10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED: SEPTEMBER 30, 2015

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

COMMISSION FILE NUMBER: 333-04066

GEOSPATIAL CORPORATION

(Exact name of registrant as specified in its charter)

NEVADA	87-0554463
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

229 Howes Run Road, Sarver, PA 16055

(Address of principal executive offices)

(724) 353-3400

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Check whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    YES  ☒    NO  ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files):    YES  ☒    NO  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	☐		Accelerated filer	☐
Non-accelerated filer	☐	(Do not check if a smaller reporting company)	Smaller reporting company	☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act):    YES  ☐    NO  ☒

The number of $.001 par value common shares outstanding at November 16, 2015: 141,066,264.

FORWARD-LOOKING STATEMENTNOTICE

The statements set forth in this report which are not historical constitute "Forward-Looking Statements" within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended,andRule3b-6promulgatedthereunder,includingstatementsregardingtheexpectations, beliefs, intentions or strategies for the future. When used in this report, the terms "anticipate," "believe," "estimate," "expect" and "intend" and words or phrases of similar import, as they relate to our business or our subsidiaries or our management, are intended to identify Forward-Looking Statements. These Forward-Looking Statements are only predictions and reflect our views as of the date they are made with respect to future events and financial performance. Forward-Looking Statements are subject to many risks and uncertainties that could cause our actual results to differmateriallyfromanyfutureresultsexpressedorimpliedbythe Forward-Looking Statements.

Because our common stock is considered to be a "penny stock", the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995 do not apply to such Forward Looking Statements.

Our business involves various risks, including, but not limited to, our ability to implement our business strategies as planned in a timely manner or at all; our lack of operating history; our ability to protect our proprietary technologies; our ability to obtain financing sufficient to meet our capital needs; our inability to use historical financial data to evaluate our financial performance; and the other risk factors identified in our filings with the Securities and Exchange Commission.

. '

Because the risk factors referred to above could cause actual results or outcomes to differ materially from those expressed or implied in any forward-looking statements made by us or on our behalf, readers of this report should not place undue reliance on any forward-looking statement.Further,anyforward-lookingstatementspeaksonlyasofthedate onwhichitismade, and we undertake no obligations to update any Forward-Looking Statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of future events or developments. New factors emerge from time to time, and it is not possible for us to predict which factors will arise. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any Forward-Looking Statements.

2

TABLEOFCONTENTS

PART I -FINANCIALINFORMATION	4
ITEM 1.FINANCIALSTATEMENTS	4
ITEM 2. MANAGEMENT’S DISCUSSION & ANALYSIS OF FINANCIAL CONDITION AND RESULTSOFOPERATIONS	18
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUTMARKETRISK	21
ITEM 4. CONTROLSAND PROCEDURES	21
PART II -OTHERINFORMATION	22
ITEM 2. SALES OF UNREGISTERED EQUITY SECURITIES AND USEOFPROCEEDS	22
ITEM6.EXHIBITS	22

3

PARTI-FINANCIALINFORMATION

ITEM1. FINANCIALSTATEMENTS

GEOSPATIAL CORPORATION INDEX

	Page
FINANCIALSTATEMENTSASOFSEPTEMBER 30,2015ANDDECEMBER31,2014ANDFORTHETHREEANDNINE MONTHSENDED SEPTEMBER 30,2015AND2014
Consolidated BalanceSheets(Unaudited)	5
Consolidated Statements ofOperations(Unaudited)	6
Consolidated Statements of Changes in Stockholders’ Equity(Deficit)(Unaudited)	7
Consolidated Statements of CashFlows(Unaudited)	8
Notes to Unaudited ConsolidatedFinancialStatements	9

4

Geospatial Corporation and Subsidiaries

Consolidated Balance Sheets

	September 30,			December 31,
	2015			2014
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	23,202		$	17,723
Accounts receivable		—			32,800
Prepaid expenses and other current assets		210,569			180,689
Total current assets		233,771			231,212
Property and equipment:
Field equipment		339,079			339,079
Field vehicles		43,285			43,285
Total property and equipment		382,364			382,364
Less:  accumulated depreciation		(217,720	)		(126,864	)
Net property and equipment		164,644			255,500
Total assets	$	398,415		$	486,712
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable	$	636,284		$	740,151
Accrued expenses		1,930,645			1,353,532
Due to related parties		179,172			137,910
Notes payable to related parties		6,893			29,047
Current portion of capital lease liability to related party		3,453			3,379
Senior convertible redeemable notes, net of deferred debt issue costs		—			1,525,025
Notes payable, net of deferred debt issue costs		1,545,410			232,892
Accrued registration payment arrangement		1,334,629			2,525,075
Total current liabilities		5,636,486			6,547,011
Non-current liabilities:
Notes payable		3,667			39,741
Capital lease liability to related party		4,158			6,757
Total non-current liabilities		7,825			46,498
Total liabilities		5,644,311			6,593,509
Stockholders' deficit:
Preferred stock:
Undesignated, $0.001 par value;  20,000,000 shares authorized at September 30, 2015 and December 31, 2014; no shares issued and outstanding September 30, 2015 and December 31, 2014		—			—
Series B Convertible Preferred Stock, $0.001 par value;  5,000,000 shares authorized at September 30, 2015 and December 31, 2014;  0 and 530,049 shares issued and outstanding at September 30, 2015 and December 31, 2014, respectively		—			530
Common stock, $.001 par value; 350,000,000 shares authorized at September 30, 2015 and December 31, 2014;   138,456,264 and 126,235,177 shares issued and outstanding at September 30, 2015 and December 31, 2014, respectively		138,456			126,235
Additional paid-in capital		35,313,551			33,596,411
Accumulated deficit		(40,697,903	)		(39,829,973	)
Total stockholders' deficit		(5,245,896	)		(6,106,797	)
Total liabilities and stockholders' deficit	$	398,415		$	486,712

The accompanying notes are an integral part of these consolidated financial statements.

5

Geospatial Corporation and Subsidiaries

Consolidated Statements of Operations

(Unaudited)

	For the Three Months						For the Nine Months
	Ended September 30,						Ended September 30,
	2015			2014			2015			2014
Sales	$	—		$	58,400		$	20,800		$	254,151
Cost of sales		33,545			49,809			113,114			145,626
Gross profit (loss)		(33,545	)		8,591			(92,314	)		108,525
Selling, general and administrative expenses		698,559			724,098			2,021,897			1,967,784
Net loss from operations		(732,104	)		(715,507	)		(2,114,211	)		(1,859,259	)
Other income (expense):
Interest expense		(41,794	)		(40,346	)		(163,709	)		(119,254	)
Gain on extinguishment of debt		73,181			74,528			219,544			310,002
Registration payment arrangements		—			—			1,190,446			—
Total other income (expenses)		31,387			34,182			1,246,281			190,748
Net loss before income taxes		(700,717	)		(681,325	)		(867,930	)		(1,668,511	)
Provision for income taxes		—			—			—			—
Net loss	$	(700,717	)	$	(681,325	)	$	(867,930	)	$	(1,668,511	)
Basic and fully-diluted net loss per share of common stock	$	(0.01	)	$	(0.01	)	$	(0.01	)	$	(0.02	)

The accompanying notes are an integral part of these consolidated financial statements.

6

Geospatial Corporation and Subsidiaries

Consolidated Statements of Changes in Stockholders' Deficit

For the Nine Months Ended September 30, 2015

(Unaudited)

											Series B
											Convertible
	Preferred Stock						Common Stock				Preferred Stock		Additional Paid-In			Accumulated
	Shares			Amount			Shares		Amount		Subscribed		Capital			Deficit			Total
Balance, December 31, 2014		530,049		$	530			126,235,177	$	126,235	$	—	$	33,596,411		$	(39,829,973	)	$	(6,106,797	)
Sale of common stock, net of issuance
costs		—			—			770,000		770		—		159,032			—			159,802
Conversion of Series B Convertible
Preferred Stock to common stock		(530,049	)		(530	)		5,300,500		5,300		—		(4,770	)		—			—
Conversion of senior convertible
redeemable notes to common stock		—			—			6,150,587		6,151		—		1,562,878			—			1,569,029
Net loss for the nine months ended
September 30, 2015		—			—			—		—		—		—			(867,930	)		(867,930	)
																	.
Balance, September 30, 2015		—		$	—			138,456,264	$	138,456	$	—	$	35,313,551		$	(40,697,903	)	$	(5,245,896	)

The accompanying notes are an integral part of these consolidated financial statements.

7

Geospatial Corporation and Subsidiaries

Consolidated Statements of Cash Flows

	For the Nine Months
	Ended September 30,
	2015			2014
Cash flows from operating activities:
Net income (loss)	$	(867,930	)	$	(1,668,511	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		90,856			71,026
Amortization of deferred debt issuance costs		53,114			—
Gain on extinguishment of debt		(219,543	)		(310,002	)
Issuance of common stock for services		—			82,500
Accrued registration payment arrangement		(1,190,446	)		—
Accrued interest payable		104,207			108,812
Changes in operating assets and liablities:
Accounts receivable		32,800			102,450
Prepaid expenses and other current assets		(29,880	)		(152,082	)
Accounts payable		115,676			73,265
Accrued expenses		575,099			10,832
Due to related parties		41,262			29,619
Other long-term liabilities		—			(19,887	)
Net cash used in operating activities		(1,294,784	)		(1,671,978	)
Cash flows from investing activities:
Purchase of property, plant and equipment		—			(197,188	)
Net cash used in investing activities		—			(197,188	)
Cash flows from financing activities:
Proceeds from issuance of notes payable		1,780,000			—
Proceeds from issuance of notes payable to related parties		6,891			—
Principal payments on notes payable		(590,655	)		(119,175	)
Principal payments on capital lease liabilities		(2,525	)		(2,453	)
Deferred debt issuance costs paid		(53,250	)		—
Proceeds from sale of common stock, net of offering costs		159,802			2,236,086
Proceeds from exercise of warrants to purchase common stock, net of offering costs		—			5,332
Proceeds from exercise of warrants to purchase Series B Convertible Preferred Stock,
net of offering costs		—			266,571
Repurchase of shares of common stock for cancellation		—			(1,114,688	)
Net cash provided by financing activities		1,300,263			1,271,673
Net change in cash and cash equivalents		5,479			(597,493	)
Cash and cash equivalents at beginning of period		17,723			778,597
Cash and cash equivalents at end of period	$	23,202		$	181,104
Supplemental disclosures:
Cash paid during period for interest	$	6,386		$	10,442
Cash paid during period for income taxes		—			—
Non-cash transactions:
Issuance of common stock for services		—			82,500
Issuance of common stock in settlement of liabilities		—			50,000
Conversion of senior convertible redeemable notes to common stock		1,569,029			—

The accompanying notes are an integral part of these consolidated financial statements.

