Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Mar. 31, 2016 | Jun. 30, 2015 | |
Document And Entity Information | |||
Entity Registrant Name | Duos Technologies Group, Inc. | ||
Entity Central Index Key | 1,396,536 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2015 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Is Entity a Well-known Seasoned Issuer | No | ||
Is Entity a Voluntary Filer | No | ||
Is Entity's Reporting Status Current | Yes | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Public Float | $ 15,800,000 | ||
Entity Common Stock, Shares Outstanding | 65,008,605 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2,015 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
CURRENT ASSETS: | ||
Cash | $ 140,129 | $ 85,435 |
Accounts receivable | 452,235 | 317,934 |
Costs and estimated earnings in excess of billings on uncompleted contracts | 421,116 | 218,309 |
Prepaid expenses and other current assets | 165,095 | 92,859 |
Total Current Assets | 1,178,575 | 714,537 |
Property and Equipment, net | 72,544 | 44,883 |
OTHER ASSETS: | ||
Patents and trademarks, net | 57,006 | 52,496 |
Total Other Assets | 57,006 | 52,496 |
TOTAL ASSETS | 1,308,125 | 811,916 |
CURRENT LIABILITIES: | ||
Accounts payable | 1,061,961 | 550,456 |
Accounts payable - related party | 30,070 | 53,122 |
Commercial insurance/office equipment financing | 44,024 | 33,055 |
Notes payable-related parties | 486,964 | $ 75,000 |
Notes payable | 52,500 | |
Convertible notes payable, including premiums | 338,058 | $ 1,425,106 |
Line of credit | 40,216 | |
Payroll taxes payable | 296,215 | $ 600,181 |
Accrued expenses | 955,570 | 694,498 |
Billings in excess of costs and estimated earnings on uncompleted contracts | 303,064 | 153,783 |
Deferred revenue | 908,206 | 865,394 |
Contingent lawsuit payable | 550,000 | 1,411,650 |
Total Current Liabilities | 5,066,848 | 5,862,245 |
Total Liabilities | $ 5,066,848 | $ 5,862,245 |
Commitments and Contingencies (Note 10) | ||
STOCKHOLDERS' EQUITY (DEFICIT): | ||
Preferred stock, $0.001 par value; 10,000,000 authorized, none issued or outstanding | ||
Common stock: $0.001 par value; 500,000,000 shares authorized, 64,777,621 and 57,738,209 shares issued and issuable, and outstanding at December 31, 2015 and December 31, 2014, respectively | $ 64,778 | $ 57,738 |
Additional paid-in capital | 17,127,675 | 13,517,159 |
Accumulated deficit | (20,951,176) | (18,625,226) |
Total Stockholders' Equity (Deficit) | (3,758,723) | (5,050,329) |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | $ 1,308,125 | $ 811,916 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Dec. 31, 2015 | Dec. 31, 2014 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value | $ .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 | 500,000,000 | 500,000,000 |
Common stock, shares issued | 64,777,621 | 57,738,209 |
Common stock, shares outstanding | 64,777,621 | 57,738,209 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
REVENUES: | ||
Project | $ 3,758,653 | $ 1,802,930 |
Maintenance and technical support | 2,481,183 | $ 2,399,527 |
IT asset management services | 527,927 | |
Total Revenues | 6,767,763 | $ 4,202,457 |
COST OF REVENUES: | ||
Project | 2,051,969 | 1,146,045 |
Maintenance and technical support | 958,995 | $ 986,058 |
IT asset management services | 185,212 | |
Total Cost of Revenues | 3,196,176 | $ 2,132,103 |
GROSS PROFIT | 3,571,587 | 2,070,354 |
OPERATING EXPENSES: | ||
Selling and marketing expenses | 254,083 | 283,440 |
Salaries, wages and contract labor | 2,586,735 | 2,264,333 |
Research and development | 216,806 | 191,662 |
Professional Fees | 256,111 | 83,538 |
General and administrative expenses | 906,344 | $ 835,073 |
Impairment loss on intangible assets and goodwill acquired (see Note 13) | 1,578,816 | |
Total Operating Expenses | 5,798,895 | $ 3,658,046 |
INCOME (LOSS ) FROM OPERATIONS | (2,227,308) | (1,587,692) |
OTHER INCOME (EXPENSES): | ||
Interest expense | (744,343) | $ (515,539) |
Gain (loss) on settlement of debt, net | (216,271) | |
Other income, net | 861,973 | $ 76 |
Total Other Income (Expense) | (98,641) | (515,463) |
Loss before taxes | $ (2,325,950) | (2,103,155) |
Franchise tax | (3,860) | |
NET LOSS | $ (2,325,950) | (2,107,015) |
Preferred stock dividends | (536,376) | |
Net loss applicable to common stock | $ (2,325,950) | $ (2,643,391) |
NET LOSS APPLICABLE TO COMMON STOCK PER COMMON SHARE: | ||
Basic | $ (0.04) | $ (0.05) |
Diluted | $ (0.04) | $ (0.05) |
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: | ||
Basic | 61,250,974 | 56,611,537 |
Diluted | 61,250,974 | 56,611,537 |
STATEMENTS OF CHANGES IN STOCKH
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT) - USD ($) | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Total |
Balance at Dec. 31, 2013 | $ 56,605 | $ 12,600,969 | $ (15,981,835) | $ (3,324,261) |
Balance, shares at Dec. 31, 2013 | 56,605,329 | |||
Common stock issued for inducement | $ 1,133 | 379,814 | $ 380,947 | |
Common stock issued for inducement, shares | 1,132,880 | |||
Cumulative dividends (Note 13) | 536,376 | $ (536,376) | ||
Net Loss | (2,107,015) | $ (2,107,015) | ||
Balance at Dec. 31, 2014 | $ 57,738 | 13,517,159 | (18,625,226) | (5,050,329) |
Balance, shares at Dec. 31, 2014 | 57,738,209 | |||
Common stock issued upon conversion of convertible debt | $ 3,819 | 2,254,252 | 2,258,071 | |
Common stock issued upon conversion of convertible debt, shares | 3,818,563 | |||
Common stock issued for settlement of accounts payable | $ 50 | 16,750 | 16,800 | |
Common stock issued for settlement of accounts payable, shares | 50,000 | |||
Common stock deemed issuance to ISA shareholders related to reverse merger (see Note 13) | $ 1,247 | 392,682 | 393,928 | |
Common stock deemed issuance to ISA shareholders related to reverse merger (see Note 13), shares | 1,246,870 | |||
Common stock issued for services | $ 237 | 136,373 | 136,610 | |
Common stock issued for services, shares | 237,265 | |||
Officer salary settled for common stock | $ 141 | 56,341 | 56,482 | |
Officer salary settled for common stock, shares | 141,205 | |||
Exchange of warrants for common stock | $ 34 | 3,048 | 3,082 | |
Exchange of warrants for common stock, shares | 34,350 | |||
Warrants issued with convertible debt | 30,722 | 30,722 | ||
Promissory notes settled by issuance of common stock | $ 1,511 | 609,291 | 610,802 | |
Promissory notes settled by issuance of common stock, shares | 1,511,159 | |||
Reclassification of convertible note premiums upon conversion of debt | 111,058 | 111,058 | ||
Net Loss | (2,325,950) | (2,325,950) | ||
Balance at Dec. 31, 2015 | $ 64,778 | $ 17,127,675 | $ (20,951,176) | $ (3,758,723) |
Balance, shares at Dec. 31, 2015 | 64,777,621 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Cash flows from operating activities: | ||
Net Loss | $ (2,325,950) | $ (2,107,015) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 44,411 | $ 55,162 |
Gain on settlement of accounts payable/note conversion | (27,194) | |
Stock issued for services | 58,775 | |
Loss on settlement of debt | 243,465 | |
Amortization of stock based prepaid consulting fees | 41,126 | |
Loss related to warrants exchanged for stock | $ 3,082 | |
Common Stock issued for inducement | $ 380,947 | |
Impairment loss on intangible assets and goodwill acquired | $ 1,578,816 | |
Changes in assets and liabilities: | ||
Accounts receivable | (134,301) | $ 337,689 |
Costs and estimated earnings on uncompleted contracts | $ (202,807) | $ (23,211) |
Put premium | ||
Prepaid expenses and other current assets | $ (35,526) | $ (5,463) |
Accounts payable | (657,920) | (365,547) |
Accounts payable-related party | $ (23,052) | (7,589) |
Interest from premium accretion on convertible notes | 25,889 | |
Payroll taxes payable | $ (303,966) | 143,226 |
Accrued expenses | 294,117 | (36,650) |
Billings in excess of costs and earnings on uncompleted contracts | 149,281 | 144,266 |
Contingent lawsuit payable | (861,650) | 409,326 |
Deferred revenue | 42,812 | 63,320 |
Net Cash Used in Operating Activities | (2,116,481) | $ (985,650) |
Cash flows from investing activities: | ||
Cash acquired in acquisition | 1,346 | |
Purchase of patents/trademarks | (10,420) | $ (5,500) |
Purchase of fixed assets | (66,162) | (24,846) |
Net Cash Used In Investing Activities | $ (75,236) | (30,346) |
Cash flows from financing activities: | ||
Bank overdraft proceeds | $ (97,491) | |
Proceeds from bank line of credit | $ 40,216 | |
Proceeds from related party notes | 464,464 | |
Proceeds from borrowings under convertible notes and other debt | 1,730,772 | $ 1,198,370 |
Proceeds of insurance and equipment financing | 10,959 | 302 |
Net Cash Provided by Financing Activities | 2,246,411 | 1,101,181 |
Net increase (decrease) in cash | 54,694 | 85,185 |
Cash, beginning of year | 85,435 | 250 |
Cash, end of year | 140,129 | 85,435 |
Supplemental Disclosure of Cash Flow Information: | ||
Interest paid | 59,398 | 52,062 |
Taxes paid | $ 3,136 | 4,243 |
Supplemental Non-Cash Investing and Financing Activities: | ||
Preferred stock dividends (Note 13) | $ 536,376 | |
Common stock issued upon conversion of convertible debt | $ 2,258,071 | |
Common stock issued to settle notes payable and accrued interest | 610,802 | |
Common stock issued to settle accounts payable | 16,800 | |
Common stock issued for accrued salary | 56,482 | |
Reclassification of put premium liability on convertible notes to paid-in capital | 111,058 | |
Increase in debt discount and paid-in capital for warrants issued with debt | 30,722 | |
Liabilities assumed in share exchange | 1,186,234 | |
Less: assets acquired in share exchange | (1,347) | |
Net liabilities assumed | 1,184,887 | |
Fair value of shares exchanged | 393,929 | |
Increase in intangible assets | $ 1,578,816 |
NOTE 1 - NATURE OF OPERATIONS A
NOTE 1 - NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
NOTE 1 - NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 1 – NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING Nature of Duos Technologies Group, Inc. (f/k/a Information Systems Associates, Inc. (“ISA”), through its operating subsidiary “Duos Technologies, Inc. (“duostech” or the “Company”) is primarily engaged in the design and deployment of state-of-the-art, artificial intelligence driven intelligent technologies systems. duostech converges traditional security measures with information technologies to create “actionable intelligence.” duostech’s IP is built upon two of its core technology platforms ( praes i dium® and cen t ), both distributed as licensed software suites, and natively embedded within engineered turnkey systems (see detailed description of the Company’s products at its website www.duostech.com). praes i cen t The Company’s strategy includes expansion of its technology base through organic development efforts, strategic partnerships, and growth through strategic acquisitions. duostech’s primary target industry sectors include transportation, with emphasis on freight and transit railroad owners/operators, petro-chemical, utilities and healthcare. As reported previously, Duos Technologies Group, Inc. is the result of the reverse merger between duostech and ISA, which became effective as of April 1, 2015. The merger was followed by the change of name to Duos Technologies Group, Inc., a symbol change from IOSA to DUOT and up-listing from OTC Pink to OTC QB. ISA’s original business of IT Asset Management (ITAM) services for large data centers is now operated as a division of the Company that continues its sales efforts through large strategic partners. The Company developed a methodology for the efficient data collection of assets contained within large data centers and was awarded a patent in 2010 for specific methods to collect and audit data. Principles of Consolidation The audited consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Duos Technologies, Inc and TrueVue 360, Inc. All significant inter-company transactions and balances are eliminated in consolidation. Use of Estimates The preparation of 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 disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from these estimates. The most significant estimates in the accompanying financial statements include the allowance on accounts receivable, valuation of deferred tax assets, estimates of percentage completion on projects and related revenues, valuation of intangible assets and goodwill, valuation of stock-based compensation, valuation of warrants issued with debt, valuation of beneficial conversion features in convertible debt, valuation of stock-based awards and valuation of loss contingencies. We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. Cash and Cash Equivalents For the purposes of the Statement of Cash Flows, the Company considers liquid investments with an original maturity of three months or less to be a cash equivalent. There were no cash equivalents at December 31, 2015 or 2014. Concentrations Cash Concentrations Cash and cash equivalents are maintained at financial institutions and at times, balances may exceed federally insured limits. We have not experienced any losses related to these balances. There were no amounts on deposit in excess of federally insured limits at December 31, 2015 and 2014. Significant Customers and Concentration of Credit Risk The Company, by policy, routinely assesses the financial strength of its customers. As a result, the Company believes that its accounts receivable credit risk exposure is limited and has not experienced any write-downs in its accounts receivable balances through December 31, 2015. A significant portion of revenues is derived from certain customer relationships. The following is a summary of customers that each represents greater than 10% of total revenues in 2015 and 2014, and total accounts receivable at December 31, 2015 and 2014, respectively. 2015 2014 Revenue Accounts Receivable Revenue Accounts Receivable Customer A 30 % Customer A 33 % Customer A 48 % Customer A 52 % Customer B 16 % Customer B 28 % Customer B 26 % Customer B 18 % Customer C 16 % Customer C 24 % Customer C 12 % Geographic Concentration Approximately 1.73% of revenue is generated from customers outside of the United States. Fair Value of Financial Instruments and Fair Value Measurements We measure our financial assets and liabilities in accordance with generally accepted accounting principles. For certain of our financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities, the carrying amounts approximate fair value due to their short maturities. Amounts recorded for notes payable, net of discount, and loans payable also approximate fair value because current interest rates available to us for debt with similar terms and maturities are substantially the same. We follow accounting guidance for financial assets and liabilities. This standard defines fair value, provides guidance for measuring fair value and requires certain disclosures. This standard does not require any new fair value measurements, but rather applies to all other accounting pronouncements that require or permit fair value measurements. This guidance does not apply to measurements related to share-based payments. This guidance discusses valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flow), and the cost approach (cost to replace the service capacity of an asset or replacement cost). The guidance 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: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2: Inputs, other than quoted prices that are observable, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active. Level 3: Unobservable inputs in which little or no market data exists, therefore developed using estimates and assumptions developed by us, which reflect those that a market participant would use. The estimated fair value of certain financial instruments, including accounts receivable and accounts payable are carried at historical cost basis, which approximates their fair values because of the short-term nature of these instruments. The cost basis of notes and convertible debentures approximates fair value due to the market interest rates carried for these instruments. Accounts Receivable Accounts receivable are stated at estimated net realizable value. Accounts receivable are comprised of balances due from customers net of estimated allowances for uncollectible accounts. In determining the collections on the account, historical trends are evaluated and specific customer issues are reviewed to arrive at appropriate allowances. The Company reviews its accounts to estimate losses resulting from the inability of its customers to make required payments. Any required allowance is based on specific analysis of past due accounts and also considers historical trends of write-offs. Past due status is based on how recently payments have been received from customers. The Company’s collection experience has been favorable reflecting a limited number of customers. No allowance was deemed necessary at December 31, 2015 and 2014. Property and Equipment Property and equipment is stated at cost, less accumulated depreciation. Depreciation is provided by the straight-line method over the estimated economic life of the property and equipment (three to five years). When assets are sold or retired, their costs and accumulated depreciation are eliminated from the accounts and any gain or loss resulting from their disposal is included in the statement of operations. Leasehold improvements are expensed over the term of our lease. Software Development Costs The Company accounts for costs incurred to develop or purchase computer software for