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Nxt-ID, Inc. – ‘10-K’ for 12/31/13 – ‘EX-101.INS’

On:  Monday, 2/24/14, at 6:36pm ET   ·   As of:  2/25/14   ·   For:  12/31/13   ·   Accession #:  1019687-14-613   ·   File #:  0-54960

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

 2/25/14  Nxt-ID, Inc.                      10-K       12/31/13   54:3.3M                                   Publicease Inc/FA

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

Document/Exhibit                   Description                      Pages   Size 

 1: 10-K        Nxt-Id, Inc.                                        HTML    444K 
 2: EX-10.4     Amended and Restated Employment Agreement           HTML    103K 
 3: EX-14.1     Code of Business Conduct and Ethics                 HTML     61K 
 4: EX-31.1     Certification -- §302 - SOA'02                      HTML     20K 
 5: EX-31.2     Certification -- §302 - SOA'02                      HTML     20K 
 6: EX-32.1     Certification -- §906 - SOA'02                      HTML     17K 
 7: EX-32.2     Certification -- §906 - SOA'02                      HTML     17K 
36: R1          Document and Entity Information                     HTML     45K 
27: R2          Consolidated Balance Sheets                         HTML     82K 
34: R3          Consolidated Balance Sheets (Parenthetical)         HTML     44K 
38: R4          Consolidated Statements of Operations               HTML     57K 
50: R5          Consolidated Statements of Changes in               HTML     58K 
                Stockholders' Equity (Deficiency)                                
28: R6          Consolidated Statements of Cash Flows               HTML    100K 
33: R7          1. Organization and Principal Business Activity     HTML     22K 
24: R8          2. Going Concern and Management Plans               HTML     22K 
18: R9          3. Summary of Significant Accounting Policies       HTML     50K 
51: R10         4. Accrued Expenses                                 HTML     25K 
40: R11         5. Convertible Notes Payable                        HTML     24K 
39: R12         6. Derivative Liabilities                           HTML     43K 
44: R13         7. Advances From Officer                            HTML     21K 
45: R14         8. Stockholders' Deficiency                         HTML     52K 
43: R15         9. Income Taxes                                     HTML     48K 
46: R16         10. Commitments and Contingencies                   HTML     40K 
35: R17         11. Subsequent Events                               HTML     20K 
37: R18         3. Summary of Significant Accounting Policies       HTML    105K 
                (Policies)                                                       
42: R19         4. Accrued Expenses (Tables)                        HTML     24K 
54: R20         6. Derivative Liabilities (Tables)                  HTML     38K 
48: R21         8. Stockholders' Deficiency (Tables)                HTML     36K 
30: R22         9. Income Taxes (Tables)                            HTML     47K 
41: R23         2. Going Concern and Managment Plans (Narrative)    HTML     30K 
32: R24         3. Summary of Significant Accounting Policies       HTML     27K 
                (Narrative)                                                      
16: R25         4. Accrued Expenses (Details)                       HTML     36K 
49: R26         5. Convertible Notes Payable (Narrative)            HTML     28K 
52: R27         6. Derivative Liabilities (Details-Valuation)       HTML     32K 
21: R28         6. Derivative Liabilities (Details-Fair Value)      HTML     20K 
20: R29         6. Derivative Liabilities (Details-Level 3)         HTML     27K 
22: R30         7. Advances From Officers (Narrative)               HTML     22K 
23: R31         8. Stockholders' Deficiency (Details-Warrants       HTML     55K 
                Outstanding)                                                     
25: R32         8. Stockholders' Deficiency (Narrative)             HTML     40K 
15: R33         9. Income Taxes (Details-Income Tax Provision)      HTML     47K 
47: R34         9. Income Taxes (Details-Reconciliation of Income   HTML     33K 
                Tax)                                                             
29: R35         9. Income Taxes (Details-Deferred Tax Assets)       HTML     36K 
31: R36         9. Income Taxes (Narrative)                         HTML     18K 
17: R37         10. Commitments and Contingencies (Narrative)       HTML     33K 
53: XML         IDEA XML File -- Filing Summary                      XML     70K 
14: EXCEL       IDEA Workbook of Financial Reports                  XLSX     90K 
19: EXCEL       IDEA Workbook of Financial Reports (.xls)            XLS    348K 
 8: EX-101.INS  XBRL Instance -- nxti-20131231                       XML    512K 
10: EX-101.CAL  XBRL Calculations -- nxti-20131231_cal               XML    108K 
11: EX-101.DEF  XBRL Definitions -- nxti-20131231_def                XML    164K 
12: EX-101.LAB  XBRL Labels -- nxti-20131231_lab                     XML    520K 
13: EX-101.PRE  XBRL Presentations -- nxti-20131231_pre              XML    383K 
 9: EX-101.SCH  XBRL Schema -- nxti-20131231                         XSD     83K 
26: ZIP         XBRL Zipped Folder -- 0001019687-14-000613-xbrl      Zip     72K

‘EX-101.INS’   —   XBRL Instance — nxti-20131231

This Exhibit is an XBRL XML File.

                                                                                                                                                                                
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><font style="font-size: 8pt"></font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt">Nxt-ID, Inc. (“Nxt-ID” or the “Company”) was incorporated in the State of Delaware on February 8, 2012. Nxt-ID is a biometrics company focused on the growing m-commerce market with an innovative MobileBio suite of biometric solutions that secure mobile platforms. The Company also serves the access control and law enforcement facial recognition markets. </font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt"> </font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt">3D-ID, LLC (“3D-ID”) was organized and registered in the State of Florida on February 14, 2011. 3D-ID is an early stage company engaged in the design, research and development, integration, analysis, modeling, system networking, sales and support of intelligent surveillance, three dimensional facial recognition and three dimensional imaging devices and systems primarily for identification and access control in the security industries.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt">On September 25, 2012, Nxt-ID, a company having similar ownership as 3D-ID, acquired 100% of the membership interests in 3D-ID (the “Acquisition”) in exchange for 20,000,000 shares of Nxt-ID common stock. Since this was a transaction between entities under common control in accordance with Accounting Standards Codification (“ASC”) 805, “Business Combinations”, Nxt-ID recognized the net assets of 3D-ID at their carrying amounts in the accounts of Nxt-ID on the date that 3D-ID was organized.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt"> </font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt">In connection with the Acquisition, the Company’s Board of Directors and stockholders approved an amendment to the Certificate of Incorporation of the Company to increase the Company’s authorized stock from 1,000 shares of common stock, par value $0.0001 per share, to 110,000,000 shares, consisting of 100,000,000 shares of common stock, par value $0.0001 per share, and 10,000,000 shares of blank-check preferred stock, par value $0.0001 per share. The amendment to the Certificate of Incorporation was approved by the State of Delaware on December 10, 2012, however, has been accounted for retroactively as of February 14, 2011, the date that 3D-ID was organized. The approval of the amendment was delayed for administrative reasons and was merely a perfunctory task.</font></p>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt"></font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt">The Company is an early stage entity and incurred net losses of $1,544,534 during the year ended December 31, 2013. As of December 31, 2013 the Company had a working capital deficiency and stockholders’ deficiency of $1,839,127 and $1,831,393, respectively. Subsequent to December 31, 2013, the Company raised $900,000 through the issuance of common stock and warrants in a private placement (see Note 11). The Company received notice on February 11, 2014 from <font style="color: black">Connecticut Innovations, Inc. </font>requesting the conversion of their outstanding convertible note of $150,000 and accrued interest of $21,485 into common stock on February 17, 2014. Since February 17<sup>th</sup> was a holiday the Company issued the shares on February 18, 2014. The Company issued 55,497 shares in full relief of the outstanding debt of $171,485.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt">In order to execute the Company's long-term strategic plan to develop and commercialize its core products, the Company will need to raise additional funds, through public or private equity offerings, debt financings, or other means. The Company can give no assurance that the cash raised subsequent to December 31, 2013 or any additional funds raised will be sufficient to execute its business plan. Additionally, the Company can give no assurance that additional funds will be available on reasonable terms, or available at all, or that it will generate sufficient revenue to alleviate the going concern. These conditions raise substantial doubt about the Company’s ability to continue as a going concern.</font></p> <p style="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><font style="font-size: 8pt"> </font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt">The Company’s ability to execute its business plan is dependent upon its ability to raise additional equity, secure debt financing, and/or generate revenue. Should the Company not be successful in obtaining the necessary financing, or generate sufficient revenue to fund its operations, the Company would need to curtail certain of its operational activities. The accompanying financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern.</font></p>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><font style="font-size: 8pt"></font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><font style="font-size: 8pt; font-variant: small-caps"><b><i>Use of Estimates in the Financial Statements</i></b></font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt">The preparation of 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 amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The Company’s significant estimates and assumptions include the valuation allowance relating to the Company’s deferred tax asset, the fair value of the Company’s stock, derivative financial instruments and stock-based compensation.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt; font-variant: small-caps"><b><i> </i></b></font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt; font-variant: small-caps"><b><i>Principles of Consolidation</i></b></font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt">The consolidated financial statements include the accounts of Nxt-ID and its wholly-owned subsidiary, 3D-ID. Intercompany balances and transactions have been eliminated upon consolidation.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt; font-variant: small-caps"><b><i>Cash</i></b></font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt">The Company considers all highly liquid securities with an original maturity date of three months or less when purchased to be cash equivalents. At December 31, 2013 and 2012, the Company had no cash equivalents. Due to their short-term nature, cash equivalents are carried at cost, which approximates fair value.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt; font-variant: small-caps"><b><i>Concentrations of Credit Risk</i></b></font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt">Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt">The Company maintains its cash balances in financial institutions located in the United States. At times, the Company’s cash balances may be uninsured or in deposit accounts that exceed the Federal Deposit Insurance Corporation (“FDIC”) insurance limits.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><font style="font-size: 8pt">  </font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt; font-variant: small-caps"><b><i>Revenue Recognition</i></b></font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt">The Company’s 3D facial recognition and identification products are currently available for sale. The Company recognizes revenue in connection with the sale of these products when persuasive evidence of an arrangement exists, the service has been rendered or product delivery has occurred, the price is fixed or readily determinable and collectability of the sale is reasonably assured.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt">The Company requires all of its product sales to be supported by evidence of a sale transaction that clearly indicates the selling price to the customer, shipping terms and payment terms. Evidence of an arrangement generally consists of a contract or purchase order approved by the customer. The Company recognizes revenue at the time in which it receives a confirmation that the goods were either tendered at their destination, when shipped “FOB destination,” or transferred to a shipping agent, when shipped “FOB shipping point.” Delivery to the customer is deemed to have occurred when the customer takes title to the product. Generally, title passes to the customer upon shipment, but could occur when the customer receives the product based on the terms of the agreement with the customer. The selling prices of all goods that the Company sells are fixed, and agreed to with the customer, prior to shipment.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt">In the event a sale is made to a customer under circumstances in which collectability is not reasonably assured, the Company either requires the customer to remit payment prior to shipment or defers recognition of the revenue until payment is received. The Company maintains a reserve for amounts which may not be collectible due to risk of credit losses. The Company’s sales typically do not include multiple deliverable arrangements.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt; font-variant: small-caps"><b><i>Long-Lived Assets</i></b></font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt">Long-lived assets, such as property and equipment, are evaluated for impairment whenever events or changes in circumstances indicate the carrying value of an asset may not be recoverable in accordance with ASC 360-10-35-17 through 35-35 "Measurement of an Impairment Loss." The Company assesses the impairment of the assets based on the undiscounted future cash flow the assets are expected to generate compared to the carrying value of the assets. If the carrying amount of the assets is determined not to be recoverable, a write-down to fair value is recorded. Management estimates future cash flows using assumptions about expected future operating performance. Management's estimates of future cash flows may differ from actual cash flow due to, among other things, technological changes, economic conditions or changes to the Company's business operations.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><font style="font-size: 8pt">  </font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt; font-variant: small-caps"><b><i>Property and Equipment</i></b></font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt">Property and equipment consisting of furniture and fixtures is stated at cost. The costs of additions and betterments are capitalized and expenditures for repairs and maintenance are expensed in the period incurred. When items of property and equipment are sold or retired, the related costs and accumulated depreciation are removed from the accounts and any gain or loss is included in income. Depreciation of property and equipment is provided utilizing the straight-line method over the estimated useful life of the respective asset as follows:</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p> <table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: top"> <td><font style="font-size: 8pt"> </font></td> <td style="padding-left: 10pt; text-align: justify"><font style="font-size: 8pt">Equipment</font></td> <td style="padding-left: 10pt; text-align: justify"><font style="font-size: 8pt">5 years</font></td></tr> <tr style="vertical-align: top"> <td style="width: 15%"><font style="font-size: 8pt"> </font></td> <td style="width: 35%; padding-left: 10pt; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">Furniture and fixtures</font></td> <td style="width: 50%; padding-left: 10pt; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">3 to 5 years</font></td></tr> <tr style="vertical-align: top"> <td><font style="font-size: 8pt"> </font></td> <td style="padding-left: 10pt; text-align: center"><font style="font-size: 8pt"> </font></td> <td style="padding-left: 10pt; text-align: center"><font style="font-size: 8pt"> </font></td></tr> </table> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt">Depreciation expense for the year ended December 31, 2013 and 2012 was $585 and $99, respectively.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt; font-variant: small-caps"><b><i> </i></b></font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt; font-variant: small-caps"><b><i>Inventory</i></b></font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt">Inventory is valued at the lower of cost or market with cost determined using the first-in, first-out method and with market defined as the lower of replacement cost or realizable value. Inventory is comprised principally of raw materials.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt; font-variant: small-caps"><b><i>Convertible Instruments</i></b></font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt">The Company applies the accounting standards for derivatives and hedging and for distinguishing liabilities from equity when accounting for hybrid contracts that feature conversion options. The accounting standards require companies to bifurcate conversion options from their host instruments and account for them as free standing derivative financial instruments according to certain criteria. The criteria includes circumstances in which (i) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (ii) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur and (iii) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt"> </font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt">The derivative is subsequently marked to market at each reporting date based on current fair value, with the changes in fair value reported in the results of operations.