8

Geospatial Corporation and Subsidiaries

Notes to Unaudited Consolidated Financial Statements

September 30, 2015

Note 1 – Basis of Presentation

The Unaudited Consolidated Financial Statements included herein have been prepared by Geospatial Corporation (the “Company”) in accordance with generally accepted accounting principles for interim financial information and regulations contained in the Securities Exchange Act of 1934, as amended. Accordingly, the accompanying Unaudited Consolidated Financial Statements do not include all of the information and notes required by accounting principles generally accepted in the United States of America for complete financial statements. The accompanying Unaudited Consolidated Financial Statements as of and for the three and nine months ended September 30, 2015 should be read in conjunction with the Company’s Financial Statements as of and for the year ended December 31, 2014. In the opinion of the Company’s management, all adjustments considered necessary for a fair statement of the accompanying Unaudited Consolidated Financial Statements have been included, and all adjustments, unless otherwise discussed in the Notes to the Unaudited Condensed Consolidated Financial Statements, are of a normal and recurring nature. Operating results for the three and nine months ended September 30, 2015 are not necessarily indicative of the results that may be expected for the year ending December 31, 2015, or any other interim periods, or any future year or period.

The use of accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.

The Condensed Consolidated Financial Statements include the accounts of the Company and its subsidiary, Geospatial Mapping Systems, Inc. All intercompany accounts and transactions have been eliminated.

Note 2 – Accrued Expenses

Accrued expenses consisted of the following:

	September 30,		December 31,
	2015		2014
Payroll and taxes	$	1,529,075	$	1,134,918
Accounting		56,893		67,280
Insurance		74,352		33,902
Contractors and subcontractors		191,384		60,848
Other		78,941		56,584
Accrued expenses	$	1,930,645	$	1,353,532

9

Geospatial Corporation and Subsidiaries

Notes to Unaudited Consolidated Financial Statements

September 30, 2015

Note 3 – Related-Party Transactions

The Company leases its headquarters building from Mark A. Smith, the Company’s Chairman and Chief Executive Officer. The building has approximately 3,200 square feet of office space, and is used by the Company’s corporate, technical, and operations staff. The Company incurred $19,500 of lease expense during the three months ended September 30, 2015 and 2014, and $58,500 of lease expense during the nine months ended September 30, 2015 and 2014. The lease is cancellable by either party upon 30 days’ notice.

On November 9, 2012, the Company and Mr. Smith entered into a Lease Agreement, pursuant to which the Company leases a field vehicle from Mr. Smith. The lease is for 60 months, and is for substantially the same terms for which Mr. Smith leases the vehicle from the manufacturer. Interest on the lease amounted to $59 and $196, respectively, for the three months and nine months ended September 30, 2015, and $77 and $346, respectively, for the three and nine months ended September 30, 2014. The lease is recorded as a capital lease. At September 30, 2015, gross assets recorded under the lease and associated accumulated depreciation were $16,870 and $9,700, respectively. Future minimum payments under the capital lease are as follows as of September 30, 2015:

Balance of 2015	$	907
Year ending December 31, 2016		3,628
Year ending December 31, 2017		3,326
Thereafter		—
Total minimum payments		7,861
Less:  minimum interest payments		(250	)
Minimum principal payments	$	7,611

During the three months ended September 30, 2015, Thomas R. Oxenreiter, the Company’s Chief Financial Officer, loaned the Company $6,891. During the three and nine months ended September 30, 2015, interest on the loan at 10% per annum totaled $2. The Company issued warrants to purchase 6,891 shares of the Company’s common stock at $0.20 per share in connection with the loan.

10

Geospatial Corporation and Subsidiaries Notes to Unaudited Consolidated Financial Statements

September 30, 2015

Note 4 – Notes Payable

Current notes payable consisted of the following:

	September 30, 2015		December 31, 2014
Secured Promissory Note payable to an individual, due October 2, 2015, bearing interest at 10% per annum, plus warrants to purchase the common stock	$	1,050,142	$	—
Unsecured Convertible Promissory Notes payable to individuals, due at various times through November 4, 2015, bearing interest at 10% plus warrants to purchase common stock		287,786		—
Current portion of long-term notes payable		207,482		232,892
Current notes payable	$	1,545,410	$	232,892

11

Geospatial Corporation and Subsidiaries

Notes to Unaudited Consolidated Financial Statements

September 30, 2015

Note 4 – Notes Payable (continued)

Long-term notes payable consisted of the following:

	September 30, 2015			December 31, 2014
Notes payable under settlement agreements with former employees, payable monthly with terms of up to 39 months, with interest rates ranging from 0% to 4%	$	167,908		$	218,892
Notes payable under settlement agreements with vendors, payable monthly with terms of up to 60 months, with interest rates ranging from 0% to 32%		43,241			53,741
Total long-term notes payable		211,149			272,633
Less: current portion		(207,482	)		(272,892	)
Long-term notes payable, less current portion	$	3,667		$	39,741

Future maturities of long-term debt are as follows as of September 30, 2015:

Balance of 2015	$	38,074
Year ending December 31, 2016		2,000
Year ending December 31, 2017		2,000
Year ending December 31, 2018		1,166
Thereafter		—
	$	43,240

12

Geospatial Corporation and Subsidiaries

Notes to Unaudited Consolidated Financial Statements

September 30, 2015

Note 5 – Income Taxes

The Company’s provision for (benefit from) income taxes is summarized below:

	Three Months Ended September 30, 2015			Three Months Ended September 30, 2014			Nine months Ended September 30, 2015			Nine months Ended September 30, 2014
Current:
Federal	$	—		$	—		$	—		$	—
State		—			—			—			—
		—			—			—			—
Deferred:
Federal		(220,406	)		(214,109	)		(742,996	)		(523,091	)
State		(69,970	)		(67,971	)		(235,872	)		(166,061	)
		(290,376	)		(282,080	)		(978,868	)		(689,152	)
Total income taxes		(290,376	)		(282,080	)		(978,868	)		(689,152	)
Less:  valuation allowance		290,376			282,080			978,868			689,152
Net income taxes	$	—		$	—		$	—		$	—

The reconciliation of the federal statutory income tax rate to the effective income tax rate is as follows:

	Three Months Ended September 30, 2015			Three Months Ended September 30, 2014			Nine months Ended September 30, 2015			Nine months Ended September 30, 2014
Federal statutory rate		35.0	%		35.0	%		35.0	%		35.0	%
State income taxes (net of federal benefit)		6.5			6.5			6.5			6.5
Valuation allowance		(41.5	)		(41.5	)		(41.5	)		(41.5	)
Effective rate		0.0	%		0.0	%		0.0	%		0.0	%

13

Geospatial Corporation and Subsidiaries

Notes to Unaudited Consolidated Financial Statements

September 30, 2015

Note 5 – Income Taxes (continued)

Significant components of the Company’s deferred tax assets and liabilities are summarized below. A valuation allowance has been established as realization of such assets has not met the more-likely-than-not threshold requirement under FASB ASC 740.

	September 30, 2015			December 31, 2014
Start-up costs	$	39,949		$	47,325
Depreciation		(36,870	)		(37,684	)
Accrued expenses		646,482			378,020
Net operating loss carryforward		15,690,529			14,973,562
Deferred income taxes		16,340,090			15,361,223
Less:  valuation allowance		(16,340,090	)		(15,361,223	)
Net deferred income taxes	$	—		$	—

At September 30, 2015, the Company had federal and state net operating loss carryforwards of approximately $37,809,000. The federal and state net operating loss carryforwards will expire beginning in 2021 and 2026, respectively. The amount of the state net operating loss carryforward that can be utilized each year to offset taxable income is limited by state law.

14

Geospatial Corporation and Subsidiaries

Notes to Unaudited Consolidated Financial Statements

September 30, 2015

Note 6 – Net Loss Per Share of Common Stock

Basic net loss per share are computed by dividing earnings available to common stockholders by the weighted average number of shares of common stock outstanding during the period. Diluted net loss per share reflects per share amounts that would have resulted if dilutive potential common stock had been converted to common stock. Dilutive potential common shares are calculated in accordance with the treasury stock method, which assumes that proceeds from the exercise of all warrants and options are used to repurchase common stock at market value. The number of shares remaining after the proceeds are exhausted represents the potentially dilutive effect of the securities.

The following reconciles amounts reported in the financial statements:

	Three Months Ended September 30, 2015			Three Months Ended September 30, 2014			Nine months Ended September 30, 2015			Nine months Ended September 30, 2014
Net loss	$	(700,717	)	$	(681,325	)	$	(867,930	)	$	(1,668,511	)
Weighted average number of shares of common stock outstanding		138,056,264			124,163,383			136,022,394			105,226,831
Dilutive potential shares of common stock		138,056,264			124,163,383			136,022,394			105,226,831
Net loss per share of common stock:
Basic	$	(0.01	)	$	(0.01	)	$	(0.01	)	$	(0.02	)
Diluted	$	(0.01	)	$	(0.01	)	$	(0.01	)	$	(0.02	)

15

Geospatial Corporation and Subsidiaries

Notes to Unaudited Consolidated Financial Statements

September 30, 2015

Note 6 – Net Loss Per Share of Common Stock (continued)

The following securities were not included in the computation of diluted net loss per share, as their effect would have been anti-dilutive:

	Three Months Ended September 30, 2015		Three Months Ended September 30, 2014		Nine months Ended September 30, 2015		Nine months Ended September 30, 2014
Series B Convertible Preferred Stock		—		5,300,490		1,325,123		21,672,035
Options and warrants to purchase common stock		14,345,798		8,110,405		14,345,798		10,698,719
Warrants to purchase Series B Convertible Preferred Stock		67,646		1,689,792		67,646		2,337,517
Unsecured Convertible Promissory Notes		—		—		—		—
Secured Promissory Note		6,732,841		—		4,310,455		—
Senior Convertible Redeemable Notes		—		2,937,368		1,464,024		2,936,579
Total		21,146,285		18,038,055		21,513,046		37,644,850

16

Geospatial Corporation and Subsidiaries

Notes to Unaudited Consolidated Financial Statements

September 30, 2015

Note 7 – Stock-Based Payments

During the nine months ended September 30, 2015, the Company granted stock appreciation rights on 1,362,500 shares of the Company’s common stock to eligible employees and consultants pursuant to the 2013 Equity Incentive Plan.

During the nine months ended September 30, 2015, the Company granted warrants to purchase 3,962,641 shares of the Company’s common stock to lenders in connection with loans to the Company, and warrants to purchase 1,300,000 shares of the Company’s common stock to consultants.

