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Liquidity and Going Concern Issues
6 Months Ended
Jun. 30, 2013
Going Concern Disclosure [Abstract]  
Liquidity and Going Concern Issues
Note 2 — Liquidity and Going Concern Issues
 
The Company’s independent registered public accounting firm’s report issued on our consolidated financial statements for the years ended December 31, 2012 and 2011 included an explanatory paragraph describing the existence of conditions that raise substantial doubt about the Company’s ability to continue as a going concern, including continued operating losses and the potential inability to pay currently due debts. The Company has incurred a net loss from continuing operations consistently over the last 2 years. The net loss for the second quarter of 2013 was $2,593,034. The Company incurred annual net losses from its continuing operations of $4,747,387 in 2012 and $5,332,866 in 2011, and has an accumulated deficit of $28,739,338 as of June 30, 2013. The Company’s ongoing losses have had a significant negative impact on the Company’s financial position and liquidity.
 
The Company’s cash requirements are primarily for funding operating losses, working capital, research, principal and interest payments on debt obligations, and capital expenditures. Historically, the Company has met these cash needs by borrowings under notes, sales of convertible debt, the sales of equity securities and the sale of assets. There can be no assurance that the Company will be able to borrow or sell securities in the future, which raises substantial doubt about the ability of the Company to continue as a going concern. The consolidated financial statements do not include any adjustments relating to the recoverability and classification of assets carrying amounts or the amount of and classification of liabilities that may result should the Company be unable to continue as a going concern.
 
With the sale of assets relating to the Company’s Tactical Display Group business (the “TDG Assets”) on June 15, 2012 and subsequent debt repayments, the Company was for a period no longer in default under the various covenants then contained in its agreements with its Convertible, Senior Secured Term loan lender and with its bank which provided Lines of Credit under a secured revolving loan agreement. This asset sale, debt repayments and other debt deferrals improved the working capital position of the Company. However due to its continued operating losses and the transition of its business away from its former military related product sales, the Company experienced further increase in its working capital deficiency. 
 
In connection with the Company’s need for additional capital, on March 21, 2013, the Company issued a secured convertible debenture in the amount of $800,000. The debenture bears interest at a rate of 16% per year, payable quarterly in cash or shares of common stock at our option. Commencing on February 1, 2014, the Company will be required to redeem a certain amount under the debenture on a periodic basis in an amount equal to $200,000 on each of February 1, 2014, May 1, 2014 and August 1, 2014 and $50,000 on each of August 1, 2015, August 1, 2016, August 1, 2017 and March 21, 2018, until the debenture’s maturity date of March 21, 2018.
 
The Company has not been in compliance with its minimum cash covenant as contained in its agreements with its Convertible, Senior Secured Term loan lender. Additionally the Company has not making its required monthly principal and interest payments to this lender and was behind $464,343 and $52,815, respectively in such payments as of June 30, 2013.
 
Management of the Company has been pursuing a financing to raise the additional capital needed to continue planned operations. On August 5, 2013, the Company closed on a public offering of common stock and warrants for a total of $8,050,000 in gross proceeds before underwriting discounts and commissions and other offering expenses payable by the Company. Please refer to Note 20 – Subsequent Events, for more details on the transaction.
 
The public offering and related debt conversions and repayments have allowed to Company to cure all its prior debt defaults. All of the Company’s secured debts were either repaid or converted into common stock and warrants simultaneously with the consummation of the public offering. Since the closing of the public offering, the Company has the financial resources to better execute on its business plans but it still must grow its business significantly to become profitable and self-sustaining on a cash flow basis. In the event that the Company is unable to do so in a timely manner, the Company would need to pursue other financing alternatives in the near future, which could include a private financing, bridge financing or collaboration agreements. The Company may not be able to obtain financing on acceptable terms, or at all, and the Company may not be able to enter into such collaborative arrangements. The terms of any financing may adversely affect the holdings or the rights of the Company’s stockholders. If the Company is unable to obtain funding, the Company could be forced to delay, reduce or eliminate its research and development programs,  future commercialization efforts or otherwise curtail its business, which could adversely affect its business prospects.