0001398432-16-000702.txt : 20160810 0001398432-16-000702.hdr.sgml : 20160810 20160810160639 ACCESSION NUMBER: 0001398432-16-000702 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 60 CONFORMED PERIOD OF REPORT: 20160630 FILED AS OF DATE: 20160810 DATE AS OF CHANGE: 20160810 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GENERAL CANNABIS CORP CENTRAL INDEX KEY: 0001477009 STANDARD INDUSTRIAL CLASSIFICATION: OIL, GAS FIELD SERVICES, NBC [1389] IRS NUMBER: 208096131 STATE OF INCORPORATION: CO FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-54457 FILM NUMBER: 161821620 BUSINESS ADDRESS: STREET 1: 6565 EAST EVANS AVENUE CITY: DENVER STATE: CO ZIP: 80224 BUSINESS PHONE: (719) 748-5603 MAIL ADDRESS: STREET 1: 6565 EAST EVANS AVENUE CITY: DENVER STATE: CO ZIP: 80224 FORMER COMPANY: FORMER CONFORMED NAME: Advanced Cannabis Solutions, Inc. DATE OF NAME CHANGE: 20131023 FORMER COMPANY: FORMER CONFORMED NAME: Promap Corp DATE OF NAME CHANGE: 20091117 10-Q 1 a12971.htm FORM 10-Q 10-Q



UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549


FORM 10-Q


(Mark One)

þ

Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for quarterly period ended June 30, 2016.

 

 

o

Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934


for the transition period from __________ to __________.


Commission file number:   000-54457


GENERAL CANNABIS CORPORATION

(Exact name of registrant as specified in its charter)


Colorado

 

90-1072649

(State of incorporation)

 

(IRS Employer Identification No.)

 

6565 East Evans Avenue

Denver, CO 80224

(Address of principal executive offices) (Zip Code)


Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to the filing requirements for the past 90 days. Yes   þ     No  o     


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


Indicate by check mark whether the registrant is a large accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in rule 12b-2 of the Exchange Act.


Large accelerated filer  o

 

Accelerated filer     o

Non-accelerated filer    o

 

Smaller reporting company     þ


Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  o       No  þ


As of August 10, 2016, there were 15,495,421 issued and outstanding shares of the Companys common stock.








GENERAL CANNABIS CORPORATION

FORM 10-Q


TABLE OF CONTENTS


PART I. FINANCIAL INFORMATION

 

 

 

 

Item 1.

Financial Statements

3

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

18

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

24

Item 4.

Controls and Procedures

24

 

 

 

PART II. OTHER INFORMATION

27

 

 

 

Item 1.

Legal Proceedings

27

Item 1A.

Risk Factors

27

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

27

Item 3.

Defaults Upon Senior Securities

27

Item 4.

Mine Safety Disclosures

27

Item 5.

Other Information

27

Item 6.

Exhibits

27

 

 

 

 

Signatures

28




2




PART I.  FINANCIAL INFORMATION


ITEM 1.  FINANCIAL STATEMENTS


GENERAL CANNABIS CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS


 

 

June 30, 2016

(Unaudited)

 

December 31, 2015

ASSETS

 

 

 

 

Current Assets

 

 

 

 

Cash and cash equivalents

$

54,400

$

58,711

Accounts receivable

 

160,810

 

124,553

Prepaid expenses and other current assets

 

20,010

 

46,734

Inventory, net

 

29,214

 

15,518

Total current assets

 

264,434

 

245,516

 

 

 

 

 

Property and equipment, net

 

1,705,482

 

1,725,268

Intangible assets, net

 

1,354,712

 

1,524,927

Goodwill

 

187,000

 

187,000

Total Assets

$

3,511,628

$

3,682,711

 

 

 

 

 

LIABILITIES & STOCKHOLDERS’ EQUITY (DEFICIT)

 

 

 

 

 

 

 

 

 

Current Liabilities

 

 

 

 

Accounts payable and accrued expenses

$

496,968

$

293,532

Interest payable

 

126,668

 

84,720

Line of credit – related party

 

1,237,500

 

800,000

Notes payable (net of discount), current portion

 

1,202,380

 

986,475

Deferred rental revenue

 

32,016

 

33,146

Accrued stock payable

 

635,496

 

1,532,420

Total current liabilities

 

3,731,028

 

3,730,293

 

 

 

 

 

Notes payable (net of debt discount), less current portion

 

147,734

 

151,397

Tenant deposits

 

8,854

 

9,204

Total Liabilities

 

3,887,616

 

3,890,894

 

 

 

 

 

Commitments and Contingencies

 

--

 

--

 

 

 

 

 

Stockholders’ Equity (Deficit)

 

 

 

 

Preferred stock, no par value; 5,000,000 share authorized; no shares issued and outstanding at June 30, 2016 and December 31, 2015

 

--

 

--

Common Stock, $0.001 par value; 100,000,000 shares authorized; 15,495,421 shares and 14,915,421 shares issued and outstanding on June 30, 2016 and December 31, 2015, respectively

 

15,495

 

14,915

Additional paid-in capital

 

18,560,598

 

16,204,280

Accumulated deficit

 

(18,952,081)

 

(16,427,378)

Total Stockholders’ Deficit

 

(375,988)

 

(208,183)

 

 

 

 

 

Total Liabilities & Stockholders’ Deficit

$

3,511,628

$

3,682,711



See Notes to condensed consolidated financial statements.



3




GENERAL CANNABIS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)


 

 

Three months ended

June 30,

 

Six months ended

June 30,

 

 

2016

 

2015

 

2016

 

2015

REVENUES

 

 

 

 

 

 

 

 

Service

$

647,876

$

376,722

$

1,284,095

$

394,104

Tenant

 

31,464

 

37,911

 

67,833

 

64,588

Product Sales

 

22,602

 

12,569

 

42,126

 

25,367

Total revenues

 

701,942

 

427,202

 

1,394,054

 

484,059

 

 

 

 

 

 

 

 

 

COSTS AND EXPENSES

 

 

 

 

 

 

 

 

Cost of service revenues

 

455,314

 

313,051

 

907,898

 

326,088

Cost of goods sold

 

15,390

 

38,542

 

43,657

 

39,642

Selling, general and administrative

 

395,146

 

366,279

 

811,508

 

551,683

Share-based expense

 

501,505

 

3,855,465

 

1,101,974

 

4,104,090

Professional fees

 

75,457

 

156,390

 

181,186

 

250,497

Depreciation and amortization

 

97,075

 

66,871

 

194,341

 

75,878

Total costs and expenses

 

1,539,887

 

4,796,598

 

3,240,564

 

5,347,878

 

 

 

 

 

 

 

 

 

OPERATING LOSS

 

(837,945)

 

(4,369,396)

 

(1,846,510)

 

(4,863,819)

 

 

 

 

 

 

 

 

 

OTHER EXPENSE (INCOME)

 

 

 

 

 

 

 

 

Amortization of debt discount and deferred
financing costs

 

79,781

 

134,195

 

215,618

 

376,825

Interest expense

 

60,745

 

78,498

 

104,575

 

147,705

Loss on extinguishment of debt

 

358,000

 

--

 

358,000

 

--

Net (gain) loss on derivative liability

 

--

 

(232,867)

 

--

 

(210,634)

Total other expense (income), net

 

498,526

 

(20,174)

 

678,193

 

313,896

 

 

 

 

 

 

 

 

 

NET LOSS

$

(1,336,471)

$

(4,349,222)

$

(2,524,703)

$

(5,177,715)

 

 

 

 

 

 

 

 

 

PER SHARE DATA – Basic and diluted

 

 

 

 

 

 

 

 

Net loss per share

$

(0.09)

$

(0.31)

$

(0.17)

$

(0.38)

Weighted average number of common shares outstanding

 

15,384,762

 

14,054,673

 

15,157,509

 

13,577,719



See Notes to condensed consolidated financial statements.



4




GENERAL CANNABIS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


 

 

Six months ended

June 30,

 

 

2016

 

2015

CASH FLOWS USED IN OPERATING ACTIVITIES

 

 

 

 

Net loss

$

(2,524,703)

$

(5,177,715)

Adjustments to reconcile net loss to net cash (used in) provided by

operating activities:

 

 

 

 

Amortization of debt discount

 

215,618

 

357,658

Amortization of deferred financing costs

 

--

 

19,167

Loss on extinguishment of debt

 

358,000

 

--

(Gain) loss on derivative liability, net

 

--

 

(210,634)

Depreciation and amortization expense

 

194,341

 

75,878

Equity-based payments

 

1,101,974

 

4,104,090

Changes in operating assets and liabilities (net of amounts acquired):

 

 

 

 

Accounts receivable

 

(36,257)

 

(54,871)

Prepaid expenses and other assets

 

26,724

 

(82,220)

Inventory

 

(13,696)

 

15,534

Accounts payable and accrued liabilities

 

243,904

 

147,995

Net cash used in operating activities:

 

(434,095)

 

(805,118)

 

 

 

 

 

CASH FLOWS USED IN INVESTING ACTIVITIES

 

 

 

 

Purchase of property and equipment

 

(4,340)

 

(42,562)

Net cash used in investing activities

 

(4,340)

 

(42,562)

 

 

 

 

 

CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES

 

 

 

 

Increase in line of credit -- related party

 

437,500

 

289,000

 Borrowings under notes payable

 

--

 

325,000

Payments on notes payable

 

(3,376)

 

(3,101)

Proceeds from warrant exercises

 

--

 

87,616

Net cash provided by financing activities

 

434,124

 

698,515

 

 

 

 

 

NET DECREASE IN CASH

 

(4,311)

 

(149,165)

CASH, BEGINNING OF PERIOD

 

58,711

 

165,536

CASH, END OF PERIOD

$

54,400

$

16,371

 

 

 

 

 

SUPPLEMENTAL SCHEDULE OF CASH FLOW INFORMATION

 

 

 

 

Cash paid for interest

$

62,627

$

95,540

 

 

 

 

 

NON-CASH TRANSACTIONS

 

 

 

 

Issuance of common stock and warrants from accrued stock payable

$

1,069,775

$

114,487

Acquisition of IPG with common stock payable and warrants

 

--

 

1,887,000

Convertible notes payable settled in common stock

 

--

 

290,000

Interest on convertible notes payable settled in common stock

 

--

 

1,063

Issuance of common stock upon cashless conversion of warrants by Full Circle

 

--

 

3,683,270



See Notes to condensed consolidated financial statements.



5




GENERAL CANNABIS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 (Unaudited)


NOTE 1.   NATURE OF OPERATIONS, HISTORY AND PRESENTATION


Nature of Operations


General Cannabis Corporation (the “Company,” “we,” “us,” “our,” or “GCC”) (formerly, Advanced Cannabis Solutions, Inc.), was incorporated on June 3, 2013, and provides products and services to the regulated cannabis industry.  On April 28, 2015, our common stock was uplisted and resumed quotation on the OTC Market’s OTCQB on May 6, 2015.  Our operations are segregated into the following four reportable segments:


Security and Cash Management Services

 

In March 2015, we acquired substantially all of the assets of Iron Protection Group, LLC, a Colorado limited liability company, which continues to do business as “Iron Protection Group.” Iron Protection Group (“IPG”) provides advanced security, including on-site professionals, video surveillance and cash transport, to licensed cannabis cultivators and retail shops. As of June 30, 2016, IPG had approximately 58 security guards on staff who serve 16 clients throughout Colorado.


Marketing and Products


In September 2015, we acquired substantially all of the assets of Chiefton Supply Co., and established a dba of Chiefton Supply Co., incorporated in Colorado (“Chiefton”).  Chiefton is an apparel and design company.  We design, distribute and sell apparel featuring graphic designs.  Our apparel is purchased and screen printed by third parties, for which there are numerous suppliers.  Chiefton also provides high-level design and branding services to various clients, from grow stores and dispensaries to wholesale cannabis companies.


In April 2016, we relaunched GC Supply, dedicated to providing wholesale equipment and supplies to participants in the regulated cannabis industry.  We will provide turnkey sourcing and stocking services to cultivation, retail and infused products manufacturing facilities.  Offerings will include infrastructure, equipment, consumables, various delivery technologies (vaporizers and capsules) and compliance packaging.  GC Supply operates out of a leased, 1,800 square-foot warehouse located in Colorado Springs, Colorado.

  

Consulting and Advisory

 

Through Next Big Crop we deliver comprehensive consulting services to the cannabis industry that include obtaining licenses, compliance, cultivation, retail operations, logistical support, facility design and building services, and expansion of existing operations.  Our business plan is based on the future growth of the regulated cannabis market in the United States.


In April 2016, we launched our public market research services division, called General Cannabis Equity Research, or GCER.  Our approach to investment research will place an emphasis on intrinsic value and management quality.  We will evaluate cannabis investments in the same manner as a merger and acquisitions specialist might.  Our analyses of the individual cannabis companies will be driven by economic realities of the industry and its constantly changing dynamics.


Finance and Real Estate


Real Estate Leasing


Our real estate leasing business primarily includes the acquisition and leasing of cultivation space and related facilities to licensed marijuana growers and dispensary owners for their operations. Management anticipates that these facilities will range in size from 5,000 to 50,000 square feet. These facilities will only be leased to tenants that possess the requisite state licenses to operate cultivation facilities. The leases with the tenants will provide certain requirements that permit us to continually evaluate our tenants’ compliance with applicable laws and regulations.


As of the date of this report, we owned one cultivation property that is located in a suburb of Pueblo, Colorado (the “Pueblo West Property”). The Pueblo West Property consists of approximately three acres of land, which currently includes a 5,000 square foot steel building, and parking lot. The Pueblo West Property is zoned for cultivating cannabis and is leased to a medical cannabis grower until December 31, 2022.  We are evaluating strategic options for this property.




6



Shared Office Space, Networking and Event Services   

 

In October 2014, we purchased a former retail bank located at 6565 East Evans Avenue, Denver, Colorado 80224, which has been branded as The Greenhouse (“The Greenhouse”).  The building is a 16,056 square-foot facility, which will be converted to serve as the largest shared workspace for entrepreneurs, professionals and others serving the cannabis industry.  Clients will be able to lease space to use as offices, meeting rooms, lecture halls, educational and networking facilities, and individual workstations.


The Greenhouse has approximately 10,000 square feet of existing office space and 5,000 square feet on its ground floor that is dedicated to a consumer banking design.  The banking space includes a vault with safety deposit boxes, three drive through teller windows and five secure teller windows inside.


We plan to continue to acquire commercial real estate and lease office space to participants in the cannabis industry. These participants include media, internet, packaging, lighting, cultivation supplies, and financial services. In exchange for certain services that may be provided to these tenants, we expect to receive rental income in the form of cash. In certain cases, we may acquire equity interests or provide debt capital to these businesses.


Industry Finance and Equipment Leasing Services


We lease cultivation equipment and facilities to customers in the cannabis industry. We expect we will enter into sale lease-back transactions of grow lights, tenant improvements and other grow equipment. Since Colorado State law does not allow entities operating under a cannabis license to pledge the assets or the license of the cannabis operation for any type of general borrowing activity, we intend to provide loans to individuals and businesses in the cannabis industry on an unsecured basis.  Equipment will only be leased to tenants that possess the requisite state licenses to operate such facilities. The leases with the tenants will provide certain requirements that permit us to continually evaluate our tenants’ compliance with applicable laws and regulations.


We are exploring lending opportunities in Oregon, Washington, Colorado, and Arizona. Our finance strategy will include making direct term loans and providing revolving lines of credit to businesses involved in the cultivation and sale of cannabis and related products.  These loans will generally be secured to the maximum extent permitted by law.  We believe there is a significant demand for this financing.  We are pursuing other finance services including customized finance, capital formation, and banking, for participants in the cannabis industry.


On November 4, 2015, we entered into an agreement (the “DB Option Agreement”) with Infinity Capital, a related party, which was amended on March 29, 2016 (the “Amended DB Option Agreement”).  Pursuant to the Amended DB Option Agreement, we have the right to purchase all of Infinity Capital’s interest in DB Products Arizona, LLC (“DB”) at Infinity Capital’s actual cost, plus $1.00, or $750,001. The interests for which the option has been granted are Infinity Capital’s 50% equity interest in the membership interests of DB, and any outstanding unpaid principal and interest owed on promissory note(s) issued by DB in favor of Infinity Capital for up to $750,000.  DB is involved in the production and distribution of Dixie Brands, Inc’s full line of medical cannabis “Dixie Elixirs and Edibles” products in Arizona.  DB expects to begin sales in 2016.  We have no obligation to exercise the option, which expires September 24, 2016.


Basis of Presentation


The accompanying (a) condensed consolidated balance sheet at December 31, 2015, has been derived from audited statements and (b) condensed consolidated unaudited financial statements as of June 30, 2016 and 2015, have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements, and should be read in conjunction with the audited consolidated financial statements and related footnotes included in our Annual Report on Form 10-K for the year ended December 31, 2015 (the “2015 Annual Report”), filed with the Securities and Exchange Commission (the “SEC”) on March 25, 2016.  It is management’s opinion, however, that all material adjustments (consisting of normal recurring adjustments), have been made which are necessary for a fair financial statements presentation. The condensed consolidated financial statements include all material adjustments (consisting of normal recurring accruals) necessary to make the condensed consolidated financial statements not misleading as required by Regulation S-X, Rule 10-01. Operating results for the three and six months ended June 30, 2016, are not necessarily indicative of the results of operations expected for the year ending December 31, 2016.


The condensed consolidated financial statements include the results of GCC and its five wholly-owned subsidiary companies: (a) ACS Colorado Corp., a Colorado corporation formed in 2013; (b) Advanced Cannabis Solutions Corporation, a Colorado corporation formed in 2013; (c) 6565 E. Evans Avenue LLC, a Colorado limited liability company formed in 2014; (d) General Cannabis Capital Corporation, a Colorado corporation formed in 2015; and (e) GC Security LLC, (“GCS”) a Colorado limited liability company formed in 2015.  Advanced Cannabis Solutions Corporation has one wholly-owned subsidiary company, ACS Corp., which was formed in Colorado on June 6, 2013.  Intercompany accounts and transactions have been eliminated.



7



Certain reclassifications have been made to the prior period condensed consolidated financial statements to conform to the current period presentation. The reclassifications had no effect on net loss, total assets, or total stockholders’ equity (deficit).


Going Concern


The condensed consolidated financial statements have been prepared on a going concern basis, which assumes we will be able to realize our assets and discharge our liabilities in the normal course of business for the foreseeable future.  The ability to continue as a going concern is dependent upon our generating profitable operations in the future and / or obtaining the necessary financing to meet our obligations and repay our liabilities arising from normal business operations when they come due. Management believes that actions presently being taken to further implement our business plan and generate additional revenues provide opportunity for the Company to continue as a going concern.  While we believe in the viability of our strategy to generate additional revenues and our ability to raise additional funds, there can be no assurances to that effect.


We had an accumulated deficit of $18,952,081 and $16,427,378, respectively, at June 30, 2016 and December 31, 2015, and further losses are anticipated in the development of our business. Accordingly, there is substantial doubt about our ability to continue as a going concern. The accompanying condensed consolidated financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern.


Significant Accounting Policy Updates


Modification of Debt Instruments


Modifications or exchanges of debt, which are not considered a troubled debt restructuring, are considered extinguishments if the terms of the new debt and the original instrument are substantially different.  The instruments are considered substantially different when the present value of the cash flows under the terms of the new debt instrument are at least 10% different from the present value of the remaining cash flows under the terms of the original instrument.  The fair value of non-cash consideration associated with the new debt instrument, such as warrants, are included as a day one cash flow in the 10% cash flow test.  If the original and new debt instruments are substantially different, the original debt is derecognized and the new debt is initially recorded at fair value, with the difference recognized as an extinguishment gain or loss.


Recently Issued Accounting Standards


Financial Accounting Standards Board, or FASB, Accounting Standards Update, or FASB ASU 2016-12 “Revenue from Contracts with Customers (Topic 606)” – In May 2016, the FASB issued 2016-12.  The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.  ASU 2016-12 provides clarification on assessing collectability, presentation of sales taxes, noncash consideration, and completed contracts and contract modifications.  This ASU is effective for annual reporting periods beginning after December 15, 2017, with the option to adopt as early as December 15, 2016. We are currently assessing the impact of adoption of this ASU on our consolidated results of operations, cash flows and financial position.


FASB ASU 2016-11 “Revenue Recognition (Topic 605) and Derivatives and Hedging (Topic 815)” – In May 2016, the FASB issued 2016-11, which clarifies guidance on assessing whether an entity is a principal or an agent in a revenue transaction.  This conclusion impacts whether an entity reports revenue on a gross or net basis.  This ASU is effective for annual reporting periods beginning after December 15, 2017, with the option to adopt as early as December 15, 2016. We are currently assessing the impact of adoption of this ASU on our consolidated results of operations, cash flows and financial position.


FASB ASU 2016-10 “Revenue from Contracts with Customers (Topic 606)” – In April 2016, the FASB issued ASU 2016-10, clarify identifying performance obligations and the licensing implementation guidance, while retaining the related principles for those areas.  This ASU is effective for annual reporting periods beginning after December 15, 2017, with the option to adopt as early as December 15, 2016. We are currently assessing the impact of adoption of this ASU on our consolidated results of operations, cash flows and financial position.


FASB ASU 2016-09 “Compensation – Stock Compensation (Topic 718)” – In March 2016, the FASB issued ASU 2016-09, which includes multiple provisions intended to simplify various aspects of accounting for share-based payments.  While aimed at reducing the cost and complexity of the accounting for share-based payments, the amendments are expected to significantly impact net income, earnings per share, and the statement of cash flows.  Implementation and administration may present challenges for companies with significant share-based payment activities.  This ASU is effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years.  We are currently evaluating the potential impact this standard will have on our consolidated financial statements and related disclosures.




8



FASB ASU 2016-02 “Leases (Topic 842)” – In February 2016, the FASB issued ASU 2016-02, which will require lessees to recognize almost all leases on their balance sheet as a right-of-use asset and a lease liability.  For income statement purposes, the FASB retained a dual model, requiring leases to be classified as either operating or finance.  Classification will be based on criteria that are largely similar to those applied in current lease accounting, but without explicit bright lines.  Lessor accounting is similar to the current model, but updated to align with certain changes to the lessee model and the new revenue recognition standard.  This ASU is effective for fiscal years beginning after December 18, 2018, including interim periods within those fiscal years.  We are currently evaluating the potential impact this standard will have on our consolidated financial statements and related disclosures.


NOTE 2.   BUSINESS ACQUISITIONS


IPG Acquisition


On March 26, 2015, GCS, our wholly-owned subsidiary, entered into an Asset Purchase Agreement (the “IPG APA”) by and among us, GCS and Iron Protection Group, LLC, a Colorado limited liability company (the “Seller”), whereby GCS agreed to acquire substantially all of the assets of Seller (the “IPG Acquisition”). Pursuant to the terms of the IPG APA, we delivered to Seller 500,000 restricted shares of our common stock, which vested over a one-year period (100,000 shares on October 1, 2015; 200,000 shares on January 1, 2016; and 200,000 shares on April 1, 2016).


In addition, we delivered to Seller three-year warrants (the “IPG Warrants”) to purchase an aggregate of 500,000 shares of our common stock at an exercise price of: (i) $4.50 for warrants to purchase 250,000 shares, and (ii) $5.00 for warrants to purchase another 250,000 shares. The IPG APA contains certain provisions that require Seller to forfeit a portion of the stock consideration in the event that Seller violates its obligations under the IPG APA relating to non-competition and non-disclosure. The closing date of the IPG Acquisition was March 26, 2015, and we calculated the purchase price of the IPG Acquisition to be approximately $1,887,000. At the acquisition date and pursuant to the IPG APA, we did not assume any of the Seller’s liabilities and there were no tangible assets of significance.


The aggregate consideration was as follows:


Common stock payable

$

1,054,000

Warrants issued with $4.50 exercise price

 

421,000

Warrants issued with $5.00 exercise price

 

412,000

 

$

1,887,000


The 500,000 shares of common stock were valued based on the closing price per share on March 26, 2015, or $2.48, reduced by a discount of 15% due to restrictions in the ability to trade our common stock.  The $1,054,000 value of stock consideration was originally recorded as accrued stock payable on the condensed consolidated balance sheet, which was then reduced as we issued common stock according to the vesting schedule.  As of June 30, 2016, all common stock has been issued.


The purchase price allocation is as follows:


Intangible assets:

 

 

Customer relationship intangible

$

1,000,000

Marketing-related intangibles

 

200,000

Non-compete agreements

 

500,000

Goodwill

 

187,000

 

$

1,887,000


We finalized the purchase price allocation in the fourth quarter of the year ended December 31, 2015. 


In connection with our acquisition of IPG, we agreed to issue to the sole shareholder of the Seller 100,000 fully vested warrants to purchase shares of our common stock if revenues of the Security segment exceeded $3,000,000 for the year ended December 31, 2015, with an exercise price of $2.48.  This condition was not met during the year ended December 31, 2015, so no value was recorded for these warrants.




9



The accompanying condensed consolidated financial statements include the results of IPG from the date of acquisition, March 26, 2015.  The pro forma effects of the acquisition on the results of operations as if the transaction had been completed on January 1, 2015, are as follows:


 

 

Six months ended

 

 

June 30, 2015

(Unaudited)

Total net revenues

$

853,805

Net loss

 

(5,124,454)

Net loss per common share:

 

 

  Basic and diluted

$

(0.36)


Chiefton Acquisition


On September 25, 2015, we closed an asset purchase agreement for the purchase of substantially all the assets of Chiefton Supply Co., a Colorado corporation, and established a dba within GCC of Chiefton.  This acquisition expands our service offerings in the cannabis industry and provides a new revenue stream.


We acquired the Chiefton assets for consideration of 80,000 restricted shares of our common stock. The shares shall remain in escrow for six months for the exclusive purpose of being available to indemnify us for any claims that may be made by any person or governmental entity related to or arising from Chiefton’s intellectual property during the six month period after closing. After such period, the shares will be released if no claims have been made, provided that if any claims have been made the shares will remain in escrow until the claim is resolved, at which time the shares will be released less the value of any and all settlement amounts, penalties, damages or other liabilities arising from the claim.


The aggregate consideration was as follows:


Cash

$

12,249

Common stock

 

69,400

  Aggregate consideration

$

81,649


The value of the common stock consideration was estimated based on our closing common stock price on September 25, 2015, or $1.02 per share, reduced by a discount of 15% due to restrictions in the ability to trade our shares.  The $69,400 value of stock consideration was originally included in accrued stock payable on the condensed consolidated balance sheet.  As of June 30, 2016, all common stock has been issued.


The purchase price allocation is as follows:


Inventory

$

12,249

Intangible assets – intellectual property

 

69,400

 

$

81,649


We finalized the purchase price allocation in the fourth quarter of the year ended December 31, 2015. 


NOTE 3.   LONG-LIVED ASSETS


Property and Equipment


Depreciation expense was $11,967 and $9,008, respectively, for the three months ended June 30, 2016 and 2015, and $24,126 and $18,015, respectively, for the six months ended June 30, 2016 and 2015.  We have not recognized any impairment as of June 30, 2016.




10



Intangible Assets


Intangible assets consisted of the following as of June 30, 2016:


 

 

Gross

 

Accumulated Amortization

 

Net

 

Estimated Life

(in years)

Customer relationship intangible

$

1,000,000

$

126,575

$

873,425

 

10

Marketing-related intangibles

 

200,000

 

50,630

 

149,370

 

5

Non-compete agreements

 

500,000

 

210,959

 

289,041

 

3

Chiefton brand and graphic designs

 

69,400

 

26,524

 

42,876

 

2

  Intangible assets, net

$

1,769,400

$

414,688

$

1,354,712

 

 


Amortization expense was $85,108 and $57,863, respectively, for the three months ended June 30, 2016 and 2015, and $170,215 and $57,863, respectively, for the six months ended June 30, 2016 and 2015.  We have not recognized any impairment as of June 30, 2016.


Goodwill


In connection with our purchase of IPG, we recorded goodwill of $187,000. We have not recognized any impairment as of June 30, 2016.


NOTE 4.    DEBT


Line of Credit – Related Party


In February 2015, we issued a senior secured note to Infinity Capital, LLC (“Infinity Capital”), as amended in April 2015, bearing 5% interest payable monthly in arrears commencing June 30, 2015, until the maturity date of August 31, 2015 (the “Infinity Note”).   Infinity Capital, an investment management company, was founded and is controlled by our chairman of the board, Michael Feinsod, a related party.  On July 1, 2015, the outstanding principal and interest of $309,000 was settled by our issuing a 10% private placement note.  Subsequent to the settlement on July 1, 2015, we continued to borrow under the Infinity Note.  Interest expense for the Infinity Note for the six months ended June 30, 2016, was approximately $26,540, and approximately $38,268 was accrued as of June 30, 2016.


Notes Payable


 

 

June 30,

2016

 

December 31,

2015

10.0% private placement notes

$

659,000

$

659,000

14.0% mortgage note payable (The Greenhouse)

 

600,000

 

600,000

8.5% convertible note payable (Pueblo West Property)

 

154,931

 

158,307

 

 

1,413,931

 

1,417,307

Unamortized debt discount

 

(63,817)

 

(279,435)

 

 

1,350,114

 

1,137,872

Less: Current portion

 

(1,202,380)

 

(986,475)

Long-term portion

$

147,734

$

151,397


10% Private Placement Notes


In 2015, we completed a private placement pursuant to a Promissory Note and Warrant Purchase Agreement (the “10% Agreement”) with certain accredited investors, bearing interest at 10% payable quarterly (each such note, a “10% Note,” and collectively, the “10% Notes”).  Subject to the terms and conditions of the 10% Agreement, each investor is granted fully-vested warrants equal to their note principal divided by two (the “10% Warrants”) (with standard dilution clauses).  The 10% Warrants are exercisable for a period of eighteen months after grant date and have an exercise price of $1.08 per share.  The debt is treated as conventional debt.  The 10% Notes are collateralized by a security interest in substantially all of our assets.


$309,000 of the 10% Notes are due to a related party, Infinity Capital, at June 30, 2016 and December 31, 2015.  As of and for the six months ended June 30, 2016, approximately $7,225 of interest expense, and $14,500 of accrued interest under the 10% Notes relates to Infinity Capital.




11



On June 3, 2016, we reached an agreement with the 10% Note holders to extend the maturity date from May 1, 2016 to January 31, 2017.  In exchange for the extension, we issued the holders an aggregate of 659,000 additional warrants to purchase our common stock at $1.07 per share for a period of five years, with an aggregate fair value of $358,000, determined using Black-Scholes, a risk-free rate of 1.2% and volatility of 151%.  We concluded that this modification of the debt instruments met the criteria for a debt extinguishment and, accordingly, recorded a loss on extinguishment of debt of $358,000.  Absent the warrants, the fair value of the new debt remained the same as the fair value of the original debt.


14% Mortgage Note Payable (The Greenhouse)


In October 2014, we executed a mortgage on The Greenhouse in the amount of $600,000, bearing 14.0% interest payable monthly, with a maturity date of October 21, 2016 (the “Greenhouse Mortgage”).  The debt is treated as conventional debt.


In addition, we granted warrants to Evans Street Lendco LLC (“Evans Lendco”), the note holder of the Greenhouse Mortgage, which expire on October 21, 2016.  The warrants vested immediately and allowed for Evans Lendco to purchase 600,000 shares of our common stock at a price of $4.40 per share, (with standard dilution clauses).  Due to the drop in our stock price, on July 29, 2015, we agreed with Evans Lendco to replace the warrants previously issued to Evans Lendco with warrants to purchase 225,000 shares of our stock at $1.20 per share with a term of two years.  The estimated fair value of the replacement warrants is less than the fair value of the original warrants on their date of grant.  Accordingly, we will continue to amortize the remaining fair value of the original warrants over the remaining life of the underlying debt.


8.5% Convertible Note Payable (Pueblo West Property)


In December 2013, we executed a mortgage on our Pueblo West Property in the amount of $170,000, bearing 8.5% interest with monthly principal and interest payments totaling $1,674, with the balance due on December 31, 2018 (the “Pueblo Mortgage”). This note is convertible at any time at $5.00 per share.


Derivative treatment is not required, as the conversion feature meets the scope exception. The conversion feature is not beneficial, because the conversion price was higher than the stock price on the commitment date.  Accordingly, we treated the Pueblo Mortgage as conventional debt.


12% Convertible Notes


Conversion of 12% Convertible Notes


During the year ended December 31, 2015, lenders converted $321,123 of 12% Convertible Notes for 64,225 shares of our common stock.  The December 2013 Issuance and the January 2014 Issuance (collectively, the “12% Convertible Notes”) included a provision that if the trading stock price exceeded $10 for twenty consecutive trading days and the daily volume for those twenty consecutive trading days exceeds 25,000 shares, then the 12% Convertible Notes convert into shares of our common stock on or after December 1, 2015.  As of April 24, 2014, these parameters were met.  On December 1, 2015, the remaining $1,330,000 of convertible notes was automatically converted to 266,000 shares of our common stock.


December 2013 Issuance


In December 2013, we entered into convertible promissory notes with various third parties totaling $530,000 (the “December 2013 Issuance”). The principal amounts of these notes ranged between $10,000 and $150,000. The notes required quarterly interest payments at 12%, and were convertible into shares of our common stock at a conversion rate of $5.00 per share (with standard dilution clauses).


Derivative treatment was not required, as the conversion feature met the scope exception. The conversion feature was not beneficial, because the conversion price was higher than the stock price on the commitment date.  Accordingly, we treated the December 2013 Issuance as conventional debt.


January 2014 Issuance


In January 2014, we entered into convertible promissory notes with various third parties totaling $1,605,000 (the “January 2014 Issuance”). The principal amounts of these notes ranged between $10,000 and $200,000. The notes required quarterly interest payments at 12%, and were convertible into shares of our common stock at a conversion rate of $5.00 per share (with standard dilution clauses).




12



Derivative treatment was not required, as the conversion feature met the scope exception.  Since the initial conversion price was less than the market value of the common stock at the time of issuance, it was determined that a beneficial conversion feature existed. The intrinsic value of the beneficial conversion feature and the combined value of the debt discount resulted in a value greater than the value of the debt and, as such, the total discount was limited to the value of the debt balance of $1,605,000.


Annual maturities of long-term debt (excluding unamortized discount) for the next three years, consist of:


Year ending December 31,

 

 

2016

$

603,522

2017

 

666,507

2018

 

143,902

 

$

1,413,931


NOTE 5.  ACCRUED STOCK PAYABLE


The following tables summarize the changes in accrued common stock payable during the six months ended June 30, 2016:


 

 

Amount

 

Number of Shares

December 31, 2015

$

1,532,420

 

730,000

IPG acquisition -- issued

 

(843,200)

 

(400,000)

Chiefton acquisition -- issued

 

(69,400)

 

(80,000)

Feinsod Agreement -- accrual

 

165,296

 

--

Consulting services -- accrual

 

6,988

 

--

Consulting services -- issued

 

(25,000)

 

(50,000)

Employment agreements -- accrual

 

567

 

--

Employment agreements -- issued

 

(132,175)

 

(50,000)

June 30, 2016

$

635,496

 

150,000


Feinsod Agreement


On August 4, 2014, we entered into an agreement with Michael Feinsod in consideration for serving as Executive Chairman of the Board and as a member of the Board and pursuant to the terms of the Executive Board and Director Agreement (the “Feinsod Agreement”).  The Board approved the issuance to Infinity Capital of (a) 200,000 shares of our common stock on August 4, 2014; (b) 1,000,000 shares of our common stock upon the uplisting of our common stock to the OTC Market’s OTCQB; (c) 150,000 shares of our common stock on August 4, 2015; and (d) 150,000 shares of our common stock on August 4, 2016.  Mr. Feinsod must remain a member of the Board in order for the common stock to be issued.  In addition, the Feinsod Agreement requires the issuance of a number of shares of our common stock to Infinity Capital equal to 10% of any new issuances not to exceed 600,000 shares of our common stock in the aggregate during the time that Mr. Feinsod remains a member of the Board (the “New Issuance Allowance”).  Under the terms of the Feinsod Agreement, the New Issuance Allowance will not be triggered upon issuances relating to convertible securities existing as of the date of the Feinsod Agreement.  For illustrative purposes, if we issue 7,000,000 new shares of common stock, then the New Issuance Allowance issued to Infinity Capital would be capped at 600,000 shares of our common stock.  No shares have been issued under the New Issuance Allowance.


The 1,000,000 shares of our common stock were valued at $2.97 per share, based on the closing price of our common stock of $3.49 on April 27, 2015, and then reduced by 15% due to restrictions on the ability to trade our shares.  The other shares under the Feinsod Agreement were valued at $4.42 per share, based on the closing price of our common stock of $5.20 on August 4, 2014, and then reduced by 15% due to restriction on the ability to trade our common stock.  We are recognizing expense for the unissued shares ratably over the vesting period.


Employment Agreements


On May 13, 2015, we hired two individuals from Next Big Crop (“NBC”), an unaffiliated entity serving the cannabis industry, to service our new and existing clients. We did not purchase any existing client base from NBC and upon execution of employment agreements, granted these persons a total of 100,000 shares of our common stock with a vesting date of January 1, 2016. On the date of grant, the 100,000 shares had an initial fair value of $311,000, based on a closing price per share of our common stock of $3.11 on May 13, 2015. Due to restrictions in the ability to trade our shares, a discount of fifteen percent (15%) was applied to the fair value of the shares. After taking into consideration the illiquidity of the shares, the fair value was determined to be $264,350.  One individual forfeited his shares, so expense was only recognized for 50,000 shares.  These shares were issued in April 2016.




13



Consulting Agreement


On July 15, 2015, we entered into an agreement with an individual to provide consulting services to customers in exchange for 50,000 shares of our common stock to be delivered on March 15, 2016.  The fair value of the common stock is determined at the end of each reporting period and the pro rata amount earned is recognized as accrued stock payable over the term of the agreement.  These shares were issued in March 2016.


NOTE 6.   COMMITMENTS AND CONTINGENCIES


Legal


To the best of the Company’s knowledge and belief, no legal proceedings of merit are currently pending or threatened against the Company.


NOTE 7.   STOCKHOLDERS’ EQUITY


Share-based expense consisted of the following:


 

 

Three months ended

June 30,

 

Six months ended

June 30,

 

 

2016

 

2015

 

2016

 

2015

Employee Awards

$

381,441

$

623,567

$

834,062

$

623,567

Consulting Awards

 

37,416

 

17,454

 

47,516

 

17,454

Feinsod Agreement

 

82,648

 

3,214,444

 

165,296

 

3,463,069

DB Option Agreement

 

--

 

--

 

55,100

 

--

 

$

501,505

$

3,855,465

$

1,101,974

$

4,104,090


Employee Stock Options


On October 29, 2014, the Board authorized the adoption of and on June 26, 2015, our stockholders ratified our 2014 Equity Incentive Plan (the “Incentive Plan”).  The Incentive Plan provides for the issuance of up to 10 million shares of our common stock, and is designed to provide an additional incentive to executives, employees, directors and key consultants, aligning our long term interests with participants.  In April 2016, we filed a Registration Statement on Form S-8 (the “Registration Statement”), which automatically became effective in May 2016.  The Registration Statement relates to 10,000,000 shares of our common stock, which are issuable pursuant to, or upon exercise of, options that have been granted or may be granted under our Incentive Plan.


Share-based compensation costs for award grants to employees and directors (“Employee Awards”) are recognized on a straight-line basis over the service period for the entire award, with the amount of compensation cost recognized at any date equaling at least the portion of the award that is vested.  The following summarizes the Black-Scholes assumptions used for Employee Awards granted during the six months ended June 30, 2016:


Exercise price

 

$ 0.61 -- 1.01

Stock price on date of grant

 

$ 0.63 -- 1.01

Volatility

 

149 -- 153 %

Risk-free interest rate

 

0.87 – 0.90 %

Expected life (years)

 

3.0

Dividend yield

 

--


The following summarizes Employee Awards activity:


 

 

Number of Shares

 

Weighted-average Exercise Price per Share

 

Weighted-average Remaining Contractual Term

(in years)

 

Aggregate Intrinsic Value

Outstanding at December 31, 2015

 

2,509,000

$

1.49

 

 

 

 

Granted

 

228,000

 

 

 

 

 

 

Forfeited

 

(235,650)

$

0.75

 

 

 

 

Outstanding at June 30, 2016

 

2,501,350

$

1.48

 

2.6

$

203,000

Exercisable at June 30, 2016

 

547,500

$

2.79

 

3.4

$

--




14



As of June 30, 2016, there was approximately $555,000 of total unrecognized compensation expense related to unvested Employee Awards, which is expected to be recognized over a weighted-average period of five months.


Warrants for Consulting Services


As needed, we may issue warrants to third parties in exchange for consulting services.  Stock-based compensation costs for award grants to third parties for consulting services (“Consulting Awards”) are recognized on a straight-line basis over the service period for the entire award, with the amount of compensation cost recognized at any date equaling at least the portion of the award that is vested.  Service Awards are revalued at each reporting date until fully vested, which may generate an expense or benefit.  No Consulting Awards were granted during the six months ended June 30, 2016.


The following summarizes Consulting Awards:


 

 

Number of Shares

 

Weighted-average Exercise Price per Share

 

Weighted-average Remaining Contractual Term

(in years)

 

Aggregate Intrinsic Value

Outstanding at December 31, 2015

 

252,500

$

3.62

 

 

 

 

Outstanding at June 30, 2016

 

252,500

$

3.62

 

0.9

$

2,250

Exercisable at June 30, 2016

 

245,000

$

 3.71

 

0.5

$

2,250


As of June 30, 2016, there was approximately $2,700 of total unrecognized expense related to unvested Consulting Awards, which is expected to be recognized over a weighted-average period of six months.


IPG Acquisition Warrants


In connection with the IPG APA, we issued to IPG 500,000 fully-vested warrants to purchase a) 250,000 shares of our common stock at $4.50 per share, (the “IPG $4.50 Warrants”), and b) 250,000 shares of our common stock at $5.00 per share (the “IPG $5.00 Warrants”) (collectively, the “IPG Warrants”). The IPG Warrants are subject to customary adjustments in the event of our reclassification, consolidation, merger, subdivision of shares of our common stock, combination of shares of our common stock or payment of dividends in the form of the our common stock. The IPG Warrants expire three years after their initial issuance date.


