MobileSmith (MOSTQ) 10-Q 14 May 19 2019 Q1 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2019	May 13, 2019
Document And Entity Information
Entity Registrant Name	MobileSmith, Inc.
Entity Central Index Key	0001113513
Document Type	10-Q
Document Period End Date	Mar. 31, 2019
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Is Entity's Reporting Status Current?	Yes
Entity Filer Category	Non-accelerated Filer
Entity Emerging Growth Company	false
Entity Small Business	true
Entity Common Stock, Shares Outstanding		28,271,598
Document Fiscal Period Focus	Q1
Document Fiscal Year Focus	2019

CONDENSED CONSOLIDATED BALANCE

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($)	Mar. 31, 2019	Dec. 31, 2018
Current Assets
Cash and Cash Equivalents	$ 103,063	$ 267,290
Restricted Cash	168,561	239,611
Trade Accounts Receivable, Net	149,523	271,387
Prepaid Expenses and Other Current Assets	175,856	125,798
Total Current Assets	597,003	904,086
Property and Equipment, Net	40,880	45,012
Capitalized Software, Net	38,042	64,352
Operating Lease Right-of-Use Asset	811,171	0
Total Assets	1,487,096	1,013,450
Current Liabilities
Trade Accounts Payable	214,654	166,681
Accrued Interest	866,429	1,584,794
Other Liabilities and Accrued Expenses	261,203	307,811
Operating Lease Liability, Current	104,574	0
Contract Liability, Current	1,238,827	1,476,725
Total Current Liabilities	2,685,687	3,536,011
Long-Term Liabilities
Bank Loan	5,000,000	5,000,000
Subordinated Promissory Note, Related Party	1,125,000	525,000
Convertible Notes Payable, Related Parties, Net of Discount	37,066,516	35,740,085
Convertible Notes Payable, Net of Discount	610,740	610,740
Deferred Rent	0	35,287
Operating Lease Liability	743,520	0
Contract Liability	210,260	226,270
Total Liabilities	47,441,723	45,673,393
Commitments and Contingencies (Note 3)
Stockholders' Deficit
Preferred Stock, $0.001 Par Value, 5,000,000 Shares Authorized, No Shares Issued and Outstanding at March 31, 2019 and December 31, 2018	0	0
Common Stock, $0.001 Par Value, 100,000,000 Shares Authorized at both March 31, 2019 and December 31, 2018 and 28,271,598 Shares Issued and Outstanding at March 31, 2019 and December 31, 2018	28,272	28,272
Additional Paid-in Capital	114,962,533	114,082,897
Accumulated Deficit	(160,945,432)	(158,771,112)
Total Stockholders' Deficit	(45,954,627)	(44,659,943)
Total Liabilities and Stockholders' Deficit	$ 1,487,096	$ 1,013,450

CONDENSED CONSOLIDATED BALANC_2

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Mar. 31, 2019	Dec. 31, 2018
Stockholders' Deficit
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	100,000,000
Common Stock, Issued	28,271,598	28,271,598
Common Stock, Outstanding	28,271,598	28,271,598

CONDENSED CONSOLIDATED STATEMEN

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) - USD ($)	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
REVENUES:
Total Revenue	$ 740,719	$ 496,823
COST OF REVENUES
Total Cost of Revenue	231,921	161,535
GROSS PROFIT	508,798	335,288
OPERATING EXPENSES:
Sales and Marketing	359,781	297,238
Research and Development	499,872	341,401
General and Administrative	713,661	523,044
Total Operating Expenses	1,573,314	1,161,683
LOSS FROM OPERATIONS	(1,064,516)	(826,395)
OTHER INCOME (EXPENSE):
Other Income	807	1,597
Interest Expense, Net	(1,112,784)	(994,898)
Total Other Expense	(1,111,977)	(993,301)
NET LOSS	$ (2,176,493)	$ (1,819,696)
NET LOSS PER COMMON SHARE:
Basic and Fully Diluted from Continuing Operations	$ (0.08)	$ (0.07)
WEIGHTED-AVERAGE NUMBER OF SHARES USED IN COMPUTING NET LOSS PER COMMON SHARE:
Basic And Fully Diluted	28,271,598	24,722,647
Subscription and Support
REVENUES:
Total Revenue	$ 616,117	$ 496,823
COST OF REVENUES
Total Cost of Revenue	193,081	161,535
Services and Other
REVENUES:
Total Revenue	124,602	0
COST OF REVENUES
Total Cost of Revenue	$ 38,840	$ 0

