UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

x  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the Quarterly Period Ended September 30, 2014 

Commission File Number   333-157010

  

STATIONDIGITAL CORPORATION

(formerly known as Alarming Devices, Inc.)

(Exact name of registrant as specified in its charter)

 

Highlands Plaza Two, 5700 Oakland Ave, #200

St. Louis, Missouri, 63110

(Address of principal executive office and zip code)

(855) 782-8466

(Registrant's telephone number, including area code)

Indicate by check mark whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x No ¨

 

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

 

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

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

 

As of November 25, 2014, 83,511,827 shares of the Registrant's common stock, par value $0.001 per share, were issued and outstanding. 

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PART I - FINANCIAL INFORMATION		3
Item 1.	Financial Statements	3
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	20
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	22
Item 4.	Controls and Procedures	22
PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	23
Item 1A.	Risk Factors	23
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	23
Item 3.	Defaults Upon Senior Securities	24
Item 4.	Mine Safety Disclosures	24
Item 5.	Other Information	24
Item 6.	Exhibits	25
SIGNATURES		26

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StationDigital Corporation ("StationDigital") was originally organized as a Missouri limited liability company on November 14, 2012 and was subsequently converted to a Delaware C-Corporation on November 18, 2013.

On April 23, 2014, StationDigital consummated a Stock Purchase Agreement, as amended and originally entered into on March 12, 2014 (the "Agreement") entered into with Steel Pier Capital Advisors, LLC ("Steel Pier") whereby StationDigital acquired 4,805,067 shares of 5,000,000 shares of Common Stock held by Steel Pier. The acquisition of the Shares resulted in a change in control of the Registrant.

Also on April 23, 2014, the Registrant authorized an amendment to its Articles of Incorporation to (i) change its name to StationDigital Corporation, (ii) to increase the number of its authorized shares of capital stock from 75,000,000 to 510,000,000 shares of which 500,000,000 shares were designated common stock, par value $0.001 per share and 10,000,000 shares were designated "blank check" preferred stock, par value $0.001 per share and (iii) to effect a forward split such that 17.6471 shares of Common Stock and Preferred Stock were issued for every 1 share of Common Stock and Preferred Stock issued and outstanding immediately prior to the Amendment. The Registrant also authorized a conversion of its corporate domicile to the State of Delaware.

Also on April 23, 2014, the Registrant entered into and consummated the Agreement and Plan of Merger with StationDigital, whereby StationDigital merged with the Registrant for approximately 3,400,000 pre-Split shares of the Company's Common Stock and 56 shares of a newly-created Series A Preferred Stock. Further, the Registrant amended its By-laws to change its fiscal year end to December 31^st; the change is intended to align the Registrant's fiscal periods with that of StationDigital's business.

StationDigital is the first truly next generation digital media broadcast platform. StationDigital's primary identity, as of 2014, is as a sophisticated pure play music discovery Internet radio service, offering a competitive, state of the art product to capture market share in the Internet radio space, and one with a unique, industry first value proposition: the StationDigital Listener Rewards Program, where all of our registered users earn listener rewards points every time they listen to StationDigital, either on the web or through any of our mobile apps, and for every time they share StationDigital with friends through social media, thus directly incentivizing our users for playing an active and ongoing part in the organic growth of our customer base and our brand. StationDigital rewards points can then be redeemed right inside our apps through the StationDigital online superstore for a wide variety of both physical and digital merchandise which is designed to appeal to users of all kinds.

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StationDigital is also guided by a much more ambitious vision:  to be the first free Internet radio platform to evolve into a comprehensive digital media broadcast platform, available on any device, anywhere, anytime. To that end, StationDigital intends to steadily add music videos, movies, television programming, specialty programming and video games to our platform of digital media and entertainment which will be available to our users at all times. We intend for our user rewards program to extend to each additional digital media offering on the StationDigital platform.

The preparation of financial statements in conformity with U.S. generally accepted accounting principles 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 amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The Company regularly evaluates estimates and assumptions related to the recoverability of deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company's estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.

The Company considers all highly liquid instruments with a maturity of three months or less at the time of issuance to be cash equivalents.

The fair values of financial instruments, which include cash and amounts due to related parties, were estimated to approximate their carrying values due to the immediate or relatively short maturity of these instruments.

The Company's operations and financing activities are conducted primarily in United States dollars, and as a result the Company is not subject to significant exposure to market risks from changes in foreign currency rates.  Management has determined that the Company is not exposed to significant credit risk.

The Company operates in one segment and therefore segment information is not presented.

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In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential common shares if their effect is anti-dilutive.