internal use in accordance with FASB ASC 350-40 “Internal-Use Software” or ASC 350-50 "Website Costs". Costs incurred during Patents and Patents and trademarks which are stated at amortized cost, relate to the development of video surveillance Long-Lived Assets The Company evaluates the recoverability of its property, equipment, and other long-lived assets in accordance Accrual of Legal Costs Associated with Loss The Company Product Warranties The Company has a 90 day warranty period for materials and labor after final acceptance of all projects. If any Sales Return Our systems are sold as integrated systems and there are no sales returns Revenue Recognition Project Revenue The Company constructs intelligent technology systems consisting of materials and labor under customer contracts. Revenues and related costs on project revenue are recognized using the “percentage of completion method” of accounting in accordance with ASC 605-35, “Construction-Type and Production-Type Contracts”. Under this method, contract revenues are recognized over the performance period of the contract in direct proportion to the costs incurred as a percentage of total estimated costs for the entirety of the contract. Costs include direct material, direct labor, subcontract labor and other allocable indirect costs. All un-allocable indirect costs and corporate general and administrative costs are also charged to the periods as incurred. Any recognized revenues that have not been billed to a customer are recorded as an asset in “costs and estimated earnings in excess of billings on uncompleted contracts”. Any billings of customers in excess of recognized revenues are recorded as a liability in “billings in excess of costs and estimated earnings on uncompleted contracts”. However, in the event a loss on a contract is foreseen, the Company will recognize the loss when such loss is determined. A contract is considered complete when all costs except insignificant items have been incurred and the installation is operating according to specifications or has been accepted by the customer. The Company has contracts in various stages of completion. Such contracts require estimates to determine the appropriate cost and revenue recognition. Costs estimates are reviewed periodically on a contract-by-contract basis throughout the life of the contract such that adjustments to the profit resulting from revisions are made cumulative to the date of the revision. Significant management judgments and estimates, including the estimated costs to complete projects, must be made and used in connection with the revenue recognized in the accounting period. Current estimates may be revised as additional information becomes available. Maintenance and Technical Support Maintenance and technical support services are provided on both an as-needed and extended-term basis and may include providing both parts and labor. Maintenance and technical support provided outside of a maintenance contract are on an as-requested basis, and revenue is recognized as the services are provided. Revenue for maintenance and technical support provided on an extended-term basis is recognized ratably over the term of the contract. For sales arrangements that do not involve multiple elements such as professional services, which are of short-term duration, revenues are recognized when services are completed. IT Asset Management Services The Company recognizes revenue from its IT asset management business in accordance with the Securities and Exchange Commission (the “SEC”) Staff Accounting Bulletin No. 104, "Revenue Recognition" and Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 985-605-25 which addresses Revenue Recognition for the software industry. The general criteria for revenue recognition under ASC 985-605 for our Company, which sells software licenses, which do not require any significant modification or customization, is that revenue is recognized when persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed or determinable and collectability is probable. The Company’s IT asset management business generates revenues from three sources: (1) Professional Services (consulting & auditing); (2) Software licensing with optional hardware sales and (3) Customer Service (training and maintenance support). For sales arrangements that do not involve multiple elements: (1) Revenues for professional services, which are of short-term duration, are recognized when services are completed; (2) Throughout the date of this report, software license sales have been one time sales of a perpetual license to use our software product and the customer also has the option to purchase third party manufactured handheld devices from us if they purchase our software license. Accordingly the revenue is recognized upon delivery of the software and delivery of the hardware, as applicable, to the customer; (3) Training sales are one-time upfront short term training sessions and are recognized after the service has been performed; and (4) Maintenance/support is an optional product sold to our software license customers under one year contracts. Accordingly, maintenance payments received upfront are deferred and recognized over the contract term. Multiple Elements Arrangements with customers may involve multiple elements including project revenue and maintenance services in our Intelligent Technology Systems business. Maintenance will occur after the project is completed and may be provided on an extended-term basis or on an as-needed basis. In our IT Asset Management business, multiple elements may include any of the above four sources. Training and maintenance on software products may occur after the software product sale while other services may occur before or after the software product sale and may not relate to the software product. Revenue recognition for multiple element arrangement is as follows: Each element is accounted for separately when each element has value to the customer on a standalone basis and there is Company specific objective evidence of selling price of each deliverable. For revenue arrangements with multiple deliverables, the Company allocates the total customer arrangement to the separate units of accounting based on their relative selling prices as determined by the price of the items when sold separately. Once the selling price is allocated, the revenue for each element is recognized using the applicable criteria under GAAP as discussed above for elements sold in non-multiple element arrangements. A delivered item or items that do not qualify as a separate unit of accounting within the arrangement are combined with the other applicable undelivered items within the arrangement. The allocation of arrangement consideration and the recognition of revenue is then determined for those combined deliverables as a single unit of accounting. The Company sells it various services and software and hardware products at established prices on a standalone basis which provides Company specific objective evidence of selling price for purposes of multiple element relative selling price allocation. The Company only sells maintenance services or spare parts based on its established rates after it has completed a system integration project for a customer. The customer is not required to purchase maintenance services. All elements in multiple element arrangements with Company customers qualify as separate units of account for revenue recognition purposes. Deferred Revenue Deferred revenues represent billings or cash received in excess of revenue recognizable on service agreements Advertising The Company expenses the cost of Share-Based Compensation Stock-based compensation is accounted for in accordance with the Share-Based Payment Topic of ASC 718 Pursuant to Income Taxes The Company accounts for income taxes in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 740, Income Taxes, which requires the recognition of deferred income taxes for differences between the basis of assets and liabilities for financial statement and income tax purposes. The deferred tax assets and liabilities represent the future tax return consequences of those differences, which will either be taxable or deductible when the assets and liabilities are recovered or settled. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. The Company evaluates all significant tax positions as required by ASC 740. As of December 31, 2015, the Company does not believe that it has taken any positions that would require the recording of any additional tax liability nor does it believe that there are any unrealized tax benefits that would either increase or decrease within the next year. Any penalties and interest assessed by income taxing authorities are included in operating expenses. The federal and state income tax returns of the Company are subject to examination by the IRS and state taxing authorities, generally for three years after they were filed. Tax years 2012, 2013 and 2014 remain open for potential audit. Earnings (Loss) Per Share Basic earnings per share (EPS) are computed by dividing net loss applicable to common stock by the weighted average number of common shares outstanding. Diluted net loss per common share is computed by dividing the net loss applicable to common stock by the weighted average number of common shares outstanding for the period and, if dilutive, potential common shares outstanding during the period. Potential common shares consist of the incremental common shares issuable upon the exercise of stock options, stock warrants, convertible debt instruments or other common stock equivalents. Potentially dilutive securities are excluded from the computation if their effect is anti-dilutive. At December 31, 2015, outstanding warrants to purchase an aggregate of 609,340 shares of common stock and 734,047 shares of common stock issuable upon conversion of convertible debt were excluded from the computation of dilutive earnings per share because the inclusion would have been anti-dilutive. Segment Information The Company operates in one reportable Reclassifications Certain amounts in the 2014 statements of operations have been reclassified from operating expenses to cost of revenue to conform to the 2015 presentation. Recent Issued Accounting Standards Financial Accounting Standards Board, Accounting Standard Updates which are not effective until after December 31, 2015 are not expected to have a significant effect on the Company’s consolidated financial position or results of operations. In August 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2014-15, “Presentation of Financial Statements – Going Concern (Topic 205-40)”, which requires management to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern for each annual and interim reporting period. If substantial doubt exists, additional disclosure is required. This new standard will be effective for the Company for annual and interim periods beginning after December 15, 2016. Early adoption is permitted. The Company does not expect the implementation of this standard to have a material effect on its disclosures. In April 2015, the Financial Accounting Standards Board issued Accounting Standards Update No. 2015-03, "Simplifying the Presentation of Debt Issuance Costs," On May 8, 2015, the FASB issued ASU 2015-08, “Business Combinations (Topic 805) Pushdown Accounting |
NOTE 2 - GOING CONCERN
NOTE 2 - GOING CONCERN | 12 Months Ended |
Dec. 31, 2015 | |
Going Concern [Abstract] | |
NOTE 2 - GOING CONCERN | NOTE 2 – GOING CONCERN As reflected in the accompanying consolidated financial statements, the Company had a net loss of $2,325,950 including an impairment loss of $1,578,816 and other non-cash charges to earnings related to the reverse merger with Information Systems Associates, Inc. and cash used in operating activities was $2,116,481 for the year ended December 31, 2015. The working capital deficit, stockholders’ deficit and accumulated deficit as of December 31, 2015 were $3,888,273, $3,758,723 and $20,951,176 respectively. These matters raise substantial doubt about the Company’s ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company’s ability to further implement its business plan and raise capital. Management has been successful in raising smaller amounts of capital from Accredited Investors through sales of equity and converting much of its debt into equity. In addition, short-term loans from friends and family, deferrals of certain salary payments by officers and extensions on payments to certain suppliers continue to provide limited working capital for maintenance of operations. In April 2015, the Company completed a previously announced reverse triangular merger whereby duostech became a wholly owned subsidiary of the Company. The two companies are now integrated and continue to operate in their respective markets. The Company was successful in reducing operating costs from consolidation of the two entities as a result of the merger. In addition, a complete and detailed plan of operations has been developed which contemplates seeking to raise capital and focusing on growing revenue and profits from existing operations. On June 30, 2015, the Company retained a broker dealer to assist in its capital raising efforts on a “best efforts basis”. Although this arrangement was formally terminated at the end of 2015, the broker dealer continued to pursue debt financing for working capital (see Subsequent Events) in 2016, and facilitated a Term Sheet for debt financing of $1.8M, which the Company accepted. Management believes that the actions presently being taken provide the opportunity for the Company to continue as a going concern. Growth in revenues in 2015 exceeded expectations such that operating losses, excluding the impairment loss, were substantially reduced from the previous year. Our forecasts indicate that current operations are close to breakeven, such that the requirements to raise significant amounts for working capital are less than before. Ultimately, the continuation of the Company as a going concern is dependent upon the ability of the Company to generate sufficient revenue and to attain profitable operations. These consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. |
NOTE 3 - TRADE ACCOUNTS AND OTH
NOTE 3 - TRADE ACCOUNTS AND OTHER RECEIVABLES | 12 Months Ended |
Dec. 31, 2015 | |
Trade Accounts And Other Receivables [Abstract] | |
NOTE 3 - TRADE ACCOUNTS AND OTHER RECEIVABLES | NOTE 3 – TRADE ACCOUNTS AND OTHER RECEIVABLES Trade Accounts Receivable Accounts receivable were as follows at December 31, 2015 and 2014: 2015 2014 Accounts Receivable $ 452,235 $ 317,934 Allowance for doubtful accounts — — $ 452,235 $ 317,934 There was no bad debt expense related to trade accounts receivable in 2015 and 2014. |
NOTE 4 - PROPERTY AND EQUIPMENT
NOTE 4 - PROPERTY AND EQUIPMENT | 12 Months Ended |
Dec. 31, 2015 | |
Property, Plant and Equipment [Abstract] | |
NOTE 4 - PROPERTY AND EQUIPMENT | NOTE 4 – PROPERTY AND EQUIPMENT The major classes of property and equipment are as follow at December 31, 2015 and 2014: 2015 2014 Furniture, fixtures and equipment $ 1,100,658 $ 976,598 Less: Accumulated depreciation (1,028,114 ) (931,715 ) $ 72,544 $ 44,883 Total depreciation in 2015 and 2014 was $38,501 and $49,286, respectively. |
NOTE 5 - PATENTS AND TRADEMARKS
NOTE 5 - PATENTS AND TRADEMARKS | 12 Months Ended |
Dec. 31, 2015 | |
Patents And Trademarks [Abstract] | |
NOTE 5 - PATENTS AND TRADEMARKS | NOTE 5 – PATENTS AND TRADEMARKS 2015 2014 Patents and trademarks $ 267,135 $ 256,715 Less: Accumulated amortization (210,129 ) (204,219 ) $ 57,006 $ 52,496 Total amortization of patents in 2015 and 2014 was $5,910 and $5,876, respectively. |
NOTE 6 - DEBT
NOTE 6 - DEBT | 12 Months Ended |
Dec. 31, 2015 | |
Debt Disclosure [Abstract] | |
