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Digital Ally Inc – ‘10-K’ for 12/31/15 – ‘EX-101.INS’

On:  Monday, 3/7/16, at 5:19pm ET   ·   For:  12/31/15   ·   Accession #:  1493152-16-7877   ·   File #:  1-33899

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  As Of               Filer                 Filing    For·On·As Docs:Size             Issuer                      Filing Agent

 3/07/16  Digital Ally Inc                  10-K       12/31/15   95:5.7M                                   M2 Compliance/FA

Annual Report   —   Form 10-K   —   Sect. 13 / 15(d) – SEA’34
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10-K        Annual Report                                       HTML    404K 
 2: EX-21.1     Subsidiaries List                                   HTML     29K 
 3: EX-23.1     Consent of Experts or Counsel                       HTML     29K 
 4: EX-23.2     Consent of Experts or Counsel                       HTML     29K 
 5: EX-24.1     Power of Attorney                                   HTML     31K 
10: EX-99.1     Miscellaneous Exhibit                               HTML    310K 
 6: EX-31.1     Certification -- §302 - SOA'02                      HTML     33K 
 7: EX-31.2     Certification -- §302 - SOA'02                      HTML     33K 
 8: EX-32.1     Certification -- §906 - SOA'02                      HTML     30K 
 9: EX-32.2     Certification -- §906 - SOA'02                      HTML     29K 
17: R1          Document and Entity Information                     HTML     55K 
18: R2          Consolidated Balance Sheets                         HTML    124K 
19: R3          Consolidated Balance Sheets (Parenthetical)         HTML     42K 
20: R4          Consolidated Statements of Operations               HTML     95K 
21: R5          Consolidated Statements of Stockholders' Equity     HTML    100K 
22: R6          Consolidated Statements of Stockholders' Equity     HTML     30K 
                (Parenthetical)                                                  
23: R7          Consolidated Statements of Cash Flows               HTML    150K 
24: R8          Nature of Business and Summary of Significant       HTML     74K 
                Accounting Policies                                              
25: R9          Concentration of Credit Risk and Major Customers    HTML     35K 
26: R10         Accounts Receivable - Allowance for Doubtful        HTML     35K 
                Accounts                                                         
27: R11         Inventories                                         HTML     38K 
28: R12         Furnitures, Fixtures and Equipment                  HTML     48K 
29: R13         Intangible Assets                                   HTML     58K 
30: R14         Subordinated Notes Payable, Secured Convertible     HTML     71K 
                Note Payable, and Capital Lease Obligations                      
31: R15         Fair Value Measurement                              HTML     51K 
32: R16         Accrued Expenses                                    HTML     38K 
33: R17         Common Stock                                        HTML     44K 
34: R18         Income Taxes                                        HTML     67K 
35: R19         Commitments and Contingencies                       HTML     70K 
36: R20         Stock-Based Compensation                            HTML     62K 
37: R21         Common Stock Purchase Warrants                      HTML     39K 
38: R22         Related Party Transactions                          HTML     33K 
39: R23         Net Loss Per Share                                  HTML     38K 
40: R24         Subsequent Events                                   HTML     33K 
41: R25         Nature of Business and Summary of Significant       HTML    135K 
                Accounting Policies (Policies)                                   
42: R26         Nature of Business and Summary of Significant       HTML     35K 
                Accounting Policies (Tables)                                     
43: R27         Accounts Receivable - Allowance for Doubtful        HTML     34K 
                Accounts (Tables)                                                
44: R28         Inventories (Tables)                                HTML     36K 
45: R29         Furniture, Fixtures and Equipment (Tables)          HTML     41K 
46: R30         Intangible Assets (Table)                           HTML     59K 
47: R31         Subordinated Notes Payable, Secured Convertible     HTML     51K 
                Note Payable, and Capital Lease Obligations                      
                (Tables)                                                         
48: R32         Fair Value Measurement (Tables)                     HTML     48K 
49: R33         Accrued Expenses (Tables)                           HTML     40K 
50: R34         Income Taxes (Tables)                               HTML     64K 
51: R35         Commitments and Contingencies (Tables)              HTML     36K 
52: R36         Stock-Based Compensation (Tables)                   HTML     59K 
53: R37         Common Stock Purchase Warrants (Tables)             HTML     42K 
54: R38         Net Loss Per Share (Tables)                         HTML     36K 
55: R39         Nature of Business and Summary of Significant       HTML     50K 
                Accounting Policies (Details Narrative)                          
56: R40         Nature of Business and Summary of Significant       HTML     32K 
                Accounting Policies - Summary of Sales by                        
                Geographic Area (Details)                                        
57: R41         Concentration of Credit Risk and Major Customers    HTML     37K 
                (Details Narrative)                                              
58: R42         Accounts Receivable - Allowance for Doubtful        HTML     36K 
                Accounts - Schedule of Allowance for Doubtful                    
                Accounts Receivable (Details)                                    
59: R43         Inventories (Details Narrative)                     HTML     30K 
60: R44         Inventories - Schedule of Inventories (Details)     HTML     42K 
61: R45         Furniture, Fixtures and Equipment (Details          HTML     30K 
                Narrative)                                                       
62: R46         Furniture, Fixtures and Equipment - Schedule of     HTML     67K 
                Furniture, Fixtures and Equipment (Details)                      
63: R47         Intangible Assets (Details Narrative)               HTML     31K 
64: R48         Intangible Assets - Schedule of Intangible Assets   HTML     47K 
                (Details)                                                        
65: R49         Intangible Assets - Schedule of Estimated           HTML     41K 
                Amortization for Intangible Assets (Details)                     
66: R50         Subordinated Notes Payable, Secured Convertible     HTML    169K 
                Note Payable, and Capital Lease Obligations                      
                (Details Narrative)                                              
67: R51         Subordinated Notes Payable, Secured Convertible     HTML     41K 
                Note Payable, and Capital Lease Obligations -                    
                Summary of Notes Payable (Details)                               
68: R52         Subordinated Notes Payable, Secured Convertible     HTML     36K 
                Note Payable, and Capital Lease Obligations -                    
                Summary of Secured Convertible Note Payable                      
                (Details)                                                        
69: R53         Subordinated Notes Payable, Secured Convertible     HTML     53K 
                Note Payable, and Capital Lease Obligations -                    
                Summary of Future Minimum Lease Payments (Details)               
70: R54         Subordinated Notes Payable, Secured Convertible     HTML     35K 
                Note Payable, and Capital Lease Obligations -                    
                Summary of Assets Under Capital Leases (Details)                 
71: R55         Fair Value Measurement - Financial Assets and       HTML     40K 
                Liabilities Measured at Fair Value on Recurring                  
                Basis (Details)                                                  
72: R56         Fair Value Measurement - Fair Value Measurements    HTML     43K 
                Change in Level Three Inputs (Details)                           
73: R57         Accrued Expenses - Schedule of Accrued Expenses     HTML     54K 
                (Details)                                                        
74: R58         Accrued Expenses - Schedule of Accrued Warranty     HTML     36K 
                Expense (Details)                                                
75: R59         Common Stock (Details Narrative)                    HTML     80K 
76: R60         Income Taxes (Details Narrative)                    HTML     59K 
77: R61         Income Taxes - Schedule of Components of Income     HTML     45K 
                Tax (Provision) (Details)                                        
78: R62         Income Taxes - Schedule of Reconciliation of the    HTML     52K 
                Income Tax (Provision) (Details)                                 
79: R63         Income Taxes - Schedule of Significant Components   HTML     93K 
                of the Company's Deferred Tax Assets (Liabilities)               
                (Details)                                                        
80: R64         Commitments and Contingencies (Details Narrative)   HTML     70K 
81: R65         Commitments and Contingencies - Schedule of Future  HTML     44K 
                Minimum Lease Payments (Details)                                 
82: R66         Commitments and Contingencies - Schedule of Future  HTML     35K 
                Sponsorship Fee (Details)                                        
83: R67         Stock-Based Compensation (Details Narrative)        HTML     60K 
84: R68         Stock-Based Compensation - Summary of Stock         HTML     57K 
                Options Outstanding (Details)                                    
85: R69         Stock-Based Compensation - Shares Authorized Under  HTML     72K 
                Stock Option Plans by Exercise Price Range                       
                (Details)                                                        
86: R70         Stock-Based Compensation - Summary of Restricted    HTML     49K 
                Stock Activity (Details)                                         
87: R71         Stock-Based Compensation - Non-vested Balance of    HTML     34K 
                Restricted Stock (Details)                                       
88: R72         Common Stock Purchase Warrants (Details Narrative)  HTML     49K 
89: R73         Common Stock Purchase Warrants - Summary of         HTML     46K 
                Warrant Activity (Details)                                       
90: R74         Common Stock Purchase Warrants - Summary of Range   HTML     50K 
                of Exercise Prices and Weighted Average Remaining                
                Contractual Life of Warrants (Details)                           
91: R75         Related Party Transactions (Details Narrative)      HTML     34K 
92: R76         Net Loss Per Share - Calculation of Weighted        HTML     50K 
                Average Number of Shares Outstanding and Loss per                
                Share Outstanding (Details)                                      
94: XML         IDEA XML File -- Filing Summary                      XML    170K 
93: EXCEL       IDEA Workbook of Financial Reports                  XLSX     99K 
11: EX-101.INS  XBRL Instance -- dgly-20151231                       XML   1.44M 
13: EX-101.CAL  XBRL Calculations -- dgly-20151231_cal               XML    280K 
14: EX-101.DEF  XBRL Definitions -- dgly-20151231_def                XML    569K 
15: EX-101.LAB  XBRL Labels -- dgly-20151231_lab                     XML   1.26M 
16: EX-101.PRE  XBRL Presentations -- dgly-20151231_pre              XML    932K 
12: EX-101.SCH  XBRL Schema -- dgly-20151231                         XSD    197K 
95: ZIP         XBRL Zipped Folder -- 0001493152-16-007877-xbrl      Zip    159K

‘EX-101.INS’   —   XBRL Instance — dgly-20151231

This Exhibit is an XBRL XML File.

                                                                                                                                                                                
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<p style="margin: 0pt"></p> <p style="margin: 0pt"></p> <table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td style="text-align: center; line-height: 115%"> </td> <td style="text-align: center; line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><b>December 31, 2015 </b></td> <td style="text-align: center; line-height: 115%"> </td> <td style="text-align: center; line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><b>December 31, 2014</b> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 57%; padding-left: 0.5in; text-indent: -0.5in; line-height: 115%">Subordinated notes payable, at par </td> <td style="width: 2%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%">$</td> <td style="width: 18%; text-align: right; line-height: 115%">—</td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 2%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%">$</td> <td style="width: 18%; text-align: right; line-height: 115%">2,500,000</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 0.5in; text-indent: -0.5in; line-height: 115%">Unamortized discount </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%">—</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%">(55,187</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 12pt; text-indent: -12pt; line-height: 115%">Total notes payable </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">—</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">2,444,813</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 10pt; line-height: 115%">Less: Current maturities of long-term debt</td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%">—</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%">2,444,813</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 12pt; text-indent: -12pt; line-height: 115%">Subordinated notes payable, long-term</td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%">$</td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%">—</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%">$</td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%">—</td></tr> </table> <p style="margin: 0pt"></p>
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<p style="margin: 0pt"></p> <p style="margin: 0pt"></p> <table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><b>December 31, 2015 </b></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><b>December 31,2014 </b></td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 57%; padding-left: 12pt; text-indent: -12pt; line-height: 115%">Secured convertible note payable, at fair value </td> <td style="width: 2%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%">$</td> <td style="width: 18%; text-align: right; line-height: 115%">—</td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 2%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%">$</td> <td style="width: 18%; text-align: right; line-height: 115%">3,273,431</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 10pt; line-height: 115%">Less: Current maturities</td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%">—</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%">(2,019,720</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 12pt; text-indent: -12pt; line-height: 115%">Secured convertible note payable, long-term</td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%">$</td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%">—</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%">$</td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%">1,253,711</td></tr> </table> <p style="margin: 0pt"></p>
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<DGLY:PlacementAgentFeePaidInCash contextRef="From2015-01-01to2015-12-31_custom_PlacementAgreementMember_custom_WestParkCapitalIncMember" unitRef="USD" decimals="0"> 720000 </DGLY:PlacementAgentFeePaidInCash>
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<DGLY:WarrantExpirationTerm contextRef="From2012-07-23to2012-07-24_custom_ThirdPartyLenderMember"> November 30, 2013 to November 30, 2015 </DGLY:WarrantExpirationTerm>
<DGLY:WarrantExpirationTerm contextRef="From2015-01-01to2015-12-31_custom_CommonStockPurchaseWarrantsMember"> July 22, 2017 through January 22, 2021 </DGLY:WarrantExpirationTerm>
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<p style="margin: 0pt"></p> <p style="margin: 0pt"></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>NOTE 7. SUBORDINATED NOTES PAYABLE, SECURED CONVERTIBLE NOTE PAYABLE, AND CAPITAL LEASE OBLIGATIONS</b></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b> </b></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Subordinated Notes Payable</i></b>. Subordinated notes payable is comprised of the following:</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><b> </b></p> <table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td style="text-align: center; line-height: 115%"> </td> <td style="text-align: center; line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><b>December 31, 2015 </b></td> <td style="text-align: center; line-height: 115%"> </td> <td style="text-align: center; line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><b>December 31, 2014</b> </td> <td style="text-align: center; line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 58%; padding-left: 0.5in; text-indent: -0.5in; line-height: 115%">Subordinated notes payable, at par </td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%">$</td> <td style="width: 18%; text-align: right; line-height: 115%">—</td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%">$</td> <td style="width: 18%; text-align: right; line-height: 115%">2,500,000</td> <td style="width: 1%; line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 0.5in; text-indent: -0.5in; line-height: 115%">Unamortized discount </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%">—</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%">(55,187</td> <td style="line-height: 115%">)</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 12pt; text-indent: -12pt; line-height: 115%">Total notes payable </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">—</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">2,444,813</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 10pt; line-height: 115%">Less: Current maturities of long-term debt</td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%">—</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%">2,444,813</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 12pt; text-indent: -12pt; line-height: 115%">Subordinated notes payable, long-term</td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%">$</td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%">—</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%">$</td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%">—</td> <td style="line-height: 115%"> </td></tr> </table> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">During the year ended December 31, 2011, the Company, in two separate transactions, borrowed an aggregate of $2.5 million under two unsecured notes payable to a private, third-party lender. The loans were funded in May and November 2011 and both are represented by promissory notes (the “Notes”) that bear interest at the rate of 8% per annum and are payable interest only on a monthly basis. The maturity date of the original Note in the principal amount of $1,500,000 was extended from May 30, 2012 to May 30, 2013 in conjunction with the issuance of the second Note during November 2011. Both Notes were due and payable in full on May 30, 2013 and could be prepaid without penalty at any time. The Notes are subordinated to all existing and future senior indebtedness, as such term is defined in the Notes.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">The Company granted the lender warrants (the “Warrants”) exercisable to purchase a total of 56,250 shares of its common stock at an exercise price of $8.00 per share (as modified) until November 30, 2013. The exercise price for the Warrants exercisable to purchase 37,500 shares issued with the first Note was reduced from $12.00 per share to $8.00 per share in consideration for the extension of the first Note’s maturity date. The Company paid fees totaling $147,500 to an unaffiliated entity and issued warrants exercisable to purchase 13,750 shares of its Common Stock on the same terms and conditions as the Warrants for its services relating to the transactions, including the modification of the Warrants issued pursuant to the first Note.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">The Company allocated $236,726 of the proceeds of the Notes to additional paid-in-capital, which represented the grant date fair value of the Warrant for 56,250 common shares issued to the lender and the warrant for 13,750 shares issued to the unaffiliated third party who arranged the transactions. In addition, the cash fees paid to the unaffiliated third party totaling $147,500 is included in the discount on the Notes. The modification of the original Note that occurred during November 2011 was treated as an early extinguishment of the debt.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">On July 24, 2012, the Company entered into an agreement with the third party lender that extended the maturity date of the Notes from May 30, 2013 to May 30, 2014. In connection with the extension, the Company reduced the exercise price for the Warrants exercisable to purchase 56,250 shares previously granted to the lender from $8.00 to $4.00 and extended their expiration date from November 30, 2013 to November 30, 2015. The Company issued an unaffiliated third party a warrant exercisable to purchase 6,250 shares of Common Stock at a price of $4.00 per share through November 30, 2015 for its services in connection with the extension of the maturity dates of the Notes. Additionally, the Company reduced the exercise price of warrants it had issued to such firm in May and November 2011 from $8.00 per share to $4.00 per share and extended their maturity dates to November 30, 2015. Such warrants are exercisable to purchase 13,750 shares of Common Stock. The Company allocated $38,052 to additional paid in capital, which represented the grant date fair value of the new warrants issued to the independent third party in July 2012 and the modification of the warrants for reducing the exercise price from $8.00 to $4.00 associated with extending the maturity date of the Note from May 30, 2013 to May 30, 2014. The restructuring of the Notes that occurred in July 2012 was treated as a modification of the debt and the remaining unamortized discount of the Notes will be amortized to interest expense ratably over the modified terms of the Notes.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">On December 4, 2013, the Company entered into an agreement with the same third party lender to extend the maturity date of the Notes from May 30, 2014 to May 30, 2015. In connection with the extension, the Company granted the lender warrants exercisable to purchase 40,000 shares of its common stock at $8.50 per share through December 3, 2018. The Company also paid fees totaling $10,000 to an unaffiliated third party and issued a warrant exercisable to purchase 10,000 shares of Common Stock at a price of $8.50 per share through December 3, 2018 for its services in connection with the extension of the maturity dates of the Notes. The Company allocated $205,820 to additional paid in capital, which represented the grant date fair value of the new warrants issued to the lender and the unaffiliated third party who arranged the transaction. In addition, the cash fees paid to the unaffiliated third party totaling $10,000 were included in the discount on the Notes. The restructuring of the Notes that occurred in December 2013 was treated as a modification of the debt and the remaining unamortized discount of the Notes will be amortized to interest expense ratably over the modified terms of the Notes. The discount amortized to interest expense totaled $55,187 and $132,447 for the years ended December 31, 2015, and 2014, respectively.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">On May 27, 2015, the Company and the Lender agreed to extend the maturity dates of the Notes to July 15, 2015 with all other terms remaining the same. On July 15, 2015, the maturity date of the Notes were further extended to August 15, 2015 and, as consideration for the extension, the Company issued warrants exercisable to purchase 5,000 shares of common stock at an exercise price of $16.50 with a term of five years. The grant date fair value of such warrants was $60,224 which was amortized to interest expense over the extended term. On July 24, 2015 the Company paid the outstanding principal and accrued interest on the Notes in full from proceeds of the registered direct offering of common stock and warrants exercisable to purchase common stock. (See Note 10.)</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><b><i>Secured Convertible Note Payable</i></b></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><b> </b></p> <table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><b>December 31, 2015 </b></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><b>December 31,2014 </b></td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 58%; padding-left: 12pt; text-indent: -12pt; line-height: 115%">Secured convertible note payable, at fair value </td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%">$</td> <td style="width: 18%; text-align: right; line-height: 115%">—</td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%">$</td> <td style="width: 18%; text-align: right; line-height: 115%">3,273,431</td> <td style="width: 1%; line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 10pt; line-height: 115%">Less: Current maturities</td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%">—</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%">(2,019,720</td> <td style="line-height: 115%">)</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 12pt; text-indent: -12pt; line-height: 115%">Secured convertible note payable, long-term</td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%">$</td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%">—</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%">$</td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%">1,253,711</td> <td style="line-height: 115%"> </td></tr> </table> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">On August 28, 2014, the Company completed a second private placement to the holder of the Secured Convertible Note of $4.0 million aggregate principal amount of a Secured Convertible Note (the “$4.0 million Secured Convertible Note”). The $4.0 million Secured Convertible Note bore interest at 6% per annum, payable quarterly, and was secured by all assets of the Company. Principal payments were not required until the sixth month after origination and continued ratably for the remaining 18-month term of the $4.0 million Secured Convertible Note. The principal and interest payments could be made through the payment of cash or in-kind by transferring unrestricted and fully registered shares in an amount equivalent to 80% of the volume weighted average trading price for the 20 consecutive trading days preceding the payment date. The $4.0 million Secured Convertible Note was convertible into shares of common stock at the holder’s option at a conversion price of $6.10 per share at any time it was outstanding. In addition, the Company could force conversion if the market price exceeded $12.20 per share for 20 consecutive trading days.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">In connection with the second private placement the Company issued a warrant (the “August Warrant”) exercisable to purchase 262,295 shares of common stock at $7.32 per share. The August Warrant is exercisable immediately and expires August 28, 2019. The $4.0 million Secured Convertible Note and August Warrant contain anti-dilution provisions and restrict the incurrence of additional secured indebtedness.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">The August Warrant was treated as a derivative liability for accounting purposes. Accordingly, the Company has estimated the fair value of the warrant derivative as of the date the $4.0 million Secured Convertible Note was issued at $992,521. Changes in the fair value of the warrant derivative liabilities totaled $1,193,694 through December 31, 2014, and the derivative liability was $2,186,214 as of December 31, 2014 in the accompanying Consolidated Balance Sheet.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">On December 4, 2014, the holder of the $4.0 million Secured Convertible Note exercised its right to convert $36,600 of principal into 6,000 shares of common stock of the Company at the conversion price of $6.10 per share. The increase in fair market value of these 6,000 shares over the $36,600 principal retired was $89,400, representing the increase in the Company’s stock price over the conversion rate as of the conversion date. Such amount was recognized as a charge to the income statement during the year ended December 31, 2014 and included in change in fair value of secured convertible notes payable.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">The Company paid a placement agent fee of $240,000 and approximately $101,500 of third party costs for the transaction, which included legal fees. The Company elected to account for the $4.0 million Secured Convertible Note on its fair value basis and, therefore, all related debt issuance expenses which totaled $354,628 were charged to other expenses in the year ended December 31, 2014. The fair market value of the $4.0 million Secured Note was $3,273,431 at December 31, 2014 and the $302,552 change in fair market value of the note was included in change in fair value of secured notes payable in the Consolidated Statement of Operations.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">The holder of the $4.0 million Secured Convertible Note had no right to convert the Secured Convertible Notes or exercise the Warrants to the extent that such conversions or exercises would result in the holder being the beneficial owner in excess of 4.99% of the Company’s stock. In addition, the holder had no right to convert the $4.0 million Secured Convertible Note or exercise the August Warrant if the issuance of shares of the common stock upon such conversion or exercise would breach the Company’s limitation under the applicable Nasdaq listing rules (the “ Nasdaq Share Cap”). For these purposes the Nasdaq Share Cap limit applicable to such conversions or exercises of the Secured Convertible Note and the $4.0 million Secured Convertible Note and the Warrant and August Warrant was based upon the aggregation of such instruments as one issuance and on the number of shares the Company had issued and outstanding when it issued the Secured Convertible Note and Warrant in March 2014. The Nasdaq Share Cap limitation would not apply if the Company’s shareholders approve issuances above the Nasdaq Share Cap.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">The Company was required to maintain a minimum cash balance of not less than $1.5 million until such time as the Company satisfied all of the “Equity Conditions,” as defined in the $4.0 million Secured Convertible Note. Such Equity Conditions included the Company’s shareholders approving the issuance of shares above the Nasdaq Share Cap. The $1.5 million minimum cash balance was reported as restricted cash separate from cash and cash equivalents in the Consolidated Balance Sheet as of December 31, 2014.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">The Company called a Special Meeting of Shareholders in which it sought approval from its shareholders for issuances of shares above the Nasdaq Share Cap. On February 13, 2015 its shareholders gave such approval. Upon such approval, the Company satisfied all of the “Equity Conditions,” which released all of the restrictions on cash balances.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Between February 13 and 25, 2015 the holder of the $4.0 million Secured Convertible Note exercised its right to convert the remaining principal of $3,963,780 into 655,738 shares of common stock and 5,475 shares for accrued interest at the conversion price of $7.32 per share. The increase in fair market value of these 655,213 shares over the $3,963,780 principal retired was $4,434,383 representing the increase in our stock price over the conversion rate as of the conversion dates. Such amount was recognized as a charge to the Consolidated Statement of Operations during the year ended December 31, 2015 and included in change in fair value of secured convertible notes payable.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">On March 24, 2015 the holder exercised part of its August Warrant to purchase 212,295 shares of common stock with the change in value of the warrant derivative totaling $340,722 being recognized as income in the Consolidated Statement of Operations representing the change in our stock price compared to the exercise price at the respective exercise date. The holder also exercised part of its August Warrant to purchase 37,800 shares on April 9, 2015 with the change in value of the warrant derivative totaling $127,951 being recognized as income in the Consolidated Statement of Operations representing the change in our stock price compared to the exercise price at the respective exercise date. As of December 31, 2015, the August Warrant was exercisable to purchase 12,200 common shares remaining under it and was recorded as a liability in the amount of $67,053 on the Consolidated Balance Sheet.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b><i> </i></b></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><b><i>Capital Leases</i></b>. Future minimum lease payments under non-cancelable capital leases having terms in excess of one year are as follows:</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p> <table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td style="text-align: justify; line-height: 115%"><b>Year ending December 31:</b></td> <td style="line-height: 115%"> </td> <td colspan="2" style="line-height: 115%"> </td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom"> <td style="text-align: justify; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="2" style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 79%; padding-left: 10pt; text-align: justify; line-height: 115%">2016</td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%">$</td> <td style="width: 18%; text-align: right; line-height: 115%">38,258</td> <td style="width: 1%; line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 10pt; text-align: justify; line-height: 115%">2017</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">34,298</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 10pt; text-align: justify; line-height: 115%">2018</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">8,575</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 10pt; text-align: justify; line-height: 115%">2019</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">—</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 10pt; text-align: justify; line-height: 115%">2020 and thereafter </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%">—</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 10pt; text-align: justify; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 10pt; text-align: justify; line-height: 115%">Total future minimum lease payments </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">81,131</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 10pt; text-align: justify; line-height: 115%">Less amount representing interest </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%">5,019</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 10pt; text-align: justify; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 10pt; text-align: justify; line-height: 115%">Present value of minimum lease payments </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">76,112</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 10pt; text-align: justify; line-height: 115%">Less current portion </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%">34,828</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 10pt; text-align: justify; line-height: 115%">Capital lease obligations, less current portion </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%">$</td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%">41,284</td> <td style="line-height: 115%"> </td></tr> </table> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">Assets under capital leases are included in furniture, fixtures and equipment as follows:</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p> <table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><b>December 31, 2015</b></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><b>December 31, 2014</b></td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 58%; line-height: 115%">Office furniture, fixtures and equipment </td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%">$</td> <td style="width: 18%; text-align: right; line-height: 115%">382,928</td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%">$</td> <td style="width: 18%; text-align: right; line-height: 115%">280,304</td> <td style="width: 1%; line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="line-height: 115%">Less: accumulated amortization </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%">(224,089</td> <td style="line-height: 115%">)</td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%">(135,115</td> <td style="line-height: 115%">)</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="line-height: 115%">Net furniture, fixtures and equipment </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%">$</td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%">158,839</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%">$</td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%">145,189</td> <td style="line-height: 115%"> </td></tr> </table> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b> </b></p>
</us-gaap:DebtDisclosureTextBlock>
<us-gaap:FairValueDisclosuresTextBlock contextRef="From2015-01-01to2015-12-31">