As of June 30, 2016, all of the IPG Warrants are outstanding and exercisable.


Warrants with Debt


The following summarizes warrants issued with debt:


 

 

Number of Shares

 

Weighted-average Exercise Price per Share

 

Weighted-average Remaining Contractual Term

(in years)

 

Aggregate Intrinsic Value

Outstanding at December 31, 2015

 

597,200

$

1.41

 

 

 

 

Granted

 

659,000

 

1.07

 

 

 

 

Outstanding at June 30, 2016

 

1,256,200

 

1.41

 

3.0

$

--

Exercisable at June 30, 2016

 

1,256,200

$

1.23

 

3.0

$

--


DB Option Agreement warrants


In order to extend the DB Option Agreement with Infinity Capital, we granted Infinity Capital warrants to purchase 100,000 shares of our common stock at an exercise price of $0.67 per share with a five year life.  The fair value of $55,100 is included in equity-based expense.  The following summarizes the Black-Scholes assumptions used to estimate the fair value of the DB Option Agreement warrants:


Volatility

 

150 %

Risk-free interest rate

 

1.2 %

Expected life (years)

 

5.0

Dividend yield

 

--




15



Series A Warrants


Between July 11, 2013 and August 8, 2013, we issued 707,000 shares of our common stock and 707,000 fully-vested Series A Warrants for cash consideration of $1.00 per share. Each Series A Warrant entitles the holder to purchase one share of our common stock at a price of $10.00 per share. The Series A Warrants expire on the earlier of August 1, 2016, or twenty days following written notification from us that our common stock had a closing bid price at or above $12.00 for any ten consecutive trading days. This condition was met as of April 30, 2014; however, we have not forced conversion of the warrants at this time.


Between August 14, 2013 and September 19, 2013, we issued 266,000 shares and 266,000 fully-vested Series A Warrants of our common stock for cash consideration of $1.00 per share. The Series A Warrants expire on the earlier of August 1, 2016, or twenty days following written notification from us that our common stock had a closing bid price at or above $12.00 for any ten consecutive trading days. This condition was met as of April 30, 2014; however, we have not forced conversion of the warrants at this time.


As of June 30, 2016, all 973,000 warrants are outstanding and exercisable.


NOTE 8.  NET LOSS PER SHARE


Basic net loss per share is computed by dividing net loss by the weighted-average number of common shares outstanding during the reporting period.  Diluted net loss per share is computed similarly to basic loss per share, except that it includes the potential dilution that could occur if dilutive securities are exercised.


The following table presents a reconciliation of the denominators used in the computation of net loss per share – basic and diluted:


 

 

Three months ended

June 30,

 

Six months ended

June 30,

 

 

2016

 

2015

 

2016

 

2015

Net loss

$

(1,336,471)

$

(4,349,222)

$

(2,524,703)

$

(5,177,715)

Weighted average outstanding shares of common stock

 

15,384,762

 

14,054,673

 

15,157,509

 

13,577,719

Dilutive effect of stock options and warrants

 

--

 

--

 

--

 

--

Common stock and equivalents

 

15,384,762

 

14,054,673

 

15,157,509

 

13,577,719

Net loss per share – Basic and diluted

$

(0.09)

$

(0.31)

$

(0.17)

$

(0.38)


Outstanding stock options and common stock warrants are considered anti-dilutive because we are in a net loss position.

 

NOTE 9.   SUBSEQUENT EVENTS


There were no events subsequent to June 30, 2016, and up to the date of this filing that would require disclosure.


NOTE 10.   SEGMENT INFORMATION


Our operations are organized into four segments: Security and Cash Management Services; Marketing and Products; Consulting and Advisory; and Finance and Real Estate.  All revenue originates and all assets are located in the United States.  We have revised our disclosure to correspond to the information provided to the chief operating decision maker.


Three months ended June 30


2016

 

Security and Cash Management

 

Marketing and Products

 

Consulting and Advisory

 

Finance and Real Estate

 

Total

Revenues, net

$

531,663

$

66,041

$

72,774

$

31,464

$

701,942

Costs and expenses

 

(534,620)

 

(79,522)

 

(99,794)

 

(11,593)

 

(725,529)

Other expense

 

--

 

--

 

--

 

(1,110)

 

(1,110)

 

$

(2,957)

$

(13,481)

$

(27,020)

$

18,761

 

(24,697)

Corporate expenses

 

 

 

 

 

 

 

 

 

(1,311,774)

 

 

 

 

 

 

 

 

Net loss

$

(1,336,471)




16




2015

 

Security and Cash Management

 

Marketing and Products

 

Consulting and Advisory

 

Finance and Real Estate

 

Total

Revenues, net

$

376,722

$

12,569

$

--

$

37,911

$

427,202

Costs and expenses

 

(380,852)

 

(32,438)

 

--

 

(18,531)

 

(431,821)

Other expense

 

--

 

--

 

--

 

(3,493)

 

(3,493)

 

$

(4,130)

$

(19,869)

$

--

$

15,887

 

(8,112)

Corporate expenses

 

 

 

 

 

 

 

 

 

(4,341,110)

 

 

 

 

 

 

 

 

Net loss

$

(4,349,222)


Six months ended June 30


2016

 

Security and Cash Management

 

Marketing and Products

 

Consulting and Advisory

 

Finance and Real Estate

 

Total

Revenues, net

$

1,039,194

$

116,139

$

170,888

$

67,833

$

1,394,054

Costs and expenses

 

(1,076,016)

 

(161,097)

 

(183,563)

 

(23,379)

 

(1,444,055)

Other expense

 

--

 

--

 

--

 

(4,462)

 

(4,462)

 

$

(36,822)

$

(44,958)

$

(12,675)

$

39,992

 

(54,463)

Corporate expenses

 

 

 

 

 

 

 

 

 

(2,470,240)

 

 

 

 

 

 

 

 

Net loss

$

(2,524,703)


2015

 

Security and Cash Management

 

Marketing and Products

 

Consulting and Advisory

 

Finance and Real Estate

 

Total

Revenues, net

$

394,104

$

25,367

$

--

$

64,588

$

484,059

Costs and expenses

 

(408,322)

 

(57,091)

 

--

 

(27,538)

 

(492,951)

Other expense

 

--

 

--

 

--

 

(5,815)

 

(5,815)

 

$

(14,218)

$

(31,724)

$

--

$

31,235

 

(14,707)

Corporate expenses

 

 

 

 

 

 

 

 

 

(5,163,008)

 

 

 

 

 

 

 

 

Net loss

$

(5,177,715)


Total assets

 

June 30, 2016

 

December 31,

2015

Security and Cash Management

$

101,935

 

132,314

Marketing and Products

 

50,589

 

127,345

Consulting and Advisory

 

39,822

 

22,268

Finance and Real Estate

 

452,760

 

431,639

Corporate

 

2,866,522

 

2,969,145

 

$

3,511,628

 

3,682,711


All assets are located in the United States.




17



ITEM 2.   MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS


This Management’s Discussion and Analysis (“MD&A”) is intended to provide an understanding of our financial condition, results of operations and cash flows by focusing on changes in certain key measures from year to year.  This discussion should be read in conjunction with the Condensed Consolidated Unaudited Financial Statements contained in this Quarterly Report on Form 10-Q and the Consolidated Financial Statements and related notes and MD&A of Financial Condition and Results of operations appearing in our Annual Report on Form 10-K as of and for the years ended December 31, 2015 and 2014. The results of operations for an interim period may not give a true indication of results for future interim periods or for the year.


Cautionary Statement Regarding Forward Looking Statements


This Quarterly Report on Form 10-Q, Financial Statements and Notes to Financial Statements contain forward-looking statements that discuss, among other things, future expectations and projections regarding future developments, operations and financial conditions. All forward-looking statements are based on management’s existing beliefs about present and future events outside of management’s control and on assumptions that may prove to be incorrect. If any underlying assumptions prove incorrect, our actual results may vary materially from those anticipated, estimated, projected or intended.  We undertake no obligation to publicly update or revise any forward-looking statements to reflect actual results, changes in expectations or events or circumstances after the date this Quarterly Report on Form 10-Q is filed.


When this report uses the words “we,” “us,” “our,” or “GCC” and the “Company,” they refer to General Cannabis Corporation (formerly, “Advanced Cannabis Solutions, Inc.”).


Our Products, Services and Customers


We operate in a rapidly evolving and highly regulated industry that, as has been estimated by some, will exceed $30 billion by the year 2020.  We have been and will continue to be aggressive in executing acquisitions and other opportunities that it believes will benefit us in the long-term.


Through our reporting segments we provide services and products to the regulated cannabis industry, which include the following:


Security and Cash Management Services

 

In March 2015, we acquired substantially all of the assets of Iron Protection Group, LLC, a Colorado limited liability company, which continues to do business as “Iron Protection Group.” Iron Protection Group (“IPG”) provides advanced security, including on-site professionals, video surveillance and cash transport, to licensed cannabis cultivators and retail shops. As of March 31, 2016, IPG had approximately 52 security guards on staff who serve 15 clients throughout Colorado.


Marketing and Products


In September 2015, we acquired substantially all of the assets of Chiefton Supply Co., and established a dba of Chiefton Supply Co., incorporated in Colorado (“Chiefton”).  Chiefton is an apparel and design company.  We design, distribute and sell apparel featuring graphic designs.  Our apparel is purchased and screen printed by third parties, for which there are numerous suppliers.  Chiefton also provides high-level design and branding services to various clients, from grow stores and dispensaries to wholesale cannabis companies.


In April 2016, we relaunched GC Supply, dedicated to providing wholesale equipment and supplies to participants in the regulated cannabis industry.  We will provide turnkey sourcing and stocking services to cultivation, retail and infused products manufacturing facilities.  Offerings will include infrastructure, equipment, consumables, various delivery technologies (vaporizers and capsules) and compliance packaging.  GC Supply operates out of a leased, 1,800 square-foot warehouse located in Colorado Springs, Colorado.

  

Consulting and Advisory

 

Through Next Big Crop we deliver comprehensive consulting services to the cannabis industry that include obtaining licenses, compliance, cultivation, retail operations, logistical support, facility design and building services, and expansion of existing operations.  Our business plan is based on the future growth of the regulated cannabis market in the United States.


In April 2016, we launched our public market research services division, called General Cannabis Equity Research, or GCER.  Our approach to investment research will place an emphasis on intrinsic value and management quality.  We will evaluate cannabis investments in the same manner as a merger and acquisitions specialist might.  Our analyses of the individual cannabis companies will be driven by economic realities of the industry and its constantly changing dynamics.



18



Finance and Real Estate


Real Estate Leasing


Our real estate leasing business primarily includes the acquisition and leasing of cultivation space and related facilities to licensed marijuana growers and dispensary owners for their operations. Management anticipates that these facilities will range in size from 5,000 to 50,000 square feet. These facilities will only be leased to tenants that possess the requisite state licenses to operate cultivation facilities. The leases with the tenants will provide certain requirements that permit us to continually evaluate our tenants’ compliance with applicable laws and regulations.


As of the date of this report, we owned one cultivation property that is located in a suburb of Pueblo, Colorado (the “Pueblo West Property”). The Pueblo West Property consists of approximately three acres of land, which currently includes a 5,000 square foot steel building, and parking lot. The Pueblo West Property is zoned for cultivating cannabis and is leased to a medical cannabis grower until December 31, 2022.  We are evaluating strategic options for this property.


Shared Office Space, Networking and Event Services   

 

In October 2014, we purchased a former retail bank located at 6565 East Evans Owner, Denver, Colorado 80224, which has been branded as The Greenhouse (“The Greenhouse”).  The building is a 16,056 square-foot facility, which will be converted to serve as the largest shared workspace for entrepreneurs, professionals and others serving the cannabis industry.  Clients will be able to lease space to use as offices, meeting rooms, lecture halls, educational and networking facilities, and individual workstations.


The Greenhouse has approximately 10,000 square feet of existing office space and 5,000 square feet on its ground floor that is dedicated to a consumer banking design.  The banking space includes a vault with safety deposit boxes, three drive through teller windows and five secure teller windows inside.


We plan to continue to acquire commercial real estate and lease office space to participants in the cannabis industry. These participants include media, internet, packaging, lighting, cultivation supplies, and financial services. In exchange for certain services that may be provided to these tenants, we expect to receive rental income in the form of cash. In certain cases, we may acquire equity interests or provide debt capital to these businesses.


Industry Finance and Equipment Leasing Services


We lease cultivation equipment and facilities to customers in the cannabis industry. We expect we will enter into sale lease-back transactions of grow lights, tenant improvements and other grow equipment. Since Colorado State law does not allow entities operating under a cannabis license to pledge the assets or the license of the cannabis operation for any type of general borrowing activity, we intend to provide loans to individuals and businesses in the cannabis industry on an unsecured basis.  Equipment will only be leased to tenants that possess the requisite state licenses to operate such facilities. The leases with the tenants will provide certain requirements that permit us to continually evaluate our tenants’ compliance with applicable laws and regulations.


We are exploring lending opportunities in Oregon, Washington, Colorado, and Arizona. Our finance strategy will include making direct term loans and providing revolving lines of credit to businesses involved in the cultivation and sale of cannabis and related products.  These loans will generally be secured to the maximum extent permitted by law.  We believe there is a significant demand for this financing.  We are pursuing other finance services including customized finance, capital formation, and banking, for participants in the cannabis industry.


On November 4, 2015, we entered into an agreement (the “DB Option Agreement”) with Infinity Capital, a related party, which was amended on March 29, 2016 (the “Amended DB Option Agreement”).  Pursuant to the Amended DB Option Agreement, we have the right to purchase all of Infinity Capital’s interest in DB Products Arizona, LLC (“DB”) at Infinity Capital’s actual cost, plus $1.00, or $750,001. The interests for which the option has been granted are Infinity Capital’s 50% equity interest in the membership interests of DB, and any outstanding unpaid principal and interest owed on promissory note(s) issued by DB in favor of Infinity Capital for up to $750,000.  DB is involved in the production and distribution of Dixie Brands, Inc’s full line of medical cannabis “Dixie Elixirs and Edibles” products in Arizona.  DB expects to begin sales in 2016.  We have no obligation to exercise the option, which expires September 24, 2016.


Subsidiary Structure


General Cannabis Corporation has five wholly-owned subsidiary companies: (a) ACS Colorado Corp., a Colorado corporation formed in 2013; (b) Advanced Cannabis Solutions Corporation, a Colorado corporation formed in 2013; (c) 6565 E. Evans Avenue LLC, a Colorado limited liability company formed in 2014; (d) General Cannabis Capital Corporation, a Colorado corporation formed in 2015; and (e) GC Security LLC, a Colorado limited liability company formed in 2015.  Advanced Cannabis Solutions Corporation has one wholly-owned subsidiary company, ACS Corp., which was formed in Colorado on June 6, 2013.  Intercompany accounts and transactions have been eliminated.



19



Results of Operations


The following table sets forth, for the periods indicated, condensed statements of operations data.  The table and the discussion below should be read in conjunction with the accompanying condensed financial statements and the notes thereto appearing elsewhere in this report.


Consolidated Results


 

 

Three months ended June 30,

 

 

 

Percent

 

 

2016

 

2015

 

Change

 

Change

Revenues

$

701,942

$

427,202

$

274,740

 

64%

Costs and expenses

 

(1,539,887)

 

(4,796,598)

 

3,256,711

 

(68)%

Other expense

 

(498,526)

 

20,174

 

(518,700)

 

(2,571)%

Net loss

$

(1,336,471)

$

(4,349,222)

$

3,012,751

 

(69)%


 

 

Six months ended June 30,

 

 

 

Percent

 

 

2016

 

2015

 

Change

 

Change

Revenues

$

1,394,054

$

484,059

$

909,995

 

188%

Costs and expenses

 

(3,240,564)

 

(5,347,878)

 

2,107,314

 

(39)%

Other expense

 

(678,193)

 

(313,896)

 

(364,297)

 

116%

Net loss

$

(2,524,703)

$

(5,177,715)

$

2,653,012

 

(51)%


Revenues


Revenue for the three and six months ended June 30, 2016 compared to 2015, increased primarily due to (a) the acquisition of IPG, which occurred in late March 2015; (b) the acquisition of Chiefton, which occurred in September 2015; and (c) the relaunch of our consulting practice as Next Big Crop in July 2015.  Additionally, due to organic growth IPG revenues increased to $531,663 during the three months ended June 30, 2016, compared to revenue of $376,722 for the same period in 2015.


Costs and expenses


 

 

Three months ended June 30,

 

 

 

Percent

 

 

2016

 

2015

 

Change

 

Change

Cost of service revenues

$

455,314

$

313,051

$

142,263

 

45%

Cost of goods sold

 

15,390

 

38,542

 

(23,152)

 

(60)%

Selling, general and administrative

 

395,146

 

366,279

 

28,867

 

8%

Share-based expense

 

501,505

 

3,855,465

 

(3,353,960)

 

(87)%

Professional fees

 

75,457

 

156,390

 

(80,933)

 

(52)%

Depreciation and amortization

 

97,075

 

66,871

 

30,204

 

45%

 

$

1,539,887

$

4,796,598

$

(3,256,711)

 

(68)%


 

 

Six months ended June 30,

 

 

 

Percent

 

 

2016

 

2015

 

Change

 

Change

Cost of service revenues

$

907,898

$

326,088

$

581,810

 

178%

Cost of goods sold

 

43,657

 

39,642

 

4,015

 

10%

Selling, general and administrative

 

811,508

 

551,683

 

259,825

 

47%

Share-based expense

 

1,101,974

 

4,104,090

 

(3,002,116)

 

(73)%

Professional fees

 

181,186

 

250,497

 

(69,311)

 

(28)%

Depreciation and amortization

 

194,341

 

75,878

 

118,463

 

156%

 

$

3,240,564

$

5,347,878

$

(2,107,314)

 

(39)%


The increase in cost of service revenues for the three and six months ended June 30, 2016 compared to 2015, relates primarily to the IPG acquisition, as well as the organic growth of revenue for IPG in 2016 compared to 2015.  The changes in cost of goods sold were due primarily to the Chiefton acquisition in September 2015, the decline in our wholesale business in 2016, and a write-off of inventory during the three months ended June 30, 2015, of $27,500 from our wholesale supply business.


Selling, general and administrative expense increased in 2016 due to the IPG and Chiefton acquisitions, and our hiring of individuals from Next Big Crop in July 2015 for our consulting segment.  During the three months ended June 30, 2016, a reduction in management headcount for IPG resulted in a decrease in management salaries.



20



Share-based expense included the following:


 

 

Three months ended

June 30,

 

Six months ended

June 30,

 

 

2016

 

2015

 

2016

 

2015

Feinsod agreement

$

82,648

$

3,214,444

$

165,296

$

3,463,069

Consulting Awards

 

37,416

 

17,454

 

47,516

 

17,454

Employee Awards

 

381,441

 

623,567

 

834,062

 

623,567

DB Option Agreement warrants

 

--

 

--

 

55,100

 

--

 

$

501,505

$

3,855,465

$

1,101,974

$

4,104,090


On August 4, 2014, pursuant to an agreement with Michael Feinsod (“Feinsod”), our Board of Directors (the “Board”) appointed Feinsod Chairman of the Board and approved a compensatory agreement with Infinity Capital, LLC (“Infinity Capital”), an investment management company founded and controlled by him.  Under the agreement, we issued 200,000 shares of our common stock in 2014 and committed to issuing an additional 150,000 shares in 2015 and 150,000 shares in 2016.  The 200,000 shares were expensed immediately, while the additional shares are being expensed ratably through their issue date.  Additionally, when our common stock was uplisted to the OTC Market’s OTCQB in May 2015, we issued 1,000,000 shares of our common stock to Infinity Capital and recorded expense of $2,966,500.  Employee awards are issued under our 2014 Equity Incentive Plan, which was approved by shareholders on June 26, 2015.  In March 2016, we extended the DB Option Agreement and issued 100,000 warrants for our common stock.


Professional fees consist primarily of accounting and legal expenses.  Legal fees are typically incurred for acquisitions and other corporate matters.  Accounting fees are incurred for annual audits and quarterly reviews.  Professional fees generally fluctuate depending on the timing of the delivery of service.


Depreciation and amortization expense increased due to the amortization of the intangibles from the IPG and Chiefton acquisitions.


Other Expense


 

 

Three months ended

June 30,

 

Six months ended

June 30,

 

 

2016

 

2015

 

2016

 

2015

Amortization of debt discount and deferred
financing costs

$

79,781

$

134,195

$

215,618

$

376,825

Interest expense

 

60,745

 

78,498

 

104,575

 

147,705

Loss on extinguishment of debt

 

358,000

 

--

 

358,000

 

--

Net (gain) loss on derivative liability

 

--

 

(232,867)

 

--

 

(201,634)

 

$

498,526

$

(20,174)

$

678,193

$

313,896


Amortization of debt discount and deferred financing costs are lower in 2016 compared to 2015, due to (a) the settlement of the 12% Notes in December 2015; (b) the write-off of the deferred financing costs for the Full Circle financing in 2015; and (c) additional borrowings in 2015 under the 10% convertible notes payable, which was fully amortized in April 2016.  Interest expense is lower in 2016 compared to 2015 due to the settlement of the 12% Notes in December 2015.  Extending the maturity date of the 10% Notes from April 2016 to January 2017 was treated as a debt extinguishment, and the warrants issued to affect the extension were expensed during the three months ended June 30, 2016.  The Full Circle warrants that generated the derivative liability were fully exercised in May 2015, thus there was no gain or loss in 2016.


Security and Cash Management


We launched this segment with the IPG acquisition on March 26, 2015.


 

 

Three months ended June 30,

 

 

 

Percent

 

 

2016

 

2015

 

Change

 

Change

Revenues

$

531,663

$

376,722

$

154,941

 

41%

Costs and expenses

 

(534,620)

 

(380,852)

 

(153,768)

 

40%

 

$

(2,957)

$

(4,130)

$

1,173

 

(28)%


 

 

Six months ended June 30,

 

 

 

Percent

 

 

2016

 

2015

 

Change

 

Change

Revenues

$

1,039,194

$

394,104

$

645,090

 

164%

Costs and expenses

 

(1,076,016)

 

(408,322)

 

(667,694)

 

164%

 

$

(36,822)

$

(14,218)

$

(22,604)

 

(159)%


21



Results in 2016 include six months of activity, whereas 2015 includes only results subsequent to the acquisition of IPG in late March 2015.  During the growth and integration of IPG, expenses increased as we added management positions, which were subsequently eliminated during the three months ended June 30, 2016, allowing us to return to a nearly break even position.    Revenues and the related costs of revenue increased due to organic growth during the three months ended June 30, 2016 compared to 2015.


Marketing and Products


 

 

Three months ended June 30,

 

 

 

Percent

 

 

2016

 

2015

 

Change

 

Change

Revenues

$

66,041

$

12,569

$

53,472

 

425%

Costs and expenses

 

(79,522)

 

(32,438)

 

(47,084)

 

145%

 

$

(13,481)

$

(19,869)

$

6,388

 

(32)%


 

 

Six months ended June 30,

 

 

 

Percent

 

 

2016

 

2015

 

Change

 

Change

Revenues

$

116,139

$

25,367

$

90,772

 

358%

Costs and expenses

 

(161,097)

 

(57,091)

 

(104,006)

 

182%

 

$

(44,958)

$

(31,724)

$

(13,234)

 

42%


Revenues in 2016 were from Chiefton, acquired in late September 2015.  Revenues in 2015 were from our wholesale supply business, which decreased to minimal levels in 2016.  We are transitioning to a relaunch of GC Supply in 2016 with a new mix of products.  Costs and expenses increased in 2016 primarily due to Chiefton.  During the three months ended June 30, 2015, we wrote off $27,500 of inventory from our wholesale supply business.


Consulting and Advisory


 

 

Three months ended

June 30,

 

 

2016

 

2015

Revenues

$

72,774

$

--

Costs and expenses

 

(99,794)

 

--

 

$

(27,020)

$

--


 

 

Six months ended

June 30,

 

 

2016

 

2015

Revenues

$

170,888

$

--

Costs and expenses

 

(183,563)

 

--

 

$

(12,675)

$

--


We relaunched our consulting business under the tradename Next Big Crop in July 2015, by hiring two individuals with expertise in the cannabis consulting industry, including obtaining licenses, compliance, cultivation, logistical support, facility design and building services.   We have contracts with clients pursuing medical cannabis licenses in numerous states.  Costs and expenses consist primarily of payroll and external consulting fees.


Finance and Real Estate


 

 

Three months ended June 30,

 

 

 

Percent

 

 

2016

 

2015

 

Change

 

Change

Revenues

$

31,464

$

37,911

$

(6,447)

 

(17)%

Costs and expenses

 

(11,593)

 

(18,531)

 

6,938

 

(37)%

Interest expense

 

(1,110)

 

(3,493)

 

2,383

 

(68)%

 

$

18,761

$

15,887

$

2,874

 

18%


 

 

Six months ended June 30,

 

 

 

Percent

 

 

2016

 

2015

 

Change

 

Change

Revenues

$

67,833

$

64,588

$

3,245

 

5%

Costs and expenses

 

(23,379)

 

(27,538)

 

4,159

 

(15)%

Interest expense

 

(4,462)

 

(5,815)

 

1,353

 

(23)%

 

$

39,992

$

31,235

$

8,757

 

28%




22



Revenue from leasing our Pueblo facility remained steady between 2016 and 2015.  Revenue fluctuates in 2016 compared to 2015, due to lease revenue for The Greenhouse.  We continue to renovate The Greenhouse and are pursuing new tenants in anticipation of being able to generate additional revenue from currently available space.  Costs and expenses increased in 2016 compared to 2015, associated with The Greenhouse.  Interest expense represents the interest for the mortgage on our Pueblo facility.


Liquidity and Capital Resources


We had cash of $54,400 and $58,711, respectively, as of June 30, 2016 and December 31, 2015.  Our cash flows from operating, investing and financing activities were as follows:


 

 

Six months ended

June 30,

 

 

2016

 

2015

Net cash used in operating activities

$

(434,095)

$

(805,118)

Net cash used in investing activities

 

(4,340)

 

(42,562)

Net cash provided by financing activities

 

434,124

 

698,515


Net cash used in operating activities decreased in 2016 by $371,023 compared to 2015, primarily due to our management of working capital and a reduction in discretionary expenses.  Our operations expanded significantly in 2015, with the launch of our Security and Cash Management segment through the acquisition of IPG, as well as the relaunch of our Consulting segment, with the hiring of three employees with expertise in the cannabis industry.  We have also expanded our infrastructure ahead of anticipated revenue growth in all of our segments.  Where possible, we continue to use non-cash equity-based instruments to obtain consulting services and compensate employees.


Net cash used in investing activities relates primarily to renovating The Greenhouse for use as corporate offices and future revenue generating activities through leasing available space.


Net cash provided by financing activities in 2016 and 2015 was from our short-term financing with Infinity Capital, which carries an interest rate of 5%, offset by payments on our Pueblo mortgage.  In 2015, we also issued the 10% Notes for $325,000 and received $87,616 when a third party exercised warrants.


Non-GAAP Financial Measures


For the non-GAAP Adjusted EBITDA (Earnings (loss) Before Interest, Taxes, Depreciation and Amortization) per share-basic and diluted measures presented above, we have provided (1) the most directly comparable GAAP measure; (2) a reconciliation of the differences between the non-GAAP measure and the most directly comparable GAAP measure; (3) an explanation of why our management believes this non-GAAP measure provides useful information to investors; and (4) additional purposes for which we use this non-GAAP measure.


We believe that the disclosure of Adjusted EBITDA per share-basic and diluted provides investors with a better comparison of our period-to-period operating results. We exclude the effects of certain items from net loss per share-basic and diluted when we evaluate key measures of our performance internally, and in assessing the impact of known trends and uncertainties on our business. We also believe that excluding the effects of these items provides a more balanced view of the underlying dynamics of our business. Adjusted EBITDA per share-diluted excludes the impacts of interest expense, tax expense, depreciation and amortization, gain (loss) on its derivative liability, and share-based compensation. Weighted average number of common shares outstanding - basic and diluted (adjusted) excludes the impact of shares issued in connection with share-based compensation.


Tabular reconciliations of this supplemental non-GAAP financial information to our most comparable GAAP information are contained in this Quarterly Report on Form 10-Q. We present such non-GAAP supplemental financial information, as we believe such information provides additional meaningful methods of evaluating certain aspects of our operating performance from period-to-period on a basis that may not be otherwise apparent on a non-GAAP basis. This supplemental financial information should be considered in addition to, not in lieu of, our Condensed Consolidated Financial Statements.



23




 

 

Three months ended

June 30,

 

Six months ended

June 30,

 

 

2016

 

2015

 

2016

 

2015

Net loss

$

(1,336,471)

$

(4,349,222)

$

(2,524,703)

$

(5,177,715)

Adjustments:

 

 

 

 

 

 

 

 

Share-based expense

 

501,505

 

3,855,465

 

1,101,974

 

4,104,090

Depreciation and amortization

 

97,075

 

66,871

 

194,341

 

75,878

Inventory write-off

 

--

 

27,500

 

--

 

27,500

Amortization of debt discount and debt
financing costs

 

79,781

 

134,195

 

215,618

 

376,825

Interest expense

 

60,745

 

78,498

 

104,575

 

147,705

Loss on extinguishment of debt

 

358,000

 

--

 

358,000

 

--

Net (gain) loss on derivative liability

 

--

 

(232,867)

 

--

 

(210,634)

Total adjustments

 

1,097,106

 

3,929,662

 

1,974,508

 

4,521,364

Adjusted EBITDA

$

(239,365)

$

(419,560)

$

(550,195)

$

(656,351)

 

 

 

 

 

 

 

 

 

Per share – basic and diluted:

 

 

 

 

 

 

 

 

Net loss

$

(0.09)

$

(0.31)

$

(0.17)

$

(0.38)

Adjusted EBITDA

 

(0.02)

 

(0.03)

 

(0.04)

 

(0.05)

 

 

 

 

 

 

 

 

 

Weighted-average shares outstanding:

 

 

 

 

 

 

 

 

Net loss

 

15,384,762

 

14,054,673

 

15,157,509

 

13,577,719

Adjusted EBITDA

 

15,474,322

 

13,351,376

 

15,209,707

 

13,224,127


Critical Accounting Policies


Our condensed consolidated financial statements and accompanying notes have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires management to make estimates, judgments and assumptions that affect reported amounts of assets, liabilities, revenues and expenses. We continually evaluate the accounting policies and estimates used to prepare the condensed financial statements. The estimates are based on historical experience and assumptions believed to be reasonable under current facts and circumstances. Actual amounts and results could differ from these estimates made by management. Certain accounting policies that require significant management estimates and are deemed critical to our results of operations or financial position are discussed in our Annual Report on Form 10-K for the year ended December 31, 2015, and Note 1 to the Condensed Consolidated Financial Statements in this Form 10-Q.


Off-Balance Sheet Arrangements


We did not have any off-balance sheet arrangements that are reasonably likely to have a current or future material effect on our financial condition, revenue or expenses, results of operations, liquidity, capital expenditures or capital resources.


ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK


As a “smaller reporting company” as defined by Item 10 of Regulation S-K, we are not required to provide information required by this Item.


ITEM 4.  CONTROLS AND PROCEDURES


Evaluation of Disclosure Controls and Procedures


We maintain disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) that are designed to ensure that information required to be disclosed in our reports filed under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.


We carried out an evaluation under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of June 30, 2016, the end of the period covered by this report. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective at the reasonable assurance level due to the material weaknesses discussed below.



24



Internal Control over Financial Reporting


Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) promulgated under the Exchange Act as a process designed by, or under the supervision of, our principal executive officer and principal financial officer and effected by the Board, management, and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP and includes those policies and procedures that:


·

Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company;

·

Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures of are being made only in accordance with authorizations of our management and directors; and

·

Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on the financial statements.


Because of our inherent limitations, our internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.


Management identified the following material weaknesses:


·

We have not performed a risk assessment and mapped our processes to control objectives;

·

We have not implemented comprehensive entity-level internal controls;

·

We have not implemented adequate system and manual controls; and

·

We do not have sufficient segregation of duties.


Assessment of Internal Control over Financial Reporting


Our management assessed the effectiveness of our internal control over financial reporting as of June 30, 2016. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control - Integrated Framework (2013). Based on management’s assessment, management concluded that the above material weaknesses have not been remediated and, accordingly, our internal control over financial reporting is not effective as of June 30, 2016.


Remediation of Material Weaknesses


We have designed and plan to implement, or in some cases have already implemented, the specific remediation initiatives described below:


·

We intend to allocate resources to perform a risk assessment and map processes to control objectives and, where necessary, implement and document internal controls in accordance with COSO.

·

Our entity-level controls are, generally, informal and we intend to evaluate current processes, supplement where necessary, and document requirements.

·

While we have implemented procedures to identify, evaluate and record significant transactions, we need to formally document these procedures and evidence the performance of the related controls.

·

We plan to evaluate system and manual controls, identify specific weaknesses, and implement a comprehensive system of internal controls.

·

We are assessing our current staffing and evaluating our personnel requirements to improve our segregation of duties.


Management understands that in order to remediate the material weaknesses, additional segregation of duties, changes in personnel, and technologies are necessary. We do not expect to have fully remediated these material weaknesses until management has tested those internal controls and found them to have been remediated.


Our Annual Report on Form 10-K does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to such attestation pursuant to rules of the SEC that permits us to provide only management’s report in our Annual Report on Form 10-K.




25



Changes in Internal Control over Financial Reporting


We have implemented an informal process of preparation and review of balance sheet reconciliations, as well as informal procedures to identify, evaluate and record significant transactions; however, these changes do not meet the strict requirements to overcome the material weaknesses identified above.



26



PART II.  OTHER INFORMATION


ITEM 1.    LEGAL PROCEEDINGS


In July 2016, we reached a legal settlement with a former employee for approximately $24,000.


ITEM 1A.  RISK FACTORS


As a “smaller reporting company” as defined by Item 10 of Regulation S-K, we are not required to provide the information required regarding market risk factors.


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


Exhibit

Number

 

Description

31.1

 

Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2

 

Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1

 

Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS

 

XBRL Instance Document

101.SCH

 

XBRL Taxonomy Extension Schema Document

101.CAL

 

XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF

 

XBRL Taxonomy Extension Definition Linkbase Document

101.LAB

 

XBRL Taxonomy Extension Label Linkbase Document

101.PRE

 

XBRL Taxonomy Extension Presentation Linkbase Document




27




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.


 

GENERAL CANNABIS CORPORATION

 

 

 

Date: August 10, 2016

By:

/s/Robert Frichtel

 

 

Robert Frichtel, Principal Executive Officer

 

 

 

 

By:

/s/ Shelly Whitson

 

 

Shelly Whitson, Principal Financial and Accounting Officer




28


EX-31.1 2 exh31_1.htm EXHIBIT 31.1 Exhibit

Exhibit 31.1


CERTIFICATIONS


I, Robert Frichtel, certify that;


1.      I have reviewed this quarterly report on Form 10-Q of General Cannabis Corporatiion;


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 the 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 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 (the registrant’s fourth fiscal quarter in the case of an annual report) 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(s) 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 the 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 control over financial reporting.



Date: August 10, 2016

By:

/s/ Robert Frichtel

 

 

Robert Frichtel, Principal Executive Officer


EX-31.2 3 exh31_2.htm EXHIBIT 31.2 Exhibit

Exhibit 31.2


CERTIFICATIONS


I, Shelly Whitson, certify that;


1.      I have reviewed this quarterly report on Form 10-Q of General Cannabis Corporatiion;


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 the 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 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 (the registrant’s fourth fiscal quarter in the case of an annual report) 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(s) 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 the 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 control over financial reporting.



Date: August 10, 2016

By:

/s/ Shelly Whitson

 

 

Shelly Whitson, Principal Financial and Accounting Officer


EX-32.1 4 exh32_1.htm EXHIBIT 32.1 Exhibit

EXHIBIT 32.1


In connection with the Quarterly Report of General Cannabis Corporation, (the “Company”) on Form 10-Q for the quarter ended June 30, 2016, as filed with the Securities Exchange Commission on the date hereof (the “Report”), Robert Frichtel, the Company’s Principal Executive Officer, and Shelly Whitson, the Company’s Principal Financial and Accounting Officer, certify pursuant to 18 U.S.C. Sec. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of their knowledge:


 

(1)

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of1934; and

 

 

 

 

(2)

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.



