Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2016 | Nov. 07, 2016 | |
Document And Entity Information | ||
Entity Registrant Name | DIGITAL ALLY INC | |
Entity Central Index Key | 1,342,958 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2016 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 5,378,931 | |
Trading Symbol | DGLY | |
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 | $ 1,815,699 | $ 6,924,079 |
Accounts receivable-trade, less allowance for doubtful accounts of $70,000 - 2016 and $74,997 - 2015 | 2,517,518 | 3,368,909 |
Accounts receivable-other | 289,520 | 142,473 |
Inventories, net | 10,412,276 | 10,661,766 |
Prepaid expenses | 633,761 | 586,015 |
Total current assets | 15,668,774 | 21,683,242 |
Furniture, fixtures and equipment | 2,327,686 | 2,043,041 |
Less accumulated depreciation and amortization | 1,378,805 | 978,855 |
Total Furniture, fixture and equipment | 948,881 | 1,064,186 |
Intangible assets, net | 468,936 | 410,261 |
Other assets | 291,994 | 316,521 |
Total assets | 17,378,585 | 23,474,210 |
Current liabilities: | ||
Accounts payable | 1,777,767 | 1,374,160 |
Accrued expenses | 1,247,993 | 936,327 |
Derivative liabilities | 48,313 | 67,053 |
Capital lease obligations-current | 32,329 | 34,828 |
Deferred revenue-current | 811,318 | 568,988 |
Income taxes payable | 7,048 | 10,139 |
Total current liabilities | 3,924,768 | 2,991,495 |
Long-term liabilities: | ||
Capital lease obligations-less current portion | 16,866 | 41,284 |
Deferred revenue- less current portion | 1,892,832 | 1,685,891 |
Total liabilities | 5,834,466 | 4,718,670 |
Commitments and contingencies | ||
Stockholders' equity: | ||
Preferred stock, $0.001 par value; 10,000,000 common stock shares authorized; shares issued and outstanding: 0 – 2016 and 2015 | ||
Common stock, $0.001 par value; 25,000,000 common stock shares authorized; shares issued: 5,447,049 – 2016 and 5,241,999 – 2015 | 5,447 | 5,242 |
Additional paid in capital | 59,076,340 | 57,854,178 |
Treasury stock, at cost (63,518 shares) | (2,157,226) | (2,157,226) |
Accumulated deficit | (45,380,442) | (36,946,654) |
Total stockholders' equity | 11,544,119 | 18,755,540 |
Total liabilities and stockholders' equity | $ 17,378,585 | $ 23,474,210 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) | Sep. 30, 2016 | Dec. 31, 2015 |
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts receivable | $ 70,000 | $ 74,997 |
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 25,000,000 | 25,000,000 |
Common stock, shares issued | 5,447,049 | 5,241,999 |
Treasury stock shares | 63,518 | 63,518 |
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 | |
Income Statement [Abstract] | ||||
Product revenue | $ 3,918,167 | $ 4,914,411 | $ 12,226,147 | $ 14,471,609 |
Other revenue | 421,360 | 181,677 | 902,734 | 507,480 |
Total revenue | 4,339,527 | 5,096,088 | 13,128,881 | 14,979,089 |
Cost of revenue | 2,305,956 | 3,056,314 | 7,976,455 | 8,193,381 |
Gross profit | 2,033,571 | 2,039,774 | 5,152,426 | 6,785,708 |
Selling, general and administrative expenses: | ||||
Research and development expense | 731,077 | 720,640 | 2,353,081 | 2,247,863 |
Selling, advertising and promotional expense | 1,369,244 | 1,175,498 | 3,295,743 | 2,951,791 |
Stock- based compensation expense | 422,246 | 479,084 | 1,203,312 | 1,077,485 |
General and administrative expense | 2,752,645 | 1,805,337 | 6,772,483 | 5,429,511 |
Total selling, general and administrative expenses | 5,275,212 | 4,180,559 | 13,624,619 | 11,706,650 |
Operating loss | (3,241,641) | (2,140,785) | (8,472,193) | (4,920,942) |
Interest income | 5,913 | 4,430 | 22,103 | 12,573 |
Change in warrant derivative liabilities | (19,075) | 89,645 | 18,740 | 371,428 |
Change in fair value of secured convertible notes payable | (4,434,383) | |||
Senior secured convertible notes payable issuance expenses | (19,495) | (93,845) | ||
Other income (expense) | 1,878 | |||
Interest expense | (776) | (74,958) | (2,438) | (280,972) |
Loss before income tax expense | (3,255,579) | (2,141,163) | (8,433,788) | (9,344,263) |
Income tax (expense) benefit | ||||
Net loss | $ (3,255,579) | $ (2,141,163) | $ (8,433,788) | $ (9,344,263) |
Net loss per share information: | ||||
Basic | $ (0.61) | $ (0.45) | $ (1.59) | $ (2.29) |
Diluted | $ (0.61) | $ (0.45) | $ (1.59) | $ (2.29) |
Weighted average shares outstanding: | ||||
Basic | 5,380,855 | 4,799,126 | 5,315,646 | 4,076,493 |
Diluted | 5,380,855 | 4,799,126 | 5,315,646 | 4,076,493 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Stockholders' Equity (Unaudited) - 9 months ended Sep. 30, 2016 - USD ($) | Common Stock [Member] | Additional Paid In Capital [Member] | Treasury Stock [Member] | Accumulated Deficit [Member] | Total |
Balance at Dec. 31, 2015 | $ 5,242 | $ 57,854,178 | $ (2,157,226) | $ (36,946,654) | $ 18,755,540 |
Balance, shares at Dec. 31, 2015 | 5,241,999 | ||||
Stock-based compensation | 1,203,312 | 1,203,312 | |||
Restricted common stock grant | $ 200 | (200) | |||
Restricted common stock grant, shares | 200,000 | ||||
Issuance of common stock upon exercise of stock options | $ 5 | 19,050 | $ 19,050 | ||
Issuance of common stock upon exercise of stock options, shares | 5,050 | (5,050) | |||
Net loss | (8,433,788) | $ (8,433,788) | |||
Balance at Sep. 30, 2016 | $ 5,447 | $ 59,076,340 | $ (2,157,226) | $ (45,380,442) | $ 11,544,119 |
Balance, shares at Sep. 30, 2016 | 5,447,049 |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Cash Flows From Operating Activities: | ||
Net loss | $ (8,433,788) | $ (9,344,263) |
Adjustments to reconcile net loss to net cash flows (used in) operating activities: | ||
Depreciation and amortization | 430,537 | 472,785 |
Secured convertible note payable expenses | 93,845 | |
Stock-based compensation | 1,203,312 | 1,077,485 |
Change in derivative liabilities | (18,740) | (371,428) |
Change in fair value of secured convertible note payable | 4,434,383 | |
Interest expense related to stock conversion and note extension | 93,244 | |
Provision for inventory obsolescence | 253,048 | 411,357 |
Provision for doubtful accounts receivable | (4,997) | 9,020 |
(Increase) decrease in: | ||
Accounts receivable - trade | 856,388 | (146,007) |
Accounts receivable - other | (147,047) | 10,616 |
Inventories | (3,558) | (3,803,303) |
Prepaid expenses | (47,746) | (193,667) |
Other assets | 24,527 | (98,149) |
Increase(decrease) in: | ||
Accounts payable | 403,607 | (602,767) |
Accrued expenses | 311,666 | 66,698 |
Income taxes payable | (3,091) | 3 |
Deposits | (1,878) | |
Deferred revenue | 449,271 | 860,070 |
Net cash (used in) operating activities | (4,726,611) | (7,031,956) |
Cash Flows from Investing Activities: | ||
Purchases of furniture, fixtures and equipment | (284,644) | (247,335) |
Additions to intangible assets | (89,263) | (147,439) |
Release of restricted cash related to secured convertible note | 1,500,000 | |
Net cash provided by (used in) investing activities | (373,907) | 1,105,226 |
Cash Flows from Financing Activities: | ||
Proceeds from issuance of common stock and warrants, net of issuance costs | 11,223,285 | |
Payment of notes payable | (2,500,000) | |
Debt issuance expense for secured convertible notes payable | (93,845) | |
Proceeds from exercise of stock options and warrants | 19,055 | 2,133,889 |
Principal payments on capital lease obligation | (26,917) | (73,554) |
Net cash provided by (used in) financing activities | (7,862) | 10,689,775 |
Net increase (decrease) in cash and cash equivalents | (5,108,380) | 4,763,045 |
Cash and cash equivalents, beginning of period | 6,924,079 | 3,049,716 |
Cash and cash equivalents, end of period | 1,815,699 | 7,812,761 |
Supplemental disclosures of cash flow information: | ||
Cash payments for interest | 2,425 | 176,769 |
Cash payments for income taxes | 10,591 | 8,197 |
Supplemental disclosures of non-cash investing and financing activities: | ||
Restricted common stock grant | 200 | 139 |
Capital expenditures financed by capital lease obligations | 94,367 | |
Conversion of secured convertible note into common stock | $ 7,740,834 |
Nature of Business and Summary
Nature of Business and Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Nature of Business and Summary of Significant Accounting Policies | NOTE 1. NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of Business: Digital Ally, Inc. and subsidiaries (collectively, “Digital Ally,” “Digital,” the “Company,” “we,” “ours” and “us”) produces digital video imaging and storage products for use in law enforcement, security and commercial applications. Its products are an in-car digital video/audio recorder contained in a rear-view mirror for use in law enforcement and commercial fleets; a system that provides its law enforcement customers with audio/video surveillance from multiple vantage points and hands-free automatic activation of body-worn cameras and in-car video systems; a miniature digital video system designed to be worn on an individual’s body; a weather-resistant mobile digital video recording system for use on motorcycles, ATV’s and boats; and a hand-held laser speed detection device that it is offering primarily to law enforcement agencies. The Company has active research and development programs to adapt its technologies to other applications. It has the ability to integrate electronic, radio, computer, mechanical, and multi-media technologies to create unique solutions to address needs in a variety of other industries and markets, including mass transit, school bus, taxi cab and the military. The Company sells its products to law enforcement agencies and other security organizations, consumer and commercial fleet operators through direct sales domestically and third-party distributors internationally. The Company was originally incorporated in Nevada on December 13, 2000 as Vegas Petra, Inc. and had no operations until 2004. On November 30, 2004, Vegas Petra, Inc. entered into a Plan of Merger with Digital Ally, Inc., at which time the merged entity was renamed Digital Ally, Inc. The following is a summary of the Company’s Significant Accounting Policies: Basis of Consolidation: The accompanying financial statements include the consolidated accounts of Digital Ally and its wholly-owned subsidiaries, Digital Ally International, Inc., MP Ally, LLC, and Medical Devices Ally, LLC. All intercompany balances and transactions have been eliminated during consolidation. The Company formed Digital Ally International, Inc. during August 2009 to facilitate the export sales of its products. In addition, Medical Devices Ally, LLC was formed in July 2014 and MP Ally, LLC was formed in July 2015, both of which have been inactive since formation. Fair Value of Financial Instruments: The carrying amounts of financial instruments, including cash and cash equivalents, accounts receivable and accounts payable approximate fair value because of the short-term nature of these items. The Company accounts for its derivative liabilities on its fair value basis. Revenue Recognition: Revenues from the sale of products are recorded when the product is shipped, title and risk of loss have transferred to the purchaser, payment terms are fixed or determinable and payment is reasonably assured. Customers do not have a right to return the product other than for warranty reasons for which they would only receive repair services or replacement product. The Company sells its products and services to law enforcement and commercial customers in the following manner: ● Sales to domestic customers are made direct to the end customer (typically a law enforcement agency or a commercial customer) through its direct sales force, which is composed of its employees. Revenue is recorded when the product is shipped to the end customer. ● Sales to international customers are made through independent distributors who purchase products from the Company at a wholesale price and sell to the end user (typically law enforcement agencies or a commercial customer) at a retail price. The distributor retains the margin as its compensation for its role in the transaction. The distributor generally maintains product inventory, customer receivables and all related risks and rewards of ownership. Revenue is recorded when the product is shipped to the distributor consistent with the terms of the distribution agreement. ● Repair parts and services for domestic and international customers are generally handled by its inside customer service employees. Revenue is recognized upon shipment of the repair parts and acceptance of the service or materials by the end customer. Sales taxes collected on products sold are excluded from revenues and are reported as an accrued expense in the accompanying balance sheets until payments are remitted. Other revenue is comprised of revenues from extended warranties, repair services and the sale of scrap and excess raw material and component parts. Revenue is recognized upon shipment of the product and acceptance of the service or materials by the end customer. Extended warranties are offered on selected products and when a customer purchases an extended warranty the associated proceeds are treated as deferred revenue and recognized over the term of the extended warranty on a straight line method. Sales returns and allowances aggregated $61,673 and $77,282 for the three months ended September 30, 2016 and 2015, respectively, and $263,663 and $612,341 for the nine months ended September 30, 2016 and 2015, respectively. Obligations for estimated sales returns and allowances are recognized at the time of sales on an accrual basis. The accrual is determined based upon historical