ImageWare Systems (IWSY) 10-Q 20 May 21 2021 Q1 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2021	May 17, 2021
Cover [Abstract]
Entity Registrant Name	IMAGEWARE SYSTEMS INC
Entity Central Index Key	0000941685
Document Type	10-Q
Document Period End Date	Mar. 31, 2021
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Is Entity's Reporting Status Current?	Yes
Entity Filer Category	Non-accelerated Filer
Entity Emerging Growth Company	false
Entity Small Business	true
Entity Shell Company	false
Entity Interactive Data Current	Yes
Entity Incorporation, State or Country Code	DE
Entity File Number	001-15757
Entity Common Stock, Shares Outstanding		303,292,986
Document Fiscal Period Focus	Q1
Document Fiscal Year Focus	2021

CONDENSED CONSOLIDATED BALANCE

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Mar. 31, 2021	Dec. 31, 2020
Current Assets:
Cash and cash equivalents	$ 5,056	$ 8,345
Accounts receivable, net of allowance for doubtful accounts of $5 at March 31, 2021 and December 31, 2020	493	577
Inventory, net	88	40
Other current assets	625	196
Total current assets	6,262	9,158
Property and equipment, net	112	155
Other assets	525	458
Operating lease right-of-use assets	1,462	1,557
Intangible assets, net of accumulated amortization	55	58
Goodwill	3,416	3,416
Total assets	11,832	14,802
Current Liabilities:
Accounts payable	974	1,007
Deferred revenue	777	903
Accrued expenses	1,006	1,130
Operating lease liabilities, current portion	435	421
Derivative liabilities	22,850	24,128
Notes payable, current portion	1,107	918
Total current liabilities	27,149	28,507
Other long-term liabilities	65	65
Notes payable, net of current portion	464	653
Lease liabilities, net of current portion	1,178	1,297
Pension obligation	2,518	2,531
Total liabilities	31,374	33,053
Mezzanine Equity:
Series D Convertible Redeemable Preferred Stock, $0.01 par value, designated 26,000 shares, 23,111 and 22,863 shares issued at March 31, 2021 and December 31, 2020, respectively and 22,757 and 22,863 shares outstanding at March 31, 2021 and December 31 2020, respectively; liquidation preference $22,757 and $22,863 at March 31, 2021 and December 31, 2020, respectively.	3,391	1,572
Shareholders' Deficit:
Common stock, $0.01 par value, 2,000,000,000 shares authorized; 276,749,448 and 180,096,317 shares issued at March 31, 2021 and December 31, 2020, respectively, and 276,742,744 and 180,089,613 shares outstanding at March 31, 2021 and December 31, 2020, respectively.	2,766	1,801
Additional paid in capital	191,585	193,652
Treasury stock, at cost 6,704 shares	(64)	(64)
Accumulated other comprehensive loss	(1,935)	(1,989)
Accumulated deficit	(215,287)	(213,225)
Total shareholders' deficit	(22,933)	(19,823)
Total liabilities, mezzanine equity and shareholders' deficit	11,832	14,802
Series A Preferred Stock
Shareholders' Deficit:
Preferred stock	0	0
Series A-1 Preferred Stock
Shareholders' Deficit:
Preferred stock	0	0
Series B Preferred Stock
Shareholders' Deficit:
Preferred stock	$ 2	$ 2

CONDENSED CONSOLIDATED BALANC_2

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Mar. 31, 2021	Dec. 31, 2020
Current Assets:
Accounts receivable, net of allowance for doubtful accounts	$ 5	$ 5
Shareholders' deficit:
Common stock, par value	$ .01	$ 0.01
Common stock, shares authorized	2,000,000,000	2,000,000,000
Common stock, shares issued	276,749,448	180,096,317
Common stock, shares outstanding	276,742,744	180,089,613
Treasury stock, shares	6,704	6,704
Mezzanine Preferred Stock
Shareholders' deficit:
Preferred stock, par value	$ .01	$ 0.01
Preferred stock, shares authorized	26,000	26,000
Preferred stock, shares issued	23,111	22,863
Preferred stock, shares outstanding	22,757	22,863
Preferred stock, liquidation preference	$ 22,757	$ 22,863
Series A Preferred Stock
Shareholders' deficit:
Preferred stock, par value	$ .01	$ 0.01
Preferred stock, shares authorized	38,000	38,000
Preferred stock, shares issued	37,467	37,467
Preferred stock, shares outstanding	6,149	14,911
Preferred stock, liquidation preference	$ 6,149	$ 14,911
Series A-1 Preferred Stock
Shareholders' deficit:
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock, shares authorized	38,000	38,000
Preferred stock, shares issued	37,467	37,467
Preferred stock, shares outstanding	5,922	14,782
Preferred stock, liquidation preference	$ 5,922	$ 14,782
Series B Preferred Stock
Shareholders' deficit:
Preferred stock, par value	$ .01	$ .01
Preferred stock, shares authorized	750,000	750,000
Preferred stock, shares issued	389,400	389,400
Preferred stock, shares outstanding	239,400	239,400
Preferred stock, liquidation preference	$ 620	$ 607

CONDENSED CONSOLIDATED STATEMEN

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Income Statement [Abstract]
Product revenues	$ 56	$ 150
Maintenance revenues	677	646
Cost of revenue, product	9	21
Cost of revenue, maintenance	110	98
Gross profit	614	677
Operating expense:
General and administrative	1,347	983
Sales and marketing	724	1,058
Research and development	1,168	1,868
Depreciation and amortization	18	18
Total	3,257	3,927
Loss from operations	(2,643)	(3,250)
Interest (income) expense, net	0	24
(Gain) loss on change in fair value of derivative liabilities	(1,172)	(197)
Loss on extinguishment of derivative liabilities	335	0
Other (income) expense, net	25	0
Other components of net periodic pension expense	(54)	(47)
Loss before income taxes	(1,885)	(3,124)
Income tax expense (income)	0	0
Net loss	(1,885)	(3,124)
Preferred dividends, preferred stock discount accretion and deemed dividends from preferred stock exchange	(2,255)	(1,374)
Net loss available to common shareholders	$ (4,140)	$ (4,498)
Basic income and diluted loss per common share - see Note 3:
Basic and diluted loss per share available to common shareholders	$ (0.02)	$ (0.04)
Basic and diluted weighted-average shares outstanding	245,829,914	116,196,197

CONDENSED CONSOLIDATED STATEM_2

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Statement of Other Comprehensive Income [Abstract]
Net loss	$ (1,885)	$ (3,124)
Other comprehensive income (loss):
Foreign currency translation adjustment	54	31
Comprehensive loss	$ (1,831)	$ (3,093)

CONSOLIDATED STATEMENTS OF SHAR

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' DEFICIT - USD ($) $ in Thousands	Series A Preferred Stock	Series A-1 Preferred Stock	Series B Preferred Stock	Common Stock	Treasury Stock	Additional Paid-In Capital	Accumulated Other Comprehensive Loss	Accumulated Deficit	Total
Beginning balance, shares at Dec. 31, 2019	37,467	0	239,400	113,353,176	(6,704)
Beginning balance, amount at Dec. 31, 2019	$ 0	$ 0	$ 2	$ 1,133	$ (64)	$ 195,079	$ (1,741)	$ (203,171)	$ (8,762)
Accretion of preferred stock discount	0	0	0	0	0	(175)	0	0	(175)
Stock-based compensation expense and issuance of RSUs, amount	0	0	0	$ 0	0	124	0	0	124
Issuance of common stock in lieu of cash, shares				10,000,000
Issuance of common stock in lieu of cash, amount	0	0	0	$ 100	0	1,287	0	0	1,387
Common stock issued in exchange for unexercised options, shares				400,000
Common stock issued in exchange for unexercised options, amount	0	0	0	$ 4	0	58	0	0	62
Foreign currency translation adjustment	0	0	0	0	0	0	31	0	31
Dividends on Series A preferred stock, amount	0	0	0	0	0	0	0	(937)	(937)
Dividends on Series C preferred stock, amount	0	0	0	0	0	0	0	(250)	(250)
Net loss	$ 0	$ 0	$ 0	$ 0	$ 0	0	0	(3,124)	(3,124)
Ending balance, shares at Mar. 31, 2020	37,467	0	239,400	123,753,176	(6,704)
Ending balance, amount at Mar. 31, 2020	$ 0	$ 0	$ 2	$ 1,237	$ (64)	196,373	(1,710)	(207,482)	(11,644)
Beginning balance, shares at Dec. 31, 2020	14,911	14,782	239,400	180,096,317	(6,704)
Beginning balance, amount at Dec. 31, 2020	$ 1	$ 0	$ 2	$ 1,801	$ (64)	193,652	(1,989)	(213,225)	(19,823)
Accretion of preferred stock discount	0	0	0	$ 0	0	(1,817)	0	0	(1,817)
Stock-based compensation expense and issuance of RSUs, shares				161,168
Stock-based compensation expense and issuance of RSUs, amount	0	0	0	$ 2	0	76	0	0	78
Issuance of common stock in lieu of cash, shares				242,647
Issuance of common stock in lieu of cash, amount	0	0	0	$ 2	0	19	0	0	21
Issuance of common stock pursuant to warrant exercise, shares				400
Issuance of common stock pursuant to warrant exercise, amount	$ 0	0	0	$ 0	0	0	0	0	0
Conversion of Series A Preferred to Common Stock, shares	(8,762)			43,819,500
Conversion of Series A Preferred to Common Stock, amount	$ 0	$ 0	0	$ 438	0	(438)	0	0	0
Conversion of Series A-1 Preferred to Common Stock, shares		(8,860)		44,300,000
Conversion of Series A-1 Preferred to Common Stock, amount	0	$ 0	0	$ 443	0	(443)	0	0	0
Conversion of Series D Preferred to Common Stock, shares				6,115,324
Conversion of Series D Preferred to Common Stock, amount	0	0	0	$ 59	0	630	0	(2)	687
Foreign currency translation adjustment	0	0	0	$ 0	0	0	54	0	54
Dividends on Series A preferred stock, shares				1,050,826
Dividends on Series A preferred stock, amount				$ 11	0	81	0	(92)	0
Dividends on Series A-1 preferred stock, shares				963,266
Dividends on Series A-1 preferred stock, amount				$ 10	0	73	0	(83)	0
Dividends on Series D preferred stock, amount	0	0	0	0	0	(248)	0	0	(248)
Net loss	$ 0	$ 0	$ 0	$ 0	$ 0	0	0	(1,885)	(1,885)
Ending balance, shares at Mar. 31, 2021	6,149	5,922	239,400	276,749,448	(6,704)
Ending balance, amount at Mar. 31, 2021	$ 0	$ 0	$ 2	$ 2,766	$ (64)	$ 191,585	$ (1,935)	$ (215,287)	$ (22,933)