Date: August 10, 2016

By:

/s/ Robert Frichtel

 

 

Robert Frichtel, Principal Executive Officer


Date: August 10, 2016

By:

/s/ Shelly Whitson

 

 

Shelly Whitson, Principal Financial and Accounting Officer


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No Smaller Reporting Company No 2016 Q2 2016-06-30 <p style="margin:0px"><b>NOTE 1.&#160;&#160;&#160;NATURE OF OPERATIONS, HISTORY AND PRESENTATION</b></p><br/><p style="margin:0px"><b>Nature of Operations</b></p><br/><p style="margin:0px">General Cannabis Corporation (the &#8220;Company,&#8221; &#8220;we,&#8221; &#8220;us,&#8221; &#8220;our,&#8221; or &#8220;GCC&#8221;) (formerly, Advanced Cannabis Solutions, Inc.), was incorporated on June 3, 2013, and provides products and services to the regulated cannabis industry. &#160;On April 28, 2015, our common stock was uplisted and resumed quotation on the OTC Market&#8217;s OTCQB on May 6, 2015. &#160;Our operations are segregated into the following four reportable segments:</p><br/><p style="margin:0px"><u>Security and Cash Management Services</u></p><br/><p style="margin:0px">In March 2015, we acquired substantially all of the assets of Iron Protection Group, LLC, a Colorado limited liability company, which continues to do business as &#8220;Iron Protection Group.&#8221; Iron Protection Group (&#8220;IPG&#8221;) provides advanced security, including on-site professionals, video surveillance and cash transport, to licensed cannabis cultivators and retail shops. As of June 30, 2016, IPG had approximately 58 security guards on staff who serve 16 clients throughout Colorado.</p><br/><p style="margin:0px"><u>Marketing and Products</u></p><br/><p style="margin:0px">In September 2015, we acquired substantially all of the assets of Chiefton Supply Co., and established a dba of Chiefton Supply Co., incorporated in Colorado (&#8220;Chiefton&#8221;). &#160;Chiefton is an apparel and design company. &#160;We design, distribute and sell apparel featuring graphic designs. &#160;Our apparel is purchased and screen printed by third parties, for which there are numerous suppliers. &#160;Chiefton also provides high-level design and branding services to various clients, from grow stores and dispensaries to wholesale cannabis companies.</p><br/><p style="margin:0px">In April 2016, we relaunched GC Supply, dedicated to providing wholesale equipment and supplies to participants in the regulated cannabis industry. &#160;We will provide turnkey sourcing and stocking services to cultivation, retail and infused products manufacturing facilities. &#160;Offerings will include infrastructure, equipment, consumables, various delivery technologies (vaporizers and capsules) and compliance packaging. &#160;GC Supply operates out of a leased, 1,800 square-foot warehouse located in Colorado Springs, Colorado.</p><br/><p style="margin:0px"><u>Consulting and Advisory</u></p><br/><p style="margin:0px">Through Next Big Crop we deliver comprehensive consulting services to the cannabis industry that include obtaining licenses, compliance, cultivation, retail operations, logistical support, facility design and building services, and expansion of existing operations.&#160;&#160;Our business plan is based on the future growth of the regulated cannabis market in the United States.</p><br/><p style="margin:0px">In April 2016, we launched our public market research services division, called General Cannabis Equity Research, or GCER. &#160;Our approach to investment research will place an emphasis on intrinsic value and management quality. &#160;We will evaluate cannabis investments in the same manner as a merger and acquisitions specialist might. &#160;Our analyses of the individual cannabis companies will be driven by economic realities of the industry and its constantly changing dynamics.</p><br/><p style="margin:0px"><u>Finance and Real Estate</u></p><br/><p style="margin:0px"><i>Real Estate Leasing</i></p><br/><p style="margin:0px">Our real estate leasing business primarily includes the acquisition and leasing of cultivation space and related facilities to licensed marijuana growers and dispensary owners for their operations. Management anticipates that these facilities will range in size from 5,000 to 50,000 square feet. These facilities will only be leased to tenants that possess the requisite state licenses to operate cultivation facilities. The leases with the tenants will provide certain requirements that permit us to continually evaluate our tenants&#8217; compliance with applicable laws and regulations.</p><br/><p style="margin:0px">As of the date of this report, we owned one cultivation property that is located in a suburb of Pueblo, Colorado (the &#8220;Pueblo West Property&#8221;). The Pueblo West Property consists of approximately three acres of land, which currently includes a 5,000 square foot steel building, and parking lot. The Pueblo West Property is zoned for cultivating cannabis and is leased to a medical cannabis grower until December 31, 2022. &#160;We are evaluating strategic options for this property.</p><br/><p style="margin:0px; page-break-before:always"><i>Shared Office Space, Networking and Event Services&#160;&#160;&#160;</i></p><br/><p style="margin:0px">In October 2014, we purchased a former retail bank located at 6565 East Evans Avenue, Denver, Colorado 80224, which has been branded as The Greenhouse (&#8220;The Greenhouse&#8221;). &#160;The building is a 16,056 square-foot facility, which will be converted to serve as the largest shared workspace for entrepreneurs, professionals and others serving the cannabis industry. &#160;Clients will be able to lease space to use as offices, meeting rooms, lecture halls, educational and networking facilities, and individual workstations.</p><br/><p style="margin:0px">The Greenhouse has approximately 10,000 square feet of existing office space and 5,000 square feet on its ground floor that is dedicated to a consumer banking design. &#160;The banking space includes a vault with safety deposit boxes, three drive through teller windows and five secure teller windows inside.</p><br/><p style="margin:0px">We plan to continue to acquire commercial real estate and lease office space to participants in the cannabis industry. These participants include media, internet, packaging, lighting, cultivation supplies, and financial services. In exchange for certain services that may be provided to these tenants, we expect to receive rental income in the form of cash. In certain cases, we may acquire equity interests or provide debt capital to these businesses.</p><br/><p style="margin:0px"><i>Industry Finance and Equipment Leasing Services</i></p><br/><p style="margin:0px">We lease cultivation equipment and facilities to customers in the cannabis industry. We expect we will enter into sale lease-back transactions of grow lights, tenant improvements and other grow equipment. Since Colorado State law does not allow entities operating under a cannabis license to pledge the assets or the license of the cannabis operation for any type of general borrowing activity, we intend to provide loans to individuals and businesses in the cannabis industry on an unsecured basis. &#160;Equipment will only be leased to tenants that possess the requisite state licenses to operate such facilities. The leases with the tenants will provide certain requirements that permit us to continually evaluate our tenants&#8217; compliance with applicable laws and regulations.</p><br/><p style="margin:0px">We are exploring lending opportunities in Oregon, Washington, Colorado, and Arizona. Our finance strategy will include making direct term loans and providing revolving lines of credit to businesses involved in the cultivation and sale of cannabis and related products. &#160;These loans will generally be secured to the maximum extent permitted by law. &#160;We believe there is a significant demand for this financing. &#160;We are pursuing other finance services including customized finance, capital formation, and banking, for participants in the cannabis industry.</p><br/><p style="margin:0px">On November 4, 2015, we entered into an agreement (the &#8220;DB Option Agreement&#8221;) with Infinity Capital, a related party, which was amended on March 29, 2016 (the &#8220;Amended DB Option Agreement&#8221;). &#160;Pursuant to the Amended DB Option Agreement, we have the right to purchase all of Infinity Capital&#8217;s interest in DB Products Arizona, LLC (&#8220;DB&#8221;) at Infinity Capital&#8217;s actual cost, plus $1.00, or $750,001. The interests for which the option has been granted are Infinity Capital&#8217;s 50% equity interest in the membership interests of DB, and any outstanding unpaid principal and interest owed on promissory note(s) issued by DB in favor of Infinity Capital for up to $750,000. &#160;DB is involved in the production and distribution of Dixie Brands, Inc&#8217;s full line of medical cannabis &#8220;Dixie Elixirs and Edibles&#8221; products in Arizona. &#160;DB expects to begin sales in 2016. &#160;We have no obligation to exercise the option, which expires September 24, 2016.</p><br/><p style="margin:0px"><b>Basis of Presentation</b></p><br/><p style="margin:0px">The accompanying (a) condensed consolidated balance sheet at December&#160;31, 2015, has been derived from audited statements and (b) condensed consolidated unaudited financial statements as of June 30, 2016 and 2015, have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements, and should be read in conjunction with the audited consolidated financial statements and related footnotes included in our Annual Report on Form 10-K for the year ended December&#160;31, 2015 (the &#8220;2015 Annual Report&#8221;), filed with the Securities and Exchange Commission (the &#8220;SEC&#8221;) on March 25, 2016. &#160;It is management&#8217;s opinion, however, that all material adjustments (consisting of normal recurring adjustments), have been made which are necessary for a fair financial statements presentation. The condensed consolidated financial statements include all material adjustments (consisting of normal recurring accruals) necessary to make the condensed consolidated financial statements not misleading as required by Regulation S-X, Rule 10-01. Operating results for the three and six months ended June 30, 2016, are not necessarily indicative of the results of operations expected for the year ending December&#160;31, 2016.</p><br/><p style="margin:0px">The condensed consolidated financial statements include the results of GCC and its five wholly-owned subsidiary companies: (a) ACS Colorado Corp., a Colorado corporation formed in 2013; (b) Advanced Cannabis Solutions Corporation, a Colorado corporation formed in 2013; (c) 6565 E. Evans Avenue LLC, a Colorado limited liability company formed in 2014; (d) General Cannabis Capital Corporation, a Colorado corporation formed in 2015; and (e) GC Security LLC, (&#8220;GCS&#8221;) a Colorado limited liability company formed in 2015. &#160;Advanced Cannabis Solutions Corporation has one wholly-owned subsidiary company, ACS Corp., which was formed in Colorado on June 6, 2013. &#160;Intercompany accounts and transactions have been eliminated.</p><br/><p style="margin:0px; page-break-before:always">Certain reclassifications have been made to the prior period condensed consolidated financial statements to conform to the current period presentation. The reclassifications had no effect on net loss, total assets, or total stockholders&#8217; equity (deficit).</p><br/><p style="margin:0px"><b>Going Concern</b></p><br/><p style="margin:0px">The condensed consolidated financial statements have been prepared on a going concern basis, which assumes we will be able to realize our assets and discharge our liabilities in the normal course of business for the foreseeable future.&#160;&#160;The ability to continue as a going concern is dependent upon our generating profitable operations in the future and / or obtaining the necessary financing to meet our obligations and repay our liabilities arising from normal business operations when they come due. Management believes that actions presently being taken to further implement our business plan and generate additional revenues provide opportunity for the Company to continue as a going concern.&#160;&#160;While we believe in the viability of our strategy to generate additional revenues and our ability to raise additional funds, there can be no assurances to that effect.</p><br/><p style="margin:0px">We had an accumulated deficit of $18,952,081 and $16,427,378, respectively, at June 30, 2016 and December&#160;31, 2015, and further losses are anticipated in the development of our business. Accordingly, there is substantial doubt about our ability to continue as a going concern. The accompanying condensed consolidated financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern.</p><br/><p style="margin:0px"><b>Significant Accounting Policy Updates</b></p><br/><p style="margin:0px"><u>Modification of Debt Instruments</u></p><br/><p style="margin:0px">Modifications or exchanges of debt, which are not considered a troubled debt restructuring, are considered extinguishments if the terms of the new debt and the original instrument are substantially different. &#160;The instruments are considered substantially different when the present value of the cash flows under the terms of the new debt instrument are at least 10% different from the present value of the remaining cash flows under the terms of the original instrument. &#160;The fair value of non-cash consideration associated with the new debt instrument, such as warrants, are included as a day one cash flow in the 10% cash flow test. &#160;If the original and new debt instruments are substantially different, the original debt is derecognized and the new debt is initially recorded at fair value, with the difference recognized as an extinguishment gain or loss.</p><br/><p style="margin:0px"><b>Recently Issued Accounting Standards</b></p><br/><p style="margin:0px"><i>Financial Accounting Standards Board, or FASB, Accounting Standards Update, or FASB ASU 2016-12 &#8220;Revenue from Contracts with Customers (Topic 606)&#8221;</i> &#8211; In May 2016, the FASB issued 2016-12. &#160;The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. &#160;ASU 2016-12 provides clarification on assessing collectability, presentation of sales taxes, noncash consideration, and completed contracts and contract modifications. &#160;This ASU is effective for annual reporting periods beginning after December 15, 2017, with the option to adopt as early as December 15, 2016. We are currently assessing the impact of adoption of this ASU on our consolidated results of operations, cash flows and financial position.</p><br/><p style="margin:0px"><i>FASB ASU 2016-11 &#8220;Revenue Recognition (Topic 605) and Derivatives and Hedging (Topic 815)&#8221;</i> &#8211; In May 2016, the FASB issued 2016-11, which clarifies guidance on assessing whether an entity is a principal or an agent in a revenue transaction. &#160;This conclusion impacts whether an entity reports revenue on a gross or net basis. &#160;This ASU is effective for annual reporting periods beginning after December 15, 2017, with the option to adopt as early as December 15, 2016. We are currently assessing the impact of adoption of this ASU on our consolidated results of operations, cash flows and financial position.</p><br/><p style="margin:0px"><i>FASB ASU 2016-10 &#8220;Revenue from Contracts with Customers (Topic 606)&#8221;</i> &#8211; In April 2016, the FASB issued ASU 2016-10, clarify identifying performance obligations and the licensing implementation guidance, while retaining the related principles for those areas. &#160;This ASU is effective for annual reporting periods beginning after December 15, 2017, with the option to adopt as early as December 15, 2016. We are currently assessing the impact of adoption of this ASU on our consolidated results of operations, cash flows and financial position.</p><br/><p style="margin:0px"><i>FASB ASU 2016-09 &#8220;Compensation &#8211; Stock Compensation (Topic 718)&#8221;</i> &#8211; In March 2016, the FASB issued ASU 2016-09, which includes multiple provisions intended to simplify various aspects of accounting for share-based payments. &#160;While aimed at reducing the cost and complexity of the accounting for share-based payments, the amendments are expected to significantly impact net income, earnings per share, and the statement of cash flows. &#160;Implementation and administration may present challenges for companies with significant share-based payment activities. &#160;This ASU is effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. &#160;We are currently evaluating the potential impact this standard will have on our consolidated financial statements and related disclosures.</p><br/><p style="margin:0px; page-break-before:always"><i>FASB ASU 2016-02 &#8220;Leases (Topic 842)&#8221; &#8211; </i>In February 2016, the FASB issued ASU 2016-02, which will require lessees to recognize almost all leases on their balance sheet as a right-of-use asset and a lease liability. &#160;For income statement purposes, the FASB retained a dual model, requiring leases to be classified as either operating or finance. &#160;Classification will be based on criteria that are largely similar to those applied in current lease accounting, but without explicit bright lines. &#160;Lessor accounting is similar to the current model, but updated to align with certain changes to the lessee model and the new revenue recognition standard. &#160;This ASU is effective for fiscal years beginning after December 18, 2018, including interim periods within those fiscal years. &#160;We are currently evaluating the potential impact this standard will have on our consolidated financial statements and related disclosures.</p><br/> <p style="margin:0px"><b>Nature of Operations</b></p><br/><p style="margin:0px">General Cannabis Corporation (the &#8220;Company,&#8221; &#8220;we,&#8221; &#8220;us,&#8221; &#8220;our,&#8221; or &#8220;GCC&#8221;) (formerly, Advanced Cannabis Solutions, Inc.), was incorporated on June 3, 2013, and provides products and services to the regulated cannabis industry. &#160;On April 28, 2015, our common stock was uplisted and resumed quotation on the OTC Market&#8217;s OTCQB on May 6, 2015. &#160;Our operations are segregated into the following four reportable segments:</p><br/><p style="margin:0px"><u>Security and Cash Management Services</u></p><br/><p style="margin:0px">In March 2015, we acquired substantially all of the assets of Iron Protection Group, LLC, a Colorado limited liability company, which continues to do business as &#8220;Iron Protection Group.&#8221; Iron Protection Group (&#8220;IPG&#8221;) provides advanced security, including on-site professionals, video surveillance and cash transport, to licensed cannabis cultivators and retail shops. As of June 30, 2016, IPG had approximately 58 security guards on staff who serve 16 clients throughout Colorado.</p><br/><p style="margin:0px"><u>Marketing and Products</u></p><br/><p style="margin:0px">In September 2015, we acquired substantially all of the assets of Chiefton Supply Co., and established a dba of Chiefton Supply Co., incorporated in Colorado (&#8220;Chiefton&#8221;). &#160;Chiefton is an apparel and design company. &#160;We design, distribute and sell apparel featuring graphic designs. &#160;Our apparel is purchased and screen printed by third parties, for which there are numerous suppliers. &#160;Chiefton also provides high-level design and branding services to various clients, from grow stores and dispensaries to wholesale cannabis companies.</p><br/><p style="margin:0px">In April 2016, we relaunched GC Supply, dedicated to providing wholesale equipment and supplies to participants in the regulated cannabis industry. &#160;We will provide turnkey sourcing and stocking services to cultivation, retail and infused products manufacturing facilities. &#160;Offerings will include infrastructure, equipment, consumables, various delivery technologies (vaporizers and capsules) and compliance packaging. &#160;GC Supply operates out of a leased, 1,800 square-foot warehouse located in Colorado Springs, Colorado.</p><br/><p style="margin:0px"><u>Consulting and Advisory</u></p><br/><p style="margin:0px">Through Next Big Crop we deliver comprehensive consulting services to the cannabis industry that include obtaining licenses, compliance, cultivation, retail operations, logistical support, facility design and building services, and expansion of existing operations.&#160;&#160;Our business plan is based on the future growth of the regulated cannabis market in the United States.</p><br/><p style="margin:0px">In April 2016, we launched our public market research services division, called General Cannabis Equity Research, or GCER. &#160;Our approach to investment research will place an emphasis on intrinsic value and management quality. &#160;We will evaluate cannabis investments in the same manner as a merger and acquisitions specialist might. &#160;Our analyses of the individual cannabis companies will be driven by economic realities of the industry and its constantly changing dynamics.</p><br/><p style="margin:0px"><u>Finance and Real Estate</u></p><br/><p style="margin:0px"><i>Real Estate Leasing</i></p><br/><p style="margin:0px">Our real estate leasing business primarily includes the acquisition and leasing of cultivation space and related facilities to licensed marijuana growers and dispensary owners for their operations. Management anticipates that these facilities will range in size from 5,000 to 50,000 square feet. These facilities will only be leased to tenants that possess the requisite state licenses to operate cultivation facilities. The leases with the tenants will provide certain requirements that permit us to continually evaluate our tenants&#8217; compliance with applicable laws and regulations.</p><br/><p style="margin:0px">As of the date of this report, we owned one cultivation property that is located in a suburb of Pueblo, Colorado (the &#8220;Pueblo West Property&#8221;). The Pueblo West Property consists of approximately three acres of land, which currently includes a 5,000 square foot steel building, and parking lot. The Pueblo West Property is zoned for cultivating cannabis and is leased to a medical cannabis grower until December 31, 2022. &#160;We are evaluating strategic options for this property.</p><br/><p style="margin:0px; page-break-before:always"><i>Shared Office Space, Networking and Event Services&#160;&#160;&#160;</i></p><br/><p style="margin:0px">In October 2014, we purchased a former retail bank located at 6565 East Evans Avenue, Denver, Colorado 80224, which has been branded as The Greenhouse (&#8220;The Greenhouse&#8221;). &#160;The building is a 16,056 square-foot facility, which will be converted to serve as the largest shared workspace for entrepreneurs, professionals and others serving the cannabis industry. &#160;Clients will be able to lease space to use as offices, meeting rooms, lecture halls, educational and networking facilities, and individual workstations.</p><br/><p style="margin:0px">The Greenhouse has approximately 10,000 square feet of existing office space and 5,000 square feet on its ground floor that is dedicated to a consumer banking design. &#160;The banking space includes a vault with safety deposit boxes, three drive through teller windows and five secure teller windows inside.</p><br/><p style="margin:0px">We plan to continue to acquire commercial real estate and lease office space to participants in the cannabis industry. These participants include media, internet, packaging, lighting, cultivation supplies, and financial services. In exchange for certain services that may be provided to these tenants, we expect to receive rental income in the form of cash. In certain cases, we may acquire equity interests or provide debt capital to these businesses.</p><br/><p style="margin:0px"><i>Industry Finance and Equipment Leasing Services</i></p><br/><p style="margin:0px">We lease cultivation equipment and facilities to customers in the cannabis industry. We expect we will enter into sale lease-back transactions of grow lights, tenant improvements and other grow equipment. Since Colorado State law does not allow entities operating under a cannabis license to pledge the assets or the license of the cannabis operation for any type of general borrowing activity, we intend to provide loans to individuals and businesses in the cannabis industry on an unsecured basis. &#160;Equipment will only be leased to tenants that possess the requisite state licenses to operate such facilities. The leases with the tenants will provide certain requirements that permit us to continually evaluate our tenants&#8217; compliance with applicable laws and regulations.</p><br/><p style="margin:0px">We are exploring lending opportunities in Oregon, Washington, Colorado, and Arizona. Our finance strategy will include making direct term loans and providing revolving lines of credit to businesses involved in the cultivation and sale of cannabis and related products. &#160;These loans will generally be secured to the maximum extent permitted by law. &#160;We believe there is a significant demand for this financing. &#160;We are pursuing other finance services including customized finance, capital formation, and banking, for participants in the cannabis industry.</p><br/><p style="margin:0px">On November 4, 2015, we entered into an agreement (the &#8220;DB Option Agreement&#8221;) with Infinity Capital, a related party, which was amended on March 29, 2016 (the &#8220;Amended DB Option Agreement&#8221;). &#160;Pursuant to the Amended DB Option Agreement, we have the right to purchase all of Infinity Capital&#8217;s interest in DB Products Arizona, LLC (&#8220;DB&#8221;) at Infinity Capital&#8217;s actual cost, plus $1.00, or $750,001. The interests for which the option has been granted are Infinity Capital&#8217;s 50% equity interest in the membership interests of DB, and any outstanding unpaid principal and interest owed on promissory note(s) issued by DB in favor of Infinity Capital for up to $750,000. &#160;DB is involved in the production and distribution of Dixie Brands, Inc&#8217;s full line of medical cannabis &#8220;Dixie Elixirs and Edibles&#8221; products in Arizona. &#160;DB expects to begin sales in 2016. &#160;We have no obligation to exercise the option, which expires September 24, 2016.</p> 4 58 16 1800 5000 50000 5000 16056 10000 5000 750001 0.50 750000 <p style="margin:0px"><b>Basis of Presentation</b></p><br/><p style="margin:0px">The accompanying (a) condensed consolidated balance sheet at December&#160;31, 2015, has been derived from audited statements and (b) condensed consolidated unaudited financial statements as of June 30, 2016 and 2015, have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements, and should be read in conjunction with the audited consolidated financial statements and related footnotes included in our Annual Report on Form 10-K for the year ended December&#160;31, 2015 (the &#8220;2015 Annual Report&#8221;), filed with the Securities and Exchange Commission (the &#8220;SEC&#8221;) on March 25, 2016. &#160;It is management&#8217;s opinion, however, that all material adjustments (consisting of normal recurring adjustments), have been made which are necessary for a fair financial statements presentation. The condensed consolidated financial statements include all material adjustments (consisting of normal recurring accruals) necessary to make the condensed consolidated financial statements not misleading as required by Regulation S-X, Rule 10-01. Operating results for the three and six months ended June 30, 2016, are not necessarily indicative of the results of operations expected for the year ending December&#160;31, 2016.</p><br/><p style="margin:0px">The condensed consolidated financial statements include the results of GCC and its five wholly-owned subsidiary companies: (a) ACS Colorado Corp., a Colorado corporation formed in 2013; (b) Advanced Cannabis Solutions Corporation, a Colorado corporation formed in 2013; (c) 6565 E. Evans Avenue LLC, a Colorado limited liability company formed in 2014; (d) General Cannabis Capital Corporation, a Colorado corporation formed in 2015; and (e) GC Security LLC, (&#8220;GCS&#8221;) a Colorado limited liability company formed in 2015. &#160;Advanced Cannabis Solutions Corporation has one wholly-owned subsidiary company, ACS Corp., which was formed in Colorado on June 6, 2013. &#160;Intercompany accounts and transactions have been eliminated.</p><br/><p style="margin:0px; page-break-before:always">Certain reclassifications have been made to the prior period condensed consolidated financial statements to conform to the current period presentation. The reclassifications had no effect on net loss, total assets, or total stockholders&#8217; equity (deficit).</p> 5 <p style="margin:0px"><b>Going Concern</b></p><br/><p style="margin:0px">The condensed consolidated financial statements have been prepared on a going concern basis, which assumes we will be able to realize our assets and discharge our liabilities in the normal course of business for the foreseeable future.&#160;&#160;The ability to continue as a going concern is dependent upon our generating profitable operations in the future and / or obtaining the necessary financing to meet our obligations and repay our liabilities arising from normal business operations when they come due. Management believes that actions presently being taken to further implement our business plan and generate additional revenues provide opportunity for the Company to continue as a going concern.&#160;&#160;While we believe in the viability of our strategy to generate additional revenues and our ability to raise additional funds, there can be no assurances to that effect.</p><br/><p style="margin:0px">We had an accumulated deficit of $18,952,081 and $16,427,378, respectively, at June 30, 2016 and December&#160;31, 2015, and further losses are anticipated in the development of our business. Accordingly, there is substantial doubt about our ability to continue as a going concern. The accompanying condensed consolidated financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern.</p> <p style="margin:0px"><b>Significant Accounting Policy Updates</b></p><br/><p style="margin:0px"><u>Modification of Debt Instruments</u></p><br/><p style="margin:0px">Modifications or exchanges of debt, which are not considered a troubled debt restructuring, are considered extinguishments if the terms of the new debt and the original instrument are substantially different. &#160;The instruments are considered substantially different when the present value of the cash flows under the terms of the new debt instrument are at least 10% different from the present value of the remaining cash flows under the terms of the original instrument. &#160;The fair value of non-cash consideration associated with the new debt instrument, such as warrants, are included as a day one cash flow in the 10% cash flow test. &#160;If the original and new debt instruments are substantially different, the original debt is derecognized and the new debt is initially recorded at fair value, with the difference recognized as an extinguishment gain or loss.</p> 0.10 <p style="margin:0px"><b>Recently Issued Accounting Standards</b></p><br/><p style="margin:0px"><i>Financial Accounting Standards Board, or FASB, Accounting Standards Update, or FASB ASU 2016-12 &#8220;Revenue from Contracts with Customers (Topic 606)&#8221;</i> &#8211; In May 2016, the FASB issued 2016-12. &#160;The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. &#160;ASU 2016-12 provides clarification on assessing collectability, presentation of sales taxes, noncash consideration, and completed contracts and contract modifications. &#160;This ASU is effective for annual reporting periods beginning after December 15, 2017, with the option to adopt as early as December 15, 2016. We are currently assessing the impact of adoption of this ASU on our consolidated results of operations, cash flows and financial position.</p><br/><p style="margin:0px"><i>FASB ASU 2016-11 &#8220;Revenue Recognition (Topic 605) and Derivatives and Hedging (Topic 815)&#8221;</i> &#8211; In May 2016, the FASB issued 2016-11, which clarifies guidance on assessing whether an entity is a principal or an agent in a revenue transaction. &#160;This conclusion impacts whether an entity reports revenue on a gross or net basis. &#160;This ASU is effective for annual reporting periods beginning after December 15, 2017, with the option to adopt as early as December 15, 2016. We are currently assessing the impact of adoption of this ASU on our consolidated results of operations, cash flows and financial position.</p><br/><p style="margin:0px"><i>FASB ASU 2016-10 &#8220;Revenue from Contracts with Customers (Topic 606)&#8221;</i> &#8211; In April 2016, the FASB issued ASU 2016-10, clarify identifying performance obligations and the licensing implementation guidance, while retaining the related principles for those areas. &#160;This ASU is effective for annual reporting periods beginning after December 15, 2017, with the option to adopt as early as December 15, 2016. We are currently assessing the impact of adoption of this ASU on our consolidated results of operations, cash flows and financial position.</p><br/><p style="margin:0px"><i>FASB ASU 2016-09 &#8220;Compensation &#8211; Stock Compensation (Topic 718)&#8221;</i> &#8211; In March 2016, the FASB issued ASU 2016-09, which includes multiple provisions intended to simplify various aspects of accounting for share-based payments. &#160;While aimed at reducing the cost and complexity of the accounting for share-based payments, the amendments are expected to significantly impact net income, earnings per share, and the statement of cash flows. &#160;Implementation and administration may present challenges for companies with significant share-based payment activities. &#160;This ASU is effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. &#160;We are currently evaluating the potential impact this standard will have on our consolidated financial statements and related disclosures.</p><br/><p style="margin:0px; page-break-before:always"><i>FASB ASU 2016-02 &#8220;Leases (Topic 842)&#8221; &#8211; </i>In February 2016, the FASB issued ASU 2016-02, which will require lessees to recognize almost all leases on their balance sheet as a right-of-use asset and a lease liability. &#160;For income statement purposes, the FASB retained a dual model, requiring leases to be classified as either operating or finance. &#160;Classification will be based on criteria that are largely similar to those applied in current lease accounting, but without explicit bright lines. &#160;Lessor accounting is similar to the current model, but updated to align with certain changes to the lessee model and the new revenue recognition standard. &#160;This ASU is effective for fiscal years beginning after December 18, 2018, including interim periods within those fiscal years. &#160;We are currently evaluating the potential impact this standard will have on our consolidated financial statements and related disclosures.</p> <p style="margin:0px"><b>NOTE 2.</b>&#160;&#160;&#160;<b>BUSINESS ACQUISITIONS</b></p><br/><p style="margin:0px"><b>IPG Acquisition</b></p><br/><p style="margin:0px">On March 26, 2015, GCS, our wholly-owned subsidiary, entered into an Asset Purchase Agreement (the &#8220;IPG APA&#8221;) by and among us, GCS and Iron Protection Group, LLC, a Colorado limited liability company (the &#8220;Seller&#8221;), whereby GCS agreed to acquire substantially all of the assets of Seller (the &#8220;IPG Acquisition&#8221;). Pursuant to the terms of the IPG APA, we delivered to Seller 500,000 restricted shares of our common stock, which vested over a one-year period (100,000 shares on October 1, 2015; 200,000 shares on January 1, 2016; and 200,000 shares on April 1, 2016).</p><br/><p style="margin:0px">In addition, we delivered to Seller three-year warrants (the &#8220;IPG Warrants&#8221;) to purchase an aggregate of 500,000 shares of our common stock at an exercise price of: (i) $4.50 for warrants to purchase 250,000 shares, and (ii) $5.00 for warrants to purchase another 250,000 shares. The IPG APA contains certain provisions that require Seller to forfeit a portion of the stock consideration in the event that Seller violates its obligations under the IPG APA relating to non-competition and non-disclosure. The closing date of the IPG Acquisition was March 26, 2015, and we calculated the purchase price of the IPG Acquisition to be approximately $1,887,000. 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padding:0px">&#160;</p></td><td style="margin-top:0px" valign="top" width="105"><p style="margin:0px" align="right">421,000</p> </td></tr> <tr><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="336"><p style="margin:0px">Warrants issued with $5.00 exercise price</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="top" width="16.667"><p align="right" style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6; border-bottom:1px solid #000000" valign="top" width="105"><p style="margin:0px" align="right">412,000</p> </td></tr> <tr><td style="margin-top:0px" valign="bottom" width="336"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="top" width="16.667"><p align="right" style="margin:0px">$</p> </td><td style="margin-top:0px; border-bottom:3px double #000000" valign="top" width="105"><p style="margin:0px" align="right">1,887,000</p> </td></tr> </table><br/><p style="margin:0px">The 500,000 shares of common stock were valued based on the closing price per share on March 26, 2015, or $2.48, reduced by a discount of 15% due to restrictions in the ability to trade our common stock. &#160;The $1,054,000 value of stock consideration was originally recorded as accrued stock payable on the condensed consolidated balance sheet, which was then reduced as we issued common stock according to the vesting schedule. &#160;As of June 30, 2016, all common stock has been issued.</p><br/><p style="margin:0px">The purchase price allocation is as follows:</p><br/><table style="margin-top:0px; 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padding:0px">&#160;</p></td><td style="margin-top:0px" valign="top" width="99"><p style="margin:0px" align="right">200,000</p> </td></tr> <tr><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="336"><p style="margin:0px; padding-left:4.333px">Non-compete agreements</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="top" width="16.667"><p align="right" style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="top" width="99"><p style="margin:0px" align="right">500,000</p> </td></tr> <tr><td style="margin-top:0px" valign="bottom" width="336"><p style="margin:0px; padding-left:4.333px">Goodwill</p> </td><td style="margin-top:0px" valign="top" width="16.667"><p align="right" style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; border-bottom:1px solid #000000" valign="top" width="99"><p style="margin:0px" align="right">187,000</p> </td></tr> <tr><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="336"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="top" width="16.667"><p align="right" style="margin:0px">$</p> </td><td style="margin-top:0px; background-color:#DEEAF6; border-bottom:3px double #000000" valign="top" width="99"><p style="margin:0px" align="right">1,887,000</p> </td></tr> </table><br/><p style="margin:0px">We finalized the purchase price allocation in the fourth quarter of the year ended December 31, 2015.&#160;</p><br/><p style="margin:0px">In connection with our acquisition of IPG, we agreed to issue to the sole shareholder of the Seller 100,000 fully vested warrants to purchase shares of our common stock if revenues of the Security segment exceeded $3,000,000 for the year ended December 31, 2015, with an exercise price of $2.48. &#160;This condition was not met during the year ended December 31, 2015, so no value was recorded for these warrants.</p><br/><p style="margin:0px; page-break-before:always">The accompanying condensed consolidated financial statements include the results of IPG from the date of acquisition, March 26, 2015. &#160;The pro forma effects of the acquisition on the results of operations as if the transaction had been completed on January 1, 2015, are as follows:</p><br/><table style="margin-top:0px; font-size:10pt" cellpadding="0" cellspacing="0"><tr style="font-size:0"><td width="337.667"></td><td width="18"></td><td width="138"></td></tr> <tr><td style="margin-top:0px" valign="top" width="337.667"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="top" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="top" width="138"><p style="margin:0px" align="center"><b>Six months ended </b></p> </td></tr> <tr><td style="margin-top:0px" valign="top" width="337.667"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="top" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; border-bottom:1px solid #000000" valign="top" width="138"><p style="margin:0px" align="center"><b>June 30, 2015</b></p> <p style="margin:0px" align="center">(Unaudited)</p> </td></tr> <tr><td style="margin-top:0px; background-color:#DEEAF6" valign="top" width="337.667"><p style="margin:0px">Total net revenues</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="top" width="18"><p align="right" style="margin:0px">$</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="top" width="138"><p style="margin:0px" align="right">853,805</p> </td></tr> <tr><td style="margin-top:0px" valign="top" width="337.667"><p style="margin:0px">Net loss</p> </td><td style="margin-top:0px" valign="top" width="18"><p align="right" style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="top" width="138"><p style="margin:0px" align="right">(5,124,454)</p> </td></tr> <tr><td style="margin-top:0px" valign="top" width="337.667"><p style="margin:0px">Net loss per common share:</p> </td><td style="margin-top:0px" valign="top" width="18"><p align="right" style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="top" width="138"><p style="margin:0px; padding:0px">&#160;</p></td></tr> <tr><td style="margin-top:0px; background-color:#DEEAF6" valign="top" width="337.667"><p style="margin:0px">&#160;&#160;Basic and diluted</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="top" width="18"><p align="right" style="margin:0px">$</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="top" width="138"><p style="margin:0px" align="right">(0.36)</p> </td></tr> </table><br/><p style="margin:0px"><b>Chiefton Acquisition</b></p><br/><p style="margin:0px">On September 25, 2015, we closed an asset purchase agreement for the purchase of substantially all the assets of Chiefton Supply Co., a Colorado corporation, and established a dba within GCC of Chiefton. &#160;This acquisition expands our service offerings in the cannabis industry and provides a new revenue stream.</p><br/><p style="margin:0px">We acquired the Chiefton assets for consideration of 80,000 restricted shares of our common stock. The shares shall remain in escrow for six months for the exclusive purpose of being available to indemnify us for any claims that may be made by any person or governmental entity related to or arising from Chiefton&#8217;s intellectual property during the six month period after closing. After such period, the shares will be released if no claims have been made, provided that if any claims have been made the shares will remain in escrow until the claim is resolved, at which time the shares will be released less the value of any and all settlement amounts, penalties, damages or other liabilities arising from the claim.</p><br/><p style="margin:0px">The aggregate consideration was as follows:</p><br/><table style="margin-top:0px; font-size:10pt" cellpadding="0" cellspacing="0"><tr style="font-size:0"><td width="336"></td><td width="16.667"></td><td width="93"></td></tr> <tr><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="336"><p style="margin:0px">Cash</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="top" width="16.667"><p align="right" style="margin:0px">$</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="top" width="93"><p style="margin:0px" align="right">12,249</p> </td></tr> <tr><td style="margin-top:0px" valign="bottom" width="336"><p style="margin:0px">Common stock</p> </td><td style="margin-top:0px" valign="top" width="16.667"><p align="right" style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; border-bottom:1px solid #000000" valign="top" width="93"><p style="margin:0px" align="right">69,400</p> </td></tr> <tr><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="336"><p style="margin:0px">&#160;&#160;Aggregate consideration</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="top" width="16.667"><p align="right" style="margin:0px">$</p> </td><td style="margin-top:0px; background-color:#DEEAF6; border-bottom:3px double #000000" valign="top" width="93"><p style="margin:0px" align="right">81,649</p> </td></tr> </table><br/><p style="margin:0px">The value of the common stock consideration was estimated based on our closing common stock price on September 25, 2015, or $1.02 per share, reduced by a discount of 15% due to restrictions in the ability to trade our shares. &#160;The $69,400 value of stock consideration was originally included in accrued stock payable on the condensed consolidated balance sheet. &#160;As of June 30, 2016, all common stock has been issued.</p><br/><p style="margin:0px">The purchase price allocation is as follows:</p><br/><table style="margin-top:0px; 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padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="top" width="16.667"><p align="right" style="margin:0px">$</p> </td><td style="margin-top:0px; background-color:#DEEAF6; border-top:1px solid #000000; border-bottom:3px double #000000" valign="top" width="93"><p style="margin:0px" align="right">81,649</p> </td></tr> </table><br/><p style="margin:0px">We finalized the purchase price allocation in the fourth quarter of the year ended December 31, 2015.&#160;</p><br/> 500000 100000 200000 200000 500000 4.50 250000 5.00 250000 1887000 2.48 0.15 1054000 100000 3000000 2.48 80000 1.02 0.15 69400 The aggregate consideration was as follows:<br /><br /><table style="margin-top:0px; font-size:10pt" cellpadding="0" cellspacing="0"><tr style="font-size:0"><td width="336"></td><td width="16.667"></td><td width="105"></td></tr> <tr><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="336"><p style="margin:0px">Common stock payable</p> </td><td style="margin-top:0px; 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padding:0px">&#160;</p></td><td style="margin-top:0px" valign="top" width="16.667"><p align="right" style="margin:0px">$</p> </td><td style="margin-top:0px; border-bottom:3px double #000000" valign="top" width="105"><p style="margin:0px" align="right">1,887,000</p> </td></tr> </table> 1054000 421000 412000 1887000 The purchase price allocation is as follows:<br /><br /><table style="margin-top:0px; font-size:10pt" cellpadding="0" cellspacing="0"><tr style="font-size:0"><td width="336"></td><td width="16.667"></td><td width="99"></td></tr> <tr><td style="margin-top:0px" valign="bottom" width="336"><p style="margin:0px">Intangible assets:</p> </td><td style="margin-top:0px" valign="top" width="16.667"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="top" width="99"><p style="margin:0px; padding:0px">&#160;</p></td></tr> <tr><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="336"><p style="margin:0px; padding-left:4.333px">Customer relationship intangible</p> </td><td style="margin-top:0px; 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padding-left:4.333px">Goodwill</p> </td><td style="margin-top:0px" valign="top" width="16.667"><p align="right" style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; border-bottom:1px solid #000000" valign="top" width="99"><p style="margin:0px" align="right">187,000</p> </td></tr> <tr><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="336"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="top" width="16.667"><p align="right" style="margin:0px">$</p> </td><td style="margin-top:0px; background-color:#DEEAF6; border-bottom:3px double #000000" valign="top" width="99"><p style="margin:0px" align="right">1,887,000</p> </td></tr> </table> 1000000 200000 500000 187000 1887000 The pro forma effects of the acquisition on the results of operations as if the transaction had been completed on January 1, 2015, are as follows:<br /><br /><table style="margin-top:0px; font-size:10pt" cellpadding="0" cellspacing="0"><tr style="font-size:0"><td width="337.667"></td><td width="18"></td><td width="138"></td></tr> <tr><td style="margin-top:0px" valign="top" width="337.667"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="top" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="top" width="138"><p style="margin:0px" align="center"><b>Six months ended </b></p> </td></tr> <tr><td style="margin-top:0px" valign="top" width="337.667"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="top" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; border-bottom:1px solid #000000" valign="top" width="138"><p style="margin:0px" align="center"><b>June 30, 2015</b></p> <p style="margin:0px" align="center">(Unaudited)</p> </td></tr> <tr><td style="margin-top:0px; background-color:#DEEAF6" valign="top" width="337.667"><p style="margin:0px">Total net revenues</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="top" width="18"><p align="right" style="margin:0px">$</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="top" width="138"><p style="margin:0px" align="right">853,805</p> </td></tr> <tr><td style="margin-top:0px" valign="top" width="337.667"><p style="margin:0px">Net loss</p> </td><td style="margin-top:0px" valign="top" width="18"><p align="right" style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="top" width="138"><p style="margin:0px" align="right">(5,124,454)</p> </td></tr> <tr><td style="margin-top:0px" valign="top" width="337.667"><p style="margin:0px">Net loss per common share:</p> </td><td style="margin-top:0px" valign="top" width="18"><p align="right" style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="top" width="138"><p style="margin:0px; padding:0px">&#160;</p></td></tr> <tr><td style="margin-top:0px; background-color:#DEEAF6" valign="top" width="337.667"><p style="margin:0px">&#160;&#160;Basic and diluted</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="top" width="18"><p align="right" style="margin:0px">$</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="top" width="138"><p style="margin:0px" align="right">(0.36)</p> </td></tr> </table> 853805 -5124454 -0.36 The aggregate consideration was as follows:<br /><br /><table style="margin-top:0px; 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padding:0px">&#160;</p></td><td style="margin-top:0px; border-bottom:1px solid #000000" valign="bottom" width="84"><p style="margin:0px" align="center"><b>Net</b></p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; border-bottom:1px solid #000000" valign="bottom" width="76.333"><p style="margin:0px" align="center"><b>Estimated Life</b></p> <p style="margin:0px" align="center">(in years)</p> </td></tr> <tr><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="241.667"><p style="margin:0px">Customer relationship intangible</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="96"><p style="margin:0px" align="right">1,000,000</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="102"><p style="margin:0px" align="right">126,575</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="84"><p style="margin:0px" align="right">873,425</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="76.333"><p style="margin:0px" align="center">10</p> </td></tr> <tr><td style="margin-top:0px" valign="bottom" width="241.667"><p style="margin:0px">Marketing-related intangibles</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="96"><p style="margin:0px" align="right">200,000</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="102"><p style="margin:0px" align="right">50,630</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="84"><p style="margin:0px" align="right">149,370</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="76.333"><p style="margin:0px" align="center">5</p> </td></tr> <tr><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="241.667"><p style="margin:0px">Non-compete agreements</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="96"><p style="margin:0px" align="right">500,000</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="102"><p style="margin:0px" align="right">210,959</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="84"><p style="margin:0px" align="right">289,041</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="76.333"><p style="margin:0px" align="center">3</p> </td></tr> <tr><td style="margin-top:0px" valign="bottom" width="241.667"><p style="margin:0px">Chiefton brand and graphic designs</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; border-bottom:1px solid #000000" valign="bottom" width="96"><p style="margin:0px" align="right">69,400</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; border-bottom:1px solid #000000" valign="bottom" width="102"><p style="margin:0px" align="right">26,524</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; border-bottom:1px solid #000000" valign="bottom" width="84"><p style="margin:0px" align="right">42,876</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="76.333"><p style="margin:0px" align="center">2</p> </td></tr> <tr><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="241.667"><p style="margin:0px">&#160;&#160;Intangible assets, net</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; background-color:#DEEAF6; border-bottom:3px double #000000" valign="bottom" width="96"><p style="margin:0px" align="right">1,769,400</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; background-color:#DEEAF6; border-bottom:3px double #000000" valign="bottom" width="102"><p style="margin:0px" align="right">414,688</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; background-color:#DEEAF6; border-bottom:3px double #000000" valign="bottom" width="84"><p style="margin:0px" align="right">1,354,712</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="76.333"><p style="margin:0px; padding:0px">&#160;</p></td></tr> </table><br/><p style="margin:0px">Amortization expense was $85,108 and $57,863, respectively, for the three months ended June 30, 2016 and 2015, and $170,215 and $57,863, respectively, for the six months ended June 30, 2016 and 2015. &#160;We have not recognized any impairment as of June 30, 2016.</p><br/><p style="margin:0px"><b>Goodwill</b></p><br/><p style="margin:0px">In connection with our purchase of IPG, we recorded goodwill of $187,000. 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padding:0px">&#160;</p></td><td style="margin-top:0px; border-bottom:1px solid #000000" valign="bottom" width="84"><p style="margin:0px" align="center"><b>Net</b></p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; border-bottom:1px solid #000000" valign="bottom" width="76.333"><p style="margin:0px" align="center"><b>Estimated Life</b></p> <p style="margin:0px" align="center">(in years)</p> </td></tr> <tr><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="241.667"><p style="margin:0px">Customer relationship intangible</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="96"><p style="margin:0px" align="right">1,000,000</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="102"><p style="margin:0px" align="right">126,575</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="84"><p style="margin:0px" align="right">873,425</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="76.333"><p style="margin:0px" align="center">10</p> </td></tr> <tr><td style="margin-top:0px" valign="bottom" width="241.667"><p style="margin:0px">Marketing-related intangibles</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="96"><p style="margin:0px" align="right">200,000</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="102"><p style="margin:0px" align="right">50,630</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="84"><p style="margin:0px" align="right">149,370</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="76.333"><p style="margin:0px" align="center">5</p> </td></tr> <tr><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="241.667"><p style="margin:0px">Non-compete agreements</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="96"><p style="margin:0px" align="right">500,000</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="102"><p style="margin:0px" align="right">210,959</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="84"><p style="margin:0px" align="right">289,041</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="76.333"><p style="margin:0px" align="center">3</p> </td></tr> <tr><td style="margin-top:0px" valign="bottom" width="241.667"><p style="margin:0px">Chiefton brand and graphic designs</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; border-bottom:1px solid #000000" valign="bottom" width="96"><p style="margin:0px" align="right">69,400</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; border-bottom:1px solid #000000" valign="bottom" width="102"><p style="margin:0px" align="right">26,524</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; border-bottom:1px solid #000000" valign="bottom" width="84"><p style="margin:0px" align="right">42,876</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="76.333"><p style="margin:0px" align="center">2</p> </td></tr> <tr><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="241.667"><p style="margin:0px">&#160;&#160;Intangible assets, net</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; background-color:#DEEAF6; border-bottom:3px double #000000" valign="bottom" width="96"><p style="margin:0px" align="right">1,769,400</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; background-color:#DEEAF6; border-bottom:3px double #000000" valign="bottom" width="102"><p style="margin:0px" align="right">414,688</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; background-color:#DEEAF6; border-bottom:3px double #000000" valign="bottom" width="84"><p style="margin:0px" align="right">1,354,712</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="76.333"><p style="margin:0px; padding:0px">&#160;</p></td></tr> </table> 1000000 126575 873425 P10Y 200000 50630 149370 P5Y 500000 210959 289041 P3Y 69400 26524 42876 P2Y 1769400 414688 1354712 <p style="margin:0px"><b>NOTE 4.&#160;&#160;&#160; DEBT</b></p><br/><p style="margin:0px"><b>Line of Credit &#8211; Related Party</b></p><br/><p style="margin:0px">In February 2015, we issued a senior secured note to Infinity Capital, LLC (&#8220;Infinity Capital&#8221;), as amended in April 2015, bearing 5% interest payable monthly in arrears commencing June 30, 2015, until the maturity date of August 31, 2015 (the &#8220;Infinity Note&#8221;). &#160;&#160;Infinity Capital, an investment management company, was founded and is controlled by our chairman of the board, Michael Feinsod, a related party. &#160;On July 1, 2015, the outstanding principal and interest of $309,000 was settled by our issuing a 10% private placement note. &#160;Subsequent to the settlement on July 1, 2015, we continued to borrow under the Infinity Note. &#160;Interest expense for the Infinity Note for the six months ended June 30, 2016, was approximately $26,540, and approximately $38,268 was accrued as of June 30, 2016.</p><br/><p style="margin:0px"><b>Notes Payable</b></p><br/><table style="margin-top:0px; font-size:10pt" cellpadding="0" cellspacing="0"><tr style="font-size:0"><td width="361.667"></td><td width="18"></td><td width="96"></td><td width="18"></td><td width="96"></td></tr> <tr><td style="margin-top:0px" valign="top" width="361.667"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="top" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; border-bottom:1px solid #000000" valign="top" width="96"><p style="margin:0px" align="center"><b>June 30,</b></p> <p style="margin:0px" align="center"><b>2016</b></p> </td><td style="margin-top:0px" valign="top" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; border-bottom:1px solid #000000" valign="top" width="96"><p style="margin:0px" align="center"><b>December 31,</b></p> <p style="margin:0px" align="center"><b>2015</b></p> </td></tr> <tr><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="361.667"><p style="margin:0px; padding-left:4.333px; text-indent:-4.333px">10.0% private placement notes</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="96"><p style="margin:0px" align="right">659,000</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="96"><p style="margin:0px" align="right">659,000</p> </td></tr> <tr><td style="margin-top:0px" valign="bottom" width="361.667"><p style="margin:0px; padding-left:4.333px; text-indent:-4.333px">14.0% mortgage note payable (The Greenhouse)</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="96"><p style="margin:0px" align="right">600,000</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="96"><p style="margin:0px" align="right">600,000</p> </td></tr> <tr><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="361.667"><p style="margin:0px; padding-left:4.333px; text-indent:-4.333px">8.5% convertible note payable (Pueblo West Property)</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6; border-bottom:1px solid #000000" valign="bottom" width="96"><p style="margin:0px" align="right">154,931</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6; border-bottom:1px solid #000000" valign="bottom" width="96"><p style="margin:0px" align="right">158,307</p> </td></tr> <tr><td style="margin-top:0px" valign="bottom" width="361.667"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="96"><p style="margin:0px" align="right">1,413,931</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="96"><p style="margin:0px" align="right">1,417,307</p> </td></tr> <tr><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="361.667"><p style="margin:0px; padding-left:4.333px; text-indent:-4.333px">Unamortized debt discount</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6; border-bottom:1px solid #000000" valign="bottom" width="96"><p style="margin:0px" align="right">(63,817)</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6; border-bottom:1px solid #000000" valign="bottom" width="96"><p style="margin:0px" align="right">(279,435)</p> </td></tr> <tr><td style="margin-top:0px" valign="bottom" width="361.667"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="96"><p style="margin:0px" align="right">1,350,114</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="96"><p style="margin:0px" align="right">1,137,872</p> </td></tr> <tr><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="361.667"><p style="margin:0px; padding-left:4.333px; text-indent:-4.333px">Less: Current portion</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6; border-bottom:1px solid #000000" valign="bottom" width="96"><p style="margin:0px" align="right">(1,202,380)</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6; border-bottom:1px solid #000000" valign="bottom" width="96"><p style="margin:0px" align="right">(986,475)</p> </td></tr> <tr><td style="margin-top:0px" valign="bottom" width="361.667"><p style="margin:0px; padding-left:4.333px; text-indent:-4.333px">Long-term portion</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; border-bottom:3px double #000000" valign="bottom" width="96"><p style="margin:0px" align="right">147,734</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; border-bottom:3px double #000000" valign="bottom" width="96"><p style="margin:0px" align="right">151,397</p> </td></tr> </table><br/><p style="margin:0px"><i><u>10% Private Placement Notes</u></i></p><br/><p style="margin:0px">In 2015, we completed a private placement pursuant to a Promissory Note and Warrant Purchase Agreement (the &#8220;10% Agreement&#8221;) with certain accredited investors, bearing interest at 10% payable quarterly (each such note, a &#8220;10% Note,&#8221; and collectively, the &#8220;10% Notes&#8221;). &#160;Subject to the terms and conditions of the 10% Agreement, each investor is granted fully-vested warrants equal to their note principal divided by two (the &#8220;10% Warrants&#8221;) (with standard dilution clauses). &#160;The 10% Warrants are exercisable for a period of eighteen months after grant date and have an exercise price of $1.08 per share. &#160;The debt is treated as conventional debt. &#160;The 10% Notes are collateralized by a security interest in substantially all of our assets.</p><br/><p style="margin:0px">$309,000 of the 10% Notes are due to a related party, Infinity Capital, at June 30, 2016 and December 31, 2015. &#160;As of and for the six months ended June 30, 2016, approximately $7,225 of interest expense, and $14,500 of accrued interest under the 10% Notes relates to Infinity Capital.</p><br/><p style="margin:0px; page-break-before:always">On June 3, 2016, we reached an agreement with the 10% Note holders to extend the maturity date from May 1, 2016 to January 31, 2017. &#160;In exchange for the extension, we issued the holders an aggregate of 659,000 additional warrants to purchase our common stock at $1.07 per share for a period of five years, with an aggregate fair value of $358,000, determined using Black-Scholes, a risk-free rate of 1.2% and volatility of 151%. &#160;We concluded that this modification of the debt instruments met the criteria for a debt extinguishment and, accordingly, recorded a loss on extinguishment of debt of $358,000. &#160;Absent the warrants, the fair value of the new debt remained the same as the fair value of the original debt.</p><br/><p style="margin:0px"><i><u>14% Mortgage Note Payable (The Greenhouse)</u></i></p><br/><p style="margin:0px">In October 2014, we executed a mortgage on The Greenhouse in the amount of $600,000, bearing 14.0% interest payable monthly, with a maturity date of October&#160;21, 2016 (the &#8220;Greenhouse Mortgage&#8221;). &#160;The debt is treated as conventional debt.</p><br/><p style="margin:0px">In addition, we granted warrants to Evans Street Lendco LLC (&#8220;Evans Lendco&#8221;), the note holder of the Greenhouse Mortgage, which expire on October 21, 2016. &#160;The warrants vested immediately and allowed for Evans Lendco to purchase 600,000 shares of our common stock at a price of $4.40 per share, (with standard dilution clauses). &#160;Due to the drop in our stock price, on July 29, 2015, we agreed with Evans Lendco to replace the warrants previously issued to Evans Lendco with warrants to purchase 225,000 shares of our stock at $1.20 per share with a term of two years. &#160;The estimated fair value of the replacement warrants is less than the fair value of the original warrants on their date of grant. &#160;Accordingly, we will continue to amortize the remaining fair value of the original warrants over the remaining life of the underlying debt.</p><br/><p style="margin:0px"><i><u>8.5% Convertible Note Payable (Pueblo West Property)</u></i></p><br/><p style="margin:0px">In December 2013, we executed a mortgage on our Pueblo West Property in the amount of $170,000, bearing 8.5% interest with monthly principal and interest payments totaling $1,674, with the balance due on December 31, 2018 (the &#8220;Pueblo Mortgage&#8221;). This note is convertible at any time at $5.00 per share. </p><br/><p style="margin:0px">Derivative treatment is not required, as the conversion feature meets the scope exception. The conversion feature is not beneficial, because the conversion price was higher than the stock price on the commitment date. &#160;Accordingly, we treated the Pueblo Mortgage as conventional debt.