<p style="margin: 0pt"></p> <p style="margin: 0pt"></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>NOTE 8. Fair Value Measurement</b></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b> </b></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in">In accordance with ASC Topic 820 — <i>Fair Value Measurements and Disclosures</i> (“ASC 820”), the Company utilizes the market approach to measure fair value for its financial assets and liabilities. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets, liabilities or a group of assets or liabilities, such as a business.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in">ASC 820 utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels:</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in"> </p> <table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr> <td style="width: 29px; line-height: 115%">●</td> <td style="line-height: 115%">Level 1 — Quoted prices in active markets for identical assets and liabilities</td></tr> <tr> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td></tr> <tr> <td style="line-height: 115%">●</td> <td style="line-height: 115%">Level 2 — Other significant observable inputs (including quoted prices in active markets for similar assets or liabilities)</td></tr> <tr> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td></tr> <tr> <td style="line-height: 115%">●</td> <td style="line-height: 115%">Level 3 — Significant unobservable inputs (including the Company’s own assumptions in determining the fair value)</td></tr> </table> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">The following table represents the Company’s hierarchy for its financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2015 and December 31, 2014.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"> </p> <table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="14" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><b>December 31, 2015</b></td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom"> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><b>Level 1</b></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><b>Level 2</b></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><b>Level 3</b></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><b>Total</b></td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="line-height: 115%"><b>Liabilities:</b></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="width: 44%; padding-left: 10pt; line-height: 115%">Warrant derivative liability</td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; border-bottom: black 1.5pt solid; line-height: 115%">$</td> <td style="width: 11%; border-bottom: black 1.5pt solid; text-align: right; line-height: 115%">—</td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; border-bottom: black 1.5pt solid; line-height: 115%">$</td> <td style="width: 11%; border-bottom: black 1.5pt solid; text-align: right; line-height: 115%">—</td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; border-bottom: black 1.5pt solid; line-height: 115%">$</td> <td style="width: 11%; border-bottom: black 1.5pt solid; text-align: right; line-height: 115%">67,053</td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; border-bottom: black 1.5pt solid; line-height: 115%">$</td> <td style="width: 11%; border-bottom: black 1.5pt solid; text-align: right; line-height: 115%">67,053</td> <td style="width: 1%; line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%">$</td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%">—</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%">$</td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%">—</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%">$</td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%">67,053</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%">$</td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%">67,053</td> <td style="line-height: 115%"> </td></tr> </table> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p> <table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="14" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><b>December 31, 2014</b></td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom"> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><b>Level 1</b></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><b>Level 2</b></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><b>Level 3</b></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><b>Total</b></td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="line-height: 115%"><b>Liabilities:</b></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="width: 44%; padding-left: 10pt; line-height: 115%">Warrant derivative liability</td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="width: 11%; border-bottom: black 1.5pt solid; text-align: right; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="width: 11%; border-bottom: black 1.5pt solid; text-align: right; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; border-bottom: black 1.5pt solid; line-height: 115%">$</td> <td style="width: 11%; border-bottom: black 1.5pt solid; text-align: right; line-height: 115%">2,186,214</td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; border-bottom: black 1.5pt solid; line-height: 115%">$</td> <td style="width: 11%; border-bottom: black 1.5pt solid; text-align: right; line-height: 115%">2,186,214</td> <td style="width: 1%; line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 10pt; line-height: 115%">Secured convertible note</td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%">$</td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%">—</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%">$</td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%">—</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%">$</td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%">3,273,431</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%">$</td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%">3,273,431</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%">$</td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%">—</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%">$</td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%">—</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%">$</td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%">5,459,645</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%">$</td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%">5,459,645</td> <td style="line-height: 115%"> </td></tr> </table> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">The following table represents the change in level 3 tier value measurements:</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p> <table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><b>Warrant</b><br /> <b>Derivative</b><br /> <b>Liability</b></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><b>Secured</b><br /> <b>Convertible</b><br /> <b>Note</b></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><b>Total</b></td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 55%; line-height: 115%">December 31, 2014</td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%">$</td> <td style="width: 12%; text-align: right; line-height: 115%">2,186,214</td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%">$</td> <td style="width: 12%; text-align: right; line-height: 115%">3,273,431</td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%">$</td> <td style="width: 12%; text-align: right; line-height: 115%">5,459,645</td> <td style="width: 1%; line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="line-height: 115%">Conversion of secured convertible note to common stock</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">—</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">(3,273,431</td> <td style="line-height: 115%">)</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">(3,273,431</td> <td style="line-height: 115%">)</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="line-height: 115%">Exercise of common stock purchase warrants</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">(1,748,155</td> <td style="line-height: 115%">)</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">—</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">(1,748,155</td> <td style="line-height: 115%">)</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="line-height: 115%">Change in fair value</td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%">(371,006</td> <td style="line-height: 115%">)</td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%">—</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%">(371,006</td> <td style="line-height: 115%">)</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="line-height: 115%">December 31, 2015</td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%">$</td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%">67,053</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%">$</td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%">—</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%">$</td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%">67,053</td> <td style="line-height: 115%"> </td></tr> </table> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
</us-gaap:FairValueDisclosuresTextBlock>
<us-gaap:AccountsPayableAndAccruedLiabilitiesDisclosureTextBlock contextRef="From2015-01-01to2015-12-31">
<p style="margin: 0pt"></p> <p style="margin: 0pt"></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>NOTE 9. ACCRUED EXPENSES </b></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">Accrued expenses consisted of the following at December 31, 2015 and December 31, 2014:</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 28.05pt"> </p> <table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><b>December 31, 2015</b></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><b>December 31, 2014</b></td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 62%; padding-left: 0.5in; text-indent: -0.5in; line-height: 115%">Accrued warranty expense</td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%">$</td> <td style="width: 16%; text-align: right; line-height: 115%">159,838</td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%">$</td> <td style="width: 16%; text-align: right; line-height: 115%">247,082</td> <td style="width: 1%; line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 0.5in; text-indent: -0.5in; line-height: 115%">Accrued sales commissions</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">100,295</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">89,600</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 0.5in; text-indent: -0.5in; line-height: 115%">Accrued payroll and related fringes</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">247,984</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">154,851</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 0.5in; text-indent: -0.5in; line-height: 115%">Accrued insurance</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">34,926</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">81,431</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 0.5in; text-indent: -0.5in; line-height: 115%">Accrued rent</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">224,393</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">260,634</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 0.5in; text-indent: -0.5in; line-height: 115%">Accrued litigation and related charges</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">—</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">53,666</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 0.5in; text-indent: -0.5in; line-height: 115%">Other</td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%">168,891</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%">255,709</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 0.5in; text-indent: -12pt; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%">$</td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%">936,327</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%">$</td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%">1,142,973</td> <td style="line-height: 115%"> </td></tr> </table> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">Accrued warranty expense was comprised of the following for the years ended December 31, 2015 and 2014:</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 28.05pt"> </p> <table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><b>2015</b></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><b>2014</b></td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 62%; padding-left: 0.5in; text-indent: -0.5in; line-height: 115%">Beginning balance</td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%">$</td> <td style="width: 16%; text-align: right; line-height: 115%">247,082</td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%">$</td> <td style="width: 16%; text-align: right; line-height: 115%">167,970</td> <td style="width: 1%; line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 0.5in; text-indent: -0.5in; line-height: 115%">Provision for warranty expense</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">5,317</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">198,266</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 0.5in; text-indent: -0.5in; line-height: 115%">Charges applied to warranty reserve</td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%">(92,561</td> <td style="line-height: 115%">)</td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%">(119,154</td> <td style="line-height: 115%">)</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="line-height: 115%">Ending balance</td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td></tr> </table> <p style="font: 10pt/115% Times New Roman, Times, Serif; margin: 0 0 10pt"></p>
</us-gaap:AccountsPayableAndAccruedLiabilitiesDisclosureTextBlock>
<us-gaap:StockholdersEquityNoteDisclosureTextBlock contextRef="From2015-01-01to2015-12-31">
<p style="margin: 0pt"></p> <p style="margin: 0pt"></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>NOTE 10. COMMON STOCK</b></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">On June 9, 2015 at the annual shareholders meeting the shareholders approved the increase in the Company’s authorized shares of common stock from 9,375,000 to 25,000,000.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">The Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) on July 22, 2015 with two investors pursuant to which it issued and sold in an at-the- market registered direct offering (the “Offering”), an aggregate of 879,766 shares (the “Shares”) of common stock at an offering price of $13.64 per share, for gross proceeds of $12,000,008 before the deduction of the placement agent fee and other offering expenses of $776,723. In additional to the common stock purchased, the investors received a registered short-term warrant (the “Series A Warrant”) exercisable to purchase a total of 437,086 shares of common stock at an exercise price of $13.43 per share. The Series A Warrants were immediately exercisable and expire on July 22, 2017. The Shares and the Series A Warrants were offered by the Company pursuant to a registration statement on Form S-3 (File No. 333-202944), which was declared effective by the Securities and Exchange Commission (the “Commission”) on May 18, 2015 (the “Registration Statement”).</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 22.5pt"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">In a concurrent private placement (the “Private Placement”), the Company issued two additional warrants to the investors (the “Series B Warrants” and “Series C Warrants”), collectively with the Shares and the Series A Warrants the (“Securities”), with an exercise price of $13.43 per share. The investors received Series B Warrants to purchase a total of 222,738 shares of common stock and Series C Warrants to purchase a total of 879,766 shares of common stock. The Series B Warrants and Series C Warrants were both immediately exercisable and the Series B Warrants expire on July 22, 2017 and the Series C Warrants expire on January 22, 2021.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 22.5pt"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Subject to limited exceptions, the holders of the Warrants do not have the right to exercise any portion of its warrants if the holder, together with its affiliates, would beneficially own in excess of 4.99% or 9.99% of the number of shares of Common Stock outstanding immediately after giving effect to such exercise (the “Beneficial Ownership Limitation”); provided, however, that upon 61 days’ prior notice to the Company, the holder may increase or decrease the Beneficial Ownership Limitation, but in no event shall the Beneficial Ownership Limitation exceed 9.99%.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 22.5pt"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">The Company was required to file a registration statement on Form S-3 relating to the issuance of the Series B Warrants and Series C Warrants to provide for the resale of the shares of common stock issuable upon the exercise of such Warrants. The Company has filed a registration statement on Form S-3 (File No. 333-206699), which was declared effective by the Securities and Exchange Commission (the “Commission”) on September 15, 2015 (the “Registration Statement”).</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">The Purchase Agreement also contained representations, warranties, indemnification and other provisions customary for transactions of this nature. Among other restrictions, the Company is generally prohibited until July 22, 2017 from effecting or entering into an agreement to effect any issuance by the Company of Common Stock or equivalents involving a Variable Rate Transaction. A Variable Rate Transaction generally means a transaction in which the Company (i) issues or sells any debt or equity securities that are convertible into, exchangeable or exercisable for, or include the right to receive additional shares of Common Stock either (A) at a conversion price, exercise price or exchange rate or other price that is based upon and/or varies with the trading prices of or quotations for the shares of Common Stock at any time after the initial issuance of such debt or equity securities, or (B) with a conversion, exercise or exchange price that is subject to being reset at some future date after the initial issuance of such debt or equity security or upon the occurrence of specified or contingent events directly or indirectly related to the business of the Company or the market for the Common Stock or (ii) enters into any agreement, including, but not limited to, an equity line of credit, whereby the Company may issue securities at a future determined price.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">The Company entered into a Placement Agreement (the “Placement Agreement”) pursuant to which the Company engaged WestPark Capital, Inc. as the sole placement agent in connection with the Offering and the Private Placement. The Company paid the Placement Agent a placement agent fee in cash of $720,000 and reimbursed approximately $30,000 of their out-of-pocket expenses. Other expenses of the offering totaled $26,723, which included accounting, legal, printing and other expenses. Total issuance costs were $776,723, which was deducted from the gross proceeds of the offering resulting in net proceeds of $11,223,285.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">The Company used the net proceeds to retire $2.5 million principal amount of subordinated notes and for general corporate purposes.</p>
</us-gaap:StockholdersEquityNoteDisclosureTextBlock>
<us-gaap:IncomeTaxDisclosureTextBlock contextRef="From2015-01-01to2015-12-31">
<p style="margin: 0pt"></p> <p style="margin: 0pt"></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>NOTE 11. INCOME TAXES</b></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">The components of income tax (provision) benefit for the years ended December 31, 2015 and 2014 are as follows:</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 28.05pt"> </p> <table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom; background-color: white"> <td style="text-align: center; line-height: 115%"> </td> <td style="text-align: center; line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><b>2015</b></td> <td style="text-align: center; line-height: 115%"> </td> <td style="text-align: center; line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><b>2014</b></td> <td style="text-align: center; line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="text-align: justify; line-height: 115%">Current taxes:</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="width: 66%; padding-left: 10pt; text-align: justify; line-height: 115%">Federal</td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%">$</td> <td style="width: 14%; text-align: right; line-height: 115%">—</td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%">$</td> <td style="width: 14%; text-align: right; line-height: 115%">—</td> <td style="width: 1%; line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 10pt; text-align: justify; line-height: 115%">State</td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%">—</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%">—</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="text-align: justify; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="text-align: justify; line-height: 115%">Total current taxes</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">—</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">—</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="text-align: justify; line-height: 115%">Deferred tax (provision) benefit</td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%">—</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%">—</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="text-align: justify; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="text-align: justify; line-height: 115%">Income tax (provision) benefit</td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%">$</td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%">—</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%">$</td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%">—</td> <td style="line-height: 115%"> </td></tr> </table> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">A reconciliation of the income tax (provision) benefit at the statutory rate of 34% for the years ended December 31, 2015 and 2014 to the Company’s effective tax rate is as follows:</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p> <table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td style="text-align: justify; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><b>2015</b></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><b>2014</b></td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 66%; text-align: justify; line-height: 115%">U.S. Statutory tax rate</td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 14%; text-align: right; line-height: 115%">34.0</td> <td style="width: 1%; line-height: 115%">%</td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 14%; text-align: right; line-height: 115%">34.0</td> <td style="width: 1%; line-height: 115%">%</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="text-align: justify; line-height: 115%">State taxes, net of Federal benefit</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">6.2</td> <td style="line-height: 115%">%</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">6.2</td> <td style="line-height: 115%">%</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="text-align: justify; line-height: 115%">Federal Research and development tax credits</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">1.5</td> <td style="line-height: 115%">%</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">2.9</td> <td style="line-height: 115%">%</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="text-align: justify; line-height: 115%">Stock based compensation</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">0.6</td> <td style="line-height: 115%">%</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">1.9</td> <td style="line-height: 115%">%</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="line-height: 115%">Common stock issued upon conversion of promissory note and related common stock purchase warrants</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">3.3</td> <td style="line-height: 115%">%</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">6.7</td> <td style="line-height: 115%">%</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="text-align: justify; line-height: 115%">Change in valuation reserve on deferred tax assets</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">(45.0</td> <td style="line-height: 115%">)%</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">(51.5</td> <td style="line-height: 115%">)%</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="text-align: justify; line-height: 115%">Other, net</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">(0.6</td> <td style="line-height: 115%">)%</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">(0.2</td> <td style="line-height: 115%">)%</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="text-align: justify; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="text-align: justify; line-height: 115%">Income tax (provision) benefit</td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%">0.0</td> <td style="line-height: 115%">%</td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%">0.0</td> <td style="line-height: 115%">%</td></tr> </table> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Significant components of the Company’s deferred tax assets (liabilities) as of December 31, 2015 and 2014 are as follows:</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p> <table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td style="text-align: justify; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><b>2015</b></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><b>2014</b></td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="text-align: justify; line-height: 115%">Deferred tax assets:</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="width: 66%; padding-left: 10pt; text-align: justify; line-height: 115%">Stock-based compensation</td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%">$</td> <td style="width: 14%; text-align: right; line-height: 115%">1,623,000</td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%">$</td> <td style="width: 14%; text-align: right; line-height: 115%">1,206,000</td> <td style="width: 1%; line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 10pt; text-align: justify; line-height: 115%">Start-up costs</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">180,000</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">180,000</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 10pt; text-align: justify; line-height: 115%">Inventory reserves</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">480,000</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">240,000</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 10pt; text-align: justify; line-height: 115%">Uniform capitalization of inventory costs</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">150,000</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">97,000</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 10pt; text-align: justify; line-height: 115%">Allowance for doubtful accounts receivable</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">30,000</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">26,000</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 10pt; text-align: justify; line-height: 115%">Other reserves</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">2,000</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">2,000</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 10pt; text-align: justify; line-height: 115%">Equipment depreciation</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">—</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">82,000</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 10pt; text-align: justify; line-height: 115%">Deferred revenue</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">903,000</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">433,000</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 10pt; text-align: justify; line-height: 115%">Derivative liabilities</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">26,000</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">601,000</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 10pt; text-align: justify; line-height: 115%">Accrued expenses</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">210,000</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">275,000</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 10pt; text-align: justify; line-height: 115%">Net operating loss carryforward</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">12,295,000</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">7,531,000</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 10pt; text-align: justify; line-height: 115%">Research and development tax credit carryforward</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">1,747,000</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">1,568,000</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 10pt; text-align: justify; line-height: 115%">Alternative minimum tax credit carryforward</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">90,000</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">90,000</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 10pt; text-align: justify; line-height: 115%">State jobs credit carryforward</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">230,000</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">230,000</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 10pt; text-align: justify; line-height: 115%">State research and development credit carryforward</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">280,000</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">280,000</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 10pt; text-align: justify; line-height: 115%">Charitable contributions carryforward</td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%">50,000</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%">—</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="text-align: justify; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="text-align: justify; line-height: 115%">Total deferred tax assets</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">18,296,000</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">12,874,000</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 10pt; text-align: justify; line-height: 115%">Valuation reserve</td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%">(18,105,000</td> <td style="line-height: 115%">)</td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%">(12,692,000</td> <td style="line-height: 115%">)</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="text-align: justify; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="text-align: justify; line-height: 115%">Total deferred tax assets</td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%">191,000</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%">182,000</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="text-align: justify; line-height: 115%">Deferred tax liabilities:</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 10pt; text-align: justify; line-height: 115%">Equipment depreciation</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">(6,000</td> <td style="line-height: 115%">)</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">—</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 10pt; text-align: justify; line-height: 115%">Domestic international sales company</td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%">(185,000</td> <td style="line-height: 115%">)</td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%">(182,000</td> <td style="line-height: 115%">)</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="text-align: justify; line-height: 115%"> Total deferred tax liabilities</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">(191,000</td> <td style="line-height: 115%">))</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">(182,000</td> <td style="line-height: 115%">)</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="text-align: justify; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="text-align: justify; line-height: 115%">Net deferred tax assets (liability)</td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%">$</td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%">—</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%">$</td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%">—</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="text-align: justify; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="line-height: 115%">Net deferred tax asset (liability) are classified in our consolidated balance sheets as follows:</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 10pt; text-align: justify; line-height: 115%">Current</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%">$</td> <td style="text-align: right; line-height: 115%">—</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%">$</td> <td style="text-align: right; line-height: 115%">—</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 10pt; text-align: justify; line-height: 115%">Non-current</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%">$</td> <td style="text-align: right; line-height: 115%">—</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%">$</td> <td style="text-align: right; line-height: 115%">—</td> <td style="line-height: 115%"> </td></tr> </table> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">The valuation allowance on deferred tax assets totaled $18,105,000 and $12,692,000 as of December 31, 2015 and December 31, 2014, respectively. We record the benefit we will derive in future accounting periods from tax losses and credits and deductible temporary differences as “deferred tax assets”. In accordance with Accounting Standards Codification (ASC) 740, “Income Taxes,” we record a valuation allowance to reduce the carrying value of our deferred tax assets if, based on all available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">The economic recession and its effect on state and local governmental budgets in particular remained weak in 2015 and 2014 and we incurred operating losses during this period. Law enforcement agencies are our primary customer and are typically funded through state and local tax rolls. The economy showed improvement in 2015 and 2014, but the establishment of a long-term positive impact on the state and local budgets is still uncertain at best. Despite the improvement in general economic conditions and our ongoing cost containment efforts, we incurred additional losses in 2015 and 2014 that placed us in a three-year cumulative loss position at December 31, 2015 and 2014. Accordingly, we determined there was not sufficient positive evidence regarding our potential for future profits to outweigh the negative evidence of our three-year cumulative loss position under the guidance provided in ASC 740. Therefore, we determined to increase our valuation allowance by $5,413,000 to continue to fully reserve our deferred tax assets at December 31, 2015. We expect to continue to maintain a full valuation allowance until we determine that we can sustain a level of profitability that demonstrates our ability to realize these assets. To the extent we determine that the realization of some or all of these benefits is more likely than not based upon expected future taxable income, a portion or all of the valuation allowance will be reversed. Such a reversal would be recorded as an income tax benefit and, for some portion related to deductions for stock option exercises, an increase in shareholders’ equity.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">  </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">At December 31, 2015, the Company had available approximately $30,700,000 of net operating loss carryforwards available to offset future taxable income generated. Such tax net operating loss carryforwards expire between 2026 and 2035. In addition, the Company had research and development tax credit carryforwards totaling $1,747,000 available as of December 31, 2015, which expire between 2023 and 2035.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">The Internal Revenue Code contains provisions under Section 382 which limit a company’s ability to utilize net operating loss carry-forwards in the event that it has experienced a more than 50% change in ownership over a three-year period. Current estimates prepared by the Company indicate that due to ownership changes which have occurred, approximately $765,000 of its net operating loss and $175,000 of its research and development tax credit carryforwards are currently subject to an annual limitation of approximately $1,151,000, but may be further limited by additional ownership changes which may occur in the future. As stated above, the net operating loss and research and development credit carryforwards expire between 2023 and 2035, allowing the Company to potentially utilize all of the limited net operating loss carry-forwards during the carryforward period.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">As discussed in Note 1, “Summary of Significant Accounting Policies,” tax positions are evaluated in a two-step process. The Company first determines whether it is more likely than not that a tax position will be sustained upon examination. If a tax position meets the more-likely-than-not recognition threshold, it is then measured to determine the amount of benefit to recognize in the financial statements. The tax position is measured as the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement. Management has identified no tax positions taken that would meet or exceed these thresholds and therefore there are no gross interest, penalties and unrecognized tax expense/benefits that are not expected to ultimately result in payment or receipt of cash in the consolidated financial statements.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">The effective tax rate for the years ended December 31, 2015 and 2014 varied from the expected statutory rate due to the Company continuing to provide a 100% valuation allowance on net deferred tax assets. The Company determined that it was appropriate to continue the full valuation allowance on net deferred tax assets as of December 31, 2015 primarily because of the current year operating losses.</p>
</us-gaap:IncomeTaxDisclosureTextBlock>
<us-gaap:DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock contextRef="From2015-01-01to2015-12-31">