CONDENSED CONSOLIDATED STATEM_3

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Cash flows from operating activities
Net loss	$ (1,885)	$ (3,124)
Adjustments to reconcile net loss to net cash used by operating activities:
Depreciation and amortization	18	18
Loss on disposal of fixed assets	82	0
Stock-based compensation	78	124
Issuance of common stock in exchange for unexercised options	0	62
Issuance of common stock as compensation in lieu of cash	21	0
Change in fair value of derivative liabilities	1,172	197
Loss on extinguishment of derivative liabilities	(335)	0
Change in assets and liabilities
Accounts receivable	84	168
Inventory	(48)	(64)
Other assets	(495)	30
Operating lease right-of-use assets	(10)	(3)
Accounts payable	(33)	662
Deferred revenue	(129)	234
Accrued expense	(123)	102
Pension obligation	(13)	8
Total adjustments	(1,405)	1,144
Net cash used in operating activities	(3,290)	(1,980)
Cash flows from investing activities
Purchase of property and equipment	(53)	0
Net cash used in investing activities	(53)	0
Cash flows from financing activities
Proceeds from issuance of common stock, net	0	622
Proceeds from issuance of related party notes payable	0	350
Net cash provided by financing activities	0	972
Effect of exchange rate changes on cash	54	31
Net decrease in cash and cash equivalents	(3,289)	(977)
Cash and cash equivalents at beginning of period	8,345	1,030
Cash and cash equivalents at end of period	5,056	53
Supplemental disclosure of cash flow information:
Cash paid for interest	0	0
Cash paid for income taxes	0	0
Summary of non-cash investing and financing activities:
Stock dividends on Series A Convertible Redeemable Preferred Stock	92	937
Stock dividends on Series A-1 Convertible Redeemable Preferred Stock	83	250
Stock dividends on Series D Convertible Redeemable Preferred Stock	248	0
Accretion of discount on Series C Convertible Redeemable Preferred Stock	0	175
Accretion of discount on Series D Convertible Redeemable Preferred Stock	1,817	0
Conversion of Series A Convertible Redeemable Preferred Stock into Common Stock	438	0
Conversion of Series A-1 Convertible Redeemable Preferred Stock into Common Stock	443	0
Stock subscription receivable	$ 0	$ 765

DESCRIPTION OF BUSINESS AND OPE

DESCRIPTION OF BUSINESS AND OPERATIONS	3 Months Ended
	Mar. 31, 2021
Organization, Consolidation and Presentation of Financial Statements [Abstract]
DESCRIPTION OF BUSINESS AND OPERATIONS	Overview As used in this Quarterly Report, “we”, “us”, “our”, “ImageWare”, “ImageWare Systems” or the “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 the products are integrated into the IWS Biometric Engine. The Company's common stock, par value $0.01 per share (the " Common Stock Liquidity, Going Concern and Management’s Plan 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, and payments relating to purchases of property and equipment. 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 At March 31, 2021 and December 31, 2020, we had negative working capital of $20,887,000 and $19,349,000, respectively. Included in our negative working capital as of March 31, 2021 are $22,850,000 of derivative liabilities which are not required to be settled in cash except in the event of the consummation of a Change of Control or at any time after the fourth anniversary of the Series D Preferred issuance, at which time the holders of the Series D Preferred may require the Company to redeem in cash any or all of the holder’s outstanding Series D Preferred at an amount equal to the Series D Liquidation Preference Amount. At March 31, 2021 the Liquidation Preference Amount totaled $22,757,000. Considering the financings consummated in 2020, as well as our projected cash requirements, and assuming we are unable to generate incremental revenue, our available cash will be insufficient to satisfy our cash requirements for the next twelve months from the date of this filing. At May 14, 2021, cash on hand approximated $3,661,000. Based on the Company’s rate of cash consumption in the first quarter of 2021 and the last quarter of 2020, the Company estimates it will need additional capital in the third quarter of 2021 and its prospects for obtaining that capital are uncertain. As a result of the Company’s historical losses and financial condition, there is substantial doubt about the Company’s ability to continue as a going concern. On March 11, 2020, the World Health Organization declared the COVID-19 outbreak a pandemic. The COVID-19 pandemic is affecting the United States and global economies and may affect the Company's operations and those of third parties on which the Company relies. Additionally, as the duration of the COVID-19 pandemic is difficult to assess or predict, the impact of the COVID-19 pandemic on the financial markets may reduce our ability to access capital, which could negatively impact the Company's short-term and long-term liquidity. These effects could have a material impact on the Company's liquidity, capital resources, operations and business and those of the third parties on which the Company relies. To address our working capital requirements, management has begun instituting several cost cutting measures and may seek additional equity and/or debt financing through the issuance of additional debt and/or equity securities. Other than the Lincoln Purchase Agreement, there are currently no financing arrangements to support our projected cash shortfall, including commitments to purchase additional debt and/or equity securities, or other agreements, and no assurances can be given that we will be successful in raising additional debt and/or equity securities, or entering into any other transaction that addresses our ability to continue as a going concern. In view of the matters described in the preceding paragraph, recoverability of a major portion of the recorded asset amounts shown in the accompanying consolidated balance sheet is dependent upon continued operations of the Company, which, in turn, is dependent upon the Company’s ability to continue to raise capital and generate positive cash flows from operations. However, the Company operates in markets that are emerging and highly competitive. There is no assurance that the Company will be able to obtain additional capital, operate at a profit or generate positive cash flows in the future. Therefore, management’s plans do not alleviate the substantial doubt of the Company’s ability to continue as a going concern. The condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts and classifications of liabilities that might be necessary should the Company be unable to continue as a going concern. Recent Developments Charter Amendment Our Certificate of Incorporation as of March 31, 2021 authorizes a total of 1.0 billion shares of Common Stock for issuance. Effective as of January 28, 2021 and February 16, 2021, respectively, our Board of Directors and the Majority Shareholders approved and authorized an amendment to our Certificate of Incorporation to increase the number of authorized shares of Common Stock from 1.0 billion shares to 2.0 billion shares, resulting in a total increase of 1.0 billion authorized shares of Common Stock. The increase in the number of authorized shares of Common Stock became effective upon filing the Certificate of Amendment with the Delaware Division of Corporations on April 21, 2021. Coronavirus (COVID-19) Pandemic On March 11, 2020, the World Health Organization declared the novel strain of coronavirus (“ COVID-19 The Series D Financing On November 12, 2020 and December 23, 2020, the Company consummated private placements of 12,060 shares of its Series D Convertible Preferred Stock, par value $0.01 per share (the " Series D Preferred Series D Financing Bridge Notes Conversion Purchase Agreement Purchasers Series D Certificate On the fourth anniversary of the Issuance Date (as defined in the Series D Certificate), or in the event of the consummation of a Change of Control (as defined in the Series D Certificate), if any shares of Series D Preferred are outstanding, then each holder of Series D Preferred shall have the right (the “ Holder Redemption Right Holder Redemption Price In connection with the sale of the Series D Preferred, we granted certain registration rights to the Investors with respect to the Conversion Shares and Dividend Shares, pursuant to a Registration Rights Agreement by and among us and the Investors. The registration statement registering the Conversion Shares and Dividend Shares was declared effective by the United States Securities and Exchange Commission (the “ SEC

SIGNIFICANT ACCOUNTING POLICIES

SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION	3 Months Ended
	Mar. 31, 2021
Accounting Policies [Abstract]
SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION	Basis of Presentation The accompanying condensed consolidated balance sheet as of December 31, 2020, which has been derived from audited financial statements, and the unaudited interim condensed consolidated financial statements have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America (“ GAAP Operating results for the three months ended March 31, 2021 are not necessarily indicative of the results that may be expected for the year ending December 31, 2021, or any other future periods. Significant Accounting Policies Principles of Consolidation The condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. 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, LLC, a Nevada limited liability company (formerly Castleworks LLC); Digital Imaging International GmbH, a company formed under German laws; and Image Ware Mexico S de RL de CV, a company formed under Mexican laws. All significant intercompany transactions and balances have been eliminated. Operating Cycle Assets and liabilities related to long-term contracts are included in current assets and current liabilities in the accompanying condensed consolidated balance sheets, although they will be liquidated in the normal course of contract completion which may take more than one operating cycle. Use of Estimates The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, and the reported amounts of revenue and expense during the reporting period. Significant estimates include the evaluation of our ability to continue as a going concern, the allowance for doubtful accounts receivable, assumptions used in the Black-Scholes model to calculate the fair value of share based payments, fair value of financial instruments issued with and affected by the Series D Preferred Financing, assumptions used in the application of revenue recognition policies, and assumptions used in the application of fair value methodologies to calculate the fair value of pension assets and obligations. Actual results could differ from estimates. 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 net realizable value. See Note 4. 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 expense, and deferred revenue, the carrying amounts approximate fair value due to their relatively short maturities. Lease Liabilities and Operating Lease Right-of-Use Assets The Company is a party to certain contractual arrangements for office space which meet the definition of leases under Accounting Standards Codification (“ ASC ASC 842 Revenue Recognition In accordance with ASC 606, revenue is recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. The core principle of the standard is that we should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which we expect to be entitled in exchange for those goods or services. To achieve that core principle, we apply the following five step model: 1. Identify the contract with the customer; 2. Identify the performance obligation in the contract; 3. Determine the transaction price; 4. Allocate the transaction price to the performance obligations in the contract; and 5. Recognize revenue when (or as) each performance obligation is satisfied. At contract inception, we assess the goods and services promised in a contract with a customer and identify as a performance obligation each promise to transfer to the customer either: (i) a good or service (or a bundle of goods or services) that is distinct, or (ii) a series of distinct goods or services that are substantially the same and that have the same pattern of transfer to the customer. We recognize revenue only when we satisfy a performance obligation by transferring a promised good or service to a customer. Determining the timing of the satisfaction of performance obligations as well as the transaction price and the amounts allocated to performance obligations requires judgement. We disclose disaggregation of our customer revenue by classes of similar products and services as follows: ● Software licensing and royalties; ● Sales of computer hardware and identification media; ● Services; and ● Post-contract customer support. Software Licensing and Royalties Software licenses consist of revenue from the sale of software for identity management applications. Our software licenses are functional intellectual property and typically provide customers with the right to use our software in perpetuity as it exists when made available to the customer. We recognize revenue from software licensing at a point in time upon delivery, provided all other revenue recognition criteria are met. Royalties consist of revenue from usage-based arrangements and guaranteed minimum-based arrangements. We recognize revenue for royalty arrangements at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied. Computer Hardware and Identification Media We generate revenue from the sale of computer hardware and identification media. Revenue for these items is recognized upon delivery of these products to the customer, provided all other revenue recognition criteria are met. Services Services revenue is comprised primarily of software customization services, software integration services, system installation services and customer training. Revenue is generally recognized upon completion of services and customer acceptance provided all other revenue recognition criteria are met. Post-Contract Customer Support (“PCS”) Post contract customer support consists of maintenance on software and hardware for our identity management solutions. Arrangements with Multiple Performance Obligations A performance obligation is a promise in a contract to transfer a distinct good or service to the customer. In addition to selling software licenses, hardware and identification media, services and post-contract customer support on a standalone basis, certain contracts include multiple performance obligations. For such arrangements, we allocate revenue to each performance obligation based on our best estimate of the relative standalone selling price. The standalone selling price for a performance obligation is the price at which we would sell a promised good or service separately to a customer. The primary methods used to estimate standalone selling price are as follows: (i) the expected cost-plus margin approach, under which we forecast our expected costs of satisfying a performance obligation and then add an appropriate margin for that distinct good or service, and (ii) the percent discount off of list price approach. Contract Costs We recognize an asset for the incremental costs of obtaining a contract with a customer if we expect the benefit of those costs to be longer than one year. We apply a practical expedient to expense costs as incurred for costs to obtain a contract when the amortization period is one year or less. At March 31, 2021 and December 31, 2020, we had capitalized incremental costs of obtaining a contract with a customer of approximately $65,000 and $[ ], respectively. We recorded no additional contract costs during the three months ended March 31, 2021. Additionally, we recognized approximately $80,000 in revenue during the three months ended March 31, 2021 that was related to contract costs at the beginning of the period. Other Items We do not offer rights of return for our products and services in the normal course of business. Sales tax collected from customers is excluded from revenue. The following table sets forth our disaggregated revenue for the three months ended March 31, 2021 and 2020: Three Months Ended March 31, Net Revenue 2021 2020 (dollars in thousands) Software and royalties $ 39 $ 125 Hardware and consumables 13 14 Services 4 11 Maintenance 677 646 Total revenue $ 733 $ 796 Customer Concentration For the three months ended March 31, 2021, two customers accounted for approximately 45% or $333,000 of our total revenue and had trade receivables at March 31, 2021 of $249,000 of which approximately $171,000 was collected as of the date of this Quarterly Report. For the three months ended March 31, 2020, one customer accounted for approximately 27% or $216,000 of our total revenue and had trade receivables at March 31, 2020 of $0. Recently Issued Accounting Standards From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“ FASB FASB Accounting Series Update (“ASU”) No. 2020-06 Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging— Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity

