0001493152-16-014720.txt : 20161110 0001493152-16-014720.hdr.sgml : 20161110 20161110140304 ACCESSION NUMBER: 0001493152-16-014720 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 54 CONFORMED PERIOD OF REPORT: 20160930 FILED AS OF DATE: 20161110 DATE AS OF CHANGE: 20161110 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Intellicheck Mobilisa, Inc. CENTRAL INDEX KEY: 0001040896 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 113234779 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-50296 FILM NUMBER: 161987272 BUSINESS ADDRESS: STREET 1: 100 JERICHO QUADRANGLE, STREET 2: SUITE 202 CITY: JERICHO STATE: NY ZIP: 11753 BUSINESS PHONE: 516-992-1900 MAIL ADDRESS: STREET 1: 100 JERICHO QUADRANGLE, STREET 2: SUITE 202 CITY: JERICHO STATE: NY ZIP: 11753 FORMER COMPANY: FORMER CONFORMED NAME: Intelli Check Mobilisa, Inc DATE OF NAME CHANGE: 20080319 FORMER COMPANY: FORMER CONFORMED NAME: INTELLI CHECK INC DATE OF NAME CHANGE: 19990917 10-Q 1 form10-q.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

[X]	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2016

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

For the transition period from ________________ to ________________

Commission File No.: 001-15465

Intellicheck Mobilisa, Inc.

(Exact name of Registrant as specified in its charter)

Delaware		11-3234779
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

100 Jericho Quadrangle, Suite 202, Jericho, NY 11753

(Address of Principal Executive Offices) (Zip Code)

Registrant’s telephone number, including area code: (516) 992-1900

Indicate by check mark whether registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act 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 [X] No [ ]

Indicate by check mark whether 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 [X] 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 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 [ ]		Smaller reporting company [X]
				(Do not check if a 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 [X]

Number of shares outstanding of the issuer’s Common Stock:

Class		Outstanding at November 10, 2016

Common Stock, $.001 par value		10,565,553

INTELLICHECK MOBILISA, INC.

Index

	Page
Part I – Financial Information

Item 1. Financial Statements

Consolidated Balance Sheets – September 30, 2016 (Unaudited) and December 31, 2015	3

Consolidated Statements of Operations for the three and nine months ended September 30, 2016 and 2015 (Unaudited)	4

Consolidated Statement of Stockholders’ Equity for the nine months ended September 30, 2016 (Unaudited)	5

Consolidated Statements of Cash Flows for the nine months ended September 30, 2016 and 2015 (Unaudited)	6

Notes to Consolidated Financial Statements (Unaudited)	7

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	15

Item 3. Quantitative and Qualitative Disclosures About Market Risk	21

Item 4. Controls and Procedures	21

Part II - Other Information	22

Item 1. Legal Proceedings	22

Item 1A. Risk Factors	22

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	22

Item 3. Defaults Upon Senior Securities	22

Item 4. Mine Safety Disclosures	22

Item 5. Other Information	22

Item 6. Exhibits	22

Signatures	23

Exhibits

31.1		Rule 13a-14(a) Certification of Chief Executive Officer
31.2		Rule 13a-14(a) Certification of Chief Financial Officer
32		18 U.S.C. Section 1350 Certifications
101.INS		XBRL Instance Document
101.SCH		XBRL Taxonomy Extension Schema
101.CAL		XBRL Taxonomy Extension Calculation Linkbase
101.DEF		XBRL Taxonomy Extension Definition Linkbase
101.LAB		XBRL Taxonomy Extension Label Linkbase
101.PRE		XBRL Taxonomy Extension Presentation Linkbase

PART I – FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

INTELLICHECK MOBILISA, INC.

CONSOLIDATED BALANCE SHEETS

	September 30, 2016			December 31, 2015
	(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	3,534,399		$	5,953,257
Accounts receivable, net of allowance of $12,764 and $18,411 as of September 30, 2016 and December 31, 2015, respectively		827,890			1,158,972
Inventory		74,241			74,732
Other current assets		299,138			178,362
Total current assets		4,735,668			7,365,323

NOTES RECEIVABLE, net of current portion		121,477			150,496
PROPERTY AND EQUIPMENT, net		284,701			325,427
GOODWILL		8,101,661			8,101,661
INTANGIBLE ASSETS, net		2,233,454			2,470,127
OTHER ASSETS		61,298			59,800

Total assets	$	15,538,259		$	18,472,834

LIABILITIES AND STOCKHOLDERS’ EQUITY

CURRENT LIABILITIES:
Accounts payable	$	99,649		$	260,276
Accrued expenses		685,856			536,316
Deferred revenue, current portion		909,822			909,233
Total current liabilities		1,695,327			1,705,825

OTHER LIABILITIES
Deferred revenue, long-term portion		213,574			341,242
Deferred rent		72,240			99,355

Total liabilities		1,981,141			2,146,422

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS EQUITY:
Common stock - $.001 par value; 40,000,000 shares authorized; 10,548,983 and 9,878,906 shares issued and outstanding, respectively		10,549			9,879
Additional paid-in capital		116,825,843			114,950,278
Accumulated deficit		(103,279,274	)		(98,633,745	)
Total stockholders’ equity		13,557,118			16,326,412

Total liabilities and stockholders’ equity	$	15,538,259		$	18,472,834

See accompanying notes to consolidated financial statements

INTELLICHECK MOBILISA, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2016			2015			2016			2015

REVENUES	$	1,214,308		$	2,199,473		$	3,105,330		$	5,478,170
COST OF REVENUES		(268,137	)		(803,484	)		(622,833	)		(2,446,392	)
Gross profit		946,171			1,395,989			2,482,497			3,031,778

OPERATING EXPENSES
Selling, general and administrative		1,268,915			2,083,137			5,115,838			5,087,682
Research and development		407,615			692,310			2,024,818			1,869,063
Total operating expenses		1,676,530			2,775,447			7,140,656			6,956,745

Loss from operations		(730,359	)		(1,379,458	)		(4,658,159	)		(3,924,967	)

OTHER INCOME (EXPENSE)
Interest and other income		3,437			112,233			12,630			144,391
Interest expense		-			(572	)		-			(3,307	)

Net loss	$	(726,922	)	$	(1,267,797	)	$	(4,645,529	)	$	(3,783,883	)

PER SHARE INFORMATION
Loss per common share -
Basic/Diluted	$	(0.07	)	$	(0.13	)	$	(0.48	)	$	(0.39	)

Weighted average common shares used in computing per share amounts -
Basic/Diluted		10,246,629			9,851,764			9,680,010			9,584,582

See accompanying notes to consolidated financial statements

INTELLICHECK MOBILISA, INC.

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

For the nine months ended September 30, 2016

(Unaudited)

							Additional
	Common Stock						Paid-in			Accumulated
	Shares			Amount			Capital			Deficit			Total

BALANCE, January 1, 2016		9,878,906		$	9,879		$	114,950,278		$	(98,633,745	)	$	16,326,412

Stock-based compensation expense		-			-			802,623			-			802,623
Issuance of common stock, net of costs		1,200,000			1,200			1,779,141			-			1,780,341
Purchase and retirement of common stock		(979,114	)		(979	)		(1,095,629	)		-			(1,096,608	)
Exercise of stock options		345,127			345			389,534			-			389,879
Vesting of restricted stock		104,064			104			(104	)		-			-
Net loss		-			-			-			(4,645,529	)		(4,645,529	)

BALANCE, September 30, 2016		10,548,983		$	10,549		$	116,825,843		$	(103,279,274	)	$	13,557,118

See accompanying notes to consolidated financial statements

INTELLICHECK MOBILISA, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Nine Months Ended September 30,
	2016			2015

CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(4,645,529	)	$	(3,783,883	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		328,105			798,072
Noncash stock-based compensation expense		802,623			685,892
Provision for doubtful accounts		12,764			-
Gain on sale of wireless assets		-			(108,825	)
Gain on sale of property and equipment		-			(31,500	)
Deferred rent		(27,115	)		(20,311	)
Changes in assets and liabilities:
Decrease (Increase) in accounts receivable		318,318			(832,929	)
Decrease in inventory		491			22,576
(Increase) in other current assets		(120,776	)		(59,512	)
(Increase) Decrease in other assets		(1,498	)		12,207
(Decrease) in accounts payable, accrued expenses		(11,087	)		(90,223	)
(Decrease) in deferred revenue		(127,079	)		(336,329	)
Net cash used in operating activities		(3,470,783	)		(3,744,765	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of patents		-			(125,000	)
Purchases of property and equipment		(50,707	)		(93,142	)
Collection of note receivable		29,020			-
Proceeds from sale of property and equipment		-			31,500
Proceeds from sale of wireless assets		-			30,000
Net cash used in investing activities		(21,687	)		(156,642	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from issuance of common stock		1,780,341			7,630,757
Net proceeds from issuance of common stock from exercise of stock options		389,879			977
Purchase and retirement of common stock		(1,096,608	)		-
Payments on note payable		-			(31,078	)
Net cash provided by financing activities		1,073,612			7,600,656

Net decrease (increase) in cash and cash equivalents		(2,418,858	)		3,699,249

CASH AND CASH EQUIVALENTS, beginning of period		5,953,257			2,966,350

CASH AND CASH EQUIVALENTS, end of period	$	3,534,399		$	6,665,599

Supplemental disclosure of noncash investing and financing activities:
Issuance of notes receivable related to sale of wireless division	$	-		$	200,000
Financing of property and equipment	$	-		$	31,078

See accompanying notes to consolidated financial statements

INTELLICHECK MOBILISA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. NATURE OF BUSINESS

Business

Intellicheck Mobilisa, Inc. (the “Company” or “Intellicheck”) is a leading technology company that is engaged in developing, integrating and marketing threat identification and identity authentication solutions to address challenges that include retail fraud prevention, law enforcement threat identification, and mobile and handheld access control and security for the government, military and commercial markets. Intellicheck’s products include Retail ID™, the industry leading solution for preventing fraud in the retail industry; Age ID™, a smartphone or tablet-based solution for preventing sale of age-restricted products to minors; Law ID™, a smartphone-based solution used by law enforcement officers to identify and mitigate threats; and Defense ID®, a mobile and fixed infrastructure solution for threat identification, identity authentication and access control to military bases and other government facilities.

Intellicheck continues to develop and release innovative products based upon its rich patent portfolio consisting of over 25 patents.

Liquidity

For the nine months ended September 30, 2016, the Company incurred a net loss of $4,645,529 and used cash in operations of $3,470,783. As of September 30, 2016, the Company had cash and cash equivalents of $3,534,399 and an accumulated deficit of $103,279,274. Based on our business plan and, cash resources, we expect our existing and future resources and revenues generated from operations to satisfy our working capital requirements for at least the next 12 months.

However, if performance expectations fall short or expenses exceed expectations, the Company may need to secure additional financing or reduce expenses to continue operations. Failure to do so would have a material adverse impact on its financial condition. There can be no assurance that any contemplated additional financing will be available on terms acceptable, if at all. If required, the Company believes it would be able to reduce expenses to a sufficient level to continue as a going concern.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Mobilisa, Inc. (“Mobilisa”) and Positive Access Corporation (“Positive Access”). All intercompany balances and transactions have been eliminated upon consolidation.

2. SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Rule 8-03 of Regulation S-X. Accordingly, they do not include all of the information and notes required by generally accepted accounting principles for complete financial statements. In the opinion of management, the unaudited interim financial statements furnished herein include all adjustments necessary for a fair presentation of the Company’s financial position at September 30, 2016 and the results of its operations for the three and nine months ended September 30, 2016 and 2015, stockholders’ equity for the nine months ended September 30, 2016 and cash flows for the nine months ended September 30, 2016 and 2015. All such adjustments are of a normal and recurring nature. Interim financial statements are prepared on a basis consistent with the Company’s annual financial statements. Results of operations for the nine month period ended September 30, 2016, are not necessarily indicative of the operating results that may be expected for the year ending December 31, 2016.

The balance sheet as of December 31, 2015 has been derived from the audited financial statements at that date but does not include all of the information and notes required by accounting principles generally accepted in the United States of America for complete financial statements.

References in this Quarterly Report on Form 10-Q to “authoritative guidance” is to the Accounting Standards Codification issued by the Financial Accounting Standards Board (“FASB”).

For further information, refer to the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015.

Recent Accounting Pronouncements

In May 2014, the FASB issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606). ASU 2014-09 completes the joint effort by the FASB and International Accounting Standards Board (“IASB”) to improve financial reporting by creating common revenue recognition guidance for U.S. GAAP and International Financial Reporting Standards (“IFRS”). ASU 2014-09 applies to all companies that enter into contracts with customers to transfer goods or services. ASU 2014-09 is effective for public entities for interim and annual reporting periods beginning in the first quarter of 2018. Early adoption is permitted beginning in the first quarter of 2017 for public companies. The Company is currently evaluating the requirements of ASU 2014-09 and have not yet determined its impact on our consolidated financial statements and expects to be completed by December 31, 2016.

Use of Estimates

The preparation of the Company’s financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the Company’s financial statements and accompanying notes. Significant estimates and assumptions that affect amounts reported in the financial statements include the evaluation of goodwill for impairment, valuation of intangible assets, deferred tax valuation allowances, and the fair value of stock options granted under the Company’s stock-based compensation plans. Due to the inherent uncertainties involved in making estimates, actual results reported in future periods may be different from those estimates.

Cash and Cash Equivalents

Cash and cash equivalents include cash and highly liquid investments with original maturities of three months or less when purchased. There were no cash equivalents held on September 30, 2016 and December 31, 2015.

Allowance for Doubtful Accounts

The Company records its allowance for doubtful accounts based upon its assessment of various factors. The Company considers historical experience, the age of the accounts receivable balances, credit quality of the Company’s customers, current economic conditions and other factors that may affect customers’ ability to pay.

Inventory

Inventory is stated at the lower of cost or market and cost is determined using the first-in, first-out method. Inventory is primarily comprised of finished goods. As of September 30, 2016 and December 31, 2015, the majority of inventory is related to Government and Commercial Identity products for intended near-term sales.

Goodwill

Goodwill represents the excess of acquisition cost over the fair value of net assets acquired in business combinations. Pursuant to ASC Topic 350, the Company tests goodwill for impairment on an annual basis in the fourth quarter, or between annual tests, in certain circumstances. Under guidance, the Company first assessed qualitative factors to determine whether it was necessary to perform the two-step quantitative goodwill impairment test. An entity is not required to calculate the fair value of a reporting unit unless the entity determines, based on a qualitative assessment, that it is more likely than not that its fair value is less than its carrying amount. Events or changes in circumstances which could trigger an impairment review include macroeconomic conditions, industry and market conditions, cost factors, overall financial performance, other entity specific events and sustained decrease in share price.

Intangible Assets

Intangible assets include trade names, patents developed technology non-contractual customer relationships. The Company uses the straight line method to amortize these assets over their estimated useful lives. The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of these assets may not be fully recoverable in accordance with ASC Topic 360. To determine recoverability of its long-lived assets, the Company evaluates the probability that future undiscounted net cash flows, without interest charges, will be less than the carrying amount of the assets. There were no impairment charges recognized during the nine months ended September 30, 2016 and 2015.

Income Taxes

The Company accounts for income taxes under in accordance with ASC Topic 740, “Accounting for Income Taxes.” Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and net operating loss carryforwards. Deferred tax assets and liabilities are measured using expected tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. The Company has recorded a full valuation allowance for its net deferred tax assets as of September 30, 2016 and December 31, 2015, due to the uncertainty of the realizability of those assets.

Fair Value of Financial Instruments

The Company adheres to the provisions of ASC Topic 820, “Fair Value Measurements and Disclosures”. This pronouncement requires that the Company calculate the fair value of financial instruments and include this additional information in the notes to financial statements when the fair value is different than the book value of those financial instruments. The Company’s financial instruments include cash and cash equivalents, accounts receivable, note receivable, accounts payable and accrued expenses. At September 30, 2016 and December 31, 2015, the carrying value of the Company’s financial instruments approximated fair value, due to their short-term nature.

Revenue Recognition and Deferred Revenue

Revenue is generally recognized when persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed and determinable, collectability is probable, and there is no future Company involvement or commitment. The Company sells its commercial products directly through its sales force and through distributors. Revenue from direct sales of products is recognized when shipped to the customer and title has passed.

Under the provisions of ASC Topic 605-25, “Revenue Arrangements with Multiple Deliverables,” for multi-element arrangements that include tangible products containing software essential to the tangible product’s functionality and undelivered software elements relating to the tangible product’s essential software, the Company allocates revenue to all deliverables based on their relative selling prices. In such circumstances, the Company uses a hierarchy to determine the selling price to be used for allocating revenue to deliverables: (i) vendor-specific objective evidence of fair value (“VSOE”), (ii) third-party evidence of selling price and (iii) best estimate of the selling price (“ESP”). VSOE generally exists only when the Company sells the deliverable separately and is the price actually charged by the Company for that deliverable. ESPs reflect the Company’s best estimates of what the selling prices of elements would be if they were sold regularly on a stand-alone basis.

The Company also recognizes revenues from licensing of its patented software to customers. The licensed software requires continuing service or post contractual customer support and performance; accordingly, a portion of the revenue is deferred based on its fair value and recognized ratably over the period in which the future service, support and performance are provided, which is generally one to three years. Royalties from the licensing of the Company’s technology are recognized as revenues in the period they are earned.

The Company also performs consulting work for other companies. These services are billed on a time and materials basis. Revenue from these arrangements is also recognized as time is spent on the contract and materials are purchased.

The Company offers enhanced extended warranties for its sales of hardware and software at a set price. The revenue from these sales are deferred and recognized on a straight-line basis over the contractual period, which is typically one to four years.

Business Concentrations and Credit Risk

During the three and nine month periods ended September 30, 2016, the Company made sales to three customers that accounted for approximately 35% and 26% of total revenues, respectively. The revenue was associated with two commercial identity sales customers and one Defense ID customer. These customers represented 32% of total accounts receivable at September 30, 2016. During the three and nine month periods ended September 30, 2015, the Company made sales to two customers that accounted for approximately 51% and 40% of total revenues, respectively. The revenue was associated with one commercial identity customer and one Defense ID customer. These customers represented 51% of total accounts receivable at September 30, 2015.

Net Loss Per Share

Basic net loss per share is computed by dividing the net loss for the period by the weighted average number of common shares outstanding during the period. Diluted net loss per share is computed by dividing the net loss for the period by the weighted average number of shares of common stock and potentially dilutive common stock outstanding during the period. The dilutive effect of outstanding options and restricted stock is reflected in diluted earnings per share by application of the treasury stock method. The calculation of diluted net loss per share excludes all anti-dilutive shares.

	Three Months Ended September 30,						Nine Months Ended September 30,
	2016			2015			2016			2015
Numerator:
Net loss	$	(726,922	)	$	(1,267,797	)	$	(4,645,529	)	$	(3,783,883	)

Denominator:
Weighted average common shares –
Basic/Diluted		10,246,629			9,851,764			9,680,010			9,584,582

Net loss per share –
Basic/Diluted	$	(0.07	)	$	(0.13	)	$	(0.48	)	$	(0.39	)

The following table summarizes the common stock equivalents excluded from loss per diluted share because their effect would be anti-dilutive:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Stock options		1,651,920		1,905,362		1,651,920		1,905,362
Warrants		688,301		64,981		688,301		64,981
Restricted Stock		43,466		68,743		43,466		68,743
		2,383,687		2,039,086		2,383,687		2,039,086

The above listing is not intended to be a comprehensive list of all of our accounting policies. In many cases, the accounting treatment of a particular transaction is specifically dictated by generally accepted accounting principles, with no need for management’s judgment in their application. There are also areas in which management’s judgment in selecting any available alternative would not produce a materially different result.

3. INTANGIBLE ASSETS AND GOODWILL

The changes in the carrying amount of intangible assets for nine months ended September 30, 2016 were as follows:

Balance at December 31, 2015	$	2,470,127
Deduction: Amortization expense		(236,673	)
Balance at September 30, 2016	$	2,233,454

The following summarizes amortization of intangible assets included in the statement of operations:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Cost of sales	$	59,162	$	59,163	$	177,488	$	288,898
General and administrative		19,730		138,090		59,185		412,562
	$	78,892	$	197,253	$	236,673	$	701,460

4. NOTE RECEIVABLE

On August 31, 2015, the Company sold the wireless enterprise assets to the Jamestown S’Klallam Tribe (the “Buyer”) for total consideration of $350,000 which consists of an upfront cash payment of $30,000, the issuance of a promissory note totaling $200,000 and contingent consideration up to a maximum of $120,000 based on future earnings. Under the terms of the promissory note, monthly payments of $3,683 including principal and interest at 4%, are to be made over a 60-month term expiring in August 2020. At September 30, 2016, the total note receivable is $159,990, of which $38,513 and $121,477 is included in Other Current Assets and Notes Receivable, net of current portion, respectively, on the Consolidated Balance Sheets. At December 31, 2015, the total note receivable is $187,861, of which $37,365 and $150,496 is included in other current assets and Notes Receivable, net of current portion, respectively on the Consolidated Balance Sheets.