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt">Conversion options that contain variable settlement features such as provisions to adjust the conversion price upon subsequent issuances of equity or equity linked securities at exercise prices more favorable than that featured in the hybrid contract generally result in their bifurcation from the host instrument.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 48pt"><font style="font-size: 8pt"> </font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt">The Company accounts for convertible debt instruments when the Company has determined that the embedded conversion options should not be bifurcated from their host instruments in accordance with ASC 470-20 “Debt with Conversion and Other Options”. The Company records, when necessary, discounts to convertible notes for the intrinsic value of conversion options embedded in debt instruments based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note. Debt discounts under these arrangements are amortized over the term of the related debt. See Note 5.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt"> </font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt; font-variant: small-caps"><b><i>Derivative financials instruments</i></b></font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt"> </font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt">The Company does not use derivative instruments to hedge exposures to cash flow, market or foreign currency risks. The Company evaluates all of its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the consolidated statements of operations. For stock-based derivative financial instruments, the Company uses the Black-Scholes option valuation model to value the derivative instruments at inception and on subsequent valuation dates. The conversion feature embedded within Company’s convertible note payable does not have fixed settlement provisions as the conversion price varies based on the trading price of the Company’s common stock and the potential number of common shares to be issued upon conversion is indeterminable up to a maximum of 120,000 shares of common stock. In addition, the warrants issued in connection with the Offering (as defined in Note 8) do not have fixed settlement provisions as their exercise prices may be lowered if the Company conducts an offering in the future at a price per share below the exercise price of the warrants. Accordingly, the conversion feature and warrants have been recognized as derivative instruments. Although the Company determined the conversion feature and warrants both include a implied downside protection feature, it performed a Monte-Carlo simulation and concluded that the difference in value between the Monte-Carlo simulation and the Black-Scholes valuation model is de minimis and the use of the Black-Scholes valuation model is considered to be a reasonable method to value each instrument. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date.  (See Note 6.)</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt"><b><i> </i></b></font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt; font-variant: small-caps"><b><i>Debt discount and amortization of debt discount</i></b></font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt"> </font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt">Debt discount represents the fair value of embedded conversion options of various convertible debt instruments and attached convertible equity instruments issued in connection with debt instruments. The debt discount is amortized over the earlier of (i) the term of the debt or (ii) conversion of the debt, using the straight-line method which approximates the interest method. The amortization of debt discount is included as a component of other expenses in the accompanying statements of operations.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt; font-variant: small-caps"><b><i> </i></b></font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt; font-variant: small-caps"><b><i>Income Taxes</i></b></font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt">The Company uses the asset and liability method of accounting for income taxes in accordance with ASC Topic 740, "Income Taxes." Under this method, income tax expense is recognized for the amount of: (i) taxes payable or refundable for the current year and (ii) deferred tax consequences of temporary differences resulting from matters that have been recognized in an entity's financial statements or tax returns. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the year 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 the results of operations in the period that includes the enactment date. A valuation allowance is provided to reduce the deferred tax assets reported if based on the weight of the available positive and negative evidence, it is more likely than not some portion or all of the deferred tax assets will not be realized.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt">ASC Topic 740-10-30 clarifies the accounting for uncertainty in income taxes recognized in an enterprise's financial statements and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC Topic 740-10-40 provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. The Company will classify as income tax expense any interest and penalties. The Company has no material uncertain tax positions for any of the reporting periods presented. Generally, the tax authorities may examine the partnership/corporate tax returns for three years from the date of filing. All periods are open for examination since the Company is still in the process of filing its tax returns for all periods. Therefore, the Company’s net operating loss carryovers will not be available to offset future taxable income, if any, until the returns are filed.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt; font-variant: small-caps"><b><i>Stock-Based Compensation</i></b></font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt"> </font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt">The Company accounts for share-based awards exchanged for employee services at the estimated grant date fair value of the award. The Company estimates the fair value of employee stock options using the Black-Scholes option pricing model. The Company amortizes the fair value of employee stock options on a straight-line basis over the requisite service period of the awards. Compensation expense includes the impact of an estimate for forfeitures for all stock options.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt"> </font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt">The Company accounts for equity instruments issued to non-employees at their fair value on the measurement date. The measurement of stock-based compensation is subject to periodic adjustment as the underlying equity instrument vests or becomes non-forfeitable. Non-employee stock-based compensation charges are amortized over the vesting period or as earned.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt; font-variant: small-caps"><b><i>Net Loss per Share</i></b></font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt">Basic loss per share was computed using the weighted average number of common shares outstanding. Diluted loss per share includes the effect of diluted common stock equivalents. <font style="color: black">Potentially dilutive securities realizable from the exercise of 454,600 warrants and from the conversion of the Company’s notes payable into 50,000 shares of common stock as of December 31, 2013, respectively, were excluded from the computation of diluted net loss per share because the effect of their inclusion would have been anti-dilutive. As of December 31, 2012 there were no potentially dilutive securities.</font></font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt"> </font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><font style="font-size: 8pt; font-variant: small-caps"><b><i>Research and Development</i></b></font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt">Research and development costs consist of expenditures incurred during the course of planned research and investigation aimed at the discovery of new knowledge, which will be useful in developing new products or processes. The Company expenses all research and development costs as incurred.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt; font-variant: small-caps"><b><i>Recent Accounting Pronouncements</i></b></font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><font style="font-size: 8pt"> </font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt">The Financial Accounting Standards Board (“FASB”) has issued Accounting Standards Update (“ASU”) No. 2013-11, Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists (a consensus of the FASB Emerging Issues Task Force). The amendments in this ASU state that an unrecognized tax benefit, or a portion of an unrecognized tax benefit, should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward, except as follows. To the extent a net operating loss carryforward, a similar tax loss, or a tax credit carryforward is not available at the reporting date under the tax law of the applicable jurisdiction to settle any additional income taxes that would result from the disallowance of a tax position or the tax law of the applicable jurisdiction does not require the entity to use, and the entity does not intend to use, the deferred tax asset for such purpose, the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets. The amendments in this ASU are effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. For nonpublic entities, the amendments are effective for fiscal years, and interim periods within those years, beginning after December 15, 2014. Early adoption is permitted. The amendments should be applied prospectively to all unrecognized tax benefits that exist at the effective date. Retrospective application is permitted. The adoption of this standard is not expected to have a material impact on the Company’s consolidated financial position and results of operations.</font></p>
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<us-gaap:UseOfEstimates contextRef="From2013-01-01to2013-12-31">
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><font style="font-size: 8pt"></font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><font style="font-size: 8pt; font-variant: small-caps"><b><i>Use of Estimates in the Financial Statements</i></b></font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt">The preparation of 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 amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The Company’s significant estimates and assumptions include the valuation allowance relating to the Company’s deferred tax asset, the fair value of the Company’s stock, derivative financial instruments and stock-based compensation.</font></p>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt; font-variant: small-caps"></font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt; font-variant: small-caps"><b><i>Principles of Consolidation</i></b></font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt">The consolidated financial statements include the accounts of Nxt-ID and its wholly-owned subsidiary, 3D-ID. Intercompany balances and transactions have been eliminated upon consolidation.</font></p>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt; font-variant: small-caps"><b><i>Cash</i></b></font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt">The Company considers all highly liquid securities with an original maturity date of three months or less when purchased to be cash equivalents. At December 31, 2013 and 2012, the Company had no cash equivalents. Due to their short-term nature, cash equivalents are carried at cost, which approximates fair value.</font></p>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt; font-variant: small-caps"><b><i>Concentrations of Credit Risk</i></b></font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt">Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt">The Company maintains its cash balances in financial institutions located in the United States. At times, the Company’s cash balances may be uninsured or in deposit accounts that exceed the Federal Deposit Insurance Corporation (“FDIC”) insurance limits.</font></p>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><font style="font-size: 8pt"></font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt; font-variant: small-caps"><b><i>Revenue Recognition</i></b></font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt">The Company’s 3D facial recognition and identification products are currently available for sale. The Company recognizes revenue in connection with the sale of these products when persuasive evidence of an arrangement exists, the service has been rendered or product delivery has occurred, the price is fixed or readily determinable and collectability of the sale is reasonably assured.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt">The Company requires all of its product sales to be supported by evidence of a sale transaction that clearly indicates the selling price to the customer, shipping terms and payment terms. Evidence of an arrangement generally consists of a contract or purchase order approved by the customer. The Company recognizes revenue at the time in which it receives a confirmation that the goods were either tendered at their destination, when shipped “FOB destination,” or transferred to a shipping agent, when shipped “FOB shipping point.” Delivery to the customer is deemed to have occurred when the customer takes title to the product. Generally, title passes to the customer upon shipment, but could occur when the customer receives the product based on the terms of the agreement with the customer. The selling prices of all goods that the Company sells are fixed, and agreed to with the customer, prior to shipment.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt">In the event a sale is made to a customer under circumstances in which collectability is not reasonably assured, the Company either requires the customer to remit payment prior to shipment or defers recognition of the revenue until payment is received. The Company maintains a reserve for amounts which may not be collectible due to risk of credit losses. The Company’s sales typically do not include multiple deliverable arrangements.</font></p>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt; font-variant: small-caps"><b><i>Property and Equipment</i></b></font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt">Property and equipment consisting of furniture and fixtures is stated at cost. The costs of additions and betterments are capitalized and expenditures for repairs and maintenance are expensed in the period incurred. When items of property and equipment are sold or retired, the related costs and accumulated depreciation are removed from the accounts and any gain or loss is included in income. Depreciation of property and equipment is provided utilizing the straight-line method over the estimated useful life of the respective asset as follows:</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p> <table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: top"> <td><font style="font-size: 8pt"> </font></td> <td style="padding-left: 10pt; text-align: justify"><font style="font-size: 8pt">Equipment</font></td> <td style="padding-left: 10pt; text-align: justify"><font style="font-size: 8pt">5 years</font></td></tr> <tr style="vertical-align: top"> <td style="width: 15%"><font style="font-size: 8pt"> </font></td> <td style="width: 35%; padding-left: 10pt; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">Furniture and fixtures</font></td> <td style="width: 50%; padding-left: 10pt; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">3 to 5 years</font></td></tr> </table> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt">Depreciation expense for the year ended December 31, 2013 and 2012 was $585 and $99, respectively.</font></p>
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<nxti:LonglivedAssets contextRef="From2013-01-01to2013-12-31">
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><font style="font-size: 8pt"></font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt; font-variant: small-caps"><b><i>Long-Lived Assets</i></b></font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt">Long-lived assets, such as property and equipment, are evaluated for impairment whenever events or changes in circumstances indicate the carrying value of an asset may not be recoverable in accordance with ASC 360-10-35-17 through 35-35 "Measurement of an Impairment Loss." The Company assesses the impairment of the assets based on the undiscounted future cash flow the assets are expected to generate compared to the carrying value of the assets. If the carrying amount of the assets is determined not to be recoverable, a write-down to fair value is recorded. Management estimates future cash flows using assumptions about expected future operating performance. Management's estimates of future cash flows may differ from actual cash flow due to, among other things, technological changes, economic conditions or changes to the Company's business operations.</font></p>
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<nxti:ConvertibleInstruments contextRef="From2013-01-01to2013-12-31">
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><font style="font-size: 8pt"></font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt; font-variant: small-caps"><b><i>Convertible Instruments</i></b></font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt">The Company applies the accounting standards for derivatives and hedging and for distinguishing liabilities from equity when accounting for hybrid contracts that feature conversion options. The accounting standards require companies to bifurcate conversion options from their host instruments and account for them as free standing derivative financial instruments according to certain criteria. The criteria includes circumstances in which (i) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (ii) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur and (iii) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt"> </font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt">The derivative is subsequently marked to market at each reporting date based on current fair value, with the changes in fair value reported in the results of operations.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt">Conversion options that contain variable settlement features such as provisions to adjust the conversion price upon subsequent issuances of equity or equity linked securities at exercise prices more favorable than that featured in the hybrid contract generally result in their bifurcation from the host instrument.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 48pt"><font style="font-size: 8pt"> </font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt">The Company accounts for convertible debt instruments when the Company has determined that the embedded conversion options should not be bifurcated from their host instruments in accordance with ASC 470-20 “Debt with Conversion and Other Options”. The Company records, when necessary, discounts to convertible notes for the intrinsic value of conversion options embedded in debt instruments based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note. Debt discounts under these arrangements are amortized over the term of the related debt. See Note 5.</font></p>
