Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2016 | Mar. 29, 2017 | Jun. 30, 2016 | |
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, 2016 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Is Entity a Well-known Seasoned Issuer | No | ||
Is Entity a Voluntary Filer | No | ||
Is Entity's Reporting Status Current | Yes | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Public Float | $ 8,500,000 | ||
Entity Common Stock, Shares Outstanding | 66,220,698 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2,016 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
CURRENT ASSETS: | ||
Cash | $ 174,376 | $ 140,129 |
Accounts receivable | 256,989 | 452,235 |
Costs and estimated earnings in excess of billings on uncompleted contracts | 476,673 | 421,116 |
Prepaid expenses and other current assets | 135,964 | 165,095 |
Total Current Assets | 1,044,002 | 1,178,575 |
Property and Equipment, net | 66,491 | 72,544 |
OTHER ASSETS: | ||
Patents and trademarks, net | 51,423 | 57,006 |
Total Other Assets | 51,423 | 57,006 |
TOTAL ASSETS | 1,161,916 | 1,308,125 |
CURRENT LIABILITIES: | ||
Accounts payable | 842,787 | 1,014,711 |
Accounts payable - related parties | 40,136 | 30,070 |
Commercial insurance/office equipment financing | 46,368 | 44,024 |
Notes payable - related parties | 577,716 | 486,964 |
Notes payable | 87,210 | 196,608 |
Convertible notes payable, including premiums | 193,950 | 193,950 |
Warrant derivative liability | 793,099 | |
Line of credit | 38,019 | 40,216 |
Payroll taxes payable | 444,476 | 296,215 |
Accrued expenses | 1,218,105 | 1,002,820 |
Billings in excess of costs and estimated earnings on uncompleted contracts | 219,625 | 303,064 |
Deferred revenue | 675,171 | 908,206 |
Contingent lawsuit payable | 550,000 | |
Total Current Liabilities | 5,176,662 | 5,066,848 |
Notes payable, net of discounts | 1,206,522 | |
Total Liabilities | 6,383,184 | 5,066,848 |
Series A redeemable convertible cumulative preferred stock, $10 stated value per share, 500,000 shares designated, 29,600 shares issued and outstanding at December 31, 2016 ($301,920 liquidation value) | 301,920 | |
Commitments and Contingencies (Note 10) | ||
STOCKHOLDERS' DEFICIT: | ||
Preferred stock, $0.001 par value, 10,000,000 authorized, 9,500,000 available to be designated | ||
Common stock: $0.001 par value; 500,000,000 shares authorized 66,220,698 and 64,777,621 shares issued and outstanding at December 31, 2016 and December 31, 2015, respectively | 66,221 | 64,778 |
Additional paid-in capital | 18,077,300 | 17,127,675 |
Total paid-in-capital | 18,143,521 | 17,192,453 |
Accumulated deficit | (23,518,709) | (20,951,176) |
Sub-total | (5,375,188) | (3,758,723) |
Less: Treasury stock (114,793 shares of common stock) | (148,000) | |
Total Stockholders' Deficit | (5,523,188) | (3,758,723) |
Total Liabilities and Stockholders' Deficit | $ 1,161,916 | $ 1,308,125 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Statement of Financial Position [Abstract] | ||
Series A redeemable convertible cumulative preferred stock, stated value per share | $ 10 | |
Series A redeemable convertible cumulative preferred stock, shares designated | 500,000 | |
Series A redeemable convertible cumulative preferred stock, shares issued | 29,600 | |
Series A redeemable convertible cumulative preferred stock, shares outstanding | 29,600 | |
Series A redeemable convertible cumulative preferred stock, liquidation value | $ 301,920 | |
Preferred stock, par value | $ 0.001 | $ .001 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, available to be designated | 9,500,000 | 9,500,000 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 500,000,000 | 500,000,000 |
Common stock, shares issued | 66,220,698 | 64,777,621 |
Common stock, shares outstanding | 66,220,698 | 64,777,621 |
Treasury stock shares | 114,793 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
REVENUES: | ||
Project | $ 3,200,182 | $ 3,758,653 |
Maintenance and technical support | 2,230,633 | 2,481,183 |
IT asset management services | 674,078 | 527,927 |
Total Revenues | 6,104,893 | 6,767,763 |
COST OF REVENUES: | ||
Project | 1,580,665 | 2,051,969 |
Maintenance and technical support | 785,872 | 958,995 |
IT asset management services | 365,914 | 185,212 |
Total Cost of Revenues | 2,732,451 | 3,196,176 |
GROSS PROFIT | 3,372,442 | 3,571,587 |
OPERATING EXPENSES: | ||
Selling and marketing expenses | 278,264 | 254,083 |
Salaries, wages and contract labor | 3,370,191 | 2,586,735 |
Research and development | 271,950 | 216,806 |
Professional Fees | 306,458 | 256,111 |
General and administrative expenses | 889,685 | 906,344 |
Impairment loss on intangible assets and goodwill acquired | 1,578,816 | |
Total Operating Expenses | 5,116,548 | 5,798,895 |
LOSS FROM OPERATIONS | (1,744,106) | (2,227,308) |
OTHER INCOME (EXPENSES): | ||
Interest expense | (561,174) | (744,343) |
Loss on settlement of debt | (216,271) | |
Warrant derivative gain (loss) | (264,099) | |
Other income, net | 7,766 | 861,973 |
Total Other Income (Expense) | (817,507) | (98,641) |
NET LOSS | (2,561,613) | (2,325,950) |
Series A preferred stock dividends | (5,920) | |
Net loss applicable to common stock | $ (2,567,533) | $ (2,325,950) |
NET LOSS APPLICABLE TO COMMON STOCK PER COMMON SHARE: | ||
Basic & Diluted | $ (0.04) | $ (0.04) |
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: | ||
Basic & Diluted | 65,925,944 | 61,250,974 |
STATEMENTS OF CHANGES IN STOCKH
STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT - USD ($) | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Treasury Stock | Total |
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 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 | ||||
Common stock issued upon conversion of convertible debt | |||||
Common stock issued for services | $ 1,441 | 349,659 | 351,100 | ||
Common stock issued for services, shares | 1,440,977 | ||||
Exchange of warrants for common stock | $ 2 | 628 | 630 | ||
Exchange of warrants for common stock, shares | 2,100 | ||||
Warrants issued for services | 90,036 | 90,036 | |||
Warrants issued with debt | 509,303 | 509,303 | |||
Common stock repurchased | (148,000) | (148,000) | |||
Series A preferred stock dividends | (5,920) | (5,920) | |||
Net Loss | (2,561,613) | (2,561,613) | |||
Balance at Dec. 31, 2016 | $ 66,221 | $ 18,077,300 | $ (23,518,709) | $ (148,000) | $ (5,523,188) |
Balance, shares at Dec. 31, 2016 | 66,220,698 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Cash from operating activities: | ||
Net Loss | $ (2,561,613) | $ (2,325,950) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 47,051 | 44,411 |
Gain on settlement of accounts payable/note conversion | (27,194) | |
Stock and warrants issued for services | 90,036 | 58,775 |
Amortization of debt discounts | 243,427 | |
Loss on settlement of debt | 243,465 | |
Amortization of stock based prepaid consulting fees | 351,100 | 41,126 |
Loss related to warrants exchanged for stock | 630 | 3,082 |
Impairment loss | 1,578,816 | |
Warrant derivative loss | 264,099 | |
Changes in assets and liabilities: | ||
Accounts receivable | 195,246 | (134,301) |
Costs and estimated earnings on uncompleted contracts | (55,557) | (202,807) |
Prepaid expenses and other current assets | 252,282 | (35,526) |
Accounts payable | (221,379) | (657,920) |
Accounts payable-related party | 10,066 | (23,052) |
Payroll taxes payable | 148,261 | (303,966) |
Accrued expenses | 262,535 | 294,117 |
Contingent lawsuit liability | (550,000) | (861,650) |
Billings in excess of costs and earnings on uncompleted contracts | (83,439) | 149,281 |
Deferred revenue | (233,035) | 42,812 |
Net cash used in operating activities | (1,840,290) | (2,116,481) |
Cash flows from investing activities: | ||
Cash acquired in acquisition | 1,346 | |
Purchase of patents/trademarks | (70) | (10,420) |
Purchase of fixed assets | (35,345) | (66,162) |
Net cash used in investing activities | (35,415) | (75,236) |
Cash flows from financing activities: | ||
Proceeds from issuance of series A preferred stock | 296,000 | |
Proceeds from borrowings under convertible notes and other debt | 1,730,772 | |
Proceeds from bank line of credit | 40,216 | |
Repurchase common stock | (148,000) | |
Proceeds from related party notes | 221,570 | 464,464 |
Repayments of related party notes | (130,818) | |
Proceeds (repayments) of insurance and equipment financing | (220,800) | 10,959 |
Repayments of notes payable | (155,000) | |
Proceeds of notes payable, net of $358,263 cash fees | 2,047,000 | |
Net cash provided by financing activities | 1,909,952 | 2,246,411 |
Net decrease in cash | 34,247 | 54,694 |
Cash, beginning of period | 140,129 | 85,435 |
Cash, end of period | 174,376 | 140,129 |
Supplemental Disclosure of Cash Flow Information: | ||
Interest paid | 245,134 | 59,398 |
Taxes paid | 10,149 | 3,136 |
Supplemental Non-Cash Investing and Financing Activities: | ||
Common stock issued upon conversion of convertible debt | 2,258,071 | |
Common stock issued for prepaid consulting services | 351,100 | |
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 | 791,303 | 30,722 |
Note issued for financing of insurance premiums | 223,154 | |
Accrued dividends | 5,920 | |
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 intangible assets | $ 1,578,816 |
CONSOLIDATED STATEMENTS OF CAS7
CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) | 12 Months Ended |
Dec. 31, 2016USD ($) | |
Statement of Cash Flows [Abstract] | |
Cash fees | $ 358,263 |
NOTE 1 - NATURE OF OPERATIONS A
NOTE 1 - NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2016 | |
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 POLICIES Nature of Operations Duos Technologies Group, Inc. (Company), through its operating subsidiary Duos Technologies, Inc. (duostech) 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. duostechs IP is built upon two of its core technology platforms (praes i ® t i ® t The Companys strategy includes expansion of its technology base through organic development efforts, strategic partnerships, and growth through strategic acquisitions. duostechs 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 a wholly owned subsidiary of Information Systems Associates, Inc., a Florida corporation (ISA), which became effective as of April 1, 2015 and as a result of which duostech became a wholly owned subsidiary of the merged entity. The merger was followed by a corporate name change to Duos Technologies Group, Inc., a symbol change from IOSA to DUOT and up-listing from OTC Pink to OTCQB. ISAs 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. ISA 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 consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, duostech and TrueVue 360, Inc. All 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 consolidated financial statements include the allowance on accounts receivable, valuation of deferred tax assets, valuation of assets acquired and liabilities assumed in business combinations, valuation of intangible and other long-lived assets, estimates of percentage completion on projects and related revenues, valuation of stock-based compensation, valuation of derivatives, 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, 2016 or 2015. Concentrations Cash Concentrations Cash is 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, 2016 and 2015. Significant Customers and Concentration of Credit Risk Major Customers and Accounts Receivable The Company had certain customers whose revenue individually represented 10% or more of the Companys total revenue, or whose accounts receivable balances individually represented 10% or more of the Companys total accounts receivable, as follows: Geographic Concentration Approximately 20.89% and 1.73% of revenue in 2016 and 2015, respectively, is generated from customers outside of the United States. Derivative Instruments ASC Topic 815, Derivatives and Hedging 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. 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. 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 shorter of the term of our lease or their useful lives. 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 the preliminary project stage along with post-implementation stages of internal use computer software are expensed as incurred. Costs incurred to maintain existing product offerings are expensed as incurred. Patents and Trademarks Patents and trademarks which are stated at amortized cost, relate to the development of video surveillance security system technology and are being amortized over 17 years. Long-Lived Assets The Company evaluates the recoverability of its property, equipment, and other long-lived assets in accordance with FASB ASC 360-10-35-15 Impairment or Disposal of Long-Lived Assets, which requires recognition of impairment of long-lived assets in the event the net book value of such assets exceed the estimated future undiscounted cash flows attributable to such assets or the business to which such intangible assets relate. This guidance requires that long-lived assets and certain identifiable intangibles be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. Accrual of Legal Costs Associated with Loss Contingencies The Company expenses legal costs associated with loss contingencies, as incurred. Product Warranties The Company has a 90 day warranty period for materials and labor after final acceptance of all projects. If any parts are defective they are replaced under our vendor warranty which is usually 12-36 months. Final acceptance terms vary by customer. Some customers have a cure period for any material deviation and if the Company fails or is unable to correct any deviations, a full refund of all payments made by the customer will be arranged by the Company. As of December 31, 2016 and 2015, management considers all final acceptance terms have been met; therefore no accrual of warranty reserves has been made. Loan Costs Loan costs paid to lenders or third-parties are recorded as debt discounts to the related loans and amortized to interest expense over the loan term. Sales Returns Liabilities Our systems are sold as integrated systems and there are no sales returns allowed. 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 Companys IT asset management business generates revenues from three sources: (1) Professional Services (consulting and 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) For all periods reflected in 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 its 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 that are not accounted for under the percentage of completion method. Advertising The Company expenses the cost of advertising. During the years ended December 31, 2016 and 2015, there were no advertising costs. Share-Based Compensation Stock-based compensation is accounted for in accordance with the Share-Based Payment Topic of ASC 718 which requires recognition in the financial statements of the cost of employee and director services received in exchange for an award of equity instruments over the shorter of the period the employee or director is required to perform the services in exchange for the award or the vesting period. The ASC also requires measurement of the cost of employee and director services received in exchange for an award based on the grant-date fair value of the award. Pursuant to ASC Topic 505-50, for share-based payments to consultants and other third-parties, compensation expense is determined at the measurement date. The expense is recognized over the service period of the award. Until the measurement date is reached, the total amount of compensation expense remains uncertain. The Company initially records compensation expense based on the fair value of the award at the reporting date. 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, 2016, 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 2013, 2014 and 2015 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, convertible preferred stock or other common stock equivalents. Potentially dilutive securities are excluded from the computation if their effect is anti-dilutive. At December 31, 2016 and 2015, outstanding warrants to purchase an aggregate of 24,858,346 and 609,340, respectively, shares of common stock and 4,294,730 and 734,047, respectively, shares of common stock issuable upon conversion of convertible debt and at December 31, 2016, 1,677,333 shares issuable upon conversion of Series A preferred stock 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 segment. Reclassifications Certain amounts in the 2015 balance sheet have been reclassified from accounts payable to accrued expenses to conform to the 2016 presentation. This reclassification increased accrued expenses in 2015 by $47,250 and decreased accounts payable by the same amount. Recent Issued Accounting Standards In August 2015, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2015-14 Revenue from Contracts with Customers. The ASU defers the effective date of previously issued ASU 2014-09 (the new revenue recognition standard) by one year for both public and private companies. The ASU requires public entities to apply the new revenue recognition guidance for annual reporting periods beginning after December 15, 2017, and interim reporting periods within annual reporting periods beginning after December 15, 2017. Both public and nonpublic entities will be permitted to apply the new revenue recognition standard as of the original effective date for public entities (annual periods beginning after December 15, 2016). The Company plans to adopt this standard for their fiscal year beginning January 1, 2018. The Company is in the process of analyzing the impacts of this ASU, but does not believe it will have a material impact on its consolidated financial statements. In February 2016, the Financial Accounting Standards Board issued Accounting Standards Update No. 2016-02: Leases (Topic 842) In March 2016, the FASB issued Accounting Standards Update No. 2016-09: "Compensation Stock Compensation (Topic 718) - I |
