ImageWare Systems (IWSY) 10-Q 12 May 14 2014 Q1 Quarterly report Financial data

Document_and_Entity_Informatio

Document and Entity Information	3 Months Ended
	Mar. 31, 2014	9-May-14
Document And Entity Information	'	'
Entity Registrant Name	'IMAGEWARE SYSTEMS INC	'
Entity Central Index Key	'0000941685	'
Document Type	'10-Q	'
Document Period End Date	31-Mar-14	'
Amendment Flag	'false	'
Current Fiscal Year End Date	'--12-31	'
Is Entity a Well-known Seasoned Issuer?	'No	'
Is Entity a Voluntary Filer?	'No	'
Is Entity's Reporting Status Current?	'Yes	'
Entity Filer Category	'Smaller Reporting Company	'
Entity Common Stock, Shares Outstanding	'	92,177,545
Document Fiscal Period Focus	'Q1	'
Document Fiscal Year Focus	'2014	'

CONDENSED_CONSOLIDATED_BALANCE

CONDENSED CONSOLIDATED BALANCE SHEETS (USD $)	Mar. 31, 2014	Dec. 31, 2013
Current Assets:	'	'
Cash and cash equivalents	$2,159,000	$2,363,000
Accounts receivable, net of allowance for doubtful accounts of $3 at March 31, 2014 and December 31, 2014	491,000	302,000
Inventory, net	568,000	505,000
Other current assets	538,000	148,000
Total Current Assets	3,756,000	3,318,000
Property and equipment, net	226,000	245,000
Other assets	34,000	395,000
Intangible assets, net of accumulated amortization	165,000	172,000
Goodwill	3,416,000	3,416,000
Total Assets	7,597,000	7,546,000
Current Liabilities:	'	'
Accounts payable	235,000	486,000
Deferred revenue	1,616,000	1,662,000
Accrued expenses	1,040,000	924,000
Derivative liabilities	'	57,000
Notes payable to related parties	55,000	55,000
Total Current Liabilities	2,946,000	3,184,000
Pension obligation	1,045,000	1,031,000
Total Liabilities	3,991,000	4,215,000
Shareholders' equity:	'	'
Series B Convertible Redeemable Preferred Stock, $0.01 par value; designated 750,000 shares, 389,400 shares issued, and 239,400 shares outstanding at March 31, 2014 and December 31, 2013, respectively; liquidation preference $620 and $607 at March 31, 2014 and December 31, 2013, respectively.	2,000	2,000
Common stock, $0.01 par value, 150,000,000 shares authorized; 90,679,237 and 87,555,317 shares issued at March 31, 2014 and December 31, 2013, respectively, and 90,672,533 and 87,548,613 shares outstanding at March 31, 2014 and December 31, 2013, respectively.	906,000	874,000
Additional paid in capital	133,594,000	131,652,000
Treasury stock, at cost 6,704 shares	-64,000	-64,000
Accumulated other comprehensive loss	-840,000	-830,000
Accumulated deficit	-129,992,000	-128,303,000
Total Shareholders' Equity	3,606,000	3,331,000
Total Liabilities and Shareholders' Equity	$7,597,000	$7,546,000

CONDENSED_CONSOLIDATED_BALANCE1

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)	Mar. 31, 2014	Dec. 31, 2013
In Thousands, except Share data, unless otherwise specified
Current Assets:	'	'
Accounts receivable, net of allowance for doubtful accounts	$3	$3
Shareholders' deficit:	'	'
Preferred stock, shares authorized	4,000,000	4,000,000
Series B convertible preferred , Par value	$0.01	$0.01
Series B convertible preferred, designated	750,000	750,000
Series B convertible preferred, shares issued	389,400	389,400
Series B convertible preferred, shares outstanding	239,400	239,400
Series B convertible preferred, liquidation preference	$620	$607
Common stock, par value	$0.01	$0.01
Common stock, shares authorised	150,000,000	150,000,000
Common stock, shares issued	90,679,237	87,555,317
Common stock, shares outstanding	90,672,533	87,548,613
Treasury stock, shares	6,704	6,704

CONDENSED_CONSOLIDATED_STATEME

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (USD $)	3 Months Ended
In Thousands, except Share data, unless otherwise specified	Mar. 31, 2014	Mar. 31, 2013
Revenues:	'	'
Product	$434	$207
Maintenance	629	649
Total	1,063	856
Cost of revenues:	'	'
Product	70	44
Maintenance	181	193
Gross profit	812	619
Operating expenses:	'	'
General and administrative	1,016	898
Sales and marketing	618	475
Research and development	1,030	920
Depreciation and amortization	42	23
Total	2,706	2,316
Loss from operations	-1,894	-1,697
Interest expense, net	79	1
Change in fair value of derivative liabilities	'	1,176
Other income, net	-283	-104
Loss before income taxes	-1,690	-2,770
Income tax expense	'	3
Net income (loss)	-1,690	-2,773
Preferred dividends	-13	-13
Net loss available to common shareholders	($1,703)	($2,786)
Net Loss per share	($0.02)	($0.04)
Preferred dividends	$0	$0
Basic loss per share available to common shareholders	($0.02)	($0.04)
Basic weighted-average shares	88,604,221	76,846,563
Diluted income (loss) per common share - see Note 3:	'	'
Diluted loss per share	($0.02)	($0.04)
Diluted weighted-average shares	88,604,221	76,846,563

CONDENSED_CONSOLIDATED_STATEME1

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited) (USD $)	3 Months Ended
In Thousands, unless otherwise specified	Mar. 31, 2014	Mar. 31, 2013
Condensed Consolidated Statements Of Comprehensive Income Loss	'	'
Net loss	($1,690)	($2,773)
Other comprehensive income ( loss ):	'	'
Foreign currency translation adjustment	-9	8
Comprehensive loss	($1,699)	($2,765)

CONDENSED_CONSOLIDATED_STATEME2

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (USD $)	3 Months Ended
In Thousands, unless otherwise specified	Mar. 31, 2014	Mar. 31, 2013
Cash flows from operating activities	'	'
Net loss	($1,690)	($2,773)
Adjustments to reconcile net loss to net cash used by operating activities:	'	'
Depreciation and amortization	42	26
Amortization of debt issuance costs	-211	-104
Reduction in accounts payable and accrued liabilities from the expiration of statute of limitations	78	'
Change in fair value of derivative liabilities	'	1,176
Warrants issued in lieu of cash paid for services	'	1
Stock-based compensation	217	126
Change in assets and liabilities	'	'
Accounts receivable	-189	-204
Inventory	-63	-109
Other assets	21	-6
Accounts payable	-45	-105
Deferred revenue	-46	25
Accrued expenses	121	-53
Pension obligation	15	3
Total adjustments	-60	776
Net cash used in operating activities	-1,750	-1,997
Cash flows from investing activities	'	'
Purchase of property and equipment	-17	-49
Net cash used in investing activities	-17	-49
Cash flows from financing activities	'	'
Proceeds from exercised stock options	24	2
Proceeds from exercised warrants to purchase stock	1,548	16
Net cash provided by financing activities	1,572	18
Effect of exchange rate changes on cash	-9	8
Net decrease in cash and cash equivalents	-204	-2,020
Cash and cash equivalents at beginning of period	2,363	4,225
Cash and cash equivalents at end of period	2,159	2,205
Supplemental disclosure of cash flow information:	'	'
Cash paid for interest	'	'
Cash paid for income taxes	'	'
Summary of non-cash investing and financing activities:	'	'
Reclassification of warrants previously classified as derivative liabilities to additional paid-in capital	57	626
Issuance of common stock warrants securing line of credit borrowing facility	$127	$580

ORGANIZATION_AND_DESCRIPTION_O

ORGANIZATION AND DESCRIPTION OF BUSINESS	3 Months Ended
	Mar. 31, 2014
Notes to Financial Statements	'
Note 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS	'
	Overview
	ImageWare Systems, Inc. (the “Company”) is incorporated in the state of Delaware. The Company is a pioneer and leader in the emerging market for biometrically enabled software-based identity management solutions. Using those human characteristics that are unique to us all, the Company creates software that provides a highly reliable indication of a person’s identity. The Company’s “flagship” product is the patented IWS Biometric Engine®. The Company’s products are used to manage and issue secure credentials, including national IDs, passports, driver licenses and access control credentials. The Company’s products also provide law enforcement with integrated mug shot, fingerprint LiveScan and investigative capabilities. The Company also provides comprehensive authentication security software using biometrics to secure physical and logical access to facilities or computer networks or Internet sites. Biometric technology is now an integral part of all markets the Company addresses and all of the products are integrated into the IWS Biometric Engine.
	Recent Developments
	Liquidity and Capital Resources
	In March 2013, the Company entered into a new unsecured line of credit agreement with available borrowings of up to $2,500,000 (the “Line of Credit”). The Line of Credit was extended by an existing shareholder and member of our Board of Directors (the “Holder”).  In March 2014, the Line of Credit’s borrowing was increased to an aggregate total of $3,500,000 (the “Amendment”). Pursuant to the terms and conditions of the Amendment, the Holder has the right to convert up to $2.5 million of the outstanding balance of the Line of Credit into shares of the Company's common stock for $0.95 per share. Any remaining outstanding balance will be convertible into shares of the Company's common stock for $2.25 per share. As consideration for entering into the Amendment, the Company issued to the Holder a warrant exercisable for 177,778 shares of the Company’s common stock. The warrant expires on March 27, 2015 and has an exercise price of $2.25 per share.
	In April 2014, the Company and Holder entered into a further amendment to the Line of Credit to decrease the available borrowings to $3.0 million (the “Second Amendment”).  Contemporaneous with the execution of the Second Amendment, the Company entered into a new unsecured line of credit with available borrowings of up to $500,000 with a second member of the Company’s Board of Directors (the “Second Holder”), which amount would be convertible into shares of the Company’s common stock for $2.25 per share. As a result of these amendments, total available borrowings under aggregate lines of credit available to the Company remain unchanged at a total of $3,500,000. The Holder also assigned and transferred to the Second Holder one-half of the 177,778 warrants issued by the Company to the Holder to purchase shares of the Company’s common stock, originally granted to the Holder upon execution of the Amendment.
	Advances under the Lines of Credit are made at the Company’s request. The Lines of Credit shall terminate, and no further advances shall be made, upon the earlier of March 2015 or such date that the Company consummates a debt and/or equity financing resulting in net proceeds to the Company of at least $3,500,000. In the event of such financing, the outstanding balance under the terms of this note shall be due and payable upon demand.
	As of March 31, 2014, no advances were made under the Lines of Credit.
	Historically, our principal sources of cash have included customer payments from the sale of our products, proceeds from the issuance of common and preferred stock and proceeds from the issuance of debt. Our principal uses of cash have included cash used in operations, payments relating to purchases of property and equipment and repayments of borrowings. We expect that our principal uses of cash in the future will be for product development including customization of identity management products for enterprise and consumer applications, further development of intellectual property, development of Software-as-a-Service (“SaaS”) capabilities for existing products as well as general working capital and capital expenditure requirements. We expect that, as our revenues grow, our sales and marketing and research and development expenses will continue to grow, albeit at a slower rate and, as a result, we will need to generate significant net revenues to achieve and sustain income from operations.
	Management believes that the Company’s current cash and cash equivalents will be sufficient to meet working capital and capital expenditure requirements for at least the next 12 months from the date of this filing and that we will have sufficient liquidity to fund our business and meet our contractual obligations over a period beyond the next 12 months.

