• Filing Date: 2014-08-14
  • Form Type: 10-Q
  • Description: Quarterly report
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8. PRIVATE PLACEMENT
6 Months Ended
Jun. 30, 2014
Private Placement  
8. PRIVATE PLACEMENT

NOTE 8: PRIVATE PLACEMENT

 

On July 10, 2012, the Company sold 1,347,201 shares of its Common Stock to various investors at $.45 per share subject to certain anti-dilution rights for a period of twenty four months. Due to the Company’s November 2012 offering at $.30 per share as described below, the Company issued an additional 673,598 shares pursuant to the aforementioned anti-dilution rights. The Company received gross proceeds of $606,240 before offering costs. Each investor received Fixed Price Warrants to purchase 50% of the number of shares of Common Stock purchased in the Offering. The Fixed Price Warrants are exercisable at any time from the date of issuance through July 10, 2017 at an exercise price of $.55. Each investor also received a Warrant to purchase 20% of the number of shares that were purchased in the Offering (the “Milestone Warrants”). The Milestone Warrants were automatically exercised without any additional consideration to be paid since the Company reported audited gross revenues of less than $5,000,000 for the period July 1, 2012 through June 30, 2013. In August 2013, the Company issued an aggregate of 258,327 shares of Common Stock pursuant to the Milestone Warrants. Exemption from registration for the sale of securities is claimed under Rule 506 of Regulation D promulgated pursuant to Section 4(2) of the Securities Act of 1933, as amended.

 

On March 31, 2013, the Company issued 528,000 shares of Common Stock automatically upon the conversion of outstanding shares of Preferred Stock. Exemption from registration was claimed under Section 3(a)(9) of the Securities Act as an exchange of securities of the same issuer without any compensation being paid.

 

During 2013, the Company raised $5,562,816 in gross proceeds from the sale of its Common Stock at $.30 per share. Pursuant to said offering, the Company sold 19,125,006 shares of its Common Stock and Class BB Warrants to purchase 9,562,503 shares of Common Stock exercisable at $.50 per share through December 15, 2017. A total of $150,000 of commissions was paid to a licensed member of FINRA together with Warrants to purchase 625,000 shares. Exemption from registration for the sale of the aforementioned securities is claimed under Rule 506 of Regulation D promulgated pursuant to Section 4(2) of the Securities Act of 1933, as amended. Thomas Arnost, Sean Trepeta and Sean McDonnell, officers and directors of the Company, purchased $200,000, $90,000 and $50,000, respectively, of securities pursuant to said offering.

 

Between January 1, 2014 and the date of this report, the Company has raised gross proceeds of $2,160,300 from the sale of its Common Stock (including $175,000 of the stock subscription receivables) at $.30 per share. In connection with this private placement offering, the Company has issued 7,201,000 shares of Common Stock and Class BB Warrants to purchase 3,600,500 shares of Common Stock at an exercise price of $.50 per share through December 15, 2017.

 

On March 31, 2014, the Company entered into a common stock purchase agreement with Aspire Capital Fund LLC as described in Note 15. On that date, Aspire Capital agreed to pay $500,000 to the Company for an initial purchase of 1,000,000 restricted shares of the Company’s Common Stock. These 1,000,000 restricted shares, plus a commitment fee of an additional 1,000,000 shares, for a total of 2,000,000 shares were issued in April 2014 to Aspire Capital.