NOTE 2 - GOING CONCERN
NOTE 2 - GOING CONCERN | 12 Months Ended |
Dec. 31, 2016 | |
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 $2,561,613 in 2016. During the same period, cash used in operating activities was $1,840,290. The working capital deficit, stockholders deficit and accumulated deficit as of December 31, 2016 were $4,132,660, $5,523,188 and $23,518,709. These matters raise substantial doubt about the Companys ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Companys ability to further implement its business plan, raise additional capital and become profitable. Management embarked on a business growth strategy in 2014 to engage with private companies in or related to its market space with the intention of a merger or acquisition. In April 2015, the Company completed a reverse triangular merger whereby duostech became a wholly owned subsidiary of the Company. The two companies are now integrated and the merged company continues to grow its business in all of the markets where they have previously operated. On December 20, 2016, the Company signed a Securities Purchase Agreement and Promissory Note in the aggregate principal amount of up to $2,500,000 of which $575,000 was remitted by the investor upon signing. The Company can draw further amounts upon achieving certain milestones related to a planned registered raise of at least $10M. Concurrently, the Company signed an investment banking engagement for the purposes of raising sufficient capital, expected to be $10M, to fund the Companys working capital deficit and provide sufficient funding to further the Companys growth objectives. (See Note 18). While no assurance can be provided, management believes that these actions provide the opportunity for the Company to continue as a going concern and to grow its business and achieve profitability. Ultimately however, the continuation of the Company as a going concern is dependent upon the ability of the Company to execute the plan described above, generate sufficient revenue and to attain profitable operations. These consolidated financial statements do not include any adjustments related 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 _ ACCOUNTS RECEIVABLE
NOTE 3 – ACCOUNTS RECEIVABLE | 12 Months Ended |
Dec. 31, 2016 | |
Trade Accounts And Other Receivables [Abstract] | |
NOTE 3 - ACCOUNTS RECEIVABLE | NOTE 3 ACCOUNTS RECEIVABLE Accounts receivable were as follows at December 31, 2016 and 2015: 2016 2015 Accounts Receivable $ 256,989 $ 452,235 Allowance for doubtful accounts $ 256,989 $ 452,235 There was bad debt expense related to accounts receivable of $70,248 and $0 in 2016 and 2015, respectively. |
NOTE 4 - PROPERTY AND EQUIPMENT
NOTE 4 - PROPERTY AND EQUIPMENT | 12 Months Ended |
Dec. 31, 2016 | |
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, 2016 and 2015: 2016 2015 Furniture, fixtures and equipment $ 1,136,003 $ 1,100,658 Less: Accumulated depreciation (1,069,512 ) (1,028,114 ) $ 66,491 $ 72,544 Total depreciation in 2016 and 2015 was $41,398 and $38,501, respectively. |
NOTE 5 - PATENTS AND TRADEMARKS
NOTE 5 - PATENTS AND TRADEMARKS | 12 Months Ended |
Dec. 31, 2016 | |
Patents And Trademarks [Abstract] | |
NOTE 5 - PATENTS AND TRADEMARKS | NOTE 5 PATENTS AND TRADEMARKS 2016 2015 Patents and trademarks $ 267,205 $ 267,135 Less: Accumulated amortization (215,782 ) (210,129 ) $ 51,423 $ 57,006 Total amortization of patents in 2016 and 2015 was $5,653 and $5,910 respectively. |
NOTE 6 - DEBT
NOTE 6 - DEBT | 12 Months Ended |
Dec. 31, 2016 | |
Debt Disclosure [Abstract] | |
NOTE 6 - DEBT | NOTE 6 DEBT Notes Payable - Financing Agreements The Companys notes payable relating to financing agreements classified as current liabilities consist of the following as of December 31, 2016 and 2015: December 31, 2016 December 31, 2015 Notes Payable Principal Interest Principal Interest Third Party - Insurance Note 1 $ 25,075 9.75 % $ 21,325 9.75 % Third Party - Insurance Note 2 9,861 10.00 % 11,277 9.75 % Third Party - Insurance Note 3 8.05 % 8.66 % Third Party - Insurance Note 4 11,432 9.24 % 11,422 8.99 % Total $ 46,368 $ 44,024 The Company entered into an agreement on December 23, 2015 with its insurance provider by executing an $21,325 note payable (Insurance Note 1) issued to purchase an insurance policy, secured by that policy with an annual interest rate of 9.75% payable in monthly installments of principal and interest totaling $2,229 through October 23, 2016. The policy was renewed December 23, 2016 with a $25,075 note payable. The Company entered into an agreement on September 15, 2015 with its insurance provider by executing a $18,823 note payable (Insurance Note 2) issued to purchase an insurance policy, secured by that policy with an annual interest rate of 9.75% payable in monthly installments of principal and interest totaling $1,678 through July 15, 2016. The policy was renewed September 15, 2016 with an $19,065 note payable and annual interest rate of 10% payable in monthly installments of principal and interest totaling $1,702 through June 30, 2017. At December 31, 2016 and 2015, the note payable balance was $9,861 and $11,277, respectively. The Company entered into an agreement on February 3, 2016 with its insurance provider by executing an $123,571 note payable (Insurance Note 3) issued to purchase an insurance policy, secured by that policy with an annual interest rate of 8.05% payable in monthly installments of principal and interest totaling $12,818 through December 3, 2017. A similar note was entered into on February 3, 2015. At December 31, 2016 and 2015, the note payable balance was zero. The Company entered into an agreement on April 1, 2016 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 9.24% payable in monthly installments of principal and interest totaling $5,782 through February 1, 2017. A similar note was issued on April 1, 2015 and paid off by March 31, 2016. At December 31, 2016 and 2015, the note payable balance was $11,432 and $11,422, respectively. Notes Payable - Related Parties The Companys notes payable to related parties classified as current liabilities consist of the following as of December 31, 2016 and 2015: December 31, 2016 December 31, 2015 Notes Payable Principal Interest Principal Interest Shareholder $ 65,000 9 % $ 65,000 9 % Related party 13,369 8 % 17,651 8 % Related party 10,504 33,615 Related party 56,500 8 % 36,500 8 % Related Party 3,170 21,170 Related Party 8,431 8 % 11,131 8 % CFO 31,973 8 % 7,841 Shareholder 226,936 6 % 294,056 6 % CEO 56,614 8 % Shareholder 105,219 8 % Total $ 577,716 $ 486,964 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 9% per annum. There was an accrued interest balance of $49,231 and $43,381 as of December 31, 2016 and December 31, 2015, 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 18% per annum. 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 8% per annum and monthly payments of $1,535 commencing January 15, 2016. The Company made payments during the first quarter of 2016 in the amount of $4,282 and will resume payments in the second quarter of 2017. As of December 31, 2016, the loan had an outstanding amount of $13,369 and there was an accrued interest balance of $802. 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 30% per annum. 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 Companys 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 five-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, 2016 and 2015, the balance was $10,504 and $33,615, respectively. 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, March 3, 2015 and September 30, 2015 the wife of the CEO loaned the Company an additional $12,000, $5,000 and $9,500 respectively. On January 24, 2016, an additional $20,000 was loaned to the Company. The total principal due at December 31, 2016 and 2015 was $56,500 and $36,500, respectively. There was accrued interest balance of $7,474 and $3,052 as of December 31, 2016 and 2015, 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, 2016 and 2015, the loan had an outstanding balance of $3,170 and $21,170, respectively. 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 30% per annum was restructured into a note due on or before December 15, 2016 for a total of $11,131 principal balance, accruing interest at 8% per annum and monthly payments of $968 commencing January 15, 2016. The Company made payments during the first quarter of 2016 in the amount of $2,700 and will resume payments in the second quarter of 2017. As of December 31, 2016 and 2015, the loan had an outstanding balance of $8,431 and $11,131, respectively, and there was an accrued interest balance of $506 at December 31, 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 which is included in the interest expense balance of $744,343 for 2015. 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 Companys 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. On January 28, 2016, the CFO loaned the Company $30,000, accruing interest at 8% per annum which is repayable by the Company when sufficient funds are available. At December 31, 2016 and 2015, the outstanding loan balance was $31,973 and $7,841, respectively. 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, 2016, the Company is nine payments in arrears and the outstanding balance was $226,936. The outstanding balance at December 31, 2015 was $294,056. On July 19, 2016, the Company received a $60,000 loan less fees of $75 for a related party loan with proceeds of $59,925 from the Companys CEO. The promissory note carries an annual interest rate of 7.99% with a monthly installment payment of $1,052 through July 19, 2022. As of December 31, 2016, the outstanding balance was $56,614. On August 11, 2016, the Company received an $111,645 loan from a related party principal shareholder. The note accrues interest at the rate of 8% per annum and is repayable on or before February 11, 2017. As of December 31, 2016, the outstanding balance was $105,219. Notes Payable December 31, 2016 December 31, 2015 Payable To Principal Interest Principal Interest Shareholder $ 19,108 $ 19,108 Shareholder 125,000 .67% Vendor 22,500 52,500 Total $ 41,608 $ 196,608 Upon the consummation of the merger on April 1, 2015, the Company assumed a 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 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 was 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 Companys 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 convert $81,250 of the $165,000 outstanding note to 506,421 shares of the Companys common stock 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. The Company recorded a loss on conversion in the amount of $55,484 which is included in the interest expense balance of $744,343 for 2015. The note was repaid on April 1, 2016 including the accrued interest of $7,078. At December 31, 2016 and 2015, the accrued interest was zero and $4,578, respectively. 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 agreed to pay to FacilityTeam $2,500 per month starting October 1, 2015 for 24 months and, pursuant thereto, took a charge in the third quarter of 2015 for the settlement amount of $60,000. At December 31, 2016 and 2015, the outstanding balance was $22,500 and $52,500, respectively. Convertible Notes, Including Premiums December 31, 2016 December 31, 2015 Payable To Principal Premium Principal, Including Premium Principal Premium Principal, Including Premium Vendor $ 50,000 $ 50,000 $ 100,000 $ 50,000 $ 50,000 $ 100,000 Vendor 46,975 46,975 93,950 46,975 46,975 93,950 Total $ 96,975 $ 96,975 $ 193,950 $ 96,975 $ 96,975 $ 193,950 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 Companys common stock at a 50% discount to the average closing bid prices for the companys common stock for the five days immediately preceding the conversion date. An interest payment was made on January 11, 2016 in the amount of $3,230. The outstanding note balance at December 31, 2016 and 2015 was $50,000 and $50,000, respectively and accrued interest on December 31, 2016 and 2015 was $7,511 and $4,723, respectively. As previously disclosed, on May 23, 2016, the Company filed a lawsuit against, the holder of this note and another convertible note described below. The Company owes the principal and interest due under the notes and has sought to pay principal and interest of the note which first came due but its offer was rejected. Payment was made on March 7, 2017. (see Note 18) 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 providing 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 Companys common stock at a 50% discount to the average price of the Companys common stock for the five trading days preceding conversion 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 each of December 31, 2016 and 2015, the outstanding balance on the note was $93,950 which includes the $46,975 premium and there was accrued interest on December 31, 2016 and 2015 of $12,682 and $4,228, respectively. During the previous quarter, the new holder attempted a conversion into stock of a portion of the note. The Company determined that the conversion notice was invalid in several respects and rejected the conversion. As previously disclosed, on May 23, 2016, the Company filed a lawsuit against, the holder of this note and another convertible note described above. The Company owes the principal and interest due under the notes and has sought to pay principal and interest of the note which first came due but its offer was rejected. Payment was made on March 7, 2017. (see Note 18) Notes Payable Third Parties December 31, 2016 December 31, 2015 Payable To Principal Less Unamortized Discounts Principal, Less Unamortized Discounts Principal Less Unamortized Discounts Principal, Less Unamortized Discounts Note 1-non-current $ 1,800,000 $ 593,478 $ 1,206,522 $ $ $ Note 2-current 605,263 559,661 45,602 Total $ 2,405,263 $ 1,153,139 $ 1,252,124 $ $ $ Note 1 On March 31, 2016, the Company entered into a Securities Purchase Agreement with an institutional investor, which, together with the transaction documents referenced therein, provides for the terms in the following paragraph. The Company closed the Offering on April 1, 2016. The offering amount was $1,800,000 less a 5% original issue discount. The note is a senior debt obligation 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 is not convertible into the Companys 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 for 2.5 million shares of common stock exercisable for five years at an exercise price of $0.35 per share. The warrants also contain certain anti-dilution 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 $466,031 was recorded as a debt discount and is being 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 agents 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 an exercise price of $0.40 per share and valued at their fair value of $43,272. Other closing expenses totaled $40,000 plus another $10,000 of legal fees previously paid. Total cash issue costs of $192,000, the original issue discount of $90,000, the warrant relative fair value of $466,031 and warrant fair value of $43,272 were recorded as debt discounts to be