Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2019 | Aug. 12, 2019 | |
Document And Entity Information | ||
Entity Registrant Name | Duos Technologies Group, Inc. | |
Entity Central Index Key | 0001396536 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2019 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2019 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Document Fiscal Period Focus | Q2 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Incorporation State Country Code | FL | |
Entity File Number | 000-55497 | |
Entity Common Stock, Shares Outstanding | 25,430,224 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 |
CURRENT ASSETS: | ||
Cash | $ 280,684 | $ 1,209,301 |
Accounts receivable, net | 1,841,778 | 1,538,793 |
Contract assets | 304,061 | 1,208,604 |
Prepaid expenses and other current assets | 366,591 | 235,198 |
Total Current Assets | 2,793,114 | 4,191,896 |
Property and equipment, net | 353,134 | 204,226 |
Operating lease right of use asset | 565,926 | |
OTHER ASSETS: | ||
Software Development Costs, net | 30,000 | 40,000 |
Patents and trademarks, net | 54,187 | 53,871 |
Total Other Assets | 84,187 | 93,871 |
TOTAL ASSETS | 3,796,361 | 4,489,993 |
CURRENT LIABILITIES: | ||
Accounts payable | 897,246 | 1,416,716 |
Accounts payable - related parties | 13,473 | 13,473 |
Notes payable - financing agreements | 125,029 | 48,330 |
Line of credit | 28,704 | 31,201 |
Payroll taxes payable | 120,964 | 317,573 |
Accrued expenses | 237,999 | 222,328 |
Current portion-operating lease obligations | 237,470 | |
Contract liabilities | 1,078,633 | 2,248,829 |
Deferred revenue | 597,516 | 362,528 |
Total Current Liabilities | 3,337,034 | 4,660,978 |
Operating lease obligations | 354,932 | |
Total Liabilities | 3,691,966 | 4,660,978 |
Commitments and Contingencies (Note 6) | ||
STOCKHOLDERS' EQUITY (DEFICIT): | ||
Common stock: $0.001 par value; 500,000,000 shares authorized, 25,155,224 and 21,082,351 shares issued, 25,147,231 and 21,075,958 shares outstanding at June 30, 2019 and December 31, 2018, respectively | 25,155 | 21,082 |
Additional paid-in capital | 29,575,305 | 27,397,225 |
Total stock & paid-in-capital | 32,430,460 | 30,248,307 |
Accumulated deficit | (32,175,455) | (30,269,833) |
Sub-total | 255,005 | (21,526) |
Less: Treasury stock (7,992 and 6,393 shares of common stock at June 30, 2019 and December 31, 2018, respectively) | (150,610) | (149,459) |
Total Stockholders' Equity (Deficit) | 104,395 | (170,985) |
Total Liabilities and Stockholders' Equity (Deficit) | 3,796,361 | 4,489,993 |
Series A Convertible Preferred Stock [Member] | ||
STOCKHOLDERS' EQUITY (DEFICIT): | ||
Preferred stock | ||
Series B Convertible Preferred Stock [Member] | ||
STOCKHOLDERS' EQUITY (DEFICIT): | ||
Preferred stock | $ 2,830,000 | $ 2,830,000 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Jun. 30, 2019 | Dec. 31, 2018 |
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares available to be designated | 9,485,000 | 9,485,000 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 500,000,000 | 500,000,000 |
Common stock, shares issued | 25,155,224 | 21,082,351 |
Common stock, shares outstanding | 25,147,231 | 21,075,958 |
Treasury stock shares | 7,992 | 6,393 |
Series A Convertible Preferred Stock [Member] | ||
Preferred stock, par value | $ 10 | $ 10 |
Preferred stock, shares available to be designated | 500,000 | 500,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Preferred stock, conversion price per share | $ 6.30 | $ 6.30 |
Series B Convertible Preferred Stock [Member] | ||
Preferred stock, par value | $ 1,000 | $ 1,000 |
Preferred stock, shares available to be designated | 15,000 | 15,000 |
Preferred stock, shares issued | 2,830 | 2,830 |
Preferred stock, shares outstanding | 2,830 | 2,830 |
Preferred stock, conversion price per share | $ 0.50 | $ 0.50 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
REVENUES: | ||||
Total Revenues | $ 1,345,805 | $ 3,240,056 | $ 5,697,886 | $ 4,387,985 |
COST OF REVENUES: | ||||
Total Cost of Revenues | 1,171,405 | 1,982,815 | 3,392,642 | 2,654,175 |
GROSS PROFIT | 174,400 | 1,257,241 | 2,305,244 | 1,733,810 |
OPERATING EXPENSES: | ||||
Selling and marketing expenses | 128,506 | 74,403 | 238,122 | 115,624 |
Salaries, wages and contract labor | 1,338,302 | 1,315,240 | 2,607,081 | 2,081,111 |
Research and development | 118,435 | 143,081 | 231,129 | 278,361 |
Professional fees | 17,054 | 59,937 | 144,973 | 123,801 |
General and administrative expenses | 521,268 | 295,141 | 986,655 | 504,976 |
Total Operating Expenses | 2,123,565 | 1,887,802 | 4,207,960 | 3,103,873 |
LOSS FROM OPERATIONS | (1,949,165) | (630,561) | (1,902,716) | (1,370,063) |
OTHER INCOME (EXPENSES): | ||||
Interest Expense | (3,692) | (4,438) | (6,313) | (10,166) |
Gain on settlement of debt | ||||
Warrant derivative gain | ||||
Other income, net | 3,066 | 636 | 3,407 | 2,762 |
Total Other Income (Expense) | (626) | (3,802) | (2,906) | (7,404) |
NET LOSS | (1,949,791) | (634,363) | (1,905,622) | (1,377,467) |
Net loss applicable to common stock | $ (1,949,791) | $ (634,363) | $ (1,905,622) | $ (1,377,467) |
Basic & Diluted Net Loss Per Share | $ (0.08) | $ (0.03) | $ (0.08) | $ (0.07) |
Weighted Average Shares-Basic & Diluted | 25,041,232 | 20,707,153 | 23,316,146 | 20,706,712 |
Project Revenues [Member] | ||||
REVENUES: | ||||
Total Revenues | $ 984,991 | $ 2,940,992 | $ 4,903,429 | $ 3,785,706 |
COST OF REVENUES: | ||||
Total Cost of Revenues | 967,649 | 1,846,871 | 3,060,643 | 2,394,670 |
Maintenance and Technical Support Revenues [Member] | ||||
REVENUES: | ||||
Total Revenues | 280,601 | 252,447 | 602,075 | 509,893 |
COST OF REVENUES: | ||||
Total Cost of Revenues | 156,341 | 108,193 | 261,665 | 211,516 |
IT Asset Management Services Revenues [Member] | ||||
REVENUES: | ||||
Total Revenues | 80,213 | 46,617 | 192,382 | 92,386 |
COST OF REVENUES: | ||||
Total Cost of Revenues | $ 47,415 | $ 27,751 | $ 70,334 | $ 47,989 |
STATEMENTS OF CHANGES IN STOCKH
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT) - USD ($) | Preferred Stock | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Treasury Stock | Total |
Balance at Dec. 31, 2017 | $ 2,830,000 | $ 20,658 | $ 26,608,823 | $ (28,688,946) | $ (148,000) | $ 622,535 |
Balance, shares at Dec. 31, 2017 | 2,830 | 20,657,850 | ||||
Common stock issued for services | $ 52 | 73,656 | 73,708 | |||
Common stock issued for services, shares | 52,209 | |||||
Net Income (Loss) | (743,104) | (743,104) | ||||
Balance at Mar. 31, 2018 | $ 2,830,000 | $ 20,710 | 26,682,479 | (29,432,049) | (148,000) | (46,861) |
Balance, shares at Mar. 31, 2018 | 2,830 | 20,710,059 | ||||
Balance at Dec. 31, 2017 | $ 2,830,000 | $ 20,658 | 26,608,823 | (28,688,946) | (148,000) | 622,535 |
Balance, shares at Dec. 31, 2017 | 2,830 | 20,657,850 | ||||
Stock issuance cost | ||||||
Net Income (Loss) | (1,377,467) | |||||
Balance at Jun. 30, 2018 | $ 2,830,000 | $ 20,710 | 27,085,549 | (30,066,413) | (148,000) | (278,154) |
Balance, shares at Jun. 30, 2018 | 2,830 | 20,710,059 | ||||
Balance at Mar. 31, 2018 | $ 2,830,000 | $ 20,710 | 26,682,479 | (29,432,049) | (148,000) | (46,861) |
Balance, shares at Mar. 31, 2018 | 2,830 | 20,710,059 | ||||
Stock options granted to employees | 403,070 | 403,070 | ||||
Net Income (Loss) | (634,363) | (634,363) | ||||
Balance at Jun. 30, 2018 | $ 2,830,000 | $ 20,710 | 27,085,549 | (30,066,413) | (148,000) | (278,154) |
Balance, shares at Jun. 30, 2018 | 2,830 | 20,710,059 | ||||
Balance at Dec. 31, 2018 | $ 2,830,000 | $ 21,082 | 27,397,225 | (30,269,833) | (149,459) | (170,985) |
Balance, shares at Dec. 31, 2018 | 2,830 | 21,082,351 | ||||
Commons stock issued for warrants exercised | $ 3,000 | 1,647,000 | 1,650,000 | |||
Commons stock issued for warrants exercised, shares | 3,000,000 | |||||
Stock options granted to employees | 21,892 | 21,892 | ||||
Net Income (Loss) | 44,169 | 44,169 | ||||
Balance at Mar. 31, 2019 | $ 2,830,000 | $ 24,082 | 29,066,117 | (30,225,664) | (149,459) | 1,545,076 |
Balance, shares at Mar. 31, 2019 | 2,830 | 24,082,351 | ||||
Balance at Dec. 31, 2018 | $ 2,830,000 | $ 21,082 | 27,397,225 | (30,269,833) | (149,459) | (170,985) |
Balance, shares at Dec. 31, 2018 | 2,830 | 21,082,351 | ||||
Stock issuance cost | (10,000) | |||||
Net Income (Loss) | (1,905,622) | |||||
Balance at Jun. 30, 2019 | $ 2,830,000 | $ 25,155 | 29,575,305 | (32,175,455) | (150,610) | 104,395 |
Balance, shares at Jun. 30, 2019 | 2,830 | 25,155,224 | ||||
Balance at Mar. 31, 2019 | $ 2,830,000 | $ 24,082 | 29,066,117 | (30,225,664) | (149,459) | 1,545,076 |
Balance, shares at Mar. 31, 2019 | 2,830 | 24,082,351 | ||||
Commons stock issued for warrants exercised | $ 1,073 | 512,947 | 514,020 | |||
Commons stock issued for warrants exercised, shares | 1,072,873 | |||||
Stock Repurchase | (1,151) | (1,151) | ||||
Stock options granted to employees | 6,241 | 6,241 | ||||
Stock issuance cost | (10,000) | (10,000) | ||||
Net Income (Loss) | (1,949,791) | (1,949,791) | ||||
Balance at Jun. 30, 2019 | $ 2,830,000 | $ 25,155 | $ 29,575,305 | $ (32,175,455) | $ (150,610) | $ 104,395 |
Balance, shares at Jun. 30, 2019 | 2,830 | 25,155,224 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Cash from operating activities: | ||
Net loss | $ (1,905,622) | $ (1,377,467) |
Adjustments to reconcile net loss to net cash (used in) provided by operating activities: | ||
Depreciation and amortization | 87,325 | 43,714 |
Stock based compensation | 28,134 | 403,070 |
Changes in assets and liabilities: | ||
Accounts receivable | (302,986) | (453,476) |
Contract assets | 904,543 | 83,872 |