SIGNIFICANT_ACCOUNTING_POLICIE

SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION	3 Months Ended
	Mar. 31, 2014
Notes to Financial Statements	'
Note 2 - SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION	'
	Basis of Presentation
	The accompanying condensed consolidated balance sheet as of December 31, 2013, which has been derived from audited financial statements, and the unaudited interim condensed consolidated financial statements have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and the rules and regulations of the Securities and Exchange Commission (“SEC”) related to a quarterly report on Form 10-Q. Certain information and note disclosures normally included in annual financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to those rules and regulations, although the Company believes that the disclosures made are adequate to make the information not misleading. The interim financial statements reflect all adjustments which, in the opinion of management, are necessary for a fair statement of the results for the periods presented. All such adjustments are of a normal and recurring nature. These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited financial statements for the year ended December 31, 2013, which are included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013 that was filed with the SEC on March 17, 2014.
	Operating results for the three months ended March 31, 2014 are not necessarily indicative of the results that may be expected for the year ended December 31, 2014, or any other future periods.
	Significant Accounting Policies
	Principles of Consolidation
	The condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany transactions and balances have been eliminated.
	Operating Cycle
	Assets and liabilities related to long-term contracts are included in current assets and current liabilities in the accompanying condensed consolidated balance sheets, although they will be liquidated in the normal course of contract completion which may take more than one operating cycle.
	Use of Estimates
	The preparation of the condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, and the reported amounts of revenue and expense during the reporting period. Significant estimates include the allowance for doubtful accounts receivable, inventory carrying values, deferred tax asset valuation allowances, accounting for loss contingencies, recoverability of goodwill and acquired intangible assets and amortization periods, assumptions used in the Black-Scholes model to calculate the fair value of share-based payments, assumptions used in the application of fair value methodologies to calculate the fair value of derivative liabilities, revenue and cost of revenues recognized under the percentage of completion method and assumptions used in the application of fair value methodologies to calculate the fair value of pension assets and obligations. Actual results could differ from estimates.
	Cash and Cash Equivalents
	The Company defines cash equivalents as highly liquid investments with original maturities of less than 90 days that are not held for sale in the ordinary course of business.
	Accounts Receivable
	In the normal course of business, the Company extends credit without collateral requirements to its customers that satisfy pre-defined credit criteria. Accounts receivable are recorded net of an allowance for doubtful accounts. The Company records its allowance for doubtful accounts based upon an assessment of various factors. The Company considers historical experience, the age of the accounts receivable balances, the credit quality of its customers, current economic conditions and other factors that may affect customers’ ability to pay to determine the level of allowance required.  Accounts receivable are written off against the allowance for doubtful accounts when all collection efforts by the Company have been unsuccessful.
	Inventories
	Finished goods inventories are stated at the lower of cost, determined using the average cost method, or market.  See Note 4, “Inventory”, below.
	Fair Value of Financial Instruments
	For certain of the Company’s financial instruments, including accounts receivable, accounts payable, accrued expenses, deferred revenue and notes payable to related-parties, the carrying amounts approximate fair value due to their relatively short maturities.
	Derivative Financial Instruments
	The Company does not use derivative instruments to hedge exposures to cash flow, market or foreign currency risks.
	The Company reviews the terms of common stock, preferred stock, warrants and convertible debt it issues to determine if there are embedded derivative instruments, including embedded conversion options that must be bifurcated and accounted for separately as derivative financial instruments.  In circumstances where the host instrument contains more than one embedded derivative instrument, including the conversion option, requiring bifurcation, the bifurcated derivative instruments are accounted for as a single, compound derivative instrument.
	Bifurcated embedded derivatives are initially recorded at fair value and are then revalued at each reporting date with changes in the fair value reported as non-operating income or expense. When the equity or convertible debt instruments contain embedded derivative instruments that are to be bifurcated and accounted for as liabilities, the total proceeds received are first allocated to the fair value of all the bifurcated derivative instruments.  The remaining proceeds, if any, are then allocated to the host instruments themselves, usually resulting in those instruments being recorded at a discount from their face value.
	The discount from the face value of the convertible debt, together with the stated interest on the instrument, is amortized over the life of the instrument through periodic charges to interest expense, using the effective interest method.
	Revenue Recognition
	The Company recognizes revenue from the following major revenue sources:
		●	Long-term fixed-price contracts involving significant customization
		●	Fixed-price contracts involving minimal customization
		●	Software licensing
		●	Sales of computer hardware and identification media
		●	Post-contract customer support (“PCS”)
	The Company’s revenue recognition policies are consistent with GAAP including the Financial Accounting Standards Board (“FASB”), Accounting Standards Codification (“ASC”) 985-605, Software Revenue Recognition, ASC 605-35, Revenue Recognition, Construction-Type and Production-Type Contracts, Securities and Exchange Commission Staff Accounting Bulletin 104, and ASC 605-25, Revenue Recognition, Multiple Element Arrangements. Accordingly, the Company recognizes revenue when all of the following criteria are met: (i) persuasive evidence that an arrangement exists, (ii) delivery has occurred or services have been rendered, (iii) the fee is fixed or determinable and (iv) collectability is reasonably assured.
	The Company recognizes revenue and profit as work progresses on long-term, fixed-price contracts involving significant amounts of hardware and software customization using the percentage of completion method based on costs incurred to date, compared to total estimated costs upon completion. The primary components of costs incurred are third party software and direct labor cost including fringe benefits.  Revenues recognized in excess of amounts billed are classified as current assets under “Costs and estimated earnings in excess of billings on uncompleted contracts”. Amounts billed to customers in excess of revenue recognized are classified as current liabilities under “Billings in excess of costs and estimated earnings on uncompleted contracts”. Revenue from contracts for which the Company cannot reliably estimate total costs, or there are not significant amounts of customization, are recognized upon completion. The Company also generates non-recurring revenue from the licensing of its software. Software license revenue is recognized upon the execution of a license agreement, upon deliverance, when fees are fixed and determinable, when collectability is probable and when all other significant obligations have been fulfilled. The Company also generates revenue from the sale of computer hardware and identification media. Revenue for these items is recognized upon delivery of these products to the customer. The Company’s revenue from periodic maintenance agreements is generally recognized ratably over the respective maintenance periods provided no significant obligations remain and collectability of the related receivable is probable. Amounts collected in advance for maintenance services are included in current liabilities under "Deferred revenues".  Sales tax collected from customers is excluded from revenue.
	Customer Concentration
	For the three months ended March 31, 2014, two customers accounted for approximately 30% or $314,000 of total revenues and had trade receivables at March 31, 2014 of approximately $142,000. For the three months ended March 31, 2013, one customer accounted for approximately 18% or $152,000, respectively, of total revenues and had trade receivables at March 31, 2013 of $0.
	Recently Issued Accounting Standards
	From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (the “FASB”), or other standard setting bodies, which are adopted by us as of the specified effective date.  Unless otherwise discussed, the Company’s management believes the impact of recently issued standards not yet effective will not have a material impact on the Company’s consolidated financial statements upon adoption.
	FASB ASU 2013-05. In March 2013, the FASB issued ASU 2013-05, Foreign Currency Matters (Topic 830): Parent's Accounting for the Cumulative Translation Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity (a consensus of the FASB Emerging Issues Task Force). ASU 2013-05 requires that when a reporting entity (parent) ceases to have a controlling financial interest in a subsidiary or group of assets that is a nonprofit activity or a business within a foreign entity, the parent is required to release any related cumulative translation adjustment into net income. The provisions of ASU 2013-05 are effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. The adoption of this ASU did not have a material effect on the Company’s condensed  consolidated financial statements.
	FASB ASU 2013-11. In July 2013, the FASB issued ASU 2013-11, Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists. This guidance requires netting unrecognized tax benefits against deferred tax assets for a loss or other carryforward that would apply in settlement of uncertain tax positions. This guidance will be effective for annual reporting periods beginning after December 15, 2013. The adoption of this ASU did not have a material effect on the Company’s condensed  consolidated financial statements.

NET_LOSS_PER_COMMON_SHARE

NET LOSS PER COMMON SHARE	3 Months Ended
	Mar. 31, 2014
Notes to Financial Statements	'
Note 3 - NET LOSS PER COMMON SHARE	'
	Basic loss per common share is calculated by dividing net loss available to common shareholders for the period by the weighted-average number of common shares outstanding during the period. Diluted loss per common share is calculated by dividing net loss available to common shareholders for the period by the weighted-average number of common shares outstanding during the period, adjusted to include, if dilutive, potential dilutive shares consisting of convertible preferred stock, convertible notes payable, stock options and warrants, calculated using the treasury stock and if-converted methods.  For diluted loss per share calculation purposes, the net loss available to common shareholders is adjusted to add back any preferred stock dividends and any interest on convertible debt reflected in the condensed consolidated statement of operations for the respective periods.
	The table below presents the computation of basic and diluted loss per share:
	(Amounts in thousands except share and per share amounts)	Three Months Ended
		March 31,
		2014			2013
	Numerator for basic and diluted loss per share:
	Net loss	$	(1,690	)	$	(2,773	)
	Preferred dividends		(13	)		(13	)
	Net loss available to common shareholders	$	(1,703	)	$	(2,786	)
	Denominator for basic and dilutive loss per share — weighted-average shares outstanding		88,604,221			76,846,563
	Net loss	$	(0.02	)	$	(0.04	)
	Preferred dividends		(0.00	)		(0.00	)
	Basic and diluted loss per share available to common shareholders	$	(0.02	)	$	(0.04	)
	The Company has excluded the following weighted-average securities from the calculation of diluted loss per share, as their effect would have been antidilutive:
	Potential Dilutive securities	Three Months Ended
		March 31,
		2014			2013
	Restricted stock grants		—			199,333
	Convertible notes payable		113,885			40,805
	Convertible preferred stock		45,392			46,991
	Stock options		2,102,673			1,140,608
	Warrants		3,606,108			9,160,458
	Total potential dilutive securities		5,868,058			10,588,195