5. DEBT

Revolving Line of Credit

The Company has a revolving credit facility with Silicon Valley Bank that allows for maximum borrowings of $2,000,000. The borrowings are secured by certain collateralized accounts totaling $2,000,000. The facility bears interest at a rate of U.S. prime (3.50% at September 30, 2016). Interest is payable monthly and the principal is due upon maturity on October 5, 2017. As of September 30, 2016, there were no amounts outstanding under this facility and unused availability under this facility was $2,000,000.

6. ACCRUED EXPENSES

Accrued expenses are comprised of the following:

	September 30, 2016		December 31, 2015
Professional fees	$	134,537	$	172,766
Payroll and related		322,492		313,003
Severance payments to former officer		150,350		-
Other		78,477		50,547
	$	685,856	$	536,316

7. INCOME TAXES

As of December 31, 2015, the Company had net operating loss carryforwards (NOL’s) for federal and New York state income tax purposes of approximately $47.4 million. In March 2016, the Company completed an Internal Revenue Code Section 382 study which determined that a cumulative three-year ownership change in excess of 50% had occurred in March 2016 due to a share repurchase. As a result, the Company’s available NOLs were reduced from $47.4 million at December 31, 2015 to $2.2 million during the first quarter of 2016. There can be no assurance that the Company will realize any benefit of the NOL’s. The federal and New York state NOL’s are available to offset future taxable income and expire from 2016 through 2036 if not utilized. The Company has a full valuation allowance on its deferred tax assets since management continues to believe that it is more likely than not that these assets will not be realized.

8. SHARE BASED COMPENSATION

The Company accounts for the issuance of equity awards to employees in accordance with ASC Topic 718 and 505, which requires that the cost resulting from all share based payment transactions be recognized in the financial statements. These pronouncements establish fair value as the measurement objective in accounting for share based payment arrangements and requires all companies to apply a fair value based measurement method in accounting for all share based payment transactions with employees.

All stock-based compensation is included in operating expenses for the periods as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Compensation cost recognized
Selling, general and administrative	$	125,581	$	396,654	$	763,938	$	642,169
Research and development		9,348		21,830		38,685		43,723
	$	134,929	$	418,484	$	802,623	$	685,892

The Company uses the Black-Scholes option pricing model to value the options. The table below presents the weighted average expected life of the options in years. The expected life computation is based on the time to option expiration. Volatility is determined using changes in historical stock prices. The interest rate for periods within the expected life of the award is based on the U.S. Treasury yield curve in effect at the time of grant.

The fair value of share-based payment units was estimated using the Black-Scholes option pricing model with the following assumptions and weighted average fair values as follows:

	Nine Months Ended
	September 30, 2016
Valuation assumptions:
Stock price		$1.01 - $1.93
Exercise price		$1.01 - $1.93
Expected dividend yield		0	%
Expected volatility		96.77% - 97.32	%
Expected life (in years)		5
Risk-free interest rate		0.94% - 1.35	%

Stock option activity under the 1998, 1999, 2001, 2003, 2006 and 2015 Stock Option Plans (collectively, the “Plans”) during the periods indicated below were as follows:

	Number of Shares Subject to Issuance			Weighted- average Exercise Price		Weighted- average Remaining Contractual Term		Aggregate Intrinsic Value

Outstanding at December 31, 2015		1,901,298		$	1.46		4.51 years	$	-
									-
Granted		253,543			1.22				-
Forfeited or expired		(157,794	)		2.59				-
Exercised		(345,127	)		1.13				-
Outstanding at September 30, 2016		1,651,920		$	1.38		3.86 years	$	835,849

Exercisable at September 30, 2016		1,023,796		$	1.31		3.85 years	$	540,134

The aggregate intrinsic value in the table above represents the total pretax intrinsic value (the difference between the Company’s closing stock price on the last trading day of the period and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had they all exercised their options on September 30, 2016. This amount changes based upon the fair market value of the Company’s stock.

As of September 30, 2016, the Company had 921,831 shares available for future grants under the Plans.

Restricted Stock Units

The Company issues Restricted Stock Units (“RSUs”) which are equity-based instruments that may be settled in shares of common stock of the Company. During the nine months ended September 30, 2016, the Company issued RSUs to certain directors and officers as compensation. RSU agreements can vest immediately or with the passage of time. The vesting of all RSUs is contingent on continued board and employment services.

The compensation expense incurred by the Company for RSUs is based on the closing market price of the Company’s common stock on the date of grant and is amortized ratably on a straight-line basis over the requisite service period and charged to general and administrative expense with a corresponding increase to additional paid-in capital.

	Number of Shares			Weighted Average Grant Date Fair Value		Aggregate Intrinsic Value

Outstanding at December 31, 2015		67,077		$	1.56	$	-
Granted		80,453			1.69		-
Vested and settled in Shares		(104,064	)		1.58		-

Outstanding at September 30, 2016		43,466		$	1.76	$	1,691

As of September 30, 2016, there was $592,435 of total unrecognized compensation cost, net of estimated forfeitures, related to all unvested stock options and restricted stock units, which is expected to be recognized over a weighted average period of approximately 2.1 years.

Warrants

All previously granted warrants were issued with an exercise price that was equal to or above the fair market value of the Company’s common stock on the date of grant. As of September 30, 2016, the Company had 688,301 remaining warrants outstanding and exercisable through 2021. No warrants were exercised during the nine months ended September 30, 2016.

9. COMMON STOCK

On January 14, 2015, the Company announced the closing of an underwritten public offering of 4,857,143 shares of its common stock, offered to the public at $1.75 per share. Net proceeds to the Company from this offering were approximately $7,845,000 after deducting underwriting discounts and commissions paid by the Company. Direct offering costs totaling approximately $214,000 were recorded as a reduction to the net proceeds on the consolidated statement of stockholders’ equity.

On February 24, 2016, the Company entered into a stock repurchase agreement with two former directors, who were also members of management (the “Former Executives”) for the repurchase of all 979,114 shares owned by the Former Executives of the Company’s common stock for $1,096,608. The transaction was finalized on March 4, 2016.

On June 15, 2016, the Company announced the closing of an underwritten public offering of 1,200,000 shares of its common stock and 600,000 five year warrants to purchase shares with an exercise price of $2.20 per share, at a combined public offering of $1.75 per share and half-warrant. Net proceeds to the Company from this offering were approximately $1,902,000 after deducting underwriting discounts and commissions paid by the Company. As part of the offering, there was an overallotment option for the underwriters to purchase up to 180,000 shares of common stock at a purchase price of $1.63 per share and/or up to 90,000 additional warrants at a purchase price of $0.0001 per warrant. On June 20, 2016, the underwriters exercised their right to purchase 23,320 warrants. Direct offering costs totaling approximately $122,000 were recorded as a reduction to the net proceeds on the consolidated statement of stockholders’ equity.

10. LEGAL PROCEEDINGS

The Company is not aware of any infringement by the Company’s products or technology on the proprietary rights of others.

The Company is not currently involved in any legal or regulatory proceeding, or arbitration, the outcome of which is expected to have a material adverse effect on its business.

11. COMMITMENTS AND CONTINGENCIES

The Company leases an office in the state of New York and storage space in the state of Washington which expire in March 2018 and December 2016, respectively. The landlord (“Landlord”) of the Washington space is owned by the Former Executives as discussed in Note 9.

On February 24, 2016, the Company terminated the Washington lease and paid a $100,000 termination fee to the Landlord in full satisfaction the Company’s remaining obligations under its original lease.

On May 19, 2016, Mr. Robert Williamsen, the Company’s Vice President and Chief Revenue Officer departed the Company, via mutual consent, to pursue other interests. Pursuant to Mr. Williamsen’s employment agreement with the Company, Mr. Williamsen will receive a payment of his monthly salary, subject to all applicable withholdings, for a period of 12 months following May 19, 2016, which the first payment commenced on July 7, 2016, and partial reimbursement for continued health, dental, and vision coverage through August 2016. Pursuant to the terms of Mr. Williamsen’s stock option agreements, Mr. Williamsen exercised his vested stock option awards.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

References made in this Quarterly Report on Form 10-Q to “we,” “our,” “us,” “Intellicheck,” or the “Company,” refer to Intellicheck Mobilisa, Inc.

The following discussion and analysis of our financial condition and results of operations constitutes management’s review of the factors that affected our financial and operating performance for the nine month period ended September 30, 2016. This discussion should be read in conjunction with the financial statements and notes thereto contained elsewhere in this report and in our Annual Report on Form 10-K, for the year ended December 31, 2015. The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Mobilisa, Inc. (“Mobilisa”) and Positive Access Corporation (“Positive Access”).

Overview

We are a leading technology solutions company that is engaged in developing, integrating and marketing threat identification, identity authentication, verification and validation technology solutions making it possible for customers to enhance the safety and awareness of their facilities and people, improve customer service, and achieve increased operational efficiencies to address a variety of challenges that include retail fraud prevention, age-restricted product sales compliance, law enforcement increased situational awareness and threat identification and prevention, and mobile and handheld access control and security for the government, military and commercial markets. Among Intellicheck’s products are Retail ID^™ and Retail ID Mobile^™, the industry leading solution for preventing fraud in the retail industry that provides added value in increasing customer loyalty program and credit card application conversions; while delivering enhanced customer service; Age ID^™, a smartphone or tablet-based solution that can also be integrated in point of sale systems which provides instant identification verification and authentication solutions for applications that include the prevention of the sale of age-restricted products to minors; Law ID^™, a flexible solution for mobile devices including smartphones and tablets that is used by law enforcement officers to identify and mitigate threats; and Defense ID^®, a mobile and fixed infrastructure solution for threat identification, identity authentication and access control to military bases and other government facilities, and Guest ID^™, which makes hotel check-in faster, easier and more accurate by instantly authenticating an individual’s ID, and automatically populating registration forms.

We continue to develop and release innovative products based upon our rich patent portfolio consisting of over 25 patents.

Critical Accounting Policies and the Use of Estimates

The preparation of the Company’s financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the Company’s financial statements and accompanying notes. Significant estimates and assumptions that affect amounts reported in the financial statements include impairment of goodwill, valuation of intangible assets, deferred tax valuation allowances, allowance for doubtful accounts and the fair value of stock options granted under the Company’s stock-based compensation plans. Due to the inherent uncertainties involved in making estimates, actual results reported in future periods may be different from those estimates.

We believe that there are several accounting policies that are critical to understanding our historical and future performance, as these policies affect the reported amounts of revenue and the more significant areas involving management’s judgments and estimates. These significant accounting policies relate to revenue recognition, stock-based compensation, deferred taxes and commitments and contingencies. These policies and our procedures related to these policies are described in detail below.

Goodwill

The excess of the purchase consideration over the fair value of the assets of acquired businesses is considered goodwill. Under authoritative guidance, purchased goodwill is not amortized, but rather it is periodically reviewed for impairment. We had goodwill of $8,101,661 at September 30, 2016. This goodwill resulted from the acquisition of Mobilisa, Inc. and Positive Access Corporation.

For the year ended December 31, 2015, we performed our annual impairment test of goodwill in the fourth quarter. Under authoritative guidance, we can use industry and Company specific qualitative factors to determine whether it is more likely than not that impairment exists, before using a two-step quantitative analysis. Events or changes in circumstances which could trigger an impairment review include macroeconomic conditions, industry and market conditions, cost factors, overall financial performance, other entity specific events and sustained decrease in share price. As a result of the qualitative factors in 2015, specifically as a result of the decline in the stock price and the decrease in market multiples, we performed the first step of the goodwill impairment test in order to identify potential impairment by comparing our fair value of the Company to our carrying amount, including goodwill. The fair value was determined using the weighting of certain valuation techniques, including both income and market approaches which include a discounted cash flow analysis, an estimation of an implied control premium, in addition to our market capitalization on the measurement date. The implied control premium selected was developed based on certain observable market data of comparable companies. The market capitalization is sensitive to the volatility of our stock price. Although we believe that the factors considered in the impairment analysis are reasonable, changes in any one of the assumptions used could have produced a different result which may have led to an impairment charge. Any future impairment loss could have a material adverse effect on our long-term assets and operating expenses in the period in which impairment is determined to exist.

As of December 31, 2015, we determined that the fair value was in excess of its carrying amount and therefore the second step of the goodwill impairment test was not required.

We determined that no events occurred or circumstances changed during the nine months ended September 30, 2016 that would more likely than not reduce the fair value of the Company below its carrying amounts. We will, however, continue to monitor our stock price and operations for any potential indicators of impairment. We will conduct the 2016 annual test for goodwill impairment in the fourth quarter, or at such time where an indicator of impairment appears to exist.

Intangible Assets

Our intangible assets consist of trade names, patents, developed technology and non-contractual customer relationships and as a result of a qualitative analysis, we do not believe there is any indication of impairment.

Revenue Recognition and Deferred Revenue

Revenue is generally recognized when persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed and determinable, collectability is probable, and there is no future Company involvement or commitment. We sell our commercial products directly through its sales force and through distributors. Revenue from direct sales of products is recognized when shipped to the customer and title has passed.

Under the provisions of ASC Topic 605-25, “Revenue Arrangements with Multiple Deliverables,” for multi-element arrangements that include tangible products containing software essential to the tangible product’s functionality and undelivered software elements relating to the tangible product’s essential software, we allocate revenue to all deliverables based on their relative selling prices. In such circumstances, we use a hierarchy to determine the selling price to be used for allocating revenue to deliverables: (i) vendor-specific objective evidence of fair value (“VSOE”), (ii) third-party evidence of selling price and (iii) best estimate of the selling price (“ESP”). VSOE generally exists only when we sell the deliverable separately and is the price actually charged by us for that deliverable. ESPs reflect the Company’s best estimates of what the selling prices of elements would be if they were sold regularly on a stand-alone basis.

We also recognize revenues from licensing of its patented software to customers. The licensed software requires continuing service or post contractual customer support and performance; accordingly, a portion of the revenue is deferred based on its fair value and recognized ratably over the period in which the future service, support and performance are provided, which is generally one to three years. Royalties from the licensing of our technology are recognized as revenues in the period they are earned.

We also perform consulting work for other companies. These services are billed on a time and materials basis. Revenue from these arrangements is also recognized as time is spent on the contract and materials are purchased.

We offer enhanced extended warranties for our sales of hardware and software at a set price. The revenue from these sales are deferred and recognized on a straight-line basis over the contractual period, which is typically one to four years.

Stock-Based Compensation

We account for the issuance of equity awards to employees in accordance with ASC Topic 718 and 505, which requires that the cost resulting from all share based payment transactions be recognized in the financial statements. This pronouncement establishes fair value as the measurement objective in accounting for share based payment arrangements and requires all companies to apply a fair value based measurement method in accounting for all share based payment transactions with employees.

Deferred Income Taxes

Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and net operating loss carry forwards. Deferred tax assets and liabilities are measured using expected tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. We have recorded a full valuation allowance for our net deferred tax assets as of September 30, 2016, due to the uncertainty of the our ability to realize those assets.

Commitments and Contingencies

We are not currently involved in any legal proceedings that we believe would have a material adverse effect on our financial position, results of operations or cash flows.

Results of Operations (All figures have been rounded to the nearest $1,000)

Comparison of the three months ended September 30, 2016 to the three months ended September 30, 2015

Revenues for quarter ended September 30, 2016 decreased 45% to $1,214,000 compared to $2,199,000 for the previous year.

Three months ended September 30,
	2016		2015		% Change
Identity Systems	$	1,211,000	$	2,175,000		(44	)%
Other		3,000		24,000		(88	)%
	$	1,214,000	$	2,199,000		(45	)%

The decrease in Identity Systems revenue in the third quarter of 2016 is primarily the result of lower commercial and Defense ID^®sales. The decrease in other revenues is a result of our sale of the Wireless asset business in the third quarter of 2015. Total invoiced orders decreased 43% to $1,169,000 in the third quarter of 2016 compared to $2,036,000 in the third quarter of 2015. As of September 30, 2016, our backlog, which represents non-cancelable sales orders for products not yet shipped and services to be performed, was approximately $233,000 compared to $898,000 at September 30, 2015. As of December 31, 2015, our backlog was approximately $339,000.

Our gross profit as a percentage of revenues was 77.9% for the three months ended September 30, 2016 compared to 63.5% for the three months ended September 30, 2015. The increase in percentage is due to higher revenues on our Software as a Service (“SaaS”) model and lower equipment sales that typically has a lower margin.

Operating expenses, which consist of selling, general and administrative and research and development expenses, decreased $1,098,000 or 40% to $1,677,000 for the three months ended September 30, 2016 compared to $2,775,000 for the three months ended September 30, 2015. This decrease is primarily due to lower costs for stock-based compensation on stock options issued during the prior quarter and amortization in prior period related to a fully amortized intangible asset. We also incurred a reduction in expenses such as legal and professional fees as well as decreased the use of a specialized consulting firm for certain research and development projects.

Other income and expense was insignificant for the three months ended September 30, 2016. Other income and expense of $112,000 for the three months ended September 30, 2015 consisted primarily of the gain on the sale of the wireless assets on August 31, 2015.

As further explained in Note 7, we have a net operating loss carryforward for losses generated in prior years of $2.2 million and, therefore, no provision for income tax has been made for the three months ended September 30, 2016.

As a result of the factors noted above, the Company generated a net loss of $727,000 for the three months ended September 30, 2016 compared to a net loss of $1,268,000 for the three months ended September 30, 2015.

Comparison of the nine months ended September 30, 2016 to the nine months ended September 30, 2015

Revenues decreased by 43% to $3,105,000 for the nine months ended September 30, 2016 from $5,478,000 for the nine months ended September 30, 2015.

Nine months ended September 30,
	2016		2015		% Change
Identity Systems	$	3,095,000	$	5,126,000		(40	)%
Other		10,000		352,000		(97	)%
	$	3,105,000	$	5,478,000		(43	)%

The decrease in Identity Systems revenues in the nine months ended September 30, 2016, is primarily the result of lower commercial and Defense ID^® sales. The decrease in other revenues is the result of our sale of the Wireless asset business in the third quarter of 2015.

Our gross profit as a percentage of revenues amounted to 79.9% for the nine months ended September 30, 2016 compared to 55.3% for the nine months ended September 30, 2015. The increase in the percentage is due to higher revenues on our new SaaS model and lower equipment sales that typically has a lower margin.

Operating expenses, which consist of selling, general and administrative and research and development expenses, increased $184,000 or 3% to $7,141,000 for the nine months ended September 30, 2016 from $6,957,000 for the nine months ended September 30, 2015. This increase is primarily due to a severance package expensed in the current year to a former officer pursuant to an employment agreement to be paid through May 2017, accelerated R&D efforts and an increase in legal fees. These increases are offset in part by a reduction in headcount, amortization in 2015 related to a fully amortized intangible asset and a reduction in professional fees.

Other income and expense was insignificant for the nine months ended September 30, 2016. Other income and expense of $141,000 for the nine months ended September 30, 2015 consisted primarily of the gain on the sale of the wireless assets on August 31, 2015.

As a result of the factors noted above, the Company generated a net loss of $4,646,000 for the nine months ended September 30, 2016 as compared to a net loss of $3,784,000 for the nine months ended September 30, 2015.

Liquidity and Capital Resources (All figures have been rounded to the nearest $1,000)

As of September 30, 2016, we had cash and cash equivalents of $3,534,000, working capital (defined as current assets minus current liabilities) of $3,040,000, total assets of $15,538,000 and stockholders’ equity of $13,557,000.

During the nine months ended September 30, 2016, we used net cash of $3,471,000 in operating activities as compared to net cash used of $3,745,000 in the nine months ended September 30, 2015. Cash used in investing activities was $22,000 for the nine months ended September 30, 2016 compared to $157,000 for the nine months ended September 30, 2015. Cash provided by financing activities was $1,074,000 for the nine months ended September 30, 2016 compared to $7,601,000 for the nine months ended September 30, 2015.

On February 24, 2016, we entered into a stock repurchase agreement with two former directors, who were also members of management (the “Former Executives”) for the repurchase of all 979,114 shares owned by the Former Executives of our common stock for $1,096,608. The transaction was finalized on March 4, 2016.