Prepaid expenses and other current assets | 86,411 | (150,340) |
Operating lease right of use asset | (565,926) | |
Accounts payable | (519,468) | 351,832 |
Related payable-related party | 2,000 | |
Payroll taxes payable | (196,609) | 28,942 |
Accrued expenses | 15,671 | (54,781) |
Operating lease obligation | 592,402 | |
Contract liabilities | (1,170,197) | 1,568,554 |
Deferred revenue | 234,988 | (250,175) |
Net cash (used in) provided by operating activities | (2,711,334) | 195,745 |
Cash flows from investing activities: | ||
Software development costs | (60,000) | |
Purchase of patents/trademarks | (3,000) | (1,000) |
Purchase of fixed assets | (223,549) | (134,814) |
Net cash used in investing activities | (226,549) | (195,814) |
Cash flows from financing activities: | ||
Repurchase of common stock | (1,151) | |
Repayments of line of credit | (2,497) | (1,305) |
Repayments of related party notes | (48,215) | |
Issuance cost | (10,000) | |
Repayments of insurance and equipment financing | (141,105) | (138,633) |
Proceeds from warrants exercised | 2,164,019 | |
Net cash provided by (used in) financing activities | 2,009,266 | (188,153) |
Net decrease in cash | (928,617) | (188,222) |
Cash, beginning of period | 1,209,301 | 1,941,818 |
Cash, end of period | 280,684 | 1,753,596 |
Supplemental Disclosure of Cash Flow Information: | ||
Interest paid | 4,109 | 5,327 |
Supplemental Non-Cash Investing and Financing Activities: | ||
Common stock issued for accrued BOD fees | 73,708 | |
Note issued for financing of insurance premiums | $ 217,804 | $ 198,548 |
NATURE OF OPERATIONS, BASIS OF
NATURE OF OPERATIONS, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 6 Months Ended |
Jun. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
NATURE OF OPERATIONS, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 1 NATURE OF OPERATIONS, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of Operations Duos Technologies Group, Inc. (the “duostech Group”), through its operating subsidiaries, Duos Technologies, Inc. (“duostech”) and TrueVue360, Inc (“TrueVue360”, duostech Group and duostech, collectively the “Company”) is primarily engaged in the design and deployment of state-of-the-art, artificial intelligence driven intelligent technologies systems. duostech converges traditional security measures with information technologies to create “actionable intelligence.” duostech’s IP is built upon two of its core technology platforms (praesidium® and centraco®), both distributed as licensed software suites, and natively embedded within engineered turnkey systems. praesidium® is a modular suite of analytics applications which process and simultaneously analyze data streams from a virtually unlimited number of conventional sensors and/or data points. Native algorithms compare analyzed data against user-defined criteria and rules in real time and automatically report any exceptions, deviations and/or anomalies. This application suite also includes a broad range of conventional operational system components and sub-systems, including an embedded feature-rich video management engine and a proprietary Alarm Management Service (AMS). This unique service provides continuous monitoring of all connected devices, processes, equipment and sub-systems, and automatically communicates to the front end-user interface, if and when an issue, event or performance anomalies are detected. centraco® is a comprehensive user interface that includes the functionalities of a Physical Security Information Management (PSIM) system as well as those of an Enterprise Information System (EIS). This multi-layered interface can be securely installed as a stand-alone application suite inside a local area network or pushed outside a wide area network using the same browser-based interface. It leverages industry standards for data security, access, and encryption as appropriate. The platform also operates as a cloud-hosted solution. The Company provides a broad range of sophisticated intelligent technology solutions with an emphasis on security, inspection and operations for critical infrastructure within a variety of industries including transportation, retail, law enforcement, oil, gas and utilities sectors. In January 2019, the Company launched a dedicated Artificial Intelligence software platform, truevue360, through its subsidiary TrueVue360 with the objective of focusing the Companys advanced intelligent technologies in the areas of Artificial Intelligent, Deep Machine Learning and Advance Algorithms to further support our business growth. Consequently, our business operations are now in three business units: intelligent technologies, AI/machine learning platforms and IT asset management. The Companys strategy includes expansion of its technology base through organic development efforts, strategic partnerships, and growth through accretive acquisitions. The Company provides its broad range of technology solutions with an emphasis on mission critical security, inspection and operations within the rail transportation, commercial, petrochemical, government, and banking sectors. The Company also offers professional and consulting services for large data centers. Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (all of which are of a normal recurring nature) considered necessary for a fair presentation have been included. Operating results for the six months ended June 30, 2019 are not indicative of the results that may be expected for the year ending December 31, 2019 or for any other future period. These unaudited consolidated financial statements and the unaudited condensed notes thereto should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Companys Annual Report on Form 10-K for the year ended December 31, 2018 filed with the Securities and Exchange Commission (the SEC) on April 15, 2019. Principles of Consolidation The consolidated financial statements include duostech Group and its wholly-owned subsidiaries, Duos Technologies, Inc. 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 intangible and other long-lived assets, estimates of net contract revenues and the total estimated costs to determine progress towards contract completion, valuation of derivatives, valuation of warrants issued with debt, valuation of beneficial conversion features in convertible debt, and valuation of stock-based awards. 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. 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 June 30, 2019. Significant Customers and Concentration of Credit Risk 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: For the six months ended June 30, 2019, two customers accounted for 69% and 12% of revenues. For the six months ended June 30, 2018, two customers accounted for 56% and 14% of revenues. At June 30, 2019, four customers accounted for 25%, 17%, 13% and 10% of accounts receivable. At December 31, 2018, Geographic Concentration Approximately 72% of revenue is generated from two customers outside of the United States. Fair Value of Financial Instruments and Fair Value Measurements We measure our financial assets and liabilities in accordance with generally accepted accounting principles. For certain of our financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities, the carrying amounts approximate fair value due to their short maturities. Amounts recorded for notes payable, net of discount, and loans payable also approximate fair value because current interest rates available to us for debt with similar terms and maturities are substantially the same. We follow accounting guidance for financial assets and liabilities. This standard defines fair value, provides guidance for measuring fair value and requires certain disclosures. This standard does not require any new fair value measurements, but rather applies to all other accounting pronouncements that require or permit fair value measurements. This guidance does not apply to measurements related to share-based payments. This guidance discusses valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flow), and the cost approach (cost to replace the service capacity of an asset or replacement cost). The guidance utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels: Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2: Inputs, other than quoted prices that are observable, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active. Level 3: Unobservable inputs in which little or no market data exists, therefore developed using estimates and assumptions developed by us, which reflect those that a market participant would use. Software Development Costs Software development costs incurred prior to establishing technological feasibility are charged to operations and included in research and development costs. The technological feasibility of a software product is established when the Company has completed all planning, designing, coding, and testing activities that are necessary to establish that the product meets its design specifications, including functionality, features, and technical performance requirements. Software development costs incurred after establishing technological feasibility for software sold as a perpetual license, as defined within ASC 985-20 (Software Costs of Software to be sold, Leased, or Marketed) are capitalized and amortized on a product-by-product basis when the product is available for general release to customers. 