return rates adjusted for known changes in key variables affecting these return rates. Use of Estimates: The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates. Cash and cash equivalents: Cash and cash equivalents include funds on hand, in bank and short-term investments with original maturities of ninety (90) days or less. Accounts Receivable: Accounts receivable are carried at original invoice amount less an estimate made for doubtful receivables based on a review of all outstanding amounts on a weekly basis. The Company determines the allowance for doubtful accounts by regularly evaluating individual customer receivables and considering a customer’s financial condition, credit history, and current economic conditions. Trade receivables are written off when deemed uncollectible. Recoveries of trade receivables previously written off are recorded when received. A trade receivable is considered to be past due if any portion of the receivable balance is outstanding for more than thirty (30) days beyond terms. No interest is charged on overdue trade receivables. Inventories: Inventories consist of electronic parts, circuitry boards, camera parts and ancillary parts (collectively, “components”), work-in-process and finished goods, and are carried at the lower of cost (First-in, First-out Method) or market value. The Company determines the estimate for the reserve for slow moving or obsolete inventories by regularly evaluating individual inventory levels, projected sales and current economic conditions. Furniture, fixtures and equipment: Furniture, fixtures and equipment is stated at cost net of accumulated depreciation. Additions and improvements are capitalized while ordinary maintenance and repair expenditures are charged to expense as incurred. Depreciation is recorded by the straight-line method over the estimated useful life of the asset, which ranges from three to ten years. Amortization expense on capitalized leases is included with depreciation expense. Intangible assets: Intangible assets include deferred patent costs and license agreements. Legal expenses incurred in preparation of patent application have been deferred and will be amortized over the useful life of granted patents. Costs incurred in preparation of applications that are not granted will be charged to expense at that time. The Company has entered into several sublicense agreements under which it has been assigned the exclusive rights to certain licensed materials used in its products. These sublicense agreements generally require upfront payments to obtain the exclusive rights to such material. The Company capitalizes the upfront payments as intangible assets and amortizes such costs over their estimated useful life on a straight line method. Long-Lived Assets: Long-lived assets such as property, plant and equipment and purchased intangible assets subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If circumstances require a long-lived asset or asset group be tested for possible impairment, the Company first compares undiscounted cash flows expected to be generated by that asset or asset group to its carrying value. If the carrying value of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent that the carrying value exceeds its fair value. Fair value is determined through various valuation techniques, including discounted cash flow models, quoted market values and third-party appraisals, as considered necessary. Warranties: The Company’s products carry explicit product warranties that extend up to two years from the date of shipment. The Company records a provision for estimated warranty costs based upon historical warranty loss experience and periodically adjusts these provisions to reflect actual experience. Accrued warranty costs are included in accrued expenses. Extended warranties are offered on selected products and when a customer purchases an extended warranty the associated proceeds are treated as deferred revenue and recognized over the term of the extended warranty. Customer Deposits: The Company requires deposits in advance of shipment for certain customer sales orders, in particular when accepting orders from foreign customers for which the Company does not have a payment history. Customer deposits are reflected as a current liability in the accompanying Condensed Consolidated Balance Sheets. Shipping and Handling Costs: Shipping and handling costs for outbound sales orders totaled $26,077 and $22,480 for the three months ended September 30, 2016 and 2015, respectively, and $72,296 and $69,691 for the nine months ended September 30, 2016 and 2015, respectively. Such costs are included in selling, general and administrative expenses in the Condensed Consolidated Statements of Operations. Advertising Costs: Advertising expense includes costs related to trade shows and conventions, promotional material and supplies, and media costs. Advertising costs are expensed in the period in which they are incurred. The Company incurred total advertising expense of approximately $615,586 and $324,179 for the three months ended September 30, 2016 and 2015, respectively, and $936,998 and $658,558 for the nine months ended September 30, 2016 and 2015, respectively. Such costs are included in selling, general and administrative expenses in the Condensed Consolidated Statements of Operations. Income Taxes: Deferred taxes are provided for by the liability method wherein deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carryforwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax basis. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. The Company applies the provisions of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) No. 740 - Income Taxes that provides a framework for accounting for uncertainty in income taxes and provided a comprehensive model to recognize, measure, present, and disclose in its financial statements uncertain tax positions taken or expected to be taken on a tax return. It initially recognizes tax positions in the financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. Such tax positions are initially and subsequently measured as the largest amount of tax benefit that is greater than 50% likely of being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and all relevant facts. Application requires numerous estimates based on available information. The Company considers many factors when evaluating and estimating its tax positions and tax benefits, and it recognized tax positions and tax benefits may not accurately anticipate actual outcomes. As it obtains additional information, the Company may need to periodically adjust its recognized tax positions and tax benefits. These periodic adjustments may have a material impact on its consolidated statements of operations. The Company’s policy is to record estimated interest and penalties related to the underpayment of income taxes as income tax expense in the consolidated statements of operations. There was no interest expense related to the underpayment of estimated taxes during the nine months ended September 30, 2016 and 2015. There have been no penalties in the nine months ended September 30, 2016 and 2015. Research and Development Expenses: The Company expenses all research and development costs as incurred. Development costs of computer software to be sold, leased, or otherwise marketed are subject to capitalization beginning when a product’s technological feasibility has been established and ending when a product is available for general release to customers. In most instances, the Company’s products are released soon after technological feasibility has been established. Costs incurred subsequent to achievement of technological feasibility were not significant, and software development costs were expensed as incurred during the nine months ended September 30, 2016 and 2015. Stock-Based Compensation: The Company grants stock-based compensation to its employees, board of directors and certain third party contractors. Share-based compensation arrangements may include the issuance of options to purchase common stock in the future or the issuance of restricted stock, which generally are subject to vesting requirements. The Company records stock-based compensation expense for all stock-based compensation granted based on the grant-date fair value. The Company recognizes these compensation costs on a straight-line basis over the requisite service period of the award. The Company estimates the grant-date fair value of stock-based compensation using the Black-Scholes valuation model. Assumptions used to estimate compensation expense are determined as follows: ● Expected term is determined using the contractual term and vesting period of the award; ● Expected volatility of award grants made in the Company’s plan is measured using the weighted average of historical daily changes in the market price of the Company’s common stock over the period equal to the expected term of the award; ● Expected dividend rate is determined based on expected dividends to be declared; ● Risk-free interest rate is equivalent to the implied yield on zero-coupon U.S. Treasury bonds with a maturity equal to the expected term of the awards; and ● Forfeitures are based on the history of cancellations of awards granted and management’s analysis of potential Segments of Business: Management has determined that its operations are comprised of one reportable segment: the sale of digital audio and video recording and speed detection devices. For the three and nine months ended September 30, 2016 and 2015, sales by geographic area were as follows: Three Months Ended September 30, Nine Months Ended September 30, 2016 2015 2016 2015 Sales by geographic area: United States of America 3,512,075 $ 5,092,937 $ 11,974,469 $ 14,864,676 Foreign 827,452 3,151 1,154,412 114,413 $ 4,339,527 $ 5,096,088 $ 13,128,881 $ 14,979,089 Sales to customers outside of the United States are denominated in U.S. dollars. All Company assets are physically located within the United States. Accounting Developments: In May 2014, the FASB issued Accounting Standard Update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers” In July 2015, the FASB issued ASU 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory In April 2015, the FASB issued ASU 2015-03, Interest— Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs. In November 2015, the FASB issued ASU 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). The objective of ASU 2016-02 is to recognize lease assets and lease liabilities by lessees for those leases classified as operating leases under previous U.S. GAAP. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption of ASU 2016-02 is permitted. The Company is currently evaluating the effects adoption of this guidance will have on its consolidated financial statements. In March 2016, the FASB issued ASU No. 2016-09, Compensation-Stock Compensation (Topic 718) |
Basis of Presentation
Basis of Presentation | 9 Months Ended |
Sep. 30, 2016 | |
Accounting Policies [Abstract] | |
Basis of Presentation | NOTE 2. BASIS OF PRESENTATION The condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles in the United States for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine month periods September 30, 2016 are not necessarily indicative of the results that may be expected for the year ending December 31, 2016. The condensed balance sheet at December 31, 2015 has been derived from the audited financial statements at that date, but does not include all of the information and footnotes required by generally accepted accounting principles in the United States for complete financial statements. For further information, refer to the financial statements and footnotes included in the Company’s annual report on Form 10-K for the year ended December 31, 2015. |
Concentration of Credit Risk an
Concentration of Credit Risk and Major Customers | 9 Months Ended |
Sep. 30, 2016 | |
Risks and Uncertainties [Abstract] | |
Concentration of Credit Risk and Major Customers | NOTE 3. CONCENTRATION OF CREDIT RISK AND MAJOR CUSTOMERS Financial instruments that potentially subject the Company to concentrations of credit risk consist of accounts receivable. Sales to domestic customers are typically made on credit and the Company generally does not require collateral. The Company performs ongoing credit evaluations of its customers’ financial condition and maintains an allowance for estimated losses. Accounts are written off when deemed uncollectible and accounts receivable are presented net of an allowance for doubtful accounts. The allowance for doubtful accounts totaled $70,000 as of September 30, 2016 and $74,977 as of December 31, 2015. The Company sells through a network of unaffiliated distributors for international sales and primarily employee-based sales agents for domestic sales. No distributor/agent individually exceeded 10% of total revenues, for the nine months ended September 30, 2016 or September 30, 2015. No customer receivable balance exceeded 10% of total accounts receivable as of September 30, 2016. One customer receivable balance exceeded 10% of total accounts receivable as of September 30, 2015, which totaled $372,453, or 12% of total accounts receivable. The Company purchases finished circuit boards and other proprietary component parts from suppliers located in the United States and from Asia. Although the Company obtains certain of these components from single source suppliers, the Company generally owns all tooling and management has located or is in process of locating alternative suppliers to reduce the risk in most cases to supplier problems that could result in significant production delays. The Company has not historically experienced any significant supply disruptions from any of its principal vendors and does not anticipate future supply disruptions. The Company acquires most of its components on a purchase order basis and does not have long-term contracts with its suppliers. |