On June 15, 2016, we announced the closing of an underwritten public offering of 1,200,000 shares of our common stock and 600,000 five year warrants to purchase shares with an exercise price of $2.20 per share, at a combined public offering of $1.75 per share and half-warrant. Net proceeds to the Company from this offering were approximately $1,902,000 after deducting underwriting discounts and commissions paid by the Company. As part of the offering, there was an overallotment option for the underwriters to purchase up to 180,000 shares of common stock at a purchase price of $1.63 per share and/or up to 90,000 additional warrants at a purchase price of $0.0001 per warrant. On June 20, 2016, the underwriters exercised their right to purchase 23,320 warrants. Direct offering costs totaling approximately $122,000 were recorded as a reduction to the net proceeds on the consolidated statement of stockholders’ equity.

We have a revolving credit facility with Silicon Valley Bank that allows for maximum borrowings of $2,000,000. The borrowings are secured by collateralized accounts totaling $2,000,000. The facility bears interest at a rate of U.S. prime (3.50 % at September 30, 2016). Interest is payable monthly and the principal is due upon maturity on October 5, 2017. As of September 30, 2016, there were no amounts outstanding under this facility and unused availability under this facility was $2,000,000.

We currently anticipate that our available cash, expected cash from operations and availability under the revolving credit agreement, will be sufficient to meet our anticipated working capital and capital expenditure requirements for at least the next 12 months.

We keep the option open to raise additional funds to respond to business contingencies which may include the need to fund more rapid expansion, fund additional marketing expenditures, develop new markets for our technology, enhance our operating infrastructure, respond to competitive pressures, or acquire complementary businesses or necessary technologies. There can be no assurance that we will be able to secure the additional funds when needed or obtain such on terms satisfactory to us, if at all.

We have filed a universal shelf registration statement on Form S-3 with the Securities and Exchange Commission (“SEC”), which became effective July 19, 2010. Under the shelf registration statement, we may offer and sell, from time to time in the future in one or more public offerings, our common stock, preferred stock, warrants, and units. The aggregate initial offering price of all securities sold by us will not exceed $25,000,000, and, pursuant to SEC rules, we may only sell up to one-third of the market cap held by non-affiliate stockholders in any 12-month period. We renewed this registration with the SEC on October 21, 2016 and it was declared effective November 3, 2016.

The specific terms of any future offering, including the prices and use of proceeds, will be determined at the time of any such offering and will be described in detail in a prospectus supplement which will be filed with the SEC at the time of the offering.

The shelf registration statement is designed to give the Company the flexibility to access additional capital at some point in the future when market conditions are appropriate.

We are not currently involved in any legal or regulatory proceeding, or arbitration, the outcome of which is expected to have a material adverse effect on our business.

Net Operating Loss Carry Forwards

As of December 31, 2015, we had net operating loss carryforwards (“NOL’s”) for federal and New York State income tax purposes of approximately $47.4 million. In March 2016, we completed a study which determined that a cumulative three-year ownership change in excess of 50% had occurred in March 2016 due to a share repurchase. As a result, our available NOLs were reduced from $47.4 million to $2.2 million during the first quarter of 2016. There can be no assurance that we will realize any benefit of the NOL’s. The federal and New York state NOL’s are available to offset future taxable income and expire from 2016 to 2036, if not utilized.

Adjusted EBITDA

We use Adjusted EBITDA as a non-GAAP financial performance measurement. Adjusted EBITDA is calculated by adding back to net loss, interest, income taxes, impairments of long-lived assets and goodwill, depreciation, amortization and stock-based compensation expense. Adjusted EBITDA is provided to investors to supplement the results of operations reported in accordance with GAAP. Management believes that Adjusted EBITDA provides an additional tool for investors to use in comparing our financial results with other companies that also use Adjusted EBITDA in their communications to investors. By excluding non-cash charges such as impairments of long-lived assets and goodwill, amortization, depreciation and stock-based compensation, as well as non-operating charges for interest and income taxes, investors can evaluate our operations and can compare the results on a more consistent basis to the results of other companies. In addition, Adjusted EBITDA is one of the primary measures management uses to monitor and evaluate financial and operating results.

We consider Adjusted EBITDA to be an important indicator of our operational strength and performance of our business and a useful measure of our historical operating trends. However, there are significant limitations to the use of Adjusted EBITDA since it excludes interest and other income and expense, impairments of long lived assets and goodwill, stock-based compensation expense, all of which impact our profitability, as well as depreciation and amortization related to the use of long-term assets which benefit multiple periods. We believe that these limitations are compensated by providing Adjusted EBITDA only with GAAP net loss and clearly identifying the difference between the two measures. Consequently, Adjusted EBITDA should not be considered in isolation or as a substitute for net loss presented in accordance with GAAP. Adjusted EBITDA as defined by us may not be comparable with similarly named measures provided by other entities.

A reconciliation of GAAP net loss to Adjusted EBITDA follows:

	(Unaudited)
	Three Months Ended September 30,						Nine Months Ended September 30,
	2016			2015			2016			2015
Net loss	$	(726,922	)	$	(1,267,797	)	$	(4,645,529	)	$	(3,783,883	)
Reconciling items:
Interest and other – net		(3,437	)		(111,661	)		(12,630	)		(141,084	)
Depreciation and amortization		104,935			227,049			328,105			798,072
Stock-based compensation costs		134,929			418,484			802,623			685,892
Adjusted EBITDA	$	(490,495	)	$	(733,925	)	$	(3,527,431	)	$	(2,441,003	)

Off-Balance Sheet Arrangements

We have not entered into any off-balance sheet financing arrangements and have not established any special purpose entities. We have not guaranteed any debt or commitments of other entities or entered into any options on non-financial assets.

Forward Looking Statements

This document contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, particularly statements anticipating future growth in revenues, loss from operations and cash flow. Words such as “anticipates,” “estimates,” “expects,” “projects,” “intends,” “plans,” “believes” and words and terms of similar substance used in connection with any discussion of future operating or financial performance identify forward-looking statements. These forward-looking statements are based on management’s current expectations and beliefs about future events. As with any projection or forecast, they are inherently susceptible to uncertainty and changes in circumstances, and the Company is under no obligation to, and expressly disclaims any obligation to, update or alter its forward-looking statements whether as a result of such changes, new information, subsequent events or otherwise.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Financial instruments, which subject us to concentrations of credit risk, consist primarily of cash and cash equivalents. We maintain cash in one financial institution. We perform periodic evaluations of the relative credit standing of this institution.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our Chief Executive Officer and our Chief Financial Officer evaluated, with the participation of our management, the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form 10-Q. As of September 30, 2016, our Chief Executive Officer and our Chief Financial Officer concluded that our disclosure controls and procedures, as defined in Securities Exchange Act Rule 13a-15(e) and 15d-15(e), were effective.

Our disclosure controls and procedures have been formulated to ensure (i) that information that we are required to disclose in reports that we file or submit under the Securities Exchange Act of 1934 were recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms and (ii) that the information required to be disclosed by us is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures.

Changes in Internal Controls over Financial Reporting

There was no change in our internal controls over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the second quarter of 2016 covered by this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

Part II - Other Information

Item 1. LEGAL PROCEEDINGS

None.

Item 1A. Risk Factors

Current economic conditions may cause a decline in business and consumer spending which could adversely affect our business and financial performance.

While a significant portion of our business is with the U.S. government, our operating results may be impacted by the overall health of the North American economy. Our business and financial performance, including collection of our accounts receivable, realization of inventory, recoverability of assets including investments, may be adversely affected by current and future economic conditions, such as a reduction in the availability of credit, financial market volatility, recession, etc.

Our operations and financial results are subject to various other risks and uncertainties that could adversely affect our business, financial condition, results of operations, and trading price of our common stock. Please refer to our annual report on Form 10-K for fiscal year 2015 for information concerning other risks and uncertainties that could negatively impact us.

Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None

Item 3. DEFAULTS UPON SENIOR SECURITIES

None

Item 4. MINE SAFETY DISCLOSURES

Not applicable.

Item 5. OTHER INFORMATION

None

Item 6. Exhibits

(a) The following exhibits are filed as part of the Quarterly Report on Form 10-Q:

	Exhibit No.		Description

	31.1		Rule 13a-14(a) Certification of Chief Executive Officer
	31.2		Rule 13a-14(a) Certification of Chief Financial Officer
	32		18 U.S.C. Section 1350 Certifications
	101.INS		XBRL Instance Document
	101.SCH		XBRL Taxonomy Extension Schema
	101.CAL		XBRL Taxonomy Extension Calculation Linkbase
	101.DEF		XBRL Taxonomy Extension Definition Linkbase
	101.LAB		XBRL Taxonomy Extension Label Linkbase
	101.PRE		XBRL Taxonomy Extension Presentation Linkbase

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 10, 2016	Intellicheck Mobilisa, Inc.

	By:	/s/ William Roof
		William Roof, PhD, MBA
		Chief Executive Officer

	By:	/s/ Bill White
		Bill White
		Chief Financial Officer
		(Principal Financial and Accounting Officer)

EX-31.1 2 ex31-1.htm

Exhibit 31.1

CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, William Roof, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Intellicheck Mobilisa, Inc.;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

	a)	designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

	b)	designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

	c)	evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

	d)	disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

	a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

	b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.

Date: November 10, 2016	By:	/s/ William Roof
	Name:	William Roof, PhD, MBA
	Title:	Chief Executive Officer
		(Principal Executive Officer)

EX-31.2 3 ex31-2.htm

Exhibit 31.2

CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Bill White, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Intellicheck Mobilisa, Inc.;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

	a)	designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

	b)	designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

	c)	evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

	d)	disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

	a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

	b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.

Date: November 10, 2016	By:	/s/ Bill White
	Name:	Bill White
	Title:	Chief Financial Officer
		(Principal Financial and Accounting Officer)

EX-32 4 ex32.htm

Exhibit 32

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code), each of the undersigned officers of Intellicheck Mobilisa, Inc. (the “Company”), does hereby certify, to such officer’s knowledge, that:

The Quarterly Report on Form 10-Q for the period ended September 30, 2016 of the Company fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: November 10, 2016	By:	/s/ William Roof
	Name:	William Roof, PhD, MBA
	Title:	Chief Executive Officer
		(Principal Executive Officer)

Dated: November 10, 2016	By:	/s/ Bill White
	Name:	Bill White
	Title:	Chief Financial Officer
		(Principal Financial and Accounting Officer)

The foregoing certification is being furnished solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code) and is not being filed as part of the Form 10-Q or as a separate disclosure document.

EX-101.INS 5 idn-20160930.xml XBRL INSTANCE FILE 0001040896 2016-09-30 0001040896 us-gaap:RestrictedStockUnitsRSUMember 2016-01-01 2016-09-30 0001040896 us-gaap:EmployeeStockOptionMember 2015-01-01 2015-09-30 0001040896 us-gaap:WarrantMember 2015-01-01 2015-09-30 0001040896 us-gaap:RestrictedStockMember 2015-01-01 2015-09-30 0001040896 us-gaap:EmployeeStockOptionMember 2016-01-01 2016-09-30 0001040896 us-gaap:WarrantMember 2016-01-01 2016-09-30 0001040896 us-gaap:RestrictedStockMember 2016-01-01 2016-09-30 0001040896 us-gaap:MaximumMember 2015-12-31 0001040896 2015-07-01 2015-09-30 0001040896 2015-01-01 2015-09-30 0001040896 us-gaap:RevolvingCreditFacilityMember IDN:SiliconValleyBankMember us-gaap:PrimeRateMember 2016-01-01 2016-09-30 0001040896 IDN:ThreeCustomerMember us-gaap:SalesRevenueNetMember 2016-01-01 2016-09-30 0001040896 us-gaap:CommonStockMember IDN:PublicOfferingMember 2015-01-13 2015-01-14 0001040896 us-gaap:CommonStockMember IDN:PublicOfferingMember 2015-01-14 0001040896 us-gaap:RevolvingCreditFacilityMember IDN:SiliconValleyBankMember 2016-09-30 0001040896 us-gaap:RevolvingCreditFacilityMember IDN:SiliconValleyBankMember 2016-01-01 2016-09-30 0001040896 IDN:BuyerMember 2015-08-30 2015-08-31 0001040896 IDN:BuyerMember 2015-08-31 0001040896 2015-12-31 0001040896 2016-01-01 2016-09-30 0001040896 2015-09-30 0001040896 us-gaap:CommonStockMember 2015-12-31 0001040896 us-gaap:AdditionalPaidInCapitalMember 2015-12-31 0001040896 us-gaap:RetainedEarningsMember 2015-12-31 0001040896 IDN:TwoCustomerMember us-gaap:AccountsReceivableMember 2016-01-01 2016-09-30 0001040896 us-gaap:CostOfSalesMember 2016-01-01 2016-09-30 0001040896 us-gaap:GeneralAndAdministrativeExpenseMember 2016-01-01 2016-09-30 0001040896 us-gaap:CostOfSalesMember 2015-01-01 2015-09-30 0001040896 us-gaap:GeneralAndAdministrativeExpenseMember 2015-01-01 2015-09-30 0001040896 us-gaap:MinimumMember 2016-09-30 0001040896 us-gaap:MaximumMember 2016-09-30 0001040896 us-gaap:MinimumMember 2016-03-01 2016-03-31 0001040896 us-gaap:ResearchAndDevelopmentExpenseMember 2016-01-01 2016-09-30 0001040896 us-gaap:ResearchAndDevelopmentExpenseMember 2015-01-01 2015-09-30 0001040896 IDN:StockOptionandEquityIncentivePlansMember 2016-09-30 0001040896 us-gaap:RestrictedStockUnitsRSUMember 2016-09-30 0001040896 IDN:LandlordMember 2016-01-01 2016-09-30 0001040896 2016-11-10 0001040896 2014-12-31 0001040896 us-gaap:CommonStockMember 2016-01-01 2016-09-30 0001040896 us-gaap:CommonStockMember 2016-09-30 0001040896 us-gaap:AdditionalPaidInCapitalMember 2016-01-01 2016-09-30 0001040896 us-gaap:AdditionalPaidInCapitalMember 2016-09-30 0001040896 us-gaap:RetainedEarningsMember 2016-01-01 2016-09-30 0001040896 us-gaap:RetainedEarningsMember 2016-09-30 0001040896 IDN:EmployeeStockOptionsMember 2016-01-01 2016-09-30 0001040896 us-gaap:RestrictedStockUnitsRSUMember 2015-12-31 0001040896 IDN:FormerExecutivesMember 2016-02-23 2016-02-24 0001040896 IDN:LandlordMember 2016-02-23 2016-02-24 0001040896 2016-07-01 2016-09-30 0001040896 IDN:ThreeCustomerMember us-gaap:SalesRevenueNetMember 2016-07-01 2016-09-30 0001040896 IDN:TwoCustomerMember us-gaap:SalesRevenueNetMember 2015-07-01 2015-09-30 0001040896 IDN:TwoCustomerMember us-gaap:SalesRevenueNetMember 2015-01-01 2015-09-30 0001040896 IDN:CustomerOneMember us-gaap:AccountsReceivableMember 2015-01-01 2015-09-30 0001040896 us-gaap:EmployeeStockOptionMember 2016-07-01 2016-09-30 0001040896 us-gaap:WarrantMember 2016-07-01 2016-09-30 0001040896 us-gaap:RestrictedStockMember 2016-07-01 2016-09-30 0001040896 us-gaap:EmployeeStockOptionMember 2015-07-01 2015-09-30 0001040896 us-gaap:RestrictedStockMember 2015-07-01 2015-09-30 0001040896 us-gaap:WarrantMember 2015-07-01 2015-09-30 0001040896 us-gaap:CostOfSalesMember 2016-07-01 2016-09-30 0001040896 us-gaap:GeneralAndAdministrativeExpenseMember 2016-07-01 2016-09-30 0001040896 us-gaap:CostOfSalesMember 2015-07-01 2015-09-30 0001040896 us-gaap:GeneralAndAdministrativeExpenseMember 2015-07-01 2015-09-30 0001040896 us-gaap:MinimumMember 2016-03-31 0001040896 us-gaap:ResearchAndDevelopmentExpenseMember 2016-07-01 2016-09-30 0001040896 us-gaap:ResearchAndDevelopmentExpenseMember 2015-07-01 2015-09-30 0001040896 us-gaap:MinimumMember 2016-01-01 2016-09-30 0001040896 us-gaap:MaximumMember 2016-01-01 2016-09-30 0001040896 us-gaap:CommonStockMember IDN:PublicOfferingMember 2016-06-14 2016-06-15 0001040896 us-gaap:CommonStockMember IDN:PublicOfferingMember 2016-06-15 0001040896 us-gaap:CommonStockMember IDN:PublicOfferingMember us-gaap:OverAllotmentOptionMember 2016-06-14 2016-06-15 0001040896 us-gaap:CommonStockMember IDN:PublicOfferingMember us-gaap:OverAllotmentOptionMember 2016-06-15 0001040896 us-gaap:CommonStockMember IDN:PublicOfferingMember 2016-06-19 2016-06-20 0001040896 IDN:EmployeeStockOptionsMember 2015-12-31 0001040896 IDN:EmployeeStockOptionsMember 2016-09-30 xbrli:shares iso4217:USD iso4217:USD xbrli:shares xbrli:pure 10-Q false Intellicheck Mobilisa, Inc. --12-31 Smaller Reporting Company IDN

.001

0.001

-1267797

-3783883

-4645529

-726922

1905362

64981

68743

1651920

688301

43466

2039086

2383687

1651920

688301

43466

1905362

68743

64981

12764

18411

40000000

4857143

1200000

197253

701460

236673

177488

59185

288898

412562

78892

59162

19730

59163

138090

134537

172766

322492

313003

78477

50547

345127

0.00

P5Y

1.01

1.93

200000

0.04

3683

1.75

1.63

214000

122000

P60M

10565553

0.0350

0.26

0.32

0.35

0.51

0.40

0.51

2233454

2470127

P2Y1M6D

1.01

1.93

7845000

1902000

1395989

3031778

2482497

946171

2199473

5478170

3105330

1214308

3534399

5953257

6665599

2966350

418484

685892

802623

763938

642169

38685

43723

134929

125581

396654

9348

21830

2000000

30000

120000

350000

802623

104

-104

13557118

16326412

9879

114950278

-98633745

10549

116825843

-103279274

9878906

10548983

2020-08-31

159990

187861

38513

37365

2017-10-05

47400000

2200000

2016 through 2036 0.50

1691

80453

43466

67077

104064

1.69

1.58

1.76

1.56

-979114

979114

-1096608

-979

-1095629

1096608

3. INTANGIBLE ASSETS AND GOODWILL   The changes in the carrying amount of intangible assets for nine months ended September 30, 2016 were as follows:   <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 79%">Balance at December 31, 2015</td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 18%; text-align: right">2,470,127</td> <td style="width: 1%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-bottom: 1.5pt">Deduction: Amortization expense</td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">(236,673</td> <td style="padding-bottom: 1.5pt">)</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-bottom: 2.5pt">Balance at September 30, 2016</td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">2,233,454</td> <td style="padding-bottom: 2.5pt"> </td></tr> </table>   The following summarizes amortization of intangible assets included in the statement of operations:   <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="6" style="border-bottom: black 1.5pt solid; text-align: center">Three Months Ended September 30,</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="6" style="border-bottom: black 1.5pt solid; text-align: center">Nine Months Ended September 30,</td> <td style="padding-bottom: 1.5pt"> </td></tr> <tr style="vertical-align: bottom"> <td style="text-align: center"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center">2016</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center">2015</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center">2016</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center">2015</td> <td style="padding-bottom: 1.5pt"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 48%; padding-left: 8.65pt; text-indent: -8.65pt">Cost of sales</td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 10%; text-align: right">59,162</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 10%; text-align: right">59,163</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 10%; text-align: right">177,488</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 10%; text-align: right">288,898</td> <td style="width: 1%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-bottom: 1.5pt; padding-left: 8.65pt; text-indent: -8.65pt">General and administrative</td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">19,730</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">138,090</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">59,185</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">412,562</td> <td style="padding-bottom: 1.5pt"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-bottom: 2.5pt; padding-left: 8.65pt; text-indent: -8.65pt"> </td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">78,892</td> <td style="padding-bottom: 2.5pt"> </td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">197,253</td> <td style="padding-bottom: 2.5pt"> </td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">236,673</td> <td style="padding-bottom: 2.5pt"> </td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">701,460</td> <td style="padding-bottom: 2.5pt"> </td></tr> </table>