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 June 30, 2019, there was an aggregate of 20,825,984 outstanding warrants to purchase shares of common stock. At June 30, 2019, there was an aggregate of 2,162,000 shares of employee stock options to purchase shares of common stock. Also, at June 30, 2019, 5,660,000 common shares were issuable upon conversion of Series B convertible preferred stock, all of which were excluded from the computation of dilutive earnings per share because their inclusion would have been anti-dilutive. Revenue Recognition As of January 1, 2018, the Company adopted Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers (ASC 606), that affects the timing of when certain types of revenues will be recognized. The basic principles in ASC 606 include the following: a contract with a customer creates distinct unrecognized contract assets and performance obligations; satisfaction of a performance obligation creates revenue; and a performance obligation is satisfied upon transfer of control to a good or service to a customer. Revenue is recognized for sales of systems and services over time using cost-based input methods, in which significant judgement is required to evaluate assumptions including the amount of net contract revenues and the total estimated costs to determine our progress towards contract completion and to calculate the corresponding amount of revenue to recognize. Revenue is recognized by evaluating our revenue contracts with customers based on the five-step model under ASC 606: 1. Identify the contract with the customer; 2. Identify the performance obligations in the contract; 3. Determine the transaction price; 4. Allocate the transaction price to separate performance obligations; and 5. Recognize revenue when (or as) each performance obligations is satisfied. Accordingly, the Company now bases its revenue recognition on ASC 606-10-25-27, where control of a good or service transfers over time if the entitys performance does not create an asset with an alternative use to the entity and the entity has an enforceable right to payment for performance completed to date including a profit margin or reasonable return on capital. Control is deemed to pass to the customer instantaneously as the goods are manufactured and revenue is recognized accordingly. In addition, the Company has adopted ASC 606-10-55-21 such that if the cost incurred is not proportionate to the progress in satisfying the performance obligation, we adjust the input method to recognize revenue only to the extent of the cost incurred. Therefore, the Company will recognize revenue at an equal amount to the cost of the goods to satisfy the performance obligation. To accurately reflect revenue recognition based on the input method, the Company has adopted the implementation guidance as set out in ASC-606-10-55-187 through 192. Segment Information The Company operates in one reportable segment. Stock Based Compensation The Company accounts for employee stock-based compensation in accordance with ASC 718-10, Share-Based Payment In June 2018, the FASB issued ASU 2018-07, Compensation Stock Compensation (Topic 718). This update is intended to reduce cost and complexity and to improve financial reporting for share-based payments issued to non-employees (for example, service providers, external legal counsel, suppliers, etc.). The ASU expands the scope of Topic 718, CompensationStock Compensation, which currently only includes share-based payments issued to employees, to also include share-based payments issued to non-employees for goods and services. Consequently, the accounting for share-based payments to non-employees and employees will be substantially aligned. This standard will be effective for financial statements issued by public companies for the annual and interim periods beginning after December 15, 2018. Early adoption of the standard is permitted. The standard will be applied in a retrospective approach for each period presented. Management implemented this standard on January 1, 2019. Determining Fair Value Under ASC 718-10 The Company estimates the fair value of stock options granted using the Black-Scholes option-pricing formula. This fair value is then amortized on a straight-line basis over the requisite service periods of the awards, which is generally the vesting period. The Companys determination of fair value using an option-pricing model is affected by the stock price as well as assumptions regarding the number of highly subjective variables. The Company estimates volatility based upon the historical stock price of the Company and estimates the expected term for employee stock options using the simplified method for employees and directors and the contractual term for non-employees. The risk-free rate is determined based upon the prevailing rate of United States Treasury securities with similar maturities. Recent Accounting Pronouncements From time to time, the FASB or other standards setting bodies will issue new accounting pronouncements. Updates to the FASB ASC are communicated through issuance of an Accounting Standards Update (ASU). In August 2018, the FASB issued ASU 2018-13, Changes to Disclosure Requirements for Fair Value Measurements, which will improve the effectiveness of disclosure requirements for recurring and nonrecurring fair value measurements. The standard removes, modifies, and adds certain disclosure requirements, and is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The Company will be evaluating the impact this standard will have on the Companys financial statements. Management does not believe that any other recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying financial statements. |
LIQUIDITY
LIQUIDITY | 6 Months Ended |
Jun. 30, 2019 | |
LIQUIDITY [Abstract] | |
LIQUIDITY | NOTE 2 LIQUIDITY Management continues to believe that we have alleviated the substantial doubt for the Company to continue as a going concern. We are executing the plan to grow our business and achieve profitability without the requirement to raise additional capital for existing operations other than encouraging early conversions of cash warrants. Ultimately, the continuation of the Company as a going concern is dependent upon the ability of the Company to continue executing the plan described above, generate sufficient revenue and to attain consistently profitable operations. Additionally, the Company expects potential further warrant exercises, in addition to potential capital raises of its equity or debt securities, though no guarantees can be made with respect to the foregoing. Management will continue to evaluate these plans in future filings. |
SOFTWARE DEVELOPMENT COSTS
SOFTWARE DEVELOPMENT COSTS | 6 Months Ended |
Jun. 30, 2019 | |
SOFTWARE DEVELOPMENT COSTS [Abstract] | |
SOFTWARE DEVELOPMENT COSTS | NOTE 3 SOFTWARE DEVELOPMENT COSTS At June 30, 2019 and December 31, 2018, the Company capitalized $60,000, relating to the development of new software products. These software products were developed by a third-party and had passed the preliminary project stage prior to capitalization. Software development costs consisted of the following at June 30, 2019 and December 31, 2018: June 30, 2019 December 31, 2018 Software Development Costs $ 60,000 $ 60,000 Less: Accumulated amortization (30,000 ) (20,000 ) Total $ 30,000 $ 40,000 Amortization expense of software development costs for the six months ended June 30, 2019 and 2018 was $10,000 and $10,000, respectively. |
DEBT
DEBT | 6 Months Ended |
Jun. 30, 2019 | |
Debt Disclosure [Abstract] | |
DEBT | NOTE 4 DEBT Notes Payable - Financing Agreements The Companys notes payable relating to financing agreements classified as current liabilities consist of the following as of: June 30, 2019 December 31, 2018 Notes Payable Principal Interest Principal Interest Third Party - Insurance Note 1 $ 6,418 9.29 % $ 25,066 9.29 % Third Party - Insurance Note 2 31,438 6.36 % 8,501 10.25 % Third Party - Insurance Note 3 1,645 10.75 % 14,763 10.75 % Third Party - Insurance Note 4 85,528 6.36 % Total $ 125,029 $ 48,330 The Company entered into an agreement on December 23, 2018 with its insurance provider by executing a $25,066 note payable (Insurance Note 1) issued to purchase an insurance policy, secured by that policy with an annual interest rate of 9.29% payable in monthly installments of principal and interest totaling $2,172 through September 23, 2019. The balance of Insurance Note 1 as of June 30, 2019 and December 31, 2018 was $6,418 and $25,066, respectively. The Company entered into an agreement on April 15, 2018 with its insurance provider by executing a $49,000 note payable (Insurance Note 2) issued to purchase an insurance policy, secured by that policy with an annual interest rate of 10.75% payable in monthly installments of principal and interest totaling $4,378 through February 15, 2019. The policy renewed on April 15, 2019 in the amount of $51,940 with an annual interest rate of 6.36% payable in monthly installments of principal and interest totaling $5,326. At June 30, 2019 and December 31, 2018, the balance of Insurance Note 2 was $31,438 and $8,501, respectively. The Company entered into an agreement on September 15, 2018 renewing with its insurance provider by executing a $15,810 note payable (Insurance Note 3), secured by that policy, with an annual interest rate of 10.75% payable in monthly installments of principal and interest totaling $1,660 through July 15, 2019. At June 30, 2019 and December 31, 2018, the balance of Insurance Note 3 was $1,645 and $14,763, respectively. The Company entered into an agreement on February 3, 2018 with its insurance provider by executing a $127,561 note payable (Insurance Note 4) issued to purchase an insurance policy, secured by that policy with an annual interest rate of 8.80% payable in monthly installments of principal and interest totaling $13,276 through November 3, 2018. The policy renewed on February 3, 2019 in the amount of $141,058 with an annual interest rate of 6.36% payable in monthly installments of principal and interest totaling $14,520. At June 30, 2019 and December 31, 2018, the balance of Insurance Note 4 was $85,528 and zero, respectively. |
