ImageWare Systems (IWSY) 10-K 15 Mar 16 2015 FY Annual report Financial data

Document and Entity Information

Document and Entity Information - USD ($)	12 Months Ended
	Dec. 31, 2015	Mar. 14, 2016	Jun. 30, 2015
Document And Entity Information
Entity Registrant Name	IMAGEWARE SYSTEMS INC
Entity Central Index Key	941,685
Document Type	10-K
Document Period End Date	Dec. 31, 2015
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Is Entity a Well-known Seasoned Issuer?	No
Is Entity a Voluntary Filer?	No
Is Entity's Reporting Status Current?	No
Entity Filer Category	Accelerated Filer
Entity Public Float			$ 87,655,831
Entity Common Stock, Shares Outstanding		94,070,895
Document Fiscal Period Focus	FY
Document Fiscal Year Focus	2,015

CONSOLIDATED BALANCE SHEETS

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Current Assets:
Cash and cash equivalents	$ 3,352	$ 218
Accounts receivable, net of allowance for doubtful accounts of $3 at December 31, 2015 and December 31, 2014	349	266
Inventory, net	46	916
Other current assets	69	86
Total Current Assets	3,816	3,816
Property and equipment, net	162	211
Other assets	98	153
Intangible assets, net of accumulated amortization	117	144
Goodwill	3,416	3,416
Total Assets	7,609	5,410
Current Liabilities:
Accounts payable	198	459
Deferred revenue	1,059	1,827
Accrued expenses	1,149	1,013
Total Current Liabilities	$ 2,406	3,299
Convertible line of credit to related party, net of discount		1,311
Pension obligation	$ 1,511	1,834
Total Liabilities	3,917	3,299
Shareholders' Equity (Deficit):
Common Stock, $0.01 par value, 150,000,000 shares authorized; 94,077,599 and 93,513,854 shares issued at December 31, 2015 and December 31, 2014, respectively, and 94,070,895 and 93,507,150 shares outstanding at December 31, 2015 and December 31, 2014, respectively.	940	934
Additional paid in capital	149,902	135,982
Treasury stock, at cost 6,704 shares	(64)	(64)
Accumulated other comprehensive loss	(1,195)	(1,594)
Accumulated deficit	(145,893)	(136,294)
Total Shareholders' Equity (Deficit)	3,692	(1,034)
Total Liabilities and Shareholders' Equity (Deficit)	7,609	5,410
Series B Preferred Stock [Member]
Shareholders' Equity (Deficit):
Preferred stock, authorized 4,000,000 shares: Series B Convertible Redeemable Preferred, $0.01 par value; designated 750,000 shares, 389,400 shares issued, and 239,400 shares outstanding at December 31, 2015 and 2014; liquidation preference $607 at December 31, 2015 and 2014. Series E Convertible Redeemable Preferred, $0.01 par value; designated 12,000 shares, 12,000 and 0 shares issued and outstanding at December 31, 2015 and 2014; liquidation preference $12,240 and $0 at December 31, 2015 and 2014.	$ 2	$ 2
Series E Preferred Stock [Member]
Shareholders' Equity (Deficit):
Preferred stock, authorized 4,000,000 shares: Series B Convertible Redeemable Preferred, $0.01 par value; designated 750,000 shares, 389,400 shares issued, and 239,400 shares outstanding at December 31, 2015 and 2014; liquidation preference $607 at December 31, 2015 and 2014. Series E Convertible Redeemable Preferred, $0.01 par value; designated 12,000 shares, 12,000 and 0 shares issued and outstanding at December 31, 2015 and 2014; liquidation preference $12,240 and $0 at December 31, 2015 and 2014.

CONSOLIDATED BALANCE SHEETS (Pa

CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Current Assets:
Accounts receivable, net of allowance for doubtful accounts	$ 3	$ 3
Shareholders' equity:
Common stock, par value	$ .01	$ 0.01
Common stock, shares authorized	150,000,000	150,000,000
Common stock, shares issued	94,077,599	93,513,854
Common stock, shares outstanding	94,070,895	93,507,150
Treasury stock, shares	6,704
Series B Preferred Stock [Member]
Shareholders' equity:
Preferred stock, shares authorized	4,000,000	4,000,000
Preferred stock, par value per share	$ 0.01	$ 0.01
Preferred stock, shares issued	750,000	389,400
Preferred stock, shares outstanding	239,400	239,400
Liquidation preference	$ 607	$ 607
Series E Preferred Stock [Member]
Shareholders' equity:
Preferred stock, shares authorized	12,000	0
Preferred stock, par value per share	$ .01	$ 0.01
Preferred stock, shares issued	12,000	0
Preferred stock, shares outstanding	12,000	0
Liquidation preference	$ 12,240	$ 0

CONSOLIDATED STATEMENTS OF OPER

CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Revenues:
Product	$ 2,192	$ 1,634	$ 2,686
Maintenance	2,577	2,525	2,618
Total	4,769	4,159	5,304
Cost of revenues:
Product	1,117	257	319
Maintenance	827	735	771
Gross profit	2,825	3,167	4,214
Operating expenses:
General and administrative	3,437	3,818	3,378
Sales and marketing	2,791	2,471	2,129
Research and development	4,643	4,495	3,869
Depreciation and amortization	164	179	125
Total	11,035	10,963	9,501
Loss from operations	(8,210)	(7,796)	(5,287)
Interest expense	$ 447	$ 416	221
Change in fair value of derivative liabilities			(4,776)
Other income, net	$ (145)	$ (297)	(443)
Loss before income taxes	(8,512)	(7,915)	(9,841)
Income tax expense	22	25	8
Net loss	(8,534)	(7,940)	(9,849)
Preferred dividends	(1,065)	(51)	(51)
Net loss available to common shareholders	$ (9,599)	$ (7,991)	$ (9,900)
Basic and diluted loss per common share see Note 2:
Net loss	$ (0.09)	$ (0.09)	$ (.12)
Preferred dividends	(.01)
Basic and diluted loss per share available to common shareholders	$ (.01)	$ (.09)	$ (.12)
Basic and diluted weighted-average shares outstanding	93,786,079	91,795,971	81,231,962

CONSOLIDATED STATEMENTS OF COMP

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Consolidated Statements Of Comprehensive Income Loss
Net loss	$ (8,534)	$ (7,940)	$ (9,849)
Other comprehensive income (loss):
Reduction (increase) in additional minimum pension liability	332	(744)	(622)
Foreign currency translation adjustment	67	(20)	(69)
Comprehensive loss	$ (8,135)	$ (870)	$ (10,540)

CONSOLIDATED STATEMENTS OF SHAR

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (DEFICIT) - USD ($) $ in Thousands	Series B Preferred Stock [Member]	Series E Preferred Stock	Common Stock	Treasury Stock	Additional Paid-In Capital	Accumulated Other Comprehensive Loss	Accumulated Deficit	Total
Beginning, shares at Dec. 31, 2012	239,400		76,646,553	(6,704)
Beginning, amount at Dec. 31, 2012	$ 2		$ 765	$ (64)	$ 120,182	$ (139)	$ (118,403)	$ 2,343
Issuance of common stock pursuant to warrant exercises, Shares			6,132,779
Issuance of common stock pursuant to warrant exercises, Amount			$ 61		3,230			3,291
Settlement of derivative liabilities pursuant to warrants exercised for cash					279			279
Issuance of common stock pursuant to cashless warrant exercises, Shares			4,458,493
Issuance of common stock pursuant to cashless warrant exercises, Amount			$ 45		6,453			6,498
Warrants issued to secure line of credit borrowing facility					580			580
Issuance of common stock pursuant to option exercises, Shares			35,310
Issuance of common stock pursuant to option exercises, Amount					11			11
Stock issued to consultants as compensation, shares			264,000
Stock issued to consultants as compensation, amount			$ 3		38			$ 41
Recognition of beneficial conversion feature on convertible debt
Warrants issued to consultants as compensation					108			$ 108
Conversion of related party notes payable to common stock, shares			18,182
Conversion of related party notes payable to common stock, amount					10			10
Reclassification of warrants previously classified as derivative liabilities					186			186
Stock-based compensation expense, shares
Stock-based compensation expense, amount					$ 575			575
Addition/reduction in minimum pension liability						$ (622)		(622)
Foreign currency translation adjustment						$ (69)		(69)
Dividends on preferred stock							$ (51)	(51)
Net loss							(9,849)	(9,849)
Ending, shares at Dec. 31, 2013	239,400		87,555,317	(6,704)
Ending, amount at Dec. 31, 2013	$ 2		$ 874	$ (64)	$ 131,652	$ (830)	$ (128,303)	3,331
Issuance of common stock pursuant to warrant exercises, Shares			4,742,632
Issuance of common stock pursuant to warrant exercises, Amount			$ 47		2,801			2,848
Settlement of derivative liabilities pursuant to warrants exercised for cash					57			$ 57
Issuance of common stock pursuant to cashless warrant exercises, Shares			868,565
Issuance of common stock pursuant to cashless warrant exercises, Amount			$ 9		(9)
Warrants issued to secure line of credit borrowing facility					128			$ 128
Issuance of common stock pursuant to option exercises, Shares			98,617
Issuance of common stock pursuant to option exercises, Amount			$ 1		66			67
Recognition of beneficial conversion feature on convertible debt					296			296
Warrants issued to consultants as compensation					53			53
Conversion of related party notes payable to common stock, shares			154,607
Conversion of related party notes payable to common stock, amount			$ 2		83			85
Stock-based compensation expense, shares			94,116
Stock-based compensation expense, amount			$ 1		$ 855			856
Addition/reduction in minimum pension liability						$ (744)		(744)
Foreign currency translation adjustment						$ (20)		(20)
Dividends on preferred stock							$ (51)	(51)
Net loss							(7,940)	(7,940)
Ending, shares at Dec. 31, 2014	239,400		93,513,854	(6,704)
Ending, amount at Dec. 31, 2014	$ 2		$ 934	$ (64)	$ 135,982	$ (1,594)	$ (136,294)	(1,034)
Settlement of derivative liabilities pursuant to warrants exercised for cash		$ 10,022
Issuance of Series E Convertible Redeemable Preferred Stock for cash, net of issuance costs, Shares		10,022
Issuance of Series E Convertible Redeemable Preferred Stock for cash, net of issuance costs, Amount					9,955			9,955
Conversion of related party debt into Series E Convertible Redeemable Preferred Stock, Shares		1,978
Conversion of related party debt into Series E Convertible Redeemable Preferred Stock, Amount					1,978			$ 1,978
Issuance of Common Stock in payment of Series E Preferred dividends, Shares			478,664
Issuance of Common Stock in payment of Series E Preferred dividends, Amount			$ 5		769		$ (774)
Issuance of common stock pursuant to cashless warrant exercises, Shares			45,376
Issuance of common stock pursuant to cashless warrant exercises, Amount			$ 1		(1)
Issuance of common stock pursuant to option exercises, Shares			39,705
Issuance of common stock pursuant to option exercises, Amount					33			$ 33
Recognition of beneficial conversion feature on convertible debt					146			146
Warrants modified in lieu of cash as compensation					80			80
Stock-based compensation expense, shares
Stock-based compensation expense, amount					$ 960			960
Addition/reduction in minimum pension liability						$ 332		332
Foreign currency translation adjustment						$ 67		67
Dividends on preferred stock							$ (291)	(291)
Net loss							(8,534)	(8,534)
Ending, shares at Dec. 31, 2015	239,400	12,000	94,077,599	(6,704)
Ending, amount at Dec. 31, 2015	$ 2		$ 940	$ (64)	$ 149,902	$ (1,195)	$ (145,893)	$ 3,692

CONSOLIDATED STATEMENTS OF CASH

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Cash flows from operating activities
Net loss	$ (8,534)	$ (7,940)	$ (9,849)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation and amortization	164	179	125
Amortization of debt discount and debt issuance costs	438	426	217
Stock-based compensation	$ 960	$ 856	6,116
Change in fair value of derivative liabilities			4,776
Write down of capitalized labor inventory to net realizable value	$ 281
Reduction in accounts payable and accrued expenses from expiration of statute of limitations		$ (224)	(440)
Warrants modified/issued in lieu of cash as compensation for services	$ 80	53	108
Change in assets and liabilities
Accounts receivable	(83)	35	26
Inventory	589	(411)	(243)
Other assets	17	62	(50)
Accounts payable	(261)	188	(130)
Accrued expenses	(76)	130	(116)
Deferred revenue	(768)	165	102
Pension obligation	10	59	7
Total adjustments	1,351	1,518	4,998
Net cash used in operating activities	(7,183)	(6,422)	(4,851)
Cash flows from investing activities
Purchase of property and equipment	(87)	(117)	(193)
Net cash used in investing activities	(87)	(117)	$ (193)
Cash flows from financing activities
Proceeds from line of credit, net	400	1,550
Proceeds from exercise of stock options	(33)	$ 67	$ 11
Proceeds from issuance of preferred stock, net of issuance costs	9,955
Dividends paid to preferred stockholders	$ (51)	$ (51)	$ (51)
Proceeds from exercised warrants to purchase stock		2,848	3,291
Net cash provided by financing activities	$ 10,337	4,414	3,251
Effect of exchange rate changes on cash and cash equivalents	67	(20)	(69)
Net increase (decrease) in cash and cash equivalents	3,134	(2,145)	(1,862)
Cash and cash equivalents at beginning of year	218	2,363	4,225
Cash and cash equivalents at end of year	3,352	218	$ 2,363
Supplemental disclosure of cash flow information:
Cash paid for interest	$ 1	2
Cash paid for income taxes		1	$ 1
Summary of non-cash investing and financing activities:
Conversion of related party notes payable into common stock		$ 85	$ 10
Conversion of related party notes payable into Series E Preferred	$ 1,978
Beneficial conversion feature of convertible debt	146	$ 296
Stock dividend on Series E Preferred	774
Accrued unpaid dividends on Series E Preferred	240
Issuance of common stock pursuant to cashless warrant exercises	1	$ 9	$ 45
Reduction (increase) in additional minimum pension liability	$ 332	(744)	(622)
Reclassification of warrants previously classified as derivative liabilities to additional paid-in capital		57	6,684
Issuance of common warrants securing line of credit borrowing facility		128	580
Issuance of restricted stock pursuant to achievement of vesting conditions		$ 1	$ 1

DESCRIPTION OF BUSINESS AND OPE

DESCRIPTION OF BUSINESS AND OPERATIONS	12 Months Ended
	Dec. 31, 2015
Notes to Financial Statements
DESCRIPTION OF BUSINESS AND OPERATIONS	1. DESCRIPTION OF BUSINESS AND OPERATIONS Overview As used in this Annual Report, “we,” “us,” “our,” “ImageWare,” “ImageWare Systems,” “Company” or “our Company” refers to ImageWare Systems, Inc. and all of its subsidiaries. ImageWare Systems, Inc. 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 Notice of Allowance In November 2015, the Company received a notice of allowance from the United States Patent and Trademark Office (“ USPTO Lines of Credit In March 2016, the Company and a significant shareholder and member of the Company’s Board of Directors (the “ Holder Fourth Amendment Line of Credit Contemporaneous with the execution of the Fourth Amendment, the Company entered into a new unsecured line of credit (“ the 500K Line of Cred Second Holder Liquidity and Capital Resources 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, product development, 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 With the February 2015 consummation of the Series E Financing and existing and amended lines of credit borrowing facilities, 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 December 31, 2015 and that we will have sufficient liquidity to fund our business and meet our contractual obligations during the aforementioned period.