</p><br/><p style="margin:0px"><i><u>12% Convertible Notes</u></i></p><br/><p style="margin:0px"><i>Conversion of 12% Convertible Notes</i></p><br/><p style="margin:0px">During the year ended December 31, 2015, lenders converted $321,123 of 12% Convertible Notes for 64,225 shares of our common stock. &#160;The December 2013 Issuance and the January 2014 Issuance (collectively, the &#8220;12% Convertible Notes&#8221;) included a provision that if the trading stock price exceeded $10 for twenty consecutive trading days and the daily volume for those twenty consecutive trading days exceeds 25,000 shares, then the 12% Convertible Notes convert into shares of our common stock on or after December 1, 2015. &#160;As of April 24, 2014, these parameters were met. &#160;On December 1, 2015, the remaining $1,330,000 of convertible notes was automatically converted to 266,000 shares of our common stock.</p><br/><p style="margin:0px"><i>December 2013 Issuance</i></p><br/><p style="margin:0px">In December 2013, we entered into convertible promissory notes with various third parties totaling $530,000 (the &#8220;December 2013 Issuance&#8221;). The principal amounts of these notes&#160;ranged between $10,000 and $150,000. The notes required quarterly interest payments at 12%, and were convertible into shares of our common stock at a conversion rate of $5.00 per share (with standard dilution clauses). </p><br/><p style="margin:0px">Derivative treatment was not required, as the conversion feature met the scope exception. The conversion feature was not beneficial, because the conversion price was higher than the stock price on the commitment date. &#160;Accordingly, we treated the December 2013 Issuance as conventional debt.</p><br/><p style="margin:0px"><i>January 2014 Issuance</i></p><br/><p style="margin:0px">In January 2014, we entered into convertible promissory notes with various third parties totaling $1,605,000 (the &#8220;January 2014 Issuance&#8221;). The principal amounts of these notes&#160;ranged between $10,000 and $200,000. The notes required quarterly interest payments at 12%, and were convertible into shares of our common stock at a conversion rate of $5.00 per share (with standard dilution clauses).</p><br/><p style="margin:0px; page-break-before:always">Derivative treatment was not required, as the conversion feature met the scope exception. &#160;Since the initial conversion price was less than the market value of the common stock at the time of issuance, it was determined that a beneficial conversion feature existed. The intrinsic value of the beneficial conversion feature and the combined value of the debt discount resulted in a value greater than the value of the debt and, as such, the total discount was limited to the value of the debt balance of $1,605,000.</p><br/><p style="margin:0px">Annual maturities of long-term debt (excluding unamortized discount) for the next three years, consist of:</p><br/><table style="margin-top:0px; font-size:10pt" cellpadding="0" cellspacing="0"><tr style="font-size:0"><td width="244.267"></td><td width="16.667"></td><td width="94.733"></td></tr> <tr><td style="margin-top:0px" valign="top" width="244.267"><p style="margin:0px"><b>Year ending December 31,</b></p> </td><td style="margin-top:0px" valign="top" width="16.667"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="top" width="94.733"><p style="margin:0px; padding:0px">&#160;</p></td></tr> <tr><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="244.267"><p style="margin:0px">2016</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="top" width="16.667"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="94.733"><p style="margin:0px" align="right">603,522</p> </td></tr> <tr><td style="margin-top:0px" valign="bottom" width="244.267"><p style="margin:0px">2017</p> </td><td style="margin-top:0px" valign="top" width="16.667"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="94.733"><p style="margin:0px" align="right">666,507</p> </td></tr> <tr><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="244.267"><p style="margin:0px">2018</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="top" width="16.667"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="94.733"><p style="margin:0px" align="right">143,902</p> </td></tr> <tr><td style="margin-top:0px" valign="bottom" width="244.267"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="top" width="16.667"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; border-top:1px solid #000000; border-bottom:3px double #000000" valign="bottom" width="94.733"><p style="margin:0px" align="right">1,413,931</p> </td></tr> </table><br/> 0.05 309000 26540 38268 309000 309000 7225 14500 2017-01-31 659000 1.07 358000 0.012 1.51 $358,000 600000 0.140 2016-10-21 600000 4.40 225000 1.20 170000 0.085 1674 5.00 321123 0.12 64225 The December 2013 Issuance and the January 2014 Issuance (collectively, the &#8220;12% Convertible Notes&#8221;) included a provision that if the trading stock price exceeded $10 for twenty consecutive trading days and the daily volume for those twenty consecutive trading days exceeds 25,000 shares, then the 12% Convertible Notes convert into shares of our common stock on or after December 1, 2015. 10 20 25000 1330000 266000 530000 10000 150000 0.12 5.00 1605000 10000 200000 0.12 5.00 1605000 Notes Payable<br /><br /><table style="margin-top:0px; font-size:10pt" cellpadding="0" cellspacing="0"><tr style="font-size:0"><td width="361.667"></td><td width="18"></td><td width="96"></td><td width="18"></td><td width="96"></td></tr> <tr><td style="margin-top:0px" valign="top" width="361.667"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="top" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; border-bottom:1px solid #000000" valign="top" width="96"><p style="margin:0px" align="center"><b>June 30,</b></p> <p style="margin:0px" align="center"><b>2016</b></p> </td><td style="margin-top:0px" valign="top" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; border-bottom:1px solid #000000" valign="top" width="96"><p style="margin:0px" align="center"><b>December 31,</b></p> <p style="margin:0px" align="center"><b>2015</b></p> </td></tr> <tr><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="361.667"><p style="margin:0px; padding-left:4.333px; text-indent:-4.333px">10.0% private placement notes</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="96"><p style="margin:0px" align="right">659,000</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="96"><p style="margin:0px" align="right">659,000</p> </td></tr> <tr><td style="margin-top:0px" valign="bottom" width="361.667"><p style="margin:0px; padding-left:4.333px; text-indent:-4.333px">14.0% mortgage note payable (The Greenhouse)</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="96"><p style="margin:0px" align="right">600,000</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="96"><p style="margin:0px" align="right">600,000</p> </td></tr> <tr><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="361.667"><p style="margin:0px; padding-left:4.333px; text-indent:-4.333px">8.5% convertible note payable (Pueblo West Property)</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6; border-bottom:1px solid #000000" valign="bottom" width="96"><p style="margin:0px" align="right">154,931</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6; border-bottom:1px solid #000000" valign="bottom" width="96"><p style="margin:0px" align="right">158,307</p> </td></tr> <tr><td style="margin-top:0px" valign="bottom" width="361.667"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="96"><p style="margin:0px" align="right">1,413,931</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="96"><p style="margin:0px" align="right">1,417,307</p> </td></tr> <tr><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="361.667"><p style="margin:0px; padding-left:4.333px; text-indent:-4.333px">Unamortized debt discount</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6; border-bottom:1px solid #000000" valign="bottom" width="96"><p style="margin:0px" align="right">(63,817)</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6; border-bottom:1px solid #000000" valign="bottom" width="96"><p style="margin:0px" align="right">(279,435)</p> </td></tr> <tr><td style="margin-top:0px" valign="bottom" width="361.667"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="96"><p style="margin:0px" align="right">1,350,114</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="96"><p style="margin:0px" align="right">1,137,872</p> </td></tr> <tr><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="361.667"><p style="margin:0px; padding-left:4.333px; text-indent:-4.333px">Less: Current portion</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6; border-bottom:1px solid #000000" valign="bottom" width="96"><p style="margin:0px" align="right">(1,202,380)</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6; border-bottom:1px solid #000000" valign="bottom" width="96"><p style="margin:0px" align="right">(986,475)</p> </td></tr> <tr><td style="margin-top:0px" valign="bottom" width="361.667"><p style="margin:0px; padding-left:4.333px; text-indent:-4.333px">Long-term portion</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; border-bottom:3px double #000000" valign="bottom" width="96"><p style="margin:0px" align="right">147,734</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; border-bottom:3px double #000000" valign="bottom" width="96"><p style="margin:0px" align="right">151,397</p> </td></tr> </table> 659000 659000 600000 600000 154931 158307 1413931 1417307 63817 279435 1350114 1137872 -1202380 -986475 147734 151397 Annual maturities of long-term debt (excluding unamortized discount) for the next three years, consist of:<br /><br /><table style="margin-top:0px; font-size:10pt" cellpadding="0" cellspacing="0"><tr style="font-size:0"><td width="244.267"></td><td width="16.667"></td><td width="94.733"></td></tr> <tr><td style="margin-top:0px" valign="top" width="244.267"><p style="margin:0px"><b>Year ending December 31,</b></p> </td><td style="margin-top:0px" valign="top" width="16.667"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="top" width="94.733"><p style="margin:0px; padding:0px">&#160;</p></td></tr> <tr><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="244.267"><p style="margin:0px">2016</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="top" width="16.667"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="94.733"><p style="margin:0px" align="right">603,522</p> </td></tr> <tr><td style="margin-top:0px" valign="bottom" width="244.267"><p style="margin:0px">2017</p> </td><td style="margin-top:0px" valign="top" width="16.667"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="94.733"><p style="margin:0px" align="right">666,507</p> </td></tr> <tr><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="244.267"><p style="margin:0px">2018</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="top" width="16.667"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="94.733"><p style="margin:0px" align="right">143,902</p> </td></tr> <tr><td style="margin-top:0px" valign="bottom" width="244.267"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="top" width="16.667"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; border-top:1px solid #000000; border-bottom:3px double #000000" valign="bottom" width="94.733"><p style="margin:0px" align="right">1,413,931</p> </td></tr> </table> 603522 666507 143902 <p style="margin:0px"><b>NOTE 5. &#160;ACCRUED STOCK PAYABLE</b></p><br/><p style="margin:0px">The following tables summarize the changes in accrued common stock payable during the six months ended June 30, 2016: </p><br/><table style="margin-top:0px; font-size:10pt" cellpadding="0" cellspacing="0"><tr style="font-size:0"><td width="241.667"></td><td width="18"></td><td width="96"></td><td width="18"></td><td width="96"></td></tr> <tr><td style="margin-top:0px" valign="bottom" width="241.667"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; border-bottom:1px solid #000000" valign="bottom" width="96"><p style="margin:0px" align="center"><b>Amount</b></p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; border-bottom:1px solid #000000" valign="bottom" width="96"><p style="margin:0px" align="center"><b>Number of Shares</b></p> </td></tr> <tr><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="241.667"><p style="margin:0px; padding-left:4.333px; text-indent:-4.333px">December 31, 2015</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="96"><p style="margin:0px" align="right">1,532,420</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="96"><p style="margin:0px" align="right">730,000</p> </td></tr> <tr><td style="margin-top:0px" valign="bottom" width="241.667"><p style="margin:0px; padding-left:4.333px; text-indent:-4.333px">IPG acquisition -- issued</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="96"><p style="margin:0px" align="right">(843,200)</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="96"><p style="margin:0px" align="right">(400,000)</p> </td></tr> <tr><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="241.667"><p style="margin:0px; padding-left:4.333px; text-indent:-4.333px">Chiefton acquisition -- issued</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="96"><p style="margin:0px" align="right">(69,400)</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="96"><p style="margin:0px" align="right">(80,000)</p> </td></tr> <tr><td style="margin-top:0px" valign="bottom" width="241.667"><p style="margin:0px; padding-left:4.333px; text-indent:-4.333px">Feinsod Agreement -- accrual</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="96"><p style="margin:0px" align="right">165,296</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="96"><p style="margin:0px" align="right">--</p> </td></tr> <tr><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="241.667"><p style="margin:0px; padding-left:4.333px; text-indent:-4.333px">Consulting services -- accrual</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="96"><p style="margin:0px" align="right">6,988</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="96"><p style="margin:0px" align="right">--</p> </td></tr> <tr><td style="margin-top:0px" valign="bottom" width="241.667"><p style="margin:0px; padding-left:4.333px; text-indent:-4.333px">Consulting services -- issued</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="96"><p style="margin:0px" align="right">(25,000)</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="96"><p style="margin:0px" align="right">(50,000)</p> </td></tr> <tr><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="241.667"><p style="margin:0px; padding-left:4.333px; text-indent:-4.333px">Employment agreements -- accrual</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="96"><p style="margin:0px" align="right">567</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="96"><p style="margin:0px" align="right">--</p> </td></tr> <tr><td style="margin-top:0px" valign="bottom" width="241.667"><p style="margin:0px; padding-left:4.333px; text-indent:-4.333px">Employment agreements -- issued</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="96"><p style="margin:0px" align="right">(132,175)</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="96"><p style="margin:0px" align="right">(50,000)</p> </td></tr> <tr><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="241.667"><p style="margin:0px; padding-left:4.333px; text-indent:-4.333px">June 30, 2016</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; background-color:#DEEAF6; border-top:1px solid #000000; border-bottom:3px double #000000" valign="bottom" width="96"><p style="margin:0px" align="right">635,496</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6; border-top:1px solid #000000; border-bottom:3px double #000000" valign="bottom" width="96"><p style="margin:0px" align="right">150,000</p> </td></tr> </table><br/><p style="margin:0px"><b>Feinsod Agreement</b></p><br/><p style="margin:0px">On August 4, 2014, we entered into an agreement with Michael Feinsod in consideration for serving as Executive Chairman of the Board and as a member of the Board and pursuant to the terms of the Executive Board and Director Agreement (the &#8220;Feinsod Agreement&#8221;). &#160;The Board approved the issuance to Infinity Capital of (a) 200,000 shares of our common stock on August 4, 2014; (b) 1,000,000 shares of our common stock upon the uplisting of our common stock to the OTC Market&#8217;s OTCQB; (c) 150,000 shares of our common stock on August 4, 2015; and (d) 150,000 shares of our common stock on August 4, 2016. &#160;Mr. Feinsod must remain a member of the Board in order for the common stock to be issued. &#160;In addition, the Feinsod Agreement requires the issuance of a number of shares of our common stock to Infinity Capital equal to 10% of any new issuances not to exceed 600,000 shares of our common stock in the aggregate during the time that Mr. Feinsod remains a member of the Board (the &#8220;New Issuance Allowance&#8221;). &#160;Under the terms of the Feinsod Agreement, the New Issuance Allowance will not be triggered upon issuances relating to convertible securities existing as of the date of the Feinsod Agreement. &#160;For illustrative purposes, if we issue 7,000,000 new shares of common stock, then the New Issuance Allowance issued to Infinity Capital would be capped at 600,000 shares of our common stock. &#160;No shares have been issued under the New Issuance Allowance.</p><br/><p style="margin:0px">The 1,000,000 shares of our common stock were valued at $2.97 per share, based on the closing price of our common stock of $3.49 on April 27, 2015, and then reduced by 15% due to restrictions on the ability to trade our shares. &#160;The other shares under the Feinsod Agreement were valued at $4.42 per share, based on the closing price of our common stock of $5.20 on August 4, 2014, and then reduced by 15% due to restriction on the ability to trade our common stock. &#160;We are recognizing expense for the unissued shares ratably over the vesting period.</p><br/><p style="margin:0px"><b>Employment Agreements</b></p><br/><p style="margin:0px">On May 13, 2015, we hired two individuals from Next Big Crop (&#8220;NBC&#8221;), an unaffiliated entity serving the cannabis industry, to service our new and existing clients. We did not purchase any existing client base from NBC and upon execution of employment agreements, granted these persons a total of 100,000 shares of our common stock with a vesting date of January 1, 2016. On the date of grant, the 100,000 shares had an initial fair value of $311,000, based on a closing price per share of our common stock of $3.11 on May 13, 2015. Due to restrictions in the ability to trade our shares, a discount of fifteen percent (15%) was applied to the fair value of the shares. After taking into consideration the illiquidity of the shares, the fair value was determined to be $264,350. &#160;One individual forfeited his shares, so expense was only recognized for 50,000 shares. &#160;These shares were issued in April 2016.</p><br/><p style="margin:0px; page-break-before:always"><b>Consulting Agreement</b></p><br/><p style="margin:0px">On July 15, 2015, we entered into an agreement with an individual to provide consulting services to customers in exchange for 50,000 shares of our common stock to be delivered on March 15, 2016. &#160;The fair value of the common stock is determined at the end of each reporting period and the pro rata amount earned is recognized as accrued stock payable over the term of the agreement. &#160;These shares were issued in March 2016.</p><br/> On August 4, 2014, we entered into an agreement with Michael Feinsod in consideration for serving as Executive Chairman of the Board and as a member of the Board and pursuant to the terms of the Executive Board and Director Agreement (the &#8220;Feinsod Agreement&#8221;). The Board approved the issuance to Infinity Capital of (a) 200,000 shares of our common stock on August 4, 2014; (b) 1,000,000 shares of our common stock upon the uplisting of our common stock to the OTC Market&#8217;s OTCQB; (c) 150,000 shares of our common stock on August 4, 2015; and (d) 150,000 shares of our common stock on August 4, 2016. Mr. Feinsod must remain a member of the Board in order for the common stock to be issued. In addition, the Feinsod Agreement requires the issuance of a number of shares of our common stock to Infinity Capital equal to 10% of any new issuances not to exceed 600,000 shares of our common stock in the aggregate during the time that Mr. Feinsod remains a member of the Board (the &#8220;New Issuance Allowance&#8221;). Under the terms of the Feinsod Agreement, the New Issuance Allowance will not be triggered upon issuances relating to convertible securities existing as of the date of the Feinsod Agreement. For illustrative purposes, if we issue 7,000,000 new shares of common stock, then the New Issuance Allowance issued to Infinity Capital would be capped at 600,000 shares of our common stock. No shares have been issued under the New Issuance Allowance. 200000 1000000 150000 150000 600000 2.97 3.49 0.15 4.42 5.20 0.15 100000 311000 3.11 0.15 264350 50000 50000 The following tables summarize the changes in accrued common stock payable during the six months ended June 30, 2016:<br /><br /><table style="margin-top:0px; font-size:10pt" cellpadding="0" cellspacing="0"><tr style="font-size:0"><td width="241.667"></td><td width="18"></td><td width="96"></td><td width="18"></td><td width="96"></td></tr> <tr><td style="margin-top:0px" valign="bottom" width="241.667"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; border-bottom:1px solid #000000" valign="bottom" width="96"><p style="margin:0px" align="center"><b>Amount</b></p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; border-bottom:1px solid #000000" valign="bottom" width="96"><p style="margin:0px" align="center"><b>Number of Shares</b></p> </td></tr> <tr><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="241.667"><p style="margin:0px; padding-left:4.333px; text-indent:-4.333px">December 31, 2015</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="96"><p style="margin:0px" align="right">1,532,420</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="96"><p style="margin:0px" align="right">730,000</p> </td></tr> <tr><td style="margin-top:0px" valign="bottom" width="241.667"><p style="margin:0px; padding-left:4.333px; text-indent:-4.333px">IPG acquisition -- issued</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="96"><p style="margin:0px" align="right">(843,200)</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="96"><p style="margin:0px" align="right">(400,000)</p> </td></tr> <tr><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="241.667"><p style="margin:0px; padding-left:4.333px; text-indent:-4.333px">Chiefton acquisition -- issued</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="96"><p style="margin:0px" align="right">(69,400)</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="96"><p style="margin:0px" align="right">(80,000)</p> </td></tr> <tr><td style="margin-top:0px" valign="bottom" width="241.667"><p style="margin:0px; padding-left:4.333px; text-indent:-4.333px">Feinsod Agreement -- accrual</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="96"><p style="margin:0px" align="right">165,296</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="96"><p style="margin:0px" align="right">--</p> </td></tr> <tr><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="241.667"><p style="margin:0px; padding-left:4.333px; text-indent:-4.333px">Consulting services -- accrual</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="96"><p style="margin:0px" align="right">6,988</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="96"><p style="margin:0px" align="right">--</p> </td></tr> <tr><td style="margin-top:0px" valign="bottom" width="241.667"><p style="margin:0px; padding-left:4.333px; text-indent:-4.333px">Consulting services -- issued</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="96"><p style="margin:0px" align="right">(25,000)</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="96"><p style="margin:0px" align="right">(50,000)</p> </td></tr> <tr><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="241.667"><p style="margin:0px; padding-left:4.333px; text-indent:-4.333px">Employment agreements -- accrual</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="96"><p style="margin:0px" align="right">567</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="96"><p style="margin:0px" align="right">--</p> </td></tr> <tr><td style="margin-top:0px" valign="bottom" width="241.667"><p style="margin:0px; padding-left:4.333px; text-indent:-4.333px">Employment agreements -- issued</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="96"><p style="margin:0px" align="right">(132,175)</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="96"><p style="margin:0px" align="right">(50,000)</p> </td></tr> <tr><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="241.667"><p style="margin:0px; padding-left:4.333px; text-indent:-4.333px">June 30, 2016</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; background-color:#DEEAF6; border-top:1px solid #000000; border-bottom:3px double #000000" valign="bottom" width="96"><p style="margin:0px" align="right">635,496</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6; border-top:1px solid #000000; border-bottom:3px double #000000" valign="bottom" width="96"><p style="margin:0px" align="right">150,000</p> </td></tr> </table> 730000 -843200 -400000 -69400 -80000 165296 6988 -25000 -50000 567 -132175 -50000 150000 <p style="margin:0px"><b>NOTE 6.&#160;&#160;&#160;COMMITMENTS AND CONTINGENCIES</b></p><br/><p style="margin:0px"><b>Legal</b></p><br/><p style="margin:0px">To the best of the Company&#8217;s knowledge and belief, no legal proceedings of merit are currently pending or threatened against the Company.</p><br/> <p style="margin:0px"><b>NOTE 7.&#160;&#160;&#160;STOCKHOLDERS&#8217; EQUITY</b></p><br/><p style="margin:0px">Share-based expense consisted of the following:</p><br/><table style="margin-top:0px; font-size:10pt" cellpadding="0" cellspacing="0" align="center"><tr style="font-size:0"><td width="311.533"></td><td width="16.667"></td><td width="83.533"></td><td width="16.667"></td><td width="81.733"></td><td width="16.667"></td><td width="79.8"></td><td width="19.8"></td><td width="82.8"></td></tr> <tr><td style="margin-top:0px" valign="bottom" width="311.533"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="top" width="16.667"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; border-bottom:1px solid #000000" valign="bottom" width="181.933" colspan="3"><p style="margin:0px" align="center"><b>Three months ended</b></p> <p style="margin:0px" align="center"><b>June 30,</b></p> </td><td style="margin-top:0px" valign="bottom" width="16.667"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; border-bottom:1px solid #000000" valign="bottom" width="182.4" colspan="3"><p style="margin:0px" align="center"><b>Six months ended</b></p> <p style="margin:0px" align="center"><b>June 30,</b></p> </td></tr> <tr><td style="margin-top:0px" valign="bottom" width="311.533"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="top" width="16.667"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; border-bottom:1px solid #000000" valign="bottom" width="83.533"><p style="margin:0px" align="center"><b>2016</b></p> </td><td style="margin-top:0px" valign="bottom" width="16.667"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; border-bottom:1px solid #000000" valign="bottom" width="81.733"><p style="margin:0px" align="center"><b>2015</b></p> </td><td style="margin-top:0px" valign="bottom" width="16.667"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; border-bottom:1px solid #000000" valign="bottom" width="79.8"><p style="margin:0px" align="center"><b>2016</b></p> </td><td style="margin-top:0px" valign="bottom" width="19.8"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; border-bottom:1px solid #000000" valign="bottom" width="82.8"><p style="margin:0px" align="center"><b>2015</b></p> </td></tr> <tr><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="311.533"><p style="margin:0px; padding-left:-1.667px">Employee Awards</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="16.667"><p style="margin:0px; padding-right:-7.333px" align="right">$</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="83.533"><p style="margin:0px" align="right">381,441</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="16.667"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="81.733"><p style="margin:0px" align="right">623,567</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="16.667"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="79.8"><p style="margin:0px" align="right">834,062</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="19.8"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="82.8"><p style="margin:0px" align="right">623,567</p> </td></tr> <tr><td style="margin-top:0px" valign="bottom" width="311.533"><p style="margin:0px; padding-left:-1.667px">Consulting Awards</p> </td><td style="margin-top:0px" valign="bottom" width="16.667"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="83.533"><p style="margin:0px" align="right">37,416</p> </td><td style="margin-top:0px" valign="bottom" width="16.667"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="81.733"><p style="margin:0px" align="right">17,454</p> </td><td style="margin-top:0px" valign="bottom" width="16.667"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="79.8"><p style="margin:0px" align="right">47,516</p> </td><td style="margin-top:0px" valign="bottom" width="19.8"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="82.8"><p style="margin:0px" align="right">17,454</p> </td></tr> <tr><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="311.533"><p style="margin:0px; padding-left:-1.667px">Feinsod Agreement</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="16.667"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="83.533"><p style="margin:0px" align="right">82,648</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="16.667"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="81.733"><p style="margin:0px" align="right">3,214,444</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="16.667"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="79.8"><p style="margin:0px" align="right">165,296</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="19.8"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="82.8"><p style="margin:0px" align="right">3,463,069</p> </td></tr> <tr><td style="margin-top:0px" valign="bottom" width="311.533"><p style="margin:0px; padding-left:-1.667px">DB Option Agreement</p> </td><td style="margin-top:0px" valign="bottom" width="16.667"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; border-bottom:1px solid #000000" valign="bottom" width="83.533"><p style="margin:0px" align="right">--</p> </td><td style="margin-top:0px" valign="bottom" width="16.667"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; border-bottom:1px solid #000000" valign="bottom" width="81.733"><p style="margin:0px" align="right">--</p> </td><td style="margin-top:0px" valign="bottom" width="16.667"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; border-bottom:1px solid #000000" valign="bottom" width="79.8"><p style="margin:0px" align="right">55,100</p> </td><td style="margin-top:0px" valign="bottom" width="19.8"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; border-bottom:1px solid #000000" valign="bottom" width="82.8"><p style="margin:0px" align="right">--</p> </td></tr> <tr><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="311.533"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="16.667"><p style="margin:0px; padding-right:-7.333px" align="right">$</p> </td><td style="margin-top:0px; background-color:#DEEAF6; border-bottom:3px double #000000" valign="bottom" width="83.533"><p style="margin:0px" align="right">501,505</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="16.667"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; background-color:#DEEAF6; border-bottom:3px double #000000" valign="bottom" width="81.733"><p style="margin:0px" align="right">3,855,465</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="16.667"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; background-color:#DEEAF6; border-bottom:3px double #000000" valign="bottom" width="79.8"><p style="margin:0px" align="right">1,101,974</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="19.8"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; background-color:#DEEAF6; border-bottom:3px double #000000" valign="bottom" width="82.8"><p style="margin:0px" align="right">4,104,090</p> </td></tr> </table><br/><p style="margin:0px"><b>Employee Stock Options</b></p><br/><p style="margin:0px">On October 29, 2014, the Board authorized the adoption of and on June 26, 2015, our stockholders ratified our 2014 Equity Incentive Plan (the &#8220;Incentive Plan&#8221;). &#160;The Incentive Plan provides for the issuance of up to 10 million shares of our common stock, and is designed to provide an additional incentive to executives, employees, directors and key consultants, aligning our long term interests with participants. &#160;In April 2016, we filed a Registration Statement on Form S-8 (the &#8220;Registration Statement&#8221;), which automatically became effective in May 2016. &#160;The Registration Statement relates to 10,000,000 shares of our common stock, which are issuable pursuant to, or upon exercise of, options that have been granted or may be granted under our Incentive Plan.</p><br/><p style="margin:0px">Share-based compensation costs for award grants to employees and directors (&#8220;Employee Awards&#8221;) are recognized on a straight-line basis over the service period for the entire award, with the amount of compensation cost recognized at any date equaling at least the portion of the award that is vested. &#160;The following summarizes the Black-Scholes assumptions used for Employee Awards granted during the six months ended June 30, 2016:</p><br/><table style="margin-top:0px; font-size:10pt" cellpadding="0" cellspacing="0"><tr style="font-size:0"><td width="244.267"></td><td width="16.667"></td><td width="94.733"></td></tr> <tr><td style="margin-top:0px" valign="bottom" width="244.267"><p style="margin:0px">Exercise price</p> </td><td style="margin-top:0px" valign="top" width="16.667"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="94.733"><p style="margin:0px" align="right">$ 0.61 -- 1.01</p> </td></tr> <tr><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="244.267"><p style="margin:0px">Stock price on date of grant</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="top" width="16.667"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="94.733"><p style="margin:0px" align="right">$ 0.63 -- 1.01</p> </td></tr> <tr><td style="margin-top:0px" valign="bottom" width="244.267"><p style="margin:0px">Volatility</p> </td><td style="margin-top:0px" valign="top" width="16.667"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="94.733"><p style="margin:0px" align="right">149 -- 153 %</p> </td></tr> <tr><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="244.267"><p style="margin:0px">Risk-free interest rate</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="top" width="16.667"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="94.733"><p style="margin:0px" align="right">0.87 &#8211; 0.90 %</p> </td></tr> <tr><td style="margin-top:0px" valign="bottom" width="244.267"><p style="margin:0px">Expected life (years)</p> </td><td style="margin-top:0px" valign="top" width="16.667"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="94.733"><p style="margin:0px" align="right">3.0</p> </td></tr> <tr><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="244.267"><p style="margin:0px">Dividend yield</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="top" width="16.667"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="94.733"><p style="margin:0px" align="right">--</p> </td></tr> </table><br/><p style="margin:0px">The following summarizes Employee Awards activity:</p><br/><table style="margin-top:0px; font-size:10pt" cellpadding="0" cellspacing="0"><tr style="font-size:0"><td width="259.667"></td><td width="18"></td><td width="84"></td><td width="18"></td><td width="90"></td><td width="18"></td><td width="84"></td><td width="18"></td><td width="82.333"></td></tr> <tr><td style="margin-top:0px" valign="bottom" width="259.667"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; border-bottom:1px solid #000000" valign="bottom" width="84"><p style="margin:0px" align="center"><b>Number of Shares</b></p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; border-bottom:1px solid #000000" valign="bottom" width="90"><p style="margin:0px" align="center"><b>Weighted-average Exercise Price per Share</b></p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; border-bottom:1px solid #000000" valign="bottom" width="84"><p style="margin:0px; padding-left:-5.867px; padding-right:-5.267px" align="center"><b>Weighted-average Remaining Contractual Term</b></p> <p style="margin:0px; padding-left:-5.867px; padding-right:-5.267px" align="center"><b>(in years)</b></p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; border-bottom:1px solid #000000" valign="bottom" width="82.333"><p style="margin:0px" align="center"><b>Aggregate Intrinsic Value</b></p> </td></tr> <tr><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="259.667"><p style="margin:0px">Outstanding at December 31, 2015</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="top" width="84"><p style="margin:0px" align="right">2,509,000</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="90"><p style="margin:0px" align="center">1.49</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="84"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="82.333"><p style="margin:0px; padding:0px">&#160;</p></td></tr> <tr><td style="margin-top:0px" valign="bottom" width="259.667"><p style="margin:0px">Granted</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="top" width="84"><p style="margin:0px" align="right">228,000</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="90"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="84"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="82.333"><p style="margin:0px; padding:0px">&#160;</p></td></tr> <tr><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="259.667"><p style="margin:0px">Forfeited</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; 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background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="top" width="84"><p style="margin:0px" align="right">547,500</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="90"><p style="margin:0px" align="center">2.79</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="84"><p style="margin:0px" align="center">3.4</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="82.333"><p style="margin:0px" align="right">--</p> </td></tr> </table><br/><p style="margin:0px; 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border-bottom:1px solid #000000" valign="bottom" width="84"><p style="margin:0px; padding-left:-5.867px; padding-right:-5.267px" align="center"><b>Weighted-average Remaining Contractual Term</b></p> <p style="margin:0px" align="center"><b>(in years)</b></p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; border-bottom:1px solid #000000" valign="bottom" width="82.333"><p style="margin:0px" align="center"><b>Aggregate Intrinsic Value</b></p> </td></tr> <tr><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="259.667"><p style="margin:0px">Outstanding at December 31, 2015</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="top" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="top" width="84"><p style="margin:0px" align="center">252,500</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="top" width="18"><p style="margin:0px" align="center">$</p> </td><td style="margin-top:0px; 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width="19.8"></td><td width="82.8"></td></tr> <tr><td style="margin-top:0px" valign="bottom" width="311.533"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="top" width="16.667"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; border-bottom:1px solid #000000" valign="bottom" width="181.933" colspan="3"><p style="margin:0px" align="center"><b>Three months ended</b></p> <p style="margin:0px" align="center"><b>June 30,</b></p> </td><td style="margin-top:0px" valign="bottom" width="16.667"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; border-bottom:1px solid #000000" valign="bottom" width="182.4" colspan="3"><p style="margin:0px" align="center"><b>Six months ended</b></p> <p style="margin:0px" align="center"><b>June 30,</b></p> </td></tr> <tr><td style="margin-top:0px" valign="bottom" width="311.533"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="top" width="16.667"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; border-bottom:1px solid #000000" valign="bottom" width="83.533"><p style="margin:0px" align="center"><b>2016</b></p> </td><td style="margin-top:0px" valign="bottom" width="16.667"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; border-bottom:1px solid #000000" valign="bottom" width="81.733"><p style="margin:0px" align="center"><b>2015</b></p> </td><td style="margin-top:0px" valign="bottom" width="16.667"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; border-bottom:1px solid #000000" valign="bottom" width="79.8"><p style="margin:0px" align="center"><b>2016</b></p> </td><td style="margin-top:0px" valign="bottom" width="19.8"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; border-bottom:1px solid #000000" valign="bottom" width="82.8"><p style="margin:0px" align="center"><b>2015</b></p> </td></tr> <tr><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="311.533"><p style="margin:0px; padding-left:-1.667px">Employee Awards</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="16.667"><p style="margin:0px; padding-right:-7.333px" align="right">$</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="83.533"><p style="margin:0px" align="right">381,441</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="16.667"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="81.733"><p style="margin:0px" align="right">623,567</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="16.667"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="79.8"><p style="margin:0px" align="right">834,062</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="19.8"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="82.8"><p style="margin:0px" align="right">623,567</p> </td></tr> <tr><td style="margin-top:0px" valign="bottom" width="311.533"><p style="margin:0px; padding-left:-1.667px">Consulting Awards</p> </td><td style="margin-top:0px" valign="bottom" width="16.667"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="83.533"><p style="margin:0px" align="right">37,416</p> </td><td style="margin-top:0px" valign="bottom" width="16.667"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="81.733"><p style="margin:0px" align="right">17,454</p> </td><td style="margin-top:0px" valign="bottom" width="16.667"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="79.8"><p style="margin:0px" align="right">47,516</p> </td><td style="margin-top:0px" valign="bottom" width="19.8"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="82.8"><p style="margin:0px" align="right">17,454</p> </td></tr> <tr><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="311.533"><p style="margin:0px; padding-left:-1.667px">Feinsod Agreement</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="16.667"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="83.533"><p style="margin:0px" align="right">82,648</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="16.667"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="81.733"><p style="margin:0px" align="right">3,214,444</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="16.667"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="79.8"><p style="margin:0px" align="right">165,296</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="19.8"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="82.8"><p style="margin:0px" align="right">3,463,069</p> </td></tr> <tr><td style="margin-top:0px" valign="bottom" width="311.533"><p style="margin:0px; padding-left:-1.667px">DB Option Agreement</p> </td><td style="margin-top:0px" valign="bottom" width="16.667"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; border-bottom:1px solid #000000" valign="bottom" width="83.533"><p style="margin:0px" align="right">--</p> </td><td style="margin-top:0px" valign="bottom" width="16.667"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; border-bottom:1px solid #000000" valign="bottom" width="81.733"><p style="margin:0px" align="right">--</p> </td><td style="margin-top:0px" valign="bottom" width="16.667"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; border-bottom:1px solid #000000" valign="bottom" width="79.8"><p style="margin:0px" align="right">55,100</p> </td><td style="margin-top:0px" valign="bottom" width="19.8"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; border-bottom:1px solid #000000" valign="bottom" width="82.8"><p style="margin:0px" align="right">--</p> </td></tr> <tr><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="311.533"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="16.667"><p style="margin:0px; padding-right:-7.333px" align="right">$</p> </td><td style="margin-top:0px; background-color:#DEEAF6; border-bottom:3px double #000000" valign="bottom" width="83.533"><p style="margin:0px" align="right">501,505</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="16.667"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; background-color:#DEEAF6; border-bottom:3px double #000000" valign="bottom" width="81.733"><p style="margin:0px" align="right">3,855,465</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="16.667"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; background-color:#DEEAF6; border-bottom:3px double #000000" valign="bottom" width="79.8"><p style="margin:0px" align="right">1,101,974</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="19.8"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; background-color:#DEEAF6; border-bottom:3px double #000000" valign="bottom" width="82.8"><p style="margin:0px" align="right">4,104,090</p> </td></tr> </table> 381441 623567 834062 623567 37416 17454 47516 17454 82648 3214444 165296 3463069 55100 501505 3855465 1101974 4104090 The following summarizes the Black-Scholes assumptions used for Employee Awards granted during the six months ended June 30, 2016:<br /><br /><table style="margin-top:0px; font-size:10pt" cellpadding="0" cellspacing="0"><tr style="font-size:0"><td width="244.267"></td><td width="16.667"></td><td width="94.733"></td></tr> <tr><td style="margin-top:0px" valign="bottom" width="244.267"><p style="margin:0px">Exercise price</p> </td><td style="margin-top:0px" valign="top" width="16.667"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="94.733"><p style="margin:0px" align="right">$ 0.61 -- 1.01</p> </td></tr> <tr><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="244.267"><p style="margin:0px">Stock price on date of grant</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="top" width="16.667"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="94.733"><p style="margin:0px" align="right">$ 0.63 -- 1.01</p> </td></tr> <tr><td style="margin-top:0px" valign="bottom" width="244.267"><p style="margin:0px">Volatility</p> </td><td style="margin-top:0px" valign="top" width="16.667"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="94.733"><p style="margin:0px" align="right">149 -- 153 %</p> </td></tr> <tr><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="244.267"><p style="margin:0px">Risk-free interest rate</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="top" width="16.667"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="94.733"><p style="margin:0px" align="right">0.87 &#8211; 0.90 %</p> </td></tr> <tr><td style="margin-top:0px" valign="bottom" width="244.267"><p style="margin:0px">Expected life (years)</p> </td><td style="margin-top:0px" valign="top" width="16.667"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="94.733"><p style="margin:0px" align="right">3.0</p> </td></tr> <tr><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="244.267"><p style="margin:0px">Dividend yield</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="top" width="16.667"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="94.733"><p style="margin:0px" align="right">--</p> </td></tr> </table> 0.61 1.01 0.63 1.01 1.49 1.53 0.0087 0.0090 P3Y The following summarizes Employee Awards activity:<br /><br /><table style="margin-top:0px; font-size:10pt" cellpadding="0" cellspacing="0"><tr style="font-size:0"><td width="259.667"></td><td width="18"></td><td width="84"></td><td width="18"></td><td width="90"></td><td width="18"></td><td width="84"></td><td width="18"></td><td width="82.333"></td></tr> <tr><td style="margin-top:0px" valign="bottom" width="259.667"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; border-bottom:1px solid #000000" valign="bottom" width="84"><p style="margin:0px" align="center"><b>Number of Shares</b></p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; border-bottom:1px solid #000000" valign="bottom" width="90"><p style="margin:0px" align="center"><b>Weighted-average Exercise Price per Share</b></p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; border-bottom:1px solid #000000" valign="bottom" width="84"><p style="margin:0px; padding-left:-5.867px; padding-right:-5.267px" align="center"><b>Weighted-average Remaining Contractual Term</b></p> <p style="margin:0px; padding-left:-5.867px; padding-right:-5.267px" align="center"><b>(in years)</b></p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; border-bottom:1px solid #000000" valign="bottom" width="82.333"><p style="margin:0px" align="center"><b>Aggregate Intrinsic Value</b></p> </td></tr> <tr><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="259.667"><p style="margin:0px">Outstanding at December 31, 2015</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="top" width="84"><p style="margin:0px" align="right">2,509,000</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="90"><p style="margin:0px" align="center">1.49</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="84"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="82.333"><p style="margin:0px; padding:0px">&#160;</p></td></tr> <tr><td style="margin-top:0px" valign="bottom" width="259.667"><p style="margin:0px">Granted</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="top" width="84"><p style="margin:0px" align="right">228,000</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="90"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="84"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="82.333"><p style="margin:0px; padding:0px">&#160;</p></td></tr> <tr><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="259.667"><p style="margin:0px">Forfeited</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="top" width="84"><p style="margin:0px" align="right">(235,650)</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="90"><p style="margin:0px" align="center">0.75</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="84"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="82.333"><p style="margin:0px; padding:0px">&#160;</p></td></tr> <tr><td style="margin-top:0px" valign="bottom" width="259.667"><p style="margin:0px">Outstanding at June 30, 2016</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; border-top:1px solid #000000; border-bottom:3px double #000000" valign="top" width="84"><p style="margin:0px" align="right">2,501,350</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px" valign="bottom" width="90"><p style="margin:0px" align="center">1.48</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="84"><p style="margin:0px" align="center">2.6</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px" valign="bottom" width="82.333"><p style="margin:0px" align="right">203,000</p> </td></tr> <tr><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="259.667"><p style="margin:0px">Exercisable at June 30, 2016</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="top" width="84"><p style="margin:0px" align="right">547,500</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="90"><p style="margin:0px" align="center">2.79</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="84"><p style="margin:0px" align="center">3.4</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="82.333"><p style="margin:0px" align="right">--</p> </td></tr> </table><table style="margin-top:0px; font-size:10pt" cellpadding="0" cellspacing="0"><tr style="font-size:0"><td width="259.667"></td><td width="18"></td><td width="84"></td><td width="18"></td><td width="90"></td><td width="18"></td><td width="84"></td><td width="18"></td><td width="82.333"></td></tr> <tr><td style="margin-top:0px" valign="top" width="259.667"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="top" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; border-bottom:1px solid #000000" valign="bottom" width="84"><p style="margin:0px" align="center"><b>Number of Shares</b></p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; border-bottom:1px solid #000000" valign="bottom" width="90"><p style="margin:0px" align="center"><b>Weighted-average Exercise Price per Share</b></p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; border-bottom:1px solid #000000" valign="bottom" width="84"><p style="margin:0px; padding-left:-5.867px; padding-right:-5.267px" align="center"><b>Weighted-average Remaining Contractual Term</b></p> <p style="margin:0px" align="center"><b>(in years)</b></p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; border-bottom:1px solid #000000" valign="bottom" width="82.333"><p style="margin:0px" align="center"><b>Aggregate Intrinsic Value</b></p> </td></tr> <tr><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="259.667"><p style="margin:0px">Outstanding at December 31, 2015</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="top" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="top" width="84"><p style="margin:0px" align="center">252,500</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="top" width="18"><p style="margin:0px" align="center">$</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="top" width="90"><p style="margin:0px" align="center">3.62</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="top" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="top" width="84"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="top" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="top" width="82.333"><p style="margin:0px; padding:0px">&#160;</p></td></tr> <tr><td style="margin-top:0px" valign="bottom" width="259.667"><p style="margin:0px">Outstanding at June 30, 2016</p> </td><td style="margin-top:0px" valign="top" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="top" width="84"><p style="margin:0px" align="center">252,500</p> </td><td style="margin-top:0px" valign="top" width="18"><p style="margin:0px" align="center">$</p> </td><td style="margin-top:0px" valign="top" width="90"><p style="margin:0px" align="center">3.62</p> </td><td style="margin-top:0px" valign="top" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="top" width="84"><p style="margin:0px" align="center">0.9</p> </td><td style="margin-top:0px" valign="top" width="18"><p style="margin:0px" align="center">$</p> </td><td style="margin-top:0px" valign="top" width="82.333"><p style="margin:0px" align="center">2,250</p> </td></tr> <tr><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="259.667"><p style="margin:0px">Exercisable at June 30, 2016</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="top" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="top" width="84"><p style="margin:0px" align="center">245,000</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="top" width="18"><p style="margin:0px" align="center">$</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="top" width="90"><p style="margin:0px" align="center">&#160;3.71</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="top" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="top" width="84"><p style="margin:0px" align="center">0.5</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="top" width="18"><p style="margin:0px" align="center">$</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="top" width="82.333"><p style="margin:0px" align="center">2,250</p> </td></tr> </table><table style="margin-top:0px; font-size:10pt" cellpadding="0" cellspacing="0"><tr style="font-size:0"><td width="259.667"></td><td width="18"></td><td width="84"></td><td width="18"></td><td width="90"></td><td width="18"></td><td width="84"></td><td width="18"></td><td width="82.333"></td></tr> <tr><td style="margin-top:0px" valign="top" width="259.667"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="top" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; border-bottom:1px solid #000000" valign="bottom" width="84"><p style="margin:0px" align="center"><b>Number of Shares</b></p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; border-bottom:1px solid #000000" valign="bottom" width="90"><p style="margin:0px" align="center"><b>Weighted-average Exercise Price per Share</b></p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; border-bottom:1px solid #000000" valign="bottom" width="84"><p style="margin:0px; padding-left:-5.867px; padding-right:-5.267px" align="center"><b>Weighted-average Remaining Contractual Term</b></p> <p style="margin:0px" align="center"><b>(in years)</b></p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; border-bottom:1px solid #000000" valign="bottom" width="82.333"><p style="margin:0px" align="center"><b>Aggregate Intrinsic Value</b></p> </td></tr> <tr><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="259.667"><p style="margin:0px">Outstanding at December 31, 2015</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="top" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="top" width="84"><p style="margin:0px" align="right">597,200</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="top" width="18"><p style="margin:0px" align="center">$</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="top" width="90"><p style="margin:0px" align="center">1.41</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="top" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="top" width="84"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="top" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="top" width="82.333"><p style="margin:0px; padding:0px">&#160;</p></td></tr> <tr><td style="margin-top:0px" valign="bottom" width="259.667"><p style="margin:0px">Granted</p> </td><td style="margin-top:0px" valign="top" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; border-bottom:1px solid #000000" valign="top" width="84"><p style="margin:0px" align="right">659,000</p> </td><td style="margin-top:0px" valign="top" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="top" width="90"><p style="margin:0px" align="center">1.07</p> </td><td style="margin-top:0px" valign="top" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="top" width="84"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="top" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="top" width="82.333"><p style="margin:0px; padding:0px">&#160;</p></td></tr> <tr><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="259.667"><p style="margin:0px">Outstanding at June 30, 2016</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="top" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6; border-bottom:3px double #000000" valign="top" width="84"><p style="margin:0px" align="right">1,256,200</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="top" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="top" width="90"><p style="margin:0px" align="center">1.41</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="top" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="top" width="84"><p style="margin:0px" align="center">3.0</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="top" width="18"><p style="margin:0px" align="center">$</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="top" width="82.333"><p style="margin:0px" align="center">--</p> </td></tr> <tr><td style="margin-top:0px" valign="bottom" width="259.667"><p style="margin:0px">Exercisable at June 30, 2016</p> </td><td style="margin-top:0px" valign="top" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="top" width="84"><p style="margin:0px" align="right">1,256,200</p> </td><td style="margin-top:0px" valign="top" width="18"><p style="margin:0px" align="center">$</p> </td><td style="margin-top:0px" valign="top" width="90"><p style="margin:0px" align="center">1.23</p> </td><td style="margin-top:0px" valign="top" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="top" width="84"><p style="margin:0px" align="center">3.0</p> </td><td style="margin-top:0px" valign="top" width="18"><p style="margin:0px" align="center">$</p> </td><td style="margin-top:0px" valign="top" width="82.333"><p style="margin:0px" align="center">--</p> </td></tr> </table> 2509000 1.49 228000 235650 0.75 2501350 1.48 P2Y219D 203000 547500 2.79 P3Y146D 252500 3.62 252500 3.62 P328D 2250 245000 3.71 P6M 2250 597200 1.41 659000 1.07 1256200 1.41 P3Y 1256200 1.23 P3Y The following summarizes the Black-Scholes assumptions used to estimate the fair value of the DB Option Agreement warrants:<br /><br /><table style="margin-top:0px; font-size:10pt" cellpadding="0" cellspacing="0"><tr style="font-size:0"><td width="259.667"></td><td width="18"></td><td width="84"></td></tr> <tr><td style="margin-top:0px; background-color:#DEEAF6" valign="top" width="259.667"><p style="margin:0px">Volatility</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="top" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="84"><p style="margin:0px" align="center">150 %</p> </td></tr> <tr><td style="margin-top:0px" valign="bottom" width="259.667"><p style="margin:0px; padding-left:4.333px; text-indent:-4.333px">Risk-free interest rate</p> </td><td style="margin-top:0px" valign="top" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="top" width="84"><p style="margin:0px" align="center">1.2 %</p> </td></tr> <tr><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="259.667"><p style="margin:0px; padding-left:4.333px; text-indent:-4.333px">Expected life (years)</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="top" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="top" width="84"><p style="margin:0px" align="center">5.0</p> </td></tr> <tr><td style="margin-top:0px" valign="bottom" width="259.667"><p style="margin:0px; padding-left:4.333px; text-indent:-4.333px">Dividend yield</p> </td><td style="margin-top:0px" valign="top" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="top" width="84"><p style="margin:0px" align="center">--</p> </td></tr> </table> 1.50 0.012 P5Y <p style="margin:0px"><b>NOTE 8. &#160;NET LOSS PER SHARE</b></p><br/><p style="margin:0px">Basic net loss per share is computed by dividing net loss by the weighted-average number of common shares outstanding during the reporting period. &#160;Diluted net loss per share is computed similarly to basic loss per share, except that it includes the potential dilution that could occur if dilutive securities are exercised.</p><br/><p style="margin:0px">The following table presents a reconciliation of the denominators used in the computation of net loss per share &#8211; basic and diluted:</p><br/><table style="margin-top:0px; font-size:10pt" cellpadding="0" cellspacing="0" align="center"><tr style="font-size:0"><td width="311.533"></td><td width="16.667"></td><td width="83.533"></td><td width="16.667"></td><td width="81.733"></td><td width="16.667"></td><td width="79.8"></td><td width="19.8"></td><td width="82.8"></td></tr> <tr><td style="margin-top:0px" valign="bottom" width="311.533"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="top" width="16.667"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; border-bottom:1px solid #000000" valign="bottom" width="181.933" colspan="3"><p style="margin:0px" align="center"><b>Three months ended</b></p> <p style="margin:0px" align="center"><b>June 30,</b></p> </td><td style="margin-top:0px" valign="bottom" width="16.667"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; border-bottom:1px solid #000000" valign="bottom" width="182.4" colspan="3"><p style="margin:0px" align="center"><b>Six months ended</b></p> <p style="margin:0px" align="center"><b>June 30,</b></p> </td></tr> <tr><td style="margin-top:0px" valign="bottom" width="311.533"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="top" width="16.667"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; border-bottom:1px solid #000000" valign="bottom" width="83.533"><p style="margin:0px" align="center"><b>2016</b></p> </td><td style="margin-top:0px" valign="bottom" width="16.667"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; border-bottom:1px solid #000000" valign="bottom" width="81.733"><p style="margin:0px" align="center"><b>2015</b></p> </td><td style="margin-top:0px" valign="bottom" width="16.667"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; border-bottom:1px solid #000000" valign="bottom" width="79.8"><p style="margin:0px" align="center"><b>2016</b></p> </td><td style="margin-top:0px" valign="bottom" width="19.8"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; border-bottom:1px solid #000000" valign="bottom" width="82.8"><p style="margin:0px" align="center"><b>2015</b></p> </td></tr> <tr><td style="margin-top:0px; background-color:#DEEAF6" valign="top" width="311.533"><p style="margin:0px; padding-left:-1.667px">Net loss</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="16.667"><p style="margin:0px; padding-right:-7.333px" align="right">$</p> </td><td style="margin-top:0px; background-color:#DEEAF6; border-bottom:3px double #000000" valign="bottom" width="83.533"><p style="margin:0px" align="right">(1,336,471)</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="16.667"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; background-color:#DEEAF6; border-bottom:3px double #000000" valign="bottom" width="81.733"><p style="margin:0px" align="right">(4,349,222)</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="16.667"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; background-color:#DEEAF6; border-bottom:3px double #000000" valign="bottom" width="79.8"><p style="margin:0px" align="right">(2,524,703)</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="19.8"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; background-color:#DEEAF6; border-bottom:3px double #000000" valign="bottom" width="82.8"><p style="margin:0px" align="right">(5,177,715)</p> </td></tr> <tr><td style="margin-top:0px" valign="top" width="311.533"><p style="margin:0px; padding-left:-1.667px">Weighted average outstanding shares of common stock</p> </td><td style="margin-top:0px" valign="bottom" width="16.667"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="83.533"><p style="margin:0px" align="right">15,384,762</p> </td><td style="margin-top:0px" valign="bottom" width="16.667"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="81.733"><p style="margin:0px" align="right">14,054,673</p> </td><td style="margin-top:0px" valign="bottom" width="16.667"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="79.8"><p style="margin:0px" align="right">15,157,509</p> </td><td style="margin-top:0px" valign="bottom" width="19.8"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="82.8"><p style="margin:0px" align="right">13,577,719</p> </td></tr> <tr><td style="margin-top:0px; background-color:#DEEAF6" valign="top" width="311.533"><p style="margin:0px; padding-left:-1.667px">Dilutive effect of stock options and warrants</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="16.667"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6; border-bottom:1px solid #000000" valign="bottom" width="83.533"><p style="margin:0px" align="right">--</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="16.667"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6; border-bottom:1px solid #000000" valign="bottom" width="81.733"><p style="margin:0px" align="right">--</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="16.667"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6; border-bottom:1px solid #000000" valign="bottom" width="79.8"><p style="margin:0px" align="right">--</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="19.8"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6; border-bottom:1px solid #000000" valign="bottom" width="82.8"><p style="margin:0px" align="right">--</p> </td></tr> <tr><td style="margin-top:0px" valign="top" width="311.533"><p style="margin:0px; padding-left:-1.667px">Common stock and equivalents</p> </td><td style="margin-top:0px" valign="bottom" width="16.667"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; border-bottom:3px double #000000" valign="bottom" width="83.533"><p style="margin:0px" align="right">15,384,762</p> </td><td style="margin-top:0px" valign="bottom" width="16.667"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; border-bottom:3px double #000000" valign="bottom" width="81.733"><p style="margin:0px" align="right">14,054,673</p> </td><td style="margin-top:0px" valign="bottom" width="16.667"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; border-bottom:3px double #000000" valign="bottom" width="79.8"><p style="margin:0px" align="right">15,157,509</p> </td><td style="margin-top:0px" valign="bottom" width="19.8"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; border-bottom:3px double #000000" valign="bottom" width="82.8"><p style="margin:0px" align="right">13,577,719</p> </td></tr> <tr><td style="margin-top:0px; background-color:#DEEAF6" valign="top" width="311.533"><p style="margin:0px; padding-left:-1.667px">Net loss per share &#8211; Basic and diluted</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="16.667"><p style="margin:0px; padding-right:-7.333px" align="right">$</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="83.533"><p style="margin:0px" align="right">(0.09)</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="16.667"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="81.733"><p style="margin:0px" align="right">(0.31)</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="16.667"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="79.8"><p style="margin:0px" align="right">(0.17)</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="19.8"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="82.8"><p style="margin:0px" align="right">(0.38)</p> </td></tr> </table><br/><p style="margin:0px">Outstanding stock options and common stock warrants are considered anti-dilutive because we are in a net loss position.