amortized over the three-year term of the debt. Net proceeds were $1,518,000 after all issue costs. Additionally, at closing, certain previously recorded obligations of the Company totaling $690,110, as discussed below, were paid directly from the lender reducing the actual proceeds to the Company. On April 1, 2016, in conjunction with the closing of the aforementioned Securities Purchase Agreement, the sum of $558,032 was remitted out of the proceeds in final settlement of the litigation with CW Electric. This amount consisted of $550,000 of the agreed settlement, which was previously accrued as of December 31, 2015, plus $8,032 of accrued interest. This represents full and final settlement of this matter, which is now closed. On April 1, 2016, the Company directed the sum of $132,078 to be paid out of proceeds of the Securities Purchase agreement to a shareholder who held a note secured against part of the Companys assets. The payment of $125,000 in principal and $7,078 of accrued interest represents full payment of the note and the noteholder no longer holds any security against the assets. On April 1, 2016, the Company made a payment of $142,000 (part of the $192,000 discussed above) to a placement agent as compensation for arrangement of financing through the aforementioned Securities Purchase Agreement. The payment was deducted from proceeds of that agreement. As discussed above, the Company also issued 200,000 three-year warrants with an exercise price of $0.40 to the agent as additional compensation. These amounts are broadly in line with the anticipated compensation agreed within the original placement agency agreement which was terminated in December, 2015. Note 2 On December 20, 2016, the Company entered into a Securities Purchase Agreement (the "Purchase Agreement") with JMJ Financial, ("JMJ," and together with the Company, the "Parties") and borrowed an initial principal amount of $605,263 from the total available as discussed below. Pursuant to the Purchase Agreement, JMJ purchased from the Company (i) a Promissory Note in the aggregate principal amount of up to $2,500,000 (the "Note") for consideration of up to $2,350,000 net of an original issue discount of 5%, due and payable on the earlier of May 15, 2017 or the third business day after the closing of the Public Offering (as defined therein), and (ii) a Common Stock Purchase Warrant (the "Warrant") to purchase 4,035,086 shares of the Company's common stock ("Common Stock") at an exercise price per share equal to the lesser of (i) 80% of the per share price of the Common Stock in the Company's contemplated public offering of securities (the "Public Offering"), (ii) $0.15 per share, (iii) the lowest daily closing price of the Common Stock during the ten days prior to the Public Offering (subject to adjustment), (iv) the lowest daily closing price of the Common Stock during the ten days prior to the Maturity Date (subject to adjustment), (v) 80% of the unit price in the Public Offering (if applicable), or (vi) 80% of the exercise price of any warrants issued in the Public Offering. Additionally, pursuant to the Purchase Agreement, the Company will issue JMJ shares of Common Stock equal to 30% of the principal sum of the Note ("Origination Shares") on the 5th trading day after the pricing of the Public Offering, but in no event later than May 30, 2017. The number of Origination Shares will equal the principal sum of the Note divided by the lowest of (i) the lowest daily closing price of the Common Stock during the ten days prior to delivery of the Origination Shares or during the ten days prior to the date of the Public Offering (in each case subject to adjustment for stock splits), (ii) 80% of the common stock offering price of the Public Offering, (iii) 80% of the unit price offering price of the Public Offering (if applicable), or (iv) 80% of the exercise price of any warrants issued in the Public Offering. Cash closing expenses totaled $46,000 to the private placement agent. The Company also issued warrants for 322,807 common stock to the placement agent with the same terms as the lender warrants. Total cash issue costs of $46,000, the original issue discount of $30,263 and a discount relating to the warrants of $529,000 were recorded as debt discounts to be amortized over the 146-day term of the debt. Net proceeds were $529,000 after all issue costs. The Company previously paid and expensed legal fees of $28,750 and paid an advance retainer of $50,000 to a law firm for future work relating to the planned public offering which is recorded as a prepaid asset at December 31, 2016. |
NOTE 7 - LINE OF CREDIT
NOTE 7 - LINE OF CREDIT | 12 Months Ended |
Dec. 31, 2016 | |
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, 2016 and 2015, was $38,019 and $40,216, respectively, including accrued interest. This line of credit has no maturity date. The annual interest rate is the Prime Rate plus 8% (10.25% at December 31, 2016). The former CEO of ISA is the personal guarantor. |
NOTE 8 - CONTRACT ACCOUNTING
NOTE 8 - CONTRACT ACCOUNTING | 12 Months Ended |
Dec. 31, 2016 | |
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, 2016 and 2015, costs and estimated earnings in excess of billings on uncompleted contracts consisted of the following: 2016 2015 Costs and estimated earnings recognized $ 2,631,315 $ 2,322,836 Less: Billings or cash received (2,154,642 ) (1,901,720 ) Costs and estimated earnings in excess of billings on uncompleted contracts $ 476,673 $ 421,116 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, 2016 and 2015, billings in excess of costs and estimated earnings on uncompleted contracts consisted of the following: 2016 2015 Billings and/or cash receipts on uncompleted contracts $ 396,609 $ 1,146,804 Less: Costs and estimated earnings recognized (176,984 ) (843,740 ) Billings in excess of costs and estimated earnings on uncompleted contracts $ 219,625 $ 303,064 |
NOTE 9 - DEFERRED COMPENSATION
NOTE 9 - DEFERRED COMPENSATION | 12 Months Ended |
Dec. 31, 2016 | |
Compensation Related Costs [Abstract] | |
NOTE 9 - DEFERRED COMPENSATION | NOTE 9 DEFERRED COMPENSATION As of December 31, 2016 and 2015, the Company has accrued $894,217 and $776,428, respectively, of deferred compensation relating to the individual agreements, which are included in the accompanying consolidated 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, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
NOTE 10 - COMMITMENTS AND CONTINGENCIES | NOTE 10 COMMITMENTS AND CONTINGENCIES Operating Leases The Company has several non-cancelable operating leases, primarily for equipment, that expire over the next year. 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 2016 and 2015 was $12,457 and $12,578, respectively. Year Ended December 31, 2016 2015 Purchase Power $ 588 $ 710 Coffee Perks/A. Antique Coffee Services 300 300 Canon 11,569 11,569 Total Operating Leases rent expense $ 12,457 $ 12,578 The Company has an operating lease agreement, through the former parent, for office space located in Jacksonville, Florida that expired on April 30, 2016. 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. Minimum rent payments under this lease are recognized on a straight-line basis over the term of the lease. The current monthly lease payment is $14,179. Rental expense for the office lease during 2016 and 2015 was $171,513 and $142,593, respectively. The following is a schedule of future minimum lease payments for non-cancelable operating leases are as follows: 2017 169,483 2018 174,568 2019 179,805 2020 185,199 2021 155,846 Total $ 864,901 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. 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 Companys 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. These advisory fee payments will be accrued and deferred for payment until the earlier of 1) closing of a 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 issued to the investment banker 912,000 vested shares of the Companys common stock as of the execution date of this agreement. In addition, the Company issued warrants for the purchase of 302,000 shares of the Companys common stock. The warrants shall have a five-year term and an exercise price of $0.30. (see Notes 14 and 15) 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 was 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 May 5, 2016, the Company cancelled the agreement due to lack of performance with the consultant who was to provide advisory services for an initial period of six months. The Company paid an initial amount of $2,500 and no further compensation will be paid. No shares of common stock were issued in connection with this agreement. On May 13, 2016, the Company entered into an agreement with a consultant in the business of providing services for management consulting, business advisory, shareholder information and public relations for a period of three months. During the Term of this Agreement, the Company will pay to the Consultant the sum of $3,000 per month. The Company may accrue monthly fees without payment to the consultant until the company closes a qualified financing other than the first months retainer. Upon signing, the Company issued to the Consultant 125,000 shares of the Companys restricted common stock for a total purchase price of $100 and recorded $27,400 as a prepaid asset to be amortized over the three-month term. The Company amortized $27,400 to expense as of December 31, 2016. As of August 14, 2016, the agreement had expired and was not renewed in writing by the parties as called for in the agreement. The Company continues to work with the Principal on certain potential funding arrangements that were started (but not consummated) during the period in which the contract was in effect. On September 1, 2016, the Company entered into an agreement with a registered investment broker, for the purposes of securing interim and long-term funding for the Company. During the ninety-day term of this agreement, the Company was to pay the broker $50,000, certain travel expenses, plus 7% cash fee of the aggregate principle amount raised on a qualified financing. The Company has paid an initial amount of $6,500 to the broker and the broker sent materials to qualified investors. The Company has cancelled the agreement effective December 27, 2016 and the initial fee of $6,500 was refunded to the Company on February 1, 2017. Litigation 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 Companys agreement to pay the Settlement Amount, was signed by the parties (the Agreed Judgment) and such document deposited into escrow with CW Electrics 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 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, duostechs counsel informed CW Electrics counsel that on February 5, 2016, Duos executed a term sheet with an investment fund which will, among other things, provide the funding for the settlement with C.W. Electric. At the time, Duos and the lender believed that the closing would take place during or prior to the second week in March. Consequently, Duos requested that C.W. Electric refrain from filing and/or executing on the Agreed Judgment attached to the Settlement Agreement until after the closing, as they were in the final stretches of obtaining the funding necessary to resolve this matter. CW Electrics counsel agreed to an extension and following the filing of a respective joint motion, the District Court for the Eastern District of Kentucky entered an order of continuance until March 20, 2016 and further extended until April 20, 2016. Payment was made in full upon the closing of the loan dated April 1, 2016. A contingent lawsuit payable of $550,000 was reflected at March 31, 2016 and December 31, 2015 in the Companys consolidated financial statements. On April 1, 2016, CW has released the Company, duostech and affiliates from any action that could have been brought in the suit. 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. On December 12, 2016, the Company was notified that it was in breach of settlement with a previous vendor, FacilityTeam based in in Ontario, Canada alleging failure to make payments against that settlement. On December 28, 2016 the Company subsequently agreed to a modified payment schedule as part of a post judgement settlement for the amounts still outstanding. The final payment was made on March 7, 2017. (see Note 18) On May 12, 2016, in Broward County, Florida, the holder of two convertible notes entered into in March and June 2015 in the amount of $50,000 and $46,975 respectively sued the company alleging that the Company was in default for not making scheduled principal and interest payment and failing to convert a portion of the notes into the Companys common stock. As previously reported, on May 23, 2016, we filed a lawsuit in Broward County, Florida against, Greentree Financial Group, Inc., the holder of $96,975 aggregate principal amount of our convertible notes. The suit alleges, amongst other things, that the officers and directors of Greentree that entered into the notes, failed to disclose legal facts with respect to their personal conduct in the past, which, had the Company known, would have made it unlikely that such transaction would have been consummated. The Company owes the principal and interest due under the notes and sought to pay principal and interest of the note which first came due, but its offer was rejected. Delinquent Payroll Taxes Payable As reported previously, the Company has a delinquent payroll tax payable at December 31, 2016 and 2015 in the amount of $400,076 and $244,470, respectively. The delinquent portion is included in the payroll taxes payable balance of $444,476 and $296,215, respectively, as shown on the Companys consolidated balance sheet. The IRS has accepted the Companys offer of a monthly installment agreement in the amount of $25,000 commencing March 28, 2016. |
NOTE 11 - INCOME TAXES
NOTE 11 - INCOME TAXES | 12 Months Ended |
Dec. 31, 2016 | |
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, 2016 and 2015 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, 2016 and 2015 were as follows: Years Ended December 31, 2016 2015 Income tax benefit at U.S. statutory rate of 34% $ (870,948 ) $ (790,823 ) State income taxes (92,218 ) (83,734 ) Non-deductible expenses 356,674 722,740 Change in valuation allowance 606,492 151,817 Total provision for income tax $ $ The Companys approximate net deferred tax assets as of December 31, 2016 and 2015 were as follows: December 31, 2016 2015 Deferred Tax Assets: Net operating loss carryforward $ 5,241,802 $ 4,602,442 Intangible assets 181,338 215,206 5,423,140 4,816,648 Valuation allowance (5,423,140 ) 4,816,648 ) Net deferred tax assets $ $ The net operating loss carryforward was approximately $13,941,000 and $12,240,000 at December 31, 2016 and 2015, respectively. The Company provided a valuation allowance equal to the deferred income tax assets at December 31, 2016 and 2015 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 $606,492 in 2016. The potential tax benefit arising from the loss carryforward will expire in years through 2036. 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 Companys 2016, 2015 and 2014 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, 2016 | |
Related Party Transactions [Abstract] | |
NOTE 12 - RELATED PARTIES | NOTE 12 RELATED PARTIES Notes, Loans and Accounts Payable As of December 31, 2016 and 2015 there were various notes and loans payable to related parties totaling $577,715 and $486,964, respectively, with related unpaid interest of $62,959 and $47,959 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 $40,136 and $30,070 at December 31, 2016 and 2015, 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, 2016 and 2015 and we will not incur any additional fees going forward. At December 31, 2016 and 2015, $0 and $5,173, respectively, were due to the former parent under this agreement which is included in Accounts payable - related parties. |
NOTE 13 _ SERIES A REDEEMABLE C
NOTE 13 – SERIES A REDEEMABLE CONVERTIBLE CUMLATIVE PREFERRED STOCK | 12 Months Ended |
Dec. 31, 2016 | |
Note 13 Series Redeemable Convertible Cumlative Preferred Stock | |