SELECT_BALANCE_SHEET_DETAILS

SELECT BALANCE SHEET DETAILS	3 Months Ended
	Mar. 31, 2014
Notes to Financial Statements	'
Note 4 - SELECT BALANCE SHEET DETAILS	'
	Inventory
	Inventories of $568,000 as of March 31, 2014 were comprised of work in process of $554,000 representing direct labor costs on in-process projects and finished goods of $14,000 net of reserves for obsolete and slow-moving items of $3,000. Inventories of $505,000 as of December 31, 2013 were comprised of work in process of $499,000 representing direct labor costs on in-process projects and finished goods of $6,000 net of reserves for obsolete and slow-moving items of $3,000. Appropriate consideration is given to obsolescence, excessive levels, deterioration and other factors in evaluating net realizable value and required reserve levels.
	Intangible Assets
	The Company has intangible assets in the form of trademarks, trade names and patents.  The carrying amounts of the Company’s acquired trademark and trade name intangible assets were $27,000 and $31,000 as of March 31, 2014 and December 31, 2013, respectively, which include accumulated amortization of $320,000 and $316,000 as of March 31, 2014 and December 31, 2013, respectively.  Amortization expense for the intangible assets was $4,000 for the three months ended March 31, 2014 and 2013.  All intangible assets are being amortized over their estimated useful lives with no estimated residual values.  Any costs incurred by the Company to renew or extend the life of intangible assets will be evaluated under ASC No. 350, Intangibles – Goodwill and Other, for proper treatment.
	The carrying amounts of the Company’s patent intangible assets were $138,000 and $141,000 as of March 31, 2014 and December 31, 2013, respectively, which include accumulated amortization of $521,000 and $518,000 as of March 31, 2014 and December 31, 2013, respectively.  Amortization expense for patent intangible assets was $3,000 for the three months ended March 31, 2014 and 2013.  Patent intangible assets are being amortized on a straight-line basis over their weighted-average remaining life of approximately 13.5 years.
	The estimated acquired intangible amortization expense for the next five fiscal years is as follows:
	Fiscal Year Ended December 31,	Estimated
		Amortization
		Expense
		($ in thousands)
	2014 (9 months)	$	21
	2015		27
	2016		12
	2017		12
	2018		12
	Thereafter		81
	Totals	$	165
	Goodwill
	The Company annually, or more frequently if events or circumstances indicate a need, tests the carrying amount of goodwill for impairment.  A two-step impairment test is used to first identify potential goodwill impairment and then measure the amount of goodwill impairment loss, if any. The first step was conducted by determining and comparing the fair value, employing the market approach, of the Company’s reporting unit to the carrying value of the reporting unit. The Company continues to have only one reporting unit, Identity Management. Based on the results of this impairment test, the Company determined that its goodwill was not impaired as of March 31, 2014 and December 31, 2013.

NOTES_PAYABLE_AND_LINE_OF_CRED

NOTES PAYABLE AND LINE OF CREDIT	3 Months Ended
	Mar. 31, 2014
Notes to Financial Statements	'
Note 5 - NOTES PAYABLE AND LINE OF CREDIT	'
	Notes payable consist of the following:
	($ in thousands)	March 31,			December 31,
		2014			2013
	Notes payable to related parties:
	7% convertible promissory notes. Face value of notes $55 at March 31, 2014 and December 31, 2013. Discount on notes is $0 at March 31, 2014 and December 31, 2013. In January 2013, the Company received an extension to June 30, 2014. Notes are callable at any time at option of holder.	$	55		$	55
	Total notes payable to related parties	$	55		$	55
	Total notes payable		55			55
	Less current portion		(55	)		(55	)
	Long-term notes payable	$	-		$	-
	7% Convertible Promissory Notes to Related Parties
	On November 14, 2008, the Company entered into a series of convertible promissory notes (the "Related-Party Convertible Notes"), in the principal aggregate amount of $110,000, with certain officers and members of the Company’s Board of Directors. The Related-Party Convertible Notes bear interest at 7.0% per annum and were due February 14, 2009. The principal amount of the Related-Party Convertible Notes plus accrued but unpaid interest is convertible at the option of the holder into common stock of the Company. The number of shares into which the Related-Party Convertible Notes are convertible shall be calculated by dividing the outstanding principal and accrued but unpaid interest by $0.55 (the “Conversion Price”).
	In conjunction with the issuance of the Related-Party Convertible Notes, the Company issued an aggregate of 149,996 warrants to the note holders to purchase common stock of the Company which were exercised in their entirety, on a cashless basis, between October and November 2013 resulting in the issuance of 111,783 shares of the Company’s common stock.
	The Company, in 2008, initially recorded the convertible notes net of a discount equal to the fair value allocated to the warrants of approximately $13,000. The Company estimated the fair value of the warrants using the Black-Scholes option pricing model using the following assumptions: term of 5 years, a risk free interest rate of 2.53%, a dividend yield of 0%, and volatility of 96%. The convertible notes also contained a beneficial conversion feature, resulting in an additional debt discount of $12,000. The beneficial conversion amount was measured using the accounting intrinsic value, i.e. the excess of the aggregate fair value of the common stock into which the debt is convertible over the proceeds allocated to the security. The Company has accreted the beneficial conversion feature over the life of the Related-Party Convertible Notes.
	The Company did not repay the Related-Party Convertible Notes on the due date. In August 2009, the Company received from the Related-Party Convertible Note holders a waiver of default and extension of the Maturity Date to January 31, 2010. As consideration for the waiver and note extension, the Company issued to the Related-Party Convertible Note holders warrants to purchase an aggregate of 150,000 shares of the Company’s common stock. The warrants have an exercise price of $0.50 per share and expire on August 25, 2014.
	The Company did not repay the notes on January 31, 2010.  During the year ended December 31, 2012, the Company repaid $45,000 in principal to certain holders of the Related-Party Convertible Notes. On January 21, 2013, the holders of the Related-Party Convertible Notes agreed to extend the due date on their respective convertible notes to be due and payable no later than June 30, 2014 however, the Related-Party Convertible Notes will be callable at any time, at the option of the note holder, prior to June 30, 2014. In December 2013, a holder converted $10,000 of the Related-Party Convertible Notes into 18,182 shares of common stock of the Company. Also, in December 2013, 13,636 warrants were exercised, on a cashless basis, resulting in the issuance of 9,969 shares of the Company’s common stock.
	Lines of Credit
	In March 2013, the Company entered into a new unsecured line of credit agreement with available borrowings of up to $2,500,000 (the “Line of Credit”). The Line of Credit was extended by an existing shareholder and member of our Board of Directors (the “Holder”).  In March 2014, the Line of Credit’s borrowing was increased to an aggregate total of $3,500,000 (the “Amendment”). Pursuant to the terms and conditions of the Amendment, the Holder has the right to convert up to $2.5 million of the outstanding balance of the Line of Credit into shares of the Company's common stock for $0.95 per share. Any remaining outstanding balance will be convertible into shares of the Company's common stock for $2.25 per share.
	As consideration for the initial Line of Credit, the Company issued to the Holder a warrant (“Line of Credit Warrant”) exercisable for 1,052,632 shares of the Company’s common stock. The Line of Credit Warrant has a term of two years from the date of issuance and an exercise price of $0.95 per share.  As consideration for entering into the Amendment, the Company issued to the Holder an additional warrant (“Amendment Warrant”) exercisable for 177,778 shares of the Company’s common stock. The Amendment Warrant expires on March 27, 2015 and has an exercise price of $2.25 per share.
	In April 2014, the Company and Holder entered into a further amendment to the Line of Credit to decrease the available borrowings to $3.0 million (the “Second Amendment”).  Contemporaneous with the execution of the Second Amendment, the Company entered into a new unsecured line of credit with available borrowings of up to $500,000 with a second member of the Company’s Board of Directors (the “Second Holder”), which amount would be convertible into shares of the Company’s common stock for $2.25 per share. As a result of these amendments, total available borrowings under aggregate Lines of Credit available to the Company remain unchanged at a total of $3,500,000. The Holder also assigned and transferred to the Second Holder one-half of the 177,778 Amendment Warrants issued by the Company to the Holder to purchase shares of the Company’s common stock, originally granted to the Holder upon execution of the Amendment.
	Borrowings under the Lines of Credit accrue interest at a rate of 8% per annum and are due in March 2015.  Advances under the credit facilities are made at the Company’s request. The Lines of Credit shall terminate, and no further advances shall be made, upon the earlier of March 2015 or such date that the Company consummates a debt and/or equity financing resulting in net proceeds to the Company of at least $3.5 million. In the event of such financing, the outstanding balance under the terms of the Lines of Credit shall be due and payable upon demand.
	The Company estimated the fair value of the Line of Credit Warrant and the Amendment Warrants using the Black-Scholes option pricing model using the following assumptions: term of two years for the Line of Credit Warrants issued March 2013 and a term of one year for the Amendment Warrants issued in March 2014, a risk free interest rate of 2.58%, a dividend yield of 0%, and volatility of 79% for the Line of Credit Warrant and 74% for the Amendment Warrant. The Company recorded the fair value of the Line of Credit Warrant and the Amendment Warrants as deferred financing fees of approximately $707,000 to be amortized over the life of the Lines of Credit.
	The Company evaluated the Lines of Credit and determined that the instrument contains a contingent beneficial conversion feature, i.e. an embedded conversion right that enables the holder to obtain the underlying common stock at a price below market value. The beneficial conversion feature is contingent as the terms of the conversion do not permit the Company to compute the number of shares that the holder would receive if the contingent event occurs (i.e. future borrowings under the Lines of Credit). The Company has considered the accounting for this contingent beneficial conversion feature using the guidance in ASC 470, Debt. The guidance in ASC 470 states that a contingent beneficial conversion feature in an instrument shall not be recognized in earnings until the contingency is resolved. The beneficial conversion features of future borrowings under the Lines of Credit will be measured using the intrinsic value calculated at the date the contingency is resolved using the exercise price and trading value of the Company’s common stock at the date the Lines of Credit were issued (commitment date). Such amounts could range from $0 to approximately $500,000 depending on the amount borrowed by the Company under the Lines of Credit.
	As of March 31, 2014, no advances were made under the Lines of Credit.