SUMMARY OF SIGNIFICANT ACCOUNTI

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	12 Months Ended
	Dec. 31, 2015
Notes to Financial Statements
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. The Company’s wholly-owned subsidiaries are XImage Corporation, a California Corporation, ImageWare Systems ID Group, Inc. a Delaware corporation (formerly Imaging Technology Corporation), I.W. Systems Canada Company, a Nova Scotia unlimited liability company, ImageWare Digital Photography Systems, Inc, LLC a Nevada limited liability company (formerly Castleworks LLC), Digital Imaging International GmbH, a company formed under German laws and Image Ware México S de RL de CV, a company formed under Mexican laws. Operating Cycle Assets and liabilities related to long-term contracts are included in current assets and current liabilities in the accompanying 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 consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“ U.S. GAAP 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. Accounts receivable are considered delinquent when the due date on the invoice has passed. The Company records its allowance for doubtful accounts based upon its 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 6. Property, Equipment and Leasehold Improvements Property and equipment, consisting of furniture and equipment, are stated at cost and are being depreciated on a straight-line basis over the estimated useful lives of the assets, which generally range from three to five years. Maintenance and repairs are charged to expense as incurred. Major renewals or improvements are capitalized. When assets are sold or abandoned, the cost and related accumulated depreciation are removed from the accounts and the resulting gain or loss is recognized. Expenditures for leasehold improvements are capitalized. Amortization of leasehold improvements is computed using the straight-line method over the shorter of the remaining lease term or the estimated useful lives of the improvements. Fair Value of Financial Instruments For certain of the Company’s financial instruments, including accounts receivable, accounts payable, accrued expenses, deferred revenues 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 the common and preferred stock, warrants and convertible debt it issues to determine whether there are embedded derivative instruments, including embedded conversion options, which are required to 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, that is required to be bifurcated, 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; and ● Post-contract customer support (“ PCS The Company’s revenue recognition policies are consistent with U.S. GAAP including the Financial Accounting Standards Board (“ FASB ASC Software Revenue Recognition Revenue Recognition, Construction-Type and Production-Type Contracts Securities and Exchange Commission Staff Accounting Bulletin 104 Revenue Recognition, Multiple Element Arrangements The Company recognizes revenue and profit as work progresses on long-term, fixed-price contracts involving significant amount of hardware and software customization using the percentage of completion method based on costs incurred to date compared to total estimated costs at 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 revenues 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. For contracts that require significant amounts of customization that the Company accounts for under the completed contract method of revenue recognition, the Company defers revenue recognition until customer acceptance is received. For contracts containing either extended or dependent payment terms, revenue recognition is deferred until such time as payment has been received by the Company. 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, when all other significant obligations have been fulfilled a nd the Company has obtained vendor specific objective evidence (“ VSOE ”) of the fair value of the undelivered element. VSOE of fair value for customer support services is determined by reference to the price the customer pays for such element when sold separately; that is, the renewal rate offered to customers. In those instances when objective and reliable evidence of fair value exists for the undelivered items but not for the delivered items, the residual method is used to allocate the arrangement consideration. Under the residual method, the amount of arrangement consideration allocated to the delivered items equals the total arrangement consideration less the aggregate fair value of the undelivered items Goodwill The Company accounts for its intangible assets under the provisions of ASC 350, “ Intangibles - Goodwill and Other Property, Plant and Equipment The Company did not record any goodwill impairment charges for the years ended December 31, 2015, 2014 or 2013. Intangible and Long Lived Assets Intangible assets are carried at their cost less any accumulated amortization. Any costs incurred to renew or extend the life of an intangible or long lived asset are reviewed for capitalization. The Company evaluates long-lived assets for impairment whenever events or changes in circumstances indicate their net book value may not be recoverable. When such factors and circumstances exist, the Company compares the projected undiscounted future cash flows associated with the related asset or group of assets over their estimated useful lives against their respective carrying amount. Impairment, if any, is based on the excess of the carrying amount over the fair value, based on market value when available, or discounted expected cash flows, of those assets and is recorded in the period in which the determination is made. The Company’s management currently believes there is no impairment of its long-lived assets. There can be no assurance, however, that market conditions will not change or demand for the Company’s products under development will continue. Either of these could result in future impairment of long-lived assets. Concentration of Credit Risk Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of cash and trade accounts receivable. The Company places its cash with high quality financial institutions and at times during the years ended December 31, 2015 and 2014 exceeded the FDIC insurance limits of $250,000. Sales are typically made on credit and the Company generally does not require collateral. The Company performs ongoing credit evaluations of its customers’ financial condition and maintains an allowance for doubtful accounts. 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 presented net of an allowance for doubtful accounts of approximately $3,000 at December 31, 2015 and 2014. For the year ended December 31, 2015 two customers accounted for approximately 37% or $1,753,000 of total revenues and had trade receivables of $78,000 as of the end of the year. For the year ended December 31, 2014 one customer accounted for approximately 17% or $725,000 of total revenues and had trade receivables of $0 as of the end of the year. For the year ended December 31, 2013, one customer accounted for approximately 42% or $2,211,000 of total revenues and $0 trade receivables as of the end of the year. Stock-Based Compensation At December 31, 2015, the Company had one stock-based compensation plan 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 718, “ Compensation – Stock Compensation 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 options granted during the years ended December 31, 2015, 2014 and 2013 ranged from 74% to 121%. 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 years ended December 31, 2015, 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 years ended December 31, 2015, 2014 and 2013 averaged 2.6%. Dividend yield is zero as the Company does not expect to declare any dividends on the Company’s common shares 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. In December 2014, the Company issued 94,116 shares of its Common Stock to certain members of the Company’s Board of Directors as compensation for services to be rendered through December 2015. Such shares vested monthly over the 12 months of 2015 with any unvested shares being forfeitable should the Board members’ service be terminated during 2015. For the year ended December 31, 2015, the Company recorded approximately $216,000 as compensation expense related to this stock issuance. 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 year ended December 31, 2014, the Company recorded approximately $238,000 as compensation expense. Income Taxes Current income tax expense or benefit is the amount of income taxes expected to be payable or refundable for the current year. A deferred income tax asset or liability is computed for the expected future impact of differences between the financial reporting and tax bases of assets and liabilities and for the expected future tax benefit to be derived from tax credits and loss carryforwards. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Foreign Currency Translation The financial position and results of operations of the Company’s foreign subsidiaries are measured using the foreign subsidiary’s local currency as the functional currency. Revenues and expenses of such subsidiaries have been translated into U.S. dollars at weighted-average exchange rates prevailing during the period. Assets and liabilities have been translated at the rates of exchange on the balance sheet date. The resulting translation gain and loss adjustments are recorded directly as a separate component of shareholders’ equity, unless there is a sale or complete liquidation of the underlying foreign investments. The Company translates foreign currencies of its German, Canadian and Mexican subsidiaries. The cumulative translation adjustment, which is recorded in accumulated other comprehensive loss, increased approximately $67,000 for the year ended December 31, 2015, decreased approximately $20,000 for the year ended December 31, 2014 and decreased approximately $69,000 for the year ended December 31, 2013. Comprehensive Loss Comprehensive loss consists of net gains and losses affecting shareholders’ equity that, under generally accepted accounting principles, are excluded from net loss. For the Company, the only items are the cumulative translation adjustment and the additional minimum liability related to the Company’s defined benefit pension plan, recognized pursuant to ASC 715-30, " Compensation - Retirement Benefits - Defined Benefit Plans – Pension Advertising Costs The Company expenses advertising costs as incurred. The Company incurred approximately $12,000 in advertising expenses during the year ended December 31, 2015 and $9,000 in advertising expenses during the year ended December 31, 2014 and $12,000 during the year ended December 31, 2013. Loss Per 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 commons shareholders is adjusted to add back any preferred stock dividends and any interest on convertible debt reflected in the consolidated statement of operations for the respective periods. (Amounts in thousands, except share and per share amounts) Year Ended December 31, Numerator for basic and diluted loss per share: 2015 2014 2013 Net loss $ (8,534 ) $ (7,940 ) $ (9,849 ) Preferred dividends (1,065 ) (51 ) (51 ) Net loss available to common shareholders $ (9,599 ) $ (7,991 ) $ (9,900 ) Denominator for basic loss per share — weighted-average shares outstanding 93,786,079 91,795,971 81,231,962 Effect of dilutive securities — — — Denominator for diluted loss per share — weighted-average shares outstanding 93,786,079 91,795,971 81,231,962 Basic and diluted loss per share: Net loss $ (0.09 ) $ (0.09 ) $ (0.12 ) Preferred dividends (0.01 ) (— ) (— ) Net loss available to common shareholders $ (0.10 ) $ (0.09 ) $ (0.12 ) The following potential dilutive securities have been excluded from the computations of diluted weighted-average shares outstanding as their effect would have been antidilutive: Potential Dilutive Securities: Common Share Equivalents at December 31, 2015 Common Share Equivalents at December 31, 2014 Common Share Equivalents at December 31, 2013 Convertible notes payable and lines of credit — 1,649,548 101,185 Convertible redeemable preferred stock – Series B 46,029 46,029 46,139 Convertible redeemable preferred stock – Series E 6,442,105 — — Stock options 5,376,969 4,057,296 3,783,411 Restricted stock grants — — 80,932 Warrants 450,000 977,778 8,455,124 Total Potential Dilutive Securities 12,315,103 6,730,651 12,466,791 Recently Issued Accounting Standards From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (the “ FASB FASB ASU 2014-09. ASU Revenue from Contracts with Customers FASB ASU No. 2014-12 Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period FASB ASU No. 2014-15 Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern FASB ASU No. 2014 16 ASU 2014-16 Derivatives and Hedging (Topic 815) - Determining Whether the Host Contract in a Hybrid Financial Instrument Issued in the Form of a Share is More Akin to Debt or to Equity FASB ASU No. 2015-02 Consolidations FASB ASU No. 2015-03 Simplifying the Presentation of Debt Issuance Costs.” FASB ASU No. 2015-04 Compensation - Retirement Benefits (Topic 715): Practical Expedient for the Measurement Date of an Employer’s Defined Benefit Obligation and Plan Assets.” FASB ASU No. 2015-05 “Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement”. FASB ASU No. 2015-11 “Simplifying the Measurement of Inventory (Topic 330): Simplifying the Measurement of Inventory”. FASB ASU No. 2015-15 Simplifying the Presentation of Debt Issuance Costs.” Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements FASB ASU No. 2016-01 Financial Instruments—Overall - Recognition and Measurement of Financial Assets and Financial Liabilities”. FASB ASU No. 2016-02 Leases”

FAIR VALUE ACCOUNTING

FAIR VALUE ACCOUNTING	12 Months Ended
	Dec. 31, 2015
Fair Value Disclosures [Abstract]
FAIR VALUE ACCOUNTING	3. FAIR VALUE ACCOUNTING The Company accounts for fair value measurements in accordance with ASC 820, “ Fair Value Measurements and Disclosures 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 December 31, 2015 ($ in thousands) Total Level 1 Level 2 Level 3 Assets: Pension assets $ 1,557 $ 1,557 $ — $ — Totals $ 1,557 $ 1,557 $ — $ — Fair Value at December 31, 2014 ($ in thousands) Total Level 1 Level 2 Level 3 Assets: Pension assets $ 1,654 $ 1,654 $ — $ — Totals $ 1,654 $ 1,654 $ — $ — 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. During the year ended December 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, 2012 $ 2,244 Included in earnings 4,776 Settlements (6,963 ) Issuances — Transfers in and /or out of Level 3 — Balance at December 31, 2013 $ 57 Included in earnings — Settlements (57 ) Issuances — Transfers in and/or out of Level 3 — Balance at December 31, 2014 $ — Included in earnings — Settlements — Issuances — Transfers in and/or out of Level 3 — Balance at December 31, 2015 $ — All unrealized gains or losses resulting from changes in value of any Level 3 instruments are reflected as a separate line in the 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. See further disclosures regarding the Company’s derivative liabilities in Note 10.