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<us-gaap:DerivativesPolicyTextBlock contextRef="From2013-01-01to2013-12-31">
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt; font-variant: small-caps"><b><i>Derivative financials instruments</i></b></font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt"> </font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt">The Company does not use derivative instruments to hedge exposures to cash flow, market or foreign currency risks. The Company evaluates all of its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the consolidated statements of operations. For stock-based derivative financial instruments, the Company uses the Black-Scholes option valuation model to value the derivative instruments at inception and on subsequent valuation dates. The conversion feature embedded within Company’s convertible note payable does not have fixed settlement provisions as the conversion price varies based on the trading price of the Company’s common stock and the potential number of common shares to be issued upon conversion is indeterminable up to a maximum of 120,000 shares of common stock. In addition, the warrants issued in connection with the Offering (as defined in Note 8) do not have fixed settlement provisions as their exercise prices may be lowered if the Company conducts an offering in the future at a price per share below the exercise price of the warrants. Accordingly, the conversion feature and warrants have been recognized as derivative instruments. Although the Company determined the conversion feature and warrants both include a implied downside protection feature, it performed a Monte-Carlo simulation and concluded that the difference in value between the Monte-Carlo simulation and the Black-Scholes valuation model is de minimis and the use of the Black-Scholes valuation model is considered to be a reasonable method to value each instrument. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date.  (See Note 6.)</font></p>
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<us-gaap:DebtPolicyTextBlock contextRef="From2013-01-01to2013-12-31">
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt"><b></b></font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt; font-variant: small-caps"><b><i>Debt discount and amortization of debt discount</i></b></font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt"> </font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt">Debt discount represents the fair value of embedded conversion options of various convertible debt instruments and attached convertible equity instruments issued in connection with debt instruments. The debt discount is amortized over the earlier of (i) the term of the debt or (ii) conversion of the debt, using the straight-line method which approximates the interest method. The amortization of debt discount is included as a component of other expenses in the accompanying statements of operations.</font></p>
</us-gaap:DebtPolicyTextBlock>
<us-gaap:IncomeTaxPolicyTextBlock contextRef="From2013-01-01to2013-12-31">
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt; font-variant: small-caps"><b></b></font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt; font-variant: small-caps"><b><i>Income Taxes</i></b></font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt">The Company uses the asset and liability method of accounting for income taxes in accordance with ASC Topic 740, "Income Taxes." Under this method, income tax expense is recognized for the amount of: (i) taxes payable or refundable for the current year and (ii) deferred tax consequences of temporary differences resulting from matters that have been recognized in an entity's financial statements or tax returns. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the year 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 the results of operations in the period that includes the enactment date. A valuation allowance is provided to reduce the deferred tax assets reported if based on the weight of the available positive and negative evidence, it is more likely than not some portion or all of the deferred tax assets will not be realized.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt">ASC Topic 740-10-30 clarifies the accounting for uncertainty in income taxes recognized in an enterprise's financial statements and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC Topic 740-10-40 provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. The Company will classify as income tax expense any interest and penalties. The Company has no material uncertain tax positions for any of the reporting periods presented. Generally, the tax authorities may examine the partnership/corporate tax returns for three years from the date of filing. All periods are open for examination since the Company is still in the process of filing its tax returns for all periods. Therefore, the Company’s net operating loss carryovers will not be available to offset future taxable income, if any, until the returns are filed.</font></p>
</us-gaap:IncomeTaxPolicyTextBlock>
<us-gaap:ShareBasedCompensationOptionAndIncentivePlansPolicy contextRef="From2013-01-01to2013-12-31">
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><font style="font-size: 8pt"></font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt; font-variant: small-caps"><b><i>Stock-Based Compensation</i></b></font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt"> </font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt">The Company accounts for share-based awards exchanged for employee services at the estimated grant date fair value of the award. The Company estimates the fair value of employee stock options using the Black-Scholes option pricing model. The Company amortizes the fair value of employee stock options on a straight-line basis over the requisite service period of the awards. Compensation expense includes the impact of an estimate for forfeitures for all stock options.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt"> </font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt">The Company accounts for equity instruments issued to non-employees at their fair value on the measurement date. The measurement of stock-based compensation is subject to periodic adjustment as the underlying equity instrument vests or becomes non-forfeitable. Non-employee stock-based compensation charges are amortized over the vesting period or as earned.</font></p>
</us-gaap:ShareBasedCompensationOptionAndIncentivePlansPolicy>
<us-gaap:EarningsPerSharePolicyTextBlock contextRef="From2013-01-01to2013-12-31">
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><font style="font-size: 8pt"></font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt; font-variant: small-caps"><b><i>Net Loss per Share</i></b></font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt">Basic loss per share was computed using the weighted average number of common shares outstanding. Diluted loss per share includes the effect of diluted common stock equivalents. <font style="color: black">Potentially dilutive securities realizable from the exercise of 454,600 warrants and from the conversion of the Company’s notes payable into 50,000 shares of common stock as of December 31, 2013, respectively, were excluded from the computation of diluted net loss per share because the effect of their inclusion would have been anti-dilutive. As of December 31, 2012 there were no potentially dilutive securities.</font></font></p>
</us-gaap:EarningsPerSharePolicyTextBlock>
<us-gaap:ResearchAndDevelopmentExpensePolicy contextRef="From2013-01-01to2013-12-31">
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><font style="font-size: 8pt; font-variant: small-caps"><b><i>Research and Development</i></b></font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt">Research and development costs consist of expenditures incurred during the course of planned research and investigation aimed at the discovery of new knowledge, which will be useful in developing new products or processes. The Company expenses all research and development costs as incurred.</font></p>
</us-gaap:ResearchAndDevelopmentExpensePolicy>
<us-gaap:NewAccountingPronouncementsPolicyPolicyTextBlock contextRef="From2013-01-01to2013-12-31">
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><font style="font-size: 8pt"></font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt; font-variant: small-caps"><b><i>Recent Accounting Pronouncements</i></b></font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><font style="font-size: 8pt"> </font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt">The Financial Accounting Standards Board (“FASB”) has issued Accounting Standards Update (“ASU”) No. 2013-11, Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists (a consensus of the FASB Emerging Issues Task Force). The amendments in this ASU state that an unrecognized tax benefit, or a portion of an unrecognized tax benefit, should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward, except as follows. To the extent a net operating loss carryforward, a similar tax loss, or a tax credit carryforward is not available at the reporting date under the tax law of the applicable jurisdiction to settle any additional income taxes that would result from the disallowance of a tax position or the tax law of the applicable jurisdiction does not require the entity to use, and the entity does not intend to use, the deferred tax asset for such purpose, the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets. The amendments in this ASU are effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. For nonpublic entities, the amendments are effective for fiscal years, and interim periods within those years, beginning after December 15, 2014. Early adoption is permitted. The amendments should be applied prospectively to all unrecognized tax benefits that exist at the effective date. Retrospective application is permitted. The adoption of this standard is not expected to have a material impact on the Company’s consolidated financial position and results of operations.</font></p>
</us-gaap:NewAccountingPronouncementsPolicyPolicyTextBlock>
<us-gaap:AccountsPayableAccruedLiabilitiesAndOtherLiabilitiesDisclosureCurrentTextBlock contextRef="From2013-01-01to2013-12-31">
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><font style="font-size: 8pt">Accrued expenses and other current liabilities consist of the following:</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p> <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt"> </font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td> <td colspan="6" style="text-align: center; border-bottom: Black 1pt solid"><font style="font-size: 8pt">December 31,</font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt"> </font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td> <td colspan="2" style="text-align: center; border-bottom: Black 1pt solid"><font style="font-size: 8pt">2013</font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td> <td colspan="2" style="text-align: center; border-bottom: Black 1pt solid"><font style="font-size: 8pt">2012</font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td></tr> <tr style="vertical-align: bottom; background-color: rgb(238,238,238)"> <td style="width: 70%"><font style="font-size: 8pt">Salaries</font></td><td style="width: 2%"><font style="font-size: 8pt"> </font></td> <td style="width: 1%; text-align: left"><font style="font-size: 8pt">$</font></td><td style="width: 11%; text-align: right"><font style="font-size: 8pt">18,750</font></td><td style="width: 1%; text-align: left"><font style="font-size: 8pt"> </font></td><td style="width: 2%"><font style="font-size: 8pt"> </font></td> <td style="width: 1%; text-align: left"><font style="font-size: 8pt">$</font></td><td style="width: 11%; text-align: right"><font style="font-size: 8pt">16,000</font></td><td style="width: 1%; text-align: left"><font style="font-size: 8pt"> </font></td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: left"><font style="font-size: 8pt">Reimbursable expenses</font></td><td><font style="font-size: 8pt"> </font></td> <td style="text-align: left"><font style="font-size: 8pt"> </font></td><td style="text-align: right"><font style="font-size: 8pt">196</font></td><td style="text-align: left"><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td> <td style="text-align: left"><font style="font-size: 8pt"> </font></td><td style="text-align: right"><font style="font-size: 8pt">27,334</font></td><td style="text-align: left"><font style="font-size: 8pt"> </font></td></tr> <tr style="vertical-align: bottom; background-color: rgb(238,238,238)"> <td style="text-align: left"><font style="font-size: 8pt">Consulting fees</font></td><td><font style="font-size: 8pt"> </font></td> <td style="text-align: left"><font style="font-size: 8pt"> </font></td><td style="text-align: right"><font style="font-size: 8pt">18,574</font></td><td style="text-align: left"><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td> <td style="text-align: left"><font style="font-size: 8pt"> </font></td><td style="text-align: right"><font style="font-size: 8pt">5,698</font></td><td style="text-align: left"><font style="font-size: 8pt"> </font></td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: left"><font style="font-size: 8pt">Royalty fees</font></td><td><font style="font-size: 8pt"> </font></td> <td style="text-align: left"><font style="font-size: 8pt"> </font></td><td style="text-align: right"><font style="font-size: 8pt">35,000</font></td><td style="text-align: left"><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td> <td style="text-align: left"><font style="font-size: 8pt"> </font></td><td style="text-align: right"><font style="font-size: 8pt">20,000</font></td><td style="text-align: left"><font style="font-size: 8pt"> </font></td></tr> <tr style="vertical-align: bottom; background-color: rgb(238,238,238)"> <td style="text-align: left"><font style="font-size: 8pt">Investment banking fees</font></td><td><font style="font-size: 8pt"> </font></td> <td style="text-align: left"><font style="font-size: 8pt"> </font></td><td style="text-align: right"><font style="font-size: 8pt">45,000</font></td><td style="text-align: left"><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td> <td style="text-align: left"><font style="font-size: 8pt"> </font></td><td style="text-align: right"><font style="font-size: 8pt">–</font></td><td style="text-align: left"><font style="font-size: 8pt"> </font></td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: left; padding-bottom: 1pt"><font style="font-size: 8pt">Interest expense - convertible note</font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td> <td style="border-bottom: Black 1pt solid; text-align: left"><font style="font-size: 8pt"> </font></td><td style="border-bottom: Black 1pt solid; text-align: right"><font style="font-size: 8pt">17,497</font></td><td style="padding-bottom: 1pt; text-align: left"><font style="font-size: 8pt"> </font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td> <td style="border-bottom: Black 1pt solid; text-align: left"><font style="font-size: 8pt"> </font></td><td style="border-bottom: Black 1pt solid; text-align: right"><font style="font-size: 8pt">247</font></td><td style="padding-bottom: 1pt; text-align: left"><font style="font-size: 8pt"> </font></td></tr> <tr style="vertical-align: bottom; background-color: rgb(238,238,238)"> <td style="padding-bottom: 2.5pt; padding-left: 11pt"><font style="font-size: 8pt">Totals</font></td><td style="padding-bottom: 2.5pt"><font style="font-size: 8pt"> </font></td> <td style="border-bottom: Black 2.5pt double; text-align: left"><font style="font-size: 8pt">$</font></td><td style="border-bottom: Black 2.5pt double; text-align: right"><font style="font-size: 8pt">135,017</font></td><td style="padding-bottom: 2.5pt; text-align: left"><font style="font-size: 8pt"> </font></td><td style="padding-bottom: 2.5pt"><font style="font-size: 8pt"> </font></td> <td style="border-bottom: Black 2.5pt double; text-align: left"><font style="font-size: 8pt">$</font></td><td style="border-bottom: Black 2.5pt double; text-align: right"><font style="font-size: 8pt">69,279</font></td><td style="padding-bottom: 2.5pt; text-align: left"><font style="font-size: 8pt"> </font></td></tr> </table> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><font style="font-size: 8pt; font-variant: small-caps"><b> </b></font></p>
</us-gaap:AccountsPayableAccruedLiabilitiesAndOtherLiabilitiesDisclosureCurrentTextBlock>
<us-gaap:ScheduleOfAccountsPayableAndAccruedLiabilitiesTableTextBlock contextRef="From2013-01-01to2013-12-31">