EQUITY

EQUITY	3 Months Ended
	Mar. 31, 2014
Notes to Financial Statements	'
Note 6 - EQUITY	'
	The Company’s Certificate of Incorporation, as amended, authorize the issuance of two classes of stock to be designated “common stock” and “preferred stock”. The preferred stock may be divided into such number of series and with the rights, preferences, privileges and restrictions as the Board of Directors may determine.
	Series B Convertible Redeemable Preferred Stock
	The Company had 239,400 shares of Series B Convertible Redeemable Preferred (“Series B Preferred”) outstanding as of March 31, 2014 and December 31, 2013.  At March 31, 2014 and December 31, 2013, the Company had cumulative undeclared dividends of approximately $21,000 and $8,000, respectively.  There were no conversions of Series B Preferred into common stock during the three months ended March 31, 2014 or 2013.
	Common Stock
	The following table summarizes common stock activity for the three months ended March 31, 2014:
		Common Stock
	Shares outstanding at December 31, 2013		87,548,613
	Shares issued pursuant to options exercised for cash		33,920
	Shares issued pursuant to warrants exercised for cash		3,090,000
	Shares outstanding at March 31, 2014		90,672,533
	During the three months ended March 31, 2014, the Company issued 33,920 shares of common stock pursuant to the exercise of 33,920 options for cash proceeds of approximately $24,000.  During the three months ended March 31, 2014, the Company issued 3,090,000 shares of common stock pursuant to the exercise of 3,090,000 warrants for cash proceeds of approximately $1,548,000.
	Warrants
	The following table summarizes warrant activity for the following periods:
		Warrants			Weighted-
					Average
					Exercise
					Price
	Balance at December 31, 2013		6,598,416		$	0.52
	Granted		277,778		$	2.1
	Expired / Canceled		(50,000	)	$	1.08
	Exercised		(3,090,000	)	$	0.5
	Balance at March 31, 2014		3,736,194		$	0.81
	During the three months ended March 31, 2014, the Company issued to certain consultants warrants to purchase an aggregate of 100,000 shares of the Company’s common stock. Such warrants have an exercise prices ranging of $1.83 per share and vest only upon the attainment of specified events. No such events were obtained during the three months ended March 31, 2014.
	During the three months ended March 31, 2014, the Company issued to an existing shareholder and member of our Board of Directors warrants to purchase 177,778 shares of the Company’s common stock. Such warrants have an exercise price of $2.25 per share and expire on March 27, 2015.
	During the three months ended March 31, 2014, there were 3,090,000 warrants exercised for cash resulting in the issuance of 3,090,000 shares of common stock and proceeds to the Company of approximately $1,548,000 and 50,000 warrants that expired.
	As of March 31, 2014, warrants to purchase 3,736,194 shares of common stock at prices ranging from $0.50 to $2.25 were outstanding. All warrants are exercisable as of March 31, 2014, and expire at various dates through December 2016, with the exception of an aggregate of 380,000 warrants, which become exercisable only upon the attainment of specified events.
	Stock-Based Compensation
	As of March 31, 2014, the Company had two active stock-based compensation plans for employees and nonemployee directors, which authorize the granting of various equity-based incentives including stock options and restricted stock.
	The Company estimates the fair value of its stock options using a Black-Scholes option-pricing model, consistent with the provisions of ASC No. 718, Compensation – Stock Compensation. The fair value of stock options granted is recognized to expense over the requisite service period. Stock-based compensation expense is reported in general and administrative, sales and marketing, engineering and customer service expenses based upon the departments to which substantially all of the associated employees report and credited to additional paid-in capital.  Stock-based compensation expense related to equity options was approximately $158,000 and $126,000 for the three months ended March 31, 2014 and 2013, respectively.
	ASC 718 requires the use of a valuation model to calculate the fair value of stock-based awards. The Company has elected to use the Black-Scholes option-pricing model, which incorporates various assumptions including volatility, expected life, and interest rates. The Company is required to make various assumptions in the application of the Black-Scholes option-pricing model. The Company has determined that the best measure of expected volatility is based on the historical weekly volatility of the Company’s common stock. Historical volatility factors utilized in the Company’s Black-Scholes computations for the three months ended March 31, 2014 and 2013 ranged from 78% to 135%. The Company has elected to estimate the expected life of an award based upon the SEC approved “simplified method” noted under the provisions of Staff Accounting Bulletin No. 110. The expected term used by the Company during the three months ended March 31, 2014 and 2013 was 5.9 years. The difference between the actual historical expected life and the simplified method was immaterial.  The interest rate used is the risk free interest rate and is based upon U.S. Treasury rates appropriate for the expected term. Interest rates used in the Company’s Black-Scholes calculations for the three months ended March 31, 2014 and 2013 was 2.6%. Dividend yield is zero as the Company does not expect to declare any dividends on the Company’s common stock in the foreseeable future.
	In addition to the key assumptions used in the Black-Scholes model, the estimated forfeiture rate at the time of valuation is a critical assumption.  The Company has estimated an annualized forfeiture rate of approximately 0% for corporate officers, 4.1% for members of the Board of Directors and 6.0% for all other employees.  The Company reviews the expected forfeiture rate annually to determine if that percent is still reasonable based on historical experience.
	A summary of the activity under the Company’s stock option plans is as follows:
		Options			Weighted-
					Average
					Exercise Price
	Balance at December 31, 2013		3,783,411		$	0.94
	Granted		-		$	-
	Expired/Cancelled		(6,250	)	$	0.92
	Exercised		(33,920	)	$	0.71
	Balance at March 31, 2014		3,743,241		$	0.95
	In December 2013, the Company issued 144,000 shares of its common stock to certain members of the Company’s Board of Directors as compensation for services to be rendered through December 2014. Such shares are forfeitable should the Board members’ service be terminated.  For the three months ended March 31, 2014 and 2013, the Company recorded $60,000 and $0 as compensation expense.

DERIVATIVE_LIABILITIES

DERIVATIVE LIABILITIES	3 Months Ended
	Mar. 31, 2014
Notes to Financial Statements	'
Note 7 - DERIVATIVE LIABILITIES	'
	The Company accounts for its derivative instruments under the provisions of ASC 815, Derivatives and Hedging-Contracts in Entity’s Own Equity-Scope and Scope Exceptions . Under the provisions of ASC 815, the anti-dilution and cash settlement provisions in certain warrants (collectively the “ Derivative Liabilities ”) qualify as derivative instruments.
	The Company is required to mark-to-market at the end of each reporting period the value of the derivative liabilities.  The Company revalues these derivative liabilities at the end of each reporting period by using available market information and commonly accepted valuation methodologies.  The periodic change in value of the derivative liabilities is recorded as either non-cash derivative income (if the value of the embedded derivative and warrants decrease) or as non-cash derivative expense (if the value of the embedded derivative and warrants increase).  Although the values of the embedded derivative and warrants are affected by interest rates, the remaining contractual conversion period and the Company’s stock volatility, the primary cause of the change in the values of the derivative liabilities will be the value of the Company’s common stock.  If the stock price goes up, the value of these derivatives will generally increase and if the stock price goes down the value of these derivatives will generally decrease.
	The Company uses a Monte-Carlo simulation methodology and the Black-Scholes option-pricing model in the determination of the fair value of the Derivative Liabilities. The Monte-Carlo simulation methodology is affected by the Company’s stock price as well as assumptions regarding the expected stock price volatility over the term of the Derivative Liabilities and assumptions regarding future financings. The Company utilized the services of an independent valuation firm, Vantage Point Advisors, Inc. to perform the Monte-Carlo simulations.
	The Black-Scholes option-pricing model is affected by the Company’s stock prices as well as assumptions regarding the expected stock price volatility of the term of the derivative liabilities in addition to interest rates and dividend yields.
	As of December 31, 2013, the Company had 40,000 outstanding warrants to purchase shares of the Company’s common stock that qualified for derivative liability treatment.  The recorded fair market value of those warrants at December 31, 2013 was approximately $57,000, which is reflected as a current liability in the condensed consolidated balance sheet as of December 31, 2013. During the three months ended March 31, 2014, all remaining warrants qualifying for derivative liability treatment were exercised for cash proceeds of $20,000 resulting in the issuance of 40,000 shares of the Company’s common stock with an aggregate fair value of approximately $57,000.

FAIR_VALUE_ACCOUNTING

FAIR VALUE ACCOUNTING	3 Months Ended
	Mar. 31, 2014
Notes to Financial Statements	'
Note 8 - FAIR VALUE ACCOUNTING	'
	The Company accounts for fair value measurements in accordance with ASC 820, Fair Value Measurements and Disclosures, which defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosures about fair value measurements.
	ASC 820 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. 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 three levels of the fair value hierarchy under ASC 820 are described below:
	Level 1	Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.
	Level 2	Applies to assets or liabilities for which there are inputs other than quoted prices included within Level 1 that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.
	Level 3	Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity).
	The following table sets forth the Company’s financial assets and liabilities measured at fair value by level within the fair value hierarchy. As required by ASC 820, assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.
			Fair Value at March 31, 2014
	($ in thousands)		Total			Level 1		Level 2		Level 3
	Assets:
	Pension assets		$	1,794		$	1,794	$	—	$	—
	Totals		$	1,794		$	1,794	$	—	$	—
	Liabilities:
	Derivative liabilities		$	—		$	—	$	—	$	—
	Totals		$	—		$	—	$	—	$	—
			Fair Value at December 31, 2013
	($ in thousands)		Total			Level 1		Level 2		Level 3
	Assets:
	Pension assets		$	1,790		$	1,790	$	—	$	—
	Totals		$	1,790		$	1,790	$	—	$	—
	Liabilities:
	Derivative liabilities		$	57		$	—	$	—	$	57
	Totals		$	57		$	—	$	—	$	57
	The Company’s pension assets are classified within Level 1 of the fair value hierarchy because they are valued using market prices.  The pension assets are primarily comprised of the cash surrender value of insurance contracts. All plan assets are managed in a policyholder pool in Germany by outside investment managers.  The investment objectives for the plan are the preservation of capital, current income and long-term growth of capital.
	As of December 31, 2013, the Company had 40,000 outstanding warrants to purchase shares of the Company’s common stock that qualified for derivative liability treatment.  The recorded fair market value of those warrants at December 31, 2013 was approximately $57,000 which is reflected as a current liability in the condensed consolidated balance sheet as of December 31, 2013. The fair value of the Company’s derivative liabilities are classified within Level 3 of the fair value hierarchy because they are valued using pricing models that incorporate management assumptions that cannot be corroborated with observable market data.  The Company uses Black-Scholes or Monte-Carlo simulation methodologies in the determination of the fair value of the derivative liabilities. During the three months ended March 31, 2014, all remaining warrants qualifying for derivative liability treatment were exercised by their holders.
	The Monte-Carlo simulation methodology is affected by the Company’s stock price as well as assumptions regarding the expected stock price volatility over the term of the derivative liabilities in addition to the probability of future financings. The Black-Scholes valuation model is affected by the Company’s stock price as well as assumptions regarding the expected stock price volatility over the term of the derivative liabilities in addition to expected dividend yield and risk free interest rates appropriate for the expected term.
	The Company monitors the activity within each level and any changes with the underlying valuation techniques or inputs utilized to recognize if any transfers between levels are necessary.  That determination is made, in part, by working with outside valuation experts for Level 3 instruments and monitoring market related data and other valuation inputs for Level 1 and Level 2 instruments.
	A reconciliation of the Company’s liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) is as follows:
	($ in thousands)		Derivative Liabilities
	Balance at December 31, 2013		$	57
	Total unrealized gains			—
	Included in earnings			—
	Settlements			(57	)
	Issuances			—
	Transfers in and/or out of Level 3			—
	Balance at March 31, 2014		$	—
	All unrealized gains or losses resulting from changes in value of any Level 3 instruments are reflected as a separate line in the condensed consolidated statement of operations in arriving at net loss.  The Company is not a party to any hedge arrangements, commodity swap agreements or any other derivative financial instruments.
	Certain assets are measured at fair value on a non-recurring basis and are subject to fair value adjustments only in certain circumstances. Included in this category is goodwill written down to fair value when determined to be impaired. The valuation methods for goodwill involve assumptions based on management’s judgment using internal and external data, and which are classified in Level 3 of the valuation hierarchy.