</p><br/> The following table presents a reconciliation of the denominators used in the computation of net loss per share &#x2013; basic and diluted:<br /><br /><table style="margin-top:0px; font-size:10pt" cellpadding="0" cellspacing="0" align="center"><tr style="font-size:0"><td width="311.533"></td><td width="16.667"></td><td width="83.533"></td><td width="16.667"></td><td width="81.733"></td><td width="16.667"></td><td width="79.8"></td><td width="19.8"></td><td width="82.8"></td></tr> <tr><td style="margin-top:0px" valign="bottom" width="311.533"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="top" width="16.667"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; border-bottom:1px solid #000000" valign="bottom" width="181.933" colspan="3"><p style="margin:0px" align="center"><b>Three months ended</b></p> <p style="margin:0px" align="center"><b>June 30,</b></p> </td><td style="margin-top:0px" valign="bottom" width="16.667"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; border-bottom:1px solid #000000" valign="bottom" width="182.4" colspan="3"><p style="margin:0px" align="center"><b>Six months ended</b></p> <p style="margin:0px" align="center"><b>June 30,</b></p> </td></tr> <tr><td style="margin-top:0px" valign="bottom" width="311.533"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="top" width="16.667"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; border-bottom:1px solid #000000" valign="bottom" width="83.533"><p style="margin:0px" align="center"><b>2016</b></p> </td><td style="margin-top:0px" valign="bottom" width="16.667"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; border-bottom:1px solid #000000" valign="bottom" width="81.733"><p style="margin:0px" align="center"><b>2015</b></p> </td><td style="margin-top:0px" valign="bottom" width="16.667"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; border-bottom:1px solid #000000" valign="bottom" width="79.8"><p style="margin:0px" align="center"><b>2016</b></p> </td><td style="margin-top:0px" valign="bottom" width="19.8"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; border-bottom:1px solid #000000" valign="bottom" width="82.8"><p style="margin:0px" align="center"><b>2015</b></p> </td></tr> <tr><td style="margin-top:0px; background-color:#DEEAF6" valign="top" width="311.533"><p style="margin:0px; padding-left:-1.667px">Net loss</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="16.667"><p style="margin:0px; padding-right:-7.333px" align="right">$</p> </td><td style="margin-top:0px; background-color:#DEEAF6; border-bottom:3px double #000000" valign="bottom" width="83.533"><p style="margin:0px" align="right">(1,336,471)</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="16.667"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; background-color:#DEEAF6; border-bottom:3px double #000000" valign="bottom" width="81.733"><p style="margin:0px" align="right">(4,349,222)</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="16.667"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; background-color:#DEEAF6; border-bottom:3px double #000000" valign="bottom" width="79.8"><p style="margin:0px" align="right">(2,524,703)</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="19.8"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; background-color:#DEEAF6; border-bottom:3px double #000000" valign="bottom" width="82.8"><p style="margin:0px" align="right">(5,177,715)</p> </td></tr> <tr><td style="margin-top:0px" valign="top" width="311.533"><p style="margin:0px; padding-left:-1.667px">Weighted average outstanding shares of common stock</p> </td><td style="margin-top:0px" valign="bottom" width="16.667"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="83.533"><p style="margin:0px" align="right">15,384,762</p> </td><td style="margin-top:0px" valign="bottom" width="16.667"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="81.733"><p style="margin:0px" align="right">14,054,673</p> </td><td style="margin-top:0px" valign="bottom" width="16.667"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="79.8"><p style="margin:0px" align="right">15,157,509</p> </td><td style="margin-top:0px" valign="bottom" width="19.8"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="82.8"><p style="margin:0px" align="right">13,577,719</p> </td></tr> <tr><td style="margin-top:0px; background-color:#DEEAF6" valign="top" width="311.533"><p style="margin:0px; padding-left:-1.667px">Dilutive effect of stock options and warrants</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="16.667"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6; border-bottom:1px solid #000000" valign="bottom" width="83.533"><p style="margin:0px" align="right">--</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="16.667"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6; border-bottom:1px solid #000000" valign="bottom" width="81.733"><p style="margin:0px" align="right">--</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="16.667"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6; border-bottom:1px solid #000000" valign="bottom" width="79.8"><p style="margin:0px" align="right">--</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="19.8"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6; border-bottom:1px solid #000000" valign="bottom" width="82.8"><p style="margin:0px" align="right">--</p> </td></tr> <tr><td style="margin-top:0px" valign="top" width="311.533"><p style="margin:0px; padding-left:-1.667px">Common stock and equivalents</p> </td><td style="margin-top:0px" valign="bottom" width="16.667"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; border-bottom:3px double #000000" valign="bottom" width="83.533"><p style="margin:0px" align="right">15,384,762</p> </td><td style="margin-top:0px" valign="bottom" width="16.667"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; border-bottom:3px double #000000" valign="bottom" width="81.733"><p style="margin:0px" align="right">14,054,673</p> </td><td style="margin-top:0px" valign="bottom" width="16.667"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; border-bottom:3px double #000000" valign="bottom" width="79.8"><p style="margin:0px" align="right">15,157,509</p> </td><td style="margin-top:0px" valign="bottom" width="19.8"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; border-bottom:3px double #000000" valign="bottom" width="82.8"><p style="margin:0px" align="right">13,577,719</p> </td></tr> <tr><td style="margin-top:0px; background-color:#DEEAF6" valign="top" width="311.533"><p style="margin:0px; padding-left:-1.667px">Net loss per share &#8211; Basic and diluted</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="16.667"><p style="margin:0px; padding-right:-7.333px" align="right">$</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="83.533"><p style="margin:0px" align="right">(0.09)</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="16.667"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="81.733"><p style="margin:0px" align="right">(0.31)</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="16.667"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="79.8"><p style="margin:0px" align="right">(0.17)</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="19.8"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="82.8"><p style="margin:0px" align="right">(0.38)</p> </td></tr> </table> 15384762 14054673 15157509 13577719 15384762 14054673 15157509 13577719 <p style="margin:0px"><b>NOTE 9.&#160;&#160;&#160;SUBSEQUENT EVENTS</b></p><br/><p style="margin:0px">There were no events subsequent to June 30, 2016, and up to the date of this filing that would require disclosure.</p><br/> <p style="margin:0px"><b>NOTE 10.&#160;&#160;&#160;SEGMENT INFORMATION</b></p><br/><p style="margin:0px">Our operations are organized into four segments: Security and Cash Management Services; Marketing and Products; Consulting and Advisory; and Finance and Real Estate. &#160;All revenue originates and all assets are located in the United States. &#160;We have revised our disclosure to correspond to the information provided to the chief operating decision maker.</p><br/><p style="margin:0px"><b>Three months ended June 30</b></p><br/><table style="margin-top:0px; font-size:10pt" cellpadding="0" cellspacing="0"><tr style="font-size:0"><td width="175.667"></td><td width="17.533"></td><td width="96.467"></td><td width="18"></td><td width="84"></td><td width="18"></td><td width="84"></td><td width="18"></td><td width="84"></td><td width="18"></td><td width="78"></td></tr> <tr><td style="margin-top:0px; border-bottom:1px solid #000000" valign="bottom" width="175.667"><p style="margin:0px" align="center"><b>2016</b></p> </td><td style="margin-top:0px" valign="bottom" width="17.533"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; border-bottom:1px solid #000000" valign="bottom" width="96.467"><p style="margin:0px" align="center"><b>Security and Cash Management</b></p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; border-bottom:1px solid #000000" valign="bottom" width="84"><p style="margin:0px" align="center"><b>Marketing and Products</b></p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; border-bottom:1px solid #000000" valign="bottom" width="84"><p style="margin:0px" align="center"><b>Consulting and Advisory</b></p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; border-bottom:1px solid #000000" valign="bottom" width="84"><p style="margin:0px" align="center"><b>Finance and Real Estate</b></p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; border-bottom:1px solid #000000" valign="bottom" width="78"><p style="margin:0px" align="center"><b>Total</b></p> </td></tr> <tr><td style="margin-top:0px; background-color:#DEEAF6" valign="top" width="175.667"><p style="margin:0px">Revenues, net</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="17.533"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="96.467"><p style="margin:0px" align="right">531,663</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="84"><p style="margin:0px" align="right">66,041</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="84"><p style="margin:0px" align="right">72,774</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="84"><p style="margin:0px" align="right">31,464</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="78"><p style="margin:0px" align="right">701,942</p> </td></tr> <tr><td style="margin-top:0px" valign="top" width="175.667"><p style="margin:0px">Costs and expenses</p> </td><td style="margin-top:0px" valign="bottom" width="17.533"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="96.467"><p style="margin:0px" align="right">(534,620)</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="84"><p style="margin:0px" align="right">(79,522)</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="84"><p style="margin:0px" align="right">(99,794)</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="84"><p style="margin:0px" align="right">(11,593)</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="78"><p style="margin:0px" align="right">(725,529)</p> </td></tr> <tr><td style="margin-top:0px; background-color:#DEEAF6" valign="top" width="175.667"><p style="margin:0px">Other expense</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="17.533"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="96.467"><p style="margin:0px" align="right">--</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="84"><p style="margin:0px" align="right">--</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="84"><p style="margin:0px" align="right">--</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="84"><p style="margin:0px" align="right">(1,110)</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="78"><p style="margin:0px" align="right">(1,110)</p> </td></tr> <tr><td style="margin-top:0px" valign="top" width="175.667"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="17.533"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; border-top:1px solid #000000; border-bottom:3px double #000000" valign="bottom" width="96.467"><p style="margin:0px" align="right">(2,957)</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; border-top:1px solid #000000; border-bottom:3px double #000000" valign="bottom" width="84"><p style="margin:0px" align="right">(13,481)</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; border-top:1px solid #000000; border-bottom:3px double #000000" valign="bottom" width="84"><p style="margin:0px" align="right">(27,020)</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; border-top:1px solid #000000; border-bottom:3px double #000000" valign="bottom" width="84"><p style="margin:0px" align="right">18,761</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; border-top:1px solid #000000" valign="bottom" width="78"><p style="margin:0px" align="right">(24,697)</p> </td></tr> <tr><td style="margin-top:0px; background-color:#DEEAF6" valign="top" width="175.667"><p style="margin:0px">Corporate expenses</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="17.533"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="96.467"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="84"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="84"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="84"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6; border-bottom:1px solid #000000" valign="bottom" width="78"><p style="margin:0px" align="right">(1,311,774)</p> </td></tr> <tr><td style="margin-top:0px" valign="top" width="175.667"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="17.533"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="96.467"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="84"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="84"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="84"><p style="margin:0px" align="right">Net loss</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; border-bottom:3px double #000000" valign="bottom" width="78"><p style="margin:0px" align="right">(1,336,471)</p> </td></tr> </table><br/><table style="margin-top:0px; font-size:10pt" cellpadding="0" cellspacing="0"><tr style="font-size:0"><td width="175.667"></td><td width="17.533"></td><td width="96.467"></td><td width="18"></td><td width="84"></td><td width="18"></td><td width="84"></td><td width="18"></td><td width="84"></td><td width="18"></td><td width="78"></td></tr> <tr><td style="margin-top:0px; border-bottom:1px solid #000000" valign="bottom" width="175.667"><p style="margin:0px" align="center"><b>2015</b></p> </td><td style="margin-top:0px" valign="bottom" width="17.533"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; border-bottom:1px solid #000000" valign="bottom" width="96.467"><p style="margin:0px" align="center"><b>Security and Cash Management</b></p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; border-bottom:1px solid #000000" valign="bottom" width="84"><p style="margin:0px" align="center"><b>Marketing and Products</b></p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; border-bottom:1px solid #000000" valign="bottom" width="84"><p style="margin:0px" align="center"><b>Consulting and Advisory</b></p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; border-bottom:1px solid #000000" valign="bottom" width="84"><p style="margin:0px" align="center"><b>Finance and Real Estate</b></p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; border-bottom:1px solid #000000" valign="bottom" width="78"><p style="margin:0px" align="center"><b>Total</b></p> </td></tr> <tr><td style="margin-top:0px; background-color:#DEEAF6" valign="top" width="175.667"><p style="margin:0px">Revenues, net</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="17.533"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="96.467"><p style="margin:0px" align="right">376,722</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="84"><p style="margin:0px" align="right">12,569</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="84"><p style="margin:0px" align="right">--</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="84"><p style="margin:0px" align="right">37,911</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="78"><p style="margin:0px" align="right">427,202</p> </td></tr> <tr><td style="margin-top:0px" valign="top" width="175.667"><p style="margin:0px">Costs and expenses</p> </td><td style="margin-top:0px" valign="bottom" width="17.533"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="96.467"><p style="margin:0px" align="right">(380,852)</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="84"><p style="margin:0px" align="right">(32,438)</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="84"><p style="margin:0px" align="right">--</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="84"><p style="margin:0px" align="right">(18,531)</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="78"><p style="margin:0px" align="right">(431,821)</p> </td></tr> <tr><td style="margin-top:0px; background-color:#DEEAF6" valign="top" width="175.667"><p style="margin:0px">Other expense</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="17.533"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="96.467"><p style="margin:0px" align="right">--</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="84"><p style="margin:0px" align="right">--</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="84"><p style="margin:0px" align="right">--</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="84"><p style="margin:0px" align="right">(3,493)</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="78"><p style="margin:0px" align="right">(3,493)</p> </td></tr> <tr><td style="margin-top:0px" valign="top" width="175.667"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="17.533"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; border-top:1px solid #000000; border-bottom:3px double #000000" valign="bottom" width="96.467"><p style="margin:0px" align="right">(4,130)</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; border-top:1px solid #000000; border-bottom:3px double #000000" valign="bottom" width="84"><p style="margin:0px" align="right">(19,869)</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; border-top:1px solid #000000; border-bottom:3px double #000000" valign="bottom" width="84"><p style="margin:0px" align="right">--</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; border-top:1px solid #000000; border-bottom:3px double #000000" valign="bottom" width="84"><p style="margin:0px" align="right">15,887</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; border-top:1px solid #000000" valign="bottom" width="78"><p style="margin:0px" align="right">(8,112)</p> </td></tr> <tr><td style="margin-top:0px; background-color:#DEEAF6" valign="top" width="175.667"><p style="margin:0px">Corporate expenses</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="17.533"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="96.467"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="84"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="84"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="84"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6; border-bottom:1px solid #000000" valign="bottom" width="78"><p style="margin:0px" align="right">(4,341,110)</p> </td></tr> <tr><td style="margin-top:0px" valign="top" width="175.667"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="17.533"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="96.467"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="84"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="84"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="84"><p style="margin:0px" align="right">Net loss</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; border-bottom:3px double #000000" valign="bottom" width="78"><p style="margin:0px" align="right">(4,349,222)</p> </td></tr> </table><br/><p style="margin:0px"><b>Six months ended June 30</b></p><br/><table style="margin-top:0px; font-size:10pt" cellpadding="0" cellspacing="0"><tr style="font-size:0"><td width="175.667"></td><td width="17.533"></td><td width="96.467"></td><td width="18"></td><td width="84"></td><td width="18"></td><td width="84"></td><td width="18"></td><td width="84"></td><td width="18"></td><td width="78"></td></tr> <tr><td style="margin-top:0px; border-bottom:1px solid #000000" valign="bottom" width="175.667"><p style="margin:0px" align="center"><b>2016</b></p> </td><td style="margin-top:0px" valign="bottom" width="17.533"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; border-bottom:1px solid #000000" valign="bottom" width="96.467"><p style="margin:0px" align="center"><b>Security and Cash Management</b></p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; border-bottom:1px solid #000000" valign="bottom" width="84"><p style="margin:0px" align="center"><b>Marketing and Products</b></p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; border-bottom:1px solid #000000" valign="bottom" width="84"><p style="margin:0px" align="center"><b>Consulting and Advisory</b></p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; border-bottom:1px solid #000000" valign="bottom" width="84"><p style="margin:0px" align="center"><b>Finance and Real Estate</b></p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; border-bottom:1px solid #000000" valign="bottom" width="78"><p style="margin:0px" align="center"><b>Total</b></p> </td></tr> <tr><td style="margin-top:0px; background-color:#DEEAF6" valign="top" width="175.667"><p style="margin:0px">Revenues, net</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="17.533"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="96.467"><p style="margin:0px" align="right">1,039,194</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="84"><p style="margin:0px" align="right">116,139</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="84"><p style="margin:0px" align="right">170,888</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="84"><p style="margin:0px" align="right">67,833</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="78"><p style="margin:0px" align="right">1,394,054</p> </td></tr> <tr><td style="margin-top:0px" valign="top" width="175.667"><p style="margin:0px">Costs and expenses</p> </td><td style="margin-top:0px" valign="bottom" width="17.533"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="96.467"><p style="margin:0px" align="right">(1,076,016)</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="84"><p style="margin:0px" align="right">(161,097)</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="84"><p style="margin:0px" align="right">(183,563)</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="84"><p style="margin:0px" align="right">(23,379)</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="78"><p style="margin:0px" align="right">(1,444,055)</p> </td></tr> <tr><td style="margin-top:0px; background-color:#DEEAF6" valign="top" width="175.667"><p style="margin:0px">Other expense</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="17.533"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="96.467"><p style="margin:0px" align="right">--</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="84"><p style="margin:0px" align="right">--</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="84"><p style="margin:0px" align="right">--</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="84"><p style="margin:0px" align="right">(4,462)</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="78"><p style="margin:0px" align="right">(4,462)</p> </td></tr> <tr><td style="margin-top:0px" valign="top" width="175.667"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="17.533"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; border-top:1px solid #000000; border-bottom:3px double #000000" valign="bottom" width="96.467"><p style="margin:0px" align="right">(36,822)</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; border-top:1px solid #000000; border-bottom:3px double #000000" valign="bottom" width="84"><p style="margin:0px" align="right">(44,958)</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; border-top:1px solid #000000; border-bottom:3px double #000000" valign="bottom" width="84"><p style="margin:0px" align="right">(12,675)</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; border-top:1px solid #000000; border-bottom:3px double #000000" valign="bottom" width="84"><p style="margin:0px" align="right">39,992</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; border-top:1px solid #000000" valign="bottom" width="78"><p style="margin:0px" align="right">(54,463)</p> </td></tr> <tr><td style="margin-top:0px; background-color:#DEEAF6" valign="top" width="175.667"><p style="margin:0px">Corporate expenses</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="17.533"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="96.467"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="84"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="84"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="84"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6; border-bottom:1px solid #000000" valign="bottom" width="78"><p style="margin:0px" align="right">(2,470,240)</p> </td></tr> <tr><td style="margin-top:0px" valign="top" width="175.667"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="17.533"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="96.467"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="84"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="84"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="84"><p style="margin:0px" align="right">Net loss</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; border-bottom:3px double #000000" valign="bottom" width="78"><p style="margin:0px" align="right">(2,524,703)</p> </td></tr> </table><br/><table style="margin-top:0px; 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Products</b></p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; border-bottom:1px solid #000000" valign="bottom" width="84"><p style="margin:0px" align="center"><b>Consulting and Advisory</b></p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; border-bottom:1px solid #000000" valign="bottom" width="84"><p style="margin:0px" align="center"><b>Finance and Real Estate</b></p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; border-bottom:1px solid #000000" valign="bottom" width="78"><p style="margin:0px" align="center"><b>Total</b></p> </td></tr> <tr><td style="margin-top:0px; background-color:#DEEAF6" valign="top" width="175.667"><p style="margin:0px">Revenues, net</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="17.533"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="96.467"><p style="margin:0px" align="right">394,104</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="84"><p style="margin:0px" align="right">25,367</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="84"><p style="margin:0px" align="right">--</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="84"><p style="margin:0px" align="right">64,588</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="78"><p style="margin:0px" align="right">484,059</p> </td></tr> <tr><td style="margin-top:0px" valign="top" width="175.667"><p style="margin:0px">Costs and expenses</p> </td><td style="margin-top:0px" valign="bottom" width="17.533"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="96.467"><p style="margin:0px" align="right">(408,322)</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="84"><p style="margin:0px" align="right">(57,091)</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="84"><p style="margin:0px" align="right">--</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="84"><p style="margin:0px" align="right">(27,538)</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="78"><p style="margin:0px" align="right">(492,951)</p> </td></tr> <tr><td style="margin-top:0px; background-color:#DEEAF6" valign="top" width="175.667"><p style="margin:0px">Other expense</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="17.533"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="96.467"><p style="margin:0px" align="right">--</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="84"><p style="margin:0px" align="right">--</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="84"><p style="margin:0px" align="right">--</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="84"><p style="margin:0px" align="right">(5,815)</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="78"><p style="margin:0px" align="right">(5,815)</p> </td></tr> <tr><td style="margin-top:0px" valign="top" width="175.667"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="17.533"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; border-top:1px solid #000000; border-bottom:3px double #000000" valign="bottom" width="96.467"><p style="margin:0px" align="right">(14,218)</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; border-top:1px solid #000000; border-bottom:3px double #000000" valign="bottom" width="84"><p style="margin:0px" align="right">(31,724)</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; border-top:1px solid #000000; border-bottom:3px double #000000" valign="bottom" width="84"><p style="margin:0px" align="right">--</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; border-top:1px solid #000000; border-bottom:3px double #000000" valign="bottom" width="84"><p style="margin:0px" align="right">31,235</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; border-top:1px solid #000000" valign="bottom" width="78"><p style="margin:0px" align="right">(14,707)</p> </td></tr> <tr><td style="margin-top:0px; background-color:#DEEAF6" valign="top" width="175.667"><p style="margin:0px">Corporate expenses</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="17.533"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="96.467"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="84"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="84"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="84"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6; border-bottom:1px solid #000000" valign="bottom" width="78"><p style="margin:0px" align="right">(5,163,008)</p> </td></tr> <tr><td style="margin-top:0px" valign="top" width="175.667"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="17.533"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="96.467"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="84"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="84"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="84"><p style="margin:0px" align="right">Net loss</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; border-bottom:3px double #000000" valign="bottom" width="78"><p style="margin:0px" align="right">(5,177,715)</p> </td></tr> </table><br/><table style="margin-top:0px; font-size:10pt" cellpadding="0" cellspacing="0"><tr style="font-size:0"><td width="289.667"></td><td width="18"></td><td width="84"></td><td width="18"></td><td width="84"></td></tr> <tr><td style="margin-top:0px; border-bottom:1px solid #000000" valign="bottom" width="289.667"><p style="margin:0px"><b>Total assets</b></p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; border-bottom:1px solid #000000" valign="bottom" width="84"><p style="margin:0px" align="center"><b>June 30, 2016</b></p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; border-bottom:1px solid #000000" valign="bottom" width="84"><p style="margin:0px; padding-left:-6.467px; padding-right:-6.467px" align="center"><b>December 31,</b></p> <p style="margin:0px" align="center"><b>2015</b></p> </td></tr> <tr><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="289.667"><p style="margin:0px; padding-left:4.333px; text-indent:-4.333px">Security and Cash Management</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="84"><p style="margin:0px" align="right">101,935</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="84"><p style="margin:0px" align="right">132,314</p> </td></tr> <tr><td style="margin-top:0px" valign="bottom" width="289.667"><p style="margin:0px">Marketing and Products</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="84"><p style="margin:0px" align="right">50,589</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="84"><p style="margin:0px" align="right">127,345</p> </td></tr> <tr><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="289.667"><p style="margin:0px; padding-left:4.333px; text-indent:-4.333px">Consulting and Advisory</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="84"><p style="margin:0px" align="right">39,822</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="84"><p style="margin:0px" align="right">22,268</p> </td></tr> <tr><td style="margin-top:0px" valign="bottom" width="289.667"><p style="margin:0px; padding-left:4.333px; text-indent:-4.333px">Finance and Real Estate</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="84"><p style="margin:0px" align="right">452,760</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="84"><p style="margin:0px" align="right">431,639</p> </td></tr> <tr><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="289.667"><p style="margin:0px; padding-left:4.333px; text-indent:-4.333px">Corporate</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6; border-bottom:1px solid #000000" valign="bottom" width="84"><p style="margin:0px" align="right">2,866,522</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6; border-bottom:1px solid #000000" valign="bottom" width="84"><p style="margin:0px" align="right">2,969,145</p> </td></tr> <tr><td style="margin-top:0px" valign="bottom" width="289.667"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; border-bottom:3px double #000000" valign="bottom" width="84"><p style="margin:0px" align="right">3,511,628</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; border-bottom:3px double #000000" valign="bottom" width="84"><p style="margin:0px" align="right">3,682,711</p> </td></tr> </table><br/><p style="margin:0px">All assets are located in the United States.</p><br/> <table style="margin-top:0px; font-size:10pt" cellpadding="0" cellspacing="0"><tr style="font-size:0"><td width="175.667"></td><td width="17.533"></td><td width="96.467"></td><td width="18"></td><td width="84"></td><td width="18"></td><td width="84"></td><td width="18"></td><td width="84"></td><td width="18"></td><td width="78"></td></tr> <tr><td style="margin-top:0px; border-bottom:1px solid #000000" valign="bottom" width="175.667"><p style="margin:0px" align="center"><b>2016</b></p> </td><td style="margin-top:0px" valign="bottom" width="17.533"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; border-bottom:1px solid #000000" valign="bottom" width="96.467"><p style="margin:0px" align="center"><b>Security and Cash Management</b></p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; border-bottom:1px solid #000000" valign="bottom" width="84"><p style="margin:0px" align="center"><b>Marketing and Products</b></p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; border-bottom:1px solid #000000" valign="bottom" width="84"><p style="margin:0px" align="center"><b>Consulting and Advisory</b></p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; border-bottom:1px solid #000000" valign="bottom" width="84"><p style="margin:0px" align="center"><b>Finance and Real Estate</b></p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; border-bottom:1px solid #000000" valign="bottom" width="78"><p style="margin:0px" align="center"><b>Total</b></p> </td></tr> <tr><td style="margin-top:0px; background-color:#DEEAF6" valign="top" width="175.667"><p style="margin:0px">Revenues, net</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="17.533"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="96.467"><p style="margin:0px" align="right">531,663</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="84"><p style="margin:0px" align="right">66,041</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="84"><p style="margin:0px" align="right">72,774</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="84"><p style="margin:0px" align="right">31,464</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="78"><p style="margin:0px" align="right">701,942</p> </td></tr> <tr><td style="margin-top:0px" valign="top" width="175.667"><p style="margin:0px">Costs and expenses</p> </td><td style="margin-top:0px" valign="bottom" width="17.533"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="96.467"><p style="margin:0px" align="right">(534,620)</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="84"><p style="margin:0px" align="right">(79,522)</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="84"><p style="margin:0px" align="right">(99,794)</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="84"><p style="margin:0px" align="right">(11,593)</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="78"><p style="margin:0px" align="right">(725,529)</p> </td></tr> <tr><td style="margin-top:0px; background-color:#DEEAF6" valign="top" width="175.667"><p style="margin:0px">Other expense</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="17.533"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="96.467"><p style="margin:0px" align="right">--</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="84"><p style="margin:0px" align="right">--</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="84"><p style="margin:0px" align="right">--</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="84"><p style="margin:0px" align="right">(1,110)</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="78"><p style="margin:0px" align="right">(1,110)</p> </td></tr> <tr><td style="margin-top:0px" valign="top" width="175.667"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="17.533"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; border-top:1px solid #000000; border-bottom:3px double #000000" valign="bottom" width="96.467"><p style="margin:0px" align="right">(2,957)</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; border-top:1px solid #000000; border-bottom:3px double #000000" valign="bottom" width="84"><p style="margin:0px" align="right">(13,481)</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; border-top:1px solid #000000; border-bottom:3px double #000000" valign="bottom" width="84"><p style="margin:0px" align="right">(27,020)</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; border-top:1px solid #000000; border-bottom:3px double #000000" valign="bottom" width="84"><p style="margin:0px" align="right">18,761</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; border-top:1px solid #000000" valign="bottom" width="78"><p style="margin:0px" align="right">(24,697)</p> </td></tr> <tr><td style="margin-top:0px; background-color:#DEEAF6" valign="top" width="175.667"><p style="margin:0px">Corporate expenses</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="17.533"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="96.467"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="84"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="84"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="84"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6; border-bottom:1px solid #000000" valign="bottom" width="78"><p style="margin:0px" align="right">(1,311,774)</p> </td></tr> <tr><td style="margin-top:0px" valign="top" width="175.667"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="17.533"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="96.467"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="84"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="84"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="84"><p style="margin:0px" align="right">Net loss</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; border-bottom:3px double #000000" valign="bottom" width="78"><p style="margin:0px" align="right">(1,336,471)</p> </td></tr> </table><table style="margin-top:0px; font-size:10pt" cellpadding="0" cellspacing="0"><tr style="font-size:0"><td width="175.667"></td><td width="17.533"></td><td width="96.467"></td><td width="18"></td><td width="84"></td><td width="18"></td><td width="84"></td><td width="18"></td><td width="84"></td><td width="18"></td><td width="78"></td></tr> <tr><td style="margin-top:0px; border-bottom:1px solid #000000" valign="bottom" width="175.667"><p style="margin:0px" align="center"><b>2015</b></p> </td><td style="margin-top:0px" valign="bottom" width="17.533"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; border-bottom:1px solid #000000" valign="bottom" width="96.467"><p style="margin:0px" align="center"><b>Security and Cash Management</b></p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; border-bottom:1px solid #000000" valign="bottom" width="84"><p style="margin:0px" align="center"><b>Marketing and Products</b></p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; border-bottom:1px solid #000000" valign="bottom" width="84"><p style="margin:0px" align="center"><b>Consulting and Advisory</b></p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; border-bottom:1px solid #000000" valign="bottom" width="84"><p style="margin:0px" align="center"><b>Finance and Real Estate</b></p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; border-bottom:1px solid #000000" valign="bottom" width="78"><p style="margin:0px" align="center"><b>Total</b></p> </td></tr> <tr><td style="margin-top:0px; background-color:#DEEAF6" valign="top" width="175.667"><p style="margin:0px">Revenues, net</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="17.533"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="96.467"><p style="margin:0px" align="right">376,722</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="84"><p style="margin:0px" align="right">12,569</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="84"><p style="margin:0px" align="right">--</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="84"><p style="margin:0px" align="right">37,911</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="78"><p style="margin:0px" align="right">427,202</p> </td></tr> <tr><td style="margin-top:0px" valign="top" width="175.667"><p style="margin:0px">Costs and expenses</p> </td><td style="margin-top:0px" valign="bottom" width="17.533"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="96.467"><p style="margin:0px" align="right">(380,852)</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="84"><p style="margin:0px" align="right">(32,438)</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="84"><p style="margin:0px" align="right">--</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="84"><p style="margin:0px" align="right">(18,531)</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="78"><p style="margin:0px" align="right">(431,821)</p> </td></tr> <tr><td style="margin-top:0px; background-color:#DEEAF6" valign="top" width="175.667"><p style="margin:0px">Other expense</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="17.533"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="96.467"><p style="margin:0px" align="right">--</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="84"><p style="margin:0px" align="right">--</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="84"><p style="margin:0px" align="right">--</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="84"><p style="margin:0px" align="right">(3,493)</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="78"><p style="margin:0px" align="right">(3,493)</p> </td></tr> <tr><td style="margin-top:0px" valign="top" width="175.667"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="17.533"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; border-top:1px solid #000000; border-bottom:3px double #000000" valign="bottom" width="96.467"><p style="margin:0px" align="right">(4,130)</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; border-top:1px solid #000000; border-bottom:3px double #000000" valign="bottom" width="84"><p style="margin:0px" align="right">(19,869)</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; border-top:1px solid #000000; border-bottom:3px double #000000" valign="bottom" width="84"><p style="margin:0px" align="right">--</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; border-top:1px solid #000000; border-bottom:3px double #000000" valign="bottom" width="84"><p style="margin:0px" align="right">15,887</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; border-top:1px solid #000000" valign="bottom" width="78"><p style="margin:0px" align="right">(8,112)</p> </td></tr> <tr><td style="margin-top:0px; background-color:#DEEAF6" valign="top" width="175.667"><p style="margin:0px">Corporate expenses</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="17.533"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="96.467"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="84"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="84"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="84"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6; border-bottom:1px solid #000000" valign="bottom" width="78"><p style="margin:0px" align="right">(4,341,110)</p> </td></tr> <tr><td style="margin-top:0px" valign="top" width="175.667"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="17.533"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="96.467"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="84"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="84"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="84"><p style="margin:0px" align="right">Net loss</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; border-bottom:3px double #000000" valign="bottom" width="78"><p style="margin:0px" align="right">(4,349,222)</p> </td></tr> </table><table style="margin-top:0px; font-size:10pt" cellpadding="0" cellspacing="0"><tr style="font-size:0"><td width="175.667"></td><td width="17.533"></td><td width="96.467"></td><td width="18"></td><td width="84"></td><td width="18"></td><td width="84"></td><td width="18"></td><td width="84"></td><td width="18"></td><td width="78"></td></tr> <tr><td style="margin-top:0px; border-bottom:1px solid #000000" valign="bottom" width="175.667"><p style="margin:0px" align="center"><b>2016</b></p> </td><td style="margin-top:0px" valign="bottom" width="17.533"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; border-bottom:1px solid #000000" valign="bottom" width="96.467"><p style="margin:0px" align="center"><b>Security and Cash Management</b></p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; border-bottom:1px solid #000000" valign="bottom" width="84"><p style="margin:0px" align="center"><b>Marketing and Products</b></p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; border-bottom:1px solid #000000" valign="bottom" width="84"><p style="margin:0px" align="center"><b>Consulting and Advisory</b></p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; border-bottom:1px solid #000000" valign="bottom" width="84"><p style="margin:0px" align="center"><b>Finance and Real Estate</b></p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; border-bottom:1px solid #000000" valign="bottom" width="78"><p style="margin:0px" align="center"><b>Total</b></p> </td></tr> <tr><td style="margin-top:0px; background-color:#DEEAF6" valign="top" width="175.667"><p style="margin:0px">Revenues, net</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="17.533"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="96.467"><p style="margin:0px" align="right">1,039,194</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="84"><p style="margin:0px" align="right">116,139</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="84"><p style="margin:0px" align="right">170,888</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="84"><p style="margin:0px" align="right">67,833</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="78"><p style="margin:0px" align="right">1,394,054</p> </td></tr> <tr><td style="margin-top:0px" valign="top" width="175.667"><p style="margin:0px">Costs and expenses</p> </td><td style="margin-top:0px" valign="bottom" width="17.533"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="96.467"><p style="margin:0px" align="right">(1,076,016)</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="84"><p style="margin:0px" align="right">(161,097)</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="84"><p style="margin:0px" align="right">(183,563)</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="84"><p style="margin:0px" align="right">(23,379)</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="78"><p style="margin:0px" align="right">(1,444,055)</p> </td></tr> <tr><td style="margin-top:0px; background-color:#DEEAF6" valign="top" width="175.667"><p style="margin:0px">Other expense</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="17.533"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="96.467"><p style="margin:0px" align="right">--</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="84"><p style="margin:0px" align="right">--</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="84"><p style="margin:0px" align="right">--</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="84"><p style="margin:0px" align="right">(4,462)</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="78"><p style="margin:0px" align="right">(4,462)</p> </td></tr> <tr><td style="margin-top:0px" valign="top" width="175.667"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="17.533"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; border-top:1px solid #000000; border-bottom:3px double #000000" valign="bottom" width="96.467"><p style="margin:0px" align="right">(36,822)</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; border-top:1px solid #000000; border-bottom:3px double #000000" valign="bottom" width="84"><p style="margin:0px" align="right">(44,958)</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; border-top:1px solid #000000; border-bottom:3px double #000000" valign="bottom" width="84"><p style="margin:0px" align="right">(12,675)</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; border-top:1px solid #000000; border-bottom:3px double #000000" valign="bottom" width="84"><p style="margin:0px" align="right">39,992</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; border-top:1px solid #000000" valign="bottom" width="78"><p style="margin:0px" align="right">(54,463)</p> </td></tr> <tr><td style="margin-top:0px; background-color:#DEEAF6" valign="top" width="175.667"><p style="margin:0px">Corporate expenses</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="17.533"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="96.467"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="84"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="84"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="84"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6; border-bottom:1px solid #000000" valign="bottom" width="78"><p style="margin:0px" align="right">(2,470,240)</p> </td></tr> <tr><td style="margin-top:0px" valign="top" width="175.667"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="17.533"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="96.467"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="84"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="84"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="84"><p style="margin:0px" align="right">Net loss</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; border-bottom:3px double #000000" valign="bottom" width="78"><p style="margin:0px" align="right">(2,524,703)</p> </td></tr> </table><table style="margin-top:0px; font-size:10pt" cellpadding="0" cellspacing="0"><tr style="font-size:0"><td width="175.667"></td><td width="17.533"></td><td width="96.467"></td><td width="18"></td><td width="84"></td><td width="18"></td><td width="84"></td><td width="18"></td><td 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align="center"><b>Consulting and Advisory</b></p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; border-bottom:1px solid #000000" valign="bottom" width="84"><p style="margin:0px" align="center"><b>Finance and Real Estate</b></p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; border-bottom:1px solid #000000" valign="bottom" width="78"><p style="margin:0px" align="center"><b>Total</b></p> </td></tr> <tr><td style="margin-top:0px; background-color:#DEEAF6" valign="top" width="175.667"><p style="margin:0px">Revenues, net</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="17.533"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="96.467"><p style="margin:0px" align="right">394,104</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="84"><p style="margin:0px" align="right">25,367</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="84"><p style="margin:0px" align="right">--</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="84"><p style="margin:0px" align="right">64,588</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="78"><p style="margin:0px" align="right">484,059</p> </td></tr> <tr><td style="margin-top:0px" valign="top" width="175.667"><p style="margin:0px">Costs and expenses</p> </td><td style="margin-top:0px" valign="bottom" width="17.533"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="96.467"><p style="margin:0px" align="right">(408,322)</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="84"><p style="margin:0px" align="right">(57,091)</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="84"><p style="margin:0px" align="right">--</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="84"><p style="margin:0px" align="right">(27,538)</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="78"><p style="margin:0px" align="right">(492,951)</p> </td></tr> <tr><td style="margin-top:0px; background-color:#DEEAF6" valign="top" width="175.667"><p style="margin:0px">Other expense</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="17.533"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="96.467"><p style="margin:0px" align="right">--</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="84"><p style="margin:0px" align="right">--</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="84"><p style="margin:0px" align="right">--</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="84"><p style="margin:0px" align="right">(5,815)</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="78"><p style="margin:0px" align="right">(5,815)</p> </td></tr> <tr><td style="margin-top:0px" valign="top" width="175.667"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="17.533"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; border-top:1px solid #000000; border-bottom:3px double #000000" valign="bottom" width="96.467"><p style="margin:0px" align="right">(14,218)</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; border-top:1px solid #000000; border-bottom:3px double #000000" valign="bottom" width="84"><p style="margin:0px" align="right">(31,724)</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; border-top:1px solid #000000; border-bottom:3px double #000000" valign="bottom" width="84"><p style="margin:0px" align="right">--</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; border-top:1px solid #000000; border-bottom:3px double #000000" valign="bottom" width="84"><p style="margin:0px" align="right">31,235</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; border-top:1px solid #000000" valign="bottom" width="78"><p style="margin:0px" align="right">(14,707)</p> </td></tr> <tr><td style="margin-top:0px; background-color:#DEEAF6" valign="top" width="175.667"><p style="margin:0px">Corporate expenses</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="17.533"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="96.467"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="84"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="84"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="84"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6; border-bottom:1px solid #000000" valign="bottom" width="78"><p style="margin:0px" align="right">(5,163,008)</p> </td></tr> <tr><td style="margin-top:0px" valign="top" width="175.667"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="17.533"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="96.467"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="84"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="84"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="84"><p style="margin:0px" align="right">Net loss</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; border-bottom:3px double #000000" valign="bottom" width="78"><p style="margin:0px" align="right">(5,177,715)</p> </td></tr> </table> 531663 66041 72774 31464 701942 -534620 -79522 -99794 -11593 -725529 1110 1110 -2957 -13481 -27020 18761 -24697 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valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; border-bottom:1px solid #000000" valign="bottom" width="84"><p style="margin:0px; padding-left:-6.467px; padding-right:-6.467px" align="center"><b>December 31,</b></p> <p style="margin:0px" align="center"><b>2015</b></p> </td></tr> <tr><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="289.667"><p style="margin:0px; padding-left:4.333px; text-indent:-4.333px">Security and Cash Management</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="84"><p style="margin:0px" align="right">101,935</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="84"><p style="margin:0px" align="right">132,314</p> </td></tr> <tr><td style="margin-top:0px" valign="bottom" width="289.667"><p style="margin:0px">Marketing and Products</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="84"><p style="margin:0px" align="right">50,589</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="84"><p style="margin:0px" align="right">127,345</p> </td></tr> <tr><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="289.667"><p style="margin:0px; padding-left:4.333px; text-indent:-4.333px">Consulting and Advisory</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="84"><p style="margin:0px" align="right">39,822</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="84"><p style="margin:0px" align="right">22,268</p> </td></tr> <tr><td style="margin-top:0px" valign="bottom" width="289.667"><p style="margin:0px; padding-left:4.333px; text-indent:-4.333px">Finance and Real Estate</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="84"><p style="margin:0px" align="right">452,760</p> </td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="84"><p style="margin:0px" align="right">431,639</p> </td></tr> <tr><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="289.667"><p style="margin:0px; padding-left:4.333px; text-indent:-4.333px">Corporate</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6; border-bottom:1px solid #000000" valign="bottom" width="84"><p style="margin:0px" align="right">2,866,522</p> </td><td style="margin-top:0px; background-color:#DEEAF6" valign="bottom" width="18"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px; background-color:#DEEAF6; border-bottom:1px solid #000000" valign="bottom" width="84"><p style="margin:0px" align="right">2,969,145</p> </td></tr> <tr><td style="margin-top:0px" valign="bottom" width="289.667"><p style="margin:0px; padding:0px">&#160;</p></td><td style="margin-top:0px" valign="bottom" width="18"><p style="margin:0px" align="right">$</p> </td><td style="margin-top:0px; border-bottom:3px double #000000" valign="bottom" 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Document And Entity Information - shares
6 Months Ended
Jun. 30, 2016
Aug. 10, 2016
Document and Entity Information [Abstract]    
Entity Registrant Name GENERAL CANNABIS CORP  
Document Type 10-Q  
Current Fiscal Year End Date --12-31  
Entity Common Stock, Shares Outstanding   15,495,421
Amendment Flag false  
Entity Central Index Key 0001477009  
Entity Current Reporting Status Yes  
Entity Voluntary Filers No  
Entity Filer Category Smaller Reporting Company  
Entity Well-known Seasoned Issuer No  
Document Period End Date Jun. 30, 2016  
Document Fiscal Year Focus 2016  
Document Fiscal Period Focus Q2  
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CONSOLIDATED BALANCE SHEETS (unaudited) - USD ($)
Jun. 30, 2016
Dec. 31, 2015
Current Assets    
Cash and cash equivalents $ 54,400 $ 58,711
Accounts receivable 160,810 124,553
Prepaid expenses and other current assets 20,010 46,734
Inventory, net 29,214 15,518
Total current assets 264,434 245,516
Property and equipment, net 1,705,482 1,725,268
Intangible assets, net 1,354,712 1,524,927
Goodwill 187,000 187,000
Total Assets 3,511,628 3,682,711
Current Liabilities    
Accounts payable and accrued expenses 496,968 293,532
Interest payable 126,668 84,720
Line of credit – related party 1,237,500 800,000
Notes payable (net of discount), current portion 1,202,380 986,475
Deferred rental revenue 32,016 33,146
Accrued stock payable 635,496 1,532,420
Total current liabilities 3,731,028 3,730,293
Notes payable (net of debt discount), less current portion 147,734 151,397
Tenant deposits 8,854 9,204
Total Liabilities 3,887,616 3,890,894
Commitments and Contingencies
Stockholders’ Equity (Deficit)    
Preferred stock, no par value; 5,000,000 share authorized; no shares issued and outstanding at June 30, 2016 and December 31, 2015
Common Stock, $0.001 par value; 100,000,000 shares authorized; 15,495,421 shares and 14,915,421 shares issued and outstanding on June 30, 2016 and December 31, 2015, respectively 15,495 14,915
Additional paid-in capital 18,560,598 16,204,280
Accumulated deficit (18,952,081) (16,427,378)
Total Stockholders’ Deficit (375,988) (208,183)
Total Liabilities & Stockholders’ Deficit $ 3,511,628 $ 3,682,711
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CONSOLIDATED BALANCE SHEETS (unaudited) (Parentheticals) - $ / shares
Jun. 30, 2016
Dec. 31, 2015
Preferred stock, value (in Dollars per share) $ 0 $ 0
Preferred stock, shares authorized 5,000,000 5,000,000
Preferred stock, shares issued 0 0
Preferred stock, shares outstanding 0 0
Common Stock, par value (in Dollars per share) $ 0.001 $ 0.001
Common Stock, shares authorized 100,000,000 100,000,000
Common Stock, shares issued 15,495,421 14,915,421
Common Stock, shares outstanding 15,495,421 14,915,421
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CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($)
3 Months Ended 6 Months Ended
Jun. 30, 2016
Jun. 30, 2015
Jun. 30, 2016
Jun. 30, 2015
REVENUES        
Service $ 647,876 $ 376,722 $ 1,284,095 $ 394,104
Tenant 31,464 37,911 67,833 64,588
Product Sales 22,602 12,569 42,126 25,367
Total revenues 701,942 427,202 1,394,054 484,059
COSTS AND EXPENSES        
Cost of service revenues 455,314 313,051 907,898 326,088
Cost of goods sold 15,390 38,542 43,657 39,642
Selling, general and administrative 395,146 366,279 811,508 551,683
Share-based expense 501,505 3,855,465 1,101,974 4,104,090
Professional fees 75,457 156,390 181,186 250,497
Depreciation and amortization 97,075 66,871 194,341 75,878
Total costs and expenses 1,539,887 4,796,598 3,240,564 5,347,878
OPERATING LOSS (837,945) (4,369,396) (1,846,510) (4,863,819)
OTHER EXPENSE (INCOME)        
Amortization of debt discount and deferred financing costs 79,781 134,195 215,618 376,825
Interest expense 60,745 78,498 104,575 147,705
Loss on extinguishment of debt 358,000   358,000  
Net (gain) loss on derivative liability   (232,867)   (210,634)
Total other expense (income), net 498,526 (20,174) 678,193 313,896
NET LOSS $ (1,336,471) $ (4,349,222) $ (2,524,703) $ (5,177,715)
PER SHARE DATA – Basic and diluted        
Net loss per share (in Dollars per share) $ (0.09) $ (0.31) $ (0.17) $ (0.38)
Weighted average number of common shares outstanding (in Shares) 15,384,762 14,054,673 15,157,509 13,577,719
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CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($)
6 Months Ended
Jun. 30, 2016
Jun. 30, 2015
CASH FLOWS USED IN OPERATING ACTIVITIES    
Net loss $ (2,524,703) $ (5,177,715)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:    
Amortization of debt discount 215,618 357,658
Amortization of deferred financing costs   19,167
Loss on extinguishment of debt 358,000  
(Gain) loss on derivative liability, net   (210,634)
Depreciation and amortization expense 194,341 75,878
Equity-based payments 1,101,974 4,104,090
Changes in operating assets and liabilities (net of amounts acquired):    
Accounts receivable (36,257) (54,871)
Prepaid expenses and other assets 26,724 (82,220)
Inventory (13,696) 15,534
Accounts payable and accrued liabilities 243,904 147,995
Net cash used in operating activities: (434,095) (805,118)
CASH FLOWS USED IN INVESTING ACTIVITIES    
Purchase of property and equipment (4,340) (42,562)
Net cash used in investing activities (4,340) (42,562)
CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES    
Increase in line of credit -- related party 437,500 289,000
Borrowings under notes payable   325,000
Payments on notes payable (3,376) (3,101)
Proceeds from warrant exercises   87,616
Net cash provided by financing activities 434,124 698,515
NET DECREASE IN CASH (4,311) (149,165)
CASH, BEGINNING OF PERIOD 58,711 165,536
CASH, END OF PERIOD 54,400 16,371
SUPPLEMENTAL SCHEDULE OF CASH FLOW INFORMATION    
Cash paid for interest 62,627 95,540
NON-CASH TRANSACTIONS    
Issuance of common stock and warrants from accrued stock payable $ 1,069,775 114,487
Acquisition of IPG with common stock payable and warrants   1,887,000
Convertible notes payable settled in common stock   290,000
Interest on convertible notes payable settled in common stock   1,063
Issuance of common stock upon cashless conversion of warrants by Full Circle   $ 3,683,270
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NATURE OF OPERATIONS, HISTORY AND PRESENTATION
6 Months Ended
Jun. 30, 2016
Disclosure Text Block [Abstract]  
Nature of Operations [Text Block]