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt"> </font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td> <td colspan="6" style="text-align: center; border-bottom: Black 1pt solid"><font style="font-size: 8pt">December 31,</font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt"> </font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td> <td colspan="2" style="text-align: center; border-bottom: Black 1pt solid"><font style="font-size: 8pt">2013</font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td> <td colspan="2" style="text-align: center; border-bottom: Black 1pt solid"><font style="font-size: 8pt">2012</font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td></tr> <tr style="vertical-align: bottom; background-color: rgb(238,238,238)"> <td style="width: 70%"><font style="font-size: 8pt">Salaries</font></td><td style="width: 2%"><font style="font-size: 8pt"> </font></td> <td style="width: 1%; text-align: left"><font style="font-size: 8pt">$</font></td><td style="width: 11%; text-align: right"><font style="font-size: 8pt">18,750</font></td><td style="width: 1%; text-align: left"><font style="font-size: 8pt"> </font></td><td style="width: 2%"><font style="font-size: 8pt"> </font></td> <td style="width: 1%; text-align: left"><font style="font-size: 8pt">$</font></td><td style="width: 11%; text-align: right"><font style="font-size: 8pt">16,000</font></td><td style="width: 1%; text-align: left"><font style="font-size: 8pt"> </font></td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: left"><font style="font-size: 8pt">Reimbursable expenses</font></td><td><font style="font-size: 8pt"> </font></td> <td style="text-align: left"><font style="font-size: 8pt"> </font></td><td style="text-align: right"><font style="font-size: 8pt">196</font></td><td style="text-align: left"><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td> <td style="text-align: left"><font style="font-size: 8pt"> </font></td><td style="text-align: right"><font style="font-size: 8pt">27,334</font></td><td style="text-align: left"><font style="font-size: 8pt"> </font></td></tr> <tr style="vertical-align: bottom; background-color: rgb(238,238,238)"> <td style="text-align: left"><font style="font-size: 8pt">Consulting fees</font></td><td><font style="font-size: 8pt"> </font></td> <td style="text-align: left"><font style="font-size: 8pt"> </font></td><td style="text-align: right"><font style="font-size: 8pt">18,574</font></td><td style="text-align: left"><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td> <td style="text-align: left"><font style="font-size: 8pt"> </font></td><td style="text-align: right"><font style="font-size: 8pt">5,698</font></td><td style="text-align: left"><font style="font-size: 8pt"> </font></td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: left"><font style="font-size: 8pt">Royalty fees</font></td><td><font style="font-size: 8pt"> </font></td> <td style="text-align: left"><font style="font-size: 8pt"> </font></td><td style="text-align: right"><font style="font-size: 8pt">35,000</font></td><td style="text-align: left"><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td> <td style="text-align: left"><font style="font-size: 8pt"> </font></td><td style="text-align: right"><font style="font-size: 8pt">20,000</font></td><td style="text-align: left"><font style="font-size: 8pt"> </font></td></tr> <tr style="vertical-align: bottom; background-color: rgb(238,238,238)"> <td style="text-align: left"><font style="font-size: 8pt">Investment banking fees</font></td><td><font style="font-size: 8pt"> </font></td> <td style="text-align: left"><font style="font-size: 8pt"> </font></td><td style="text-align: right"><font style="font-size: 8pt">45,000</font></td><td style="text-align: left"><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td> <td style="text-align: left"><font style="font-size: 8pt"> </font></td><td style="text-align: right"><font style="font-size: 8pt">–</font></td><td style="text-align: left"><font style="font-size: 8pt"> </font></td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: left; padding-bottom: 1pt"><font style="font-size: 8pt">Interest expense - convertible note</font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td> <td style="border-bottom: Black 1pt solid; text-align: left"><font style="font-size: 8pt"> </font></td><td style="border-bottom: Black 1pt solid; text-align: right"><font style="font-size: 8pt">17,497</font></td><td style="padding-bottom: 1pt; text-align: left"><font style="font-size: 8pt"> </font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td> <td style="border-bottom: Black 1pt solid; text-align: left"><font style="font-size: 8pt"> </font></td><td style="border-bottom: Black 1pt solid; text-align: right"><font style="font-size: 8pt">247</font></td><td style="padding-bottom: 1pt; text-align: left"><font style="font-size: 8pt"> </font></td></tr> <tr style="vertical-align: bottom; background-color: rgb(238,238,238)"> <td style="padding-bottom: 2.5pt; padding-left: 11pt"><font style="font-size: 8pt">Totals</font></td><td style="padding-bottom: 2.5pt"><font style="font-size: 8pt"> </font></td> <td style="border-bottom: Black 2.5pt double; text-align: left"><font style="font-size: 8pt">$</font></td><td style="border-bottom: Black 2.5pt double; text-align: right"><font style="font-size: 8pt">135,017</font></td><td style="padding-bottom: 2.5pt; text-align: left"><font style="font-size: 8pt"> </font></td><td style="padding-bottom: 2.5pt"><font style="font-size: 8pt"> </font></td> <td style="border-bottom: Black 2.5pt double; text-align: left"><font style="font-size: 8pt">$</font></td><td style="border-bottom: Black 2.5pt double; text-align: right"><font style="font-size: 8pt">69,279</font></td><td style="padding-bottom: 2.5pt; text-align: left"><font style="font-size: 8pt"> </font></td></tr> </table>
</us-gaap:ScheduleOfAccountsPayableAndAccruedLiabilitiesTableTextBlock>
<us-gaap:DebtDisclosureTextBlock contextRef="From2013-01-01to2013-12-31">
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt">On December 13, 2012, the Company received approval from Connecticut Innovations, Inc. (“CII”) for a Convertible Note (the “Note”) in the amount of $150,000 The Company received the first tranche of $75,000 on December 21, 2012, and the second tranche of $75,000 on January 31, 2013. As of December 31, 2013, the Company has accrued $17,497 in interest in connection with the Note. The Note’s maturity date is December 21, 2014.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><font style="font-size: 8pt"> </font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt">The Note accrues interest at the annual rate of 12% and all principal and interest is repayable in full on December 21, 2014 if it has not been converted. CII has the option to convert the outstanding principal and interest on the Note into shares of the Company’s common stock at a discount of 25% of the Company’s common stock price, but not less than $1.25 as agreed by the two parties. In accordance with ASC 470, “Accounting for Securities with Beneficial Conversion Features or Contingently Adjustable Conversion Ratios,” the Note is considered to have a beneficial conversion feature as the effective conversion price will be less than the Company’s stock price.  In addition, in accordance with ASC 815 the conversion feature is considered to be a derivative instrument as the conversion price varies based on the trading price of the Company’s common stock and the potential number of common shares to be issued upon conversion is variable up to a maximum of 120,000 shares. At December 31, 2013, the note payable is convertible into 50,000 shares of the Company’s common stock.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt"> </font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt">The conversion feature embedded in the note payable was triggered once the Company completed a qualified financing, as defined in the note agreement. The Company determined that a qualified financing occurred during the second quarter of 2013 in connection with the issuance of the registered units under its initial registration statement (See Note 8).  As a result, the Company recorded a conversion feature liability and a corresponding debt discount of $44,966 on the accompanying consolidated balance sheet on the date the qualified financing was determined to have occurred.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt"> </font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt">The unrealized loss on the change in the fair value of the conversion feature liability was determined to be $73,974 for the year ended December 31, 2013 (See Note 6). Amortization expense relating to the Company’s debt discount for the year ended December 31, 2013 was $18,211.</font></p>
</us-gaap:DebtDisclosureTextBlock>
<us-gaap:ScheduleOfDerivativeLiabilitiesAtFairValueTableTextBlock contextRef="From2013-01-01to2013-12-31">
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt"> </font></td><td style="color: black; font-weight: bold; padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td> <td colspan="2" style="color: black; font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><font style="font-size: 8pt">May 25, 2013</font></td><td style="padding-bottom: 1pt; color: black; font-weight: bold"><font style="font-size: 8pt"> </font></td><td style="color: black; font-weight: bold; padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td> <td colspan="2" style="color: black; font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><font style="font-size: 8pt">December 31, 2013</font></td><td style="padding-bottom: 1pt; color: black; font-weight: bold"><font style="font-size: 8pt"> </font></td></tr> <tr style="vertical-align: bottom; background-color: rgb(238,238,238)"> <td style="color: black; text-align: justify"><font style="font-size: 8pt">Embedded Conversion Feature and Warrant Liability:</font></td><td><font style="font-size: 8pt"> </font></td> <td style="text-align: left"><font style="font-size: 8pt"> </font></td><td style="text-align: right"><font style="font-size: 8pt"> </font></td><td style="text-align: left"><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td> <td style="text-align: left"><font style="font-size: 8pt"> </font></td><td style="text-align: right"><font style="font-size: 8pt"> </font></td><td style="text-align: left"><font style="font-size: 8pt"> </font></td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="width: 62%; color: black; text-align: left; padding-left: 9.9pt"><font style="font-size: 8pt">Risk-free interest rate</font></td><td style="width: 2%; color: black"><font style="font-size: 8pt"> </font></td> <td style="width: 1%; color: black; text-align: left"><font style="font-size: 8pt"> </font></td><td style="width: 15%; color: black; text-align: right"><font style="font-size: 8pt">0.30</font></td><td style="width: 1%; color: black; text-align: left"><font style="font-size: 8pt">%</font></td><td style="width: 2%; color: black"><font style="font-size: 8pt"> </font></td> <td style="width: 1%; color: black; text-align: left"><font style="font-size: 8pt"> </font></td><td style="width: 15%; color: black; text-align: right"><font style="font-size: 8pt">0.30</font></td><td style="width: 1%; color: black; text-align: left"><font style="font-size: 8pt">%</font></td></tr> <tr style="vertical-align: bottom; background-color: rgb(238,238,238)"> <td style="color: black; text-align: left; padding-left: 9.9pt"><font style="font-size: 8pt">Expected volatility</font></td><td style="color: black"><font style="font-size: 8pt"> </font></td> <td style="color: black; text-align: left"><font style="font-size: 8pt"> </font></td><td style="color: black; text-align: right"><font style="font-size: 8pt">91.17</font></td><td style="color: black; text-align: left"><font style="font-size: 8pt">%</font></td><td style="color: black"><font style="font-size: 8pt"> </font></td> <td style="color: black; text-align: left"><font style="font-size: 8pt"> </font></td><td style="color: black; text-align: right"><font style="font-size: 8pt">123.54</font></td><td style="color: black; text-align: left"><font style="font-size: 8pt">%</font></td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="color: black; text-align: left; padding-left: 9.9pt"><font style="font-size: 8pt">Expected life (in years)</font></td><td style="color: black"><font style="font-size: 8pt"> </font></td> <td style="color: black; text-align: left"><font style="font-size: 8pt"> </font></td><td style="color: black; text-align: right"><font style="font-size: 8pt">1.60</font></td><td style="color: black; text-align: left"><font style="font-size: 8pt"> </font></td><td style="color: black"><font style="font-size: 8pt"> </font></td> <td style="color: black; text-align: left"><font style="font-size: 8pt"> </font></td><td style="color: black; text-align: right"><font style="font-size: 8pt">4.59</font></td><td style="color: black; text-align: left"><font style="font-size: 8pt"> </font></td></tr> <tr style="vertical-align: bottom; background-color: rgb(238,238,238)"> <td style="color: black; text-align: left; padding-left: 9.9pt"><font style="font-size: 8pt">Expected dividend yield</font></td><td style="color: black"><font style="font-size: 8pt"> </font></td> <td style="color: black; text-align: left"><font style="font-size: 8pt"> </font></td><td style="color: black; text-align: right"><font style="font-size: 8pt">–</font></td><td style="color: black; text-align: left"><font style="font-size: 8pt"> </font></td><td style="color: black"><font style="font-size: 8pt"> </font></td> <td style="color: black; text-align: left"><font style="font-size: 8pt"> </font></td><td style="color: black; text-align: right"><font style="font-size: 8pt">–</font></td><td style="color: black; text-align: left"><font style="font-size: 8pt"> </font></td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="color: black; padding-left: 9.9pt"><font style="font-size: 8pt">Number of shares</font></td><td style="color: black"><font style="font-size: 8pt"> </font></td> <td style="color: black; text-align: left"><font style="font-size: 8pt"> </font></td><td style="color: black; text-align: right"><font style="font-size: 8pt">120,000</font></td><td style="color: black; text-align: left"><font style="font-size: 8pt"> </font></td><td style="color: black"><font style="font-size: 8pt"> </font></td> <td style="color: black; text-align: left"><font style="font-size: 8pt"> </font></td><td style="color: black; text-align: right"><font style="font-size: 8pt">500,000</font></td><td style="color: black; text-align: left"><font style="font-size: 8pt"> </font></td></tr> <tr style="vertical-align: bottom; background-color: rgb(238,238,238)"> <td style="color: black; padding-left: 9.9pt"><font style="font-size: 8pt">Fair value</font></td><td style="color: black"><font style="font-size: 8pt"> </font></td> <td style="color: black; text-align: left"><font style="font-size: 8pt">$</font></td><td style="color: black; text-align: right"><font style="font-size: 8pt">44,966</font></td><td style="color: black; text-align: left"><font style="font-size: 8pt"> </font></td><td style="color: black"><font style="font-size: 8pt"> </font></td> <td style="color: black; text-align: left"><font style="font-size: 8pt">$</font></td><td style="color: black; text-align: right"><font style="font-size: 8pt">1,650,243</font></td><td style="color: black; text-align: left"><font style="font-size: 8pt"> </font></td></tr> </table>
</us-gaap:ScheduleOfDerivativeLiabilitiesAtFairValueTableTextBlock>
<us-gaap:FairValueNetDerivativeAssetLiabilityMeasuredOnRecurringBasisUnobservableInputReconciliationTableTextBlock contextRef="From2013-01-01to2013-12-31">
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt">Fair value of financial instruments is defined as an exit price, which is the price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date. The degree of judgment utilized in measuring the fair value of assets and liabilities generally correlates to the level of pricing observability. Financial assets and liabilities with readily available, actively quoted prices or for which fair value can be measured from actively quoted prices in active markets generally have more pricing observability and require less judgment in measuring fair value. Conversely, financial assets and liabilities that are rarely traded or not quoted have less price observability and are generally measured at fair value using valuation models that require more judgment. These valuation techniques involve some level of management estimation and judgment, the degree of which is dependent on the price transparency of the asset, liability or market and the nature of the asset or liability. The Company has categorized its financial assets and liabilities measured at fair value into a three-level hierarchy.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt"> </font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt">The conversion feature embedded within the Company’s convertible notes payable and the warrants issued in connection with the Offering (as defined in Note 8) do not have fixed settlement provisions because the conversion and exercises prices may be lowered if the Company issues securities at lower prices in the future.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt"> </font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt">The derivative liabilities were valued using the Black-Scholes option valuation model and the following weighted average assumptions on the following dates:</font></p> <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt"> </font></td><td style="color: black; font-weight: bold; padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td> <td colspan="2" style="color: black; font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><font style="font-size: 8pt">May 25, 2013</font></td><td style="padding-bottom: 1pt; color: black; font-weight: bold"><font style="font-size: 8pt"> </font></td><td style="color: black; font-weight: bold; padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td> <td colspan="2" style="color: black; font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><font style="font-size: 8pt">December 31, 2013</font></td><td style="padding-bottom: 1pt; color: black; font-weight: bold"><font style="font-size: 8pt"> </font></td></tr> <tr style="vertical-align: bottom; background-color: rgb(238,238,238)"> <td style="color: black; text-align: justify"><font style="font-size: 8pt">Embedded Conversion Feature and Warrant Liability:</font></td><td><font style="font-size: 8pt"> </font></td> <td style="text-align: left"><font style="font-size: 8pt"> </font></td><td style="text-align: right"><font style="font-size: 8pt"> </font></td><td style="text-align: left"><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td> <td style="text-align: left"><font style="font-size: 8pt"> </font></td><td style="text-align: right"><font style="font-size: 8pt"> </font></td><td style="text-align: left"><font style="font-size: 8pt"> </font></td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="width: 62%; color: black; text-align: left; padding-left: 9.9pt"><font style="font-size: 8pt">Risk-free interest rate</font></td><td style="width: 2%; color: black"><font style="font-size: 8pt"> </font></td> <td style="width: 1%; color: black; text-align: left"><font style="font-size: 8pt"> </font></td><td style="width: 15%; color: black; text-align: right"><font style="font-size: 8pt">0.30</font></td><td style="width: 1%; color: black; text-align: left"><font style="font-size: 8pt">%</font></td><td style="width: 2%; color: black"><font style="font-size: 8pt"> </font></td> <td style="width: 1%; color: black; text-align: left"><font style="font-size: 8pt"> </font></td><td style="width: 15%; color: black; text-align: right"><font style="font-size: 8pt">0.30</font></td><td style="width: 1%; color: black; text-align: left"><font style="font-size: 8pt">%</font></td></tr> <tr style="vertical-align: bottom; background-color: rgb(238,238,238)"> <td style="color: black; text-align: left; padding-left: 9.9pt"><font style="font-size: 8pt">Expected volatility</font></td><td style="color: black"><font style="font-size: 8pt"> </font></td> <td style="color: black; text-align: left"><font style="font-size: 8pt"> </font></td><td style="color: black; text-align: right"><font style="font-size: 8pt">91.17</font></td><td style="color: black; text-align: left"><font style="font-size: 8pt">%</font></td><td style="color: black"><font style="font-size: 8pt"> </font></td> <td style="color: black; text-align: left"><font style="font-size: 8pt"> </font></td><td