The Company accounts for income under FASB accounting standards codification No. 740 income taxes. Under FASB accounting standards codification No. 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amounts expected to be realized. The tax return for the period ended December 31, 2013 is subject to examination by the Internal Revenue Service.

The Company measures the fair value of its assets and liabilities under the guidance of ASC 820, Fair Value Measurements and Disclosures, which establishes a framework for measuring fair value in accordance with generally accepted accounting principles and expands disclosures about fair value measurements. ASC 820 does not require any new fair value measurements, but its provisions apply to all other accounting pronouncements that require or permit fair value measurement. ASC 820 clarifies that fair value is an exit price, representing the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants based on the highest and best use of the asset or liability. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. ASC 820 requires the Company to use valuation techniques to measure fair value that maximize the use of observable inputs and minimize the use of unobservable inputs. These inputs are prioritized as follows:

Level 1: Observable inputs such as quoted prices for identical assets or liabilities in active markets;

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Level 2: Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly such as quoted prices for similar assets or liabilities or market-corroborated inputs; and

Level 3: Unobservable inputs for which there is little or no market data, which require the reporting entity to develop its own assumptions about how market participants would price the assets or liabilities. The valuation techniques that may be used to measure fair value are as follows:

A.	Market approach - Uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities.

B.	Income approach - Uses valuation techniques to convert future amounts to a single present amount based on current market expectations about those future amounts, including present value techniques, option-pricing models and excess earnings method.

C.	Cost approach - Based on the amount that currently would be required to replace the service capacity of an asset (replacement cost).

Product development consists primarily of software engineering and design, metadata, information technology and costs associated with supporting consumer connected-device manufacturers in implementing our service in their products. We have incurred product development expenses primarily to develop and improve our system, website and the StationDigital app.

We account for our development costs in accordance with ASC 350-50-25, which sets forth the appropriate method of accounting for each of the five stages of website development. The costs incurred during the planning stage were expensed as incurred; the costs incurred for activities during the website application and infrastructure development stage were capitalized in accordance with ASC 350-40; costs incurred during the graphics development stage were capitalized for costs that were for the creation of initial graphics for the website, subsequent updates to the initial graphics were expensed as incurred, unless they provided additional functionality; costs incurred during the content development stage were expensed as incurred unless they were for the integration of a database with our website, which were capitalized; and generally, the costs incurred during the operating stage have been expensed as incurred.

Capitalized amounts are amortized over the useful life of the related application.

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The Company will recognize revenue on arrangements in accordance with FASB ASC No. 605, "Revenue Recognition". In all cases, revenue is recognized only when the price is fixed and determinable, persuasive evidence of an arrangement exists, the service is performed and collectability of the resulting receivable is reasonably assured. The Company will recognize revenue from advertising and online sales at the time services are rendered.

Accounts receivable are recorded net of an allowance for doubtful accounts. Our allowance for doubtful accounts will be based upon historical loss patterns, the number of days that billings are past due and an evaluation of the potential risk of loss associated with delinquent accounts. We also consider any changes to the financial condition of our customers and any other external market factors that could impact the collectability of our receivables in the determination of our allowance for doubtful accounts.

Property and equipment is recorded at cost, less accumulated depreciation. Depreciation is computed using the straight-line method based on the estimated useful lives of the assets, which is three years.

Property and equipment is reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Recoverability of these assets is measured by a comparison of the carrying amounts to the future undiscounted cash flows the assets are expected to generate. If property and equipment are considered to be impaired, the impairment to be recognized equals the amount by which the carrying value of the asset exceeds its fair market value.

Website Development Costs

Company management does not expect the adoption of recently issued accounting pronouncements to have a significant impact on the Company's results of operations, financial position or cash flow.

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Note 2 – Going Concern

These financial statements have been prepared on a going concern basis, which implies the Company will continue to realize it assets and discharge its liabilities in the normal course of business. From inception (November 14, 2012) through September 30, 2014, the Company has an accumulated deficit of $13,105,885. The continuation of the Company as a going concern is dependent upon the continued financial support from its lenders, the ability of the Company to obtain necessary equity financing to continue operations, and the attainment of profitable operations. These factors raise substantial doubt regarding the Company's ability to continue as a going concern. These financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

Property and equipment consisted of the following as of September 30, 2014 and December 31, 2013:

 

		September 30, 2014				December 31, 2013
Computer & office equipment		$	41,447			$	3,835
Computer software			41,113				41,113
Property & Equipment, Total			82,560				44,948
Less accumulated depreciation			14,321				3,083
Property & Equipment, Net		$	68,239			$	41,865

 

 

Depreciation expense during the Three Months Ended September 30, 2014, the Three Months Ended September 30, 2013, the Nine Months Ended September 30, 2014 and the Nine Months Ended September 30, 2013 was $3,746, $116, $11,237 and $332, respectively.