INTANGIBLE ASSETS AND GOODWILL

INTANGIBLE ASSETS AND GOODWILL	12 Months Ended
	Dec. 31, 2015
Notes to Financial Statements
INTANGIBLE ASSETS AND GOODWILL	4. INTANGIBLE ASSETS AND GOODWILL The Company has intangible assets in the form of trademarks, trade names and patents. The carrying amount of the Company’s acquired trademarks and trade names were approximately $0 and $15,000 as of December 31, 2015, and 2014, respectively, which include accumulated amortization of $347,000, and $332,000 as of December 31, 2015, and 2014, respectively. Amortization expense related to trademarks and tradenames was $15,000 for the years ended December 31, 2015, 2014 and 2013. All intangible assets are 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 The carrying amounts of the Company’s patent intangible assets were $117,000 and $129,000 as of December 31, 2015 and 2014, respectively, which includes accumulated amortization of $542,000 and $530,000 as of December 31, 2015 and 2014, respectively. Amortization expense for patent intangible assets was $12,000 for the year ended December 31, 2015 and $13,000 for the year ended December 31, 2014. Patent intangible assets are being amortized on a straight-line basis over their remaining life of approximately 10.5 years. There was no impairment of the Company's intangible assets during the years ended December 31, 2015 and 2014. The Company annually, or more frequently if events or circumstances indicate a need, tests the carrying amount of goodwill for impairment. The Company performs its annual impairment test in the fourth quarter of each year. A two-step impairment test is used to first identify potential goodwill impairment and then measure the amount of goodwill impairment loss, if any. The first step was conducted by determining and comparing the fair value, employing the market approach, of the Company’s reporting unit to the carrying value of the reporting unit. The Company continues to have only one reporting unit, Identity Management. Based on the results of this impairment test, the Company determined that its goodwill was not impaired during the years ended December 31, 2015, 2014 and 2013. The estimated acquired intangible amortization expense for the next five fiscal years is as follows: Fiscal Year Ended December 31, Estimated Amortization Expense ($ in thousands) 2016 $ 12 2017 12 2018 12 2019 12 2020 12 Thereafter 57 Totals $ 117

RELATED PARTIES

RELATED PARTIES	12 Months Ended
	Dec. 31, 2015
Notes to Financial Statements
RELATED PARTIES	5. RELATED PARTIES Related Party Convertible Notes On November 14, 2008, the Company entered into a series of convertible promissory notes (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 to January 31, 2010 of the maturity date of the Related-Party Convertible Notes. As consideration for the waiver and note extension, the Company issued to the Related-Party Convertible Note holders an aggregate of 150,000 warrants to purchase 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 no warrants to purchase shares of Common Stock were outstanding and exercisable as of December 31, 2015. 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, 2015, however, the Related-Party Convertible Notes will be callable at any time, at the option of the note holder, prior to June 30, 2015. During the year ended December 31, 2014, holders of Related-Party Convertible Notes in the principal amount of $85,034 elected to convert their respective Related-Party Convertible Notes into 154,607 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 Cred Amendment As consideration for the initial Line of Credit, the Company issued a warrant to the Holder, exercisable for 1,052,632 shares of the Company’s Common Stock (the " Line of Credit Warrant Amendment Warrant The Company estimated the fair value of the Line of Credit Warrant using the Black-Scholes option pricing model using the following assumptions: term of two years, a risk free interest rate of 2.58%, a dividend yield of 0%, and volatility of 79%. The Company recorded the fair value of the Line of Credit Warrant as a deferred financing fee of approximately $580,000 to be amortized over the life of the Line of Credit agreement. The Company estimated the fair value of the Amendment Warrant using the Black-Scholes option pricing model using the following assumptions: term on one year, a risk free interest rate of 2.58%, a dividend yield of 0% and volatility of 74%. The Company recorded the fair value of the Amendment Warrant as an additional deferred financing fee of approximately $127,000 to be amortized over the life of the Line of Credit agreement. During the years ended December 31, 2015 and 2014, the Company recorded an aggregate of approximately $53,000 and $369,000, respectively in deferred financing fee amortization expense which is recorded as a component of interest expense in the Company’s consolidated statements of operations. In April 2014, the Company and the Holder entered into a further amendment to the Line of Credit to decrease the available borrowings to $3,000,000 (the “ Second Amendment $500K Line of Credit Second Holder In December 2014, the Company and the Holder entered into a further amendment to the Line of Credit to increase the available borrowing to $5,000,000 and extend the maturity date of the Line of Credit to March 27, 2017 (the “ Third Amendment Outstanding Balance As of December 31, 2014, advances made under the Line of Credit aggregated $1,550,000 and there were no borrowings under the $500K Line of Credit. During the year ended December 31, 2015, the Company borrowed $750,000 under the Line of Credit and borrowed $0 under the $500K Line of Credit. During the year ended December 31, 2015, the Company repaid $350,000 in principal borrowings under the Line of Credit. As of March 31, 2016, no advances were made under the Company’s Lines of Credit. In February 2015, as a result of the Series E Financing, the Company issued 1,978 shares of Series E Preferred to the Holder of the Line of Credit to satisfy $1,950,000 in principal borrowings under the Line of Credit plus approximately $28,000 in accrued interest. As a result of the Series E Financing, the Company’s borrowing capacity under the Line of Credit was reduced to $3,050,000 with the maturity date unchanged and the $500K Line of Credit was terminated in accordance with its terms. In March 2016, the Company and the Holder entered into a fourth amendment to the Line of Credit (the “ Fourth Amendment Contemporaneous with the execution of the Fourth Amendment, the Company entered into a new $500K Line of Credit with available borrowings of up to $500,000 with the Second Holder, which replaced the original $500K Line of Credit that terminated as a result of the consummation of the Series E Financing. Similar to the Fourth Amendment, the new $500K Line of Credit with the Second Holder matures on June 30, 2017, and provides for the conversion of the outstanding balance due under the terms of the $500K Line of Credit into that number of fully paid and non-assessable shares of the Company’s Common Stock as is equal to the quotient obtained by dividing the outstanding balance by $1.25. T he Company evaluated the lines of credit agreements and determined that the instruments contain 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 line of credit agreement). 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 line of credit agreement will be measured using the intrinsic value calculated at the date the contingency is resolved using the conversion price and trading value of the Company’s Common Stock at the date the line of credit agreement was issued (commitment date). As of December 31, 2014, the Company had recorded approximately $296,000 in beneficial conversion feature as a debt discount and had amortized approximately $56,000 of such debt discount as a component of interest expense. Pursuant to additional borrowings made during the year ended December 31, 2015, the Company recognized an additional $146,000 in beneficial conversion feature as debt discount. As a result of the Series E financing and retirement of all amounts outstanding under the line of credit, the Company recognized all remaining unamortized debt discount of approximately $385,000 as a component of interest expense during the year ended December 31, 2015.

INVENTORY

INVENTORY	12 Months Ended
	Dec. 31, 2015
Notes to Financial Statements
INVENTORY	6. INVENTORY Inventories of $46,000 as of December 31, 2015 were comprised of work in process of $42,000, representing direct labor costs on in-process projects, approximately $21,000 of equipment related to in-process projects and finished goods of $4,000 net of reserves for obsolete and slow-moving items of $3,000. The balance of direct labor costs on in-process projects of $42,000 at December 31, 2015, reflects a write down of approximately $261,000 to net realizable value. Inventories of $916,000 as of December 31, 2014 were comprised of work in process of $909,000 representing direct labor costs on in-process projects of $881,000 and equipment on in-process projects of $28,000. Finished goods inventories were $7,000 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.

PROPERTY AND EQUIPMENT

PROPERTY AND EQUIPMENT	12 Months Ended
	Dec. 31, 2015
Notes to Financial Statements
PROPERTY AND EQUIPMENT	7. PROPERTY AND EQUIPMENT Property and equipment at December 31, 2015 and 2014, consists of: ($ in thousands) 2015 2014 Equipment $ 887 $ 818 Leasehold improvements 11 5 Furniture 101 103 999 926 Less accumulated depreciation (837 ) (715 ) $ 162 $ 211 Total depreciation expense for the years ended December 31, 2015, 2014 and 2013 was approximately $137,000, $152,000 and $97,000, respectively.

ACCRUED EXPENSES

ACCRUED EXPENSES	12 Months Ended
	Dec. 31, 2015
Notes to Financial Statements
ACCRUED EXPENSES	8. ACCRUED EXPENSES Principal components of accrued expenses consist of: ($ in thousands) December 31, 2015 December 31, 2014 Compensated absences $ 260 $ 290 Wages, payroll taxes and sales commissions 11 4 Customer deposits 69 68 Liquidated damages 200 200 Royalties 147 147 Pension and employee benefit plans 6 35 Income and sales taxes 131 171 Dividends 261 21 Interest — 17 Other 64 60 $ 1,149 $ 1,013

LINES OF CREDIT

LINES OF CREDIT	12 Months Ended
	Dec. 31, 2015
Line of Credit Facility [Abstract]
LINES OF CREDIT	9. LINES OF CREDIT Outstanding lines of credit consist of the following: ($ in thousands) December 31, 2015 December 31, 2014 Lines of Credit to a related party 8% convertible lines of credit. Face value of advances under lines of credit $0 at December 31, 2015 and $1,550 at December 31, 2014. Discount on advances under lines of credit is $0 at December 31, 2015 and $239 at December 31, 2014. Maturity date is March 27, 2017. $ — $ 1,311 Total lines of credit to related parties — 1,311 Less current portion (— ) (— ) Long-term lines of credit to related parties $ — $ 1,311 Lines of Credit As of December 31, 2014, advances made under the Line of Credit agreement aggregated $1,550,000 and there were no borrowings under the $500K Line of Credit. During the year ended December 31, 2015, the Company borrowed $750,000 under the Line of Credit and borrowed $0 under the $500K Line of Credit. During the year ended December 31, 2015, the Company repaid $350,000 in principal borrowings under the Line of Credit. For a more detailed discussion of the Company’s Lines of Credit, see Note 5 Related Parties.

DERIVATIVE LIABILITIES

DERIVATIVE LIABILITIES	12 Months Ended
	Dec. 31, 2015
Notes to Financial Statements
DERIVATIVE LIABILITIES	10. 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 Derivative Liabilities 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 valuation 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 valuation 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. During the year ended December 31, 2014, all remaining warrants qualifying for derivative liability treatment were exercised for cash proceeds of approximately $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. As of December 31, 2015, the Company had no outstanding warrants to purchase shares of the Company’s Common Stock that qualified for derivative liability treatment.

INCOME TAXES

INCOME TAXES	12 Months Ended
	Dec. 31, 2015
Notes to Financial Statements
INCOME TAXES	11. INCOME TAXES The Company accounts for income taxes in accordance with ASC 740, Accounting for Income Taxes, ASC 740 requires a company to first determine whether it is more-likely-than-not (defined as a likelihood of more than fifty percent) that a tax position will be sustained based on its technical merits as of the reporting date, assuming that taxing authorities will examine the position and have full knowledge of all relevant information. A tax position that meets this more-likely-than-not threshold is then measured and recognized at the largest amount of benefit that is greater than fifty percent likely to be realized upon effective settlement with a taxing authority. The amount accrued for uncertain tax positions was zero at December 31, 2015, 2014 and 2013, respectively. The Company’s uncertain position relative to unrecognized tax benefits and any potential increase in these liabilities relates primarily to the allocations of revenue and costs among the Company’s global operations and the impact of tax rulings made during the period affecting its tax positions. The Company’s existing tax position could result in liabilities for unrecognized tax benefits. The Company recognizes interest and/or penalties related to uncertain tax positions in income tax expense. The amount of interest and penalties accrued as of December 31, 2015 and 2014 was $______ and $11,000, respectively. Significant judgment is required in evaluating the Company’s uncertain tax positions and determining the Company’s provision for income taxes. No assurance can be given that the final tax outcome of these matters will not be different from that which is reflected in the Company’s historical income tax provisions and accruals. The Company adjusts these items in light of changing facts and circumstances. To the extent that the final tax outcome of these matters is different than the amounts recorded, such differences will impact the provision for income taxes in the period in which such determination is made. The significant components of the income tax provision are as follows: ($ in thousands) Year Ended December 31, Current 2015 2014 2013 Federal $ $ — $ — State — — Foreign 25 8 Deferred Federal — — State — — Foreign — — $ $ 25 $ 8 The principal components of the Company’s deferred tax assets at December 31, 2015, 2014 and 2013 are as follows: ($ in thousands) 2015 2014 2013 Net operating loss carryforwards $ $ 14,200 $ 12,703 Intangible and fixed assets 427 538 Stock based compensation 1,565 1,319 Reserves and accrued expenses 6 6 Other (85 ) (121 ) 16,113 14,445 Less valuation allowance (16,113 ) (14,445 ) Net deferred tax assets $ $ — $ — A reconciliation of the provision for income taxes to the amount computed by applying the statutory income tax rates to loss before income taxes is as follows: 2015 2014 2013 Amounts computed at statutory rates $ $ (2,699 ) $ (3,349 ) State income tax, net of federal benefit (212 ) (47 ) Expiration of net operating loss carryforwards 708 75 Non-deductible interest and change in fair value of derivative liabilities 145 1,698 Foreign taxes 386 370 Other 4 4 Net change in valuation allowance on deferred tax assets 1,693 1,257 $ $ 25 $ 8 The Company has established a valuation allowance against its deferred tax assets due to the uncertainty surrounding the realization of such assets. At December 31, 2015, 2014 and 2013, the Company had federal and state net operating loss carryforwards, a portion of which may be available to offset future taxable income for tax purposes. The federal net operating loss carryforwards expire at various dates from 2020 through 2035. The state net operating loss carryforwards expire at various dates from 2028 through 2035. The Internal Revenue Code (the "Code" Tax returns for the years 2010 through 2015 are subject to examination by taxing authorities.

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES	12 Months Ended
	Dec. 31, 2015
Notes to Financial Statements
COMMITMENTS AND CONTINGENCIES	12. COMMITMENTS AND CONTINGENCIES Employment Agreements The Company has employment agreements with its Chief Executive Officer, its Senior Vice President of Administration and Chief Financial Officer, and its Chief Technical Officer. 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 (as defined in the employment agreements), 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, this executive 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 (as defined in the employment agreements), they are entitled to the severance benefits described above, except that 100% of their outstanding stock options and restricted stock awards will immediately vest. Under the terms of the employment agreement with our Chief Technical Officer, this executive 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 six months of base salary; (ii) continuation of their fringe benefits and medical insurance for a period of six months. In the event that his employment is terminated within six months prior to or thirteen months following a change of control (as defined in the employment agreements), he is entitled to the severance benefits described above, except that 100% of his outstanding stock options and restricted stock awards will immediately vest. Litigation 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 The Company’s corporate headquarters are located in San Diego, California where we occupy 9,927 square feet of office space. This facility is leased through October 2017 at a cost of approximately $18,000 per month. In addition to our corporate headquarters, we also occupied the following spaces at December 31, 2015: ● 1,508 square feet in Ottawa, Province of Ontario, Canada, at a cost of approximately $3,000 per month until the expiration of the lease on March 31, 2016; ● 8,045 square feet in Portland, Oregon, at a cost of approximately $16,000 per month until the expiration of the lease on October 31, 2018 and ● 425 square feet of office space in Mexico City, Mexico, at a cost of approximately $3,000 per month until terminated by either party. At December 31, 2015, future minimum lease payments are as follows: ($ in thousands) 2016 $ 426 2017 386 2018 168 2019 — 2020 and thereafter — Total $ 980 Rental expense incurred under operating leases for the years ended December 31, 2015, 2014 and 2013 was approximately $477,000, $430,000 and $418,000, respectively.