SERIES A REDEEMABLE CONVERTIBLE CUMLATIVE PREFERRED STOCK | NOTE 13 SERIES A REDEEMABLE CONVERTIBLE CUMLATIVE PREFERRED STOCK Our board of directors has designated 500,000 of the 10,000,000 authorized shares of preferred stock as Series A Convertible Preferred Stock. In September through October 2016, the Company sold 29,600 shares of Series A Convertible Preferred Stock for cash proceeds equal to the state value of $296,000. Accrued cumulative dividends were $5,920 as of December 31, 2016. The total redemption value was $301,920 at December 31, 2016. Rank. Conversion. Liquidation Preference. Voting Rights. Dividends. Certain Adjustments. Redemption. The Series A convertible preferred stock has been reflected as temporary equity at its redemption value on the accompanying consolidated balance sheet because of its redemption feature. |
NOTE 14 - STOCKHOLDERS' DEFICIT
NOTE 14 - STOCKHOLDERS' DEFICIT | 12 Months Ended |
Dec. 31, 2016 | |
Equity [Abstract] | |
NOTE 14 - STOCKHOLDERS' DEFICIT | NOTE 14 STOCKHOLDERS DEFICIT 2016 Equity Plan On March 11, 2016, the Board adopted the plan and the shareholders approved the plan during the annual shareholders meeting on April 21, 2016. On May 27, 2016, the Company filed a registration statement for the securities planned to be issued under the plan which became effective at that date. The 2016 Equity Incentive Plan (the 2016 Plan) provides for the issuance of up to 8,000,000 shares of our common stock. The purpose of the Plan is to assist the Company in attracting and retaining key employees, directors and consultants and to provide incentives to such individuals to align their interests with those of our stockholders. Administration The 2016 Plan is administered by the Compensation Committee of the Board, which currently consists of two members of the Board, each of whom is a non-employee director within the meaning of Rule 16b-3 promulgated under the Exchange Act and an outside director within the meaning of Code Section 162(m). Among other things, the compensation committee has complete discretion, subject to the express limits of the 2016 Plan, to determine the directors, employees and nonemployee consultants to be granted an award, the type of award to be granted the terms and conditions of the award, the form of payment to be made and/or the number of shares of common stock subject to each award, the exercise price of each option and base price of each stock appreciation right (SAR), the term of each award, the vesting schedule for an award, whether to accelerate vesting, the value of the common stock underlying the award, and the required withholding, if any. The Compensation Committee may amend, modify or terminate any outstanding award, provided that the participants consent to such action is required if the action would impair the participants rights or entitlements with respect to that award. The Compensation Committee is also authorized to construe the award agreements, and may prescribe rules relating to the 2016 Plan. Notwithstanding the foregoing, the compensation committee does not have any authority to grant or modify an award under the 2016 Plan with terms or conditions that would cause the grant, vesting or exercise thereof to be considered nonqualified deferred compensation subject to Code Section 409A. Grant of Awards; Shares Available for Awards The 2016 Plan provides for the grant of stock options, SARs, performance share awards, performance unit awards, distribution equivalent right awards, restricted stock awards, restricted stock unit awards and unrestricted stock awards to non-employee directors, officers, employees and nonemployee consultants of the Company or its affiliates. We have reserved a total of 8 million shares of common stock for issuance as or under awards to be made under the 2016 Plan. If any award expires, is cancelled, or terminates unexercised or is forfeited, the number of shares subject thereto is again available for grant under the 2016 Plan. Currently, there are eleven identified employees (including two executive officers and directors), three non-employee directors, and up to thirty other current or future staff members who would be entitled to receive stock options and/or shares of restricted stock under the 2016 Plan. Future new hires and additional non-employee directors and/or consultants would be eligible to participate in the 2016 Plan as well. Stock Options The 2016 Plan provides for either incentive stock options (ISOs), which are intended to meet the requirements for special federal income tax treatment under the Code, or nonqualified stock options (NQSOs); the stockholders approved the 2016 Plan at the annual meeting as previously described. Stock options may be granted on such terms and conditions as the compensation committee may determine; provided, however, that the per share exercise price under a stock option may not be less than the fair market value of a share of the Companys common stock on the date of grant and the term of the stock option may not exceed 10 years (110% of such value and five years in the case of an ISO granted to an employee who owns (or is deemed to own) more than 10% of the total combined voting power of all classes of capital stock of our company or a parent or subsidiary of our company). ISOs may only be granted to employees. In addition, the aggregate fair market value of our common stock covered by one or more ISOs (determined at the time of grant) which are exercisable for the first time by an employee during any calendar year may not exceed $100,000. Any excess is treated as a NQSO. Stock Appreciation Rights A SAR entitles the participant, upon exercise, to receive an amount, in cash or stock or a combination thereof, equal to the increase in the fair market value of the underlying common stock between the date of grant and the date of exercise. SARs may be granted in tandem with, or independently of, stock options granted under the 2016 Plan. A SAR granted in tandem with a stock option (i) is exercisable only at such times, and to the extent, that the related stock option is exercisable in accordance with the procedure for exercise of the related stock option; (ii) terminates upon termination or exercise of the related stock option (likewise, the common stock option granted in tandem with a SAR terminates upon exercise of the SAR); (iii) is transferable only with the related stock option; and (iv) if the related stock option is an ISO, may be exercised only when the value of the stock subject to the stock option exceeds the exercise price of the stock option. A SAR that is not granted in tandem with a stock option is exercisable at such times as the compensation committee may specify. Performance Shares and Performance Unit Awards Performance share and performance unit awards entitle the participant to receive cash or shares of our common stock upon the attainment of specified performance goals. In the case of performance units, the right to acquire the units is denominated in cash values. Restricted Stock Awards and Restricted Stock Unit Awards A restricted stock award is a grant or sale of common stock to the participant, subject to our right to repurchase all or part of the shares at their purchase price (or to require forfeiture of such shares if issued to the participant at no cost) in the event that conditions specified by the compensation committee in the award are not satisfied prior to the end of the time period during which the shares subject to the award may be repurchased by or forfeited to us. Our restricted stock unit entitles the participant to receive a cash payment equal to the fair market value of a share of common stock for each restricted stock unit subject to such restricted stock unit award, if the participant satisfies the applicable vesting requirement. Unrestricted Stock Awards An unrestricted stock award is a grant or sale of shares of our common stock to the participant that is not subject to transfer, forfeiture or other restrictions, in consideration for past services rendered to the Company or an affiliate or for other valid consideration. Amendment and Termination The compensation committee may adopt, amend and rescind rules relating to the administration of the 2016 Plan, and amend, suspend or terminate the 2016 Plan, but no such amendment or termination will be made that materially and adversely impairs the rights of any participant with respect to any award received thereby under the 2016 Plan without the participants consent, other than amendments that are necessary to permit the granting of awards in compliance with applicable laws. We have attempted to structure the 2016 Plan so that remuneration attributable to stock options and other awards will not be subject to the deduction limitation contained in Code Section 162(m). 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 and 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 Companys 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. 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 Companys 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. These 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 Companys common stock valued at $273,600 based on the quoted trading price of $0.30 per share as of the execution date of this agreement. In addition, the Company has issued warrants for the purchase of 302,000 shares of the Companys common stock. The warrants have a five-year term and an exercise price of $0.30. The Company had accrued $60,000 during 2016 which was unpaid and was recorded in accrued expenses on the Companys consolidated balance sheet. In December 2016, the Company terminated the agreement and the accrued expenses of $60,000 was reversed and the 302,000 warrants were cancelled. As these warrants were fully vested at the date of grant, the Company has charged $90,036 to consulting expense. On January 22, 2016, Warrant Holders were granted 2,100 shares of common stock in exchange for existing 5,250 warrants resulting in a loss on settlement of $630 charged to operations. The Company issued 403,977 shares of common stock for consulting services rendered valued at the quoted trading price on the respective grant dates resulting in consulting expense of $50,000 in the year ended December 31, 2016. On May 13, 2016, the Company issued 125,000 shares of common stock for consulting services valued at the quoted trading price on the grant date resulting in prepaid consulting expense of $27,400 and was amortized over the three-month agreement term. Treasury Stock In August 2016, the Companys Board of Directors approved a new class of Preferred Stock, Series A (see Note 13). For shareholders who invested in previous private placements, the Company was offering on a case by case basis, the ability to convert the existing amount invested into an equivalent amount in the Series A on the condition that they invest an equivalent additional amount in the Series A. As of December, 2016, four of the companys shareholders sold 114,793 of their common shares back to the Company in exchange for Series A preferred stock valued at $148,000. 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 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. |
NOTE 15 - COMMON STOCK PURCHASE
NOTE 15 - COMMON STOCK PURCHASE WARRANTS | 12 Months Ended |
Dec. 31, 2016 | |
Other Liabilities Disclosure [Abstract] | |
NOTE 15 - COMMON STOCK PURCHASE WARRANTS | NOTE 15 COMMON STOCK PURCHASE WARRANTS Warrants The following is a summary of activity for warrants to purchase common stock for the year ended December 31, 2016: December 31, 2016 Number of Warrants Weighted Avg. Exercise Price Remaining Contractual Life (Years) Outstanding at the beginning of the year 609,340 $ .54 4.5 Warrants expired, forfeited or cancelled (307,250 ) .41 Warrants issued with debt, debt modifications or services 7,359,893 .23 4.6 Warrants exchanged for common stock (5,250 ) 6.67 Outstanding at end of period 7,656,733 .24 4.6 Exercisable at end of period 7,656,733 $ .24 4.6 On April 1, 2016, the Company issued a warrant exercisable into 2.5 million shares with a term of five years and exercise price of $0.35 per share in conjunction with a Securities Purchase Agreement. The Warrants also contain certain anti-dilution 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 $466,031 was recorded as a debt discount and additional paid in capital and will be amortized to interest expense over the term of the debt. On April 1, 2016, the Company issued three-year warrants for 200,000 common shares with an exercise price of $0.40 to the placement agent as additional compensation for arrangement of financing through the Securities Purchase Agreement. The fair value of the warrants of $43,272 was recorded as a discount and will be amortized to interest expense over the term of the debt. In the first quarter of 2016, 5,250 warrants were exchanged for 2,100 common shares resulting in a loss on exchange of $630 charged to operations. During the same period, 1,500 warrants expired. In the second quarter of 2016, 3,750 warrants expired. During 2016, an additional 4,659,893 warrants were issued with the Securities Purchase Agreements and the amended Placement Agent Agreements. In December of 2016, 302,000 warrants were cancelled. |
NOTE 16 _ DERIVATIVE FINANCIAL
NOTE 16 – DERIVATIVE FINANCIAL INSTRUMENTS | 12 Months Ended |
Dec. 31, 2016 | |
Note 16 Derivative Financial Instruments | |
NOTE 16 - DERIVATIVE FINANCIAL INSTRUMENTS | NOTE 16 DERIVATIVE FINANCIAL INSTRUMENTS The Company applies the provisions of ASC Topic 815-40, Contracts in Entitys Own Equity (ASC Topic 815-40), under which convertible instruments and warrants, which contain terms that protect holders from declines in the stock price (reset provisions), may not be exempt from derivative accounting treatment. As a result, the warrants are initially recorded as a liability at fair value and are revalued at fair value at each reporting date. During the year ended December 31, 2016, the company issued 4,357,893 warrants in connection with a debt financing of $605,263. The warrants are for a five-year term, are exercisable initially at $0.15 per share and carry a re-pricing feature in the event that the stock price declines prior to repayment of the underlying debt instrument. The warrants were valued on the issuance date at $746,980, of which $529,000 was recorded as a debt discount and $217,980 was charged to derivative gain (loss). The Company calculated the estimated fair values of the liabilities for warrant derivative instruments at December 31, 2016 and at the warrant issuance date of December 20, 2016 with the Black Scholes Pricing Model (BSM) option pricing model and Monte Carlo simulations using the closing price of the Companys common stock of $0.038 and the ranges for volatility, expected term and risk free interest indicated below that follows (BSM inputs only). The Monte Carlo simulations were used to determine a range of expected volatilities and the implied volatility used was determined with a correlation to the highest probability results from that simulation. Thus, for the year ended December 31, 2016, the Company recognized a loss from the change in derivative liability of $46,119 in warrant derivative gain (loss) related to the warrant derivative instruments. BSM Inputs Warrants As of December 20, 2016 As of December 31, 2016 Expected Volatility 144% 144% Expected Remaining Term 5.00 years 4.97 years Risk Free Interest Rate 2.04% 2.04% |
NOTE 17 _ FAIR VALUE MEASUREMEN
NOTE 17 – FAIR VALUE MEASUREMENTS | 12 Months Ended |
Dec. 31, 2016 | |
Note 17 Fair Value Measurements | |
NOTE 17 - FAIR VALUE MEASUREMENTS | NOTE 17 FAIR VALUE MEASUREMENTS We currently measure and report at fair value the liability for warrant derivative instruments. The fair value liabilities for price adjustable warrants have been recorded as determined utilizing the BSM option pricing model and Monte Carlo simulations (see Note 16). The following tables summarize our financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2016: Balance at December 31, 2016 Quoted Prices in Active Markets for Identical Assets Significant Other Observable Inputs Significant Unobservable Inputs (Level 1) (Level 2) (Level 3) Liabilities: Fair value of liability for warrant derivative instruments $ 793,099 $ $ $ 793,099 The following is a roll forward through December 31, 2016 of the fair value liability of warrant derivative instruments: Fair Value of Liability for Warrant Derivative Instruments Balance at December 31, 2015 $ Initial fair value of warrant liability included in expense ($217,980) and debt discount ($529,000) 746,980 Change in fair value included in other (income) expense 46,119 Balance at December 31, 2016 $ 793,099 |
NOTE 18 - SUBSEQUENT EVENTS
NOTE 18 - SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2016 | |
Subsequent Events [Abstract] | |
