	Debt Description September 30, December 31, 2016 2015 Maturity Rate Comerica Bank Loan and Security Agreement $ 5,000,000 $ 5,000,000 June 2018 3.85 % Capital lease obligations - Noteholder lease 75,526 92,270 August 2019 8.00 % Capital lease obligations - office furniture 16,201 22,368 August 2018 9.80 % Capital lease obligations - vehicle 17,832 — July 2021 5.59 % Convertible notes - related parties, net of discount of $1,295,223 and $2,010,743, respectively 37,829,008 33,363,488 November 2018 8.00 % Convertible notes, net of discount of $50,129 680,640 680,640 November 2018 8.00 % Total debt 43,619,207 39,158,766 Less: current portion of long-term debt Capital lease obligations 36,203 30,877 Comerica Bank LSA — 5,000,000 Convertible notes - related parties, net of discount of $2,010,743 — 33,363,488 Convertible notes, net of discount of $50,129 — 680,640 Total current portion of long-term debt 36,203 39,075,005 Debt - long-term $ 43,583,004 $ 83,761
Summary of convertible notes	Convertible Notes Type: Balance 2007 NPA notes, net of discount $ 29,547,833 2014 NPA notes, net of discount 8,961,815 Total convertible notes, net of discount $ 38,509,648

3. COMMITMENTS AND CONTINGENC14

3. COMMITMENTS AND CONTINGENCIES (Tables)	9 Months Ended
	Sep. 30, 2016
Commitments and Contingencies Disclosure [Abstract]
Company's future obligations under its capital leases	Year: 2016 $ 10,692 2017 43,477 2018 38,407 2019 23,631 2020 4,219 Thereafter 2,461 122,877 Lease amount representing interest (13,328 ) Capital lease obligations $ 109,559
Company's future obligation under the office lease	Year: 2016 $ 41,381 2017 167,786 2018 172,418 2019 44,082 Total $ 425,667

4. EQUITY COMPENSATION (Tables)

4. EQUITY COMPENSATION (Tables)	9 Months Ended
	Sep. 30, 2016
Equity Compensation Tables
Schedule of Stock Options Outstanding	Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Term Aggregate Intrinsic Value Outstanding, December 31, 2015 361,349 $ 1.44 Cancelled (122,983 ) 1.55 Issued 468,860 1.50 Outstanding, September 30, 2016 707,226 1.46 5.27 $ 13,113 Vested and exercisable, September 30, 2016 206,230 $ 1.36 2.38 $ 13,113

2. DEBT (Details)

2. DEBT (Details) - USD ($)	Sep. 30, 2016	Dec. 31, 2015
Debt Details
Comerica Bank LSA	$ 5,000,000	$ 5,000,000
Capital leases obligations - Noteholder lease	75,526	92,270
Capital lease obligations - Office furniture	16,201	22,368
Capital lease obligations - vehicle	17,832	0
Convertible notes - related parties, net of discount of $1,295,223 and $2,010,743, respectively	37,829,008	33,363,488
Convertible notes, net of discount of $50,129	680,640	680,640
Total debt	43,619,207	39,158,766
Less: current portion of long term debt
Capital lease obligations	36,203	30,877
Comerica Bank LSA	0	5,000,000
Convertible notes - related parties, net of discount of $2,010,743	0	33,363,488
Convertible notes, net of discount of $50,129	0	680,640
Total current portion of long term debt	36,203	39,075,005
Debt - long term	$ 43,583,004	$ 83,761

2. DEBT (Details 1)

2. DEBT (Details 1)	Sep. 30, 2016USD ($)
Convertible notes, net of discount	$ 38,509,648
2007 NPA notes, net of discount
Convertible notes, net of discount	29,547,833
2014 NPA notes
Convertible notes, net of discount	$ 8,961,815

3. COMMITMENTS AND CONTINGENC18

3. COMMITMENTS AND CONTINGENCIES (Details)	Sep. 30, 2016USD ($)
Commitments and Contingencies Disclosure [Abstract]
2,016	$ 10,692
2,017	43,477
2,018	38,407
2,019	23,631
2,020	4,219
Thereafter	2,461
Total	122,877
Less amount representing interest	(13,328)
Capital lease obligations	$ 109,559

3. COMMITMENTS AND CONTINGENC19

3. COMMITMENTS AND CONTINGENCIES (Details 1)	Sep. 30, 2016USD ($)
Commitments and Contingencies Disclosure [Abstract]
2,016	$ 41,381
2,017	167,786
2,018	172,418
2,019	44,082
Total	$ 425,667

4. EQUITY COMPENSATION (Details

4. EQUITY COMPENSATION (Details)	9 Months Ended
	Sep. 30, 2016USD ($)$ / sharesshares
Equity Compensation Details
Number of Shares Outstanding, Beginning | shares	361,349
Number of Shares Cancelled | shares	(122,983)
Number of Shares Issued | shares	468,860
Number of Shares Outstanding, Ending | shares	707,226
Stock Options Vested and Exercisable Number of Shares | shares	206,230
Weighted Average Exercise Price Outstanding, Beginning | $ / shares	$ 1.44
Weighted Average Exercise Price Cancelled | $ / shares	1.55
Weighted Average Exercise Price Issued | $ / shares	1.50
Weighted Average Exercise Price Outstanding, Ending | $ / shares	1.46
Weighted Average Exercise Price Vested and exercisable, Ending | $ / shares	$ 1.36
Weighted Average Remaining Contractual Life (in years) Outstanding	5 years 3 months 7 days
Weighted Average Remaining Contractual Life (in years) Vested and expected to vest	2 years 4 months 17 days
Aggregate Intrinsic Value Outstanding | $	$ 13,113
Aggregate Intrinsic Value vested and expected to vest | $	$ 13,113

5. MAJOR CUSTOMERS AND CONCEN21

5. MAJOR CUSTOMERS AND CONCENTRATION OF CREDIT RISK (Details Narrative)	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
One Customers
Percentage of revenues from major customers	16.00%
Three Customers
Percentage of accounts receivables from major customers	67.00%	81.00%
Two Customer
Percentage of revenues from major customers	31.00%