<p style="margin: 0pt"></p> <p style="margin: 0pt"></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>NOTE 13. STOCK-BASED COMPENSATION </b></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 28.05pt"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 28.05pt">The Company recorded pretax compensation expense related to the grant of stock options and restricted stock issued of $1,623,033 and $834,593 for the years ended December 31, 2015 and 2014, respectively.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 28.05pt"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 28.05pt">As of December 31, 2015, the Company had adopted seven separate stock option and restricted stock plans: (i) the 2005 Stock Option and Restricted Stock Plan (the “2005 Plan”), (ii) the 2006 Stock Option and Restricted Stock Plan (the “2006 Plan”), (iii) the 2007 Stock Option and Restricted Stock Plan (the “2007 Plan”), (iv) the 2008 Stock Option and Restricted Stock Plan (the “2008 Plan”), (v) the 2011 Stock Option and Restricted Stock Plan (the “2011 Plan”), (vi) the 2013 Stock Option and Restricted Stock Plan (the “2013 Plan”) and (vii) the 2015 Stock Option and Restricted Stock Plan (the “2015 Plan”). These Plans permit the grant of stock options or restricted stock to its employees, non-employee directors and others totaling 1,475,000 shares of common stock. The 2005 Plan expired during 2015 with 28 shares reserved for awards which are now unavailable for issuance. The Company believes that such awards better align the interests of its employees with those of its shareholders. Option awards have been granted with an exercise price equal to the market price of the Company’s stock at the date of grant with such option awards generally vesting based on the completion of continuous service and having ten-year contractual terms. These option awards provide for accelerated vesting if there is a change in control (as defined in the Plans) or the death or disability of the holder. The Company has registered all shares of common stock that are issuable under its Plans with the SEC. A total of 75,002 shares remained available for grant under the various Plans as of December 31, 2015.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 28.05pt">In addition to the Stock Option and Restricted Stock Plans described above, the Company has issued other options outside of these Plans to non-employees for services rendered that are subject to the same general terms as the Plans, of which 1,250 options are fully vested and remain outstanding as of December 31, 2015.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 28.05pt">The fair value of each option award is estimated on the date of grant using a Black-Scholes option valuation model. There were no stock options issued during 2015. Activity in the various Plans during the year ended December 31, 2015 is reflected in the following table:</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p> <table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td style="border-bottom: black 1.5pt solid; line-height: 115%"><b>Options</b></td> <td style="line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><b>Shares</b></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><b>Weighted</b><br /> <b>Average</b><br /> <b>Exercise Price</b></td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 68%; padding-left: 0.5in; text-indent: -0.5in; line-height: 115%">Outstanding at January 1, 2015</td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 13%; text-align: right; line-height: 115%">370,743</td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%">$</td> <td style="width: 13%; text-align: right; line-height: 115%">18.97</td> <td style="width: 1%; line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 10pt; line-height: 115%">Granted</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">—</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">—</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 10pt; line-height: 115%">Exercised</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">(39,928</td> <td style="line-height: 115%">)</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">(7.59</td> <td style="line-height: 115%">)</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 10pt; line-height: 115%">Forfeited</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%">(2,125</td> <td style="line-height: 115%">)</td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%">(6.96</td> <td style="line-height: 115%">)</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 20pt; line-height: 115%">Outstanding at December 31, 2015</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%">328,690</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%">$</td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%">20.43</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 0.5in; text-indent: -0.5in; line-height: 115%">Exercisable at December 31, 2015</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%">284,390</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%">$</td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%">23.06</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 12pt; text-indent: -12pt; line-height: 115%">Weighted-average fair value for options granted during the period at fair value</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%">—</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%">$</td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%">—</td> <td style="line-height: 115%"> </td></tr> </table> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">  </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">The Plans allow for the cashless exercise of stock options. This provision allows the option holder to surrender/cancel options with an intrinsic value equivalent to the purchase/exercise price of other options exercised. There were no shares surrendered pursuant to cashless exercises during the year ended December 31, 2015.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">At December 31, 2015, the aggregate intrinsic value of options outstanding was approximately $262,297, and the aggregate intrinsic value of options exercisable was approximately $140,281. The aggregate intrinsic value of options exercised during the year ended December 31, 2015 was $281,792.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">As of December 31, 2015, the unamortized portion of stock compensation expense on all existing stock options was $30,098, which will be recognized over the next 20 months.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">The following table summarizes the range of exercise prices and weighted average remaining contractual life for outstanding and exercisable options under the Company’s option plans as of December 31, 2015:</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"> </p> <table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td style="text-align: center; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="6" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><b>Outstanding options</b></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="6" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><b>Exercisable options</b></td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom"> <td style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><b>Exercise price range</b></td> <td style="line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><b>Number of</b><br /> <b>options</b></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><b>Weighted</b><br /> <b>average</b><br /> <b>remaining</b><br /> <b>contractual</b><br /> <b>life</b></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><b>Number of</b><br /> <b>options</b></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><b>Weighted</b><br /> <b>average</b><br /> <b>remaining</b><br /> <b>contractual</b><br /> <b>life</b></td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 0.5in; text-indent: -0.5in; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="width: 48%; padding-left: 0.5in; text-indent: -0.5in; line-height: 115%">$0.01 to $3.99</td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 10%; text-align: right; line-height: 115%">63,124</td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 10%; text-align: right; line-height: 115%">7.3 years</td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 10%; text-align: right; line-height: 115%">21,438</td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 10%; text-align: right; line-height: 115%">6.4 years</td> <td style="width: 1%; line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 0.5in; text-indent: -0.5in; line-height: 115%">$4.00 to $6.99</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">37,625</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">6.8 years</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">35,886</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">6.9 years</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 0.5in; text-indent: -0.5in; line-height: 115%">$7.00 to $9.99</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">19,069</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">5.7 years</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">18,194</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">5.7 years</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 0.5in; text-indent: -0.5in; line-height: 115%">$10.00 to $12.99</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">52,808</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">1.4 years</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">52,808</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">1.4 years</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 0.5in; text-indent: -0.5in; line-height: 115%">$13.00 to $15.99</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">51,439</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">4.7 years</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">51,439</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">4.7 years</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 0.5in; text-indent: -0.5in; line-height: 115%">$16.00 to $18.99</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">1,250</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> 1.5 years </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">1,250</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">1.5 years</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 0.5in; text-indent: -0.5in; line-height: 115%">$19.00 to $29.99</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">6,500</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">3.6 years</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">6,500</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> 3.6 years</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 0.5in; text-indent: -0.5in; line-height: 115%">$30.00 to $55.00</td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%">96,875</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%">1.9 years</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%">96,875</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%">1.9 years</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%">328,690</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%">4.1 years</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%">284,390</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%">3.6 years</td> <td style="line-height: 115%"> </td></tr> </table> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt"><b><i> </i></b></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt"><b><i>Restricted stock grants.</i></b><i> </i>The Board of Directors has granted restricted stock awards under the Plans. Restricted stock awards are valued on the date of grant and have no purchase price for the recipient. Restricted stock awards typically vest over six months to four years corresponding to anniversaries of the grant date. Under the Plans, unvested shares of restricted stock awards may be forfeited upon the termination of service to or employment with the Company, depending upon the circumstances of termination. Except for restrictions placed on the transferability of restricted stock, holders of unvested restricted stock have full stockholder’s rights, including voting rights and the right to receive cash dividends.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">A summary of all restricted stock activity under the equity compensation plans for the year ended December 31, 2015 is as follows:</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"> </p> <table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><b>Restricted</b><br /> <b>stock</b></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><b>Weighted</b><br /> <b>average grant</b><br /> <b>date fair value</b></td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 64%; line-height: 115%">Nonvested balance, January 1, 2015</td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 15%; text-align: right; line-height: 115%">188,500</td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%">$</td> <td style="width: 15%; text-align: right; line-height: 115%">5.32</td> <td style="width: 1%; line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 10pt; line-height: 115%">Granted</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">326,500</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">8.42</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 10pt; line-height: 115%">Vested</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">(158,500</td> <td style="line-height: 115%">)</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">(4.73</td> <td style="line-height: 115%">)</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 10pt; line-height: 115%">Forfeited</td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%">(2,000</td> <td style="line-height: 115%">)</td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%">(5.70</td> <td style="line-height: 115%">)</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="line-height: 115%">Nonvested balance, December 31, 2015</td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%">354,500</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%">$</td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%">8.43</td> <td style="line-height: 115%"> </td></tr> </table> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 28.05pt"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 28.05pt">The Company estimated the fair market value of these restricted stock grants based on the closing market price on the date of grant. As of December 31, 2015, there were $1,552,495 of total unrecognized compensation costs related to all remaining non-vested restricted stock grants, which will be amortized over the next 48 months in accordance with the vesting scale.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 28.05pt">  </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">The nonvested balance of restricted stock vests as follows:</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"> </p> <table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><b>Year ended December 31,</b></td> <td style="line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><b>Number</b><br /> <b>of shares</b></td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 81%; line-height: 115%">2015</td> <td style="width: 2%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 15%; text-align: right; line-height: 115%">135,900</td> <td style="width: 1%; line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="line-height: 115%">2016</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">75,150</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="line-height: 115%">2018</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">69,050</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="line-height: 115%">2019</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">74,400</td> <td style="line-height: 115%"> </td></tr> </table> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b></b></p>
</us-gaap:DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock>
<DGLY:CommonStockPurchaseWarrantsTextBlock contextRef="From2015-01-01to2015-12-31">
<p style="margin: 0pt"></p> <p style="margin: 0pt"></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>NOTE 14. COMMON STOCK PURCHASE WARRANTS</b></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">The Company issued common stock purchase warrants (the “Warrants”) in conjunction with the original issuance and extension of the Subordinated Notes Payable, the $4.0 million Secured Convertible Note (see Note 5) and the July 2015 registered direct offering (See Note 8). The Warrants are immediately exercisable and allow the holders to purchase up to 1,599,290 shares of common stock at $4.00 to $7.32 per share after modification. The Warrants expire from July 22, 2017 through January 22, 2021 and allow for cashless exercise.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"> </p> <table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><b>Warrants</b></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><b>Weighted average</b><br /> <b>exercise price</b></td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 64%; line-height: 115%">Vested Balance, January 1, 2015</td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 15%; text-align: right; line-height: 115%">306,481</td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%">$</td> <td style="width: 15%; text-align: right; line-height: 115%">7.47</td> <td style="width: 1%; line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="line-height: 115%">Granted</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">1,544,590</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">13.39</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="line-height: 115%">Exercised</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">(250,095</td> <td style="line-height: 115%">)</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">(7.32</td> <td style="line-height: 115%">)</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="line-height: 115%">Cancelled</td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%">(1,686</td> <td style="line-height: 115%">)</td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%">(4.00</td> <td style="line-height: 115%">)</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="line-height: 115%">Vested Balance, December 31, 2015</td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%">1,599,290</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%">$</td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%">13.25</td> <td style="line-height: 115%"> </td></tr> </table> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">The total intrinsic value of all outstanding warrants aggregated $-0- as of December 31, 2015 and the weighted average remaining term is 43 months.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">The following table summarizes the range of exercise prices and weighted average remaining contractual life for outstanding and exercisable warrants to purchase common shares as of December 31, 2015:</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"> </p> <table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="6" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><b>Outstanding and </b><br /> <b>exercisable warrants</b></td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom"> <td style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><b>Exercise price</b></td> <td style="line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><b>Number</b><br /> <b>of </b><br /> <b>options</b></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><b>Weighted</b><br /> <b>average</b><br /> <b>remaining</b><br /> <b>contractual </b><br /> <b>life</b></td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 0.5in; text-indent: -0.5in; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="width: 60%; padding-left: 0.5in; text-indent: -0.5in; line-height: 115%">$7.32</td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 17%; text-align: right; line-height: 115%">12,200</td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 17%; text-align: right; line-height: 115%">3.7 years</td> <td style="width: 1%; line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 0.5in; text-indent: -0.5in; line-height: 115%">$8.50</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">42,500</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">2.9 years</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 0.5in; text-indent: -0.5in; line-height: 115%">$13.43</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">659,824</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">1.6 years</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 0.5in; text-indent: -0.5in; line-height: 115%">$13.43</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">879,766</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> 5.1 years </td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 0.5in; text-indent: -0.5in; line-height: 115%">$16.50</td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%">5,000</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%">4.5 years</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%">1,599,290</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%">3.5 years</td> <td style="line-height: 115%"> </td></tr> </table> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b></b></p>
</DGLY:CommonStockPurchaseWarrantsTextBlock>
<us-gaap:RelatedPartyTransactionsDisclosureTextBlock contextRef="From2015-01-01to2015-12-31">
<p style="margin: 0pt"></p> <p style="margin: 0pt"></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>NOTE 15. RELATED PARTY TRANSACTIONS</b></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b> </b></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">On June 15, 2015 the Company entered into a consulting agreement with a relative of the Company’s President and Chairman to provide product research, development, advertising and marketing for new products in its commercial fleet business. The fee is $10,000 per month plus expenses and continues for the lesser of nine months or a total of $65,000 is paid for such services, exclusive of approved expenses. During the year ended December 31, 2015, total fees included in research and development for this related party was $65,000 and at December 31, 2015, amounts owed to this related party for consulting fees was $10,000 which was included in accounts payable.</p>
</us-gaap:RelatedPartyTransactionsDisclosureTextBlock>
<us-gaap:EarningsPerShareTextBlock contextRef="From2015-01-01to2015-12-31">
<p style="margin: 0pt"></p> <p style="margin: 0pt"></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><b>NOTE 16. NET LOSS PER SHARE </b></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 28.05pt">The calculation of the weighted average number of shares outstanding and loss per share outstanding for the years ended December 31, 2015 and 2014 are as follows:</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 28.05pt"> </p> <table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="6" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><b>Year ended December 31,</b></td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom"> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><b>2015</b></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><b>2014</b></td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 66%; line-height: 115%">Numerator for basic and diluted income per share – Net loss</td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; border-bottom: black 2.25pt double; line-height: 115%">$</td> <td style="width: 14%; border-bottom: black 2.25pt double; text-align: right; line-height: 115%">(12,037,892</td> <td style="width: 1%; line-height: 115%">)</td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; border-bottom: black 2.25pt double; line-height: 115%">$</td> <td style="width: 14%; border-bottom: black 2.25pt double; text-align: right; line-height: 115%">(9,163,261</td> <td style="width: 1%; line-height: 115%">)</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="line-height: 115%">Denominator for basic loss per share – weighted average shares outstanding</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">4,340,012</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">2,590,002</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="line-height: 115%">Dilutive effect of shares issuable under stock options and warrants outstanding</td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%">—  </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%">—  </td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="line-height: 115%">Denominator for diluted loss per share – adjusted weighted average shares outstanding</td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%">4,340,012</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%">2,590,002</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="line-height: 115%">Net loss per share:</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 10pt; line-height: 115%">Basic</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%">$</td> <td style="text-align: right; line-height: 115%">(2.77</td> <td style="line-height: 115%">)</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%">$</td> <td style="text-align: right; line-height: 115%">(3.54</td> <td style="line-height: 115%">)</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 10pt; line-height: 115%">Diluted</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%">$</td> <td style="text-align: right; line-height: 115%">(2.77</td> <td style="line-height: 115%">)</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%">$</td> <td style="text-align: right; line-height: 115%">(3.54</td> <td style="line-height: 115%">)</td></tr> </table> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 28.05pt"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 28.05pt">Basic loss per share is based upon the weighted average number of common shares outstanding during the period. For the years ended December 31, 2015 and 2014, all outstanding stock options to purchase common stock were antidilutive, and, therefore, not included in the computation of diluted income (loss) per share.</p>
</us-gaap:EarningsPerShareTextBlock>
<us-gaap:ScheduleOfRevenueByMajorCustomersByReportingSegmentsTableTextBlock contextRef="From2015-01-01to2015-12-31">
<p style="margin: 0pt"></p> <table cellspacing="0" cellpadding="0" style="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="6" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"><b>Year ended December 31,</b></font></td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom"> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"><b>2015</b></font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"><b>2014</b></font></td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">Sales by geographic area: </font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="width: 64%; padding-left: 10pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">United States of America </font></td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="width: 15%; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">19,881,541</font></td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="width: 15%; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">16,479,656</font></td> <td style="width: 1%; line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 10pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">Foreign</font></td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">148,667</font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">961,763</font></td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">20,030,208</font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">17,441,419</font></td> <td style="line-height: 115%"> </td></tr> </table> <p style="margin: 0pt"></p>
</us-gaap:ScheduleOfRevenueByMajorCustomersByReportingSegmentsTableTextBlock>
<us-gaap:ScheduleOfFutureMinimumLeasePaymentsForCapitalLeasesTableTextBlock contextRef="From2015-01-01to2015-12-31">
<p style="margin: 0pt"></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Future minimum lease payments under non-cancelable capital leases having terms in excess of one year are as follows:</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p> <table cellspacing="0" cellpadding="0" style="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td style="text-align: justify; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"><b>Year ending December 31:</b></font></td> <td style="line-height: 115%"> </td> <td colspan="2" style="line-height: 115%"> </td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom"> <td style="text-align: justify; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="2" style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 79%; padding-left: 10pt; text-align: justify; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">2016</font></td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="width: 18%; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">38,258</font></td> <td style="width: 1%; line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 10pt; text-align: justify; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">2017</font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">34,298</font></td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 10pt; text-align: justify; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">2018</font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">8,575</font></td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 10pt; text-align: justify; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">2019</font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">—</font></td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 10pt; text-align: justify; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">2020 and thereafter </font></td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">—</font></td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 10pt; text-align: justify; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 10pt; text-align: justify; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">Total future minimum lease payments </font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">81,131</font></td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 10pt; text-align: justify; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">Less amount representing interest </font></td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">5,019</font></td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 10pt; text-align: justify; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 10pt; text-align: justify; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">Present value of minimum lease payments </font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">76,112</font></td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 10pt; text-align: justify; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">Less current portion </font></td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">34,828</font></td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 10pt; text-align: justify; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">Capital lease obligations, less current portion </font></td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">41,284</font></td> <td style="line-height: 115%"> </td></tr> </table> <p style="margin: 0pt"></p>
</us-gaap:ScheduleOfFutureMinimumLeasePaymentsForCapitalLeasesTableTextBlock>
<us-gaap:ScheduleOfCapitalLeasedAsssetsTableTextBlock contextRef="From2015-01-01to2015-12-31">
<p style="margin: 0pt"></p> <p style="margin: 0pt"></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">Assets under capital leases are included in furniture, fixtures and equipment as follows:</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p> <table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><b>December 31, 2015</b></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><b>December 31, 2014</b></td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 58%; line-height: 115%">Office furniture, fixtures and equipment </td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%">$</td> <td style="width: 18%; text-align: right; line-height: 115%">382,928</td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%">$</td> <td style="width: 18%; text-align: right; line-height: 115%">280,304</td> <td style="width: 1%; line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="line-height: 115%">Less: accumulated amortization </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%">(224,089</td> <td style="line-height: 115%">)</td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%">(135,115</td> <td style="line-height: 115%">)</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="line-height: 115%">Net furniture, fixtures and equipment </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%">$</td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%">158,839</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%">$</td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%">145,189</td> <td style="line-height: 115%"> </td></tr> </table> <p style="margin: 0pt"></p>
</us-gaap:ScheduleOfCapitalLeasedAsssetsTableTextBlock>
<us-gaap:ScheduleOfFairValueAssetsAndLiabilitiesMeasuredOnRecurringBasisTableTextBlock contextRef="From2015-01-01to2015-12-31">
<p style="margin: 0pt"></p> <p style="margin: 0pt"></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">The following table represents the Company’s hierarchy for its financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2015 and December 31, 2014.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"> </p> <table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="14" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><b>December 31, 2015</b></td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom"> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><b>Level 1</b></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><b>Level 2</b></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><b>Level 3</b></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><b>Total</b></td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="line-height: 115%"><b>Liabilities:</b></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="width: 44%; padding-left: 10pt; line-height: 115%">Warrant derivative liability</td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; border-bottom: black 1.5pt solid; line-height: 115%">$</td> <td style="width: 11%; border-bottom: black 1.5pt solid; text-align: right; line-height: 115%">—</td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; border-bottom: black 1.5pt solid; line-height: 115%">$</td> <td style="width: 11%; border-bottom: black 1.5pt solid; text-align: right; line-height: 115%">—</td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; border-bottom: black 1.5pt solid; line-height: 115%">$</td> <td style="width: 11%; border-bottom: black 1.5pt solid; text-align: right; line-height: 115%">67,053</td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; border-bottom: black 1.5pt solid; line-height: 115%">$</td> <td style="width: 11%; border-bottom: black 1.5pt solid; text-align: right; line-height: 115%">67,053</td> <td style="width: 1%; line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%">$</td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%">—</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%">$</td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%">—</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%">$</td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%">67,053</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%">$</td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%">67,053</td> <td style="line-height: 115%"> </td></tr> </table> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p> <table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="14" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><b>December 31, 2014</b></td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom"> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><b>Level 1</b></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><b>Level 2</b></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><b>Level 3</b></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><b>Total</b></td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="line-height: 115%"><b>Liabilities:</b></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="width: 44%; padding-left: 10pt; line-height: 115%">Warrant derivative liability</td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="width: 11%; border-bottom: black 1.5pt solid; text-align: right; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="width: 11%; border-bottom: black 1.5pt solid; text-align: right; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; border-bottom: black 1.5pt solid; line-height: 115%">$</td> <td style="width: 11%; border-bottom: black 1.5pt solid; text-align: right; line-height: 115%">2,186,214</td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; border-bottom: black 1.5pt solid; line-height: 115%">$</td> <td style="width: 11%; border-bottom: black 1.5pt solid; text-align: right; line-height: 115%">2,186,214</td> <td style="width: 1%; line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 10pt; line-height: 115%">Secured convertible note</td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%">$</td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%">—</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%">$</td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%">—</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%">$</td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%">3,273,431</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%">$</td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%">3,273,431</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%">$</td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%">—</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%">$</td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%">—</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%">$</td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%">5,459,645</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%">$</td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%">5,459,645</td> <td style="line-height: 115%"> </td></tr> </table> <p style="margin: 0pt"></p>
</us-gaap:ScheduleOfFairValueAssetsAndLiabilitiesMeasuredOnRecurringBasisTableTextBlock>
<us-gaap:FairValueNetDerivativeAssetLiabilityMeasuredOnRecurringBasisUnobservableInputReconciliationTableTextBlock contextRef="From2015-01-01to2015-12-31">
<p style="margin: 0pt"></p> <p style="margin: 0pt"></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">The following table represents the change in level 3 tier value measurements:</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p> <table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><b>Warrant</b><br /> <b>Derivative</b><br /> <b>Liability</b></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><b>Secured</b><br /> <b>Convertible</b><br /> <b>Note</b></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><b>Total</b></td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 55%; line-height: 115%">December 31, 2014</td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%">$</td> <td style="width: 12%; text-align: right; line-height: 115%">2,186,214</td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%">$</td> <td style="width: 12%; text-align: right; line-height: 115%">3,273,431</td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%">$</td> <td style="width: 12%; text-align: right; line-height: 115%">5,459,645</td> <td style="width: 1%; line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="line-height: 115%">Conversion of secured convertible note to common stock</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">—</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">(3,273,431</td> <td style="line-height: 115%">)</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">(3,273,431</td> <td style="line-height: 115%">)</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="line-height: 115%">Exercise of common stock purchase warrants</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">(1,748,155</td> <td style="line-height: 115%">)</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">—</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">(1,748,155</td> <td style="line-height: 115%">)</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="line-height: 115%">Change in fair value</td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%">(371,006</td> <td style="line-height: 115%">)</td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%">—</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%">(371,006</td> <td style="line-height: 115%">)</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="line-height: 115%">December 31, 2015</td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%">$</td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%">67,053</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%">$</td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%">—</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%">$</td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%">67,053</td> <td style="line-height: 115%"> </td></tr> </table> <p style="margin: 0pt"></p>
</us-gaap:FairValueNetDerivativeAssetLiabilityMeasuredOnRecurringBasisUnobservableInputReconciliationTableTextBlock>
<us-gaap:ScheduleOfAccruedLiabilitiesTableTextBlock contextRef="From2015-01-01to2015-12-31">
<p style="margin: 0pt"></p> <p style="margin: 0pt"></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">Accrued expenses consisted of the following at December 31, 2015 and December 31, 2014:</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 28.05pt"> </p> <table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><b>December 31, 2015</b></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><b>December 31, 2014</b></td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 62%; padding-left: 0.5in; text-indent: -0.5in; line-height: 115%">Accrued warranty expense</td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%">$</td> <td style="width: 16%; text-align: right; line-height: 115%">159,838</td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%">$</td> <td style="width: 16%; text-align: right; line-height: 115%">247,082</td> <td style="width: 1%; line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 0.5in; text-indent: -0.5in; line-height: 115%">Accrued sales commissions</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">100,295</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">89,600</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 0.5in; text-indent: -0.5in; line-height: 115%">Accrued payroll and related fringes</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">247,984</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">154,851</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 0.5in; text-indent: -0.5in; line-height: 115%">Accrued insurance</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">34,926</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">81,431</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 0.5in; text-indent: -0.5in; line-height: 115%">Accrued rent</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">224,393</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">260,634</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 0.5in; text-indent: -0.5in; line-height: 115%">Accrued litigation and related charges</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">—</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">53,666</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 0.5in; text-indent: -0.5in; line-height: 115%">Other</td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%">168,891</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%">255,709</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 0.5in; text-indent: -12pt; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%">$</td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%">936,327</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%">$</td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%">1,142,973</td> <td style="line-height: 115%"> </td></tr> </table> <p style="margin: 0pt"></p>
</us-gaap:ScheduleOfAccruedLiabilitiesTableTextBlock>
<us-gaap:ScheduleOfProductWarrantyLiabilityTableTextBlock contextRef="From2015-01-01to2015-12-31">
<p style="margin: 0pt"></p> <p style="margin: 0pt"></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">Accrued warranty expense was comprised of the following for the years ended December 31, 2015 and 2014:</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 28.05pt"> </p> <table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><b>2015</b></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><b>2014</b></td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 62%; padding-left: 0.5in; text-indent: -0.5in; line-height: 115%">Beginning balance</td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%">$</td> <td style="width: 16%; text-align: right; line-height: 115%">247,082</td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%">$</td> <td style="width: 16%; text-align: right; line-height: 115%">167,970</td> <td style="width: 1%; line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 0.5in; text-indent: -0.5in; line-height: 115%">Provision for warranty expense</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">5,317</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">198,266</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 0.5in; text-indent: -0.5in; line-height: 115%">Charges applied to warranty reserve</td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%">(92,561</td> <td style="line-height: 115%">)</td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%">(119,154</td> <td style="line-height: 115%">)</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="line-height: 115%">Ending balance</td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%">$</td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%">159,838</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%">$</td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%">247,082</td> <td style="line-height: 115%"> </td></tr> </table> <p style="font: 10pt/115% Times New Roman, Times, Serif; margin: 0 0 10pt"></p>