Note 8 – Gains on Extinguishment of Debt

Due to significant cash flow problems, the Company has negotiated concessions on the amounts of certain liabilities and extensions of payment terms. The Company accounts for such concessions in accordance with Financial Accounting Standards Board Accounting Standards Codification 470-60, Troubled Debt Restructurings by Debtors, and recognizes gains to the extent that the carrying value of the liability exceeds the fair value of the restructured payment plan. Such gains are included as “Gains on extinguishment of debt” in “Other income and expenses” on the Company’s Consolidated Statement of Operations. In addition, the Company has accounts payable that have aged or are expected to age beyond the statute of limitations. The Company is amortizing those liabilities over the remaining term of the statute of limitations. Gains on extinguishment of debt amounted to $73,181 and $74,528 during the three months ended September 30, 2015 and 2014, respectively, and $219,544 and $310,002 during the nine months ended September 30, 2015 and 2014, respectively.

Note 9 – Registration Payment Arrangements

The Company is contractually obligated to issue shares of its common stock to certain investors for failure to register shares of its common stock under the Securities Act of 1933, as amended (the “Securities Act”). The Company has recorded a liability for the estimated number of shares to be issued at the fair value of the stock to be issued. The Company measures fair value by the price of its common stock at its most recent sale. The Company reviews its estimate of the number of shares to be issued and the fair value of the stock to be issued quarterly. The liability is included on the Consolidated Balance Sheet under the heading “accrued registration payment arrangement,” and amounted to $1,334,629 at September 30, 2015, and $2,525,075 at December 31, 2014. Gains or losses resulting from changes in the carrying amount of the liability are included in the Consolidated Statement of Operations in other income and expense under the heading “registration payment arrangements” which amounted to gains of $1,190,446 during the nine months ended September 30, 2015. There were no such gains or losses during the three months ended September 30, 2015, or during the three and nine months ended September 30, 2014.

17

ITEM2: MANAGEMENT’SDISCUSSION&ANALYSISOFFINANCIALCONDITIONANDRESULTSOFOPERATIONS

Overview

YoushouldreadthefollowingManagement’sDiscussionandAnalysisofFinancialConditionandResultsofOperations(“MD&A”)togetherwithour financialstatementsandnotestheretoasofandfortheyearendedDecember31,2014,andforthethreemonthsendedMarch31,2015,filedwithourRegistration StatementonFormS-1onJune12,2015,andourfinancialstatementsandnotestheretoasofandforthethreeandnine monthsendedSeptember 30,2015,whichappear elsewhereinthisQuarterlyReportonForm10-Q.

Weprovidecloud-basedgeospatialsolutionstoaccuratelylocateanddigitallymapundergroundpipelinesandotherinfrastructureinthreedimensions. Ourprofessionalstaffofferstheexpertise,ability,andtechnologiesrequiredtodesignandexecutesolutionsthataredeliveredinacloud-basedGIS(geographic informationsystem)platform.

We believe that the market for aggregating and maintaining positional data for underground assets is maturing, and that business and governmental entitiesarebeginningtounderstandthevalueofsuchdata.Webelievethatthisdevelopingmarketpresentsuswithanopportunitytodeliverlong-termvaluetoour shareholders. In order to realize that value, our primary challenge is to raise working capital sufficient to operate our business, and investment capital to hire employees,acquireassets,andexpandourbusiness.Managementiscurrentlyfocusedonraisingcapital,andplanningtopositionourbusinesstocapitalizeonthe maturing market for positional data once such capital is in place, including identifying new technologies for aggregating positional data, developing our GeoUnderground software, and planning the strategies and processes for our upcoming marketing campaigns. We use financial and non-financial performance indicatorstoassessourbusiness,includingliquiditymeasures,revenues,grossmargins,operatingrevenue,andbacklog.

LiquidityandCapitalResources

AtSeptember 30,2015,wehadcurrentassetsof$486,643,andcurrentliabilitiesof$5,889,358.

OurCompanyhasincurrednetlossessinceinception.Ouroperationsandcapitalrequirementshavebeenfundedbysalesofourcommonandpreferred stockandadvancesfromourchiefexecutiveofficer.AtSeptember 30,2015,currentliabilitiesexceededcurrentassetsby$5,402,715,andtotalliabilitiesexceededtotal assetsby$5,245,896.Thosefactorsraisedoubtsaboutourabilitytocontinueasagoingconcern.

In 2012, we raised approximately $632,000 in cash through private sales of our Series B Convertible Preferred Stock (“Series B Stock”), and converted approximately $215,000 in liabilities to Series B Stock. In 2013, we raised approximately $3,246,000 through private sales of our Series B Stock and common stock, and converted approximately $4,926,000 of liabilities to Series B Stock and common stock. During 2014, we raised approximately $2,430,000 through private sales of our common stock, and approximately $272,000 through the exercise of outstanding warrants to purchase Series B Stock and common stock. In addition,wehavenegotiatedsettlementsorlong-termextensionsonapproximately$1,776,000ofliabilitiesfrom2012through2014.Weenteredintoanagreement with Reduct NV, licensor of our former exclusive technology, on May 10, 2013 that eliminates all prior liabilities to Reduct in consideration for the issuance of 9,000,000 shares of our common stock, warrants to purchase 3,500,000 shares of our common stock, and purchases of $300,000 of equipment from Reduct. The agreement allows us to purchase their products on a non-exclusive basis without the minimum purchase requirements to maintain the exclusive license. On February 26, 2015, an outstanding Senior Secured Redeemable Note with a balance due of approximately $1.6 million was converted into shares of our common stock.

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OnJanuary 16,2015,weissuedaSeniorSecuredPromissoryNotetoHorbergEnterprisesLLC(the“HorbergNote”)intheprincipalamountof$500,000. TheHorbergNotewasdueonApril8,2015,andaccruednointerestthroughtheduedate.TheHorbergNotewassecuredbyliensonallofourassets.Wealso issuedHorbergEnterprises LLCwarrantstopurchase1,500,000sharesofourcommonstockinconsiderationforitspurchasingtheHorbergNote.Proceedsfrom theissuanceoftheHorbergNotewereusedforworkingcapitalpurposes.WerepaidtheHorbergNoteonApril3,2015.

OnApril2,2015,weissuedaSecuredPromissoryNotetoDavidM.Truitt(the“TruittNote”)intheprincipalamountof$1,000,000.TheTruittNoteis dueonOctober2,2015,andbearsinterestat10%perannum.TheTruittNoteissecuredbyliensonallofourassets,andisconvertibleintosharesofourcommon stock at the option of the holder. We also issued Mr. Truitt warrants to purchase 2,000,000 shares of our common stock in consideration for his purchasing the TruittNote.ProceedsfromtheissuanceoftheTruittNotewereusedtorepaytheHorbergNoteandforworkingcapitalpurposes.

During 2015, we raised approximately $421,000 in cash through private sales of our common stock. Also during 2015, we issued Unsecured Convertible Promissory Notes (the “Unsecured Notes”) with principal amounts totaling approximately $299,000, which bear interest at 10% per annum. The Unsecured Notes are convertible into shares of our common stock at the option of the holder. We issued warrants to purchase 408,891 shares of our common stock in connection with the Unsecured Notes. Proceeds from the Unsecured Notes were used for working capital purposes.

OnSeptember17,2014,weenteredintoanAssetPurchaseAgreementtoacquiresubstantiallyalltheassetsofSelectAnalyticsLLC,acompanythat operatestheShaleNavigatorwebsite,andisengagedinthebusinessofaggregating,managing,andsellinginfrastructuredata.PursuanttotheAssetPurchase Agreement,wewillberequiredtopay$160,000incashandissue550,000sharesoftheCompany’scommonstocktothesellerduring2015.

ManagementiscontinuingeffortstosecurefundingsufficientfortheCompany’soperatingandcapitalrequirementsthroughprivatesalesofcommon stock,andtonegotiatesettlementsorextensionsofexistingliabilities.Theproceedsofsuchsalesofstock,ifany,willbeusedtofundgeneralworkingcapital needs.

Beginningin2012,wechangedthefocusofourcompanytopositionustogeneraterevenuefromdataacquisitionanddatamanagement.Weexpanded ourserviceofferingstoprovidedataacquisitionservicesutilizingtwelvedifferenttechnologies.Wedevelopednew,cloud-basedmappingsoftwaretobemarketed under our existing name GeoUndergound that replaces our previous version of GeoUnderground. We currently utilize GeoUnderground to deliver data to customers. We intend to offer GeoUnderground as a subscription-based stand-alone product beginning in the first quarter of 2016. Webelievethatourchangesto ouroperatingfocuswillenableustobegintogeneratesignificantrevenuefromoperations.

Webelievethatouractionsandplannedactionswillenableustofinanceouroperationsbeyondthenexttwelvemonths.

Wedonotbelievethatinflationandchangingpriceswillhaveamaterialimpactonournetsalesandrevenues,oronincomefromcontinuingoperations.

ResultsofOperations

Wehad no sales during the three months ended September 30, 2015, and salesof$20,800duringthenine monthsendedSeptember 30,2015.Costofsaleswere$33,545and$113,114forthethreeandnine months,respectively,endedSeptember 30,2015.Forthethreeandnine monthsendedSeptember 30,2014,saleswere$58,400and$254,151,respectively,andcostofsales were$49,809and$145,626,respectively.Oursaleshavefluctuatedthroughout2015and2014asourabilitytomarketandperformjobswashamperedbyour financialcondition.Weexpectsalesandcostofsalestocontinuetofluctuateasourbusinesscontinuestomature.

Selling,general,andadministrative(“SG&A”)expenseswere$698,559and$2,021,897forthethreeandnine monthsendedSeptember 30,2015,respectively, comparedto$724,098and$1,967,784forthethreeandnine months,respectively,endedSeptember 30,2014. The decrease in SG&A costs for the three months ended September 30, 2015 compared to the three months ended September 30, 2014 was due to decreases in development costs associated with our software, and decreases in professional fees, which was partially offset by an increase in payroll costs related to our expanded technical staff in 2015. TheincreaseinSG&Acostsforthenine months endedSeptember 30,2015comparedtothenine monthsendedSeptember 30,2014 was duetoincreasedpayrollcostsrelatedtoourexpandedtechnicalstaffin2015.

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Otherincomeandexpenseforthethreeandnine monthsendedSeptember 30,2015wasanetincomeof$31,387and$1,246,281,respectively,whichincluded interest expense of $41,794 and $163,709, respectively, gains on extinguishment of debt of $73,181 and $219,544, respectively, and gains related to registration paymentarrangementsof$0and$1,190,446,respectively.Otherincomeandexpenseforthethreeandnine monthsendedSeptember 30,2014wasanetincomeof $34,182and$190,748,respectively,whichincludedinterestexpenseof$40,346and$119,254,respectively,andgainsonextinguishmentofdebtof$74,528and $310,002,respectively.Theincreaseininterestexpensein2015wasduetointerestonnewloansin2015,andinterestonhigherbalancesforexistingloans.The gainsonextinguishmentofdebtresultedfromsettlementagreementsonpriorliabilities.