LINE OF CREDIT
LINE OF CREDIT | 6 Months Ended |
Jun. 30, 2019 | |
LINE OF CREDIT [Abstract] | |
LINE OF CREDIT | NOTE 5 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 June 30, 2019 and December 31, 2018, was $28,704 and $31,201, respectively, including accrued interest. This line of credit has no maturity date. The annual interest rate is 12% at June 30, 2019. The former CEO of ISA is the personal guarantor. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 6 Months Ended |
Jun. 30, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE 6 COMMITMENTS AND CONTINGENCIES Delinquent Payroll Taxes Payable As of the date hereof, the Company has paid its payroll taxes in full. However, the Company had previously appealed to the IRS for a reduction of penalty payments assessed for the late payment of payroll taxes. The IRS has since responded, and the Company will be required to repay the penalties in connection with the delinquent payroll taxes. The Company has started making monthly payments in the amount of $15,000 starting in July 2018 to pay down the accrued late fees. At June 30, 2019, the payroll taxes payable balance of $120,964 includes accrued late fees in the amount of $63,572. Licensing Agreement The Company has entered into a new software license and configuration services agreement with a third-party vendor. The annual support and maintenance fees of approximately $300,000 include support and updates to the vendors Gateway software and customer access to their services (including web application, mobile application, and associated APIs) for gateway configuration, gateway monitoring and management, application configuration, application management, and automatic model updates. The Company has also entered into a SaaS Agreement with the same vendor that is an Amazon AWS-hosted software service enabling the automation of visual observation tasks using deep convolutional neural networks and other computer vision techniques. It consists of a public API, web application, iPhone application, and associated backend services. The system supports the labeling of example image data, the automatic building of classification, detection, localization, measuring and counting applications based on the labeled example data, and the run-time deployment of the trained application models. |
OPERATING LEASE OBLIGATIONS
OPERATING LEASE OBLIGATIONS | 6 Months Ended |
Jun. 30, 2019 | |
Lessee, Operating Lease, Description [Abstract] | |
OPERATING LEASE OBLIGATIONS | NOTE 7 OPERATING LEASE OBLIGATIONS The Company has two operating lease agreements for office and warehouse space of approximately 12,708 square feet located in Jacksonville, Florida. On April 1, 2019, the Company increased the office square feet from 8,308 to 10,203 office space. The Company now has a total of office and warehouse space of approximately 14,603 square feet. The current lease was amended on May 1, 2016 and again on April 1, 2019 and ends on October 31, 2021. The rent is subject to an annual escalation of 3%, beginning May 1, 2017. The Company entered a new lease agreement of office and warehouse space on June 1, 2018 and ending May 31, 2021. In February 2016, the FASB issued ASU No. 2016-02 Leases (Topic 842) |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 6 Months Ended |
Jun. 30, 2019 | |
Equity [Abstract] | |
STOCKHOLDERS' DEFICIT | NOTE 8 STOCKHOLDERS EQUITY Common stock issued for exercise of warrants During the first quarter of 2019, the Company entered into an agreement with two shareholders who were also holders of warrants to purchase shares of common stock in the aggregate amount of 3,000,000 shares, to reduce the exercise price of these warrants to $0.55 from the original exercise price of $0.65 based on immediate exercise. Both shareholders exercised these warrants in March 2019 for proceeds to the Company of $1,650,000. The Company also accepted warrant exercises in the second quarter of 2019 from three additional shareholders who were also holders of warrants to purchase shares of common stock in the aggregate amount of 934,581 shares. The exercise price of these warrants was also lowered to $0.55 from the original exercise price of $0.65 based on immediate exercise for further proceeds to the Company of $514,020. Further, during the second quarter of 2019, the Company issued 138,292 shares of common stock upon the cashless exercise of 651,982 common stock warrants. Stock-Based Compensation Stock-based compensation expense recognized under ASC 718-10 for the six months ended June 30, 2019, was $28,134 for stock options granted to employees and directors. This expense is included in selling, general and administrative expenses in the unaudited consolidated statements of operations. Stock-based compensation expense recognized during the period is based on the value of the portion of share-based payment awards that is ultimately expected to vest during the period. At June 30, 2019, the total compensation cost for stock options not yet recognized was $13,887. This cost will be recognized over the remaining vesting term of the options of approximately one year. Employee Stock Options A maximum of 2,500,000 shares were made available for grant under the 2016 Plan, as amended, and all outstanding options under the Plan provide a cashless exercise feature. The identification of individuals entitled to receive awards, the terms of the awards, and the number of shares subject to individual awards, are determined by our Board of Directors or the Compensation Committee, at their sole discretion. The aggregate number of shares with respect to which options or stock awards may be granted under the 2016 Plan and the purchase price per share, if applicable, shall be adjusted for any increase or decrease in the number of issued shares resulting from a stock dividend, stock split, reverse stock split, recapitalization or similar event. As of June 30, 2019, and December 31, 2018, options to purchase 2,162,000 shares of common stock and 2,242,000 shares of common stock were outstanding under the 2016 Plan, respectively. The Company has no expired employee stock options under the 2016 Plan at June 30, 2019. June 30, 2019 Weighted Average Exercise Shares Price Outstanding at December 31, 2018 2,242,000 $ 1.00 Granted 120,000 $ 1.00 Exercised $ Forfeited (200,000) $ 1.00 Expired $ Outstanding at June 30, 2019 2,162,000 $ 1.00 Exercisable at June 30, 2019 2,042,000 $ 1.00 Outstanding Weighted average remaining contractual term 3.80 Aggregate intrinsic value $ Weighted average grant date fair value (per share) $ 0.22 Exercisable Weighted average remaining contractual term 3.55 Aggregate intrinsic value On January 29, 2019, the Board of Directors appointed a new independent director and Chairman of the Compensation Committee. As a result of the appointment, the new director was granted 120,000 stock options exercisable at $1.00 per share vesting one year from the date of grant. On March 31, 2019, the President and Chief Operating Officer of Duos Technologies Inc., resigned from her positions. Due to the resignation, the individual forfeited 200,000 stock options previously granted. Warrants The following is a summary of activity for warrants to purchase common stock for the six months ended June 30, 2019: June 30, 2019 Number of Warrants Weighted Avg. Exercise Price Remaining Contractual Life (Years) Outstanding at December 31, 2018 25,412,547 $ .70 3.9 Warrants expired Warrants issued Warrants cancelled/exercised (4,586,563 ) .47 Outstanding at end of period 20,825,984 .63 3.4 Exercisable at end of period 20,825,984 $ .47 3.4 During the first quarter of 2019, the Company received $1,650,000 for the exercise of warrants for 3,000,000 shares of common stock. During the second quarter of 2019, the Company received an aggregate of $514,020 for the exercise of warrants to purchase 934,581 shares of common stock. Also, during the second quarter of 2019, the Company issued 138,292 shares of common stock upon the cashless exercise of 651,982 common stock warrants. |
REVENUE
REVENUE | 6 Months Ended |
Jun. 30, 2019 | |
REVENUES: | |
REVENUE | NOTE 9 - REVENUE Revenue Recognition and Contract Accounting The Company generates revenue from three sources: (1) Project Revenue; (2) Maintenance and Technical Support and (3) IT Asset Management (software licensing, consulting and auditing). The Company constructs intelligent technology systems consisting of materials and labor under customer contracts. Revenues and related costs on project revenue are recognized based on ASC 606-10-25-27, where control of a good or service transfers over time if the entitys performance does not create an asset with an alternative use to the entity and the entity has an enforceable right to payment for performance completed to date including a profit margin or reasonable return on capital. Control is deemed to pass to the customer instantaneously as the goods are manufactured and revenue is recognized accordingly. In addition, the Company has adopted ASC 606-10-55-21 such that if the cost incurred is not proportionate to the progress in satisfying the performance obligation, we adjust the input method to recognize revenue only to the extent of the cost incurred. Therefore, the Company will recognize revenue at an equal amount to the cost of the goods to satisfy the performance obligation. To accurately reflect revenue recognition based on the input method, the Company has adopted the implementation guidance as set out in ASC 606-10-55-187 through 192. Under this method, contract revenues are recognized over the performance period of the contract in direct proportion to the costs incurred. 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 contract assets. Any billings of customers more than recognized revenues are recorded as a liability in contract liabilities. However, in the event a loss on a contract is foreseen, the Company will recognize the loss when such loss is determined. |