 

As of September 30, 2014 and December 31, 2013, the Company's Founder and former Chief Executive Officer was indebted to the Company in the amounts of $140 and $4,045, respectively.

As of September 30, 2014 and December 31, 2013, the Company's Chief Executive Officer was indebted to the Company in the amounts of $9,958 and $0, respectively.

As of September 30, 2014 and December 31, 2013, CloudWebStore was indebted to the Company in the amounts of $883,761 and $467,789, respectively, which is non-interest bearing, unsecured, and due on demand.  The Company's Founder and former Chief Executive Officer is also the Chief Executive Officer and majority shareholder of CloudWebStore.

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As of September 30, 2014 and December 31, 2013, CloudWebMall was indebted to the Company in the amounts of $6,942 and $600, respectively, which is non-interest bearing, unsecured, and due on demand.  The Company's Founder and former Chief Executive Officer is also the Chief Executive Officer and majority shareholder of CloudWebMall.

As of September 30, 2014 and December 31, 2013, the Company was indebted to GoldenHeart Holdings in the amounts of $0 and $5,676,478, respectively, which is non-interest bearing due upon the Company generation of more than $500,000 of gross revenue in any given month, upon resignation or termination of Tim Roberts (former CEO, now employee) with or without cause and in any event due no later than May 15, 2016, and unsecured.  The Company's Founder and former Chief Executive Officer is also the Chief Executive Officer and majority shareholder of GoldenHeart Holdings.

As of September 30, 2014 and December 31, 2013, the Company was indebted to GHH Commerce in the amounts of $0 and $416,183, respectively, which is non-interest bearing, unsecured, and due on demand.  The Company's Founder and former Chief Executive Officer is also the Chief Executive Officer and majority shareholder of GHH Commerce.

 

On May 15, 2014, the Company entered into a Master Services Agreement with CloudWebStore for CloudWebStore to develop a tailored and branded eStore for the Company to sell and distribute a variety of digital and physical products. The term of the Agreement is for One Hundred Twenty (120) months and, pursuant to the Agreement, the Company will receive twenty percent (20%) of Net Revenue generated from sales of Products via the eStore. In addition, the Company is required to pay a development fee of One Million Dollars ($1,000,000) to CloudWebStore on or before December 31, 2014.  The Company's Founder and former Chief Executive Officer is also the Chief Executive Officer and majority shareholder of CloudWebStore.  Costs incurred to develop software for internal use are required to be capitalized and amortized over the estimated useful life of the asset if certain criteria are met. Costs related to preliminary project activities and post implementation activities are expensed as incurred. We evaluate the costs incurred during the application development stage of website development to determine whether the costs meet the criteria for capitalization. As of September 30, 2014 and December 31, 2013, we had approximately $0 and $0, respectively, of capitalized internal use software and website development costs specific to the eStore being developed pursuant to the Master Services Agreement with CloudWebStore, net of accumulated amortization. These costs are being amortized over their three year estimated useful lives. As of September 30, 2014 and September 30, 2013, the Company recorded amortization expense of $0 and $0, respectively.

On June 30, 2014, the Company borrowed $500,000 under a convertible senior secured note.  The note accrues interest at the rate of 12%, is due on March 31, 2015 and was convertible at the holder's option into like securities of the Company's next offering at the greater of a 30% discount to such offering price or $0.50 per share.  On August 26, 2014, the note was amended and is convertible at the holder's option into like securities of the Company's next offering at the lesser of a 30% discount to such offering price or $0.45 per share.  The note is secured by a security interest in all of the Company's assets.  In connection with the issuance of the note, the Company also issued warrants to the Holder to purchase 500,000 shares of the Company's common stock at an exercise price equal to the greater of 70% of the price of the common stock in the subsequent offering or $0.50 per share, which warrant shall expire five years after the date of issuance.  On August 26, 2014, the warrants were amended for the Holder to purchase 500,000 shares of the Company's common stock at an exercise price equal to the lesser of 70% of the price of the common stock in the subsequent offering or $0.45 per share.  In accordance with ASC 470-50, the modification of non cash terms had a fair value that was greater than 10% of the non cash terms of the modified agreement. Accordingly the modification was accounted for as extinguishment of debt. The new debt instrument was initially recorded at fair value, and that amount used to determine the debt extinguishment gain or loss to be recognized and the effective rate of the new instrument. The Company recognized a gain of $8,304 based on modification.  The Company evaluated the modified terms of the convertible note and warrants under FASB ASC 815 and determined that the convertible note and warrants require derivative accounting treatment, which resulted in recognizing a discount of $462,763 on the note which is being amortized over the life of the note and derivative liability in the amount of $484,075 as of September 30, 2014.