Gains or expense related to registration payment arrangements result from a series of Stock Subscription Agreements we entered into in 2009 and 2010 (the “Stock Subscription Agreements”). We are required to register the shares of common stock sold pursuant to the Stock Subscription Agreements under the SecuritiesAct.OurfailuretoregisterthesharesofcommonstockundertheSecuritiesActresultedinourobligationtoissueadditionalshares(“PenaltyShares”)to investors who purchased shares pursuant to the Stock Subscription Agreements. We recorded a liability on our books for the value of the estimated number of shares to be issued. We incur losses on our registration payment arrangements when the estimated number of Penalty Shares to be issued increases, or when the value of our common stock increases. We record gains on our registration payment arrangements when the estimated number of Penalty Shares to be issued decreases,orwhenthevalueofourcommonstockdecreases.

During the nine months ended September 30, 2015, we had gains related to registration payment arrangements due to decreases in the value of our commonstockandtheestimatednumberofPenaltySharestobeissued.Wehadnogainsorexpenserelatedtoregistrationpaymentarrangementsduringthenine monthsendedSeptember 30,2014.Weexpectthatincomeorexpenserelatedtoregistrationpaymentarrangementswillfluctuateasthepriceofourcommon stockandtheestimateofthenumberofPenaltySharestobeissuedfluctuate.

Wehadnobenefitfromincometaxesduringthethreeandnine monthsendedSeptember 30,2015or2014,asourdeferredtaxbenefitwascompletelyoffsetbya valuationallowanceduetotheuncertaintyofrealizationofthebenefit.

Off-BalanceSheetArrangements

TheCompanyhadnooff-balancesheetarrangementsasofSeptember 30,2015.

ApplicationofCriticalAccountingPolicies

We prepare our financial statements in conformity with accounting principles generally accepted in the United States of America, which requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financialstatements,andthereportedamountsofrevenuesandexpensesduringthereportingperiod.Actualresultscoulddifferfromthoseestimates.Estimatesand assumptionswhich,inouropinion,aresignificanttotheunderlyingamountsincludedinthefinancialstatementsandforwhichitwouldbereasonablypossiblethat futureeventsorinformationcouldchangethoseestimatesinclude:

RegistrationPaymentArrangements.Wearecontractuallyobligatedtoissuesharesofourcommonstocktocertaininvestorsforfailuretoregistertheir sharesofourcommonstockundertheSecuritiesAct.Wehaverecordedaliabilityfortheestimatednumberofsharestobeissuedatthefairvalueofthestockto beissued.Wereviewonaquarterlybasisourestimateofthenumberofsharestobeissuedandthefairvalueofthestocktobeissued.

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Realization of Deferred Income Tax Assets. We provide a net deferred tax asset or liability equal to the expected future tax benefit or expense of temporary reporting differences between financial reporting and tax accounting methods and any available operating loss or tax credit carryovers. At September 30, 2015,wehadadeferredtaxassetresultingprincipallyfromournetoperatinglossdeductioncarryforwardavailablefortaxpurposesinfutureyears.Thisdeferred taxassetiscompletelyoffsetbyavaluationallowanceduetotheuncertaintyofrealization.Weevaluatethenecessityofthevaluationallowancequarterly.

Estimated Costs to Complete Fixed-Price Contracts. We record revenues for fixed-price contracts under the percentage-of-completion method of accounting,wherebyrevenuesarerecognizedratablyasthosecontractsarecompleted.Thisrateisbasedprimarilyontheproportionofcontractcostsincurredto datetototalcontractcostsprojectedtobeincurredfortheentireproject,ortheproportionofmeasurableoutputcompletedtodatetototaloutputanticipatedforthe entireproject.Wereviewourestimatesofcoststocompleteeachcontractquarterly,andmakeadjustmentsifnecessary.AtSeptember 30,2015,wedonotbelievethat materialchangesto contractcostestimatesatcompletionforanyofouropencontractsarereasonablylikelytooccur.

ITEM3. QUANTITATIVEANDQUALITATIVEDISCLOSURESABOUTMARKETRISK

InterestRateRisk—Interestrateriskreferstofluctuationsinthevalueofasecurityresultingfromchangesinthegenerallevelofinterestrates.Wedonot havesignificantshort-terminvestments.Accordingly,webelievethatwedonothaveamaterialinterestrateexposure.

ForeignCurrencyRisk—OurfunctionalcurrencyistheUnitedStatesdollar.Wedonotcurrentlyhaveanyassetsorliabilitiesdenominatedinforeign currencies.Consequently,wehavenodirectexposuretoforeigncurrencyrisk.

CommodityPriceRisk—Basedonthenatureofourbusiness,wehavenodirectexposuretocommoditypricerisk.

ITEM4. CONTROLS ANDPROCEDURES.

DisclosureControlsandProcedures

TheCompanymaintainsdisclosurecontrolsandproceduresthataredesignedtoensurethatinformationrequiredtobedisclosedinthereportsthatthe CompanyfilesorsubmitsundertheSecuritiesExchangeActof1934isrecorded,processed,summarized,andreportedwithinthetimeperiodsspecifiedinthe United States Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to the Company’s management,includingitsChiefExecutiveOfficerandChiefFinancialOfficer,asappropriate,toallowtimelydecisionsregardingrequireddisclosure.

Asoftheendoftheperiodcoveredbythisreport,theCompanycarriedoutanevaluation,underthesupervisionandwiththeparticipationofCompany management,includingtheChiefExecutiveOfficerandtheChiefFinancialOfficer,oftheeffectivenessofthedesignandoperationoftheCompany’sdisclosure controlsandprocedurespursuanttotheSecuritiesExchangeActof1934(“ExchangeAct”)Rules13a-15(e)and15d-15(e).Basedupon,andasofthedateofthis evaluation,theChiefExecutiveOfficerandtheChiefFinancial OfficerconcludedthattheCompany’sdisclosurecontrolsandprocedureswereeffective.

ChangesinInternalControloverFinancialReporting

TherewerenochangesinourinternalcontroloverfinancialreportingduringthethreemonthsendedSeptember 30,2015thathavemateriallyaffected,orare reasonablylikelytomateriallyaffect,ourinternalcontroloverfinancialreporting.

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PART II - OTHER INFORMATION

ITEM2. SALESOFUNREGISTEREDEQUITYSECURITIESANDUSEOFPROCEEDS

Between July 9, 2015 and September 14, 2015,theCompanysold 650,000sharesofitscommonstocktofiveinvestorsatasalespriceof$0.20pershare,foranaggregatesalespriceof$130,000.Thesalestookplaceinaseriesofprivateplacementtransactionspursuanttotheexemptionfromtheregistrationrequirementsof theSecuritiesActprovidedbySection4(2)oftheSecuritiesActand/orRegulationD.Thepurchasersareaccreditedinvestors,andtheCompanyconductedtheprivateplacementswithoutanygeneralsolicitationoradvertisement,andwitharestrictiononresale.

Between October 27, 2015 and November 10, 2015,theCompanysold 652,500sharesofitscommonstockto fourinvestorsatasalespriceof$0.10pershare,foranaggregatesalespriceof$261,000.ThesalestookplaceinaseriesofprivateplacementtransactionspursuanttotheexemptionfromtheregistrationrequirementsoftheSecuritiesActprovidedbySection4(2)oftheSecuritiesActand/orRegulationD.Thepurchasersareaccreditedinvestors,andtheCompanyconductedtheprivateplacementswithoutanygeneralsolicitationoradvertisement,andwitharestrictiononresale.

Between July 8,2015 and July 29, 2015,theCompanyissuedUnsecuredConvertiblePromissoryNotes to three lendersinthe aggregate principalamountof$150,000,whichisconvertibleintosharesofcommonstockattheoptionoftheholders,andwarrantstopurchase 210,000sharesofitscommonstockatanexercisepriceof$0.20pershare.The issuancewasmadepursuanttotheexemptionfromtheregistrationrequirementsoftheSecuritiesActprovidedbySection4(2)oftheSecuritiesActand/orRegulationD.Therecipients areaccreditedinvestors,andtheCompanyissuedthe Unsecured Convertible Promissory Notesandthewarrantswithoutanygeneralsolicitationoradvertisement andwitharestrictiononresale.

On August 13,2015,theCompanyissued anUnsecuredConvertiblePromissoryNote to a lenderintheprincipalamountof$30,000,whichis convertibleintosharesofcommonstockattheoptionoftheholder,andwarrantstopurchase 3,000sharesofitscommonstockatanexercisepriceof$0.25pershare.TheissuancewasmadepursuanttotheexemptionfromtheregistrationrequirementsoftheSecuritiesActprovidedbySection4(2)oftheSecuritiesActand/orRegulationD.Therecipient is anaccreditedinvestor,andtheCompanyissuedthe Unsecured Convertible Promissory Noteandthewarrantswithoutanygeneralsolicitationoradvertisementandwitharestrictiononresale.

On September 30,2015,theCompanyissuedtoThomasR.Oxenreiter,theCompany’sChiefFinancialOfficerandDirector, an Unsecured Convertible Promissory Note in the principal amount of $6,891, which is convertible into shares of the Company’s common stock at the option of the holder,andwarrantstopurchase 6,891sharesoftheCompany’scommonstockatanexercisepriceof$0.20pershare.Theissuancewasmadepursuanttotheexemption fromtheregistrationrequirementsoftheSecuritiesActprovidedbySection4(2)oftheSecuritiesActand/orRegulationD.Mr.Oxenreiterisanaccreditedinvestor,andtheCompanyissuedthecommonstockandwarrantswithoutanygeneralsolicitationoradvertisementandwitharestrictiononresale.

On October 13,2015,theCompanyissuedtoThomasR.Oxenreiter,theCompany’sChiefFinancialOfficerandDirector, an Unsecured Convertible Promissory Note in the principal amount of $12,000, which is convertible into shares of the Company’s common stock at the option of the holder,andwarrantstopurchase 12,000sharesoftheCompany’scommonstockatanexercisepriceof$0.15pershare.Theissuancewasmadepursuanttotheexemption fromtheregistrationrequirementsoftheSecuritiesActprovidedbySection4(2)oftheSecuritiesActand/orRegulationD.Mr.Oxenreiterisanaccreditedinvestor,andtheCompanyissuedthecommonstockandwarrantswithoutanygeneralsolicitationoradvertisementandwitharestrictiononresale.

ITEM6. EXHIBITS

Exhibit	Description
31.1	Rule 13a-14(a) Certification of Mark A. Smith
31.2	Rule 13a-14(a) Certification of Thomas R. Oxenreiter
32.1	Section 1350 Certification of Chief Executive Officer
32.2	Section 1350 Certification of Chief Financial Officer
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

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SIGNATURES

PursuanttotherequirementsoftheSecuritiesExchangeActof1934,theRegistranthasdulycausedthisreporttobesignedonitsbehalfbytheundersigned hereunto dulyauthorized.