NOTE 18 - SUBSEQUENT EVENTS | NOTE 18 SUBSEQUENT EVENTS On January 19, 2017, the Company executed a settlement agreement with Greentree Financial Group resolving a pending lawsuit concerning two convertible notes (the Notes) that were entered into in March and June of 2015. The settlement calls for payment of $150,000 due 45 days from the signing and resolves all outstanding obligations related to the Notes. Payment was made on March 7, 2017 in the amount of $150,194 and the court signed a final order of dismissal on March 24, 2017. The Company will record an additional $194 in interest expense and a gain on settlement in the amount of $53,870. On January 20, 2017, the Company filed a 14A for a special shareholders meeting that was held on February 23, 2017. The shareholder meeting considered one action which was a planned corporate action for a reverse split of the Companys common stock. The shareholders approved the Company taking such action in an amount ranging from 1 for 5 through 1 for 500. On January 23, 2017, the Company filed an S-1 registration statement for an equity offering of $10M. On January 25, 2017, the Company borrowed an additional $157,895 and received a net amount of $130,500 representing the second draw against the Promissory Note agreement with JMJ Financial. Warrants in the amount of 1,052,632 were issued as per the agreement. On February 8, 2017, the Company borrowed an additional $105,263 and received a net amount of $87,000 representing the third draw against the Promissory Note agreement with JMJ Financial Warrants in the amount of 701,753 were issued as per the agreement. On or about February 15, 2017, the Company received a Notice of Filing of Complaint of Discrimination filed by an employee that had been released for insubordination. The Company feels that after the initial investigation is completed by the Florida Commission on Human Relations, there will be no action taken against the Company. On February 27, 2017, the Company borrowed an additional $263,158 and received a net amount of $217,500 representing the fourth draw against the Promissory Note agreement with JMJ Financial. Warrants in the amount of 1,754,386 were issued as per the agreement. On March 6, 2017, the Company borrowed an additional $157,895 and received a net amount of $130,500 representing the fifth draw against the Promissory Note agreement with JMJ Financial. Warrants in the amount of 1,052,632 were issued as per the agreement. On March 6, 2017, the Company filed a request with FINRA to perform a reverse split in the amount of 1 for 35. The Company will decide an effective date after approval from FINRA. On March 7, 2017, the Company made a final payment in the amount of $6,325 to settle an outstanding matter with FacilityTeam and the matter is now considered paid in full and closed. On March 14, 2017, the Company borrowed an additional $263,158 and received a net amount of $217,500 representing the sixth draw against the Promissory Note agreement with JMJ Financial. Warrants in the amount of 1,754,386 were issued as per the agreement. |
NOTE 1 - NATURE OF OPERATIONS26
NOTE 1 - NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Nature of Operartions | Nature of Operations Duos Technologies Group, Inc. (Company), through its operating subsidiary Duos Technologies, Inc. (duostech) 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. duostechs IP is built upon two of its core technology platforms (praes i ® t i ® t The Companys strategy includes expansion of its technology base through organic development efforts, strategic partnerships, and growth through strategic acquisitions. duostechs 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 a wholly owned subsidiary of Information Systems Associates, Inc., a Florida corporation (ISA), which became effective as of April 1, 2015 and as a result of which duostech became a wholly owned subsidiary of the merged entity. The merger was followed by a corporate name change to Duos Technologies Group, Inc., a symbol change from IOSA to DUOT and up-listing from OTC Pink to OTCQB. ISAs 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. ISA 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 consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, duostech and TrueVue 360, Inc. All 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 consolidated financial statements include the allowance on accounts receivable, valuation of deferred tax assets, valuation of assets acquired and liabilities assumed in business combinations, valuation of intangible and other long-lived assets, estimates of percentage completion on projects and related revenues, valuation of stock-based compensation, valuation of derivatives, 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, 2016 or 2015. |
Concentrations | Concentrations Cash Concentrations Cash is 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, 2016 and 2015. Significant Customers and Concentration of Credit Risk Major Customers and Accounts Receivable The Company had certain customers whose revenue individually represented 10% or more of the Companys total revenue, or whose accounts receivable balances individually represented 10% or more of the Companys total accounts receivable, as follows: Geographic Concentration Approximately 20.89% and 1.73% of revenue in 2016 and 2015, respectively, is generated from customers outside of the United States. |
Derivative Instruments | Derivative Instruments ASC Topic 815, Derivatives and Hedging The Company uses a Monte Carlo based simulation model to compute the fair value of its embedded derivative instruments. Some of the more significant inputs to our fair value model that, if changed, might produce a significantly higher or lower fair value measurement of the Companys derivative liabilities include the expected volatility, expected term and the stock price on the valuation date. |
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. |
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. |
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 shorter of the term of our lease or their useful lives. |
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 the preliminary project stage along with post-implementation stages of internal use computer software are expensed as incurred. Costs incurred to maintain existing product offerings are expensed as incurred. |
Patents and Trademarks | Patents and Trademarks Patents and trademarks which are stated at amortized cost, relate to the development of video surveillance security system technology and are being amortized over 17 years. |
Long-Lived Assets | Long-Lived Assets The Company evaluates the recoverability of its property, equipment, and other long-lived assets in accordance with FASB ASC 360-10-35-15 Impairment or Disposal of Long-Lived Assets, which requires recognition of impairment of long-lived assets in the event the net book value of such assets exceed the estimated future undiscounted cash flows attributable to such assets or the business to which such intangible assets relate. This guidance requires that long-lived assets and certain identifiable intangibles be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. |
Accrual of Legal Costs Associated with Loss Contingencies | Accrual of Legal Costs Associated with Loss Contingencies The Company expenses legal costs associated with loss contingencies, as incurred. |
Product Warranties | Product Warranties The Company has a 90 day warranty period for materials and labor after final acceptance of all projects. If any parts are defective they are replaced under our vendor warranty which is usually 12-36 months. Final acceptance terms vary by customer. Some customers have a cure period for any material deviation and if the Company fails or is unable to correct any deviations, a full refund of all payments made by the customer will be arranged by the Company. As of December 31, 2016 and 2015, management considers all final acceptance terms have been met; therefore no accrual of warranty reserves has been made. |
Loan Costs | Loan Costs Loan costs paid to lenders or third-parties are recorded as debt discounts to the related loans and amortized to interest expense over the loan term. |
Sales Returns Liabilities | Sales Returns Liabilities Our systems are sold as integrated systems and there are no sales returns allowed. |
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 Companys 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) For all periods reflected in 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 its 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 Revenue Deferred revenues represent billings or cash received in excess of revenue recognizable on service agreements that are not accounted for under the percentage of completion method. |
Advertising | Advertising The Company expenses the cost of advertising. During the years ended December 31, 2016 and 2015, there were no advertising costs. |
Share-Based Compensation | Share-Based Compensation Stock-based compensation is accounted for in accordance with the Share-Based Payment Topic of ASC 718 which requires recognition in the financial statements of the cost of employee and director services received in exchange for an award of equity instruments over the shorter of the period the employee or director is required to perform the services in exchange for the award or the vesting period. The ASC also requires measurement of the cost of employee and director services received in exchange for an award based on the grant-date fair value of the award. Pursuant to ASC Topic 505-50, for share-based payments to consultants and other third-parties, compensation expense is determined at the measurement date. The expense is recognized over the service period of the award. Until the measurement date is reached, the total amount of compensation expense remains uncertain. The Company initially records compensation expense based on the fair value of the award at the reporting date. |
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, 2016, 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 2013, 2014 and 2015 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, convertible preferred stock or other common stock equivalents. Potentially dilutive securities are excluded from the computation if their effect is anti-dilutive. At December 31, 2016 and 2015, outstanding warrants to purchase an aggregate of 24,858,346 and 609,340, respectively, shares of common stock and 4,294,730 and 734,047, respectively, shares of common stock issuable upon conversion of convertible debt and at December 31, 2016, 1,677,333 shares issuable upon conversion of Series A preferred stock were excluded from the computation of dilutive earnings per share because the inclusion would have been anti-dilutive. |
Segment Information | Segment Information The Company operates in one reportable segment. |
Reclassifications | Reclassifications Certain amounts in the 2015 balance sheet have been reclassified from accounts payable to accrued expenses to conform to the 2016 presentation. This reclassification increased accrued expenses in 2015 by $47,250 and decreased accounts payable by the same amount. |
Recent Issued Accounting Standards | Recent Issued Accounting Standards In August 2015, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2015-14 Revenue from Contracts with Customers. The ASU defers the effective date of previously issued ASU 2014-09 (the new revenue recognition standard) by one year for both public and private companies. The ASU requires public entities to apply the new revenue recognition guidance for annual reporting periods beginning after December 15, 2017, and interim reporting periods within annual reporting periods beginning after December 15, 2017. Both public and nonpublic entities will be permitted to apply the new revenue recognition standard as of the original effective date for public entities (annual periods beginning after December 15, 2016). The Company plans to adopt this standard for their fiscal year beginning January 1, 2018. The Company is in the process of analyzing the impacts of this ASU, but does not believe it will have a material impact on its consolidated financial statements. In February 2016, the Financial Accounting Standards Board issued Accounting Standards Update No. 2016-02: Leases (Topic 842) In March 2016, the FASB issued Accounting Standards Update No. 2016-09: "Compensation Stock Compensation (Topic 718) - I |
NOTE 3 - ACCOUNTS RECEIVABLE (T
NOTE 3 - ACCOUNTS RECEIVABLE (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Receivables [Abstract] | |
Schedule of Accounts Receivable | Accounts receivable were as follows at December 31, 2016 and 2015: 2016 2015 Accounts Receivable $ 256,989 $ 452,235 Allowance for doubtful accounts $ 256,989 $ 452,235 |
NOTE 4 - PROPERTY AND EQUIPME28
NOTE 4 - PROPERTY AND EQUIPMENT (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Property, Plant and Equipment [Abstract] | |
Major classes of property and equipment | The major classes of property and equipment are as follow at December 31, 2016 and 2015: 2016 2015 Furniture, fixtures and equipment $ 1,136,003 $ 1,100,658 Less: Accumulated depreciation (1,069,512 ) (1,028,114 ) $ 66,491 $ 72,544 |
NOTE 5 - PATENTS AND TRADEMAR29
NOTE 5 - PATENTS AND TRADEMARKS (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Patents And Trademarks [Abstract] | |
Patents and trademarks | 2016 2015 Patents and trademarks $ 267,205 $ 267,135 Less: Accumulated amortization (215,782 ) (210,129 ) $ 51,423 $ 57,006 |
NOTE 6 - DEBT (Tables)
NOTE 6 - DEBT (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Debt Disclosure [Abstract] | |
Notes Payable - Financing Agreements | The Companys notes payable relating to financing agreements classified as current liabilities consist of the following as of December 31, 2016 and 2015: December 31, 2016 December 31, 2015 Notes Payable Principal Interest Principal Interest Third Party - Insurance Note 1 $ 25,075 9.75 % $ 21,325 9.75 % Third Party - Insurance Note 2 9,861 10.00 % 11,277 9.75 % Third Party - Insurance Note 3 8.05 % 8.66 % Third Party - Insurance Note 4 11,432 9.24 % 11,422 8.99 % Total $ 46,368 $ 44,024 |
Notes Payable - Related Parties | The Companys notes payable to related parties classified as current liabilities consist of the following as of December 31, 2016 and 2015: December 31, 2016 December 31, 2015 Notes Payable Principal Interest Principal Interest Shareholder $ 65,000 9 % $ 65,000 9 % Related party 13,369 8 % 17,651 8 % Related party 10,504 33,615 Related party 56,500 8 % 36,500 8 % Related Party 3,170 21,170 Related Party 8,431 8 % 11,131 8 % CFO 31,973 8 % 7,841 Shareholder 226,936 6 % 294,056 6 % CEO 56,614 8 % Shareholder 105,219 8 % Total $ 577,716 $ 486,964 |
Notes Payable | December 31, 2016 December 31, 2015 Payable To Principal Interest Principal Interest Shareholder $ 19,108 $ 19,108 Shareholder 125,000 .67% Vendor 22,500 52,500 Total $ 41,608 $ 196,608 |
Convertible Notes Payable-Net of Discounts, Including Premiums | December 31, 2016 December 31, 2015 Payable To Principal Premium Principal, Including Premium Principal Premium Principal, Including Premium Vendor $ 50,000 $ 50,000 $ 100,000 $ 50,000 $ 50,000 $ 100,000 Vendor 46,975 46,975 93,950 46,975 46,975 93,950 Total $ 96,975 $ 96,975 $ 193,950 $ 96,975 $ 96,975 $ 193,950 |
Notes Payable – Third Parties | December 31, 2016 December 31, 2015 Payable To Principal Less Unamortized Discounts Principal, Less Unamortized Discounts Principal Less Unamortized Discounts Principal, Less Unamortized Discounts Note 1-non-current $ 1,800,000 $ 593,478 $ 1,206,522 $ $ $ Note 2-current 605,263 559,661 45,602 Total $ 2,405,263 $ 1,153,139 $ 1,252,124 $ $ $ |
NOTE 8 - CONTRACT ACCOUNTING (T
NOTE 8 - CONTRACT ACCOUNTING (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Contract Accounting [Abstract] | |
Costs and Estimated Earnings in Excess of Billings on Uncompleted Contracts | At December 31, 2016 and 2015, costs and estimated earnings in excess of billings on uncompleted contracts consisted of the following: 2016 2015 Costs and estimated earnings recognized $ 2,631,315 $ 2,322,836 Less: Billings or cash received (2,154,642 ) (1,901,720 ) Costs and estimated earnings in excess of billings on uncompleted contracts $ 476,673 $ 421,116 |
Billings in Excess of Costs and Estimated Earnings on Uncompleted Contracts | At December 31, 2016 and 2015, billings in excess of costs and estimated earnings on uncompleted contracts consisted of the following: 2016 2015 Billings and/or cash receipts on uncompleted contracts $ 396,609 $ 1,146,804 Less: Costs and estimated earnings recognized (176,984 ) (843,740 ) Billings in excess of costs and estimated earnings on uncompleted contracts $ 219,625 $ 303,064 |