EQUITY

EQUITY	12 Months Ended
	Dec. 31, 2015
Notes to Financial Statements
EQUITY	13. EQUITY The Company’s Articles 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 Stock (“ Series B Preferred Series E Convertible Redeemable Preferred Stock On January 29, 2015, the Company filed the Certificate of Designations of the Series E Preferred Stock with the Delaware Secretary of State, designating 12,000 shares of the Company’s preferred stock, par value $0.01 per share, as Series E Preferred. Shares of Series E Preferred accrue dividends at a rate of 8% per annum if the Company chooses to pay accrued dividends in cash, and 10% per annum if the Company chooses to pay accrued dividends in shares of Common Stock. Each share of Series E Preferred has a liquidation preference of $1,000 per share and is convertible, at the option of the holder, into that number of shares of the Company’s Common Stock equal to the Liquidation Preference, divided by $1.90. The Series E Preferred shall be subordinate to and rank junior to the Company’s Series B Preferred and all indebtedness of the Company. Each holder of the Series E Preferred is entitled to vote on all matters, together with the holders of Common Stock, on an as converted basis. Any time after the six-month period following the issuance date, the Company may redeem all or a portion of the Series E Preferred outstanding upon thirty (30) calendar days prior written notice (the “ Company's Redemption Notice In February 2015, the Company consummated a registered direct offering conducted without an underwriter or placement agent. In connection therewith, the Company issued 12,000 shares of Series E Preferred to certain investors at a price of $1,000 per share, with each share convertible into 526.32 shares of the Company’s Common Stock at $1.90 per share. The Company had 12,000 and 0 shares of Series E Preferred outstanding as of December 31, 2015 and December 31, 2014, respectively. At December 31, 2015 and December 31, 2014, the Company had cumulative undeclared dividends of approximately $240,000 and $0, respectively. There were no conversions of Series E Preferred into Common Stock during the twelve months ended December 31, 2015. For the twelve month period ended December 31, 2015, the Company issued the holders of Series E Preferred 478,664 shares of Common Stock as payment of dividends due through September 30, 2015 and accrued $240,000 for the period October 1, 2015 through December 31, 2015, to be paid in cash to holders of record as of December 31, 2015. Common Stock The following table summarizes outstanding Common Stock activity for the following periods: Common Stock Shares outstanding at December 31, 2012 76,639,849 Shares issued pursuant to warrants exercised for cash 6,132,779 Shares issued pursuant to cashless warrants exercised 4,458,493 Conversion of related-party notes payable into Common Stock 18,182 Shares issued as compensation in lieu of cash 264,000 Shares issued pursuant to option exercises 35,310 Shares outstanding at December 31, 2013 87,548,613 Shares issued pursuant to warrants exercised for cash 4,742,632 Shares issued pursuant to cashless warrants exercised 868,565 Conversion of related-party notes payable into Common Stock 154,607 Shares issued as compensation in lieu of cash 94,116 Shares issued pursuant to option exercises 98,617 Shares outstanding at December 31, 2014 93,507,150 Shares issued pursuant to payment of stock dividend on Series E Preferred 478,664 Shares issued pursuant to cashless warrants exercised 45,376 Shares issued pursuant to option exercises 39,705 Shares outstanding at December 31, 2015 94,070,895 Warrants As of December 31, 2015, warrants to purchase 450,000 The following table summarizes warrant activity for the following periods: Warrants Weighted- Average Exercise Price Balance at December 31, 2012 18,788,485 $ 0.56 Granted 1,232,632 $ 1.01 Expired / Canceled (688,749 ) $ 1.49 Exercised (12,733,952 ) $ 0.52 Balance at December 31, 2013 6,598,416 $ 0.63 Granted 302,778 $ 2.02 Expired / Canceled (55,000 ) $ 1.10 Exercised (5,868,416 ) $ 0.58 Balance at December 31, 2014 977,778 $ 1.22 Granted — $ 0.00 Expired / Canceled (419,444 ) $ 1.86 Exercised (108,334 ) $ 1.01 Balance at December 31, 2015 450,000 $ 0.67 During the year ended December 31, 2015, the Company modified 200,00 warrants previously issued to a consultant by eliminating certain performance condition requirements resulting in such warrants vesting pursuant to the passage of time. The Company determined the modification date fair value of the vested warrants using the Black-Scholes option valuation model and recorded approximately $80,000 in expense for the year ended December 31, 2015. The Company used the following assumptions in the application of the Black-Scholes option valuation modes: an exercise price of $1.72, a term of 0.77 years, a risk free interest rate of 2.58%, a dividend yield of 0% and volatility of 64%. Such expense is recorded in the Company’s consolidated statement of operations as a component of sales and marketing expense. During the year ended December 31, 2015, there were 108,334 warrants exercised pursuant to cashless transactions and 419,444 warrants expired. The Company issued 45,376 shares of its Common Stock pursuant to cashless warrant exercises. The intrinsic value of warrants outstanding as of December 31, 2015 was $285,000. The following table summarizes information regarding the warrants outstanding as of December 31, 2015: Exercise Price Number Outstanding Weighted—Average Remaining Life (Years) Weighted—Average Exercise Price $ 0.50 250,000 1.0 $ 0.50 $ 0.80 150,000 3 .0 $ 0.80 $ 1.10 50,000 1.1 $ 1.10 450,000 1.7 $ 0.67

STOCK-BASED COMPENSATION

STOCK-BASED COMPENSATION	12 Months Ended
	Dec. 31, 2015
Notes to Financial Statements
STOCK-BASED COMPENSATION	14. STOCK-BASED COMPENSATION Stock Options As of December 31, 2015, the Company had one active stock-based compensation plan: the 1999 Stock Option Plan (the “ 1999 Plan 1999 Plan The 1999 Plan was adopted by the Company’s Board of Directors on December 17, 1999. Under the terms of the 1999 Plan, the Company could, originally, issue up to 350,000 non-qualified or incentive stock options to purchase Common Stock of the Company. During the year ended December 31, 2014, the Company subsequently amended and restated the 1999 Plan whereby it increased the share reserve for issuance to approximately 7.0 million shares of the Company’s Common Stock. The 1999 Plan prohibits the grant of stock option or stock appreciation right awards with an exercise price less than fair market value of Common Stock on the date of grant. The 1999 Plan also generally prohibits the “re-pricing” of stock options or stock appreciation rights, although awards may be bought-out for a payment in cash or the Company’s stock. The 1999 Plan permits the grant of stock based awards other than stock options, including the grant of “full value” awards such as restricted stock, stock units and performance shares. The 1999 Plan permits the qualification of awards under the plan (payable in either stock or cash) as “performance-based compensation” within the meaning of Section 162(m) of the Internal Revenue Code. The number of options issued and outstanding and the number of options remaining available for future issuance are shown in the table below. On July 1, 2014, the Company began soliciting written consents from its shareholders to approve an amendment to the Company’s 1999 Stock Option Plan to increase the number of shares authorized for issuance thereunder from approximately 4.0 million to approximately 7.0 million (the “ Amendment A summary of the activity under the Company’s stock option plans is as follows: Options Weighted- Average Exercise Price Weighted- Average Remaining Contractual Term (Years) Balance at December 31, 2012 3,031,221 $ 0.82 7.9 Granted 817,500 $ 1.39 — Expired/Cancelled (30,000 ) $ 0.74 — Exercised (35,310 ) $ 0.31 — Balance at December 31, 2013 3,783,411 $ 0.94 7.4 Granted 435,000 $ 2.13 — Expired/Cancelled (62,498 ) $ 1.96 — Exercised (98,617 ) $ 0.68 — Balance at December 31, 2014 4,057,296 $ 1.06 6.8 Granted 2,110,000 $ 1.63 — Expired/Cancelled (750,622 ) $ 1.86 — Exercised (39,705 ) $ 0.87 — Balance at December 31, 2015 5,376,969 $ 1.17 6.9 At December 31, 2015, a total of 5,376,969 options were outstanding of which 3,442,579 were exercisable at a weighted average price of $0.91 per share with a remaining weighted average contractual term of approximately 5.5 years. The Company expects that, in addition to the 3,442,579 options that were exercisable as of December 31, 2015, another 1,875,979 will ultimately vest resulting in a combined total of 5,318,558. Those 5,318,558 shares have a weighted average exercise price of $1.17, an aggregate intrinsic value of approximately $1,647,923 and a weighted average remaining contractual life of 6.9 years as of December 31, 2015. During the year ended December 31, 2015, there were 39,705 options exercised for cash resulting in the issuance of 39,705 shares of the Company’s Common Stock and proceeds of approximately $34,000. During the year ended December 31, 2014, there were 98,617 options exercised which resulted in proceeds of approximately $67,000 to the Company. The intrinsic value of options exercised during the years ended December 31, 2015 and 2014 was approximately $35,100 and $170,000, respectively. The intrinsic value of options exercisable at December 31, 2015 and 2014 was approximately $1,575,000 and $4,696,000, respectively. The aggregate intrinsic value for all options outstanding as of December 31, 2015 and 2014 was approximately $1,652,148 and $5,427,000, respectively. The following table summarizes information about employee stock options outstanding and exercisable at December 31, 2015: Options Outstanding Options Exercisable Exercise Price Weighted- Average Weighted- Weighted- Number Remaining Life Average Number Average Outstanding (Years) Exercise Price Exercisable Exercise Price $ 0.17–0.24 420,221 3.0 $ 0.19 420,221 $ 0.19 $ 0.54-0.74 735,500 4.6 $ 0.72 735,500 $ 0.72 $ 0.77-1.15 2,346,248 6.6 $ 0.98 1,974,191 $ 0.95 $ 1.45-2.74 1,875,000 9.1 $ 1.82 312,667 $ 2.02 Total 5,376,969 3,442,579 During the year ended December 31, 2015, the Company issued an aggregate of 425,000 stock options to purchase shares of the Company’s common stock to certain members of the Company’s management team. Such options contain certain performance conditions affecting the vesting of these options. The Company evaluated the options using the guidance in ASC No. 718, Compensation – Stock Compensation In September 2015, the Company issued an aggregate of 144,000 options to purchase shares of the Company’s stock to certain members of the Company’s Board of Directors in return for their service from January 1, 2016 through December 31, 2016. Such options will vest at the rate of 12,000 options per month on the last day of each month during the 2016 year. The options have an exercise price of $1.73 per share and a term of 10 years. The Company will begin recognition of compensation based on the grant-date fair value ratably over the 2016 requisite service period. In the fourth quarter of 2015, the Company issued 210,000 options to certain employees of the Company. As of December 31, 2015 such options were subject to approval by the Company's Board of Directors. In February 2016, the Company's Board of Directors approved the aforementioned option issuance. Restricted Stock Awards In December 2014, the Company issued 94,116 shares of its Common Stock to certain members of the Company’s Board of Directors as compensation for services to be rendered through December 2015. Such shares are forfeitable should the Board members’ services be terminated. For the year ended December 31, 2015, no such shares were forfeited and the Company recorded approximately $216,000 as compensation expense. Stock-based Compensation Stock-based compensation related to equity options and restricted stock has been classified as follows in the accompanying consolidated statements of operations (in thousands): Year Ended December 31, 2015 2014 2013 Cost of revenues $ 15 $ 12 $ 12 General and administrative 618 572 351 Sales and marketing 171 142 132 Research and development 156 130 121 Total $ 960 $ 856 $ 616 Common Stock Reserved for Future Issuance The following table summarizes the Common Stock reserved for future issuance as of December 31, 2015: Common Stock Convertible preferred stock – Series B and Series E 6,488,134 Convertible lines of credit 1,670,735 Stock options outstanding 5,376,969 Warrants outstanding 450,000 Restricted stock grants - Authorized for future grant under stock option plans 1,198,438 15,184,276

EMPLOYEE BENEFIT PLAN

EMPLOYEE BENEFIT PLAN	12 Months Ended
	Dec. 31, 2015
Notes to Financial Statements
EMPLOYEE BENEFIT PLAN	15. EMPLOYEE BENEFIT PLAN During 1995, the Company adopted a defined contribution 401(k) retirement plan (the “ Plan Employees are fully vested in their share of the Company’s contributions after the completion of five years of service. In 2013, the Company authorized contributions of approximately $107,000 for the 2013 plan year of which $79,000 were paid prior to December 31, 2013. In 2014, the Company authorized contributions of approximately $118,000 for the 2014 plan year of which $88,000 were paid prior to December 31, 2014. In 2015, the Company authorized contributions of approximately $119,000 for the 2015 plan year of which $83,000 were paid prior to December 31, 2015.

PENSION PLAN

PENSION PLAN	12 Months Ended
	Dec. 31, 2015
Notes to Financial Statements
PENSION PLAN	16. PENSION PLAN One of the Company’s foreign subsidiaries maintains a defined benefit pension plan that provides benefits based on length of service and final average earnings. The following table sets forth the benefit obligation, fair value of plan assets, and the funded status of the Company’s plan; amounts recognized in the Company’s consolidated financial statements; and the assumptions used in determining the actuarial present value of the benefit obligations as of December 31: ($ in thousands) 2015 2014 2013 Change in benefit obligation: Benefit obligation at beginning of year $ 3,488 $ 2,821 $ 2,031 Service cost — — 2 Interest cost 70 106 94 Actuarial (gain) loss (123 ) 1,003 577 Effect of exchange rate changes (356 ) (442 ) 117 Effect of curtailment — — — Benefits paid (11 ) — — Benefit obligation at end of year 3,068 3,488 2,821 Change in plan assets: Fair value of plan assets at beginning of year 1,654 1,790 1,630 Actual return of plan assets 40 47 41 Company contributions 34 43 43 Benefits paid — — — Effect of exchange rate changes (171 ) (226 ) 76 Fair value of plan assets at end of year 1,557 ) 1,654 1,790 Funded status (1,557 ) (1,834 ) (1,031 ) Unrecognized actuarial loss (gain) 1,413 1,911 922 Unrecognized prior service (benefit) cost — — — Additional minimum liability (1,413 ) (1,911 ) (922 ) Unrecognized transition (asset) liability — — — Net amount recognized $ (1,511 ) $ (1,834 ) $ (1,031 ) Plan Assets Pension plan assets were comprised of the following asset categories at December 31, Equity securities 5.0 % 6.4 % 10.4 % Debt securities 89.3 % 87.4 % 83.1 % Other 5.7 % 6.2 % 6.5 % Total 100 % 100 % 100 % Components of net periodic benefit cost are as follows: Service cost $ — $ — $ 2 Interest cost on projected benefit obligations 70 106 94 Expected return on plan assets — — — Amortization of prior service costs — — — Amortization of actuarial loss — — — Net periodic benefit costs $ 70 $ 106 $ 96 The weighted average assumptions used to determine net periodic benefit cost for the years ended December 31, were Discount rate 2.4 % 2.2 % 3.9 % Expected return on plan assets 4.0 % 4.0 % 4.0 % Rate of pension increases 2.0 % 2.0 % 2.0 % Rate of compensation increase N/A N/A N/A The following discloses information about the Company’s defined benefit pension plan that had an accumulated benefit obligation in excess of plan assets as of December 31, Projected benefit obligation $ 3,068 $ 3,488 $ 2,821 Accumulated benefit obligation $ 3,068 $ 3,488 $ 2,821 Fair value of plan assets $ 1,557 $ 1,654 $ 1,790 As of December 31, 2015, the following benefit payments are expected to be paid as follows (in thousands): 2016 $ 15 2017 $ 79 2018 $ 81 2019 $ 82 2020 $ 84 2021 — 2025 $ 601 The Company made contributions to the plan of approximately $34,000 during year 2015 and approximately $43,000 during 2014 and 2013. The investment objectives for the plan are the preservation of capital, current income and long-term growth of capital. The Company’s pension assets are classified within Level 1 of the fair value hierarchy, as defined under ASC 820, 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 measurement date used to determine the benefit information of the plan was January 1, 2016.