Inventories
Inventories | 9 Months Ended |
Sep. 30, 2016 | |
Inventory Disclosure [Abstract] | |
Inventories | NOTE 4. INVENTORIES Inventories consisted of the following at September 30, 2016 and December 31, 2015: September 30, 2016 December 31, 2015 Raw material and component parts $ 4,168,866 $ 3,833,873 Work-in-process 246,767 134,641 Finished goods 7,452,101 7,895,663 Subtotal 11,867,734 11,864,177 Reserve for excess and obsolete inventory (1,455,458 ) (1,202,411 ) Total $ 10,412,276 $ 10,661,766 Finished goods inventory includes units held by potential customers and sales agents for test and evaluation purposes. The cost of such units totaled $685,909 and $651,004 as of September 30, 2016 and December 31, 2015, respectively. |
Secured Convertible Note Payabl
Secured Convertible Note Payable, and Capital Lease Obligations | 9 Months Ended |
Sep. 30, 2016 | |
Debt Disclosure [Abstract] | |
Secured Convertible Note Payable, and Capital Lease Obligations | NOTE 5. SECURED CONVERTIBLE NOTE PAYABLE, AND CAPITAL LEASE OBLIGATIONS Secured Convertible Note Payable Between February 13 and 25, 2015 the holder of the $4.0 million Secured Convertible Note exercised its right to convert the remaining principal of $3,963,780 into 655,738 shares of common stock and 5,475 shares for accrued interest at the conversion price of $7.32 per share. The increase in fair market value of these 655,213 shares over the $3,963,780 principal retired was $4,434,383 representing the increase in our stock price over the conversion rate as of the conversion dates. Such amount was recognized as a charge to the Condensed Consolidated Statement of Operations during the nine months ended September 30, 2015 and included in change in fair value of secured convertible notes payable. On March 24, 2015 the holder exercised part of its Warrant to purchase 212,295 shares of common stock with the change in value of the warrant derivative totaling $340,722 being recognized as income in the Condensed Consolidated Statement of Operations representing the change in the Company’s stock price compared to the exercise price at the respective exercise date. On April 9, 2015 the holder exercised part of its Warrant to purchase 37,800 shares of common stock with the change in value of the warrant derivative totaling $127,951 being recognized as income in the Condensed Consolidated Statement of Operations representing the change in the Company’s stock price compared to the exercise price at the respective exercise date. As of September 30, 2016, the remaining Warrant was exercisable to purchase 12,200 common shares and was recorded as a liability at its fair value in the amount of $48,313 on the Condensed Consolidated Balance Sheet. Capital Leases Year ending December 31: 2016 (period from October 1, 2016 to December 31, 2016) $ 8,575 2017 34,298 2018 8,574 2019 — 2020 and thereafter — Total future minimum lease payments 51,447 Less amount representing interest 2,252 Present value of minimum lease payments 49,195 Less current portion 32,329 Capital lease obligations, less current portion $ 16,866 Assets under capital leases are included in furniture, fixtures and equipment as follows: September 30, 2016 December 31, 2015 Furniture, fixtures and equipment $ 382,928 $ 382,928 Less: accumulated amortization (279,714 ) (224,089 ) Net furniture, fixtures and equipment $ 103,214 $ 158,839 |
Fair Value Measurement
Fair Value Measurement | 9 Months Ended |
Sep. 30, 2016 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurement | NOTE 6. Fair Value Measurement In accordance with ASC Topic 820 — Fair Value Measurements and Disclosures ASC 820 utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels: ● Level 1 — Quoted prices in active markets for identical assets and liabilities ● Level 2 — Other significant observable inputs (including quoted prices in active markets for similar assets or liabilities) ● Level 3 — Significant unobservable inputs (including the Company’s own assumptions in determining the fair value) The following table represents the Company’s hierarchy for its financial assets and liabilities measured at fair value on a recurring basis as of September 30, 2016 and December 31, 2015. September 30, 2016 Level 1 Level 2 Level 3 Total Liabilities: Warrant derivative liability $ - $ - $ 48,313 $ 48,313 $ - $ - $ 48,313 $ 48,313 December 31, 2015 Level 1 Level 2 Level 3 Total Liabilities: Warrant derivative liability $ - $ - $ 67,053 $ 67,053 $ - $ - $ 67,053 $ 67,053 The following table represents the change in level 3 tier value measurements: Warrant Derivative Liability December 31, 2015 $ 67,053 Change in fair value (18,740 ) September 30, 2016 $ 48,313 |
Accrued Expenses
Accrued Expenses | 9 Months Ended |
Sep. 30, 2016 | |
Payables and Accruals [Abstract] | |
Accrued Expenses | NOTE 7. ACCRUED EXPENSES Accrued expenses consisted of the following at September 30, 2016 and December 31, 2015: September 30, 2016 December 31, 2015 Accrued warranty expense $ 227,459 $ 159,838 Accrued sales commissions 44,986 100,295 Accrued payroll and related fringes 495,025 247,984 Accrued insurance 122,917 34,926 Accrued rent 193,623 224,393 Accrued sales returns and allowances 48,444 72,456 Other 115,539 96,435 $ 1,247,993 $ 936,327 Accrued warranty expense was comprised of the following for the nine months ended September 30, 2016: 2016 Beginning balance $ 159,838 Provision for warranty expense 164,362 Charges applied to warranty reserve (96,741 ) Ending balance $ 227,459 |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2016 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | NOTE 8. INCOME TAXES The effective tax rate for the three and nine months ended September 30, 2016 and 2015 varied from the expected statutory rate due to the Company continuing to provide a 100% valuation allowance on net deferred tax assets. The Company determined that it was appropriate to continue the full valuation allowance on net deferred tax assets as of September 30, 2016 primarily because of the current year operating losses. The valuation allowance on deferred tax assets totaled $21,215,000 and $18,105,000 as of September 30, 2016 and December 31, 2015, respectively. The Company records the benefit it will derive in future accounting periods from tax losses and credits and deductible temporary differences as “deferred tax assets.” In accordance with Accounting Standards Codification (ASC) 740, “Income Taxes,” the Company records a valuation allowance to reduce the carrying value of its deferred tax assets if, based on all available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. At September 30, 2016, the Company had available approximately $37,514,000 of net operating loss carryforwards available to offset future taxable income generated. Such tax net operating loss carryforwards expire between 2023 and 2036. In addition, the Company had research and development tax credit carryforwards approximating $1,872,000 available as of September 30, 2016, which expire between 2023 and 2036. The Internal Revenue Code contains provisions under Section 382 which limit a company’s ability to utilize net operating loss carry-forwards in the event that it has experienced a more than 50% change in ownership over a three-year period. Current estimates prepared by the Company indicate that due to ownership changes which have occurred, approximately $765,000 of its net operating loss and $175,000 of its research and development tax credit carryforwards are currently subject to an annual limitation of approximately $1,151,000, but may be further limited by additional ownership changes which may occur in the future. As stated above, the net operating loss and research and development credit carryforwards expire between 2023 and 2036, allowing the Company to potentially utilize all of the limited net operating loss carry-forwards during the carryforward period. As discussed in Note 1, “Summary of Significant Accounting Policies,” tax positions are evaluated in a two-step process. The Company first determines whether it is more likely than not that a tax position will be sustained upon examination. If a tax position meets the more-likely-than-not recognition threshold, it is then measured to determine the amount of benefit to recognize in the financial statements. The tax position is measured as the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement. Management has identified no tax positions taken that would meet or exceed these thresholds and therefore there are no gross interest, penalties and unrecognized tax expense/benefits that are not expected to ultimately result in payment or receipt of cash in the consolidated financial statements. The Company’s federal and state income tax returns are closed for examination purposes by relevant statute and by examination for 2011 and all prior tax years. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | NOTE 9. COMMITMENTS AND CONTINGENCIES Operating Leases. Year ending December 31: 2016 (period from October 1, 2016 to December 31, 2016) $ 110,644 2017 445,449 2018 451,248 2019 457,327 2020 154,131 $ 1,618,799 License agreements. Litigation. On October 25, 2013, the Company filed a complaint in the United States District Court for the District of Kansas to eliminate threats by a competitor, Utility Associates, Inc. (“Utility”), of alleged patent infringement regarding U.S. Patent No. 6,831,556 (the ” ’556 Patent”). Specifically, the lawsuit seeks a declaration that the Company’s mobile video surveillance systems do not infringe any claim of the ’556 Patent. The Company became aware that Utility had mailed letters to current and prospective purchasers of its mobile video surveillance systems threatening that the use of such systems purchased from third parties not licensed to the ’556 Patent would create liability for them for patent infringement. The Company rejects Utility’s assertion and will vigorously defend the right of end-users to purchase such systems from providers other than Utility. The United States District Court for the District of Kansas dismissed the lawsuit because it decided that Kansas was not the proper jurisdictional forum for the dispute. The District Court’s decision was not a ruling on the merits of the case. The Company appealed the decision and the Federal Circuit affirmed the District Court’s previous decision. In addition, the Company began proceedings to invalidate the ’556 Patent through a request for inter partes review On September 4, 2014 the Company filed an Unfair Competition lawsuit against Utility Associates, Inc. (“Utility”) in the United States District Court for the District of Kansas. In the lawsuit it contends that Utility has defamed the Company and illegally interfered with its contracts, customer relationships and business expectancies by falsely asserting to its customers and others that its products violate the ’556 Patent, of which Utility claims to be the holder. The suit also includes claims against Utility for tortious interference with contract and violation of the Kansas Uniform Trade Secrets Act (KUSTA), arising out of Utility’s employment of the Company’s employees, in violation of that employee’s Non-Competition and Confidentiality agreements with the Company. In addition to damages, the Company seeks temporary, preliminary, and permanent injunctive relief, prohibiting Utility from, among other things, continuing to threaten or otherwise interfere with the Company’s customers. On March 4, 2015, an initial hearing was held upon the Company’s request for injunctive relief. Based upon facts revealed at the March 4, 2015 hearing, on March 16, 2015, the Company sought leave to amend its Complaint in the Kansas suit to assert additional claims against Utility. Those new claims include claims of actual or attempted monopolization, in violation of § 2 of the Sherman Act, claims arising under a new Georgia statute that prohibits threats of patent infringement in “bad faith,” and additional claims of unfair competition/false advertising in violation of § 63(a) of the Lanham Act. As these statutes expressly provide, the Company will seek treble damages, punitive damages and attorneys’ fees as well as injunctive relief. The Court concluded its hearing on April 22, 2015, and allowed the Company leave to amend its complaint, but denied its preliminary injunction. The discovery stage of the lawsuit expired in May 2016. Both parties have filed summary judgment motions, which are currently under review and consideration by the court. The jury trial date is scheduled for June 2017. The Company believes that the USPTO’s final decision issued on July 27, 2015 will provide it with substantial basis to pursue its claims either through summary judgment motions prior to trial or the jury trial itself and it intends to pursue recovery from Utility, its insurers and other parties, as appropriate. On September 13, 2014, Utility filed suit in the United States District Court for the Northern District of Georgia against the Company alleging infringement of the ’556 Patent. The suit was served on the Company on September 20, 2014. As alleged in the Company’s first filed lawsuit described above, the Company believes that the ’556 Patent is both invalid and not