	Geospatial Corporation (Registrant)
	(Registrant)
Date: November 20, 2015	By:	/S/   MARK A. SMITH
	Name: Title:	Mark A. Smith Chief Executive Officer
	By:	/S/ THOMAS R. OXENREITER
	Name:	Thomas R. Oxenreiter
	Title:	Chief Financial Officer

EX-31.1

GEOSPATIAL CORPORATION 10-Q

Exhibit31.1

CertificationPursuanttoSection 302 of
the Sarbanes-Oxley Act of 2002

I,MarkA.Smith,certifythat:

1. IhavereviewedthisQuarterlyReportforthequarterendedSeptember 30,2015onForm10-QofGeospatialCorporation;

2. Basedonmyknowledge,thisreportdoesnotcontainanyuntruestatementofamaterialfactoromittostateamaterialfactnecessarytomakethestatements made,inlightofthecircumstancesunderwhichsuchstatementsweremade,notmisleadingwithrespecttotheperiodcoveredbythisreport;

3. Basedonmyknowledge,thefinancialstatements,andotherfinancialinformationincludedinthisreport,fairlypresentinallmaterialrespectsthefinancial condition,resultsofoperationsandcashflowsoftheregistrantasof,andfor,theperiodspresentedinthisreport;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules13a-15(e)and15d-15(e))andinternalcontroloverfinancialreporting(asdefinedinExchangeActRules13a-15(f)and15d-15(f))fortheregistrantandhave:

a.  Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure thatmaterialinformationrelatingtotheregistrant,includingitsconsolidatedsubsidiaries,ismadeknowntousbyotherswithinthoseentities,particularly duringtheperiodinwhichthisreportisbeingprepared;

b. Designedsuchinternalcontroloverfinancialreporting,orcausedsuchinternalcontroloverfinancialreportingtobedesignedunderoursupervision,to providereasonableassuranceregardingthereliabilityoffinancialreportingandthepreparationoffinancialstatementsforexternalpurposesinaccordance withgenerallyacceptedaccountingprinciples;

c.  Evaluatedtheeffectivenessoftheregistrant’sdisclosurecontrolsandproceduresandpresentedinthisreportourconclusionsabouttheeffectivenessof thedisclosurecontrolsandprocedures,asoftheendoftheperiodcoveredbythisreportbasedonsuchevaluation;and

d. Disclosedinthisreportanychangeintheregistrant’sinternalcontroloverfinancialreportingthatoccurredduringtheregistrant’smostrecentfiscal quarter(theregistrant’sfourthfiscalquarterinthecaseofanannualreport)thathasmateriallyaffected,orisreasonablylikelytomateriallyaffect,the registrant’sinternalcontroloverfinancialreporting.

5. Theregistrant’sothercertifyingofficersandIhavedisclosed,basedonourmostrecentevaluationofinternalcontroloverfinancialreporting,totheregistrant’s auditorsandtheauditcommitteeoftheregistrant’sboardofdirectors(orpersonsperformingtheequivalentfunctions):

a.  Allsignificantdeficienciesandmaterialweaknessesinthedesignoroperationofinternalcontroloverfinancialreportingwhicharereasonablylikelyto adverselyaffecttheregistrant’sabilitytorecord,process,summarizeandreportfinancialinformation;and

b. Anyfraud,whetherornotmaterial,thatinvolvesmanagementorotheremployeeswhohaveasignificantroleintheregistrant’sinternalcontrolover financialreporting.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: November 20,2015	By:	/s/ Mark Smith
	Name: Title:	Mark A.Smith Chief Executive Officer

EX-31.2

GEOSPATIAL CORPORATION 10-Q

Exhibit31.2

CertificationPursuanttoSection302
oftheSarbanes-OxleyActof2002

I,ThomasR.Oxenreiter,certifythat:

1. IhavereviewedthisQuarterlyReportforthequarterendedSeptember 30,2015onForm10-QofGeospatialCorporation;

2. Basedonmyknowledge,thisreportdoesnotcontainanyuntruestatementofamaterialfactoromittostateamaterialfactnecessarytomakethestatements made,inlightofthecircumstancesunderwhichsuchstatementsweremade,notmisleadingwithrespecttotheperiodcoveredbythisreport;

3. Basedonmyknowledge,thefinancialstatements,andotherfinancialinformationincludedinthisreport,fairlypresentinallmaterialrespectsthefinancial condition,resultsofoperationsandcashflowsoftheregistrantasof,andfor,theperiodspresentedinthisreport;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules13a-15(e)and15d-15(e))andinternalcontroloverfinancialreporting(asdefinedinExchangeActRules13a-15(f)and15d-15(f))fortheregistrantandhave:

a.  Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure thatmaterialinformationrelatingtotheregistrant,includingitsconsolidatedsubsidiaries,ismadeknowntousbyotherswithinthoseentities,particularly duringtheperiodinwhichthisreportisbeingprepared;

b. Designedsuchinternalcontroloverfinancialreporting,orcausedsuchinternalcontroloverfinancialreportingtobedesignedunderoursupervision,to providereasonableassuranceregardingthereliabilityoffinancialreportingandthepreparationoffinancialstatementsforexternalpurposesinaccordance withgenerallyacceptedaccountingprinciples;

c.  Evaluatedtheeffectivenessoftheregistrant’sdisclosurecontrolsandproceduresandpresentedinthisreportourconclusionsabouttheeffectivenessof thedisclosurecontrolsandprocedures,asoftheendoftheperiodcoveredbythisreportbasedonsuchevaluation;and

d. Disclosedinthisreportanychangeintheregistrant’sinternalcontroloverfinancialreportingthatoccurredduringtheregistrant’smostrecentfiscal quarter(theregistrant’sfourthfiscalquarterinthecaseofanannualreport)thathasmateriallyaffected,orisreasonablylikelytomateriallyaffect,the registrant’sinternalcontroloverfinancialreporting.

5. Theregistrant’sothercertifyingofficersandIhavedisclosed,basedonourmostrecentevaluationofinternalcontroloverfinancialreporting,totheregistrant’s auditorsandtheauditcommitteeoftheregistrant’sboardofdirectors(orpersonsperformingtheequivalentfunctions):

a.  Allsignificantdeficienciesandmaterialweaknessesinthedesignoroperationofinternalcontroloverfinancialreportingwhicharereasonablylikelyto adverselyaffecttheregistrant’sabilitytorecord,process,summarizeandreportfinancialinformation;and

b. Anyfraud,whetherornotmaterial,thatinvolvesmanagementorotheremployeeswhohaveasignificantroleintheregistrant’sinternalcontrolover financialreporting.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: November 20,2015	By:	/s/ Thomas R. Oxenreiter
	Name: Title:	Thomas R. Oxenreiter Chief Financial Officer

EX-32.1

GEOSPATIAL CORPORATION 10-Q

Exhibit32.1

CERTIFICATIONPURSUANTTOTITLE18,UNITEDSTATESCODE,SECTION1350

AsAdoptedPursuanttoSection906

oftheSarbanes-OxleyActof2002

InconnectionwiththeQuarterlyReportofGeospatialCorporation(the“Company”)onForm10-QfortheperiodendingSeptember 30,2015asfiledwiththe SecuritiesandExchangeCommission(the“Report”),I,MarkASmith,ChiefExecutiveOfficeroftheCompany,certify,pursuantto18U.S.C.Section1350,as adoptedpursuanttoSection906oftheSarbanes-OxleyActof2002,that:

(1) TheReportfullycomplieswiththerequirementsofsection13(a)or15(d)oftheSecuritiesExchangeActof1934,asamended;and

(2) TheinformationcontainedintheReportfairlypresents,inallmaterialrespects,thefinancialconditionandresultofoperationsoftheCompany.

Date: November 20, 2015	By:	/s/ Mark A. Smith
		Mark A. Smith Chief Executive Officer

EX-32.2

GEOSPATIAL CORPORATION 10-Q

Exhibit32.2

CERTIFICATIONPURSUANTTOTITLE18,UNITEDSTATESCODE,SECTION1350

AsAdoptedPursuanttoSection906

oftheSarbanes-OxleyActof2002

InconnectionwiththeQuarterlyReportofGeospatialCorporation(the“Company”)onForm 10-QfortheperiodendingSeptember 30,2015asfiledwiththe SecuritiesandExchangeCommission(the“Report”),I,Thomas R.Oxenreiter,ChiefFinancialOfficeroftheCompany,certify,pursuantto18U.S.C. Section1350,asadoptedpursuanttoSection 906oftheSarbanes-OxleyActof2002,that:

(1) TheReportfullycomplieswiththerequirementsofsection13(a)or15(d)oftheSecuritiesExchangeActof1934,asamended;and

(2) TheinformationcontainedintheReportfairlypresents,inallmaterialrespects,thefinancialconditionandresultofoperationsoftheCompany.

Date: November 20,2015	By:	/s/ ThomasR.Oxenreiter
	Name: Title:	ThomasR.Oxenreiter Chief Financial Officer

XML

Net Loss Per Share of Common Stock (Details 1) - shares	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Total number of securities anti diliutive	21,146,285	18,038,055	21,513,046	37,644,850
Options and warrants to purchase common stock [Member]
Total number of securities anti diliutive	14,345,798	8,110,405	14,345,798	10,698,719
Warrants to purchase Series B Convertible Preferred Stock [Member]
Total number of securities anti diliutive	67,646	1,689,792	67,646	2,337,517
Secured Promissory Note [Member]
Total number of securities anti diliutive	6,732,841		4,310,455
Series B Convertible Preferred Stock [Member]
Total number of securities anti diliutive		5,300,490	1,325,123	21,672,035
Senior Convertible Redeemable Notes [Member]
Total number of securities anti diliutive		2,937,368	1,464,024	2,936,579

XML

Notes Payable (Details) - USD ($)	Sep. 30, 2015	Dec. 31, 2014
Current portion of long-term notes payable	$ 207,482	$ 232,892
Current notes payable	1,545,410	$ 232,892
10% Secured Promissory Note Due October 2, 2015 [Member]
Current notes payable	1,050,142
Unsecured Convertible Promissory Note Due November 4, 2015 [Member]
Current notes payable	$ 287,786

XML

Related Party Transactions

9 Months Ended

Sep. 30, 2015

Related Party Transactions [Abstract]

Related Party Transactions

Note 3 – Related-Party Transactions

The Company leases its headquarters building from Mark A. Smith, the Company’s Chairman and Chief Executive Officer. The building has approximately 3,200 square feet of office space, and is used by the Company’s corporate, technical, and operations staff. The Company incurred $19,500 of lease expense during the three months ended September 30, 2015 and 2014, and $58,500 of lease expense during the nine months ended September 30, 2015 and 2014. The lease is cancellable by either party upon 30 days’ notice.