style="color: black; text-align: right"><font style="font-size: 8pt">123.54</font></td><td style="color: black; text-align: left"><font style="font-size: 8pt">%</font></td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="color: black; text-align: left; padding-left: 9.9pt"><font style="font-size: 8pt">Expected life (in years)</font></td><td style="color: black"><font style="font-size: 8pt"> </font></td> <td style="color: black; text-align: left"><font style="font-size: 8pt"> </font></td><td style="color: black; text-align: right"><font style="font-size: 8pt">1.60</font></td><td style="color: black; text-align: left"><font style="font-size: 8pt"> </font></td><td style="color: black"><font style="font-size: 8pt"> </font></td> <td style="color: black; text-align: left"><font style="font-size: 8pt"> </font></td><td style="color: black; text-align: right"><font style="font-size: 8pt">4.59</font></td><td style="color: black; text-align: left"><font style="font-size: 8pt"> </font></td></tr> <tr style="vertical-align: bottom; background-color: rgb(238,238,238)"> <td style="color: black; text-align: left; padding-left: 9.9pt"><font style="font-size: 8pt">Expected dividend yield</font></td><td style="color: black"><font style="font-size: 8pt"> </font></td> <td style="color: black; text-align: left"><font style="font-size: 8pt"> </font></td><td style="color: black; text-align: right"><font style="font-size: 8pt">–</font></td><td style="color: black; text-align: left"><font style="font-size: 8pt"> </font></td><td style="color: black"><font style="font-size: 8pt"> </font></td> <td style="color: black; text-align: left"><font style="font-size: 8pt"> </font></td><td style="color: black; text-align: right"><font style="font-size: 8pt">–</font></td><td style="color: black; text-align: left"><font style="font-size: 8pt"> </font></td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="color: black; padding-left: 9.9pt"><font style="font-size: 8pt">Number of shares</font></td><td style="color: black"><font style="font-size: 8pt"> </font></td> <td style="color: black; text-align: left"><font style="font-size: 8pt"> </font></td><td style="color: black; text-align: right"><font style="font-size: 8pt">120,000</font></td><td style="color: black; text-align: left"><font style="font-size: 8pt"> </font></td><td style="color: black"><font style="font-size: 8pt"> </font></td> <td style="color: black; text-align: left"><font style="font-size: 8pt"> </font></td><td style="color: black; text-align: right"><font style="font-size: 8pt">500,000</font></td><td style="color: black; text-align: left"><font style="font-size: 8pt"> </font></td></tr> <tr style="vertical-align: bottom; background-color: rgb(238,238,238)"> <td style="color: black; padding-left: 9.9pt"><font style="font-size: 8pt">Fair value</font></td><td style="color: black"><font style="font-size: 8pt"> </font></td> <td style="color: black; text-align: left"><font style="font-size: 8pt">$</font></td><td style="color: black; text-align: right"><font style="font-size: 8pt">44,966</font></td><td style="color: black; text-align: left"><font style="font-size: 8pt"> </font></td><td style="color: black"><font style="font-size: 8pt"> </font></td> <td style="color: black; text-align: left"><font style="font-size: 8pt">$</font></td><td style="color: black; text-align: right"><font style="font-size: 8pt">1,650,243</font></td><td style="color: black; text-align: left"><font style="font-size: 8pt"> </font></td></tr> </table> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt"> </font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt">The risk-free interest rate was based on rates established by the Federal Reserve. Since the Company’s stock has not been publicly traded for a sufficiently long period of time, the Company is utilizing an expected volatility figure based on a review of the historical volatilities, over a period of time, equivalent to the expected life of the instrument being valued, of similarly positioned public companies within its industry. The expected life of the conversion feature was determined by the maturity date of the Note and the expected life of the warrants was determined by their expiration dates. The expected dividend yield was based upon the fact that the Company has not historically paid dividends on its common stock, and does not expect to pay dividends on its common stock in the future.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><font style="font-size: 8pt"><b> </b></font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><font style="font-size: 8pt"><b>Fair Value Measurement</b></font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><font style="font-size: 8pt"><i> </i></font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><font style="font-size: 8pt"><i>Valuation Hierarchy</i></font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt">ASC 820, “Fair Value Measurements and Disclosures,” establishes a valuation hierarchy for disclosure of the inputs to valuation used to measure fair value. This hierarchy prioritizes the inputs into three broad levels as follows. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument. Level 3 inputs are unobservable inputs based on the Company’s own assumptions used to measure assets and liabilities at fair value. A financial asset or liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt"> </font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt">The following table provides the liabilities carried at fair value measured on a recurring basis as of December 31, 2013:</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt"> </font></p> <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt"> </font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td> <td colspan="2"><font style="font-size: 8pt"> </font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td><td style="color: black; font-weight: bold; padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td> <td colspan="10" style="color: black; font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><font style="font-size: 8pt">Fair Value Measurements at December 31, 2013</font></td><td style="padding-bottom: 1pt; color: black; font-weight: bold"><font style="font-size: 8pt"> </font></td></tr> <tr style="vertical-align: bottom"> <td style="text-align: center"><font style="font-size: 8pt"> </font></td><td style="font-weight: bold; padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><font style="font-size: 8pt">Total <br />Carrying <br />Value at <br />December 31, 2013</font></td><td style="padding-bottom: 1pt; font-weight: bold"><font style="font-size: 8pt"> </font></td><td style="font-weight: bold; padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><font style="font-size: 8pt">Quoted <br />prices in <br />active <br />markets <br />(Level 1)</font></td><td style="padding-bottom: 1pt; font-weight: bold"><font style="font-size: 8pt"> </font></td><td style="font-weight: bold; padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><font style="font-size: 8pt">Significant <br />other <br />observable <br />inputs <br />(Level 2)</font></td><td style="padding-bottom: 1pt; font-weight: bold"><font style="font-size: 8pt"> </font></td><td style="font-weight: bold; padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><font style="font-size: 8pt">Significant <br />unobservable <br />inputs <br />(Level 3)</font></td><td style="padding-bottom: 1pt; font-weight: bold"><font style="font-size: 8pt"> </font></td></tr> <tr style="vertical-align: bottom; background-color: rgb(238,238,238)"> <td style="width: 40%; color: black; text-align: justify"><font style="font-size: 8pt">Derivative liabilities</font></td><td style="width: 2%; color: black"><font style="font-size: 8pt"> </font></td> <td style="width: 1%; color: black; text-align: left"><font style="font-size: 8pt">$</font></td><td style="width: 11%; color: black; text-align: right"><font style="font-size: 8pt">1,650,243</font></td><td style="width: 1%; color: black; text-align: left"><font style="font-size: 8pt"> </font></td><td style="width: 2%; color: black"><font style="font-size: 8pt"> </font></td> <td style="width: 1%; color: black; text-align: left"><font style="font-size: 8pt">$</font></td><td style="width: 11%; color: black; text-align: right"><font style="font-size: 8pt">–</font></td><td style="width: 1%; color: black; text-align: left"><font style="font-size: 8pt"> </font></td><td style="width: 2%; color: black"><font style="font-size: 8pt"> </font></td> <td style="width: 1%; color: black; text-align: left"><font style="font-size: 8pt">$</font></td><td style="width: 11%; color: black; text-align: right"><font style="font-size: 8pt">–</font></td><td style="width: 1%; color: black; text-align: left"><font style="font-size: 8pt"> </font></td><td style="width: 2%; color: black"><font style="font-size: 8pt"> </font></td> <td style="width: 1%; color: black; text-align: left"><font style="font-size: 8pt">$</font></td><td style="width: 11%; color: black; text-align: right"><font style="font-size: 8pt">1,650,243</font></td><td style="width: 1%; color: black; text-align: left"><font style="font-size: 8pt"> </font></td></tr> </table> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt">  </font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt">The carrying amounts of cash, inventory, prepaid expenses, accounts payable and accrued liabilities approximate their fair value due to their short maturities. The Company’s other financial instruments include its convertible notes payable obligations. The carrying value of these instruments approximate fair value, as they bear terms and conditions comparable to market, for obligations with similar terms and maturities. The Company measures the fair value of financial assets and liabilities based on the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The Company maximizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt"> </font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt">Level 3 liabilities are valued using unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the derivative liabilities. For fair value measurements categorized within Level 3 of the fair value hierarchy, the Company’s accounting department, who reports to the Principal Financial Officer, determines its valuation policies and procedures. The development and determination of the unobservable inputs for Level 3 fair value measurements and fair value calculations are the responsibility of the Company’s accounting department and are approved by the Principal Financial Officer.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt"> </font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt"><i>Level 3 Valuation Techniques</i></font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt">Level 3 financial liabilities consist of the conversion feature liability and common stock purchase warrants for which there are no current market for these securities such that the determination of fair value requires significant judgment or estimation. Changes in fair value measurements categorized within Level 3 of the fair value hierarchy are analyzed each period based on changes in estimates or assumptions and recorded as appropriate. A significant decrease in the volatility or a significant decrease in the Company’s stock price, in isolation, would result in a significantly lower fair value measurement.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt"> </font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt">As of December 31, 2013, there were no transfers in or out of level 3 from other levels in the fair value hierarchy.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt"> </font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt">The following table sets forth a summary of the changes in the fair value of our Level 3 financial liabilities that are measured at fair value on a recurring basis:</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt"> </font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p> <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt"> </font></td><td style="font-weight: bold"><font style="font-size: 8pt"> </font></td> <td colspan="2" style="font-weight: bold; text-align: center"><font style="font-size: 8pt">For the year ended</font></td><td style="font-weight: bold"><font style="font-size: 8pt"> </font></td></tr> <tr style="vertical-align: bottom"> <td style="text-align: center"><font style="font-size: 8pt"> </font></td><td style="font-weight: bold; padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><font style="font-size: 8pt">December 31, 2013</font></td><td style="padding-bottom: 1pt; font-weight: bold"><font style="font-size: 8pt"> </font></td></tr> <tr style="vertical-align: bottom; background-color: rgb(238,238,238)"> <td style="text-align: left"><font style="font-size: 8pt">Beginning balance</font></td><td><font style="font-size: 8pt"> </font></td> <td style="text-align: left"><font style="font-size: 8pt">$</font></td><td style="text-align: right"><font style="font-size: 8pt">–</font></td><td style="text-align: left"><font style="font-size: 8pt"> </font></td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="width: 81%; text-align: left"><font style="font-size: 8pt">Recognition of conversion feature liability</font></td><td style="width: 2%"><font style="font-size: 8pt"> </font></td> <td style="width: 1%; text-align: left"><font style="font-size: 8pt"> </font></td><td style="width: 15%; text-align: right"><font style="font-size: 8pt">44,966</font></td><td style="width: 1%; text-align: left"><font style="font-size: 8pt"> </font></td></tr> <tr style="vertical-align: bottom; background-color: rgb(238,238,238)"> <td style="text-align: left"><font style="font-size: 8pt">Recognition of derivative liability - warrants</font></td><td><font style="font-size: 8pt"> </font></td> <td style="text-align: left"><font style="font-size: 8pt"> </font></td><td style="text-align: right"><font style="font-size: 8pt">1,531,303</font></td><td style="text-align: left"><font style="font-size: 8pt"> </font></td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: left; padding-bottom: 1pt"><font style="font-size: 8pt">Net unrealized loss on derivative liabilities</font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td> <td style="border-bottom: Black 1pt solid; text-align: left"><font style="font-size: 8pt"> </font></td><td style="border-bottom: Black 1pt solid; text-align: right"><font style="font-size: 8pt">73,974</font></td><td style="padding-bottom: 1pt; text-align: left"><font style="font-size: 8pt"> </font></td></tr> <tr style="vertical-align: bottom; background-color: rgb(238,238,238)"> <td style="padding-bottom: 1pt"><font style="font-size: 8pt">Ending balance</font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td> <td style="border-bottom: Black 1pt solid; text-align: left"><font style="font-size: 8pt">$</font></td><td style="border-bottom: Black 1pt solid; text-align: right"><font style="font-size: 8pt">1,650,243</font></td><td style="padding-bottom: 1pt; text-align: left"><font style="font-size: 8pt"> </font></td></tr> </table> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt; font-variant: small-caps"><b> </b></font></p>
</us-gaap:FairValueNetDerivativeAssetLiabilityMeasuredOnRecurringBasisUnobservableInputReconciliationTableTextBlock>
<us-gaap:ScheduleOfFairValueAssetsAndLiabilitiesMeasuredOnRecurringBasisTableTextBlock contextRef="From2013-01-01to2013-12-31">
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt"> </font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td> <td colspan="2"><font style="font-size: 8pt"> </font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td><td style="color: black; font-weight: bold; padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td> <td colspan="10" style="color: black; font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><font style="font-size: 8pt">Fair Value Measurements at December 31, 2013</font></td><td style="padding-bottom: 1pt; color: black; font-weight: bold"><font style="font-size: 8pt"> </font></td></tr> <tr style="vertical-align: bottom"> <td style="text-align: center"><font style="font-size: 8pt"> </font></td><td style="font-weight: bold; padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><font style="font-size: 8pt">Total <br />Carrying <br />Value at <br />December 31, 2013</font></td><td style="padding-bottom: 1pt; font-weight: bold"><font style="font-size: 8pt"> </font></td><td style="font-weight: bold; padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><font style="font-size: 8pt">Quoted <br />prices in <br />active <br />markets <br />(Level 1)</font></td><td style="padding-bottom: 1pt; font-weight: bold"><font style="font-size: 8pt"> </font></td><td style="font-weight: bold; padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><font style="font-size: 8pt">Significant <br />other <br />observable <br />inputs <br />(Level 2)</font></td><td style="padding-bottom: 1pt; font-weight: bold"><font style="font-size: 8pt"> </font></td><td style="font-weight: bold; padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><font style="font-size: 8pt">Significant <br />unobservable <br />inputs <br />(Level 3)</font></td><td style="padding-bottom: 1pt; font-weight: bold"><font style="font-size: 8pt"> </font></td></tr> <tr style="vertical-align: bottom; background-color: rgb(238,238,238)"> <td style="width: 40%; color: black; text-align: justify"><font style="font-size: 8pt">Derivative liabilities</font></td><td style="width: 2%; color: black"><font style="font-size: 8pt"> </font></td> <td style="width: 1%; color: black; text-align: left"><font style="font-size: 8pt">$</font></td><td style="width: 11%; color: black; text-align: right"><font style="font-size: 8pt">1,650,243</font></td><td style="width: 1%; color: black; text-align: left"><font style="font-size: 8pt"> </font></td><td style="width: 2%; color: black"><font style="font-size: 8pt"> </font></td> <td style="width: 1%; color: black; text-align: left"><font style="font-size: 8pt">$</font></td><td style="width: 11%; color: black; text-align: right"><font style="font-size: 8pt">–</font></td><td style="width: 1%; color: black; text-align: left"><font style="font-size: 8pt"> </font></td><td style="width: 2%; color: black"><font style="font-size: 8pt"> </font></td> <td style="width: 1%; color: black; text-align: left"><font style="font-size: 8pt">$</font></td><td style="width: 11%; color: black; text-align: right"><font style="font-size: 8pt">–</font></td><td style="width: 1%; color: black; text-align: left"><font style="font-size: 8pt"> </font></td><td style="width: 2%; color: black"><font style="font-size: 8pt"> </font></td> <td style="width: 1%; color: black; text-align: left"><font style="font-size: 8pt">$</font></td><td style="width: 11%; color: black; text-align: right"><font style="font-size: 8pt">1,650,243</font></td><td style="width: 1%; color: black; text-align: left"><font style="font-size: 8pt"> </font></td></tr> </table>
</us-gaap:ScheduleOfFairValueAssetsAndLiabilitiesMeasuredOnRecurringBasisTableTextBlock>