CONDENSED CONSOLIDATED STATEM_2

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) - USD ($)	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss	$ (2,176,493)	$ (1,819,696)
Adjustments to Reconcile Net Loss to Net Cash Used in Operating Activities:
Depreciation and Amortization	30,442	40,664
Amortization of Debt Discount	251,606	133,271
Share Based Compensation	504,461	163,263
Changes in Assets and Liabilities:
Accounts Receivable	121,864	156,749
Prepaid Expenses and Other Assets	(50,058)	(174,066)
Accounts Payable	47,973	(59,017)
Contract Liability	(253,908)	186,152
Operating Lease Right-of-use Asset	37,300	0
Operating Lease Liability	(33,491)	0
Accrued and Other Expenses	(757,106)	(62,968)
Net Cash Used in Operating Activities	(2,277,410)	(1,435,648)
CASH FLOWS FROM INVESTING ACTIVITIES:
Payments to Acquire Property, Plant and Equipment	0	(1,978)
Net Cash Used in Investing Activities	0	(1,978)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from Issuance of Subordinated Promissory Notes, Related Party	600,000	325,000
Proceeds from Issuance of Convertible Notes Payable, Related Party	1,450,000	2,250,000
Repayments of Financing Lease Obligations	(7,867)	(9,720)
Net Cash Provided by Financing Activities	2,042,133	2,565,280
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	(235,277)	1,127,654
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING OF PERIOD	506,901	178,856
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD	271,624	1,306,510
Composition of Cash, Cash Equivalents and Restricted Cash Balance:
Cash and Cash Equivalents	103,063	1,242,268
Restricted Cash	168,561	64,242
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD	271,624	1,306,510
Supplemental Disclosures of Cash Flow Information:
Operating Lease Payments	51,887	0
Cash Paid During the Period for Interest	1,577,846	866,654
Operating Lease Right-Of-Use Asset Obtained In Exchange For Lease Obligations	883,634	0
Recorded Debt Discount Associated with Beneficial Conversion Feature	$ 375,175	$ 524,825

CONDENSED CONSOLIDATED STATEM_3

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT (Unaudited) - USD ($)	Common Stock	Additional Paid-In Capital	Accumulated Deficit	Total
Beginning Balance, shares at Dec. 31, 2017	24,722,647
Beginning Balance, amount at Dec. 31, 2017	$ 24,723	$ 105,795,621	$ (150,501,642)	$ (44,681,298)
Equity-Based Compensation		163,264		163,264
Beneficial Conversion Feature Recorded as a Result of Issuance of Convertible Debt		524,825		524,825
Cumulative Adjustment Related To Adoption Of New Accounting Pronouncement			65,277	65,277
Net Loss			(1,819,696)	(1,819,696)
Ending Balance, shares at Mar. 31, 2018	24,722,647
Ending Balance, amount at Mar. 31, 2018	$ 24,723	106,483,710	(152,256,061)	(45,747,628)
Beginning Balance, shares at Dec. 31, 2018	28,271,598
Beginning Balance, amount at Dec. 31, 2018	$ 28,272	114,082,897	(158,771,112)	(44,659,943)
Equity-Based Compensation		504,461		504,461
Beneficial Conversion Feature Recorded as a Result of Issuance of Convertible Debt		375,175		375,175
Cumulative Adjustment Related To Adoption Of New Accounting Pronouncement			2,173	2,173
Net Loss			(2,176,493)	(2,176,493)
Ending Balance, shares at Mar. 31, 2019	28,271,598
Ending Balance, amount at Mar. 31, 2019	$ 28,272	$ 114,962,533	$ (160,945,432)	$ (45,954,627)

