Annual report pursuant to Section 13 and 15(d)

Summary of Significant Accounting Policies (Tables)

v3.8.0.1
Summary of Significant Accounting Policies (Tables)
12 Months Ended
Dec. 31, 2017
Accounting Policies [Abstract]  
Schedule of Inventories

The composition of inventory as of December 31, is as follows:

 

    2017     2016  
Raw materials   $ 288,295     $ 326,228  
Finished goods     748,967       599,056  
Inventory reserve     (179,600 )     (20,000 )
Total   $ 857,662     $ 905,284

Summary of Customer Concentration Risk Percentage

The following table illustrates the level of concentration of the below two groups within revenue as a percentage of total revenues during the years ended December 31:

 

    2017     2016  
Top Five Customers     37 %     29 %
Federal Agencies     14 %     3 %

 

The following table illustrates the level of concentration of the below two groups within accounts receivable as a percentage of total accounts receivable balance as of December 31:

 

    2017     2016  
Top Five Customers     85 %     82 %
Federal Agencies     1 %     1 %

Summary of Computation of Loss Per Share

The following table illustrates our computation of loss per share for the years ended December 31:

  

    2017     2016  
Numerator:                
Net loss   $ (10,715,561 )   $ (2,706,984 )
                 
Denominator for basic and diluted loss per share:                
Weighted average common shares outstanding     1,114,225       911,312  
                 
Loss per common share - basic and diluted   $ (9.62 )   $ (2.97 )

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

The following table presents securities that could potentially dilute basic loss per share in the future. For all periods presented, the potentially dilutive securities were not included in the computation of diluted loss per share because these securities would have been anti-dilutive for the years ended December 31:

 

    2017     2016  
Stock options     247,692       175,642  
Convertible debt     947,203       891,132  
Common stock warrants     899,542       881,990  
Convertible preferred stock:                
Series D Convertible Preferred     25,000       25,000  
Series G Convertible Preferred     26,857       28,857  
Series H Convertible Preferred     33,334       33,334  
Series H2 Convertible Preferred     70,000       70,000  
Series J Convertible Preferred     115,267       117,367  
Series K Convertible Preferred     229,334       227,200  
      2,594,229       2,450,522

Summary of Assumptions for Grants of Stock Options

The following table summarizes the assumptions we utilized for grants of stock options to the three sub-groups of our stock option recipients during the year ended December 31, 2017:

 

Assumptions   Non-Employee
Board Members
    CEO, other
Officers and Employees
 
Expected life     6.0 (yrs     6.0 (yrs )
Expected volatility     92.85%-104.83     105.71 %
Risk-free interest rate     1.01%-1.53 %     1.63 %
Forfeiture rate     5.00 %     5.00 %
Expected dividend yield     0.0 %     0.0 %

Summary of Stock Based Compensation Expense

The following table summarizes the effect of this stock-based compensation expense within each of the line items within our accompanying consolidated statements of operations for the years ended December 31:

 

    2017     2016  
Research and development   $ 92,055     $ 65,500  
Selling and marketing     54,404       42,315  
General and administrative     259,968       272,149  
Total stock-based compensation expense   $ 406,427     $ 379,964

Schedule of Reconciliation Related to Liabilities

The following table provides a reconciliation of the warrant derivative liability, convertible debt, conversion option derivative liability, stock warrant, additional paid-in capital and accumulated deficit on the consolidated balance sheet as of December 31, 2016:

 

    Convertible debt, current portion     Convertible debt, long term portion     Warrant Derivative Liability     Conversion Option Liability     Warrants to acquire common stock     Additional Paid-in Capital     Accumulated deficit  
Balance, January 1, 2017 (Prior to adoption of ASU 2017-11)   $ 4,005,702     $ 529,742     $ 1,685,108     $ 951,059     $ 6,325,102     $ 27,544,265     $ (42,264,190 )
Reclassified derivative liabilities and cumulative effect of adoption     769,316       154,152     $ (1,685,108 )     (951,059 )     2,636,236       1,446,011       (2,369,548 )
Balance, January 1, 2017 (After adoption of ASU 2017-11)   $ 4,775,018     $ 683,894     $ -     $ -     $ 8,961,338     $ 28,990,276     $ (44,633,738 )

Schedule of Liabilities Measured at Fair Value On Recurring Basis

The following tables set forth the Company’s financial assets and financial liabilities that were accounted for at fair value on a recurring basis as of December 31, 2017 and December 31, 2016. The development of the unobservable inputs for Level 3 fair value measurements and fair value calculations are the responsibility of the Company’s management.