<us-gaap:FairValueLiabilitiesMeasuredOnRecurringAndNonrecurringBasisTableTextBlock contextRef="From2013-01-01to2013-12-31">
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt"> </font></td><td style="font-weight: bold"><font style="font-size: 8pt"> </font></td> <td colspan="2" style="font-weight: bold; text-align: center"><font style="font-size: 8pt">For the year ended</font></td><td style="font-weight: bold"><font style="font-size: 8pt"> </font></td></tr> <tr style="vertical-align: bottom"> <td style="text-align: center"><font style="font-size: 8pt"> </font></td><td style="font-weight: bold; padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><font style="font-size: 8pt">December 31, 2013</font></td><td style="padding-bottom: 1pt; font-weight: bold"><font style="font-size: 8pt"> </font></td></tr> <tr style="vertical-align: bottom; background-color: rgb(238,238,238)"> <td style="text-align: left"><font style="font-size: 8pt">Beginning balance</font></td><td><font style="font-size: 8pt"> </font></td> <td style="text-align: left"><font style="font-size: 8pt">$</font></td><td style="text-align: right"><font style="font-size: 8pt">–</font></td><td style="text-align: left"><font style="font-size: 8pt"> </font></td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="width: 81%; text-align: left"><font style="font-size: 8pt">Recognition of conversion feature liability</font></td><td style="width: 2%"><font style="font-size: 8pt"> </font></td> <td style="width: 1%; text-align: left"><font style="font-size: 8pt"> </font></td><td style="width: 15%; text-align: right"><font style="font-size: 8pt">44,966</font></td><td style="width: 1%; text-align: left"><font style="font-size: 8pt"> </font></td></tr> <tr style="vertical-align: bottom; background-color: rgb(238,238,238)"> <td style="text-align: left"><font style="font-size: 8pt">Recognition of derivative liability - warrants</font></td><td><font style="font-size: 8pt"> </font></td> <td style="text-align: left"><font style="font-size: 8pt"> </font></td><td style="text-align: right"><font style="font-size: 8pt">1,531,303</font></td><td style="text-align: left"><font style="font-size: 8pt"> </font></td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: left; padding-bottom: 1pt"><font style="font-size: 8pt">Net unrealized loss on derivative liabilities</font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td> <td style="border-bottom: Black 1pt solid; text-align: left"><font style="font-size: 8pt"> </font></td><td style="border-bottom: Black 1pt solid; text-align: right"><font style="font-size: 8pt">73,974</font></td><td style="padding-bottom: 1pt; text-align: left"><font style="font-size: 8pt"> </font></td></tr> <tr style="vertical-align: bottom; background-color: rgb(238,238,238)"> <td style="padding-bottom: 1pt"><font style="font-size: 8pt">Ending balance</font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td> <td style="border-bottom: Black 1pt solid; text-align: left"><font style="font-size: 8pt">$</font></td><td style="border-bottom: Black 1pt solid; text-align: right"><font style="font-size: 8pt">1,650,243</font></td><td style="padding-bottom: 1pt; text-align: left"><font style="font-size: 8pt"> </font></td></tr> </table>
</us-gaap:FairValueLiabilitiesMeasuredOnRecurringAndNonrecurringBasisTableTextBlock>
<us-gaap:RelatedPartyTransactionsDisclosureTextBlock contextRef="From2013-01-01to2013-12-31">
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><font style="font-size: 8pt; font-variant: small-caps"></font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt">During the year ended December 31, 2013, the Company received an aggregate of $64,000 of cash advances from an officer of the Company and made aggregate repayments of $64,000.  The advances were non-interest bearing and short-term in nature.</font></p>
</us-gaap:RelatedPartyTransactionsDisclosureTextBlock>
<us-gaap:StockholdersEquityNoteDisclosureTextBlock contextRef="From2013-01-01to2013-12-31">
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><font style="font-size: 8pt; font-variant: small-caps"></font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><font style="font-size: 8pt"><b><i>Common Stock Issuances</i></b></font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt">During the first quarter of 2013, the Company issued 204,000 shares of common stock at $0.25 per share in a private placement and received net proceeds of $51,000.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt"> </font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt">On May 10, 2013, a registration statement under the Securities Act of 1933 with respect to a public offering of 1,000,000 Units at $1.00 per unit consisting of one share of common stock and one warrant to purchase one share of common stock was declared effective by the U.S. Securities and Exchange Commission. The warrants have an exercise price of $1.00 per share and a term of three years and contain customary anti-dilution provisions. During the year ended December 31, 2013, the Company sold 304,600 Units and has received proceeds of $304,600, less offering costs of approximately $109,000.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt"> </font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt">On January 13, 2014, the Company closed a “best efforts” private offering of $1,000,000 (the “Offering”) with a group of accredited investors (the “Purchasers”) and the Company exercised the oversubscription amount allowed in the Offering of $350,000, for total gross proceeds to the Company of $1,350,000 before deducting placement agent fees and other expenses. Pursuant to a securities purchase agreement with the Purchasers (the “Purchase Agreement”), the Company issued to the Purchasers (i) 415,387 shares (the “Shares”) of the Company’s common stock, par value, $0.0001 (the “Common Stock”) and (ii) 1,350,000 warrants (the “Warrants”) to purchase shares (the “Warrant Shares” and together with the Shares and the Warrants, the “Securities”) of the Company’s Common Stock at an exercise price of $3.25 per share. In connection with the Offering, 138,463 units were sold at the end of December of 2013 and 276,924 units were sold in January 2014, all at $3.25 per unit. As a result, the Company received aggregate gross proceeds of $450,000 in December 2013 from the issuance of 138,463 shares of common stock and 450,000 warrants, and the Company received $900,000 in January 2014 from the issuance of 276,924 shares of common stock and 900,000 warrants. Costs incurred associated with the Offering in December 2013 were $56,820. In January 2014, the placement agent received 41,539 warrants from the Offering in the same form as the investors.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt"> </font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt">The Warrants are exercisable for a period of five years from the original issue date. The exercise price with respect to the Warrants is $3.25 per share. The exercise price for the Warrants is subject to adjustment upon certain events, such as stock splits, combinations, dividends, distributions, reclassifications, mergers or other corporate change and dilutive issuances. See Note 6.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt"> </font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt">Pursuant to the Purchase Agreement, the Company’s founders who are members of management (the “Founders”) agreed to cancel a corresponding number of shares to those Shares issued in the Offering and place in escrow a corresponding number of shares to be cancelled for each Warrant Share issued. As a result, the Founders retired 138,463 and 276,924 shares of common stock in December 2013 and January 2014, respectively.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt"> </font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt">In connection with the sale of the Shares and Warrants, the Company entered into a registration rights agreement (the “Registration Rights Agreement”) with the Purchasers, pursuant to which the Company agreed to register the Shares and the shares of our Common Stock underlying the Warrants (the “Registrable Securities”) on a Form S-1 registration statement (the “Registration Statement”) to be filed with the SEC on the earlier of February 25, 2014 or within 3 business days following the filing of our Annual Report on Form 10-K for the year ended December 31, 2013 (the “Filing Date”) and to cause the Registration Statement to be declared effective under the Securities Act within 90 days following the Filing Date (the “Required Filing Date”). If the Registration Statement is not filed by the Filing Date or declared effective by the Required Effective Date, the Company is required to pay partial liquidated damages to each Purchaser in the amount equal to 2% for the purchase price paid for the Shares and Warrants then owned by such Purchaser for each 30-day period for which the Company is non-compliant.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt"> </font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt">During the year ended December 31, 2012, the Company issued 632,000 shares of common stock at $0.25 per share and received proceeds of $158,000.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt"> </font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt">During the year ended December 31, 2012, the founders of 3D-ID contributed $4,300 to fund the Company’s activities.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt"> </font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt"><b><i>Common Stock Purchase Warrants</i></b></font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt"> </font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt">During the year ended December 31, 2013, the Company received $300,000 in net proceeds from the exercise of 300,000 warrants from holders of the units.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt"> </font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><font style="font-size: 8pt">The following table summarizes the Company's warrants outstanding at December 31, 2013:</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><font style="font-size: 8pt"><b> </b></font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></p> <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td colspan="2"><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td> <td colspan="2" style="text-align: center"><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td> <td colspan="2"><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td> <td colspan="2" style="text-align: center"><font style="font-size: 8pt">Weighted</font></td><td><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td> <td colspan="2"><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td></tr> <tr style="vertical-align: bottom"> <td colspan="2"><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td> <td colspan="2" style="text-align: center"><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td> <td colspan="2" style="text-align: center"><font style="font-size: 8pt">Weighted</font></td><td><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td> <td colspan="2" style="text-align: center"><font style="font-size: 8pt">Average</font></td><td><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td> <td colspan="2"><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td></tr> <tr style="vertical-align: bottom"> <td colspan="2"><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td> <td colspan="2" style="text-align: center"><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td> <td colspan="2" style="text-align: center"><font style="font-size: 8pt">Average</font></td><td><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td> <td colspan="2" style="text-align: center"><font style="font-size: 8pt">Remaining</font></td><td><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td> <td colspan="2"><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td></tr> <tr style="vertical-align: bottom"> <td colspan="2"><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td> <td colspan="2" style="text-align: center"><font style="font-size: 8pt">Number of</font></td><td><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td> <td colspan="2" style="text-align: center"><font style="font-size: 8pt">Exercise</font></td><td><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td> <td colspan="2" style="text-align: center"><font style="font-size: 8pt">Life</font></td><td><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td> <td colspan="2" style="text-align: center"><font style="font-size: 8pt">Intrinsic</font></td><td><font style="font-size: 8pt"> </font></td></tr> <tr style="vertical-align: bottom"> <td colspan="2"><font style="font-size: 8pt"> </font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td> <td colspan="2" style="text-align: center; border-bottom: Black 1pt solid"><font style="font-size: 8pt">Warrants</font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td> <td colspan="2" style="text-align: center; border-bottom: Black 1pt solid"><font style="font-size: 8pt">Price</font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td> <td colspan="2" style="text-align: center; border-bottom: Black 1pt solid"><font style="font-size: 8pt">In Years</font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td> <td colspan="2" style="text-align: center; border-bottom: Black 1pt solid"><font style="font-size: 8pt">Value</font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td></tr> <tr style="vertical-align: bottom; background-color: rgb(238,238,238)"> <td style="text-align: left"><font style="font-size: 8pt"> </font></td><td style="text-align: left"><font style="font-size: 8pt">Outstanding at December 31, 2012</font></td><td style="text-align: left"><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td> <td style="text-align: left"><font style="font-size: 8pt"> </font></td><td style="text-align: right"><font style="font-size: 8pt">–</font></td><td style="text-align: left"><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td> <td style="text-align: left"><font style="font-size: 8pt">$</font></td><td style="text-align: right"><font style="font-size: 8pt">–</font></td><td style="text-align: left"><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td> <td style="text-align: left"><font style="font-size: 8pt"> </font></td><td style="text-align: right"><font style="font-size: 8pt"> </font></td><td style="text-align: left"><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td> <td style="text-align: left"><font style="font-size: 8pt"> </font></td><td style="text-align: right"><font style="font-size: 8pt"> </font></td><td style="text-align: left"><font style="font-size: 8pt"> </font></td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="width: 1%; text-align: left"><font style="font-size: 8pt"> </font></td><td style="width: 38%; text-align: justify"><font style="font-size: 8pt">Issued </font></td><td style="width: 1%; text-align: left"><font style="font-size: 8pt"> </font></td><td style="width: 2%"><font style="font-size: 8pt"> </font></td> <td style="width: 1%; text-align: left"><font style="font-size: 8pt"> </font></td><td style="width: 11%; text-align: right"><font style="font-size: 8pt">754,600</font></td><td style="width: 1%; text-align: left"><font style="font-size: 8pt"> </font></td><td style="width: 2%"><font style="font-size: 8pt"> </font></td> <td style="width: 1%; text-align: left"><font style="font-size: 8pt"> </font></td><td style="width: 11%; text-align: right"><font style="font-size: 8pt">2.34</font></td><td style="width: 1%; text-align: left"><font style="font-size: 8pt"> </font></td><td style="width: 2%"><font style="font-size: 8pt"> </font></td> <td style="width: 1%; text-align: left"><font style="font-size: 8pt"> </font></td><td style="width: 11%; text-align: right"><font style="font-size: 8pt">–</font></td><td style="width: 1%; text-align: left"><font style="font-size: 8pt"> </font></td><td style="width: 2%"><font style="font-size: 8pt"> </font></td> <td style="width: 1%; text-align: left"><font style="font-size: 8pt"> </font></td><td style="width: 11%; text-align: right"><font style="font-size: 8pt">–</font></td><td style="width: 1%; text-align: left"><font style="font-size: 8pt"> </font></td></tr> <tr style="vertical-align: bottom; background-color: rgb(238,238,238)"> <td style="text-align: left"><font style="font-size: 8pt"> </font></td><td style="text-align: left"><font style="font-size: 8pt">Exercised</font></td><td style="text-align: left"><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td> <td style="text-align: left"><font style="font-size: 8pt"> </font></td><td style="text-align: right"><font style="font-size: 8pt">(300,000</font></td><td style="text-align: left"><font style="font-size: 8pt">)</font></td><td><font style="font-size: 8pt"> </font></td> <td style="text-align: left"><font style="font-size: 8pt"> </font></td><td style="text-align: right"><font style="font-size: 8pt">1.00</font></td><td style="text-align: left"><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td> <td style="text-align: left"><font style="font-size: 8pt"> </font></td><td style="text-align: right"><font style="font-size: 8pt">–</font></td><td style="text-align: left"><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td> <td style="text-align: left"><font style="font-size: 8pt"> </font></td><td style="text-align: right"><font style="font-size: 8pt">–</font></td><td style="text-align: left"><font style="font-size: 8pt"> </font></td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="padding-bottom: 1pt; text-align: left"><font style="font-size: 8pt"> </font></td><td style="padding-bottom: 1pt; text-align: left"><font style="font-size: 8pt">Cancelled</font></td><td style="padding-bottom: 1pt; text-align: left"><font style="font-size: 8pt"> </font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td> <td style="border-bottom: Black 1pt solid; text-align: left"><font style="font-size: 8pt"> </font></td><td style="border-bottom: Black 1pt solid; text-align: right"><font style="font-size: 8pt">–</font></td><td style="padding-bottom: 1pt; text-align: left"><font style="font-size: 8pt"> </font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td> <td style="border-bottom: Black 1pt solid; text-align: left"><font style="font-size: 8pt"> </font></td><td style="border-bottom: Black 1pt solid; text-align: right"><font style="font-size: 8pt">–</font></td><td style="padding-bottom: 1pt; text-align: left"><font style="font-size: 8pt"> </font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td> <td style="border-bottom: Black 1pt solid; text-align: left"><font style="font-size: 8pt"> </font></td><td style="border-bottom: Black 1pt solid; text-align: right"><font style="font-size: 8pt">–</font></td><td style="padding-bottom: 1pt; text-align: left"><font style="font-size: 8pt"> </font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td> <td style="border-bottom: Black 1pt solid; text-align: left"><font style="font-size: 8pt"> </font></td><td style="border-bottom: Black 1pt solid; text-align: right"><font style="font-size: 8pt">–</font></td><td style="padding-bottom: 1pt; text-align: left"><font style="font-size: 8pt"> </font></td></tr> <tr style="vertical-align: bottom; background-color: rgb(238,238,238)"> <td style="padding-bottom: 1pt; text-align: left"><font style="font-size: 8pt"> </font></td><td style="padding-bottom: 1pt; text-align: left"><font style="font-size: 8pt">Outstanding at December 31, 2013</font></td><td style="padding-bottom: 1pt; text-align: left"><font style="font-size: 8pt"> </font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td> <td style="border-bottom: Black 1pt solid; text-align: left"><font style="font-size: 8pt"> </font></td><td style="border-bottom: Black 1pt solid; text-align: right"><font style="font-size: 8pt">454,600</font></td><td style="padding-bottom: 1pt; text-align: left"><font style="font-size: 8pt"> </font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td> <td style="border-bottom: Black 1pt solid; text-align: left"><font style="font-size: 8pt">$</font></td><td style="border-bottom: Black 1pt solid; text-align: right"><font style="font-size: 8pt">3.23</font></td><td style="padding-bottom: 1pt; text-align: left"><font style="font-size: 8pt"> </font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td> <td style="border-bottom: Black 1pt solid; text-align: left"><font style="font-size: 8pt"> </font></td><td style="border-bottom: Black 1pt solid; text-align: right"><font style="font-size: 8pt">4.97</font></td><td style="padding-bottom: 1pt; text-align: left"><font style="font-size: 8pt"> </font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td> <td style="border-bottom: Black 1pt solid; text-align: left"><font style="font-size: 8pt">$</font></td><td style="border-bottom: Black 1pt solid; text-align: right"><font style="font-size: 8pt">351,300</font></td><td style="padding-bottom: 1pt; text-align: left"><font style="font-size: 8pt"> </font></td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: left"><font style="font-size: 8pt"> </font></td><td style="text-align: right"><font style="font-size: 8pt"> </font></td><td style="text-align: left"><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td> <td style="text-align: left"><font style="font-size: 8pt"> </font></td><td style="text-align: right"><font style="font-size: 8pt"> </font></td><td style="text-align: left"><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td> <td style="text-align: left"><font style="font-size: 8pt"> </font></td><td style="text-align: right"><font style="font-size: 8pt"> </font></td><td style="text-align: left"><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td> <td style="text-align: left"><font style="font-size: 8pt"> </font></td><td style="text-align: right"><font style="font-size: 8pt"> </font></td><td style="text-align: left"><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td> <td style="text-align: left"><font style="font-size: 8pt"> </font></td><td style="text-align: right"><font style="font-size: 8pt"> </font></td><td style="text-align: left"><font style="font-size: 8pt"> </font></td></tr> <tr style="vertical-align: bottom; background-color: rgb(238,238,238)"> <td style="padding-bottom: 2.5pt; text-align: left"><font style="font-size: 8pt"> </font></td><td style="padding-bottom: 2.5pt; text-align: left"><font style="font-size: 8pt">Exercisable at December 31, 2013</font></td><td style="padding-bottom: 2.5pt; text-align: left"><font style="font-size: 8pt"> </font></td><td style="padding-bottom: 2.5pt"><font style="font-size: 8pt"> </font></td> <td style="border-bottom: Black 2.5pt double; text-align: left"><font style="font-size: 8pt"> </font></td><td style="border-bottom: Black 2.5pt double; text-align: right"><font style="font-size: 8pt">454,600</font></td><td style="padding-bottom: 2.5pt; text-align: left"><font style="font-size: 8pt"> </font></td><td style="padding-bottom: 2.5pt"><font style="font-size: 8pt"> </font></td> <td style="border-bottom: Black 2.5pt double; text-align: left"><font style="font-size: 8pt">$</font></td><td style="border-bottom: Black 2.5pt double; text-align: right"><font style="font-size: 8pt">3.23</font></td><td style="padding-bottom: 2.5pt; text-align: left"><font style="font-size: 8pt"> </font></td><td style="padding-bottom: 2.5pt"><font style="font-size: 8pt"> </font></td> <td style="border-bottom: Black 2.5pt double; text-align: left"><font style="font-size: 8pt"> </font></td><td style="border-bottom: Black 2.5pt double; text-align: right"><font style="font-size: 8pt">4.97</font></td><td style="padding-bottom: 2.5pt; text-align: left"><font style="font-size: 8pt"> </font></td><td style="padding-bottom: 2.5pt"><font style="font-size: 8pt"> </font></td> <td style="border-bottom: Black 2.5pt double; text-align: left"><font style="font-size: 8pt">$</font></td><td style="border-bottom: Black 2.5pt double; text-align: right"><font style="font-size: 8pt">351,300</font></td><td style="padding-bottom: 2.5pt; text-align: left"><font style="font-size: 8pt"> </font></td></tr> </table> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"> <font style="font-size: 8pt; font-variant: small-caps"><b> </b></font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt"><b><i>Long-Term Stock Incentive Plan</i></b></font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt"> </font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt">On January 4, 2013, a majority the Company’s stockholders approved by written consent the Company’s 2013 Long-Term Stock Incentive Plan (“LTIP”). The maximum aggregate number of shares of common stock that may be issued under the LTIP, including stock awards and stock appreciation rights, is limited to 10% of the shares of common stock outstanding on the first business or trading day of any fiscal year, which is 2,193,782 at December 31, 2013. During the year ended December 31, 2013, the Company issued 48,833 restricted shares under the plan to two non-executive directors with an aggregate fair value of $30,000. During the year ended December 31, 2013, the Company issued 100,000 shares with an aggregate value of $100,000 to four non-executive employees. At December 31, 2013, a total of 148,833 shares have been issued from the Plan and 2,044,949 are available to be issued.</font></p>
</us-gaap:StockholdersEquityNoteDisclosureTextBlock>
<us-gaap:ScheduleOfStockholdersEquityNoteWarrantsOrRightsTextBlock contextRef="From2013-01-01to2013-12-31">
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td colspan="2"><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td> <td colspan="2" style="text-align: center"><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td> <td colspan="2"><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td> <td colspan="2" style="text-align: center"><font style="font-size: 8pt">Weighted</font></td><td><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td> <td colspan="2"><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td></tr> <tr style="vertical-align: bottom"> <td colspan="2"><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td> <td colspan="2" style="text-align: center"><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td> <td colspan="2" style="text-align: center"><font style="font-size: 8pt">Weighted</font></td><td><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td> <td colspan="2" style="text-align: center"><font style="font-size: 8pt">Average</font></td><td><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td> <td colspan="2"><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td></tr> <tr style="vertical-align: bottom"> <td colspan="2"><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td> <td colspan="2" style="text-align: center"><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td> <td colspan="2" style="text-align: center"><font style="font-size: 8pt">Average</font></td><td><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td> <td colspan="2" style="text-align: center"><font style="font-size: 8pt">Remaining</font></td><td><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td> <td colspan="2"><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td></tr> <tr style="vertical-align: bottom"> <td colspan="2"><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td> <td colspan="2" style="text-align: center"><font style="font-size: 8pt">Number of</font></td><td><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td> <td colspan="2" style="text-align: center"><font style="font-size: 8pt">Exercise</font></td><td><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td> <td colspan="2" style="text-align: center"><font style="font-size: 8pt">Life</font></td><td><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td> <td colspan="2" style="text-align: center"><font style="font-size: 8pt">Intrinsic</font></td><td><font style="font-size: 8pt"> </font></td></tr> <tr style="vertical-align: bottom"> <td colspan="2"><font style="font-size: 8pt"> </font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td> <td colspan="2" style="text-align: center; border-bottom: Black 1pt solid"><font style="font-size: 8pt">Warrants</font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td> <td colspan="2" style="text-align: center; border-bottom: Black 1pt solid"><font style="font-size: 8pt">Price</font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td> <td colspan="2" style="text-align: center; border-bottom: Black 1pt solid"><font style="font-size: 8pt">In Years</font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td> <td colspan="2" style="text-align: center; border-bottom: Black 1pt solid"><font style="font-size: 8pt">Value</font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td></tr> <tr style="vertical-align: bottom; background-color: rgb(238,238,238)"> <td style="text-align: left"><font style="font-size: 8pt"> </font></td><td style="text-align: left"><font style="font-size: 8pt">Outstanding at December 31, 2012</font></td><td style="text-align: left"><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td> <td style="text-align: left"><font style="font-size: 8pt"> </font></td><td style="text-align: right"><font style="font-size: 8pt">–</font></td><td style="text-align: left"><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td> <td style="text-align: left"><font style="font-size: 8pt">$</font></td><td style="text-align: right"><font style="font-size: 8pt">–</font></td><td style="text-align: left"><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td> <td style="text-align: left"><font style="font-size: 8pt"> </font></td><td style="text-align: right"><font style="font-size: 8pt"> </font></td><td style="text-align: left"><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td> <td style="text-align: left"><font style="font-size: 8pt"> </font></td><td style="text-align: right"><font style="font-size: 8pt"> </font></td><td style="text-align: left"><font style="font-size: 8pt"> </font></td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="width: 1%; text-align: left"><font style="font-size: 8pt"> </font></td><td style="width: 38%; text-align: justify"><font style="font-size: 8pt">Issued </font></td><td style="width: 1%; text-align: left"><font style="font-size: 8pt"> </font></td><td style="width: 2%"><font style="font-size: 8pt"> </font></td> <td style="width: 1%; text-align: left"><font style="font-size: 8pt"> </font></td><td style="width: 11%; text-align: right"><font style="font-size: 8pt">754,600</font></td><td style="width: 1%; text-align: left"><font style="font-size: 8pt"> </font></td><td style="width: 2%"><font style="font-size: 8pt"> </font></td> <td style="width: 1%; text-align: left"><font style="font-size: 8pt"> </font></td><td style="width: 11%; text-align: right"><font style="font-size: 8pt">2.34</font></td><td style="width: 1%; text-align: left"><font style="font-size: 8pt"> </font></td><td style="width: 2%"><font style="font-size: 8pt"> </font></td> <td style="width: 1%; text-align: left"><font style="font-size: 8pt"> </font></td><td style="width: 11%; text-align: right"><font style="font-size: 8pt">–</font></td><td style="width: 1%; text-align: left"><font style="font-size: 8pt"> </font></td><td style="width: 2%"><font style="font-size: 8pt"> </font></td> <td style="width: 1%; text-align: left"><font style="font-size: 8pt"> </font></td><td style="width: 11%; text-align: right"><font style="font-size: 8pt">–</font></td><td style="width: 1%; text-align: left"><font style="font-size: 8pt"> </font></td></tr> <tr style="vertical-align: bottom; background-color: rgb(238,238,238)"> <td style="text-align: left"><font style="font-size: 8pt"> </font></td><td style="text-align: left"><font style="font-size: 8pt">Exercised</font></td><td style="text-align: left"><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td> <td style="text-align: left"><font style="font-size: 8pt"> </font></td><td style="text-align: right"><font style="font-size: 8pt">(300,000</font></td><td style="text-align: left"><font style="font-size: 8pt">)</font></td><td><font style="font-size: 8pt"> </font></td> <td style="text-align: left"><font style="font-size: 8pt"> </font></td><td style="text-align: right"><font style="font-size: 8pt">1.00</font></td><td style="text-align: left"><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td> <td style="text-align: left"><font style="font-size: 8pt"> </font></td><td style="text-align: right"><font style="font-size: 8pt">–</font></td><td style="text-align: left"><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td> <td style="text-align: left"><font style="font-size: 8pt"> </font></td><td style="text-align: right"><font style="font-size: 8pt">–</font></td><td style="text-align: left"><font style="font-size: 8pt"> </font></td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="padding-bottom: 1pt; text-align: left"><font style="font-size: 8pt"> </font></td><td style="padding-bottom: 1pt; text-align: left"><font style="font-size: 8pt">Cancelled</font></td><td style="padding-bottom: 1pt; text-align: left"><font style="font-size: 8pt"> </font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td> <td style="border-bottom: Black 1pt solid; text-align: left"><font style="font-size: 8pt"> </font></td><td style="border-bottom: Black 1pt solid; text-align: right"><font style="font-size: 8pt">–</font></td><td style="padding-bottom: 1pt; text-align: left"><font style="font-size: 8pt"> </font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td> <td style="border-bottom: Black 1pt solid; text-align: left"><font style="font-size: 8pt"> </font></td><td style="border-bottom: Black 1pt solid; text-align: right"><font style="font-size: 8pt">–</font></td><td style="padding-bottom: 1pt; text-align: left"><font style="font-size: 8pt"> </font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td> <td style="border-bottom: Black 1pt solid; text-align: left"><font style="font-size: 8pt"> </font></td><td style="border-bottom: Black 1pt solid; text-align: right"><font style="font-size: 8pt">–</font></td><td style="padding-bottom: 1pt; text-align: left"><font style="font-size: 8pt"> </font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td> <td style="border-bottom: Black 1pt solid; text-align: left"><font style="font-size: 8pt"> </font></td><td style="border-bottom: Black 1pt solid; text-align: right"><font style="font-size: 8pt">–</font></td><td style="padding-bottom: 1pt; text-align: left"><font style="font-size: 8pt"> </font></td></tr> <tr style="vertical-align: bottom; background-color: rgb(238,238,238)"> <td style="padding-bottom: 1pt; text-align: left"><font style="font-size: 8pt"> </font></td><td style="padding-bottom: 1pt; text-align: left"><font style="font-size: 8pt">Outstanding at December 31, 2013</font></td><td style="padding-bottom: 1pt; text-align: left"><font style="font-size: 8pt"> </font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td> <td style="border-bottom: Black 1pt solid; text-align: left"><font style="font-size: 8pt"> </font></td><td style="border-bottom: Black 1pt solid; text-align: right"><font style="font-size: 8pt">454,600</font></td><td style="padding-bottom: 1pt; text-align: left"><font style="font-size: 8pt"> </font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td> <td style="border-bottom: Black 1pt solid; text-align: left"><font style="font-size: 8pt">$</font></td><td style="border-bottom: Black 1pt solid; text-align: right"><font style="font-size: 8pt">3.23</font></td><td style="padding-bottom: 1pt; text-align: left"><font style="font-size: 8pt"> </font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td> <td style="border-bottom: Black 1pt solid; text-align: left"><font style="font-size: 8pt"> </font></td><td style="border-bottom: Black 1pt solid; text-align: right"><font style="font-size: 8pt">4.97</font></td><td style="padding-bottom: 1pt; text-align: left"><font style="font-size: 8pt"> </font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td> <td style="border-bottom: Black 1pt solid; text-align: left"><font style="font-size: 8pt">$</font></td><td style="border-bottom: Black 1pt solid; text-align: right"><font style="font-size: 8pt">351,300</font></td><td style="padding-bottom: 1pt; text-align: left"><font style="font-size: 8pt"> </font></td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: left"><font style="font-size: 8pt"> </font></td><td style="text-align: right"><font style="font-size: 8pt"> </font></td><td style="text-align: left"><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td> <td style="text-align: left"><font style="font-size: 8pt"> </font></td><td style="text-align: right"><font style="font-size: 8pt"> </font></td><td style="text-align: left"><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td> <td style="text-align: left"><font style="font-size: 8pt"> </font></td><td style="text-align: right"><font style="font-size: 8pt"> </font></td><td style="text-align: left"><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td> <td style="text-align: left"><font style="font-size: 8pt"> </font></td><td style="text-align: right"><font style="font-size: 8pt"> </font></td><td style="text-align: left"><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td> <td style="text-align: left"><font style="font-size: 8pt"> </font></td><td style="text-align: right"><font style="font-size: 8pt"> </font></td><td style="text-align: left"><font style="font-size: 8pt"> </font></td></tr> <tr style="vertical-align: bottom; background-color: rgb(238,238,238)"> <td style="padding-bottom: 2.5pt; text-align: left"><font style="font-size: 8pt"> </font></td><td style="padding-bottom: 2.5pt; text-align: left"><font style="font-size: 8pt">Exercisable at December 31, 2013</font></td><td style="padding-bottom: 2.5pt; text-align: left"><font style="font-size: 8pt"> </font></td><td style="padding-bottom: 2.5pt"><font style="font-size: 8pt"> </font></td> <td style="border-bottom: Black 2.5pt double; text-align: left"><font style="font-size: 8pt"> </font></td><td style="border-bottom: Black 2.5pt double; text-align: right"><font style="font-size: 8pt">454,600</font></td><td style="padding-bottom: 2.5pt; text-align: left"><font style="font-size: 8pt"> </font></td><td style="padding-bottom: 2.5pt"><font style="font-size: 8pt"> </font></td> <td style="border-bottom: Black 2.5pt double; text-align: left"><font style="font-size: 8pt">$</font></td><td style="border-bottom: Black 2.5pt double; text-align: right"><font style="font-size: 8pt">3.23</font></td><td style="padding-bottom: 2.5pt; text-align: left"><font style="font-size: 8pt"> </font></td><td style="padding-bottom: 2.5pt"><font style="font-size: 8pt"> </font></td> <td style="border-bottom: Black 2.5pt double; text-align: left"><font style="font-size: 8pt"> </font></td><td style="border-bottom: Black 2.5pt double; text-align: right"><font style="font-size: 8pt">4.97</font></td><td style="padding-bottom: 2.5pt; text-align: left"><font style="font-size: 8pt"> </font></td><td style="padding-bottom: 2.5pt"><font style="font-size: 8pt"> </font></td> <td style="border-bottom: Black 2.5pt double; text-align: left"><font style="font-size: 8pt">$</font></td><td style="border-bottom: Black 2.5pt double; text-align: right"><font style="font-size: 8pt">351,300</font></td><td style="padding-bottom: 2.5pt; text-align: left"><font style="font-size: 8pt"> </font></td></tr> </table>
