| SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | Accounts
Receivable Credit is granted to substantially
all customers throughout the United States. The Company carries its accounts receivable at invoice amount, less an allowance for
doubtful accounts. On a periodic basis, the Company evaluates its accounts receivable and establishes an allowance for doubtful
accounts, based on a history of past write-offs and collections and current credit conditions. The Companys policy is to
not accrue interest on past due receivables. Management determined that an allowance of $70,000 for doubtful accounts was reasonably
stated at December 31, 2015 and 2014. Concentration
of Credit Risk Loan
Origination Fees Sale
of Certain Accounts Receivable The Company
has available a financing line with a financial institution (the Purchaser). In connection with this line of credit the Company
adopted FASB ASC 860 Transfers and Servicing These
transactions qualify for a sale of assets since (1) the Company has transferred all of its right, title and interest in the selected
accounts receivable invoices to the financial institution, (2) the Purchaser may pledge, sell or transfer the selected accounts
receivable invoices, and (3) the Company has no effective control over the selected accounts receivable invoices since it is not
entitled to or obligated to repurchase or redeem the invoices before their maturity and it does not have the ability to unilaterally
cause the Purchaser to return the invoices. Under FASB ASC 860, after a transfer of financial assets, an entity recognizes the
financial and servicing assets it controls and the liabilities it has incurred, derecognizes financial assets when control has
been surrendered, and derecognizes liabilities when extinguished. Pursuant
to the provisions of FASB ASC 860, the Company reflects the transactions as a sale of assets and establishes an accounts receivable
from the Purchaser for the retained amount less the costs of the transaction and less any anticipated future loss in the value
of the retained asset. In April 2014, the Company completed a revised financing agreement with the Purchaser. The retained amount
was revised to 15% of the total accounts receivable invoice sold to the Purchaser. Previously the retained amount was 20%. The
fee for the initial purchase is .466% of the invoice. The fee is charged at prime plus 4% (effective rate of 7.5% at December
31, 2015) against the average daily outstanding balance of funds advanced. Previously, the fee for the first 30 days was 1% and
additional fees were charged against the average daily balance of net outstanding funds at the prime rate, which was 3.25% per
annum at that time. The estimated future loss reserve for each receivable included in the estimated value of the retained asset
is based on the payment history of the accounts receivable customer and is included in the allowance for doubtful accounts, if
any. As collateral, the Company granted the Purchaser a first priority interest in accounts receivable and a blanket lien, which
may be junior to other creditors, on all other assets. The
financing line provides the Company the ability to finance up to $2,000,000 of selected accounts receivable invoices, which
includes a sublimit for one of the Companys customers of $1,500,000. During the year ended December 31, 2015, the
Company sold approximately $7,065,000 ($8,299,000 - 2014) of its accounts receivable to the Purchaser. As of December
31, 2015, $566,561 ($874,458 - 2014) of these receivables remained outstanding. Additionally, as of December 31, 2015,
the Company had approximately $20,000 available under the financing line with the financial institution ($140,000
2014). After deducting estimated fees and advances from the Purchaser, the net receivable from the Purchaser amounted
to $82,341 at December 31, 2015 ($149,573 - 2014), and is included in accounts receivable in the accompanying balance sheets
as of that date. There
were no gains or losses on the sale of the accounts receivable because all were collected. The cost associated with the financing
line totaled approximately $79,000 for the year ended December 31, 2015 ($144,000 - 2014). These financing line fees are classified
on the statements of operations as interest expense. Property
and Equipment - Property and equipment are recorded at cost and are
depreciated over their estimated useful lives for financial statement purposes. The cost of improvements to leased properties
is amortized over the shorter of the lease term or the life of the improvement. Maintenance and repairs are charged to expense
as incurred while improvements are capitalized. Accounting
for the Impairment or Disposal of Long-Lived Assets - The Company follows
provisions of FASB ASC 360 Property, Plant and Equipment in accounting for the impairment of disposal of long-lived
assets. This standard specifies, among other things, that long-lived assets are to be reviewed for potential impairment whenever
events or circumstances indicate that the carrying amounts may not be recoverable. The Company determined that there was no impairment
of long-lived assets during 2015 and 2014. Revenue
Recognition - The Companys revenues are generated under both time
and material and fixed price agreements. Consulting revenue is recognized when the associated costs are incurred, which
coincides with the consulting services being provided. Time and materials service agreements are based on hours worked and
are billed at agreed upon hourly rates for the respective position plus other billable direct costs. Fixed price service
agreements are based on a fixed amount of periodic billings for recurring services of a similar nature performed according to
the contractual arrangements with clients. Under both types of agreements, the delivery of services occurs when an employee
works on a specific project or assignment as stated in the contract or purchase order. Based on historical experience, the
Company believes that collection is reasonably assured. During
2015, sales to one client, including sales under subcontracts for services to several entities, accounted for 60.1% of total sales
(60.2% - 2014) and 29.1% of accounts receivable at December 31, 2015 (27.8% - 2014). Sales to another client, which consisted
of sales under subcontracts, accounted for 25.7% of sales in 2015 (30.7% - 2014) and 36.2% of accounts receivable at December
31, 2015 (49.6% - 2014). Equity
Instruments - For equity instruments issued to consultants and vendors
in exchange for goods and services the Company follows the provisions of FASB ASC 718 Compensation Stock Compensation.