CONTRACT ACCOUNTING
CONTRACT ACCOUNTING | 6 Months Ended |
Jun. 30, 2019 | |
Revenue from Contract with Customer [Abstract] | |
CONTRACT ACCOUNTING | NOTE 10 CONTRACT ACCOUNTING Contract Assets Contract assets on uncompleted contracts represents costs and estimated earnings in excess of billings and/or cash received on uncompleted contracts accounted for under the input method, which recognizes revenue only to the extent of the cost incurred. At June 30, 2019 and December 31, 2018, contract assets on uncompleted contracts consisted of the following: June 30, 2019 December 31. 2018 Costs and estimated earnings recognized $ 3,241,030 $ 4,273,057 Less: Billings or cash received (2,936,969 ) (3,064,453 ) Contract assets $ 304,061 $ 1,208,604 Contract Liabilities Contract liabilities on uncompleted contracts represents billings and/or cash received that exceed accumulated revenues recognized on uncompleted contracts accounted for under the input method, which recognizes revenue only to the extent of the cost incurred. At June 30, 2019 and December 31, 2018, contract liabilities on uncompleted contracts consisted of the following: June 30, 2019 December 31. 2018 Billings and/or cash receipts on uncompleted contracts $ 12,166,178 $ 8,563,241 Less: Costs and estimated earnings recognized (11,087,545 ) (6,314,412 ) Contract liabilities $ 1,078,633 $ 2,248,829 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 (ITAM) The Companys ITAM business generates revenues under contract with customers 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 performance obligations: (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 ITAM 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. Disaggregation of Revenue The Company is following the guidance of ASC 606-10-55-296 and 297 for disaggregation of revenue. Accordingly, revenue has been disaggregated according to the nature, amount, timing and uncertainty of revenue and cash flows. We are providing qualitative and quantitative disclosures. Qualitative: 1. We have three distinct revenue sources: a. Turnkey, engineered projects; b. Associated maintenance and support services; and c. Licensing and professional services related to auditing of data center assets. 2. We currently operate in North America including the USA, Mexico and Canada. 3. Our customers include rail transportation, commercial, petrochemical, government, banking and IT suppliers. 4. Our contracts are fixed-price and fall into two duration types: a. Turnkey engineered projects and professional service contracts that are less than 1 year in duration and are typically three to nine months in length; and b. Maintenance and support contracts ranging from one to five years in length. 5. Transfer of goods and services are over time. Quantitative: For the Six Months Ended June 30, 2019 Segments Rail Commercial Petrochemical Government Banking IT Suppliers Total Primary Geographical Markets North America $ 4,476,933 $ 188,931 $ 54,973 $ 97,068 $ 687,599 $ 192,382 $ 5,697,886 Major Goods and Service Lines Turnkey Projects $ 3,942,219 $ 186,734 $ 39,361 $ 56,626 $ 678,489 $ $ 4,903,429 Maintenance & Support 534,714 2,197 15,612 40,442 9,110 602,075 Data Center Auditing Services 144,982 144,982 Software License 47,400 47,400 $ 4,476,933 $ 188,931 $ 54,973 $ 97,068 $ 687,599 $ 192,382 $ 5,697,886 Timing of Revenue Recognition Goods transferred over time $ 3,942,219 $ 186,734 $ 39,361 $ 56,626 $ 678,489 $ 192,382 $ 5,095,811 Services transferred over time 534,714 2,197 15,612 40,442 9,110 602,075 $ 4,476,933 $ 188,931 $ 54,973 $ 97,068 $ 687,599 $ 192,382 $ 5,697,886 |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 6 Months Ended |
Jun. 30, 2019 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 11 SUBSEQUENT EVENTS On July 9, 2019, a shareholder exercised 200,000 warrants at an exercise price of $0.55 for $110,000. On July 29, 2019, the same shareholder exercised warrants to purchase 75,000 shares of common stock for proceeds to the Company of $41,250. On July 29, 2019, the Company entered into an agreement with a shareholder to purchase back 10,537 shares of common stock at fair the market value of $0.65 per share for a payment made by the Company in the amount of $6,849. On July 31, at the Annual Meeting of the shareholders, an increase in the authorized shares of the Companys 2016 Equity Incentive Plan was approved from 2,500,000 to 4,500,000 shares. On August 13, 2019, the Companys Board of Directors nominated and approved Ned Mavrommatis as a Director and co-Chairman of the Audit Committee. |
NATURE OF OPERATIONS, BASIS O_2
NATURE OF OPERATIONS, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 6 Months Ended |
Jun. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Nature of Operations | Nature of Operations The Company provides a broad range of sophisticated intelligent technology solutions with an emphasis on security, inspection and operations for critical infrastructure within a variety of industries including transportation, retail, law enforcement, oil, gas and utilities sectors. In January 2019, the Company launched a dedicated Artificial Intelligence software platform, truevue360, through its subsidiary TrueVue360 with the objective of focusing the Companys advanced intelligent technologies in the areas of Artificial Intelligent, Deep Machine Learning and Advance Algorithms to further support our business growth. Consequently, our business operations are now in three business units: intelligent technologies, AI/machine learning platforms and IT asset management. The Companys strategy includes expansion of its technology base through organic development efforts, strategic partnerships, and growth through accretive acquisitions. The Company provides its broad range of technology solutions with an emphasis on mission critical security, inspection and operations within the rail transportation, commercial, petrochemical, government, and banking sectors. The Company also offers professional and consulting services for large data centers. |
Basis of Presentation | Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (all of which are of a normal recurring nature) considered necessary for a fair presentation have been included. Operating results for the six months ended June 30, 2019 are not indicative of the results that may be expected for the year ending December 31, 2019 or for any other future period. These unaudited consolidated financial statements and the unaudited condensed notes thereto should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Companys Annual Report on Form 10-K for the year ended December 31, 2018 filed with the Securities and Exchange Commission (the SEC) on April 15, 2019. |
Principles of Consolidation | Principles of Consolidation The consolidated financial statements include duostech Group and its wholly-owned subsidiaries, Duos Technologies, Inc. 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 intangible and other long-lived assets, estimates of net contract revenues and the total estimated costs to determine progress towards contract completion, valuation of derivatives, valuation of warrants issued with debt, valuation of beneficial conversion features in convertible debt, and valuation of stock-based awards. 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. |
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 June 30, 2019. Significant Customers and Concentration of Credit Risk 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: For the six months ended June 30, 2019, two customers accounted for 69%, and 12% of revenues. For the six months ended June 30, 2018, two customers accounted for 56% and 14% of revenues. At June 30, 2019, four customers accounted for 25%, 17%, 13% and 10% of accounts receivable. At December 31, 2018, Geographic Concentration Approximately 72% of revenue is generated from two customers outside of the United States. |
Fair Value of 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. |
Software Development Costs | Software Development Costs Software development costs incurred prior to establishing technological feasibility are charged to operations and included in research and development costs. The technological feasibility of a software product is established when the Company has completed all planning, designing, coding, and testing activities that are necessary to establish that the product meets its design specifications, including functionality, features, and technical performance requirements. Software development costs incurred after establishing technological feasibility for software sold as a perpetual license, as defined within ASC 985-20 (Software Costs of Software to be sold, Leased, or Marketed) are capitalized and amortized on a product-by-product basis when the product is available for general release to customers. |