NOTE 6 - DEBT | NOTE 6 – DEBT Notes Payable - Financing Agreements The Company’s notes payable relating to financing agreements classified as current liabilities consist of the following as of December 31, 2015 and December 31, 2014: December 31, 2015 December 31, 2014 Notes Payable Principal Interest Principal Interest Third Party - Insurance Note 1 $ 21,325 9.75 % $ 8,892 9.95 % Third Party - Insurance Note 2 11,277 9.75 % 20,376 9.25 % Third Party - Equipment Financing — — 3,787 13.48 % Third Party - Insurance Note 3 — 8.66 % — — Third Party - Insurance Note 4 11,422 8.99 % — — Total $ 44,024 $ 33,055 The Company entered into an agreement on December 13, 2014 with its insurance provider by executing an $8,892 note payable (Insurance Note 1) issued to purchase an insurance policy, secured by that policy with an annual interest rate of 9.95% payable in monthly installments of principal and interest totaling $930 through October 13, 2015. The policy was renewed December 23, 2015 with a $21,325 note payable. The Company entered into an agreement on September 15, 2014 with its insurance provider by executing a $28,678 note payable (Insurance Note 2) issued to purchase an insurance policy, secured by that policy with an annual interest rate of 9.25% payable in monthly installments of principal and interest totaling $3,001 through July 15, 2015. The policy was renewed September 15, 2015 with an $18,823 note payable and annual interest rate of 9.75% payable in monthly installments of principal and interest totaling $1,678 through July 15, 2016. At December 31, 2015, the note payable balance was $11,277. The Company issued a $40,729 note payable on August 12, 2011 to a vendor to finance computer equipment, secured by that equipment with an interest rate of 13.48% per annum payable in monthly installments of principal and interest totaling $1,917 through March 12, 2014. The equipment was accounted for as a capital lease. (see Note 10). In May 2014, the Company executed a buy-out option for $11,364 to purchase this computer equipment, and agreed to make 12 monthly installments of $947 through April 1, 2015. The Company entered into an agreement on February 3, 2015 with its insurance provider by executing an $111,548 note payable (Insurance Note 3) issued to purchase an insurance policy, secured by that policy with an annual interest rate of 8.66% payable in monthly installments of principal and interest totaling $9,803 through December 3, 2015. At December 31, 2015 the note payable balance was zero. The Company entered into an agreement on April 1, 2015 with its insurance provider by executing a $65,000 note payable (Insurance Note 4) issued to purchase an insurance policy, secured by that policy with an annual interest rate of 8.99% payable in monthly installments of principal and interest totaling $5,775 through February 1, 2016. At December 31, 2015 the note payable balance was $11,422. Notes Payable - Related Parties The Company’s notes payable to related parties classified as current liabilities consist of the following as of December 31, 2015 and December 31, 2014: December 31, 2015 December 31, 2014 Notes Payable Principal Interest* Principal Interest* Shareholder $ 65,000 .75 % $ 65,000 .75 % Related party 17,651 .67 % — — Related party 33,615 — — — Related party 36,500 .67 % 10,000 .67 % Related Party 21,170 — — — Related Party 11,131 .67 % — — CFO 7,841 — — — Shareholder 294,056 .50 % — — Total $ 486,964 $ 75,000 * effective interest rate per month including default penalties On May 28, 2008, a shareholder who is indirectly invested in the Company with the Chief Executive Officer (CEO) through another entity, loaned the Company the sum of $65,000 accruing interest at .75% per month. There was an accrued interest balance of $43,381 and $37,531 as of December 31, 2015 and December 31, 2014, respectively. The note was repayable on or before September 15, 2008 although no demand for repayment has been received from the holder. There is no formal written agreement and the terms are documented on a letter from a former Chief Financial Officer (CFO) of the Company. The terms contain no default clauses and as of the time of this report, no demand for repayment has been made or expected. The Company intends to either negotiate a conversion to common stock or to repay the loan when sufficient working capital permits such action. Upon the consummation of the merger on April 1, 2015, the Company assumed an Original Issue Discount (OID) promissory note with a remaining principal balance of $15,000 accruing interest at 1.5% per month. On November 30, 2015 there was an outstanding principal balance of $15,000 and an accrued interest balance of $2,651 in which the promissory note was restructured into a note due on or before December 15, 2016 for a total of $17,651 principal balance, accruing interest at .67% per month and monthly payments of $1,535 commencing January 15, 2016. Upon the consummation of the merger on April 1, 2015, the Company assumed two promissory notes due to an entity which had previously extended credit on a revolving basis for working capital. The total principal balance was $212,693 at the time of the merger and carried total interest and extension fees of 2.5% per month. On September 30, 2015, the note and accrued interest for a total of $275,660 was exchanged for 1,002,401 common shares. The Company recorded a loss on settlement in the amount of $115,139. The same lender had extended further credit to the Company’s TrueVue360 subsidiary which on September 30, 2015 had a principal balance of $28,040 and accrued interest balance of $9,777 totaling $37,817. The note can be extended each time for a further 30 days on payment of a 1% extension fee in addition to the 1.5% interest cost which can be accrued. The Company agreed to convert this note to an 18-month term loan with 0% interest and monthly payments of $2,100 starting November 1, 2015. The Company also issued 501,201 5-year warrants with a strike price of $0.28 as consideration for the conversion of the larger note and the zero interest feature of the extended payment plan. As of December 31, 2015, the balance was $33,615. On December 12, 2013, the wife of the CEO loaned the Company the sum of $10,000 at an annual percentage rate of 8%. On January 29, 2015 and March 3, 2015, the wife of the CEO loaned the Company an additional $12,000 and $5,000, respectively. On September 30, 2015 an additional $9,500 was loaned to the Company. The total principal due at December 31, 2015 and December 31 2014 was $36,500 and $10,000, respectively. There was accrued interest balance of $3,052 and $842 as of December 31, 2015 and December 31, 2014, respectively. The note is repayable on demand of the holder. As of the time of this report, no such demand has been made. Upon the consummation of the merger on April 1, 2015, the Company assumed a promissory note with a remaining principal balance of $30,378 due to the former CEO of ISA. These amounts are non-interest bearing and are due on demand. The Company pays these loans as sufficient funds become available. At December 31, 2015, the loan had an outstanding balance of $21,170. Upon the consummation of the merger on April 1, 2015, the Company assumed an OID promissory note with a remaining principal and accrued interest balance of $10,593. During the third quarter of 2015, interest payments of $1,500 were paid. At November 30, 2015 the principal balance of the note was $10,000, and an accrued interest balance of $1,131 at a rate of 2.5% per month was restructured into a note due on or before December 15, 2016 for a total of $11,131 principal balance, accruing interest at .67% per month and monthly payments of $968 commencing January 15, 2016. On March 10, 2015, the Company received a $100,000 loan from a related party principal shareholder. The note accrues interest at the rate of 12% per annum and was repayable on or before December 15, 2015. The Company and shareholder agreed to convert the principal amount and accrued interest for a total of $107,627 to common stock effective October 28, 2015 for 358,758 shares of common stock at $0.30 per share. The Company recorded a loss on conversion in the amount of $35,876. Upon the consummation of the merger on April 1, 2015, the Company assumed two promissory notes with a total principal balance of $8,783 due to the Company’s CFO. During the second quarter of 2015, the CFO loaned the Company an additional $365 and the Company made payments to the CFO during the same period in the amount of $1,307. These advances do not incur any interest and will be paid by the Company when sufficient funds are available. At December 31, 2015, the CFO had an outstanding loan balance of $7,841. Upon the consummation of the merger on April 1, 2015, the Company assumed a promissory note with a principal balance of $857 due to a former Board member. These advances do not incur any interest. On September 11, 2015 the note was paid in full. On March 3, 2015, and April 1, 2015 the Vice President of Accounting of the Company loaned the Company the sum of $1,500 and $12,100 respectively, at an annual percentage rate of 8%. The note was repayable on demand of the holder in the event of a significant accounts receivable payment to the Company. The company repaid the loan in full on April 15, 2015 including accrued interest in the amount of $51. On April 8, 2015, the Company received a $310,000 loan from a related party principal shareholder. The note accrues interest at the rate of 6% per annum and was repayable on or before October 31, 2015. There was accrued interest balance of $8,616 as of September 30, 2015. The Company and shareholder have agreed to replace the note with a new note in the amount of $320,166, which includes principal and accrued interest through October 31, 2015. Repayment shall occur with eleven monthly payments of $27,750 plus one final payment of $27,006.63 (including interest of 6%) beginning on or before December 31, 2015. As of December 31, 2015, the balance was $294,056. Notes Payable December 31, 2015 Notes Payable Principal Interest Vendor $ 52,500 — Total $ 52,500 — Upon the consummation of the merger on April 1, 2015, the Company assumed a non-interest bearing OID promissory note with a remaining principal balance of $33,600 ($26,923 net of OID discounts) pursuant to a 1 year funding which began in August 2014, secured by future receivables up to $62,400 (which was the original principal balance of the note). The Company amortized the original issue discount over the term of the promissory note. The Company was making a monthly payment of $4,800 and the note was paid in full on November 2, 2015. Upon the consummation of the merger on April 1, 2015, the Company assumed a promissory note with a principal balance of $50,000. On July 1, 2015, the principal balance of $50,000 was converted to 150,000 common shares, with a remaining accrued interest balance of $13,750 that was paid October 30, 2015. The Company recorded a loss on conversion in the amount of $26,500. On August 10, 2015, the Company entered into an agreement with FacilityTeam of Ontario, Canada to settle a dispute that had arisen concerning payments for software development services. The Company strongly believed that FacilityTeam did not deliver the products promised and felt that we would prevail in arbitration called for by the contract between the parties. Ultimately, the Company opted to settle the matter for the cost of the litigation which was estimated be at least $60,000; rather than spend further resources on defending the claim and pursuing the counterclaim against FacilityTeam. The Company agreed to pay to FacilityTeam $2,500 per month starting October 1, 2015 for 24 months and taking a charge in the third quarter of 2015 for the settlement amount of $60,000. At December 31, 2015 the balance was $52,500. Convertible Notes, Including Premiums December 31, 2015 December 31, 2014 Notes Payable Principal Premium Principal, Including Premium Principal Premium Principal, Including Premium Investor $ 19,108 $ — $ 19,108 $ — $ — $ — Vendor 50,000 50,000 100,000 — — — Shareholder 125,000 — 125,000 — — — Investor Group — — — 1,398,370 26,736 1,425,106 Shareholder 46,975 46,975 93,950 — — — Total $ 241,083 $ 73,488 $ 338,058 $ 1,398,370 $ 26,736 $ 1,425,106 Upon the consummation of the merger on April 1, 2015, the Company assumed a convertible promissory note with a remaining principal balance of $19,108 due to an unrelated party investor and shareholder of the Company. The $19,108 is non-interest bearing and currently due, although the note holder has not made any demand for payment at this time. Upon the consummation of the merger on April 1, 2015, the Company assumed a convertible promissory note of $50,000 due to a vendor of the Company which included a premium of $50,000 relating to its treatment as stock settled debt under ASC 480. The $50,000 convertible note accrues interest at 1% per month and is convertible into the Company’s common stock at a 50% discount to the average closing bid prices for the 5 days immediately prior to the conversion date. The net note balance at December 31, 2015 is $50,000 and $4,723 in accrued interest. Upon the consummation of the merger on April 1, 2015, the Company assumed a non-interest bearing OID promissory note due to an unrelated party stockholder, subject to a forbearance agreement and due July 14, 2015. A 25% penalty is due if the balance is not paid by the due date. Furthermore, 5% of all factor payments to the Company are to be used to pay down the note. The note is secured by certain of the Company’s intellectual property. Additionally, until the loan is paid, if there is a trigger notice (loan is due or is called), the factor will pay to the stockholder all factor holdback amounts after collection of the related accounts receivable, less any factor fees. On September 21, 2015, the shareholder agreed to new terms to convert $81,250 of the $165,000 outstanding note to 506,421 common shares and the addition of the 25% penalty as stated above in the amount of $41,250, with a new note balance of $125,000, 15- month term and 8% interest. At December 31, 2015, the accrued interest was $4,578. The Company recorded a loss on conversion in the amount of $55,484. Pursuant to a financing agreement with one investor group (the “holder”), dated September 23, 2013, duostech issued a $10,000 debenture in 2015 and there were $1,398,370 of unsecured convertible debentures outstanding at December 31, 2014. The debentures bear interest at 6% annually and each debenture principal is due in three years from the debenture issuance date. The interest is due monthly in arrears. The principal balance at March 30, 2015 and December 31, 2014 was $1,408,370 and $1,398,370, respectively. The Company had been making its monthly interest payments and accordingly, accrued interest was $0 and $7,126 at September 30, 2015 and December 31, 2014. There is no default provision for the non-payment of interest when due. The maturity dates range from October 27, 2016 through November 30, 2017. The financing agreement states that these debentures will take highest priority over all other existing debt of the Company in the case of bankruptcy or other liquidation event. If any debenture is outstanding as of the maturity date then the Company shall pay a 3% premium on the principal in addition to repayment of the principal and any accrued interest. This 3% premium is being accrued as additional interest expense over the debentures terms. If the Company merges with a public entity then the holder has the right to (i) convert the remaining principal of one or more debentures into the combined Company’s stock at a 20% discount to the negotiated value of such stock according to the terms of the merger; or (ii) to call in one or more or even all of the debentures as due and payable within six (6) months of the “call” date with regard to each debenture and such obligation of the Company to pay shall include a 3% premium on the principal balance or (iii) let one or more of the debentures remain in effect according to the original terms, however, if the Company completes a merger with a public entity the Company has the right to pay-off the debentures remaining principal balance and with a required 3% premium and any accrued interest. Although these convertible debentures appear to meet the requirements of stock settled debt under ASC 480 due to the variable conversion fixed rate, no premium on the debt or related interest expense has been recorded at the debt issuance dates since the conversion option is contingent on a future event. On March 31, 2015, there was $1,415,546 of convertible debt which included $7,176 accrued interest that was converted into 2,211,791 shares of common stock as a result of closing of a reverse merger with Information Systems Associates, Inc. (ISA). The conversion was priced at a 20% discount from the Company’s closing price on June 30, 2015 of $0.80 for a net conversion price of $0.64 per share in accordance with the original terms of the convertible debentures. As a result of this conversion, $37,120 of accrued debt premium relating to the 3% provision noted above, which is not required to be paid to debenture holders, was reclassified to additional paid-in capital and a $352,093 interest expense was recognized and recorded as a debt premium on March 31, 2015 pursuant to the resolution of the contingency under ASC 480 and then reclassified to additional paid-in capital. In June 2015, the Company issued three Convertible Promissory Notes in the aggregate amount of $115,000 to the same investor group for a 2-year term, 8% coupon and convertible into the Company's common stock at a 35% discount from the 5-trading day’s average closing price immediately preceding conversion. On June 10, 2015 the investor made the first investment of $50,000, with subsequent further investments of $50,000 on June 16, 2015, $15,000 on June 24, 2015 and $31,250 on October 5, 2015. Based on the fixed conversion ratio, these notes are treated as stock settled debt under ASC 480 and accordingly, a premium of $61,923 was recorded and charged to interest expense. On October 27, 2015 the investor converted the $146,250 investment into 499,308 shares of common stock at $.030 per share resulting in a net gain on settlement of $5,319. Upon the consummation of the merger on April 1, 2015, the Company assumed a promissory note with a remaining principal balance of $44,325 bearing interest at 1.5% per month. The note holder gave 30 day notice to the Company on May 1, 2015 for the note to be repaid in full plus any interest due. On June 30, 2015 an Addendum to Promissory Note was executed and agreed that the payment of $46,975, $44,325 plus accrued interest of $2,650 in connection with the Debt Purchase Agreement represents the total settlement of the Note. Also, on June 30, 2015 a current shareholder and services provider agreed to assume the new $46,975 note with the existing terms and conditions and an addendum was signed for the assumption and making the note convertible into the Company’s common stock at a 50% discount to the average price for the previous 5 trading days and the new Note is non-interest bearing. The addendum was treated as a debt extinguishment. The Company recorded a premium of $46,975 since the note was convertible at a fixed rate to a fixed monetary amount equal to $93,950 pursuant to ASC 480. On December 31, 2015 the balance on the note was $93,950 which includes the $46,975 premium and there was accrued interest of $4,228. On June 24, 2015, a current shareholder agreed to loan to the Company $40,000 evidenced by a two year convertible note with an 8% coupon. The note is convertible into the Company’s common stock at a 35% discount to the average closing price of the previous 5 trading days. The note holder was also issued 55,944 five year warrants with a $0.40 strike price and cashless exercise feature. The Company recorded a stock settled debt premium of $21,538 in accordance with ASC 480 and a warrant discount of $30,427. On October 26, 2016 the shareholder agreed to convert the loan total of $41,096 including $1,096 of accrued interest into 136,986 shares of common stock at $.030 per share resulting in a gain on settlement of $5,479. On July 8, 2015 the Company received $10,000 and on July 17, 2015 the Company received an additional $10,000 from a shareholder in the form of a $20,000 Convertible Note. The terms of the note were 2 years, convertible into the Company’s stock at a 35% discount from the average of the previous 5 trading day’s closing prices prior to notice of conversion. The Company recorded a note premium in the amount of $10,769 based on this note qualifying as stock settled debt under ASC 480 and a prepaid asset balance of $12,185 relating to warrants issued to the shareholder/vendor. On October 26, 2016 the shareholder agreed to convert the loan total of $20,467 including $467 of accrued interest into 68,223 shares of common stock at $.030 per share resulting in a gain on settlement of $2,729. |