ACCUMULATED OTHER COMPREHENSIVE

ACCUMULATED OTHER COMPREHENSIVE LOSS	12 Months Ended
	Dec. 31, 2015
Notes to Financial Statements
ACCUMULATED OTHER COMPREHENSIVE LOSS	17. ACCUMULATED OTHER COMPREHENSIVE LOSS Accumulated other comprehensive income is the combination of the additional minimum liability related to the Company’s defined benefit pension plan, recognized pursuant to ASC 715-30, “ Compensation - Retirement Benefits - Defined Benefit Plans – Pension As of December 31, 2015, 2014 and 2013, the components of accumulated other comprehensive loss were as follows: ($ in thousands) 2015 2014 2013 Additional minimum pension liability $ (991 ) $ (1,323 ) $ (579 ) Foreign currency translation adjustment (204 ) (271 ) (251 ) Ending balance $ (1,195 ) $ (1,594 ) $ (830 )

QUARTERLY INFORMATION (UNAUDITE

QUARTERLY INFORMATION (UNAUDITED)	12 Months Ended
	Dec. 31, 2015
Quarterly Financial Information Disclosure [Abstract]
QUARTERLY INFORMATION (UNAUDITED)	18. QUARTERLY INFORMATION (UNAUDITED) The following table sets forth selected quarterly financial data for 2015, 2014 and 2013 (in thousands, except share and per share data): 2015 (by quarter) 1 2 3 4 Revenues $ 991 $ 1,695 $ 1,181 $ 902 Cost of Sales 286 798 321 539 Operating expenses 2,641 2,660 2,813 2,921 Loss from Operations (1,936 ) (1,763 ) (1,953 ) (2,558 ) Interest expense (income), net 437 (2 ) 1 11 Other expense (income), net (46 ) — (99 ) — Income tax expense (benefit) 3 6 3 10 Net loss $ (2,330 ) $ (1,767 ) $ (1,858 ) $ (2,579 ) Net loss per share: Net loss $ (0.03 ) $ (0.02 ) $ (0.02 ) $ (0.03 ) Preferred dividends $ (0.00 ) $ (0.00 ) $ (0.00 ) $ (0.00 ) Basic loss per share to common shareholders $ (0.03 ) $ (0.02 ) $ (0.02 ) $ (0.03 ) Basic weighted-average shares outstanding 93,515,640 93,674,349 93,876,339 94,070,895 2014 (by quarter) 1 2 3 4 Revenues $ 1,063 $ 937 $ 919 $ 1,240 Cost of Sales 251 232 248 261 Operating expenses 2,706 2,667 2,793 2,797 Loss from Operations (1,894 ) (1,962 ) (2,122 ) (1,818 ) Interest expense (income), net 79 105 104 128 Other expense (income), net (283 ) (5 ) (1 ) (8 ) Income tax expense (benefit) — 12 3 10 Net loss $ (1,690 ) $ (2,074 ) $ (2,228 ) $ (1,948 ) Net loss per share: Net loss $ (0.02 ) $ (0.02 ) $ (0.02 ) $ (0.02 ) Preferred dividends $ (0.00 ) $ (0.00 ) $ (0.00 ) $ (0.00 ) Basic loss per share to common shareholders $ (0.02 ) $ (0.02 ) $ (0.02 ) $ (0.02 ) Basic weighted-average shares outstanding 88,604,221 91,930,400 93,162,548 93,384,834 2013 (by quarter) 1 2 3 4 Revenues $ 856 $ 1,024 $ 2,496 $ 928 Cost of Sales 237 296 299 258 Operating expenses 2,316 2,306 2,375 2,504 Loss from Operations (1,697 ) (1,578 ) (178 ) (1,834 ) Interest expense (income), net 1 73 73 74 Change in fair value of derivative liabilities 1,176 3,973 (470 ) 97 Other expense (income), net (104 ) (4 ) (123 ) (212 ) Income tax expense (benefit) 3 (1 ) 3 3 Net income (loss) $ (2,773 ) $ (5,619 ) $ 339 $ (1,796 ) Net income (loss) per share: Net income (loss) $ (0.04 ) $ (0.07 ) $ 0.00 $ (0.02 ) Preferred dividends $ (0.00 ) $ (0.00 ) $ (0.00 ) $ (0.00 ) Basic income (loss) per share to common shareholders $ (0.04 ) $ (0.07 ) $ 0.00 $ (0.02 ) Basic weighted-average shares outstanding 76,846,563 78,581,502 83,750,636 85,594,118

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS	12 Months Ended
	Dec. 31, 2015
Notes to Financial Statements
SUBSEQUENT EVENTS	19. SUBSEQUENT EVENTS In March 2016, the Company and an existing shareholder and member of our Board of Directors (the “Holder”) entered into a fourth amendment to the Line of Credit (the “Fourth Amendment”) solely to (i) increase available borrowings to $5.0 million; (ii) extend the maturity date to June 30, 2017, and (iii) provide for the conversion of the outstanding balance due under the terms of the Line of Credit into that number of fully paid and non-assessable shares of the Company’s Common Stock as is equal to the quotient obtained by dividing the outstanding balance by $1.25. Contemporaneous with the execution of the Fourth Amendment, the Company and a second member of the Company’s Board of Directors (the “Second Holder”) entered into a new $500K Line of Credit with available borrowings of up to $500,000, which replaced the original $500K Line of Credit that terminated as a result of the consummation of the Series E Financing. Similar to the Fourth Amendment, the new $500K Line of Credit with the Second Holder matures on June 30, 2017, and provides for the conversion of the outstanding balance due under the terms of the $500K Line of Credit into that number of fully paid and non-assessable shares of the Company’s Common Stock as is equal to the quotient obtained by dividing the outstanding balance by $1.25. Both the Line of Credit and $500K Line of Credit accrue interest at the rate of 8% per annum. As of March 15, 2016, no advances were made under the Company’s Lines of Credit.

SUMMARY OF SIGNIFICANT ACCOUN27

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)	12 Months Ended
	Dec. 31, 2015
Notes to Financial Statements
Principles of Consolidation	Principles of Consolidation The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. The Company’s wholly-owned subsidiaries are XImage Corporation, a California Corporation, ImageWare Systems ID Group, Inc. a Delaware corporation (formerly Imaging Technology Corporation), I.W. Systems Canada Company, a Nova Scotia unlimited liability company, ImageWare Digital Photography Systems, Inc, LLC a Nevada limited liability company (formerly Castleworks LLC), Digital Imaging International GmbH, a company formed under German laws and Image Ware México S de RL de CV, a company formed under Mexican laws.
Operating Cycle	Operating Cycle Assets and liabilities related to long-term contracts are included in current assets and current liabilities in the accompanying 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	Use of Estimates The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“ U.S. GAAP
Cash and cash equivalents	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	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. Accounts receivable are considered delinquent when the due date on the invoice has passed. The Company records its allowance for doubtful accounts based upon its 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	Inventories Finished goods inventories are stated at the lower of cost, determined using the average cost method, or market. See Note 6.
Property, Equipment and Leasehold Improvements	Property, Equipment and Leasehold Improvements Property and equipment, consisting of furniture and equipment, are stated at cost and are being depreciated on a straight-line basis over the estimated useful lives of the assets, which generally range from three to five years. Maintenance and repairs are charged to expense as incurred. Major renewals or improvements are capitalized. When assets are sold or abandoned, the cost and related accumulated depreciation are removed from the accounts and the resulting gain or loss is recognized. Expenditures for leasehold improvements are capitalized. Amortization of leasehold improvements is computed using the straight-line method over the shorter of the remaining lease term or the estimated useful lives of the improvements.
Fair Value of Financial Instruments	Fair Value of Financial Instruments For certain of the Company’s financial instruments, including accounts receivable, accounts payable, accrued expenses, deferred revenues and notes payable to related parties, the carrying amounts approximate fair value due to their relatively short maturities.
Derivative Financial Instruments	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 the common and preferred stock, warrants and convertible debt it issues to determine whether there are embedded derivative instruments, including embedded conversion options, which are required to 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, that is required to be bifurcated, 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	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; and ● Post-contract customer support (“ PCS The Company’s revenue recognition policies are consistent with U.S. GAAP including the Financial Accounting Standards Board (“ FASB ASC Software Revenue Recognition Revenue Recognition, Construction-Type and Production-Type Contracts Securities and Exchange Commission Staff Accounting Bulletin 104 Revenue Recognition, Multiple Element Arrangements The Company recognizes revenue and profit as work progresses on long-term, fixed-price contracts involving significant amount of hardware and software customization using the percentage of completion method based on costs incurred to date compared to total estimated costs at 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 revenues 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. For contracts that require significant amounts of customization that the Company accounts for under the completed contract method of revenue recognition, the Company defers revenue recognition until customer acceptance is received. For contracts containing either extended or dependent payment terms, revenue recognition is deferred until such time as payment has been received by the Company. 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, when all other significant obligations have been fulfilled a nd the Company has obtained vendor specific objective evidence (“ VSOE
Goodwill	Goodwill The Company accounts for its intangible assets under the provisions of ASC 350, “ Intangibles - Goodwill and Other Property, Plant and Equipment The Company did not record any goodwill impairment charges for the years ended December 31, 2015, 2014 or 2013.
Intangible and Long Lived Assets	Intangible and Long Lived Assets Intangible assets are carried at their cost less any accumulated amortization. Any costs incurred to renew or extend the life of an intangible or long lived asset are reviewed for capitalization. The Company evaluates long-lived assets for impairment whenever events or changes in circumstances indicate their net book value may not be recoverable. When such factors and circumstances exist, the Company compares the projected undiscounted future cash flows associated with the related asset or group of assets over their estimated useful lives against their respective carrying amount. Impairment, if any, is based on the excess of the carrying amount over the fair value, based on market value when available, or discounted expected cash flows, of those assets and is recorded in the period in which the determination is made. The Company’s management currently believes there is no impairment of its long-lived assets. There can be no assurance, however, that market conditions will not change or demand for the Company’s products under development will continue. Either of these could result in future impairment of long-lived assets.
Concentration of Credit Risk	Concentration of Credit Risk Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of cash and trade accounts receivable. The Company places its cash with high quality financial institutions and at times during the years ended December 31, 2015 and 2014 exceeded the FDIC insurance limits of $250,000. Sales are typically made on credit and the Company generally does not require collateral. The Company performs ongoing credit evaluations of its customers’ financial condition and maintains an allowance for doubtful accounts. 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 presented net of an allowance for doubtful accounts of approximately $3,000 at December 31, 2015 and 2014. For the year ended December 31, 2015 two customers accounted for approximately 37% or $1,753,000 of total revenues and had trade receivables of $78,000 as of the end of the year. For the year ended December 31, 2014 one customer accounted for approximately 17% or $725,000 of total revenues and had trade receivables of $0 as of the end of the year. For the year ended December 31, 2013, one customer accounted for approximately 42% or $2,211,000 of total revenues and $0 trade receivables as of the end of the year.
Stock-Based Compensation	Stock-Based Compensation At December 31, 2015, the Company had one stock-based compensation plan 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 718, “ Compensation – Stock Compensation 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 options granted during the years ended December 31, 2015, 2014 and 2013 ranged from 74% to 121%. 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 years ended December 31, 2015, 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 years ended December 31, 2015, 2014 and 2013 averaged 2.6%. Dividend yield is zero as the Company does not expect to declare any dividends on the Company’s common shares 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. In December 2014, the Company issued 94,116 shares of its Common Stock to certain members of the Company’s Board of Directors as compensation for services to be rendered through December 2015. Such shares vested monthly over the 12 months of 2015 with any unvested shares being forfeitable should the Board members’ service be terminated during 2015. For the year ended December 31, 2015, the Company recorded approximately $216,000 as compensation expense related to this stock issuance. 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 year ended December 31, 2014, the Company recorded approximately $238,000 as compensation expense.
Income Taxes	Income Taxes Current income tax expense or benefit is the amount of income taxes expected to be payable or refundable for the current year. A deferred income tax asset or liability is computed for the expected future impact of differences between the financial reporting and tax bases of assets and liabilities and for the expected future tax benefit to be derived from tax credits and loss carryforwards. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized.
Foreign Currency Translation	Foreign Currency Translation The financial position and results of operations of the Company’s foreign subsidiaries are measured using the foreign subsidiary’s local currency as the functional currency. Revenues and expenses of such subsidiaries have been translated into U.S. dollars at weighted-average exchange rates prevailing during the period. Assets and liabilities have been translated at the rates of exchange on the balance sheet date. The resulting translation gain and loss adjustments are recorded directly as a separate component of shareholders’ equity, unless there is a sale or complete liquidation of the underlying foreign investments. The Company translates foreign currencies of its German, Canadian and Mexican subsidiaries. The cumulative translation adjustment, which is recorded in accumulated other comprehensive loss, increased approximately $67,000 for the year ended December 31, 2015, decreased approximately $20,000 for the year ended December 31, 2014 and decreased approximately $69,000 for the year ended December 31, 2013.
Comprehensive Loss	Comprehensive Income Comprehensive loss consists of net gains and losses affecting shareholders’ equity that, under generally accepted accounting principles, are excluded from net loss. For the Company, the only items are the cumulative translation adjustment and the additional minimum liability related to the Company’s defined benefit pension plan, recognized pursuant to ASC 715-30, " Compensation - Retirement Benefits - Defined Benefit Plans – Pension
Advertising Costs	Advertising Costs The Company expenses advertising costs as incurred. The Company incurred approximately $12,000 in advertising expenses during the year ended December 31, 2015 and $9,000 in advertising expenses during the year ended December 31, 2014 and $12,000 during the year ended December 31, 2013.
Loss Per Share	Loss Per 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 commons shareholders is adjusted to add back any preferred stock dividends and any interest on convertible debt reflected in the consolidated statement of operations for the respective periods. (Amounts in thousands, except share and per share amounts) Year Ended December 31, Numerator for basic and diluted loss per share: 2015 2014 2013 Net loss $ (8,534 ) $ (7,940 ) $ (9,849 ) Preferred dividends (1,065 ) (51 ) (51 ) Net loss available to common shareholders $ (9,599 ) $ (7,991 ) $ (9,900 ) Denominator for basic loss per share — weighted-average shares outstanding 93,786,079 91,795,971 81,231,962 Effect of dilutive securities — — — Denominator for diluted loss per share — weighted-average shares outstanding 93,786,079 91,795,971 81,231,962 Basic and diluted loss per share: Net loss $ (0.09 ) $ (0.09 ) $ (0.12 ) Preferred dividends (0.01 ) (— ) (— ) Net loss available to common shareholders $ (0.10 ) $ (0.09 ) $ (0.12 ) The following potential dilutive securities have been excluded from the computations of diluted weighted-average shares outstanding as their effect would have been antidilutive: Potential Dilutive Securities: Common Share Equivalents at December 31, 2015 Common Share Equivalents at December 31, 2014 Common Share Equivalents at December 31, 2013 Convertible notes payable and lines of credit — 1,649,548 101,185 Convertible redeemable preferred stock – Series B 46,029 46,029 46,139 Convertible redeemable preferred stock – Series E 6,442,105 — — Stock options 5,376,969 4,057,296 3,783,411 Restricted stock grants — — 80,932 Warrants 450,000 977,778 8,455,124 Total Potential Dilutive Securities 12,315,103 6,730,651 12,466,791
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 FASB ASU 2014-09. ASU Revenue from Contracts with Customers FASB ASU No. 2014-12 Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period FASB ASU No. 2014-15 Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern FASB ASU No. 2014 16 Derivatives and Hedging (Topic 815) - Determining Whether the Host Contract in a Hybrid Financial Instrument Issued in the Form of a Share is More Akin to Debt or to Equity FASB ASU No. 2015-02 Consolidations FASB ASU No. 2015-03 Simplifying the Presentation of Debt Issuance Costs.” FASB ASU No. 2015-04 Compensation - Retirement Benefits (Topic 715): Practical Expedient for the Measurement Date of an Employer’s Defined Benefit Obligation and Plan Assets.” FASB ASU No. 2015-05 “Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement”. FASB ASU No. 2015-11 “Simplifying the Measurement of Inventory (Topic 330): Simplifying the Measurement of Inventory”. FASB ASU No. 2015-15 Simplifying the Presentation of Debt Issuance Costs.” Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements FASB ASU No. 2016-01 Financial Instruments—Overall - Recognition and Measurement of Financial Assets and Financial Liabilities”. FASB ASU No. 2016-02 Leases”