NET LOSS PER COMMON SHARE

NET LOSS PER COMMON SHARE	3 Months Ended
	Mar. 31, 2021
Basic income and diluted loss per common share - see Note 3:
NET LOSS PER COMMON SHARE	Basic loss per common share is calculated by dividing net loss available to common shareholders for the period by the weighted-average number of common shares outstanding during the period. Diluted loss per common share is calculated by dividing net loss available to common shareholders for the period by the weighted-average number of common shares outstanding during the period, adjusted to include, if dilutive, potential dilutive shares consisting of convertible preferred stock, convertible related party lines of credit, stock options and warrants, calculated using the treasury stock and if-converted methods. For diluted loss per share calculation purposes, the net loss available to common shareholders is adjusted to add back any preferred stock dividends and any interest on convertible debt reflected in the condensed consolidated statement of operations for the respective periods. The table below presents the computation of basic and diluted loss per share: (Amounts in thousands except share and per share amounts) Three Months Ended March 31, 2021 2020 Numerator for basic and diluted loss per share: Net loss $ (1,885 ) $ (3,124 ) Preferred dividends preferred stock discount accretion (2,255 ) (1,374 ) Net loss available to common shareholders $ (4,140 ) $ (4,498 ) Denominator for basic and dilutive loss per share — weighted-average shares outstanding 245,829,914 116,196,197 Basic and diluted loss per share available to common shareholders $ (0.02 ) $ (0.04 ) 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 March 31, 2021 Common Share Equivalents at December 31, 2020 Convertible redeemable preferred stock – Series A 30,743,500 74,555,000 Convertible redeemable preferred stock – Series A-1 29,610,000 73,910,000 Convertible redeemable preferred stock – Series B 46,980 46,029 Convertible redeemable preferred stock – Series D 390,348,199 392,166,023 Stock options 2,574,669 2,585,500 Restricted stock units (RSUs) 618,004 845,106 Warrants 393,589 753,775 Total Potential Dilutive Securities 454,334,941 544,861,433

SELECT BALANCE SHEET DETAILS

SELECT BALANCE SHEET DETAILS	3 Months Ended
	Mar. 31, 2021
Balance Sheet Related Disclosures [Abstract]
SELECT BALANCE SHEET DETAILS	Inventory Inventories of as of March 31, 2021 were comprised of work in process of representing direct labor costs on in-process projects and finished goods of net of reserves for obsolete and slow-moving items of . Inventories of as of December 31, 2020 were comprised of work in process of representing direct labor costs on in-process projects and finished goods of net of reserves for obsolete and slow-moving items of . Appropriate consideration is given to obsolescence, excessive levels, deterioration and other factors in evaluating net realizable value and required reserve levels. Intangible Assets The carrying amounts of the Company’s patent intangible assets were $55,000 and $58,000 as of March 31, 2021 and December 31, 2020, respectively, which includes accumulated amortization of $604,000 and $601,000 as of March 31, 2021 and December 31, 2020, respectively. Amortization expense for patent intangible assets was $3,000 for the three months ended March 31, 2021 and 2020, respectively. Patent intangible assets are being amortized on a straight-line basis over their remaining life of approximately 4.58 years. There was no impairment of the Company’s intangible assets during the three months ended March 31, 2021 and 2020. The estimated intangible amortization expense for the next five fiscal years is as follows: Fiscal Year Ended December 31, Estimated Amortization Expense ($ in thousands) 2021 (nine months) $ 9 2022 12 2023 12 2024 12 2025 10 Thereafter — Total $ 55 Goodwill 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. In December 2018, the Company adopted the provisions of ASU 2017-04, " Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment Other Assets In conjunction with the Lincoln Purchase Agreement, the Company issued to Lincoln Park, in May 2020, 2,500,000 shares of Common Stock as consideration for entering into the Lincoln Purchase Agreement. Pursuant to this issuance, the Company recorded $400,000 as a deferred stock issuance cost. Such deferred stock issuance costs will be recognized as a charge against paid in capital in proportion to securities sold under the Lincoln Purchase Agreement. At March 31, 2021 and December 31, 2020, the Company had approximately $364,000 in deferred stock issuance costs included in the caption “Other assets” in its condensed consolidated balance sheets. During the three months ended March 31, 2021, there were no securities sold by the Company under the Lincoln Park Purchase Agreement. For more information on the Lincoln Purchase Agreement, see our Annual Report on Form 10-K for the fiscal year ended December 31, 2020, as filed with the SEC on April 5, 2021.

LEASES

LEASES	3 Months Ended
	Mar. 31, 2021
Leases [Abstract]
LEASES	The Company is a party to certain contractual arrangements for office space which meet the definition of leases under ASC 842 – Leases. In accordance with ASC 842, the Company has determined that such arrangements are operating leases and accordingly the Company has, as of January 1, 2019, initially recorded operating lease right-of-use assets and related lease liability for the present value of the lease payments over the lease terms using the Company’s estimated weighted-average incremental borrowing rate of approximately 14.5% as the discount rates implicit in the Company’s leases cannot be readily determined. At December 31, 2020, such assets and liabilities aggregated approximately $1,557,000 and $1,718,000, respectively. At March 31, 2021, such assets and liabilities aggregated approximately $1,462,000 and $1,613,000, respectively. The Company determined that it had no arrangements representing finance leases. Our corporate headquarters is located in San Diego, California, where we now occupy approximately 500 square feet of office space at a cost of approximately $2,000 per month. We entered into this facility’s lease in February 2021, with the new lease commencing on March 1, 2021 on a month-to-month basis. In addition to our corporate headquarters, we also occupied the following spaces at March 31, 2021: ● 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, 2021. The Company extended this lease for a 30-day period and is currently evaluating alternative premises which the Company believes are readily available; ● 9,720 square feet in Portland, Oregon, at a cost of approximately $23,000 per month until the expiration of the lease on February 28, 2023; and ● 183 square feet of office space in Mexico City, Mexico, at a cost of approximately $2,000 per month until September 30, 2021. Prior to entering into our current lease agreement in January 2021 and moving our corporate headquarters to a new location, we occupied 8,511 square feet of office space in San Diego, at a cost of approximately $28,000 per month. In January 2021, we entered in a subleasing agreement for our previously occupied corporate headquarters located in San Diego, California. The term of the sublease commenced on April 1, 2021 and expires on April 30, 2025 coterminous with the expiration of the Company’s master lease. Sublease payments due the Company approximate $26,000 per month over the term of the sublease. The above leases contain no residual value guarantees provided by the Company and there are no options to either extend or terminate the leases. For the three months ended March 31, 2021 and 2020, the Company recorded approximately $154,000 in lease expense using the straight-line method. Under the provisions of ASC 842, lease expense is comprised of the total lease payments under the lease plus any initial direct costs incurred less any lease incentives received by the lessor amortized ratably using the straight-line method over the lease term. The weighted-average remaining lease term of the Company’s operating leases as of March 31, 2021 is 2.0 years. Cash payments under operating leases aggregated approximately $166,000 for the three months ended March 31, 2021 and $161,000 for the comparable period in 2020 and are included in operating cash flows. The Company’s lease liability was computed using the present value of future lease payments. The Company has utilized the practical expedient regarding lease and non-lease components and combined such components into a single combined component in the determination of the lease liability. The Company has excluded the lease of its office space in Mexico City, Mexico in the determination of the lease liability as its term is less than 12 months. At March 31, 2021, future minimum undiscounted lease payments are as follows: ($ in thousands) 2021 (nine months) $ 491 2022 653 2023 424 2024 387 2025 128 Thereafter — Total $ 2,083 Short-term leases not included in lease liability (14 ) Present Value effect on future minimum undiscounted lease payments at March 31, 2021 (456 ) Lease liability at March 31, 2021 $ 1,613 Less current portion (435 ) Non-current lease liability at March 31, 2021 $ 1,178