NOTE 7 - LINE OF CREDIT
NOTE 7 - LINE OF CREDIT | 12 Months Ended |
Dec. 31, 2015 | |
Line Of Credit [Abstract] | |
NOTE 7 - LINE OF CREDIT | NOTE 7 – LINE OF CREDIT The Company assumed a line of credit with Wells Fargo Bank upon merger with ISA on April 1, 2015. The line of credit provided for borrowings up to $40,000, but is now closed to future borrowing. The balance as of December 31, 2015 was $40,216 including accrued interest. This line of credit has no maturity date. The annual interest rate is the Prime Rate plus 8% (10% at December 31, 2015). The former CEO of ISA is the personal guarantor. |
NOTE 8 - CONTRACT ACCOUNTING
NOTE 8 - CONTRACT ACCOUNTING | 12 Months Ended |
Dec. 31, 2015 | |
Contract Accounting [Abstract] | |
NOTE 8 - CONTRACT ACCOUNTING | NOTE 8 – CONTRACT ACCOUNTING Costs and Estimated Earnings in Excess of Billings on Uncompleted Contracts Costs and estimated earnings in excess of billings on uncompleted contracts represents costs and estimated earnings in excess of billings and/or cash received on uncompleted contracts accounted for under the percentage of completion contract method. At December 31, 2015 and 2014, costs and estimated earnings in excess of billings on uncompleted contracts consisted of the following: 2015 2014 Costs and estimated earnings recognized $ 2,322,836 $ 990,799 Less: Billings or cash received (1,901,720 ) (772,490 ) Costs and estimated earnings in excess of billings on uncompleted contracts $ 421,116 $ 218,309 Billings in Excess of Costs and Estimated Earnings on Uncompleted Contracts Billings in excess of costs and estimated earnings on uncompleted contracts represents billings and/or cash received that exceed accumulated revenues recognized on uncompleted contracts accounted for under the percentage of completion contract method. At December 31, 2015, and 2014, billings in excess of costs and estimated earnings on uncompleted contracts consisted of the following: 2015 2014 Billings and/or cash receipts on uncompleted contracts $ 1,146,804 $ 394,517 Less: Costs and estimated earnings recognized (843,740 ) (240,734 ) Billings in excess of costs and estimated earnings on uncompleted contracts $ 303,064 $ 153,783 |
NOTE 9 - DEFERRED COMPENSATION
NOTE 9 - DEFERRED COMPENSATION | 12 Months Ended |
Dec. 31, 2015 | |
Compensation Related Costs [Abstract] | |
NOTE 9 - DEFERRED COMPENSATION | NOTE 9 – DEFERRED COMPENSATION The Company entered into several informal deferred compensation agreements in 2009 with eight employees, primarily officers and top level executives. The deferred compensation agreements include salary and commission deferrals. The Company accrued 50% of the CEO’s salary beginning in 2009 and 25% of other executives, some of which are no longer with the Company. The Company intends to fully repay 100% of the deferred amounts including employees that have subsequently left. As of December 31, 2015 and 2014, the Company has accrued $776,428 and $552,582, respectively, of deferred compensation relating to the individual agreements, which are included in the accompanying balance sheet in accrued expenses. The above referenced deferred compensation agreements are un-funded. |
NOTE 10 - COMMITMENTS AND CONTI
NOTE 10 - COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
NOTE 10 - COMMITMENTS AND CONTINGENCIES | NOTE 10 – COMMITMENTS AND CONTINGENCIES Capital Lease Equipment leased in August 2011 under a capital lease consists of computer equipment with a combined capitalized cost of $52,653. Accumulated depreciation was $52,653 and $52,653, respectively, relating to the leased equipment as of December 31, 2015 and 2014. Depreciation expense was $0 and $3,545 in 2015 and 2014, respectively. The leased equipment was purchased by the Company in May 2014 under a purchase option at the equipment's fair market value. (see Note 6) Operating Leases The Company has several non-cancelable operating leases, primarily for equipment, that expire over the next 3 years. Minimum rent payments under operating leases are recognized on a straight-line basis over the term of the lease. Rental expense for operating leases during 2015 and 2014 was $12,578 and $17,838, respectively. Year Ended December 31, 2015 2014 Purchase Power $ 710 $ 710 Coffee Perks/A. Antique Coffee Services 300 325 Canon 11,569 12,567 NFS Leasing — 4,236 Total Operating Leases rent expense $ 12,578 $ 17,838 The Company has an operating lease agreement, through the former parent, for office space located in Jacksonville, Florida that expires as of April 30, 2016. Minimum rent payments under this lease is recognized on a straight-line basis over the term of the lease. The current monthly lease payment is $14,179. Rental expense for the lease during 2015 and 2014 was $142,593 and $142,091, respectively. On March 8, 2016, the former parent executed an amendment to the current lease with a start date of May 1, 2016 and ending on October 31, 2021. Rental expense for the months of March 2016 through May 2016 will be $0, followed by a monthly rent of $14,816 (including operating cost and taxes) commencing with the month of June 2016. The rent is subject to an annual escalation of 3%, beginning May 1, 2017. The following is a schedule of future minimum lease payments for non-cancelable operating leases are as follows: 2016 $ 123,429 2017 169,483 2018 174,568 2019 179,805 2020 185,199 2021 155,846 Total $ 988,330 Stock Purchase Agreement and Amendment Prior to the consummation of the merger, on September 19, 2014, duostech entered into a definitive material agreement for the Purchase of Uni-Data and Communications, Inc., (UDC) a division of Unity International Group Inc (UIG), based in New York City. The agreement called for UIG to sell UDC to duostech, as a wholly owned and operating entity. The companies executed a Stock Purchase Agreement (SPA) which called for the sale of 100% of the shares of UDC for the payment of $10 million. As reported previously, on June 26, 2015, the parties agreed to terminate the Agreement in accordance with its terms. Placement Agency Agreement On February 18, 2015, duostech engaged an exclusive placement agent in connection with the possible acquisition of a private entity which has previously been disclosed. The acquisition required private placement of equity, equity-linked or debt securities (the “Agreement”). On June 29, 2015, the Company and the placement agent terminated the agreement; no success fee amounts were due. On July 1, 2015, duostech entered into a limited exclusive placement agent agreement in connection with the proposed offer and placement of up to $5,000,000 of securities, convertible instruments, private notes or loans (excluding a registered public offering) of the Company. The Agreement was for an initial term of 120 days. duostech paid an initial fee of $15,000 in connection with this engagement with an additional $5,000 due upon the acceptance by duostech of a valid term sheet. In the event of a transaction being concluded, the agent would have been paid 5% of senior debt that is not convertible and 8% cash plus 8% warrants of any equity based transaction. At the conclusion of the initial term no acceptable term sheet had been presented and the Company terminated the agreement on December 1, 2015. The parties agreed to continue working together without a formal agreement but with an understanding that should a term sheet be accepted and a subsequent financing be secured, Duos would honor the terms of the original agreement as described above. (see Note 15) Litigation As previously reported, on or about December 22, 2014, Corky Wells Electric (“CW Electric”) filed suit in the Circuit Court of Boyd County, Kentucky, against duostech demanding relief related to a promissory note issued by duostech to CW Electric on December 10, 2008 in the amount of $741,329. The suit was subsequently removed to the United States District Court for the Eastern District of Kentucky, Ashland Division. Previously, duostech entered into a “Stipulation for Settlement” on September 30, 2009 wherein CW Electric agreed to dismiss a previous lawsuit and duostech agreed to resume payments on the promissory note. In its suit, CW Electric contended that duostech breached the terms of that Stipulation for Settlement by not making the required number of payments at the times stipulated therein. CW Electric further contended that due to the breach of payment terms, under the terms of the promissory note, the outstanding amount continued to accrue interest at the rate of 18% per annum, which compounded monthly for a total of $1,411,650 due through the future final payment date. Effective October 28, 2015, duostech and CW Electric entered into a Settlement and Release Agreement (the “Settlement Agreement”) pursuant to which the parties have agreed to settle the suit upon the payment by duostech to CW Electric of $550,000 (the “Settlement Amount”) by February 15, 2016. An agreed judgment, evidencing the Company’s agreement to pay the Settlement Amount, was signed by the parties (the “Agreed Judgment”) and such document deposited into escrow with CW Electric’s counsel. At the time of the payment of the Settlement Amount, the Agreed Judgment is to be returned to the Company for destruction. Under the terms of the Settlement Agreement, duostech provided a letter of intent from Duos Ventures II, LLC fund or any other fund as determined by Lenger Financial to the Company for the payment of the settlement amount (the “Security”). Upon provision of the Security, duostech would have had until February 15, 2016 to pay the Settlement Amount and, if such amount was not paid by such date, then the Agreed Judgment was to be filed with the court and executed upon, with interest due at 12% per annum beginning February 15, 2016. On February 9, 2016, duostech’s counsel informed CW Electric’s counsel that on February 5 th CW has released the Company, duostech and affiliates from any action that could have been brought in the suit. The Company has recorded a non-cash gain for the quarter ended December 31, 2015 in the amount of $861,650 to other income. Amounts of $550,000 and $1,411,650 were accrued as a contingent lawsuit payable at December 31, 2015 and December 31, 2014, respectively, in the Company’s consolidated financial statements. On August 10, 2015, the Company entered into an agreement with Facility Team of Ontario, Canada to settle a dispute that had arisen concerning payments for software development services. The Company strongly believed that Facility Team did not deliver the products promised and felt that we would prevail in arbitration called for by the contract between the parties. Ultimately, the Company opted to settle the matter for the cost of the litigation which was estimated be at least $60,000; rather than spend further resources on defending the claim and pursuing the counterclaim against Facility Team. The Company agreed to pay to Facility Team $2,500 per month starting October 1, 2015 for 24 months and taking a charge in the third quarter of 2015 for the settlement amount of $60,000. At December 31, 2015 the balance was $52,500 Delinquent Payroll Taxes Payable |
NOTE 11 - INCOME TAXES
NOTE 11 - INCOME TAXES | 12 Months Ended |
Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | |
NOTE 11 - INCOME TAXES | NOTE 11 – INCOME TAXES The Company maintains deferred tax assets and liabilities that reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The deferred tax assets at December 31, 2015 and 2014 consist of net operating loss carryforwards and differences in the book basis and tax basis of intangible assets. The blended Federal and State tax rate of 37.6% applies to loss before taxes. The items accounting for the difference between income taxes at the effective statutory rate and the provision for income taxes for the years ended December 31, 2015 and 2014 were as follows: Years Ended December 31, 2015 2014 Income tax benefit at U.S. statutory rate of 34% $ (790,823 ) $ (716,385 ) State income taxes (83,734 ) (75,853 ) Non-deductible expenses 722,740 148,876 Change in valuation allowance 151,817 643,362 Total provision for income tax $ — $ — The Company’s approximate net deferred tax assets as of December 31, 2015 and 2014 were as follows: December 31, 2015 2014 Deferred Tax Assets: Net operating loss carryforward $ 4,602,442 $ 4,413,962 Intangible assets 214,206 250,869 4,816,648 4,664,831 Valuation allowance (4,816,648 ) (4,664,831 ) Net deferred tax assets $ — $ — The net operating loss carryforward was approximately $12,240,000 and $11,739,000 at December 31, 2015 and 2014, respectively. The Company provided a valuation allowance equal to the deferred income tax assets for the years ended December 31, 2015 and 2014 because it was not known whether future taxable income will be sufficient to utilize the loss carryforward and other deferred tax assets. The increase in the valuation allowance was $151,817 in 2015. The potential tax benefit arising from the loss carryforward will expire in years through 2035. Additionally, the future utilization of the net operating loss carryforward to offset future taxable income may be subject to an annual limitation as a result of ownership changes that could occur in the future in accordance with Section 382 of the Internal Revenue Code. If necessary, the deferred tax assets will be reduced by any carryforward that expires prior to utilization as a result of such limitations, with a corresponding reduction of the valuation allowance. The Company believes its tax positions are all highly certain of being upheld upon examination. The Company’s 2015, 2014 and 2013 Corporate Income Tax Returns are subject to Internal Revenue Service examination. The Company does not have any uncertain tax positions or events leading to uncertainty in a tax position. |
NOTE 12 - RELATED PARTIES
NOTE 12 - RELATED PARTIES | 12 Months Ended |
Dec. 31, 2015 | |
Related Party Transactions [Abstract] | |
NOTE 12 - RELATED PARTIES | NOTE 12 – RELATED PARTIES Notes, Loans and Accounts Payable As of December 31, 2015 and December 31, 2014 there were various notes and loans payable to related parties totaling $486,964 and $75,000, respectively, with related unpaid interest of $47,959 and $38,373 respectively (see Note 6). The Company also has accounts payable-related parties due to an officer for expense reimbursement and due to an affiliate for services in the total amount of $30,070 and $53,122 at December 31, 2015 and 2014, respectively. Administrative Services Agreement On December 1, 2002, the Company and the former parent entered into an Administrative Services Agreement whereby the former parent agreed to provide administrative and support services including but not limited to, (a) rent and general infrastructure, (b) human resource management services, and (c) accounting and financial services and other miscellaneous services. The monthly fee was subject to adjustments in accordance with the actual services rendered. There were no fees incurred with the former parent for the years ending December 31, 2015 and 2014 and we will not incur any additional fees going forward. At December 31, 2015 and 2014, $5,173 and $19,897, respectively, was due to the former parent under this agreement and is included in Accounts payable - related parties as disclosed above. |
NOTE 13 - STOCKHOLDERS' DEFICIT
NOTE 13 - STOCKHOLDERS' DEFICIT | 12 Months Ended |
Dec. 31, 2015 | |
Equity [Abstract] | |