827890

1158972

4735668

7365323

299138

178362

74241

74732

61298

59800

2233454

2470127

8101661

284701

325427

121477

150496

15538259

18472834

1695327

1705825

909822

909233

685856

536316

99649

260276

72240

99355

213574

341242

1981141

2146422

10549

9879

-103279274

-98633745

116825843

114950278

15538259

18472834

10548983

9878906

10548983

9878906

803484

2446392

622833

268137

2775447

6956745

7140656

1676530

692310

1869063

2024818

407615

2083137

5087682

5115838

1268915

-1379458

-3924967

-4658159

-730359

572

3307

112233

144391

12630

3437

-0.13

-0.39

-0.48

-0.07

9851764

9584582

9680010

10246629

-20311

-27115

798072

328105

-3744765

-3470783

-336329

-127079

-90223

-11087

12207

-1498

-59512

-120776

22576

491

-832929

318318

-156642

-21687

29020

93142

50707

125000

7600656

1073612

31078

1096608

7630757

1780341

3699249

-2418858

31078

2. SIGNIFICANT ACCOUNTING POLICIES   Basis of Presentation   The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Rule 8-03 of Regulation S-X. Accordingly, they do not include all of the information and notes required by generally accepted accounting principles for complete financial statements. In the opinion of management, the unaudited interim financial statements furnished herein include all adjustments necessary for a fair presentation of the Companys financial position at September 30, 2016 and the results of its operations for the three and nine months ended September 30, 2016 and 2015, stockholders equity for the nine months ended September 30, 2016 and cash flows for the nine months ended September 30, 2016 and 2015. All such adjustments are of a normal and recurring nature. Interim financial statements are prepared on a basis consistent with the Companys annual financial statements. Results of operations for the nine month period ended September 30, 2016, are not necessarily indicative of the operating results that may be expected for the year ending December 31, 2016.   The balance sheet as of December 31, 2015 has been derived from the audited financial statements at that date but does not include all of the information and notes required by accounting principles generally accepted in the United States of America for complete financial statements.   References in this Quarterly Report on Form 10-Q to authoritative guidance is to the Accounting Standards Codification issued by the Financial Accounting Standards Board (FASB).   For further information, refer to the financial statements and notes thereto included in the Companys Annual Report on Form 10-K for the year ended December 31, 2015.   Recent Accounting Pronouncements   In May 2014, the FASB issued Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers (Topic 606). ASU 2014-09 completes the joint effort by the FASB and International Accounting Standards Board (IASB) to improve financial reporting by creating common revenue recognition guidance for U.S. GAAP and International Financial Reporting Standards (IFRS). ASU 2014-09 applies to all companies that enter into contracts with customers to transfer goods or services. ASU 2014-09 is effective for public entities for interim and annual reporting periods beginning in the first quarter of 2018. Early adoption is permitted beginning in the first quarter of 2017 for public companies. The Company is currently evaluating the requirements of ASU 2014-09 and have not yet determined its impact on our consolidated financial statements and expects to be completed by December 31, 2016.   Use of Estimates   The preparation of the Companys financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the Companys financial statements and accompanying notes. Significant estimates and assumptions that affect amounts reported in the financial statements include the evaluation of goodwill for impairment, valuation of intangible assets, deferred tax valuation allowances, and the fair value of stock options granted under the Companys stock-based compensation plans. Due to the inherent uncertainties involved in making estimates, actual results reported in future periods may be different from those estimates.   Cash and Cash Equivalents   Cash and cash equivalents include cash and highly liquid investments with original maturities of three months or less when purchased. There were no cash equivalents held on September 30, 2016 and December 31, 2015.   Allowance for Doubtful Accounts   The Company records its allowance for doubtful accounts based upon its assessment of various factors. The Company considers historical experience, the age of the accounts receivable balances, credit quality of the Companys customers, current economic conditions and other factors that may affect customers ability to pay.   Inventory   Inventory is stated at the lower of cost or market and cost is determined using the first-in, first-out method. Inventory is primarily comprised of finished goods. As of September 30, 2016 and December 31, 2015, the majority of inventory is related to Government and Commercial Identity products for intended near-term sales.   Goodwill   Goodwill represents the excess of acquisition cost over the fair value of net assets acquired in business combinations. Pursuant to ASC Topic 350, the Company tests goodwill for impairment on an annual basis in the fourth quarter, or between annual tests, in certain circumstances. Under guidance, the Company first assessed qualitative factors to determine whether it was necessary to perform the two-step quantitative goodwill impairment test. An entity is not required to calculate the fair value of a reporting unit unless the entity determines, based on a qualitative assessment, that it is more likely than not that its fair value is less than its carrying amount. Events or changes in circumstances which could trigger an impairment review include macroeconomic conditions, industry and market conditions, cost factors, overall financial performance, other entity specific events and sustained decrease in share price.   Intangible Assets   Intangible assets include trade names, patents developed technology non-contractual customer relationships. The Company uses the straight line method to amortize these assets over their estimated useful lives. The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of these assets may not be fully recoverable in accordance with ASC Topic 360. To determine recoverability of its long-lived assets, the Company evaluates the probability that future undiscounted net cash flows, without interest charges, will be less than the carrying amount of the assets. There were no impairment charges recognized during the nine months ended September 30, 2016 and 2015.   Income Taxes   The Company accounts for income taxes under in accordance with ASC Topic 740, Accounting for Income Taxes. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and net operating loss carryforwards. Deferred tax assets and liabilities are measured using expected tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. The Company has recorded a full valuation allowance for its net deferred tax assets as of September 30, 2016 and December 31, 2015, due to the uncertainty of the realizability of those assets.   Fair Value of Financial Instruments   The Company adheres to the provisions of ASC Topic 820, Fair Value Measurements and Disclosures. This pronouncement requires that the Company calculate the fair value of financial instruments and include this additional information in the notes to financial statements when the fair value is different than the book value of those financial instruments. The Companys financial instruments include cash and cash equivalents, accounts receivable, note receivable, accounts payable and accrued expenses. At September 30, 2016 and December 31, 2015, the carrying value of the Companys financial instruments approximated fair value, due to their short-term nature.   Revenue Recognition and Deferred Revenue   Revenue is generally recognized when persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed and determinable, collectability is probable, and there is no future Company involvement or commitment. The Company sells its commercial products directly through its sales force and through distributors. Revenue from direct sales of products is recognized when shipped to the customer and title has passed.   Under the provisions of ASC Topic 605-25, Revenue Arrangements with Multiple Deliverables, for multi-element arrangements that include tangible products containing software essential to the tangible products functionality and undelivered software elements relating to the tangible products essential software, the Company allocates revenue to all deliverables based on their relative selling prices. In such circumstances, the Company uses a hierarchy to determine the selling price to be used for allocating revenue to deliverables: (i) vendor-specific objective evidence of fair value (VSOE), (ii) third-party evidence of selling price and (iii) best estimate of the selling price (ESP). VSOE generally exists only when the Company sells the deliverable separately and is the price actually charged by the Company for that deliverable. ESPs reflect the Companys best estimates of what the selling prices of elements would be if they were sold regularly on a stand-alone basis.   The Company also recognizes revenues from licensing of its patented software to customers. The licensed software requires continuing service or post contractual customer support and performance; accordingly, a portion of the revenue is deferred based on its fair value and recognized ratably over the period in which the future service, support and performance are provided, which is generally one to three years. Royalties from the licensing of the Companys technology are recognized as revenues in the period they are earned.   The Company also performs consulting work for other companies. These services are billed on a time and materials basis. Revenue from these arrangements is also recognized as time is spent on the contract and materials are purchased.   Subscriptions to database information can be purchased for month-to-month, one, two, and three year periods. Revenue from subscriptions are deferred and recognized over the contractual period, which is typically three years.   The Company offers enhanced extended warranties for its sales of hardware and software at a set price. The revenue from these sales are deferred and recognized on a straight-line basis over the contractual period, which is typically one to four years.   Business Concentrations and Credit Risk   During the three and nine month periods ended September 30, 2016, the Company made sales to three customers that accounted for approximately 35% and 26% of total revenues, respectively. The revenue was associated with two commercial identity sales customers and one Defense ID customer. These customers represented 32% of total accounts receivable at September 30, 2016. During the three and nine month periods ended September 30, 2015, the Company made sales to two customers that accounted for approximately 51% and 40% of total revenues, respectively. The revenue was associated with one commercial identity customer and one Defense ID customer. These customers represented 51% of total accounts receivable at September 30, 2015.   Net Loss Per Share   Basic net loss per share is computed by dividing the net loss for the period by the weighted average number of common shares outstanding during the period. Diluted net loss per share is computed by dividing the net loss for the period by the weighted average number of shares of common stock and potentially dilutive common stock outstanding during the period. The dilutive effect of outstanding options and restricted stock is reflected in diluted earnings per share by application of the treasury stock method. The calculation of diluted net loss per share excludes all anti-dilutive shares.   <table cellspacing="0" cellpadding="0" style="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td style="text-align: center; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="6" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%">Three Months Ended September 30,</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="6" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%">Nine Months Ended September 30,</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom"> <td style="text-align: center; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%">2016</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%">2015</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%">2016</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%">2015</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 8.65pt; text-indent: -8.65pt; line-height: 115%">Numerator:</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="width: 48%; padding-left: 8.65pt; text-indent: -8.65pt; line-height: 115%">Net loss</td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; border-bottom: black 2.25pt double; line-height: 115%">$</td> <td style="width: 10%; border-bottom: black 2.25pt double; text-align: right; line-height: 115%">(726,922</td> <td style="width: 1%; line-height: 115%">)</td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; border-bottom: black 2.25pt double; line-height: 115%">$</td> <td style="width: 10%; border-bottom: black 2.25pt double; text-align: right; line-height: 115%">(1,267,797</td> <td style="width: 1%; line-height: 115%">)</td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; border-bottom: black 2.25pt double; line-height: 115%">$</td> <td style="width: 10%; border-bottom: black 2.25pt double; text-align: right; line-height: 115%">(4,645,529</td> <td style="width: 1%; line-height: 115%">)</td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; border-bottom: black 2.25pt double; line-height: 115%">$</td> <td style="width: 10%; border-bottom: black 2.25pt double; text-align: right; line-height: 115%">(3,783,883</td> <td style="width: 1%; line-height: 115%">)</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 8.65pt; text-indent: -8.65pt; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 8.65pt; text-indent: -8.65pt; line-height: 115%">Denominator:</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 15.85pt; text-indent: -8.65pt; line-height: 115%">Weighted average common shares </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 15.85pt; text-indent: -8.65pt; line-height: 115%">Basic/Diluted</td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%">10,246,629</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%">9,851,764</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%">9,680,010</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%">9,584,582</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 8.65pt; text-indent: -8.65pt; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 8.65pt; text-indent: -8.65pt; line-height: 115%">Net loss per share </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 15.85pt; text-indent: -8.65pt; line-height: 115%">Basic/Diluted</td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%">$</td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%">(0.07</td> <td style="line-height: 115%">)</td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%">$</td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%">(0.13</td> <td style="line-height: 115%">)</td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%">$</td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%">(0.48</td> <td style="line-height: 115%">)</td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%">$</td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%">(0.39</td> <td style="line-height: 115%">)</td></tr> </table>   The following table summarizes the common stock equivalents excluded from loss per diluted share because their effect would be anti-dilutive:   <table cellspacing="0" cellpadding="0" style="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="6" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%">Three Months Ended September 30,</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="6" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%">Nine Months Ended September 30,</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom"> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%">2016</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%">2015</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%">2016</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%">2015</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 48%; line-height: 115%">Stock options</td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 10%; text-align: right; line-height: 115%">1,651,920</td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 10%; text-align: right; line-height: 115%">1,905,362</td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 10%; text-align: right; line-height: 115%">1,651,920</td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 10%; text-align: right; line-height: 115%">1,905,362</td> <td style="width: 1%; line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="line-height: 115%">Warrants</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">688,301</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">64,981</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">688,301</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">64,981</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="line-height: 115%">Restricted Stock</td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%">43,466</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%">68,743</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%">43,466</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%">68,743</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%">2,383,687</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%">2,039,086</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%">2,383,687</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%">2,039,086</td> <td style="line-height: 115%"> </td></tr> </table>   The above listing is not intended to be a comprehensive list of all of our accounting policies. In many cases, the accounting treatment of a particular transaction is specifically dictated by generally accepted accounting principles, with no need for managements judgment in their application. There are also areas in which managements judgment in selecting any available alternative would not produce a materially different result.

4. NOTE RECEIVABLE   On August 31, 2015, the Company sold the wireless enterprise assets to the Jamestown S’Klallam Tribe (the “Buyer”) for total consideration of $350,000 which consists of an upfront cash payment of $30,000, the issuance of a promissory note totaling $200,000 and contingent consideration up to a maximum of $120,000 based on future earnings. Under the terms of the promissory note, monthly payments of $3,683 including principal and interest at 4%, are to be made over a 60-month term expiring in August 2020. At September 30, 2016, the total note receivable is $159,990, of which $38,513 and $121,477 is included in Other Current Assets and Notes Receivable, net of current portion, respectively, on the Consolidated Balance Sheets. At December 31, 2015, the total note receivable is $187,861, of which $37,365 and $150,496 is included in other current assets and Notes Receivable, net of current portion, respectively on the Consolidated Balance Sheets.

5. DEBT   Revolving Line of Credit   The Company has a revolving credit facility with Silicon Valley Bank that allows for maximum borrowings of $2,000,000. The borrowings are secured by certain collateralized accounts totaling $2,000,000. The facility bears interest at a rate of U.S. prime (3.50% at September 30, 2016). Interest is payable monthly and the principal is due upon maturity on October 5, 2017. As of September 30, 2016, there were no amounts outstanding under this facility and unused availability under this facility was $2,000,000.

6. ACCRUED EXPENSES   Accrued expenses are comprised of the following:   <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center">September 30, 2016</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center">December 31, 2015</td> <td style="padding-bottom: 1.5pt"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 62%">Professional fees</td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 16%; text-align: right">134,537</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 16%; text-align: right">172,766</td> <td style="width: 1%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td>Payroll and related</td> <td> </td> <td> </td> <td style="text-align: right">322,492</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">313,003</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td>Severance payments to former officer</td> <td> </td> <td> </td> <td style="text-align: right">150,350</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">-</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-bottom: 1.5pt">Other</td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">78,477</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">50,547</td> <td style="padding-bottom: 1.5pt"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-bottom: 2.5pt"> </td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">685,856</td> <td style="padding-bottom: 2.5pt"> </td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">536,316</td> <td style="padding-bottom: 2.5pt"> </td></tr> </table>

7. INCOME TAXES   As of December 31, 2015, the Company had net operating loss carryforwards (NOL’s) for federal and New York state income tax purposes of approximately $47.4 million. In March 2016, the Company completed an Internal Revenue Code Section 382 study which determined that a cumulative three-year ownership change in excess of 50% had occurred in March 2016 due to a share repurchase. As a result, the Company’s available NOLs were reduced from $47.4 million at December 31, 2015 to $2.2 million during the first quarter of 2016. There can be no assurance that the Company will realize any benefit of the NOL’s. The federal and New York state NOL’s are available to offset future taxable income and expire from 2016 through 2036 if not utilized. The Company has a full valuation allowance on its deferred tax assets since management continues to believe that it is more likely than not that these assets will not be realized.

10. LEGAL PROCEEDINGS   The Company is not aware of any infringement by the Company’s products or technology on the proprietary rights of others.   The Company is not currently involved in any legal or regulatory proceeding, or arbitration, the outcome of which is expected to have a material adverse effect on its business.

11. COMMITMENTS AND CONTINGENCIES   The Company leases an office in the state of New York and storage space in the state of Washington which expire in March 2018 and December 2016, respectively. The landlord (“Landlord”) of the Washington space is owned by the Former Executives as discussed in Note 9.   On February 24, 2016, the Company terminated the Washington lease and paid a $100,000 termination fee to the Landlord in full satisfaction the Company’s remaining obligations under its original lease.   On May 19, 2016, Mr. Robert Williamsen, the Company’s Vice President and Chief Revenue Officer departed the Company, via mutual consent, to pursue other interests. Pursuant to Mr. Williamsen’s employment agreement with the Company, Mr. Williamsen will receive a payment of his monthly salary, subject to all applicable withholdings, for a period of 12 months following May 19, 2016, which the first payment commenced on July 7, 2016, and partial reimbursement for continued health, dental, and vision coverage through August 2016. Pursuant to the terms of Mr. Williamsen’s stock option agreements, Mr. Williamsen exercised his vested stock option awards.

Basis of Presentation   The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Rule 8-03 of Regulation S-X. Accordingly, they do not include all of the information and notes required by generally accepted accounting principles for complete financial statements. In the opinion of management, the unaudited interim financial statements furnished herein include all adjustments necessary for a fair presentation of the Companys financial position at September 30, 2016 and the results of its operations for the three and nine months ended September 30, 2016 and 2015, stockholders equity for the nine months ended September 30, 2016 and cash flows for the nine months ended September 30, 2016 and 2015. All such adjustments are of a normal and recurring nature. Interim financial statements are prepared on a basis consistent with the Companys annual financial statements. Results of operations for the nine month period ended September 30, 2016, are not necessarily indicative of the operating results that may be expected for the year ending December 31, 2016.   The balance sheet as of December 31, 2015 has been derived from the audited financial statements at that date but does not include all of the information and notes required by accounting principles generally accepted in the United States of America for complete financial statements.   References in this Quarterly Report on Form 10-Q to authoritative guidance is to the Accounting Standards Codification issued by the Financial Accounting Standards Board (FASB).   For further information, refer to the financial statements and notes thereto included in the Companys Annual Report on Form 10-K for the year ended December 31, 2015.

Recent Accounting Pronouncements   In May 2014, the FASB issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606). ASU 2014-09 completes the joint effort by the FASB and International Accounting Standards Board (“IASB”) to improve financial reporting by creating common revenue recognition guidance for U.S. GAAP and International Financial Reporting Standards (“IFRS”). ASU 2014-09 applies to all companies that enter into contracts with customers to transfer goods or services. ASU 2014-09 is effective for public entities for interim and annual reporting periods beginning in the first quarter of 2018. Early adoption is permitted beginning in the first quarter of 2017 for public companies. The Company is currently evaluating the requirements of ASU 2014-09 and have not yet determined its impact on our consolidated financial statements and expects to be completed by December 31, 2016.

Use of Estimates   The preparation of the Company’s financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the Company’s financial statements and accompanying notes. Significant estimates and assumptions that affect amounts reported in the financial statements include the evaluation of goodwill for impairment, valuation of intangible assets, deferred tax valuation allowances, and the fair value of stock options granted under the Company’s stock-based compensation plans. Due to the inherent uncertainties involved in making estimates, actual results reported in future periods may be different from those estimates.

Cash and Cash Equivalents   Cash and cash equivalents include cash and highly liquid investments with original maturities of three months or less when purchased. There were no cash equivalents held on September 30, 2016 and December 31, 2015.

Allowance for Doubtful Accounts   The Company records its allowance for doubtful accounts based upon its assessment of various factors. The Company considers historical experience, the age of the accounts receivable balances, credit quality of the Company’s customers, current economic conditions and other factors that may affect customers’ ability to pay.

Inventory   Inventory is stated at the lower of cost or market and cost is determined using the first-in, first-out method. Inventory is primarily comprised of finished goods. As of September 30, 2016 and December 31, 2015, the majority of inventory is related to Government and Commercial Identity products for intended near-term sales.

Goodwill   Goodwill represents the excess of acquisition cost over the fair value of net assets acquired in business combinations. Pursuant to ASC Topic 350, the Company tests goodwill for impairment on an annual basis in the fourth quarter, or between annual tests, in certain circumstances. Under guidance, the Company first assessed qualitative factors to determine whether it was necessary to perform the two-step quantitative goodwill impairment test. An entity is not required to calculate the fair value of a reporting unit unless the entity determines, based on a qualitative assessment, that it is more likely than not that its fair value is less than its carrying amount. Events or changes in circumstances which could trigger an impairment review include macroeconomic conditions, industry and market conditions, cost factors, overall financial performance, other entity specific events and sustained decrease in share price.

Intangible Assets   Intangible assets include trade names, patents developed technology non-contractual customer relationships. The Company uses the straight line method to amortize these assets over their estimated useful lives. The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of these assets may not be fully recoverable in accordance with ASC Topic 360. To determine recoverability of its long-lived assets, the Company evaluates the probability that future undiscounted net cash flows, without interest charges, will be less than the carrying amount of the assets. There were no impairment charges recognized during the nine months ended September 30, 2016 and 2015.