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On July 7, 2014, the Company borrowed $15,000 under a 10% convertible promissory note, which is payable July 7, 2015 and entitles the note holder to convert the amount of the note into shares of stock at a per share price of $0.20. On July 7, 2014, the entire amount of the note was converted at a per share price of $0.20. The Company recognized no gain or loss on the conversion.

On July 23, 2014, the Company borrowed $75,000 under an original issue discount promissory note, which is payable October 23, 2014 in the amount of $82,500 and has been paid in full.

On August 15, 2014, the Company borrowed $100,000 under a convertible senior secured note.  The note accrues interest at the rate of 12%, is due on May 15, 2015 and is convertible at the holder's option into like securities of the Company's next offering at the lesser of a 30% discount to such offering price or $0.45 per share.  The note is secured by a security interest in all of the Company's assets.  In connection with the issuance of the note, the Company also issued warrants to the Holder to purchase 100,000 shares of the Company's common stock at an exercise price equal to the lesser of 70% of the price of the common stock in the subsequent offering or $0.45 per share, which warrant shall expire five years after the date of issuance.  The Company evaluated the terms of the convertible note and warrants under FASB ASC 815 and determined that the convertible note and warrants require derivative accounting treatment which resulted in recognizing a discount of $34,487 on the note which is being amortized over the life of the note and derivative liability in the amount of $96,815 as of September 30, 2014.

On August 26, 2014, the Company borrowed $25,000 under a convertible senior secured note.  The note accrues interest at the rate of 12%, is due on May 26, 2015 and is convertible at the holder's option into like securities of the Company's next offering at the lesser of a 30% discount to such offering price or $0.45 per share.  The note is secured by a security interest in all of the Company's assets.  In connection with the issuance of the note, the Company also issued warrants to the Holder to purchase 25,000 shares of the Company's common stock at an exercise price equal to the lesser of 70% of the price of the common stock in the subsequent offering or $0.45 per share, which warrant shall expire five years after the date of issuance.  The Company evaluated the terms of the convertible note and warrants under FASB ASC 815 and determined that the convertible note and warrants require derivative accounting treatment which resulted in recognizing a discount of $9,787 on the note which is being amortized over the life of the note and derivative liability in the amount of $29,340 as of September 30, 2014.

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On August 21, 2014, the Company issued 295,000 shares of restricted common stock for $59,000 ($0.20 per share).

On July 31, 2014, the Company issued 25,000 shares of restricted common stock to the Company's Chief Executive Officer for services with a fair value of $5,000 ($0.20 per share).

On August 19, 2014, the Company issued 100,000 shares of restricted common stock to an advisor for services with a fair value of $20,000 ($0.20 per share).

On August 19, 2014, the Company issued 100,000 shares of restricted common stock to an advisor for services with a fair value of $20,000 ($0.20 per share).

On August 19, 2014, the Company issued 100,000 shares of restricted common stock to an advisor for services with a fair value of $20,000 ($0.20 per share).

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On August 19, 2014, the Company issued 100,000 shares of restricted common stock to an advisor for services with a fair value of $20,000 ($0.20 per share).

On August 19, 2014, the Company issued 100,000 shares of restricted common stock to an advisor for services with a fair value of $20,000 ($0.20 per share).

On August 19, 2014, the Company issued 300,000 shares of restricted common stock to an advisor for services with a fair value of $60,000 ($0.20 per share).

On August 20, 2014, the Company issued 250,000 shares of restricted common stock for services to a consultant having a fair value of $50,000 ($0.20 per share).

On August 25, 2014, the Company issued 150,000 shares of restricted common stock for services to a consultant having a fair value of $30,000 ($0.20 per share).

On August 25, 2014, the Company issued 350,000 shares of restricted common stock to the Company's Chief Operating Officer for services with a fair value of $140,000 ($0.40 per share).

On August 27, 2014, the Company issued 50,000 shares of restricted common stock for services to a consultant having a fair value of $10,000 ($0.20 per share).

On August 31, 2014, the Company issued 25,000 shares of restricted common stock to the Company's Chief Executive Officer for services with a fair value of $5,000 ($0.20 per share).

On September 23, 2014, the Company issued 250,000 shares of restricted common stock for services to a consultant having a fair value of $62,500 ($0.25 per share).