RELATED_PARTY_TRANSACTIONS

RELATED PARTY TRANSACTIONS	3 Months Ended
	Mar. 31, 2014
Notes to Financial Statements	'
Note 9 - RELATED PARTY TRANSACTIONS	'
	Related-Party Convertible Notes
	As more fully described in Note 5, above, to these consolidated financial statements, on November 14, 2008, the Company entered into a series of convertible promissory notes (the “Related-Party Convertible Notes”), aggregating $110,000, with certain officers and members of the Company’s Board of Directors, including S. James Miller, the Company’s Chief Executive Officer and Chairman, and Charles AuBuchon. The Related-Party Convertible Notes bear interest at 7.0% per annum and were originally due February 14, 2009.
	In conjunction with the issuance of the Related-Party Convertible Notes, the Company issued an aggregate of 149,996 warrants to the note holders to purchase common stock of the Company. All such warrants were exercised, on a cashless basis, between October and November 2013.
	The Company did not repay the Related-Party Convertible Notes on the due date. In August 2009, the Company received from the Related-Party Convertible Note holders a waiver of default and extension of the Maturity Date to January 31, 2010. As consideration for the waiver and note extension, the Company issued to the Related-Party Convertible Note holders warrants to purchase an aggregate of 150,000 shares of the Company’s common stock. The warrants have an exercise price of $0.50 per share and expire on August 25, 2014, of which warrants to purchase 136,364 shares of common stock were outstanding and exercisable as of December 31, 2013.
	On January 21, 2013, the holders of the Related-Party Convertible Notes agreed to extend the due date on their respective convertible notes to be due and payable not later than June 30, 2014; however, the Related-Party Convertible Notes will be callable at any time, at the option of the note holder, prior to June 30, 2014. During the year ended December 31, 2013, a Related Party Convertible Note holder elected to convert the principal amount of $10,000 of their respective Related-Party Convertible Note into 18,182 shares of common stock.
	Lines of Credit
	In March 2013, the Company entered into a new unsecured line of credit agreement with available borrowings of up to $2,500,000 (the “Line of Credit”). The Line of Credit was extended by an existing shareholder and member of our Board of Directors (the “Holder”).  In March 2014, the Line of Credit’s borrowing was increased to an aggregate total of $3,500,000 (the “Amendment”). Pursuant to the terms and conditions of the Amendment, the Holder has the right to convert up to $2.5 million of the outstanding balance of the Line of Credit into shares of the Company's common stock for $0.95 per share. Any remaining outstanding balance will be convertible into shares of the Company's common stock for $2.25 per share.
	As consideration for the initial Line of Credit, the Company issued to the Holder a warrant (“Line of Credit Warrant”) exercisable for 1,052,632 shares of the Company’s common stock. The Line of Credit Warrant has a term of two years from the date of issuance and an exercise price of $0.95 per share.  As consideration for entering into the Amendment, the Company issued to the Holder an additional warrant (“Amendment Warrant”) exercisable for 177,778 shares of the Company’s common stock. The Amendment Warrant expires on March 27, 2015 and has an exercise price of $2.25 per share.
	In April 2014, the Company and Holder entered into a further amendment to the Line of Credit to decrease the available borrowings to $3.0 million (the “Second Amendment”).  Contemporaneous with the execution of the Second Amendment, the Company entered into a new unsecured line of credit with available borrowings of up to $500,000 with a second member of the Company’s Board of Directors (the “Second Holder”), which amount would be convertible into shares of the Company’s common stock for $2.25 per share. As a result of these amendments, total available borrowings under aggregate Lines of Credit available to the Company remain unchanged at a total of $3,500,000. The Holder also assigned and transferred to the Second Holder one-half of the 177,778 Amendment Warrants issued by the Company to the Holder to purchase shares of the Company’s common stock, originally granted to the Holder upon execution of the Amendment.
	Borrowings under the Lines of Credit accrue interest at a rate of 8% per annum and are due in March 2015.  Advances under the credit facilities are made at the Company’s request. The Lines of Credit shall terminate, and no further advances shall be made, upon the earlier of March 2015 or such date that the Company consummates a debt and/or equity financing resulting in net proceeds to the Company of at least $3.5 million. In the event of such financing, the outstanding balance under the terms of the Lines of Credit shall be due and payable upon demand.
	The Company estimated the fair value of the Line of Credit Warrants and the Amendment Warrants using the Black-Scholes option pricing model using the following assumptions: term of two years for the Line of Credit warrants issued March 2013 and a term of one year for the Amendment Warrants issued in March 2014, a risk free interest rate of 2.58%, a dividend yield of 0%, and volatility of 79% for the Line of Credit Warrant and 74% for the Amendment Warrant. The Company recorded the fair value of the Line of Credit Warrants and the Amendment Warrants as deferred financing fees of approximately $707,000 to be amortized over the life of the Lines of Credit.
	The Company evaluated the Lines of Credit and determined that the instrument contains a contingent beneficial conversion feature, i.e. an embedded conversion right that enables the holder to obtain the underlying common stock at a price below market value. The beneficial conversion feature is contingent as the terms of the conversion do not permit the Company to compute the number of shares that the holder would receive if the contingent event occurs (i.e. future borrowings under the Lines of Credit). The Company has considered the accounting for this contingent beneficial conversion feature using the guidance in ASC 470, Debt. The guidance in ASC 470 states that a contingent beneficial conversion feature in an instrument shall not be recognized in earnings until the contingency is resolved. The beneficial conversion features of future borrowings under the Lines of Credit will be measured using the intrinsic value calculated at the date the contingency is resolved using the exercise price and trading value of the Company’s common stock at the date the Lines of Credit were issued (commitment date). Such amounts could range from $0 to approximately $500,000 depending on the amount borrowed by the Company under the Lines of Credit.
	As of March 31, 2014, no advances were made under the Lines of Credit.

CONTINGENT_LIABILITIES

CONTINGENT LIABILITIES	3 Months Ended
	Mar. 31, 2014
Notes to Financial Statements	'
Note 10 - CONTINGENT LIABILITIES	'
	During the three months ended March 31, 2014 and 2013, the Company wrote off certain accounts payable and accrued expenses totaling approximately $211,000 and $104,000, respectively, which is included in “Other income” in the accompanying condensed consolidated statements of operations. Such accounts payable and accrued expenses represented amounts that could not be paid in full at the time, or were, in the view of management, unenforceable.  While management believes that such amounts no longer represent recognized liabilities of the Company, such creditors may subsequently assert a claim against the Company.
	Employment Agreements
	The Company has employment agreements with its Chief Executive Officer, Senior Vice President of Administration and Chief Financial Officer, Chief Technical Officer, and Vice President of Business Development. The Company may terminate the agreements with or without cause. Subject to the conditions and other limitations set forth in each respective employment agreement, each executive will be entitled to the following severance benefits if the Company terminates the executive’s employment without cause or in the event of an involuntary termination  (as defined in the employment agreements) by the Company or by the executive:
	Under the terms of the agreement, the Chief Executive Officer will be entitled to the following severance benefits if we terminate his employment without cause or in the event of an involuntary termination: (i) a lump sum cash payment equal to twenty-four months base salary; (ii) continuation of fringe benefits and medical insurance for a period of three years; and (iii) immediate vesting of 50% of outstanding stock options and restricted stock awards. In the event that the Chief Executive Officer’s employment is terminated within six months prior to or thirteen months following a change of control, the Chief Executive Officer is entitled to the severance benefits described above, except that 100% of the Chief Executive Officer’s outstanding stock options and restricted stock awards will immediately vest.
	Under the terms of the employment agreements with our Senior Vice President of Administration and Chief Financial Officer, Chief Technical Officer, and Vice President of Business Development, these executives will be entitled to the following severance benefits if we terminate their employment without cause or in the event of an involuntary termination: (i) a lump sum cash payment equal to six months of base salary; (ii) continuation of their fringe benefits and medical insurance for a period of six months; (iii) immediate vesting of 50% of their outstanding stock options and restricted stock awards. In the event that their employment is terminated within six months prior to or thirteen months following a change of control (defined below), they are entitled to the severance benefits described above, except that 100% of their outstanding stock options and restricted stock awards will immediately vest.
	Litigation
	On September 21, 2012 a complaint for patent infringement was filed against the Company in the United States District Court for the Eastern District of Texas, entitled Blue Spike, LLC v. ImageWare Systems, Inc., Case No. 12-cv-688-LED.  The case is one of approximately 80-plus lawsuits filed by Blue Spike, LLC.  All cases have been consolidated for all pretrial purposes, other than venue, with the first-filed, lead action entitled Blue Spike, LLC v. Texas Instruments, Inc., Case No. 12-cv-499-LED filed on August 9, 2012.  The four patents-in-suit are directed essentially to digital signal abstracting technology.  On March 14, 2014, the Court granted the Company’s motion to sever and transfer its case to the United States District Court for the Southern District of California.  Accordingly, Blue Spike’s case against the Company has been severed from the consolidated action and transferred to the Southern District of California.  The Court also denied without prejudice the Company’s motion to dismiss claims for indirect and willful infringement, without prejudice to re-filing the motion in the Southern District of California. The Company contends that the asserted patents are invalid, unenforceable and/or not infringed and intends to defend against the action vigorously.
	Other than as specifically described above, we are currently not involved in any litigation that we believe could have a material adverse effect on our financial condition or results of operations.  Other than described above, there is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the executive officers of the Company or any of our subsidiaries, threatened against or affecting the Company, our common stock, any of our subsidiaries or of the Company’s or our subsidiaries’ officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect.
	Leases
	In December 2010, we relocated our corporate headquarters to Rancho Bernardo Road in San Diego, California and entered into a three-year lease agreement. In August 2013, we entered into an amendment effective November 2013, whereby the Company consolidated its existing leases. The Company leased an additional 4,793 square feet of space in the same location while simultaneously vacating 2,560 square feet of space resulting in total rented square feet of 9,927. The lease term commenced on November 1, 2013 and ends on October 31, 2017.  Future minimum rent payments under the amended lease will be approximately $157,000 in 2014 (9 months), $216,000 in 2015, $222,000 in 2016 and $190,000 in 2017.
	In April 2012, we entered into a lease extension of our Portland, Oregon offices whereby we extended the lease term for a period of 36 months commencing November 1, 2012 until October 31, 2015.  Future minimum rent payments will be approximately $109,000 in 2014 (9 months) and $124,000 in 2015.
	In addition to the corporate headquarters lease in San Diego, California, we also lease space in Ottawa, Province of Ontario, Canada; and Mexico City, Mexico.
	At March 31, 2014, future minimum lease payments are as follows:
	($ in thousands)
	2014 (9 months)	$	299
	2015	$	381
	2016	$	232
	2017	$	190
	2018 and thereafter	$	—
		$	1,102
	Rental expense incurred under operating leases for the three months ended March 31, 2014 and 2013 was approximately $104,000 and $133,000, respectively.