Income Taxes   The Company accounts for income taxes under in accordance with ASC Topic 740, “Accounting for Income Taxes.” Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and net operating loss carryforwards. Deferred tax assets and liabilities are measured using expected tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. The Company has recorded a full valuation allowance for its net deferred tax assets as of September 30, 2016 and December 31, 2015, due to the uncertainty of the realizability of those assets.

Fair Value of Financial Instruments   The Company adheres to the provisions of ASC Topic 820, “Fair Value Measurements and Disclosures”. This pronouncement requires that the Company calculate the fair value of financial instruments and include this additional information in the notes to financial statements when the fair value is different than the book value of those financial instruments. The Company’s financial instruments include cash and cash equivalents, accounts receivable, note receivable, accounts payable and accrued expenses. At September 30, 2016 and December 31, 2015, the carrying value of the Company’s financial instruments approximated fair value, due to their short-term nature.

Revenue Recognition and Deferred Revenue   Revenue is generally recognized when persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed and determinable, collectability is probable, and there is no future Company involvement or commitment. The Company sells its commercial products directly through its sales force and through distributors. Revenue from direct sales of products is recognized when shipped to the customer and title has passed.   Under the provisions of ASC Topic 605-25, “Revenue Arrangements with Multiple Deliverables,” for multi-element arrangements that include tangible products containing software essential to the tangible product’s functionality and undelivered software elements relating to the tangible product’s essential software, the Company allocates revenue to all deliverables based on their relative selling prices. In such circumstances, the Company uses a hierarchy to determine the selling price to be used for allocating revenue to deliverables: (i) vendor-specific objective evidence of fair value (“VSOE”), (ii) third-party evidence of selling price and (iii) best estimate of the selling price (“ESP”). VSOE generally exists only when the Company sells the deliverable separately and is the price actually charged by the Company for that deliverable. ESPs reflect the Company’s best estimates of what the selling prices of elements would be if they were sold regularly on a stand-alone basis.   The Company also recognizes revenues from licensing of its patented software to customers. The licensed software requires continuing service or post contractual customer support and performance; accordingly, a portion of the revenue is deferred based on its fair value and recognized ratably over the period in which the future service, support and performance are provided, which is generally one to three years. Royalties from the licensing of the Company’s technology are recognized as revenues in the period they are earned.   The Company also performs consulting work for other companies. These services are billed on a time and materials basis. Revenue from these arrangements is also recognized as time is spent on the contract and materials are purchased.   Subscriptions to database information can be purchased for month-to-month, one, two, and three year periods. Revenue from subscriptions are deferred and recognized over the contractual period, which is typically three years.   The Company offers enhanced extended warranties for its sales of hardware and software at a set price. The revenue from these sales are deferred and recognized on a straight-line basis over the contractual period, which is typically one to four years.

Business Concentrations and Credit Risk   During the three and nine month periods ended September 30, 2016, the Company made sales to three customers that accounted for approximately 35% and 26% of total revenues, respectively. The revenue was associated with two commercial identity sales customers and one Defense ID customer. These customers represented 32% of total accounts receivable at September 30, 2016. During the three and nine month periods ended September 30, 2015, the Company made sales to two customers that accounted for approximately 51% and 40% of total revenues, respectively. The revenue was associated with one commercial identity customer and one Defense ID customer. These customers represented 51% of total accounts receivable at September 30, 2015.

Net Loss Per Share   Basic net loss per share is computed by dividing the net loss for the period by the weighted average number of common shares outstanding during the period. Diluted net loss per share is computed by dividing the net loss for the period by the weighted average number of shares of common stock and potentially dilutive common stock outstanding during the period. The dilutive effect of outstanding options and restricted stock is reflected in diluted earnings per share by application of the treasury stock method. The calculation of diluted net loss per share excludes all anti-dilutive shares.   <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td style="padding-bottom: 1.5pt; text-align: center"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="6" style="border-bottom: black 1.5pt solid; text-align: center">Three Months Ended September 30,</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="6" style="border-bottom: black 1.5pt solid; text-align: center">Nine Months Ended September 30,</td> <td style="padding-bottom: 1.5pt"> </td></tr> <tr style="vertical-align: bottom"> <td style="text-align: center"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center">2016</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center">2015</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center">2016</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center">2015</td> <td style="padding-bottom: 1.5pt"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 8.65pt; text-indent: -8.65pt">Numerator:</td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="width: 48%; padding-bottom: 2.5pt; padding-left: 8.65pt; text-indent: -8.65pt">Net loss</td> <td style="width: 1%; padding-bottom: 2.5pt"> </td> <td style="width: 1%; border-bottom: black 2.25pt double">$</td> <td style="width: 10%; border-bottom: black 2.25pt double; text-align: right">(726,922</td> <td style="width: 1%; padding-bottom: 2.5pt">)</td> <td style="width: 1%; padding-bottom: 2.5pt"> </td> <td style="width: 1%; border-bottom: black 2.25pt double">$</td> <td style="width: 10%; border-bottom: black 2.25pt double; text-align: right">(1,267,797</td> <td style="width: 1%; padding-bottom: 2.5pt">)</td> <td style="width: 1%; padding-bottom: 2.5pt"> </td> <td style="width: 1%; border-bottom: black 2.25pt double">$</td> <td style="width: 10%; border-bottom: black 2.25pt double; text-align: right">(4,645,529</td> <td style="width: 1%; padding-bottom: 2.5pt">)</td> <td style="width: 1%; padding-bottom: 2.5pt"> </td> <td style="width: 1%; border-bottom: black 2.25pt double">$</td> <td style="width: 10%; border-bottom: black 2.25pt double; text-align: right">(3,783,883</td> <td style="width: 1%; padding-bottom: 2.5pt">)</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 8.65pt; text-indent: -8.65pt"> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 8.65pt; text-indent: -8.65pt">Denominator:</td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 15.85pt; text-indent: -8.65pt">Weighted average common shares –</td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-bottom: 2.5pt; padding-left: 15.85pt; text-indent: -8.65pt">Basic/Diluted</td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double"> </td> <td style="border-bottom: black 2.25pt double; text-align: right">10,246,629</td> <td style="padding-bottom: 2.5pt"> </td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double"> </td> <td style="border-bottom: black 2.25pt double; text-align: right">9,851,764</td> <td style="padding-bottom: 2.5pt"> </td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double"> </td> <td style="border-bottom: black 2.25pt double; text-align: right">9,680,010</td> <td style="padding-bottom: 2.5pt"> </td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double"> </td> <td style="border-bottom: black 2.25pt double; text-align: right">9,584,582</td> <td style="padding-bottom: 2.5pt"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 8.65pt; text-indent: -8.65pt"> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 8.65pt; text-indent: -8.65pt">Net loss per share –</td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-bottom: 2.5pt; padding-left: 15.85pt; text-indent: -8.65pt">Basic/Diluted</td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">(0.07</td> <td style="padding-bottom: 2.5pt">)</td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">(0.13</td> <td style="padding-bottom: 2.5pt">)</td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">(0.48</td> <td style="padding-bottom: 2.5pt">)</td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">(0.39</td> <td style="padding-bottom: 2.5pt">)</td></tr> </table>   The following table summarizes the common stock equivalents excluded from loss per diluted share because their effect would be anti-dilutive:   <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="6" style="border-bottom: black 1.5pt solid; text-align: center">Three Months Ended September 30,</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="6" style="border-bottom: black 1.5pt solid; text-align: center">Nine Months Ended September 30,</td> <td style="padding-bottom: 1.5pt"> </td></tr> <tr style="vertical-align: bottom"> <td> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center">2016</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center">2015</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center">2016</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center">2015</td> <td style="padding-bottom: 1.5pt"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 48%">Stock options</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 10%; text-align: right">1,651,920</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 10%; text-align: right">1,905,362</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 10%; text-align: right">1,651,920</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 10%; text-align: right">1,905,362</td> <td style="width: 1%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td>Warrants</td> <td> </td> <td> </td> <td style="text-align: right">688,301</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">64,981</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">688,301</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">64,981</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-bottom: 1.5pt">Restricted Stock</td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">43,466</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">68,743</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">43,466</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">68,743</td> <td style="padding-bottom: 1.5pt"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-bottom: 2.5pt"> </td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double"> </td> <td style="border-bottom: black 2.25pt double; text-align: right">2,383,687</td> <td style="padding-bottom: 2.5pt"> </td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double"> </td> <td style="border-bottom: black 2.25pt double; text-align: right">2,039,086</td> <td style="padding-bottom: 2.5pt"> </td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double"> </td> <td style="border-bottom: black 2.25pt double; text-align: right">2,383,687</td> <td style="padding-bottom: 2.5pt"> </td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double"> </td> <td style="border-bottom: black 2.25pt double; text-align: right">2,039,086</td> <td style="padding-bottom: 2.5pt"> </td></tr> </table>   The above listing is not intended to be a comprehensive list of all of our accounting policies. In many cases, the accounting treatment of a particular transaction is specifically dictated by generally accepted accounting principles, with no need for management’s judgment in their application. There are also areas in which management’s judgment in selecting any available alternative would not produce a materially different result.

The calculation of diluted net loss per share excludes all anti-dilutive shares.   <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td style="padding-bottom: 1.5pt; text-align: center"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="6" style="border-bottom: black 1.5pt solid; text-align: center">Three Months Ended September 30,</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="6" style="border-bottom: black 1.5pt solid; text-align: center">Nine Months Ended September 30,</td> <td style="padding-bottom: 1.5pt"> </td></tr> <tr style="vertical-align: bottom"> <td style="text-align: center"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center">2016</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center">2015</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center">2016</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center">2015</td> <td style="padding-bottom: 1.5pt"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 8.65pt; text-indent: -8.65pt">Numerator:</td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="width: 48%; padding-bottom: 2.5pt; padding-left: 8.65pt; text-indent: -8.65pt">Net loss</td> <td style="width: 1%; padding-bottom: 2.5pt"> </td> <td style="width: 1%; border-bottom: black 2.25pt double">$</td> <td style="width: 10%; border-bottom: black 2.25pt double; text-align: right">(726,922</td> <td style="width: 1%; padding-bottom: 2.5pt">)</td> <td style="width: 1%; padding-bottom: 2.5pt"> </td> <td style="width: 1%; border-bottom: black 2.25pt double">$</td> <td style="width: 10%; border-bottom: black 2.25pt double; text-align: right">(1,267,797</td> <td style="width: 1%; padding-bottom: 2.5pt">)</td> <td style="width: 1%; padding-bottom: 2.5pt"> </td> <td style="width: 1%; border-bottom: black 2.25pt double">$</td> <td style="width: 10%; border-bottom: black 2.25pt double; text-align: right">(4,645,529</td> <td style="width: 1%; padding-bottom: 2.5pt">)</td> <td style="width: 1%; padding-bottom: 2.5pt"> </td> <td style="width: 1%; border-bottom: black 2.25pt double">$</td> <td style="width: 10%; border-bottom: black 2.25pt double; text-align: right">(3,783,883</td> <td style="width: 1%; padding-bottom: 2.5pt">)</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 8.65pt; text-indent: -8.65pt"> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 8.65pt; text-indent: -8.65pt">Denominator:</td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 15.85pt; text-indent: -8.65pt">Weighted average common shares –</td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-bottom: 2.5pt; padding-left: 15.85pt; text-indent: -8.65pt">Basic/Diluted</td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double"> </td> <td style="border-bottom: black 2.25pt double; text-align: right">10,246,629</td> <td style="padding-bottom: 2.5pt"> </td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double"> </td> <td style="border-bottom: black 2.25pt double; text-align: right">9,851,764</td> <td style="padding-bottom: 2.5pt"> </td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double"> </td> <td style="border-bottom: black 2.25pt double; text-align: right">9,680,010</td> <td style="padding-bottom: 2.5pt"> </td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double"> </td> <td style="border-bottom: black 2.25pt double; text-align: right">9,584,582</td> <td style="padding-bottom: 2.5pt"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 8.65pt; text-indent: -8.65pt"> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 8.65pt; text-indent: -8.65pt">Net loss per share –</td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-bottom: 2.5pt; padding-left: 15.85pt; text-indent: -8.65pt">Basic/Diluted</td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">(0.07</td> <td style="padding-bottom: 2.5pt">)</td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">(0.13</td> <td style="padding-bottom: 2.5pt">)</td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">(0.48</td> <td style="padding-bottom: 2.5pt">)</td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">(0.39</td> <td style="padding-bottom: 2.5pt">)</td></tr> </table>

The following table summarizes the common stock equivalents excluded from loss per diluted share because their effect would be anti-dilutive:   <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="6" style="border-bottom: black 1.5pt solid; text-align: center">Three Months Ended September 30,</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="6" style="border-bottom: black 1.5pt solid; text-align: center">Nine Months Ended September 30,</td> <td style="padding-bottom: 1.5pt"> </td></tr> <tr style="vertical-align: bottom"> <td> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center">2016</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center">2015</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center">2016</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center">2015</td> <td style="padding-bottom: 1.5pt"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 48%">Stock options</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 10%; text-align: right">1,651,920</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 10%; text-align: right">1,905,362</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 10%; text-align: right">1,651,920</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 10%; text-align: right">1,905,362</td> <td style="width: 1%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td>Warrants</td> <td> </td> <td> </td> <td style="text-align: right">688,301</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">64,981</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">688,301</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">64,981</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-bottom: 1.5pt">Restricted Stock</td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">43,466</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">68,743</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">43,466</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">68,743</td> <td style="padding-bottom: 1.5pt"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-bottom: 2.5pt"> </td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double"> </td> <td style="border-bottom: black 2.25pt double; text-align: right">2,383,687</td> <td style="padding-bottom: 2.5pt"> </td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double"> </td> <td style="border-bottom: black 2.25pt double; text-align: right">2,039,086</td> <td style="padding-bottom: 2.5pt"> </td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double"> </td> <td style="border-bottom: black 2.25pt double; text-align: right">2,383,687</td> <td style="padding-bottom: 2.5pt"> </td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double"> </td> <td style="border-bottom: black 2.25pt double; text-align: right">2,039,086</td> <td style="padding-bottom: 2.5pt"> </td></tr> </table>

The changes in the carrying amount of intangible assets for nine months ended September 30, 2016 were as follows:   <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 79%">Balance at December 31, 2015</td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 18%; text-align: right">2,470,127</td> <td style="width: 1%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-bottom: 1.5pt">Deduction: Amortization expense</td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">(236,673</td> <td style="padding-bottom: 1.5pt">)</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-bottom: 2.5pt">Balance at September 30, 2016</td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">2,233,454</td> <td style="padding-bottom: 2.5pt"> </td></tr> </table>

The following summarizes amortization of intangible assets included in the statement of operations:   <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="6" style="border-bottom: black 1.5pt solid; text-align: center">Three Months Ended September 30,</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="6" style="border-bottom: black 1.5pt solid; text-align: center">Nine Months Ended September 30,</td> <td style="padding-bottom: 1.5pt"> </td></tr> <tr style="vertical-align: bottom"> <td style="text-align: center"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center">2016</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center">2015</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center">2016</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center">2015</td> <td style="padding-bottom: 1.5pt"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 48%; padding-left: 8.65pt; text-indent: -8.65pt">Cost of sales</td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 10%; text-align: right">59,162</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 10%; text-align: right">59,163</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 10%; text-align: right">177,488</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 10%; text-align: right">288,898</td> <td style="width: 1%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-bottom: 1.5pt; padding-left: 8.65pt; text-indent: -8.65pt">General and administrative</td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">19,730</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">138,090</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">59,185</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">412,562</td> <td style="padding-bottom: 1.5pt"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-bottom: 2.5pt; padding-left: 8.65pt; text-indent: -8.65pt"> </td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">78,892</td> <td style="padding-bottom: 2.5pt"> </td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">197,253</td> <td style="padding-bottom: 2.5pt"> </td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">236,673</td> <td style="padding-bottom: 2.5pt"> </td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">701,460</td> <td style="padding-bottom: 2.5pt"> </td></tr> </table>

Accrued expenses are comprised of the following:   <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center">September 30, 2016</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center">December 31, 2015</td> <td style="padding-bottom: 1.5pt"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 62%">Professional fees</td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 16%; text-align: right">134,537</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 16%; text-align: right">172,766</td> <td style="width: 1%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td>Payroll and related</td> <td> </td> <td> </td> <td style="text-align: right">322,492</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">313,003</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td>Severance payments to former officer</td> <td> </td> <td> </td> <td style="text-align: right">150,350</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">-</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-bottom: 1.5pt">Other</td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">78,477</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">50,547</td> <td style="padding-bottom: 1.5pt"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-bottom: 2.5pt"> </td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">685,856</td> <td style="padding-bottom: 2.5pt"> </td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">536,316</td> <td style="padding-bottom: 2.5pt"> </td></tr> </table>

Subscriptions to database information can be purchased for month-to-month, one, two, and three year periods. Revenue from subscriptions are deferred and recognized over the contractual period, which is typically three years. The Company offers enhanced extended warranties for its sales of hardware and software at a set price. The revenue from these sales are deferred and recognized on a straight-line basis over the contractual period, which is typically one to four years.

2000000

688301

0.9677

0.9732

100000

The Company leases an office in the state of New York and storage space in the state of Washington which expire in March 2018 and December 2016, respectively.

2016-09-30 0001040896

1780341

1200

1779141

977

389879

1. NATURE OF BUSINESS   Business   Intellicheck Mobilisa, Inc. (the Company or Intellicheck) is a leading technology company that is engaged in developing, integrating and marketing threat identification and identity authentication solutions to address challenges that include retail fraud prevention, law enforcement threat identification, and mobile and handheld access control and security for the government, military and commercial markets. Intellichecks products include Retail ID, the industry leading solution for preventing fraud in the retail industry; Age ID, a smartphone or tablet-based solution for preventing sale of age-restricted products to minors; Law ID, a smartphone-based solution used by law enforcement officers to identify and mitigate threats; and Defense ID®, a mobile and fixed infrastructure solution for threat identification, identity authentication and access control to military bases and other government facilities.   Intellicheck continues to develop and release innovative products based upon its rich patent portfolio consisting of over 25 patents.   Liquidity   For the nine months ended September 30, 2016, the Company incurred a net loss of $4,645,529 and used cash in operations of $3,470,783. As of September 30, 2016, the Company had cash and cash equivalents of $3,534,399 and an accumulated deficit of $103,279,274. Based on our business plan and, cash resources, we expect our existing and future resources and revenues generated from operations to satisfy our working capital requirements for at least the next 12 months.   However, if performance expectations fall short or expenses exceed expectations, the Company may need to secure additional financing or reduce expenses to continue operations. Failure to do so would have a material adverse impact on its financial condition. There can be no assurance that any contemplated additional financing will be available on terms acceptable, if at all. If required, the Company believes it would be able to reduce expenses to a sufficient level to continue as a going concern.   Principles of Consolidation   The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Mobilisa, Inc. (Mobilisa) and Positive Access Corporation (Positive Access). All intercompany balances and transactions have been eliminated upon consolidation.