SUMMARY OF SIGNIFICANT ACCOUN28

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)	12 Months Ended
	Dec. 31, 2015
Summary Of Significant Accounting Policies Tables
Computation of basic and diluted loss per share	(Amounts in thousands, except share and per share amounts) Year Ended December 31, Numerator for basic and diluted loss per share: 2015 2014 2013 Net loss $ (8,534 ) $ (7,940 ) $ (9,849 ) Preferred dividends (1,065 ) (51 ) (51 ) Net loss available to common shareholders $ (9,599 ) $ (7,991 ) $ (9,900 ) Denominator for basic loss per share — weighted-average shares outstanding 93,786,079 91,795,971 81,231,962 Effect of dilutive securities — — — Denominator for diluted loss per share — weighted-average shares outstanding 93,786,079 91,795,971 81,231,962 Basic and diluted loss per share: Net loss $ (0.09 ) $ (0.09 ) $ (0.12 ) Preferred dividends (0.01 ) (— ) (— ) Net loss available to common shareholders $ (0.10 ) $ (0.09 ) $ (0.12 )
Potential Dilutive Securities	Potential Dilutive Securities: Common Share Equivalents at December 31, 2015 Common Share Equivalents at December 31, 2014 Common Share Equivalents at December 31, 2013 Convertible notes payable and lines of credit — 1,649,548 101,185 Convertible redeemable preferred stock – Series B 46,029 46,029 46,139 Convertible redeemable preferred stock – Series E 6,442,105 — — Stock options 5,376,969 4,057,296 3,783,411 Restricted stock grants — — 80,932 Warrants 450,000 977,778 8,455,124 Total Potential Dilutive Securities 12,315,103 6,730,651 12,466,791

FAIR VALUE ACCOUNTING (Tables)

FAIR VALUE ACCOUNTING (Tables)	12 Months Ended
	Dec. 31, 2015
Fair Value Disclosures [Abstract]
Fair value measurement of Assets and liability	Fair Value at December 31, 2015 ($ in thousands) Total Level 1 Level 2 Level 3 Assets: Pension assets $ 1,557 $ 1,557 $ — $ — Totals $ 1,557 $ 1,557 $ — $ — Fair Value at December 31, 2014 ($ in thousands) Total Level 1 Level 2 Level 3 Assets: Pension assets $ 1,654 $ 1,654 $ — $ — Totals $ 1,654 $ 1,654 $ — $ —
Reconciliation of liabilities measured at fair value on a recurring basis	($ in thousands) Derivative Liabilities Balance December 31, 2012 $ 2,244 Included in earnings 4,776 Settlements (6,963 ) Issuances — Transfers in and /or out of Level 3 — Balance at December 31, 2013 $ 57 Included in earnings — Settlements (57 ) Issuances — Transfers in and/or out of Level 3 — Balance at December 31, 2014 $ — Included in earnings — Settlements — Issuances — Transfers in and/or out of Level 3 — Balance at December 31, 2015 $ —

INTANGIBLE ASSETS AND GOODWILL

INTANGIBLE ASSETS AND GOODWILL (Tables)	12 Months Ended
	Dec. 31, 2015
Intangible Assets And Goodwill Tables
Intangible amortization expense	Fiscal Year Ended December 31, Estimated Amortization Expense ($ in thousands) 2016 $ 12 2017 12 2018 12 2019 12 2020 12 Thereafter 57 Totals $ 117

PROPERTY AND EQUIPMENT (Tables)

PROPERTY AND EQUIPMENT (Tables)	12 Months Ended
	Dec. 31, 2015
Property And Equipment Tables
Property and equipment	($ in thousands) 2015 2014 Equipment $ 887 $ 818 Leasehold improvements 11 5 Furniture 101 103 999 926 Less accumulated depreciation (837 ) (715 ) $ 162 $ 211

ACCRUED EXPENSES (Tables)

ACCRUED EXPENSES (Tables)	12 Months Ended
	Dec. 31, 2015
Condensed Consolidated Statements Of Comprehensive Loss
Accrued expenses	($ in thousands) December 31, 2015 December 31, 2014 Compensated absences $ 260 $ 290 Wages, payroll taxes and sales commissions 11 4 Customer deposits 69 68 Liquidated damages 200 200 Royalties 147 147 Pension and employee benefit plans 6 35 Income and sales taxes 131 171 Dividends 261 21 Interest — 17 Other 64 60 $ 1,149 $ 1,013

LINE OF CREDIT (Tables)

LINE OF CREDIT (Tables)	12 Months Ended
	Dec. 31, 2015
Line Of Credit Tables
LINE OF CREDIT	($ in thousands) December 31, 2015 December 31, 2014 Lines of Credit to a related party 8% convertible lines of credit. Face value of advances under lines of credit $0 at December 31, 2015 and $1,550 at December 31, 2014. Discount on advances under lines of credit is $0 at December 31, 2015 and $239 at December 31, 2014. Maturity date is March 27, 2017. $ — $ 1,311 Total lines of credit to related parties — 1,311 Less current portion (— ) (— ) Long-term lines of credit to related parties $ — $ 1,311

INCOME TAXES (Tables)

INCOME TAXES (Tables)	12 Months Ended
	Dec. 31, 2015
Income Taxes Tables
Income tax provision	($ in thousands) Year Ended December 31, Current 2015 2014 2013 Federal $ $ — $ — State — — Foreign 25 8 Deferred Federal — — State — — Foreign — — $ $ 25 $ 8
Deferred tax assets	($ in thousands) 2015 2014 2013 Net operating loss carryforwards $ $ 14,200 $ 12,703 Intangible and fixed assets 427 538 Stock based compensation 1,565 1,319 Reserves and accrued expenses 6 6 Other (85 ) (121 ) 16,113 14,445 Less valuation allowance (16,113 ) (14,445 ) Net deferred tax assets $ $ — $ —
Reconciliation of federal statutory income tax rate to our effective income tax rate	2015 2014 2013 Amounts computed at statutory rates $ $ (2,699 ) $ (3,349 ) State income tax, net of federal benefit (212 ) (47 ) Expiration of net operating loss carryforwards 708 75 Non-deductible interest and change in fair value of derivative liabilities 145 1,698 Foreign taxes 386 370 Other 4 4 Net change in valuation allowance on deferred tax assets 1,693 1,257 $ $ 25 $ 8

COMMITMENTS AND CONTINGENCIES (

COMMITMENTS AND CONTINGENCIES (Tables)	12 Months Ended
	Dec. 31, 2015
Stock issued in lieu of cash
Future minimum lease payments	($ in thousands) 2016 $ 426 2017 386 2018 168 2019 — 2020 and thereafter — Total $ 980

EQUITY (Tables)

EQUITY (Tables)	12 Months Ended
	Dec. 31, 2015
Equity Tables
Summary of common stock activity	Common Stock Shares outstanding at December 31, 2012 76,639,849 Shares issued pursuant to warrants exercised for cash 6,132,779 Shares issued pursuant to cashless warrants exercised 4,458,493 Conversion of related-party notes payable into Common Stock 18,182 Shares issued as compensation in lieu of cash 264,000 Shares issued pursuant to option exercises 35,310 Shares outstanding at December 31, 2013 87,548,613 Shares issued pursuant to warrants exercised for cash 4,742,632 Shares issued pursuant to cashless warrants exercised 868,565 Conversion of related-party notes payable into Common Stock 154,607 Shares issued as compensation in lieu of cash 94,116 Shares issued pursuant to option exercises 98,617 Shares outstanding at December 31, 2014 93,507,150 Shares issued pursuant to payment of stock dividend on Series E Preferred 478,664 Shares issued pursuant to cashless warrants exercised 45,376 Shares issued pursuant to option exercises 39,705 Shares outstanding at December 31, 2015 94,070,895
Summary of warrant activity	Warrants Weighted- Average Exercise Price Balance at December 31, 2012 18,788,485 $ 0.56 Granted 1,232,632 $ 1.01 Expired / Canceled (688,749 ) $ 1.49 Exercised (12,733,952 ) $ 0.52 Balance at December 31, 2013 6,598,416 $ 0.63 Granted 302,778 $ 2.02 Expired / Canceled (55,000 ) $ 1.10 Exercised (5,868,416 ) $ 0.58 Balance at December 31, 2014 977,778 $ 1.22 Granted — $ 0.00 Expired / Canceled (419,444 ) $ 1.86 Exercised (108,334 ) $ 1.01 Balance at December 31, 2015 450,000 $ 0.67
Summary of warrants by exercise price	Exercise Price Number Outstanding Weighted—Average Remaining Life (Years) Weighted—Average Exercise Price $ 0.50 250,000 1.0 $ 0.50 $ 0.80 150,000 3.0 $ 0.80 $ 1.10 50,000 1.1 $ 1.10 450,000 1.7 $ 0.67

STOCK-BASED COMPENSATION (Table

STOCK-BASED COMPENSATION (Tables)	12 Months Ended
	Dec. 31, 2015
Series B convertible preferred, shares outstanding
Stock option plan activity	Options Weighted- Average Exercise Price Weighted- Average Remaining Contractual Term (Years) Balance at December 31, 2012 3,031,221 $ 0.82 7.9 Granted 817,500 $ 1.39 — Expired/Cancelled (30,000 ) $ 0.74 — Exercised (35,310 ) $ 0.31 — Balance at December 31, 2013 3,783,411 $ 0.94 7.4 Granted 435,000 $ 2.13 — Expired/Cancelled (62,498 ) $ 1.96 — Exercised (98,617 ) $ 0.68 — Balance at December 31, 2014 4,057,296 $ 1.06 6.8 Granted 2,110,000 $ 1.63 — Expired/Cancelled (750,622 ) $ 1.86 — Exercised (39,705 ) $ 0.87 — Balance at December 31, 2015 5,376,969 $ 1.17 6.9
Stock options outstanding and exercisable	Options Outstanding Options Exercisable Exercise Price Weighted- Average Weighted- Weighted- Number Remaining Life Average Number Average Outstanding (Years) Exercise Price Exercisable Exercise Price $ 0.17–0.24 420,221 3.0 $ 0.19 420,221 $ 0.19 $ 0.54-0.74 735,500 4.6 $ 0.72 735,500 $ 0.72 $ 0.77-1.15 2,346,248 6.6 $ 0.98 1,974,191 $ 0.95 $ 1.45-2.74 1,875,000 9.1 $ 1.82 312,667 $ 2.02 Total 5,376,969 3,442,579
Common stock reserved for future issuance	Year Ended December 31, 2015 2014 2013 Cost of revenues $ 15 $ 12 $ 12 General and administrative 618 572 351 Sales and marketing 171 142 132 Research and development 156 130 121 Total $ 960 $ 856 $ 616 Common Stock Convertible preferred stock – Series B and Series E 6,488,134 Convertible lines of credit 1,670,735 Stock options outstanding 5,376,969 Warrants outstanding 450,000 Restricted stock grants - Authorized for future grant under stock option plans 1,198,438 15,184,276

PENSION PLAN (Tables)

PENSION PLAN (Tables)	12 Months Ended
	Dec. 31, 2015
Pension Plan Tables
Actuarial present value of the benefit obligations	($ in thousands) 2015 2014 2013 Change in benefit obligation: Benefit obligation at beginning of year $ 3,488 $ 2,821 $ 2,031 Service cost — — 2 Interest cost 70 106 94 Actuarial (gain) loss (123 ) 1,003 577 Effect of exchange rate changes (356 ) (442 ) 117 Effect of curtailment — — — Benefits paid (11 ) — — Benefit obligation at end of year 3,068 3,488 2,821 Change in plan assets: Fair value of plan assets at beginning of year 1,654 1,790 1,630 Actual return of plan assets 40 47 41 Company contributions 34 43 43 Benefits paid — — — Effect of exchange rate changes (171 ) (226 ) 76 Fair value of plan assets at end of year 1,557 ) 1,654 1,790 Funded status (1,557 ) (1,834 ) (1,031 ) Unrecognized actuarial loss (gain) 1,413 1,911 922 Unrecognized prior service (benefit) cost — — — Additional minimum liability (1,413 ) (1,911 ) (922 ) Unrecognized transition (asset) liability — — — Net amount recognized $ (1,511 ) $ (1,834 ) $ (1,031 ) Plan Assets Pension plan assets were comprised of the following asset categories at December 31, Equity securities 5.0 % 6.4 % 10.4 % Debt securities 89.3 % 87.4 % 83.1 % Other 5.7 % 6.2 % 6.5 % Total 100 % 100 % 100 % Components of net periodic benefit cost are as follows: Service cost $ — $ — $ 2 Interest cost on projected benefit obligations 70 106 94 Expected return on plan assets — — — Amortization of prior service costs — — — Amortization of actuarial loss — — — Net periodic benefit costs $ 70 $ 106 $ 96 The weighted average assumptions used to determine net periodic benefit cost for the years ended December 31, were Discount rate 2.4 % 2.2 % 3.9 % Expected return on plan assets 4.0 % 4.0 % 4.0 % Rate of pension increases 2.0 % 2.0 % 2.0 % Rate of compensation increase N/A N/A N/A The following discloses information about the Company’s defined benefit pension plan that had an accumulated benefit obligation in excess of plan assets as of December 31, Projected benefit obligation $ 3,068 $ 3,488 $ 2,821 Accumulated benefit obligation $ 3,068 $ 3,488 $ 2,821 Fair value of plan assets $ 1,557 $ 1,654 $ 1,790
Benefit payments	2016 $ 15 2017 $ 79 2018 $ 81 2019 $ 82 2020 $ 84 2021 — 2025 $ 601