infringed. Further, the USPTO has issued its final decision invalidating 23 of the 25 claims asserted in the ’556 Patent, as noted above. The Company believes that the suit filed by Utility is without merit and is vigorously defending the claims asserted against the Company. An adverse resolution of the foregoing litigation or patent proceedings could have a material adverse effect on the Company’s business, prospects, results of operations, financial condition, and liquidity. The Court stayed all proceedings with respect to this lawsuit pending the outcome of the patent review performed by the USPTO and the appellate court. Based on the USPTO’s final decision to invalidate substantially all claims contained in the ’556 Patent, the Company intends to file for summary judgment in its favor if Utility does not request outright dismissal. The Company received notice in April 2015 that Taser, one of its competitors, had commenced an action in the USPTO for a re-examination of its U.S. Patent No. 8,781,292 (the ” ’292 Patent). A re-examination is essentially a request that the USPTO review whether the patent should have issued in its present form in view of the “prior art,” e.g., other patents in the same technology field. The prior art used by Taser to request the re-examination is a patent application that never issued into a patent, was assigned to an unrelated third party and was not the result of any of Taser’s own research and development efforts. The Company owns the ’292 Patent, which is directed to a system that determines when a recording device, such as a law enforcement officer’s body camera or in-car video recorder, begins recording and automatically instructs other recording devices to begin recording. The technology described in the ’292 Patent is incorporated in the Company’s VuLink product. On August 17, 2015 the USPTO issued a first, non-final action rejecting all 20 claims of the ’292 Patent respecting its ’292 Patent under an ex parte The Company filed suit on January 15, 2016 in the U.S. District Court for the District of Kansas (Case No: 2:16-cv-02032) against Taser, alleging willful patent infringement against Taser’s Axon body camera product line. The lawsuit was initiated after the USPTO reconfirmed the validity of the ’292 Patent, which covers various aspects of auto-activation and multiple camera coordination for body-worn cameras and in-car video systems. The ’292 Patent previously was subject to attack by Taser, which tried to invalidate it at the USPTO. The USPTO ultimately rejected Taser’s efforts and confirmed the validity of the ’292 Patent with 59 claims covering various aspects of this valuable auto-activation technology. On February 2, 2016 the USPTO issued another patent relating to the Company’s auto-activation technology for law enforcement cameras. This ’452 Patent generally covers the automatic activation and coordination of multiple recording devices in response to a triggering event such as a law enforcement officer activating the light bar on the vehicle. The Company added the ’452 patent to its existing lawsuit against Taser seeking both monetary damages and a permanent injunction against Taser for infringement of both the ’452 and ’292 Patents. In addition to the infringement claims, the Company added a new set of claims to the lawsuit alleging that Taser conspired to keep the Company out of the marketplace by engaging in improper, unethical, and unfair competition. The amended lawsuit alleges Taser bribed officials and otherwise conspired to secure no-bid contracts for its products in violation of both state law and federal antitrust law. The Company’s lawsuit also seeks monetary and injunctive relief, including treble damages, for these alleged violations. The Company filed an amended complaint and Taser filed an answer which denied the patent infringement allegations on April 1, 2016. In addition, Taser filed a motion to dismiss all allegations in the complaint on March 4, 2016 for which the Company filed an amended complaint on March 18, 2016 to address certain technical deficiencies in the pleadings. Taser amended and renewed its motion to seek dismissal of the allegations that it had bribed officials and otherwise conspired to secure no-bid contracts for its products in violation of both state law and federal antitrust law on April 1, 2016. Formal discovery commenced on April 12, 2016 with respect to the patent related claims. The Company won its motion to commence discovery on the bribery related claims, which discovery commenced in October 2016. The Court has yet to rule on Taser’s motion to dismiss the portion of the lawsuit regarding claims that it had bribed officials and otherwise conspired to secure no-bid contracts for its products in violation of both state law and federal antitrust law. On May 27, 2016 the Company filed suit against Enforcement Video, LLC d/b/a WatchGuard Video (“WatchGuard”), alleging patent infringement based on WatchGuard’s VISTA Wifi and 4RE In-Car product lines. The Company filed the suit in the U.S. District Court for the District of Kansas. The USPTO has granted multiple patents to the Company with claims covering numerous features, such as automatically and simultaneously activating all deployed cameras in response to the activation of just one camera. Additionally, Digital Ally’s patent claims cover automatic coordination as well as digital synchronization between multiple recording devices. Digital Ally also has patent coverage directed to the coordination between a multi-camera system and an officer’s smartphone, which allows an officer to more readily assess an event on the scene while an event is taking place or immediately after it has occurred. The Company’s lawsuit alleges that WatchGuard incorporated this patented technology into its VISTA Wifi and 4RE In-Car product lines without its permission. Specifically, Digital Ally is accusing WatchGuard of infringing three patents: the ’292 and ’452 Patents and U.S. Patent No. 9,325,950. The Company is aggressively challenging WatchGuard’s infringing conduct, seeking both monetary damages, as well as seeking a permanent injunction preventing WatchGuard from continuing to sell its VISTA Wifi and 4RE In-Car product lines using Digital Ally’s own technology to compete against it. The lawsuit is in the early stages of discovery. The Company is also involved as a plaintiff and defendant in ordinary, routine litigation and administrative proceedings incidental to its business from time to time, including customer collections, vendor and employment-related matters. The Company believes the likely outcome of any other pending cases and proceedings will not be material to its business or its financial condition. Sponsorship. Year Sponsorship fee 2015 $ 375,000 2016 $ 475,000 2017 $ 475,000 2018 $ 500,000 2019 $ 500,000 The Company has the right to sell and retain the proceeds from the sale of additional sponsorships, including but not limited to, a presenting sponsorship, a concert sponsorship and founding partnerships for the Tournament. The Company recorded net sponsorship expenses of $497,235 and $172,623 during the three months ended September 30, 2016 and 2015, respectively, and $499,271 and $172,623 for the nine months ended September 30, 2016 and 2015, respectively. Such net sponsorship expense includes the sponsorship fee and other costs related to the 2015 and 2016 Tournaments that have been completed. Stock Repurchase Program 401(k) Plan. Consulting and Distributor Agreements. ● The first agreement is with an individual who provides consulting services for international sales opportunities for both our law enforcement and commercial product lines primarily in Europe. This individual is paid a monthly fee ranging from $4,000 to $6,000 per month plus necessary and reasonable expenses for a period of one year beginning March 23, 2016, which can be extended by mutual agreement of the parties. In addition to the monthly fee, the provider can earn a success fee based upon the amount of sales generated by his activities. As of September 30, 2016, the Company had advanced a total of $39,781 pursuant to this agreement. ● The second agreement is with a limited liability company (“LLC”) that is partially owned by a relative of the Company’s chief financial officer. Under the agreement, dated January 15, 2016, the LLC provides consulting services for developing a new distribution channel outside of law enforcement for its body-worn camera and related cloud storage products to customers in the United States. The Company pays the LLC an advance against commissions ranging from $5,000 to $6,000 per month plus necessary and reasonable expenses for a period of one year beginning January 2016, which agreement can be automatically extended based on the LLC achieving certain minimum sales quotas. As of September 30, 2016, the Company had advanced a total of $123,459 pursuant to this agreement. |
Stock-Based Compensation
Stock-Based Compensation | 9 Months Ended |
Sep. 30, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock-Based Compensation | NOTE 10. STOCK-BASED COMPENSATION The Company recorded pretax compensation expense related to the grant of stock options and restricted stock issued of $422,246 and $479,084 for the three months ended September 30, 2016 and 2015, respectively, and $1,203,312 and $1,077,485, for the nine months ended September 30, 2016 and 2015, respectively. As of September 30, 2016, the Company had adopted seven separate stock option and restricted stock plans: (i) the 2005 Stock Option and Restricted Stock Plan (the “2005 Plan”), (ii) the 2006 Stock Option and Restricted Stock Plan (the “2006 Plan”), (iii) the 2007 Stock Option and Restricted Stock Plan (the “2007 Plan”), (iv) the 2008 Stock Option and Restricted Stock Plan (the “2008 Plan”), (v) the 2011 Stock Option and Restricted Stock Plan (the “2011 Plan”), (vi) the 2013 Stock Option and Restricted Stock Plan (the “2013 Plan”) and (vii) the 2015 Stock Option and Restricted Stock Plan (the “2015 Plan”), which was amend in May 2016. These Plans permit the grant of stock options or restricted stock to its employees, non-employee directors and others totaling 1,925,000 shares of common stock. The 2005 Plan expired during 2015 with 28 shares reserved for awards which are unavailable for issuance. The Company believes that such awards better align the interests of its employees with those of its shareholders. Option awards have been granted with an exercise price equal to the market price of the Company’s stock at the date of grant with such option awards generally vesting based on the completion of continuous service and having ten-year contractual terms. These option awards provide for accelerated vesting if there is a change in control (as defined in the Plans) or the death or disability of the holder. The Company has registered all shares of common stock that are issuable under its Plans with the SEC. A total of 290,802 shares remained available for grant under the various Plans as of September 30, 2016. In addition to the Stock Option and Restricted Stock Plans described above, the Company has issued other options outside of these Plans to non-employees for services rendered that are subject to the same general terms as the Plans, of which 1,250 options are fully vested and remain outstanding as of September 30, 2016. The fair value of each option award is estimated on the date of grant using a Black-Scholes option valuation model. There were 40,000 stock options issued during 2016 to date. Activity in the various Plans during the nine months ended September 30, 2016 is reflected in the following table: Options Shares Weighted Average Exercise Price Outstanding at January 1, 2016 328,690 $ 20.43 Granted 40,000 3.92 Exercised (5,050 ) (3.77 ) Forfeited (1,200 ) (3.63 ) Outstanding at September 30, 2016 362,440 $ 18.46 Exercisable at September 30, 2016 315,690 $ 21.00 Weighted-average fair value for options granted during the period at fair value 40,000 $ 3.25 The Plans allow for the cashless exercise of stock options. This provision allows the option holder to surrender/cancel options with an intrinsic value equivalent to the purchase/exercise price of other options exercised. There were no shares surrendered pursuant to cashless exercises during the three or nine months ended September 30, 2016. At September 30, 2016, the aggregate intrinsic value of options outstanding was approximately $298,582, and the aggregate intrinsic value of options exercisable was approximately $198,719. The aggregate intrinsic value of options exercised during the three and nine months ended September 30, 2016 was $10,898. As of September 30, 2016, the unamortized portion of stock compensation expense on all existing stock options was $70,367, which will be recognized over the next 14 months. The following table summarizes the range of exercise prices and weighted average remaining contractual life for outstanding and exercisable options under the Company’s option plans as of September 30, 2016: Outstanding options Exercisable options Exercise price range Number of options Weighted average remaining contractual life Number of options Weighted average remaining contractual life $ 0.01 to $3.99 100,374 7.8 years 37,688 6.7 years $ 4.00 to $6.99 34,125 6.0 years 50,936 6.3 years $ 7.00 to $9.99 19,069 5.0 years 18,194 5.0 years $ 10.00 to $12.99 52,808 0.7 years 52,808 0.7 years $ 13.00 to $15.99 51,439 3.9 years 51,439 3.9 years $ 16.00 to $18.99 1,250 0.7 years 1,250 0.7 years $ 19.00 to $29.99 6,500 2.8 years 6,500 2.8 years $ 30.00 to $55.00 96,875 1.2 years 96,875 1.2 years 362,440 4.0 years 315,690 3.3 years Restricted stock grants. A summary of all restricted stock activity under the equity compensation plans for the nine months ended September 30, 2016 is as follows: Restricted stock Weighted average grant date fair value Nonvested balance, January 1, 2016 354,500 $ 8.43 Granted 200,000 4.64 Vested (127,300 ) (10.98 ) Forfeited (4,600 ) (7.72 ) Nonvested balance, September 30, 2016 422,600 $ 5.87 The Company estimated the fair market value of these restricted stock grants based on the closing market price on the date of grant. As of September 30, 2016, there were $1,328,726 of total unrecognized compensation costs related to all remaining non-vested restricted stock grants, which will be amortized over the next 42 months in accordance with the vesting scale. The nonvested balance of restricted stock vests as follows: Year ended December 31, Number of shares 2015 (October 1, through December 31,) 17,300 2016 171,950 2018 164,150 2019 69,200 |