8. SHARE BASED COMPENSATION   The Company accounts for the issuance of equity awards to employees in accordance with ASC Topic 718 and 505, which requires that the cost resulting from all share based payment transactions be recognized in the financial statements. These pronouncements establish fair value as the measurement objective in accounting for share based payment arrangements and requires all companies to apply a fair value based measurement method in accounting for all share based payment transactions with employees.   All stock-based compensation is included in operating expenses for the periods as follows:   <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="6" style="border-bottom: black 1.5pt solid; text-align: center">Three Months Ended September 30,</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="6" style="border-bottom: black 1.5pt solid; text-align: center">Nine Months Ended September 30,</td> <td style="padding-bottom: 1.5pt"> </td></tr> <tr style="vertical-align: bottom"> <td> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center">2016</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center">2015</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center">2016</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center">2015</td> <td style="padding-bottom: 1.5pt"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 8.65pt; text-indent: -8.65pt">Compensation cost recognized</td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="width: 48%; padding-left: 8.65pt; text-indent: -8.65pt">Selling, general and administrative</td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 10%; text-align: right">125,581</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 10%; text-align: right">396,654</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 10%; text-align: right">763,938</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 10%; text-align: right">642,169</td> <td style="width: 1%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-bottom: 1.5pt; padding-left: 8.65pt; text-indent: -8.65pt">Research and development</td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">9,348</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">21,830</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">38,685</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">43,723</td> <td style="padding-bottom: 1.5pt"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-bottom: 2.5pt; padding-left: 8.65pt; text-indent: -8.65pt"> </td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">134,929</td> <td style="padding-bottom: 2.5pt"> </td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">418,484</td> <td style="padding-bottom: 2.5pt"> </td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">802,623</td> <td style="padding-bottom: 2.5pt"> </td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">685,892</td> <td style="padding-bottom: 2.5pt"> </td></tr> </table>   The Company uses the Black-Scholes option pricing model to value the options. The table below presents the weighted average expected life of the options in years. The expected life computation is based on the time to option expiration. Volatility is determined using changes in historical stock prices. The interest rate for periods within the expected life of the award is based on the U.S. Treasury yield curve in effect at the time of grant.   The fair value of share-based payment units was estimated using the Black-Scholes option pricing model with the following assumptions and weighted average fair values as follows:   <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td> </td> <td> </td> <td colspan="2" style="text-align: center">Nine Months Ended</td> <td> </td></tr> <tr style="vertical-align: bottom"> <td> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center">September 30, 2016</td> <td style="padding-bottom: 1.5pt"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td>Valuation assumptions:</td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td>Stock price</td> <td> </td> <td> </td> <td style="text-align: right">$1.01 - $1.93</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td>Exercise price</td> <td> </td> <td> </td> <td style="text-align: right">$1.01 - $1.93</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="width: 72%">Expected dividend yield</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 25%; text-align: right">0</td> <td style="width: 1%">%</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td>Expected volatility</td> <td> </td> <td> </td> <td style="text-align: right">96.77% - 97.32</td> <td>%</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td>Expected life (in years)</td> <td> </td> <td> </td> <td style="text-align: right">5</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td>Risk-free interest rate</td> <td> </td> <td> </td> <td style="text-align: right">0.94% - 1.35</td> <td>%</td></tr> </table>   Stock option activity under the 1998, 1999, 2001, 2003, 2006 and 2015 Stock Option Plans (collectively, the “Plans”) during the periods indicated below were as follows:    <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td style="padding-bottom: 1.5pt; text-align: justify"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid"> Number of Shares Subject to Issuance</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid"> Weighted- average Exercise Price</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid"> Weighted- average Remaining Contractual Term</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid"> Aggregate Intrinsic Value</td> <td style="padding-bottom: 1.5pt"> </td></tr> <tr style="vertical-align: bottom"> <td style="text-align: justify"> </td> <td style="padding-bottom: 2.5pt"> </td> <td colspan="2" style="text-align: justify"> </td> <td style="padding-bottom: 2.5pt"> </td> <td style="padding-bottom: 2.5pt"> </td> <td colspan="2" style="text-align: justify"> </td> <td style="padding-bottom: 2.5pt"> </td> <td style="padding-bottom: 2.5pt"> </td> <td colspan="2" style="text-align: justify"> </td> <td style="padding-bottom: 2.5pt"> </td> <td style="padding-bottom: 2.5pt"> </td> <td colspan="2" style="text-align: justify"> </td> <td style="padding-bottom: 2.5pt"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 40%">Outstanding at December 31, 2015</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 12%; text-align: right">1,901,298</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 12%; text-align: right">1.46</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 12%; text-align: right">4.51 years</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 12%; text-align: right">-</td> <td style="width: 1%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">-</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td>Granted</td> <td> </td> <td> </td> <td style="text-align: right">253,543</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">1.22</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">-</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td>Forfeited or expired</td> <td> </td> <td> </td> <td style="text-align: right">(157,794</td> <td>)</td> <td> </td> <td> </td> <td style="text-align: right">2.59</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">-</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-bottom: 1.5pt">Exercised</td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">(345,127</td> <td style="padding-bottom: 1.5pt">)</td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">1.13</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">-</td> <td style="padding-bottom: 1.5pt"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-bottom: 2.5pt">Outstanding at September 30, 2016</td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double"> </td> <td style="border-bottom: black 2.25pt double; text-align: right">1,651,920</td> <td style="padding-bottom: 2.5pt"> </td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">1.38</td> <td style="padding-bottom: 2.5pt"> </td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double"> </td> <td style="border-bottom: black 2.25pt double; text-align: right">3.86 years</td> <td style="padding-bottom: 2.5pt"> </td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">835,849</td> <td style="padding-bottom: 2.5pt"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-bottom: 2.5pt"> </td> <td style="padding-bottom: 2.5pt"> </td> <td> </td> <td style="text-align: right"> </td> <td style="padding-bottom: 2.5pt"> </td> <td style="padding-bottom: 2.5pt"> </td> <td> </td> <td style="text-align: right"> </td> <td style="padding-bottom: 2.5pt"> </td> <td style="padding-bottom: 2.5pt"> </td> <td> </td> <td style="text-align: right"> </td> <td style="padding-bottom: 2.5pt"> </td> <td style="padding-bottom: 2.5pt"> </td> <td> </td> <td style="text-align: right"> </td> <td style="padding-bottom: 2.5pt"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-bottom: 2.5pt">Exercisable at September 30, 2016</td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double"> </td> <td style="border-bottom: black 2.25pt double; text-align: right">1,023,796</td> <td style="padding-bottom: 2.5pt"> </td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">1.31</td> <td style="padding-bottom: 2.5pt"> </td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double"> </td> <td style="border-bottom: black 2.25pt double; text-align: right">3.85 years</td> <td style="padding-bottom: 2.5pt"> </td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">540,134</td> <td style="padding-bottom: 2.5pt"> </td></tr> </table>   The aggregate intrinsic value in the table above represents the total pretax intrinsic value (the difference between the Company’s closing stock price on the last trading day of the period and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had they all exercised their options on September 30, 2016. This amount changes based upon the fair market value of the Company’s stock.   As of September 30, 2016, the Company had 921,831 shares available for future grants under the Plans.   Restricted Stock Units   The Company issues Restricted Stock Units (“RSUs”) which are equity-based instruments that may be settled in shares of common stock of the Company. During the nine months ended September 30, 2016, the Company issued RSUs to certain directors and officers as compensation. RSU agreements can vest immediately or with the passage of time. The vesting of all RSUs is contingent on continued board and employment services.   The compensation expense incurred by the Company for RSUs is based on the closing market price of the Company’s common stock on the date of grant and is amortized ratably on a straight-line basis over the requisite service period and charged to general and administrative expense with a corresponding increase to additional paid-in capital.   <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center">Number of Shares</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center">Weighted Average Grant Date Fair Value</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center">Aggregate Intrinsic Value</td> <td style="padding-bottom: 1.5pt"> </td></tr> <tr style="vertical-align: bottom"> <td> </td> <td> </td> <td colspan="2"> </td> <td> </td> <td> </td> <td colspan="2"> </td> <td> </td> <td> </td> <td colspan="2"> </td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 55%; padding-left: 8.8pt; text-indent: -8.8pt">Outstanding at December 31, 2015</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 12%; text-align: right">67,077</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 12%; text-align: right">1.56</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 12%; text-align: right">-</td> <td style="width: 1%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 20pt; text-indent: -8.8pt">Granted</td> <td> </td> <td> </td> <td style="text-align: right">80,453</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">1.69</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">-</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-bottom: 1.5pt; padding-left: 20pt; text-indent: -8.8pt">Vested and settled in Shares</td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">(104,064</td> <td style="padding-bottom: 1.5pt">)</td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">1.58</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">-</td> <td style="padding-bottom: 1.5pt"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-bottom: 2.5pt; padding-left: 8.8pt; text-indent: -8.8pt">Outstanding at September 30, 2016</td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double"> </td> <td style="border-bottom: black 2.25pt double; text-align: right">43,466</td> <td style="padding-bottom: 2.5pt"> </td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">1.76</td> <td style="padding-bottom: 2.5pt"> </td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">1,691</td> <td style="padding-bottom: 2.5pt"> </td></tr> </table>   As of September 30, 2016, there was $592,435 of total unrecognized compensation cost, net of estimated forfeitures, related to all unvested stock options and restricted stock units, which is expected to be recognized over a weighted average period of approximately 2.1 years.   Warrants   All previously granted warrants were issued with an exercise price that was equal to or above the fair market value of the Company’s common stock on the date of grant. As of September 30, 2016, the Company had 688,301 remaining warrants outstanding and exercisable through 2021. No warrants were exercised during the nine months ended September 30, 2016.

9. COMMON STOCK   On January 14, 2015, the Company announced the closing of an underwritten public offering of 4,857,143 shares of its common stock, offered to the public at $1.75 per share. Net proceeds to the Company from this offering were approximately $7,845,000 after deducting underwriting discounts and commissions paid by the Company. Direct offering costs totaling approximately $214,000 were recorded as a reduction to the net proceeds on the consolidated statement of stockholders’ equity.   On February 24, 2016, the Company entered into a stock repurchase agreement with two former directors, who were also members of management (the “Former Executives”) for the repurchase of all 979,114 shares owned by the Former Executives of the Company’s common stock for $1,096,608. The transaction was finalized on March 4, 2016.   On June 15, 2016, the Company announced the closing of an underwritten public offering of 1,200,000 shares of its common stock and 600,000 five year warrants to purchase shares with an exercise price of $2.20 per share, at a combined public offering of $1.75 per share and half-warrant. Net proceeds to the Company from this offering were approximately $1,902,000 after deducting underwriting discounts and commissions paid by the Company. As part of the offering, there was an overallotment option for the underwriters to purchase up to 180,000 shares of common stock at a purchase price of $1.63 per share and/or up to 90,000 additional warrants at a purchase price of $0.0001 per warrant. On June 20, 2016, the underwriters exercised their right to purchase 23,320 warrants. Direct offering costs totaling approximately $122,000 were recorded as a reduction to the net proceeds on the consolidated statement of stockholders’ equity.

The fair value of share-based payment units was estimated using the Black-Scholes option pricing model with the following assumptions and weighted average fair values as follows:   <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td> </td> <td> </td> <td colspan="2" style="text-align: center">Nine Months Ended</td> <td> </td></tr> <tr style="vertical-align: bottom"> <td> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center">September 30, 2016</td> <td style="padding-bottom: 1.5pt"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td>Valuation assumptions:</td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td>Stock price</td> <td> </td> <td> </td> <td style="text-align: right">$1.01 - $1.93</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td>Exercise price</td> <td> </td> <td> </td> <td style="text-align: right">$1.01 - $1.93</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="width: 72%">Expected dividend yield</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 25%; text-align: right">0</td> <td style="width: 1%">%</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td>Expected volatility</td> <td> </td> <td> </td> <td style="text-align: right">96.77% - 97.32</td> <td>%</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td>Expected life (in years)</td> <td> </td> <td> </td> <td style="text-align: right">5</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td>Risk-free interest rate</td> <td> </td> <td> </td> <td style="text-align: right">0.94% - 1.35</td> <td>%</td></tr> </table>

All stock-based compensation is included in operating expenses for the periods as follows:   <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="6" style="border-bottom: black 1.5pt solid; text-align: center">Three Months Ended September 30,</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="6" style="border-bottom: black 1.5pt solid; text-align: center">Nine Months Ended September 30,</td> <td style="padding-bottom: 1.5pt"> </td></tr> <tr style="vertical-align: bottom"> <td> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center">2016</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center">2015</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center">2016</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center">2015</td> <td style="padding-bottom: 1.5pt"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 8.65pt; text-indent: -8.65pt">Compensation cost recognized</td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="width: 48%; padding-left: 8.65pt; text-indent: -8.65pt">Selling, general and administrative</td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 10%; text-align: right">125,581</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 10%; text-align: right">396,654</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 10%; text-align: right">763,938</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 10%; text-align: right">642,169</td> <td style="width: 1%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-bottom: 1.5pt; padding-left: 8.65pt; text-indent: -8.65pt">Research and development</td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">9,348</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">21,830</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">38,685</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">43,723</td> <td style="padding-bottom: 1.5pt"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-bottom: 2.5pt; padding-left: 8.65pt; text-indent: -8.65pt"> </td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">134,929</td> <td style="padding-bottom: 2.5pt"> </td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">418,484</td> <td style="padding-bottom: 2.5pt"> </td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">802,623</td> <td style="padding-bottom: 2.5pt"> </td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">685,892</td> <td style="padding-bottom: 2.5pt"> </td></tr> </table>

Stock option activity under the 1998, 1999, 2001, 2003, 2006 and 2015 Stock Option Plans (collectively, the “Plans”) during the periods indicated below were as follows:    <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td style="padding-bottom: 1.5pt; text-align: justify"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid"> Number of Shares Subject to Issuance</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid"> Weighted- average Exercise Price</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid"> Weighted- average Remaining Contractual Term</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid"> Aggregate Intrinsic Value</td> <td style="padding-bottom: 1.5pt"> </td></tr> <tr style="vertical-align: bottom"> <td style="text-align: justify"> </td> <td style="padding-bottom: 2.5pt"> </td> <td colspan="2" style="text-align: justify"> </td> <td style="padding-bottom: 2.5pt"> </td> <td style="padding-bottom: 2.5pt"> </td> <td colspan="2" style="text-align: justify"> </td> <td style="padding-bottom: 2.5pt"> </td> <td style="padding-bottom: 2.5pt"> </td> <td colspan="2" style="text-align: justify"> </td> <td style="padding-bottom: 2.5pt"> </td> <td style="padding-bottom: 2.5pt"> </td> <td colspan="2" style="text-align: justify"> </td> <td style="padding-bottom: 2.5pt"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 40%">Outstanding at December 31, 2015</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 12%; text-align: right">1,901,298</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 12%; text-align: right">1.46</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 12%; text-align: right">4.51 years</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 12%; text-align: right">-</td> <td style="width: 1%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">-</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td>Granted</td> <td> </td> <td> </td> <td style="text-align: right">253,543</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">1.22</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">-</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td>Forfeited or expired</td> <td> </td> <td> </td> <td style="text-align: right">(157,794</td> <td>)</td> <td> </td> <td> </td> <td style="text-align: right">2.59</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">-</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-bottom: 1.5pt">Exercised</td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">(345,127</td> <td style="padding-bottom: 1.5pt">)</td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">1.13</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">-</td> <td style="padding-bottom: 1.5pt"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-bottom: 2.5pt">Outstanding at September 30, 2016</td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double"> </td> <td style="border-bottom: black 2.25pt double; text-align: right">1,651,920</td> <td style="padding-bottom: 2.5pt"> </td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">1.38</td> <td style="padding-bottom: 2.5pt"> </td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double"> </td> <td style="border-bottom: black 2.25pt double; text-align: right">3.86 years</td> <td style="padding-bottom: 2.5pt"> </td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">835,849</td> <td style="padding-bottom: 2.5pt"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-bottom: 2.5pt"> </td> <td style="padding-bottom: 2.5pt"> </td> <td> </td> <td style="text-align: right"> </td> <td style="padding-bottom: 2.5pt"> </td> <td style="padding-bottom: 2.5pt"> </td> <td> </td> <td style="text-align: right"> </td> <td style="padding-bottom: 2.5pt"> </td> <td style="padding-bottom: 2.5pt"> </td> <td> </td> <td style="text-align: right"> </td> <td style="padding-bottom: 2.5pt"> </td> <td style="padding-bottom: 2.5pt"> </td> <td> </td> <td style="text-align: right"> </td> <td style="padding-bottom: 2.5pt"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-bottom: 2.5pt">Exercisable at September 30, 2016</td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double"> </td> <td style="border-bottom: black 2.25pt double; text-align: right">1,023,796</td> <td style="padding-bottom: 2.5pt"> </td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">1.31</td> <td style="padding-bottom: 2.5pt"> </td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double"> </td> <td style="border-bottom: black 2.25pt double; text-align: right">3.85 years</td> <td style="padding-bottom: 2.5pt"> </td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">540,134</td> <td style="padding-bottom: 2.5pt"> </td></tr> </table>

150350 2021

0.0094

0.0135

600000

90000

P5Y

2.20

0.0001

The compensation expense incurred by the Company for RSUs is based on the closing market price of the Company’s common stock on the date of grant and is amortized ratably on a straight-line basis over the requisite service period and charged to general and administrative expense with a corresponding increase to additional paid-in capital.   <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center">Number of Shares</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center">Weighted Average Grant Date Fair Value</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center">Aggregate Intrinsic Value</td> <td style="padding-bottom: 1.5pt"> </td></tr> <tr style="vertical-align: bottom"> <td> </td> <td> </td> <td colspan="2"> </td> <td> </td> <td> </td> <td colspan="2"> </td> <td> </td> <td> </td> <td colspan="2"> </td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 55%; padding-left: 8.8pt; text-indent: -8.8pt">Outstanding at December 31, 2015</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 12%; text-align: right">67,077</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 12%; text-align: right">1.56</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 12%; text-align: right">-</td> <td style="width: 1%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 20pt; text-indent: -8.8pt">Granted</td> <td> </td> <td> </td> <td style="text-align: right">80,453</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">1.69</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">-</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-bottom: 1.5pt; padding-left: 20pt; text-indent: -8.8pt">Vested and settled in Shares</td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">(104,064</td> <td style="padding-bottom: 1.5pt">)</td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">1.58</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">-</td> <td style="padding-bottom: 1.5pt"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-bottom: 2.5pt; padding-left: 8.8pt; text-indent: -8.8pt">Outstanding at September 30, 2016</td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double"> </td> <td style="border-bottom: black 2.25pt double; text-align: right">43,466</td> <td style="padding-bottom: 2.5pt"> </td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">1.76</td> <td style="padding-bottom: 2.5pt"> </td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">1,691</td> <td style="padding-bottom: 2.5pt"> </td></tr> </table>

180000

2000000

2016

104064

389879

345

389534

-108825

-31500

12764

31500

30000

200000

The facility bears interest at a rate of U.S. prime (3.50% at September 30, 2016)