MEZZANINE EQUITY

MEZZANINE EQUITY	3 Months Ended
	Mar. 31, 2021
Equity [Abstract]
MEZZANINE EQUITY	Series C Convertible Redeemable Preferred Stock On September 18, 2020, the Company filed the Series C Certificate with the Secretary of State for the State of Delaware designating 1,000 shares of the Company’s preferred stock, par value $0.01 per shares, as Series C Preferred, each share with a stated value of $10,000 per share. The Company noted that the Series C Preferred instruments were hybrid instruments that contained several embedded features. The Company evaluated the identified embedded features of the Series C Preferred host instrument and determined that certain features met the definition of and contained the characteristics of derivative financial instruments requiring bifurcation at fair value from the host instrument. The Company has bifurcated from the Series C Preferred host instrument the conversion options, redemption option and participating dividend feature in accordance with the guidance in ASC 815. These bifurcated features aggregated approximately $833,000 at issuance and were recorded by the Company as a discount to the Series C. During the three months ended March 31, 2020, the Company recorded $250,000 as accrued Series C Preferred dividends and recorded the accretion of debt issuance costs and derivative liabilities of approximately $175,000. Concurrently with the issuance of Series D Convertible Redeemable Preferred Stock (described below), all holders of Series C exchanged their shares for shares of Series D Preferred. Series D Convertible Redeemable Preferred Stock On November 12, 2020, the Company filed the Series D Certificate with the Secretary of State for the State of Delaware. Pursuant to the Series D Certificate, the Series D Preferred ranks senior to all Common Stock and all other present and future classes or series of capital stock, except for Series B Preferred, and upon liquidation will be entitled to receive the Liquidation Preference Amount (as defined in the Series D Certificate) plus any accrued and unpaid dividends, before the payment or distribution of the Company’s assets or the proceeds thereof is made to the holders of any junior securities. Additionally, dividends on shares of Series D Preferred will be paid prior to any junior securities, and are to be paid at the rate of 4% of the Stated Value (as defined in the Series D Certificate) per share per annum in the form of shares of Series D Preferred. Holders of Series D Preferred shall vote together with holders of Common Stock on an as-converted basis, and not as a separate class, except (i) the holders of Series D Preferred, voting as a separate class, shall be entitled to elect two directors, (ii) the holders of Series D Preferred have the right to vote as a separate class regarding the waiver of certain protective provisions set forth in the Series D Certificate, and (iii) as otherwise required by law. The holders of Series D Preferred may voluntarily convert their shares of Series D Preferred into Common Stock at any time that is at least ninety days following the issuance date, at the conversion price calculated by dividing the Stated Value by the conversion price of $0.0583 per share of Common Stock, subject to adjustments as set forth in Section 5(e) of the Series D Certificate. The shares of Common Stock issuable upon conversion of the Series D Preferred shall be subject to the following registration rights: (i) one demand registration starting three months after the Closing, (ii) two demand registrations starting one year after the Closing, and (iii) unlimited piggy-back and Form S-3 registration rights with reasonable and customary terms. If, on any date that is at least five (5) years following the Issuance Date, (i) the Common Stock is registered pursuant to Section 12(b) or (g) under the Exchange Act; (ii) there are sufficient authorized but unissued shares of Common Stock (which have not otherwise been reserved or committed for issuance) to permit the issuance of all Common Shares issuable upon conversion of all outstanding shares of Series D Preferred; (iii) upon issuance, the Common Shares will be either (A) covered by an effective registration statement under the Securities Act, which is then available for the immediate resale Section 5(d) Mandatory Conversion On the fourth anniversary of the Issuance Date, or in the event of the consummation of a Change of Control, if any shares of Series D Preferred are outstanding, then each holder of Series D Preferred shall have the right (the “ Holder Redemption Right Holder Redemption Price On November 12, 2020 (“ Closing Date Bridge Note Conversion Purchase Agreement Securities Act On the Closing Date, the Company exchanged approximately $661,000 of liabilities of the Company for 661.3 shares of Series D Preferred, and received notice from the holders of a majority of the Series C Preferred (the “ Series C Exchange Notice Series C Exchange On December 31, 2020, the Company issued 142 shares of Series D Preferred Stock as payment of dividends due to the Series D Preferred stockholders. During the three months ended March 31, 2021, the Company issued 248 shares of Series D Preferred Stock as payment of dividends due to the Series D Preferred stockholders. During the three months ended March 31, 2021, certain holders of Series D Preferred converted 354 shares of Series D into 6,115,324 shares of Common Stock which includes 42,283 shares of common stock issued for dividends up to the date of conversion. Guidance for accounting for freestanding financial instruments that contain characteristics of both liabilities and equity are contained in ASC 480, Distinguishing Liabilities From Equity ASR 268 Redeemable Preferred Stocks. Liquidation Preference Amount The Company noted that the Series D Preferred instruments were hybrid instruments that contain several embedded features. In November 2014, the FASB issued ASU 2014-16 to amend ASC 815, “ Derivatives and Hedging ASC 815 The whole instrument approach requires an issuer or investor to consider the economic characteristics and risks of the entire hybrid instrument, including all of its stated and implied substantive terms and features. Under this approach, all stated and implied features, including the embedded feature being evaluated for bifurcation, must be considered. Each term and feature should be weighed based on the relevant facts and circumstances to determine the nature of the host contract. This approach results in a single, consistent determination of the nature of the host contract, which is then used to evaluate each embedded feature for bifurcation. That is, the host contract does not change as each feature is evaluated. The revised guidance further clarifies that the existence or omission of any single feature, including an investor-held, fixed-price, noncontingent redemption option, does not determine the economic characteristics and risks of the host contract. Instead, an entity must base that determination on an evaluation of the entire hybrid instrument, including all substantive terms and features. However, an individual term or feature may be weighed more heavily in the evaluation based on facts and circumstances. An evaluation of all relevant terms and features, including the circumstances surrounding the issuance or acquisition of the equity share, as well as the likelihood that an issuer or investor is expected to exercise any options within the host contract, to determine the nature of the host contract, requires judgement. Using the whole instrument approach, the Company concluded that the host instrument of the Series D Preferred was more akin to debt than equity as the majority of identified features contain more characteristics of debt. The Company evaluated the identified embedded features of the Series D Preferred host instrument and determined that certain features meet the definition of and contained the characteristics of derivative financial instruments requiring bifurcation at fair value from the host instrument. The Company has bifurcated from the Series D Preferred host instrument the conversion options, redemption option and participating dividend feature in accordance with the guidance in ASC 815. These bifurcated features aggregated approximately $26,011,000 at issuance and have been recorded as a discount to the Series D. During the three months ended March 31, 2021, the Company recorded the accretion of debt issuance costs and derivative liabilities aggregating approximately $1,817,000 using the effective interest rate method as a deemed dividend. The following table summarizes the share activity of Series D Preferred for the three months ended March 31, 2021: Series D Convertible Redeemable Preferred Total shares of Series D Preferred Stock - December 31, 2020 22,863 Conversion of Series D Preferred into Common Stock (354 ) Issuance of Series D Preferred as payment of dividends due 248 Total shares of Series D Preferred Stock - March 31, 2021 22,757 The carrying value of the Company’s Series D Preferred was approximately $3,391,000 and $1,572,000 net of discount of approximately $19,366,000 and $21,291,000 as of March 31, 2021 and December 31, 2020, respectively.

DERIVATIVE LIABILITIES

DERIVATIVE LIABILITIES	3 Months Ended
	Mar. 31, 2021
Derivative Liability [Abstract]
DERIVATIVE LIABILITIES	The Company accounts for its derivative instruments under the provisions of ASC 815, “ Derivatives and Hedging The Company determined that the conversion option, redemption option and participating dividend feature contained in the Series D Preferred host instrument required bifurcation. The Company valued the bifurcatable features at fair value. Such liabilities aggregated approximately $22,850,000 and $24,128,000 at March 31, 2021 and December 31, 2020, respectively, and are classified as current liabilities on the Company’s condensed consolidated balance sheets under the caption “Derivative liabilities”. The Company will revalue these features at each balance sheet date and record any change in fair value in the determination of period net income or loss. The change in fair value of such amounts are recorded in the caption “Change in fair value of derivative liabilities” in the Company’s condensed consolidated statements of operations. For the three months ended March 31, 2021, the Company recorded a decrease to its derivative liabilities using fair value methodologies of approximately $1,172,000 related to Series D embedded derivatives. In conjunction with the conversion of 354 shares of the Company’s Series D Preferred into Common Stock during the three months ended March 31, 2021, the Company recognized a loss on the extinguishment of derivative liabilities of approximately $335,000. The Company determined that the conversion option, redemption option and participating dividend feature contained in the Series C Preferred host instrument required bifurcation. The Company valued these bifurcatable features at fair value and such liabilities aggregated approximately $172,000 at March 31, 2020. There is no Series C Preferred outstanding at March 31, 2021. The change in fair value of such amounts are recorded in the caption “Change in fair value of derivative liabilities” in the Company’s condensed consolidated statements of operations. For the three months ended March 31, 2020, the Company recorded a decrease to these derivative liabilities using fair value methodologies of approximately $197,000 related to Series C embedded derivatives.

NOTES PAYABLE

NOTES PAYABLE	3 Months Ended
	Mar. 31, 2021
Notes Payable [Abstract]
NOTES PAYABLE	On March 27, 2020, President Trump signed into law the “Coronavirus Aid, Relief and Economic Security Act (“ CARES Act PPP Loan Comerica PPP SBA

EQUITY

EQUITY	3 Months Ended
	Mar. 31, 2021
Equity [Abstract]
EQUITY	The Company’s Certificate of Incorporation, as amended, authorizes 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. On June 9, 2020, the Company amended its Certificate of Incorporation to increase the number of shares of the Company’s Common Stock and the number of shares of the Company’s Preferred Stock authorized thereunder from an aggregate of 179 million to 350 million, consisting of 345 million shares of Common Stock and 5 million shares of Preferred Stock. On September 28, 2020, the Company received executed written consents from the requisite holders of the Company's voting securities, voting on an as-converted basis, approving an increase in the authorized number of shares of Common Stock from 345 million shares to 1.0 billion shares, with no change to the number of authorized shares of Preferred Stock, which action became effective October 13, 2020. On February 16, 2021, the Company received executed written consents from the requisite holders of the Company's voting securities, voting on an as-converted basis, approving an increase in the authorized number of shares of Common Stock from 1.0 billion shares to 2.0 billion shares, with no change to the number of authorized shares of Preferred Stock, which action became effective April 21, 2021. Series A Convertible Preferred Stock On September 15, 2017, the Company filed the Certificate of Designations of the Series A Preferred with the Delaware Secretary of State (the “ Series A Certificate During July 2020, the Company entered into the Series A Exchange Agreement with the Series A Holders, pursuant to which such Series A Holders exchanged 18,828 shares of Series A Preferred for an equivalent number of Series A-1 Preferred in consideration for their waiver of approximately $1,849,000 in dividends payable. On September 28, 2020, the Company received executed written consents from (i) the requisite holders of the Company’s voting securities, voting on an as-converted basis, and (ii) the requisite holders of Series A Preferred, voting as a separate class, approving the Amended Series A Certificate, which, among other things, provides for (i) the automatic conversion of all Series A Preferred into Common Stock at a rate of 10% per month following the Closing of the Series D Financing, with the conversion price for such conversion reduced from $1.15 per share of Common Stock, to $0.20 per share of Common Stock, and (ii) a reduction of the dividend rate from 8% of the stated Series A Liquidation Preference Amount if paid in cash and 10% of the stated Series A Liquidation Preference Amount if paid in Common Stock, to 4% of the Series A Liquidation Preference Amount, with the dividends being paid only in shares of Common Stock. The Company had 6,149 and 14,911 shares of Series A Preferred outstanding as of March 31, 2021 and December 31, 2020, respectively. At March 31, 2021 and December 31, 2020, the Company had cumulative undeclared dividends of $0. During the three months ended March 31, 2021, t he Company issued the holders of Series A Preferred 1,050,826 shares of Common Stock as payment of dividends due. During the , the Company issued 43,819,500 shares of Common Stock upon the conversion of 8,762 shares of Series A Preferred Stock. During the three months ended March 31, 2020, the Company recorded accrued unpaid dividends of approximately $937,000 on its Series A Preferred Stock. There were no conversions of Series A Preferred into Common Stock during the three months ended March 31, 2020. Series A-1 Convertible Preferred Stock In July 2020, the Company filed the Series A-1 Certificate with the Secretary of State for the State of Delaware – Division of Corporations, designating 31,021 shares of the Company’s Preferred Stock as Series A-1 Preferred. Shares of Series A-1 Preferred accrue cumulative dividends and are payable quarterly beginning March 31, 2021 at a rate of 8% per annum if paid in cash, or 10% per annum if paid by the issuance of shares of the Company’s Common Stock. Shares of Series A-1 Preferred rank senior to the Company’s Common Stock, pari-passu to the Company's Series A Preferred, and are subordinate and rank junior to Series B Preferred and Series D Preferred. Each share of Series A-1 Preferred has a liquidation preference equal to the greater of (i) $1,000 per share plus all accrued and unpaid dividends, or (ii) such amount per share as would have been payable had each such share been converted into Common Stock immediately prior to such liquidation, dissolution or winding up (the amount payable pursuant to the foregoing is referred to herein as the “Series A-1 Liquidation Preference Amount”) before any payment shall be made or any assets distributed to the holders of the Common Stock or any other classes and series of equity securities of the Company which by their terms rank junior to the Series A-1 Preferred. Each share of Series A-1 Preferred was convertible into that number of shares of the Company’s Common Stock (“ Series A-1 Conversion Shares During July 2020, the Company entered into an Exchange Agreement, Consent and Waiver (“ Exchange Agreement Series A Holders On September 28, 2020, the Company's holders of Common Stock and Preferred Stock voted to revise the Series A-1 Certificate by i) amending and restating the Series A-1 Certificate to, without limitation, provide for (i) the voluntary conversion of all outstanding shares of the Company's Series A-1 Preferred into shares of the Company’s Common Stock at a reduced conversion price of $0.20 per share of Common Stock, and (ii) the automatic conversion of all issued and outstanding shares of Series A Preferred and Series A-1 Preferred into shares of Common Stock at a rate of 10% per month, beginning on November 1, 2020, and ending on August 1, 2021, at the reduced conversion price of $0.20 per share of Common Stock; The Company had 5,922 and 14,782 shares of Series A-1 Preferred outstanding as of March 31, 2021 and December 31, 2020, respectively. During the three months ended March 31, 2021, the Company issued the holders of Series A-1 Preferred 963,266 shares of Common Stock as payment of dividends due. he Company issued 44,300,000 shares of Common Stock upon the conversion of 8,860 shares of Series A-1 Preferred. Series B Convertible Redeemable Preferred Stock The Company had 239,400 shares of Series B Convertible Preferred Stock (“ Series B Preferred Common Stock As of March 31, 2021, we had 276,749,448 and 276,742,744 shares of Common Stock issued and outstanding, respectively. Our authorized but unissued shares of Common Stock are available for issuance without action by our shareholders. The following table summarizes outstanding Common Stock activity during the three months ended March 31, 2021: Common Stock Shares outstanding at December 31, 2020 180,089,613 Shares issued pursuant to payment of stock dividend on Series A Preferred 1,050,826 Shares issued pursuant to payment of stock dividend on Series A-1 Preferred 963,266 Shares issued pursuant to Series D conversion to Common Stock 6,115,324 Shares issued pursuant to Series A conversion to Common Stock 43,819,500 Shares issued pursuant to Series A-1 conversion to Common Stock 44,300,000 Shares issued pursuant to warrant exercises 400 Shares issued as compensation in lieu of cash 242,647 Shares issued pursuant to RSU vesting 161,168 Shares outstanding at March 31, 2021 276,742,744 Warrants As of March 31, 2021, warrants to purchase 393,589 shares of Common Stock at prices ranging from $0.01 to $0.80 were outstanding. At March 31, 2021, no warrants are exercisable and become exercisable only upon the attainment of specified events. All warrants expire on September 19, 2028 with the exception of 150,000 warrants whose expiration date is 3 years from initial vesting, such vesting based on certain events. The intrinsic value of warrants outstanding at March 31, 2021 was $0. The Company has excluded from this computation any intrinsic value of the 243,589 warrants issued to the Series A Preferred stockholders due to the conversion exercise contingency associated with these warrants. The following table summarizes warrant activity for the following periods: Warrants Weighted-Average Exercise Price Balance at December 31, 2020 753,775 $ 0.17 Granted — — Expired / Canceled (359,786 ) 0.01 Exercised (400 ) 0.01 Balance at March 31, 2021 393,589 0.31 There were no warrants issued during the three months ended March 31, 2021. During the three months ended March 31, 2021, 359,786 warrants were cancelled pursuant to the mandatory conversion of Series A Preferred Stock into Common Stock and 400 warrants were exercised at $0.01 per warrant.