Common Stock Purchase Warrants
Common Stock Purchase Warrants | 9 Months Ended |
Sep. 30, 2016 | |
Common Stock Purchase Warrants | |
Common Stock Purchase Warrants | NOTE 11. COMMON STOCK PURCHASE WARRANTS The Company issued common stock purchase warrants (the “Warrants”) in conjunction with the subordinated notes payable held by an individual until they were paid in July 2015, the $4.0 million Secured Convertible Note (see Note 5) and the July 2015 registered direct offering and private placement. The Warrants are immediately exercisable and allow the holders to purchase up to 1,599,290 shares of common stock at $7.32 to $16.50 per share. The Warrants expire from July 22, 2017 through January 22, 2021 and allow for cashless exercise. Warrants Weighted average exercise price Vested Balance, January 1, 2016 1,599,290 $ 13.26 Granted — — Exercised — — Cancelled — — Vested Balance, September 30, 2016 1,599,290 $ 13.26 The total intrinsic value of all outstanding Warrants aggregated $-0- as of September 30, 2016 and the weighted average remaining term is 34 months. The following table summarizes the range of exercise prices and weighted average remaining contractual life for outstanding and exercisable Warrants to purchase common shares as of September 30, 2016: Outstanding and exercisable warrants Exercise price Number of options Weighted average remaining contractual life $ 7.32 12,200 2.9 years $ 8.50 42,500 2.2 years $ 13.43 659,824 0.8 years $ 13.43 879,766 4.3 years $ 16.50 5,000 3.8 years 1,599,290 2.8 years |
Preferred Stock
Preferred Stock | 9 Months Ended |
Sep. 30, 2016 | |
Equity [Abstract] | |
Preferred Stock | NOTE 12. PREFERRED STOCK The Company held its annual meeting of the shareholders (the “Annual Meeting”) on May 12, 2016. The shareholders approved an amendment to the Company’s Articles of Incorporation to increase the number of authorized shares of its capital stock that the Company may issue from 25,000,000 to 35,000,000, of which 25,000,000 shares classified as common stock and 10,000,000 classified as preferred stock. The newly authorized preferred stock has a par value of $0.001 per share. There have been no preferred shares issued as of September 30, 2016. The Board of Directors is authorized, to provide for the issuance of the shares of preferred stock in series, and by filing a certificate pursuant to the applicable law of the State of Nevada, to establish from time to time the number of shares to be included in each such series, and to fix the designation, powers, preferences and rights of the shares of each such series and the qualifications, limitations and restrictions thereof. The authority of the Board of Directors with respect to each series of Preferred Stock will include, but not be limited to, the rights to determine the following: ● The number of shares constituting that series of Preferred Stock and the distinctive designation of that series, which may be a distinguishing number, letter or title; ● The dividend rate on the shares of that series of Preferred Stock, whether dividends will be cumulative, and if so, from which date(s), and the relative rights of priority, if any, of payment of dividends on shares of that series; ● Whether that series of Preferred Stock will have voting rights, in addition to the voting rights provided by law, and, if so, the terms of such voting rights; ● Whether that series of Preferred Stock will have conversion privileges and, if so, the terms and conditions of such conversion, including provision for adjustment of the conversion rate in such events as the Board of Directors determines; ● Whether or not the shares of that series of Preferred Stock will be redeemable and, if so, the terms and conditions of such redemption, including the date or date upon or after which they are redeemable, and the amount per share payable in case of redemption, which amount may vary under different conditions and at different redemption dates; ● Whether that series of Preferred Stock will have a sinking fund for the redemption or purchase of shares of that series and, if so, the terms and amount of such sinking fund; ● The rights of the shares of that series of Preferred Stock in the event of voluntary or involuntary liquidation, dissolution or winding up of the Company, and the relative rights of priority, if any, of payment of shares of that series; and any other relative rights, preferences and limitations of that series of Preferred Stock. |
Net Loss Per Share
Net Loss Per Share | 9 Months Ended |
Sep. 30, 2016 | |
Earnings Per Share [Abstract] | |
Net Loss Per Share | NOTE 13. NET LOSS PER SHARE The calculation of the weighted average number of shares outstanding and loss per share outstanding for the three and nine months ended September 30, 2016 and 2015 are as follows: Three Months Ended September 30, Nine Months Ended September 30, 2016 2015 2016 2015 Numerator for basic and diluted income per share – Net loss $ (3,255,579 ) $ (2,141,163 ) $ (8,433,788 ) $ (9,344,263 ) Denominator for basic loss per share – weighted average shares outstanding 5,380,855 4,799,126 5,315,646 4,076,493 Dilutive effect of shares issuable under stock options and warrants outstanding — — — — Denominator for diluted loss per share – adjusted weighted average shares outstanding 5,380,855 4,799,126 5,315,646 4,076,493 Net loss per share: Basic $ (0.61 ) $ (0.45 ) $ (1.59 ) $ (2.29 ) Diluted $ (0.61 ) $ (0.45 ) $ (1.59 ) $ (2.29 ) Basic loss per share is based upon the weighted average number of common shares outstanding during the period. For the three and nine months ended September 30, 2016 and 2015, all outstanding stock options to purchase common stock were antidilutive, and, therefore, not included in the computation of diluted net loss per share. |
Nature of Business and Summar20
Nature of Business and Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Nature of Business | Nature of Business: Digital Ally, Inc. and subsidiaries (collectively, “Digital Ally,” “Digital,” the “Company,” “we,” “ours” and “us”) produces digital video imaging and storage products for use in law enforcement, security and commercial applications. Its products are an in-car digital video/audio recorder contained in a rear-view mirror for use in law enforcement and commercial fleets; a system that provides its law enforcement customers with audio/video surveillance from multiple vantage points and hands-free automatic activation of body-worn cameras and in-car video systems; a miniature digital video system designed to be worn on an individual’s body; a weather-resistant mobile digital video recording system for use on motorcycles, ATV’s and boats; and a hand-held laser speed detection device that it is offering primarily to law enforcement agencies. The Company has active research and development programs to adapt its technologies to other applications. It has the ability to integrate electronic, radio, computer, mechanical, and multi-media technologies to create unique solutions to address needs in a variety of other industries and markets, including mass transit, school bus, taxi cab and the military. The Company sells its products to law enforcement agencies and other security organizations, consumer and commercial fleet operators through direct sales domestically and third-party distributors internationally. The Company was originally incorporated in Nevada on December 13, 2000 as Vegas Petra, Inc. and had no operations until 2004. On November 30, 2004, Vegas Petra, Inc. entered into a Plan of Merger with Digital Ally, Inc., at which time the merged entity was renamed Digital Ally, Inc. |
Basis of Consolidation | Basis of Consolidation: The accompanying financial statements include the consolidated accounts of Digital Ally and its wholly-owned subsidiaries, Digital Ally International, Inc., MP Ally, LLC, and Medical Devices Ally, LLC. All intercompany balances and transactions have been eliminated during consolidation. The Company formed Digital Ally International, Inc. during August 2009 to facilitate the export sales of its products. In addition, Medical Devices Ally, LLC was formed in July 2014 and MP Ally, LLC was formed in July 2015, both of which have been inactive since formation. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments: The carrying amounts of financial instruments, including cash and cash equivalents, accounts receivable and accounts payable approximate fair value because of the short-term nature of these items. The Company accounts for its derivative liabilities on its fair value basis. |
Revenue Recognition | Revenue Recognition: Revenues from the sale of products are recorded when the product is shipped, title and risk of loss have transferred to the purchaser, payment terms are fixed or determinable and payment is reasonably assured. Customers do not have a right to return the product other than for warranty reasons for which they would only receive repair services or replacement product. The Company sells its products and services to law enforcement and commercial customers in the following manner: ● Sales to domestic customers are made direct to the end customer (typically a law enforcement agency or a commercial customer) through its direct sales force, which is composed of its employees. Revenue is recorded when the product is shipped to the end customer. ● Sales to international customers are made through independent distributors who purchase products from the Company at a wholesale price and sell to the end user (typically law enforcement agencies or a commercial customer) at a retail price. The distributor retains the margin as its compensation for its role in the transaction. The distributor generally maintains product inventory, customer receivables and all related risks and rewards of ownership. Revenue is recorded when the product is shipped to the distributor consistent with the terms of the distribution agreement. ● Repair parts and services for domestic and international customers are generally handled by its inside customer service employees. Revenue is recognized upon shipment of the repair parts and acceptance of the service or materials by the end customer. Sales taxes collected on products sold are excluded from revenues and are reported as an accrued expense in the accompanying balance sheets until payments are remitted. Other revenue is comprised of revenues from extended warranties, repair services and the sale of scrap and excess raw material and component parts. Revenue is recognized upon shipment of the product and acceptance of the service or materials by the end customer. Extended warranties are offered on selected products and when a customer purchases an extended warranty the associated proceeds are treated as deferred revenue and recognized over the term of the extended warranty on a straight line method. Sales returns and allowances aggregated $61,673 and $77,282 for the three months ended September 30, 2016 and 2015, respectively, and $263,663 and $612,341 for the nine months ended September 30, 2016 and 2015, respectively. Obligations for estimated sales returns and allowances are recognized at the time of sales on an accrual basis. The accrual is determined based upon historical return rates adjusted for known changes in key variables affecting these return rates. |
Use of Estimates | Use of Estimates: The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates. |
Cash and Cash Equivalents | Cash and cash equivalents: Cash and cash equivalents include funds on hand, in bank and short-term investments with original maturities of ninety (90) days or less. |
Accounts Receivable | Accounts Receivable: Accounts receivable are carried at original invoice amount less an estimate made for doubtful receivables based on a review of all outstanding amounts on a weekly basis. The Company determines the allowance for doubtful accounts by regularly evaluating individual customer receivables and considering a customer’s financial condition, credit history, and current economic conditions. Trade receivables are written off when deemed uncollectible. Recoveries of trade receivables previously written off are recorded when received. A trade receivable is considered to be past due if any portion of the receivable balance is outstanding for more than thirty (30) days beyond terms. No interest is charged on overdue trade receivables. |
Inventories | Inventories: Inventories consist of electronic parts, circuitry boards, camera parts and ancillary parts (collectively, “components”), work-in-process and finished goods, and are carried at the lower of cost (First-in, First-out Method) or market value. The Company determines the estimate for the reserve for slow moving or obsolete inventories by regularly evaluating individual inventory levels, projected sales and current economic conditions. |