ACCUMULATED OTHER COMPREHENSI39

ACCUMULATED OTHER COMPREHENSIVE LOSS (Tables)	12 Months Ended
	Dec. 31, 2015
Notes to Financial Statements
Components of accumulated other comprehensive loss	($ in thousands) 2015 2014 2013 Additional minimum pension liability $ (991 ) $ (1,323 ) $ (579 ) Foreign currency translation adjustment (204 ) (271 ) (251 ) Ending balance $ (1,195 ) $ (1,594 ) $ (830 )

QUARTERLY INFORMATION (Tables)

QUARTERLY INFORMATION (Tables)	12 Months Ended
	Dec. 31, 2015
Quarterly Financial Information Disclosure [Abstract]
Schedule of Quarterly Financial Information	The following table sets forth selected quarterly financial data for 2015, 2014 and 2013 (in thousands, except share and per share data): 2015 (by quarter) 1 2 3 4 Revenues $ 991 $ 1,695 $ 1,181 $ 902 Cost of Sales 286 798 321 539 Operating expenses 2,641 2,660 2,813 2,921 Loss from Operations (1,936 ) (1,763 ) (1,953 ) (2,558 ) Interest expense (income), net 437 (2 ) 1 11 Other expense (income), net (46 ) — (99 ) — Income tax expense (benefit) 3 6 3 10 Net loss $ (2,330 ) $ (1,767 ) $ (1,858 ) $ (2,579 ) Net loss per share: Net loss $ (0.03 ) $ (0.02 ) $ (0.02 ) $ (0.03 ) Preferred dividends $ (0.00 ) $ (0.00 ) $ (0.00 ) $ (0.00 ) Basic loss per share to common shareholders $ (0.03 ) $ (0.02 ) $ (0.02 ) $ (0.03 ) Basic weighted-average shares outstanding 93,515,640 93,674,349 93,876,339 94,070,895 2014 (by quarter) 1 2 3 4 Revenues $ 1,063 $ 937 $ 919 $ 1,240 Cost of Sales 251 232 248 261 Operating expenses 2,706 2,667 2,793 2,797 Loss from Operations (1,894 ) (1,962 ) (2,122 ) (1,818 ) Interest expense (income), net 79 105 104 128 Other expense (income), net (283 ) (5 ) (1 ) (8 ) Income tax expense (benefit) — 12 3 10 Net loss $ (1,690 ) $ (2,074 ) $ (2,228 ) $ (1,948 ) Net loss per share: Net loss $ (0.02 ) $ (0.02 ) $ (0.02 ) $ (0.02 ) Preferred dividends $ (0.00 ) $ (0.00 ) $ (0.00 ) $ (0.00 ) Basic loss per share to common shareholders $ (0.02 ) $ (0.02 ) $ (0.02 ) $ (0.02 ) Basic weighted-average shares outstanding 88,604,221 91,930,400 93,162,548 93,384,834 2013 (by quarter) 1 2 3 4 Revenues $ 856 $ 1,024 $ 2,496 $ 928 Cost of Sales 237 296 299 258 Operating expenses 2,316 2,306 2,375 2,504 Loss from Operations (1,697 ) (1,578 ) (178 ) (1,834 ) Interest expense (income), net 1 73 73 74 Change in fair value of derivative liabilities 1,176 3,973 (470 ) 97 Other expense (income), net (104 ) (4 ) (123 ) (212 ) Income tax expense (benefit) 3 (1 ) 3 3 Net income (loss) $ (2,773 ) $ (5,619 ) $ 339 $ (1,796 ) Net income (loss) per share: Net income (loss) $ (0.04 ) $ (0.07 ) $ 0.00 $ (0.02 ) Preferred dividends $ (0.00 ) $ (0.00 ) $ (0.00 ) $ (0.00 ) Basic income (loss) per share to common shareholders $ (0.04 ) $ (0.07 ) $ 0.00 $ (0.02 ) Basic weighted-average shares outstanding 76,846,563 78,581,502 83,750,636 85,594,118

DESCRIPTION OF BUSINESS AND O41

DESCRIPTION OF BUSINESS AND OPERATIONS (Details Narrative)	12 Months Ended
	Dec. 31, 2015
Description Of Business And Operations Details Narrative
State of Incorporation	Delaware

SUMMARY OF SIGNIFICANT ACCOUN42

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended												12 Months Ended
	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Numerator for basic and diluted loss per share:
Net loss	$ (2,579)	$ (1,858)	$ (1,767)	$ (2,330)	$ (1,948)	$ (2,228)	$ (2,074)	$ (1,690)	$ (1,796)	$ 339	$ (5,619)	$ (2,773)	$ (8,534)	$ (7,940)	$ (9,849)
Preferred dividends													(1,065)	(51)	(51)
Net loss available to common shareholders													$ (9,599)	$ (7,991)	$ (9,900)
Denominator for basic loss per share weighted-average shares outstanding	94,070,895	93,876,339	93,674,349	93,515,640	93,384,834	93,162,548	91,930,400	88,604,221	85,594,118	83,750,636	78,581,502	76,846,563	93,786,079	91,795,971	81,231,962
Effect of dilutive securities
Denominator for diluted loss per share weighted-average shares outstanding													93,786,079	91,795,971	81,231,962
Basic and diluted loss per share:
Net loss													$ (0.09)	$ (0.09)	$ (0.12)
Preferred dividends													(0.01)
Net loss available to common shareholders													$ (0.10)	$ (0.09)	$ (0.12)

SUMMARY OF SIGNIFICANT ACCOUN43

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 1) - shares	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Potential Dilutive Securities:
Potential Dilutive Securities	12,315,103	6,730,651	12,466,791
Series B Preferred Stock [Member]
Potential Dilutive Securities:
Potential Dilutive Securities	46,029	46,029	46,139
Series E Preferred Stock
Potential Dilutive Securities:
Potential Dilutive Securities	6,442,105
Convertible notes payable and lines of credit [Member]
Potential Dilutive Securities:
Potential Dilutive Securities		1,649,548	101,185
Stock options [Member]
Potential Dilutive Securities:
Potential Dilutive Securities	5,376,969	4,057,296	3,783,411
Restricted stock grants [Member]
Potential Dilutive Securities:
Potential Dilutive Securities			80,932
Warrants [Member]
Potential Dilutive Securities:
Potential Dilutive Securities	450,000	977,778	8,455,124

SUMMARY OF SIGNIFICANT ACCOUN44

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Cash placed with high quality financial institutions	$ 250,000	$ 250,000
Accounts receivable	$ 3,000	$ 3,000
Customer risk revenue percentage	37.00%	17.00%	42.00%
Customer accounted for revenue	$ 1,753,000	$ 725,000	$ 2,211,000
Trade receivables	78,000	0	0
Stock based compensation expense	$ 744,000	$ 618,000	$ 575,000
Expected term	5 years 10 months 24 days	5 years 10 months 24 days	5 years 10 months 24 days
Interest rate	2.60%	2.60%	2.60%
Foreign currency translation adjustment	$ 67,000	$ (20,000)	$ (69,000)
Advertising expense	$ 12,000	$ 9,000	$ 12,000
Officer [Member]
Forfeiture rate	0.00%
Directors [Member]
Shares issued for services		94,116	144,000
Compensation expense	$ 216,000	$ 238,000
Forfeiture rate	4.10%
Other Employees [Member]
Forfeiture rate	6.00%
MinimumMember
Volatility rate	74.00%
Maximum [Member]
Volatility rate	121.00%

FAIR VALUE ACCOUNTING (Details)

FAIR VALUE ACCOUNTING (Details) - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Assets:
Pension assets	$ 1,557	$ 1,654	$ 1,790
Totals	1,557	1,654
Level 1
Assets:
Pension assets	1,557	1,654
Totals	$ 1,557	$ 1,654
Level 2
Assets:
Pension assets
Totals
Level 3
Assets:
Pension assets
Totals

FAIR VALUE ACCOUNTING (Details

FAIR VALUE ACCOUNTING (Details 1) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Fair Value Disclosures [Abstract]
At beginning of period		$ 57	$ 2,244
Included in earnings			4,776
Settlements		$ (57)	$ (6,963)
Issuances
Transfers in and/or out of Level 3
At end of period			$ 57

INTANGIBLE ASSETS AND GOODWIL47

INTANGIBLE ASSETS AND GOODWILL (Details) - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Notes to Financial Statements
2,016	$ 12
2,017	12
2,018	12
2,019	12
2,020	12
Thereafter	57
Totals	$ 117	$ 144

INTANGIBLE ASSETS AND GOODWIL48

INTANGIBLE ASSETS AND GOODWILL (Details Narrative) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Carrying amount of acquired trademarks and trade names	$ 0	$ 15
Carrying amount of Finite Lived Patents Gross	117	129
Trademarks And Trade Names [Member]
Amortization expense	15	15
Accumulated amortization	347	332
Patents [Member]
Amortization expense	12	13
Accumulated amortization	$ 542	$ 530
Weighted-average remaining life of acquired patents	10 years 6 months

RELATED PARTY (Details Narrati

RELATED PARTY (Details Narratives) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Advances under line of credit	$ 0	$ 1,550
LOC Borrowings	400	1,550
Repayment of line of credit	$ 350
Warrant term	6 years 10 months 24 days
Advances under LOC	$ 400	1,550
Beneficial conversion feature	146	56
Amortization of debt discount	438	426	$ 217
Convertible notes	$ 110,000
Convertible notes interest rate	7.00%
Warrant exercise price	$ .50
Convertible Notes Payable [Member]
Warrants issued in consideration	149,996
Debt converted	$ 85,034
Shares issued on debt conversion	154,607
Convertible Notes Payable [Member] | Scenario, Adjustment [Member]
Warrants issued in consideration	150,000
Line of Credit 1 [Member]
Line of Credit Borrowing capacity	$ 2,500
Warrant issued	1,052,632
Warrant term	2 years
Warrant exercise price	$ 2.25
Deferred financing fee	$ 580
Deferred financing fee amortization expense	53	$ 369
Fair value warrant issued	127
Line of Credit 2 [Member]
Line of Credit Borrowing capacity	$ 3,500
Conversion share stated value	$ 2.25

INVENTORY (Details Narrative)

INVENTORY (Details Narrative) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Inventory Details Narrative
Inventory	$ 46	$ 916
Work in process	42	909
Direct labor cost, in-process projects	302	909
Equipment cost, in-process projects		881
Finished goods	4	7
Reserves for obsolete and slow-moving items	3	$ 3
Inventory write down	$ 281

PROPERTY AND EQUIPMENT (Details

PROPERTY AND EQUIPMENT (Details) - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Notes to Financial Statements
Equipment	$ 887	$ 818
Leasehold improvements	11	5
Furniture	101	103
Property and equipment total	999	926
Less accumulated depreciation	(837)	(715)
Property and equipment net	$ 162	$ 211

PROPERTY AND EQUIPMENT (Detai52

PROPERTY AND EQUIPMENT (Details Narrative) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Property And Equipment Details Narrative
Depreciation expense	$ 137	$ 152	$ 97

ACCRUED EXPENSES (Details)

ACCRUED EXPENSES (Details) - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Notes to Financial Statements
Compensated absences	$ 260	$ 290
Wages, payroll taxes and sales commissions	11	4
Customer deposits	69	68
Liquidated damages	200	200
Royalties	147	147
Pension and employee benefit plans	6	35
Income and sales taxes	131	171
Dividends	$ 261	21
Interest		17
Other	$ 64	60
Accrued liabilities	$ 1,149	$ 1,013

LINES OF CREDIT (Details)

LINES OF CREDIT (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Lines of credit to a related party		$ 1,311
Total lines of credit to related parties		$ 1,311
Less current portion
Long-term notes payable and line of credit to related parties		$ 1,311
Line of credit rate	8.00%
Advances under line of credit	$ 0	1,550
LOC Maturity Date	Mar. 27, 2017
Line of Credit [Member]
Discount on advances	$ 0	$ 239

DERIVATIVE LIABILITIES (Details

DERIVATIVE LIABILITIES (Details Narratives) $ in Thousands	12 Months Ended
	Dec. 31, 2015USD ($)shares
Derivative Liabilities Details Narratives
Outstanding warrants to purchase shares of the Company's common stock | shares
Proceeds from Warrants exercises | $	$ 20,000
Shares of stock issued upon exercise of warrant | shares	40,000
Shares of stock issued upon exercise of warrant, value | $	$ 57

INCOME TAXES (Details)

INCOME TAXES (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Current
Federal
State
Foreign		$ 25	$ 8
Deferred
Federal
State
Foreign
Total		$ 25	$ 8

INCOME TAXES (Details 1)

INCOME TAXES (Details 1) - USD ($)	Dec. 31, 2014	Dec. 31, 2013
Notes to Financial Statements
Net operating loss carryforwards	$ 14,200	$ 12,703
Intangible and fixed assets	427	538
Stock based compensation	1,565	1,319
Reserves and accrued expenses	6	6
Other	(85)	(121)
Deferred tax assets total	16,113	14,445
Less valuation allowance	$ (16,113)	$ (14,445)
Net deferred tax assets

INCOME TAXES (Details 2)

INCOME TAXES (Details 2) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
Notes to Financial Statements
Amounts computed at statutory rates	$ (2,699)	$ (3,349)
State income tax, net of federal benefit	(212)	(47)
Expiration of net operating loss carryforwards	708	75
Non-deductible interest and change in fair value of derivative liabilities	145	1,698
Foreign taxes	386	370
Other	4	4
Net change in valuation allowance on deferred tax assets	1,693	1,257
Reconciliation of the provision-benefit) for income taxes	$ 25	$ 8

INCOME TAXES (Details Narrative

INCOME TAXES (Details Narrative) $ in Thousands	Dec. 31, 2014USD ($)
Income Taxes Details Narrative
Interest and penalties accrued	$ 11

COMMITMENTS AND CONTINGENCIES60

COMMITMENTS AND CONTINGENCIES (Details) $ in Thousands	Dec. 31, 2015USD ($)
Notes to Financial Statements
2,016	$ 426
2,017	386
2,018	$ 168
2,019
2020 and thereafter
Total	$ 980

COMMITMENTS AND CONTINGENCIES61

COMMITMENTS AND CONTINGENCIES (Details Narratives) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Rent expense	$ 477	$ 430	$ 418
CALIFORNIA | MinimumMember
Rent expense	18
CANADA | MinimumMember
Rent expense	3
OREGON | MinimumMember
Rent expense	16
MEXICO | MinimumMember
Rent expense	$ 3

EQUITY (Details)