STOCK-BASED COMPENSATION

STOCK-BASED COMPENSATION	3 Months Ended
	Mar. 31, 2021
Compensation Related Costs [Abstract]
STOCK-BASED COMPENSATION	Stock Options As of March 31, 2021, the Company had one active stock-based compensation plan: the 2020 Omnibus Stock Incentive Plan (the “ 2020 Plan 2020 Omnibus Stock Incentive Plan On June 9, 2020, pursuant to authorization obtained from the Company’s stockholders, the Company adopted the 2020 Omnibus Stock Incentive Plan (the “ 2020 Plan Pursuant to the adoption of the 2020 Plan, such plan will supersede and replace the Company’s 1999 Plan and no new awards will be granted under the 1999 Plan thereafter. Any awards outstanding under the 1999 Plan on the date of approval of the 2020 Plan will remain subject to the 1999 Plan. Upon approval of our 2020 Plan, all shares of Common Stock remaining authorized and available for issuance under the 1999 Plan and any shares subject to outstanding awards under the 1999 Plan that subsequently expire, terminate, or are surrendered or forfeited for any reason without issuance of shares will automatically become available for issuance under our 2020 Plan. As of the March 31, 2012, there were 26,511,811 shares available for issuance under the 2020 Plan. The Company amended the 2020 Plan to increase the number of shares of Common Stock available for issuance to 145.0 million shares. Such amendment became effective on April 21, 2021. 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. 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 Topic 14. There were no options granted during the three months ended March 31, 2021 and 2020. 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 adopted the provisions of ASU 2016-09 and will continue to use an estimated annualized forfeiture rate of approximately 0% for corporate officers, 4.1% for members of the Board of Directors and 15.0% for all other employees. The Company is currently in the process of reviewing the expected forfeiture rate to determine if that percent is still reasonable based on recent historical experience. 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, 2020 2,585,500 $ 0.19 9.2 Granted — Expired/Cancelled (10,831 ) $ 0.78 Exercised — Balance at March 31, 2021 2,574,669 $ 0.18 8.9 There were no issuances of options to purchase Common Stock during the three months ended March 31, 2021 During the three months ended March 31, 2021, an aggregate of 10,381 options expired unexercised. At March 31, 2021, a total of 2,574,669 options were outstanding, of which 110,091 were exercisable at a weighted average price of $1.09 per share with a remaining weighted average contractual term of 6.06 years. The Company expects that, in addition to the 110,091 options that were exercisable as of March 31, 2021, another 2,464,578 will ultimately vest resulting in a combined total of 2,574,669. Those 2,574,669 shares have a weighted average exercise price of $0.18 and an aggregate intrinsic value of approximately $0 as of March 31, 2021. Stock-based compensation expense related to equity options was approximately $32,000 for the . The intrinsic value of options exercisable and outstanding at March 31, 2020 was $0. T he aggregate intrinsic value for all options outstanding as of March 31, 2020 was $0. The Company periodically issues Restricted Stock Units (“RSUs”) to certain employees which vest over time. When vested, each RSU represents the right to that number of shares of Common Stock equal to the number of RSUs granted. The grant date fair value for RSU’s is based upon the market price of the Company's Common Stock on the date of the grant. The fair value is then amortized to compensation expense over the requisite service period or vesting term. A summary of the activity related to RSUs is as follows: RSU’s Weighted-Average Issuance Price Balance at December 31, 2020 845,106 $ 0.14 Granted — $ — Expired/Cancelled (150,935 ) $ 0.13 Vested (76,167 ) $ 0.13 Balance at March 31, 2021 618,004 $ 0.14 There were no RSUs granted to employees during t he During the , 76,167 RSUs vested with the remainder of outstanding RSUs vesting at various times through September 29, 2022. During the three months ended March 31, 2021 and 2020, the Company recorded compensation expense of approximately $15,000 and $0 related to RSUs. During the three months ended March 31, 2021 and 2020, the Company issued 161,168 and 0 shares of its Common Stock pursuant to the vesting of RSUs. As of March 31, 2021, the Company has not issued the Common Stock shares pursuant to the vesting of the 808,859 RSUs. Stock-based Compensation Stock-based compensation related to equity options and RSUs has been classified as follows in the accompanying consolidated statements of operations (in thousands): Three Months Ended March 31, 2021 2020 Cost of revenue $ 1 $ 2 General and administrative 37 67 Sales and marketing 21 29 Research and development 19 26 Total $ 78 $ 124

FAIR VALUE ACCOUNTING

FAIR VALUE ACCOUNTING	3 Months Ended
	Mar. 31, 2021
Fair Value Disclosures [Abstract]
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 March 31, 2021 ($ in thousands) Total Level 1 Level 2 Level 3 Assets: Pension assets $ 1,800 $ — $ — $ 1,800 Totals $ 1,800 $ — $ — $ 1,800 Liabilities: Derivative liabilities $ 22,850 $ — $ — $ 22,850 Totals $ 22,850 $ — $ — $ 22,850 Fair Value at December 31, 2020 ($ in thousands) Total Level 1 Level 2 Level 3 Assets: Pension assets $ 1,881 $ — $ — $ 1,881 Totals $ 1,881 $ — $ — $ 1,881 Liabilities: Derivative liabilities $ 24,128 $ — $ — $ 24,128 Totals $ 24,128 $ — $ — $ 24,128 The Company’s German pension plan is funded by insurance contract policies whereby the insurance company guarantees a fixed minimum return. The Company has determined that the pension assets are appropriately classified within Level 3 of the fair value hierarchy because they are valued using actuarial valuation methodologies which approximate cash surrender value that cannot be corroborated with observable market data. All plan assets are managed in a policyholder pool in Germany by outside investment managers. The investment manager is responsible for the investment strategy of the insurance premiums that Company submits and does not hold individual assets per participating employer. The German Federal Financial Supervisory oversees and supervises the insurance contracts. As of March 31, 2021, the Company had embedded features contained in the Series D Preferred host instrument that qualified for derivative liability treatment. The recorded fair market value of these features was approximately $22,850,000 and $24,128,000 at March 31, 2021 and December 31, 2020, respectively, and are classified as a current liability in the condensed consolidated balance sheets as of March 31, 2021 and December 31, 2020. The fair value of the Company’s derivative liabilities is classified within Level 3 of the fair value hierarchy because they are valued using pricing models that incorporate management assumptions that cannot be corroborated with observable market data. The Company uses Monte-Carlo simulations in the determination of the fair value of derivative liabilities. Some of the aforementioned fair value methodologies are affected by the Company’s stock price as well as assumptions regarding the expected stock price volatility over the term of the derivative liabilities in addition to the probability of future events. Significant assumptions used in the fair value methodologies during the three months ended March 31, 2021 are a risk-free rate of 0.56%, equity volatility of 103.6%, effective life of 3.75 years and a preferred stock dividend rate of 4%. These assumptions incorporate management’s estimate of the probability of future financings (Series D Financing) and the timing of potential change of control events. The primary assumptions impacted by Series D Financing were the effective life of 3.75 years and equity volatility. The Company monitors the activity within each level and any changes with the underlying valuation techniques or inputs utilized to recognize if any transfers between levels are necessary. That determination is made, in part, by working with outside valuation experts for Level 3 instruments and monitoring market related data and other valuation inputs for Level 1 and Level 2 instruments. The reconciliations of Level 3 pension assets measured at fair value during the three months ended March 31, 2021 and 2020 are presented below: ($ in thousands) Three months ended March 31, 2021 Three months ended March 31, 2020 Pension assets: Fair value at beginning of period $ 1,881 $ 1,713 Return on plan assets 15 14 Company contributions and benefits paid, net 2 (10 ) Effect of rate changes (98 ) (42 ) Fair value at end of period $ 1,800 $ 1,675 The reconciliations of Level 3 derivative liabilities measured at fair value for Series D Preferred Stock during the three months ended March 31, 2021 and for Series C Preferred Stock during the three months ended March 31, 2020 are presented below: ($ in thousands) Three months ended March 31, 2021 Three months ended March 31, 2020 Derivative liabilities Fair value at beginning of period $ 24,128 $ 369 Derivative liability from issuance of Preferred Series D 248 — Decrease in derivative liability from conversions of Preferred Series D (354 ) — Change in fair value included in earnings (1,172 ) (197 ) Fair value at end of period $ 22,850 $ 172

RELATED PARTY TRANSACTIONS

RELATED PARTY TRANSACTIONS	3 Months Ended
	Mar. 31, 2021
Related Party Transactions [Abstract]
RELATED PARTY TRANSACTIONS	Professional Services Agreement During the year ended December 31, 2020, the Company entered into professional services agreement with a firm affiliated with a member of the Company’s Board at the time the parties entered into the agreement. The Company made no payments pursuant to this agreement during the twelve months ended December 31, 2020 and made payment of approximately $34,000 during three months ended March 31, 2021. The Company has the right to terminate the agreement on thirty days written notice at any time.