1. DESCRIPTION OF BUSINESS AND

1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION	3 Months Ended
	Mar. 31, 2019
Organization, Consolidation and Presentation of Financial Statements [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 same year the Company focused exclusively on development of do-it-yourself customer facing platform that enabled 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. During 2017 the Company concluded that it had its highest rate of success with clients within the Healthcare industry and concentrated its development and sales and marketing efforts in that industry. During 2018 we further refined our Healthcare offering and redefined our product - a suite of e-health mobile solutions, that consists of: ● access to a catalog of ready to deploy mobile app solutions (App Blueprint Catalog) with focus on three operational areas: patient acquisition, perioperative surgery care and in-network coordination ● related deployment, support and integration services (App Build and Managed Services and custom development, where applicable), and ● hosting of the deployed mobile apps. Our flagship MobileSmith® Platform has transformed from a do-it-yourself customer facing platform into an internally used engine that supports the deployment of mobile apps created from Blueprints, integration of various third-party code and services into the mobile apps produced from Blueprints and the hosting of deployed apps and design of new Blueprints. 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 March 31, 2019. 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, 2018 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 three months ended March 31, 2019 and 2018, 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. Certain prior period amounts have been reclassified for consistency with the current period presentation. These reclassifications had no effect on the reported results of operations. Recently Issued Accounting Pronouncements and Their Impact on Significant Accounting Policies The Company's significant accounting policies are detailed in "Note 2: Significant Accounting Policies" of the Company's Annual Report on Form 10-K for the year ended December 31, 2018. In February 2016, the Financial Accounting Standards Board ("FASB") established Topic 842, Leases, by issuing Accounting Standards Update (ASU) No. 2016-02, which requires companies to recognize leases the balance sheet and disclose key information about leasing arrangements. The new standard establishes a right-of-use model ("ROU") that requires a lessee to recognize a ROU asset and lease liability on the balance sheet for all leases with a term longer than 12 months. Leases are to be classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the income statement. The new standard is effective for us on January 1, 2019, and we adopted the standard on January1, 2019. A modified retrospective transition approach is required, applying the new standard to all leases existing at the date of initial application. As a result we did not restate the prior period presented in the Condensed Consolidated Financial Statements . The new standard provides a number of optional practical expedients in transition. We elected the ‘package of practical expedients’, which permits us not to reassess under the new standard our prior conclusions about lease identification, lease classification and initial direct costs. The most significant judgments and impacts upon adoption of the standard include the following: ● We recognized right-of-use asset and operating lease liability for our corporate office operating lease that have not previously been recorded. The lease liability for operating lease is based on the net present value of future minimum lease payments. ● Capital lease assets previously included within Property and equipment were reclassified to financing lease right-of-use assets. Financing lease right-of-use assets will continue to be included within Property and equipment. Capital lease liabilities previously included in Short-term capital lease obligations and Long-term capital lease obligations were reclassified to Other Liabilities and Accrued Expenses in our Condensed Consolidated Balance Sheet. ● The right-of-use asset for operating lease is based on the lease liability adjusted for the reclassification of deferred rent, which we remeasured at adoption due to the application of hindsight to our lease term estimates. Deferred rent will no longer be presented separately. ● Certain line items in the Condensed Consolidated Statements of Cash Flows and have been renamed to align with the new terminology presented in the new standard; “Repayment of capital lease obligations” is now presenting as “Repayments of financing lease obligations”. In the “Operating Activities” section of the Condensed Consolidated Statements of Cash Flows we have added “Operating lease right-of-use asset” and “Operating lease liability” which represent the change in the operating lease asset and liability, respectively. Additionally, in the “Supplemental disclosure of cash flow information” section of the Condensed Consolidated Statements of Cash Flows we have added “Operating lease payments,” and in the “Noncash investing and financing activities” section we have added “Operating lease right-of-use assets obtained in exchange for lease obligations.” ● In determining the discount rate used to measure the right-of-use asset and lease liability, we use rates implicit in the lease, or if not readily available, we use our incremental borrowing rate. Our incremental borrowing rate of 8% is based on the rate on our convertible debt. The following tables summarize the current period impacts of adopting Topic 842 on our Condensed Consolidated Financial Statements as of January 1, 2019: Beginning Balance Cumulative Effect Adjustment Beginning Balance, As Adjusted Assets Operating Lease Right-of-Use Asset - Corporate Office $ — $ 883,634 $ 883,634 Liabilities and Stockholders' Deficit Operating Lease Liabilities — 881,585 881,585 Accumulated Deficit $ (158,771,112 ) $ 2,173 $ (158,768,939 )