NOTE 10 - COMMITMENTS AND CON32
NOTE 10 - COMMITMENTS AND CONTINGENCIES (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Operating leases | Year Ended December 31, 2016 2015 Purchase Power $ 588 $ 710 Coffee Perks/A. Antique Coffee Services 300 300 Canon 11,569 11,569 Total Operating Leases rent expense $ 12,457 $ 12,578 |
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: 2017 169,483 2018 174,568 2019 179,805 2020 185,199 2021 155,846 Total $ 864,901 |
NOTE 11 - INCOME TAXES (Tables)
NOTE 11 - INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | |
Difference between income taxes at effective statutory rate and provision for income 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, 2016 and 2015 were as follows: Years Ended December 31, 2016 2015 Income tax benefit at U.S. statutory rate of 34% $ (870,948 ) $ (790,823 ) State income taxes (92,218 ) (83,734 ) Non-deductible expenses 356,674 722,740 Change in valuation allowance 606,492 151,817 Total provision for income tax $ $ |
Net deferred tax assets | The Companys approximate net deferred tax assets as of December 31, 2016 and 2015 were as follows: December 31, 2016 2015 Deferred Tax Assets: Net operating loss carryforward $ 5,241,802 $ 4,602,442 Intangible assets 181,338 215,206 5,423,140 4,816,648 Valuation allowance (5,423,140 ) 4,816,648 ) Net deferred tax assets $ $ |
NOTE 14 - STOCKHOLDERS' DEFIC34
NOTE 14 - STOCKHOLDERS' DEFICIT (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Equity [Abstract] | |
Fair Value of Merger | 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 |
Pro Forma Results of Operation | 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 ) |
NOTE 15 - COMMON STOCK PURCHA35
NOTE 15 - COMMON STOCK PURCHASE WARRANTS (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Other Liabilities Disclosure [Abstract] | |
Warrants | The following is a summary of activity for warrants to purchase common stock for the year ended December 31, 2016: December 31, 2016 Number of Warrants Weighted Avg. Exercise Price Remaining Contractual Life (Years) Outstanding at the beginning of the year 609,340 $ .54 4.5 Warrants expired, forfeited or cancelled (307,250 ) .41 Warrants issued with debt, debt modifications or services 7,359,893 .23 4.6 Warrants exchanged for common stock (5,250 ) 6.67 Outstanding at end of period 7,656,733 .24 4.6 Exercisable at end of period 7,656,733 $ .24 4.6 |
NOTE 16 _ DERIVATIVE FINANCIA36
NOTE 16 – DERIVATIVE FINANCIAL INSTRUMENTS (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Note 16 Derivative Financial Instruments Tables | |
Estimated fair values of the liabilities for warrant derivative | BSM Inputs Warrants As of December 20, 2016 As of December 31, 2016 Expected Volatility 144% 144% Expected Remaining Term 5.00 years 4.97 years Risk Free Interest Rate 2.04% 2.04% |
NOTE 17 _ FAIR VALUE MEASUREM37
NOTE 17 – FAIR VALUE MEASUREMENTS (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Note 17 Fair Value Measurements Tables | |
Summarize our financial assets and liabilities measured at fair value on a recurring basis | The following tables summarize our financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2016: Balance at December 31, 2016 Quoted Prices in Active Markets for Identical Assets Significant Other Observable Inputs Significant Unobservable Inputs (Level 1) (Level 2) (Level 3) Liabilities: Fair value of liability for warrant derivative instruments $ 793,099 $ $ $ 793,099 |
Fair value liability of warrant derivative instruments | The following is a roll forward through December 31, 2016 of the fair value liability of warrant derivative instruments: Fair Value of Liability for Warrant Derivative Instruments Balance at December 31, 2015 $ Initial fair value of warrant liability included in expense ($217,980) and debt discount ($529,000) 746,980 Change in fair value included in other (income) expense 46,119 Balance at December 31, 2016 $ 793,099 |
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, 2016 | Dec. 31, 2015 | |
Revenue | Outside of United States [Member] | ||
Concentration of Credit Risk | 20.89% | 1.73% |
Customer A [Member] | Revenue | ||
Concentration of Credit Risk | 21.00% | 22.00% |
Customer A [Member] | Accounts Receivable | ||
Concentration of Credit Risk | 50.00% | 33.00% |
Customer B [Member] | Revenue | ||
Concentration of Credit Risk | 19.00% | 21.00% |
Customer B [Member] | Accounts Receivable | ||
Concentration of Credit Risk | 26.00% | 27.00% |
Customer C [Member] | Revenue | ||
Concentration of Credit Risk | 16.00% | 20.00% |
Customer C [Member] | Accounts Receivable | ||
Concentration of Credit Risk | 14.00% | 24.00% |
Customer D [Member] | Revenue | ||
Concentration of Credit Risk | 11.00% | 14.00% |
NOTE 1 - NATURE OF OPERATIONS39
NOTE 1 - NATURE OF OPERATIONS, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFCANT ACCTG POLICIES (Narratives) (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Number of Warrants Outstanding | 24,858,346 | 609,340 |
Number of Shares upon Conversion | 4,294,730 | 734,047 |
Product warranty Period | 90 days | |
Increased accrued expenses | $ 47,250 | |
Patents and Trademarks [Member] | ||
Estimated economic life of the property and equipment | 17 years | |
Minimum [Member] | ||
Estimated economic life of the property and equipment | 3 years | |
Product warranty Period | 12 months | |
Maximum [Member] | ||
Estimated economic life of the property and equipment | 5 years | |
Product warranty Period | 36 months | |
Series A Preferred Stock [Member] | ||
Number of Shares upon Conversion | 1,677,333 |
NOTE 2 - GOING CONCERN (Narrati
NOTE 2 - GOING CONCERN (Narrative) (Details) - USD ($) | 12 Months Ended | |||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 20, 2016 | Dec. 31, 2014 | |
Going Concern [Abstract] | ||||
Net Loss | $ 2,561,613 | |||
Net cash used in operations | 1,840,290 | $ 2,116,481 | ||
Working capital deficit | 4,132,660 | |||
Stockholders' deficit | 5,523,188 | 3,758,723 | $ 5,050,329 | |
Accumulated deficit | $ 23,518,709 | $ 20,951,176 | ||
Aggregate principal amount Promissory Note | $ 2,500,000 | |||
Remitted by the investor upon signing amount | 575,000 | |||
Futher Debt amount raised as per milestones | 10,000,000 | |||
Expected capital from investment banking engagement | $ 10,000,000 |
NOTE 3 - ACCOUNTS RECEIVABLE (D
NOTE 3 - ACCOUNTS RECEIVABLE (Details) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Receivables [Abstract] | ||
Accounts Receivable | $ 256,989 | $ 452,235 |
Allowance for doubtful accounts | ||
Accounts Receivable, Net | $ 256,989 | $ 452,235 |
NOTE 3 _ ACCOUNTS RECEIVABLE (N
NOTE 3 – ACCOUNTS RECEIVABLE (Narrative) (Details) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Receivables [Abstract] | ||
Receivable due from Affiliate and Related Bad Debt | $ 70,248 | $ 0 |
NOTE 4 - PROPERTY AND EQUIPME43
NOTE 4 - PROPERTY AND EQUIPMENT (Details) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Property, Plant and Equipment [Abstract] | ||
Furniture, fixtures and equipment | $ 1,136,003 | $ 1,100,658 |
Less: Accumulated depreciation | (1,069,512) | (1,028,114) |
Furniture, fixtures and equipment, Net | $ 66,491 | $ 72,544 |
NOTE 4 - PROPERTY AND EQUIPME44
NOTE 4 - PROPERTY AND EQUIPMENT (Narrative) (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation | $ 41,398 | $ 38,501 |
NOTE 5 - PATENTS AND TRADEMAR45
NOTE 5 - PATENTS AND TRADEMARKS (Details) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Patents And Trademarks [Abstract] | ||
Patents and trademarks | $ 267,205 | $ 267,135 |
Less: Accumulated amortization | (215,782) | (210,129) |
Patents and trademarks, Net | $ 51,423 | $ 57,006 |
NOTE 5 - PATENTS AND TRADEMAR46
NOTE 5 - PATENTS AND TRADEMARKS (Narrative) (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Patents And Trademarks [Abstract] | ||
Amortization of patents | $ 5,653 | $ 5,910 |
NOTE 6 - DEBT (Schedule of Note
NOTE 6 - DEBT (Schedule of Notes Payable - Financing Agreements) (Details) - USD ($) | Dec. 31, 2016 | Dec. 23, 2016 | Sep. 30, 2016 | Feb. 03, 2016 | Dec. 31, 2015 | Dec. 23, 2015 | Sep. 15, 2015 | Apr. 02, 2015 |
Notes Payable, Principal | $ 46,368 | $ 44,024 | ||||||
Third Party - Insurance Note 1 [Member] | ||||||||
Notes Payable, Principal | $ 25,075 | $ 25,075 | $ 21,325 | $ 21,325 | ||||
Notes Payable, Interest | 9.75% | 9.75% | ||||||
Third Party - Insurance Note 2 [Member] | ||||||||
Notes Payable, Principal | $ 9,861 | $ 19,065 | $ 11,277 | $ 18,823 | ||||
Notes Payable, Interest | 10.00% | 9.75% | ||||||
Third Party - Insurance Note 3 [Member] | ||||||||
Notes Payable, Principal | $ 123,571 | |||||||
Notes Payable, Interest | 8.05% | 8.66% | ||||||
Third Party - Insurance Note 4 [Member] | ||||||||
Notes Payable, Principal | $ 11,432 | $ 11,422 | $ 65,000 | |||||
Notes Payable, Interest | 9.24% | 8.99% |
NOTE 6 - DEBT (Schedule of No48
NOTE 6 - DEBT (Schedule of Notes Payable - Related Parties) (Details) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Notes Payable - Related Parties, Principal Amount | $ 577,716 | $ 486,964 |
Shareholder [Member] | ||
Notes Payable - Related Parties, Principal Amount | $ 65,000 | $ 65,000 |
Notes Payable - Related Parties, Interest Rate | 9.00% | 9.00% |
Related Party [Member] | ||
Notes Payable - Related Parties, Principal Amount | $ 13,369 | $ 17,651 |
Notes Payable - Related Parties, Interest Rate | 8.00% | 8.00% |
Related Party [Member] | ||
Notes Payable - Related Parties, Principal Amount | $ 10,504 | $ 33,615 |
Notes Payable - Related Parties, Interest Rate | ||
Related Party [Member] | ||
Notes Payable - Related Parties, Principal Amount | $ 56,500 | $ 36,500 |
Notes Payable - Related Parties, Interest Rate | 8.00% | 8.00% |
Related Party [Member] | ||
Notes Payable - Related Parties, Principal Amount | $ 3,170 | $ 21,170 |
Notes Payable - Related Parties, Interest Rate | ||
Related Party [Member] | ||
Notes Payable - Related Parties, Principal Amount | $ 8,431 | $ 11,131 |
Notes Payable - Related Parties, Interest Rate | 8.00% | 8.00% |
CFO [Member] | ||
Notes Payable - Related Parties, Principal Amount | $ 31,973 | $ 7,841 |
Notes Payable - Related Parties, Interest Rate | 8.00% | |
Shareholder [Member] | ||
Notes Payable - Related Parties, Principal Amount | $ 226,936 | $ 294,056 |
Notes Payable - Related Parties, Interest Rate | 6.00% | 6.00% |
CEO [Member] | ||
Notes Payable - Related Parties, Principal Amount | $ 56,614 | |
Notes Payable - Related Parties, Interest Rate | 8.00% | |
Shareholder [Member] | ||
Notes Payable - Related Parties, Principal Amount | $ 105,219 | |
Notes Payable - Related Parties, Interest Rate | 8.00% |
NOTE 6 - DEBT (Schedule of No49
NOTE 6 - DEBT (Schedule of Notes Payable - Net of Discounts) (Details) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Notes Payable-Net of Discounts, Principal Amount | $ 41,608 | $ 196,608 |
Shareholder [Member] | ||
Notes Payable-Net of Discounts, Principal Amount | $ 19,108 | $ 19,108 |
Notes Payable-Net of Discounts, Interest | ||
Shareholder [Member] | ||
Notes Payable-Net of Discounts, Principal Amount | $ 125,000 | |
Notes Payable-Net of Discounts, Interest | 0.67% | |
Vendor [Member] | ||
Notes Payable-Net of Discounts, Principal Amount | $ 22,500 | $ 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, 2016 | Dec. 31, 2015 |
Convertible Notes Payable, Principal Amount | $ 96,975 | $ 96,975 |
Convertible Notes Payable, Premium | 96,975 | 96,975 |
Principal, net of Discount Including Premium | 193,950 | 193,950 |
Vendor [Member] | ||
Convertible Notes Payable, Principal Amount | 50,000 | 50,000 |
Convertible Notes Payable, Premium | 50,000 | 50,000 |
Principal, net of Discount Including Premium | 100,000 | 100,000 |
Vendor [Member] | ||
Convertible Notes Payable, Principal Amount | 46,975 | 46,975 |
Convertible Notes Payable, Premium | 46,975 | 46,975 |
Principal, net of Discount Including Premium | $ 93,950 | $ 93,950 |
NOTE 6 - DEBT (Schedule of No51
NOTE 6 - DEBT (Schedule of Notes Payable - Third Party) (Details) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Principal, Less Unamortized Discounts | $ 41,608 | $ 196,608 |
Note 1-non-current [Member] | ||
Principal Amount | 1,800,000 | |
Less unamortized discounts | 593,478 | |
Principal, Less Unamortized Discounts | 1,206,522 | |
Note 2-current [Member] | ||
Principal Amount | 605,263 | |
Less unamortized discounts | 559,661 | |
Principal, Less Unamortized Discounts | 45,602 | |
Third Party [Member] | ||
Principal Amount | 2,405,263 | |
Less unamortized discounts | 1,153,139 | |
Principal, Less Unamortized Discounts | $ 1,252,124 |
NOTE 6 - DEBT (Narrative) (Deta
NOTE 6 - DEBT (Narrative) (Details) - USD ($) | Dec. 03, 2016 | Aug. 11, 2016 | Jul. 15, 2016 | Apr. 02, 2016 | Jan. 11, 2016 | Aug. 10, 2015 | Apr. 08, 2015 | Mar. 03, 2015 | Dec. 12, 2013 | Feb. 02, 2017 | Dec. 20, 2016 | Oct. 23, 2016 | Jul. 19, 2016 | Mar. 31, 2016 | Jan. 28, 2016 | Jan. 24, 2016 | Nov. 30, 2015 | Oct. 28, 2015 | Sep. 30, 2015 | Apr. 30, 2015 | Mar. 31, 2015 | Jan. 29, 2015 | Mar. 31, 2016 | Sep. 30, 2015 | Jun. 30, 2015 | Jun. 30, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 23, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Apr. 30, 2016 | Feb. 03, 2016 | Dec. 23, 2015 | Sep. 15, 2015 | Apr. 02, 2015 | Mar. 10, 2015 | May 28, 2008 |
Notes payable outstanding balance | $ 46,368 | $ 44,024 | ||||||||||||||||||||||||||||||||||||
Balance of interest Expense | $ 352,093 | |||||||||||||||||||||||||||||||||||||
Interest payment | $ 3,230 | $ 245,134 | $ 59,398 | |||||||||||||||||||||||||||||||||||
Principal balance of convertible debenture | $ 1,415,546 | |||||||||||||||||||||||||||||||||||||
Senior secured and warrant exercisable securities, shares | 200,000 | 4,659,893 | 14,963 | 2,500,000 | ||||||||||||||||||||||||||||||||||
Warrant exercise price | $ 0.40 | $ 0.001 | $ 0.001 | $ 0.35 | ||||||||||||||||||||||||||||||||||
Fair value of the warrants | $ 390,799 | $ 390,799 | ||||||||||||||||||||||||||||||||||||
Warrants issued to placement agent | 24,858,346 | 609,340 | ||||||||||||||||||||||||||||||||||||
Total amount due to shareholder | $ 40,136 | $ 30,070 | ||||||||||||||||||||||||||||||||||||
Third Party - Insurance Note 1 [Member] | ||||||||||||||||||||||||||||||||||||||
Monthly installments of principal and interest | $ 2,229 | |||||||||||||||||||||||||||||||||||||
Interest rate | 9.75% | |||||||||||||||||||||||||||||||||||||
Notes payable outstanding balance | 25,075 | 21,325 | $ 25,075 | $ 21,325 | ||||||||||||||||||||||||||||||||||
Third Party - Insurance Note 2 [Member] | ||||||||||||||||||||||||||||||||||||||
Monthly installments of principal and interest | $ 1,678 | |||||||||||||||||||||||||||||||||||||
Interest rate | 10.00% | 9.75% | ||||||||||||||||||||||||||||||||||||
Notes payable outstanding balance | 9,861 | 11,277 | $ 19,065 | $ 18,823 | ||||||||||||||||||||||||||||||||||
Third Party - Insurance Note 2 [Member] | Subsequent Event [Member] | ||||||||||||||||||||||||||||||||||||||
Monthly installments of principal and interest | $ 1,702 | |||||||||||||||||||||||||||||||||||||
Third Party - Insurance Note 3 [Member] | ||||||||||||||||||||||||||||||||||||||
Monthly installments of principal and interest | $ 12,818 | |||||||||||||||||||||||||||||||||||||
Interest rate | 8.05% | |||||||||||||||||||||||||||||||||||||
Notes payable outstanding balance | $ 123,571 | |||||||||||||||||||||||||||||||||||||
Third Party - Insurance Note 4 [Member] | ||||||||||||||||||||||||||||||||||||||
Interest rate | 9.24% | |||||||||||||||||||||||||||||||||||||
Notes payable outstanding balance | 11,432 | 11,422 | $ 65,000 | |||||||||||||||||||||||||||||||||||
Third Party - Insurance Note 4 [Member] | Subsequent Event [Member] | ||||||||||||||||||||||||||||||||||||||
Monthly installments of principal and interest | $ 5,782 | |||||||||||||||||||||||||||||||||||||
CEO [Member] | ||||||||||||||||||||||||||||||||||||||
Interest rate | 9.00% | |||||||||||||||||||||||||||||||||||||
Notes payable outstanding balance | $ 65,000 | |||||||||||||||||||||||||||||||||||||
Accrued interest balance | 49,231 | 43,381 | ||||||||||||||||||||||||||||||||||||
CFO [Member] | ||||||||||||||||||||||||||||||||||||||
Notes payable outstanding balance | 31,973 | 7,841 | $ 8,783 | |||||||||||||||||||||||||||||||||||
Monthly interest rate | 8.00% | |||||||||||||||||||||||||||||||||||||
Aggregate principal amount of note | $ 30,000 | $ 365 | ||||||||||||||||||||||||||||||||||||
Repayments of debt | $ 1,307 | |||||||||||||||||||||||||||||||||||||