921831

592435

23320 Q3

1901298

1651920

253543

157794

1023796

1.46

1.38

1.22

2.59

1.13

1.31

P4Y6M4D

P3Y10M10D

P3Y10M6D

835849

540134

EX-101.SCH 6 idn-20160930.xsd XBRL SCHEMA FILE 00000001 - Document - Document And Entity Information link:presentationLink link:calculationLink link:definitionLink 00000002 - Statement - Consolidated Balance Sheets link:presentationLink link:calculationLink link:definitionLink 00000003 - Statement - Consolidated Balance Sheets (Parenthetical) link:presentationLink link:calculationLink link:definitionLink 00000004 - Statement - Consolidated Statements of Operations (Unaudited) link:presentationLink link:calculationLink link:definitionLink 00000005 - Statement - Consolidated Statement of Stockholders' Equity (Unaudited) link:presentationLink link:calculationLink link:definitionLink 00000006 - Statement - Consolidated Statements of Cash Flows (Unaudited) link:presentationLink link:calculationLink link:definitionLink 00000007 - Disclosure - Nature of Business link:presentationLink link:calculationLink link:definitionLink 00000008 - Disclosure - Significant Accounting Policies link:presentationLink link:calculationLink link:definitionLink 00000009 - Disclosure - Intangible Assets and Goodwill link:presentationLink link:calculationLink link:definitionLink 00000010 - Disclosure - Note Receivable link:presentationLink link:calculationLink link:definitionLink 00000011 - Disclosure - Debt link:presentationLink link:calculationLink link:definitionLink 00000012 - Disclosure - Accrued Expenses link:presentationLink link:calculationLink link:definitionLink 00000013 - Disclosure - Income Taxes link:presentationLink link:calculationLink link:definitionLink 00000014 - Disclosure - Share Based Compensation link:presentationLink link:calculationLink link:definitionLink 00000015 - Disclosure - Common Stock link:presentationLink link:calculationLink link:definitionLink 00000016 - Disclosure - Legal Proceedings link:presentationLink link:calculationLink link:definitionLink 00000017 - Disclosure - Commitments and Contingencies link:presentationLink link:calculationLink link:definitionLink 00000018 - Disclosure - Significant Accounting Policies (Policies) link:presentationLink link:calculationLink link:definitionLink 00000019 - Disclosure - Significant Accounting Policies (Tables) link:presentationLink link:calculationLink link:definitionLink 00000020 - Disclosure - Intangible Assets and Goodwill (Tables) link:presentationLink link:calculationLink link:definitionLink 00000021 - Disclosure - Accrued Expenses (Tables) link:presentationLink link:calculationLink link:definitionLink 00000022 - Disclosure - Share Based Compensation (Tables) link:presentationLink link:calculationLink link:definitionLink 00000023 - Disclosure - Nature of Business (Details Narrative) link:presentationLink link:calculationLink link:definitionLink 00000024 - Disclosure - Significant Accounting Policies (Details Narrative) link:presentationLink link:calculationLink link:definitionLink 00000025 - Disclosure - Significant Accounting Policies - Schedule of Earnings Per Share Basic and Diluted (Details) link:presentationLink link:calculationLink link:definitionLink 00000026 - Disclosure - Significant Accounting Policies - Summary of the Common Stock Equivalents Excluded from Loss per Diluted Share (Details) link:presentationLink link:calculationLink link:definitionLink 00000027 - Disclosure - Intangible Assets and Goodwill - Schedule of Intangible Assets and Goodwill (Details) link:presentationLink link:calculationLink link:definitionLink 00000028 - Disclosure - Intangible Assets and Goodwill - Schedule of Finite-Lived Intangible Assets, Future Amortization Expense (Details) link:presentationLink link:calculationLink link:definitionLink 00000029 - Disclosure - Note Receivable (Details Narrative) link:presentationLink link:calculationLink link:definitionLink 00000030 - Disclosure - Debt (Details Narrative) link:presentationLink link:calculationLink link:definitionLink 00000031 - Disclosure - Accrued Expenses - Schedule of Accrued Expenses (Details) link:presentationLink link:calculationLink link:definitionLink 00000032 - Disclosure - Income Taxes (Details Narrative) link:presentationLink link:calculationLink link:definitionLink 00000033 - Disclosure - Share Based Compensation (Details Narrative) link:presentationLink link:calculationLink link:definitionLink 00000034 - Disclosure - Share Based Compensation - Schedule of Stock Based Compensation (Details) link:presentationLink link:calculationLink link:definitionLink 00000035 - Disclosure - Share Based Compensation - Schedule of Fair Value of Share Based Payment (Details) link:presentationLink link:calculationLink link:definitionLink 00000036 - Disclosure - Share Based Compensation - Schedule of Stock Option Activity (Details) link:presentationLink link:calculationLink link:definitionLink 00000037 - Disclosure - Share Based Compensation - Schedule of Restricted Stock Units Outstanding (Details) link:presentationLink link:calculationLink link:definitionLink 00000038 - Disclosure - Common Stock (Details Narrative) link:presentationLink link:calculationLink link:definitionLink 00000039 - Disclosure - Commitments and Contingencies (Details Narrative) link:presentationLink link:calculationLink link:definitionLink EX-101.CAL 7 idn-20160930_cal.xml XBRL CALCULATION FILE EX-101.DEF 8 idn-20160930_def.xml XBRL DEFINITION FILE EX-101.LAB 9 idn-20160930_lab.xml XBRL LABEL FILE Restricted Stock Units (RSUs) [Member] Award Type [Axis] Stock Options [Member] Antidilutive Securities [Axis] Warrants [Member] Restricted Stock [Member] Maximum [Member] Range [Axis] Revolving Credit Facility [Member] Credit Facility [Axis] Silicon Valley Bank [Member] Related Party [Axis] Us Prime [Member] Variable Rate [Axis] Three Customer [Member] Customer [Axis] Sales Revenue, Net [Member] Concentration Risk Benchmark [Axis] Common Stock [Member] Equity Components [Axis] Public Offering [Member] Sale of Stock [Axis] Buyer [Member] Additional Paid-in Capital [Member] Accumulated Deficit [Member] Two Customer [Member] Accounts Receivable [Member] Cost of Sales [Member] Income Statement Location [Axis] General and Administrative [Member] Minimum [Member] Research and Development [Member] Stock Option and Equity Incentive Plans [Member] Plan Name [Axis] Landlord [Member] Additional Paid-In Capital [Member] Stock Option [Member] Former Executives [Member] Customer One [Member] Overallotment Option [Member] Type of Arrangement and Non-arrangement Transactions [Axis] Over-Allotment Option [Member] Document And Entity Information [Abstract] Entity Registrant Name Entity Central Index Key Document Type Amendment Flag Document Period End Date Current Fiscal Year End Date Entity Filer Category Entity Common Stock, Shares Outstanding Trading Symbol Document Fiscal Period Focus Document Fiscal Year Focus Statement of Financial Position [Abstract] ASSETS CURRENT ASSETS: Cash and cash equivalents Accounts receivable, net of allowance of $12,764 and $18,411 as of September 30, 2016 and December 31, 2015, respectively Inventory Other current assets Total current assets NOTES RECEIVABLE, net of current portion PROPERTY AND EQUIPMENT, net GOODWILL INTANGIBLE ASSETS, net OTHER ASSETS Total assets LIABILITIES AND STOCKHOLDERS’ EQUITY CURRENT LIABILITIES: Accounts payable Accrued expenses Deferred revenue, current portion Total current liabilities OTHER LIABILITIES Deferred revenue, long-term portion Deferred rent Total liabilities COMMITMENTS AND CONTINGENCIES STOCKHOLDERS EQUITY: Common stock - $.001 par value; 40,000,000 shares authorized; 10,548,983 and 9,878,906 shares issued and outstanding, respectively Additional paid-in capital Accumulated deficit Total stockholders’ equity Total liabilities and stockholders’ equity Allowance for accounts receivable Common stock, par value Common stock, shares authorized Common stock, shares issued Common stock, shares outstanding Income Statement [Abstract] REVENUES COST OF REVENUES Gross profit OPERATING EXPENSES Selling, general and administrative Research and development Total operating expenses Loss from operations OTHER INCOME (EXPENSE) Interest and other income Interest expense Net loss PER SHARE INFORMATION Loss per common share - Basic/Diluted Weighted average common shares used in computing per share amounts - Basic/Diluted Statement [Table] Statement [Line Items] BALANCE BALANCE, shares Stock-based compensation expense Issuance of common stock, net of costs Issuance of common stock, net of costs, Shares Purchase and retirement of common stock Purchase and retirement of common stock, shares Exercise of stock options Exercise of stock options, shares Vesting of restricted stock Vesting of restricted stock, shares Net loss BALANCE BALANCE, shares Statement of Cash Flows [Abstract] CASH FLOWS FROM OPERATING ACTIVITIES: Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization Noncash stock-based compensation expense Provision for doubtful accounts Gain on sale of wireless assets Gain on sale of property and equipment Deferred rent Changes in assets and liabilities: Decrease (Increase) in accounts receivable Decrease in inventory (Increase) in other current assets (Increase) Decrease in other assets (Decrease) in accounts payable, accrued expenses (Decrease) in deferred revenue Net cash used in operating activities CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of patents Purchases of property and equipment Collection of note receivable Proceeds from sale of property and equipment Proceeds from sale of wireless assets Net cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES: Net proceeds from issuance of common stock Net proceeds from issuance of common stock from exercise of stock options Purchase and retirement of common stock Payments on note payable Net cash provided by financing activities Net decrease (increase) in cash and cash equivalents CASH AND CASH EQUIVALENTS, beginning of period CASH AND CASH EQUIVALENTS, end of period Supplemental disclosure of noncash investing and financing activities: Issuance of notes receivable related to sale of wireless division Financing of property and equipment Organization, Consolidation and Presentation of Financial Statements [Abstract] Nature of Business Accounting Policies [Abstract] Significant Accounting Policies Goodwill and Intangible Assets Disclosure [Abstract] Intangible Assets and Goodwill Debt Disclosure [Abstract] Note Receivable Debt Payables and Accruals [Abstract] Accrued Expenses Income Tax Disclosure [Abstract] Income Taxes Share-based Compensation [Abstract] Share Based Compensation Stockholders' Equity Note [Abstract] Common Stock Commitments and Contingencies Disclosure [Abstract] Legal Proceedings Commitments and Contingencies Basis of Presentation Recent Accounting Pronouncements Use of Estimates Cash and Cash Equivalents Allowance for Doubtful Accounts Inventory Goodwill Intangible Assets Income Taxes Fair Value of Financial Instruments Revenue Recognition and Deferred Revenue Business Concentrations and Credit Risk Net Loss Per Share Schedule of Earnings Per Share Basic and Diluted Summary of the Common Stock Equivalents Excluded from Loss per Diluted Share Schedule of Intangible Assets and Goodwill Schedule of Finite-Lived Intangible Assets, Future Amortization Expense EX-101.PRE 10 idn-20160930_pre.xml XBRL PRESENTATION FILE XML 11 R1.htm IDEA: XBRL DOCUMENT

Document And Entity Information - shares	9 Months Ended
Document And Entity Information - shares	Sep. 30, 2016	Nov. 10, 2016
Document And Entity Information [Abstract]
Entity Registrant Name	Intellicheck Mobilisa, Inc.
Entity Central Index Key	0001040896
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2016
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		10,565,553
Trading Symbol	IDN
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2016

XML 12 R2.htm IDEA: XBRL DOCUMENT

Consolidated Balance Sheets - USD ($)	Sep. 30, 2016	Dec. 31, 2015
CURRENT ASSETS:
Cash and cash equivalents	$ 3,534,399	$ 5,953,257
Accounts receivable, net of allowance of $12,764 and $18,411 as of September 30, 2016 and December 31, 2015, respectively	827,890	1,158,972
Inventory	74,241	74,732
Other current assets	299,138	178,362
Total current assets	4,735,668	7,365,323
NOTES RECEIVABLE, net of current portion	121,477	150,496
PROPERTY AND EQUIPMENT, net	284,701	325,427
GOODWILL	8,101,661	8,101,661
INTANGIBLE ASSETS, net	2,233,454	2,470,127
OTHER ASSETS	61,298	59,800
Total assets	15,538,259	18,472,834
CURRENT LIABILITIES:
Accounts payable	99,649	260,276
Accrued expenses	685,856	536,316
Deferred revenue, current portion	909,822	909,233
Total current liabilities	1,695,327	1,705,825
OTHER LIABILITIES
Deferred revenue, long-term portion	213,574	341,242
Deferred rent	72,240	99,355
Total liabilities	1,981,141	2,146,422
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS EQUITY:
Common stock - $.001 par value; 40,000,000 shares authorized; 10,548,983 and 9,878,906 shares issued and outstanding, respectively	10,549	9,879
Additional paid-in capital	116,825,843	114,950,278
Accumulated deficit	(103,279,274)	(98,633,745)
Total stockholders’ equity	13,557,118	16,326,412
Total liabilities and stockholders’ equity	$ 15,538,259	$ 18,472,834

XML 13 R3.htm IDEA: XBRL DOCUMENT

Consolidated Balance Sheets (Parenthetical) - USD ($)	Sep. 30, 2016	Dec. 31, 2015
Statement of Financial Position [Abstract]
Allowance for accounts receivable	$ 12,764	$ 18,411
Common stock, par value	$ .001	$ 0.001
Common stock, shares authorized	40,000,000	40,000,000
Common stock, shares issued	10,548,983	9,878,906
Common stock, shares outstanding	10,548,983	9,878,906

XML 14 R4.htm IDEA: XBRL DOCUMENT

Consolidated Statements of Operations (Unaudited) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Income Statement [Abstract]
REVENUES	$ 1,214,308	$ 2,199,473	$ 3,105,330	$ 5,478,170
COST OF REVENUES	(268,137)	(803,484)	(622,833)	(2,446,392)
Gross profit	946,171	1,395,989	2,482,497	3,031,778
OPERATING EXPENSES
Selling, general and administrative	1,268,915	2,083,137	5,115,838	5,087,682
Research and development	407,615	692,310	2,024,818	1,869,063
Total operating expenses	1,676,530	2,775,447	7,140,656	6,956,745
Loss from operations	(730,359)	(1,379,458)	(4,658,159)	(3,924,967)
OTHER INCOME (EXPENSE)
Interest and other income	3,437	112,233	12,630	144,391
Interest expense		(572)		(3,307)
Net loss	$ (726,922)	$ (1,267,797)	$ (4,645,529)	$ (3,783,883)
PER SHARE INFORMATION
Loss per common share - Basic/Diluted	$ (0.07)	$ (0.13)	$ (0.48)	$ (0.39)
Weighted average common shares used in computing per share amounts - Basic/Diluted	10,246,629	9,851,764	9,680,010	9,584,582

XML 15 R5.htm IDEA: XBRL DOCUMENT

Consolidated Statement of Stockholders' Equity (Unaudited) - 9 months ended Sep. 30, 2016 - USD ($)	Common Stock [Member]	Additional Paid-In Capital [Member]	Accumulated Deficit [Member]	Total
BALANCE at Dec. 31, 2015	$ 9,879	$ 114,950,278	$ (98,633,745)	$ 16,326,412
BALANCE, shares at Dec. 31, 2015	9,878,906
Stock-based compensation expense		802,623		802,623
Issuance of common stock, net of costs	$ 1,200	1,779,141		1,780,341
Issuance of common stock, net of costs, Shares	1,200,000
Purchase and retirement of common stock	$ (979)	(1,095,629)		(1,096,608)
Purchase and retirement of common stock, shares	(979,114)
Exercise of stock options	$ 345	389,534		389,879
Exercise of stock options, shares	345,127
Vesting of restricted stock	$ 104	(104)
Vesting of restricted stock, shares	104,064
Net loss			(4,645,529)	(4,645,529)
BALANCE at Sep. 30, 2016	$ 10,549	$ 116,825,843	$ (103,279,274)	$ 13,557,118
BALANCE, shares at Sep. 30, 2016	10,548,983

XML 16 R6.htm IDEA: XBRL DOCUMENT

Consolidated Statements of Cash Flows (Unaudited) - USD ($)	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$ (4,645,529)	$ (3,783,883)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	328,105	798,072
Noncash stock-based compensation expense	802,623	685,892
Provision for doubtful accounts	12,764
Gain on sale of wireless assets		(108,825)
Gain on sale of property and equipment		(31,500)
Deferred rent	(27,115)	(20,311)
Changes in assets and liabilities:
Decrease (Increase) in accounts receivable	318,318	(832,929)
Decrease in inventory	491	22,576
(Increase) in other current assets	(120,776)	(59,512)
(Increase) Decrease in other assets	(1,498)	12,207
(Decrease) in accounts payable, accrued expenses	(11,087)	(90,223)
(Decrease) in deferred revenue	(127,079)	(336,329)
Net cash used in operating activities	(3,470,783)	(3,744,765)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of patents		(125,000)
Purchases of property and equipment	(50,707)	(93,142)
Collection of note receivable	29,020
Proceeds from sale of property and equipment		31,500
Proceeds from sale of wireless assets		30,000
Net cash used in investing activities	(21,687)	(156,642)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from issuance of common stock	1,780,341	7,630,757
Net proceeds from issuance of common stock from exercise of stock options	389,879	977
Purchase and retirement of common stock	(1,096,608)
Payments on note payable		(31,078)
Net cash provided by financing activities	1,073,612	7,600,656
Net decrease (increase) in cash and cash equivalents	(2,418,858)	3,699,249
CASH AND CASH EQUIVALENTS, beginning of period	5,953,257	2,966,350
CASH AND CASH EQUIVALENTS, end of period	3,534,399	6,665,599
Supplemental disclosure of noncash investing and financing activities:
Issuance of notes receivable related to sale of wireless division		200,000
Financing of property and equipment		$ 31,078

XML 17 R7.htm IDEA: XBRL DOCUMENT

Nature of Business

9 Months Ended

Sep. 30, 2016

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Nature of Business

1. NATURE OF BUSINESS

Business

Intellicheck continues to develop and release innovative products based upon its rich patent portfolio consisting of over 25 patents.

Liquidity

Principles of Consolidation

XML 18 R8.htm IDEA: XBRL DOCUMENT

Significant Accounting Policies

9 Months Ended

Sep. 30, 2016

Accounting Policies [Abstract]

Significant Accounting Policies

2. SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

References in this Quarterly Report on Form 10-Q to “authoritative guidance” is to the Accounting Standards Codification issued by the Financial Accounting Standards Board (“FASB”).

For further information, refer to the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015.

Recent Accounting Pronouncements

Use of Estimates

Cash and Cash Equivalents

Allowance for Doubtful Accounts

Inventory

Goodwill

Intangible Assets

Income Taxes

Fair Value of Financial Instruments

Revenue Recognition and Deferred Revenue

Business Concentrations and Credit Risk

Net Loss Per Share

	Three Months Ended September 30,						Nine Months Ended September 30,
	2016			2015			2016			2015
Numerator:
Net loss	$	(726,922	)	$	(1,267,797	)	$	(4,645,529	)	$	(3,783,883	)

Denominator:
Weighted average common shares –
Basic/Diluted		10,246,629			9,851,764			9,680,010			9,584,582

Net loss per share –
Basic/Diluted	$	(0.07	)	$	(0.13	)	$	(0.48	)	$	(0.39	)

The following table summarizes the common stock equivalents excluded from loss per diluted share because their effect would be anti-dilutive:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Stock options		1,651,920		1,905,362		1,651,920		1,905,362
Warrants		688,301		64,981		688,301		64,981
Restricted Stock		43,466		68,743		43,466		68,743
		2,383,687		2,039,086		2,383,687		2,039,086

XML 19 R9.htm IDEA: XBRL DOCUMENT

Intangible Assets and Goodwill

9 Months Ended

Sep. 30, 2016

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible Assets and Goodwill

3. INTANGIBLE ASSETS AND GOODWILL

The changes in the carrying amount of intangible assets for nine months ended September 30, 2016 were as follows:

Balance at December 31, 2015	$	2,470,127
Deduction: Amortization expense		(236,673	)
Balance at September 30, 2016	$	2,233,454

The following summarizes amortization of intangible assets included in the statement of operations:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Cost of sales	$	59,162	$	59,163	$	177,488	$	288,898
General and administrative		19,730		138,090		59,185		412,562
	$	78,892	$	197,253	$	236,673	$	701,460

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

+ References + Details

XML 20 R10.htm IDEA: XBRL DOCUMENT

Note Receivable

9 Months Ended

Sep. 30, 2016

Debt Disclosure [Abstract]

Note Receivable

4. NOTE RECEIVABLE

XML 21 R11.htm IDEA: XBRL DOCUMENT

Debt

9 Months Ended

Sep. 30, 2016

Debt Disclosure [Abstract]

Debt

5. DEBT

Revolving Line of Credit

XML 22 R12.htm IDEA: XBRL DOCUMENT

Accrued Expenses

9 Months Ended

Sep. 30, 2016

Payables and Accruals [Abstract]

Accrued Expenses

6. ACCRUED EXPENSES

Accrued expenses are comprised of the following:

	September 30, 2016		December 31, 2015
Professional fees	$	134,537	$	172,766
Payroll and related		322,492		313,003
Severance payments to former officer		150,350		-
Other		78,477		50,547
	$	685,856	$	536,316

XML 23 R13.htm IDEA: XBRL DOCUMENT

Income Taxes

9 Months Ended

Sep. 30, 2016

Income Tax Disclosure [Abstract]

Income Taxes

7. INCOME TAXES

XML 24 R14.htm IDEA: XBRL DOCUMENT

Share Based Compensation

9 Months Ended

Sep. 30, 2016

Share-based Compensation [Abstract]

Share Based Compensation

8. SHARE BASED COMPENSATION

All stock-based compensation is included in operating expenses for the periods as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Compensation cost recognized
Selling, general and administrative	$	125,581	$	396,654	$	763,938	$	642,169
Research and development		9,348		21,830		38,685		43,723
	$	134,929	$	418,484	$	802,623	$	685,892

The fair value of share-based payment units was estimated using the Black-Scholes option pricing model with the following assumptions and weighted average fair values as follows:

	Nine Months Ended
	September 30, 2016
Valuation assumptions:
Stock price		$1.01 - $1.93
Exercise price		$1.01 - $1.93
Expected dividend yield		0	%
Expected volatility		96.77% - 97.32	%
Expected life (in years)		5
Risk-free interest rate		0.94% - 1.35	%

Stock option activity under the 1998, 1999, 2001, 2003, 2006 and 2015 Stock Option Plans (collectively, the “Plans”) during the periods indicated below were as follows:

	Number of Shares Subject to Issuance			Weighted- average Exercise Price		Weighted- average Remaining Contractual Term		Aggregate Intrinsic Value

Outstanding at December 31, 2015		1,901,298		$	1.46		4.51 years	$	-
									-
Granted		253,543			1.22				-
Forfeited or expired		(157,794	)		2.59				-
Exercised		(345,127	)		1.13				-
Outstanding at September 30, 2016		1,651,920		$	1.38		3.86 years	$	835,849

Exercisable at September 30, 2016		1,023,796		$	1.31		3.85 years	$	540,134

As of September 30, 2016, the Company had 921,831 shares available for future grants under the Plans.

Restricted Stock Units

	Number of Shares			Weighted Average Grant Date Fair Value		Aggregate Intrinsic Value

Outstanding at December 31, 2015		67,077		$	1.56	$	-
Granted		80,453			1.69		-
Vested and settled in Shares		(104,064	)		1.58		-

Outstanding at September 30, 2016		43,466		$	1.76	$	1,691

Warrants

- Definition

The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details.