Furniture, Fixtures and Equipment | Furniture, fixtures and equipment: Furniture, fixtures and equipment is stated at cost net of accumulated depreciation. Additions and improvements are capitalized while ordinary maintenance and repair expenditures are charged to expense as incurred. Depreciation is recorded by the straight-line method over the estimated useful life of the asset, which ranges from three to ten years. Amortization expense on capitalized leases is included with depreciation expense. |
Intangible Assets | Intangible assets: Intangible assets include deferred patent costs and license agreements. Legal expenses incurred in preparation of patent application have been deferred and will be amortized over the useful life of granted patents. Costs incurred in preparation of applications that are not granted will be charged to expense at that time. The Company has entered into several sublicense agreements under which it has been assigned the exclusive rights to certain licensed materials used in its products. These sublicense agreements generally require upfront payments to obtain the exclusive rights to such material. The Company capitalizes the upfront payments as intangible assets and amortizes such costs over their estimated useful life on a straight line method. |
Long-Lived Assets | Long-Lived Assets: Long-lived assets such as property, plant and equipment and purchased intangible assets subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If circumstances require a long-lived asset or asset group be tested for possible impairment, the Company first compares undiscounted cash flows expected to be generated by that asset or asset group to its carrying value. If the carrying value of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent that the carrying value exceeds its fair value. Fair value is determined through various valuation techniques, including discounted cash flow models, quoted market values and third-party appraisals, as considered necessary. |
Warranties | Warranties: The Company’s products carry explicit product warranties that extend up to two years from the date of shipment. The Company records a provision for estimated warranty costs based upon historical warranty loss experience and periodically adjusts these provisions to reflect actual experience. Accrued warranty costs are included in accrued expenses. Extended warranties are offered on selected products and when a customer purchases an extended warranty the associated proceeds are treated as deferred revenue and recognized over the term of the extended warranty. |
Customer Deposits | Customer Deposits: The Company requires deposits in advance of shipment for certain customer sales orders, in particular when accepting orders from foreign customers for which the Company does not have a payment history. Customer deposits are reflected as a current liability in the accompanying Condensed Consolidated Balance Sheets. |
Shipping and Handling Costs | Shipping and Handling Costs: Shipping and handling costs for outbound sales orders totaled $26,077 and $22,480 for the three months ended September 30, 2016 and 2015, respectively, and $72,296 and $69,691 for the nine months ended September 30, 2016 and 2015, respectively. Such costs are included in selling, general and administrative expenses in the Condensed Consolidated Statements of Operations. |
Advertising Costs | Advertising Costs: Advertising expense includes costs related to trade shows and conventions, promotional material and supplies, and media costs. Advertising costs are expensed in the period in which they are incurred. The Company incurred total advertising expense of approximately $615,586 and $324,179 for the three months ended September 30, 2016 and 2015, respectively, and $936,998 and $658,558 for the nine months ended September 30, 2016 and 2015, respectively. Such costs are included in selling, general and administrative expenses in the Condensed Consolidated Statements of Operations. |
Income Taxes | Income Taxes: Deferred taxes are provided for by the liability method wherein deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carryforwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax basis. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. The Company applies the provisions of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) No. 740 - Income Taxes that provides a framework for accounting for uncertainty in income taxes and provided a comprehensive model to recognize, measure, present, and disclose in its financial statements uncertain tax positions taken or expected to be taken on a tax return. It initially recognizes tax positions in the financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. Such tax positions are initially and subsequently measured as the largest amount of tax benefit that is greater than 50% likely of being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and all relevant facts. Application requires numerous estimates based on available information. The Company considers many factors when evaluating and estimating its tax positions and tax benefits, and it recognized tax positions and tax benefits may not accurately anticipate actual outcomes. As it obtains additional information, the Company may need to periodically adjust its recognized tax positions and tax benefits. These periodic adjustments may have a material impact on its consolidated statements of operations. The Company’s policy is to record estimated interest and penalties related to the underpayment of income taxes as income tax expense in the consolidated statements of operations. There was no interest expense related to the underpayment of estimated taxes during the nine months ended September 30, 2016 and 2015. There have been no penalties in the nine months ended September 30, 2016 and 2015. |
Research and Development Expenses | Research and Development Expenses: The Company expenses all research and development costs as incurred. Development costs of computer software to be sold, leased, or otherwise marketed are subject to capitalization beginning when a product’s technological feasibility has been established and ending when a product is available for general release to customers. In most instances, the Company’s products are released soon after technological feasibility has been established. Costs incurred subsequent to achievement of technological feasibility were not significant, and software development costs were expensed as incurred during the nine months ended September 30, 2016 and 2015. |
Stock-Based Compensation | Stock-Based Compensation: The Company grants stock-based compensation to its employees, board of directors and certain third party contractors. Share-based compensation arrangements may include the issuance of options to purchase common stock in the future or the issuance of restricted stock, which generally are subject to vesting requirements. The Company records stock-based compensation expense for all stock-based compensation granted based on the grant-date fair value. The Company recognizes these compensation costs on a straight-line basis over the requisite service period of the award. The Company estimates the grant-date fair value of stock-based compensation using the Black-Scholes valuation model. Assumptions used to estimate compensation expense are determined as follows: ● Expected term is determined using the contractual term and vesting period of the award; ● Expected volatility of award grants made in the Company’s plan is measured using the weighted average of historical daily changes in the market price of the Company’s common stock over the period equal to the expected term of the award; ● Expected dividend rate is determined based on expected dividends to be declared; ● Risk-free interest rate is equivalent to the implied yield on zero-coupon U.S. Treasury bonds with a maturity equal to the expected term of the awards; and ● Forfeitures are based on the history of cancellations of awards granted and management’s analysis of potential |
Segments of Business | Segments of Business: Management has determined that its operations are comprised of one reportable segment: the sale of digital audio and video recording and speed detection devices. For the three and nine months ended September 30, 2016 and 2015, sales by geographic area were as follows: Three Months Ended September 30, Nine Months Ended September 30, 2016 2015 2016 2015 Sales by geographic area: United States of America 3,512,075 $ 5,092,937 $ 11,974,469 $ 14,864,676 Foreign 827,452 3,151 1,154,412 114,413 $ 4,339,527 $ 5,096,088 $ 13,128,881 $ 14,979,089 Sales to customers outside of the United States are denominated in U.S. dollars. All Company assets are physically located within the United States. |
Accounting Developments | Accounting Developments: In May 2014, the FASB issued Accounting Standard Update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers” In July 2015, the FASB issued ASU 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory In April 2015, the FASB issued ASU 2015-03, Interest— Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs. In November 2015, the FASB issued ASU 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). The objective of ASU 2016-02 is to recognize lease assets and lease liabilities by lessees for those leases classified as operating leases under previous U.S. GAAP. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption of ASU 2016-02 is permitted. The Company is currently evaluating the effects adoption of this guidance will have on its consolidated financial statements. In March 2016, the FASB issued ASU No. 2016-09, Compensation-Stock Compensation (Topic 718) |
Nature of Business and Summar21
Nature of Business and Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Summary of Sales by Geographic Area | For the three and nine months ended September 30, 2016 and 2015, sales by geographic area were as follows: Three Months Ended September 30, Nine Months Ended September 30, 2016 2015 2016 2015 Sales by geographic area: United States of America 3,512,075 $ 5,092,937 $ 11,974,469 $ 14,864,676 Foreign 827,452 3,151 1,154,412 114,413 $ 4,339,527 $ 5,096,088 $ 13,128,881 $ 14,979,089 |
Inventories (Tables)
Inventories (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventories | Inventories consisted of the following at September 30, 2016 and December 31, 2015: September 30, 2016 December 31, 2015 Raw material and component parts $ 4,168,866 $ 3,833,873 Work-in-process 246,767 134,641 Finished goods 7,452,101 7,895,663 Subtotal 11,867,734 11,864,177 Reserve for excess and obsolete inventory (1,455,458 ) (1,202,411 ) Total $ 10,412,276 $ 10,661,766 |
Secured Convertible Note Paya23
Secured Convertible Note Payable, and Capital Lease Obligations (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Debt Disclosure [Abstract] | |
Summary of Future Minimum Lease Payments Under Non-cancelable Capital Leases | Future minimum lease payments under non-cancelable capital leases having terms in excess of one year are as follows: Year ending December 31: 2016 (period from October 1, 2016 to December 31, 2016) $ 8,575 2017 34,298 2018 8,574 2019 — 2020 and thereafter — Total future minimum lease payments 51,447 Less amount representing interest 2,252 Present value of minimum lease payments 49,195 Less current portion 32,329 Capital lease obligations, less current portion $ 16,866 |
Summary of Assets Under Capital Leases | Assets under capital leases are included in furniture, fixtures and equipment as follows: September 30, 2016 December 31, 2015 Furniture, fixtures and equipment $ 382,928 $ 382,928 Less: accumulated amortization (279,714 ) (224,089 ) Net furniture, fixtures and equipment $ 103,214 $ 158,839 |
Fair Value Measurement (Tables)
Fair Value Measurement (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Fair Value Disclosures [Abstract] | |
Financial Assets and Liabilities Measured at Fair Value on Recurring Basis | The following table represents the Company’s hierarchy for its financial assets and liabilities measured at fair value on a recurring basis as of September 30, 2016 and December 31, 2015. September 30, 2016 Level 1 Level 2 Level 3 Total Liabilities: Warrant derivative liability $ - $ - $ 48,313 $ 48,313 $ - $ - $ 48,313 $ 48,313 December 31, 2015 Level 1 Level 2 Level 3 Total Liabilities: Warrant derivative liability $ - $ - $ 67,053 $ 67,053 $ - $ - $ 67,053 $ 67,053 |
Fair Value Measurements Change in Level Three Inputs | The following table represents the change in level 3 tier value measurements: Warrant Derivative Liability December 31, 2015 $ 67,053 Change in fair value (18,740 ) September 30, 2016 $ 48,313 |
Accrued Expenses (Tables)
Accrued Expenses (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Payables and Accruals [Abstract] | |
Schedule of Accrued Expenses | Accrued expenses consisted of the following at September 30, 2016 and December 31, 2015: September 30, 2016 December 31, 2015 Accrued warranty expense $ 227,459 $ 159,838 Accrued sales commissions 44,986 100,295 Accrued payroll and related fringes 495,025 247,984 Accrued insurance 122,917 34,926 Accrued rent 193,623 224,393 Accrued sales returns and allowances 48,444 72,456 Other 115,539 96,435 $ 1,247,993 $ 936,327 |