SUBSEQUENT_EVENTS

SUBSEQUENT EVENTS	3 Months Ended
	Mar. 31, 2014
Notes to Financial Statements	'
Note 11 - SUBSEQUENT EVENTS	'
	In April 2014, the Company and Holder entered into a further amendment to the Line of Credit to decrease the available borrowings to $3.0 million (the “Second Amendment”).  Contemporaneous with the execution of the Second Amendment, the Company entered into a new unsecured line of credit with available borrowings of up to $500,000 with a second member of the Company’s Board of Directors (the “Second Holder”), which amount would be convertible into shares of the Company’s common stock for $2.25 per share. As a result of these amendments, total available borrowings under aggregate lines of credit available to the Company remain unchanged at a total of $3,500,000. The Holder also assigned and transferred to the Second Holder one-half of the 177,778 warrants issued by the Company to the Holder to purchase shares of the Company’s common stock, originally granted to the Holder upon execution of the Amendment.  See Note 5, “Notes Payable and Lines of Credit” for a further description of the Lines of Credit and the Amendment.
	In April 2014, the Company issued 2,380 shares of its common stock pursuant to the exercise of employee stock options for total cash proceeds of approximately $2,000. Also in April 2014, the Company issued 1,502,632 shares of its common stock pursuant to the exercise of 1,502,632 warrants for total cash proceeds of approximately $1,225,000.

SIGNIFICANT_ACCOUNTING_POLICIE1

SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION (Policies)	3 Months Ended
	Mar. 31, 2014
Significant Accounting Policies And Basis Of Presentation Policies	'
Basis of Presentation	'
	The accompanying condensed consolidated balance sheet as of December 31, 2013, which has been derived from audited financial statements, and the unaudited interim condensed consolidated financial statements have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and the rules and regulations of the Securities and Exchange Commission (“SEC”) related to a quarterly report on Form 10-Q. Certain information and note disclosures normally included in annual financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to those rules and regulations, although the Company believes that the disclosures made are adequate to make the information not misleading. The interim financial statements reflect all adjustments which, in the opinion of management, are necessary for a fair statement of the results for the periods presented. All such adjustments are of a normal and recurring nature. These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited financial statements for the year ended December 31, 2013, which are included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013 that was filed with the SEC on March 17, 2014.
	Operating results for the three months ended March 31, 2014 are not necessarily indicative of the results that may be expected for the year ended December 31, 2014, or any other future periods.
Principles of Consolidation	'
	The condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany transactions and balances have been eliminated.
Operating Cycle	'
	Assets and liabilities related to long-term contracts are included in current assets and current liabilities in the accompanying condensed consolidated balance sheets, although they will be liquidated in the normal course of contract completion which may take more than one operating cycle.
Use of Estimates	'
	The preparation of the condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, and the reported amounts of revenue and expense during the reporting period. Significant estimates include the allowance for doubtful accounts receivable, inventory carrying values, deferred tax asset valuation allowances, accounting for loss contingencies, recoverability of goodwill and acquired intangible assets and amortization periods, assumptions used in the Black-Scholes model to calculate the fair value of share-based payments, assumptions used in the application of fair value methodologies to calculate the fair value of derivative liabilities, revenue and cost of revenues recognized under the percentage of completion method and assumptions used in the application of fair value methodologies to calculate the fair value of pension assets and obligations. Actual results could differ from estimates.
Cash and cash equivalents	'
	The Company defines cash equivalents as highly liquid investments with original maturities of less than 90 days that are not held for sale in the ordinary course of business.
Accounts receivable	'
	In the normal course of business, the Company extends credit without collateral requirements to its customers that satisfy pre-defined credit criteria. Accounts receivable are recorded net of an allowance for doubtful accounts. The Company records its allowance for doubtful accounts based upon an assessment of various factors. The Company considers historical experience, the age of the accounts receivable balances, the credit quality of its customers, current economic conditions and other factors that may affect customers’ ability to pay to determine the level of allowance required.  Accounts receivable are written off against the allowance for doubtful accounts when all collection efforts by the Company have been unsuccessful.
Inventories	'
	Finished goods inventories are stated at the lower of cost, determined using the average cost method, or market.  See Note 4, “Inventory”, below.
Fair Value of Financial Instruments	'
	For certain of the Company’s financial instruments, including accounts receivable, accounts payable, accrued expenses, deferred revenue and notes payable to related-parties, the carrying amounts approximate fair value due to their relatively short maturities.
Derivative Financial Instruments	'
	The Company does not use derivative instruments to hedge exposures to cash flow, market or foreign currency risks.
	The Company reviews the terms of common stock, preferred stock, warrants and convertible debt it issues to determine if there are embedded derivative instruments, including embedded conversion options that must be bifurcated and accounted for separately as derivative financial instruments.  In circumstances where the host instrument contains more than one embedded derivative instrument, including the conversion option, requiring bifurcation, the bifurcated derivative instruments are accounted for as a single, compound derivative instrument.
	Bifurcated embedded derivatives are initially recorded at fair value and are then revalued at each reporting date with changes in the fair value reported as non-operating income or expense. When the equity or convertible debt instruments contain embedded derivative instruments that are to be bifurcated and accounted for as liabilities, the total proceeds received are first allocated to the fair value of all the bifurcated derivative instruments.  The remaining proceeds, if any, are then allocated to the host instruments themselves, usually resulting in those instruments being recorded at a discount from their face value.
	The discount from the face value of the convertible debt, together with the stated interest on the instrument, is amortized over the life of the instrument through periodic charges to interest expense, using the effective interest method.
Revenue recognition	'
	The Company recognizes revenue from the following major revenue sources:
		●	Long-term fixed-price contracts involving significant customization
		●	Fixed-price contracts involving minimal customization
		●	Software licensing
		●	Sales of computer hardware and identification media
		●	Post-contract customer support (“PCS”)
	The Company’s revenue recognition policies are consistent with GAAP including the Financial Accounting Standards Board (“FASB”), Accounting Standards Codification (“ASC”) 985-605, Software Revenue Recognition, ASC 605-35, Revenue Recognition, Construction-Type and Production-Type Contracts, Securities and Exchange Commission Staff Accounting Bulletin 104, and ASC 605-25, Revenue Recognition, Multiple Element Arrangements. Accordingly, the Company recognizes revenue when all of the following criteria are met: (i) persuasive evidence that an arrangement exists, (ii) delivery has occurred or services have been rendered, (iii) the fee is fixed or determinable and (iv) collectability is reasonably assured.
	The Company recognizes revenue and profit as work progresses on long-term, fixed-price contracts involving significant amounts of hardware and software customization using the percentage of completion method based on costs incurred to date, compared to total estimated costs upon completion. The primary components of costs incurred are third party software and direct labor cost including fringe benefits.  Revenues recognized in excess of amounts billed are classified as current assets under “Costs and estimated earnings in excess of billings on uncompleted contracts”. Amounts billed to customers in excess of revenue recognized are classified as current liabilities under “Billings in excess of costs and estimated earnings on uncompleted contracts”. Revenue from contracts for which the Company cannot reliably estimate total costs, or there are not significant amounts of customization, are recognized upon completion. The Company also generates non-recurring revenue from the licensing of its software. Software license revenue is recognized upon the execution of a license agreement, upon deliverance, when fees are fixed and determinable, when collectability is probable and when all other significant obligations have been fulfilled. The Company also generates revenue from the sale of computer hardware and identification media. Revenue for these items is recognized upon delivery of these products to the customer. The Company’s revenue from periodic maintenance agreements is generally recognized ratably over the respective maintenance periods provided no significant obligations remain and collectability of the related receivable is probable. Amounts collected in advance for maintenance services are included in current liabilities under "Deferred revenues".  Sales tax collected from customers is excluded from revenue.
Customer Concentration	'
	For the three months ended March 31, 2014, two customers accounted for approximately 30% or $314,000 of total revenues and had trade receivables at March 31, 2014 of approximately $142,000. For the three months ended March 31, 2013, one customer accounted for approximately 18% or $152,000, respectively, of total revenues and had trade receivables at March 31, 2013 of $0.
Recently Issued Accounting Standards	'
	Recently Issued Accounting Standards
	From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (the “FASB”), or other standard setting bodies, which are adopted by us as of the specified effective date.  Unless otherwise discussed, the Company’s management believes the impact of recently issued standards not yet effective will not have a material impact on the Company’s consolidated financial statements upon adoption.
	FASB ASU 2013-05. In March 2013, the FASB issued ASU 2013-05, Foreign Currency Matters (Topic 830): Parent's Accounting for the Cumulative Translation Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity (a consensus of the FASB Emerging Issues Task Force). ASU 2013-05 requires that when a reporting entity (parent) ceases to have a controlling financial interest in a subsidiary or group of assets that is a nonprofit activity or a business within a foreign entity, the parent is required to release any related cumulative translation adjustment into net income. The provisions of ASU 2013-05 are effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. The adoption of this ASU did not have a material effect on the Company’s condensed  consolidated financial statements.
	FASB ASU 2013-11. In July 2013, the FASB issued ASU 2013-11, Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists. This guidance requires netting unrecognized tax benefits against deferred tax assets for a loss or other carryforward that would apply in settlement of uncertain tax positions. This guidance will be effective for annual reporting periods beginning after December 15, 2013. The adoption of this ASU did not have a material effect on the Company’s condensed  consolidated financial statements.

NET_LOSS_PER_COMMON_SHARE_Tabl

NET LOSS PER COMMON SHARE (Tables)	3 Months Ended
	Mar. 31, 2014
Net Loss Per Common Share Tables	'
Computation of basic and diluted loss per share	'
	(Amounts in thousands except share and per share amounts)	Three Months Ended
		March 31,
		2014			2013
	Numerator for basic and diluted loss per share:
	Net loss	$	(1,690	)	$	(2,773	)
	Preferred dividends		(13	)		(13	)
	Net loss available to common shareholders	$	(1,703	)	$	(2,786	)
	Denominator for basic and dilutive loss per share — weighted-average shares outstanding		88,604,221			76,846,563
	Net loss	$	(0.02	)	$	(0.04	)
	Preferred dividends		(0.00	)		(0.00	)
	Basic and diluted loss per share available to common shareholders	$	(0.02	)	$	(0.04	)
Weighted-average securities from calculation of diluted loss per share	'
	Potential Dilutive securities	Three Months Ended
		March 31,
		2014			2013
	Restricted stock grants		—			199,333
	Convertible notes payable		113,885			40,805
	Convertible preferred stock		45,392			46,991
	Stock options		2,102,673			1,140,608
	Warrants		3,606,108			9,160,458
	Total potential dilutive securities		5,868,058			10,588,195

SELECT_BALANCE_SHEET_DETAILS_T

SELECT BALANCE SHEET DETAILS (Tables)	3 Months Ended
	Mar. 31, 2014
Select Balance Sheet Details Tables	'
Estimated acquired intangible amortization expense	'
	Fiscal Year Ended December 31,	Estimated
		Amortization
		Expense
		($ in thousands)
	2014 (9 months)	$	21
	2015		27
	2016		12
	2017		12
	2018		12
	Thereafter		81
	Totals	$	165