CONTINGENT LIABILITIES

CONTINGENT LIABILITIES	3 Months Ended
	Mar. 31, 2021
Commitments and Contingencies Disclosure [Abstract]
CONTINGENT LIABILITIES	Employment Agreements The Company has an employment agreement with its Chief Executive Officer, which expires on March 2, 2022. The Company may terminate the agreement with or without cause. Subject to the conditions and other limitations set forth in the employment agreement, the 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 agreement) 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 their employment without cause or in the event of an involuntary termination: (i) severance payments equal to the lesser of twelve months’ base salary or the remaining period prior to the expiration of the Employment Period; (ii) continuation of fringe benefits and medical insurance for a period of twelve months. 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. 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.

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS	3 Months Ended
	Mar. 31, 2021
Subsequent Events [Abstract]
SUBSEQUENT EVENTS	Issuance of Common Stock due to Conversions and Vesting of Restricted Stock Units (“RSUs”) During the period April 1, 2021 through May 20, 2021, the Company issued an aggregate 26,550,242 shares of its Common Stock including 25,950,904 shares of Common Stock for conversions of its Preferred Stocks and 599,338 pursuant to RSU vestings. Amendment to Certificate of Incorporation Our Certificate of Incorporation as of March 31, 2021 authorizes a total of 1.0 billion shares of Common Stock for issuance. Effective as of January 28, 2021 and February 16, 2021, respectively, our Board of Directors and the Majority Shareholders approved and authorized an amendment to our Certificate of Incorporation to increase the number of authorized shares of Common Stock from 1.0 billion shares to 2.0 billion shares, resulting in a total increase of 1.0 billion authorized shares of Common Stock. Contemporaneous with this action, the Company amended the 2020 Omnibus Incentive Plan to increase the number of shares of Common Stock available for issuance under the 2020 Plan to 145.0 million shares. These actions became effective on April 21, 2021. Creation of Advisory Board and Issuance of Warrants In April 2021, the Company created an advisory board to the Board of Directors comprised of 3 individuals. As compensation for advisory board services, the Company granted each member warrants to purchase 200,000 shares of the Company’s Common Stock. Such warrants have an exercise price of $0.07 per share and will vest over a one-year period beginning on April 19, 2021. Issuance of Options In April 2021, the Company granted an aggregate of 54,050,000 options to purchase shares of Common Stock including 50,700,000 to certain officers and employees and 3,350,000 to certain members of the Company’s Board of Directors. Such options have an exercise price of $0.067 and vest at various times through April 16, 2023. As a condition of issuance of these options, certain employees surrendered an aggregate of 6,520,000 previously issued or contractually promised equity awards and certain members of the Company’s Board of Directors surrendered the right to an initial grant of options to purchase that number of shares of Common Stock equal to $120,000 divided by the fair market value of the Company’s Common Stock as determined on the date of grant as reported on the OTC Markets, and further surrendered an option to purchase that number of shares of Common Stock equal to $60,000 divided by the fair market value of the Company’s Common Stock as determined on the date of grant beginning on the first anniversary and on each annual anniversary thereafter. Entry into Second Lincoln Park Purchase Agreement On May 17, 2021 (the " Execution Date Purchase Agreement Registration Rights Agreement Lincoln Park Under the terms and subject to the conditions of the Purchase Agreement, the Company has the right, but not the obligation, to sell to Lincoln Park, and Lincoln Park is obligated to purchase up to $15,100,000 worth of shares of Common Stock. Such sales of Common Stock by the Company, if any, will be subject to certain limitations, and may occur from time to time, at the Company's sole discretion, over the 24-month period commencing on the date that a registration statement covering the resale of shares of Common Stock that have been and may be issued under the Purchase Agreement, which the Company agreed to file with the Securities and Exchange Commission (the " SEC Commencement Date Under the Purchase Agreement, on any business day over the term of the Purchase Agreement, the Company has the right, in its sole discretion, to present Lincoln Park with a purchase notice (each, a " Purchase Notice Regular Purchase Purchase Price ● the lowest sale price of the Company's Common Stock on the purchase date; and ● the average of the three lowest closing sale prices for the Company's Common Stock during the fifteen consecutive business days ending on the business day immediately preceding the purchase date of such shares. In addition, on any date on which the Company submits a Purchase Notice to Lincoln Park, the Company also has the right, in its sole discretion, to present Lincoln with an accelerated purchase notice (each, an " Accelerated Purchase Notice Accelerated Purchase Accelerated Purchase Measurement Period ● 95% of the volume weighted average price of the Company's Common Stock during the applicable Accelerated Purchase Measurement Period on the applicable Accelerated Purchase Date; and ● the closing sale price of the Company's Common Stock on the applicable Accelerated Purchase Date. The Company may also direct Lincoln Park on any business day on which an Accelerated Purchase has been completed and all of the shares to be purchased thereunder have been properly delivered to Lincoln Park in accordance with the Purchase Agreement, to purchase an amount of stock (the " Additional Accelerated Purchase Additional Accelerated Purchase Measurement Period ● 95% of the volume weighted average price of the Company's Common Stock during the applicable Additional Accelerated Purchase Measurement Period on the applicable Additional Accelerated Purchase date; and ● the closing sale price of the Company's Common Stock on the applicable Additional Accelerated Purchase date. The aggregate number of shares that the Company can sell to Lincoln Park under the Purchase Agreement may in no case exceed that number which, together with Lincoln Park’s then current holdings of Common Stock, exceed 4.99% of the Common Stock outstanding immediately prior to the delivery of the Purchase Notice. Lincoln Park has no right to require the Company to sell any shares of Common Stock to Lincoln Park, but Lincoln Park is obligated to make purchases as the Company directs, subject to certain conditions. There are no upper limits on the price per share that Lincoln Park must pay for shares of Common Stock. The Company has agreed with Lincoln Park that it will not enter into any "variable rate" transactions with any third party for a period defined in the Purchase Agreement. The Company has agreed to issue to Lincoln Park 1,000,000 shares of Common Stock as commitment shares in consideration for entering into the Purchase Agreement on the Execution Date. The Purchase Agreement and the Registration Rights Agreement contain customary representations, warranties, agreements and conditions to completing future sale transactions, indemnification rights and obligations of the parties. The Company has the right to terminate the Purchase Agreement at any time, at no cost or penalty, subject to the survival of certain provisions set forth in the Purchase Agreement. During any "event of default" under the Purchase Agreement, all of which are outside of Lincoln Park's control, Lincoln Park does not have the right to terminate the Purchase Agreement; however, the Company may not initiate any regular or other purchase of shares by Lincoln Park, until such event of default is cured. In addition, in the event of bankruptcy proceedings by or against the Company, the Purchase Agreement will automatically terminate. Actual sales of shares of Common Stock to Lincoln Park under the Purchase Agreement will depend on a variety of factors to be determined by the Company from time to time, including, among others, market conditions, the trading price of the Common Stock and determinations by the Company as to the appropriate sources of funding for the Company and its operations. Lincoln Park has no right to require any sales by the Company but is obligated to make purchases from the Company as it directs in accordance with the Purchase Agreement. Lincoln Park has covenanted not to cause or engage in any manner whatsoever, any direct or indirect short selling or hedging of the Company's shares. In connection with the execution of the Purchase Agreement, the Company has agreed to sell, and Lincoln Park has agreed to purchase, 1.0 million shares of Common Stock for a purchase price of $100,000 (“ Original Purchase Due to the terms of the Purchase Agreement as described above, management is not currently expecting the related proceeds from this agreement to be sufficient to sustain operations for an extended period of time. The May 17, 2021 Purchase Agreement supercedes and terminates the previous agreement between the Company and Lincoln Park entered into on June 11, 2020.