NOTE 13 - STOCKHOLDERS' DEFICIT | NOTE 13 – STOCKHOLDERS’ DEFICIT Series A Convertible Preferred Stock On December 29, 2014 the Company agreed with the majority of the then Series A redeemable convertible preferred shareholders to exchange all Series A Convertible preferred stock into the Company’s common stock at an 8% premium in terms of the quantity of shares to the original conversion rate which original conversion rate was approximately $0.54 per share. Accordingly, approximately 13,454,989 common shares were issued which includes the approximately 996,666 additional 8% premium common shares issued as an inducement to convert. The Company valued these additional premium shares based upon a contemporaneous business valuation of the Company resulting in a per share value of approximately $0.336 per share or an aggregate approximate $335,143 which was charged to operations in 2014. Since the preferred stock had been redeemable at stated value plus undeclared dividends, the Company recognized $536,376 of dividends in each of 2014 and 2013. Furthermore, since as discussed below under “Common Stock”, the Company has retroactively applied the effects of a subsequent merger, no Series A preferred stock transactions are reflected in the accompanying statement of changes in stockholders’ equity and the dividends were charged to retained earnings with a credit to additional paid-in capital in 2014. Series B Convertible Preferred Stock On December 29, 2014 the Company agreed with the majority of the then Series B convertible preferred shareholders to exchange all Series B Convertible preferred stock into the Company’s common stock at an 8% premium in terms of the quantity of shares to the original conversion rate which original conversion rate was approximately $0.66 per share. Accordingly approximately 1,838,885 common shares were issued which includes the approximately 136,214 additional 8% premium common shares issued as an inducement to convert. The Company valued these additional premium shares based upon a contemporaneous business valuation of the Company resulting in a per share value of approximately $0.336 per share or an aggregate of approximately $45,804 which was charged to operations. Furthermore, since as discussed below under “Common Stock”, the Company has retroactively applied the effects of a subsequent merger, no Series B preferred stock transactions are reflected in the accompanying statement of changes in stockholders’ equity and the dividends are charged to retained earnings with a credit to additional paid-in capital in 2014. Conversion of Debt On March 31, 2015, Duos Ventures LLC converted $1,415,546 of convertible debentures which included $7,176 accrued interest into 2,211,791 shares of common stock as a result of the closing of a reverse merger with Information Systems Associate, Inc. (ISA). The conversion was priced at a 20% discount from the ISA closing price on March 31, 2015 of $0.80 for a net conversion price of $0.64 per share in accordance with the original terms of the convertible debentures. As a result of this conversion, $37,120 of accrued debt premium relating to the 3% provision (see Note 6) was reclassified to equity and a $352,093 interest expense was recognized and recorded as a debt premium on March 31, 2015 pursuant to the resolution of the contingency under ASC 480 and then reclassified to equity. Reverse Merger On April 1, 2015, the Company completed a reverse triangular merger, pursuant to an Agreement and Plan of Merger (the “Merger Agreement”) among the Company (“Duos”), Information Systems Associates, Inc. (ISA), a publicly traded company, and Duos Acquisition Corporation, a Florida corporation and wholly owned subsidiary of ISA (“Merger Sub”). Under the terms of the Merger Agreement, Merger Sub merged with and into Duos, with Duos remaining as the surviving corporation and a wholly-owned subsidiary of ISA (the “Merger”). The Merger was effective as of April 1, 2015, upon the filing of a copy of the Merger Agreement and articles of merger with the Secretary of State of the State of Florida (the “Effective Time”). As part of the merger agreement, ISA confirmed to Duos executives that its stockholders would receive 60,000,000 common shares of ISA. The Company intends to carry on Duos’ business as a line of business following the Merger. The Company also intends to continue ISA's existing operations through its existing wholly owned subsidiary, TrueVue 360, Inc. Duos made the decision to become a public company to give it broader access to the public financial markets to support its growth goals. The objective was to streamline the merger process by finding a clean, operating entity with no “toxic” debt and that was not and had never been a shell company. The Merger was accounted for as a reverse merger using the acquisition method under ASC 805-40 with the Company (then named “Information Systems Associates, Inc.”) deemed to be the acquired company for accounting purposes. This determination is based on then duostech shareholders obtaining an approximate 98% voting control as well as management and Board control of the combined entity. Accordingly, the assets and liabilities and historical operations that are reflected in the consolidated financial statements after the merger are those of duostech stated at historical cost and the assets and liabilities of ISA were recorded at their fair values at the merger date. The results of operations of ISA are only consolidated with the results of operations starting on the merger date. An analysis of duostech established a total enterprise valuation of $19,350,000 using a relative values approach. At the time of the merger, it was estimated that the Company shareholders would own approximately 2% of the outstanding stock after issuance of 60,000,000 shares to duostech shareholders in connection with the Merger. This resulted in a purchase price of $393,929. The difference between the recorded historical value of assets acquired and liabilities assumed totaling $1,578,816 was allocated $165,000 for trade name and technology and a further $250,000 for existing customer relationships, both of which will be amortized over 2 years. These trade name and technology amounts are based on the value of a secured loan against the patent and software and the customer relationships is calculated based on the estimated gross margin for the next two years for certain customer relationships. The remaining $1,163,816 is allocated to Goodwill which is the expected synergies that will benefit the combined entity. Goodwill is not expected to be deductible for income tax purposes. For accounting purposes, the Company is deemed to have issued 1,246,870 shares of common stock to the ISA shareholders for a purchase price of $393,929. In connection with the merger, the Company incurred acquisition costs of $36,718 in 2014 of which $16,425 is included in professional fees, $10,000 is included in salaries, wages and contract labor and $10,293 is included in general and administrative expenses on the December 31, 2014 statements of operations. In addition, the Company incurred $75,489 in 2015 of which $31,812 is included in professional fees, $35,000 is included in salaries, wages and contract labor and $8,677 is included in general and administrative expenses as of March 31, 2015. The fair value of the assets acquired and liabilities assumed in the merger are as follows: Assets acquired: Cash $ 1,347 Trade name and technology 165,000 Customer relationships 250,000 Goodwill 1,163,816 Total assets 1,580,163 Liabilities assumed: Accounts payable 216,461 Loans payable 748,426 Accrued expenses 35,275 Accrued salary 184,263 Deferred revenue 1,809 Total liabilities 1,186,234 Purchase price $ 393,929 The estimates of fair values and the purchase price allocation is subject to change pending the finalization of the valuation of assets acquired and liabilities assumed. The following unaudited pro forma consolidated results of operations have been prepared as if the merger occurred on January 1, 2014: Three Months Ended March 31, Year Ended December 31, 2015 2014 Net Revenues $ 1,107,166 $ 4,603,768 Net Loss (1,338,399 ) (3,049,378 ) Net Loss per Share $ (.02 ) $ (.05 ) Pro forma data does not purport to be indicative of the results that would have been obtained had these events actually occurred at the beginning of the periods presented and is not intended to be a projection of future results. All share and per share data in the accompanying financial statements and footnotes have been retroactively reflected for the exchange. On June 30, 2015, the Company assessed the valuation of its intangible assets and goodwill acquired in the April 1, 2015 merger and determined to charge $1,578,816 to operations as a loss on impairment. Common stock issued for services and settlements On March 31, 2015, the Company issued 50,000 shares of common stock to a software engineering vendor for a $20,000 partial settlement of an outstanding payable. The shares were valued at $0.336 per share, or $16,800, based on contemporaneous conversions of the Company's Preferred Stock Series A & B to Common Stock. The Company recorded a $3,200 gain on the settlement of this payable which is included in Other Income in the statement of operations. On May 20, 2015, the Company entered into a one year agreement with a third party for consulting services. The prepaid vested 100,000 shares of common stock were issued in June 2015 and valued on that day at the closing price of the stock on the previous day of $0.65 per share for a total of $65,000. The $65,000 was recorded as a prepaid asset which is being amortized to expense over the agreement term. On May 27, 2015 the Company settled a $33,000 payable to an investor relations firm with 41,250 shares of common stock. There was no gain or loss. In conjunction with and subsequent to the merger agreement, ISA Warrant Holders were granted 19,387 shares of common stock in exchange for 33,750 existing warrants. The difference between the fair value of the warrants surrendered and the shares issued resulted in a loss on a settlement of $3,082 charged to operations. On June 30, 2015, the Company’s CFO agreed to exchange $56,482 of accrued salary for restricted shares of the Company. The Company issued 141,205 shares of common stock based on a closing trading price of $0.40 per share. The shares were further divided and allocated by the CFO to three other parties including two charitable organizations and the son of the CFO with the CFO retaining 45,000 shares. There was no gain or loss on the settlement. On July 1, 2015, the principal balance of a promissory note of $50,000 was converted to 150,000 shares of common stock with a per share conversion price of $0.33. The shares were valued at their quoted trading price of $0.51 per share on the conversion date or $76,500 resulting in a loss on settlement of $26,500. On August 27, 2015, the Company issued 50,000 shares of common stock in connection with a consulting agreement for $100 with a per share price of $0.002. The shares were valued at $10,775 based on the quoted trading price of $0.2155 per share resulting in a consulting expense of $10,675. During the third quarter of 2015, the Company issued 46,015 shares of common stock for services valued at the quoted trading price on the respective grant dates resulting in an expense of $15,000. In the third quarter of 2015, Warrant Holders were granted 14,963 shares of common stock in exchange for existing 20,250 warrants. The difference between the fair value of the warrants surrendered and the shares issued resulted in a gain on the exchanges and therefore no charges were made to operations. On September 21, 2015, the Company issued 506,421 shares of common stock in exchange for an $81,250 portion of an outstanding convertible note. The shares were valued at $0.27 per share or $136,734 resulting in a loss settlement of $55,484. On September 30 2015, the Company issued 1,002,401 shares of common stock in exchange for a promissory note and accrued interest totaling $275,660 with a related party. In addition, the Company issued 501,201 five year warrants in exchange for an extension of a $37,817 note. The shares were valued at $260,624 or $0.26 per share and the warrants were valued at $130,175 using a Black-Scholes option pricing model, resulting in a total value of $390,799 and a loss on settlement of $115,139. On October 26, 2015, the Company issued 68,223 shares of common stock in exchange for a promissory note and accrued interest totaling $20,467 with a per share conversion price of $0.30. The shares were valued at their contractual price of $0.26 per share on the conversion date or $17,738 resulting in a gain on settlement of $2,729. Also on October 26, 2015, the Company issued 136,986 shares of common stock in exchange for a convertible note and accrued interest totaling $41,096 with a conversion price of $0.30. The shares were valued at their contractual price of $0.26 per share on the conversion date or $35,616 resulting in a gain on settlement of $5,479. On October 27, 2015, the Company issued 499,308 shares of common stock in exchange for a convertible note and accrued interest totaling $149,792 with a per share conversion price of $0.30. The shares were valued at their contractual price of $0.26 and $0.40 per share on the conversion date or $144,473 resulting in a net gain on settlement of $5,319. On October 28, 2015, the Company issued 358,758 shares of common stock in exchange for a promissory note and accrued interest totaling $107,627 with a per share conversion price of $0.30. The shares were valued at their contractual price of $0.40 per share on the conversion date or $143,503 resulting in a loss on settlement of $35,876. On December 16, 2015, the Company issued 229,167 shares of common stock in exchange for a convertible note and accrued interest totaling $68,750 with a per share conversion price of $0.30. The shares were valued at their contractual price of $0.30 per share on the conversion date or $68,750 resulting in no gain or loss on settlement. On December 30, 2015, the Company issued 166,667 shares of common stock in exchange for a convertible note and accrued interest totaling $50,000 with a per share conversion price of $0.30. The shares were valued at their contractual price of $0.30 per share on the conversion date or $50,000 resulting in no gain or loss on settlement. |
NOTE 14 - COMMON STOCK PURCHASE
NOTE 14 - COMMON STOCK PURCHASE WARRANTS | 12 Months Ended |
Dec. 31, 2015 | |
Other Liabilities Disclosure [Abstract] | |
NOTE 14 - COMMON STOCK PURCHASE WARRANTS AND OPTIONS | NOTE 14 – COMMON STOCK PURCHASE WARRANTS Warrants The following is a summary of activity for warrants to purchase common stock for the year ended December 31, 2015: December 31, 2015 Number of Warrants Weighted Avg. Exercise Price Remaining Contractual Life (Years) Assumed in merger on April 1, 2015 82,875 $ 4.73 1.6 Warrants issued with debt or debt modifications 585,715 $ .29 4.6 Warrants exchanged for common stock (54,000 ) $ 3.70 Expired (5,250 ) $ 6.67 Outstanding at end of period 609,340 $ .54 4.5 Exercisable at end of period 609,340 $ .54 4.5 There was no intrinsic value of these warrants at December 31, 2015. During 2015, warrants for 501,201 common shares were issued for debt extension, warrants for 28,571 common shares were issued with debt and warrants for 55,943 common shares were issued with debt. In 2015 through December 31, 2015, 54,000 warrants were exchanged for 34,350 common shares resulting in a loss on settlement of $3,082 charged to operations . In 2015 through December 31, 2015, 5,250 warrants expired. |
NOTE 15 - SUBSEQUENT EVENTS
NOTE 15 - SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2015 | |
Subsequent Events [Abstract] | |