2. DEBT

2. DEBT	3 Months Ended
	Mar. 31, 2019
Debt Disclosure [Abstract]
2. DEBT	The table below summarizes the Company's debt outstanding at March 31, 2019 and December 31, 2018: Debt Description March 31, December 31, 2019 2018 Maturity Rate Comerica Bank Loan and Security Agreement $ 5,000,000 $ 5,000,000 June 2020 6.10 % Convertible notes - related parties, net of discount of $1,647,715 and $1,527,146, respectively 37,066,516 35,740,085 November 2020 8.00 % Convertible notes, net of discount of $45,029 610,740 610,740 November 2020 8.00 % Subordinated Promissory Note, Related Party 1,125,000 525,000 November 2020 8.00 % Total debt $ 43,802,256 $ 41,875,825 Convertible Notes During the three months ended March 31, 2019, the Company issued through a private placement of $1,450,000 in principal amount of additional unsecured Convertible Subordinated Notes unsecured Convertible Subordinated Note Purchase Agreement dated December 10, 2014 The table below summarizes our convertible notes issued as of March 31, 2019 by type: Convertible Notes Type: Balance 2007 NPA notes, net of discount $ 20,382,355 2014 NPA notes, net of discount 17,294,901 Total convertible notes, net of discount $ 37,677,256 Subordinated Promissory Notes, Related Party During the three months ended March 31, 2019, the Company issued several subordinated notes to a related party totaling $600,000. These notes have an interest rate of 8% and mature on November 14, 2020. Comerica LSA The Company has an outstanding Loan and Security Agreement with Comerica Bank dated June 9, 2014 (the "LSA") in the amount of $5,000,000, with original maturity of June 9, 2016. On June 8, 2018, the Company and Comerica Bank entered into Second Amendment to the LSA, which extended the maturity of the LSA to June 9, 2020. The LSA is secured by an extended irrevocable letter of credit issued by UBS AG (Geneva, Switzerland) ("UBS AG") with a renewal term expiring on May 31, 2020, which term is 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.

3. COMMITMENTS AND CONTINGENCIE

3. COMMITMENTS AND CONTINGENCIES	3 Months Ended
	Mar. 31, 2019
Commitments and Contingencies Disclosure [Abstract]
3. COMMITMENTS AND CONTINGENCIES	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 AND EQUITY BASED COMP

4. EQUITY AND EQUITY BASED COMPENSATION	3 Months Ended
	Mar. 31, 2019
Equity [Abstract]
4. EQUITY AND EQUITY BASED COMPENSATION	The following is a summary of the stock option activity for the three months ended March 31, 2019: Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Term Aggregate Intrinsic Value Outstanding, December 31, 2018 6,704,716 $ 1.83 7.4 $ 765,927 Cancelled (52,500 ) 1.95 Issued 366,980 1.80 Outstanding, March 31, 2019 7,019,196 1.83 7.3 $ 716,736 Vested and exercisable, March 31, 2019 2,446,722 $ 1.68 5.2 $ 540,738 Aggregate intrinsic value represents the difference between the closing price of the Company’s common stock at March 31, 2019 and the exercise price of outstanding, in-the-money stock options. The closing price of the common stock at March 31, 2019, as reported on the OTCQB Venture Marketplace, was $1.86 per share. At March 31, 2019, an amount of $5,661,710 unvested expense has yet to be recorded related to outstanding stock options.