SIGNIFICANT ACCOUNTING POLICI_2

SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION (Policies)	3 Months Ended
	Mar. 31, 2021
Accounting Policies [Abstract]
Basis of Presentation	The accompanying condensed consolidated balance sheet as of December 31, 2020, which has been derived from audited financial statements, and the unaudited interim condensed consolidated financial statements have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America (“ GAAP Operating results for the three months ended March 31, 2021 are not necessarily indicative of the results that may be expected for the year ending December 31, 2021, or any other future periods.
Principles of Consolidation	The condensed 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, LLC, a Nevada limited liability company (formerly Castleworks LLC); Digital Imaging International GmbH, a company formed under German laws; and Image Ware Mexico S de RL de CV, a company formed under Mexican laws. All significant intercompany transactions and balances have been eliminated.
Operating Cycle	Assets and liabilities related to long-term contracts are included in current assets and current liabilities in the accompanying condensed consolidated balance sheets, although they will be liquidated in the normal course of contract completion which may take more than one operating cycle.
Use of Estimates	The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, and the reported amounts of revenue and expense during the reporting period. Significant estimates include the evaluation of our ability to continue as a going concern, the allowance for doubtful accounts receivable, assumptions used in the Black-Scholes model to calculate the fair value of share based payments, fair value of financial instruments issued with and affected by the Series D Preferred Financing, assumptions used in the application of revenue recognition policies, and assumptions used in the application of fair value methodologies to calculate the fair value of pension assets and obligations. Actual results could differ from estimates.
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 net realizable value. See Note 4.
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 expense, and deferred revenue, the carrying amounts approximate fair value due to their relatively short maturities.
Lease Liabilities and Operating Lease Right-of-Use Assets	The Company is a party to certain contractual arrangements for office space which meet the definition of leases under Accounting Standards Codification (“ ASC ASC 842
Revenue Recognition	In accordance with ASC 606, revenue is recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. The core principle of the standard is that we should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which we expect to be entitled in exchange for those goods or services. To achieve that core principle, we apply the following five step model: 1. Identify the contract with the customer; 2. Identify the performance obligation in the contract; 3. Determine the transaction price; 4. Allocate the transaction price to the performance obligations in the contract; and 5. Recognize revenue when (or as) each performance obligation is satisfied. At contract inception, we assess the goods and services promised in a contract with a customer and identify as a performance obligation each promise to transfer to the customer either: (i) a good or service (or a bundle of goods or services) that is distinct, or (ii) a series of distinct goods or services that are substantially the same and that have the same pattern of transfer to the customer. We recognize revenue only when we satisfy a performance obligation by transferring a promised good or service to a customer. Determining the timing of the satisfaction of performance obligations as well as the transaction price and the amounts allocated to performance obligations requires judgement. We disclose disaggregation of our customer revenue by classes of similar products and services as follows: ● Software licensing and royalties; ● Sales of computer hardware and identification media; ● Services; and ● Post-contract customer support. Software Licensing and Royalties Software licenses consist of revenue from the sale of software for identity management applications. Our software licenses are functional intellectual property and typically provide customers with the right to use our software in perpetuity as it exists when made available to the customer. We recognize revenue from software licensing at a point in time upon delivery, provided all other revenue recognition criteria are met. Royalties consist of revenue from usage-based arrangements and guaranteed minimum-based arrangements. We recognize revenue for royalty arrangements at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied. Computer Hardware and Identification Media We generate revenue from the sale of computer hardware and identification media. Revenue for these items is recognized upon delivery of these products to the customer, provided all other revenue recognition criteria are met. Services Services revenue is comprised primarily of software customization services, software integration services, system installation services and customer training. Revenue is generally recognized upon completion of services and customer acceptance provided all other revenue recognition criteria are met. Post-Contract Customer Support (“PCS”) Post contract customer support consists of maintenance on software and hardware for our identity management solutions. Arrangements with Multiple Performance Obligations A performance obligation is a promise in a contract to transfer a distinct good or service to the customer. In addition to selling software licenses, hardware and identification media, services and post-contract customer support on a standalone basis, certain contracts include multiple performance obligations. For such arrangements, we allocate revenue to each performance obligation based on our best estimate of the relative standalone selling price. The standalone selling price for a performance obligation is the price at which we would sell a promised good or service separately to a customer. The primary methods used to estimate standalone selling price are as follows: (i) the expected cost-plus margin approach, under which we forecast our expected costs of satisfying a performance obligation and then add an appropriate margin for that distinct good or service, and (ii) the percent discount off of list price approach. Contract Costs We recognize an asset for the incremental costs of obtaining a contract with a customer if we expect the benefit of those costs to be longer than one year. We apply a practical expedient to expense costs as incurred for costs to obtain a contract when the amortization period is one year or less. At March 31, 2021 and December 31, 2020, we had capitalized incremental costs of obtaining a contract with a customer of approximately $65,000. We recorded no additional contract costs during the three months ended March 31, 2021. Additionally, we recognized approximately $80,000 in revenue during the three months ended March 31, 2021 that was related to contract costs at the beginning of the period. Other Items We do not offer rights of return for our products and services in the normal course of business. Sales tax collected from customers is excluded from revenue. The following table sets forth our disaggregated revenue for the three months ended March 31, 2021 and 2020: Three Months Ended March 31, Net Revenue 2021 2020 (dollars in thousands) Software and royalties $ 39 $ 125 Hardware and consumables 13 14 Services 4 11 Maintenance 677 646 Total revenue $ 733 $ 796
Customer Concentration	For the three months ended March 31, 2021, two customers accounted for approximately 45% or $333,000 of our total revenue and had trade receivables at March 31, 2021 of $249,000 of which approximately $171,000 was collected as of the date of this Quarterly Report. For the three months ended March 31, 2020, one customer accounted for approximately 27% or $216,000 of our total revenue and had trade receivables at March 31, 2020 of $0.
Recently Issued Accounting Standards	From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“ FASB FASB Accounting Series Update (“ASU”) No. 2020-06 Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging— Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity

SIGNIFICANT ACCOUNTING POLICI_3

SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION (Tables)	3 Months Ended
	Mar. 31, 2021
Accounting Policies [Abstract]
Disaggregation of revenue	Three Months Ended March 31, Net Revenue 2021 2020 (dollars in thousands) Software and royalties $ 39 $ 125 Hardware and consumables 13 14 Services 4 11 Maintenance 677 646 Total revenue $ 733 $ 796

NET LOSS PER COMMON SHARE (Tabl

NET LOSS PER COMMON SHARE (Tables)	3 Months Ended
	Mar. 31, 2021
Basic income and diluted loss per common share - see Note 3:
Computation of basic and diluted loss per share	(Amounts in thousands except share and per share amounts) Three Months Ended March 31, 2021 2020 Numerator for basic and diluted loss per share: Net loss $ (1,885 ) $ (3,124 ) Preferred dividends preferred stock discount accretion (2,255 ) (1,374 ) Net loss available to common shareholders $ (4,140 ) $ (4,498 ) Denominator for basic and dilutive loss per share — weighted-average shares outstanding 245,829,914 116,196,197 Basic and diluted loss per share available to common shareholders $ (0.02 ) $ (0.04 )
Antidilutive securities excluded from earnings per share	Potential Dilutive Securities: Common Share Equivalents at March 31, 2021 Common Share Equivalents at December 31, 2020 Convertible redeemable preferred stock – Series A 30,743,500 74,555,000 Convertible redeemable preferred stock – Series A-1 29,610,000 73,910,000 Convertible redeemable preferred stock – Series B 46,980 46,029 Convertible redeemable preferred stock – Series D 390,348,199 392,166,023 Stock options 2,574,669 2,585,500 Restricted stock units (RSUs) 618,004 845,106 Warrants 393,589 753,775 Total Potential Dilutive Securities 454,334,941 544,861,433

SELECT BALANCE SHEET DETAILS (T

SELECT BALANCE SHEET DETAILS (Tables)	3 Months Ended
	Mar. 31, 2021
Balance Sheet Related Disclosures [Abstract]
Estimated acquired intangible amortization expense	Fiscal Year Ended December 31, Estimated Amortization Expense ($ in thousands) 2021 (nine months) $ 9 2022 12 2023 12 2024 12 2025 10 Thereafter — Total $ 55

LEASES (Tables)

LEASES (Tables)	3 Months Ended
	Mar. 31, 2021
Leases [Abstract]
Future minimum undiscounted lease payments	($ in thousands) 2021 $ 491 2022 653 2023 424 2024 387 2025 128 Thereafter — Total $ 2,083 Short-term leases not included in lease liability (14 ) Present Value effect on future minimum undiscounted lease payments at March 31, 2021 (456 ) Lease liability at March 31, 2021 $ 1,613 Less current portion (435 ) Non-current lease liability at March 31, 2021 $ 1,178

MEZZANINE EQUITY (Tables)

MEZZANINE EQUITY (Tables)	3 Months Ended
	Mar. 31, 2021
Equity [Abstract]
Mezzanine equity	Series D Convertible Redeemable Preferred Total shares of Series D Preferred Stock - December 31, 2020 22,863 Conversion of Series D Preferred into Common Stock (354 ) Issuance of Series D Preferred as payment of dividends due 248 Total shares of Series D Preferred Stock - March 31, 2021 22,757

EQUITY (Tables)

EQUITY (Tables)	3 Months Ended
	Mar. 31, 2021
Equity [Abstract]
Summary of common stock activity	Common Stock Shares outstanding at December 31, 2020 180,089,613 Shares issued pursuant to payment of stock dividend on Series A Preferred 1,050,826 Shares issued pursuant to payment of stock dividend on Series A-1 Preferred 963,266 Shares issued pursuant to Series D conversion to Common Stock 6,115,324 Shares issued pursuant to Series A conversion to Common Stock 43,819,500 Shares issued pursuant to Series A-1 conversion to Common Stock 44,300,000 Shares issued pursuant to warrant exercises 400 Shares issued as compensation in lieu of cash 242,647 Shares issued pursuant to RSU vesting 161,168 Shares outstanding at March 31, 2021 276,742,744
Summary of warrant activity	Warrants Weighted-Average Exercise Price Balance at December 31, 2020 753,775 $ 0.17 Granted — — Expired / Canceled (359,786 ) 0.01 Exercised (400 ) 0.01 Balance at March 31, 2021 393,589 0.31

STOCK-BASED COMPENSATION (Table

STOCK-BASED COMPENSATION (Tables)	3 Months Ended
	Mar. 31, 2021
Compensation Related Costs [Abstract]
Stock option plan activity	Options Weighted-Average Exercise Price Weighted-Average Remaining Contractual Term (Years) Balance at December 31, 2020 2,585,500 $ 0.19 9.2 Granted — Expired/Cancelled (10,381 ) 0.78 Exercised — Balance at March 31, 2021 2,574,669 0.18 8.9
RSUs activity	RSU’s Weighted-Average Issuance Price Balance at December 31, 2020 845,106 $ 0.14 Granted — $ — Expired/Cancelled (150,935 ) $ 0.13 Vested (76,167 ) $ 0.13 Balance at March 31, 2021 618,004 $ 0.14
Stock-based compensation related to equity options	Three Months Ended March 31, 2021 2020 Cost of revenue $ 1 $ 2 General and administrative 37 67 Sales and marketing 21 29 Research and development 19 26 Total $ 78 $ 124

FAIR VALUE ACCOUNTING (Tables)

FAIR VALUE ACCOUNTING (Tables)	3 Months Ended
	Mar. 31, 2021
Fair Value Disclosures [Abstract]
Fair value measurement of assets and liabilities	Fair Value at March 31, 2021 ($ in thousands) Total Level 1 Level 2 Level 3 Assets: Pension assets $ 1,800 $ — $ — $ 1,800 Totals $ 1,800 $ — $ — $ 1,800 Liabilities: Derivative liabilities $ 22,850 $ — $ — $ 22,850 Totals $ 22,850 $ — $ — $ 22,850 Fair Value at December 31, 2020 ($ in thousands) Total Level 1 Level 2 Level 3 Assets: Pension assets $ 1,881 $ — $ — $ 1,881 Totals $ 1,881 $ — $ — $ 1,881 Liabilities: Derivative liabilities $ 24,128 $ — $ — $ 24,128 Totals $ 24,128 $ — $ — $ 24,128
Pension assets measured at fair value on a recurring basis	($ in thousands) Three months ended March 31, 2021 Three months ended March 31, 2020 Pension assets: Fair value at beginning of period $ 1,881 $ 1,713 Return on plan assets 15 14 Company contributions and benefits paid, net 2 (10 ) Effect of rate changes (98 ) (42 ) Fair value at end of period $ 1,800 $ 1,675
Schedule of derivative liabilities	($ in thousands) Three months ended March 31, 2021 Three months ended March 31, 2020 Derivative liabilities Fair value at beginning of period $ 24,128 $ 369 Derivative liability from issuance of Preferred Series D 248 — Decrease in derivative liability from conversions of Preferred Series D (354 ) — Change in fair value included in earnings (1,172 ) (197 ) Fair value at end of period $ 22,850 $ 172

DESCRIPTION OF BUSINESS AND O_2

DESCRIPTION OF BUSINESS AND OPERATIONS (Details Narrative) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Dec. 31, 2020	Mar. 31, 2020	Dec. 31, 2019
Organization, Consolidation and Presentation of Financial Statements [Abstract]
State of incorporation	DE
Working capital deficit	$ (20,887)	$ (19,349)
Cash	$ 5,056	$ 8,345	$ 53	$ 1,030

SIGNIFICANT ACCOUNTING POLICI_4

SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Revenue	$ 733	$ 796
Software and Royalties
Revenue	39	125
Hardware and Consumables
Revenue	13	14
Services
Revenue	$ 4	$ 11