+ References + Details

XML 25 R15.htm IDEA: XBRL DOCUMENT

Common Stock

9 Months Ended

Sep. 30, 2016

Stockholders' Equity Note [Abstract]

Common Stock

9. COMMON STOCK

- Definition

The entire disclosure for shareholders' equity comprised of portions attributable to the parent entity and noncontrolling interest, including other comprehensive income. Includes, but is not limited to, balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings, accumulated balance for each classification of other comprehensive income and amount of comprehensive income.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 310
-SubTopic 10
-Section S99
-Paragraph 4
-Subparagraph (SAB Topic 4.E)
-URI http://asc.fasb.org/extlink&oid=27010918&loc=d3e74567-122707

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 4
-URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21484-112644

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 210
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.5-02(29))
-URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 5
-URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21488-112644

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08(e))
-URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 210
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.5-02(31))
-URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section S99
-Paragraph 4
-Subparagraph (SAB Topic 4.C)
-URI http://asc.fasb.org/extlink&oid=27012166&loc=d3e187143-122770

Reference 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 210
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.5-02(30))
-URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682

Reference 9: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 6
-URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21506-112644

Reference 10: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08(d))
-URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690

Reference 11: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.3-04)
-URI http://asc.fasb.org/extlink&oid=27012166&loc=d3e187085-122770

Reference 12: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 30
-Section 50
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=6405834&loc=d3e23285-112656

Reference 13: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21475-112644

Reference 14: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Glossary Preferred Stock
-URI http://asc.fasb.org/extlink&oid=6521494

Reference 15: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21463-112644

Reference 16: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 11
-URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21564-112644

+ Details

XML 26 R16.htm IDEA: XBRL DOCUMENT

Legal Proceedings

9 Months Ended

Sep. 30, 2016

Commitments and Contingencies Disclosure [Abstract]

Legal Proceedings

10. LEGAL PROCEEDINGS

The Company is not aware of any infringement by the Company’s products or technology on the proprietary rights of others.

The Company is not currently involved in any legal or regulatory proceeding, or arbitration, the outcome of which is expected to have a material adverse effect on its business.

XML 27 R17.htm IDEA: XBRL DOCUMENT

Commitments and Contingencies

9 Months Ended

Sep. 30, 2016

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

11. COMMITMENTS AND CONTINGENCIES

XML 28 R18.htm IDEA: XBRL DOCUMENT

Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2016

Accounting Policies [Abstract]

Basis of Presentation

References in this Quarterly Report on Form 10-Q to “authoritative guidance” is to the Accounting Standards Codification issued by the Financial Accounting Standards Board (“FASB”).

For further information, refer to the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015.

Recent Accounting Pronouncements

Use of Estimates

Cash and Cash Equivalents

Allowance for Doubtful Accounts

Fair Value of Financial Instruments

Revenue Recognition and Deferred Revenue

Business Concentrations and Credit Risk

Net Loss Per Share

	Three Months Ended September 30,						Nine Months Ended September 30,
	2016			2015			2016			2015
Numerator:
Net loss	$	(726,922	)	$	(1,267,797	)	$	(4,645,529	)	$	(3,783,883	)

Denominator:
Weighted average common shares –
Basic/Diluted		10,246,629			9,851,764			9,680,010			9,584,582

Net loss per share –
Basic/Diluted	$	(0.07	)	$	(0.13	)	$	(0.48	)	$	(0.39	)

The following table summarizes the common stock equivalents excluded from loss per diluted share because their effect would be anti-dilutive:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Stock options		1,651,920		1,905,362		1,651,920		1,905,362
Warrants		688,301		64,981		688,301		64,981
Restricted Stock		43,466		68,743		43,466		68,743
		2,383,687		2,039,086		2,383,687		2,039,086

XML 29 R19.htm IDEA: XBRL DOCUMENT

Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2016

Accounting Policies [Abstract]

Schedule of Earnings Per Share Basic and Diluted

The calculation of diluted net loss per share excludes all anti-dilutive shares.

	Three Months Ended September 30,						Nine Months Ended September 30,
	2016			2015			2016			2015
Numerator:
Net loss	$	(726,922	)	$	(1,267,797	)	$	(4,645,529	)	$	(3,783,883	)

Denominator:
Weighted average common shares –
Basic/Diluted		10,246,629			9,851,764			9,680,010			9,584,582

Net loss per share –
Basic/Diluted	$	(0.07	)	$	(0.13	)	$	(0.48	)	$	(0.39	)

Summary of the Common Stock Equivalents Excluded from Loss per Diluted Share

The following table summarizes the common stock equivalents excluded from loss per diluted share because their effect would be anti-dilutive:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Stock options		1,651,920		1,905,362		1,651,920		1,905,362
Warrants		688,301		64,981		688,301		64,981
Restricted Stock		43,466		68,743		43,466		68,743
		2,383,687		2,039,086		2,383,687		2,039,086

XML 30 R20.htm IDEA: XBRL DOCUMENT

Intangible Assets and Goodwill (Tables)

9 Months Ended

Sep. 30, 2016

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Intangible Assets and Goodwill

The changes in the carrying amount of intangible assets for nine months ended September 30, 2016 were as follows:

Balance at December 31, 2015	$	2,470,127
Deduction: Amortization expense		(236,673	)
Balance at September 30, 2016	$	2,233,454

Schedule of Finite-Lived Intangible Assets, Future Amortization Expense

The following summarizes amortization of intangible assets included in the statement of operations:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Cost of sales	$	59,162	$	59,163	$	177,488	$	288,898
General and administrative		19,730		138,090		59,185		412,562
	$	78,892	$	197,253	$	236,673	$	701,460

XML 31 R21.htm IDEA: XBRL DOCUMENT

Accrued Expenses (Tables)

9 Months Ended

Sep. 30, 2016

Payables and Accruals [Abstract]

Schedule of Accrued Expenses

Accrued expenses are comprised of the following:

	September 30, 2016		December 31, 2015
Professional fees	$	134,537	$	172,766
Payroll and related		322,492		313,003
Severance payments to former officer		150,350		-
Other		78,477		50,547
	$	685,856	$	536,316

XML 32 R22.htm IDEA: XBRL DOCUMENT

Share Based Compensation (Tables)

9 Months Ended

Sep. 30, 2016

Share Based Compensation Tables

Schedule of Stock Based Compensation

All stock-based compensation is included in operating expenses for the periods as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Compensation cost recognized
Selling, general and administrative	$	125,581	$	396,654	$	763,938	$	642,169
Research and development		9,348		21,830		38,685		43,723
	$	134,929	$	418,484	$	802,623	$	685,892

Schedule of Fair Value of Share Based Payment

The fair value of share-based payment units was estimated using the Black-Scholes option pricing model with the following assumptions and weighted average fair values as follows:

	Nine Months Ended
	September 30, 2016
Valuation assumptions:
Stock price		$1.01 - $1.93
Exercise price		$1.01 - $1.93
Expected dividend yield		0	%
Expected volatility		96.77% - 97.32	%
Expected life (in years)		5
Risk-free interest rate		0.94% - 1.35	%

Schedule of Stock Option Activity

Stock option activity under the 1998, 1999, 2001, 2003, 2006 and 2015 Stock Option Plans (collectively, the “Plans”) during the periods indicated below were as follows:

	Number of Shares Subject to Issuance			Weighted- average Exercise Price		Weighted- average Remaining Contractual Term		Aggregate Intrinsic Value

Outstanding at December 31, 2015		1,901,298		$	1.46		4.51 years	$	-
									-
Granted		253,543			1.22				-
Forfeited or expired		(157,794	)		2.59				-
Exercised		(345,127	)		1.13				-
Outstanding at September 30, 2016		1,651,920		$	1.38		3.86 years	$	835,849

Exercisable at September 30, 2016		1,023,796		$	1.31		3.85 years	$	540,134

Schedule of Restricted Stock Units Outstanding

	Number of Shares			Weighted Average Grant Date Fair Value		Aggregate Intrinsic Value

Outstanding at December 31, 2015		67,077		$	1.56	$	-
Granted		80,453			1.69		-
Vested and settled in Shares		(104,064	)		1.58		-

Outstanding at September 30, 2016		43,466		$	1.76	$	1,691

XML 33 R23.htm IDEA: XBRL DOCUMENT

Nature of Business (Details Narrative) - USD ($)	3 Months Ended		9 Months Ended
Nature of Business (Details Narrative) - USD ($)	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015	Dec. 31, 2015	Dec. 31, 2014
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Net loss	$ 726,922	$ 1,267,797	$ 4,645,529	$ 3,783,883
Net cash used in operating activities			3,470,783	3,744,765
Cash and cash equivalents	3,534,399	$ 6,665,599	3,534,399	$ 6,665,599	$ 5,953,257	$ 2,966,350
Accumulated deficit	$ 103,279,274		$ 103,279,274		$ 98,633,745

XML 34 R24.htm IDEA: XBRL DOCUMENT

Significant Accounting Policies (Details Narrative) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015	Dec. 31, 2015
Accounting Policies [Line Items]
Cash equivalents
Impairment charges on intangible assets
Deferred revenue, description			Subscriptions to database information can be purchased for month-to-month, one, two, and three year periods. Revenue from subscriptions are deferred and recognized over the contractual period, which is typically three years. The Company offers enhanced extended warranties for its sales of hardware and software at a set price. The revenue from these sales are deferred and recognized on a straight-line basis over the contractual period, which is typically one to four years.
Three Customer [Member] \| Sales Revenue, Net [Member]
Accounting Policies [Line Items]
Percentage of credit risk	35.00%		26.00%
Two Customer [Member] \| Sales Revenue, Net [Member]
Accounting Policies [Line Items]
Percentage of credit risk		51.00%		40.00%
Two Customer [Member] \| Accounts Receivable [Member]
Accounting Policies [Line Items]
Percentage of credit risk			32.00%
Customer One [Member] \| Accounts Receivable [Member]
Accounting Policies [Line Items]
Percentage of credit risk				51.00%

XML 35 R25.htm IDEA: XBRL DOCUMENT

Significant Accounting Policies - Schedule of Earnings Per Share Basic and Diluted (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Accounting Policies [Abstract]
Net loss	$ (726,922)	$ (1,267,797)	$ (4,645,529)	$ (3,783,883)
Weighted average common shares - Basic/Diluted	10,246,629	9,851,764	9,680,010	9,584,582
Net loss per share - Basic/dDiluted	$ (0.07)	$ (0.13)	$ (0.48)	$ (0.39)

XML 36 R26.htm IDEA: XBRL DOCUMENT

Significant Accounting Policies - Summary of the Common Stock Equivalents Excluded from Loss per Diluted Share (Details) - shares	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share amount	2,383,687	2,039,086	2,383,687	2,039,086
Stock Options [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share amount	1,651,920	1,905,362	1,651,920	1,905,362
Warrants [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share amount	688,301	64,981	688,301	64,981
Restricted Stock [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share amount	43,466	68,743	43,466	68,743

XML 37 R27.htm IDEA: XBRL DOCUMENT

Intangible Assets and Goodwill - Schedule of Intangible Assets and Goodwill (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Goodwill and Intangible Assets Disclosure [Abstract]
Balance at beginning of year			$ 2,470,127
Deduction: Amortization expense	$ (78,892)	$ (197,253)	(236,673)	$ (701,460)
Balance at end of year	$ 2,233,454		$ 2,233,454

XML 38 R28.htm IDEA: XBRL DOCUMENT

Intangible Assets and Goodwill - Schedule of Finite-Lived Intangible Assets, Future Amortization Expense (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Finite-Lived Intangible Assets [Line Items]
Amortization of Intangible Assets	$ 78,892	$ 197,253	$ 236,673	$ 701,460
Cost of Sales [Member]
Finite-Lived Intangible Assets [Line Items]
Amortization of Intangible Assets	59,162	59,163	177,488	288,898
General and Administrative [Member]
Finite-Lived Intangible Assets [Line Items]
Amortization of Intangible Assets	$ 19,730	$ 138,090	$ 59,185	$ 412,562

XML 39 R29.htm IDEA: XBRL DOCUMENT

Note Receivable (Details Narrative) - USD ($)	Aug. 31, 2015	Sep. 30, 2016	Dec. 31, 2015
Note receivable		$ 159,990	$ 187,861
Note receivable net of allowances		38,513	37,365
Note receivable net		$ 121,477	$ 150,496
Buyer [Member]
Sale of assets cash consideration	$ 350,000
Upfront cash payment amount	30,000
Issuance of promissory note	200,000
Contingent consideration maximum amount	120,000
Promissory note monthly payment	$ 3,683
Promissory note interest rate	4.00%
Promissory note term	60 months
Promissory note expiration year	Aug. 31, 2020

XML 40 R30.htm IDEA: XBRL DOCUMENT

Debt (Details Narrative)	9 Months Ended
Debt (Details Narrative)	Sep. 30, 2016 USD ($)
Line of Credit Facility [Line Items]
Line of credit facility, unused availability	$ 2,000,000
Revolving Credit Facility [Member] \| Silicon Valley Bank [Member]
Line of Credit Facility [Line Items]
Line of credit facility, maximum borrowing capacity	2,000,000
Line of credit facility, collateral, amount	$ 2,000,000
Line of credit facility, interest rate description	The facility bears interest at a rate of U.S. prime (3.50% at September 30, 2016)
Line of credit maturity date	Oct. 05, 2017
Revolving Credit Facility [Member] \| Silicon Valley Bank [Member] \| Us Prime [Member]
Line of Credit Facility [Line Items]
Percentage of line of credit interest	3.50%

XML 41 R31.htm IDEA: XBRL DOCUMENT

Accrued Expenses - Schedule of Accrued Expenses (Details) - USD ($)	Sep. 30, 2016	Dec. 31, 2015
Payables and Accruals [Abstract]
Professional fees	$ 134,537	$ 172,766
Payroll and related	322,492	313,003
Severance payments to former officer	150,350
Other	78,477	50,547
Accrued Liabilities	$ 685,856	$ 536,316

XML 42 R32.htm IDEA: XBRL DOCUMENT

Income Taxes (Details Narrative) - USD ($)	1 Months Ended	9 Months Ended
Income Taxes (Details Narrative) - USD ($)	Mar. 31, 2016	Sep. 30, 2016	Dec. 31, 2015
Operating Loss Carryforwards [Line Items]
Operating loss carryforwards			$ 47,400,000
Operating loss carryforwards expiration term		2016 through 2036
Minimum [Member]
Operating Loss Carryforwards [Line Items]
Operating loss carryforwards	$ 2,200,000
Percentage of cumulative ownership changes	50.00%
Maximum [Member]
Operating Loss Carryforwards [Line Items]
Operating loss carryforwards			$ 47,400,000

XML 43 R33.htm IDEA: XBRL DOCUMENT

Share Based Compensation (Details Narrative)	9 Months Ended
Share Based Compensation (Details Narrative)	Sep. 30, 2016 USD ($) shares
Class of warrant or right, outstanding	688,301
Warrants exercisable date	2021
Restricted Stock Units (RSUs) [Member]
Unrecognized compensation cost related to non-vested share-based compensation \| $	$ 592,435
Recognized over weight average period	2 years 1 month 6 days
Stock Option and Equity Incentive Plans [Member]
Shares available for future grants	921,831

XML 44 R34.htm IDEA: XBRL DOCUMENT

Share Based Compensation - Schedule of Stock Based Compensation (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Share-based Compensation Expense	$ 134,929	$ 418,484	$ 802,623	$ 685,892
General and Administrative [Member]
Share-based Compensation Expense	125,581	396,654	763,938	642,169
Research and Development [Member]
Share-based Compensation Expense	$ 9,348	$ 21,830	$ 38,685	$ 43,723

XML 45 R35.htm IDEA: XBRL DOCUMENT

Share Based Compensation - Schedule of Fair Value of Share Based Payment (Details)	9 Months Ended
	Sep. 30, 2016 $ / shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected dividend yield	0.00%
Expected life (in years)	5 years
Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock price	$ 1.01
Exercise price	$ 1.01
Expected volatility	96.77%
Risk-free interest rate	0.94%
Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock price	$ 1.93
Exercise price	$ 1.93
Expected volatility	97.32%
Risk-free interest rate	1.35%

XML 46 R36.htm IDEA: XBRL DOCUMENT

Share Based Compensation - Schedule of Stock Option Activity (Details) - Stock Option [Member]	9 Months Ended
	Sep. 30, 2016 USD ($) $ / shares shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of Shares Subject to Issuance, Outstanding \| shares	1,901,298
Number of Shares Subject to Issuance, Granted \| shares	253,543
Number of Shares Subject to Issuance, Forfeited or expired \| shares	(157,794)
Number of Shares Subject to Issuance, Exercised \| shares	(345,127)
Number of Shares Subject to Issuance, Outstanding \| shares	1,651,920
Number of Shares Subject to Issuance, Exercisable \| shares	1,023,796
Weighted-average Exercise Price, Outstanding \| $ / shares	$ 1.46
Weighted-average Exercise Price, Granted \| $ / shares	1.22
Weighted-average Exercise Price, Forfeited or expired \| $ / shares	2.59
Weighted-average Exercise Price, Exercised \| $ / shares	1.13
Weighted-average Exercise Price, Outstanding \| $ / shares	1.38
Weighted-average Exercise Price, Exercisable \| $ / shares	$ 1.31
Weighted-average Remaining Contractual Term, Outstanding Beginning	4 years 6 months 4 days
Weighted-average Remaining Contractual Term, Outstanding Ending	3 years 10 months 10 days
Weighted-average Remaining Contractual Term, Exercisable	3 years 10 months 6 days
Outstanding-Aggregate Intrinsic Value \| $	$ 835,849
Exercisable-Aggregate Intrinsic Value \| $	$ 540,134

XML 47 R37.htm IDEA: XBRL DOCUMENT

Share Based Compensation - Schedule of Restricted Stock Units Outstanding (Details) - Restricted Stock Units (RSUs) [Member]	9 Months Ended
	Sep. 30, 2016 $ / shares shares
Number of Shares Outstanding Beginning Balance \| shares	67,077
Number of Shares Granted \| shares	80,453
Number of Shares Vested and Settled in Shares \| shares	(104,064)
Number of Shares Outstanding Ending Balance \| shares	43,466
Weighted Average Grant Date Fair Value Outstanding Beginning Balance	$ 1.56
Weighted Average Grant Date Fair Value Granted	1.69
Weighted Average Grant Date Fair Value Vested and Settled in Shares	1.58
Weighted Average Grant Date Fair Value Outstanding Ending Balance	1.76
Aggregate Intrinsic Value Outstanding Beginning Balance
Aggregate Intrinsic Value Outstanding Ending Balance	$ 1,691

XML 48 R38.htm IDEA: XBRL DOCUMENT

Common Stock (Details Narrative) - USD ($)					9 Months Ended
Common Stock (Details Narrative) - USD ($)	Jun. 20, 2016	Jun. 15, 2016	Feb. 24, 2016	Jan. 14, 2015	Sep. 30, 2016
Class of Stock [Line Items]
Number of common value stock repurchase during the period					$ (1,096,608)
Former Executives [Member]
Class of Stock [Line Items]
Number of common stock shares repurchased during the period			979,114
Number of common value stock repurchase during the period			$ 1,096,608
Common Stock [Member]
Class of Stock [Line Items]
Stock issued during period, shares, new issues					1,200,000
Number of common stock shares repurchased during the period					(979,114)
Number of common value stock repurchase during the period					$ (979)
Common Stock [Member] \| Public Offering [Member]
Class of Stock [Line Items]
Stock issued during period, shares, new issues		1,200,000		4,857,143
Shares issued, price per share		$ 1.75		$ 1.75
Proceeds from issuance of offering		$ 1,902,000		$ 7,845,000
Payments of stock issuance costs		$ 122,000		$ 214,000
Warrant to purchase of common stock shares		600,000
Warrants exercisable term		5 years
Warrants exercise price per share		$ 2.20
Underwriters exercised their right to purchase number of warrants	23,320
Common Stock [Member] \| Public Offering [Member] \| Overallotment Option [Member]
Class of Stock [Line Items]
Shares issued, price per share		$ 1.63
Warrant to purchase of common stock shares		90,000
Warrants exercise price per share		$ 0.0001
Overallotment option for the underwriters to purchase number of maximum common stock		180,000

XML 49 R39.htm IDEA: XBRL DOCUMENT

Commitments and Contingencies (Details Narrative) - Landlord [Member] - USD ($)		9 Months Ended
	Feb. 24, 2016	Sep. 30, 2016
Commitments And contingencies [Line Items]
Leases expiration date description		The Company leases an office in the state of New York and storage space in the state of Washington which expire in March 2018 and December 2016, respectively.
Payment of termination fees	$ 100,000