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 June 30, 2019, there was an aggregate of 20,825,984 outstanding warrants to purchase shares of common stock. At June 30, 2019, there was an aggregate of 2,162,000 shares of employee stock options to purchase shares of common stock. Also, at June 30, 2019, 5,660,000 common shares were issuable upon conversion of Series B convertible preferred stock, all of which were excluded from the computation of dilutive earnings per share because their inclusion would have been anti-dilutive. |
Revenue Recognition | Revenue Recognition As of January 1, 2018, the Company adopted Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers (ASC 606), that affects the timing of when certain types of revenues will be recognized. The basic principles in ASC 606 include the following: a contract with a customer creates distinct unrecognized contract assets and performance obligations; satisfaction of a performance obligation creates revenue; and a performance obligation is satisfied upon transfer of control to a good or service to a customer. Revenue is recognized for sales of systems and services over time using cost-based input methods, in which significant judgement is required to evaluate assumptions including the amount of net contract revenues and the total estimated costs to determine our progress towards contract completion and to calculate the corresponding amount of revenue to recognize. Revenue is recognized by evaluating our revenue contracts with customers based on the five-step model under ASC 606: 1. Identify the contract with the customer; 2. Identify the performance obligations in the contract; 3. Determine the transaction price; 4. Allocate the transaction price to separate performance obligations; and 5. Recognize revenue when (or as) each performance obligations is satisfied. Accordingly, the Company now bases its revenue recognition on ASC 606-10-25-27, where control of a good or service transfers over time if the entitys performance does not create an asset with an alternative use to the entity and the entity has an enforceable right to payment for performance completed to date including a profit margin or reasonable return on capital. Control is deemed to pass to the customer instantaneously as the goods are manufactured and revenue is recognized accordingly. In addition, the Company has adopted ASC 606-10-55-21 such that if the cost incurred is not proportionate to the progress in satisfying the performance obligation, we adjust the input method to recognize revenue only to the extent of the cost incurred. Therefore, the Company will recognize revenue at an equal amount to the cost of the goods to satisfy the performance obligation. To accurately reflect revenue recognition based on the input method, the Company has adopted the implementation guidance as set out in ASC-606-10-55-187 through 192. |
Segment Information | Segment Information The Company operates in one reportable segment. |
Stock Based Compensation | Stock Based Compensation The Company accounts for employee stock-based compensation in accordance with ASC 718-10, Share-Based Payment In June 2018, the FASB issued ASU 2018-07, Compensation Stock Compensation (Topic 718). This update is intended to reduce cost and complexity and to improve financial reporting for share-based payments issued to non-employees (for example, service providers, external legal counsel, suppliers, etc.). The ASU expands the scope of Topic 718, CompensationStock Compensation, which currently only includes share-based payments issued to employees, to also include share-based payments issued to non-employees for goods and services. Consequently, the accounting for share-based payments to non-employees and employees will be substantially aligned. This standard will be effective for financial statements issued by public companies for the annual and interim periods beginning after December 15, 2018. Early adoption of the standard is permitted. The standard will be applied in a retrospective approach for each period presented. Management implemented this standard on January 1, 2019. Determining Fair Value Under ASC 718-10 The Company estimates the fair value of stock options granted using the Black-Scholes option-pricing formula. This fair value is then amortized on a straight-line basis over the requisite service periods of the awards, which is generally the vesting period. The Companys determination of fair value using an option-pricing model is affected by the stock price as well as assumptions regarding the number of highly subjective variables. The Company estimates volatility based upon the historical stock price of the Company and estimates the expected term for employee stock options using the simplified method for employees and directors and the contractual term for non-employees. The risk-free rate is determined based upon the prevailing rate of United States Treasury securities with similar maturities. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements From time to time, the FASB or other standards setting bodies will issue new accounting pronouncements. Updates to the FASB ASC are communicated through issuance of an Accounting Standards Update (ASU). In August 2018, the FASB issued ASU 2018-13, Changes to Disclosure Requirements for Fair Value Measurements, which will improve the effectiveness of disclosure requirements for recurring and nonrecurring fair value measurements. The standard removes, modifies, and adds certain disclosure requirements, and is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The Company will be evaluating the impact this standard will have on the Companys financial statements. Management does not believe that any other recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying financial statements. |
SOFTWARE DEVELOPMENT COSTS (Tab
SOFTWARE DEVELOPMENT COSTS (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
SOFTWARE DEVELOPMENT COSTS [Abstract] | |
Schedule of Software Development Costs | Software development costs consisted of the following at June 30, 2019 and December 31, 2018: June 30, 2019 December 31, 2018 Software Development Costs $ 60,000 $ 60,000 Less: Accumulated amortization (30,000 ) (20,000 ) Total $ 30,000 $ 40,000 |
DEBT (Tables)
DEBT (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
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: June 30, 2019 December 31, 2018 Notes Payable Principal Interest Principal Interest Third Party - Insurance Note 1 $ 6,418 9.29 % $ 25,066 9.29 % Third Party - Insurance Note 2 31,438 6.36 % 8,501 10.25 % Third Party - Insurance Note 3 1,645 10.75 % 14,763 10.75 % Third Party - Insurance Note 4 85,528 6.36 % Total $ 125,029 $ 48,330 |
STOCKHOLDERS' EQUITY (Tables)
STOCKHOLDERS' EQUITY (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Schedule of Employee Stock Options and Warrants | The Company has no expired employee stock options under the 2016 Plan at June 30, 2019. June 30, 2019 Weighted Average Exercise Shares Price Outstanding at December 31, 2018 2,242,000 $ 1.00 Granted 120,000 $ 1.00 Exercised $ Forfeited (200,000) $ 1.00 Expired $ Outstanding at June 30, 2019 2,162,000 $ 1.00 Exercisable at June 30, 2019 2,042,000 $ 1.00 Outstanding Weighted average remaining contractual term 3.80 Aggregate intrinsic value $ Weighted average grant date fair value (per share) $ 0.22 Exercisable Weighted average remaining contractual term 3.55 Aggregate intrinsic value |
Warrant [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Schedule of Employee Stock Options and Warrants | The following is a summary of activity for warrants to purchase common stock for the six months ended June 30, 2019: June 30, 2019 Number of Warrants Weighted Avg. Exercise Price Remaining Contractual Life (Years) Outstanding at December 31, 2018 25,412,547 $ .70 3.9 Warrants expired Warrants issued Warrants cancelled/exercised (4,586,563 ) .47 Outstanding at end of period 20,825,984 .63 3.4 Exercisable at end of period 20,825,984 $ .47 3.4 |
CONTRACT ACCOUNTING (Tables)
CONTRACT ACCOUNTING (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of Contract Assets on Uncompleted Contracts | At June 30, 2019 and December 31, 2018, contract assets on uncompleted contracts consisted of the following: June 30, 2019 December 31. 2018 Costs and estimated earnings recognized $ 3,241,030 $ 4,273,057 Less: Billings or cash received (2,936,969 ) (3,064,453 ) Contract assets $ 304,061 $ 1,208,604 |
Schedule of Contract Liabilities on Uncompleted Contracts | At June 30, 2019 and December 31, 2018, contract liabilities on uncompleted contracts consisted of the following: June 30, 2019 December 31. 2018 Billings and/or cash receipts on uncompleted contracts $ 12,166,178 $ 8,563,241 Less: Costs and estimated earnings recognized (11,087,545 ) (6,314,412 ) Contract liabilities $ 1,078,633 $ 2,248,829 |
Schedule of Disaggregation of Revenue Quantitative | Quantitative: For the Six Months Ended June 30, 2019 Segments Rail Commercial Petrochemical Government Banking IT Suppliers Total Primary Geographical Markets North America $ 4,476,933 $ 188,931 $ 54,973 $ 97,068 $ 687,599 $ 192,382 $ 5,697,886 Major Goods and Service Lines Turnkey Projects $ 3,942,219 $ 186,734 $ 39,361 $ 56,626 $ 678,489 $ $ 4,903,429 Maintenance & Support 534,714 2,197 15,612 40,442 9,110 602,075 Data Center Auditing Services 144,982 144,982 Software License 47,400 47,400 $ 4,476,933 $ 188,931 $ 54,973 $ 97,068 $ 687,599 $ 192,382 $ 5,697,886 Timing of Revenue Recognition Goods transferred over time $ 3,942,219 $ 186,734 $ 39,361 $ 56,626 $ 678,489 $ 192,382 $ 5,095,811 Services transferred over time 534,714 2,197 15,612 40,442 9,110 602,075 $ 4,476,933 $ 188,931 $ 54,973 $ 97,068 $ 687,599 $ 192,382 $ 5,697,886 |