NOTE 1.   NATURE OF OPERATIONS, HISTORY AND PRESENTATION


Nature of Operations


General Cannabis Corporation (the “Company,” “we,” “us,” “our,” or “GCC”) (formerly, Advanced Cannabis Solutions, Inc.), was incorporated on June 3, 2013, and provides products and services to the regulated cannabis industry.  On April 28, 2015, our common stock was uplisted and resumed quotation on the OTC Market’s OTCQB on May 6, 2015.  Our operations are segregated into the following four reportable segments:


Security and Cash Management Services


In March 2015, we acquired substantially all of the assets of Iron Protection Group, LLC, a Colorado limited liability company, which continues to do business as “Iron Protection Group.” Iron Protection Group (“IPG”) provides advanced security, including on-site professionals, video surveillance and cash transport, to licensed cannabis cultivators and retail shops. As of June 30, 2016, IPG had approximately 58 security guards on staff who serve 16 clients throughout Colorado.


Marketing and Products


In September 2015, we acquired substantially all of the assets of Chiefton Supply Co., and established a dba of Chiefton Supply Co., incorporated in Colorado (“Chiefton”).  Chiefton is an apparel and design company.  We design, distribute and sell apparel featuring graphic designs.  Our apparel is purchased and screen printed by third parties, for which there are numerous suppliers.  Chiefton also provides high-level design and branding services to various clients, from grow stores and dispensaries to wholesale cannabis companies.


In April 2016, we relaunched GC Supply, dedicated to providing wholesale equipment and supplies to participants in the regulated cannabis industry.  We will provide turnkey sourcing and stocking services to cultivation, retail and infused products manufacturing facilities.  Offerings will include infrastructure, equipment, consumables, various delivery technologies (vaporizers and capsules) and compliance packaging.  GC Supply operates out of a leased, 1,800 square-foot warehouse located in Colorado Springs, Colorado.


Consulting and Advisory


Through Next Big Crop we deliver comprehensive consulting services to the cannabis industry that include obtaining licenses, compliance, cultivation, retail operations, logistical support, facility design and building services, and expansion of existing operations.  Our business plan is based on the future growth of the regulated cannabis market in the United States.


In April 2016, we launched our public market research services division, called General Cannabis Equity Research, or GCER.  Our approach to investment research will place an emphasis on intrinsic value and management quality.  We will evaluate cannabis investments in the same manner as a merger and acquisitions specialist might.  Our analyses of the individual cannabis companies will be driven by economic realities of the industry and its constantly changing dynamics.


Finance and Real Estate


Real Estate Leasing


Our real estate leasing business primarily includes the acquisition and leasing of cultivation space and related facilities to licensed marijuana growers and dispensary owners for their operations. Management anticipates that these facilities will range in size from 5,000 to 50,000 square feet. These facilities will only be leased to tenants that possess the requisite state licenses to operate cultivation facilities. The leases with the tenants will provide certain requirements that permit us to continually evaluate our tenants’ compliance with applicable laws and regulations.


As of the date of this report, we owned one cultivation property that is located in a suburb of Pueblo, Colorado (the “Pueblo West Property”). The Pueblo West Property consists of approximately three acres of land, which currently includes a 5,000 square foot steel building, and parking lot. The Pueblo West Property is zoned for cultivating cannabis and is leased to a medical cannabis grower until December 31, 2022.  We are evaluating strategic options for this property.


Shared Office Space, Networking and Event Services   


In October 2014, we purchased a former retail bank located at 6565 East Evans Avenue, Denver, Colorado 80224, which has been branded as The Greenhouse (“The Greenhouse”).  The building is a 16,056 square-foot facility, which will be converted to serve as the largest shared workspace for entrepreneurs, professionals and others serving the cannabis industry.  Clients will be able to lease space to use as offices, meeting rooms, lecture halls, educational and networking facilities, and individual workstations.


The Greenhouse has approximately 10,000 square feet of existing office space and 5,000 square feet on its ground floor that is dedicated to a consumer banking design.  The banking space includes a vault with safety deposit boxes, three drive through teller windows and five secure teller windows inside.


We plan to continue to acquire commercial real estate and lease office space to participants in the cannabis industry. These participants include media, internet, packaging, lighting, cultivation supplies, and financial services. In exchange for certain services that may be provided to these tenants, we expect to receive rental income in the form of cash. In certain cases, we may acquire equity interests or provide debt capital to these businesses.


Industry Finance and Equipment Leasing Services


We lease cultivation equipment and facilities to customers in the cannabis industry. We expect we will enter into sale lease-back transactions of grow lights, tenant improvements and other grow equipment. Since Colorado State law does not allow entities operating under a cannabis license to pledge the assets or the license of the cannabis operation for any type of general borrowing activity, we intend to provide loans to individuals and businesses in the cannabis industry on an unsecured basis.  Equipment will only be leased to tenants that possess the requisite state licenses to operate such facilities. The leases with the tenants will provide certain requirements that permit us to continually evaluate our tenants’ compliance with applicable laws and regulations.


We are exploring lending opportunities in Oregon, Washington, Colorado, and Arizona. Our finance strategy will include making direct term loans and providing revolving lines of credit to businesses involved in the cultivation and sale of cannabis and related products.  These loans will generally be secured to the maximum extent permitted by law.  We believe there is a significant demand for this financing.  We are pursuing other finance services including customized finance, capital formation, and banking, for participants in the cannabis industry.


On November 4, 2015, we entered into an agreement (the “DB Option Agreement”) with Infinity Capital, a related party, which was amended on March 29, 2016 (the “Amended DB Option Agreement”).  Pursuant to the Amended DB Option Agreement, we have the right to purchase all of Infinity Capital’s interest in DB Products Arizona, LLC (“DB”) at Infinity Capital’s actual cost, plus $1.00, or $750,001. The interests for which the option has been granted are Infinity Capital’s 50% equity interest in the membership interests of DB, and any outstanding unpaid principal and interest owed on promissory note(s) issued by DB in favor of Infinity Capital for up to $750,000.  DB is involved in the production and distribution of Dixie Brands, Inc’s full line of medical cannabis “Dixie Elixirs and Edibles” products in Arizona.  DB expects to begin sales in 2016.  We have no obligation to exercise the option, which expires September 24, 2016.


Basis of Presentation


The accompanying (a) condensed consolidated balance sheet at December 31, 2015, has been derived from audited statements and (b) condensed consolidated unaudited financial statements as of June 30, 2016 and 2015, have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements, and should be read in conjunction with the audited consolidated financial statements and related footnotes included in our Annual Report on Form 10-K for the year ended December 31, 2015 (the “2015 Annual Report”), filed with the Securities and Exchange Commission (the “SEC”) on March 25, 2016.  It is management’s opinion, however, that all material adjustments (consisting of normal recurring adjustments), have been made which are necessary for a fair financial statements presentation. The condensed consolidated financial statements include all material adjustments (consisting of normal recurring accruals) necessary to make the condensed consolidated financial statements not misleading as required by Regulation S-X, Rule 10-01. Operating results for the three and six months ended June 30, 2016, are not necessarily indicative of the results of operations expected for the year ending December 31, 2016.


The condensed consolidated financial statements include the results of GCC and its five wholly-owned subsidiary companies: (a) ACS Colorado Corp., a Colorado corporation formed in 2013; (b) Advanced Cannabis Solutions Corporation, a Colorado corporation formed in 2013; (c) 6565 E. Evans Avenue LLC, a Colorado limited liability company formed in 2014; (d) General Cannabis Capital Corporation, a Colorado corporation formed in 2015; and (e) GC Security LLC, (“GCS”) a Colorado limited liability company formed in 2015.  Advanced Cannabis Solutions Corporation has one wholly-owned subsidiary company, ACS Corp., which was formed in Colorado on June 6, 2013.  Intercompany accounts and transactions have been eliminated.


Certain reclassifications have been made to the prior period condensed consolidated financial statements to conform to the current period presentation. The reclassifications had no effect on net loss, total assets, or total stockholders’ equity (deficit).


Going Concern


The condensed consolidated financial statements have been prepared on a going concern basis, which assumes we will be able to realize our assets and discharge our liabilities in the normal course of business for the foreseeable future.  The ability to continue as a going concern is dependent upon our generating profitable operations in the future and / or obtaining the necessary financing to meet our obligations and repay our liabilities arising from normal business operations when they come due. Management believes that actions presently being taken to further implement our business plan and generate additional revenues provide opportunity for the Company to continue as a going concern.  While we believe in the viability of our strategy to generate additional revenues and our ability to raise additional funds, there can be no assurances to that effect.


We had an accumulated deficit of $18,952,081 and $16,427,378, respectively, at June 30, 2016 and December 31, 2015, and further losses are anticipated in the development of our business. Accordingly, there is substantial doubt about our ability to continue as a going concern. The accompanying condensed consolidated financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern.


Significant Accounting Policy Updates


Modification of Debt Instruments


Modifications or exchanges of debt, which are not considered a troubled debt restructuring, are considered extinguishments if the terms of the new debt and the original instrument are substantially different.  The instruments are considered substantially different when the present value of the cash flows under the terms of the new debt instrument are at least 10% different from the present value of the remaining cash flows under the terms of the original instrument.  The fair value of non-cash consideration associated with the new debt instrument, such as warrants, are included as a day one cash flow in the 10% cash flow test.  If the original and new debt instruments are substantially different, the original debt is derecognized and the new debt is initially recorded at fair value, with the difference recognized as an extinguishment gain or loss.


Recently Issued Accounting Standards


Financial Accounting Standards Board, or FASB, Accounting Standards Update, or FASB ASU 2016-12 “Revenue from Contracts with Customers (Topic 606)” – In May 2016, the FASB issued 2016-12.  The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.  ASU 2016-12 provides clarification on assessing collectability, presentation of sales taxes, noncash consideration, and completed contracts and contract modifications.  This ASU is effective for annual reporting periods beginning after December 15, 2017, with the option to adopt as early as December 15, 2016. We are currently assessing the impact of adoption of this ASU on our consolidated results of operations, cash flows and financial position.


FASB ASU 2016-11 “Revenue Recognition (Topic 605) and Derivatives and Hedging (Topic 815)” – In May 2016, the FASB issued 2016-11, which clarifies guidance on assessing whether an entity is a principal or an agent in a revenue transaction.  This conclusion impacts whether an entity reports revenue on a gross or net basis.  This ASU is effective for annual reporting periods beginning after December 15, 2017, with the option to adopt as early as December 15, 2016. We are currently assessing the impact of adoption of this ASU on our consolidated results of operations, cash flows and financial position.


FASB ASU 2016-10 “Revenue from Contracts with Customers (Topic 606)” – In April 2016, the FASB issued ASU 2016-10, clarify identifying performance obligations and the licensing implementation guidance, while retaining the related principles for those areas.  This ASU is effective for annual reporting periods beginning after December 15, 2017, with the option to adopt as early as December 15, 2016. We are currently assessing the impact of adoption of this ASU on our consolidated results of operations, cash flows and financial position.


FASB ASU 2016-09 “Compensation – Stock Compensation (Topic 718)” – In March 2016, the FASB issued ASU 2016-09, which includes multiple provisions intended to simplify various aspects of accounting for share-based payments.  While aimed at reducing the cost and complexity of the accounting for share-based payments, the amendments are expected to significantly impact net income, earnings per share, and the statement of cash flows.  Implementation and administration may present challenges for companies with significant share-based payment activities.  This ASU is effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years.  We are currently evaluating the potential impact this standard will have on our consolidated financial statements and related disclosures.


FASB ASU 2016-02 “Leases (Topic 842)” – In February 2016, the FASB issued ASU 2016-02, which will require lessees to recognize almost all leases on their balance sheet as a right-of-use asset and a lease liability.  For income statement purposes, the FASB retained a dual model, requiring leases to be classified as either operating or finance.  Classification will be based on criteria that are largely similar to those applied in current lease accounting, but without explicit bright lines.  Lessor accounting is similar to the current model, but updated to align with certain changes to the lessee model and the new revenue recognition standard.  This ASU is effective for fiscal years beginning after December 18, 2018, including interim periods within those fiscal years.  We are currently evaluating the potential impact this standard will have on our consolidated financial statements and related disclosures.


XML 17 R7.htm IDEA: XBRL DOCUMENT v3.5.0.2
BUSINESS ACQUISITIONS
6 Months Ended
Jun. 30, 2016
Business Combinations [Abstract]  
Business Combination Disclosure [Text Block]

NOTE 2.   BUSINESS ACQUISITIONS


IPG Acquisition


On March 26, 2015, GCS, our wholly-owned subsidiary, entered into an Asset Purchase Agreement (the “IPG APA”) by and among us, GCS and Iron Protection Group, LLC, a Colorado limited liability company (the “Seller”), whereby GCS agreed to acquire substantially all of the assets of Seller (the “IPG Acquisition”). Pursuant to the terms of the IPG APA, we delivered to Seller 500,000 restricted shares of our common stock, which vested over a one-year period (100,000 shares on October 1, 2015; 200,000 shares on January 1, 2016; and 200,000 shares on April 1, 2016).


In addition, we delivered to Seller three-year warrants (the “IPG Warrants”) to purchase an aggregate of 500,000 shares of our common stock at an exercise price of: (i) $4.50 for warrants to purchase 250,000 shares, and (ii) $5.00 for warrants to purchase another 250,000 shares. The IPG APA contains certain provisions that require Seller to forfeit a portion of the stock consideration in the event that Seller violates its obligations under the IPG APA relating to non-competition and non-disclosure. The closing date of the IPG Acquisition was March 26, 2015, and we calculated the purchase price of the IPG Acquisition to be approximately $1,887,000. At the acquisition date and pursuant to the IPG APA, we did not assume any of the Seller’s liabilities and there were no tangible assets of significance.


The aggregate consideration was as follows:


Common stock payable

$

1,054,000

Warrants issued with $4.50 exercise price

 

421,000

Warrants issued with $5.00 exercise price

 

412,000

 

$

1,887,000


The 500,000 shares of common stock were valued based on the closing price per share on March 26, 2015, or $2.48, reduced by a discount of 15% due to restrictions in the ability to trade our common stock.  The $1,054,000 value of stock consideration was originally recorded as accrued stock payable on the condensed consolidated balance sheet, which was then reduced as we issued common stock according to the vesting schedule.  As of June 30, 2016, all common stock has been issued.


The purchase price allocation is as follows:


Intangible assets:

 

 

Customer relationship intangible

$

1,000,000

Marketing-related intangibles

 

200,000

Non-compete agreements

 

500,000

Goodwill

 

187,000

 

$

1,887,000


We finalized the purchase price allocation in the fourth quarter of the year ended December 31, 2015. 


In connection with our acquisition of IPG, we agreed to issue to the sole shareholder of the Seller 100,000 fully vested warrants to purchase shares of our common stock if revenues of the Security segment exceeded $3,000,000 for the year ended December 31, 2015, with an exercise price of $2.48.  This condition was not met during the year ended December 31, 2015, so no value was recorded for these warrants.