On November 9, 2012, the Company and Mr. Smith entered into a Lease Agreement, pursuant to which the Company leases a field vehicle from Mr. Smith. The lease is for 60 months, and is for substantially the same terms for which Mr. Smith leases the vehicle from the manufacturer. Interest on the lease amounted to $59 and $196, respectively, for the three months and nine months ended September 30, 2015, and $77 and $346, respectively, for the three and nine months ended September 30, 2014. The lease is recorded as a capital lease. At September 30, 2015, gross assets recorded under the lease and associated accumulated depreciation were $16,870 and $9,700, respectively. Future minimum payments under the capital lease are as follows as of September 30, 2015:

Balance of 2015	$	907
Year ending December 31, 2016		3,628
Year ending December 31, 2017		3,326
Thereafter		—
Total minimum payments		7,861
Less:  minimum interest payments		(250	)
Minimum principal payments	$	7,611

During the three months ended September 30, 2015, Thomas R. Oxenreiter, the Company’s Chief Financial Officer, loaned the Company $6,891. During the three and nine months ended September 30, 2015, interest on the loan at 10% per annum totaled $2. The Company issued warrants to purchase 6,891 shares of the Company’s common stock at $0.20 per share in connection with the loan.

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Income Taxes (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Deferred:
Federal	$ (220,406)	$ (214,109)	$ (742,996)	$ (523,091)
State	(69,970)	(67,971)	(235,872)	(166,061)
Deferred Federal and State	(290,376)	(282,080)	(978,868)	(689,152)
Total income taxes	(290,376)	(282,080)	(978,868)	(689,152)
Less: valuation allowance	$ 290,376	$ 282,080	$ 978,868	$ 689,152

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Income Taxes (Details Narrative)	Sep. 30, 2015 USD ($)
Income Taxes Details Narrative
Federal and state net operating loss carryforwards	$ 37,809,000

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Income Taxes (Details 1)	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Income Taxes Details 1
Federal statutory rate	35.00%	35.00%	35.00%	35.00%
State income taxes (net of federal benefit)	6.50%	6.50%	6.50%	6.50%
Valuation allowance	(41.50%)	(41.50%)	(41.50%)	(41.50%)
Effective rate	0.00%	0.00%	0.00%	0.00%

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Income Taxes (Details 2) - USD ($)	Sep. 30, 2015	Dec. 31, 2014
Income Taxes Details 2
Start-up costs	$ 39,949	$ 47,325
Depreciation	(36,870)	(37,684)
Accrued expenses	646,482	378,020
Net operating loss carryforward	15,690,529	14,973,562
Deferred income taxes	16,340,090	15,361,223
Less: valuation allowance	$ (16,340,090)	$ (15,361,223)
Net deferred income taxes

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Accrued Expenses

9 Months Ended

Sep. 30, 2015

Payables and Accruals [Abstract]

Accrued Expenses

Note 2 – Accrued Expenses

Accrued expenses consisted of the following:

	September 30,		December 31,
	2015		2014
Payroll and taxes	$	1,529,075	$	1,134,918
Accounting		56,893		67,280
Insurance		74,352		33,902
Contractors and subcontractors		191,384		60,848
Other		78,941		56,584
Accrued expenses	$	1,930,645	$	1,353,532

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Net Loss Per Share of Common Stock (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Net Loss Per Share Of Common Stock Details
Net loss	$ (700,717)	$ (681,325)	$ (867,930)	$ (1,668,511)
Weighted average number of shares of common stock outstanding	138,056,264	124,163,383	136,022,394	105,226,831
Dilutive potential shares of common stock	138,056,264	124,163,383	136,022,394	105,226,831
Net loss per share of common stock:
Basic (in dollars per share)	$ (0.01)	$ (0.01)	$ (0.01)	$ (0.02)
Diluted (in dollars per share)	$ (0.01)	$ (0.01)	$ (0.01)	$ (0.02)

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Consolidated Balance Sheets (Unaudited) - USD ($)	Sep. 30, 2015	Dec. 31, 2014
Current assets:
Cash and cash equivalents	$ 23,202	$ 17,723
Accounts receivable		32,800
Prepaid expenses and other current assets	210,569	180,689
Total current assets	233,771	231,212
Property and equipment:
Field equipment	339,079	339,079
Field vehicles	43,285	43,285
Total property and equipment	382,364	382,364
Less: accumulated depreciation	(217,720)	(126,864)
Net property and equipment	164,644	255,500
Total assets	398,415	486,712
Current liabilities:
Accounts payable	636,284	740,151
Accrued expenses	1,930,645	1,353,532
Due to related parties	179,172	137,910
Notes payable to related parties	6,893	29,047
Current portion of capital lease liability to related party	3,453	3,379
Senior convertible redeemable notes, net of deferred debt issue costs		1,525,025
Notes payable, net of deferred debt issue costs	1,545,410	232,892
Accrued registration payment arrangement	1,334,629	2,525,075
Total current liabilities	5,636,486	6,547,011
Non-current liabilities:
Notes payable	3,667	39,741
Capital lease liability to related party	4,158	6,757
Total non-current liabilities	7,825	46,498
Total liabilities	5,644,311	6,593,509
Stockholders' deficit:
Preferred stock: Undesignated, $0.001 par value; 20,000,000 shares authorized at September 30, 2015 and December 31, 2014; no shares issued and outstanding September 30, 2015 and December 31, 2014; Series B Convertible Preferred Stock, $0.001 par value; 5,000,000 shares authorized at September 30, 2015 and December 31, 2014; 0 and 530,049 shares issued and outstanding at September 30, 2015 and December 31, 2014, respectively		530
Common stock, $.001 par value; 350,000,000 shares authorized at September 30, 2015 and December 31, 2014;138,456,264 and 126,235,177 shares issued and outstanding at September 30, 2015 and December 31, 2014, respectively	138,456	126,235
Additional paid-in capital	35,313,551	33,596,411
Accumulated deficit	(40,697,903)	(39,829,973)
Total stockholders' deficit	(5,245,896)	(6,106,797)
Total liabilities and stockholders' deficit	$ 398,415	486,712
Series B Preferred Stock [Member]
Stockholders' deficit:
Preferred stock: Undesignated, $0.001 par value; 20,000,000 shares authorized at September 30, 2015 and December 31, 2014; no shares issued and outstanding September 30, 2015 and December 31, 2014; Series B Convertible Preferred Stock, $0.001 par value; 5,000,000 shares authorized at September 30, 2015 and December 31, 2014; 0 and 530,049 shares issued and outstanding at September 30, 2015 and December 31, 2014, respectively		$ 530

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Consolidated Statements of Cash Flows (Unaudited) - USD ($)	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Cash flows from operating activities:
Net income (loss)	$ (867,930)	$ (1,668,511)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation	90,856	71,026
Amortization of deferred debt issuance costs	53,114
Gain on extinguishment of debt	(219,543)	(310,002)
Issuance of common stock for services		82,500
Registration payment arrangements	(1,190,446)
Accrued interest payable	104,207	108,812
Changes in operating assets and liablities:
Accounts receivable	32,800	102,450
Prepaid expenses and other current assets	(29,880)	(152,082)
Accounts payable	115,676	73,265
Accrued expenses	575,099	10,832
Due to related parties	41,262	29,619
Other long-term liabilities		(19,887)
Net cash used in operating activities	(1,294,784)	(1,671,978)
Cash flows from investing activities:
Purchase of property, plant and equipment		(197,188)
Net cash used in investing activities		(197,188)
Cash flows from financing activities:
Proceeds from issuance of notes payable	1,780,000
Proceeds from issuance of notes payable to related parties	6,891
Principal payments on notes payable	(590,655)	(119,175)
Principal payments on capital lease liabilities	(2,525)	(2,453)
Deferred debt issuance costs paid	(53,250)
Proceeds from sale of common stock, net of offering costs	159,802	2,236,086
Proceeds from exercise of warrants to purchase common stock, net of offering costs		5,332
Proceeds from exercise of warrants to purchase Series B Convertible Preferred Stock, net of offering costs		266,571
Repurchase of shares of common stock for cancellation		(1,114,688)
Net cash provided by financing activities	1,300,263	1,271,673
Net change in cash and cash equivalents	5,479	(597,493)
Cash and cash equivalents at beginning of period	17,723	778,597
Cash and cash equivalents at end of period	23,202	181,104
Supplemental disclosures:
Cash paid during period for interest	6,386	10,442
Non-cash transactions:
Issuance of common stock for services		82,500
Issuance of common stock in settlement of liabilities		$ 50,000
Conversion of senior convertible redeemable notes to common stock	$ 1,569,029

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Gains on Extinguishment of Debt (Details Narrative) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Gains On Extinguishment Of Debt Details Narrative
Gain on extinguishment of debt	$ 73,181	$ 74,528	$ 219,543	$ 310,002

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Related-Party Transactions (Details Narrative)	3 Months Ended		9 Months Ended
	Sep. 30, 2015 USD ($) ft² $ / shares shares	Sep. 30, 2014 USD ($)	Sep. 30, 2015 USD ($) ft² $ / shares shares	Sep. 30, 2014 USD ($)
Interest on note	$ 41,794	$ 40,346	$ 163,709	$ 119,254
Board of Directors Chairman [Member]
Area of office space | ft²	3,200		3,200
Lease expenses	$ 19,500	19,500	$ 58,500	$ 58,500
Lease term				60 months
Interest on lease	59	$ 196	77	$ 346
Gross assets under capital lease	16,870		16,870
Accumulated depreciation	$ 9,700		$ 9,700
Number of shares upon warrant exercise | shares	6,891		6,891
Exercise price (per share) | $ / shares	$ 0.20		$ 0.20
Chief Financial Officer [Member]
Interest on note	$ 2
Interest rate	10.00%		10.00%
Note amount	$ 6,891		$ 6,891

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Registration Payment Arrangements (Details Narrative) - USD ($)	9 Months Ended
	Sep. 30, 2015	Dec. 31, 2014
Commitments and Contingencies Disclosure [Abstract]
Registration payment arrangements	$ 1,190,446
Accrued registration payment arrangement	$ 1,334,629	$ 2,525,075

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Notes Payable (Details Narrative)	9 Months Ended
	Sep. 30, 2015
10% Secured Promissory Note Due October 2, 2015 [Member]
Interest rate	10.00%
Due date of debt	Oct. 02, 2015
Unsecured Convertible Promissory Note Due November 4, 2015 [Member]
Interest rate	10.00%
Due date of debt	Nov. 04, 2015
Notes Payable To Former Employees [Member]
Term of debt	39 months
Interest rate - minimum	0.00%
Interest rate - maximum	4.00%
Notes Payable To Vendors [Member]
Term of debt	60 months
Interest rate - minimum	0.00%
Interest rate - maximum	32.00%

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Basis of Presentation

9 Months Ended

Sep. 30, 2015

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

Note 1 – Basis of Presentation

The Unaudited Consolidated Financial Statements included herein have been prepared by Geospatial Corporation (the “Company”) in accordance with generally accepted accounting principles for interim financial information and regulations contained in the Securities Exchange Act of 1934, as amended. Accordingly, the accompanying Unaudited Consolidated Financial Statements do not include all of the information and notes required by accounting principles generally accepted in the United States of America for complete financial statements. The accompanying Unaudited Consolidated Financial Statements as of and for the three and nine months ended September 30, 2015 should be read in conjunction with the Company’s Financial Statements as of and for the year ended December 31, 2014. In the opinion of the Company’s management, all adjustments considered necessary for a fair statement of the accompanying Unaudited Consolidated Financial Statements have been included, and all adjustments, unless otherwise discussed in the Notes to the Unaudited Condensed Consolidated Financial Statements, are of a normal and recurring nature. Operating results for the three and nine months ended September 30, 2015 are not necessarily indicative of the results that may be expected for the year ending December 31, 2015, or any other interim periods, or any future year or period.