</us-gaap:ScheduleOfProductWarrantyLiabilityTableTextBlock>
<us-gaap:ScheduleOfFutureMinimumRentalPaymentsForOperatingLeasesTableTextBlock contextRef="From2015-01-01to2015-12-31">
<p style="margin: 0pt"></p> <p style="margin: 0pt"></p> <table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 12pt; text-indent: -12pt; line-height: 115%"><b>Year ending December 31:</b></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="width: 85%; padding-left: 20pt; text-indent: -12.25pt; line-height: 115%">2016</td> <td style="width: 2%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%">$</td> <td style="width: 12%; text-align: right; line-height: 115%">439,707</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 20pt; text-indent: -12.25pt; line-height: 115%">2017</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">445,449</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 20pt; text-indent: -12.25pt; line-height: 115%">2018</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">451,248</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 20pt; text-indent: -12.25pt; line-height: 115%">2019</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">457,327</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 20pt; text-indent: -12.25pt; line-height: 115%">2020</td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%">154,131</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%">$</td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%">1,947,862</td></tr> </table> <p style="margin: 0pt"></p>
</us-gaap:ScheduleOfFutureMinimumRentalPaymentsForOperatingLeasesTableTextBlock>
<DGLY:ScheduleOfFutureSponsorshipFeeTableTextBlock contextRef="From2015-01-01to2015-12-31">
<p style="margin: 0pt"></p> <p style="margin: 0pt"></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 28.05pt">The Agreement provides the Company with naming rights and other benefits for the 2015 through 2019 annual Tournament in exchange for the following sponsorship fee:</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 28.05pt"> </p> <table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%">Year</td> <td style="line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%">Sponsorship fee</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 56%; padding-left: 5.4pt; text-align: center; line-height: 115%">2015</td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%">$</td> <td style="width: 41%; text-align: right; line-height: 115%">375,000</td> <td style="width: 1%; line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 5.4pt; text-align: center; line-height: 115%">2016</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%">$</td> <td style="text-align: right; line-height: 115%">475,000</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 5.4pt; text-align: center; line-height: 115%">2017</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%">$</td> <td style="text-align: right; line-height: 115%">475,000</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 5.4pt; text-align: center; line-height: 115%">2018</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%">$</td> <td style="text-align: right; line-height: 115%">500,000</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 5.4pt; text-align: center; line-height: 115%">2019</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%">$</td> <td style="text-align: right; line-height: 115%">500,000</td> <td style="line-height: 115%"> </td></tr> </table> <p style="margin: 0pt"></p>
</DGLY:ScheduleOfFutureSponsorshipFeeTableTextBlock>
<us-gaap:ScheduleOfShareBasedCompensationStockOptionsActivityTableTextBlock contextRef="From2015-01-01to2015-12-31">
<p style="margin: 0pt"></p> <p style="margin: 0pt"></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 28.05pt">The fair value of each option award is estimated on the date of grant using a Black-Scholes option valuation model. There were no stock options issued during 2015. Activity in the various Plans during the year ended December 31, 2015 is reflected in the following table:</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p> <table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td style="border-bottom: black 1.5pt solid; line-height: 115%"><b>Options</b></td> <td style="line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><b>Shares</b></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><b>Weighted</b><br /> <b>Average</b><br /> <b>Exercise Price</b></td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 68%; padding-left: 0.5in; text-indent: -0.5in; line-height: 115%">Outstanding at January 1, 2015</td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 13%; text-align: right; line-height: 115%">370,743</td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%">$</td> <td style="width: 13%; text-align: right; line-height: 115%">18.97</td> <td style="width: 1%; line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 10pt; line-height: 115%">Granted</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">—</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">—</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 10pt; line-height: 115%">Exercised</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">(39,928</td> <td style="line-height: 115%">)</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">(7.59</td> <td style="line-height: 115%">)</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 10pt; line-height: 115%">Forfeited</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%">(2,125</td> <td style="line-height: 115%">)</td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%">(6.96</td> <td style="line-height: 115%">)</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 20pt; line-height: 115%">Outstanding at December 31, 2015</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%">328,690</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%">$</td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%">20.43</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 0.5in; text-indent: -0.5in; line-height: 115%">Exercisable at December 31, 2015</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%">284,390</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%">$</td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%">23.06</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 12pt; text-indent: -12pt; line-height: 115%">Weighted-average fair value for options granted during the period at fair value</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%">—</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%">$</td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%">—</td> <td style="line-height: 115%"> </td></tr> </table> <p style="margin: 0pt"></p>
</us-gaap:ScheduleOfShareBasedCompensationStockOptionsActivityTableTextBlock>
<us-gaap:ScheduleOfShareBasedCompensationSharesAuthorizedUnderStockOptionPlansByExercisePriceRangeTextBlock contextRef="From2015-01-01to2015-12-31">
<p style="margin: 0pt"></p> <p style="margin: 0pt"></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">The following table summarizes the range of exercise prices and weighted average remaining contractual life for outstanding and exercisable options under the Company’s option plans as of December 31, 2015:</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"> </p> <table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td style="text-align: center; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="6" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><b>Outstanding options</b></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="6" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><b>Exercisable options</b></td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom"> <td style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><b>Exercise price range</b></td> <td style="line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><b>Number of</b><br /> <b>options</b></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><b>Weighted</b><br /> <b>average</b><br /> <b>remaining</b><br /> <b>contractual</b><br /> <b>life</b></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><b>Number of</b><br /> <b>options</b></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><b>Weighted</b><br /> <b>average</b><br /> <b>remaining</b><br /> <b>contractual</b><br /> <b>life</b></td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 0.5in; text-indent: -0.5in; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="width: 48%; padding-left: 0.5in; text-indent: -0.5in; line-height: 115%">$0.01 to $3.99</td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 10%; text-align: right; line-height: 115%">63,124</td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 10%; text-align: right; line-height: 115%">7.3 years</td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 10%; text-align: right; line-height: 115%">21,438</td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 10%; text-align: right; line-height: 115%">6.4 years</td> <td style="width: 1%; line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 0.5in; text-indent: -0.5in; line-height: 115%">$4.00 to $6.99</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">37,625</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">6.8 years</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">35,886</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">6.9 years</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 0.5in; text-indent: -0.5in; line-height: 115%">$7.00 to $9.99</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">19,069</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">5.7 years</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">18,194</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">5.7 years</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 0.5in; text-indent: -0.5in; line-height: 115%">$10.00 to $12.99</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">52,808</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">1.4 years</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">52,808</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">1.4 years</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 0.5in; text-indent: -0.5in; line-height: 115%">$13.00 to $15.99</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">51,439</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">4.7 years</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">51,439</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">4.7 years</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 0.5in; text-indent: -0.5in; line-height: 115%">$16.00 to $18.99</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">1,250</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> 1.5 years </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">1,250</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">1.5 years</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 0.5in; text-indent: -0.5in; line-height: 115%">$19.00 to $29.99</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">6,500</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">3.6 years</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">6,500</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> 3.6 years</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 0.5in; text-indent: -0.5in; line-height: 115%">$30.00 to $55.00</td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%">96,875</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%">1.9 years</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%">96,875</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%">1.9 years</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%">328,690</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%">4.1 years</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%">284,390</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%">3.6 years</td> <td style="line-height: 115%"> </td></tr> </table> <p style="margin: 0pt"></p>
</us-gaap:ScheduleOfShareBasedCompensationSharesAuthorizedUnderStockOptionPlansByExercisePriceRangeTextBlock>
<us-gaap:ScheduleOfSharebasedCompensationRestrictedStockAndRestrictedStockUnitsActivityTableTextBlock contextRef="From2015-01-01to2015-12-31">
<p style="margin: 0pt"></p> <p style="margin: 0pt"></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">A summary of all restricted stock activity under the equity compensation plans for the year ended December 31, 2015 is as follows:</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"> </p> <table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><b>Restricted</b><br /> <b>stock</b></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><b>Weighted</b><br /> <b>average grant</b><br /> <b>date fair value</b></td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 64%; line-height: 115%">Nonvested balance, January 1, 2015</td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 15%; text-align: right; line-height: 115%">188,500</td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%">$</td> <td style="width: 15%; text-align: right; line-height: 115%">5.32</td> <td style="width: 1%; line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 10pt; line-height: 115%">Granted</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">326,500</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">8.42</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 10pt; line-height: 115%">Vested</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">(158,500</td> <td style="line-height: 115%">)</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">(4.73</td> <td style="line-height: 115%">)</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 10pt; line-height: 115%">Forfeited</td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%">(2,000</td> <td style="line-height: 115%">)</td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%">(5.70</td> <td style="line-height: 115%">)</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="line-height: 115%">Nonvested balance, December 31, 2015</td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%">354,500</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%">$</td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%">8.43</td> <td style="line-height: 115%"> </td></tr> </table> <p style="margin: 0pt"></p>
</us-gaap:ScheduleOfSharebasedCompensationRestrictedStockAndRestrictedStockUnitsActivityTableTextBlock>
<us-gaap:ScheduleOfNonvestedRestrictedStockUnitsActivityTableTextBlock contextRef="From2015-01-01to2015-12-31">
<p style="margin: 0pt"></p> <p style="margin: 0pt"></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">The nonvested balance of restricted stock vests as follows:</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"> </p> <table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><b>Year ended December 31,</b></td> <td style="line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><b>Number</b><br /> <b>of shares</b></td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 81%; line-height: 115%">2015</td> <td style="width: 2%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 15%; text-align: right; line-height: 115%">135,900</td> <td style="width: 1%; line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="line-height: 115%">2016</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">75,150</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="line-height: 115%">2018</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">69,050</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="line-height: 115%">2019</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">74,400</td> <td style="line-height: 115%"> </td></tr> </table> <p style="margin: 0pt"></p>
</us-gaap:ScheduleOfNonvestedRestrictedStockUnitsActivityTableTextBlock>
<us-gaap:ScheduleOfStockholdersEquityNoteWarrantsOrRightsTextBlock contextRef="From2015-01-01to2015-12-31">
<p style="margin: 0pt"></p> <p style="margin: 0pt"></p> <table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><b>Warrants</b></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><b>Weighted average</b><br /> <b>exercise price</b></td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 63%; line-height: 115%">Vested Balance, January 1, 2015</td> <td style="width: 2%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 15%; text-align: right; line-height: 115%">306,481</td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 2%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%">$</td> <td style="width: 15%; text-align: right; line-height: 115%">7.47</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="line-height: 115%">Granted</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">1,544,590</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">13.39</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="line-height: 115%">Exercised</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">(250,095</td> <td style="line-height: 115%">)</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">(7.32</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="line-height: 115%">Cancelled</td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%">(1,686</td> <td style="line-height: 115%">)</td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%">(4.00</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="line-height: 115%">Vested Balance, December 31, 2015</td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%">1,599,290</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%">$</td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%">13.25</td></tr> </table> <p style="margin: 0pt"></p>
</us-gaap:ScheduleOfStockholdersEquityNoteWarrantsOrRightsTextBlock>
<us-gaap:ScheduleOfEarningsPerShareBasicAndDilutedTableTextBlock contextRef="From2015-01-01to2015-12-31">
<p style="margin: 0pt"></p> <p style="margin: 0pt"></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 28.05pt">The calculation of the weighted average number of shares outstanding and loss per share outstanding for the years ended December 31, 2015 and 2014 are as follows:</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 28.05pt"> </p> <table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="6" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><b>Year ended December 31,</b></td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom"> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><b>2015</b></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><b>2014</b></td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 66%; line-height: 115%">Numerator for basic and diluted income per share – Net loss</td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; border-bottom: black 2.25pt double; line-height: 115%">$</td> <td style="width: 14%; border-bottom: black 2.25pt double; text-align: right; line-height: 115%">(12,037,892</td> <td style="width: 1%; line-height: 115%">)</td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; border-bottom: black 2.25pt double; line-height: 115%">$</td> <td style="width: 14%; border-bottom: black 2.25pt double; text-align: right; line-height: 115%">(9,163,261</td> <td style="width: 1%; line-height: 115%">)</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="line-height: 115%">Denominator for basic loss per share – weighted average shares outstanding</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">4,340,012</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">2,590,002</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="line-height: 115%">Dilutive effect of shares issuable under stock options and warrants outstanding</td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%">—  </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%">—  </td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="line-height: 115%">Denominator for diluted loss per share – adjusted weighted average shares outstanding</td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%">4,340,012</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%">2,590,002</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="line-height: 115%">Net loss per share:</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 10pt; line-height: 115%">Basic</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%">$</td> <td style="text-align: right; line-height: 115%">(2.77</td> <td style="line-height: 115%">)</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%">$</td> <td style="text-align: right; line-height: 115%">(3.54</td> <td style="line-height: 115%">)</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 10pt; line-height: 115%">Diluted</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%">$</td> <td style="text-align: right; line-height: 115%">(2.77</td> <td style="line-height: 115%">)</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%">$</td> <td style="text-align: right; line-height: 115%">(3.54</td> <td style="line-height: 115%">)</td></tr> </table> <p style="margin: 0pt"></p>
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<us-gaap:CapitalLeasesFutureMinimumPaymentsNetMinimumPayments1 contextRef="AsOf2015-12-31" unitRef="USD" decimals="0"> 81131 </us-gaap:CapitalLeasesFutureMinimumPaymentsNetMinimumPayments1>
<us-gaap:CapitalLeasesFutureMinimumPaymentsInterestIncludedInPayments contextRef="AsOf2015-12-31" unitRef="USD" decimals="0"> 5019 </us-gaap:CapitalLeasesFutureMinimumPaymentsInterestIncludedInPayments>
<us-gaap:CapitalLeasesFutureMinimumPaymentsPresentValueOfNetMinimumPayments contextRef="AsOf2015-12-31" unitRef="USD" decimals="0"> 76112 </us-gaap:CapitalLeasesFutureMinimumPaymentsPresentValueOfNetMinimumPayments>
<us-gaap:ProceedsFromNotesPayable contextRef="From2015-01-01to2015-12-31" unitRef="USD" decimals="0"> -2500000 </us-gaap:ProceedsFromNotesPayable>
<us-gaap:ProceedsFromNotesPayable contextRef="From2012-07-01to2012-07-31" unitRef="USD" decimals="0"> 38052 </us-gaap:ProceedsFromNotesPayable>
<us-gaap:ProceedsFromNotesPayable contextRef="From2013-12-01to2013-12-31_custom_UnaffiliatedEntityMember" unitRef="USD" decimals="0"> 205820 </us-gaap:ProceedsFromNotesPayable>
<us-gaap:ProceedsFromNotesPayable contextRef="From2015-01-01to2015-12-31_custom_LenderMember" unitRef="USD" decimals="0"> 236726 </us-gaap:ProceedsFromNotesPayable>
<us-gaap:FairValueAdjustmentOfWarrants contextRef="From2015-05-26to2015-05-27_custom_LenderMember" unitRef="USD" decimals="0"> 60224 </us-gaap:FairValueAdjustmentOfWarrants>
<us-gaap:DebtInstrumentFaceAmount contextRef="AsOf2015-12-31_custom_FourMillionSecuredConvertibleNoteMember" unitRef="USD" decimals="0"> 4000000 </us-gaap:DebtInstrumentFaceAmount>
<us-gaap:CashEquivalentsAtCarryingValue contextRef="AsOf2014-12-31_custom_FourMillionSecuredConvertibleNoteMember" unitRef="USD" decimals="0"> 1500000 </us-gaap:CashEquivalentsAtCarryingValue>
<DGLY:NumberOfSharesConvertedForAccruedInterest contextRef="From2015-02-13to2015-02-25_custom_FourMillionSecuredConvertibleNoteMember" unitRef="Shares" decimals="INF"> 5475 </DGLY:NumberOfSharesConvertedForAccruedInterest>
<us-gaap:SaleOfStockNumberOfSharesIssuedInTransaction contextRef="From2015-07-21to2015-07-22_custom_PurchaseAgreementMember" unitRef="Shares" decimals="INF"> 879766 </us-gaap:SaleOfStockNumberOfSharesIssuedInTransaction>
<us-gaap:SaleOfStockPricePerShare contextRef="AsOf2015-07-22_custom_PurchaseAgreementMember" unitRef="USDPShares" decimals="INF"> 13.64 </us-gaap:SaleOfStockPricePerShare>
<us-gaap:SaleOfStockConsiderationReceivedOnTransaction contextRef="From2015-07-21to2015-07-22_custom_PurchaseAgreementMember" unitRef="USD" decimals="0"> 12000008 </us-gaap:SaleOfStockConsiderationReceivedOnTransaction>
<us-gaap:OtherExpenses contextRef="From2015-07-21to2015-07-22_custom_PurchaseAgreementMember" unitRef="USD" decimals="0"> 776723 </us-gaap:OtherExpenses>
<us-gaap:OtherExpenses contextRef="From2015-01-01to2015-12-31_custom_PlacementAgreementMember_custom_WestParkCapitalIncMember" unitRef="USD" decimals="0"> 26723 </us-gaap:OtherExpenses>
<us-gaap:DebtInstrumentSinkingFundPayment contextRef="From2015-01-01to2015-12-31_custom_SubordinatedNotesAndGeneralCorporatePurposesMember" unitRef="USD" decimals="0"> 2500000 </us-gaap:DebtInstrumentSinkingFundPayment>
<us-gaap:ScheduleOfComponentsOfIncomeTaxExpenseBenefitTableTextBlock contextRef="From2015-01-01to2015-12-31">
<p style="margin: 0pt"></p> <p style="margin: 0pt"></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">The components of income tax (provision) benefit for the years ended December 31, 2015 and 2014 are as follows:</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 28.05pt"> </p> <table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom; background-color: white"> <td style="text-align: center; line-height: 115%"> </td> <td style="text-align: center; line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><b>2015</b></td> <td style="text-align: center; line-height: 115%"> </td> <td style="text-align: center; line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><b>2014</b></td> <td style="text-align: center; line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="text-align: justify; line-height: 115%">Current taxes:</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="width: 66%; padding-left: 10pt; text-align: justify; line-height: 115%">Federal</td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%">$</td> <td style="width: 14%; text-align: right; line-height: 115%">—</td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%">$</td> <td style="width: 14%; text-align: right; line-height: 115%">—</td> <td style="width: 1%; line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 10pt; text-align: justify; line-height: 115%">State</td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%">—</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%">—</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="text-align: justify; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="text-align: justify; line-height: 115%">Total current taxes</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">—</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">—</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="text-align: justify; line-height: 115%">Deferred tax (provision) benefit</td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%">—</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%">—</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="text-align: justify; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="text-align: justify; line-height: 115%">Income tax (provision) benefit</td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%">$</td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%">—</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%">$</td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%">—</td> <td style="line-height: 115%"> </td></tr> </table> <p style="margin: 0pt"></p>
</us-gaap:ScheduleOfComponentsOfIncomeTaxExpenseBenefitTableTextBlock>
<us-gaap:ScheduleOfEffectiveIncomeTaxRateReconciliationTableTextBlock contextRef="From2015-01-01to2015-12-31">
<p style="margin: 0pt"></p> <p style="margin: 0pt"></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">A reconciliation of the income tax (provision) benefit at the statutory rate of 34% for the years ended December 31, 2015 and 2014 to the Company’s effective tax rate is as follows:</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p> <table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td style="text-align: justify; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><b>2015</b></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><b>2014</b></td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 66%; text-align: justify; line-height: 115%">U.S. Statutory tax rate</td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 14%; text-align: right; line-height: 115%">34.0</td> <td style="width: 1%; line-height: 115%">%</td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 14%; text-align: right; line-height: 115%">34.0</td> <td style="width: 1%; line-height: 115%">%</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="text-align: justify; line-height: 115%">State taxes, net of Federal benefit</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">6.2</td> <td style="line-height: 115%">%</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">6.2</td> <td style="line-height: 115%">%</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="text-align: justify; line-height: 115%">Federal Research and development tax credits</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">1.5</td> <td style="line-height: 115%">%</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">2.9</td> <td style="line-height: 115%">%</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="text-align: justify; line-height: 115%">Stock based compensation</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">0.6</td> <td style="line-height: 115%">%</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">1.9</td> <td style="line-height: 115%">%</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="line-height: 115%">Common stock issued upon conversion of promissory note and related common stock purchase warrants</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">3.3</td> <td style="line-height: 115%">%</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">6.7</td> <td style="line-height: 115%">%</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="text-align: justify; line-height: 115%">Change in valuation reserve on deferred tax assets</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">(45.0</td> <td style="line-height: 115%">)%</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">(51.5</td> <td style="line-height: 115%">)%</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="text-align: justify; line-height: 115%">Other, net</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">(0.6</td> <td style="line-height: 115%">)%</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">(0.2</td> <td style="line-height: 115%">)%</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="text-align: justify; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="text-align: justify; line-height: 115%">Income tax (provision) benefit</td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%">0.0</td> <td style="line-height: 115%">%</td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%">0.0</td> <td style="line-height: 115%">%</td></tr> </table> <p style="margin: 0pt"></p>
</us-gaap:ScheduleOfEffectiveIncomeTaxRateReconciliationTableTextBlock>
<us-gaap:ScheduleOfDeferredTaxAssetsAndLiabilitiesTableTextBlock contextRef="From2015-01-01to2015-12-31">
<p style="margin: 0pt"></p> <p style="margin: 0pt"></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Significant components of the Company’s deferred tax assets (liabilities) as of December 31, 2015 and 2014 are as follows:</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p> <table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td style="text-align: justify; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><b>2015</b></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><b>2014</b></td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="text-align: justify; line-height: 115%">Deferred tax assets:</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="width: 66%; padding-left: 10pt; text-align: justify; line-height: 115%">Stock-based compensation</td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%">$</td> <td style="width: 14%; text-align: right; line-height: 115%">1,623,000</td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%">$</td> <td style="width: 14%; text-align: right; line-height: 115%">1,206,000</td> <td style="width: 1%; line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 10pt; text-align: justify; line-height: 115%">Start-up costs</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">180,000</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">180,000</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 10pt; text-align: justify; line-height: 115%">Inventory reserves</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">480,000</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">240,000</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 10pt; text-align: justify; line-height: 115%">Uniform capitalization of inventory costs</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">150,000</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">97,000</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 10pt; text-align: justify; line-height: 115%">Allowance for doubtful accounts receivable</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">30,000</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">26,000</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 10pt; text-align: justify; line-height: 115%">Other reserves</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">2,000</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">2,000</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 10pt; text-align: justify; line-height: 115%">Equipment depreciation</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">—</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">82,000</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 10pt; text-align: justify; line-height: 115%">Deferred revenue</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">903,000</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">433,000</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 10pt; text-align: justify; line-height: 115%">Derivative liabilities</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">26,000</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">601,000</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 10pt; text-align: justify; line-height: 115%">Accrued expenses</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">210,000</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">275,000</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 10pt; text-align: justify; line-height: 115%">Net operating loss carryforward</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">12,295,000</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">7,531,000</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 10pt; text-align: justify; line-height: 115%">Research and development tax credit carryforward</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">1,747,000</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">1,568,000</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 10pt; text-align: justify; line-height: 115%">Alternative minimum tax credit carryforward</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">90,000</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">90,000</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 10pt; text-align: justify; line-height: 115%">State jobs credit carryforward</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">230,000</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">230,000</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 10pt; text-align: justify; line-height: 115%">State research and development credit carryforward</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">280,000</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">280,000</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 10pt; text-align: justify; line-height: 115%">Charitable contributions carryforward</td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%">50,000</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%">—</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="text-align: justify; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="text-align: justify; line-height: 115%">Total deferred tax assets</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">18,296,000</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">12,874,000</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 10pt; text-align: justify; line-height: 115%">Valuation reserve</td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%">(18,105,000</td> <td style="line-height: 115%">)</td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%">(12,692,000</td> <td style="line-height: 115%">)</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="text-align: justify; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="text-align: justify; line-height: 115%">Total deferred tax assets</td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%">191,000</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%">182,000</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="text-align: justify; line-height: 115%">Deferred tax liabilities:</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 10pt; text-align: justify; line-height: 115%">Equipment depreciation</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">(6,000</td> <td style="line-height: 115%">)</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">—</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 10pt; text-align: justify; line-height: 115%">Domestic international sales company</td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%">(185,000</td> <td style="line-height: 115%">)</td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%">(182,000</td> <td style="line-height: 115%">)</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="text-align: justify; line-height: 115%"> Total deferred tax liabilities</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">(191,000</td> <td style="line-height: 115%">))</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">(182,000</td> <td style="line-height: 115%">)</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="text-align: justify; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="text-align: justify; line-height: 115%">Net deferred tax assets (liability)</td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%">$</td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%">—</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%">$</td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%">—</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="text-align: justify; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="line-height: 115%">Net deferred tax asset (liability) are classified in our consolidated balance sheets as follows:</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 10pt; text-align: justify; line-height: 115%">Current</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%">$</td> <td style="text-align: right; line-height: 115%">—</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%">$</td> <td style="text-align: right; line-height: 115%">—</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 10pt; text-align: justify; line-height: 115%">Non-current</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%">$</td> <td style="text-align: right; line-height: 115%">—</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%">$</td> <td style="text-align: right; line-height: 115%">—</td> <td style="line-height: 115%"> </td></tr> </table> <p style="margin: 0pt"></p>
</us-gaap:ScheduleOfDeferredTaxAssetsAndLiabilitiesTableTextBlock>
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<us-gaap:CurrentFederalTaxExpenseBenefit contextRef="From2014-01-01to2014-12-31" unitRef="USD" xsi:nil="true"/>
<us-gaap:CurrentStateAndLocalTaxExpenseBenefit contextRef="From2015-01-01to2015-12-31" unitRef="USD" xsi:nil="true"/>
<us-gaap:CurrentStateAndLocalTaxExpenseBenefit contextRef="From2014-01-01to2014-12-31" unitRef="USD" xsi:nil="true"/>
<us-gaap:CurrentIncomeTaxExpenseBenefit contextRef="From2015-01-01to2015-12-31" unitRef="USD" decimals="0"> 0 </us-gaap:CurrentIncomeTaxExpenseBenefit>
<us-gaap:CurrentIncomeTaxExpenseBenefit contextRef="From2014-01-01to2014-12-31" unitRef="USD" decimals="0"> 0 </us-gaap:CurrentIncomeTaxExpenseBenefit>
<us-gaap:DeferredIncomeTaxExpenseBenefit contextRef="From2015-01-01to2015-12-31" unitRef="USD" xsi:nil="true"/>
<us-gaap:DeferredIncomeTaxExpenseBenefit contextRef="From2014-01-01to2014-12-31" unitRef="USD" xsi:nil="true"/>
<us-gaap:EffectiveIncomeTaxRateReconciliationStateAndLocalIncomeTaxes contextRef="From2015-01-01to2015-12-31" unitRef="Percentage" decimals="INF"> 0.0620 </us-gaap:EffectiveIncomeTaxRateReconciliationStateAndLocalIncomeTaxes>
<us-gaap:EffectiveIncomeTaxRateReconciliationStateAndLocalIncomeTaxes contextRef="From2014-01-01to2014-12-31" unitRef="Percentage" decimals="INF"> 0.0620 </us-gaap:EffectiveIncomeTaxRateReconciliationStateAndLocalIncomeTaxes>
<us-gaap:EffectiveIncomeTaxRateReconciliationTaxCreditsResearch contextRef="From2015-01-01to2015-12-31" unitRef="Percentage" decimals="INF"> 0.0150 </us-gaap:EffectiveIncomeTaxRateReconciliationTaxCreditsResearch>
<us-gaap:EffectiveIncomeTaxRateReconciliationTaxCreditsResearch contextRef="From2014-01-01to2014-12-31" unitRef="Percentage" decimals="INF"> 0.0290 </us-gaap:EffectiveIncomeTaxRateReconciliationTaxCreditsResearch>
<us-gaap:EffectiveIncomeTaxRateReconciliationNondeductibleExpenseShareBasedCompensationCost contextRef="From2015-01-01to2015-12-31" unitRef="Percentage" decimals="INF"> 0.0060 </us-gaap:EffectiveIncomeTaxRateReconciliationNondeductibleExpenseShareBasedCompensationCost>
<us-gaap:EffectiveIncomeTaxRateReconciliationNondeductibleExpenseShareBasedCompensationCost contextRef="From2014-01-01to2014-12-31" unitRef="Percentage" decimals="INF"> 0.0190 </us-gaap:EffectiveIncomeTaxRateReconciliationNondeductibleExpenseShareBasedCompensationCost>