The accompanying condensed consolidated financial statements include the results of IPG from the date of acquisition, March 26, 2015.  The pro forma effects of the acquisition on the results of operations as if the transaction had been completed on January 1, 2015, are as follows:


 

 

Six months ended

 

 

June 30, 2015

(Unaudited)

Total net revenues

$

853,805

Net loss

 

(5,124,454)

Net loss per common share:

 

 

  Basic and diluted

$

(0.36)


Chiefton Acquisition


On September 25, 2015, we closed an asset purchase agreement for the purchase of substantially all the assets of Chiefton Supply Co., a Colorado corporation, and established a dba within GCC of Chiefton.  This acquisition expands our service offerings in the cannabis industry and provides a new revenue stream.


We acquired the Chiefton assets for consideration of 80,000 restricted shares of our common stock. The shares shall remain in escrow for six months for the exclusive purpose of being available to indemnify us for any claims that may be made by any person or governmental entity related to or arising from Chiefton’s intellectual property during the six month period after closing. After such period, the shares will be released if no claims have been made, provided that if any claims have been made the shares will remain in escrow until the claim is resolved, at which time the shares will be released less the value of any and all settlement amounts, penalties, damages or other liabilities arising from the claim.


The aggregate consideration was as follows:


Cash

$

12,249

Common stock

 

69,400

  Aggregate consideration

$

81,649


The value of the common stock consideration was estimated based on our closing common stock price on September 25, 2015, or $1.02 per share, reduced by a discount of 15% due to restrictions in the ability to trade our shares.  The $69,400 value of stock consideration was originally included in accrued stock payable on the condensed consolidated balance sheet.  As of June 30, 2016, all common stock has been issued.


The purchase price allocation is as follows:


Inventory

$

12,249

Intangible assets – intellectual property

 

69,400

 

$

81,649


We finalized the purchase price allocation in the fourth quarter of the year ended December 31, 2015. 


XML 18 R8.htm IDEA: XBRL DOCUMENT v3.5.0.2
LONG-LIVED ASSETS
6 Months Ended
Jun. 30, 2016
Longlived Assets [Abstract]  
Longlived Assets [Text Block]

NOTE 3.   LONG-LIVED ASSETS


Property and Equipment


Depreciation expense was $11,967 and $9,008, respectively, for the three months ended June 30, 2016 and 2015, and $24,126 and $18,015, respectively, for the six months ended June 30, 2016 and 2015.  We have not recognized any impairment as of June 30, 2016.


Intangible Assets


Intangible assets consisted of the following as of June 30, 2016:


 

 

Gross

 

Accumulated Amortization

 

Net

 

Estimated Life

(in years)

Customer relationship intangible

$

1,000,000

$

126,575

$

873,425

 

10

Marketing-related intangibles

 

200,000

 

50,630

 

149,370

 

5

Non-compete agreements

 

500,000

 

210,959

 

289,041

 

3

Chiefton brand and graphic designs

 

69,400

 

26,524

 

42,876

 

2

  Intangible assets, net

$

1,769,400

$

414,688

$

1,354,712

 

 


Amortization expense was $85,108 and $57,863, respectively, for the three months ended June 30, 2016 and 2015, and $170,215 and $57,863, respectively, for the six months ended June 30, 2016 and 2015.  We have not recognized any impairment as of June 30, 2016.


Goodwill


In connection with our purchase of IPG, we recorded goodwill of $187,000. We have not recognized any impairment as of June 30, 2016.


XML 19 R9.htm IDEA: XBRL DOCUMENT v3.5.0.2
DEBT
6 Months Ended
Jun. 30, 2016
Debt Disclosure [Abstract]  
Debt Disclosure [Text Block]

NOTE 4.    DEBT


Line of Credit – Related Party


In February 2015, we issued a senior secured note to Infinity Capital, LLC (“Infinity Capital”), as amended in April 2015, bearing 5% interest payable monthly in arrears commencing June 30, 2015, until the maturity date of August 31, 2015 (the “Infinity Note”).   Infinity Capital, an investment management company, was founded and is controlled by our chairman of the board, Michael Feinsod, a related party.  On July 1, 2015, the outstanding principal and interest of $309,000 was settled by our issuing a 10% private placement note.  Subsequent to the settlement on July 1, 2015, we continued to borrow under the Infinity Note.  Interest expense for the Infinity Note for the six months ended June 30, 2016, was approximately $26,540, and approximately $38,268 was accrued as of June 30, 2016.


Notes Payable


 

 

June 30,

2016

 

December 31,

2015

10.0% private placement notes

$

659,000

$

659,000

14.0% mortgage note payable (The Greenhouse)

 

600,000

 

600,000

8.5% convertible note payable (Pueblo West Property)

 

154,931

 

158,307

 

 

1,413,931

 

1,417,307

Unamortized debt discount

 

(63,817)

 

(279,435)

 

 

1,350,114

 

1,137,872

Less: Current portion

 

(1,202,380)

 

(986,475)

Long-term portion

$

147,734

$

151,397


10% Private Placement Notes


In 2015, we completed a private placement pursuant to a Promissory Note and Warrant Purchase Agreement (the “10% Agreement”) with certain accredited investors, bearing interest at 10% payable quarterly (each such note, a “10% Note,” and collectively, the “10% Notes”).  Subject to the terms and conditions of the 10% Agreement, each investor is granted fully-vested warrants equal to their note principal divided by two (the “10% Warrants”) (with standard dilution clauses).  The 10% Warrants are exercisable for a period of eighteen months after grant date and have an exercise price of $1.08 per share.  The debt is treated as conventional debt.  The 10% Notes are collateralized by a security interest in substantially all of our assets.


$309,000 of the 10% Notes are due to a related party, Infinity Capital, at June 30, 2016 and December 31, 2015.  As of and for the six months ended June 30, 2016, approximately $7,225 of interest expense, and $14,500 of accrued interest under the 10% Notes relates to Infinity Capital.


On June 3, 2016, we reached an agreement with the 10% Note holders to extend the maturity date from May 1, 2016 to January 31, 2017.  In exchange for the extension, we issued the holders an aggregate of 659,000 additional warrants to purchase our common stock at $1.07 per share for a period of five years, with an aggregate fair value of $358,000, determined using Black-Scholes, a risk-free rate of 1.2% and volatility of 151%.  We concluded that this modification of the debt instruments met the criteria for a debt extinguishment and, accordingly, recorded a loss on extinguishment of debt of $358,000.  Absent the warrants, the fair value of the new debt remained the same as the fair value of the original debt.


14% Mortgage Note Payable (The Greenhouse)


In October 2014, we executed a mortgage on The Greenhouse in the amount of $600,000, bearing 14.0% interest payable monthly, with a maturity date of October 21, 2016 (the “Greenhouse Mortgage”).  The debt is treated as conventional debt.


In addition, we granted warrants to Evans Street Lendco LLC (“Evans Lendco”), the note holder of the Greenhouse Mortgage, which expire on October 21, 2016.  The warrants vested immediately and allowed for Evans Lendco to purchase 600,000 shares of our common stock at a price of $4.40 per share, (with standard dilution clauses).  Due to the drop in our stock price, on July 29, 2015, we agreed with Evans Lendco to replace the warrants previously issued to Evans Lendco with warrants to purchase 225,000 shares of our stock at $1.20 per share with a term of two years.  The estimated fair value of the replacement warrants is less than the fair value of the original warrants on their date of grant.  Accordingly, we will continue to amortize the remaining fair value of the original warrants over the remaining life of the underlying debt.


8.5% Convertible Note Payable (Pueblo West Property)


In December 2013, we executed a mortgage on our Pueblo West Property in the amount of $170,000, bearing 8.5% interest with monthly principal and interest payments totaling $1,674, with the balance due on December 31, 2018 (the “Pueblo Mortgage”). This note is convertible at any time at $5.00 per share.


Derivative treatment is not required, as the conversion feature meets the scope exception. The conversion feature is not beneficial, because the conversion price was higher than the stock price on the commitment date.  Accordingly, we treated the Pueblo Mortgage as conventional debt.


12% Convertible Notes


Conversion of 12% Convertible Notes


During the year ended December 31, 2015, lenders converted $321,123 of 12% Convertible Notes for 64,225 shares of our common stock.  The December 2013 Issuance and the January 2014 Issuance (collectively, the “12% Convertible Notes”) included a provision that if the trading stock price exceeded $10 for twenty consecutive trading days and the daily volume for those twenty consecutive trading days exceeds 25,000 shares, then the 12% Convertible Notes convert into shares of our common stock on or after December 1, 2015.  As of April 24, 2014, these parameters were met.  On December 1, 2015, the remaining $1,330,000 of convertible notes was automatically converted to 266,000 shares of our common stock.


December 2013 Issuance


In December 2013, we entered into convertible promissory notes with various third parties totaling $530,000 (the “December 2013 Issuance”). The principal amounts of these notes ranged between $10,000 and $150,000. The notes required quarterly interest payments at 12%, and were convertible into shares of our common stock at a conversion rate of $5.00 per share (with standard dilution clauses).


Derivative treatment was not required, as the conversion feature met the scope exception. The conversion feature was not beneficial, because the conversion price was higher than the stock price on the commitment date.  Accordingly, we treated the December 2013 Issuance as conventional debt.


January 2014 Issuance


In January 2014, we entered into convertible promissory notes with various third parties totaling $1,605,000 (the “January 2014 Issuance”). The principal amounts of these notes ranged between $10,000 and $200,000. The notes required quarterly interest payments at 12%, and were convertible into shares of our common stock at a conversion rate of $5.00 per share (with standard dilution clauses).


Derivative treatment was not required, as the conversion feature met the scope exception.  Since the initial conversion price was less than the market value of the common stock at the time of issuance, it was determined that a beneficial conversion feature existed. The intrinsic value of the beneficial conversion feature and the combined value of the debt discount resulted in a value greater than the value of the debt and, as such, the total discount was limited to the value of the debt balance of $1,605,000.


Annual maturities of long-term debt (excluding unamortized discount) for the next three years, consist of:


Year ending December 31,

 

 

2016

$

603,522

2017

 

666,507

2018

 

143,902

 

$

1,413,931


XML 20 R10.htm IDEA: XBRL DOCUMENT v3.5.0.2
ACCRUED STOCK PAYABLE
6 Months Ended
Jun. 30, 2016
Accrued Stock Payable [Abstract]  
Accrued Stock Payable [Text Block]

NOTE 5.  ACCRUED STOCK PAYABLE


The following tables summarize the changes in accrued common stock payable during the six months ended June 30, 2016:


 

 

Amount

 

Number of Shares

December 31, 2015

$

1,532,420

 

730,000

IPG acquisition -- issued

 

(843,200)

 

(400,000)

Chiefton acquisition -- issued

 

(69,400)

 

(80,000)

Feinsod Agreement -- accrual

 

165,296

 

--

Consulting services -- accrual

 

6,988

 

--

Consulting services -- issued

 

(25,000)

 

(50,000)

Employment agreements -- accrual

 

567

 

--

Employment agreements -- issued

 

(132,175)

 

(50,000)

June 30, 2016

$

635,496

 

150,000


Feinsod Agreement


On August 4, 2014, we entered into an agreement with Michael Feinsod in consideration for serving as Executive Chairman of the Board and as a member of the Board and pursuant to the terms of the Executive Board and Director Agreement (the “Feinsod Agreement”).  The Board approved the issuance to Infinity Capital of (a) 200,000 shares of our common stock on August 4, 2014; (b) 1,000,000 shares of our common stock upon the uplisting of our common stock to the OTC Market’s OTCQB; (c) 150,000 shares of our common stock on August 4, 2015; and (d) 150,000 shares of our common stock on August 4, 2016.  Mr. Feinsod must remain a member of the Board in order for the common stock to be issued.  In addition, the Feinsod Agreement requires the issuance of a number of shares of our common stock to Infinity Capital equal to 10% of any new issuances not to exceed 600,000 shares of our common stock in the aggregate during the time that Mr. Feinsod remains a member of the Board (the “New Issuance Allowance”).  Under the terms of the Feinsod Agreement, the New Issuance Allowance will not be triggered upon issuances relating to convertible securities existing as of the date of the Feinsod Agreement.  For illustrative purposes, if we issue 7,000,000 new shares of common stock, then the New Issuance Allowance issued to Infinity Capital would be capped at 600,000 shares of our common stock.  No shares have been issued under the New Issuance Allowance.


The 1,000,000 shares of our common stock were valued at $2.97 per share, based on the closing price of our common stock of $3.49 on April 27, 2015, and then reduced by 15% due to restrictions on the ability to trade our shares.  The other shares under the Feinsod Agreement were valued at $4.42 per share, based on the closing price of our common stock of $5.20 on August 4, 2014, and then reduced by 15% due to restriction on the ability to trade our common stock.  We are recognizing expense for the unissued shares ratably over the vesting period.


Employment Agreements


On May 13, 2015, we hired two individuals from Next Big Crop (“NBC”), an unaffiliated entity serving the cannabis industry, to service our new and existing clients. We did not purchase any existing client base from NBC and upon execution of employment agreements, granted these persons a total of 100,000 shares of our common stock with a vesting date of January 1, 2016. On the date of grant, the 100,000 shares had an initial fair value of $311,000, based on a closing price per share of our common stock of $3.11 on May 13, 2015. Due to restrictions in the ability to trade our shares, a discount of fifteen percent (15%) was applied to the fair value of the shares. After taking into consideration the illiquidity of the shares, the fair value was determined to be $264,350.  One individual forfeited his shares, so expense was only recognized for 50,000 shares.  These shares were issued in April 2016.


Consulting Agreement


On July 15, 2015, we entered into an agreement with an individual to provide consulting services to customers in exchange for 50,000 shares of our common stock to be delivered on March 15, 2016.  The fair value of the common stock is determined at the end of each reporting period and the pro rata amount earned is recognized as accrued stock payable over the term of the agreement.  These shares were issued in March 2016.


XML 21 R11.htm IDEA: XBRL DOCUMENT v3.5.0.2
COMMITMENTS AND CONTINGENCIES
6 Months Ended
Jun. 30, 2016
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies Disclosure [Text Block]

NOTE 6.   COMMITMENTS AND CONTINGENCIES


Legal


To the best of the Company’s knowledge and belief, no legal proceedings of merit are currently pending or threatened against the Company.


XML 22 R12.htm IDEA: XBRL DOCUMENT v3.5.0.2
STOCKHOLDERS' EQUITY
6 Months Ended
Jun. 30, 2016
Stockholders' Equity Note [Abstract]  
Stockholders' Equity Note Disclosure [Text Block]

NOTE 7.   STOCKHOLDERS’ EQUITY


Share-based expense consisted of the following:


 

 

Three months ended

June 30,

 

Six months ended

June 30,

 

 

2016

 

2015

 

2016

 

2015

Employee Awards

$

381,441

$

623,567

$

834,062

$

623,567

Consulting Awards

 

37,416

 

17,454

 

47,516

 

17,454

Feinsod Agreement

 

82,648

 

3,214,444

 

165,296

 

3,463,069

DB Option Agreement

 

--

 

--

 

55,100

 

--

 

$

501,505

$

3,855,465

$

1,101,974

$

4,104,090


Employee Stock Options


On October 29, 2014, the Board authorized the adoption of and on June 26, 2015, our stockholders ratified our 2014 Equity Incentive Plan (the “Incentive Plan”).  The Incentive Plan provides for the issuance of up to 10 million shares of our common stock, and is designed to provide an additional incentive to executives, employees, directors and key consultants, aligning our long term interests with participants.  In April 2016, we filed a Registration Statement on Form S-8 (the “Registration Statement”), which automatically became effective in May 2016.  The Registration Statement relates to 10,000,000 shares of our common stock, which are issuable pursuant to, or upon exercise of, options that have been granted or may be granted under our Incentive Plan.


Share-based compensation costs for award grants to employees and directors (“Employee Awards”) are recognized on a straight-line basis over the service period for the entire award, with the amount of compensation cost recognized at any date equaling at least the portion of the award that is vested.  The following summarizes the Black-Scholes assumptions used for Employee Awards granted during the six months ended June 30, 2016:


Exercise price

 

$ 0.61 -- 1.01

Stock price on date of grant

 

$ 0.63 -- 1.01

Volatility

 

149 -- 153 %

Risk-free interest rate

 

0.87 – 0.90 %

Expected life (years)

 

3.0

Dividend yield

 

--


The following summarizes Employee Awards activity:


 

 

Number of Shares

 

Weighted-average Exercise Price per Share

 

Weighted-average Remaining Contractual Term

(in years)

 

Aggregate Intrinsic Value

Outstanding at December 31, 2015

 

2,509,000

$

1.49

 

 

 

 

Granted

 

228,000

 

 

 

 

 

 

Forfeited

 

(235,650)

$

0.75

 

 

 

 

Outstanding at June 30, 2016

 

2,501,350

$

1.48

 

2.6

$

203,000

Exercisable at June 30, 2016

 

547,500

$

2.79

 

3.4

$

--


As of June 30, 2016, there was approximately $555,000 of total unrecognized compensation expense related to unvested Employee Awards, which is expected to be recognized over a weighted-average period of five months.


Warrants for Consulting Services


As needed, we may issue warrants to third parties in exchange for consulting services.  Stock-based compensation costs for award grants to third parties for consulting services (“Consulting Awards”) are recognized on a straight-line basis over the service period for the entire award, with the amount of compensation cost recognized at any date equaling at least the portion of the award that is vested.  Service Awards are revalued at each reporting date until fully vested, which may generate an expense or benefit.  No Consulting Awards were granted during the six months ended June 30, 2016.


The following summarizes Consulting Awards:


 

 

Number of Shares

 

Weighted-average Exercise Price per Share

 

Weighted-average Remaining Contractual Term

(in years)

 

Aggregate Intrinsic Value

Outstanding at December 31, 2015

 

252,500

$

3.62

 

 

 

 

Outstanding at June 30, 2016

 

252,500

$

3.62

 

0.9

$

2,250

Exercisable at June 30, 2016

 

245,000

$

 3.71

 

0.5

$

2,250


As of June 30, 2016, there was approximately $2,700 of total unrecognized expense related to unvested Consulting Awards, which is expected to be recognized over a weighted-average period of six months.


IPG Acquisition Warrants


In connection with the IPG APA, we issued to IPG 500,000 fully-vested warrants to purchase a) 250,000 shares of our common stock at $4.50 per share, (the “IPG $4.50 Warrants”), and b) 250,000 shares of our common stock at $5.00 per share (the “IPG $5.00 Warrants”) (collectively, the “IPG Warrants”). The IPG Warrants are subject to customary adjustments in the event of our reclassification, consolidation, merger, subdivision of shares of our common stock, combination of shares of our common stock or payment of dividends in the form of the our common stock. The IPG Warrants expire three years after their initial issuance date.


As of June 30, 2016, all of the IPG Warrants are outstanding and exercisable.


Warrants with Debt


The following summarizes warrants issued with debt:


 

 

Number of Shares

 

Weighted-average Exercise Price per Share

 

Weighted-average Remaining Contractual Term

(in years)

 

Aggregate Intrinsic Value

Outstanding at December 31, 2015

 

597,200

$

1.41

 

 

 

 

Granted

 

659,000

 

1.07

 

 

 

 

Outstanding at June 30, 2016

 

1,256,200

 

1.41

 

3.0

$

--

Exercisable at June 30, 2016

 

1,256,200

$

1.23

 

3.0

$

--


DB Option Agreement warrants


In order to extend the DB Option Agreement with Infinity Capital, we granted Infinity Capital warrants to purchase 100,000 shares of our common stock at an exercise price of $0.67 per share with a five year life.  The fair value of $55,100 is included in equity-based expense.  The following summarizes the Black-Scholes assumptions used to estimate the fair value of the DB Option Agreement warrants:


Volatility

 

150 %

Risk-free interest rate

 

1.2 %

Expected life (years)

 

5.0

Dividend yield

 

--


Series A Warrants


Between July 11, 2013 and August 8, 2013, we issued 707,000 shares of our common stock and 707,000 fully-vested Series A Warrants for cash consideration of $1.00 per share. Each Series A Warrant entitles the holder to purchase one share of our common stock at a price of $10.00 per share. The Series A Warrants expire on the earlier of August 1, 2016, or twenty days following written notification from us that our common stock had a closing bid price at or above $12.00 for any ten consecutive trading days. This condition was met as of April 30, 2014; however, we have not forced conversion of the warrants at this time.


Between August 14, 2013 and September 19, 2013, we issued 266,000 shares and 266,000 fully-vested Series A Warrants of our common stock for cash consideration of $1.00 per share. The Series A Warrants expire on the earlier of August 1, 2016, or twenty days following written notification from us that our common stock had a closing bid price at or above $12.00 for any ten consecutive trading days. This condition was met as of April 30, 2014; however, we have not forced conversion of the warrants at this time.


As of June 30, 2016, all 973,000 warrants are outstanding and exercisable.


XML 23 R13.htm IDEA: XBRL DOCUMENT v3.5.0.2
NET LOSS PER SHARE
6 Months Ended
Jun. 30, 2016
Earnings Per Share [Abstract]  
Earnings Per Share [Text Block]

NOTE 8.  NET LOSS PER SHARE


Basic net loss per share is computed by dividing net loss by the weighted-average number of common shares outstanding during the reporting period.  Diluted net loss per share is computed similarly to basic loss per share, except that it includes the potential dilution that could occur if dilutive securities are exercised.


The following table presents a reconciliation of the denominators used in the computation of net loss per share – basic and diluted:


 

 

Three months ended

June 30,

 

Six months ended

June 30,

 

 

2016

 

2015

 

2016

 

2015

Net loss

$

(1,336,471)

$

(4,349,222)

$

(2,524,703)

$

(5,177,715)

Weighted average outstanding shares of common stock

 

15,384,762

 

14,054,673

 

15,157,509

 

13,577,719

Dilutive effect of stock options and warrants

 

--

 

--

 

--

 

--

Common stock and equivalents

 

15,384,762

 

14,054,673

 

15,157,509

 

13,577,719

Net loss per share – Basic and diluted

$

(0.09)

$

(0.31)

$

(0.17)

$

(0.38)


Outstanding stock options and common stock warrants are considered anti-dilutive because we are in a net loss position.


XML 24 R14.htm IDEA: XBRL DOCUMENT v3.5.0.2
SUBSEQUENT EVENTS
6 Months Ended
Jun. 30, 2016
Subsequent Events [Abstract]  
Subsequent Events [Text Block]

NOTE 9.   SUBSEQUENT EVENTS


There were no events subsequent to June 30, 2016, and up to the date of this filing that would require disclosure.


XML 25 R15.htm IDEA: XBRL DOCUMENT v3.5.0.2
SEGMENT INFORMATION
6 Months Ended
Jun. 30, 2016
Segment Reporting [Abstract]  
Segment Reporting Disclosure [Text Block]

NOTE 10.   SEGMENT INFORMATION


Our operations are organized into four segments: Security and Cash Management Services; Marketing and Products; Consulting and Advisory; and Finance and Real Estate.  All revenue originates and all assets are located in the United States.  We have revised our disclosure to correspond to the information provided to the chief operating decision maker.


Three months ended June 30


2016

 

Security and Cash Management

 

Marketing and Products

 

Consulting and Advisory

 

Finance and Real Estate

 

Total

Revenues, net

$

531,663

$

66,041

$

72,774

$

31,464

$

701,942

Costs and expenses

 

(534,620)

 

(79,522)

 

(99,794)

 

(11,593)

 

(725,529)

Other expense

 

--

 

--

 

--

 

(1,110)

 

(1,110)

 

$

(2,957)

$

(13,481)

$

(27,020)

$

18,761

 

(24,697)

Corporate expenses

 

 

 

 

 

 

 

 

 

(1,311,774)

 

 

 

 

 

 

 

 

Net loss

$

(1,336,471)


2015

 

Security and Cash Management

 

Marketing and Products

 

Consulting and Advisory

 

Finance and Real Estate

 

Total

Revenues, net

$

376,722

$

12,569

$

--

$

37,911

$

427,202

Costs and expenses

 

(380,852)

 

(32,438)

 

--

 

(18,531)

 

(431,821)

Other expense

 

--

 

--

 

--

 

(3,493)

 

(3,493)

 

$

(4,130)

$

(19,869)

$

--

$

15,887

 

(8,112)

Corporate expenses

 

 

 

 

 

 

 

 

 

(4,341,110)

 

 

 

 

 

 

 

 

Net loss

$

(4,349,222)


Six months ended June 30


2016

 

Security and Cash Management

 

Marketing and Products

 

Consulting and Advisory

 

Finance and Real Estate

 

Total

Revenues, net

$

1,039,194

$

116,139

$

170,888

$

67,833

$

1,394,054

Costs and expenses

 

(1,076,016)

 

(161,097)

 

(183,563)

 

(23,379)

 

(1,444,055)

Other expense

 

--

 

--

 

--

 

(4,462)

 

(4,462)

 

$

(36,822)

$

(44,958)

$

(12,675)

$

39,992

 

(54,463)

Corporate expenses

 

 

 

 

 

 

 

 

 

(2,470,240)

 

 

 

 

 

 

 

 

Net loss

$

(2,524,703)


2015

 

Security and Cash Management

 

Marketing and Products

 

Consulting and Advisory

 

Finance and Real Estate

 

Total

Revenues, net

$

394,104

$

25,367

$

--

$

64,588

$

484,059

Costs and expenses

 

(408,322)

 

(57,091)

 

--

 

(27,538)

 

(492,951)

Other expense

 

--

 

--

 

--

 

(5,815)

 

(5,815)

 

$

(14,218)

$

(31,724)

$

--

$

31,235

 

(14,707)

Corporate expenses

 

 

 

 

 

 

 

 

 

(5,163,008)

 

 

 

 

 

 

 

 

Net loss

$

(5,177,715)


Total assets

 

June 30, 2016

 

December 31,

2015

Security and Cash Management

$

101,935

 

132,314

Marketing and Products

 

50,589

 

127,345

Consulting and Advisory

 

39,822

 

22,268

Finance and Real Estate

 

452,760

 

431,639

Corporate

 

2,866,522

 

2,969,145

 

$

3,511,628

 

3,682,711


All assets are located in the United States.


XML 26 R16.htm IDEA: XBRL DOCUMENT v3.5.0.2
Accounting Policies, by Policy (Policies)
6 Months Ended
Jun. 30, 2016
Accounting Policies [Abstract]  
Nature of Operations

Nature of Operations


General Cannabis Corporation (the “Company,” “we,” “us,” “our,” or “GCC”) (formerly, Advanced Cannabis Solutions, Inc.), was incorporated on June 3, 2013, and provides products and services to the regulated cannabis industry.  On April 28, 2015, our common stock was uplisted and resumed quotation on the OTC Market’s OTCQB on May 6, 2015.  Our operations are segregated into the following four reportable segments:


Security and Cash Management Services


In March 2015, we acquired substantially all of the assets of Iron Protection Group, LLC, a Colorado limited liability company, which continues to do business as “Iron Protection Group.” Iron Protection Group (“IPG”) provides advanced security, including on-site professionals, video surveillance and cash transport, to licensed cannabis cultivators and retail shops. As of June 30, 2016, IPG had approximately 58 security guards on staff who serve 16 clients throughout Colorado.


Marketing and Products


In September 2015, we acquired substantially all of the assets of Chiefton Supply Co., and established a dba of Chiefton Supply Co., incorporated in Colorado (“Chiefton”).  Chiefton is an apparel and design company.  We design, distribute and sell apparel featuring graphic designs.  Our apparel is purchased and screen printed by third parties, for which there are numerous suppliers.  Chiefton also provides high-level design and branding services to various clients, from grow stores and dispensaries to wholesale cannabis companies.


In April 2016, we relaunched GC Supply, dedicated to providing wholesale equipment and supplies to participants in the regulated cannabis industry.  We will provide turnkey sourcing and stocking services to cultivation, retail and infused products manufacturing facilities.  Offerings will include infrastructure, equipment, consumables, various delivery technologies (vaporizers and capsules) and compliance packaging.  GC Supply operates out of a leased, 1,800 square-foot warehouse located in Colorado Springs, Colorado.


Consulting and Advisory


Through Next Big Crop we deliver comprehensive consulting services to the cannabis industry that include obtaining licenses, compliance, cultivation, retail operations, logistical support, facility design and building services, and expansion of existing operations.  Our business plan is based on the future growth of the regulated cannabis market in the United States.


In April 2016, we launched our public market research services division, called General Cannabis Equity Research, or GCER.  Our approach to investment research will place an emphasis on intrinsic value and management quality.  We will evaluate cannabis investments in the same manner as a merger and acquisitions specialist might.  Our analyses of the individual cannabis companies will be driven by economic realities of the industry and its constantly changing dynamics.


Finance and Real Estate


Real Estate Leasing


Our real estate leasing business primarily includes the acquisition and leasing of cultivation space and related facilities to licensed marijuana growers and dispensary owners for their operations. Management anticipates that these facilities will range in size from 5,000 to 50,000 square feet. These facilities will only be leased to tenants that possess the requisite state licenses to operate cultivation facilities. The leases with the tenants will provide certain requirements that permit us to continually evaluate our tenants’ compliance with applicable laws and regulations.


As of the date of this report, we owned one cultivation property that is located in a suburb of Pueblo, Colorado (the “Pueblo West Property”). The Pueblo West Property consists of approximately three acres of land, which currently includes a 5,000 square foot steel building, and parking lot. The Pueblo West Property is zoned for cultivating cannabis and is leased to a medical cannabis grower until December 31, 2022.  We are evaluating strategic options for this property.


Shared Office Space, Networking and Event Services   


In October 2014, we purchased a former retail bank located at 6565 East Evans Avenue, Denver, Colorado 80224, which has been branded as The Greenhouse (“The Greenhouse”).  The building is a 16,056 square-foot facility, which will be converted to serve as the largest shared workspace for entrepreneurs, professionals and others serving the cannabis industry.  Clients will be able to lease space to use as offices, meeting rooms, lecture halls, educational and networking facilities, and individual workstations.


The Greenhouse has approximately 10,000 square feet of existing office space and 5,000 square feet on its ground floor that is dedicated to a consumer banking design.  The banking space includes a vault with safety deposit boxes, three drive through teller windows and five secure teller windows inside.


We plan to continue to acquire commercial real estate and lease office space to participants in the cannabis industry. These participants include media, internet, packaging, lighting, cultivation supplies, and financial services. In exchange for certain services that may be provided to these tenants, we expect to receive rental income in the form of cash. In certain cases, we may acquire equity interests or provide debt capital to these businesses.


Industry Finance and Equipment Leasing Services


We lease cultivation equipment and facilities to customers in the cannabis industry. We expect we will enter into sale lease-back transactions of grow lights, tenant improvements and other grow equipment. Since Colorado State law does not allow entities operating under a cannabis license to pledge the assets or the license of the cannabis operation for any type of general borrowing activity, we intend to provide loans to individuals and businesses in the cannabis industry on an unsecured basis.  Equipment will only be leased to tenants that possess the requisite state licenses to operate such facilities. The leases with the tenants will provide certain requirements that permit us to continually evaluate our tenants’ compliance with applicable laws and regulations.


We are exploring lending opportunities in Oregon, Washington, Colorado, and Arizona. Our finance strategy will include making direct term loans and providing revolving lines of credit to businesses involved in the cultivation and sale of cannabis and related products.  These loans will generally be secured to the maximum extent permitted by law.  We believe there is a significant demand for this financing.  We are pursuing other finance services including customized finance, capital formation, and banking, for participants in the cannabis industry.


On November 4, 2015, we entered into an agreement (the “DB Option Agreement”) with Infinity Capital, a related party, which was amended on March 29, 2016 (the “Amended DB Option Agreement”).  Pursuant to the Amended DB Option Agreement, we have the right to purchase all of Infinity Capital’s interest in DB Products Arizona, LLC (“DB”) at Infinity Capital’s actual cost, plus $1.00, or $750,001. The interests for which the option has been granted are Infinity Capital’s 50% equity interest in the membership interests of DB, and any outstanding unpaid principal and interest owed on promissory note(s) issued by DB in favor of Infinity Capital for up to $750,000.  DB is involved in the production and distribution of Dixie Brands, Inc’s full line of medical cannabis “Dixie Elixirs and Edibles” products in Arizona.  DB expects to begin sales in 2016.  We have no obligation to exercise the option, which expires September 24, 2016.

Basis of Accounting, Policy [Policy Text Block]

Basis of Presentation


The accompanying (a) condensed consolidated balance sheet at December 31, 2015, has been derived from audited statements and (b) condensed consolidated unaudited financial statements as of June 30, 2016 and 2015, have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements, and should be read in conjunction with the audited consolidated financial statements and related footnotes included in our Annual Report on Form 10-K for the year ended December 31, 2015 (the “2015 Annual Report”), filed with the Securities and Exchange Commission (the “SEC”) on March 25, 2016.  It is management’s opinion, however, that all material adjustments (consisting of normal recurring adjustments), have been made which are necessary for a fair financial statements presentation. The condensed consolidated financial statements include all material adjustments (consisting of normal recurring accruals) necessary to make the condensed consolidated financial statements not misleading as required by Regulation S-X, Rule 10-01. Operating results for the three and six months ended June 30, 2016, are not necessarily indicative of the results of operations expected for the year ending December 31, 2016.


The condensed consolidated financial statements include the results of GCC and its five wholly-owned subsidiary companies: (a) ACS Colorado Corp., a Colorado corporation formed in 2013; (b) Advanced Cannabis Solutions Corporation, a Colorado corporation formed in 2013; (c) 6565 E. Evans Avenue LLC, a Colorado limited liability company formed in 2014; (d) General Cannabis Capital Corporation, a Colorado corporation formed in 2015; and (e) GC Security LLC, (“GCS”) a Colorado limited liability company formed in 2015.  Advanced Cannabis Solutions Corporation has one wholly-owned subsidiary company, ACS Corp., which was formed in Colorado on June 6, 2013.  Intercompany accounts and transactions have been eliminated.


Certain reclassifications have been made to the prior period condensed consolidated financial statements to conform to the current period presentation. The reclassifications had no effect on net loss, total assets, or total stockholders’ equity (deficit).

Going Concern

Going Concern


The condensed consolidated financial statements have been prepared on a going concern basis, which assumes we will be able to realize our assets and discharge our liabilities in the normal course of business for the foreseeable future.  The ability to continue as a going concern is dependent upon our generating profitable operations in the future and / or obtaining the necessary financing to meet our obligations and repay our liabilities arising from normal business operations when they come due. Management believes that actions presently being taken to further implement our business plan and generate additional revenues provide opportunity for the Company to continue as a going concern.  While we believe in the viability of our strategy to generate additional revenues and our ability to raise additional funds, there can be no assurances to that effect.


We had an accumulated deficit of $18,952,081 and $16,427,378, respectively, at June 30, 2016 and December 31, 2015, and further losses are anticipated in the development of our business. Accordingly, there is substantial doubt about our ability to continue as a going concern. The accompanying condensed consolidated financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern.

Significant Accounting Policy Updates [Policy Text Block]

Significant Accounting Policy Updates


Modification of Debt Instruments


Modifications or exchanges of debt, which are not considered a troubled debt restructuring, are considered extinguishments if the terms of the new debt and the original instrument are substantially different.  The instruments are considered substantially different when the present value of the cash flows under the terms of the new debt instrument are at least 10% different from the present value of the remaining cash flows under the terms of the original instrument.  The fair value of non-cash consideration associated with the new debt instrument, such as warrants, are included as a day one cash flow in the 10% cash flow test.  If the original and new debt instruments are substantially different, the original debt is derecognized and the new debt is initially recorded at fair value, with the difference recognized as an extinguishment gain or loss.

New Accounting Pronouncements, Policy [Policy Text Block]

Recently Issued Accounting Standards


Financial Accounting Standards Board, or FASB, Accounting Standards Update, or FASB ASU 2016-12 “Revenue from Contracts with Customers (Topic 606)” – In May 2016, the FASB issued 2016-12.  The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.  ASU 2016-12 provides clarification on assessing collectability, presentation of sales taxes, noncash consideration, and completed contracts and contract modifications.  This ASU is effective for annual reporting periods beginning after December 15, 2017, with the option to adopt as early as December 15, 2016. We are currently assessing the impact of adoption of this ASU on our consolidated results of operations, cash flows and financial position.


FASB ASU 2016-11 “Revenue Recognition (Topic 605) and Derivatives and Hedging (Topic 815)” – In May 2016, the FASB issued 2016-11, which clarifies guidance on assessing whether an entity is a principal or an agent in a revenue transaction.  This conclusion impacts whether an entity reports revenue on a gross or net basis.  This ASU is effective for annual reporting periods beginning after December 15, 2017, with the option to adopt as early as December 15, 2016. We are currently assessing the impact of adoption of this ASU on our consolidated results of operations, cash flows and financial position.


FASB ASU 2016-10 “Revenue from Contracts with Customers (Topic 606)” – In April 2016, the FASB issued ASU 2016-10, clarify identifying performance obligations and the licensing implementation guidance, while retaining the related principles for those areas.  This ASU is effective for annual reporting periods beginning after December 15, 2017, with the option to adopt as early as December 15, 2016. We are currently assessing the impact of adoption of this ASU on our consolidated results of operations, cash flows and financial position.


FASB ASU 2016-09 “Compensation – Stock Compensation (Topic 718)” – In March 2016, the FASB issued ASU 2016-09, which includes multiple provisions intended to simplify various aspects of accounting for share-based payments.  While aimed at reducing the cost and complexity of the accounting for share-based payments, the amendments are expected to significantly impact net income, earnings per share, and the statement of cash flows.  Implementation and administration may present challenges for companies with significant share-based payment activities.  This ASU is effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years.  We are currently evaluating the potential impact this standard will have on our consolidated financial statements and related disclosures.


FASB ASU 2016-02 “Leases (Topic 842)” – In February 2016, the FASB issued ASU 2016-02, which will require lessees to recognize almost all leases on their balance sheet as a right-of-use asset and a lease liability.  For income statement purposes, the FASB retained a dual model, requiring leases to be classified as either operating or finance.  Classification will be based on criteria that are largely similar to those applied in current lease accounting, but without explicit bright lines.  Lessor accounting is similar to the current model, but updated to align with certain changes to the lessee model and the new revenue recognition standard.  This ASU is effective for fiscal years beginning after December 18, 2018, including interim periods within those fiscal years.  We are currently evaluating the potential impact this standard will have on our consolidated financial statements and related disclosures.