NOTE 15 - SUBSEQUENT EVENTS | NOTE 15 – SUBSEQUENT EVENTS On January 6, 2016, the Company entered into an agreement with an investment banker to provide general financial advisory and investment banking services. Services included, but not limited to in the agreement are to provide a valuation analysis of the Company, assist management and advise the Company with respect to its strategic planning process and business plans including an analysis of markets, positioning, financial models, organizational structure, potential strategic alliances, capital requirements, potential national listing and working closely with the Company’s management team to develop a set of long and short-term goals with special focus on enhancing corporate and shareholder value. The Agreement is for an initial term of six months. The Company shall pay a non-refundable fee accruing at the rate of $10,000 per month, for the term of the agreement. This advisory fee payments will be accrued and deferred for payment until the earlier of 1) closing of the financing described in the agreement, 2) a closing of interim funding at which point fifty percent (50%) of the outstanding monthly advisory fee will be payable on the last day of the month following closing of the interim financing or 3) the termination of the agreement. The Company has issued to the investment banker 912,000 vested shares of the Company’s common stock as of the execution date of this agreement. In addition, the Company will issue warrants for the purchase of 302,000 shares of the Company’s common stock, which the warrants shall have a 5-year expiration and a strike price of $0.30. On January 22, 2016, the Company issued 2,100 shares of common stock in warrant shares exchange. On January 24, 2016, the wife of the CEO loaned the Company the sum of $20,000 at an annual percentage rate of 8%. On January 27, 2016, the Company entered into an agreement with a consultant to provide advisory services for an initial period of six months. The consultant will assist the Company with its objective of evaluating financing and other strategic options in connection with operational expansion and respond to any opportunities that arise in regard to strategic partnerships/acquisition/joint ventures or other business relationships that may advance revenue growth and enterprise value. Upon a qualified financing of at least $1,500,000 through a party introduced by the consultant, the Company agreed to issue up to $90,000 in equity or cash at the same rate and terms as the basis of the financing. In consideration for development services thirty days from the execution of this agreement, 20,000 shares of restricted common stock of the Company will be granted to the consultant or assigns and be issued within fifteen days of the grant. Also, 30,000 additional shares shall be granted to the consultant or assigns on completion of any transactions with a potential participant. In consideration for advisory services, the non-refundable sum of $5,000 will be payable upon execution of the agreement with a further $5,000 to be deferred and paid upon the completion of any transaction with a potential participant. On January 28, 2016, the CFO loaned the Company the sum of $29,990 at an annual percentage rate of 8%. On February 5, 2016, the Company entered into a term sheet for the proposed private placement of senior secured notes and warrants (the “Offering”) by the Company and purchase by an institutional investor. In connection with the Offering, on March 31, 2016, the Company entered into a Securities Purchase Agreement with such institutional investor, which, together with the transaction documents referenced therein, provides for the terms in the following paragraph. The Company expects to close the Offering on or about April 1, 2016, subject to the satisfaction of customary closing conditions. The Offering amount is $1,800,000 less a 5% original issue discount. The securities of the note are senior secured by substantially all assets of the Company and shares of all current and future subsidiaries as well as being guaranteed by each subsidiary but are not convertible into the Company’s stock. The senior secured note also contains certain default provisions and is subject to standard covenants such as restrictions on issuing new debt. In conjunction with the note, the Company issued a warrant exercisable into 2.5 million shares with a term of five years and strike price of $0.35. The Warrants also contain certain antidilution provisions that apply in connection with any stock split, stock dividend, stock combination, recapitalization or similar transactions as well as a potential adjustment to the exercise price based on certain events. The relative fair value of the warrants of approximately $460,000 will be recorded as a debt discount and amortized to interest expense over the term of the debt. The note will mature three years from the closing date and will accrue interest at the rate of 14% per annum, payable monthly. The note will accrue additional interest at the rate of 2% per annum, compounding monthly, payable annually in arrears. The Company may choose to begin amortizing the principal at any time subject to prepayment premiums. Also, the Company agreed to an amended Placement Agent’s Fee with respect to the placement of such loan which differed from the original terms agreed with the Placement Agent as that agreement had expired (see Note 10, Placement Agency Agreement). The amendment included (a) postponement of payment of the cash fee of $5,000 to 15 days of execution of the term sheet, (b) the closing fee was fixed to $137,000 (based on a $1.8 million debt funding) and three-year warrants for 200,000 shares at a strike price of $0.40 per share. On February 9, 2016, duostech’s counsel informed CW Electric’s counsel that on February 5 th The Company has an operating lease agreement, through the former parent, for office space located in Jacksonville, Florida that expires as of April 30, 2016. On March 8, 2016, the related party executed an amendment to the current lease for the Jacksonville office, with a start date of May 1, 2016 and ending on October 31, 2021. Rental expense for the months of March 2016 through May 2016 will be $0, followed by a monthly rent of $14,816 (including operating cost and taxes) commencing with the month of June 2016. The rent is subject to an annual escalation of 3%, beginning May 1, 2017. |
NOTE 1 - NATURE OF OPERATIONS22
NOTE 1 - NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Nature of Operartions | Nature of Duos Technologies Group, Inc. (f/k/a Information Systems Associates, Inc. (“ISA”), through its operating subsidiary “Duos Technologies, Inc. (“duostech” or the “Company”) is primarily engaged in the design and deployment of state-of-the-art, artificial intelligence driven intelligent technologies systems. duostech converges traditional security measures with information technologies to create “actionable intelligence.” duostech’s IP is built upon two of its core technology platforms ( praes i dium® and cen t ), both distributed as licensed software suites, and natively embedded within engineered turnkey systems (see detailed description of the Company’s products at its website www.duostech.com). praes i cen t The Company’s strategy includes expansion of its technology base through organic development efforts, strategic partnerships, and growth through strategic acquisitions. duostech’s primary target industry sectors include transportation, with emphasis on freight and transit railroad owners/operators, petro-chemical, utilities and healthcare. As reported previously, Duos Technologies Group, Inc. is the result of the reverse merger between duostech and ISA, which became effective as of April 1, 2015. The merger was followed by the change of name to Duos Technologies Group, Inc., a symbol change from IOSA to DUOT and up-listing from OTC Pink to OTC QB. ISA’s original business of IT Asset Management (ITAM) services for large data centers is now operated as a division of the Company that continues its sales efforts through large strategic partners. The Company developed a methodology for the efficient data collection of assets contained within large data centers and was awarded a patent in 2010 for specific methods to collect and audit data. |
Principled of Consolidation | Principles of Consolidation The audited consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Duos Technologies, Inc and TrueVue 360, Inc. All significant inter-company transactions and balances are eliminated in consolidation. |
Use of Estimates | Use of Estimates The preparation of 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 disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from these estimates. The most significant estimates in the accompanying financial statements include the allowance on accounts receivable, valuation of deferred tax assets, estimates of percentage completion on projects and related revenues, valuation of intangible assets and goodwill, valuation of stock-based compensation, valuation of warrants issued with debt, valuation of beneficial conversion features in convertible debt, valuation of stock-based awards and valuation of loss contingencies. We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. |
Cash and Cash Equivalents | Cash and Cash Equivalents For the purposes of the Statement of Cash Flows, the Company considers liquid investments with an original maturity of three months or less to be a cash equivalent. There were no cash equivalents at December 31, 2015 or 2014. |
Concentrations | Concentrations Cash Concentrations Cash and cash equivalents are maintained at financial institutions and at times, balances may exceed federally insured limits. We have not experienced any losses related to these balances. There were no amounts on deposit in excess of federally insured limits at December 31, 2015 and 2014. Significant Customers and Concentration of Credit Risk The Company, by policy, routinely assesses the financial strength of its customers. As a result, the Company believes that its accounts receivable credit risk exposure is limited and has not experienced any write-downs in its accounts receivable balances through December 31, 2015. A significant portion of revenues is derived from certain customer relationships. The following is a summary of customers that each represents greater than 10% of total revenues in 2015 and 2014, and total accounts receivable at December 31, 2015 and 2014, respectively. 2015 2014 Revenue Accounts Receivable Revenue Accounts Receivable Customer A 30 % Customer A 33 % Customer A 48 % Customer A 52 % Customer B 16 % Customer B 28 % Customer B 26 % Customer B 18 % Customer C 16 % Customer C 24 % Customer C 12 % Geographic Concentration Approximately 1.73% of revenue is generated from customers outside of the United States. |
Fair Value Financial Instruments and Fair Value Measurements | Fair Value of Financial Instruments and Fair Value Measurements We measure our financial assets and liabilities in accordance with generally accepted accounting principles. For certain of our financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities, the carrying amounts approximate fair value due to their short maturities. Amounts recorded for notes payable, net of discount, and loans payable also approximate fair value because current interest rates available to us for debt with similar terms and maturities are substantially the same. We follow accounting guidance for financial assets and liabilities. This standard defines fair value, provides guidance for measuring fair value and requires certain disclosures. This standard does not require any new fair value measurements, but rather applies to all other accounting pronouncements that require or permit fair value measurements. This guidance does not apply to measurements related to share-based payments. This guidance discusses valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flow), and the cost approach (cost to replace the service capacity of an asset or replacement cost). The guidance 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: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2: Inputs, other than quoted prices that are observable, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active. Level 3: Unobservable inputs in which little or no market data exists, therefore developed using estimates and assumptions developed by us, which reflect those that a market participant would use. The estimated fair value of certain financial instruments, including accounts receivable and accounts payable are carried at historical cost basis, which approximates their fair values because of the short-term nature of these instruments. The cost basis of notes and convertible debentures approximates fair value due to the market interest rates carried for these instruments. |
Accounts Receivable | Accounts Receivable Accounts receivable are stated at estimated net realizable value. Accounts receivable are comprised of balances due from customers net of estimated allowances for uncollectible accounts. In determining the collections on the account, historical trends are evaluated and specific customer issues are reviewed to arrive at appropriate allowances. The Company reviews its accounts to estimate losses resulting from the inability of its customers to make required payments. Any required allowance is based on specific analysis of past due accounts and also considers historical trends of write-offs. Past due status is based on how recently payments have been received from customers. The CompanyÂ’s collection experience has been favorable reflecting a limited number of customers. No allowance was deemed necessary at December 31, 2015 and 2014. |
Property and Equipment | Property and Equipment Property and equipment is stated at cost, less accumulated depreciation. Depreciation is provided by the straight-line method over the estimated economic life of the property and equipment (three to five years). When assets are sold or retired, their costs and accumulated depreciation are eliminated from the accounts and any gain or loss resulting from their disposal is included in the statement of operations. Leasehold improvements are expensed over the term of our lease. |
Software Development Costs | Software Development Costs The Company accounts for costs incurred to develop or purchase computer software for internal use in accordance with FASB ASC 350-40 “Internal-Use Software” or ASC 350-50 "Website Costs". Costs incurred during |
Patents and Trademarks | Patents and Patents and trademarks which are stated at amortized cost, relate to the development of video surveillance |
Long-Lived Assets | Long-Lived Assets The Company evaluates the recoverability of its property, equipment, and other long-lived assets in accordance |
Accrual of Legal Costs Associated with Loss Contingencies | Accrual of Legal Costs Associated with Loss The |
Product Warranties | Product Warranties The Company has a 90 day warranty period for materials and labor after final acceptance of all projects. If any |
Sales Return | Sales Return Our systems are sold as integrated systems and there are no sales returns |
Revenue Recognition | Revenue Recognition Project Revenue The Company constructs intelligent technology systems consisting of materials and labor under customer contracts. Revenues and related costs on project revenue are recognized using the “percentage of completion method” of accounting in accordance with ASC 605-35, “Construction-Type and Production-Type Contracts”. Under this method, contract revenues are recognized over the performance period of the contract in direct proportion to the costs incurred as a percentage of total estimated costs for the entirety of the contract. Costs include direct material, direct labor, subcontract labor and other allocable indirect costs. All un-allocable indirect costs and corporate general and administrative costs are also charged to the periods as incurred. Any recognized revenues that have not been billed to a customer are recorded as an asset in “costs and estimated earnings in excess of billings on uncompleted contracts”. Any billings of customers in excess of recognized revenues are recorded as a liability in “billings in excess of costs and estimated earnings on uncompleted contracts”. However, in the event a loss on a contract is foreseen, the Company will recognize the loss when such loss is determined. A contract is considered complete when all costs except insignificant items have been incurred and the installation is operating according to specifications or has been accepted by the customer. The Company has contracts in various stages of completion. Such contracts require estimates to determine the appropriate cost and revenue recognition. Costs estimates are reviewed periodically on a contract-by-contract basis throughout the life of the contract such that adjustments to the profit resulting from revisions are made cumulative to the date of the revision. Significant management judgments and estimates, including the estimated costs to complete projects, must be made and used in connection with the revenue recognized in the accounting period. Current estimates may be revised as additional information becomes available. Maintenance and Technical Support Maintenance and technical support services are provided on both an as-needed and extended-term basis and may include providing both parts and labor. Maintenance and technical support provided outside of a maintenance contract are on an as-requested basis, and revenue is recognized as the services are provided. Revenue for maintenance and technical support provided on an extended-term basis is recognized ratably over the term of the contract. For sales arrangements that do not involve multiple elements such as professional services, which are of short-term duration, revenues are recognized when services are completed. IT Asset Management Services The Company recognizes revenue from its IT asset management business in accordance with the Securities and Exchange Commission (the “SEC”) Staff Accounting Bulletin No. 104, "Revenue Recognition" and Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 985-605-25 which addresses Revenue Recognition for the software industry. The general criteria for revenue recognition under ASC 985-605 for our Company, which sells software licenses, which do not require any significant modification or customization, is that revenue is recognized when persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed or determinable and collectability is probable. The Company’s IT asset management business generates revenues from three sources: (1) Professional Services (consulting & auditing); (2) Software licensing with optional hardware sales and (3) Customer Service (training and maintenance support). For sales arrangements that do not involve multiple elements: (1) Revenues for professional services, which are of short-term duration, are recognized when services are completed; (2) Throughout the date of this report, software license sales have been one time sales of a perpetual license to use our software product and the customer also has the option to purchase third party manufactured handheld devices from us if they purchase our software license. Accordingly the revenue is recognized upon delivery of the software and delivery of the hardware, as applicable, to the customer; (3) Training sales are one-time upfront short term training sessions and are recognized after the service has been performed; and (4) Maintenance/support is an optional product sold to our software license customers under one year contracts. Accordingly, maintenance payments received upfront are deferred and recognized over the contract term. Multiple Elements Arrangements with customers may involve multiple elements including project revenue and maintenance services in our Intelligent Technology Systems business. Maintenance will occur after the project is completed and may be provided on an extended-term basis or on an as-needed basis. In our IT Asset Management business, multiple elements may include any of the above four sources. Training and maintenance on software products may occur after the software product sale while other services may occur before or after the software product sale and may not relate to the software product. Revenue recognition for multiple element arrangement is as follows: Each element is accounted for separately when each element has value to the customer on a standalone basis and there is Company specific objective evidence of selling price of each deliverable. For revenue arrangements with multiple deliverables, the Company allocates the total customer arrangement to the separate units of accounting based on their relative selling prices as determined by the price of the items when sold separately. Once the selling price is allocated, the revenue for each element is recognized using the applicable criteria under GAAP as discussed above for elements sold in non-multiple element arrangements. A delivered item or items that do not qualify as a separate unit of accounting within the arrangement are combined with the other applicable undelivered items within the arrangement. The allocation of arrangement consideration and the recognition of revenue is then determined for those combined deliverables as a single unit of accounting. The Company sells it various services and software and hardware products at established prices on a standalone basis which provides Company specific objective evidence of selling price for purposes of multiple element relative selling price allocation. The Company only sells maintenance services or spare parts based on its established rates after it has completed a system integration project for a customer. The customer is not required to purchase maintenance services. All elements in multiple element arrangements with Company customers qualify as separate units of account for revenue recognition purposes. |