The use of accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.

The Condensed Consolidated Financial Statements include the accounts of the Company and its subsidiary, Geospatial Mapping Systems, Inc. All intercompany accounts and transactions have been eliminated.

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Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares	Sep. 30, 2015	Dec. 31, 2014
Common Stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common Stock, shares authorized	350,000,000	350,000,000
Common Stock, shares issued	138,456,264	126,235,177
Common Stock, shares outstanding	138,456,264	126,235,177
Undesignated Preferred Stock[Member]
Preferred stock, par value (in dollars per share)	$ 0.001	$ 0.001
Preferred Stock, shares authorized	20,000,000	20,000,000
Series B Preferred Stock [Member]
Preferred stock, par value (in dollars per share)	$ 0.001	$ 0.001
Preferred Stock, shares authorized	5,000,000	5,000,000
Preferred stock, shares issued	0	530,049
Preferred stock, shares outstanding	0	530,049

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Related Party Transactions (Tables)

9 Months Ended

Sep. 30, 2015

Related Party Transactions [Abstract]

Schedule of future minimum capital leases

Future minimum payments under the capital lease are as follows as of September 30, 2015:

Balance of 2015	$	907
Year ending December 31, 2016		3,628
Year ending December 31, 2017		3,326
Thereafter		—
Total minimum payments		7,861
Less:  minimum interest payments		(250	)
Minimum principal payments	$	7,611

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Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2015	Nov. 16, 2015
Document And Entity Information
Entity Registrant Name	Geospatial Corp
Entity Central Index Key	0001011395
Document Type	10-Q
Document Period End Date	Sep. 30, 2015
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Is Entity a Well-known Seasoned Issuer?	No
Is Entity a Voluntary Filer?	No
Is Entity's Reporting Status Current?	Yes
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		141,066,264
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2015

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Notes Payable (Tables)

9 Months Ended

Sep. 30, 2015

Debt Disclosure [Abstract]

Schedule of current notes payable

Current notes payable consisted of the following:

	September 30, 2015		December 31, 2014
Secured Promissory Note payable to an individual, due October 2, 2015, bearing interest at 10% per annum, plus warrants to purchase the common stock	$	1,050,142	$	—
Unsecured Convertible Promissory Notes payable to individuals, due at various times through November 4, 2015, bearing interest at 10% plus warrants to purchase common stock		287,786		—
Current portion of long-term notes payable		207,482		232,892
Current notes payable	$	1,545,410	$	232,892

Schedule of long-term notes payable

Long-term notes payable consisted of the following:

	September 30, 2015			December 31, 2014
Notes payable under settlement agreements with former employees, payable monthly with terms of up to 39 months, with interest rates ranging from 0% to 4%	$	167,908		$	218,892
Notes payable under settlement agreements with vendors, payable monthly with terms of up to 60 months, with interest rates ranging from 0% to 32%		43,241			53,741
Total long-term notes payable		211,149			272,633
Less: current portion		(207,482	)		(272,892	)
Long-term notes payable, less current portion	$	3,667		$	39,741

Schedule of future maturities of long-term debt

Future maturities of long-term debt are as follows as of September 30, 2015:

Balance of 2015	$	38,074
Year ending December 31, 2016		2,000
Year ending December 31, 2017		2,000
Year ending December 31, 2018		1,166
Thereafter		—
	$	43,240

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Consolidated Statements of Operations (Unaudited) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Income Statement [Abstract]
Sales		$ 58,400	$ 20,800	$ 254,151
Cost of sales	$ 33,545	49,809	113,114	145,626
Gross profit (loss)	(33,545)	8,591	(92,314)	108,525
Selling, general and administrative expenses	698,559	724,098	2,021,897	1,967,784
Net loss from operations	(732,104)	(715,507)	(2,114,211)	(1,859,259)
Other income (expense):
Interest expense	(41,794)	(40,346)	(163,709)	(119,254)
Gain on extinguishment of debt	73,181	74,528	219,543	310,002
Registration payment arrangements			1,190,446
Total other income (expenses)	31,387	34,182	1,246,281	190,748
Net loss before income taxes	(700,717)	(681,325)	(867,930)	(1,668,511)
Net loss	$ (700,717)	$ (681,325)	$ (867,930)	$ (1,668,511)
Basic and fully-diluted net loss per share of common stock (in dollars per share)	$ (0.01)	$ (0.01)	$ (0.01)	$ (0.02)

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Net Loss Per Share of Common Stock

9 Months Ended

Sep. 30, 2015

Earnings Per Share [Abstract]

Net Loss Per Share of Common Stock

Note 6 – Net Loss Per Share of Common Stock

Basic net loss per share are computed by dividing earnings available to common stockholders by the weighted average number of shares of common stock outstanding during the period. Diluted net loss per share reflects per share amounts that would have resulted if dilutive potential common stock had been converted to common stock. Dilutive potential common shares are calculated in accordance with the treasury stock method, which assumes that proceeds from the exercise of all warrants and options are used to repurchase common stock at market value. The number of shares remaining after the proceeds are exhausted represents the potentially dilutive effect of the securities.

The following reconciles amounts reported in the financial statements:

	Three Months Ended September 30, 2015			Three Months Ended September 30, 2014			Nine months Ended September 30, 2015			Nine months Ended September 30, 2014
Net loss	$	(700,717	)	$	(681,325	)	$	(867,930	)	$	(1,668,511	)
Weighted average number of shares of common stock outstanding		138,056,264			124,163,383			136,022,394			105,226,831
Dilutive potential shares of common stock		138,056,264			124,163,383			136,022,394			105,226,831
Net loss per share of common stock:
Basic	$	(0.01	)	$	(0.01	)	$	(0.01	)	$	(0.02	)
Diluted	$	(0.01	)	$	(0.01	)	$	(0.01	)	$	(0.02	)

The following securities were not included in the computation of diluted net loss per share, as their effect would have been anti-dilutive:

	Three Months Ended September 30, 2015		Three Months Ended September 30, 2014		Nine months Ended September 30, 2015		Nine months Ended September 30, 2014
Series B Convertible Preferred Stock		—		5,300,490		1,325,123		21,672,035
Options and warrants to purchase common stock		14,345,798		8,110,405		14,345,798		10,698,719
Warrants to purchase Series B Convertible Preferred Stock		67,646		1,689,792		67,646		2,337,517
Unsecured Convertible Promissory Notes		—		—		—		—
Secured Promissory Note		6,732,841		—		4,310,455		—
Senior Convertible Redeemable Notes		—		2,937,368		1,464,024		2,936,579
Total		21,146,285		18,038,055		21,513,046		37,644,850

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Income Taxes

9 Months Ended

Sep. 30, 2015

Income Tax Disclosure [Abstract]

Income Taxes

Note 5 – Income Taxes

The Company’s provision for (benefit from) income taxes is summarized below:

	Three Months Ended September 30, 2015			Three Months Ended September 30, 2014			Nine months Ended September 30, 2015			Nine months Ended September 30, 2014
Current:
Federal	$	—		$	—		$	—		$	—
State		—			—			—			—
		—			—			—			—
Deferred:
Federal		(220,406	)		(214,109	)		(742,996	)		(523,091	)
State		(69,970	)		(67,971	)		(235,872	)		(166,061	)
		(290,376	)		(282,080	)		(978,868	)		(689,152	)
Total income taxes		(290,376	)		(282,080	)		(978,868	)		(689,152	)
Less:  valuation allowance		290,376			282,080			978,868			689,152
Net income taxes	$	—		$	—		$	—		$	—

The reconciliation of the federal statutory income tax rate to the effective income tax rate is as follows:

	Three Months Ended September 30, 2015			Three Months Ended September 30, 2014			Nine months Ended September 30, 2015			Nine months Ended September 30, 2014
Federal statutory rate		35.0	%		35.0	%		35.0	%		35.0	%
State income taxes (net of federal benefit)		6.5			6.5			6.5			6.5
Valuation allowance		(41.5	)		(41.5	)		(41.5	)		(41.5	)
Effective rate		0.0	%		0.0	%		0.0	%		0.0	%

Significant components of the Company’s deferred tax assets and liabilities are summarized below. A valuation allowance has been established as realization of such assets has not met the more-likely-than-not threshold requirement under FASB ASC 740.

	September 30, 2015			December 31, 2014
Start-up costs	$	39,949		$	47,325
Depreciation		(36,870	)		(37,684	)
Accrued expenses		646,482			378,020
Net operating loss carryforward		15,690,529			14,973,562
Deferred income taxes		16,340,090			15,361,223
Less:  valuation allowance		(16,340,090	)		(15,361,223	)
Net deferred income taxes	$	—		$	—

At September 30, 2015, the Company had federal and state net operating loss carryforwards of approximately $37,809,000. The federal and state net operating loss carryforwards will expire beginning in 2021 and 2026, respectively. The amount of the state net operating loss carryforward that can be utilized each year to offset taxable income is limited by state law.