 

          Fair value measurements at December 31, 2017 using:  
    December 31, 2017     Quoted prices in
active markets
(Level 1)
    Significant other
observable inputs
(Level 2)
    Significant
unobservable inputs
(Level 3)
 
Available-For-Sale Equity Securities     19,825       19,825       -       -  
Total Financial Assets   $ 19,825     $ 19,825     $ -     $ -  

 

          Fair value measurements at December 31, 2016 using:  
    December 31, 2016     Quoted prices in
active markets
(Level 1)
    Significant other
observable inputs
(Level 2)
    Significant
unobservable inputs
(Level 3)
 
Available-For-Sale Equity Securities     25,865       25,865       -       -  
Total Financial Assets   $ 25,865     $ 25,865     $ -     $ -  

 

    December 31, 2016     Quoted prices in
active markets
(Level 1)
    Significant other
observable inputs
(Level 2)
    Significant
unobservable
inputs (Level 3)
 
Series D Preferred Stock Purchase Warrants   $ 23,313       -       -     $ 23,313  
Warrants Issued with Convertible Debt     1,661,795       -       -       1,661,795  
Conversion Option Derivative Liabilities     951,059       -       -       951,059  
Total Derivatives   $ 2,636,167     $ -     $ -     $ 2,636,167  

 

The following table provides a summary of the changes in fair value, including net transfers in and/or out, of the derivative financial instruments, measured at fair value on a recurring basis using significant unobservable inputs:

 

    January 1, 2016     Issuance
fair value
    Change in
fair value
    December 31, 2016  
Series D Preferred Stock Purchase Warrants   $ 173,526     $ -     $ (150,213 )   $ 23,313  
Warrants Issued with Convertible Debt     3,122,450       1,094,432       (2,555,087 )     1,661,795  
Conversion Option Derivative Liabilities     3,940,791       1,547,127       (4,536,859 )     951,059  
Total Derivatives   $ 7,236,767     $ 2,641,559     $ (7,242,159 )   $ 2,636,167

Schedule of Fair Value Assumptions

The fair value of the derivative liabilities was determined using a binomial pricing model. 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, 2016
 
Expected life (in months)     60.0       5.0  
Expected volatility     104.5 %     83.5 %
Risk-free interest rate     0.875 %     0.62 %
Exercise price   $ 24.30     $ 7.50  
Fair value per warrant   $ 16.20     $ 0.60  

 

The assumptions for the binomial pricing model are represented in the table below for the warrants issued with the Convertible Debt in 2016 reflected on a per share common stock equivalent basis.

 

Assumptions   At Issuance
Fair value
    Warrants revalued at
December 31, 2016
 
Expected life (in months)     60.0       43.0-51.0  
Expected volatility     118.3-120.1 %     110.0-116.0 %
Risk-free interest rate     1.48-1.69 %     1.93 %
Exercise price   $ 12.00     $ 12.00  
Fair value per warrant   $ 5.70-$6.30     $ 3.60-4.20  

 

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
December 31, 2016
 
Expected life (in months)     6.0-24.0       0-18.0       6.0-15.0  
Expected volatility     104.2-153.8 %     86.9%-142.2 %     84.4-94.8 %
Risk-free interest rate     0.05-0.99 %     0.01-0.72 %     0.62-0.85 %
Exercise price   $ 3.00-$10.50     $ 3.00-$7.50     $ 8.40  
Fair value per conversion option   $ 2.70-$8.40     $ 2.10-$7.80     $ 0.90-$1.80