Related party principal shareholder [Member] | ||||||||||||||||||||||||||||||||||||||
Interest rate | 6.00% | |||||||||||||||||||||||||||||||||||||
Maturity date | Oct. 31, 2015 | |||||||||||||||||||||||||||||||||||||
Accrued interest balance | 8,616 | $ 8,616 | ||||||||||||||||||||||||||||||||||||
Aggregate principal amount of note | $ 310,000 | |||||||||||||||||||||||||||||||||||||
Promissory new note [Member] | ||||||||||||||||||||||||||||||||||||||
Monthly installments of principal and interest | $ 27,750 | |||||||||||||||||||||||||||||||||||||
Interest rate | 6.00% | 6.00% | ||||||||||||||||||||||||||||||||||||
Notes payable outstanding balance | $ 320,166 | $ 320,166 | ||||||||||||||||||||||||||||||||||||
Repayments of debt | 27,007 | |||||||||||||||||||||||||||||||||||||
Non-interest bearing OID promissory [Member] | ||||||||||||||||||||||||||||||||||||||
Notes payable outstanding balance | 0 | 4,578 | ||||||||||||||||||||||||||||||||||||
Loss on conversion | $ 55,484 | |||||||||||||||||||||||||||||||||||||
Interest payment | 744,343 | |||||||||||||||||||||||||||||||||||||
Repayments of debt | $ 7,078 | |||||||||||||||||||||||||||||||||||||
Debt default terms | 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. | |||||||||||||||||||||||||||||||||||||
Debt conversion term | On September 21, 2015, the shareholder agreed to convert $81,250 of the $165,000 outstanding note to 506,421 shares of the Companys common stock 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. | |||||||||||||||||||||||||||||||||||||
Driginal Issue Discount (OID) promissory note [Member] | ||||||||||||||||||||||||||||||||||||||
Monthly installments of principal and interest | $ 1,535 | $ 4,282 | ||||||||||||||||||||||||||||||||||||
Interest rate | 18.00% | |||||||||||||||||||||||||||||||||||||
Notes payable outstanding balance | $ 15,000 | 13,369 | $ 15,000 | |||||||||||||||||||||||||||||||||||
Maturity date | Dec. 15, 2016 | |||||||||||||||||||||||||||||||||||||
Accrued interest balance | $ 2,651 | 802 | ||||||||||||||||||||||||||||||||||||
Monthly interest rate | 8.00% | |||||||||||||||||||||||||||||||||||||
Aggregate principal amount of note | $ 17,651 | |||||||||||||||||||||||||||||||||||||
Two promissory notes [Member] | ||||||||||||||||||||||||||||||||||||||
Notes payable outstanding balance | 275,660 | 275,660 | 10,504 | 33,615 | $ 212,693 | |||||||||||||||||||||||||||||||||
Loss on conversion | $ 115,139 | $ 115,139 | ||||||||||||||||||||||||||||||||||||
Monthly interest rate | 30.00% | |||||||||||||||||||||||||||||||||||||
Shares exchanged in debt | 1,002,401 | |||||||||||||||||||||||||||||||||||||
TrueVue360, Inc. [Member] | ||||||||||||||||||||||||||||||||||||||
Monthly installments of principal and interest | $ 2,100 | |||||||||||||||||||||||||||||||||||||
Interest rate | 1.50% | 1.50% | ||||||||||||||||||||||||||||||||||||
Notes payable outstanding balance | $ 28,040 | $ 28,040 | ||||||||||||||||||||||||||||||||||||
Accrued interest balance | $ 9,777 | $ 9,777 | ||||||||||||||||||||||||||||||||||||
Monthly interest rate | 0.00% | 0.00% | ||||||||||||||||||||||||||||||||||||
Aggregate principal amount of note | $ 37,817 | |||||||||||||||||||||||||||||||||||||
Warrant exercise price | $ 0.28 | $ 0.28 | ||||||||||||||||||||||||||||||||||||
Warrants issued to placement agent | 501,201 | 501,201 | ||||||||||||||||||||||||||||||||||||
Wife of CEO [Member] | ||||||||||||||||||||||||||||||||||||||
Interest rate | 8.00% | |||||||||||||||||||||||||||||||||||||
Notes payable outstanding balance | 56,500 | 36,500 | ||||||||||||||||||||||||||||||||||||
Accrued interest balance | 7,474 | 3,052 | ||||||||||||||||||||||||||||||||||||
Proceeds from loan | $ 5,000 | $ 10,000 | $ 20,000 | $ 9,500 | $ 12,000 | |||||||||||||||||||||||||||||||||
Former CEO of ISA [Member] | ||||||||||||||||||||||||||||||||||||||
Notes payable outstanding balance | 3,170 | 21,170 | $ 30,378 | |||||||||||||||||||||||||||||||||||
OID promissory note [Member] | ||||||||||||||||||||||||||||||||||||||
Monthly installments of principal and interest | $ 968 | $ 2,700 | ||||||||||||||||||||||||||||||||||||
Interest rate | 30.00% | |||||||||||||||||||||||||||||||||||||
Notes payable outstanding balance | $ 10,000 | 8,431 | 11,131 | $ 10,593 | ||||||||||||||||||||||||||||||||||
Maturity date | Dec. 15, 2016 | |||||||||||||||||||||||||||||||||||||
Accrued interest balance | $ 1,131 | 506 | ||||||||||||||||||||||||||||||||||||
Interest payment | $ 1,500 | |||||||||||||||||||||||||||||||||||||
Monthly interest rate | 8.00% | |||||||||||||||||||||||||||||||||||||
Aggregate principal amount of note | $ 11,131 | |||||||||||||||||||||||||||||||||||||
Shareholder [Member] | ||||||||||||||||||||||||||||||||||||||
Interest rate | 12.00% | |||||||||||||||||||||||||||||||||||||
Notes payable outstanding balance | 226,936 | 294,056 | $ 100,000 | |||||||||||||||||||||||||||||||||||
Accrued interest balance | $ 7,078 | $ 107,627 | ||||||||||||||||||||||||||||||||||||
Balance of interest Expense | $ 744,343 | |||||||||||||||||||||||||||||||||||||
Loss on conversion | $ 35,876 | |||||||||||||||||||||||||||||||||||||
Principal amount paid | 125,000 | |||||||||||||||||||||||||||||||||||||
Total amount due to shareholder | 132,078 | |||||||||||||||||||||||||||||||||||||
Shares exchanged in debt | 358,758 | |||||||||||||||||||||||||||||||||||||
Sale of Common stock per share | $ 0.30 | |||||||||||||||||||||||||||||||||||||
Related party loan from CEO [Member] | ||||||||||||||||||||||||||||||||||||||
Monthly installments of principal and interest | $ 1,052 | |||||||||||||||||||||||||||||||||||||
Interest rate | 7.99% | |||||||||||||||||||||||||||||||||||||
Notes payable outstanding balance | $ 59,925 | 56,614 | ||||||||||||||||||||||||||||||||||||
Proceeds from loan | 60,000 | |||||||||||||||||||||||||||||||||||||
Fees on loan proceeds | $ 75 | |||||||||||||||||||||||||||||||||||||
Related party principal shareholder [Member] | ||||||||||||||||||||||||||||||||||||||
Interest rate | 8.00% | |||||||||||||||||||||||||||||||||||||
Notes payable outstanding balance | 105,219 | |||||||||||||||||||||||||||||||||||||
Maturity date | Feb. 11, 2017 | |||||||||||||||||||||||||||||||||||||
Proceeds from loan | $ 111,645 | |||||||||||||||||||||||||||||||||||||
Unrelated party investor [Member] | ||||||||||||||||||||||||||||||||||||||
Notes payable outstanding balance | $ 19,108 | |||||||||||||||||||||||||||||||||||||
Facility Team of Ontario [Member] | ||||||||||||||||||||||||||||||||||||||
Monthly installments of principal and interest | $ 2,500 | |||||||||||||||||||||||||||||||||||||
Notes payable outstanding balance | 22,500 | 52,500 | ||||||||||||||||||||||||||||||||||||
Settlement amount | $ 60,000 | |||||||||||||||||||||||||||||||||||||
Vendor [Member] | ||||||||||||||||||||||||||||||||||||||
Notes payable outstanding balance | 50,000 | 50,000 | ||||||||||||||||||||||||||||||||||||
Settlement amount | 150,000 | |||||||||||||||||||||||||||||||||||||
Accrued interest balance | $ 7,511 | $ 4,723 | ||||||||||||||||||||||||||||||||||||
Monthly interest rate | 1.00% | 1.00% | ||||||||||||||||||||||||||||||||||||
Debt Purchase Agreement [Member] | ||||||||||||||||||||||||||||||||||||||
Notes payable outstanding balance | $ 93,950 | $ 93,950 | $ 93,950 | |||||||||||||||||||||||||||||||||||
Settlement amount | 150,000 | |||||||||||||||||||||||||||||||||||||
Accrued interest balance | 12,682 | 4,228 | 8,454 | |||||||||||||||||||||||||||||||||||
Premium | $ 46,975 | $ 46,975 | ||||||||||||||||||||||||||||||||||||
Private Placement [Member] | ||||||||||||||||||||||||||||||||||||||
Aggregate principal amount of note | $ 1,800,000 | |||||||||||||||||||||||||||||||||||||
Original issue discount | 3026300.00% | 5.00% | ||||||||||||||||||||||||||||||||||||
Senior secured and warrant exercisable securities, shares | 2,500,000 | 2,500,000 | ||||||||||||||||||||||||||||||||||||
Expiration period | 5 years | |||||||||||||||||||||||||||||||||||||
Warrant exercise price | $ 0.35 | $ 0.35 | ||||||||||||||||||||||||||||||||||||
Fair value of the warrants | $ 466,031 | $ 466,031 | ||||||||||||||||||||||||||||||||||||
Accrued interest rate | 14.00% | |||||||||||||||||||||||||||||||||||||
Additional accrued interest rate | 2.00% | 2.00% | ||||||||||||||||||||||||||||||||||||
Postponement payment | $ 5,000 | $ 5,000 | ||||||||||||||||||||||||||||||||||||
Placement agents fees | $ 28,750 | 137,000 | ||||||||||||||||||||||||||||||||||||
Total debt funding | $ 1,800,000 | $ 1,800,000 | ||||||||||||||||||||||||||||||||||||
Warrants issued to placement agent | 322,807 | 200,000 | 200,000 | |||||||||||||||||||||||||||||||||||
Warrants issued to placement agent, fair value | $ 43,272 | |||||||||||||||||||||||||||||||||||||
Payment of additional obligations at closing | 690,110 | |||||||||||||||||||||||||||||||||||||
Net proceeds from placement agreement | $ 529,000 | 1,518,000 | ||||||||||||||||||||||||||||||||||||
Debt issuance expenses | 40,000 | $ 40,000 | ||||||||||||||||||||||||||||||||||||
Original issue discount | 90,000 | $ 90,000 | ||||||||||||||||||||||||||||||||||||
Payment to placement agent | 50,000 | |||||||||||||||||||||||||||||||||||||
Legel fees | 10,000 | |||||||||||||||||||||||||||||||||||||
Total cash issue costs | $ 192,000 | |||||||||||||||||||||||||||||||||||||
Cash clsoing expenses | $ 46,000 | |||||||||||||||||||||||||||||||||||||
Stockholder [Member] | ||||||||||||||||||||||||||||||||||||||
Notes payable outstanding balance | 52,500 | |||||||||||||||||||||||||||||||||||||
Accrued interest balance | $ 4,578 | |||||||||||||||||||||||||||||||||||||
JMJ Financial [Member] | ||||||||||||||||||||||||||||||||||||||
Interest rate | 5.00% | |||||||||||||||||||||||||||||||||||||
Aggregate principal amount of note | $ 2,500,000 | |||||||||||||||||||||||||||||||||||||
Warrants issued to placement agent, fair value | 4,035,086 | |||||||||||||||||||||||||||||||||||||
Initial principal amount | 605,263 | |||||||||||||||||||||||||||||||||||||
Consideration amount | $ 2,350,000 | |||||||||||||||||||||||||||||||||||||
Percentage of per share price to pubic offering | 80.00% | |||||||||||||||||||||||||||||||||||||
Placement Agent [Member] | ||||||||||||||||||||||||||||||||||||||
Expiration period | 3 years | |||||||||||||||||||||||||||||||||||||
Payment to placement agent | $ 142,000 | |||||||||||||||||||||||||||||||||||||
Warrants compensation paid to placement agent | $ 200,000 | |||||||||||||||||||||||||||||||||||||
Strike price | $ 0.40 | |||||||||||||||||||||||||||||||||||||
CW Electric [Member] | ||||||||||||||||||||||||||||||||||||||
Accrued interest balance | $ 8,032 | |||||||||||||||||||||||||||||||||||||
Remitted amount out of proceeds in final settlement | 558,032 | |||||||||||||||||||||||||||||||||||||
Agreed settlement amount | $ 550,000 |
NOTE 7 - LINE OF CREDIT (Narrat
NOTE 7 - LINE OF CREDIT (Narrative) (Details) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 | Apr. 02, 2015 |
Line of Credit - Wells Fargo Bank | $ 38,019 | $ 40,216 | $ 40,000 |
Interest Rate | 10.25% | ||
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, 2016 | Dec. 31, 2015 |
Contract Accounting [Abstract] | ||
Costs and estimated earnings recognized | $ 2,631,315 | $ 2,322,836 |
Less: Billings or cash received | (2,154,642) | (1,901,720) |
Costs and estimated earnings in excess of billings on uncompleted contracts | $ 476,673 | $ 421,116 |
NOTE 8 - CONTRACT ACCOUNTING 55
NOTE 8 - CONTRACT ACCOUNTING (Schedule of billings in excess of costs and estimated earnings) (Details) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Contract Accounting [Abstract] | ||
Billings and/or cash receipts on uncompleted contracts | $ 396,609 | $ 1,146,804 |
Less: Costs and estimated earnings recognized | (176,984) | (843,740) |
Billings in excess of costs and estimated earnings on uncompleted contracts | $ 219,625 | $ 303,064 |
NOTE 9 - DEFERRED COMPENSATION
NOTE 9 - DEFERRED COMPENSATION (Narrative) (Details) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Compensation Related Costs [Abstract] | ||
Accrued deferred compensation | $ 894,217 | $ 776,428 |
NOTE 10 - COMMITMENTS AND CON57
NOTE 10 - COMMITMENTS AND CONTINGENCIES (Schedule of Rent Expense) (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |
May 31, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | |
Total Operating Leases rent expense | $ 0 | $ 12,457 | $ 12,578 |
Purchase Power [Member] | |||
Total Operating Leases rent expense | 588 | 710 | |
Coffee Perks/A. Antique Coffee Services [Member] | |||
Total Operating Leases rent expense | 300 | 300 | |
Canon [Member] | |||
Total Operating Leases rent expense | $ 11,569 | $ 11,569 |
NOTE 10 - COMMITMENTS AND CON58
NOTE 10 - COMMITMENTS AND CONTINGENCIES (Schedule of Future Minimum Lease Payments) (Details) | Dec. 31, 2016USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
2,017 | $ 169,483 |
2,018 | 174,568 |
2,019 | 179,805 |
2,020 | 185,199 |
2,021 | 155,846 |
Total | $ 864,901 |
NOTE 10 - COMMITMENTS AND CON59
NOTE 10 - COMMITMENTS AND CONTINGENCIES (Narrative) (Details) - USD ($) | Feb. 02, 2017 | Sep. 02, 2016 | May 13, 2016 | May 05, 2016 | Jan. 06, 2016 | Jul. 02, 2015 | Jan. 23, 2017 | Jun. 30, 2016 | Jan. 27, 2016 | May 31, 2016 | Dec. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | May 01, 2017 | May 23, 2016 | Apr. 30, 2016 | Apr. 02, 2016 | Mar. 31, 2016 | Mar. 28, 2016 | Oct. 28, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 10, 2008 |
Rental expense | $ 0 | $ 12,457 | $ 12,578 | ||||||||||||||||||||
Monthly Rental expense including operation cost and taxes | $ 14,816 | ||||||||||||||||||||||
Operating leases expiry period | 3 years | ||||||||||||||||||||||
Contingent lawsuit payable | $ 550,000 | 550,000 | $ 550,000 | $ 550,000 | |||||||||||||||||||
Delinquent payroll tax payable | 244,470 | 400,076 | 244,470 | ||||||||||||||||||||
Delinquent portion | $ 296,215 | $ 444,476 | $ 296,215 | ||||||||||||||||||||
Agent percentage of cash fee | 7.00% | ||||||||||||||||||||||
Strike price | $ 0.001 | $ 0.001 | $ 0.001 | $ 0.35 | $ 0.40 | ||||||||||||||||||
Term of agreement | 3 months | ||||||||||||||||||||||
Monthly payroll installment agreement amount | $ 25,000 | ||||||||||||||||||||||
Prepaid Assets amortized expenses | $ 306,458 | $ 256,111 | |||||||||||||||||||||
Initial agreement amount with broker | $ 50,000 | ||||||||||||||||||||||
Payment to broker | $ 6,500 | ||||||||||||||||||||||
Aggregate principal Convertible Notes payable | $ 96,975 | 96,975 | 96,975 | ||||||||||||||||||||
Jacksonville, Florida [Member] | |||||||||||||||||||||||
Rental expense | 171,513 | $ 142,593 | |||||||||||||||||||||
Monthly lease payment | $ 14,179 | ||||||||||||||||||||||
Corky Wells Electric [Member] | |||||||||||||||||||||||
Promissory note | $ 741,329 | ||||||||||||||||||||||
Interest rate | 18.00% | ||||||||||||||||||||||
Scenario, Previously Reported [Member] | Corky Wells Electric [Member] | |||||||||||||||||||||||
Contingent lawsuit payable | $ 1,411,650 | ||||||||||||||||||||||
Convertible Notes Payable [Member] | |||||||||||||||||||||||
Convertible notes | $ 46,975 | $ 50,000 | |||||||||||||||||||||
Greentree Financial Group, Inc [Member] | |||||||||||||||||||||||
Aggregate principal Convertible Notes payable | $ 96,975 | ||||||||||||||||||||||
Facility Team [Member] | |||||||||||||||||||||||
Settlement amount | $ 60,000 | ||||||||||||||||||||||
Consultant [Member] | |||||||||||||||||||||||
Term of agreement | 6 months | ||||||||||||||||||||||
Financing from third party through consultant | $ 1,500,000 | ||||||||||||||||||||||
Equity to third party | $ 90,000 | ||||||||||||||||||||||
Restricted common stock granted to consultant | 20,000 | 125,000 | |||||||||||||||||||||
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 | ||||||||||||||||||||||
Initial amount paid to consultant | $ 2,500 | ||||||||||||||||||||||
Monthly payroll installment agreement amount | $ 3,000 | ||||||||||||||||||||||
Restricted common stock granted to consultant, amount | $ 100 | ||||||||||||||||||||||
Prepaid Assets | $ 27,400 | ||||||||||||||||||||||
Prepaid Assets amortized period | 3 months | ||||||||||||||||||||||
Prepaid Assets amortized expenses | $ 27,400 | ||||||||||||||||||||||
Agreement with Investment Banker [Member] | |||||||||||||||||||||||
Strike price | $ 0.30 | ||||||||||||||||||||||
Expiration period | 5 years | ||||||||||||||||||||||
General financial advisory and investment banking services per month | $ 10,000 | ||||||||||||||||||||||
Term of agreement | 6 months | ||||||||||||||||||||||
Percentage payable on last day of month following closing | 50.00% | ||||||||||||||||||||||
Shares issued to investment banker, vested shares | 912,000 | ||||||||||||||||||||||