<DGLY:EffectiveIncomeTaxRateReconciliationTaxCreditsStockConvertedIntoDebt contextRef="From2015-01-01to2015-12-31" unitRef="Percentage" decimals="INF"> 0.0330 </DGLY:EffectiveIncomeTaxRateReconciliationTaxCreditsStockConvertedIntoDebt>
<DGLY:EffectiveIncomeTaxRateReconciliationTaxCreditsStockConvertedIntoDebt contextRef="From2014-01-01to2014-12-31" unitRef="Percentage" decimals="INF"> 0.0670 </DGLY:EffectiveIncomeTaxRateReconciliationTaxCreditsStockConvertedIntoDebt>
<us-gaap:EffectiveIncomeTaxRateReconciliationChangeInDeferredTaxAssetsValuationAllowance contextRef="From2015-01-01to2015-12-31" unitRef="Percentage" decimals="INF"> -0.450 </us-gaap:EffectiveIncomeTaxRateReconciliationChangeInDeferredTaxAssetsValuationAllowance>
<us-gaap:EffectiveIncomeTaxRateReconciliationChangeInDeferredTaxAssetsValuationAllowance contextRef="From2014-01-01to2014-12-31" unitRef="Percentage" decimals="INF"> -0.515 </us-gaap:EffectiveIncomeTaxRateReconciliationChangeInDeferredTaxAssetsValuationAllowance>
<us-gaap:EffectiveIncomeTaxRateReconciliationOtherAdjustments contextRef="From2015-01-01to2015-12-31" unitRef="Percentage" decimals="INF"> -0.006 </us-gaap:EffectiveIncomeTaxRateReconciliationOtherAdjustments>
<us-gaap:EffectiveIncomeTaxRateReconciliationOtherAdjustments contextRef="From2014-01-01to2014-12-31" unitRef="Percentage" decimals="INF"> -0.002 </us-gaap:EffectiveIncomeTaxRateReconciliationOtherAdjustments>
<us-gaap:EffectiveIncomeTaxRateContinuingOperations contextRef="From2015-01-01to2015-12-31" unitRef="Percentage" decimals="INF"> 0.00 </us-gaap:EffectiveIncomeTaxRateContinuingOperations>
<us-gaap:EffectiveIncomeTaxRateContinuingOperations contextRef="From2014-01-01to2014-12-31" unitRef="Percentage" decimals="INF"> 0.00 </us-gaap:EffectiveIncomeTaxRateContinuingOperations>
<DGLY:OperatingLossCarryforwardsExpirationDate1 contextRef="From2015-01-01to2015-12-31"> between 2026 and 2035 </DGLY:OperatingLossCarryforwardsExpirationDate1>
<us-gaap:EffectiveIncomeTaxRateReconciliationOtherReconcilingItemsPercent contextRef="From2015-01-01to2015-12-31" unitRef="Percentage" decimals="INF"> 1.00 </us-gaap:EffectiveIncomeTaxRateReconciliationOtherReconcilingItemsPercent>
<us-gaap:EffectiveIncomeTaxRateReconciliationOtherReconcilingItemsPercent contextRef="From2014-01-01to2014-12-31" unitRef="Percentage" decimals="INF"> 1.00 </us-gaap:EffectiveIncomeTaxRateReconciliationOtherReconcilingItemsPercent>
<dei:CurrentFiscalYearEndDate contextRef="From2015-01-01to2015-12-31"> --12-31 </dei:CurrentFiscalYearEndDate>
<us-gaap:DeferredTaxAssetsTaxDeferredExpenseCompensationAndBenefitsShareBasedCompensationCost contextRef="AsOf2015-12-31" unitRef="USD" decimals="0"> 1623000 </us-gaap:DeferredTaxAssetsTaxDeferredExpenseCompensationAndBenefitsShareBasedCompensationCost>
<us-gaap:DeferredTaxAssetsTaxDeferredExpenseCompensationAndBenefitsShareBasedCompensationCost contextRef="AsOf2014-12-31" unitRef="USD" decimals="0"> 1206000 </us-gaap:DeferredTaxAssetsTaxDeferredExpenseCompensationAndBenefitsShareBasedCompensationCost>
<DGLY:DeferredTaxAssetsStartupCosts contextRef="AsOf2015-12-31" unitRef="USD" decimals="0"> 180000 </DGLY:DeferredTaxAssetsStartupCosts>
<DGLY:DeferredTaxAssetsStartupCosts contextRef="AsOf2014-12-31" unitRef="USD" decimals="0"> 180000 </DGLY:DeferredTaxAssetsStartupCosts>
<us-gaap:DeferredTaxAssetsInventory contextRef="AsOf2015-12-31" unitRef="USD" decimals="0"> 480000 </us-gaap:DeferredTaxAssetsInventory>
<us-gaap:DeferredTaxAssetsInventory contextRef="AsOf2014-12-31" unitRef="USD" decimals="0"> 240000 </us-gaap:DeferredTaxAssetsInventory>
<DGLY:DeferredTaxAssetsUniformCapitalizationOfInventoryCosts contextRef="AsOf2015-12-31" unitRef="USD" decimals="0"> 150000 </DGLY:DeferredTaxAssetsUniformCapitalizationOfInventoryCosts>
<DGLY:DeferredTaxAssetsUniformCapitalizationOfInventoryCosts contextRef="AsOf2014-12-31" unitRef="USD" decimals="0"> 97000 </DGLY:DeferredTaxAssetsUniformCapitalizationOfInventoryCosts>
<us-gaap:DeferredTaxAssetsTaxDeferredExpenseReservesAndAccrualsAllowanceForDoubtfulAccounts contextRef="AsOf2015-12-31" unitRef="USD" decimals="0"> 30000 </us-gaap:DeferredTaxAssetsTaxDeferredExpenseReservesAndAccrualsAllowanceForDoubtfulAccounts>
<us-gaap:DeferredTaxAssetsTaxDeferredExpenseReservesAndAccrualsAllowanceForDoubtfulAccounts contextRef="AsOf2014-12-31" unitRef="USD" decimals="0"> 26000 </us-gaap:DeferredTaxAssetsTaxDeferredExpenseReservesAndAccrualsAllowanceForDoubtfulAccounts>
<us-gaap:DeferredTaxAssetsTaxDeferredExpenseReservesAndAccrualsReserves contextRef="AsOf2015-12-31" unitRef="USD" decimals="0"> 2000 </us-gaap:DeferredTaxAssetsTaxDeferredExpenseReservesAndAccrualsReserves>
<us-gaap:DeferredTaxAssetsTaxDeferredExpenseReservesAndAccrualsReserves contextRef="AsOf2014-12-31" unitRef="USD" decimals="0"> 2000 </us-gaap:DeferredTaxAssetsTaxDeferredExpenseReservesAndAccrualsReserves>
<us-gaap:DeferredTaxAssetsPropertyPlantAndEquipment contextRef="AsOf2015-12-31" unitRef="USD" xsi:nil="true"/>
<us-gaap:DeferredTaxAssetsPropertyPlantAndEquipment contextRef="AsOf2014-12-31" unitRef="USD" decimals="0"> 82000 </us-gaap:DeferredTaxAssetsPropertyPlantAndEquipment>
<DGLY:DeferredTaxAssetsTaxDeferredRevenue contextRef="AsOf2015-12-31" unitRef="USD" decimals="0"> 903000 </DGLY:DeferredTaxAssetsTaxDeferredRevenue>
<DGLY:DeferredTaxAssetsTaxDeferredRevenue contextRef="AsOf2014-12-31" unitRef="USD" decimals="0"> 433000 </DGLY:DeferredTaxAssetsTaxDeferredRevenue>
<DGLY:DeferredTaxAssetsTaxDerivativeLiabilities contextRef="AsOf2015-12-31" unitRef="USD" decimals="0"> 26000 </DGLY:DeferredTaxAssetsTaxDerivativeLiabilities>
<DGLY:DeferredTaxAssetsTaxDerivativeLiabilities contextRef="AsOf2014-12-31" unitRef="USD" decimals="0"> 601000 </DGLY:DeferredTaxAssetsTaxDerivativeLiabilities>
<us-gaap:DeferredTaxAssetsTaxDeferredExpenseReservesAndAccrualsAccruedLiabilities contextRef="AsOf2015-12-31" unitRef="USD" decimals="0"> 210000 </us-gaap:DeferredTaxAssetsTaxDeferredExpenseReservesAndAccrualsAccruedLiabilities>
<us-gaap:DeferredTaxAssetsTaxDeferredExpenseReservesAndAccrualsAccruedLiabilities contextRef="AsOf2014-12-31" unitRef="USD" decimals="0"> 275000 </us-gaap:DeferredTaxAssetsTaxDeferredExpenseReservesAndAccrualsAccruedLiabilities>
<us-gaap:DeferredTaxAssetsOperatingLossCarryforwards contextRef="AsOf2015-12-31" unitRef="USD" decimals="0"> 12295000 </us-gaap:DeferredTaxAssetsOperatingLossCarryforwards>
<us-gaap:DeferredTaxAssetsOperatingLossCarryforwards contextRef="AsOf2014-12-31" unitRef="USD" decimals="0"> 7531000 </us-gaap:DeferredTaxAssetsOperatingLossCarryforwards>
<us-gaap:DeferredTaxAssetsTaxCreditCarryforwardsResearch contextRef="AsOf2015-12-31" unitRef="USD" decimals="0"> 1747000 </us-gaap:DeferredTaxAssetsTaxCreditCarryforwardsResearch>
<us-gaap:DeferredTaxAssetsTaxCreditCarryforwardsResearch contextRef="AsOf2014-12-31" unitRef="USD" decimals="0"> 1568000 </us-gaap:DeferredTaxAssetsTaxCreditCarryforwardsResearch>
<us-gaap:DeferredTaxAssetsTaxCreditCarryforwardsAlternativeMinimumTax contextRef="AsOf2015-12-31" unitRef="USD" decimals="0"> 90000 </us-gaap:DeferredTaxAssetsTaxCreditCarryforwardsAlternativeMinimumTax>
<us-gaap:DeferredTaxAssetsTaxCreditCarryforwardsAlternativeMinimumTax contextRef="AsOf2014-12-31" unitRef="USD" decimals="0"> 90000 </us-gaap:DeferredTaxAssetsTaxCreditCarryforwardsAlternativeMinimumTax>
<us-gaap:DeferredTaxAssetsTaxCreditCarryforwardsGeneralBusiness contextRef="AsOf2015-12-31" unitRef="USD" decimals="0"> 230000 </us-gaap:DeferredTaxAssetsTaxCreditCarryforwardsGeneralBusiness>
<us-gaap:DeferredTaxAssetsTaxCreditCarryforwardsGeneralBusiness contextRef="AsOf2014-12-31" unitRef="USD" decimals="0"> 230000 </us-gaap:DeferredTaxAssetsTaxCreditCarryforwardsGeneralBusiness>
<DGLY:DeferredTaxAssetsTaxCreditCarryforwardsStateResearchAndDevelopmentCreditCarryforward contextRef="AsOf2015-12-31" unitRef="USD" decimals="0"> 280000 </DGLY:DeferredTaxAssetsTaxCreditCarryforwardsStateResearchAndDevelopmentCreditCarryforward>
<DGLY:DeferredTaxAssetsTaxCreditCarryforwardsStateResearchAndDevelopmentCreditCarryforward contextRef="AsOf2014-12-31" unitRef="USD" decimals="0"> 280000 </DGLY:DeferredTaxAssetsTaxCreditCarryforwardsStateResearchAndDevelopmentCreditCarryforward>
<us-gaap:DeferredTaxAssetsCharitableContributionCarryforwards contextRef="AsOf2015-12-31" unitRef="USD" decimals="0"> 50000 </us-gaap:DeferredTaxAssetsCharitableContributionCarryforwards>
<us-gaap:DeferredTaxAssetsCharitableContributionCarryforwards contextRef="AsOf2014-12-31" unitRef="USD" xsi:nil="true"/>
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<us-gaap:DeferredTaxAssetsNet contextRef="AsOf2015-12-31" unitRef="USD" decimals="0"> 191000 </us-gaap:DeferredTaxAssetsNet>
<us-gaap:DeferredTaxAssetsNet contextRef="AsOf2014-12-31" unitRef="USD" decimals="0"> 182000 </us-gaap:DeferredTaxAssetsNet>
<us-gaap:DeferredTaxLiabilitiesPropertyPlantAndEquipment contextRef="AsOf2015-12-31" unitRef="USD" decimals="0"> 6000 </us-gaap:DeferredTaxLiabilitiesPropertyPlantAndEquipment>
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<us-gaap:LeaseExpirationDate1 contextRef="From2015-01-01to2015-12-31"> 2020-04-30 </us-gaap:LeaseExpirationDate1>
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<us-gaap:LongtermPurchaseCommitmentPeriod contextRef="From2010-08-01to2010-08-31"> P42M </us-gaap:LongtermPurchaseCommitmentPeriod>
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<us-gaap:AccountsPayableCurrentAndNoncurrent contextRef="AsOf2015-12-31_custom_DragoneyeTechnologyLLCMember" unitRef="USD" decimals="0"> 91684 </us-gaap:AccountsPayableCurrentAndNoncurrent>
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<us-gaap:DescriptionOfDefinedContributionPensionAndOtherPostretirementPlans contextRef="From2015-01-01to2015-12-31"> In July 2008, the Company amended and restated its 401(k) retirement savings plan. The amended plan requires the Company to provide 100% matching contributions for employees who elect to contribute up to 3% of their compensation to the plan and 50% matching contributions for employee’s elective deferrals on the next 2% of their contributions. </us-gaap:DescriptionOfDefinedContributionPensionAndOtherPostretirementPlans>
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<us-gaap:DefinedContributionPlanEmployerMatchingContributionPercent contextRef="From2015-01-01to2015-12-31_custom_TwoPercentageOfEmployeeContributionMember" unitRef="Percentage" decimals="INF"> 0.50 </us-gaap:DefinedContributionPlanEmployerMatchingContributionPercent>
<us-gaap:OperatingLeasesFutureMinimumPaymentsDueCurrent contextRef="AsOf2015-12-31" unitRef="USD" decimals="0"> 439707 </us-gaap:OperatingLeasesFutureMinimumPaymentsDueCurrent>
<us-gaap:OperatingLeasesFutureMinimumPaymentsDueInTwoYears contextRef="AsOf2015-12-31" unitRef="USD" decimals="0"> 445449 </us-gaap:OperatingLeasesFutureMinimumPaymentsDueInTwoYears>
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<us-gaap:OperatingLeasesFutureMinimumPaymentsDueInFourYears contextRef="AsOf2015-12-31" unitRef="USD" decimals="0"> 457327 </us-gaap:OperatingLeasesFutureMinimumPaymentsDueInFourYears>
<us-gaap:OperatingLeasesFutureMinimumPaymentsDueInFiveYears contextRef="AsOf2015-12-31" unitRef="USD" decimals="0"> 154131 </us-gaap:OperatingLeasesFutureMinimumPaymentsDueInFiveYears>
<us-gaap:OperatingLeasesFutureMinimumPaymentsDue contextRef="AsOf2015-12-31" unitRef="USD" decimals="0"> 1947862 </us-gaap:OperatingLeasesFutureMinimumPaymentsDue>
<DGLY:SponsorFeesYearOne contextRef="From2015-01-01to2015-12-31" unitRef="USD" decimals="0"> 375000 </DGLY:SponsorFeesYearOne>
<DGLY:SponsorFeesYearTwo contextRef="From2015-01-01to2015-12-31" unitRef="USD" decimals="0"> 475000 </DGLY:SponsorFeesYearTwo>
<DGLY:SponsorFeesYearThree contextRef="From2015-01-01to2015-12-31" unitRef="USD" decimals="0"> 475000 </DGLY:SponsorFeesYearThree>
<DGLY:SponsorFeesYearFour contextRef="From2015-01-01to2015-12-31" unitRef="USD" decimals="0"> 500000 </DGLY:SponsorFeesYearFour>
<DGLY:SponsorFeesYearFive contextRef="From2015-01-01to2015-12-31" unitRef="USD" decimals="0"> 500000 </DGLY:SponsorFeesYearFive>
<us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardNumberOfSharesAuthorized contextRef="AsOf2015-12-31" unitRef="Shares" decimals="INF"> 1475000 </us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardNumberOfSharesAuthorized>
<us-gaap:CommonStockCapitalSharesReservedForFutureIssuance contextRef="AsOf2015-12-31_custom_TwoThousandAndFiveStockOptionandRestrictedStockPlanMember" unitRef="Shares" decimals="INF"> 28 </us-gaap:CommonStockCapitalSharesReservedForFutureIssuance>
<us-gaap:SharebasedCompensationArrangementBySharebasedPaymentAwardExpirationPeriod contextRef="From2015-01-01to2015-12-31"> P10Y </us-gaap:SharebasedCompensationArrangementBySharebasedPaymentAwardExpirationPeriod>
<us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardNumberOfSharesAvailableForGrant contextRef="AsOf2015-12-31" unitRef="Shares" decimals="INF"> 75002 </us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardNumberOfSharesAvailableForGrant>
<us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsVestedAndExpectedToVestOutstandingNumber contextRef="AsOf2015-12-31" unitRef="Shares" decimals="INF"> 1250 </us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsVestedAndExpectedToVestOutstandingNumber>
<us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsOutstandingIntrinsicValue contextRef="AsOf2015-12-31" unitRef="USD" decimals="0"> 262297 </us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsOutstandingIntrinsicValue>
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<us-gaap:EmployeeServiceShareBasedCompensationNonvestedAwardsTotalCompensationCostNotYetRecognizedStockOptions contextRef="AsOf2015-12-31" unitRef="USD" decimals="0"> 30098 </us-gaap:EmployeeServiceShareBasedCompensationNonvestedAwardsTotalCompensationCostNotYetRecognizedStockOptions>
<us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardAwardRequisiteServicePeriod1 contextRef="From2015-01-01to2015-12-31"> P20M </us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardAwardRequisiteServicePeriod1>
<us-gaap:EmployeeServiceShareBasedCompensationNonvestedAwardsTotalCompensationCostNotYetRecognizedShareBasedAwardsOtherThanOptions contextRef="AsOf2015-12-31_us-gaap_RestrictedStockMember" unitRef="USD" decimals="0"> 1552495 </us-gaap:EmployeeServiceShareBasedCompensationNonvestedAwardsTotalCompensationCostNotYetRecognizedShareBasedAwardsOtherThanOptions>
<us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardAwardVestingPeriod1 contextRef="From2015-01-01to2015-12-31"> P48M </us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardAwardVestingPeriod1>
<us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsOutstandingNumber contextRef="AsOf2015-12-31" unitRef="Shares" decimals="INF"> 328690 </us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsOutstandingNumber>
<us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsOutstandingNumber contextRef="AsOf2014-12-31" unitRef="Shares" decimals="INF"> 370743 </us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsOutstandingNumber>
<us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsForfeituresInPeriod contextRef="From2015-01-01to2015-12-31" unitRef="Shares" decimals="INF"> -2125 </us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsForfeituresInPeriod>
<us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsExercisableNumber contextRef="AsOf2015-12-31" unitRef="Shares" decimals="INF"> 284390 </us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsExercisableNumber>
<us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsOutstandingWeightedAverageExercisePrice contextRef="AsOf2015-12-31" unitRef="USDPShares" decimals="INF"> 20.43 </us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsOutstandingWeightedAverageExercisePrice>
<us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsOutstandingWeightedAverageExercisePrice contextRef="AsOf2014-12-31" unitRef="USDPShares" decimals="INF"> 18.97 </us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsOutstandingWeightedAverageExercisePrice>
<us-gaap:ShareBasedCompensationArrangementsByShareBasedPaymentAwardOptionsExercisesInPeriodWeightedAverageExercisePrice contextRef="From2015-01-01to2015-12-31" unitRef="USDPShares" decimals="INF"> -7.59 </us-gaap:ShareBasedCompensationArrangementsByShareBasedPaymentAwardOptionsExercisesInPeriodWeightedAverageExercisePrice>
<us-gaap:ShareBasedCompensationArrangementsByShareBasedPaymentAwardOptionsExercisesInPeriodWeightedAverageExercisePrice contextRef="From2015-01-01to2015-12-31_us-gaap_WarrantMember_custom_RangeOneMember" unitRef="USDPShares" decimals="INF"> 7.32 </us-gaap:ShareBasedCompensationArrangementsByShareBasedPaymentAwardOptionsExercisesInPeriodWeightedAverageExercisePrice>
<us-gaap:ShareBasedCompensationArrangementsByShareBasedPaymentAwardOptionsExercisesInPeriodWeightedAverageExercisePrice contextRef="From2015-01-01to2015-12-31_us-gaap_WarrantMember_custom_RangeTwoMember" unitRef="USDPShares" decimals="INF"> 8.50 </us-gaap:ShareBasedCompensationArrangementsByShareBasedPaymentAwardOptionsExercisesInPeriodWeightedAverageExercisePrice>
<us-gaap:ShareBasedCompensationArrangementsByShareBasedPaymentAwardOptionsExercisesInPeriodWeightedAverageExercisePrice contextRef="From2015-01-01to2015-12-31_us-gaap_WarrantMember_custom_RangeThreeMember" unitRef="USDPShares" decimals="INF"> 13.43 </us-gaap:ShareBasedCompensationArrangementsByShareBasedPaymentAwardOptionsExercisesInPeriodWeightedAverageExercisePrice>
<us-gaap:ShareBasedCompensationArrangementsByShareBasedPaymentAwardOptionsExercisesInPeriodWeightedAverageExercisePrice contextRef="From2015-01-01to2015-12-31_us-gaap_WarrantMember_custom_RangeFourMember" unitRef="USDPShares" decimals="INF"> 13.43 </us-gaap:ShareBasedCompensationArrangementsByShareBasedPaymentAwardOptionsExercisesInPeriodWeightedAverageExercisePrice>
<us-gaap:ShareBasedCompensationArrangementsByShareBasedPaymentAwardOptionsExercisesInPeriodWeightedAverageExercisePrice contextRef="From2015-01-01to2015-12-31_us-gaap_WarrantMember_custom_RangeFiveMember" unitRef="USDPShares" decimals="INF"> 16.50 </us-gaap:ShareBasedCompensationArrangementsByShareBasedPaymentAwardOptionsExercisesInPeriodWeightedAverageExercisePrice>
<us-gaap:ShareBasedCompensationArrangementsByShareBasedPaymentAwardOptionsForfeituresInPeriodWeightedAverageExercisePrice contextRef="From2015-01-01to2015-12-31" unitRef="USDPShares" decimals="INF"> -6.96 </us-gaap:ShareBasedCompensationArrangementsByShareBasedPaymentAwardOptionsForfeituresInPeriodWeightedAverageExercisePrice>
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<us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsGrantsInPeriodWeightedAverageGrantDateFairValue contextRef="From2015-01-01to2015-12-31" unitRef="USDPShares" xsi:nil="true"/>
<us-gaap:ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeLowerRangeLimit contextRef="From2015-01-01to2015-12-31_custom_RangeOneMember" unitRef="USDPShares" decimals="INF"> 0.01 </us-gaap:ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeLowerRangeLimit>
<us-gaap:ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeLowerRangeLimit contextRef="From2015-01-01to2015-12-31_custom_RangeTwoMember" unitRef="USDPShares" decimals="INF"> 4.00 </us-gaap:ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeLowerRangeLimit>
<us-gaap:ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeLowerRangeLimit contextRef="From2015-01-01to2015-12-31_custom_RangeThreeMember" unitRef="USDPShares" decimals="INF"> 7.00 </us-gaap:ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeLowerRangeLimit>
<us-gaap:ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeLowerRangeLimit contextRef="From2015-01-01to2015-12-31_custom_RangeFourMember" unitRef="USDPShares" decimals="INF"> 10.00 </us-gaap:ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeLowerRangeLimit>
<us-gaap:ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeLowerRangeLimit contextRef="From2015-01-01to2015-12-31_custom_RangeFiveMember" unitRef="USDPShares" decimals="INF"> 13.00 </us-gaap:ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeLowerRangeLimit>
<us-gaap:ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeLowerRangeLimit contextRef="From2015-01-01to2015-12-31_custom_RangeSixMember" unitRef="USDPShares" decimals="INF"> 16.00 </us-gaap:ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeLowerRangeLimit>
<us-gaap:ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeLowerRangeLimit contextRef="From2015-01-01to2015-12-31_custom_RangeSevenMember" unitRef="USDPShares" decimals="INF"> 19.00 </us-gaap:ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeLowerRangeLimit>
<us-gaap:ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeLowerRangeLimit contextRef="From2015-01-01to2015-12-31_custom_RangeEightMember" unitRef="USDPShares" decimals="INF"> 30.00 </us-gaap:ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeLowerRangeLimit>
<us-gaap:ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeUpperRangeLimit contextRef="From2015-01-01to2015-12-31_custom_RangeOneMember" unitRef="USDPShares" decimals="INF"> 3.99 </us-gaap:ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeUpperRangeLimit>
<us-gaap:ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeUpperRangeLimit contextRef="From2015-01-01to2015-12-31_custom_RangeTwoMember" unitRef="USDPShares" decimals="INF"> 6.99 </us-gaap:ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeUpperRangeLimit>
<us-gaap:ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeUpperRangeLimit contextRef="From2015-01-01to2015-12-31_custom_RangeThreeMember" unitRef="USDPShares" decimals="INF"> 9.99 </us-gaap:ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeUpperRangeLimit>
<us-gaap:ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeUpperRangeLimit contextRef="From2015-01-01to2015-12-31_custom_RangeFourMember" unitRef="USDPShares" decimals="INF"> 12.99 </us-gaap:ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeUpperRangeLimit>
<us-gaap:ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeUpperRangeLimit contextRef="From2015-01-01to2015-12-31_custom_RangeFiveMember" unitRef="USDPShares" decimals="INF"> 15.99 </us-gaap:ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeUpperRangeLimit>
<us-gaap:ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeUpperRangeLimit contextRef="From2015-01-01to2015-12-31_custom_RangeSixMember" unitRef="USDPShares" decimals="INF"> 18.99 </us-gaap:ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeUpperRangeLimit>
<us-gaap:ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeUpperRangeLimit contextRef="From2015-01-01to2015-12-31_custom_RangeSevenMember" unitRef="USDPShares" decimals="INF"> 29.99 </us-gaap:ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeUpperRangeLimit>
<us-gaap:ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeUpperRangeLimit contextRef="From2015-01-01to2015-12-31_custom_RangeEightMember" unitRef="USDPShares" decimals="INF"> 55.00 </us-gaap:ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeUpperRangeLimit>
<us-gaap:ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeNumberOfOutstandingOptions contextRef="AsOf2015-12-31" unitRef="Shares" decimals="INF"> 328690 </us-gaap:ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeNumberOfOutstandingOptions>
<us-gaap:ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeNumberOfOutstandingOptions contextRef="AsOf2015-12-31_custom_RangeOneMember" unitRef="Shares" decimals="INF"> 63124 </us-gaap:ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeNumberOfOutstandingOptions>
<us-gaap:ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeNumberOfOutstandingOptions contextRef="AsOf2015-12-31_custom_RangeTwoMember" unitRef="Shares" decimals="INF"> 37625 </us-gaap:ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeNumberOfOutstandingOptions>
<us-gaap:ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeNumberOfOutstandingOptions contextRef="AsOf2015-12-31_custom_RangeThreeMember" unitRef="Shares" decimals="INF"> 19069 </us-gaap:ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeNumberOfOutstandingOptions>
<us-gaap:ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeNumberOfOutstandingOptions contextRef="AsOf2015-12-31_custom_RangeFourMember" unitRef="Shares" decimals="INF"> 52808 </us-gaap:ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeNumberOfOutstandingOptions>
<us-gaap:ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeNumberOfOutstandingOptions contextRef="AsOf2015-12-31_custom_RangeFiveMember" unitRef="Shares" decimals="INF"> 51439 </us-gaap:ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeNumberOfOutstandingOptions>
<us-gaap:ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeNumberOfOutstandingOptions contextRef="AsOf2015-12-31_custom_RangeSixMember" unitRef="Shares" decimals="INF"> 1250 </us-gaap:ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeNumberOfOutstandingOptions>
<us-gaap:ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeNumberOfOutstandingOptions contextRef="AsOf2015-12-31_custom_RangeSevenMember" unitRef="Shares" decimals="INF"> 6500 </us-gaap:ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeNumberOfOutstandingOptions>
<us-gaap:ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeNumberOfOutstandingOptions contextRef="AsOf2015-12-31_custom_RangeEightMember" unitRef="Shares" decimals="INF"> 96875 </us-gaap:ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeNumberOfOutstandingOptions>
<us-gaap:SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsOutstandingWeightedAverageRemainingContractualTerm2 contextRef="From2015-01-01to2015-12-31"> P4Y1M6D </us-gaap:SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsOutstandingWeightedAverageRemainingContractualTerm2>
<us-gaap:SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsOutstandingWeightedAverageRemainingContractualTerm2 contextRef="From2015-01-01to2015-12-31_custom_RangeOneMember"> P7Y3M18D </us-gaap:SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsOutstandingWeightedAverageRemainingContractualTerm2>
<us-gaap:SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsOutstandingWeightedAverageRemainingContractualTerm2 contextRef="From2015-01-01to2015-12-31_custom_RangeTwoMember"> P6Y9M18D </us-gaap:SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsOutstandingWeightedAverageRemainingContractualTerm2>
<us-gaap:SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsOutstandingWeightedAverageRemainingContractualTerm2 contextRef="From2015-01-01to2015-12-31_custom_RangeThreeMember"> P5Y8M12D </us-gaap:SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsOutstandingWeightedAverageRemainingContractualTerm2>
<us-gaap:SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsOutstandingWeightedAverageRemainingContractualTerm2 contextRef="From2015-01-01to2015-12-31_custom_RangeFourMember"> P1Y4M24D </us-gaap:SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsOutstandingWeightedAverageRemainingContractualTerm2>
<us-gaap:SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsOutstandingWeightedAverageRemainingContractualTerm2 contextRef="From2015-01-01to2015-12-31_custom_RangeFiveMember"> P4Y8M12D </us-gaap:SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsOutstandingWeightedAverageRemainingContractualTerm2>
<us-gaap:SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsOutstandingWeightedAverageRemainingContractualTerm2 contextRef="From2015-01-01to2015-12-31_custom_RangeSixMember"> P1Y6M </us-gaap:SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsOutstandingWeightedAverageRemainingContractualTerm2>
<us-gaap:SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsOutstandingWeightedAverageRemainingContractualTerm2 contextRef="From2015-01-01to2015-12-31_custom_RangeSevenMember"> P3Y7M6D </us-gaap:SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsOutstandingWeightedAverageRemainingContractualTerm2>
<us-gaap:SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsOutstandingWeightedAverageRemainingContractualTerm2 contextRef="From2015-01-01to2015-12-31_custom_RangeEightMember"> P1Y10M24D </us-gaap:SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsOutstandingWeightedAverageRemainingContractualTerm2>
<us-gaap:ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeNumberOfExercisableOptions contextRef="AsOf2015-12-31" unitRef="Shares" decimals="INF"> 284390 </us-gaap:ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeNumberOfExercisableOptions>
<us-gaap:ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeNumberOfExercisableOptions contextRef="AsOf2015-12-31_custom_RangeOneMember" unitRef="Shares" decimals="INF"> 21438 </us-gaap:ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeNumberOfExercisableOptions>
<us-gaap:ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeNumberOfExercisableOptions contextRef="AsOf2015-12-31_custom_RangeTwoMember" unitRef="Shares" decimals="INF"> 35886 </us-gaap:ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeNumberOfExercisableOptions>
<us-gaap:ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeNumberOfExercisableOptions contextRef="AsOf2015-12-31_custom_RangeThreeMember" unitRef="Shares" decimals="INF"> 18194 </us-gaap:ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeNumberOfExercisableOptions>
<us-gaap:ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeNumberOfExercisableOptions contextRef="AsOf2015-12-31_custom_RangeFourMember" unitRef="Shares" decimals="INF"> 52808 </us-gaap:ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeNumberOfExercisableOptions>
<us-gaap:ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeNumberOfExercisableOptions contextRef="AsOf2015-12-31_custom_RangeFiveMember" unitRef="Shares" decimals="INF"> 51439 </us-gaap:ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeNumberOfExercisableOptions>
<us-gaap:ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeNumberOfExercisableOptions contextRef="AsOf2015-12-31_custom_RangeSixMember" unitRef="Shares" decimals="INF"> 1250 </us-gaap:ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeNumberOfExercisableOptions>
<us-gaap:ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeNumberOfExercisableOptions contextRef="AsOf2015-12-31_custom_RangeSevenMember" unitRef="Shares" decimals="INF"> 6500 </us-gaap:ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeNumberOfExercisableOptions>
<us-gaap:ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeNumberOfExercisableOptions contextRef="AsOf2015-12-31_custom_RangeEightMember" unitRef="Shares" decimals="INF"> 96875 </us-gaap:ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeNumberOfExercisableOptions>
<us-gaap:SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsExercisableWeightedAverageRemainingContractualTerm1 contextRef="From2015-01-01to2015-12-31"> P3Y7M6D </us-gaap:SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsExercisableWeightedAverageRemainingContractualTerm1>
<us-gaap:SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsExercisableWeightedAverageRemainingContractualTerm1 contextRef="From2015-01-01to2015-12-31_custom_RangeOneMember"> P6Y4M24D </us-gaap:SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsExercisableWeightedAverageRemainingContractualTerm1>
<us-gaap:SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsExercisableWeightedAverageRemainingContractualTerm1 contextRef="From2015-01-01to2015-12-31_custom_RangeTwoMember"> P6Y10M24D </us-gaap:SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsExercisableWeightedAverageRemainingContractualTerm1>
<us-gaap:SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsExercisableWeightedAverageRemainingContractualTerm1 contextRef="From2015-01-01to2015-12-31_custom_RangeThreeMember"> P5Y8M12D </us-gaap:SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsExercisableWeightedAverageRemainingContractualTerm1>
<us-gaap:SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsExercisableWeightedAverageRemainingContractualTerm1 contextRef="From2015-01-01to2015-12-31_custom_RangeFourMember"> P1Y4M24D </us-gaap:SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsExercisableWeightedAverageRemainingContractualTerm1>
<us-gaap:SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsExercisableWeightedAverageRemainingContractualTerm1 contextRef="From2015-01-01to2015-12-31_custom_RangeFiveMember"> P4Y8M12D </us-gaap:SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsExercisableWeightedAverageRemainingContractualTerm1>
<us-gaap:SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsExercisableWeightedAverageRemainingContractualTerm1 contextRef="From2015-01-01to2015-12-31_custom_RangeSixMember"> P1Y6M </us-gaap:SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsExercisableWeightedAverageRemainingContractualTerm1>
<us-gaap:SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsExercisableWeightedAverageRemainingContractualTerm1 contextRef="From2015-01-01to2015-12-31_custom_RangeSevenMember"> P3Y7M6D </us-gaap:SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsExercisableWeightedAverageRemainingContractualTerm1>
<us-gaap:SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsExercisableWeightedAverageRemainingContractualTerm1 contextRef="From2015-01-01to2015-12-31_custom_RangeEightMember"> P1Y10M24D </us-gaap:SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsExercisableWeightedAverageRemainingContractualTerm1>
<us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardEquityInstrumentsOtherThanOptionsNonvestedNumber contextRef="AsOf2015-12-31_us-gaap_RestrictedStockMember" unitRef="Shares" decimals="INF"> 354500 </us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardEquityInstrumentsOtherThanOptionsNonvestedNumber>
<us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardEquityInstrumentsOtherThanOptionsNonvestedNumber contextRef="AsOf2014-12-31_us-gaap_RestrictedStockMember" unitRef="Shares" decimals="INF"> 188500 </us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardEquityInstrumentsOtherThanOptionsNonvestedNumber>
<us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardEquityInstrumentsOtherThanOptionsGrantsInPeriod contextRef="From2015-01-01to2015-12-31_us-gaap_RestrictedStockMember" unitRef="Shares" decimals="INF"> 326500 </us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardEquityInstrumentsOtherThanOptionsGrantsInPeriod>
<us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardEquityInstrumentsOtherThanOptionsVestedInPeriod contextRef="From2015-01-01to2015-12-31_us-gaap_RestrictedStockMember" unitRef="Shares" decimals="INF"> 158500 </us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardEquityInstrumentsOtherThanOptionsVestedInPeriod>
<us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardEquityInstrumentsOtherThanOptionsForfeitedInPeriod contextRef="From2015-01-01to2015-12-31_us-gaap_RestrictedStockMember" unitRef="Shares" decimals="INF"> 2000 </us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardEquityInstrumentsOtherThanOptionsForfeitedInPeriod>
<us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardEquityInstrumentsOtherThanOptionsNonvestedWeightedAverageGrantDateFairValue contextRef="AsOf2015-12-31_us-gaap_RestrictedStockMember" unitRef="USDPShares" decimals="INF"> 8.43 </us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardEquityInstrumentsOtherThanOptionsNonvestedWeightedAverageGrantDateFairValue>
<us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardEquityInstrumentsOtherThanOptionsNonvestedWeightedAverageGrantDateFairValue contextRef="AsOf2014-12-31_us-gaap_RestrictedStockMember" unitRef="USDPShares" decimals="INF"> 5.32 </us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardEquityInstrumentsOtherThanOptionsNonvestedWeightedAverageGrantDateFairValue>
<us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardEquityInstrumentsOtherThanOptionsGrantsInPeriodWeightedAverageGrantDateFairValue contextRef="From2015-01-01to2015-12-31_us-gaap_RestrictedStockMember" unitRef="USDPShares" decimals="INF"> 8.42 </us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardEquityInstrumentsOtherThanOptionsGrantsInPeriodWeightedAverageGrantDateFairValue>
<us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardEquityInstrumentsOtherThanOptionsVestedInPeriodWeightedAverageGrantDateFairValue contextRef="From2015-01-01to2015-12-31_us-gaap_RestrictedStockMember" unitRef="USDPShares" decimals="INF"> -4.73 </us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardEquityInstrumentsOtherThanOptionsVestedInPeriodWeightedAverageGrantDateFairValue>
<us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardEquityInstrumentsOtherThanOptionsForfeituresWeightedAverageGrantDateFairValue contextRef="From2015-01-01to2015-12-31_us-gaap_RestrictedStockMember" unitRef="USDPShares" decimals="INF"> -5.70 </us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardEquityInstrumentsOtherThanOptionsForfeituresWeightedAverageGrantDateFairValue>
<DGLY:NumberOfRestrictedShareNonVestInYearOne contextRef="AsOf2015-12-31_us-gaap_RestrictedStockMember" unitRef="Shares" decimals="INF"> 135900 </DGLY:NumberOfRestrictedShareNonVestInYearOne>
<DGLY:NumberOfRestrictedShareNonVestInYearTwo contextRef="AsOf2015-12-31_us-gaap_RestrictedStockMember" unitRef="Shares" decimals="INF"> 75150 </DGLY:NumberOfRestrictedShareNonVestInYearTwo>
<DGLY:NumberOfRestrictedShareNonVestInYearThree contextRef="AsOf2015-12-31_us-gaap_RestrictedStockMember" unitRef="Shares" decimals="INF"> 69050 </DGLY:NumberOfRestrictedShareNonVestInYearThree>
<DGLY:NumberOfRestrictedShareNonVestInYearFour contextRef="AsOf2015-12-31_us-gaap_RestrictedStockMember" unitRef="Shares" decimals="INF"> 74400 </DGLY:NumberOfRestrictedShareNonVestInYearFour>
<DGLY:WarrantsIssuedToPurchaseNumberOfCommonStock contextRef="AsOf2015-12-31_custom_CommonStockPurchaseWarrantsMember" unitRef="Shares" decimals="INF"> 1599290 </DGLY:WarrantsIssuedToPurchaseNumberOfCommonStock>
<us-gaap:SharebasedCompensationArrangementBySharebasedPaymentAwardEquityInstrumentsOtherThanOptionsAggregateIntrinsicValueOutstanding contextRef="AsOf2015-12-31_us-gaap_WarrantMember" unitRef="USD" decimals="0"> 0 </us-gaap:SharebasedCompensationArrangementBySharebasedPaymentAwardEquityInstrumentsOtherThanOptionsAggregateIntrinsicValueOutstanding>
<us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardEquityInstrumentsOtherThanOptionsOutstandingWeightedAverageRemainingContractualTerms contextRef="From2015-01-01to2015-12-31_us-gaap_WarrantMember"> P43M </us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardEquityInstrumentsOtherThanOptionsOutstandingWeightedAverageRemainingContractualTerms>
<us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardNonOptionEquityInstrumentsOutstandingNumber contextRef="AsOf2015-12-31_us-gaap_WarrantMember" unitRef="Shares" decimals="INF"> 1599290 </us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardNonOptionEquityInstrumentsOutstandingNumber>
<us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardNonOptionEquityInstrumentsOutstandingNumber contextRef="AsOf2014-12-31_us-gaap_WarrantMember" unitRef="Shares" decimals="INF"> 306481 </us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardNonOptionEquityInstrumentsOutstandingNumber>
<us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardNonOptionEquityInstrumentsOutstandingNumber contextRef="AsOf2015-12-31_us-gaap_WarrantMember_custom_RangeOneMember" unitRef="Shares" decimals="INF"> 12200 </us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardNonOptionEquityInstrumentsOutstandingNumber>
<us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardNonOptionEquityInstrumentsOutstandingNumber contextRef="AsOf2015-12-31_us-gaap_WarrantMember_custom_RangeTwoMember" unitRef="Shares" decimals="INF"> 42500 </us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardNonOptionEquityInstrumentsOutstandingNumber>
<us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardNonOptionEquityInstrumentsOutstandingNumber contextRef="AsOf2015-12-31_us-gaap_WarrantMember_custom_RangeThreeMember" unitRef="Shares" decimals="INF"> 659824 </us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardNonOptionEquityInstrumentsOutstandingNumber>
<us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardNonOptionEquityInstrumentsOutstandingNumber contextRef="AsOf2015-12-31_us-gaap_WarrantMember_custom_RangeFourMember" unitRef="Shares" decimals="INF"> 879766 </us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardNonOptionEquityInstrumentsOutstandingNumber>
<us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardNonOptionEquityInstrumentsOutstandingNumber contextRef="AsOf2015-12-31_us-gaap_WarrantMember_custom_RangeFiveMember" unitRef="Shares" decimals="INF"> 5000 </us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardNonOptionEquityInstrumentsOutstandingNumber>
<us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardNonOptionEquityInstrumentsGranted contextRef="From2015-01-01to2015-12-31_us-gaap_WarrantMember" unitRef="Shares" decimals="INF"> 1544590 </us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardNonOptionEquityInstrumentsGranted>
<us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardNonOptionEquityInstrumentsExercised contextRef="From2015-01-01to2015-12-31_us-gaap_WarrantMember" unitRef="Shares" decimals="INF"> -250095 </us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardNonOptionEquityInstrumentsExercised>
<us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardNonOptionEquityInstrumentsForfeitures contextRef="From2015-01-01to2015-12-31_us-gaap_WarrantMember" unitRef="Shares" decimals="INF"> -1686 </us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardNonOptionEquityInstrumentsForfeitures>
<DGLY:ShareBasedCompensationArrangementByShareBasedPaymentAwardEquityInstrumentsOtherThanOptionsInPeriodWeightedAverageExercisePrice contextRef="AsOf2015-12-31_us-gaap_WarrantMember" unitRef="USDPShares" decimals="INF"> 13.25 </DGLY:ShareBasedCompensationArrangementByShareBasedPaymentAwardEquityInstrumentsOtherThanOptionsInPeriodWeightedAverageExercisePrice>
