Summary of Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2018

Schedule of Property and Equipment

Property and equipment consisted of the following at:

	September 30, 2018			December 31, 2017
Computer hardware and software	$	209,509		$	154,061
Furniture and equipment		908,701			907,586
Leasehold improvements		55,840			55,840
		1,174,050			1,117,487
Accumulated depreciation and amortization		(407,484	)		(230,394	)
Property and equipment, net	$	766,566		$	887,093

Schedule of Estimated Deferred Warranty Revenue from Remaining Obligations

We expect to recognize revenue for these remaining performance obligations during the next five years approximately as follows:

	Remaining Three Months 2018		2019		2020		2021		2022		2023
Estimated Deferred Warranty Revenue from remaining	$	44,000	$	126,000	$	69,000	$	42,000	$	19,000	$	2,000

Schedule of Disaggregation of Revenue

The following table shows the Company’s revenues disaggregated by reportable segment:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2018		2017		2018		2017
Direct to Consumer	$	4,233,444	$	5,401,048	$	13,155,589	$	17,719,533
International Third-Party Distributors		334,856		380,755		1,807,245		1,842,373
Retail		438,951		1,377,613		4,864,526		2,226,044
Airlines/Hong Kong Retail		476,658		400,338		1,639,411		1,368,999
	$	5,483,909	$	7,559,754	$	21,466,771	$	23,156,949

Schedule of Contract Assets and Liabilities

The following table provides information about contract assets which includes accounts receivable, and contract liabilities which includes deferred revenue and accrued returns and contract fees payable from contracts with customers:

	September 30, 2018		December 31, 2017
Accounts receivable, net of allowance for returns of $604,664 and $747,269, respectively, and doubtful accounts of $264,498 and $166,034, respectively	$	2,208,095	$	3,576,376
Total contract assets	$	2,208,095	$	3,576,376
Deferred revenue	$	504,390	$	598,378
Accrued returns and contract fees payable		102,980		179,922
Total contract liabilities	$	607,370	$	778,300

Schedule of Stock Options Outstanding, Nonvested

The following is a summary of all stock options outstanding and nonvested for the nine months ended September 30, 2018:

										Weighted Average
	Employee			Non- Employee			Totals			Exercise Price
Balance, January 1, 2018		476,667			-			476,667		$	0.42
Granted during the period		1,555,000			400,000			1,955,000			0.23
Vested during the period		(10,000	)		(125,000	)		(135,000	)		0.11
Cancelled during the period		(700,000	)		-			(700,000	)		0.33
Forfeited during the period		(816,667	)		-			(816,667	)		0.36
					-
Balance, September 30, 2018		505,000			275,000			780,000		$	0.14

Stock Option Plan [Member]

Summary of Stock Options Outstanding Under Stock Option Plan

The following is a summary of stock options outstanding outside of the Stock Option Plans for the nine months ended September 30, 2018 and 2017:

	Number of Shares
	Employee		Non - Employee		Totals		Weighted Average Exercise Price
Balance, January 1, 2018		333,333		1,476,667		1,810,000	$	0.31
Granted during the year		-		400,000		400,000		0.11
Exercised during the year		-		-		-		-
Expired during the period		-		-		-		-
Balance, September 30, 2018		333,333		1,876,667		2,210,000	$	0.26

	Number of Shares
	Employee			Non - Employee			Totals			Weighted Average Exercise Price
Balance, January 1, 2017		516,667			1,676,667			2,193,334		$	0.35
Granted during the year		-			-			-			-
Exercised during the year		(183,334	)		-			(183,334	)		0.27
Expired during the period		-			(200,000	)		(200,000	)		0.80
Balance, September 30, 2017		333,333			1,476,667			1,810,000		$	0.31

Schedule of Assumptions Used in Black-Scholes Option Pricing Model

The following weighted average assumptions are used in the Black-Scholes option pricing model for the nine months ended September 30, 2018 and 2017 to value the stock options granted during the period:

2018
Risk-free interest rate		2.77	%
Expected dividend yield		0.00	%
Expected life		3 years
Expected volatility		143.03	%
Weighted average grant date fair value	$	0.11

2011 Stock Option Plan [Member]

Summary of Stock Options Outstanding Under Stock Option Plan

The following is a summary of stock options outstanding under the Plan and 2011 Plan (collectively “Stock Option Plans”) for the nine months ended September 30, 2018 and 2017:

	Number of Shares								Weighted Average
	Employee			Non-Employee		Totals			Exercise Price
Balance, January 1, 2018		3,993,335			-		3,993,335		$	0.27
Granted during the year		1,555,000			-		1,555,000			0.26
Exercised during the year		-			-		-			-
Cancelled during the year		(700,000	)		-		(700,000	)		0.33
Forfeited during the year		(910,000	)		-		(910,000	)		0.36
Balance, September 30, 2018		3,938,335			-		3,938,335		$	0.21

	Number of Shares								Weighted Average
	Employee			Non- Employee		Totals			Exercise Price
Balance, January 1, 2017		3,680,002			-		3,680,002		$	0.24
Granted during the year		280,000			-		280,000			0.49
Exercised during the year		(136,667	)		-		(136,667	)		0.15
Forfeited during the year		(93,333	)		-		(93,333	)		0.32
Balance, September 30, 2017		3,730,002			-		3,730,002		$	0.26

Schedule of Assumptions Used in Black-Scholes Option Pricing Model

The following weighted average assumptions are used in the Black-Scholes option pricing model for the nine months ended September 30, 2018 and 2017 to value the stock options granted during the period:

2018				2017
Risk-free interest rate		2.84	%	Risk-free interest rate		2.17	%
Expected dividend yield		0	%	Expected dividend yield		0	%
Expected life		6 years		Expected life		6 years
Expected volatility		142.79	%	Expected volatility		145	%
Weighted average grant date fair value	$	0.26		Weighted average grant date fair value	$	0.46
Forfeiture rate		0	%	Forfeiture rate		5	%