5. DISAGGREGATED PRESENTATION O

5. DISAGGREGATED PRESENTATION OF REVENUE AND OTHER RELEVANT INFORMATION	3 Months Ended
	Mar. 31, 2019
Revenue from Contract with Customer [Abstract]
5. DISAGGREGATED PRESENTATION OF REVENUE AND OTHER RELEVANT INFORMATION	The tables below depict how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors, such as type of customer and type of contract. Customer size impact on billings and revenue: 3 Months Ended March 31, 2019 3 Months Ended March 31, 2018 Billings GAAP Revenue Billings GAAP Revenue Top 5 Customers (Measured By Amounts Billed) $ 355,500 $ 246,529 $ 351,900 $ 54,039 All Other Customers 131,311 494,190 299,580 442,784 $ 486,811 $ 740,719 $ 651,480 $ 496,823 For the three months ended March 31, 2019, three customers accounted for 73% of the accounts receivable balance and two customers accounted for 27% of total revenue. For the three months ended March 31, 2018, three customers accounted for 78% of the accounts receivable balance. New customer acquisition impact on billings and revenue: 3 Months Ended March 31, 2019 3 Months Ended March 31, 2018 Billings GAAP Revenue Billings GAAP Revenue Customers In Existence As Of The Beginning Of The Period (Including Upgrades) $ 486,811 $ 740,719 $ 461,480 $ 492,934 Customers Acquired During The Period — — 190,000 3,889 $ 486,811 $ 740,719 $ 651,480 $ 496,823

6. LEASES

6. LEASES	3 Months Ended
	Mar. 31, 2019
Leases [Abstract]
6. LEASES	Leases (Topic 842) Disclosures We are the lessee for a non-cancellable operating lease for our corporate office in Raleigh, North Carolina. We are also a lessee for non-cancellable finance lease for a corporate vehicle and office furniture. Financing leases are not significant in terms of both balances and period expenses. The operating lease for the corporate office expires on April 30, 2024. The following table summarizes the information about operating lease: Three Months Ended March 31, 2019 Operating lease expense $ 50,994 Weighted Average Remaining Lease Term (Years) 6 years Weighted Average Discount Rate 8 % Maturities of operating lease liability as of March 31, 2019, were as follows: Operating Lease Expense Variable Lease Expense Total Lease Expense Remainder of 2019 $ 143,045 $ 9,657 $ 152,702 2020 190,365 13,238 203,603 2021 189,994 13,609 203,603 2020 189,615 13,988 203,603 2023 189,225 14,378 203,603 2024 63,074 4,793 67,867 Total lease payments $ 965,318 $ 69,663 1,034,981 Less imputed interest (186,887 ) Total $ 848,094

7. SUBSEQUENT EVENTS

7. SUBSEQUENT EVENTS	3 Months Ended
	Mar. 31, 2019
Subsequent Events [Abstract]
7. SUBSEQUENT EVENTS	Subsequent to March 31, 2019, the Company borrowed $506,250 through issuance of three subordinated promissory notes to a related party.

1. DESCRIPTION OF BUSINESS AN_2

1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION (Tables)	3 Months Ended
	Mar. 31, 2019
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Effects of new accounting pinciple	Beginning Balance Cumulative Effect Adjustment Beginning Balance, As Adjusted Assets Operating Lease Right-of-Use Asset - Corporate Office $ — $ 883,634 $ 883,634 Liabilities and Stockholders' Deficit Operating Lease Liabilities — 881,585 881,585 Accumulated Deficit $ (158,771,112 ) $ 2,173 $ (158,768,939 )

2. DEBT (Tables)

2. DEBT (Tables)	3 Months Ended
	Mar. 31, 2019
Debt Disclosure [Abstract]
Company debt	Debt Description March 31, December 31, 2019 2018 Maturity Rate Comerica Bank Loan and Security Agreement $ 5,000,000 $ 5,000,000 June 2020 6.10 % Convertible notes - related parties, net of discount of $1,647,715 and $1,527,146, respectively 37,066,516 35,740,085 November 2020 8.00 % Convertible notes, net of discount of $45,029 610,740 610,740 November 2020 8.00 % Subordinated Promissory Note, Related Party 1,125,000 525,000 November 2020 8.00 % Total debt $ 43,802,256 $ 41,875,825
Summary of convertible notes	Convertible Notes Type: Balance 2007 NPA notes, net of discount $ 20,382,355 2014 NPA notes, net of discount 17,294,901 Total convertible notes, net of discount $ 37,677,256