<DGLY:ShareBasedCompensationArrangementByShareBasedPaymentAwardEquityInstrumentsOtherThanOptionsInPeriodWeightedAverageExercisePrice contextRef="AsOf2014-12-31_us-gaap_WarrantMember" unitRef="USDPShares" decimals="INF"> 7.47 </DGLY:ShareBasedCompensationArrangementByShareBasedPaymentAwardEquityInstrumentsOtherThanOptionsInPeriodWeightedAverageExercisePrice>
<DGLY:ShareBasedCompensationArrangementByShareBasedPaymentAwardEquityInstrumentsOtherThanOptionsGrantsInPeriodWeightedAverageExercisePrice contextRef="From2015-01-01to2015-12-31_us-gaap_WarrantMember" unitRef="USDPShares" decimals="INF"> 13.39 </DGLY:ShareBasedCompensationArrangementByShareBasedPaymentAwardEquityInstrumentsOtherThanOptionsGrantsInPeriodWeightedAverageExercisePrice>
<DGLY:ShareBasedCompensationArrangementByShareBasedPaymentAwardEquityInstrumentsOtherThanOptionsExerciseInPeriodWeightedAverageExercisePrice contextRef="From2015-01-01to2015-12-31_us-gaap_WarrantMember" unitRef="USDPShares" decimals="INF"> -7.32 </DGLY:ShareBasedCompensationArrangementByShareBasedPaymentAwardEquityInstrumentsOtherThanOptionsExerciseInPeriodWeightedAverageExercisePrice>
<DGLY:ShareBasedCompensationArrangementByShareBasedPaymentAwardEquityInstrumentsOtherThanOptionsCancelledInPeriodWeightedAverageExercisePrice contextRef="From2015-01-01to2015-12-31_us-gaap_WarrantMember" unitRef="USDPShares" decimals="INF"> -4.00 </DGLY:ShareBasedCompensationArrangementByShareBasedPaymentAwardEquityInstrumentsOtherThanOptionsCancelledInPeriodWeightedAverageExercisePrice>
<us-gaap:SharebasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeOutstandingOptionsWeightedAverageRemainingContractualTerm2 contextRef="From2015-01-01to2015-12-31_us-gaap_WarrantMember"> P3Y6M </us-gaap:SharebasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeOutstandingOptionsWeightedAverageRemainingContractualTerm2>
<us-gaap:SharebasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeOutstandingOptionsWeightedAverageRemainingContractualTerm2 contextRef="From2015-01-01to2015-12-31_us-gaap_WarrantMember_custom_RangeOneMember"> P3Y8M12D </us-gaap:SharebasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeOutstandingOptionsWeightedAverageRemainingContractualTerm2>
<us-gaap:SharebasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeOutstandingOptionsWeightedAverageRemainingContractualTerm2 contextRef="From2015-01-01to2015-12-31_us-gaap_WarrantMember_custom_RangeTwoMember"> P2Y10M24D </us-gaap:SharebasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeOutstandingOptionsWeightedAverageRemainingContractualTerm2>
<us-gaap:SharebasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeOutstandingOptionsWeightedAverageRemainingContractualTerm2 contextRef="From2015-01-01to2015-12-31_us-gaap_WarrantMember_custom_RangeThreeMember"> P1Y7M6D </us-gaap:SharebasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeOutstandingOptionsWeightedAverageRemainingContractualTerm2>
<us-gaap:SharebasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeOutstandingOptionsWeightedAverageRemainingContractualTerm2 contextRef="From2015-01-01to2015-12-31_us-gaap_WarrantMember_custom_RangeFourMember"> P5Y1M6D </us-gaap:SharebasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeOutstandingOptionsWeightedAverageRemainingContractualTerm2>
<us-gaap:SharebasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeOutstandingOptionsWeightedAverageRemainingContractualTerm2 contextRef="From2015-01-01to2015-12-31_us-gaap_WarrantMember_custom_RangeFiveMember"> P4Y6M </us-gaap:SharebasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeOutstandingOptionsWeightedAverageRemainingContractualTerm2>
<us-gaap:FeesAndCommissions contextRef="From2015-06-14to2015-06-15_us-gaap_ResearchAndDevelopmentExpenseMember_custom_PresidentAndChairmanMember" unitRef="USD" decimals="0"> 10000 </us-gaap:FeesAndCommissions>
<us-gaap:FeesAndCommissions contextRef="From2015-01-01to2015-12-31_us-gaap_ResearchAndDevelopmentExpenseMember_custom_PresidentAndChairmanMember_custom_LesserMember" unitRef="USD" decimals="0"> 65000 </us-gaap:FeesAndCommissions>
<us-gaap:FeesAndCommissions contextRef="From2015-01-01to2015-12-31_us-gaap_ResearchAndDevelopmentExpenseMember_custom_PresidentAndChairmanMember" unitRef="USD" decimals="0"> 65000 </us-gaap:FeesAndCommissions>
<DGLY:ConsultingFeesIncludedInAccountsPayable contextRef="AsOf2015-12-31_us-gaap_ResearchAndDevelopmentExpenseMember_custom_PresidentAndChairmanMember" unitRef="USD" decimals="0"> 10000 </DGLY:ConsultingFeesIncludedInAccountsPayable>
<us-gaap:IncrementalCommonSharesAttributableToCallOptionsAndWarrants contextRef="From2015-01-01to2015-12-31" unitRef="Shares" xsi:nil="true"/>
<us-gaap:IncrementalCommonSharesAttributableToCallOptionsAndWarrants contextRef="From2014-01-01to2014-12-31" unitRef="Shares" xsi:nil="true"/>
<dei:EntityWellKnownSeasonedIssuer contextRef="From2015-01-01to2015-12-31"> No </dei:EntityWellKnownSeasonedIssuer>
<dei:EntityVoluntaryFilers contextRef="From2015-01-01to2015-12-31"> No </dei:EntityVoluntaryFilers>
<dei:EntityCurrentReportingStatus contextRef="From2015-01-01to2015-12-31"> Yes </dei:EntityCurrentReportingStatus>
<dei:EntityPublicFloat contextRef="AsOf2015-06-30" unitRef="USD" decimals="0"> 51796198 </dei:EntityPublicFloat>
<us-gaap:DeferredTaxLiabilities contextRef="AsOf2015-12-31" unitRef="USD" decimals="0"> 191000 </us-gaap:DeferredTaxLiabilities>
<us-gaap:DeferredTaxLiabilities contextRef="AsOf2014-12-31" unitRef="USD" decimals="0"> 182000 </us-gaap:DeferredTaxLiabilities>
<DGLY:SummaryOfRangeOfExercisePricesAndWightedAverageRemainingContractualLifeOfWarrants contextRef="From2015-01-01to2015-12-31">
<p style="margin: 0pt"></p> <p style="margin: 0pt"></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">The following table summarizes the range of exercise prices and weighted average remaining contractual life for outstanding and exercisable warrants to purchase common shares as of December 31, 2015:</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"> </p> <table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="6" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><b>Outstanding and </b><br /> <b>exercisable warrants</b></td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom"> <td style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><b>Exercise price</b></td> <td style="line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><b>Number</b><br /> <b>of </b><br /> <b>options</b></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><b>Weighted</b><br /> <b>average</b><br /> <b>remaining</b><br /> <b>contractual </b><br /> <b>life</b></td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 0.5in; text-indent: -0.5in; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="width: 60%; padding-left: 0.5in; text-indent: -0.5in; line-height: 115%">$7.32</td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 17%; text-align: right; line-height: 115%">12,200</td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 17%; text-align: right; line-height: 115%">3.7 years</td> <td style="width: 1%; line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 0.5in; text-indent: -0.5in; line-height: 115%">$8.50</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">42,500</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">2.9 years</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 0.5in; text-indent: -0.5in; line-height: 115%">$13.43</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">659,824</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">1.6 years</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 0.5in; text-indent: -0.5in; line-height: 115%">$13.43</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">879,766</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> 5.1 years </td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 0.5in; text-indent: -0.5in; line-height: 115%">$16.50</td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%">5,000</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%">4.5 years</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%">1,599,290</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%">3.5 years</td> <td style="line-height: 115%"> </td></tr> </table> <p style="margin: 0pt"></p>
</DGLY:SummaryOfRangeOfExercisePricesAndWightedAverageRemainingContractualLifeOfWarrants>
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<p style="margin: 0pt"></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>NOTE 1. NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES</b></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Nature of Business:</b></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">Digital Ally, Inc. and subsidiaries (collectively, “Digital Ally,” “Digital,” and the “Company,” “produces digital video imaging and storage products for use in law enforcement, security and commercial applications. Its current products are an in-car digital video/audio recorder contained in a rear-view mirror for use in law enforcement and commercial fleets, a system that provides our law enforcement customers with audio/video surveillance from multiple vantage points and hands-free automatic activation of body-worn cameras and in-car video systems; a weather-resistant mobile digital video recording system for use on motorcycles, ATV’s and boats, a miniature digital video system designed to be worn on an individual’s body; and a hand-held laser speed detection device that it is offering primarily to law enforcement agencies. The Company has active research and development programs to adapt its technologies to other applications. It has the ability to integrate electronic, radio, computer, mechanical, and multi-media technologies to create unique solutions to address needs in a variety of other industries and markets, including mass transit, school bus, taxi cab and the military. The Company sells its products to law enforcement agencies and other security organizations, consumer and commercial fleet operators through direct sales domestically and third-party distributors internationally.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">The Company was originally incorporated in Nevada on December 13, 2000 as Vegas Petra, Inc. and had no operations until 2004. On November 30, 2004, Vegas Petra, Inc. entered into a Plan of Merger with Digital Ally, Inc., at which time the merged entity was renamed Digital Ally, Inc.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>The following is a summary of the Company’s Significant Accounting Policies:</b></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b> </b></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Basis of Consolidation:</b></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">The accompanying financial statements include the consolidated accounts of Digital Ally and its wholly-owned subsidiaries, Digital Ally International, Inc, MP Ally, LLC, and Medical Devices Ally, LLC. All intercompany balances and transactions have been eliminated during consolidation.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">Digital Ally formed Digital Ally International, Inc. during August 2009 to facilitate the export sales of its products. In addition, Medical Devices Ally, LLC was formed in July 2014 and MP Ally, LLC was formed in July 2015, both of which have been inactive since formation.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Fair Value of Financial Instruments:</b></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">The carrying amounts of financial instruments, including cash and cash equivalents, restricted cash, accounts receivable, accounts payable and subordinated note payable, approximate fair value because of the short-term nature of these items. The Company accounts for its secured convertible notes payable and derivative liabilities on their fair value basis.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Revenue Recognition:</b></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">Revenues from the sale of products are recorded when the product is shipped, title and risk of loss have transferred to the purchaser, payment terms are fixed or determinable and payment is reasonably assured. Customers do not have a right to return the product other than for warranty reasons for which they would only receive repair services or replacement product.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">The Company sells its products and services to law enforcement and commercial customers in the following manner:</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt"> </p> <table cellspacing="0" cellpadding="0" style="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: top"> <td style="width: 48px; line-height: 115%"> </td> <td style="width: 48px; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">●</font></td> <td style="text-align: justify; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">Sales to domestic customers are made direct to the end customer (typically a law enforcement agency or a commercial customer) through its direct sales force, which is composed of its employees. Revenue is recorded when the product is shipped to the end customer.</font></td></tr> <tr style="vertical-align: top"> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: justify; line-height: 115%"> </td></tr> <tr style="vertical-align: top"> <td style="line-height: 115%"> </td> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">●</font></td> <td style="text-align: justify; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">Sales to international customers are made through independent distributors who purchase products from the Company at a wholesale price and sell to the end user (typically law enforcement agencies or a commercial customer) at a retail price. The distributor retains the margin as its compensation for its role in the transaction. The distributor generally maintains product inventory, customer receivables and all related risks and rewards of ownership. Revenue is recorded when the product is shipped to the distributor consistent with the terms of the distribution agreement.</font></td></tr> <tr style="vertical-align: top"> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: justify; line-height: 115%"> </td></tr> <tr style="vertical-align: top"> <td style="line-height: 115%"> </td> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">●</font></td> <td style="text-align: justify; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">Repair parts and services for domestic and international customers are generally handled by our inside customer service employees. Revenue is recognized upon shipment of the repair parts and acceptance of the service or materials by the end customer.</font></td></tr> </table> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 0 67.5pt; text-align: justify; text-indent: -25pt">  </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">Sales taxes collected on products sold are excluded from revenues and are reported as an accrued expense in the accompanying balance sheets until payments are remitted.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">Other revenue is comprised of revenues from extended warranties, repair services and the sale of scrap and excess raw material and component parts. Revenue is recognized upon shipment of the product and acceptance of the service or materials by the end customer.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">Extended warranties are offered on selected products and when a customer purchases an extended warranty the associated proceeds are treated as deferred revenue and recognized over the term of the extended warranty on a straight line method.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">Sales returns and allowances aggregated $712,872 and $558,943 for the years ended December 31, 2015 and 2014, respectively. Obligations for sales returns and allowances are recognized at the time of sales on an accrual basis. The accrual is determined based upon historical return rates adjusted for known changes in key variables affecting these return rates.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Use of Estimates:</b></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 27pt">The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 27pt"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Cash and cash equivalents:</b></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">Cash and cash equivalents include funds on hand, in bank and short-term investments with original maturities of ninety (90) days or less.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">Cash and cash equivalents that are restricted as to withdrawal or use under the terms of the senior secured note payable are presented as restricted cash separate from cash and cash equivalents on our balance sheet. The restriction was released in 2015 when Secured Note Payable was paid in full.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Accounts Receivable:</b></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">Accounts receivable are carried at original invoice amount less an estimate made for doubtful receivables based on a review of all outstanding amounts on a weekly basis. The Company determines the allowance for doubtful accounts by regularly evaluating individual customer receivables and considering a customer’s financial condition, credit history, and current economic conditions. Trade receivables are written off when deemed uncollectible. Recoveries of trade receivables previously written off are recorded when received.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">A trade receivable is considered to be past due if any portion of the receivable balance is outstanding for more than thirty (30) days beyond terms. No interest is charged on overdue trade receivables.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Inventories:</b></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">Inventories consist of electronic parts, circuitry boards, camera parts and ancillary parts (collectively, “components”), work-in-process and finished goods, and are carried at the lower of cost (First-in, First-out Method) or market value. The Company determines the estimate for the reserve for slow moving or obsolete inventories by regularly evaluating individual inventory levels, projected sales and current economic conditions. </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Furniture, fixtures and equipment:</b></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">Furniture, fixtures and equipment is stated at cost net of accumulated depreciation. Additions and improvements are capitalized while ordinary maintenance and repair expenditures are charged to expense as incurred. Depreciation is recorded by the straight-line method over the estimated useful life of the asset, which ranges from three to ten years. Amortization expense on capitalized leases is included with depreciation expense.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Intangible assets:</b></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">Intangible assets include deferred patent costs and license agreements. Legal expenses incurred in preparation of patent application have been deferred and will be amortized over the useful life of granted patents. Costs incurred in preparation of applications that are not granted will be charged to expense at that time. The Company has entered into several sublicense agreements under which it has been assigned the exclusive rights to certain licensed materials used in its products. These sublicense agreements generally require upfront payments to obtain the exclusive rights to such material. The Company capitalizes the upfront payments as intangible assets and amortizes such costs over their estimated useful life on a straight line method.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Debt:</b></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">The Company’s debt securities are accounted for at amortized cost, except where the Company has elected to account for its secured convertible notes payable on its fair value basis.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Long-Lived Assets:</b></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">Long-lived assets such as property, plant and equipment and purchased intangible assets subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If circumstances require a long-lived asset or asset group be tested for possible impairment, the Company first compares undiscounted cash flows expected to be generated by that asset or asset group to its carrying value. If the carrying value of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent that the carrying value exceeds its fair value. Fair value is determined through various valuation techniques, including discounted cash flow models, quoted market values and third-party appraisals, as considered necessary.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Warranties:</b></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 28.05pt">The Company’s products carry explicit product warranties that extend up to two years from the date of shipment. The Company records a provision for estimated warranty costs based upon historical warranty loss experience and periodically adjusts these provisions to reflect actual experience. Accrued warranty costs are included in accrued expenses. Extended warranties are offered on selected products and when a customer purchases an extended warranty the associated proceeds are treated as deferred revenue and recognized over the term of the extended warranty.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Customer Deposits:</b></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">The Company requires deposits in advance of shipment for certain customer sales orders, in particular when accepting orders from foreign customers for which the Company does not have a payment history. Customer deposits are reflected as a current liability in the accompanying Consolidated Balance Sheets.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Shipping and Handling Costs:</b></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">Shipping and handling costs for outbound sales orders totaled $92,081 and $70,889 for the years ended December 31, 2015 and 2014, respectively. Such costs are included in selling, general and administrative expenses in the Consolidated Statements of Operations.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Advertising Costs:</b></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">Advertising expense includes costs related to trade shows and conventions, promotional material and supplies, and media costs. Advertising costs are expensed in the period in which they are incurred. The Company incurred total advertising expense of approximately $848,671 and $611,175 for the years ended December 31, 2015 and 2014, respectively. Such costs are included in selling, general and administrative expenses in the Consolidated Statements of Operations.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Income Taxes:</b></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">Deferred taxes are provided for by the liability method wherein deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carryforwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax basis. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">The Company applies the provisions of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) No. 740 - Income Taxes that provides a framework for accounting for uncertainty in income taxes and provided a comprehensive model to recognize, measure, present, and disclose in its financial statements uncertain tax positions taken or expected to be taken on a tax return. It initially recognizes tax positions in the financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. Such tax positions are initially and subsequently measured as the largest amount of tax benefit that is greater than 50% likely of being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and all relevant facts. Application requires numerous estimates based on available information. The Company considers many factors when evaluating and estimating its tax positions and tax benefits, and it recognized tax positions and tax benefits may not accurately anticipate actual outcomes. As it obtains additional information, the Company may need to periodically adjust its recognized tax positions and tax benefits. These periodic adjustments may have a material impact on its consolidated statements of operations.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">The Company’s policy is to record estimated interest and penalties related to the underpayment of income taxes as income tax expense in the consolidated statements of operations. There was no interest expense related to the underpayment of estimated taxes during the years ended December 31, 2015 and 2014. There have been no penalties in 2015 and 2014.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Research and Development Expenses:</b></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">The Company expenses all research and development costs as incurred. Development costs of computer software to be sold, leased, or otherwise marketed are subject to capitalization beginning when a product’s technological feasibility has been established and ending when a product is available for general release to customers. In most instances, the Company’s products are released soon after technological feasibility has been established. Costs incurred subsequent to achievement of technological feasibility were not significant, and software development costs were expensed as incurred during 2015 and 2014.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Stock-Based Compensation:</b></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">The Company grants stock-based compensation to its employees, board of directors and certain third party contractors. Share-based compensation arrangements may include the issuance of options to purchase common stock in the future or the issuance of restricted stock, which generally are subject to vesting requirements. The Company records stock-based compensation expense for all stock-based compensation granted after January 1, 2006 based on the grant-date fair value. The Company recognizes these compensation costs on a straight-line basis over the requisite service period of the award.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">The Company estimates the grant-date fair value of stock-based compensation using the Black-Scholes valuation model. Assumptions used to estimate compensation expense are determined as follows:</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt"> </p> <table cellspacing="0" cellpadding="0" style="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%"> <tr style="vertical-align: top"> <td style="width: 48px"> </td> <td style="width: 48px; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">●</font></td> <td style="text-align: justify; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">Expected term is determined using the contractual term and vesting period of the award;</font></td></tr> <tr style="vertical-align: top"> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: justify; line-height: 115%"> </td></tr> <tr style="vertical-align: top"> <td> </td> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">●</font></td> <td style="text-align: justify; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">Expected volatility of award grants made in the Company’s plan is measured using the weighted average of historical daily changes in the market price of the Company’s common stock over the period equal to the expected term of the award;</font></td></tr> <tr style="vertical-align: top"> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: justify; line-height: 115%"> </td></tr> <tr style="vertical-align: top"> <td> </td> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">●</font></td> <td style="text-align: justify; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">Expected dividend rate is determined based on expected dividends to be declared;</font></td></tr> <tr style="vertical-align: top"> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: justify; line-height: 115%"> </td></tr> <tr style="vertical-align: top"> <td> </td> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">●</font></td> <td style="text-align: justify; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">Risk-free interest rate is equivalent to the implied yield on zero-coupon U.S. Treasury bonds with a maturity equal to the expected term of the awards; and</font></td></tr> <tr style="vertical-align: top"> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: justify; line-height: 115%"> </td></tr> <tr style="vertical-align: top"> <td> </td> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">●</font></td> <td style="text-align: justify; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">Forfeitures are based on the history of cancellations of awards granted and management’s analysis of potential forfeitures.</font></td></tr> </table> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 0 56.1pt; text-align: justify; text-indent: -28.05pt"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Segments of Business:</b></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">Management has determined that its operations are comprised of one reportable segment: the sale of speed detection and digital audio and video recording devices. For the year ended December 31, 2015 and 2014, sales by geographic area were as follows:</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"> </p> <table cellspacing="0" cellpadding="0" style="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="6" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"><b>Year ended December 31,</b></font></td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom"> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"><b>2015</b></font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"><b>2014</b></font></td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">Sales by geographic area:</font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="width: 62%; padding-left: 10pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">United States of America</font></td> <td style="width: 2%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="width: 15%; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">19,881,541</font></td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 2%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="width: 15%; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">16,479,656</font></td> <td style="width: 1%; line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 10pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">Foreign</font></td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">148,667</font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">961,763</font></td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">20,030,208</font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">17,441,419</font></td> <td style="line-height: 115%"> </td></tr> </table> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">Sales to customers outside of the United States are denominated in U.S. dollars. All Company assets are physically located within the United States.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Recent Accounting Pronouncements:</b></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">In May 2014, the FASB issued Accounting Standard Update (“ASU”) No. 2014-09, <i>“Revenue from Contracts with Customers” </i>(“ASU 2014-09”), which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. ASU 2014-09 will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. The standard is effective for interim and annual periods beginning after December 15, 2017 and permits the use of either the retrospective or cumulative effect transition method. Early adoption is not permitted. The Company has not yet selected a transition method and is currently evaluating the standard and the impact on its consolidated financial statements and footnote disclosures.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">In July 2015, the FASB issued ASU 2015-11, Inventory (Topic 330): <i>Simplifying the Measurement of Inventory</i>. The amendments in the ASU require entities that measure inventory using the first-in, first-out or average cost methods to measure inventory at the lower of cost and net realizable value. Net realizable value is defined as estimated selling price in the ordinary course of business less reasonably predictable costs of completion, disposal and transportation. ASU 2015-11 is effective for financial statements issued for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016 on a prospective basis. This ASU will be effective for the Company for fiscal years beginning after December 15, 2016. Early adoption of ASU 2015-11 is permitted. The Company is currently evaluating the effects adoption of this guidance will have on its consolidated financial statements.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">In April 2015, the FASB issued ASU 2015-03, Interest— <i>Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs.</i> This ASU requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. ASU 2015-03 is effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. This ASU will be effective for the Company for fiscal years beginning after December 15, 2015. Early adoption is permitted, and retrospective application is required. The adoption of this standard is not expected to have a material impact on our financial statements.</p>
</us-gaap:OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureAndSignificantAccountingPoliciesTextBlock>
<us-gaap:ConcentrationRiskDisclosureTextBlock contextRef="From2015-01-01to2015-12-31">
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>NOTE 2. CONCENTRATION OF CREDIT RISK AND MAJOR CUSTOMERS </b></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">Financial instruments that potentially subject the Company to concentrations of credit risk consist of accounts receivable. Sales to domestic customers are typically made on credit and the Company generally does not require collateral while sales to international customers require payment before shipment or backing by an irrevocable letter of credit. The Company performs ongoing credit evaluations of its customers’ financial condition and maintains an allowance for estimated losses. Accounts are written off when deemed uncollectible and accounts receivable are presented net of an allowance for doubtful accounts. The allowance for doubtful accounts totaled $74,997 and $65,977 as of December 31, 2015 and December 31, 2014, respectively.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">The Company sells through a network of unaffiliated distributors for international sales and employee-based sales agents for domestic sales. No international distributor individually exceeded 10% of total revenues and no customer receivable balance exceeded 10% of total accounts receivable for the years ended December 31, 2015 and 2014.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">The Company purchases finished circuit boards and other proprietary component parts from suppliers located in the United States and on a limited basis from Asia. Although the Company obtains certain of these components from single source suppliers, the Company generally owns all tooling and management has located or is in process of locating alternative suppliers to reduce the risk in most cases to supplier problems that could result in significant production delays. The Company has not historically experienced any significant supply disruptions from any of its principal vendors and does not anticipate future supply disruptions. The Company acquires most of its components on a purchase order basis and does not have long-term contracts with its suppliers.</p>
</us-gaap:ConcentrationRiskDisclosureTextBlock>
<us-gaap:FinancingReceivablesTextBlock contextRef="From2015-01-01to2015-12-31">
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>NOTE 3. ACCOUNTS RECEIVABLE – ALLOWANCE FOR DOUBTFUL ACCOUNTS</b></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">The allowance for doubtful accounts receivable was comprised of the following for the years ended December 31, 2015 and December 31, 2014:</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p> <table cellspacing="0" cellpadding="0" style="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td style="text-align: center; line-height: 115%"> </td> <td style="text-align: center; line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"><b>December 31, 2015</b></font></td> <td style="text-align: center; line-height: 115%"> </td> <td style="text-align: center; line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"><b>December 31, 2014</b></font></td> <td style="text-align: center; line-height: 115%"> </td></tr> <tr style="vertical-align: bottom"> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">Beginning balance</font></td> <td style="line-height: 115%"> </td> <td colspan="2" style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">$65,977</font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="2" style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">$55,033</font></td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 58%; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">Provision for bad debts </font></td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 18%; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">46,864</font></td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 18%; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">10,944</font></td> <td style="width: 1%; line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">Charge-offs to allowance, net of recoveries </font></td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">(37,844</font></td> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">)</font></td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">—</font></td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">Ending balance </font></td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">74,997</font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">65,977</font></td> <td style="line-height: 115%"> </td></tr> </table>
</us-gaap:FinancingReceivablesTextBlock>
<us-gaap:InventoryDisclosureTextBlock contextRef="From2015-01-01to2015-12-31">
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>NOTE 4. INVENTORIES </b></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Inventories consisted of the following at December 31, 2015 and December 31, 2014:</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p> <table cellspacing="0" cellpadding="0" style="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td style="text-align: center; line-height: 115%"> </td> <td style="text-align: center; line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"><b>December 31, 2015 </b></font></td> <td style="text-align: center; line-height: 115%"> </td> <td style="text-align: center; line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"><b>December 31, 2014 </b></font></td> <td style="text-align: center; line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 58%; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">Raw material and component parts </font></td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="width: 18%; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">3,833,873</font></td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="width: 18%; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">2,987,124</font></td> <td style="width: 1%; line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">Work-in-process </font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">134,641</font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">280,429</font></td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">Finished goods </font></td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">7,895,663</font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">6,576,480</font></td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 10pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">Subtotal </font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">11,864,177</font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">9,844,033</font></td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">Reserve for excess and obsolete inventory </font></td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">(1,202,411</font></td> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">)</font></td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">(600,578</font></td> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">)</font></td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 10pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">Total </font></td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">10,661,766</font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">9,243,455</font></td> <td style="line-height: 115%"> </td></tr> </table> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">Finished goods inventory includes units held by potential customers and sales agents for test and evaluation purposes. The cost of such units totaled $651,004 and $645,300 as of December 31, 2015 and December 31, 2014, respectively.</p>
</us-gaap:InventoryDisclosureTextBlock>
