Restatement

12 Months Ended

Dec. 31, 2013

Restatement [Abstract]

Restatement

18. Restatement

During the course of the re-audit of 2012, errors were discovered in previously reported asset, liability, equity, revenue and expense accounts, further described as follows:

a.   In July 2012, the Company recorded $500,000 in unearned income related to the potential earn-out after twelve months associated with the sale of Illume Mobile.  The earn-out was not achieved during 2013, so the original balance sheet entry was reversed effective July 31, 2012.

b.   As part of the sale of Illume Mobile on July 31, 2012, the Company received $750,000 in common stock of DecisionPoint Systems, Inc. with the number of shares determined by a twenty day value-weighted average computation (VWAP). The actual fair market value of the shares on July 31, 2012 was less than the twenty-day VWAP, resulting in a $52,000 reduction in the originally-recorded value of the investment in DecisionPoint Systems, Inc. common stock.

c.   On December 31, 2012, the Company valued its investment in DecisionPoint based on the VWAP for the fourth quarter. The actual fair market value of the shares on December 31, 2012 was less than the fourth quarter VWAP, resulting in a $34,048 reduction in the originally-reported investment on that date offset by the Other Comprehensive Income account.

d.   The Company previously recorded $9,909 on December 31, 2012 in liability related to fourth quarter 2012 stock based compensation for shares that were issued in January 2013 and recorded as expense at the recipients’ taxable basis. These shares were restated as issued in 2012, the offsetting liability of $9,909 was reversed, and $23,318 was recognized as an increase in common stock and $23,319 was recognized as additional paid in capital. Also $8,073 of accrued interest was re-classified from long term debt to accrued liabilities.

e.   The outstanding 2011 Convertible Debenture Series A was determined to have been issued at a discount, resulting in a $72,727 contra liability to the debenture liability. Also additional $1,475,000 was recorded as additional paid-in capital for debt discount recorded for beneficial conversion feature and $1,402,273 was recorded as interest expense for amortization of debt discount.

f.   In 2012, the Company issued 1,850,000 shares of stock to a financial advisory service firm in exchange for services valued at $168,000. The actual fair market value of the shares on the date issued was $30,950 greater resulting in an increase in additional paid-in capital and G&A expense.

g.    The Company issued 750,000 shares to another financial advisory service firm in 2012 in exchange for services valued at $45,000. The actual fair market value of the shares on the date issued was $24,000 greater resulting in an increase in additional paid in capital and G&A.

h.    The Company discovered $12,574 in legal and travel expenses that had been charged to additional paid-in capital as financing expenses which should have been charged to G&A expense and reclassified that amount to expense.

i.   The Company previously recorded first, second and third quarter 2012 stock based compensation as expense at the recipients’ taxable basis. As a result, an additional $356,369 was recorded as additional paid-in capital and G&A expense.

j.   The Company issued 7,500,000 options in 2012 which only vest under certain market conditions which have not been met but did not record an expense for the options. Under ASC 718, these unvested options have been recorded with a $94,738 increase in additional paid-in capital and G&A expense.

k.   Under ASC 815-15, the 2010 Debenture which didn’t convert until March 2012 had a conversion feature which caused the 2011 Debenture Series A, 2011 Debenture Series B instruments to be deemed derivative instruments as well as warrants outstanding at that date. Under ASC 815, the 2012 Debenture Series C is deemed to be derivative instrument due to a reset provision in the conversion price. As a result, the Company recorded $4,028,085 as loss on derivative liability, $4,473,289 as derivative liabilities written off to additional paid-in capital and $445,204 to interest expense for amortization of debt discount.

l.   The Company previously reported the operations of Illume Mobile as continuing operations from January 1, 2012 through June 30, 2012. Illume Mobile’s 2012 $2,204,478 loss from operations has been restated resulting in a reclassifications of net revenues, cost of revenues, operating expenses and G&A expenses to discontinued operations.

   The restatements as of December 31, 2012 are as follows:

 )  e, k

		As of December 31, 2012
		As Reported						Adjustments				Restated
Cash		$	659,204					$	-			$	659,204
Accounts receivable - trade			74,056						-				74,056
Prepaid expenses and other			519,330			a			(500,000	)			19,330
Net property and equipment			2,189						-				2,189
Available-for-sale investment - DecisionPoint Systems, Inc.			579,875			b, c			(86,048	)			493,827
Intangible assets, net of amortization			64,227										64,227
TOTAL ASSETS		$	1,898,881					$	(586,048	)		$	1,312,833
Note Payable - Oklahoma Technology Commercialization Center- Current		$	90,000					$	-			$	90,000
Accounts payable - trade and accrued liabilities			84,062			d			(1,836	)			82,226
Unearned income			500,000			a			(500,000	)			-
TOTAL LONG-TERM DEBT, less current maturities			816,752		d, e, k			(80,798	)			735,954
TOTAL LIABILITIES			1,490,814						(582,634	)			908,180
Common stock			1,798,320			d			23,318				1,821,638
Additional paid-in capital			13,230,111		d, e, f, g, h, i, j, k				6,490,208				19,720,319
Accumulated other comprehensive income			(170,125	)		c			(34,048	)			(204,173	)
Accumulated deficit			(14,450,239	)					(6,482,892	)			(20,933,131	)
TOTAL STOCKHOLDER'S EQUITY			408,067						(3,414	)			404,653
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY		$	1,898,881					$	(586,048	)		$	1,312,833
		As of December 31, 2012
	As Reported						Adjustments				Restated
Net revenues		$	2,988,393			l		$	(554,648	)		$	2,433,745
Cost of revenues			1,305,853			l			(275,868	)			1,029,985
Gross profit			1,682,540						(278,780	)			1,403,760
General and administrative expense			3,025,071		d, f, g, h, i, j, l				(1,593,202	)			1,431,869
Loss from operations			(1,342,531	)					1,314,422				(28,109	)
Total other expense			(238,906	)				(5,787,444	)			(6,026,350	)
Net loss from continuing operations			(1,581,437	)					(4,473,022	)			(6,054,459	)
DISCONTINUED OPERATIONS			(194,608	)		b, l			(2,009,870			(2,204,478	)
NET LOSS			(1,776,045	)					(6,482,892	)			(8,258,937	)
OTHER COMPREHENSIVE INCOME			(170,125	)		c			(34,048	)			(204,173	)
COMPREHENSIVE LOSS		$	(1,946,170	)				$	(6,516,940	)		$	(8,463,110	)