EQUITY (Details) - shares	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Equity Details
At beginning of period	93,507,150	87,548,613	76,639,849
Shares issued pursuant to payment of stock dividend on Series E Preferred	478,664
Shares issued pursuant to warrants exercised for cash		4,742,632	6,132,779
Shares issued pursuant to cashless warrants exercised	45,376	868,565	4,458,493
Conversion of related-party notes payable into common stock		154,607	18,182
Shares issued as compensation in lieu of cash		94,116	264,000
Shares issued pursuant to option exercises	39,705	98,617	35,310
At end of period	94,070,895	93,507,150	87,548,613

EQUITY (Details 1)

EQUITY (Details 1) - $ / shares	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Equity Details 1
Begining Balance	97,778	6,598,416	18,788,485
Granted		302,778	1,232,632
Expired/Cancelled	(419,444)	(55,000)	(688,749)
Exercised	(108,334)	(5,868,416)	(12,733,952)
Ending Balance	450,000	97,778	6,598,416
Begining Balance, Weighted-Average Exercise Price	$ 1.22	$ 0.63	$ 0.56
Granted, Weighted-Average Exercise Price	0	2.02	1.01
Expired/Cancelled, Weighted-Average Exercise Price	1.86	1.10	1.49
Exercised, Weighted-Average Exercise Price	1.01	0.58	0.52
Ending Balance, Weighted-Average Exercise Price	$ 0.67	$ 1.22	$ 0.63

EQUITY (Details 2)

EQUITY (Details 2)	12 Months Ended
	Dec. 31, 2015$ / sharesshares
Number Outstanding | shares	450,000
Weighted Average Remaining Life (Years)	1 year 8 months 12 days
Weighted Average Exercise Price | $ / shares	$ 0.67
0.50
Number Outstanding | shares	250,000
Weighted Average Remaining Life (Years)	1 year
Weighted Average Exercise Price | $ / shares	$ 0.50
0.80
Number Outstanding | shares	150,000
Weighted Average Remaining Life (Years)	3 years
Weighted Average Exercise Price | $ / shares	$ 0.80
1.10
Number Outstanding | shares	50,000
Weighted Average Remaining Life (Years)	1 year 1 month 6 days
Weighted Average Exercise Price | $ / shares	$ 1.10

EQUITY (Details Narratives)

EQUITY (Details Narratives) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Shares issued pursuant to options exercised	39,705	98,617	35,310
Cash proceeds from option exercises	$ (33)	$ 67	$ 11
Shares issued pursuant to cashless warrants exercised for cash	45,376
Warrants outstanding	450,000
Compensation expense	$ 960	$ 856	$ 575
Warrants not yet exercisable	150,000
Warrants exercised pursuant to cashless transactions	108,334
Series B Preferred Stock [Member]
Preferred stock outstanding	239,400	239,400
Preferred par value	$ 0.01	$ 0.01
Cumulative dividends	$ 8	$ 8
Dividend, per share amount	$ .03
Series E Preferred Stock [Member]
Preferred stock outstanding	12,000	0
Preferred par value	$ .01	$ 0.01
Cumulative dividends	$ 240,000	$ 0
Liquidation preference	$ 1,000
Shares issued, sale of shares, price per share	$ 1,000
Consultant [Member]
Modified warrants	200,000
Compensation expense	$ 80,000
Series E Preferred Stock [Member]
Preferred conversion price	into that number of shares of the Company’s Common Stock equal to the Liquidation Preference, divided by $1.90.
Dividend rate, cash	8.00%
Dividend rate, PIK	10.00%
Compensation expense
Shares issued, sale of shares	12,000
Shares issued payment of dividends	478,664
Shares issued dividends, amount	$ 240,000
MinimumMember
Warrant exercise price	$ .50
Maximum [Member]
Warrant exercise price	$ 1.10

STOCK-BASED COMPENSATION (Detai

STOCK-BASED COMPENSATION (Details) - $ / shares	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Summary of the activity Under stock option plans
Begining Balance	4,057,296	3,786,000	3,031,221
Granted, Options	2,110,000	435,000	817,500
Expired/Cancelled	(750,622)	(62,498)	(30,000)
Exercised, Options	(39,705)	(98,617)	(35,310)
Ending Balance	5,376,969	4,057,296	3,786,000
Begining Balance, Weighted-Average Exercise Price	$ 1.06	$ 0.94	$ 0.82
Granted, Weighted-Average Exercise Price	1.63	2.13	1.39
Expired/Cancelled, Weighted-Average Exercise Price	1.86	1.96	0.74
Exercised, Weighted-Average Exercise Price	0.87	0.68	0.31
Ending Balance, Weighted-Average Exercise Price	$ 1.17	$ 1.06	$ 0.94
Begining Balance,Weighted-Average Remaining Contractual Term	6 years 9 months 18 days	7 years 4 months 24 days	7 years 10 months 24 days
Ending Balance,Weighted-Average Remaining Contractual Term	6 years 10 months 24 days

STOCK-BASED COMPENSATION (Det67

STOCK-BASED COMPENSATION (Details 1) - $ / shares	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Number Outstanding Options	5,376,969	4,057,296	3,786,000	3,031,221
Weighted Average Exercise Price Options	$ 1.17	$ 1.06	$ 0.94	$ 0.82
Number Exercisable Options	3,442,579
0.17-0.24
Number Outstanding Options	420,221
Weighted Average Remaining Life (Years) Options	3 years
Weighted Average Exercise Price Options	$ 0.19
Number Exercisable Options	420,221
Weighted-Average Exercise Price Options	$ 0.19
0.54-0.74
Number Outstanding Options	735,500
Weighted Average Remaining Life (Years) Options	4 years 7 months 6 days
Weighted Average Exercise Price Options	$ 0.72
Number Exercisable Options	735,500
Weighted-Average Exercise Price Options	$ 0.72
0.77-1.15
Number Outstanding Options	2,346,248
Weighted Average Remaining Life (Years) Options	6 years 7 months 6 days
Weighted Average Exercise Price Options	$ .98
Number Exercisable Options	1,974,191
Weighted-Average Exercise Price Options	$ .95
1.45-2.74
Number Outstanding Options	1,875,000
Weighted Average Remaining Life (Years) Options	9 years 1 month 6 days
Weighted Average Exercise Price Options	$ 1.82
Number Exercisable Options	312,667
Weighted-Average Exercise Price Options	$ 2.02

STOCK-BASED COMPENSATION (Det68

STOCK-BASED COMPENSATION (Details 2)	Dec. 31, 2015shares
Common stock reserved for future issuance	15,184,276
Warrants outstanding
Common stock reserved for future issuance	450,000
Common Stock | Convertible Preferred Stock [Member]
Common stock reserved for future issuance	6,488,134
Common Stock | ConvertibleNotesPayableMember
Common stock reserved for future issuance	1,670,735
Common Stock | Stock options outstanding
Common stock reserved for future issuance	5,376,969
Common Stock | Restricted stock grants
Common stock reserved for future issuance
Authorized Future Grant Under Stock Option Plans [Member]
Common stock reserved for future issuance	1,198,438

STOCK-BASED COMPENSATION (Det69

STOCK-BASED COMPENSATION (Details 3) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Stock-based compensation	$ (960)	$ (856)	$ (6,116)
Cost of Revenues [Member]
Stock-based compensation	15	12	12
General and Administrative Expense [Member]
Stock-based compensation	618	572	351
Selling And Marketing Expense [Member]
Stock-based compensation	171	142	132
Research and Development Expense [Member]
Stock-based compensation	$ 156	$ 130	$ 121

STOCK-BASED COMPENSATION (Det70

STOCK-BASED COMPENSATION (Details Narrative) - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Options authorized under plan	7,000,000	7,000,000	4,000,000
Options outstanding	5,376,969	4,057,296	3,786,000	3,031,221
Weighted average exercise price	$ .91
Weighted average remaining contractual life, vested	5 years 6 months
Options not yet vested	1,875,979
Options vested and expected to vest	5,318,558
Options vested and expected to vest, weighted average exercise price	$ 1.17
Intrinsic value vested and expected to vest	$ 1,647,923
Weighted average remaining contractual life	6 years 10 months 24 days
Exercised	39,705	98,617	35,310
Shares issued pursuant to options exercised	39,705	98,617	35,310
Proceeds from option exercise	$ 34,000	$ 67,000
Options excercised, intrinsic value	35,000	170,000
Exercisable, intrinsic value	1,575,000	4,696,000
Outstanding, intrinsic value	$ 1,652,148	$ 5,427,000
Options granted exercise price	$ 1.63	$ 2.13	$ 1.39
Option term	5 years 6 months
Unrecognized compensation cost related to unvested stock options	$ 1,869,000
Weighted-average remaining requisite service period	2 years 6 months
Stock-based compensation expense related to restricted stock grants	$ 216,000
Restricted stock issued		94,116
Management [Member]
Options granted during period	425,000
Directors [Member]
Weighted average remaining contractual life, vested	10 years
Options granted during period	144,000
Vesting rate	12,000 per month
Options granted exercise price	$ 1.73
Option term	10 years
Employees [Member]
Options granted during period	210,000
1999 Plan [Member]
Options authorized under plan	350,000

EMPLOYEE BENEFIT PLAN (Details

EMPLOYEE BENEFIT PLAN (Details Narrative) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Employee Benefit Plan Details Narrative
Company contribution rate	50.00%
Maximum percent of employee compensation	8.00%
Discretionary contribution to employee benefit plan	$ 119	$ 118	$ 107
Paid subsequent year	$ 83	$ 88	$ 79

PENSION PLAN (Details)

PENSION PLAN (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Change in benefit obligation:
Benefit obligation at beginning of year	$ 3,488	$ 2,821	$ 2,031
Service cost			2
Interest cost	$ 70	$ 106	94
Actuarial gain (loss)	(123)	1,003	577
Effect of exchange rate changes	$ (356)	$ (442)	$ 117
Effect of curtailment
Benefits paid	$ (11)
Benefit obligation at end of year	3,068	$ 3,488	$ 2,821
Change in plan assets:
Fair value of plan assets at beginning of year	1,654	1,790	1,630
Actual return of plan assets	40	47	41
Company contributions	$ 34	$ 43	$ 43
Benefits paid
Effect of exchange rate changes	$ (171)	$ (226)	$ 76
Fair value of plan assets at end of year	1,557	1,654	1,790
Funded status	(1,511)	(1,834)	(1,031)
Unrecognized actuarial loss (gain)	$ 1,595	$ 1,911	$ 922
Unrecognized prior service (benefit) cost
Additional minimum liability	$ (1,595)	$ (1,911)	$ (922)
Unrecognized transition (asset) liability
Net amount recognized	$ (1,511)	$ (1,834)	$ (1,031)
Plan Assets
Equity securities	500.00%	640.00%	1040.00%
Debt securities	8930.00%	8740.00%	8310.00%
Other	570.00%	620.00%	650.00%
Total	10000.00%	10000.00%	10000.00%
Components of net periodic benefit cost are as follows:
Service cost			$ 2
Interest cost on projected benefit obligations	$ 70	$ 106	$ 94
Expected return on plan assets
Amortization of prior service costs
Amortization of actuarial loss
Net periodic benefit costs	$ 70	$ 106	$ 96
Weighted average assumptions used to determine net periodic benefit cost for the years ended December 31, were
Discount rate	240.00%	220.00%	390.00%
Expected return on plan assets	400.00%	400.00%	400.00%
Rate of pensionincrease	200.00%	200.00%	200.00%
The following discloses information about the Companys defined benefit pension plan that had an accumulated benefit obligation in excess of plan assets as of December 31,
Projected benefit obligation	$ 3,067	$ 3,488	$ 2,821
Accumulated benefit obligation	3,067	3,488	2,821
Fair value of plan assets	$ 1,557	$ 1,654	$ 1,790

PENSION PLAN (Details 1)

PENSION PLAN (Details 1) $ in Thousands	Dec. 31, 2015USD ($)
Notes to Financial Statements
2,016	$ 15
2,017	79
2,018	81
2,019	82
2,020	84
2021-2025	$ 601

PENSION PLAN (Details Narrative

PENSION PLAN (Details Narrative) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Pension Plan Details Narrative
Contributions to the plan	$ 34	$ 43	$ 43

ACCUMULATED OTHER COMPREHENSI75

ACCUMULATED OTHER COMPREHENSIVE LOSS (Details) - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Note 8 - FAIR VALUE ACCOUNTING
Additional minimum pension liability	$ (991)	$ (1,323)	$ (579)
Foreign currency translation adjustment	(204)	(271)	(251)
Ending Balance	$ (1,195)	$ (1,594)	$ (830)

QUARTERLY INFORMATION (Details)

QUARTERLY INFORMATION (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended												12 Months Ended
	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Quarterly Financial Information Disclosure [Abstract]
Revenues	$ 902	$ 1,181	$ 1,695	$ 991	$ 1,240	$ 919	$ 937	$ 1,063	$ 928	$ 2,496	$ 1,024	$ 856
Cost of Sales	539	321	798	286	261	248	232	251	258	299	296	237
Operating expenses	2,921	2,813	2,660	2,641	2,797	2,793	2,667	2,706	2,504	2,375	2,306	2,316	$ 11,035	$ 10,963	$ 9,501
Loss from Operations	(2,558)	(1,953)	(1,763)	(1,936)	(1,818)	(2,122)	(1,962)	(1,894)	(1,834)	(178)	(1,578)	(1,697)
Interest expense (income), net	$ 11	1	$ (2)	437	128	104	105	79	74	73	73	1	447	416	221
Change in fair value of derivative liabilities									97	(470)	3,973	1,176
Other expense (income), net		(99)		(46)	(8)	(1)	(5)	$ (283)	(212)	(123)	(4)	(104)
Income tax expense (benefit)	$ 10	3	$ 6	3	10	3	12		3	3	(1)	3	22	25	8
Net income (loss)	$ (2,579)	$ (1,858)	$ (1,767)	$ (2,330)	$ (1,948)	$ (2,228)	$ (2,074)	$ (1,690)	$ (1,796)	$ 339	$ (5,619)	$ (2,773)	$ (8,534)	$ (7,940)	$ (9,849)
Net income (loss) per share:
Net income (loss)	$ (.02)	$ (0.02)	$ (0.02)	$ (0.03)	$ (0.02)	$ (0.02)	$ (0.02)	$ (0.02)	$ (0.02)	$ 0	$ (0.07)	$ (0.04)	$ (0.09)	$ (0.09)	$ (.12)
Preferred dividends	(.01)	0	0	0	0	0	0	0	0	0	0	0	(.01)
Basic income (loss) per share to common shareholders	$ (.03)	$ (0.02)	$ (0.02)	$ (0.03)	$ (0.02)	$ (0.02)	$ (0.02)	$ (0.02)	$ (0.02)	$ 0	$ (0.07)	$ (0.04)	$ (.01)	$ (.09)	$ (.12)
Basic weighted-average shares outstanding	94,070,895	93,876,339	93,674,349	93,515,640	93,384,834	93,162,548	91,930,400	88,604,221	85,594,118	83,750,636	78,581,502	76,846,563	93,786,079	91,795,971	81,231,962