<us-gaap:PropertyPlantAndEquipmentDisclosureTextBlock contextRef="From2015-01-01to2015-12-31">
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>NOTE 5. FURNITURE, FIXTURES AND EQUIPMENT</b></font></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 10pt Times New Roman, Times, Serif">Furniture, fixtures and equipment consisted of the following at December 31, 2015 and December 31, 2014:</font></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p> <table cellspacing="0" cellpadding="0" style="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"><b>Estimated Useful Life</b></font></td> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"><b>December 31, 2015</b></font></td> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"><b>December 31, 2014</b></font></td> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 37%; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">Office furniture, fixtures and equipment </font></td> <td style="width: 1%; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="width: 20%; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">3-10 years</font></td> <td style="width: 1%; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="width: 1%; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="width: 18%; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">905,124</font></td> <td style="width: 1%; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="width: 1%; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="width: 1%; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="width: 18%; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">2,193,877</font></td> <td style="width: 1%; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">Warehouse and production equipment </font></td> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">3-5 years</font></td> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">532,339</font></td> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">1,386,427</font></td> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">Demonstration and tradeshow equipment </font></td> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">2-5 years</font></td> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">451,750</font></td> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">442,112</font></td> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">Leasehold improvements </font></td> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">2-5 years</font></td> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">153,828</font></td> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">188,414</font></td> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">Website development </font></td> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">3 years</font></td> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">—</font></td> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">11,178</font></td> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">Other equipment </font></td> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">3 years</font></td> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">—</font></td> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">6,131</font></td> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 10pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"> Total cost </font></td> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">2,043,041</font></td> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">4,228,139</font></td> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">Less: accumulated depreciation and amortization </font></td> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">(978,855</font></td> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">)</font></td> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">(3,182,473</font></td> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">)</font></td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">Net furniture, fixtures and equipment </font></td> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="border-bottom: black 2.25pt double; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">1,064,186</font></td> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td> <td style="border-bottom: black 2.25pt double; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">1,045,666</font></td> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr> </table> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Depreciation and amortization of furniture, fixtures and equipment aggregated $498,810 and $324,206 for the years ended December 31, 2015 and 2014, respectively.</font></p>
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<us-gaap:IntangibleAssetsDisclosureTextBlock contextRef="From2015-01-01to2015-12-31">
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>NOTE 6. INTANGIBLE ASSETS</b></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Intangible assets consisted of the following at December 31, 2015 and 2014:</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p> <table cellspacing="0" cellpadding="0" style="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="10" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"><b>December 31, 2015</b></font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="10" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"><b>December 31, 2014</b></font></td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom"> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"><b>Gross value </b></font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"><b>Accumulated amortization</b></font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"><b>Net carrying value</b></font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"><b>Gross value</b></font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"><b>Accumulated amortization</b></font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"><b>Net carrying value</b></font></td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">Amortized intangible assets:</font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="width: 40%; padding-left: 10pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">Licenses </font></td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="width: 7%; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">—</font></td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="width: 7%; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">—</font></td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="width: 7%; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">—</font></td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="width: 7%; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">255,000</font></td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="width: 7%; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">255,000</font></td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="width: 7%; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">—</font></td> <td style="width: 1%; line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 10pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">Patents and Trademarks </font></td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">96,418</font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">47,086</font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">49,331</font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">106,995</font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">42,504</font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">64,491</font></td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">96,418</font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">47,086</font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">49,331</font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">361,995</font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">297,504</font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">64,491</font></td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">Unamortized intangible assets:</font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 10pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">Licenses </font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">73,893</font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">—</font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">73,893</font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">—</font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">—</font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">—</font></td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 10pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">Patents and trademarks pending </font></td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">287,036</font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">—</font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">287,036</font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">181,193</font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">—</font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">181,193</font></td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">360,929</font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">—</font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">360,929</font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">181,193</font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">—</font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">181,193</font></td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 20pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"> Total </font></td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">457,347</font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">47,086</font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">410,261</font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">543,188</font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">297,504</font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">245,684</font></td> <td style="line-height: 115%"> </td></tr> </table> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Patents and trademarks pending will be amortized beginning at the time they are issued by the appropriate authorities. If issuance of the final patent or trademark is denied, then the amount deferred will be immediately charged to expense.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Amortization expense for the years ended December 31, 2015 and 2014 was $31,313 and $98,484, respectively. Estimated amortization for intangible assets with definite lives for the next five years ending December 31 and thereafter is as follows:</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p> <table cellspacing="0" cellpadding="0" style="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="text-align: justify; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"><b>Year ending December 31:</b></font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="width: 79%; padding-left: 10pt; text-align: justify; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">2016</font></td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="width: 18%; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">29,146</font></td> <td style="width: 1%; line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 10pt; text-align: justify; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">2017</font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">19,064</font></td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 10pt; text-align: justify; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">2018</font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">1,121</font></td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 10pt; text-align: justify; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">2019</font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">—</font></td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 10pt; text-align: justify; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">2020 and thereafter </font></td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">—</font></td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="text-align: center; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">49,331</font></td> <td style="line-height: 115%"> </td></tr> </table>
</us-gaap:IntangibleAssetsDisclosureTextBlock>
<us-gaap:BasisOfAccountingPolicyPolicyTextBlock contextRef="From2015-01-01to2015-12-31">
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Nature of Business: </b></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">Digital Ally, Inc. and subsidiaries (collectively, “Digital Ally,” “Digital,” and the “Company,” “produces digital video imaging and storage products for use in law enforcement, security and commercial applications. Its current products are an in-car digital video/audio recorder contained in a rear-view mirror for use in law enforcement and commercial fleets, a system that provides our law enforcement customers with audio/video surveillance from multiple vantage points and hands-free automatic activation of body-worn cameras and in-car video systems; a weather-resistant mobile digital video recording system for use on motorcycles, ATV’s and boats, a miniature digital video system designed to be worn on an individual’s body; and a hand-held laser speed detection device that it is offering primarily to law enforcement agencies. The Company has active research and development programs to adapt its technologies to other applications. It has the ability to integrate electronic, radio, computer, mechanical, and multi-media technologies to create unique solutions to address needs in a variety of other industries and markets, including mass transit, school bus, taxi cab and the military. The Company sells its products to law enforcement agencies and other security organizations, consumer and commercial fleet operators through direct sales domestically and third-party distributors internationally.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">The Company was originally incorporated in Nevada on December 13, 2000 as Vegas Petra, Inc. and had no operations until 2004. On November 30, 2004, Vegas Petra, Inc. entered into a Plan of Merger with Digital Ally, Inc., at which time the merged entity was renamed Digital Ally, Inc.</p>
</us-gaap:BasisOfAccountingPolicyPolicyTextBlock>
<us-gaap:ConsolidationPolicyTextBlock contextRef="From2015-01-01to2015-12-31">
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Basis of Consolidation: </b></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">The accompanying financial statements include the consolidated accounts of Digital Ally and its wholly-owned subsidiaries, Digital Ally International, Inc, MP Ally, LLC, and Medical Devices Ally, LLC. All intercompany balances and transactions have been eliminated during consolidation.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">Digital Ally formed Digital Ally International, Inc. during August 2009 to facilitate the export sales of its products. In addition, Medical Devices Ally, LLC was formed in July 2014 and MP Ally, LLC was formed in July 2015, both of which have been inactive since formation.</p>
</us-gaap:ConsolidationPolicyTextBlock>
<us-gaap:FairValueOfFinancialInstrumentsPolicy contextRef="From2015-01-01to2015-12-31">
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Fair Value of Financial Instruments: </b></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">The carrying amounts of financial instruments, including cash and cash equivalents, restricted cash, accounts receivable, accounts payable and subordinated note payable, approximate fair value because of the short-term nature of these items. The Company accounts for its secured convertible notes payable and derivative liabilities on their fair value basis.</p>
</us-gaap:FairValueOfFinancialInstrumentsPolicy>
<us-gaap:RevenueRecognitionPolicyTextBlock contextRef="From2015-01-01to2015-12-31">
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Revenue Recognition: </b></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">Revenues from the sale of products are recorded when the product is shipped, title and risk of loss have transferred to the purchaser, payment terms are fixed or determinable and payment is reasonably assured. Customers do not have a right to return the product other than for warranty reasons for which they would only receive repair services or replacement product.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">The Company sells its products and services to law enforcement and commercial customers in the following manner:</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt"> </p> <table cellspacing="0" cellpadding="0" style="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: top"> <td style="width: 48px; line-height: 115%"> </td> <td style="width: 48px; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">●</font></td> <td style="text-align: justify; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">Sales to domestic customers are made direct to the end customer (typically a law enforcement agency or a commercial customer) through its direct sales force, which is composed of its employees. Revenue is recorded when the product is shipped to the end customer.</font></td></tr> <tr style="vertical-align: top"> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: justify; line-height: 115%"> </td></tr> <tr style="vertical-align: top"> <td style="line-height: 115%"> </td> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">●</font></td> <td style="text-align: justify; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">Sales to international customers are made through independent distributors who purchase products from the Company at a wholesale price and sell to the end user (typically law enforcement agencies or a commercial customer) at a retail price. The distributor retains the margin as its compensation for its role in the transaction. The distributor generally maintains product inventory, customer receivables and all related risks and rewards of ownership. Revenue is recorded when the product is shipped to the distributor consistent with the terms of the distribution agreement. </font></td></tr> <tr style="vertical-align: top"> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: justify; line-height: 115%"> </td></tr> <tr style="vertical-align: top"> <td style="line-height: 115%"> </td> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">●</font></td> <td style="text-align: justify; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">Repair parts and services for domestic and international customers are generally handled by our inside customer service employees. Revenue is recognized upon shipment of the repair parts and acceptance of the service or materials by the end customer. </font></td></tr> </table> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 0 67.5pt; text-align: justify; text-indent: -25pt"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">Sales taxes collected on products sold are excluded from revenues and are reported as an accrued expense in the accompanying balance sheets until payments are remitted.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">Other revenue is comprised of revenues from extended warranties, repair services and the sale of scrap and excess raw material and component parts. Revenue is recognized upon shipment of the product and acceptance of the service or materials by the end customer.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">Extended warranties are offered on selected products and when a customer purchases an extended warranty the associated proceeds are treated as deferred revenue and recognized over the term of the extended warranty on a straight line method.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">Sales returns and allowances aggregated $712,872 and $558,943 for the years ended December 31, 2015 and 2014, respectively. Obligations for sales returns and allowances are recognized at the time of sales on an accrual basis. The accrual is determined based upon historical return rates adjusted for known changes in key variables affecting these return rates.</p>
</us-gaap:RevenueRecognitionPolicyTextBlock>
<us-gaap:UseOfEstimates contextRef="From2015-01-01to2015-12-31">
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Use of Estimates: </b></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 27pt">The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.</p>
</us-gaap:UseOfEstimates>
<us-gaap:CashAndCashEquivalentsPolicyTextBlock contextRef="From2015-01-01to2015-12-31">
<p style="margin: 0pt"></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Cash and cash equivalents: </b></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">Cash and cash equivalents include funds on hand, in bank and short-term investments with original maturities of ninety (90) days or less.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">Cash and cash equivalents that are restricted as to withdrawal or use under the terms of the senior secured note payable are presented as restricted cash separate from cash and cash equivalents on our balance sheet. The restriction was released in 2015 when Secured Note Payable was paid in full.</p>
</us-gaap:CashAndCashEquivalentsPolicyTextBlock>
<us-gaap:TradeAndOtherAccountsReceivablePolicy contextRef="From2015-01-01to2015-12-31">
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Accounts Receivable: </b></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">Accounts receivable are carried at original invoice amount less an estimate made for doubtful receivables based on a review of all outstanding amounts on a weekly basis. The Company determines the allowance for doubtful accounts by regularly evaluating individual customer receivables and considering a customer’s financial condition, credit history, and current economic conditions. Trade receivables are written off when deemed uncollectible. Recoveries of trade receivables previously written off are recorded when received.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">A trade receivable is considered to be past due if any portion of the receivable balance is outstanding for more than thirty (30) days beyond terms. No interest is charged on overdue trade receivables.</p>
</us-gaap:TradeAndOtherAccountsReceivablePolicy>
<us-gaap:InventoryPolicyTextBlock contextRef="From2015-01-01to2015-12-31">
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Inventories: </b></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">Inventories consist of electronic parts, circuitry boards, camera parts and ancillary parts (collectively, “components”), work-in-process and finished goods, and are carried at the lower of cost (First-in, First-out Method) or market value. The Company determines the estimate for the reserve for slow moving or obsolete inventories by regularly evaluating individual inventory levels, projected sales and current economic conditions.</p>
</us-gaap:InventoryPolicyTextBlock>
<us-gaap:PropertyPlantAndEquipmentPolicyTextBlock contextRef="From2015-01-01to2015-12-31">
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Furniture, fixtures and equipment: </b></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">Furniture, fixtures and equipment is stated at cost net of accumulated depreciation. Additions and improvements are capitalized while ordinary maintenance and repair expenditures are charged to expense as incurred. Depreciation is recorded by the straight-line method over the estimated useful life of the asset, which ranges from three to ten years. Amortization expense on capitalized leases is included with depreciation expense.</p>
</us-gaap:PropertyPlantAndEquipmentPolicyTextBlock>
<us-gaap:GoodwillAndIntangibleAssetsPolicyTextBlock contextRef="From2015-01-01to2015-12-31">
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Intangible assets: </b></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">Intangible assets include deferred patent costs and license agreements. Legal expenses incurred in preparation of patent application have been deferred and will be amortized over the useful life of granted patents. Costs incurred in preparation of applications that are not granted will be charged to expense at that time. The Company has entered into several sublicense agreements under which it has been assigned the exclusive rights to certain licensed materials used in its products. These sublicense agreements generally require upfront payments to obtain the exclusive rights to such material. The Company capitalizes the upfront payments as intangible assets and amortizes such costs over their estimated useful life on a straight line method.</p>
</us-gaap:GoodwillAndIntangibleAssetsPolicyTextBlock>
<us-gaap:DebtPolicyTextBlock contextRef="From2015-01-01to2015-12-31">
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Debt: </b></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">The Company’s debt securities are accounted for at amortized cost, except where the Company has elected to account for its secured convertible notes payable on its fair value basis.</p>
</us-gaap:DebtPolicyTextBlock>
<us-gaap:ImpairmentOrDisposalOfLongLivedAssetsPolicyTextBlock contextRef="From2015-01-01to2015-12-31">
<p style="margin: 0pt"></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Long-Lived Assets:</b></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">Long-lived assets such as property, plant and equipment and purchased intangible assets subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If circumstances require a long-lived asset or asset group be tested for possible impairment, the Company first compares undiscounted cash flows expected to be generated by that asset or asset group to its carrying value. If the carrying value of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent that the carrying value exceeds its fair value. Fair value is determined through various valuation techniques, including discounted cash flow models, quoted market values and third-party appraisals, as considered necessary.</p>
</us-gaap:ImpairmentOrDisposalOfLongLivedAssetsPolicyTextBlock>
<us-gaap:GuaranteesIndemnificationsAndWarrantiesPolicies contextRef="From2015-01-01to2015-12-31">
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Warranties: </b></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 28.05pt">The Company’s products carry explicit product warranties that extend up to two years from the date of shipment. The Company records a provision for estimated warranty costs based upon historical warranty loss experience and periodically adjusts these provisions to reflect actual experience. Accrued warranty costs are included in accrued expenses. Extended warranties are offered on selected products and when a customer purchases an extended warranty the associated proceeds are treated as deferred revenue and recognized over the term of the extended warranty.</p>
</us-gaap:GuaranteesIndemnificationsAndWarrantiesPolicies>
<DGLY:CustomerDepositsPolicyTextBlock contextRef="From2015-01-01to2015-12-31">
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Customer Deposits: </b></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">The Company requires deposits in advance of shipment for certain customer sales orders, in particular when accepting orders from foreign customers for which the Company does not have a payment history. Customer deposits are reflected as a current liability in the accompanying Consolidated Balance Sheets.</p>
</DGLY:CustomerDepositsPolicyTextBlock>
<us-gaap:ShippingAndHandlingCostPolicyTextBlock contextRef="From2015-01-01to2015-12-31">
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Shipping and Handling Costs: </b></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">Shipping and handling costs for outbound sales orders totaled $92,081 and $70,889 for the years ended December 31, 2015 and 2014, respectively. Such costs are included in selling, general and administrative expenses in the Consolidated Statements of Operations.</p>
</us-gaap:ShippingAndHandlingCostPolicyTextBlock>
<us-gaap:AdvertisingCostsPolicyTextBlock contextRef="From2015-01-01to2015-12-31">
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Advertising Costs: </b></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">Advertising expense includes costs related to trade shows and conventions, promotional material and supplies, and media costs. Advertising costs are expensed in the period in which they are incurred. The Company incurred total advertising expense of approximately $848,671 and $611,175 for the years ended December 31, 2015 and 2014, respectively. Such costs are included in selling, general and administrative expenses in the Consolidated Statements of Operations.</p>
</us-gaap:AdvertisingCostsPolicyTextBlock>
<us-gaap:IncomeTaxPolicyTextBlock contextRef="From2015-01-01to2015-12-31">
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Income Taxes: </b></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">Deferred taxes are provided for by the liability method wherein deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carryforwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax basis. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">The Company applies the provisions of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) No. 740 - Income Taxes that provides a framework for accounting for uncertainty in income taxes and provided a comprehensive model to recognize, measure, present, and disclose in its financial statements uncertain tax positions taken or expected to be taken on a tax return. It initially recognizes tax positions in the financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. Such tax positions are initially and subsequently measured as the largest amount of tax benefit that is greater than 50% likely of being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and all relevant facts. Application requires numerous estimates based on available information. The Company considers many factors when evaluating and estimating its tax positions and tax benefits, and it recognized tax positions and tax benefits may not accurately anticipate actual outcomes. As it obtains additional information, the Company may need to periodically adjust its recognized tax positions and tax benefits. These periodic adjustments may have a material impact on its consolidated statements of operations.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">The Company’s policy is to record estimated interest and penalties related to the underpayment of income taxes as income tax expense in the consolidated statements of operations. There was no interest expense related to the underpayment of estimated taxes during the years ended December 31, 2015 and 2014. There have been no penalties in 2015 and 2014.</p>
</us-gaap:IncomeTaxPolicyTextBlock>
<us-gaap:ResearchAndDevelopmentExpensePolicy contextRef="From2015-01-01to2015-12-31">
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Research and Development Expenses: </b></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">The Company expenses all research and development costs as incurred. Development costs of computer software to be sold, leased, or otherwise marketed are subject to capitalization beginning when a product’s technological feasibility has been established and ending when a product is available for general release to customers. In most instances, the Company’s products are released soon after technological feasibility has been established. Costs incurred subsequent to achievement of technological feasibility were not significant, and software development costs were expensed as incurred during 2015 and 2014.</p>
</us-gaap:ResearchAndDevelopmentExpensePolicy>
<us-gaap:ShareBasedCompensationOptionAndIncentivePlansPolicy contextRef="From2015-01-01to2015-12-31">
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Stock-Based Compensation: </b></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">The Company grants stock-based compensation to its employees, board of directors and certain third party contractors. Share-based compensation arrangements may include the issuance of options to purchase common stock in the future or the issuance of restricted stock, which generally are subject to vesting requirements. The Company records stock-based compensation expense for all stock-based compensation granted after January 1, 2006 based on the grant-date fair value. The Company recognizes these compensation costs on a straight-line basis over the requisite service period of the award.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">The Company estimates the grant-date fair value of stock-based compensation using the Black-Scholes valuation model. Assumptions used to estimate compensation expense are determined as follows:</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt"> </p> <table cellspacing="0" cellpadding="0" style="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%"> <tr style="vertical-align: top"> <td style="width: 48px"> </td> <td style="width: 48px; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">●</font></td> <td style="text-align: justify; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">Expected term is determined using the contractual term and vesting period of the award;</font></td></tr> <tr style="vertical-align: top"> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: justify; line-height: 115%"> </td></tr> <tr style="vertical-align: top"> <td> </td> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">●</font></td> <td style="text-align: justify; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">Expected volatility of award grants made in the Company’s plan is measured using the weighted average of historical daily changes in the market price of the Company’s common stock over the period equal to the expected term of the award;</font></td></tr> <tr style="vertical-align: top"> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: justify; line-height: 115%"> </td></tr> <tr style="vertical-align: top"> <td> </td> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">●</font></td> <td style="text-align: justify; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">Expected dividend rate is determined based on expected dividends to be declared;</font></td></tr> <tr style="vertical-align: top"> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: justify; line-height: 115%"> </td></tr> <tr style="vertical-align: top"> <td> </td> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">●</font></td> <td style="text-align: justify; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">Risk-free interest rate is equivalent to the implied yield on zero-coupon U.S. Treasury bonds with a maturity equal to the expected term of the awards; and</font></td></tr> <tr style="vertical-align: top"> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: justify; line-height: 115%"> </td></tr> <tr style="vertical-align: top"> <td> </td> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">●</font></td> <td style="text-align: justify; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">Forfeitures are based on the history of cancellations of awards granted and management’s analysis of potential forfeitures.</font></td></tr> </table>
</us-gaap:ShareBasedCompensationOptionAndIncentivePlansPolicy>
<us-gaap:SegmentReportingPolicyPolicyTextBlock contextRef="From2015-01-01to2015-12-31">
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Segments of Business: </b></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">Management has determined that its operations are comprised of one reportable segment: the sale of speed detection and digital audio and video recording devices. For the year ended December 31, 2015 and 2014, sales by geographic area were as follows:</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"> </p> <table cellspacing="0" cellpadding="0" style="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="6" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"><b>Year ended December 31,</b></font></td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom"> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"><b>2015</b></font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"><b>2014</b></font></td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">Sales by geographic area: </font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="width: 64%; padding-left: 10pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">United States of America </font></td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="width: 15%; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">19,881,541</font></td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="width: 15%; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">16,479,656</font></td> <td style="width: 1%; line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 10pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">Foreign</font></td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">148,667</font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">961,763</font></td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">20,030,208</font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">17,441,419</font></td> <td style="line-height: 115%"> </td></tr> </table> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">Sales to customers outside of the United States are denominated in U.S. dollars. All Company assets are physically located within the United States.</p>
</us-gaap:SegmentReportingPolicyPolicyTextBlock>
<us-gaap:NewAccountingPronouncementsPolicyPolicyTextBlock contextRef="From2015-01-01to2015-12-31">
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Recent Accounting Pronouncements:</b></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">In May 2014, the FASB issued Accounting Standard Update (“ASU”) No. 2014-09, <i>“Revenue from Contracts with Customers” </i>(“ASU 2014-09”), which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. ASU 2014-09 will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. The standard is effective for interim and annual periods beginning after December 15, 2017 and permits the use of either the retrospective or cumulative effect transition method. Early adoption is not permitted. The Company has not yet selected a transition method and is currently evaluating the standard and the impact on its consolidated financial statements and footnote disclosures.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">In July 2015, the FASB issued ASU 2015-11, Inventory (Topic 330): <i>Simplifying the Measurement of Inventory</i>. The amendments in the ASU require entities that measure inventory using the first-in, first-out or average cost methods to measure inventory at the lower of cost and net realizable value. Net realizable value is defined as estimated selling price in the ordinary course of business less reasonably predictable costs of completion, disposal and transportation. ASU 2015-11 is effective for financial statements issued for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016 on a prospective basis. This ASU will be effective for the Company for fiscal years beginning after December 15, 2016. Early adoption of ASU 2015-11 is permitted. The Company is currently evaluating the effects adoption of this guidance will have on its consolidated financial statements.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">In April 2015, the FASB issued ASU 2015-03, Interest— <i>Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs.</i> This ASU requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. ASU 2015-03 is effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. This ASU will be effective for the Company for fiscal years beginning after December 15, 2015. Early adoption is permitted, and retrospective application is required. The adoption of this standard is not expected to have a material impact on our financial statements.</p>
</us-gaap:NewAccountingPronouncementsPolicyPolicyTextBlock>
<us-gaap:ScheduleOfFinancingReceivablesMinimumPaymentsTableTextBlock contextRef="From2015-01-01to2015-12-31">
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">The allowance for doubtful accounts receivable was comprised of the following for the years ended December 31, 2015 and December 31, 2014:</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p> <table cellspacing="0" cellpadding="0" style="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td style="text-align: center; line-height: 115%"> </td> <td style="text-align: center; line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"><b>December 31, 2015</b></font></td> <td style="text-align: center; line-height: 115%"> </td> <td style="text-align: center; line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"><b>December 31, 2014</b></font></td> <td style="text-align: center; line-height: 115%"> </td></tr> <tr style="vertical-align: bottom"> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">Beginning balance</font></td> <td style="line-height: 115%"> </td> <td colspan="2" style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">$65,977</font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="2" style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">$55,033</font></td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 58%; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">Provision for bad debts </font></td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 18%; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">46,864</font></td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 18%; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">10,944</font></td> <td style="width: 1%; line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">Charge-offs to allowance, net of recoveries </font></td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">(37,844</font></td> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">)</font></td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">—</font></td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">Ending balance </font></td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">74,997</font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">65,977</font></td> <td style="line-height: 115%"> </td></tr> </table>