On September 24, 2014, the Company issued 100,000 shares of restricted common stock for services to a consultant having a fair value of $35,000 ($0.35 per share).

On September 25, 2014, the Company issued 50,000 shares of restricted common stock for services to a consultant having a fair value of $20,000 ($0.40 per share).

On September 25, 2014, the Company issued 380,000 shares of restricted common stock for services to a consultant having a fair value of $152,000 ($0.40 per share).

On September 30, 2014, the Company issued 25,000 shares of restricted common stock to the Company's Chief Executive Officer for services with a fair value of $5,000 ($0.20 per share).

On July 7, 2014, the Company issued 75,000 shares of common stock to convert a note payable with a fair value of $15,000 ($0.20 per share). The Company recognized no gain or loss on the conversion of this note.

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On September 4, 2014, the Company issued 350,000 shares of common stock to convert a related party payable with a fair value of $356,025 ($1.017 per share). The Company recognized an increase in additional paid-in capital of $265,025 on the conversion of this note.

On April 23, 2014, the Company effected a forward split such that 17.6471 shares of common stock and preferred stock were issued for every 1 share of common stock and preferred stock issued and outstanding immediately prior to the Amendment.  On August 20, 2014, the Financial Industry Regulatory Authority (FINRA) approved the Company's forward stock split with a record date of August 21, 2014 and a payment date of August 22, 2014.

 

				Number				Average
				Outstanding				Remaining				Aggregate
Exercise				at				Life				Intrinsic
Price				September 30, 2014				(Years)				Vaue
	$	0.28				837,500				4.93			$	100,500
	$	0.50				500,000				2.51			$	-

We are from time to time subject to various legal proceedings and claims arising in the ordinary course of our business. We record a liability when we believe that it is both probable that a loss has been incurred and the amount can be reasonably estimated. Our management periodically evaluates developments that could affect the amount, if any, of liability that we have previously accrued and make adjustments as appropriate. Determining both the likelihood and the estimated amount of a loss requires significant judgment, and management's judgment may be incorrect. We do not believe the ultimate resolution of any pending legal matters is likely to have a material adverse effect on our business, financial position, results of operations or cash flows.

On June 30, 2014, the Company executed a lease for 13,268 square feet of office space in St. Louis, Missouri (effective July 5, 2014) under an operating lease that expires in 2021. Minimum future rental payments under the lease are as follows:

The lease provides for no renewal option. Rent expense for the three months ended September 30, 2014, the three months ended September 30, 2013, the nine months ended September 30, 2104 and the nine months ended September 30, 2013 were $48,947, $0, $48,947 and $0, respectively.

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In preparing these financial statements, the Company has evaluated events and transactions for potential recognition or disclosure through November 19, 2014, the date the financial statements were issued.

On November 7, 2014, the Company borrowed $1,000,000 under a convertible senior secured note.  The note accrues interest at the rate of 15%, is due on August 7, 2015 and is convertible at the holder's option into like securities of the Company's next offering at the lesser of a 30% discount to such offering price or $0.45 per share.  The note is secured by a security interest in all of the Company's assets.  In connection with the issuance of the note, the Company also issued warrants to the Holder to purchase 2,000,000 shares of the Company's common stock at an exercise price equal to the lesser of 70% of the price of the common stock in the subsequent offering or $0.45 per share, which warrant shall expire five years after the date of issuance.  The Company will evaluate the terms of the convertible note and warrants under FASB ASC 815 if determine if the convertible note and warrants require derivative accounting treatment.

On November 7, 2014, the Company entered into an agreement with all investors that participated in the private offerings of 12% senior secured convertible notes and warrants to purchase shares of common stock of the Company.  Pursuant to the Amendment, certain terms of the 12% Notes and Warrants were amended such that the interest rate of the 12% Notes increased to 15%, the term "Qualified Financing" was redefined to mean an equity or convertible equity financing by the Company after the completion of the Notes and the number of warrant shares was amended to equal two shares of common stock of the Company per one dollar invested.

 

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Net Loss

The Company incurred a net loss of $1,920,698 for the three months ended September 30, 2014, compared with a net loss of $613,151 for the three months ended September 30, 2013

For the nine months ended September 30, 2014 and the nine months ended September 30, 2013, the Company incurred operating expenses in the amount of $6,417,317 and $591,672, respectively. These operating expenses were comprised of product development costs, advertising, marketing, payroll, office and general expenses.

Other Expense

For the nine months ended September 30, 2014 and the nine months ended September 30, 2013,  the Company realized net other expense of $251,660 and $0, respectively.

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