Deferred Revenue | Deferred Deferred revenues represent billings or cash received in excess of revenue recognizable on service agreements |
Advertising | Advertising The Company expenses the cost of |
Share-Based Compensation | Share-Based Compensation Stock-based compensation is accounted for in accordance with the Share-Based Payment Topic of ASC 718 Pursuant to |
Income Taxes | Income Taxes The Company accounts for income taxes in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 740, Income Taxes, which requires the recognition of deferred income taxes for differences between the basis of assets and liabilities for financial statement and income tax purposes. The deferred tax assets and liabilities represent the future tax return consequences of those differences, which will either be taxable or deductible when the assets and liabilities are recovered or settled. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. The Company evaluates all significant tax positions as required by ASC 740. As of December 31, 2015, the Company does not believe that it has taken any positions that would require the recording of any additional tax liability nor does it believe that there are any unrealized tax benefits that would either increase or decrease within the next year. Any penalties and interest assessed by income taxing authorities are included in operating expenses. The federal and state income tax returns of the Company are subject to examination by the IRS and state taxing authorities, generally for three years after they were filed. Tax years 2012, 2013 and 2014 remain open for potential audit. |
Earnings (Loss) Per Share | Earnings (Loss) Per Share Basic earnings per share (EPS) are computed by dividing net loss applicable to common stock by the weighted average number of common shares outstanding. Diluted net loss per common share is computed by dividing the net loss applicable to common stock by the weighted average number of common shares outstanding for the period and, if dilutive, potential common shares outstanding during the period. Potential common shares consist of the incremental common shares issuable upon the exercise of stock options, stock warrants, convertible debt instruments or other common stock equivalents. Potentially dilutive securities are excluded from the computation if their effect is anti-dilutive. At December 31, 2015, outstanding warrants to purchase an aggregate of 609,340 shares of common stock and 734,047 shares of common stock issuable upon conversion of convertible debt were excluded from the computation of dilutive earnings per share because the inclusion would have been anti-dilutive. |
Segment Information | Segment The Company operates in one reportable |
Reclassifications | Reclassifications Certain amounts in the 2014 statements of operations have been reclassified from operating expenses to cost of revenue to conform to the 2015 presentation. T |
Recent Issued Accounting Standards | Recent Issued Accounting Standards Financial Accounting Standards Board, Accounting Standard Updates which are not effective until after December 31, 2015 are not expected to have a significant effect on the Company’s consolidated financial position or results of operations. In August 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2014-15, “Presentation of Financial Statements – Going Concern (Topic 205-40)”, which requires management to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern for each annual and interim reporting period. If substantial doubt exists, additional disclosure is required. This new standard will be effective for the Company for annual and interim periods beginning after December 15, 2016. Early adoption is permitted. The Company does not expect the implementation of this standard to have a material effect on its disclosures. In April 2015, the Financial Accounting Standards Board issued Accounting Standards Update No. 2015-03, "Simplifying the Presentation of Debt Issuance Costs," On May 8, 2015, the FASB issued ASU 2015-08, “Business Combinations (Topic 805) Pushdown Accounting |
NOTE 1 - NATURE OF OPERATIONS23
NOTE 1 - NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Concentration | 2015 2014 Revenue Accounts Receivable Revenue Accounts Receivable Customer A 30 % Customer A 33 % Customer A 48 % Customer A 52 % Customer B 16 % Customer B 28 % Customer B 26 % Customer B 18 % Customer C 16 % Customer C 24 % Customer C 12 % |
NOTE 3 - TRADE ACCOUNTS AND O24
NOTE 3 - TRADE ACCOUNTS AND OTHER RECEIVABLES (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Receivables [Abstract] | |
Trade Accounts Receivable | 2015 2014 Accounts Receivable $ 452,235 $ 317,934 Allowance for doubtful accounts — — $ 452,235 $ 317,934 |
NOTE 4 - PROPERTY AND EQUIPME25
NOTE 4 - PROPERTY AND EQUIPMENT (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Property, Plant and Equipment [Abstract] | |
Major classes of property and equipment | 2015 2014 Furniture, fixtures and equipment $ 1,100,658 $ 976,598 Less: Accumulated depreciation (1,028,114 ) (931,715 ) $ 72,544 $ 44,883 |
NOTE 5 - PATENTS AND TRADEMAR26
NOTE 5 - PATENTS AND TRADEMARKS (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Patents And Trademarks [Abstract] | |
Patents and trademarks | 2015 2014 Patents and trademarks $ 267,135 $ 256,715 Less: Accumulated amortization (210,129 ) (204,219 ) $ 57,006 $ 52,496 |
NOTE 6 - DEBT (Tables)
NOTE 6 - DEBT (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Debt Disclosure [Abstract] | |
Notes Payable - Financing Agreements | December 31, 2015 December 31, 2014 Notes Payable Principal Interest Principal Interest Third Party - Insurance Note 1 $ 21,325 9.75 % $ 8,892 9.95 % Third Party - Insurance Note 2 11,277 9.75 % 20,376 9.25 % Third Party - Equipment Financing — — 3,787 13.48 % Third Party - Insurance Note 3 — 8.66 % — — Third Party - Insurance Note 4 11,422 8.99 % — — Total $ 44,024 $ 33,055 |
Notes Payable - Related Parties | December 31, 2015 December 31, 2014 Notes Payable Principal Interest* Principal Interest* Shareholder $ 65,000 .75 % $ 65,000 .75 % Related party 17,651 .67 % — — Related party 33,615 — — — Related party 36,500 .67 % 10,000 .67 % Related Party 21,170 — — — Related Party 11,131 .67 % — — CFO 7,841 — — — Shareholder 294,056 .50 % — — Total $ 486,964 $ 75,000 * effective interest rate per month including default penalties |
Notes Payable | December 31, 2015 Notes Payable Principal Interest Vendor $ 52,500 — Total $ 52,500 — |
Convertible Notes Payable-Net of Discounts, Including Premiums | December 31, 2015 December 31, 2014 Notes Payable Principal Premium Principal, Including Premium Principal Premium Principal, Including Premium Investor $ 19,108 $ — $ 19,108 $ — $ — $ — Vendor 50,000 50,000 100,000 — — — Shareholder 125,000 — 125,000 — — — Investor Group — — — 1,398,370 26,736 1,425,106 Shareholder 46,975 46,975 93,950 — — — Total $ 241,083 $ 73,488 $ 338,058 $ 1,398,370 $ 26,736 $ 1,425,106 |
NOTE 8 - CONTRACT ACCOUNTING (T
NOTE 8 - CONTRACT ACCOUNTING (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Contract Accounting [Abstract] | |
Costs and Estimated Earnings in Excess of Billings on Uncompleted Contracts | Costs and Estimated Earnings in Excess of Billings on Uncompleted Contracts 2015 2014 Costs and estimated earnings recognized $ 2,322,836 $ 990,799 Less: Billings or cash received (1,901,720 ) (772,490 ) Costs and estimated earnings in excess of billings on uncompleted contracts $ 421,116 $ 218,309 |
Billings in Excess of Costs and Estimated Earnings on Uncompleted Contracts | Billings in Excess of Costs and Estimated Earnings on Uncompleted Contracts 2015 2014 Billings and/or cash receipts on uncompleted contracts $ 1,146,804 $ 394,517 Less: Costs and estimated earnings recognized (843,740 ) (240,734 ) Billings in excess of costs and estimated earnings on uncompleted contracts $ 303,064 $ 153,783 |
NOTE 10 - COMMITMENTS AND CON29
NOTE 10 - COMMITMENTS AND CONTINGENCIES (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
Operating leases | Operating Leases Year Ended December 31, 2015 2014 Purchase Power $ 710 $ 710 Coffee Perks/A. Antique Coffee Services 300 325 Canon 11,569 12,567 NFS Leasing — 4,236 Total Operating Leases rent expense $ 12,578 $ 17,838 |
Future minimum lease payments for non-cancelable operating leases | The following is a schedule of future minimum lease payments for non-cancelable operating leases are as follows: 2016 $ 123,429 2017 169,483 2018 174,568 2019 179,805 2020 185,199 2021 155,846 Total $ 988,330 |
NOTE 11 - INCOME TAXES (Tables)
NOTE 11 - INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | |
Difference between income taxes at effective statutory rate and provision for income taxes | Years Ended December 31, 2015 2014 Income tax benefit at U.S. statutory rate of 34% $ (790,823 ) $ (716,385 ) State income taxes (83,734 ) (75,853 ) Non-deductible expenses 722,740 148,876 Change in valuation allowance 151,817 643,362 Total provision for income tax $ — $ — |
Net deferred tax assets | December 31, 2015 2014 Deferred Tax Assets: Net operating loss carryforward $ 4,602,442 $ 4,413,962 Intangible assets 214,206 250,869 4,816,648 4,664,831 Valuation allowance (4,816,648 ) (4,664,831 ) Net deferred tax assets $ — $ — |
NOTE 13 - STOCKHOLDERS' DEFIC31
NOTE 13 - STOCKHOLDERS' DEFICIT (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Equity [Abstract] | |
Fair Value of Merger | Assets acquired: Cash $ 1,347 Trade name and technology 165,000 Customer relationships 250,000 Goodwill 1,163,816 Total assets 1,580,163 Liabilities assumed: Accounts payable 216,461 Loans payable 748,426 Accrued expenses 35,275 Accrued salary 184,263 Deferred revenue 1,809 Total liabilities 1,186,234 Purchase price $ 393,929 |
Pro Forma Results of Operation | Three Months Ended March 31, Year Ended December 31, 2015 2014 Net Revenues $ 1,107,166 $ 4,603,768 Net Loss (1,338,399 ) (3,049,378 ) Net Loss per Share $ (.02 ) $ (.05 ) |
NOTE 14 - COMMON STOCK PURCHA32
NOTE 14 - COMMON STOCK PURCHASE WARRANTS (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Other Liabilities Disclosure [Abstract] | |
Warrants | December 31, 2015 Number of Warrants Weighted Avg. Exercise Price Remaining Contractual Life (Years) Assumed in merger on April 1, 2015 82,875 $ 4.73 1.6 Warrants issued with debt or debt modifications 585,715 $ .29 4.6 Warrants exchanged for common stock (54,000 ) $ 3.70 Expired (5,250 ) $ 6.67 Outstanding at end of period 609,340 $ .54 4.5 Exercisable at end of period 609,340 $ .54 4.5 |
NOTE 1 - NATURE OF OPERATIONS,
NOTE 1 - NATURE OF OPERATIONS, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFCANT ACCTG POLICIES (Details) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Revenue | Outside of United States [Member] | ||
Concentration of Credit Risk | 1.73% | |
Customer A [Member] | Revenue | ||
Concentration of Credit Risk | 30.00% | 48.00% |
Customer A [Member] | Accounts Receivable | ||
Concentration of Credit Risk | 33.00% | 52.00% |
Customer B [Member] | Revenue | ||
Concentration of Credit Risk | 16.00% | 26.00% |
Customer B [Member] | Accounts Receivable | ||
Concentration of Credit Risk | 28.00% | 18.00% |
Customer C [Member] | Revenue | ||
Concentration of Credit Risk | 16.00% | |
Customer C [Member] | Accounts Receivable | ||
Concentration of Credit Risk | 24.00% | 12.00% |
NOTE 1 - NATURE OF OPERATIONS34
NOTE 1 - NATURE OF OPERATIONS, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFCANT ACCTG POLICIES (Details Narratives) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Number of Warrants Outstanding | 609,340 | |
Number of Shares upon Conversion | 734,047 | |
Product warranty Period | 90 years | |
Increased cost of revenues | $ 604,948 | |
Decreased salaries, wages and contract labor | 355,338 | |
Decreased general and administration expenses | $ 249,610 | |
Patents and Trademarks [Member] | ||
Estimated economic life of the property and equipment | 17 years | |
Maximum [Member] | ||
Estimated economic life of the property and equipment | 5 years | |
Product warranty Period | 36 years | |
Minimum [Member] | ||
Estimated economic life of the property and equipment | 3 years | |
Product warranty Period | 12 years |
NOTE 2 - GOING CONCERN (Details
NOTE 2 - GOING CONCERN (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Going Concern [Abstract] | ||
Net (loss) income | $ 2,325,950 | |
Impairment loss | 1,578,816 | |
Net cash used in operations | 2,116,481 | $ 985,650 |
Working capital deficit | 3,888,273 | |
Stockholders' deficit | 3,758,723 | |
Accumulated deficit | $ 20,951,176 |
NOTE 3 - TRADE ACCOUNTS AND O36
NOTE 3 - TRADE ACCOUNTS AND OTHER RECEIVABLES (Details) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Receivables [Abstract] | ||
Accounts Receivable | $ 452,235 | $ 317,934 |
Allowance for doubtful accounts | ||
Accounts Receivable, Net | $ 452,235 | $ 317,934 |
NOTE 3 - TRADE ACCOUNTS AND O37
NOTE 3 - TRADE ACCOUNTS AND OTHER RECEIVABLES (Details Narrative) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Receivables [Abstract] | ||
Receivable due from Affiliate and Related Bad Debt | $ 0 | $ 0 |
NOTE 4 - PROPERTY AND EQUIPME38
NOTE 4 - PROPERTY AND EQUIPMENT (Details) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Property, Plant and Equipment [Abstract] | ||
Furniture, fixtures and equipment | $ 1,100,658 | $ 976,598 |
Less: Accumulated depreciation | (1,028,114) | (931,715) |
Furniture, fixtures and equipment, Net | $ 72,544 | $ 44,883 |
NOTE 4 - PROPERTY AND EQUIPME39
NOTE 4 - PROPERTY AND EQUIPMENT (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation | $ 38,501 | $ 49,286 |
NOTE 5 - PATENTS AND TRADEMAR40
NOTE 5 - PATENTS AND TRADEMARKS (Details) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Patents And Trademarks [Abstract] | ||
Patents and trademarks | $ 267,135 | $ 256,715 |
Less: Accumulated amortization | (210,129) | (204,219) |
Patents and trademarks, Net | $ 57,006 | $ 52,496 |
NOTE 5 - PATENTS AND TRADEMAR41
NOTE 5 - PATENTS AND TRADEMARKS (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Patents And Trademarks [Abstract] | ||
Amortization of patents | $ 5,910 | $ 5,876 |
NOTE 6 - DEBT (Schedule of Note
NOTE 6 - DEBT (Schedule of Notes Payable - Financing Agreements) (Details) - USD ($) | Dec. 31, 2015 | Sep. 15, 2015 | Apr. 02, 2015 | Feb. 03, 2015 | Dec. 31, 2014 | Dec. 13, 2014 | Sep. 15, 2014 |
Notes Payable, Principal | $ 44,024 | $ 33,055 | |||||
Third Party - Insurance Note 1 [Member] | |||||||
Notes Payable, Principal | $ 21,325 | $ 8,892 | $ 8,892 | ||||
Notes Payable, Interest | 9.75% | 9.95% | |||||
Third Party - Insurance Note 2 [Member] | |||||||
Notes Payable, Principal | $ 11,277 | $ 18,823 | $ 20,376 | $ 28,678 | |||
Notes Payable, Interest | 9.75% | 9.25% | |||||
Third Party - Equipment Financing [Member] | |||||||
Notes Payable, Principal | $ 3,787 | ||||||
Notes Payable, Interest | 13.48% | ||||||
Third Party - Insurance Note 3 [Member] | |||||||
Notes Payable, Principal | $ 111,548 | ||||||
Notes Payable, Interest | 8.66% | ||||||
Third Party - Insurance Note 4 [Member] | |||||||
Notes Payable, Principal | $ 11,422 | $ 65,000 | |||||
Notes Payable, Interest | 8.99% |
NOTE 6 - DEBT (Schedule of No43
NOTE 6 - DEBT (Schedule of Notes Payable - Related Parties) (Details) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Notes Payable - Related Parties, Principal Amount | $ 486,964 | $ 75,000 |
CFO [Member] | ||
Notes Payable - Related Parties, Principal Amount | $ 7,841 | |
Notes Payable - Related Parties, Interest Rate | ||
Shareholder [Member] | ||