The measurement date for the fair value of the equity instruments issued is determined at the earlier of (i) the date at
which a commitment for performance by the consultant or vendor is reached or (ii) the date at which the consultant or vendors
performance is complete. In the case of equity instruments issued to consultants, the fair value of the equity instrument is recognized
over the term of the consulting agreement. Stock
Options - Income
Taxes - Income Taxes The
Company reviews tax positions taken to determine if it is more likely than not that the position would be sustained upon examination
resulting in an uncertain tax position. The Company did not have any material unrecognized tax benefit at December 31, 2015 or
2014. The Company recognizes interest accrued and penalties related to unrecognized tax benefits in tax expense. During the years
ended December 31, 2015 and 2014, the Company recognized no interest and penalties. The
Company files U.S. federal tax returns and tax returns in various states. The tax years 2012 through 2015 remain open to examination
by the taxing jurisdictions to which the Company is subject. Fair
Value of Financial Instruments - Level
1 uses observable inputs such as quoted prices in active markets; Level
2 uses inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level
3, which is defined as unobservable inputs in which little or no market data exists, requires the Company to develop its own assumptions. The
hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level
1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The
carrying amounts of cash, accounts receivable and accounts payable and accrued expenses are reasonable estimates of their fair
value due to their short maturity. Based on the borrowing rates currently available to the Company for loans similar to its term
debt and notes payable, the fair value approximates its carrying amount. Earnings
Per Share Basic earnings per share is based on the weighted average number of common shares
outstanding during the periods presented. Diluted earnings per share is based on the weighted average number of common shares
outstanding, as well as dilutive potential common shares which, in the Companys case, comprise shares issuable under convertible
notes payable and stock options. The treasury stock method is used to calculate dilutive shares, which reduces the gross number
of dilutive shares by the number of shares purchasable from the proceeds of the options and warrants assumed to be exercised.
In a loss year, the calculation for basic and diluted earnings per share is considered to be the same, as the impact of potential
common shares is anti-dilutive. The
following table sets forth the computation of basic and diluted loss per share as of December 31, 2015 and 2014:
Year ended December 31,
2015 2014
Numerator
for basic net loss per share:
Net
loss $ (811,082 ) $ (498,000 )
Denominator
for basic net loss per share:
Weighted
average common shares outstanding 26,561,883 26,012,842
Basic
net loss per share $ (.03 ) $ (.02 )
Numerator
for diluted net loss per share:
Net
loss $ (811,082 ) $ (498,000 )
Denominator for diluted net loss per share:
Weighted
average common shares outstanding 26,561,883 26,012,842
Diluted
net loss per share $ (.03 ) $ (.02 )
Anti-dilutive shares excluded from net loss share
calculation 28,286,546 30,566,892 Certain
common shares issuable under stock options and convertible notes payable have been omitted from the diluted net loss per share
calculation because their inclusion is considered anti-dilutive because the exercise prices were greater than the average market
price of the common shares or their inclusion would have been anti-dilutive. Equity
Investments Use
of Estimates - Recent
Accounting Pronouncements Not Yet Adopted In
August 2014, the FASB issued ASU No. 2014-15, "Presentation of Financial Statements - Going Concern (Subtopic 205-40): Disclosure
of Uncertainties about an Entity's Ability to Continue as a Going Concern." The guidance requires an entity to evaluate whether
there are conditions or events, in the aggregate, that raise substantial doubt about the entitys ability to continue as
a going concern within one year after the date that the financial statements are issued and to provide related footnote disclosures
in certain circumstances. The guidance is effective for the annual period ending after December 15, 2016, and for annual and interim
periods thereafter. Early application is permitted. The Company has adopted the standard as of December 31, 2015. See Note 2. In
April 2015, the FASB issued new accounting guidance on the presentation of debt issuance costs. The new guidance requires that
debt issuance costs related to a note be presented as a direct deduction from that note. This guidance is effective for financial
statements issued for fiscal years beginning after December 15, 2015 and interim periods within those fiscal years. We do not
believe this guidance will have a material effect on our financial statements when adopted. In
November 2015, the FASB issued new accounting guidance on the classification of deferred taxes. The new guidance requires that
all deferred tax asset and liabilities be classified as noncurrent in a classified statement of financial position. This guidance
is effective for financial statements issued for fiscal years beginning after December 15, 2016 and interim periods within those
fiscal years. Early application is permitted. When the guidance is effective all deferred tax assets and liabilities will be presented
as noncurrent. We do not believe this guidance will have a material effect on our financial statements when adopted. In
February 2016, the FASB issued amended guidance for lease arrangements in order to increase transparency and comparability by
providing additional information to users of financial statements regarding an entity's leasing activities. The revised guidance
seeks to achieve this objective by requiring reporting entities to recognize lease assets and lease liabilities on the balance
sheet for substantially all lease arrangements. The guidance, which is required to be adopted in the first quarter of 2019, will
be applied on a modified retrospective basis beginning with the earliest period presented. Early adoption is permitted. We are
currently evaluating the impact of adopting this guidance on our financial statements. |