Schedule of Accrued Warranty Expense | Accrued warranty expense was comprised of the following for the nine months ended September 30, 2016: 2016 Beginning balance $ 159,838 Provision for warranty expense 164,362 Charges applied to warranty reserve (96,741 ) Ending balance $ 227,459 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Future Minimum Lease Payments | Following are the future minimum lease payments for each year and in total. Year ending December 31: 2016 (period from October 1, 2016 to December 31, 2016) $ 110,644 2017 445,449 2018 451,248 2019 457,327 2020 154,131 $ 1,618,799 |
Schedule of Future Sponsorship Fee | The Agreement provides the Company with naming rights and other benefits for the annual Tournament for the years 2015 through 2019 in exchange for the following sponsorship fee: Year Sponsorship fee 2015 $ 375,000 2016 $ 475,000 2017 $ 475,000 2018 $ 500,000 2019 $ 500,000 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Summary of Stock Options Outstanding | Activity in the various Plans during the nine months ended September 30, 2016 is reflected in the following table: Options Shares Weighted Average Exercise Price Outstanding at January 1, 2016 328,690 $ 20.43 Granted 40,000 3.92 Exercised (5,050 ) (3.77 ) Forfeited (1,200 ) (3.63 ) Outstanding at September 30, 2016 362,440 $ 18.46 Exercisable at September 30, 2016 315,690 $ 21.00 Weighted-average fair value for options granted during the period at fair value 40,000 $ 3.25 |
Shares Authorized under Stock Option Plans by Exercise Price Range | The following table summarizes the range of exercise prices and weighted average remaining contractual life for outstanding and exercisable options under the Company’s option plans as of September 30, 2016: Outstanding options Exercisable options Exercise price range Number of options Weighted average remaining contractual life Number of options Weighted average remaining contractual life $ 0.01 to $3.99 100,374 7.8 years 37,688 6.7 years $ 4.00 to $6.99 34,125 6.0 years 50,936 6.3 years $ 7.00 to $9.99 19,069 5.0 years 18,194 5.0 years $ 10.00 to $12.99 52,808 0.7 years 52,808 0.7 years $ 13.00 to $15.99 51,439 3.9 years 51,439 3.9 years $ 16.00 to $18.99 1,250 0.7 years 1,250 0.7 years $ 19.00 to $29.99 6,500 2.8 years 6,500 2.8 years $ 30.00 to $55.00 96,875 1.2 years 96,875 1.2 years 362,440 4.0 years 315,690 3.3 years |
Summary of Restricted Stock Activity | A summary of all restricted stock activity under the equity compensation plans for the nine months ended September 30, 2016 is as follows: Restricted stock Weighted average grant date fair value Nonvested balance, January 1, 2016 354,500 $ 8.43 Granted 200,000 4.64 Vested (127,300 ) (10.98 ) Forfeited (4,600 ) (7.72 ) Nonvested balance, September 30, 2016 422,600 $ 5.87 |
Non-vested Balance of Restricted Stock | The nonvested balance of restricted stock vests as follows: Year ended December 31, Number of shares 2015 (October 1, through December 31,) 17,300 2016 171,950 2018 164,150 2019 69,200 |
Common Stock Purchase Warrants
Common Stock Purchase Warrants (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Common Stock Purchase Warrants | |
Summary of Warrant Activity | The Warrants expire from July 22, 2017 through January 22, 2021 and allow for cashless exercise. Warrants Weighted average exercise price Vested Balance, January 1, 2016 1,599,290 $ 13.26 Granted — — Exercised — — Cancelled — — Vested Balance, September 30, 2016 1,599,290 $ 13.26 |
Summary of Range of Exercise Prices and Weighted Average Remaining Contractual Life of Warrants | The following table summarizes the range of exercise prices and weighted average remaining contractual life for outstanding and exercisable Warrants to purchase common shares as of September 30, 2016: Outstanding and exercisable warrants Exercise price Number of options Weighted average remaining contractual life $ 7.32 12,200 2.9 years $ 8.50 42,500 2.2 years $ 13.43 659,824 0.8 years $ 13.43 879,766 4.3 years $ 16.50 5,000 3.8 years 1,599,290 2.8 years |
Net Loss Per Share (Tables)
Net Loss Per Share (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Earnings Per Share [Abstract] | |
Calculation of Weighted Average Number of Shares Outstanding and Loss per Share Outstanding | The calculation of the weighted average number of shares outstanding and loss per share outstanding for the three and nine months ended September 30, 2016 and 2015 are as follows: Three Months Ended September 30, Nine Months Ended September 30, 2016 2015 2016 2015 Numerator for basic and diluted income per share – Net loss $ (3,255,579 ) $ (2,141,163 ) $ (8,433,788 ) $ (9,344,263 ) Denominator for basic loss per share – weighted average shares outstanding 5,380,855 4,799,126 5,315,646 4,076,493 Dilutive effect of shares issuable under stock options and warrants outstanding — — — — Denominator for diluted loss per share – adjusted weighted average shares outstanding 5,380,855 4,799,126 5,315,646 4,076,493 Net loss per share: Basic $ (0.61 ) $ (0.45 ) $ (1.59 ) $ (2.29 ) Diluted $ (0.61 ) $ (0.45 ) $ (1.59 ) $ (2.29 ) |
Nature of Business and Summar30
Nature of Business and Summary of Significant Accounting Policies (Details Narrative) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016USD ($) | Sep. 30, 2015USD ($) | Sep. 30, 2016USD ($)Segment | Sep. 30, 2015USD ($) | |
Sales returns and allowances | $ 61,673 | $ 77,282 | $ 263,663 | $ 612,341 |
Shipping and handling costs | 26,077 | 22,480 | 72,296 | 69,691 |
Advertising expense | $ 615,586 | $ 324,179 | $ 936,998 | 658,558 |
Percentage of income tax benefit likely of being realized upon settlement with tax authority | greater than 50% | |||
Interest expense related to underpayment of estimated taxes | ||||
Penalties | ||||
Software development cost | ||||
Number of reportable segments | Segment | 1 | |||
Minimum [Member] | ||||
Estimated useful life of furniture, fixtures and equipment | 3 years | |||
Maximum [Member] | ||||
Estimated useful life of furniture, fixtures and equipment | 10 years |
Nature of Business and Summar31
Nature of Business and Summary of Significant Accounting Policies - Summary of Sales by Geographic Area (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Sales by geographic area | $ 4,339,527 | $ 5,096,088 | $ 13,128,881 | $ 14,979,089 |
United States of America [Member] | ||||
Sales by geographic area | 3,512,075 | 5,092,937 | 11,974,469 | 14,864,676 |
Foreign [Member] | ||||
Sales by geographic area | $ 827,452 | $ 3,151 | $ 1,154,412 | $ 114,413 |
Concentration of Credit Risk 32
Concentration of Credit Risk and Major Customers (Details Narrative) - USD ($) | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | |
Allowance for doubtful accounts | $ 70,000 | $ 74,997 | |
Accounts receivable | $ 372,453 | ||
Accounts Receivable [Member] | |||
Percentage of concentration risk | 12.00% | ||
Individual Distributor [Member] | Revenue [Member] | |||
Percentage of concentration risk | 10.00% | 10.00% | |
Customer [Member] | Accounts Receivable [Member] | |||
Percentage of concentration risk | 10.00% | ||
One Customer [Member] | Accounts Receivable [Member] | |||
Percentage of concentration risk | 10.00% |
Inventories (Details Narrative)
Inventories (Details Narrative) - USD ($) | Sep. 30, 2016 | Dec. 31, 2015 |
Inventory Disclosure [Abstract] | ||
Finished goods inventory | $ 685,909 | $ 651,004 |
Inventories - Schedule of Inven
Inventories - Schedule of Inventories (Details) - USD ($) | Sep. 30, 2016 | Dec. 31, 2015 |
Inventory Disclosure [Abstract] | ||
Raw material and component parts | $ 4,168,866 | $ 3,833,873 |
Work-in-process | 246,767 | 134,641 |
Finished goods | 7,452,101 | 7,895,663 |
Subtotal | 11,867,734 | 11,864,177 |
Reserve for excess and obsolete inventory | (1,455,458) | (1,202,411) |
Total | $ 10,412,276 | $ 10,661,766 |
Secured Convertible Note Paya35
Secured Convertible Note Payable, and Capital Lease Obligations (Details Narrative) - USD ($) | Apr. 09, 2015 | Mar. 24, 2015 | Feb. 25, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | Jul. 31, 2015 |
Conversion of convertible debt into common stock | $ 7,740,834 | ||||||||
Change in fair value of warrant derivative valuation | $ (19,075) | $ 89,645 | 18,740 | $ 371,428 | |||||
Derivative liabilities | $ 48,313 | $ 48,313 | $ 67,053 | ||||||
Warrant [Member] | |||||||||
Warrants granted to purchase number of common stock | 37,800 | 212,295 | 12,200 | ||||||
Change in fair value of warrant derivative valuation | $ 127,951 | $ 340,722 | |||||||
Secured Convertible Note [Member] | |||||||||
Principal amount of note payable | $ 4,000,000 | $ 4,000,000 | |||||||
Conversion of convertible debt into common stock | $ 3,963,780 | ||||||||
Conversion of note into common stock | 655,738 | ||||||||
Number of shares converted for accrued interest | 5,475 | ||||||||
Secured Convertible Note, conversion price | $ 7.32 | ||||||||
Number of shares market value increased | 655,213 | ||||||||
Change in fair market value | $ 3,963,780 | ||||||||
Value of shares retired | $ 4,434,383 |
Secured Convertible Note Paya36
Secured Convertible Note Payable, and Capital Lease Obligations - Summary of Future Minimum Lease Payments Under Non-cancelable Capital Leases (Details) - USD ($) | Sep. 30, 2016 | Dec. 31, 2015 |
Debt Disclosure [Abstract] | ||
2016 (period from October 1, 2016 to December 31, 2016) | $ 8,575 | |
2,017 | 34,298 | |
2,018 | 8,574 | |
2,019 | ||
2020 and thereafter | ||
Total future minimum lease payments | 51,447 | |
Less amount representing interest | 2,252 | |
Present value of minimum lease payments | 49,195 | |
Less current portion | 32,329 | $ 34,828 |
Capital lease obligations, less current portion | $ 16,866 | $ 41,284 |
Secured Convertible Note Paya37
Secured Convertible Note Payable, and Capital Lease Obligations - Summary of Assets Under Capital Leases (Details) - USD ($) | Sep. 30, 2016 | Dec. 31, 2015 |
Debt Disclosure [Abstract] | ||
Furniture, fixtures and equipment | $ 382,928 | $ 382,928 |
Less: accumulated amortization | (279,714) | (224,089) |
Net furniture, fixtures and equipment | $ 103,214 | $ 158,839 |
Fair Value Measurement - Financ
Fair Value Measurement - Financial Assets and Liabilities Measured at Fair Value on Recurring Basis (Details) - USD ($) | Sep. 30, 2016 | Dec. 31, 2015 |
Warrant derivative liability | $ 48,313 | $ 67,053 |
Liabilities | 48,313 | 67,053 |
Level 1 [Member] | ||
Warrant derivative liability | ||
Liabilities | ||
Level 2 [Member] | ||
Warrant derivative liability | ||
Liabilities | ||
Level 3 [Member] | ||
Warrant derivative liability | 48,313 | 67,053 |
Liabilities | $ 48,313 | $ 67,053 |
Fair Value Measurement - Fair V
Fair Value Measurement - Fair Value Measurements Change in Level Three Inputs (Details) - Warrant Derivative Liability [Member] | 9 Months Ended |
Sep. 30, 2016USD ($) | |
Balance | $ 67,053 |
Change in fair value | (18,740) |
Balance | $ 48,313 |
Accrued Expenses - Schedule of
Accrued Expenses - Schedule of Accrued Expenses (Details) - USD ($) | Sep. 30, 2016 | Dec. 31, 2015 |
Payables and Accruals [Abstract] | ||
Accrued warranty expense | $ 227,459 | $ 159,838 |
Accrued sales commissions | 44,986 | 100,295 |
Accrued payroll and related fringes | 495,025 | 247,984 |
Accrued insurance | 122,917 | 34,926 |
Accrued rent | 193,623 | 224,393 |
Accrued sales returns and allowances | 48,444 | 72,456 |
Other | 115,539 | 96,435 |
Total accrued expenses | $ 1,247,993 | $ 936,327 |
Accrued Expenses - Schedule o41
Accrued Expenses - Schedule of Accrued Warranty Expense (Details) | 9 Months Ended |
Sep. 30, 2016USD ($) | |
Payables and Accruals [Abstract] | |
Beginning balance | $ 159,838 |
Provision for warranty expense | 164,362 |
Charges applied to warranty reserve | (96,741) |
Ending balance | $ 227,459 |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | |
Effective tax rate of expected statutory rate | 100.00% | 100.00% | 100.00% | 100.00% | |
Valuation allowance on deferred tax assets | $ 21,215,000 | $ 21,215,000 | $ 18,105,000 | ||
Net operating loss carry-forwards | 37,514,000 | $ 37,514,000 | |||
Operating loss carry-forwards expiration years | expire between 2023 and 2036 | ||||
Research and development tax credit carry-forwards | $ 1,872,000 | $ 1,872,000 | |||
Operating loss, research and development tax credit forwards expiration year | expire between 2023 and 2036 | ||||
Percentage of changes in ownership | 50.00% | 50.00% | |||
Duration for changes in ownership | 3 years | ||||
Net operating loss due to ownership changes | $ 765,000 | $ 765,000 | |||
Annual limitation due to ownership changes | 1,151,000 | $ 1,151,000 | |||
Percentage of income tax benefit likely of being realized upon settlement with tax authority | greater than 50% | ||||
Research And Development [Member] | |||||
Tax credit carry-forwards | $ 175,000 | $ 175,000 | |||
Tax credit carry-forwards, expiration date | between 2023 and 2036 |
Commitments and Contingencies43
Commitments and Contingencies (Details Narrative) - USD ($) | Mar. 23, 2016 | Jan. 31, 2016 | Jul. 31, 2008 | Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Aug. 25, 2015 |
Non-cancelable operating lease | Apr. 30, 2020 | |||||||
Rent expense | $ 99,431 | $ 99,431 | $ 298,293 | $ 302,414 | ||||
Royalty expense | 6,250 | 6,641 | 18,911 | 19,957 | ||||
Sponsorship expenses | 497,235 | 172,623 | $ 499,271 | 172,623 | ||||
Percentage of employer matching contribution | 100.00% | |||||||
Matching contributions to 401 (k) Plan | 46,346 | $ 47,220 | $ 135,058 | $ 121,920 | ||||
First Agreement [Member] | Individual [Member] | ||||||||
Advance | 39,781 | 39,781 | ||||||
First Agreement [Member] | Individual [Member] | Minimum [Member] | ||||||||
Payment of advances | $ 4,000 | |||||||