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Related-Party Transactions (Details)	Sep. 30, 2015 USD ($)
Related-party Transactions Details
Balance of 2015	$ 907
Year ending December 31, 2016	3,628
Year ending December 31, 2017	3,326
Total minimum payments	7,861
Less: minimum interest payments	(250)
Minimum principal payments	$ 7,611

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Income Taxes (Tables)

9 Months Ended

Sep. 30, 2015

Income Tax Disclosure [Abstract]

Schedule of the provision for (benefit from) income taxes

The Company’s provision for (benefit from) income taxes is summarized below:

	Three Months Ended September 30, 2015			Three Months Ended September 30, 2014			Nine months Ended September 30, 2015			Nine months Ended September 30, 2014
Current:
Federal	$	—		$	—		$	—		$	—
State		—			—			—			—
		—			—			—			—
Deferred:
Federal		(220,406	)		(214,109	)		(742,996	)		(523,091	)
State		(69,970	)		(67,971	)		(235,872	)		(166,061	)
		(290,376	)		(282,080	)		(978,868	)		(689,152	)
Total income taxes		(290,376	)		(282,080	)		(978,868	)		(689,152	)
Less:  valuation allowance		290,376			282,080			978,868			689,152
Net income taxes	$	—		$	—		$	—		$	—

Reconciliation of the federal statutory income tax rate to the effective income tax rate

The reconciliation of the federal statutory income tax rate to the effective income tax rate is as follows:

	Three Months Ended September 30, 2015			Three Months Ended September 30, 2014			Nine months Ended September 30, 2015			Nine months Ended September 30, 2014
Federal statutory rate		35.0	%		35.0	%		35.0	%		35.0	%
State income taxes (net of federal benefit)		6.5			6.5			6.5			6.5
Valuation allowance		(41.5	)		(41.5	)		(41.5	)		(41.5	)
Effective rate		0.0	%		0.0	%		0.0	%		0.0	%

Schedule of deferred tax assets and liabilities

Significant components of the Company’s deferred tax assets and liabilities are summarized below. A valuation allowance has been established as realization of such assets has not met the more-likely-than-not threshold requirement under FASB ASC 740.

	September 30, 2015			December 31, 2014
Start-up costs	$	39,949		$	47,325
Depreciation		(36,870	)		(37,684	)
Accrued expenses		646,482			378,020
Net operating loss carryforward		15,690,529			14,973,562
Deferred income taxes		16,340,090			15,361,223
Less:  valuation allowance		(16,340,090	)		(15,361,223	)
Net deferred income taxes	$	—		$	—

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Registration Payment Arrangements

9 Months Ended

Sep. 30, 2015

Commitments and Contingencies Disclosure [Abstract]

Registration Payment Arrangements

Note 9 – Registration Payment Arrangements

The Company is contractually obligated to issue shares of its common stock to certain investors for failure to register shares of its common stock under the Securities Act of 1933, as amended (the “Securities Act”). The Company has recorded a liability for the estimated number of shares to be issued at the fair value of the stock to be issued. The Company measures fair value by the price of its common stock at its most recent sale. The Company reviews its estimate of the number of shares to be issued and the fair value of the stock to be issued quarterly. The liability is included on the Consolidated Balance Sheet under the heading “accrued registration payment arrangement,” and amounted to $1,334,629 at September 30, 2015, and $2,525,075 at December 31, 2014. Gains or losses resulting from changes in the carrying amount of the liability are included in the Consolidated Statement of Operations in other income and expense under the heading “registration payment arrangements” which amounted to gains of $1,190,446 during the nine months ended September 30, 2015. There were no such gains or losses during the three months ended September 30, 2015, or during the three and nine months ended September 30, 2014.

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Stock-Based Payments

9 Months Ended

Sep. 30, 2015

Equity [Abstract]

Stock-Based Payments

Note 7 – Stock-Based Payments

During the nine months ended September 30, 2015, the Company granted stock appreciation rights on 1,362,500 shares of the Company’s common stock to eligible employees and consultants pursuant to the 2013 Equity Incentive Plan.

During the nine months ended September 30, 2015, the Company granted warrants to purchase 3,962,641 shares of the Company’s common stock to lenders in connection with loans to the Company, and warrants to purchase 1,300,000 shares of the Company’s common stock to consultants.

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Gains on Extinguishment of Debt

9 Months Ended

Sep. 30, 2015

Gains On Extinguishment Of Debt

Gains on Extinguishment of Debt

Note 8 – Gains on Extinguishment of Debt

Due to significant cash flow problems, the Company has negotiated concessions on the amounts of certain liabilities and extensions of payment terms. The Company accounts for such concessions in accordance with Financial Accounting Standards Board Accounting Standards Codification 470-60, Troubled Debt Restructurings by Debtors, and recognizes gains to the extent that the carrying value of the liability exceeds the fair value of the restructured payment plan. Such gains are included as “Gains on extinguishment of debt” in “Other income and expenses” on the Company’s Consolidated Statement of Operations. In addition, the Company has accounts payable that have aged or are expected to age beyond the statute of limitations. The Company is amortizing those liabilities over the remaining term of the statute of limitations. Gains on extinguishment of debt amounted to $73,181 and $74,528 during the three months ended September 30, 2015 and 2014, respectively, and $219,544 and $310,002 during the nine months ended September 30, 2015 and 2014, respectively.

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Accrued Expenses (Tables)

9 Months Ended

Sep. 30, 2015

Payables and Accruals [Abstract]

Schedule of accrued expenses

Accrued expenses consisted of the following:

	September 30,		December 31,
	2015		2014
Payroll and taxes	$	1,529,075	$	1,134,918
Accounting		56,893		67,280
Insurance		74,352		33,902
Contractors and subcontractors		191,384		60,848
Other		78,941		56,584
Accrued expenses	$	1,930,645	$	1,353,532

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Stock-Based Payments (Details Narrative)	9 Months Ended
	Sep. 30, 2015 shares
Warrant [Member]
Number of awards granted to lenders	3,962,641
Number of awards granted to consultants	1,300,000
2013 Equity Incentive Plan [Member] | Stock Appreciation Rights [Member]
Number of awards granted	1,362,500

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Accrued Expenses (Details) - USD ($)	Sep. 30, 2015	Dec. 31, 2014
Accrued Expenses Details
Payroll and taxes	$ 1,529,075	$ 1,134,918
Accounting	56,893	67,280
Insurance	74,352	33,902
Contractors and subcontractors	191,384	60,848
Other	78,941	56,584
Accrued expenses	$ 1,930,645	$ 1,353,532

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Notes Payable (Details 1) - USD ($)	Sep. 30, 2015	Dec. 31, 2014
Total long-term notes payable	$ 43,240	$ 272,633
Less: current portion	(207,482)	(232,892)
Long-term notes payable, less current portion	3,667	39,741
Notes Payable To Former Employees [Member]
Total long-term notes payable	167,908	218,892
Notes Payable To Vendors [Member]
Total long-term notes payable	$ 43,241	$ 53,741

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Consolidated Statements of Changes in Stockholders' Deficit (Unaudited) - 9 months ended Sep. 30, 2015 - USD ($)	Preferred Stock [Member]	Common Stock [Member]	Additional Paid-In Capital [Member]	Accumulated Deficit [Member]	Total
Balance at Dec. 31, 2014	$ 530	$ 126,235	$ 33,596,411	$ (39,829,973)	$ (6,106,797)
Balance (in shares) at Dec. 31, 2014	530,049	126,235,177
Sale of common stock, net of issuance costs		$ 770	159,032		159,802
Sale of common stock, net of issuance costs (in shares)		770,000
Conversion of Series B Convertible Preferred Stock to common stock	$ (530)	$ 5,300	(4,770)
Conversion of Series B Convertible Preferred Stock to common stock( in shares)	(530,049)	5,300,500
Conversion of senior convertible redeemable notes to common stock		$ 6,151	1,562,878		1,569,029
Conversion of senior convertible redeemable notes to common stock (in shares)		6,150,587
Net loss				(867,930)	(867,930)
Balance at Sep. 30, 2015		$ 138,456	$ 35,313,551	$ (40,697,903)	$ (5,245,896)
Balance (in shares) at Sep. 30, 2015		138,456,264

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Notes Payable

9 Months Ended

Sep. 30, 2015

Debt Disclosure [Abstract]

Notes Payable

Note 4 – Notes Payable

Current notes payable consisted of the following:

	September 30, 2015		December 31, 2014
Secured Promissory Note payable to an individual, due October 2, 2015, bearing interest at 10% per annum, plus warrants to purchase the common stock	$	1,050,142	$	—
Unsecured Convertible Promissory Notes payable to individuals, due at various times through November 4, 2015, bearing interest at 10% plus warrants to purchase common stock		287,786		—
Current portion of long-term notes payable		207,482		232,892
Current notes payable	$	1,545,410	$	232,892

Long-term notes payable consisted of the following:

	September 30, 2015			December 31, 2014
Notes payable under settlement agreements with former employees, payable monthly with terms of up to 39 months, with interest rates ranging from 0% to 4%	$	167,908		$	218,892
Notes payable under settlement agreements with vendors, payable monthly with terms of up to 60 months, with interest rates ranging from 0% to 32%		43,241			53,741
Total long-term notes payable		211,149			272,633
Less: current portion		(207,482	)		(272,892	)
Long-term notes payable, less current portion	$	3,667		$	39,741

Future maturities of long-term debt are as follows as of September 30, 2015:

Balance of 2015	$	38,074
Year ending December 31, 2016		2,000
Year ending December 31, 2017		2,000
Year ending December 31, 2018		1,166
Thereafter		—
	$	43,240

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Notes Payable (Details 2) - USD ($)	Sep. 30, 2015	Dec. 31, 2014
Future maturities of long-term debt
Balance of 2015	$ 38,074
Year ending December 31, 2016	2,000
Year ending December 31, 2017	2,000
Year ending December 31, 2018	1,166
Long Term Debt Maturities	$ 43,240	$ 272,633

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Net Loss Per Share of Common Stock (Tables)

9 Months Ended

Sep. 30, 2015

Earnings Per Share [Abstract]

Schedule of earnings per share

The following reconciles amounts reported in the financial statements:

	Three Months Ended September 30, 2015			Three Months Ended September 30, 2014			Nine months Ended September 30, 2015			Nine months Ended September 30, 2014
Net loss	$	(700,717	)	$	(681,325	)	$	(867,930	)	$	(1,668,511	)
Weighted average number of shares of common stock outstanding		138,056,264			124,163,383			136,022,394			105,226,831
Dilutive potential shares of common stock		138,056,264			124,163,383			136,022,394			105,226,831
Net loss per share of common stock:
Basic	$	(0.01	)	$	(0.01	)	$	(0.01	)	$	(0.02	)
Diluted	$	(0.01	)	$	(0.01	)	$	(0.01	)	$	(0.02	)

Schedule of antidilutive securities excluded from computation of earnings

The following securities were not included in the computation of diluted net loss per share, as their effect would have been anti-dilutive:

	Three Months Ended September 30, 2015		Three Months Ended September 30, 2014		Nine months Ended September 30, 2015		Nine months Ended September 30, 2014
Series B Convertible Preferred Stock		—		5,300,490		1,325,123		21,672,035
Options and warrants to purchase common stock		14,345,798		8,110,405		14,345,798		10,698,719
Warrants to purchase Series B Convertible Preferred Stock		67,646		1,689,792		67,646		2,337,517
Unsecured Convertible Promissory Notes		—		—		—		—
Secured Promissory Note		6,732,841		—		4,310,455		—
Senior Convertible Redeemable Notes		—		2,937,368		1,464,024		2,936,579
Total		21,146,285		18,038,055		21,513,046		37,644,850