</us-gaap:ScheduleOfFinancingReceivablesMinimumPaymentsTableTextBlock>
<us-gaap:ScheduleOfInventoryCurrentTableTextBlock contextRef="From2015-01-01to2015-12-31">
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Inventories consisted of the following at December 31, 2015 and December 31, 2014:</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p> <table cellspacing="0" cellpadding="0" style="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td style="text-align: center; line-height: 115%"> </td> <td style="text-align: center; line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"><b>December 31, 2015 </b></font></td> <td style="text-align: center; line-height: 115%"> </td> <td style="text-align: center; line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"><b>December 31, 2014 </b></font></td> <td style="text-align: center; line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 58%; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">Raw material and component parts </font></td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="width: 18%; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">3,833,873</font></td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="width: 18%; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">2,987,124</font></td> <td style="width: 1%; line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">Work-in-process </font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">134,641</font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">280,429</font></td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">Finished goods </font></td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">7,895,663</font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">6,576,480</font></td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 10pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">Subtotal </font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">11,864,177</font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">9,844,033</font></td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">Reserve for excess and obsolete inventory </font></td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">(1,202,411</font></td> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">)</font></td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">(600,578</font></td> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">)</font></td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 10pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">Total </font></td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">10,661,766</font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">9,243,455</font></td> <td style="line-height: 115%"> </td></tr> </table>
</us-gaap:ScheduleOfInventoryCurrentTableTextBlock>
<us-gaap:PropertyPlantAndEquipmentTextBlock contextRef="From2015-01-01to2015-12-31">
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Furniture, fixtures and equipment consisted of the following at December 31, 2015 and December 31, 2014:</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p> <table cellspacing="0" cellpadding="0" style="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"><b>Estimated Useful Life</b></font></td> <td style="line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"><b>December 31, 2015</b></font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"><b>December 31, 2014</b></font></td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 37%; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">Office furniture, fixtures and equipment </font></td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 20%; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">3-10 years</font></td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="width: 18%; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">905,124</font></td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="width: 18%; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">2,193,877</font></td> <td style="width: 1%; line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">Warehouse and production equipment </font></td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">3-5 years</font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">532,339</font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">1,386,427</font></td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">Demonstration and tradeshow equipment </font></td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">2-5 years</font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">451,750</font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">442,112</font></td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">Leasehold improvements </font></td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">2-5 years</font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">153,828</font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">188,414</font></td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">Website development </font></td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">3 years</font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">—</font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">11,178</font></td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">Other equipment </font></td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">3 years</font></td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">—</font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">6,131</font></td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 10pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"> Total cost </font></td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">2,043,041</font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">4,228,139</font></td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">Less: accumulated depreciation and amortization </font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">(978,855</font></td> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">)</font></td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">(3,182,473</font></td> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">)</font></td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">Net furniture, fixtures and equipment </font></td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">1,064,186</font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">1,045,666</font></td> <td style="line-height: 115%"> </td></tr> </table>
</us-gaap:PropertyPlantAndEquipmentTextBlock>
<us-gaap:ScheduleOfIntangibleAssetsAndGoodwillTableTextBlock contextRef="From2015-01-01to2015-12-31">
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Intangible assets consisted of the following at December 31, 2015 and 2014:</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p> <table cellspacing="0" cellpadding="0" style="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="10" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"><b>December 31, 2015</b></font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="10" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"><b>December 31, 2014</b></font></td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom"> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"><b>Gross value </b></font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"><b>Accumulated amortization</b></font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"><b>Net carrying value</b></font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"><b>Gross value</b></font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"><b>Accumulated amortization</b></font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"><b>Net carrying value</b></font></td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">Amortized intangible assets:</font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="width: 40%; padding-left: 10pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">Licenses </font></td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="width: 7%; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">—</font></td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="width: 7%; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">—</font></td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="width: 7%; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">—</font></td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="width: 7%; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">255,000</font></td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="width: 7%; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">255,000</font></td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="width: 7%; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">—</font></td> <td style="width: 1%; line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 10pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">Patents and Trademarks </font></td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">96,418</font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">47,086</font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">49,331</font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">106,995</font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">42,504</font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">64,491</font></td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">96,418</font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">47,086</font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">49,331</font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">361,995</font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">297,504</font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">64,491</font></td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">Unamortized intangible assets:</font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 10pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">Licenses </font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">73,893</font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">—</font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">73,893</font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">—</font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">—</font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">—</font></td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 10pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">Patents and trademarks pending </font></td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">287,036</font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">—</font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">287,036</font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">181,193</font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">—</font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">181,193</font></td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">360,929</font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">—</font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">360,929</font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">181,193</font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">—</font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">181,193</font></td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 20pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"> Total </font></td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">457,347</font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">47,086</font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">410,261</font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">543,188</font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">297,504</font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">245,684</font></td> <td style="line-height: 115%"> </td></tr> </table>
</us-gaap:ScheduleOfIntangibleAssetsAndGoodwillTableTextBlock>
<us-gaap:ScheduleofFiniteLivedIntangibleAssetsFutureAmortizationExpenseTableTextBlock contextRef="From2015-01-01to2015-12-31">
<table cellspacing="0" cellpadding="0" style="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="text-align: justify; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"><b>Year ending December 31:</b></font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="width: 79%; padding-left: 10pt; text-align: justify; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">2016</font></td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="width: 18%; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">29,146</font></td> <td style="width: 1%; line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 10pt; text-align: justify; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">2017</font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">19,064</font></td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 10pt; text-align: justify; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">2018</font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">1,121</font></td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 10pt; text-align: justify; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">2019</font></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">—</font></td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 10pt; text-align: justify; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">2020 and thereafter </font></td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">—</font></td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="text-align: center; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">49,331</font></td> <td style="line-height: 115%"> </td></tr> </table>
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<p style="margin: 0pt"></p> <p style="margin: 0pt"></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>NOTE 12. COMMITMENTS AND CONTINGENCIES </b></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b><i>Operating Leases.</i></b> The Company had a non-cancelable long-term operating lease agreement for office and warehouse space that expires during April 2020. The Company also entered into month-to-month leases for equipment and storage facilities. Rent expense for the years ended December 31, 2015 and 2014 was $401,845 and $397,724, respectively, related to these leases. Following are the minimum lease payments for each year and in total.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p> <table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 12pt; text-indent: -12pt; line-height: 115%"><b>Year ending December 31:</b></td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="width: 86%; padding-left: 20pt; text-indent: -12.25pt; line-height: 115%">2016</td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%">$</td> <td style="width: 11%; text-align: right; line-height: 115%">439,707</td> <td style="width: 1%; line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 20pt; text-indent: -12.25pt; line-height: 115%">2017</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">445,449</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 20pt; text-indent: -12.25pt; line-height: 115%">2018</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">451,248</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 20pt; text-indent: -12.25pt; line-height: 115%">2019</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">457,327</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 20pt; text-indent: -12.25pt; line-height: 115%">2020</td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%">154,131</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%">$</td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%">1,947,862</td> <td style="line-height: 115%"> </td></tr> </table> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b><i> </i></b></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b><i>License agreements. </i></b>The Company has several license agreements under which it has been assigned the rights to certain licensed materials used in its products. Certain of these agreements require the Company to pay ongoing royalties based on the number of products shipped containing the licensed material on a quarterly basis. Royalty expense related to these agreements aggregated $26,454 and $27,053 for the years ended December 31, 2015 and 2014, respectively.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 28.05pt"><b><i> </i></b></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 28.05pt"><b><i>Supply and distribution agreement. </i></b>We entered into a supply and distribution agreement with Dragoneye Technology, LLC (“Dragoneye”) on May 1, 2010 under which it was granted the exclusive world-wide right to sell and distribute a proprietary law enforcement speed measurement device and derivatives to its customers. The term of the agreement was 42 months after the date Dragoneye began full scale production of the product which commenced in August 2010 and final certification of the product was obtained. The agreement had minimum purchase requirements of 1,000 units per period over three commitment periods. On January 31, 2012, the agreement was amended to reduce the minimum purchase commitment over the second and third years by 52% of the original commitment. The Company agreed to release its world-wide right to exclusively market the product to the law enforcement community in exchange for the reduction in the purchase commitment.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 28.05pt">  </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">The agreement originally required minimum order quantities that represent a remaining unfulfilled commitment to acquire $634,680 of product as of December 31, 2014. Dragoneye is responsible for all warranty, damage or other claims, losses or liabilities related to the product and is obligated to defend and indemnify us against such risks. The Company held approximately $1,318,000 of such products in finished goods inventory as of December 31, 2015 and had sold approximately 1,010 units since the beginning of the agreement through December 31, 2015.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">The Company filed a lawsuit on June 15, 2013 against Dragoneye for breaching the contract and participated in a mediation of the lawsuit on August 12, 2015 that resulted in a settlement on August 25, 2015. The settlement included the repair of all LaserAlly units the Company held and future customer returned units exhibiting the same failure. See “Litigation” below for further details.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 28.05pt"><b><i> </i></b></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 28.05pt"><b><i>Litigation. </i></b>The Company is subject to various legal proceedings arising from normal business operations. Although there can be no assurances, based on the information currently available, management believes that it is probable that the ultimate outcome of each of the actions will not have a material adverse effect on the consolidated financial statement of the Company. However, an adverse outcome in certain of the actions could have a material adverse effect on the financial results of the Company in the period in which it is recorded.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">On June 5, 2013, the Company filed a lawsuit in the District Court of Johnson County, Kansas against Dragoneye. It had entered into a supply and distribution agreement with Dragoneye on May 1, 2010 under which we were granted the right to sell and distribute a proprietary law enforcement speed measurement device and derivatives to our customers under the trade name LaserAlly. The parties amended the agreement on January 31, 2012. In its complaint the Company alleged that Dragoneye breached the contract because it failed to maintain as confidential information our customer list; it infringed on our trademarks, including LaserAlly and Digital Ally; it tortiously interfered with our existing contracts and business relationships with our dealers, distributors, customers and trading partners; and it engaged in unfair competition and violated the Kansas Uniform Trade Secrets Statutes. The Company amended the complaint to include claims regarding alleged material defects in the products supplied under the agreement. The Company participated in a mediation of the lawsuit on August 12, 2015 and agreed to an omnibus resolution of the matter. The settlement includes the return of and repair free of charge of all LaserAlly units the Company holds and future customer returned units exhibiting the same or similar failure. Dragoneye was be allowed no more than 120 days from October 1, 2015 under which to repair all units, upgrade all units to current firmware release and to re-certify the units. The Company will remit the unpaid balance of approximately $191,000 ($91,684.47 remaining at December 31, 2015) currently recorded in accounts payable to Dragoneye in five payments concurrent with the repair and return of units by Dragoneye. Furthermore, all of the remaining minimum contractual purchase requirements will be voided. On August 25, 2015, the judge approved the parties’ joint stipulation of dismissal with prejudice, which finalized the settlement.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 28.05pt"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 28.05pt">On October 25, 2013, we filed a complaint in the United States District Court for the District of Kansas to eliminate threats by a competitor, Utility Associates, Inc. (“Utility”), of alleged patent infringement regarding U.S. Patent No. 6,831,556 (the “ ‘556 patent”). Specifically, the lawsuit seeks a declaration that our mobile video surveillance systems do not infringe any claim of the ‘556 patent. We became aware that Utility had mailed letters to current and prospective purchasers of our mobile video surveillance systems threatening that the use of such systems purchased from third parties not licensed to the ‘556 patent would create liability for them for patent infringement. We reject Utility’s assertion and will vigorously defend the right of end-users to purchase such systems from providers other than Utility. The United States District Court for the District of Kansas dismissed the lawsuit because it decided that Kansas was not the proper jurisdictional forum for the dispute. The District Court’s decision was not a ruling on the merits of the case. We appealed the decision and the Federal Circuit affirmed the District Court’s previous decision.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 28.05pt"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 28.05pt">In addition, the Company began proceedings to invalidate the ‘556 patent through a request for <i>inter partes review</i> of the ‘556 patent at the United States Patent and Trademark Office (“USPTO”). On July 27, 2015, the USPTO invalidated key claims in Utility’s ‘556 Patent. The Final Decision from the USPTO significantly curtails Utility’s ability to threaten law enforcement agencies, municipalities, and others with infringement of the ‘556 Patent. Utility has appealed this decision to the United States Court of Appeals for the Federal Circuit. Briefs have not yet been filed and no schedule for oral argument has been issued. The Company believes that Utility will have a difficult time convincing the appellate court to overturn the decision of the USPTO.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 28.05pt">  </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">On June 4, 2014 the Company filed an Unfair Competition lawsuit against Utility Associates, Inc. (“Utility”) in the United States District Court for the District of Kansas. In the lawsuit it contends that Utility has defamed the Company and illegally interfered with its contracts, customer relationships and business expectancies by falsely asserting to its customers and others that its products violate the ‘556 Patent, of which Utility claims to be the holder.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">The suit also includes claims against Utility for tortious interference with contract and violation of the Kansas Uniform Trade Secrets Act (KUSTA), arising out of Utility’s employment of one of our employees, in violation of that employee’s Non-Competition and Confidentiality agreements with us. In addition to damages, we seek temporary, preliminary, and permanent injunctive relief, prohibiting Utility from, among other things, continuing to threaten or otherwise interfere with our customers. On March 4, 2015, an initial hearing was held upon our request for injunctive relief.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Based upon facts revealed at the March 4, 2015 hearing, on March 16, 2015, the Company sought leave to amend its Complaint in the Kansas suit to assert additional claims against Utility. Those new claims include claims of actual or attempted monopolization, in violation of § 2 of the Sherman Act, claims arising under a new Georgia statute that prohibits threats of patent infringement in “bad faith”, and additional claims of unfair competition/false advertising in violation of § 63(a) of the Lanham Act. As these statutes expressly provide, the Company will seek treble damages, punitive damages and attorneys’ fees as well as injunctive relief. The Court concluded its hearing on April 22, 2015, and allowed the Company leave to amend its complaint, but denied its preliminary injunction. The case is now in the discovery stage. However, the Company believes that the USPTO’s final decision issued on July 27, 2015 will provide it with substantial basis to pursue our claims either through court trial or by summary judgment motions and the Company intends to pursue recovery from Utility, its insurers and other parties, as appropriate.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">On June 13, 2014, Utility filed suit in the United States District Court for the Northern District of Georgia against us alleging infringement of the ‘556 patent. The suit was served on us on June 20, 2014. As alleged in our first filed lawsuit described above, we believe the ‘556 patent is both invalid and not infringed. Further, the USPTO has issued its final decision invalidating 23 of the 25 claims asserted in the ‘556 Patent, as noted above. The Company believes that the suit filed by Utility is without merit and is vigorously defending the claims asserted against us. An adverse resolution of the foregoing litigation or patent proceedings could have a material adverse effect on the Company’s business, prospects, results of operations, financial condition, and liquidity. The Court stayed all proceedings with respect to this lawsuit pending the outcome of the patent review performed by the USPTO and the appellate court. Based on the USPTO’s final decision to invalidate substantially all claims contained in the ‘556 patent, the Company intends to file for summary judgment in its favor if Utility does not request outright dismissal.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">The Company received notice in April 2015 that TASER International, Inc. (“Taser”), one of our competitor’s, had commenced an action in the United States Patent & Trademark Office (“USPTO”) for a re-examination of its U.S. Patent No. 8,781,292 (“the ‘292 Patent). A re-examination is essentially a request that the USPTO review whether the patent should have issued in its present form in view of the “prior art,” e.g., other patents in the same technology field. The prior art used by Taser to request the re-examination is a patent application (which never issued into a patent) assigned to an unrelated third party and was not the result of any of Taser’s own research and development efforts.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">The Company owns the ‘292 Patent, which is directed to a system that determines when a recording device, such as a law enforcement officer’s body camera or in-car video recorder, begins recording and automatically instructs other recording devices to begin recording. The technology described in the ‘292 Patent is incorporated in our VuLink product.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 27pt">On August 17, 2015 the USPTO issued a first, non-final action rejecting all 20 claims of the ‘292 Patent respecting its ‘292 Patent under an <i>ex parte</i> re-examination. The Company was provided the opportunity to discuss the merits of the prior art and the scope of the patent claims with the patent Examiner handling the reexamination and to amend the patent claims. On January 14, 2016 the USPTO ultimately rejected TASER’s efforts and confirmed the validity of the ‘292 patent with 59 claims covering various aspects of the Company’s auto-activation technology. On February 2, 2016 the USPTO issued another patent relating to the Company’s auto-activation technology for law enforcement cameras. U.S. Patent No. 9,253,452 (“the ‘452 patent”) generally covers the automatic activation and coordination of multiple recording devices in response to a triggering event such as a law enforcement officer activating the light bar on the vehicle.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 27pt">  </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 27pt">The Company filed suit on January 15, 2016 in the U.S. District Court for the District of Kansas (Case No: 2:16-cv-02032) against Taser, alleging that Taser willfully infringed the ‘292 Patent by selling and offering to sell its Axon camera product line and Signal Performance Power Magazine. The lawsuit was initiated after the USPTO reconfirmed the validity of the ‘292 patent. On February 2, 2016, the Company amended its complaint against Taser, further alleging that Taser is directly and indirectly liable for infringing the ‘452 Patent. The Company’s amended complaint seeks both monetary damages and a permanent injunction against Taser for infringing both the ‘452 and ‘292 Patents.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 27pt"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 27pt">In addition to the ‘452 Patent infringement claims, the February 2, 2016 amended complaint added a new set of claims to the lawsuit alleging that TASER conspired to keep Digital Ally out of the marketplace by engaging in improper, unethical, and unfair competition. The amended lawsuit alleges TASER bribed officials and otherwise conspired to secure no-bid contracts for its products in violation of both state law and federal antitrust law. Digital Ally’s lawsuit also seeks monetary and injunctive relief, including treble damages, for these alleged violations.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">On February 19, 2016 TASER asked for and was granted an extension of time to answer or otherwise plead to the complaint alleging willful patent infringement, the bribery of officials and otherwise conspired to secure no-bid contracts for its products in violation of both state law and federal antitrust law. On March 4, 2016, TASER filed a motion to dismiss our complaint which is now pending before the court.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">On or about May 22, 2014, Stephen Gans, a former director and former principal shareholder of us, filed a complaint in the Eighth Judicial District Court, Clark County, Nevada that asserts claims against us and Stanton E. Ross, Leroy C. Richie, Daniel F. Hutchins and Elliot M. Kaplan (the “Defendant Directors”), who are members of its Board of Directors. We were served with the complaint on May 28, 2014. Among other things, the complaint alleged (i) that the Defendant Directors breached their fiduciary duties by failing to consider a financing proposal offered by Mr. Gans and his affiliates; and (ii) that the Defendant Directors, acting at the direction of Stanton E. Ross, did not independently and objectively evaluate Mr. Gans’ protestations about certain alleged transactions between us and Infinity Energy Resources, Inc., and by so doing, breached their fiduciary duties. We and the Defendant Directors vigorously defended the claims asserted against us and them. We and the Defendant Directors filed a response denying all of the plaintiff’s allegations and have asserted counter-claims that allege that Gans committed improper acts that included: (a) failing to disclose the nature and substance of an SEC investigation of Gans; (b) engaging in potential insider trading; (c) misappropriating our confidential information; (d) attempting to use his position as a director to personally enrich himself; and (e) making unauthorized, misleading, and factually inaccurate filings to the SEC about us.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 27pt"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 27pt">On December 11, 2014, the parties agreed in principle to compromise and dismiss with prejudice substantially all of their claims. Within the scope of that settlement are each of the “shareholder derivative claims” that Gans had asserted against us and the Defendant Directors. The settlement to which the parties agreed resulted in no monetary recovery by any party. On April 7, 2015 the Court approved the settlement of all shareholder derivative claims.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 27pt"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 27pt">The Company is also involved as a plaintiff and defendant in ordinary, routine litigation and administrative proceedings incidental to its business from time to time, including customer collections, vendor and employment-related matters. The Company believes the likely outcome of any other pending cases and proceedings will not be material to its business or its financial condition.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 28.05pt"><b><i> </i></b></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 28.05pt"><b><i>Sponsorship. </i></b>On April 16, 2015 the Company entered into a Title Sponsorship Agreement (the “Agreement”) under which it became the title sponsor for a Web.com Tour golf tournament (the “Tournament”) held annually in the Kansas City Metropolitan area. The Agreement provides the Company with naming rights and other benefits for the 2015 through 2019 annual Tournament in exchange for the following sponsorship fee:</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 28.05pt"> </p> <table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%">Year</td> <td style="line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%">Sponsorship fee</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 56%; padding-left: 5.4pt; text-align: center; line-height: 115%">2015</td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%">$</td> <td style="width: 41%; text-align: right; line-height: 115%">375,000</td> <td style="width: 1%; line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 5.4pt; text-align: center; line-height: 115%">2016</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%">$</td> <td style="text-align: right; line-height: 115%">475,000</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 5.4pt; text-align: center; line-height: 115%">2017</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%">$</td> <td style="text-align: right; line-height: 115%">475,000</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 5.4pt; text-align: center; line-height: 115%">2018</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%">$</td> <td style="text-align: right; line-height: 115%">500,000</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 5.4pt; text-align: center; line-height: 115%">2019</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%">$</td> <td style="text-align: right; line-height: 115%">500,000</td> <td style="line-height: 115%"> </td></tr> </table> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">The Company has the right to sell and retain the proceeds from the sale of additional sponsorships including but not limited to a presenting sponsorship, a concert sponsorship and founding partnerships for the Tournament. The Company recorded a net sponsorship expense of $173,335 relating to the 2015 Tournament during the year ended December 31, 2015. Such expense was included in sales and promotional expense in the Consolidated Statements of Operations.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="background-color: white"><b><i>Stock Repurchase Program</i></b>. On August 25, 2015, the Board of Directors approved a program that authorizes the repurchase of up to $2.5 million of the Company’s common stock in the open market, or in privately negotiated transactions. The repurchases, if and when made, will be subject to market conditions, applicable rules of the Securities and Exchange Commission and other factors. The repurchase program will be funded using a portion of cash and cash equivalents, along with cash flow from operations. Purchases may be commenced, suspended or discontinued at any time. The Company has not repurchased any shares under this program as of December 31, 2015.</font></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 28.05pt"><b><i> </i></b></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 28.05pt"><b><i>401 (k) Plan. </i></b>In July 2008, the Company amended and restated its 401(k) retirement savings plan. The amended plan requires the Company to provide 100% matching contributions for employees who elect to contribute up to 3% of their compensation to the plan and 50% matching contributions for employee’s elective deferrals on the next 2% of their contributions. The Company has made matching contributions totaling $163,227 and $156,071 for the years ended December 31, 2015 and 2014, respectively. Each participant is 100% vested at all times in employee and employer matching contributions.</p>
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<p style="margin: 0pt"></p> <p style="margin: 0pt"></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>NOTE 17. SUBSEQUENT EVENTS </b></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 27pt"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 27pt">The Company filed suit on January 15, 2016 in the U.S. District Court for the District of Kansas (Case No: 2:16-cv-02032) against TASER International, Inc. (“Taser”), alleging willful patent infringement against Taser’s Axon body camera product line. The lawsuit was initiated after the United States Patent Office (“USPTO”) reconfirmed the validity of U.S. Patent No. 8,781,292 (“the ‘292 patent”) which covers various aspects of auto-activation and multiple camera coordination for body-worn cameras and in-car video systems. The ‘292 patent previously was subject to attack by Taser, who tried to invalidate it at the USPTO. The USPTO ultimately rejected Taser’s efforts and confirmed the validity of the ‘292 patent with 59 claims covering various aspects of this valuable auto-activation technology. On February 2, 2016 the USPTO issued another patent relating to the Company’s auto-activation technology for law enforcement cameras. U.S. Patent No. 9,253,452 (“the ‘452 patent”) generally covers the automatic activation and coordination of multiple recording devices in response to a triggering event such as a law enforcement officer activating the light bar on the vehicle. The Company added the ‘452 Patent to its existing lawsuit against Taser seeking both monetary damages and a permanent injunction against Taser for infringement of both the ‘452 and ‘292 Patents.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 27pt"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 27pt">In addition to the infringement claims, the Company added a new set of claims to the lawsuit alleging that Taser conspired to keep the Company Ally out of the marketplace by engaging in improper, unethical, and unfair competition. The amended lawsuit alleges Taser bribed officials and otherwise conspired to secure no-bid contracts for its products in violation of both state law and federal antitrust law. The Company’s lawsuit also seeks monetary and injunctive relief, including treble damages, for these alleged violations. See <b>Litigation</b> for further details.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 27pt"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 27pt">On February 19, 2016 TASER asked for and was granted an extension of time to answer or otherwise plead to the complaint alleging willful patent infringement, the bribery of officials and otherwise conspired to secure no-bid contracts for its products in violation of both state law and federal antitrust law. On March 4, 2016, TASER filed a motion to dismiss our complaint which is now pending before the court.</p>
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<dei:DocumentFiscalYearFocus contextRef="From2015-01-01to2015-12-31"> 2015 </dei:DocumentFiscalYearFocus>
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