4. EQUITY AND EQUITY BASED CO_2

4. EQUITY AND EQUITY BASED COMPENSATION (Tables)	3 Months Ended
	Mar. 31, 2019
Equity [Abstract]
Schedule of stock options outstanding	Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Term Aggregate Intrinsic Value Outstanding, December 31, 2018 6,704,716 $ 1.83 7.4 $ 765,927 Cancelled (52,500 ) 1.95 Issued 366,980 1.80 Outstanding, March 31, 2019 7,019,196 1.83 7.3 $ 716,736 Vested and exercisable, March 31, 2019 2,446,722 $ 1.68 5.2 $ 540,738

5. DISAGGREGATED PRESENTATION_2

5. DISAGGREGATED PRESENTATION OF REVENUE AND OTHER RELEVANT INFORMATION (Tables)	3 Months Ended
	Mar. 31, 2019
Revenue from Contract with Customer [Abstract]
Disaggregation of revenue	Customer size impact on billings and revenue: 3 Months Ended March 31, 2019 3 Months Ended March 31, 2018 Billings GAAP Revenue Billings GAAP Revenue Top 5 Customers (Measured By Amounts Billed) $ 355,500 $ 246,529 $ 351,900 $ 54,039 All Other Customers 131,311 494,190 299,580 442,784 $ 486,811 $ 740,719 $ 651,480 $ 496,823 New customer acquisition impact on billings and revenue: 3 Months Ended March 31, 2019 3 Months Ended March 31, 2018 Billings GAAP Revenue Billings GAAP Revenue Customers In Existence As Of The Beginning Of The Period (Including Upgrades) $ 486,811 $ 740,719 $ 461,480 $ 492,934 Customers Acquired During The Period — — 190,000 3,889 $ 486,811 $ 740,719 $ 651,480 $ 496,823

6. LEASES (Tables)

6. LEASES (Tables)	3 Months Ended
	Mar. 31, 2019
Leases [Abstract]
Operating lease information	Three Months Ended March 31, 2019 Operating lease expense $ 50,994 Weighted Average Remaining Lease Term (Years) 6 years Weighted Average Discount Rate 8 %
Maturities of operating lease liability	Operating Lease Expense Variable Lease Expense Total Lease Expense Remainder of 2019 $ 143,045 $ 9,657 $ 152,702 2020 190,365 13,238 203,603 2021 189,994 13,609 203,603 2020 189,615 13,988 203,603 2023 189,225 14,378 203,603 2024 63,074 4,793 67,867 Total lease payments $ 965,318 $ 69,663 1,034,981 Less imputed interest (186,887 ) Total $ 848,094

1. DESCRIPTION OF BUSINESS AN_3

1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION (Details) - USD ($)	Mar. 31, 2019	Dec. 31, 2018
Assets
Operating Lease Right-of-Use Asset - Corporate Office	$ 811,171	$ 0
Liabilities
Operating Lease Liabilities	848,094
Equity
Accumulated Deficit	(160,945,432)	$ (158,771,112)
Beginning Balance
Assets
Operating Lease Right-of-Use Asset - Corporate Office	0
Liabilities
Operating Lease Liabilities	0
Equity
Accumulated Deficit	(158,771,112)
Cumulative Effect Adjustment
Assets
Operating Lease Right-of-Use Asset - Corporate Office	883,634
Liabilities
Operating Lease Liabilities	881,585
Equity
Accumulated Deficit	2,173
Beginning Balance, As Adjusted
Assets
Operating Lease Right-of-Use Asset - Corporate Office	883,634
Liabilities
Operating Lease Liabilities	881,585
Equity
Accumulated Deficit	$ (158,768,939)

2. DEBT (Details)

2. DEBT (Details) - USD ($)	3 Months Ended
	Mar. 31, 2019	Dec. 31, 2018
Total Debt	$ 43,802,256	$ 41,875,825
Debt Instrument 1
Debt Description	Comerica Bank Loan and Security Agreement
Total Debt	$ 5,000,000	5,000,000
Maturity	June 2020
Interest Rate	6.10%
Debt Instrument 2
Debt Description	Convertible notes - related parties, net of discount of $1,647,715 and $1,527,146, respectively
Total Debt	$ 37,066,516	35,740,085
Maturity	November 2020
Interest Rate	8.00%
Debt Instrument 3
Debt Description	Convertible notes, net of discount of $45,029
Total Debt	$ 610,740	610,740
Maturity	November 2020
Interest Rate	8.00%
Debt Instrument 4
Debt Description	Subordinated Promissory Note, Related Party
Total Debt	$ 1,125,000	$ 525,000
Maturity	November 2020
Interest Rate	8.00%

