Quarterly report pursuant to Section 13 or 15(d)

Summary of Significant Accounting Policies (Tables)

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Summary of Significant Accounting Policies (Tables)
 6 Months Ended
Jun. 30, 2015
Accounting Policies [Abstract]  
Summary of Customer Concentration Risk Percentage

The following table illustrates the level of concentration as a percentage of total revenues during the three months and six months ended June 30, 2015 and 2014.

 

    For the Three Months Ended  
    June 30,  
    2015     2014  
Top Five Customers     65 %     64 %
Federal Agencies     27 %     3 %

 

    For the Six Months Ended  
    June 30,  
      2015       2014  
Top Five Customers     49 %     42 %
Federal Agencies     22 %     2 %

 

The following table illustrates the level of concentration as a percentage of net accounts receivable balance as of June 30, 2015 and December 31, 2014:

 

    June 30, 2015     December 31, 2014  
Top Five Customers     70 %     86 %
Federal Agencies     1 %     9 %

Summary of Computation of Loss per Share

The following table illustrates our computation of loss per share for the three months and six months ended June 30, 2015 and 2014:

 

    For the Three Months Ended     For the Six Months Ended  
    June 30,     June 30,  
    2015     2014     2015     2014  
Numerator:                                
Net loss   $ (1,386,241 )   $ (603,187 )   $ (2,772,232 )   $ (2,362,842 )
Accrued dividend for Preferred Stock     (6,811 )     (9,606 )     (23,479 )     (54,593 )
Deemed dividend on Series K Convertible Preferred Stock     -       (107,996 )     -       (1,388,062 )
Net loss applicable to common shareholders   $ (1,393,052 )   $ (720,789 )   $ (2,795,711 )   $ (3,805,497 )
                                 
Denominator for basic and diluted loss per share:                                
Weighted average common stock shares outstanding     19,682,632       13,567,472       19,247,895       12,848,751  
                                 
Loss per common share - basic and diluted   $ (0.07 )   $ (0.05 )   $ (0.14 )   $ (0.30 )

Summary of Anti-dilutive Securities Excluded from Computation of Earnings per Share

    For the Six Months Ended  
    June 30,  
    2015     2014  
Stock options     3,251,250       1,585,750  
Convertible debt     14,420,144       917,860  
Common stock warrants     19,182,201       17,757,044  
Convertible preferred stock:                
Series D Convertible Preferred Stock     750,000       750,000  
Series G Convertible Preferred Stock     865,700       865,700  
Series H Convertible Preferred Stock     1,000,000       1,000,000  
Series H2 Convertible Preferred Stock     2,100,000       -  
Series J Convertible Preferred Stock     3,546,000       4,995,000  
Series K Convertible Preferred Stock     11,416,000       11,463,000  
      56,531,295       39,334,354  

Summary of Stock Based Compensation Expense

The following table summarizes the effect of this stock-based compensation expense within each of the line items of our costs and expenses within our Condensed Consolidated Statements of Operations:

 

    For the Three Months Ended
June 30, 		 
    2015     2014  
Research and development   $ 11,523     $ 10,301  
Selling and marketing     7,099       5,914  
General and administrative     36,994       5,273  
Total stock-based compensation expense   $ 55,616     $ 21,488  

  

    For the Six Months Ended
June 30, 		 
    2015     2014  
Research and development   $ 22,865     $ 17,854  
Selling and marketing     14,075       11,905  
General and administrative     73,566       10,625  
Total stock-based compensation expense   $ 110,506     $ 40,384  

Schedule of Liabilities Measured at Fair Value on Recurring Basis

The following tables set forth the Company’s financial liabilities that were accounted for at fair value on a recurring basis as of June 30, 2015.

 

          Fair value measurements at June 30, 2015 using:  
             
    June 30, 2015    

Quoted prices in
active markets

(Level 1)

     Significant other
observable inputs
(Level 2) 		    Significant
unobservable inputs
(Level 3) 		 
Series D Preferred Stock Purchase Warrants   $ 124,643       -       -     $ 124,643  
Conversion Option Liabilities     1,731,650       -       -       1,731,650  
Total Derivatives   $ 1,856,293       -       -     $ 1,856,293  

 

    January 1, 2015     Issuance
fair value 		    Change in
fair value 		    Gain on
extinguishment
of embedded
derivative
liabilities 		    June 30, 2015  
Series D Preferred Stock Purchase Warrants   $159,875     -     $ (35,232 )   -     $124,643  
Conversion Option Liabilities     590,341       2,032,181       (42,799 )     (848,073 )     1,731,650  
Total Derivatives   $ 750,216     $ 2,032,181     $ (78,031 )   $ (848,073 )   $ 1,856,293  

Schedule of Fair Value Assumptions

The assumptions for the binomial pricing model are represented in the table below for the warrants issued in the Series D private placement reflected on a per share common stock equivalent basis.

 

Assumptions   November 10, 2011     Warrants revalued at
December 31, 2014 		    Warrants revalued at
June 30, 2015 		 
Expected life (in months)     60.0       22.0       16.0  
Expected volatility     104.5 %     116.0 %     116.1 %
Risk-free interest rate     0.875 %     0.58 %     0.48 %
Exercise price   $ 0.81     $ 0.25     $ 0.25  
Fair value per warrant   $ 0.54     $ 0.15     $ 0.12  

 

The assumptions for the binomial pricing model are represented in the table below for the conversion options reflected on a per share common stock equivalent basis.

 

Assumptions   At Issuance fair value   At Settlement fair value   Conversion options
revalued at
June 30, 2015
Expected life (in months)   6-24   0-6   2-21
Expected volatility   104.2-153.8%   0.8-142.2%   88.6-130.6%
Risk-free interest rate   0.05-0.99%   0.01-0.18%   0.01-0.54%
Exercise price   $0.10-$0.35   $0.10-$0.16   $0.11-$0.25
Fair value per conversion option   $0.09-$0.28   $0.10-$0.26   $0.08-$0.16