NOTES_PAYABLE_AND_LINE_OF_CRED1

NOTES PAYABLE AND LINE OF CREDIT (Tables)	3 Months Ended
	Mar. 31, 2014
Notes Payable And Line Of Credit Tables	'
Notes payable	'
	($ in thousands)	March 31,			December 31,
		2014			2013
	Notes payable to related parties:
	7% convertible promissory notes. Face value of notes $55 at March 31, 2014 and December 31, 2013. Discount on notes is $0 at March 31, 2014 and December 31, 2013. In January 2013, the Company received an extension to June 30, 2014. Notes are callable at any time at option of holder.	$	55		$	55
	Total notes payable to related parties	$	55		$	55
	Total notes payable		55			55
	Less current portion		(55	)		(55	)
	Long-term notes payable	$	-		$	-

EQUITY_Tables

EQUITY (Tables)	3 Months Ended
	Mar. 31, 2014
Equity Tables	'
Summary of common stock activity	'
		Common Stock
	Shares outstanding at December 31, 2013		87,548,613
	Shares issued pursuant to options exercised for cash		33,920
	Shares issued pursuant to warrants exercised for cash		3,090,000
	Shares outstanding at March 31, 2014		90,672,533
Summary of warrant activity	'
		Warrants			Weighted-
					Average
					Exercise
					Price
	Balance at December 31, 2013		6,598,416		$	0.52
	Granted		277,778		$	2.1
	Expired / Canceled		(50,000	)	$	1.08
	Exercised		(3,090,000	)	$	0.5
	Balance at March 31, 2014		3,736,194		$	0.81
Summary of stock option plans activity	'
		Options			Weighted-
					Average
					Exercise Price
	Balance at December 31, 2013		3,783,411		$	0.94
	Granted		-		$	-
	Expired/Cancelled		(6,250	)	$	0.92
	Exercised		(33,920	)	$	0.71
	Balance at March 31, 2014		3,743,241		$	0.95

FAIR_VALUE_ACCOUNTING_Tables

FAIR VALUE ACCOUNTING (Tables)	3 Months Ended										12 Months Ended
	Mar. 31, 2014										Dec. 31, 2013
Fair Value Accounting Tables	'										'
Fair value measurement of Assets and liability	'										'
		Fair Value at March 31, 2014
	($ in thousands)	Total			Level 1		Level 2		Level 3			Fair Value at December 31, 2013
											($ in thousands)	Total		Level 1		Level 2		Level 3
	Assets:
	Pension assets	$	1,794		$	1,794	$	—	$	—	Assets:
	Totals	$	1,794		$	1,794	$	—	$	—	Pension assets	$	1,790	$	1,790	$	—	$	—
	Liabilities:										Totals	$	1,790	$	1,790	$	—	$	—
	Derivative liabilities	$	—		$	—	$	—	$	—	Liabilities:
	Totals	$	—		$	—	$	—	$	—	Derivative liabilities	$	57	$	—	$	—	$	57
											Totals	$	57	$	—	$	—	$	57
Reconciliation of liabilities measured at fair value on a recurring basis	'										'
	($ in thousands)	Derivative Liabilities
	Balance at December 31, 2013	$	57
	Total unrealized gains		—
	Included in earnings		—
	Settlements		(57	)
	Issuances		—
	Transfers in and/or out of Level 3		—
	Balance at March 31, 2014	$	—

CONTINGENT_LIABILITIES_Tables

CONTINGENT LIABILITIES (Tables)	3 Months Ended
	Mar. 31, 2014
Contingent Liabilities Tables	'
Future minimum lease payments	'
	($ in thousands)
	2014 (9 months)	$	299
	2015	$	381
	2016	$	232
	2017	$	190
	2018 and thereafter	$	—
		$	1,102

ORGANIZATION_AND_DESCRIPTION_O1

ORGANIZATION AND DESCRIPTION OF BUSINESS (Details Narrative) (USD $)	Mar. 31, 2014	Mar. 31, 2013	Mar. 31, 2014	Mar. 31, 2014	Mar. 31, 2014
		Line of Credit [Member]	Line of Credit Amendment 1 [Member]	Line of Credit Amendment 2 [Member]	Line of Credit 2 [Member]
Line of credit agreement amount	$3,500,000	$2,500,000	$3,500,000	$3,000,000	$500,000
Line of credit convertible into shares of stock	'	'	2,500,000	'	2.25
Line of credit conversion share price	'	'	$0.95	'	$2.25
Line of credit conversion share price remaining balance	'	'	$2.25	'	'
Warrant issued	'	1,052,632	177,778	'	177,778
Warrant expiration date	'	'	'03-27-2015	'	'
Warrant exercise price	'	'	$2.25	'	'
Net proceeds requiring termination of LOC	$3,500,000	'	'	'	'

SIGNIFICANT_ACCOUNTING_POLICIE2

SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION (Details Narrative) (One Customer [Member], USD $)	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
One Customer [Member]	'	'
Total revenues, percentage	30.00%	18.00%
Total revenues	$314,000	$152,000
Trade receivables	$142,000	'

NET_LOSS_PER_COMMON_SHARE_Deta

NET LOSS PER COMMON SHARE (Details) (USD $)	3 Months Ended
In Thousands, except Share data, unless otherwise specified	Mar. 31, 2014	Mar. 31, 2013
Numerator for Basic earnings (loss) per share:	'	'
Net loss	($1,690)	($2,773)
Preferred dividends	-13	-13
Net loss available to common shareholders	-1,703	-2,786
Numerator for Diluted earnings (loss) per share:	'	'
Net loss	-1,690	-2,773
Preferred dividends	-13	-13
Net loss for diluted earnings (loss) per share	($1,703)	($2,786)
Denominator for Basic earnings (loss) per share:	'	'
Denominator for basic loss per share weighted-average shares outstanding	88,604,221	76,846,563
Denominator for Diluted earnings (loss) per share:	'	'
Denominator for diluted loss per share weighted-average shares outstanding	88,604,221	76,846,563
Basic income (loss) per share:	'	'
Net loss	($0.02)	($0.04)
Preferred dividends	$0	$0
Diluted income (loss) per share:	'	'
Net income (loss)	($0.02)	($0.04)

NET_LOSS_PER_COMMON_SHARE_Deta1

NET LOSS PER COMMON SHARE (Details 1) (USD $)	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Total dilutive securities	$5,868,058	$10,588,195
Restricted Stock [Member]	'	'
Total dilutive securities	'	199,333
7% Notes Payable [Member]	'	'
Total dilutive securities	113,885	40,805
Convertible Preferred Stock [Member]	'	'
Total dilutive securities	45,392	46,991
Stock Option [Member]	'	'
Total dilutive securities	2,102,673	1,140,608
Warrants [Member]	'	'
Total dilutive securities	$3,606,108	$9,160,458

SELECT_BALANCE_SHEET_DETAILS_D

SELECT BALANCE SHEET DETAILS (Details) (USD $)	Dec. 31, 2013
In Thousands, unless otherwise specified
Select Balance Sheet Details Details	'
2014 (9 months)	$21
2015	27
2016	12
2017	12
2018	12
Thereafter	81
Totals	$165

SELECT_BALANCE_SHEET_DETAILS_D1

SELECT BALANCE SHEET DETAILS (Details Narrative) (USD $)	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	Dec. 31, 2013
Inventory	$568,000	'	$505,000
Work in process	554,000	'	499,000
Finished goods	14,000	'	6,000
Reserves for obsolete and slow-moving items	3,000	'	3,000
Carrying amount of acquired trademarks and trade names	138,000	'	141,000
Accumulated amortization	521,000	'	518,000
Amortization expense	4,000	4,000	'
Fair value of purchased assets	159,000	'	'
Weighted-average remaining life of intangible assets	'13 years 6 months	'	'
Patents [Member]	'	'	'
Amortization expense	$3,000	$3,000	'

NOTES_PAYABLE_AND_LINE_OF_CRED2

NOTES PAYABLE AND LINE OF CREDIT (Details) (USD $)	Mar. 31, 2014	Dec. 31, 2013
In Thousands, unless otherwise specified
Notes payable to related parties	$55	$55
Total notes payable	55	55
Less current portion	-55	-55
Long-term notes payable	'	'
7% Notes Payable [Member]	'	'
Notes payable to related parties	$55	$55

NOTES_PAYABLE_AND_LINE_OF_CRED3

NOTES PAYABLE AND LINE OF CREDIT (Details Narratives) (USD $)	Mar. 31, 2014	Mar. 31, 2013	Mar. 31, 2014	Mar. 31, 2014	Mar. 31, 2014	Sep. 30, 2013	Sep. 30, 2013	Dec. 31, 2013	Mar. 31, 2014	Mar. 31, 2014
		Line of Credit [Member]	Line of Credit Amendment 1 [Member]	Line of Credit Amendment 2 [Member]	Line of Credit 2 [Member]	Minimum [Member]	Maximum [Member]	7% Notes Payable [Member]	7% Notes Payable [Member]	Line of Credit [Member]
Principal amount	'	'	'	'	'	'	'	'	$110,000	'
Interest rate	'	'	'	'	'	'	'	'	7.00%	'
Due date	'	'	'	'	'	'	'	14-Feb-09	'	'
Warrants issued	'	'	'	'	'	'	'	149,996	'	'
Shares issued upon exercise of warrants	'	'	'	'	'	'	'	111,783	'	'
Debt discount fair value	'	'	'	'	'	'	'	'	13,000	'
Warrants issued to note holders	'	'	'	'	'	'	'	150,000	'	'
Warrants Term	'	'	'	'	'	'	'	'5 years	'	'
Fair value warrants risk free interest rate	'	'	'	'	'	'	'	2.53%	'	2.58%
Fair value warrant dividend yield	'	'	'	'	'	'	'	0.00%	'	0.00%
Volatility	'	'	'	'	'	'	'	96.00%	'	79.00%
Additional debt discount Beneficial conversion feature	'	'	'	'	'	0	500,000	12,000	'	'
Repayment of note principal	'	'	'	'	'	'	'	45,000	'	'
Deferred Financing Fee Accumulated Amortization	'	'	'	'	'	'	'	'	'	707,000
Amount converted into common stock	'	'	'	'	'	'	'	10,000	'	'
Stock issued upon conversion of debt	'	'	'	'	'	'	'	18,182	'	'
Warrants exercised	'	'	'	'	'	'	'	13,636	'	'
Line of credit agreement amount	3,500,000	2,500,000	3,500,000	3,000,000	500,000	'	'	'	'	'
Line of credit convertible into shares of stock	'	'	2,500,000	'	2.25	'	'	'	'	'
Conversion share price	'	'	$0.95	'	$2.25	'	'	'	$0.55	'
Line of credit conversion share price remaining balance	'	'	$2.25	'	'	'	'	'	$0.50	'
Warrant issued	'	1,052,632	177,778	'	177,778	'	'	'	'	'
Warrant expiration date	'	'	'03-27-2015	'	'	'	'	'	'	'
Warrant exercise price	'	'	$2.25	'	'	'	'	$0.50	'	'
Net proceeds requiring termination of LOC	$3,500,000	'	'	'	'	'	'	'	'	'
LOC Interest Rate	'	'	8.00%	'	'	'	'	'	'	'