2. DEBT (Details 1)

2. DEBT (Details 1)	Mar. 31, 2019USD ($)
Convertible Notes, Net of Discount	$ 37,677,256
2007 NPA notes
Convertible Notes, Net of Discount	20,382,355
2014 NPA notes
Convertible Notes, Net of Discount	$ 17,294,901

4. EQUITY AND EQUITY BASED CO_3

4. EQUITY AND EQUITY BASED COMPENSATION (Details)	3 Months Ended
	Mar. 31, 2019USD ($)$ / sharesshares
Equity [Abstract]
Number of Shares Outstanding, Beginning | shares	6,704,716
Number of Shares Cancelled | shares	(52,500)
Number of Shares Issued | shares	366,980
Number of Shares Outstanding, Ending | shares	7,019,196
Number of Shares Vested and Exercisable | shares	2,446,722
Weighted Average Exercise Price Outstanding, Beginning | $ / shares	$ 1.83
Weighted Average Exercise Price Cancelled | $ / shares	1.95
Weighted Average Exercise Price Issued | $ / shares	1.80
Weighted Average Exercise Price Outstanding, Ending | $ / shares	1.83
Weighted Average Exercise Price Vested and Exercisable | $ / shares	$ 1.68
Weighted Average Remaining Contractual Life (in years) Outstanding	7 years 3 months 18 days
Weighted Average Remaining Contractual Life (in years) Vested and Exercisable	5 years 2 months 12 days
Aggregate Intrinsic Value Outstanding | $	$ 716,736
Aggregate Intrinsic Value Vested and Exercisable | $	$ 540,738

4. EQUITY AND EQUITY BASED CO_4

4. EQUITY AND EQUITY BASED COMPENSATION (Details Narrative)	Mar. 31, 2019USD ($)$ / shares
Equity [Abstract]
Closing Price of the Common Stock | $ / shares	$ 1.86
Unvested Expense Not Yet Recorded | $	$ 5,661,710

5. DISAGGREGATED PRESENTATION_3

5. DISAGGREGATED PRESENTATION OF REVENUE AND OTHER RELEVANT INFORMATION (Details) - USD ($)	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Billings	$ 486,811	$ 651,480
Revenue	740,719	496,823
Top 5 Customers (Measured By Amounts Billed)
Billings	355,500	351,900
Revenue	246,529	54,039
All Other Customers
Billings	131,311	299,580
Revenue	494,190	442,784
Customers In Existence As Of The Beginning Of The Period (Including Upgrades)
Billings	486,811	461,480
Revenue	740,719	492,934
Customers Acquired During The Period
Billings	0	190,000
Revenue	$ 0	$ 3,889

5. DISAGGREGATED PRESENTATION_4

5. DISAGGREGATED PRESENTATION OF REVENUE AND OTHER RELEVANT INFORMATION (Details Narrative)	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Three Customers | Accounts Receivable
Concentration risk percentage	73.00%	78.00%
Two Customers | Revenue
Concentration risk percentage	27.00%

6. LEASES (Details)

6. LEASES (Details)	3 Months Ended
	Mar. 31, 2019USD ($)
Leases [Abstract]
Operating Lease Expense	$ 50,994
Weighted Average Remaining Lease Term (Years)	6 years
Weighted Average Discount Rate	8.00%

6. LEASES (Details 1)

6. LEASES (Details 1)	Mar. 31, 2019USD ($)
Remainder of 2019	$ 152,702
2020	203,603
2021	203,603
2020	203,603
2023	203,603
2024	67,867
Total lease payments	1,034,981
Less imputed interest	(186,887)
Total	848,094
Operating Lease Expense
Remainder of 2019	143,045
2020	190,365
2021	189,994
2020	189,615
2023	189,225
2024	63,074
Total lease payments	965,318
Variable Lease Expense
Remainder of 2019	9,657
2020	13,238
2021	13,609
2020	13,988
2023	14,378
2024	4,793
Total lease payments	$ 69,663