NATURE OF OPERATIONS, BASIS O_3
NATURE OF OPERATIONS, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Credit Risk) (Details) | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 | |
Revenue [Member] | Outside of the US [Member] | |||
Concentration Risk [Line Items] | |||
Concentration of Credit Risk | 72.00% | ||
Customer A [Member] | Accounts Receivable | |||
Concentration Risk [Line Items] | |||
Concentration of Credit Risk | 25.00% | 58.00% | |
Customer A [Member] | Revenue [Member] | |||
Concentration Risk [Line Items] | |||
Concentration of Credit Risk | 69.00% | 56.00% | |
Customer B [Member] | Accounts Receivable | |||
Concentration Risk [Line Items] | |||
Concentration of Credit Risk | 17.00% | 34.00% | |
Customer B [Member] | Revenue [Member] | |||
Concentration Risk [Line Items] | |||
Concentration of Credit Risk | 12.00% | 14.00% | |
Customer C [Member] | Accounts Receivable | |||
Concentration Risk [Line Items] | |||
Concentration of Credit Risk | 13.00% | ||
Customer D [Member] | Accounts Receivable | |||
Concentration Risk [Line Items] | |||
Concentration of Credit Risk | 10.00% |
NATURE OF OPERATIONS, BASIS O_4
NATURE OF OPERATIONS, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Narrative) (Details) - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 |
Number of warrants outstanding | 20,825,984 | |
Cash, uninsured balance | ||
Number of employee stock options | 2,162,000 | 2,242,000 |
Series B Convertible Preferred Stock [Member] | ||
Number of shares issued upon conversion | 5,660,000 |
LIQUIDITY (Narrative) (Details)
LIQUIDITY (Narrative) (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||||
Jun. 30, 2019 | Mar. 31, 2019 | Jun. 30, 2018 | Mar. 31, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 | |
LIQUIDITY [Abstract] | |||||||
Net income | $ 1,949,791 | $ (44,169) | $ 634,363 | $ 743,104 | $ 1,905,622 | $ 1,377,467 | |
Net cash used in operations | 2,711,334 | $ (195,745) | |||||
Working capital deficit | 543,920 | 543,920 | |||||
Accumulated deficit | 32,175,455 | 32,175,455 | $ 30,269,833 | ||||
Working capital increase from warrant executions | 2,164,019 | 2,164,019 | |||||
Amount of warrant conversions secured | $ 151,250 | $ 151,250 |
SOFTWARE DEVELOPMENT COSTS (Det
SOFTWARE DEVELOPMENT COSTS (Details) - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 |
SOFTWARE DEVELOPMENT COSTS [Abstract] | ||
Software Development Costs | $ 60,000 | $ 60,000 |
Less: Accumulated amortization | (30,000) | (20,000) |
Software Development Costs, net | $ 30,000 | $ 40,000 |
SOFTWARE DEVELOPMENT COSTS (Nar
SOFTWARE DEVELOPMENT COSTS (Narrative) (Details) - USD ($) | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
SOFTWARE DEVELOPMENT COSTS [Abstract] | ||
Capitalized development of new software products | $ 60,000 | |
Amortization expense of software development costs | $ 10,000 | $ 10,000 |
DEBT (Schedule of Notes Payable
DEBT (Schedule of Notes Payable - Financing Agreements) (Details) - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 |
Debt Instrument [Line Items] | ||
Notes Payable, Principal | $ 125,029 | $ 48,330 |
Third Party - Insurance Note 1 [Member] | ||
Debt Instrument [Line Items] | ||
Notes Payable, Principal | $ 6,418 | $ 25,066 |
Notes Payable, Interest | 9.29% | 9.29% |
Third Party - Insurance Note 2 [Member] | ||
Debt Instrument [Line Items] | ||
Notes Payable, Principal | $ 31,438 | $ 8,501 |
Notes Payable, Interest | 6.36% | 10.25% |
Third Party - Insurance Note 3 [Member] | ||
Debt Instrument [Line Items] | ||
Notes Payable, Principal | $ 1,645 | $ 14,763 |
Notes Payable, Interest | 10.75% | 10.75% |
Third Party - Insurance Note 4 [Member] | ||
Debt Instrument [Line Items] | ||
Notes Payable, Principal | $ 85,528 | |
Notes Payable, Interest | 6.36% |
DEBT (Narrative) (Details)
DEBT (Narrative) (Details) - USD ($) | Apr. 15, 2019 | Feb. 03, 2019 | Jun. 30, 2019 | Dec. 31, 2018 | Dec. 23, 2018 | Sep. 15, 2018 | Apr. 15, 2018 | Feb. 03, 2018 |
Third Party - Insurance Note 1 [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Monthly installments of principal and interest | $ 2,172 | |||||||
Interest rate | 9.29% | |||||||
Notes payable outstanding balance | 6,418 | $ 25,066 | $ 25,066 | |||||
Third Party - Insurance Note 2 [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Monthly installments of principal and interest | $ 5,326 | 4,378 | ||||||
Interest rate | 6.36% | 10.25% | ||||||
Notes payable outstanding balance | $ 51,940 | 31,438 | 8,501 | $ 49,000 | ||||
Third Party - Insurance Note 3 [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Monthly installments of principal and interest | 1,660 | |||||||
Interest rate | 10.75% | |||||||
Notes payable outstanding balance | 1,645 | 14,763 | $ 15,810 | |||||
Third Party - Insurance Note 4 [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Monthly installments of principal and interest | $ 14,520 | 13,276 | ||||||
Interest rate | 6.36% | 8.80% | ||||||
Notes payable outstanding balance | $ 141,058 | $ 85,528 | $ 127,561 |
LINE OF CREDIT (Narrative) (Det
LINE OF CREDIT (Narrative) (Details) - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 | Apr. 02, 2015 |
Line of Credit Facility [Line Items] | |||
Line of Credit - Wells Fargo Bank | $ 28,704 | $ 31,201 | |
Line of Credit - Wells Fargo Bank [Member] | |||
Line of Credit Facility [Line Items] | |||
Line of Credit - Wells Fargo Bank | $ 28,704 | $ 31,201 | $ 40,000 |
Interest rate | 12.00% |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Narrative) (Details) | 6 Months Ended |
Jun. 30, 2019USD ($) | |
Commitments and Contingencies Disclosure [Abstract] | |
Payroll taxes payable | $ 120,964 |
Long-term debt and payables | 63,572 |
Software maintenance fees | 300,000 |
Payment of accrued monthly late fee | $ 15,000 |
OPERATING LEASE OBLIGATIONS (Na
OPERATING LEASE OBLIGATIONS (Narrative) (Details) | Apr. 03, 2019ft² | Jun. 30, 2019USD ($)ft² | Dec. 31, 2018USD ($) |
Lessee, Lease, Description [Line Items] | |||
Area of lease | ft² | 14,603 | ||
Right-of-use model (ROU) asset | $ 565,926 | ||
Operating lease liability - current | 237,470 | ||
Operating lease liability - long term | 354,932 | ||
Right-of-use model (ROU) asset | 597,103 | ||
Operating lease liability | $ 597,103 | ||
Jacksonville, Florida [Member] | |||
Lessee, Lease, Description [Line Items] | |||
Area of lease | ft² | 12,708 | ||
Jacksonville, Florida [Member] | Minimum [Member] | |||
Lessee, Lease, Description [Line Items] | |||
Area of lease | ft² | 8,308 | ||
Jacksonville, Florida [Member] | Maximum [Member] | |||
Lessee, Lease, Description [Line Items] | |||
Area of lease | ft² | 10,203 |
STOCKHOLDERS' EQUITY (Narrative
STOCKHOLDERS' EQUITY (Narrative) (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Mar. 31, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 | |
Class of Stock [Line Items] | ||||||
Common stock issued | 138,292 | |||||
Total compensation cost for stock options not yet recognized | $ 13,887 | $ 13,887 | ||||
Total compensation cost for stock options not yet recognized, period | 1 year | |||||
Warrants to purchase shares of common stock | 934,581 | 934,581 | ||||
Proceeds from warrants exercise | $ 514,020 | $ 2,164,019 | ||||
Stock option granted | 120,000 | 2,242,000 | ||||
Exercise price of stock option | $ 1 | |||||
Common stock issued for cashless exercise | ||||||
Options forfeited | 200,000 | |||||
Warrant [Member] | ||||||
Class of Stock [Line Items] | ||||||
Proceeds from warrants exercise | $ 3,000,000 | |||||
Common stock issued for cashless exercise | 651,982 | |||||
2016 Plan [Member] | ||||||
Class of Stock [Line Items] | ||||||
Shares available for grant | 2,500,000 | 2,500,000 | ||||
Employees and directors [Member] | ||||||
Class of Stock [Line Items] | ||||||
Common stock issued | 138,292 | |||||
Stock-based compensation expense | $ 28,134 | |||||
Common stock issued for cashless exercise | 651,982 | |||||
Board of Directors [Member] | ||||||
Class of Stock [Line Items] | ||||||
Stock option granted | 120,000 | |||||
Exercise price of stock option | $ 1 | |||||
President and Chief Operating Officer [Member] | ||||||
Class of Stock [Line Items] | ||||||
Options forfeited | 200,000 | |||||
Shareholder [Member] | ||||||
Class of Stock [Line Items] | ||||||
Warrants to purchase shares of common stock | 3,000,000 | 934,581 | 3,000,000 | 934,581 | ||
Proceeds from warrants exercise | $ 1,650,000 | $ 514,020 | ||||
Reduced exercise price | $ 0.55 | $ 0.55 | $ 0.55 | $ 0.55 | ||
Strike price | $ 0.65 | $ 0.65 | $ 0.65 | $ 0.65 |
STOCKHOLDERS' EQUITY (Schedule
STOCKHOLDERS' EQUITY (Schedule of Employee Stock Options) (Details) - USD ($) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2019 | Dec. 31, 2018 | |
Shares | ||
Outstanding at December 31, 2018 | 2,242,000 | |
Granted | 120,000 | 2,242,000 |
Exercised | ||
Forfeited | (200,000) | |
Expired | ||
Outstanding at end of period | 2,162,000 | 2,242,000 |
Exercisable at end of period | 2,042,000 | |
Weighted Average Exercise Price | ||
Outstanding at December 31, 2018 | $ 1 | |
Granted | 1 | |
Exercised | ||
Forfeited | 1 | |
Expired | ||
Outstanding at end of period | 1 | $ 1 |
Exercisable at end of period | $ 1 | |
Outstanding | ||
Outstanding Weighted average remaining contractual term | 3 years 9 months 18 days | |
Outstanding Aggregate intrinsic value | ||
Outstanding Weighted average grant date fair value (per share) | $ 0.22 | |
Exercisable | ||