Warrants issued to purchase common stock | 302,000 | ||||||||||||||||||||||
Private Placement [Member] | |||||||||||||||||||||||
Value of shares authorized for issuance | $ 5,000,000 | ||||||||||||||||||||||
Fee for placement | 15,000 | ||||||||||||||||||||||
Payment of the cash fee | $ 5,000 | ||||||||||||||||||||||
Agent percentage of senior debt fee | 5.00% | ||||||||||||||||||||||
Agent percentage of warrant fee | 8.00% | ||||||||||||||||||||||
Strike price | $ 0.35 | ||||||||||||||||||||||
Subsequent Event [Member] | |||||||||||||||||||||||
Percentage fo annual escalation | 3.00% | ||||||||||||||||||||||
Refund of initial fees | $ 6,500 | ||||||||||||||||||||||
Subsequent Event [Member] | Greentree Financial Group, Inc [Member] | |||||||||||||||||||||||
Settlement amount | $ 150,000 |
NOTE 11 - INCOME TAXES (Schedul
NOTE 11 - INCOME TAXES (Schedule of provision for income taxes) (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | ||
Income tax benefit at U.S. statutory rate of 34% | $ (870,948) | $ (790,823) |
State income taxes | (92,218) | (83,734) |
Non-deductible expenses | 356,674 | 722,740 |
Change in valuation allowance | 606,492 | 151,817 |
Total provision for income tax |
NOTE 11 - INCOME TAXES (Sched61
NOTE 11 - INCOME TAXES (Schedule of deferred tax assets) (Details) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Income Tax Disclosure [Abstract] | ||
Net operating loss carryforward | $ 5,241,802 | $ 4,602,442 |
Intangible assets | 181,338 | 214,206 |
Gross deferred tax assets | 5,423,140 | 4,816,648 |
Valuation allowance | (5,423,140) | (4,816,648) |
Net deferred tax assets |
NOTE 11 - INCOME TAXES (Narrati
NOTE 11 - INCOME TAXES (Narrative) (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | ||
Net operating loss carry forward | $ 13,941,000 | $ 12,240,000 |
Increase in the valuation allowance | $ 606,492 | |
Statutory rate | 34.00% | |
Percentage of Federal and State tax rate loss before taxes | 37.60% |
NOTE 12 - RELATED PARTIES (Narr
NOTE 12 - RELATED PARTIES (Narrative) (Details) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Notes and loans payable to related parties | $ 577,716 | $ 486,964 |
Unpaid interest | 62,959 | 47,959 |
Due to the former parent | 40,136 | 30,070 |
Due to an affiliate for services | 40,136 | 30,070 |
Administrative Services Agreement [Member] | ||
Due to the former parent | $ 0 | $ 5,173 |
NOTE 13 - SERIES A REDEEMABLE C
NOTE 13 - SERIES A REDEEMABLE CONVERTIBLE CUMLATIVE PREFERRED STOCK (Details) - USD ($) | 2 Months Ended | 12 Months Ended | ||||||
Oct. 31, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 30, 2015 | Dec. 16, 2015 | Oct. 27, 2015 | Oct. 26, 2015 | Mar. 31, 2015 | |
Preferred stock authorized | 10,000,000 | 10,000,000 | ||||||
Proceeds from sale of preferred stock | $ 296,000 | |||||||
Accrued cumulative dividends | 5,920 | |||||||
Preferred stock redemption value | $ 301,920 | |||||||
Accrued and unpaid dividends per share by the conversion price | $ 0.30 | $ 0.30 | $ 0.30 | $ 0.30 | $ 0.30 | $ 0.80 | ||
Series A Convertible Preferred Stock [Member] | ||||||||
Preferred stock authorized | 10,000,000 | |||||||
Preferred stock issued | 500,000 | |||||||
Sale of preferred stock | 2960000.00% | |||||||
Proceeds from sale of preferred stock | $ 296,000 | |||||||
Liquidation preference | $ 10 | |||||||
Accrued and unpaid dividends per share by the conversion price | $ 0.18 | |||||||
Cumulative cash dividends at an annual rate | 8.00% |
NOTE 14 - STOCKHOLDERS' DEFIC65
NOTE 14 - STOCKHOLDERS' DEFICIT (Schedule of fair value of assets acquired and liabilities assumed) (Details) | Dec. 31, 2015USD ($) |
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 |
NOTE 14 - STOCKHOLDERS' DEFIC66
NOTE 14 - STOCKHOLDERS' DEFICIT (Schedule of unaudited pro forma consolidated results of oprations) (Details) - USD ($) | 3 Months Ended | 12 Months Ended |
Mar. 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 | $ (0.02) | $ (0.05) |
NOTE 14 - STOCKHOLDERS' DEFIC67
NOTE 14 - STOCKHOLDERS' DEFICIT (Narrative) (Details) - USD ($) | May 13, 2016 | Mar. 11, 2016 | Jan. 06, 2016 | Jan. 22, 2016 | Dec. 30, 2015 | Dec. 16, 2015 | Oct. 27, 2015 | Oct. 26, 2015 | Sep. 30, 2015 | Sep. 21, 2015 | Jul. 31, 2015 | Jun. 30, 2015 | Apr. 30, 2015 | Mar. 31, 2015 | Mar. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | May 27, 2016 | Aug. 27, 2017 | Apr. 30, 2016 | Apr. 02, 2016 | Aug. 27, 2015 | Jul. 02, 2015 | May 27, 2015 | May 20, 2015 | Dec. 31, 2014 |
Issuance of common stock | 125,000 | 403,977 | 166,667 | 229,167 | 499,308 | 68,223 | 1,002,401 | 506,421 | 46,015 | 50,000 | |||||||||||||||||
Value of assets and liabilities acquired | $ 1,580,163 | $ 1,580,163 | |||||||||||||||||||||||||
Incurred acquisition costs | $ 75,489 | $ 75,489 | $ 36,718 | ||||||||||||||||||||||||
Issuance of common stock in exchange for convertible note and accrued interest | 50,000 | 166,667 | 166,667 | ||||||||||||||||||||||||
Issuance of common stock in exchange for convertible note and accrued interest, amount | $ 50,000 | $ 68,750 | $ 149,792 | $ 20,467 | $ 275,660 | $ 81,250 | $ 50,000 | $ 50,000 | |||||||||||||||||||
Conversion price | $ 0.30 | $ 0.30 | $ 0.30 | $ 0.30 | $ 0.80 | $ 0.30 | $ 0.30 | ||||||||||||||||||||
Settlement of an outstanding payable | 136,734 | $ 20,000 | $ 33,000 | ||||||||||||||||||||||||
Exercise price | $ 0.001 | $ 0.001 | $ 0.001 | $ 0.35 | $ 0.40 | ||||||||||||||||||||||
Conversion of Preferred stock | $ 150,000 | 16,800 | |||||||||||||||||||||||||
Gain (Loss) on Settlement | $ 35,876 | $ 5,479 | $ 115,139 | $ 55,484 | $ 76,500 | 3,200 | $ 3,082 | ||||||||||||||||||||
Prepaid Vested Common stock issued | 41,250 | 100,000 | |||||||||||||||||||||||||
Closing stock per share | $ 0.65 | ||||||||||||||||||||||||||
Amount Recorded prepaid asset for amortized expense | $ 65,000 | ||||||||||||||||||||||||||
Share Granted in merger agreement | 19,387 | ||||||||||||||||||||||||||
Exchange of Common stock into Warrants | 148,000 | 501,201 | 20,250 | 33,750 | |||||||||||||||||||||||
Principal balance of a promissory note | $ 37,817 | $ 50,000 | |||||||||||||||||||||||||
Common stock conversion price | $ 0.33 | ||||||||||||||||||||||||||
Quoted trading price | $ 0.51 | $ 0.2155 | |||||||||||||||||||||||||
Amount of Consulting Agreement | $ 100 | ||||||||||||||||||||||||||
Consuting Expense | $ 27,400 | $ 15,000 | $ 50,000 | $ 15,000 | $ 10,675 | ||||||||||||||||||||||
Warrant Granted | 14,963 | 4,659,893 | 14,963 | 2,500,000 | 200,000 | ||||||||||||||||||||||
Shares Value | 260,624 | $ 64,778 | $ 66,221 | $ 64,778 | |||||||||||||||||||||||
Warrant valued | 130,175 | ||||||||||||||||||||||||||
Total value of warrants | $ 390,799 | ||||||||||||||||||||||||||
Total value of Common Share | $ 50,000 | $ 68,750 | $ 144,473 | $ 35,616 | |||||||||||||||||||||||
Term of agreement | 3 months | ||||||||||||||||||||||||||
Common stock issued in exchange of warrants | 2,100 | ||||||||||||||||||||||||||
Warrants exchanged | 5,250 | 5,250 | |||||||||||||||||||||||||
Loss on settlement charged to operations | $ 630 | $ 630 | |||||||||||||||||||||||||
Common stock sold | $ 114,793 | ||||||||||||||||||||||||||
Convertible debentures | 1,415,546 | ||||||||||||||||||||||||||
Accrued interest | $ 7,176 | ||||||||||||||||||||||||||
Common stock after closing of reverse merger | 2,211,791 | ||||||||||||||||||||||||||
Conversion price discount | 20.00% | ||||||||||||||||||||||||||
Original convertable price | $ 0.64 | ||||||||||||||||||||||||||
Accrued debt premium | $ 37,120 | ||||||||||||||||||||||||||
Percentage of Provision | 3.00% | ||||||||||||||||||||||||||
Interest Expense | $ 352,093 | ||||||||||||||||||||||||||
Loss on impairment | 1,578,816 | ||||||||||||||||||||||||||
Professional Fees [Member] | |||||||||||||||||||||||||||
Incurred acquisition costs | 31,812 | 31,812 | 16,425 | ||||||||||||||||||||||||
Salaries, Wages and Contract Labor [Member] | |||||||||||||||||||||||||||
Incurred acquisition costs | 35,000 | 35,000 | 10,000 | ||||||||||||||||||||||||
General and Administrative Expenses [Member] | |||||||||||||||||||||||||||
Incurred acquisition costs | $ 8,677 | $ 8,677 | $ 10,293 | ||||||||||||||||||||||||
2016 Equity Incentive Plan [Member] | |||||||||||||||||||||||||||
Issuance of common stock | 8,000,000 | ||||||||||||||||||||||||||
Issuance of Common stock under Awards | 8,000,000 | ||||||||||||||||||||||||||
Common stock on the date of grant, term of the stock option | not exceed 10 years | ||||||||||||||||||||||||||
Employee Stock Option [Member] | |||||||||||||||||||||||||||
Voting rights | more than 10% of the total combined voting power of all classes of capital stock | ||||||||||||||||||||||||||
Aggregate fair market value of our common stock not exceed | $ 100,000 | ||||||||||||||||||||||||||
Information Systems Associates, Inc.[Member] | |||||||||||||||||||||||||||
Issuance of common stock | 60,000,000 | ||||||||||||||||||||||||||
Issuance of Common stock under Awards | 1,246,870 | ||||||||||||||||||||||||||
Enterprise valuation | $ 19,350,000 | ||||||||||||||||||||||||||
Purchase price | 393,929 | ||||||||||||||||||||||||||
Shares Value | 393,929 | ||||||||||||||||||||||||||
Difference between value of assets acquired and liabilities assumed totaling | 1,578,816 | ||||||||||||||||||||||||||
Amount allocated for trade name and technology | 165,000 | ||||||||||||||||||||||||||
Amount allocated for customer relationships | $ 250,000 | ||||||||||||||||||||||||||
Amortized Term | 2 years | ||||||||||||||||||||||||||
Amount Allocation to Goodwill | $ 1,163,816 | ||||||||||||||||||||||||||
Loss on impairment | $ 1,578,816 | ||||||||||||||||||||||||||
Agreement with Investment Banker [Member] | |||||||||||||||||||||||||||
Issuance of common stock in exchange for convertible note and accrued interest, amount | $ 60,000 | ||||||||||||||||||||||||||
Exercise price | $ 0.30 | ||||||||||||||||||||||||||
Consuting Expense | $ 90,036 | ||||||||||||||||||||||||||
Shares Value | 273,600 | ||||||||||||||||||||||||||
General financial advisory and investment banking services per month | $ 10,000 | ||||||||||||||||||||||||||
Percentage payable on last day of month following closing | 50.00% | ||||||||||||||||||||||||||
Term of agreement | 6 months | ||||||||||||||||||||||||||
Shares issued to investment banker, vested shares | 912,000 | ||||||||||||||||||||||||||
Warrants issued to purchase common stock | 302,000 | ||||||||||||||||||||||||||
Expiration period | 5 years | ||||||||||||||||||||||||||
CFO [Member] | |||||||||||||||||||||||||||
Issuance of common stock | 141,205 | ||||||||||||||||||||||||||
Issuance of common stock in exchange for convertible note and accrued interest | 56,482 | ||||||||||||||||||||||||||
Closing stock per share | $ 0.40 | ||||||||||||||||||||||||||
Retain shares | 45,000 |
NOTE 15 - COMMON STOCK PURCHA68
NOTE 15 - COMMON STOCK PURCHASE WARRANTS (Schedule of activity of warrants) (Details) - $ / shares | 3 Months Ended | 6 Months Ended | 12 Months Ended |
Mar. 31, 2016 | Jun. 30, 2016 | Dec. 31, 2016 | |
Number of Warrants | |||
Warrants expired, forfeited or cancelled | (1,500) | (3,750) | (302,000) |
Warrant [Member] | |||
Number of Warrants | |||
Outstanding at the beginning of the year | 609,340 | 609,340 | 609,340 |
Warrants expired, forfeited or cancelled | (307,250) | ||
Warrants issued with debt, debt modifications or services | 7,359,893 | ||
Warrants exchanged for common stock | (5,250) | ||
Outstanding at end of period | 7,656,733 | ||
Exercisable at end of period | 7,656,733 | ||
Weighted Avg. Exercise Price | |||
Outstanding at the beginning of the year | $ 0.54 | $ 0.54 | $ 0.54 |
Warrants expired, forfeited or cancelled | .41 | ||
Warrants issued with debt, debt modifications or services | .23 | ||
Warrants exchanged for common stock | 6.67 | ||
Outstanding at end of period | .24 | ||
Exercisable at end of period | $ .24 | ||
Remaining Contractual Life (Years) | |||
Outstanding at the beginning of the year | 4 years 6 months | ||
Warrants issued with debt, debt modifications or services | 4 years 7 months 6 days | ||
Outstanding at end of period | 4 years 7 months 6 days | ||
Exercisable at end of period | 4 years 7 months 6 days |
NOTE 15 - COMMON STOCK PURCHA69
NOTE 15 - COMMON STOCK PURCHASE WARRANTS (Narrative) (Details) - USD ($) | Apr. 02, 2016 | Apr. 30, 2016 | Jan. 22, 2016 | Mar. 31, 2016 | Jun. 30, 2016 | Dec. 31, 2016 | Dec. 31, 2015 |
Other Liabilities Disclosure [Abstract] | |||||||
Warrant issued | 200,000 | 2,500,000 | 4,659,893 | 14,963 | |||
Warrant exercise price | $ 0.40 | $ 0.35 | $ 0.001 | $ 0.001 | |||
Fair value of the warrants | $ 43,272 | $ 466,031 | $ 509,303 | $ 30,722 | |||
Warrant term | 3 years | ||||||
Warrants exchanged | 5,250 | 5,250 | |||||
Common shares issued | 2,100 | ||||||
Loss on settlement charged to operations | $ 630 | $ 630 | |||||
Warrants expired | 1,500 | 3,750 | 302,000 |
NOTE 16 _ DERIVATIVE FINANCIA70
NOTE 16 – DERIVATIVE FINANCIAL INSTRUMENTS (Details) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 20, 2016 | |
Note 16 Derivative Financial Instruments Details | ||
Expected Volatility | 144.00% | 144.00% |
Expected Remaining Term | 4 years 11 months 19 days | 5 years |
Risk Free Interest Rate | 2.04% | 2.04% |
NOTE 16 _ DERIVATIVE FINANCIA71
NOTE 16 – DERIVATIVE FINANCIAL INSTRUMENTS (Narrative) (Details) - USD ($) | 1 Months Ended | 12 Months Ended | |||
Apr. 30, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | Apr. 02, 2016 | Sep. 30, 2015 | |
Warrant issued | 2,500,000 | 4,659,893 | 14,963 | 200,000 | |
Warrant exercise price | $ 0.35 | $ 0.001 | $ 0.001 | $ 0.40 | |
Warrant term | 3 years | ||||
Value of warrants | $ 390,799 | ||||
Gain (Loss) on derivative | $ (264,099) | ||||
Derivative Financial Instruments [Member] | |||||
Warrant issued | 4,357,893 | ||||
Warrant exercise price | $ 0.15 | ||||
Warrant term | 5 years | ||||
Debt financing on Warrant | $ 605,263 | ||||
Value of warrants | 746,980 | ||||
Original issue discount | 529,000 | ||||
Gain (Loss) on derivative | 217,980 | ||||
Recognized a loss from the change in derivative liability | $ 46,119 |
NOTE 17 _ FAIR VALUE MEASUREM72
NOTE 17 – FAIR VALUE MEASUREMENTS (Details) | Dec. 31, 2016USD ($) |
Liabilities: | |
Liability for warrant derivative instruments | $ 793,099 |
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | |
Liabilities: | |
Liability for warrant derivative instruments | |
Significant Other Observable Inputs (Level 2) [Member] | |
Liabilities: | |
Liability for warrant derivative instruments | |
Significant Unobservable Inputs (Level 3) [Member] | |
Liabilities: | |
Liability for warrant derivative instruments | $ 793,099 |
NOTE 17 _ FAIR VALUE MEASUREM73
NOTE 17 – FAIR VALUE MEASUREMENTS (Fair value liability of warrant derivative instruments) (Details) | 12 Months Ended |
Dec. 31, 2016USD ($) | |
Note 17 Fair Value Measurements Fair Value Liability Of Warrant Derivative Instruments Details | |
Begining Balance | |
Initial fair value of warrant liability included in expense ($217,980) and debt discount ($529,000) | 746,980 |
Change in fair value included in other (income) expense | 46,119 |
Ending Balnace | 793,099 |
Fair Value of Warrant liability expense | 217,980 |
Fair Value of Warrant debt discount | $ 529,000 |
NOTE 18 - SUBSEQUENT EVENTS (De
NOTE 18 - SUBSEQUENT EVENTS (Details) - USD ($) | Mar. 14, 2017 | Mar. 07, 2017 | Mar. 06, 2017 | Feb. 08, 2017 | Feb. 27, 2017 | Jan. 25, 2017 | Jan. 23, 2017 | Jan. 19, 2017 | Oct. 27, 2015 | Oct. 26, 2015 | Sep. 30, 2015 | Sep. 21, 2015 | Jul. 31, 2015 | Mar. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | May 27, 2016 |
Interest expense | $ 352,093 | ||||||||||||||||
Gain on settlement | $ 35,876 | $ 5,479 | $ 115,139 | $ 55,484 | $ 76,500 | $ 3,200 | $ 3,082 | ||||||||||
Amount of borrowing | $ 2,047,000 | ||||||||||||||||
Subsequent Event [Member] | |||||||||||||||||
Settlement calls for payment | $ 6,325 | ||||||||||||||||
Amount of settlement paid | $ 150,194 | ||||||||||||||||
Equity offering | $ 10,000,000 | ||||||||||||||||
Amount of borrowing | $ 263,158 | $ 157,895 | $ 105,263 | $ 263,158 | $ 157,895 | ||||||||||||
Net amount received | 217,500 | 130,500 | 87,000 | 217,500 | 130,500 | ||||||||||||
Warrant Value issued | $ 1,754,386 | $ 1,052,632 | $ 701,753 | $ 1,754,386 | $ 1,052,632 | ||||||||||||
Reverse split | 1 for 35 | ||||||||||||||||
Subsequent Event [Member] | Greentree Financial Group resolving [Member] | |||||||||||||||||
Settlement calls for payment | $ 150,000 | ||||||||||||||||
Interest expense | 194 | ||||||||||||||||
Gain on settlement | $ 53,870 |