EQUITY_Details

EQUITY (Details)	3 Months Ended
	Mar. 31, 2014
Equity Details	'
Shares outstanding at December 31, 2013	87,548,613
Shares issued pursuant to options exercised for cash	33,920
Shares issued pursuant to warrants exercised for cash	3,090,000
Shares outstanding at March 31, 2014	90,672,533

EQUITY_Details_1

EQUITY (Details 1) (USD $)	3 Months Ended
	Mar. 31, 2014
Equity Details 1	'
Begining Balance	6,598,416
Granted	277,778
Expired/Cancelled	-50,000
Exercised	-3,090,000
Ending Balance	3,736,194
Begining Balance, Weighted-Average Exercise Price	$0.52
Granted, Weighted-Average Exercise Price	$2.10
Expired/Cancelled, Weighted-Average Exercise Price	$1.08
Exercised, Weighted-Average Exercise Price	$0.50
Ending Balance, Weighted-Average Exercise Price	$0.81

EQUITY_Details_2

EQUITY (Details 2) (USD $)	3 Months Ended
	Mar. 31, 2014
Begining Balance	6,598,416
Granted	277,778
Expired/Cancelled	-50,000
Exercised	-3,090,000
Ending Balance	3,736,194
Begining Balance, Weighted-Average Exercise Price	$0.52
Granted, Weighted-Average Exercise Price	$2.10
Expired/Cancelled, Weighted-Average Exercise Price	$1.08
Exercised, Weighted-Average Exercise Price	$0.50
Ending Balance, Weighted-Average Exercise Price	$0.81
Stock Option Plan [Member]	'
Begining Balance	3,783,411
Granted	'
Expired/Cancelled	-6,250
Exercised	-33,920
Ending Balance	3,743,241
Begining Balance, Weighted-Average Exercise Price	$0.94
Granted, Weighted-Average Exercise Price	'
Expired/Cancelled, Weighted-Average Exercise Price	$0.92
Exercised, Weighted-Average Exercise Price	$0.71
Ending Balance, Weighted-Average Exercise Price	$0.95

EQUITY_Details_Narratives

EQUITY (Details Narratives) (USD $)

3 Months Ended

3 Months Ended

Mar. 31, 2014

Dec. 31, 2013

Mar. 31, 2014

Mar. 31, 2014

Mar. 31, 2014

Mar. 31, 2013

Mar. 31, 2014

Mar. 31, 2014

Mar. 31, 2014

Mar. 31, 2014

Mar. 31, 2014

Mar. 31, 2013

Officers [Member]

Employees [Member]

Stock Compensation Plan [Member]

Stock Compensation Plan [Member]

Issuance 1 [Member]

Issuance 2 [Member]

Consultant [Member]

Existing shareholder and member of our Board of Directors [Member]

Directors [Member]

Directors [Member]

Preferred outstanding

239,400

239,400

'

'

'

'

'

'

'

'

'

'

Undeclared dividends

$21,000

$8,000

'

'

'

'

'

'

'

'

'

'

Common stock issued

'

'

'

'

'

'

33,920

3,090,000

'

'

'

'

Options exercised

'

'

'

'

'

'

33,920

3,090,000

'

'

'

'

Cash proceeds

'

'

'

'

'

'

24,000

1,548,000

'

'

'

'

Warrants expired

'

'

'

'

'

'

'

50,000

'

'

'

'

Shares of common stock issued for services

'

'

'

'

'

'

'

'

100,000

177,778

144,000

'

Warrant to purchase common stock exercise price

$2.10

'

'

'

'

'

'

'

'

$2.25

'

'

Common stock price ranging of warrants

'

'

'

'

'

'

'

'

'1.83

'

'

'

Warrants to purchase common stock outstanding

3,736,194

'

'

'

'

'

'

'

'

'

'

'

Warrants to purchase common stock not exercisable

380,000

'

'

'

'

'

'

'

'

'

'

'

Historical volatility rate, minimum

'

'

'

'

78.00%

78.00%

'

'

'

'

'

'

Historical volatility rate, maximum

'

'

'

'

135.00%

135.00%

'

'

'

'

'

'

Expected term

'

'

'

'

'5 years 10 months 24 days

'5 years 10 months 24 days

'

'

'

'

'

'

Risk free interest rate

'

'

'

'

2.60%

2.60%

'

'

'

'

'

'

Dividend yield

'

'

'

'

0.00%

0.00%

'

'

'

'

'

'

Forfeiture rate

'

'

0.00%

6.00%

'

'

'

'

'

'

4.10%

'

Compensation expense

'

'

'

'

$158,000

$126,000

'

'

'

'

$60,000

$0

DERIVATIVE_LIABILITIES_Details

DERIVATIVE LIABILITIES (Details Narratives) (USD $)	3 Months Ended
	Mar. 31, 2014	Dec. 31, 2013
Derivative Liabilities Details Narratives	'	'
Outstanding warrants to purchase Common stock	$40,000	$40,000
Fair values of Warrants which is recognised as Current liability	57,000	57,000
Common stock shares issued	40,000	'
Aggregate fair value of warrants exercised for cash	57,000	'
Cash proceeds	$20,000	'

FAIR_VALUE_ACCOUNTING_Details

FAIR VALUE ACCOUNTING (Details) (USD $)	Mar. 31, 2014	Dec. 31, 2013
In Thousands, unless otherwise specified
Assets:	'	'
Pension assets	$1,794	$1,790
Totals	1,794	1,790
Liabilities:	'	'
Derivative liabilities	'	57
Totals	'	57
Fair Value, Inputs, Level 1 [Member]	'	'
Assets:	'	'
Pension assets	1,794	1,790
Totals	1,794	1,790
Liabilities:	'	'
Derivative liabilities	'	'
Totals	'	'
Fair Value, Inputs, Level 2 [Member]	'	'
Assets:	'	'
Pension assets	'	'
Totals	'	'
Liabilities:	'	'
Derivative liabilities	'	'
Totals	'	'
Fair Value, Inputs, Level 3 [Member]	'	'
Assets:	'	'
Pension assets	'	'
Totals	'	'
Liabilities:	'	'
Derivative liabilities	'	57
Totals	'	$57

FAIR_VALUE_ACCOUNTING_Details_

FAIR VALUE ACCOUNTING (Details 1) (USD $)	3 Months Ended
In Thousands, unless otherwise specified	Mar. 31, 2014
Fair Value Accounting Details 1	'
Balance at December 31, 2013	$57
Total unrealized gains	'
Included in earnings	'
Settlements	-57
Issuances	'
Transfers in and/or out of Level 3	'
Balance at March 31, 2014	'

FAIR_VALUE_ACCOUNTING_Details_1

FAIR VALUE ACCOUNTING (Details Narratives) (USD $)	Mar. 31, 2014	Dec. 31, 2013
Fair Value Accounting Details Narratives	'	'
Outstanding warrants to purchase shares of the Company's common stock	$40,000	$40,000
Fair values of Warrants which is recognised as Current liability	$57,000	$57,000

RELATED_PARTY_Details_Narrativ

RELATED PARTY (Details Narratives) (USD $)	Mar. 31, 2014	Mar. 31, 2013	Mar. 31, 2014	Mar. 31, 2014	Mar. 31, 2014	Sep. 30, 2013	Sep. 30, 2013	Dec. 31, 2013	Mar. 31, 2014
		Line of Credit [Member]	Line of Credit Amendment 1 [Member]	Line of Credit Amendment 2 [Member]	Line of Credit 2 [Member]	Minimum [Member]	Maximum [Member]	7% Notes Payable [Member]	7% Notes Payable [Member]
Principal amount	'	'	'	'	'	'	'	'	$110,000
Interest rate	'	'	'	'	'	'	'	'	7.00%
Due date	'	'	'	'	'	'	'	14-Feb-09	'
Warrants issued	'	'	'	'	'	'	'	149,996	'
Warrant exercise price	'	'	$2.25	'	'	'	'	$0.50	'
Warrants issued to note holders	'	'	'	'	'	'	'	150,000	'
Repayment of note principal	'	'	'	'	'	'	'	45,000	'
Outstanding and exercisable	'	'	'	'	'	'	'	136,364	'
Fair value of warrants Term	'	'	'	'	'	'	'	'5 years	'
Fair value warrants risk free interest rate	'	'	'	'	'	'	'	2.53%	'
Fair value warrant dividend yield	'	'	'	'	'	'	'	0.00%	'
Volatility	'	'	'	'	'	'	'	96.00%	'
Additional debt discount Beneficial conversion feature	'	'	'	'	'	0	500,000	12,000	'
Amount converted into common stock	'	'	'	'	'	'	'	10,000	'
Stock issued upon conversion of debt	'	'	'	'	'	'	'	18,182	'
Line of credit agreement amount	3,500,000	2,500,000	3,500,000	3,000,000	500,000	'	'	'	'
Line of credit convertible into shares of stock	'	'	$2,500,000	'	$2.25	'	'	'	'
Line of credit conversion share price remaining balance	'	'	$2.25	'	'	'	'	'	$0.50
Warrant issued	'	1,052,632	177,778	'	177,778	'	'	'	'
Warrant expiration date	'	'	'03-27-2015	'	'	'	'	'	'

CONTINGENT_LIABILITIES_Details

CONTINGENT LIABILITIES (Details) (USD $)	Dec. 31, 2013
Contingent Liabilities Details	'
2014 (9 months)	$299
2015	381
2016	232
2017	190
2018 and thereafter	'
Total	$1,102

CONTINGENT_LIABILITIES_Details1

CONTINGENT LIABILITIES (Details Narratives) (USD $)	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Write off accounts payable and accrued liabilities	$211,000	$104,000
Rent expense	104,000	133,000
Headquarters [Member]	'	'
Future minimum lease payment next nine months	157,000	'
Future minimum lease payment next twelve months	216,000	'
Future minimum lease payment in 2016	222,000	'
Future minimum lease payment in 2017	190,000	'
Portland [Member]	'	'
Future minimum lease payment next nine months	109,000	'
Future minimum lease payment next twelve months	$124,000	'

SUBSEQUENT_EVENTS_Details_Narr

SUBSEQUENT EVENTS (Details Narrative) (USD $)	3 Months Ended		1 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	8-May-14	8-May-14	Mar. 31, 2014	Mar. 31, 2014
			Common Stock Issuance 1 [Member]	Common Stock Issuance 2 [Member]	Line of Credit Amendment 2 [Member]	Line of Credit 2 [Member]
Common stock issued following exercises	-3,090,000	'	2,380	1,502,632	'	'
Cash proceeds from exercise of options	$24,000	$2,000	$2,000	$1,225,000	'	'
Warrants exercised	'	'	'	1,502,632	'	'
Line of credit agreement amount	3,500,000	'	'	'	3,000,000	500,000
Line of credit convertible into shares of stock	'	'	'	'	'	$2.25
Warrant issued	'	'	'	'	'	177,778