Exercisable Weighted average remaining contractual term | 3 years 6 months 18 days | |
Exercisable Aggregate intrinsic value |
STOCKHOLDERS' EQUITY (Schedul_2
STOCKHOLDERS' EQUITY (Schedule of Activity of Warrants) (Details) | 6 Months Ended |
Jun. 30, 2019$ / sharesshares | |
Number of Warrants | |
Outstanding at December 31, 2018 | 2,242,000 |
Warrants expired | |
Outstanding at end of period | 2,162,000 |
Exercisable at end of period | 2,042,000 |
Weighted Avg. Exercise Price | |
Outstanding at December 31, 2018 | $ / shares | $ 1 |
Warrants expired | $ / shares | |
Outstanding at end of period | $ / shares | 1 |
Exercisable at end of period | $ / shares | $ 1 |
Remaining Contractual Life (Years) | |
Outstanding at end of period | 3 years 9 months 18 days |
Exercisable at end of period | 3 years 6 months 18 days |
Warrant [Member] | |
Number of Warrants | |
Outstanding at December 31, 2018 | 25,412,547 |
Warrants expired | |
Warrants issued | |
Warrants cancelled/exercised | (4,586,563) |
Outstanding at end of period | 20,825,984 |
Exercisable at end of period | 20,825,984 |
Weighted Avg. Exercise Price | |
Outstanding at December 31, 2018 | $ / shares | $ 0.70 |
Warrants cancelled/exercised | .47 |
Outstanding at end of period | $ / shares | $ .63 |
Exercisable at end of period | $ / shares | $ .47 |
Remaining Contractual Life (Years) | |
Outstanding at December 31, 2018 | 3 years 10 months 25 days |
Outstanding at end of period | 3 years 4 months 24 days |
Exercisable at end of period | 3 years 4 months 24 days |
CONTRACT ACCOUNTING (Schedule o
CONTRACT ACCOUNTING (Schedule of Contract Assets on Uncompleted Contracts) (Details) - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 |
Revenue from Contract with Customer [Abstract] | ||
Costs and estimated earnings recognized | $ 3,241,030 | $ 4,273,057 |
Less: Billings or cash received | (2,936,969) | (3,064,453) |
Contract assets | $ 304,061 | $ 1,208,604 |
CONTRACT ACCOUNTING (Schedule_2
CONTRACT ACCOUNTING (Schedule of Contract Liabilities on Uncompleted Contracts) (Details) - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 |
Revenue from Contract with Customer [Abstract] | ||
Billings and/or cash receipts on uncompleted contracts | $ 12,166,178 | $ 8,563,241 |
Less: Costs and estimated earnings recognized | (11,087,545) | (6,314,412) |
Contract liabilities | $ 1,078,633 | $ 2,248,829 |
CONTRACT ACCOUNTING (Schedule_3
CONTRACT ACCOUNTING (Schedule of Disaggregation of Revenue Quantitative) (Details) | 6 Months Ended |
Jun. 30, 2019USD ($) | |
Disaggregation of Revenue [Line Items] | |
Revenue | $ 5,697,886 |
Goods transferred over time [Member] | |
Disaggregation of Revenue [Line Items] | |
Revenue | 5,095,811 |
Services transferred over time [Member] | |
Disaggregation of Revenue [Line Items] | |
Revenue | 602,075 |
Turnkey Projects [Member] | |
Disaggregation of Revenue [Line Items] | |
Revenue | 4,903,429 |
Maintenance & Support [Member] | |
Disaggregation of Revenue [Line Items] | |
Revenue | 602,075 |
Data Center Auditing Services [Member] | |
Disaggregation of Revenue [Line Items] | |
Revenue | 144,982 |
Rail [Member] | |
Disaggregation of Revenue [Line Items] | |
Revenue | 4,476,933 |
Rail [Member] | Goods transferred over time [Member] | |
Disaggregation of Revenue [Line Items] | |
Revenue | 3,942,219 |
Rail [Member] | Services transferred over time [Member] | |
Disaggregation of Revenue [Line Items] | |
Revenue | 534,714 |
Rail [Member] | Turnkey Projects [Member] | |
Disaggregation of Revenue [Line Items] | |
Revenue | 3,942,219 |
Rail [Member] | Maintenance & Support [Member] | |
Disaggregation of Revenue [Line Items] | |
Revenue | 534,714 |
Rail [Member] | Data Center Auditing Services [Member] | |
Disaggregation of Revenue [Line Items] | |
Revenue | |
Rail [Member] | Software License [Member] | |
Disaggregation of Revenue [Line Items] | |
Revenue | |
Commercial [Member] | |
Disaggregation of Revenue [Line Items] | |
Revenue | 188,931 |
Commercial [Member] | Goods transferred over time [Member] | |
Disaggregation of Revenue [Line Items] | |
Revenue | 186,734 |
Commercial [Member] | Services transferred over time [Member] | |
Disaggregation of Revenue [Line Items] | |
Revenue | 2,197 |
Commercial [Member] | Turnkey Projects [Member] | |
Disaggregation of Revenue [Line Items] | |
Revenue | 186,734 |
Commercial [Member] | Maintenance & Support [Member] | |
Disaggregation of Revenue [Line Items] | |
Revenue | 2,197 |
Commercial [Member] | Data Center Auditing Services [Member] | |
Disaggregation of Revenue [Line Items] | |
Revenue | |
Commercial [Member] | Software License [Member] | |
Disaggregation of Revenue [Line Items] | |
Revenue | |
Petrochemical [Member] | |
Disaggregation of Revenue [Line Items] | |
Revenue | 54,973 |
Petrochemical [Member] | Software License [Member] | |
Disaggregation of Revenue [Line Items] | |
Revenue | |
Petrochemical [Member] | Goods transferred over time [Member] | |
Disaggregation of Revenue [Line Items] | |
Revenue | 39,361 |
Petrochemical [Member] | Services transferred over time [Member] | |
Disaggregation of Revenue [Line Items] | |
Revenue | 15,612 |
Petrochemical [Member] | Turnkey Projects [Member] | |
Disaggregation of Revenue [Line Items] | |
Revenue | 39,361 |
Petrochemical [Member] | Maintenance & Support [Member] | |
Disaggregation of Revenue [Line Items] | |
Revenue | 15,612 |
Petrochemical [Member] | Data Center Auditing Services [Member] | |
Disaggregation of Revenue [Line Items] | |
Revenue | |
Government [Member] | |
Disaggregation of Revenue [Line Items] | |
Revenue | 97,068 |
Government [Member] | Software License [Member] | |
Disaggregation of Revenue [Line Items] | |
Revenue | |
Government [Member] | Goods transferred over time [Member] | |
Disaggregation of Revenue [Line Items] | |
Revenue | 56,626 |
Government [Member] | Services transferred over time [Member] | |
Disaggregation of Revenue [Line Items] | |
Revenue | 40,442 |
Government [Member] | Turnkey Projects [Member] | |
Disaggregation of Revenue [Line Items] | |
Revenue | 56,626 |
Government [Member] | Maintenance & Support [Member] | |
Disaggregation of Revenue [Line Items] | |
Revenue | 40,442 |
Government [Member] | Data Center Auditing Services [Member] | |
Disaggregation of Revenue [Line Items] | |
Revenue | |
Banking [Member] | |
Disaggregation of Revenue [Line Items] | |
Revenue | 687,599 |
Banking [Member] | Software License [Member] | |
Disaggregation of Revenue [Line Items] | |
Revenue | |
Banking [Member] | Goods transferred over time [Member] | |
Disaggregation of Revenue [Line Items] | |
Revenue | 678,489 |
Banking [Member] | Services transferred over time [Member] | |
Disaggregation of Revenue [Line Items] | |
Revenue | 9,110 |
Banking [Member] | Turnkey Projects [Member] | |
Disaggregation of Revenue [Line Items] | |
Revenue | 678,489 |
Banking [Member] | Maintenance & Support [Member] | |
Disaggregation of Revenue [Line Items] | |
Revenue | 9,110 |
Banking [Member] | Data Center Auditing Services [Member] | |
Disaggregation of Revenue [Line Items] | |
Revenue | |
IT Suppliers [Member] | |
Disaggregation of Revenue [Line Items] | |
Revenue | 192,382 |
IT Suppliers [Member] | Software License [Member] | |
Disaggregation of Revenue [Line Items] | |
Revenue | 47,400 |
IT Suppliers [Member] | Goods transferred over time [Member] | |
Disaggregation of Revenue [Line Items] | |
Revenue | 192,382 |
IT Suppliers [Member] | Services transferred over time [Member] | |
Disaggregation of Revenue [Line Items] | |
Revenue | |
IT Suppliers [Member] | Turnkey Projects [Member] | |
Disaggregation of Revenue [Line Items] | |
Revenue | |
IT Suppliers [Member] | Maintenance & Support [Member] | |
Disaggregation of Revenue [Line Items] | |
Revenue | |
IT Suppliers [Member] | Data Center Auditing Services [Member] | |
Disaggregation of Revenue [Line Items] | |
Revenue | 144,982 |
Software License [Member] | |
Disaggregation of Revenue [Line Items] | |
Revenue | 47,400 |
North America [Member] | |
Disaggregation of Revenue [Line Items] | |
Revenue | 5,697,886 |
North America [Member] | Rail [Member] | |
Disaggregation of Revenue [Line Items] | |
Revenue | 4,476,933 |
North America [Member] | Commercial [Member] | |
Disaggregation of Revenue [Line Items] | |
Revenue | 188,931 |
North America [Member] | Petrochemical [Member] | |
Disaggregation of Revenue [Line Items] | |
Revenue | 54,973 |
North America [Member] | Government [Member] | |
Disaggregation of Revenue [Line Items] | |
Revenue | 97,068 |
North America [Member] | Banking [Member] | |
Disaggregation of Revenue [Line Items] | |
Revenue | 687,599 |
North America [Member] | IT Suppliers [Member] | |
Disaggregation of Revenue [Line Items] | |
Revenue | $ 192,382 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) - USD ($) | Jul. 09, 2019 | Jul. 29, 2019 | Jun. 30, 2019 | Jul. 31, 2019 | Mar. 31, 2019 |
Subsequent Event [Line Items] | |||||
Repurchase of common stock, value | $ 1,151 | ||||
Subsequent Event [Member] | 2016 Plan [Member] | |||||
Subsequent Event [Line Items] | |||||
Shares authorized under plan | 4,500,000 | ||||
Shareholder [Member] | |||||
Subsequent Event [Line Items] | |||||
Exercise price | $ 0.65 | $ 0.65 | |||
Shareholder [Member] | Subsequent Event [Member] | |||||
Subsequent Event [Line Items] | |||||
Exercise price | $ 0.55 | ||||
Warrants exercised | 200,000 | ||||
Proceeds from warrant exercise | $ 110,000 | $ 41,250 | |||
Common stock shares issued from warrants exercised | 75,000 | ||||
Fair market value of stock repurchased | $ 0.65 | ||||
Repurchase of common stock | 10,537 | ||||
Repurchase of common stock, value | $ 6,849 |