First Agreement [Member] | Individual [Member] | Maximum [Member] | ||||||||
Payment of advances | $ 6,000 | |||||||
Second Agreement [Member] | Limited Liability Company [Member] | ||||||||
Advance | $ 123,459 | $ 123,459 | ||||||
Second Agreement [Member] | Limited Liability Company [Member] | Minimum [Member] | ||||||||
Payment of advances | $ 5,000 | |||||||
Second Agreement [Member] | Limited Liability Company [Member] | Maximum [Member] | ||||||||
Payment of advances | $ 6,000 | |||||||
3% Of Employee Contribution [Member] | ||||||||
Percentage of employer matching contribution | 100.00% | |||||||
2% Of Employee Contribution [Member] | ||||||||
Percentage of employer matching contribution | 50.00% | |||||||
Employee Retirement Plan [Member] | ||||||||
Description of matching contributions to employees | The amended plan requires the Company to provide 100% matching contributions for employees who elect to contribute up to 3% of their compensation to the plan and 50% matching contributions for employees elective deferrals on the next 2% of their contributions. | |||||||
Board of Directors [Member] | ||||||||
Stock repurchase during period | $ 2,500,000 |
Commitments and Contingencies -
Commitments and Contingencies - Schedule of Future Minimum Lease Payments (Details) | Sep. 30, 2016USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
2016 (period from October 1, 2016 to December 31, 2016) | $ 110,644 |
2,017 | 445,449 |
2,018 | 451,248 |
2,019 | 457,327 |
2,020 | 154,131 |
Net lease commitments | $ 1,618,799 |
Commitments and Contingencies45
Commitments and Contingencies - Schedule of Future Sponsorship Fee (Details) | 9 Months Ended |
Sep. 30, 2016USD ($) | |
Commitments and Contingencies Disclosure [Abstract] | |
2,015 | $ 375,000 |
2,016 | 475,000 |
2,017 | 475,000 |
2,018 | 500,000 |
2,019 | $ 500,000 |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | |
Stock based compensation | $ 422,246 | $ 479,084 | $ 1,203,312 | $ 1,077,485 | |
Number of common stock authorized to grant | 1,925,000 | 1,925,000 | |||
Contractual terms | 10 years | ||||
Options, available for grant | 290,802 | 290,802 | |||
Options that are fully vested and remain outstanding | 1,250 | 1,250 | |||
Stock options issued | $ 40,000 | ||||
Aggregate intrinsic value of options outstanding | $ 298,582 | 298,582 | |||
Intrinsic value of options exercisable | 198,719 | 198,719 | |||
Intrinsic value of options exercised | 10,898 | 10,898 | |||
Unamortized portion of stock compensation expense | 70,367 | $ 70,367 | |||
Stock options recognized over period | 14 months | ||||
Unrecognized compensation costs | $ 1,328,726 | $ 1,328,726 | |||
Award vesting period | 42 months | ||||
2005 Stock Option and Restricted Stock Plan [Member] | |||||
Number of common stock shares reserved for awards which unavailable for issuance | 28 |
Stock-Based Compensation - Summ
Stock-Based Compensation - Summary of Stock Options Outstanding (Details) | 9 Months Ended |
Sep. 30, 2016$ / sharesshares | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Options Outstanding, Beginning balance | shares | 328,690 |
Options Granted | shares | 40,000 |
Options Exercised | shares | (5,050) |
Options Forfeited | shares | (1,200) |
Options Outstanding, Ending balance | shares | 362,440 |
Options Exercisable, Ending balance | shares | 315,690 |
Weighted-average fair value for options granted during the period at fair value | shares | 40,000 |
Weighted Average Exercise Price, Outstanding, Beginning balance | $ / shares | $ 20.43 |
Weighted Average Exercise Price, Granted | $ / shares | 3.92 |
Weighted Average Exercise Price, Exercised | $ / shares | (3.77) |
Weighted Average Exercise Price, Forfeited | $ / shares | (3.63) |
Weighted Average Exercise Price, Outstanding, Ending balance | $ / shares | 18.46 |
Weighted Average Exercise Price, Exercisable, Ending balance | $ / shares | 21 |
Weighted-average fair value for options granted during the period at fair value | $ / shares | $ 3.25 |
Stock-Based Compensation - Shar
Stock-Based Compensation - Shares Authorized Under Stock Option Plans by Exercise Price Range (Details) | 9 Months Ended |
Sep. 30, 2016$ / sharesshares | |
Number of options, Outstanding | 362,440 |
Weighted average remaining contractual life, Outstanding options | 4 years |
Number of options, Exercisable | 315,690 |
Weighted average remaining contractual life, Exercisable options | 3 years 3 months 18 days |
Exercise Price Range One [Member] | |
Exercise price range, lower limit | $ / shares | $ 0.01 |
Exercise price range, upper limit | $ / shares | $ 3.99 |
Number of options, Outstanding | 100,374 |
Weighted average remaining contractual life, Outstanding options | 7 years 9 months 18 days |
Number of options, Exercisable | 37,688 |
Weighted average remaining contractual life, Exercisable options | 6 years 8 months 12 days |
Exercise Price Range Two [Member] | |
Exercise price range, lower limit | $ / shares | $ 4 |
Exercise price range, upper limit | $ / shares | $ 6.99 |
Number of options, Outstanding | 34,125 |
Weighted average remaining contractual life, Outstanding options | 6 years |
Number of options, Exercisable | 50,936 |
Weighted average remaining contractual life, Exercisable options | 6 years 3 months 18 days |
Exercise Price Range Three [Member] | |
Exercise price range, lower limit | $ / shares | $ 7 |
Exercise price range, upper limit | $ / shares | $ 9.99 |
Number of options, Outstanding | 19,069 |
Weighted average remaining contractual life, Outstanding options | 5 years |
Number of options, Exercisable | 18,194 |
Weighted average remaining contractual life, Exercisable options | 5 years |
Exercise Price Range Four [Member] | |
Exercise price range, lower limit | $ / shares | $ 10 |
Exercise price range, upper limit | $ / shares | $ 12.99 |
Number of options, Outstanding | 52,808 |
Weighted average remaining contractual life, Outstanding options | 8 months 12 days |
Number of options, Exercisable | 52,808 |
Weighted average remaining contractual life, Exercisable options | 8 months 12 days |
Exercise Price Range Five [Member] | |
Exercise price range, lower limit | $ / shares | $ 13 |
Exercise price range, upper limit | $ / shares | $ 15.99 |
Number of options, Outstanding | 51,439 |
Weighted average remaining contractual life, Outstanding options | 3 years 10 months 24 days |
Number of options, Exercisable | 51,439 |
Weighted average remaining contractual life, Exercisable options | 3 years 10 months 24 days |
Exercise Price Range Six [Member] | |
Exercise price range, lower limit | $ / shares | $ 16 |
Exercise price range, upper limit | $ / shares | $ 18.99 |
Number of options, Outstanding | 1,250 |
Weighted average remaining contractual life, Outstanding options | 8 months 12 days |
Number of options, Exercisable | 1,250 |
Weighted average remaining contractual life, Exercisable options | 8 months 12 days |
Exercise Price Range Seven [Member] | |
Exercise price range, lower limit | $ / shares | $ 19 |
Exercise price range, upper limit | $ / shares | $ 29.99 |
Number of options, Outstanding | 6,500 |
Weighted average remaining contractual life, Outstanding options | 2 years 9 months 18 days |
Number of options, Exercisable | 6,500 |
Weighted average remaining contractual life, Exercisable options | 2 years 9 months 18 days |
Exercise Price Range Eight [Member] | |
Exercise price range, lower limit | $ / shares | $ 30 |
Exercise price range, upper limit | $ / shares | $ 55 |
Number of options, Outstanding | 96,875 |
Weighted average remaining contractual life, Outstanding options | 1 year 2 months 12 days |
Number of options, Exercisable | 96,875 |
Weighted average remaining contractual life, Exercisable options | 1 year 2 months 12 days |
Stock-Based Compensation - Su49
Stock-Based Compensation - Summary of Restricted Stock Activity (Details) - Restricted Stock [Member] | 9 Months Ended |
Sep. 30, 2016$ / sharesshares | |
Restricted stock, Non-vested Beginning Balance | shares | 354,500 |
Restricted stock, Granted | shares | 200,000 |
Restricted stock, Vested | shares | (127,300) |
Restricted stock, Forfeited | shares | (4,600) |
Restricted stock, Non-vested Ending Balance | shares | 422,600 |
Weighted average grant date fair value, Non-vested Beginning Balance | $ / shares | $ 8.43 |
Weighted average grant date fair value, Granted | $ / shares | 4.64 |
Weighted average grant date fair value, Vested | $ / shares | (10.98) |
Weighted average grant date fair value, Forfeited | $ / shares | (7.72) |
Weighted average grant date fair value, Non-vested Ending Balance | $ / shares | $ 5.87 |
Stock-Based Compensation - Non-
Stock-Based Compensation - Non-vested Balance of Restricted Stock (Details) - Restricted Stock [Member] | Sep. 30, 2016shares |
2015 (October 1, through December 31,) | 17,300 |
2,016 | 171,950 |
2,018 | 164,150 |
2,019 | 69,200 |
Common Stock Purchase Warrant51
Common Stock Purchase Warrants (Details Narrative) - USD ($) | 9 Months Ended | ||
Sep. 30, 2016 | Jul. 31, 2015 | Feb. 25, 2015 | |
Warrant [Member] | |||
Warrants outstanding intrinsic value | $ 0 | ||
Warrants, weighted average remaining term | 34 months | ||
Common Stock Purchase Warrants [Member] | |||
Exercisable warrants issued to purchase number of common stock | 1,599,290 | ||
Warrant expiration term | July 22, 2017 through January 22, 2021 | ||
Common Stock Purchase Warrants [Member] | Minimum [Member] | |||
Warrant, exercise per share | $ 7.32 | ||
Common Stock Purchase Warrants [Member] | Maximum [Member] | |||
Warrant, exercise per share | $ 16.50 | ||
Secured Convertible Note [Member] | |||
Principal amount of note payable | $ 4,000,000 | $ 4,000,000 |
Common Stock Purchase Warrant52
Common Stock Purchase Warrants - Summary of Warrant Activity (Details) - Warrant [Member] | 9 Months Ended |
Sep. 30, 2016$ / sharesshares | |
Warrants, Vested, Beginning balance | shares | 1,599,290 |
Warrants, Granted | shares | |
Warrants, Exercised | shares | |
Warrants, Cancelled | shares | |
Warrants, Vested, Ending balance | shares | 1,599,290 |
Weighted average exercise price, Vested, Beginning balance | $ / shares | $ 13.26 |
Weighted average exercise price, Granted | $ / shares | |
Weighted average exercise price, Exercised | $ / shares | |
Weighted average exercise price, Cancelled | $ / shares | |
Weighted average exercise price, Vested, Ending balance | $ / shares | $ 13.26 |
Common Stock Purchase Warrant53
Common Stock Purchase Warrants - Summary of Range of Exercise Prices and Weighted Average Remaining Contractual Life of Warrants (Details) - $ / shares | 9 Months Ended | |
Sep. 30, 2016 | Dec. 31, 2015 | |
Outstanding and exercisable warrants, Exercise price | $ (3.77) | |
Warrant [Member] | ||
Outstanding and exercisable warrants, Number of options | 1,599,290 | 1,599,290 |
Outstanding and exercisable warrants, Weighted average remaining contractual life | 2 years 9 months 18 days | |
Warrant [Member] | Exercise Price Range One [Member] | ||
Outstanding and exercisable warrants, Exercise price | $ 7.32 | |
Outstanding and exercisable warrants, Number of options | 12,200 | |
Outstanding and exercisable warrants, Weighted average remaining contractual life | 2 years 10 months 24 days | |
Warrant [Member] | Exercise Price Range Two [Member] | ||
Outstanding and exercisable warrants, Exercise price | $ 8.50 | |
Outstanding and exercisable warrants, Number of options | 42,500 | |
Outstanding and exercisable warrants, Weighted average remaining contractual life | 2 years 2 months 12 days | |
Warrant [Member] | Exercise Price Range Three [Member] | ||
Outstanding and exercisable warrants, Exercise price | $ 13.43 | |
Outstanding and exercisable warrants, Number of options | 659,824 | |
Outstanding and exercisable warrants, Weighted average remaining contractual life | 9 months 18 days | |
Warrant [Member] | Exercise Price Range Four [Member] | ||
Outstanding and exercisable warrants, Exercise price | $ 13.43 | |
Outstanding and exercisable warrants, Number of options | 879,766 | |
Outstanding and exercisable warrants, Weighted average remaining contractual life | 4 years 3 months 18 days | |
Warrant [Member] | Exercise Price Range Five [Member] | ||
Outstanding and exercisable warrants, Exercise price | $ 16.50 | |
Outstanding and exercisable warrants, Number of options | 5,000 | |
Outstanding and exercisable warrants, Weighted average remaining contractual life | 3 years 9 months 18 days |
Preferred Stock (Details Narrat
Preferred Stock (Details Narrative) - $ / shares | Sep. 30, 2016 | Dec. 31, 2015 |
Common stock, shares authorized | 25,000,000 | 25,000,000 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares issued | 0 | 0 |
Minimum [Member] | ||
Capital stock, shares authorized | 25,000,000 | |
Maximum [Member] | ||
Capital stock, shares authorized | 35,000,000 |
Net Loss Per Share - Calculatio
Net Loss Per Share - Calculation of Weighted Average Number of Shares Outstanding and Loss per Share Outstanding (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Earnings Per Share [Abstract] | ||||
Numerator for basic and diluted income per share - Net loss | $ (3,255,579) | $ (2,141,163) | $ (8,433,788) | $ (9,344,263) |
Denominator for basic loss per share - weighted average shares outstanding | 5,380,855 | 4,799,126 | 5,315,646 | 4,076,493 |
Dilutive effect of shares issuable under stock options and warrants outstanding | ||||
Denominator for diluted loss per share - adjusted weighted average shares outstanding | 5,380,855 | 4,799,126 | 5,315,646 | 4,076,493 |
Net loss per share: Basic | $ (0.61) | $ (0.45) | $ (1.59) | $ (2.29) |
Net loss per share: Diluted | $ (0.61) | $ (0.45) | $ (1.59) | $ (2.29) |