Quarterly report pursuant to Section 13 or 15(d)

Stockholders' Deficiency

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Stockholders' Deficiency
9 Months Ended
Sep. 30, 2014
Stockholders' Equity Note [Abstract]  
Stockholders' Equity Note Disclosure [Text Block]
Note 7 – Stockholders’ Deficiency
 
Common Stock and Warrant Offerings
 
During the nine months ended September 30, 2014, the Company entered into an investment agreement with a group of investors. Pursuant to the agreement, the investors contributed to the Company aggregate net proceeds of $3,012,846 (gross proceeds of $3,067,996 less issuance costs of $55,150) in exchange for 4,090,661 units. Each unit was sold for $0.75 per unit and consisted of one share of common stock and an immediately vested five-year warrant to purchase one share of common stock at an exercise price of $0.75 per share. The warrants carried provisions that were deemed to be “down round” price protection features. As a result, during the nine months ended September 30, 2014, the Company reclassified $1,499,000 for the fair value of the warrants to derivative liabilities and will be marked to market for each reporting period.
 
Stock-Based Compensation
 
On July 7, 2014, the Board of Directors resolved to issue 100,000 shares of common stock to a service provider in connection with the June 30, 2014 completion of the Share Exchange. The Company recognized the $43,000 value of the award as stock-based compensation expense during the three months ended June 30, 2014, which was the service period. On July 29, 2014, the Company issued the 100,000 shares of common stock.
 
Stock Warrants
 
During the nine months ended September 30, 2014, the Company issued 233,333 shares of common stock to a warrant holder who elected to exercise a warrant to purchase 400,000 shares of common stock on a "cashless" basis under the terms of the warrant. The warrant had an exercise price of $0.75 per share and the intrinsic value of the warrant exercised was $420,000.
 
A summary of the warrant activity during the nine months ended September 30, 2014 is presented below:
 
 
 
 
 
 
Weighted
 
 
 
 
 
 
 
Weighted
Average
 
 
 
 
 
 
 
Average
Remaining
 
 
 
 
 
Number of
 
Exercise
Life
 
Intrinsic
 
 
 
Warrants
 
Price
In Years
 
Value
 
 
 
 
 
 
 
 
 
 
Outstanding, December 31, 2013
 
2,812,498
 
$
0.21
 
 
 
 
 
 
 
Granted
 
6,090,661
 
 
0.75
 
 
 
 
 
 
 
Exercised
 
(400,000)
 
 
0.75
 
 
 
 
 
 
 
Forfeited
 
-
 
 
-
 
 
 
 
 
 
 
Outstanding, September 30, 2014
 
8,503,159
 
$
0.57
 
 
4.9
 
$
815,490
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Exercisable, September 30, 2014
 
6,459,324
 
$
0.75
 
 
4.5
 
$
-
 
  
The following table presents information related to stock warrants at September 30, 2014:
 
Warrants Outstanding
 
Warrants Exercisable
 
 
 
 
 
 
 
Weighted
 
 
 
 
 
 
 
Outstanding
 
Average
 
Exercisable
 
Exercise
 
Number of
 
Remaining Life
 
Number of
 
Price
 
Warrants
 
In Years
 
Warrants
 
 
 
 
 
 
 
 
 
 
 
 
 
$
0.001
 
 
2,043,835
 
 
-
 
 
-
 
$
0.750
 
 
6,459,324
 
 
4.5
 
 
6,459,324
 
 
 
 
 
8,503,159
 
 
4.5
 
 
6,459,324