Notes Payable - Related Parties, Principal Amount | $ 65,000 | $ 65,000 |
Notes Payable - Related Parties, Interest Rate | 0.75% | 0.75% |
Related Party [Member] | ||
Notes Payable - Related Parties, Principal Amount | $ 17,651 | |
Notes Payable - Related Parties, Interest Rate | 0.67% | |
Related Party [Member] | ||
Notes Payable - Related Parties, Principal Amount | $ 33,615 | |
Notes Payable - Related Parties, Interest Rate | ||
Related Party [Member] | ||
Notes Payable - Related Parties, Principal Amount | $ 36,500 | $ 10,000 |
Notes Payable - Related Parties, Interest Rate | 0.67% | 0.67% |
Related Party [Member] | ||
Notes Payable - Related Parties, Principal Amount | $ 21,170 | |
Notes Payable - Related Parties, Interest Rate | ||
Related Party [Member] | ||
Notes Payable - Related Parties, Principal Amount | $ 11,131 | |
Notes Payable - Related Parties, Interest Rate | 0.67% | |
CFO [Member] | ||
Notes Payable - Related Parties, Principal Amount | ||
Notes Payable - Related Parties, Interest Rate | ||
Shareholder [Member] | ||
Notes Payable - Related Parties, Principal Amount | $ 294,056 | |
Notes Payable - Related Parties, Interest Rate | 0.50% |
NOTE 6 - DEBT (Schedule of No44
NOTE 6 - DEBT (Schedule of Notes Payable - Net of Discounts) (Details) | Dec. 31, 2015USD ($) |
Notes Payable-Net of Discounts, Principal Amount | $ 52,500 |
Notes Payable-Net of Discounts, Interest | |
Vendor [Member] | |
Notes Payable-Net of Discounts, Principal Amount | $ 52,500 |
Notes Payable-Net of Discounts, Interest |
NOTE 6 - DEBT (Schedule of Conv
NOTE 6 - DEBT (Schedule of Convertible Notes Payable) (Details) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Convertible Notes Payable, Principal Amount | $ 241,083 | $ 1,398,370 |
Convertible Notes Payable, Premium | 73,488 | 26,736 |
Principal, net of Discount Including Premium | 338,058 | $ 1,425,106 |
Investor [Member] | ||
Convertible Notes Payable, Principal Amount | $ 19,108 | |
Convertible Notes Payable, Premium | ||
Principal, net of Discount Including Premium | $ 19,108 | |
Vendor [Member] | ||
Convertible Notes Payable, Principal Amount | 50,000 | |
Convertible Notes Payable, Premium | 50,000 | |
Principal, net of Discount Including Premium | 100,000 | |
Shareholder [Member] | ||
Convertible Notes Payable, Principal Amount | $ 125,000 | |
Convertible Notes Payable, Premium | ||
Principal, net of Discount Including Premium | $ 125,000 | |
Investor Group [Member] | ||
Convertible Notes Payable, Principal Amount | $ 1,398,370 | |
Convertible Notes Payable, Premium | 26,736 | |
Principal, net of Discount Including Premium | $ 1,425,106 | |
Shareholder [Member] | ||
Convertible Notes Payable, Principal Amount | $ 46,975 | |
Convertible Notes Payable, Premium | 46,975 | |
Principal, net of Discount Including Premium | $ 93,950 |
NOTE 6 - DEBT (Details Narrativ
NOTE 6 - DEBT (Details Narrative) - USD ($) | Jul. 15, 2016 | Oct. 13, 2015 | Jul. 15, 2015 | Aug. 12, 2011 | Apr. 30, 2015 | May. 31, 2014 | Dec. 31, 2015 | Dec. 23, 2015 | Sep. 30, 2015 | Sep. 15, 2015 | Apr. 02, 2015 | Mar. 30, 2015 | Feb. 03, 2015 | Dec. 31, 2014 | Dec. 13, 2014 | Sep. 15, 2014 |
Notes payable outstanding balance | $ 44,024 | $ 33,055 | ||||||||||||||
Warrant [Member] | ||||||||||||||||
Notes payable outstanding balance | 33,615 | |||||||||||||||
CEO [Member] | ||||||||||||||||
Accrued interest balance | 43,381 | 37,531 | ||||||||||||||
CFO [Member] | ||||||||||||||||
Notes payable outstanding balance | 7,841 | |||||||||||||||
Wife of CEO [Member] | ||||||||||||||||
Notes payable outstanding balance | 36,500 | 10,000 | ||||||||||||||
Accrued interest balance | 3,052 | 842 | ||||||||||||||
Former CEO of ISA [Member] | ||||||||||||||||
Notes payable outstanding balance | 21,170 | |||||||||||||||
Loss on conversion | 35,876 | |||||||||||||||
Shareholder [Member] | ||||||||||||||||
Notes payable outstanding balance | 294,056 | |||||||||||||||
Facility Team [Member] | ||||||||||||||||
Notes payable outstanding balance | 52,500 | |||||||||||||||
Vendor [Member] | ||||||||||||||||
Notes payable outstanding balance | 50,000 | |||||||||||||||
Accrued interest balance | 4,723 | |||||||||||||||
Stockholder [Member] | ||||||||||||||||
Accrued interest balance | 4,578 | |||||||||||||||
Loss on conversion | 55,484 | |||||||||||||||
Holder [Member] | ||||||||||||||||
Accrued interest balance | $ 0 | $ 51 | 7,126 | |||||||||||||
Debenture issued | 10,000 | |||||||||||||||
Unsecured convertible debentures outstanding | 1,398,370 | |||||||||||||||
Principal balance of convertible debenture | $ 1,408,370 | 1,398,370 | ||||||||||||||
Debt Purchase Agreement [Member] | ||||||||||||||||
Notes payable outstanding balance | 93,950 | |||||||||||||||
Accrued interest balance | 4,228 | |||||||||||||||
Premium | 46,975 | |||||||||||||||
Third Party - Insurance Note 1 [Member] | ||||||||||||||||
Monthly installments of principal and interest | $ 930 | |||||||||||||||
Interest rate | 9.95% | |||||||||||||||
Notes payable outstanding balance | 21,325 | 8,892 | $ 8,892 | |||||||||||||
Renewal of of notes payable | $ 21,325 | |||||||||||||||
Third Party - Insurance Note 2 [Member] | ||||||||||||||||
Monthly installments of principal and interest | $ 3,001 | |||||||||||||||
Interest rate | 9.75% | 9.25% | ||||||||||||||
Notes payable outstanding balance | 11,277 | $ 18,823 | $ 20,376 | $ 28,678 | ||||||||||||
Third Party - Insurance Note 2 [Member] | Computer Equipment [Member] | ||||||||||||||||
Monthly installments of principal and interest | $ 1,917 | $ 947 | ||||||||||||||
Interest rate | 13.48% | |||||||||||||||
Issuance of notes payable to vendor | $ 40,729 | |||||||||||||||
Buy-out option | $ 11,364 | |||||||||||||||
Third Party - Insurance Note 2 [Member] | Subsequent Event [Member] | ||||||||||||||||
Monthly installments of principal and interest | $ 1,678 | |||||||||||||||
Third Party - Insurance Note 3 [Member] | ||||||||||||||||
Monthly installments of principal and interest | $ 9,803 | |||||||||||||||
Interest rate | 8.66% | |||||||||||||||
Notes payable outstanding balance | $ 111,548 | |||||||||||||||
Third Party - Insurance Note 4 [Member] | ||||||||||||||||
Monthly installments of principal and interest | $ 5,775 | |||||||||||||||
Interest rate | 8.99% | |||||||||||||||
Notes payable outstanding balance | $ 11,422 | $ 65,000 |
NOTE 7 - LINE OF CREDIT (Detail
NOTE 7 - LINE OF CREDIT (Details Narrative) - USD ($) | Dec. 31, 2015 | Apr. 02, 2015 | Dec. 31, 2014 |
Line of Credit - Wells Fargo Bank | $ 40,216 | $ 40,000 | |
Interest Rate | 10.00% | ||
Prime Rate [Member] | |||
Interest Rate | 8.00% |
NOTE 8 - CONTRACT ACCOUNTING (S
NOTE 8 - CONTRACT ACCOUNTING (Schedule of costs and estimated earnings) (Details) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Contract Accounting [Abstract] | ||
Costs and estimated earnings recognized | $ 2,322,836 | $ 990,799 |
Less: Billings or cash received | (1,901,720) | (772,490) |
Costs and estimated earnings in excess of billings on uncompleted contracts | $ 421,116 | $ 218,309 |
NOTE 8 - CONTRACT ACCOUNTING 49
NOTE 8 - CONTRACT ACCOUNTING (Schedule of billings in excess of costs and estimated earnings) (Details) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Contract Accounting [Abstract] | ||
Billings and/or cash receipts on uncompleted contracts | $ 1,146,804 | $ 394,517 |
Less: Costs and estimated earnings recognized | (843,740) | (240,734) |
Billings in excess of costs and estimated earnings on uncompleted contracts | $ 303,064 | $ 153,783 |
NOTE 9 - DEFERRED COMPENSATION
NOTE 9 - DEFERRED COMPENSATION (Details Narrative) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Compensation Related Costs [Abstract] | ||
Accrued deferred compensation | $ 776,428 | $ 552,582 |
NOTE 10 - COMMITMENTS AND CON51
NOTE 10 - COMMITMENTS AND CONTINGENCIES (Schedule of Rent Expense) (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Total Operating Leases rent expense | $ 12,578 | $ 17,838 |
Purchase Power [Member] | ||
Total Operating Leases rent expense | 710 | 710 |
Coffee Perks/A. Antique Coffee Services [Member] | ||
Total Operating Leases rent expense | 300 | 325 |
Canon [Member] | ||
Total Operating Leases rent expense | $ 11,569 | 12,567 |
NFS Leasing [Member] | ||
Total Operating Leases rent expense | $ 4,236 |
NOTE 10 - COMMITMENTS AND CON52
NOTE 10 - COMMITMENTS AND CONTINGENCIES (Schedule of Future Minimum Lease Payments) (Details) | Dec. 31, 2015USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
2,016 | $ 123,429 |
2,017 | 169,483 |
2,018 | 174,568 |
2,019 | 179,805 |
2,020 | 185,199 |
2,021 | 155,846 |
Total | $ 988,330 |
NOTE 10 - COMMITMENTS AND CON53
NOTE 10 - COMMITMENTS AND CONTINGENCIES (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | 12 Months Ended | |
Aug. 31, 2011 | Dec. 31, 2015 | Dec. 31, 2015 | Dec. 31, 2014 | |
Accumulated depreciation | $ 1,028,114 | $ 1,028,114 | $ 931,715 | |
Depreciation expense | 44,411 | 55,162 | ||
Rental expense | $ 12,578 | 17,838 | ||
Operating leases expiry period | 3 years | |||
Non-cash gain | 861,650 | |||
Contingent lawsuit payable | 550,000 | $ 550,000 | 1,411,650 | |
Delinquent payroll tax payable | 244,470 | 244,470 | 571,560 | |
Delinquent portion | 296,215 | 296,215 | 600,181 | |
Facility Team [Member] | ||||
Settlement amount | 60,000 | |||
Agreement balance | 52,500 | 52,500 | ||
Jacksonville, Florida [Member] | ||||
Rental expense | 142,593 | 142,091 | ||
Monthly lease payment | 14,179 | |||
Computer Equipment Lease [Member] | ||||
Capitalized cost | $ 52,653 | |||
Accumulated depreciation | $ 52,653 | 52,653 | 52,653 | |
Depreciation expense | $ 0 | $ 3,545 |
NOTE 11 - INCOME TAXES (Schedul
NOTE 11 - INCOME TAXES (Schedule of provision for income taxes) (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Income Tax Disclosure [Abstract] | ||
Income tax benefit at U.S. statutory rate of 34% | $ (790,823) | $ (716,385) |
State income taxes | (83,734) | (75,853) |
Non-deductible expenses | 722,740 | 148,876 |
Change in valuation allowance | $ 151,817 | $ 643,362 |
Total provision for income tax |
NOTE 11 - INCOME TAXES (Sched55
NOTE 11 - INCOME TAXES (Schedule of deferred tax assets) (Details) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Income Tax Disclosure [Abstract] | ||
Net operating loss carryforward | $ 4,602,442 | $ 4,413,962 |
Intangible assets | 214,206 | 250,869 |
Gross deferred tax assets | 4,816,648 | 4,664,831 |
Valuation allowance | $ (4,816,648) | $ (4,664,831) |
Net deferred tax assets |
NOTE 11 - INCOME TAXES (Details
NOTE 11 - INCOME TAXES (Details Narrative) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Income Tax Disclosure [Abstract] | ||
Net operating loss carry forward | $ 12,240,000 | $ 11,739,000 |
Increase in the valuation allowance | $ 151,817 |
NOTE 12 - RELATED PARTIES (Deta
NOTE 12 - RELATED PARTIES (Details Narrative) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Notes and loans payable to related parties | $ 486,964 | $ 75,000 |
Unpaid interest | 47,959 | 38,373 |
Due to the former parent | 30,070 | 53,122 |
Due to an affiliate for services | 30,070 | 53,122 |
Administrative Services Agreement [Member] | ||
Due to the former parent | $ 5,173 | $ 19,897 |
NOTE 13 - STOCKHOLDERS' DEFIC58
NOTE 13 - STOCKHOLDERS' DEFICIT (Schedule of fair value of assets acquired and liabilities assumed) (Details) - USD ($) | Dec. 31, 2015 | Apr. 02, 2015 |
Assets acquired: | ||
Cash | $ 1,347 | |
Trade name and technology | 165,000 | |
Customer relationships | 250,000 | |
Goodwill | 1,163,816 | |
Total assets | 1,580,163 | $ 1,578,816 |
Liabilities assumed: | ||
Accounts payable | 216,461 | |
Loans payable | 748,426 | |
Accrued expenses | 35,275 | |
Accrued salary | 184,263 | |
Deferred revenue | 1,809 | |
Total liabilities | 1,186,234 | |
Purchase price | $ 393,929 |
NOTE 13 - STOCKHOLDERS' DEFIC59
NOTE 13 - STOCKHOLDERS' DEFICIT (Schedule of unaudited pro forma consolidated results of oprations) (Details) - USD ($) | 3 Months Ended | 12 Months Ended |
Dec. 31, 2015 | Dec. 31, 2014 | |
Equity [Abstract] | ||
Net Revenues | $ 1,107,166 | $ 4,603,768 |
Net Loss | $ (1,338,399) | $ (3,049,378) |
Net Loss per Share | $ (.02) | $ (.05) |
NOTE 13 - STOCKHOLDERS' DEFIC60
NOTE 13 - STOCKHOLDERS' DEFICIT (Details Narrative) - USD ($) | 12 Months Ended | |||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2015 | Apr. 02, 2015 | |
Subsidiary shares | 60,000,000 | |||
Enterprise valuation | $ 19,350,000 | |||
Percent owned by shareholders | 2.00% | |||
Purchase price | $ 393,929 | |||
Value of assets and liabilities acquired | $ 1,580,163 | 1,578,816 | ||
Allocated for trade name and technology | 165,000 | |||
Allocated for exsisting customer relationship | 250,000 | |||
Allocated for Goodwill | $ 1,163,816 | |||
Issued shares to subsidiary sharholders | 1,246,870 | |||
Incurred acquisition costs | $ 36,718 | $ 75,489 | ||
Issuance of common stock in exchange for convertible note and accrued interest | 166,667 | |||
Issuance of common stock in exchange for convertible note and accrued interest, amount | $ 50,000 | |||
Conversion price | $ 0.30 | |||
Professional Fees [Member] | ||||
Incurred acquisition costs | 16,425 | $ 31,812 | ||
Salaries, Wages and Contract Labor [Member] | ||||
Incurred acquisition costs | 10,000 | 35,000 | ||
General and Administrative Expenses [Member] | ||||
Incurred acquisition costs | 10,293 | $ 8,677 | ||
Series A Convertible Preferred Stock [Member] | ||||
Dividends recognized | $ 536,376 | $ 536,376 |
NOTE 14 - COMMON STOCK PURCHA61
NOTE 14 - COMMON STOCK PURCHASE WARRANTS (Schedule of activity of warrants) (Details) - $ / shares | 9 Months Ended | 12 Months Ended |
Dec. 31, 2015 | Dec. 31, 2015 | |
Number of Warrants | ||
Expired | (5,250) | |
Warrant [Member] | ||
Number of Warrants | ||
Assumed in merger on April 1, 2015 | 82,875 | |
Warrants issued with debt or debt modifications | 585,715 | |
Warrants exchanged for common stock | (54,000) | |
Expired | (5,250) | |
Outstanding at end of period | 609,340 | 609,340 |
Exercisable at end of period | 609,340 | 609,340 |
Weighted Avg. Exercise Price | ||
Assumed in merger on April 1, 2015 | $ 4.73 | |
Warrants issued with debt or debt modifications | 0.29 | |
Warrants exchanged for common stock | 3.70 | |
Expired | 6.67 | |
Outstanding at end of period | .54 | $ .54 |
Exercisable at end of period | $ .54 | $ .54 |
Remaining Contractual Life (Years) | ||
Assumed in merger on April 1, 2015 | 1 year 7 months 6 days | |
Warrants issued with debt or debt modifications | 4 years 7 months 6 days | |
Outstanding at end of period | 4 years 6 months | |
Exercisable at end of period | 4 years 6 months |
NOTE 14 - COMMON STOCK PURCHA62
NOTE 14 - COMMON STOCK PURCHASE WARRANTS (Details Narrative) | 12 Months Ended |
Dec. 31, 2015USD ($)shares | |
Other Liabilities Disclosure [Abstract] | |
Warrantes issued for debt extension | 501,201 |
Warrants issued with debt and warrants | 28,571 |
Warrants issued with debt | 55,943 |
Warrants exchanged | 54,000 |
Common shares issued | 34,350 |
Loss on settlement charged to operations | $ | $ 3,082 |
Warrants expired | 5,250 |
NOTE 15 - SUBSEQUENT EVENTS (De
NOTE 15 - SUBSEQUENT EVENTS (Details) - USD ($) | Mar. 08, 2016 | Feb. 05, 2016 | Jan. 06, 2016 | Jan. 28, 2016 | Jan. 24, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Jan. 27, 2016 | Jan. 22, 2016 |
Rental expense operating lease monthly rent | $ 12,578 | $ 17,838 | |||||||
Subsequent Event [Member] | |||||||||
Common stock issued in exchange of warrants | 2,100 | ||||||||
Subsequent Event [Member] | Agreement with Investment Banker [Member] | |||||||||
General financial advisory and investment banking services per month | $ 10,000 | ||||||||
Term of agreement | 6 months | ||||||||
Shares issued to investment banker, vested shares | 912,000 | ||||||||
Warrants issued to purchase common stock | 302,000 | ||||||||
Strike price | $ 0.30 | ||||||||
Expiration period | 5 years | ||||||||
Subsequent Event [Member] | Wife of CEO [Member] | |||||||||
Proceeds from loan | $ 20,000 | ||||||||
Annual percentage rate | 8.00% | ||||||||
Subsequent Event [Member] | Consultant [Member] | |||||||||
Financing from third party through consultant | $ 1,500,000 | ||||||||
Equity to third party | $ 90,000 | ||||||||
Restricted common stock granted to consultant | 20,000 | ||||||||
Additional shares to be granted after completion of agreement | 30,000 | ||||||||
Consideration payable for advisory services, non-refundable | $ 5,000 | ||||||||
Consideration payable upon completion of any transaction | $ 5,000 | ||||||||
Subsequent Event [Member] | CFO [Member] | |||||||||
Proceeds from loan | $ 29,990 | ||||||||
Annual percentage rate | 8.00% | ||||||||
Subsequent Event [Member] | Private Placement [Member] | |||||||||
Strike price | $ 0.35 | ||||||||
Expiration period | 5 years | ||||||||
Senior secured notes offering amount | $ 1,800,000 | ||||||||
Senior secured and warrant exercisable securities, shares | 2,500,000 | ||||||||
Maturity period | 3 years | ||||||||
Accrued interest rate | 14.00% | ||||||||
Additional accrued interest rate | 2.00% | ||||||||
Payment of the cash fee | $ 5,000 | ||||||||
Term execution | 15 days | ||||||||
Fixed closing fee | $ 137,000 | ||||||||
Debt funding | $ 1,800,000 | ||||||||
Strike price | $ 0.40 | ||||||||
Warrants issued | 200,000 | ||||||||
Relative fair value of warrants recorded | $ 460,000 | ||||||||
Subsequent Event [Member] | Operating Lease [Member] | |||||||||
Rental expense operating lease monthly rent | $ 14,816 | ||||||||
Operating lease beginning date | May 1, 2017 | ||||||||
Operating lease expiring date | Oct. 31, 2021 | ||||||||
Annual escalation of rent, percentage | 3.00% |