XML 27 R17.htm IDEA: XBRL DOCUMENT v3.5.0.2
BUSINESS ACQUISITIONS (Tables)
6 Months Ended
Jun. 30, 2016
Iron Protection Group [Member]  
BUSINESS ACQUISITIONS (Tables) [Line Items]  
Agregate consideration The aggregate consideration was as follows:

Common stock payable

$

1,054,000

Warrants issued with $4.50 exercise price

 

421,000

Warrants issued with $5.00 exercise price

 

412,000

 

$

1,887,000

Business Combination, Segment Allocation [Table Text Block] The purchase price allocation is as follows:

Intangible assets:

 

 

Customer relationship intangible

$

1,000,000

Marketing-related intangibles

 

200,000

Non-compete agreements

 

500,000

Goodwill

 

187,000

 

$

1,887,000

Business Acquisition, Pro Forma Information, Nonrecurring Adjustments [Table Text Block] The pro forma effects of the acquisition on the results of operations as if the transaction had been completed on January 1, 2015, are as follows:

 

 

Six months ended

 

 

June 30, 2015

(Unaudited)

Total net revenues

$

853,805

Net loss

 

(5,124,454)

Net loss per common share:

 

 

  Basic and diluted

$

(0.36)

Chiefton Acquisition [Member]  
BUSINESS ACQUISITIONS (Tables) [Line Items]  
Agregate consideration The aggregate consideration was as follows:

Cash

$

12,249

Common stock

 

69,400

  Aggregate consideration

$

81,649

Business Combination, Segment Allocation [Table Text Block] The purchase price allocation is as follows:

Inventory

$

12,249

Intangible assets – intellectual property

 

69,400

 

$

81,649

XML 28 R18.htm IDEA: XBRL DOCUMENT v3.5.0.2
LONG-LIVED ASSETS (Tables)
6 Months Ended
Jun. 30, 2016
Longlived Assets [Abstract]  
Schedule of Intangible Assets and Goodwill [Table Text Block] Intangible assets consisted of the following as of June 30, 2016:

 

 

Gross

 

Accumulated Amortization

 

Net

 

Estimated Life

(in years)

Customer relationship intangible

$

1,000,000

$

126,575

$

873,425

 

10

Marketing-related intangibles

 

200,000

 

50,630

 

149,370

 

5

Non-compete agreements

 

500,000

 

210,959

 

289,041

 

3

Chiefton brand and graphic designs

 

69,400

 

26,524

 

42,876

 

2

  Intangible assets, net

$

1,769,400

$

414,688

$

1,354,712

 

 

XML 29 R19.htm IDEA: XBRL DOCUMENT v3.5.0.2
DEBT (Tables)
6 Months Ended
Jun. 30, 2016
Debt Disclosure [Abstract]  
Schedule of Long-term Debt Instruments [Table Text Block] Notes Payable

 

 

June 30,

2016

 

December 31,

2015

10.0% private placement notes

$

659,000

$

659,000

14.0% mortgage note payable (The Greenhouse)

 

600,000

 

600,000

8.5% convertible note payable (Pueblo West Property)

 

154,931

 

158,307

 

 

1,413,931

 

1,417,307

Unamortized debt discount

 

(63,817)

 

(279,435)

 

 

1,350,114

 

1,137,872

Less: Current portion

 

(1,202,380)

 

(986,475)

Long-term portion

$

147,734

$

151,397

Schedule of Maturities of Long-term Debt [Table Text Block] Annual maturities of long-term debt (excluding unamortized discount) for the next three years, consist of:

Year ending December 31,

 

 

2016

$

603,522

2017

 

666,507

2018

 

143,902

 

$

1,413,931

XML 30 R20.htm IDEA: XBRL DOCUMENT v3.5.0.2
ACCRUED STOCK PAYABLE (Tables)
6 Months Ended
Jun. 30, 2016
Accrued Stock Payable [Abstract]  
Schedule of Share-based Compensation, Stock Options, Activity [Table Text Block] The following tables summarize the changes in accrued common stock payable during the six months ended June 30, 2016:

 

 

Amount

 

Number of Shares

December 31, 2015

$

1,532,420

 

730,000

IPG acquisition -- issued

 

(843,200)

 

(400,000)

Chiefton acquisition -- issued

 

(69,400)

 

(80,000)

Feinsod Agreement -- accrual

 

165,296

 

--

Consulting services -- accrual

 

6,988

 

--

Consulting services -- issued

 

(25,000)

 

(50,000)

Employment agreements -- accrual

 

567

 

--

Employment agreements -- issued

 

(132,175)

 

(50,000)

June 30, 2016

$

635,496

 

150,000

XML 31 R21.htm IDEA: XBRL DOCUMENT v3.5.0.2
STOCKHOLDERS' EQUITY (Tables)
6 Months Ended
Jun. 30, 2016
STOCKHOLDERS' EQUITY (Tables) [Line Items]  
Share-based expense [Table Text Block] Share-based expense consisted of the following:

 

 

Three months ended

June 30,

 

Six months ended

June 30,

 

 

2016

 

2015

 

2016

 

2015

Employee Awards

$

381,441

$

623,567

$

834,062

$

623,567

Consulting Awards

 

37,416

 

17,454

 

47,516

 

17,454

Feinsod Agreement

 

82,648

 

3,214,444

 

165,296

 

3,463,069

DB Option Agreement

 

--

 

--

 

55,100

 

--

 

$

501,505

$

3,855,465

$

1,101,974

$

4,104,090

Schedule of Assumptions Used [Table Text Block] The following summarizes the Black-Scholes assumptions used for Employee Awards granted during the six months ended June 30, 2016:

Exercise price

 

$ 0.61 -- 1.01

Stock price on date of grant

 

$ 0.63 -- 1.01

Volatility

 

149 -- 153 %

Risk-free interest rate

 

0.87 – 0.90 %

Expected life (years)

 

3.0

Dividend yield

 

--

Schedule of Stockholders' Equity Note, Warrants or Rights [Table Text Block] The following summarizes Employee Awards activity:

 

 

Number of Shares

 

Weighted-average Exercise Price per Share

 

Weighted-average Remaining Contractual Term

(in years)

 

Aggregate Intrinsic Value

Outstanding at December 31, 2015

 

2,509,000

$

1.49

 

 

 

 

Granted

 

228,000

 

 

 

 

 

 

Forfeited

 

(235,650)

$

0.75

 

 

 

 

Outstanding at June 30, 2016

 

2,501,350

$

1.48

 

2.6

$

203,000

Exercisable at June 30, 2016

 

547,500

$

2.79

 

3.4

$

--

 

 

Number of Shares

 

Weighted-average Exercise Price per Share

 

Weighted-average Remaining Contractual Term

(in years)

 

Aggregate Intrinsic Value

Outstanding at December 31, 2015

 

252,500

$

3.62

 

 

 

 

Outstanding at June 30, 2016

 

252,500

$

3.62

 

0.9

$

2,250

Exercisable at June 30, 2016

 

245,000

$

 3.71

 

0.5

$

2,250

 

 

Number of Shares

 

Weighted-average Exercise Price per Share

 

Weighted-average Remaining Contractual Term

(in years)

 

Aggregate Intrinsic Value

Outstanding at December 31, 2015

 

597,200

$

1.41

 

 

 

 

Granted

 

659,000

 

1.07

 

 

 

 

Outstanding at June 30, 2016

 

1,256,200

 

1.41

 

3.0

$

--

Exercisable at June 30, 2016

 

1,256,200

$

1.23

 

3.0

$

--

DB Option Agreement [Member]  
STOCKHOLDERS' EQUITY (Tables) [Line Items]  
Schedule of Assumptions Used [Table Text Block] The following summarizes the Black-Scholes assumptions used to estimate the fair value of the DB Option Agreement warrants:

Volatility

 

150 %

Risk-free interest rate

 

1.2 %

Expected life (years)

 

5.0

Dividend yield

 

--

XML 32 R22.htm IDEA: XBRL DOCUMENT v3.5.0.2
NET LOSS PER SHARE (Tables)
6 Months Ended
Jun. 30, 2016
Earnings Per Share [Abstract]  
Dilutive effect on earnings per share The following table presents a reconciliation of the denominators used in the computation of net loss per share – basic and diluted:

 

 

Three months ended

June 30,

 

Six months ended

June 30,

 

 

2016

 

2015

 

2016

 

2015

Net loss

$

(1,336,471)

$

(4,349,222)

$

(2,524,703)

$

(5,177,715)

Weighted average outstanding shares of common stock

 

15,384,762

 

14,054,673

 

15,157,509

 

13,577,719

Dilutive effect of stock options and warrants

 

--

 

--

 

--

 

--

Common stock and equivalents

 

15,384,762

 

14,054,673

 

15,157,509

 

13,577,719

Net loss per share – Basic and diluted

$

(0.09)

$

(0.31)

$

(0.17)

$

(0.38)

XML 33 R23.htm IDEA: XBRL DOCUMENT v3.5.0.2
SEGMENT INFORMATION (Tables)
6 Months Ended
Jun. 30, 2016
Segment Reporting [Abstract]  
Schedule of Segment Reporting Information, by Segment [Table Text Block]

2016

 

Security and Cash Management

 

Marketing and Products

 

Consulting and Advisory

 

Finance and Real Estate

 

Total

Revenues, net

$

531,663

$

66,041

$

72,774

$

31,464

$

701,942

Costs and expenses

 

(534,620)

 

(79,522)

 

(99,794)

 

(11,593)

 

(725,529)

Other expense

 

--

 

--

 

--

 

(1,110)

 

(1,110)

 

$

(2,957)

$

(13,481)

$

(27,020)

$

18,761

 

(24,697)

Corporate expenses

 

 

 

 

 

 

 

 

 

(1,311,774)

 

 

 

 

 

 

 

 

Net loss

$

(1,336,471)

2015

 

Security and Cash Management

 

Marketing and Products

 

Consulting and Advisory

 

Finance and Real Estate

 

Total

Revenues, net

$

376,722

$

12,569

$

--

$

37,911

$

427,202

Costs and expenses

 

(380,852)

 

(32,438)

 

--

 

(18,531)

 

(431,821)

Other expense

 

--

 

--

 

--

 

(3,493)

 

(3,493)

 

$

(4,130)

$

(19,869)

$

--

$

15,887

 

(8,112)

Corporate expenses

 

 

 

 

 

 

 

 

 

(4,341,110)

 

 

 

 

 

 

 

 

Net loss

$

(4,349,222)

2016

 

Security and Cash Management

 

Marketing and Products

 

Consulting and Advisory

 

Finance and Real Estate

 

Total

Revenues, net

$

1,039,194

$

116,139

$

170,888

$

67,833

$

1,394,054

Costs and expenses

 

(1,076,016)

 

(161,097)

 

(183,563)

 

(23,379)

 

(1,444,055)

Other expense

 

--

 

--

 

--

 

(4,462)

 

(4,462)

 

$

(36,822)

$

(44,958)

$

(12,675)

$

39,992

 

(54,463)

Corporate expenses

 

 

 

 

 

 

 

 

 

(2,470,240)

 

 

 

 

 

 

 

 

Net loss

$

(2,524,703)

2015

 

Security and Cash Management

 

Marketing and Products

 

Consulting and Advisory

 

Finance and Real Estate

 

Total

Revenues, net

$

394,104

$

25,367

$

--

$

64,588

$

484,059

Costs and expenses

 

(408,322)

 

(57,091)

 

--

 

(27,538)

 

(492,951)

Other expense

 

--

 

--

 

--

 

(5,815)

 

(5,815)

 

$

(14,218)

$

(31,724)

$

--

$

31,235

 

(14,707)

Corporate expenses

 

 

 

 

 

 

 

 

 

(5,163,008)

 

 

 

 

 

 

 

 

Net loss

$

(5,177,715)

Reconciliation of Assets from Segment to Consolidated [Table Text Block]

Total assets

 

June 30, 2016

 

December 31,

2015

Security and Cash Management

$

101,935

 

132,314

Marketing and Products

 

50,589

 

127,345

Consulting and Advisory

 

39,822

 

22,268

Finance and Real Estate

 

452,760

 

431,639

Corporate

 

2,866,522

 

2,969,145

 

$

3,511,628

 

3,682,711

XML 34 R24.htm IDEA: XBRL DOCUMENT v3.5.0.2
NATURE OF OPERATIONS, HISTORY AND PRESENTATION (Details)
6 Months Ended
Jun. 30, 2016
USD ($)
ft²
Dec. 31, 2015
USD ($)
Nov. 05, 2015
USD ($)
Mar. 30, 2014
ft²
NATURE OF OPERATIONS, HISTORY AND PRESENTATION (Details) [Line Items]        
Number of Reporting Units 4      
Number of Security Guards 58      
Number of Clients 16      
Number Of Wholly Owned Subsidiary 5      
Retained Earnings (Accumulated Deficit) (in Dollars) | $ $ (18,952,081) $ (16,427,378)    
Debt Instrument, Modification Considered Extinguishment Threshold, Present Value of Cash Flows, Percent Difference 10.00%      
Leasing Arrangement [Member]        
NATURE OF OPERATIONS, HISTORY AND PRESENTATION (Details) [Line Items]        
Area of Real Estate Property       16,056
Minimum [Member] | Leasing Arrangement [Member]        
NATURE OF OPERATIONS, HISTORY AND PRESENTATION (Details) [Line Items]        
Area of Real Estate Property 5,000      
Maximum [Member] | Leasing Arrangement [Member]        
NATURE OF OPERATIONS, HISTORY AND PRESENTATION (Details) [Line Items]        
Area of Real Estate Property 50,000      
GC Supply [Member]        
NATURE OF OPERATIONS, HISTORY AND PRESENTATION (Details) [Line Items]        
Area of Real Estate Property 1,800      
Pueblo West Property [Member]        
NATURE OF OPERATIONS, HISTORY AND PRESENTATION (Details) [Line Items]        
Area of Real Estate Property 5,000      
The Greenhouse [Member] | Office Building [Member]        
NATURE OF OPERATIONS, HISTORY AND PRESENTATION (Details) [Line Items]        
Area of Real Estate Property 10,000      
The Greenhouse [Member] | Consumer Banking [Member]        
NATURE OF OPERATIONS, HISTORY AND PRESENTATION (Details) [Line Items]        
Area of Real Estate Property 5,000      
Infinity Capital [Member]        
NATURE OF OPERATIONS, HISTORY AND PRESENTATION (Details) [Line Items]        
Right To Purchase, Cost (in Dollars) | $ $ 750,001      
Equity interest     50.00%  
Capital (in Dollars) | $     $ 750,000  
XML 35 R25.htm IDEA: XBRL DOCUMENT v3.5.0.2
BUSINESS ACQUISITIONS (Details) - USD ($)
6 Months Ended
Apr. 01, 2016
Jan. 01, 2016
Oct. 01, 2015
Mar. 26, 2015
Jun. 30, 2016
Jun. 30, 2015
Dec. 31, 2015
Sep. 25, 2015
BUSINESS ACQUISITIONS (Details) [Line Items]                
Class of Warrant or Right, Outstanding         500,000      
Class of Warrant or Right, Exercise Price of Warrants or Rights (in Dollars per share)         $ 2.48      
Acquisition of IPG with common stock payable and warrants (in Dollars)           $ 1,887,000    
Accrued stock payable (in Dollars)         $ 635,496   $ 1,532,420  
Iron Protection Group [Member]                
BUSINESS ACQUISITIONS (Details) [Line Items]                
Stock Issued During Period, Shares, Restricted Stock Award, Net of Forfeitures 200,000 200,000 100,000 500,000        
Class of Warrant or Right, Outstanding         100,000      
Acquisition of IPG with common stock payable and warrants (in Dollars)       $ 1,887,000        
Share Price (in Dollars per share)       $ 2.48        
Share Price Discount       15.00%        
Accrued stock payable (in Dollars)       $ 1,054,000        
Class of Warrant or Right, Issuance Threshold, Revenue (in Dollars)         $ 3,000,000      
Chiefton Acquisition [Member]                
BUSINESS ACQUISITIONS (Details) [Line Items]                
Share Price (in Dollars per share)               $ 1.02
Share Price Discount               15.00%
Accrued stock payable (in Dollars)               $ 69,400
Common Stock, Capital Shares Reserved for Future Issuance               80,000
IPG $4.50 Warrants [Member] | Iron Protection Group [Member]                
BUSINESS ACQUISITIONS (Details) [Line Items]                
Class of Warrant or Right, Outstanding         250,000      
Class of Warrant or Right, Exercise Price of Warrants or Rights (in Dollars per share)         $ 4.50      
IPG $5.00 Warrants [Member] | Iron Protection Group [Member]                
BUSINESS ACQUISITIONS (Details) [Line Items]                
Class of Warrant or Right, Outstanding         250,000      
Class of Warrant or Right, Exercise Price of Warrants or Rights (in Dollars per share)         $ 5.00      
XML 36 R26.htm IDEA: XBRL DOCUMENT v3.5.0.2
BUSINESS ACQUISITIONS (Details) - IPG Acquisition, Aggregate Consideration - Iron Protection Group [Member]
3 Months Ended
Mar. 31, 2016
USD ($)
BUSINESS ACQUISITIONS (Details) - IPG Acquisition, Aggregate Consideration [Line Items]  
Business Combination, Consideration Transferred, Equity Interests Issued and Issuable $ 1,887,000
Common Stock [Member]  
BUSINESS ACQUISITIONS (Details) - IPG Acquisition, Aggregate Consideration [Line Items]  
Business Combination, Consideration Transferred, Equity Interests Issued and Issuable 1,054,000
IPG $4.50 Warrants [Member]  
BUSINESS ACQUISITIONS (Details) - IPG Acquisition, Aggregate Consideration [Line Items]  
Business Combination, Consideration Transferred, Equity Interests Issued and Issuable 421,000
IPG $5.00 Warrants [Member]  
BUSINESS ACQUISITIONS (Details) - IPG Acquisition, Aggregate Consideration [Line Items]  
Business Combination, Consideration Transferred, Equity Interests Issued and Issuable $ 412,000
XML 37 R27.htm IDEA: XBRL DOCUMENT v3.5.0.2
BUSINESS ACQUISITIONS (Details) - IPG Acquisition, Purchase Price Allocation - Iron Protection Group [Member]
3 Months Ended
Mar. 31, 2016
USD ($)
Intangible assets:  
Finite-lived Intangible Assets Acquired $ 1,887,000
Goodwill 187,000
Customer Relationships [Member]  
Intangible assets:  
Finite-lived Intangible Assets Acquired 1,000,000
Marketing-Related Intangible Assets [Member]  
Intangible assets:  
Finite-lived Intangible Assets Acquired 200,000
Noncompete Agreements [Member]  
Intangible assets:  
Finite-lived Intangible Assets Acquired $ 500,000
XML 38 R28.htm IDEA: XBRL DOCUMENT v3.5.0.2
BUSINESS ACQUISITIONS (Details) - IPG Acquisition, Pro Forma Effects - Iron Protection Group [Member]
6 Months Ended
Jun. 30, 2016
USD ($)
$ / shares
Business Acquisition, Pro Forma Information, Nonrecurring Adjustment [Line Items]  
Total net revenues $ 853,805
Net loss $ (5,124,454)
Net loss per common share:  
Basic and diluted (in Dollars per share) | $ / shares $ (0.36)
XML 39 R29.htm IDEA: XBRL DOCUMENT v3.5.0.2
BUSINESS ACQUISITIONS (Details) - Chiefton Acquisition, Aggregate Consideration - USD ($)
Jun. 30, 2016
Mar. 31, 2016
Dec. 31, 2015
BUSINESS ACQUISITIONS (Details) - Chiefton Acquisition, Aggregate Consideration [Line Items]      
Cash $ 54,400   $ 58,711
Common stock 15,495   $ 14,915
Chiefton Acquisition [Member]      
BUSINESS ACQUISITIONS (Details) - Chiefton Acquisition, Aggregate Consideration [Line Items]      
Cash 12,249    
Common stock 69,400    
Aggregate consideration $ 81,649 $ 81,649  
XML 40 R30.htm IDEA: XBRL DOCUMENT v3.5.0.2
BUSINESS ACQUISITIONS (Details) - Chiefton Acquisition, Purchase Price Allocation - Chiefton Acquisition [Member] - USD ($)
Jun. 30, 2016
Mar. 31, 2016
Business Combination Segment Allocation [Line Items]    
Inventory   $ 12,249
Intangible assets – intellectual property   69,400
$ 81,649 $ 81,649
XML 41 R31.htm IDEA: XBRL DOCUMENT v3.5.0.2
LONG-LIVED ASSETS (Details) - USD ($)
3 Months Ended 6 Months Ended
Jun. 30, 2016
Jun. 30, 2015
Jun. 30, 2016
Jun. 30, 2015
Longlived Assets [Abstract]        
Depreciation $ 11,967 $ 9,008 $ 24,126 $ 18,015
Amortization of Intangible Assets 85,108 $ 57,863 170,215 $ 57,863
Impairment of Good will $ 187,000   $ 187,000  
XML 42 R32.htm IDEA: XBRL DOCUMENT v3.5.0.2
LONG-LIVED ASSETS (Details) - Intangible assets
6 Months Ended
Jun. 30, 2016
USD ($)
LONG-LIVED ASSETS (Details) - Intangible assets [Line Items]  
Finite-Lived Intangible Assets, Gross $ 1,769,400
Finite-Lived Intangible Assets, Accumulated Amortization 414,688
Finite-Lived Intangible Assets, Net 1,354,712
Customer-Related Intangible Assets [Member]  
LONG-LIVED ASSETS (Details) - Intangible assets [Line Items]  
Finite-Lived Intangible Assets, Gross 1,000,000
Finite-Lived Intangible Assets, Accumulated Amortization 126,575
Finite-Lived Intangible Assets, Net $ 873,425
Finite-Lived Intangible Asset, Useful Life 10 years
Marketing-Related Intangible Assets [Member]  
LONG-LIVED ASSETS (Details) - Intangible assets [Line Items]  
Finite-Lived Intangible Assets, Gross $ 200,000
Finite-Lived Intangible Assets, Accumulated Amortization 50,630
Finite-Lived Intangible Assets, Net $ 149,370
Finite-Lived Intangible Asset, Useful Life 5 years
Noncompete Agreements [Member]  
LONG-LIVED ASSETS (Details) - Intangible assets [Line Items]  
Finite-Lived Intangible Assets, Gross $ 500,000
Finite-Lived Intangible Assets, Accumulated Amortization 210,959
Finite-Lived Intangible Assets, Net $ 289,041
Finite-Lived Intangible Asset, Useful Life 3 years
Intellectual Property [Member]  
LONG-LIVED ASSETS (Details) - Intangible assets [Line Items]  
Finite-Lived Intangible Assets, Gross $ 69,400
Finite-Lived Intangible Assets, Accumulated Amortization 26,524
Finite-Lived Intangible Assets, Net $ 42,876
Finite-Lived Intangible Asset, Useful Life 2 years
XML 43 R33.htm IDEA: XBRL DOCUMENT v3.5.0.2
DEBT (Details)
1 Months Ended 6 Months Ended 12 Months Ended
Jul. 29, 2015
USD ($)
$ / shares
Jul. 01, 2015
USD ($)
Oct. 30, 2014
USD ($)
$ / shares
Oct. 30, 2014
USD ($)
$ / shares
Jun. 30, 2016
USD ($)
$ / shares
Jun. 30, 2015
USD ($)
Dec. 31, 2015
USD ($)
$ / shares
shares
Feb. 28, 2015
Jan. 21, 2014
USD ($)
$ / shares
Dec. 31, 2013
USD ($)
$ / shares
DEBT (Details) [Line Items]                    
Repayments of Notes Payable         $ 3,376 $ 3,101        
Interest Expense, Other         26,540          
Accured expense         $ 38,268          
Notes Payable             $ 309,000      
Class of Warrant or Right, Exercise Price of Warrants or Rights (in Dollars per share) | $ / shares         $ 2.48          
Debt Instrument, Convertible, Terms of Conversion Feature         $358,000          
Debt Instrument, Unamortized Discount         $ 63,817   $ 279,435      
Infinity Capital [Member]                    
DEBT (Details) [Line Items]                    
Long-term Debt, Percentage Bearing Fixed Interest, Percentage Rate               5.00%    
Repayments of Notes Payable   $ 309,000                
10.0% private placement, due May 1, 2016 [Member] | Maturity Date Extension [Member]                    
DEBT (Details) [Line Items]                    
Debt Instrument, Maturity Date         Jan. 31, 2017          
Issuance of Stock and Warrants for Services or Claims         $ 659,000          
Class of Warrant or Right, Exercise Price of Warrants or Rights (in Dollars per share) | $ / shares         $ 1.07          
Additional Collateral, Aggregate Fair Value         $ 358,000          
Fair Value Assumptions, Risk Free Interest Rate         1.20%          
Fair Value Assumptions, Expected Volatility Rate         151.00%          
10.0% private placement, due May 1, 2016 [Member] | Infinity Capital [Member]                    
DEBT (Details) [Line Items]                    
Interest Expense, Other         $ 7,225          
Accured expense         14,500          
Notes Payable         $ 309,000          
The Greenhouse [Member]                    
DEBT (Details) [Line Items]                    
Long-term Debt, Percentage Bearing Fixed Interest, Percentage Rate     14.00% 14.00%            
Debt Instrument, Maturity Date     Oct. 21, 2016              
Issuance of Stock and Warrants for Services or Claims $ 225,000     $ 600,000            
Class of Warrant or Right, Exercise Price of Warrants or Rights (in Dollars per share) | $ / shares $ 1.20   $ 4.40 $ 4.40            
Convertible Debt     $ 600,000 $ 600,000            
Pueblo West Property [Member]                    
DEBT (Details) [Line Items]                    
Long-term Debt, Percentage Bearing Fixed Interest, Percentage Rate                   8.50%
Class of Warrant or Right, Exercise Price of Warrants or Rights (in Dollars per share) | $ / shares                   $ 5.00
Debt Instrument Individual Principal Amount                   $ 170,000
Debt Instrument, Monthly Payment                   $ 1,674
12% Convertible Notes [Member]                    
DEBT (Details) [Line Items]                    
Long-term Debt, Percentage Bearing Fixed Interest, Percentage Rate             12.00%      
Debt Instrument, Convertible, Terms of Conversion Feature             The December 2013 Issuance and the January 2014 Issuance (collectively, the “12% Convertible Notes”) included a provision that if the trading stock price exceeded $10 for twenty consecutive trading days and the daily volume for those twenty consecutive trading days exceeds 25,000 shares, then the 12% Convertible Notes convert into shares of our common stock on or after December 1, 2015.      
Debt Conversion, Original Debt, Amount             $ 321,123      
Debt Conversion, Converted Instrument, Shares Issued (in Shares) | shares             64,225      
Debt Instrument, Convertible, Stock Price Trigger (in Dollars per share) | $ / shares             $ 10      
Debt Instrument, Convertible, Threshold Trading Days             20      
Debt Instrument, Convertible, Threshold Trading Volumne (in Shares) | shares             25,000      
12% Convertible Notes [Member] | Automatic Conversion [Member]                    
DEBT (Details) [Line Items]                    
Debt Conversion, Original Debt, Amount             $ 1,330,000      
Debt Conversion, Converted Instrument, Shares Issued (in Shares) | shares             266,000      
Unsecured Debt [Member]                    
DEBT (Details) [Line Items]                    
Long-term Debt, Percentage Bearing Fixed Interest, Percentage Rate                 12.00% 12.00%
Convertible Debt                 $ 1,605,000 $ 530,000
Debt Instrument, Convertible, Conversion Price (in Dollars per share) | $ / shares                 $ 5.00 $ 5.00
Debt Instrument, Unamortized Discount                 $ 1,605,000  
Unsecured Debt [Member] | Minimum [Member]                    
DEBT (Details) [Line Items]                    
Debt Instrument Individual Principal Amount                 10,000 $ 10,000
Unsecured Debt [Member] | Maximum [Member]                    
DEBT (Details) [Line Items]                    
Debt Instrument Individual Principal Amount                 $ 200,000 $ 150,000
XML 44 R34.htm IDEA: XBRL DOCUMENT v3.5.0.2
DEBT (Details) - Schedule of Long-term Debt Instruments - USD ($)
Jun. 30, 2016
Dec. 31, 2015
Debt Instrument [Line Items]    
Long-term Debt, Gross $ 1,413,931 $ 1,417,307
Unamortized debt discount (63,817) (279,435)
1,350,114 1,137,872
Less: Current portion (1,202,380) (986,475)
Long-term portion 147,734 151,397
10.0% private placement, due May 1, 2016 [Member]    
Debt Instrument [Line Items]    
Long-term Debt, Gross 659,000 659,000
Mortgages [Member]    
Debt Instrument [Line Items]    
Long-term Debt, Gross 600,000 600,000
Convertible Notes Payable [Member]    
Debt Instrument [Line Items]    
Long-term Debt, Gross $ 154,931 $ 158,307
XML 45 R35.htm IDEA: XBRL DOCUMENT v3.5.0.2
DEBT (Details) - Schedule of Maturities of Long-term Debt - USD ($)
Jun. 30, 2016
Dec. 31, 2015
Schedule of Maturities of Long-term Debt [Abstract]    
2016 $ 603,522  
2017 666,507  
2018 143,902  
$ 1,413,931 $ 1,417,307
XML 46 R36.htm IDEA: XBRL DOCUMENT v3.5.0.2
ACCRUED STOCK PAYABLE (Details) - USD ($)
6 Months Ended
Aug. 04, 2016
Aug. 04, 2015
Jul. 15, 2015
May 13, 2015
Aug. 04, 2014
Jun. 30, 2016
Apr. 27, 2015
ACCRUED STOCK PAYABLE (Details) [Line Items]              
Class of Warrant or Right, Exercise Price of Warrants or Rights (in Dollars per share)           $ 2.48  
Feinsod Agreement [Member]              
ACCRUED STOCK PAYABLE (Details) [Line Items]              
Related Party Transaction, Terms and Manner of Settlement           On August 4, 2014, we entered into an agreement with Michael Feinsod in consideration for serving as Executive Chairman of the Board and as a member of the Board and pursuant to the terms of the Executive Board and Director Agreement (the “Feinsod Agreement”). The Board approved the issuance to Infinity Capital of (a) 200,000 shares of our common stock on August 4, 2014; (b) 1,000,000 shares of our common stock upon the uplisting of our common stock to the OTC Market’s OTCQB; (c) 150,000 shares of our common stock on August 4, 2015; and (d) 150,000 shares of our common stock on August 4, 2016. Mr. Feinsod must remain a member of the Board in order for the common stock to be issued. In addition, the Feinsod Agreement requires the issuance of a number of shares of our common stock to Infinity Capital equal to 10% of any new issuances not to exceed 600,000 shares of our common stock in the aggregate during the time that Mr. Feinsod remains a member of the Board (the “New Issuance Allowance”). Under the terms of the Feinsod Agreement, the New Issuance Allowance will not be triggered upon issuances relating to convertible securities existing as of the date of the Feinsod Agreement. For illustrative purposes, if we issue 7,000,000 new shares of common stock, then the New Issuance Allowance issued to Infinity Capital would be capped at 600,000 shares of our common stock. No shares have been issued under the New Issuance Allowance.  
Stock Issued During Period, Shares, Issued for Services 150,000 150,000     200,000    
Class of Warrant or Right, Exercise Price of Warrants or Rights (in Dollars per share)         $ 4.42   $ 2.97
Share Price (in Dollars per share)         $ 5.20    
Share Price Discount         15.00%    
Feinsod Agreement [Member] | Maximum [Member]              
ACCRUED STOCK PAYABLE (Details) [Line Items]              
Stock Issued During Period, Shares, Issued for Services         600,000    
Feinsod Agreement [Member] | Upon Uplisting to Exchange [Member] | OTCQB MARKETPLACE [Member]              
ACCRUED STOCK PAYABLE (Details) [Line Items]              
Stock Issued During Period, Shares, Issued for Services         1,000,000    
Share Price (in Dollars per share)             $ 3.49
Share Price Discount             15.00%
Employment Agreements [Member]              
ACCRUED STOCK PAYABLE (Details) [Line Items]              
Share Price (in Dollars per share)       $ 3.11      
Share Price Discount       15.00%      
Stock Issued During Period, Shares, Restricted Stock Award, Gross       100,000      
Stock Issued During Period, Value, Restricted Stock Award, Gross (in Dollars)       $ 311,000      
Fair value illiquidity of the shares (in Dollars)       $ 264,350      
Stock Issued During Period, Shares, Restricted Stock Award, Net of Forfeitures       50,000      
Consulting [Member]              
ACCRUED STOCK PAYABLE (Details) [Line Items]              
Stock Issued During Period, Shares, Restricted Stock Award, Gross     50,000        
XML 47 R37.htm IDEA: XBRL DOCUMENT v3.5.0.2
ACCRUED STOCK PAYABLE (Details) - Changes in accrued common stock payable
6 Months Ended
Jun. 30, 2016
USD ($)
shares
ACCRUED STOCK PAYABLE (Details) - Changes in accrued common stock payable [Line Items]  
Accrued Stock Payable, Value | $ $ 1,532,420
Accrued Stock Payable, Shares | shares 730,000
Feinsod Agreement -- accrual | $ $ 165,296
Feinsod Agreement -- accrual | shares
Consulting services -- accrual | $ $ 6,988
Consulting services -- accrual | shares
Consulting services -- issued | $ $ (25,000)
Consulting services -- issued | shares (50,000)
Employment agreements -- accrual | $ $ 567
Employment agreements -- accrual | shares
Employment agreements -- issued | $ $ (132,175)
Employment agreements -- issued | shares (50,000)
Accrued Stock Payable, Value | $ $ 635,496
Accrued Stock Payable, Shares | shares 150,000
Iron Protection Group [Member]  
ACCRUED STOCK PAYABLE (Details) - Changes in accrued common stock payable [Line Items]  
Stock Issued For Acquisition, Value | $ $ (843,200)
Stock Issued For Acquisition, Shares | shares (400,000)
Chiefton Acquisition [Member]  
ACCRUED STOCK PAYABLE (Details) - Changes in accrued common stock payable [Line Items]  
Stock Issued For Acquisition, Value | $ $ (69,400)
Stock Issued For Acquisition, Shares | shares (80,000)
XML 48 R38.htm IDEA: XBRL DOCUMENT v3.5.0.2
STOCKHOLDERS' EQUITY (Details) - USD ($)
1 Months Ended 6 Months Ended
Sep. 19, 2013
Aug. 08, 2013
Jun. 30, 2016
Jun. 26, 2015
STOCKHOLDERS' EQUITY (Details) [Line Items]        
Share-based Compensation Arrangement by Share-based Payment Award, Description     On October 29, 2014, the Board authorized the adoption of and on June 26, 2015, our stockholders ratified our 2014 Equity Incentive Plan (the “Incentive Plan”). The Incentive Plan provides for the issuance of up to 10 million shares of our common stock, and is designed to provide an additional incentive to executives, employees, directors and key consultants, aligning our long term interests with participants. In April 2016, we filed a Registration Statement on Form S-8 (the “Registration Statement”), which automatically became effective in May 2016. The Registration Statement relates to 10,000,000 shares of our common stock, which are issuable pursuant to, or upon exercise of, options that have been granted or may be granted under our Incentive Plan.Share-based compensation costs for award grants to employees and directors (“Employee Awards”) are recognized on a straight-line basis over the service period for the entire award, with the amount of compensation cost recognized at any date equaling at least the portion of the award that is vested.  
Stock Issued During Period, Shares, New Issues 266,000 707,000    
Incentive Plan [Member]        
STOCKHOLDERS' EQUITY (Details) [Line Items]        
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized       10,000,000
Employee Service Share-based Compensation, Nonvested Awards, Compensation Not yet Recognized, Stock Options (in Dollars)     $ 555,000  
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition     5 months  
Consulting Awards [Member]        
STOCKHOLDERS' EQUITY (Details) [Line Items]        
Employee Service Share-based Compensation, Nonvested Awards, Compensation Not yet Recognized, Stock Options (in Dollars)     $ 2,700  
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition     6 months  
IPG Incentive Warrants [Member]        
STOCKHOLDERS' EQUITY (Details) [Line Items]        
Warrants to purchase     500,000  
IPG $4.50 Warrants [Member]        
STOCKHOLDERS' EQUITY (Details) [Line Items]        
Warrants to purchase     250,000  
Sale of Stock, Price Per Share (in Dollars per share)     $ 4.50  
IPG $5.00 Warrants [Member]        
STOCKHOLDERS' EQUITY (Details) [Line Items]        
Warrants to purchase     250,000  
Sale of Stock, Price Per Share (in Dollars per share)     $ 5.00  
Warrants Consulting Services [Member]        
STOCKHOLDERS' EQUITY (Details) [Line Items]        
Warrants to purchase     100,000  
Sale of Stock, Price Per Share (in Dollars per share)     $ 0.67  
Stock or Unit Option Plan Expense (in Dollars)     $ 55,100  
Series A [Member]        
STOCKHOLDERS' EQUITY (Details) [Line Items]        
Sale of Stock, Price Per Share (in Dollars per share)   $ 10.00    
Temporary Equity, Shares Issued 266,000 707,000    
ExercisePrice (in Dollars per share) $ 1.00 $ 1.00    
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number     973,000  
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Number     973,000  
XML 49 R39.htm IDEA: XBRL DOCUMENT v3.5.0.2
STOCKHOLDERS' EQUITY (Details) - Share-based expense - USD ($)
3 Months Ended 6 Months Ended
Jun. 30, 2016
Jun. 30, 2015
Jun. 30, 2016
Jun. 30, 2015
STOCKHOLDERS' EQUITY (Details) - Share-based expense [Line Items]        
Share-based expense $ 501,505 $ 3,855,465 $ 1,101,974 $ 4,104,090
Employee Awards        
STOCKHOLDERS' EQUITY (Details) - Share-based expense [Line Items]        
Share-based expense 381,441 623,567 834,062 623,567
Consulting Awards [Member]        
STOCKHOLDERS' EQUITY (Details) - Share-based expense [Line Items]        
Share-based expense 37,416 17,454 47,516 17,454
Feinsod Agreement [Member]        
STOCKHOLDERS' EQUITY (Details) - Share-based expense [Line Items]        
Share-based expense $ 82,648 $ 3,214,444 165,296 $ 3,463,069
DB Option Agreement [Member]        
STOCKHOLDERS' EQUITY (Details) - Share-based expense [Line Items]        
Share-based expense     $ 55,100  
XML 50 R40.htm IDEA: XBRL DOCUMENT v3.5.0.2
STOCKHOLDERS' EQUITY (Details) - Share-based compensation costs, Fair Value Assumptions
6 Months Ended
Jun. 30, 2016
$ / shares
STOCKHOLDERS' EQUITY (Details) - Share-based compensation costs, Fair Value Assumptions [Line Items]  
Expected life (years) 3 years
Minimum [Member]  
STOCKHOLDERS' EQUITY (Details) - Share-based compensation costs, Fair Value Assumptions [Line Items]  
Exercise price $ 0.61
Stock price on date of grant $ 0.63
Volatility 149.00%
Risk-free interest rate 0.87%
Maximum [Member]  
STOCKHOLDERS' EQUITY (Details) - Share-based compensation costs, Fair Value Assumptions [Line Items]  
Exercise price $ 1.01
Stock price on date of grant $ 1.01
Volatility 153.00%
Risk-free interest rate 0.90%
XML 51 R41.htm IDEA: XBRL DOCUMENT v3.5.0.2
STOCKHOLDERS' EQUITY (Details) - Schedule of Stockholders' Equity, Warrants or Rights
6 Months Ended
Jun. 30, 2016
USD ($)
$ / shares
shares
Employee Awards  
Class of Warrant or Right [Line Items]  
Outstanding, Number of Shares 2,509,000
Outstanding, Weighted-average Exercise Price per Share (in Dollars per share) | $ / shares $ 1.49
Granted, Number of Shares 228,000
Forfeited (235,650)
Forfeited (in Dollars per share) | $ / shares $ 0.75
Outstanding, Number of Shares 2,501,350
Outstanding, Weighted-average Exercise Price per Share (in Dollars per share) | $ / shares $ 1.48
Outstanding, Weighted-average Remaining Contractual Term 2 years 219 days
Outstanding, Aggregate Intrinsic Value (in Dollars) | $ $ 203,000
Exercisable, Number of Shares 547,500
Exercisable, Weighted-average Exercise Price per Share (in Dollars per share) | $ / shares $ 2.79
Exercisable, Weighted-average Remaining Contractual Term 3 years 146 days
Consulting Awards [Member]  
Class of Warrant or Right [Line Items]  
Outstanding, Number of Shares 252,500
Outstanding, Weighted-average Exercise Price per Share (in Dollars per share) | $ / shares $ 3.62
Outstanding, Number of Shares 252,500
Outstanding, Weighted-average Exercise Price per Share (in Dollars per share) | $ / shares $ 3.62
Outstanding, Weighted-average Remaining Contractual Term 328 days
Outstanding, Aggregate Intrinsic Value (in Dollars) | $ $ 2,250
Exercisable, Number of Shares 245,000
Exercisable, Weighted-average Exercise Price per Share (in Dollars per share) | $ / shares $ 3.71
Exercisable, Weighted-average Remaining Contractual Term 6 months
Exercisable, Aggregate Intrinsic Value (in Dollars) | $ $ 2,250
Warrants with Debt  
Class of Warrant or Right [Line Items]  
Outstanding, Number of Shares 597,200
Outstanding, Weighted-average Exercise Price per Share (in Dollars per share) | $ / shares $ 1.41
Granted, Number of Shares 659,000
Granted, Weighted-average Exercise Price per Share (in Dollars per share) | $ / shares $ 1.07
Outstanding, Number of Shares 1,256,200
Outstanding, Weighted-average Exercise Price per Share (in Dollars per share) | $ / shares $ 1.41
Outstanding, Weighted-average Remaining Contractual Term 3 years
Exercisable, Number of Shares 1,256,200
Exercisable, Weighted-average Exercise Price per Share (in Dollars per share) | $ / shares $ 1.23
Exercisable, Weighted-average Remaining Contractual Term 3 years
XML 52 R42.htm IDEA: XBRL DOCUMENT v3.5.0.2
STOCKHOLDERS' EQUITY (Details) - DB Option Agreement, Assumptions Used
6 Months Ended
Jun. 30, 2016
STOCKHOLDERS' EQUITY (Details) - DB Option Agreement, Assumptions Used [Line Items]  
Expected life (years) 3 years
DB Option Agreement [Member]  
STOCKHOLDERS' EQUITY (Details) - DB Option Agreement, Assumptions Used [Line Items]  
Volatility 150.00%
Risk-free interest rate 1.20%
Expected life (years) 5 years
Dividend yield
XML 53 R43.htm IDEA: XBRL DOCUMENT v3.5.0.2
NET LOSS PER SHARE (Details) - Dilutive effect on earnings per share - USD ($)
3 Months Ended 6 Months Ended
Jun. 30, 2016
Jun. 30, 2015
Jun. 30, 2016
Jun. 30, 2015
Dilutive effect on earnings per share [Abstract]        
Net loss (in Dollars) $ (1,336,471) $ (4,349,222) $ (2,524,703) $ (5,177,715)
Weighted average outstanding shares of common stock 15,384,762 14,054,673 15,157,509 13,577,719
Dilutive effect of stock options and warrants
Common stock and equivalents 15,384,762 14,054,673 15,157,509 13,577,719
Net loss per share – Basic and diluted (in Dollars per share) $ (0.09) $ (0.31) $ (0.17) $ (0.38)
XML 54 R44.htm IDEA: XBRL DOCUMENT v3.5.0.2
SEGMENT INFORMATION (Details) - Schedule of Segment Reporting Information, by Segment - USD ($)
3 Months Ended 6 Months Ended
Jun. 30, 2016
Jun. 30, 2015
Jun. 30, 2016
Jun. 30, 2015
Segment Reporting Information [Line Items]        
Revenues, net $ 701,942 $ 427,202 $ 1,394,054 $ 484,059
Costs and expenses (725,529) (431,821) (1,444,055) (492,951)
Other expense (1,110) (3,493) (4,462) (5,815)
(24,697) (8,112) (54,463) (14,707)
Corporate expenses (1,311,774) (4,341,110) (2,470,240) (5,163,008)
Net Loss (1,336,471) (4,349,222) (2,524,703) (5,177,715)
Security and Cash Management [Member]        
Segment Reporting Information [Line Items]        
Revenues, net 531,663 376,722 1,039,194 394,104
Costs and expenses (534,620) (380,852) (1,076,016) (408,322)
(2,957) (4,130) (36,822) (14,218)
Marketing and Products [Member]        
Segment Reporting Information [Line Items]        
Revenues, net 66,041 12,569 116,139 25,367
Costs and expenses (79,522) (32,438) (161,097) (57,091)
(13,481) (19,869) (44,958) (31,724)
Consulting and Advisory[Member]        
Segment Reporting Information [Line Items]        
Revenues, net 72,774   170,888  
Costs and expenses (99,794)   (183,563)  
(27,020)   (12,675)  
Finance And Real Estate [Member]        
Segment Reporting Information [Line Items]        
Revenues, net 31,464 37,911 67,833 64,588
Costs and expenses (11,593) (18,531) (23,379) (27,538)
Other expense (1,110) (3,493) (4,462) (5,815)
$ 18,761 $ 15,887 $ 39,992 $ 31,235
XML 55 R45.htm IDEA: XBRL DOCUMENT v3.5.0.2
SEGMENT INFORMATION (Details) - Assets by segment - USD ($)
Jun. 30, 2016
Dec. 31, 2015
Segment Reporting, Asset Reconciling Item [Line Items]    
Total Assets $ 3,511,628 $ 3,682,711
Security and Cash Management [Member]    
Segment Reporting, Asset Reconciling Item [Line Items]    
Total Assets 101,935 132,314
Marketing and Products [Member]    
Segment Reporting, Asset Reconciling Item [Line Items]    
Total Assets 50,589 127,345
Consulting and Advisory[Member]    
Segment Reporting, Asset Reconciling Item [Line Items]    
Total Assets 39,822 22,268
Finance And Real Estate [Member]    
Segment Reporting, Asset Reconciling Item [Line Items]    
Total Assets 452,760 431,639
Corporate Segment [Member]    
Segment Reporting, Asset Reconciling Item [Line Items]    
Total Assets $ 2,866,522 $ 2,969,145
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