Quarterly report pursuant to Section 13 or 15(d)

Accrued Expenses

Accrued Expenses
9 Months Ended
Sep. 30, 2016
Payables and Accruals [Abstract]  
Accrued Expenses





Accrued expenses consist of the following:


    September 30, 2016     December 31, 2015  
Registration rights penalty   $ 916,875     $ 728,750  
Accrued consulting fees     505,300       916,925  
Accrued host fees     1,256,756       873,544  
Accrued professional, board and other fees     1,338,265       1,069,341  
Accrued wages     188,622       187,779  
Accrued commissions     400,000       -  
Warranty payable     245,332       223,988  
Accrued taxes payable     414,694       355,950  
Accrued payroll taxes payable     140,294       -  
Warrants payable     350,516       77,761  
Accrued issuable equity     872,682       324,894  
Accrued interest expense     210,088       83,842  
Dividend payable     752,000       293,200  
Other accrued expenses     58,970       10,750  
    $ 7,650,394     $ 5,146,724  




In connection with the sale of the Company’s Series C Convertible Preferred Stock, the Company granted the purchasers certain registration rights. As of September 30, 2016 and December 31, 2015, the Company had not yet filed a registration statement under the Securities Act of 1933. The registration rights agreements entered into with the Series C Convertible Preferred Stock purchasers provide that the Company has to pay liquidated damages equal to 1% of all Series C subscription amounts received on the date the Series C resale registration statement was due to be filed pursuant to such registration rights agreements. The Company is required to pay such penalty each month thereafter until the resale registration statement is filed. The maximum liquidated damages amount is 10% of all Series C subscription amounts received. Failure to pay such liquidated damages results in interest on such damages at a rate of 18% per annum becoming due. As a result, the Company accrued $916,875 and $728,750 of Series C Convertible Preferred Stock registration rights damages at September 30, 2016 and December 31, 2015, respectively.




On September 22, 2016, the Company was released from a $503,125 liability pursuant to a September 10, 2012 consulting agreement, such that it recognized a gain on forgiveness of accrued expenses of $503,125 during the three and nine months ended September 30, 2016.




See Note 9 – Related Parties for additional details.




As of September 30, 2016 and December 31, 2015, the Company accrued $350,516 and $77,761, respectively, related to warrants payable, of which, $345,670 and $77,735, respectively, related to investment banking fees which were payable in warrants. See Note 7 – Fair Value Measurement – Warrants Payable and Note 8 – Stockholders’ Deficiency – Preferred Stock – Series C Convertible Preferred Stock for additional details.