SIGNIFICANT ACCOUNTING POLICI_5

SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION (Details Narrative) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Capitalized contract costs	$ 0	$ 0
Contract costs revenue	80,000
Revenue	$ 733	796
Two Customers
Percentage of revenue	45.00%
Revenue	$ 333
Trade receivables	$ 249
One Customer
Percentage of revenue	27.00%
Revenue	$ 216
Trade receivables		$ 0

NET LOSS PER COMMON SHARE (Deta

NET LOSS PER COMMON SHARE (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Basic income and diluted loss per common share - see Note 3:
Net loss	$ (1,885)	$ (3,124)
Preferred dividends and preferred stock discount accretion	(2,255)	(1,374)
Net loss available to common shareholders	$ (4,140)	$ (4,498)
Denominator for basic and dilutive loss per share - weighted-average shares outstanding	245,829,914	116,196,197
Basic and diluted loss per share available to common shareholders	$ (0.02)	$ (0.04)

NET LOSS PER COMMON SHARE (De_2

NET LOSS PER COMMON SHARE (Details 1) - shares	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Total potential dilutive securities	454,334,941	544,861,433
Series A Preferred Stock
Total potential dilutive securities	30,743,500	74,555,000
Series A-1 Preferred Stock
Total potential dilutive securities	29,610,000	73,910,000
Series B Preferred Stock
Total potential dilutive securities	46,980	46,029
Series D Preferred Stock
Total potential dilutive securities	390,348,199	392,166,023
Stock Options
Total potential dilutive securities	2,574,669	2,585,500
Restricted Stock Units
Total potential dilutive securities	618,004	845,106
Warrants
Total potential dilutive securities	393,589	753,775

SELECT BALANCE SHEET DETAILS (D

SELECT BALANCE SHEET DETAILS (Details) - USD ($) $ in Thousands	Mar. 31, 2021	Dec. 31, 2020
Balance Sheet Related Disclosures [Abstract]
2021 (nine months)	$ 9
2022	12
2023	12
2024	12
2025	10
Thereafter	0
Totals	$ 55	$ 58

SELECT BALANCE SHEET DETAILS _2

SELECT BALANCE SHEET DETAILS (Details Narrative) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020	Dec. 31, 2020
Balance Sheet Related Disclosures [Abstract]
Inventory	$ 88		$ 40
Work in process	78		26
Finished goods	10		14
Reserves for obsolete and slow-moving items	3		3
Carrying amounts of patent assets	55		58
Accumulated amortization	604		$ 601
Patent amortization expense	$ 3	$ 3
Weighted-average remaining life of intangible assets	4 years 6 months 29 days
Impairment of intangible assets	$ 0	$ 0

LEASES (Details)

LEASES (Details) - USD ($) $ in Thousands	Mar. 31, 2021	Dec. 31, 2020
Leases [Abstract]
2021 (nine months)	$ 491
2022	653
2023	424
2024	387
2025	128
Thereafter	0
Total	2,083
Short-term leases not included in lease liability	(14)
Present value effect on future minimum undiscounted lease payments	(456)
Lease liability	1,613
Less current portion	(435)	$ (421)
Non-current lease liability	$ 1,178	$ 1,297

LEASES (Details Narrative)

LEASES (Details Narrative) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020	Dec. 31, 2020
Leases [Abstract]
Operating lease right-of-use assets	$ 1,462		$ 1,557
Operating lease liabilities	1,613
Lease expense	$ 154	$ 154
Weighted-average remaining lease term	2 years
Cash payments under operating leases	$ 166	$ 166

MEZZANINE EQUITY (Details)

MEZZANINE EQUITY (Details) - Series D Preferred Stock	3 Months Ended
	Mar. 31, 2021shares
Total shares of Series D Preferred Stock, beginning	22,863
Conversion of Series D Preferred into Common Stock	(354)
Issuance of Series D Preferred as payment of dividends due	248
Total shares of Series D Preferred Stock, ending	22,757

DERIVATIVE LIABILITIES (Details

DERIVATIVE LIABILITIES (Details Narrative) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020	Dec. 31, 2020	Dec. 31, 2019
Derivative Liability [Abstract]
Derivative liabilities	$ 22,850	$ 172	$ 24,128	$ 369
(Gain) loss on change in fair value of derivative liabilities	1,172	197
Loss on extinguishment of derivative liabilities	$ (335)
Bifurcation of Series C		$ 172

NOTES PAYABLE (Details Narrativ

NOTES PAYABLE (Details Narrative) - USD ($) $ in Thousands	Mar. 31, 2021	Dec. 31, 2020
Notes payable, current portion	$ 1,107	$ 918
Notes payable, net of current portion	464	$ 653
PPP Loan
Notes payable, current portion	1,107
Notes payable, net of current portion	$ 464

EQUITY (Details)

EQUITY (Details) - Common Stock - shares	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Beginning balance, shares	180,096,317	113,353,176
Shares issued pursuant to payment of stock dividend on Series A Preferred	1,050,826
Shares issued pursuant to payment of stock dividend on Series A-1 Preferred	963,266
Shares issued pursuant to Series D conversion to Common Stock	6,115,324
Shares issued pursuant to Series A conversion to Common Stock	43,819,500
Shares issued pursuant to Series A-1 conversion to Common Stock	44,300,000
Shares issued pursuant to warrant exercises	400
Shares issued as compensation in lieu of cash	242,647	10,000,000
Shares issued pursuant to RSU vesting	161,168
Ending balance, shares	276,749,448	123,753,176

EQUITY (Details 1)

EQUITY (Details 1) - Warrants	3 Months Ended
	Mar. 31, 2021$ / sharesshares
Number of warrants, begining balance | shares	753,775
Number of warrants, granted | shares	0
Number of warrants, expired/cancelled | shares	(359,786)
Number of warrants, exercised | shares	(400)
Number of warrants, ending balance | shares	393,589
Weighted-average exercise price, begining balance | $ / shares	$ .17
Weighted-average exercise price, granted | $ / shares	.00
Weighted-average exercise price, expired/cancelled | $ / shares	.01
Weighted-average exercise price, exercised | $ / shares	.01
Weighted-average exercise price, ending balance | $ / shares	$ .31

EQUITY (Details Narrative)

EQUITY (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands	Mar. 31, 2021	Dec. 31, 2020
Common stock, shares issued	276,749,448	180,096,317
Common stock, shares outstanding	276,742,744	180,089,613
Intrinsic value of warrants outstanding	$ 0
Series A Preferred Stock
Preferred stock, shares outstanding	6,149	14,911
Preferred stock, par value	$ .01	$ 0.01
Series A-1 Preferred Stock
Preferred stock, shares outstanding	5,922	14,782
Preferred stock, par value	$ 0.01	$ 0.01
Series B Preferred Stock
Preferred stock, shares outstanding	239,400	239,400
Preferred stock, par value	$ .01	$ .01

STOCK-BASED COMPENSATION (Detai

STOCK-BASED COMPENSATION (Details) - Stock Options - $ / shares	3 Months Ended	12 Months Ended
	Mar. 31, 2021	Dec. 31, 2020
Number of options, begining balance	2,585,500
Number of options, granted	0
Number of options, expired/cancelled	(10,381)
Number of options, exercised	0
Number of options, ending balance	2,574,669	2,585,500
Weighted-average exercise price, begining balance	$ .19
Weighted-average exercise price, granted	.00
Weighted-average exercise price, expired/cancelled	.78
Weighted-average exercise price, exercised	.00
Weighted-average exercise price, ending balance	$ .18	$ .19
Weighted-average remaining contractual term	8 years 10 months 24 days	9 years 2 months 12 days

STOCK-BASED COMPENSATION (Det_2

STOCK-BASED COMPENSATION (Details 1)	3 Months Ended
	Mar. 31, 2021$ / sharesshares
Compensation Related Costs [Abstract]
Number of RSUs, beginning balance | shares	845,106
Number of RSUs, granted | shares	0
Number of RSUs, expired/cancelled | shares	(150,935)
Number of RSUs, vested | shares	(76,167)
Number of RSUs, ending balance | shares	618,004
Weighted-average issuance price, beginning balance | $ / shares	$ .14
Weighted-average issuance price, granted | $ / shares	0
Weighted-average issuance price, expired/cancelled | $ / shares	0.13
Weighted-average issuance price, vested | $ / shares	0.13
Weighted-average issuance price, ending balance | $ / shares	$ 0.14

STOCK-BASED COMPENSATION (Det_3

STOCK-BASED COMPENSATION (Details 2) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Stock based compensation	$ 78	$ 124
Cost of Revenue
Stock based compensation	1	2
General and Administrative
Stock based compensation	37	67
Sales and Marketing
Stock based compensation	21	29
Research and Development
Stock based compensation	$ 19	$ 26

STOCK-BASED COMPENSATION (Det_4

STOCK-BASED COMPENSATION (Details Narrative) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020	Dec. 31, 2020
Number of RSUs granted	0
Number of RSUs vested	76,167
Compensation expense related to RSUs	$ 15,000	$ 0
Shares issued pursuant to vesting RSUs	161,168	0
Stock Options
Number of options, granted	0
Number of options, expired/cancelled	(10,381)
Number of options outstanding	2,574,669		2,585,500
Number of options exercisable	110,091
Stock-based compensation expense related to equity options	$ 32
Intrinsic value of options exercisable	0
Intrinsic value for options outstanding	0
Unrecognized compensation cost related to unvested stock options	$ 558
2020 Omnibus Stock Incentive Plan
Options authorized under plan	26,382,377
Shares available for issuance under plan	26,511,811

FAIR VALUE ACCOUNTING (Details)

FAIR VALUE ACCOUNTING (Details) - USD ($) $ in Thousands	Mar. 31, 2021	Dec. 31, 2020	Mar. 31, 2020	Dec. 31, 2019
Assets:
Pension assets	$ 1,800	$ 1,881
Totals	1,800	1,881
Liabilities:
Derivative liabilities	22,850	24,128	$ 172	$ 369
Totals	22,850	24,128
Fair Value, Inputs, Level 1
Assets:
Pension assets	0	0
Totals	0	0
Liabilities:
Derivative liabilities	0	0
Totals	0	0
Fair Value, Inputs, Level 2
Assets:
Pension assets	0	0
Totals	0	0
Liabilities:
Derivative liabilities	0	0
Totals	0	0
Fair Value, Inputs, Level 3
Assets:
Pension assets	1,800	1,881
Totals	1,800	1,881
Liabilities:
Derivative liabilities	22,850	24,128
Totals	$ 22,850	$ 24,128

FAIR VALUE ACCOUNTING (Details

FAIR VALUE ACCOUNTING (Details 1) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Fair Value Disclosures [Abstract]
Fair value of plan assets, beginning	$ 1,881	$ 1,713
Return on plan assets	15	14
Company contributions and benefits paid, net	2	(10)
Effect of rate changes	(98)	(42)
Fair value of plan assets, ending	$ 1,800	$ 1,675

FAIR VALUE ACCOUNTING (Detail_2

FAIR VALUE ACCOUNTING (Details 2) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Fair Value Disclosures [Abstract]
Derivative liabilities, beginning	$ 24,128	$ 369
Derivative liability from issuance of Preferred Series D	248	0
Decrease in derivative liability from conversions of Preferred Series D	(354)	0
Change in fair value included in earnings	1,172	197
Derivative liabilities, ending	$ 22,850	$ 172