</us-gaap:ScheduleOfStockholdersEquityNoteWarrantsOrRightsTextBlock>
<us-gaap:IncomeTaxDisclosureTextBlock contextRef="From2013-01-01to2013-12-31">
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><font style="font-size: 8pt"></font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt">As of December 31, 2013 and 2012, the Company had approximately $1,641,000 and $194,000, respectively, of US federal and state net operating loss (“NOLs”) carryovers available to offset future taxable income, which expire beginning in 2033.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt"> </font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt">In accordance with Section 382 of the Internal Revenue Code, deductibility of the Company’s NOLs may be subject to an annual limitation in the event of a change of control. The Company has performed a preliminary evaluation and has determined that a change of control has not occurred as of December 31, 2013. The Company is still in the process of filing its tax returns for all periods. Therefore, the Company’s net operating loss carryovers will not be available to offset future taxable income, if any, until the returns are filed.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><font style="font-size: 8pt"> </font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><font style="font-size: 8pt">The income tax provision (benefit) consists of the following:</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><font style="font-size: 8pt"> </font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p> <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt"> </font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td> <td colspan="6" style="text-align: center; border-bottom: Black 1pt solid"><font style="font-size: 8pt">December 31,</font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt"> </font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td> <td colspan="2" style="text-align: center; border-bottom: Black 1pt solid"><font style="font-size: 8pt">2013</font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td> <td colspan="2" style="text-align: center; border-bottom: Black 1pt solid"><font style="font-size: 8pt">2012</font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td></tr> <tr style="vertical-align: bottom; background-color: rgb(238,238,238)"> <td><font style="font-size: 8pt">Current</font></td><td><font style="font-size: 8pt"> </font></td> <td style="text-align: left"><font style="font-size: 8pt"> </font></td><td style="text-align: right"><font style="font-size: 8pt"> </font></td><td style="text-align: left"><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td> <td style="text-align: left"><font style="font-size: 8pt"> </font></td><td style="text-align: right"><font style="font-size: 8pt"> </font></td><td style="text-align: left"><font style="font-size: 8pt"> </font></td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="padding-left: 11pt"><font style="font-size: 8pt">Federal</font></td><td><font style="font-size: 8pt"> </font></td> <td style="text-align: left"><font style="font-size: 8pt">$</font></td><td style="text-align: right"><font style="font-size: 8pt">–</font></td><td style="text-align: left"><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td> <td style="text-align: left"><font style="font-size: 8pt">$</font></td><td style="text-align: right"><font style="font-size: 8pt">–</font></td><td style="text-align: left"><font style="font-size: 8pt"> </font></td></tr> <tr style="vertical-align: bottom; background-color: rgb(238,238,238)"> <td style="padding-bottom: 1pt; padding-left: 11pt"><font style="font-size: 8pt">State</font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td> <td style="border-bottom: Black 1pt solid; text-align: left"><font style="font-size: 8pt"> </font></td><td style="border-bottom: Black 1pt solid; text-align: right"><font style="font-size: 8pt">–</font></td><td style="padding-bottom: 1pt; text-align: left"><font style="font-size: 8pt"> </font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td> <td style="border-bottom: Black 1pt solid; text-align: left"><font style="font-size: 8pt"> </font></td><td style="border-bottom: Black 1pt solid; text-align: right"><font style="font-size: 8pt">–</font></td><td style="padding-bottom: 1pt; text-align: left"><font style="font-size: 8pt"> </font></td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td> <td style="border-bottom: Black 1pt solid; text-align: left"><font style="font-size: 8pt"> </font></td><td style="border-bottom: Black 1pt solid; text-align: right"><font style="font-size: 8pt">–</font></td><td style="padding-bottom: 1pt; text-align: left"><font style="font-size: 8pt"> </font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td> <td style="border-bottom: Black 1pt solid; text-align: left"><font style="font-size: 8pt"> </font></td><td style="border-bottom: Black 1pt solid; text-align: right"><font style="font-size: 8pt">–</font></td><td style="padding-bottom: 1pt; text-align: left"><font style="font-size: 8pt"> </font></td></tr> <tr style="vertical-align: bottom; background-color: rgb(238,238,238)"> <td><font style="font-size: 8pt">Deferred</font></td><td><font style="font-size: 8pt"> </font></td> <td style="text-align: left"><font style="font-size: 8pt"> </font></td><td style="text-align: right"><font style="font-size: 8pt"> </font></td><td style="text-align: left"><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td> <td style="text-align: left"><font style="font-size: 8pt"> </font></td><td style="text-align: right"><font style="font-size: 8pt"> </font></td><td style="text-align: left"><font style="font-size: 8pt"> </font></td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="width: 70%; padding-left: 11pt"><font style="font-size: 8pt">Federal</font></td><td style="width: 2%"><font style="font-size: 8pt"> </font></td> <td style="width: 1%; text-align: left"><font style="font-size: 8pt"> </font></td><td style="width: 11%; text-align: right"><font style="font-size: 8pt">(491,900</font></td><td style="width: 1%; text-align: left"><font style="font-size: 8pt">)</font></td><td style="width: 2%"><font style="font-size: 8pt"> </font></td> <td style="width: 1%; text-align: left"><font style="font-size: 8pt"> </font></td><td style="width: 11%; text-align: right"><font style="font-size: 8pt">(66,000</font></td><td style="width: 1%; text-align: left"><font style="font-size: 8pt">)</font></td></tr> <tr style="vertical-align: bottom; background-color: rgb(238,238,238)"> <td style="padding-bottom: 1pt; padding-left: 11pt"><font style="font-size: 8pt">State</font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td> <td style="border-bottom: Black 1pt solid; text-align: left"><font style="font-size: 8pt"> </font></td><td style="border-bottom: Black 1pt solid; text-align: right"><font style="font-size: 8pt">(71,500</font></td><td style="padding-bottom: 1pt; text-align: left"><font style="font-size: 8pt">)</font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td> <td style="border-bottom: Black 1pt solid; text-align: left"><font style="font-size: 8pt"> </font></td><td style="border-bottom: Black 1pt solid; text-align: right"><font style="font-size: 8pt">(9,700</font></td><td style="padding-bottom: 1pt; text-align: left"><font style="font-size: 8pt">)</font></td></tr> <tr style="vertical-align: bottom; background-color: White"> <td><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td> <td style="text-align: left"><font style="font-size: 8pt"> </font></td><td style="text-align: right"><font style="font-size: 8pt">(563,400</font></td><td style="text-align: left"><font style="font-size: 8pt">)</font></td><td><font style="font-size: 8pt"> </font></td> <td style="text-align: left"><font style="font-size: 8pt"> </font></td><td style="text-align: right"><font style="font-size: 8pt">(75,700</font></td><td style="text-align: left"><font style="font-size: 8pt">)</font></td></tr> <tr style="vertical-align: bottom; background-color: rgb(238,238,238)"> <td style="text-align: left; padding-bottom: 1pt"><font style="font-size: 8pt">Change in valuation allowance</font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td> <td style="border-bottom: Black 1pt solid; text-align: left"><font style="font-size: 8pt"> </font></td><td style="border-bottom: Black 1pt solid; text-align: right"><font style="font-size: 8pt">563,400</font></td><td style="padding-bottom: 1pt; text-align: left"><font style="font-size: 8pt"> </font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td> <td style="border-bottom: Black 1pt solid; text-align: left"><font style="font-size: 8pt"> </font></td><td style="border-bottom: Black 1pt solid; text-align: right"><font style="font-size: 8pt">75,700</font></td><td style="padding-bottom: 1pt; text-align: left"><font style="font-size: 8pt"> </font></td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: left; padding-bottom: 2.5pt; padding-left: 11pt"><font style="font-size: 8pt">Total income tax provision</font></td><td style="padding-bottom: 2.5pt"><font style="font-size: 8pt"> </font></td> <td style="border-bottom: Black 2.5pt double; text-align: left"><font style="font-size: 8pt">$</font></td><td style="border-bottom: Black 2.5pt double; text-align: right"><font style="font-size: 8pt">–</font></td><td style="padding-bottom: 2.5pt; text-align: left"><font style="font-size: 8pt"> </font></td><td style="padding-bottom: 2.5pt"><font style="font-size: 8pt"> </font></td> <td style="border-bottom: Black 2.5pt double; text-align: left"><font style="font-size: 8pt">$</font></td><td style="border-bottom: Black 2.5pt double; text-align: right"><font style="font-size: 8pt">–</font></td><td style="padding-bottom: 2.5pt; text-align: left"><font style="font-size: 8pt"> </font></td></tr> </table> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><font style="font-size: 8pt"> </font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><font style="font-size: 8pt">A reconciliation of the effective income tax rate and the statutory federal income tax rate is as follows:</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><font style="font-size: 8pt"> </font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p> <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt"> </font></td><td style="font-weight: bold; padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td> <td colspan="6" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><font style="font-size: 8pt">December 31,</font></td><td style="padding-bottom: 1pt; font-weight: bold"><font style="font-size: 8pt"> </font></td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt"> </font></td><td style="font-weight: bold; padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><font style="font-size: 8pt">2013</font></td><td style="padding-bottom: 1pt; font-weight: bold"><font style="font-size: 8pt"> </font></td><td style="font-weight: bold; padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><font style="font-size: 8pt">2012</font></td><td style="padding-bottom: 1pt; font-weight: bold"><font style="font-size: 8pt"> </font></td></tr> <tr style="vertical-align: bottom; background-color: rgb(238,238,238)"> <td style="width: 70%; text-align: left"><font style="font-size: 8pt">U.S. federal statutory rate</font></td><td style="width: 2%"><font style="font-size: 8pt"> </font></td> <td style="width: 1%; text-align: left"><font style="font-size: 8pt"> </font></td><td style="width: 11%; text-align: right"><font style="font-size: 8pt">(34.00</font></td><td style="width: 1%; text-align: left"><font style="font-size: 8pt">)%</font></td><td style="width: 2%"><font style="font-size: 8pt"> </font></td> <td style="width: 1%; text-align: left"><font style="font-size: 8pt"> </font></td><td style="width: 11%; text-align: right"><font style="font-size: 8pt">(34.00</font></td><td style="width: 1%; text-align: left"><font style="font-size: 8pt">)%</font></td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: left"><font style="font-size: 8pt">State income tax rate, net of federal benefit</font></td><td><font style="font-size: 8pt"> </font></td> <td style="text-align: left"><font style="font-size: 8pt"> </font></td><td style="text-align: right"><font style="font-size: 8pt">(4.95</font></td><td style="text-align: left"><font style="font-size: 8pt">)</font></td><td><font style="font-size: 8pt"> </font></td> <td style="text-align: left"><font style="font-size: 8pt"> </font></td><td style="text-align: right"><font style="font-size: 8pt">(5.00</font></td><td style="text-align: left"><font style="font-size: 8pt">)</font></td></tr> <tr style="vertical-align: bottom; background-color: rgb(238,238,238)"> <td style="text-align: left"><font style="font-size: 8pt">Other permanent differences</font></td><td><font style="font-size: 8pt"> </font></td> <td style="text-align: left"><font style="font-size: 8pt"> </font></td><td style="text-align: right"><font style="font-size: 8pt">2.47</font></td><td style="text-align: left"><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td> <td style="text-align: left"><font style="font-size: 8pt"> </font></td><td style="text-align: right"><font style="font-size: 8pt">–</font></td><td style="text-align: left"><font style="font-size: 8pt"> </font></td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: left; padding-bottom: 1pt"><font style="font-size: 8pt">Less: valuation allowance</font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td> <td style="border-bottom: Black 1pt solid; text-align: left"><font style="font-size: 8pt"> </font></td><td style="border-bottom: Black 1pt solid; text-align: right"><font style="font-size: 8pt">36.48</font></td><td style="padding-bottom: 1pt; text-align: left"><font style="font-size: 8pt"> </font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td> <td style="border-bottom: Black 1pt solid; text-align: left"><font style="font-size: 8pt"> </font></td><td style="border-bottom: Black 1pt solid; text-align: right"><font style="font-size: 8pt">39.00</font></td><td style="padding-bottom: 1pt; text-align: left"><font style="font-size: 8pt"> </font></td></tr> <tr style="vertical-align: bottom; background-color: rgb(238,238,238)"> <td style="text-align: left; padding-bottom: 2.5pt"><font style="font-size: 8pt">Provision for income taxes</font></td><td style="padding-bottom: 2.5pt"><font style="font-size: 8pt"> </font></td> <td style="border-bottom: Black 2.5pt double; text-align: left"><font style="font-size: 8pt"> </font></td><td style="border-bottom: Black 2.5pt double; text-align: right"><font style="font-size: 8pt">–</font></td><td style="padding-bottom: 2.5pt; text-align: left"><font style="font-size: 8pt">%</font></td><td style="padding-bottom: 2.5pt"><font style="font-size: 8pt"> </font></td> <td style="border-bottom: Black 2.5pt double; text-align: left"><font style="font-size: 8pt"> </font></td><td style="border-bottom: Black 2.5pt double; text-align: right"><font style="font-size: 8pt">–</font></td><td style="padding-bottom: 2.5pt; text-align: left"><font style="font-size: 8pt">%</font></td></tr> </table> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><font style="font-size: 8pt"> </font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt">In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which temporary differences representing net future deductible amounts became deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. After consideration of all of the information available, Management believes that significant uncertainties exists with respect to future realization of the deferred tax assets and has therefore established a full valuation allowance. For the year ended December 31, 2013 and 2012, the change in valuation allowance was $563,400 and $75,700.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt"> </font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><font style="font-size: 8pt">The tax effects of temporary differences that give rise to deferred tax assets are presented below:</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p> <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt"> </font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td> <td colspan="6" style="text-align: center; border-bottom: Black 1pt solid"><font style="font-size: 8pt">December 31,</font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt"> </font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td> <td colspan="2" style="text-align: center; border-bottom: Black 1pt solid"><font style="font-size: 8pt">2013</font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td> <td colspan="2" style="text-align: center; border-bottom: Black 1pt solid"><font style="font-size: 8pt">2012</font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td></tr> <tr style="vertical-align: bottom; background-color: rgb(238,238,238)"> <td style="text-align: left"><font style="font-size: 8pt">Deferred tax assets:</font></td><td><font style="font-size: 8pt"> </font></td> <td style="text-align: left"><font style="font-size: 8pt"> </font></td><td style="text-align: right"><font style="font-size: 8pt"> </font></td><td style="text-align: left"><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td> <td style="text-align: left"><font style="font-size: 8pt"> </font></td><td style="text-align: right"><font style="font-size: 8pt"> </font></td><td style="text-align: left"><font style="font-size: 8pt"> </font></td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="width: 70%; text-align: left"><font style="font-size: 8pt">Net operating loss carryforward</font></td><td style="width: 2%"><font style="font-size: 8pt"> </font></td> <td style="width: 1%; text-align: left"><font style="font-size: 8pt">$</font></td><td style="width: 11%; text-align: right"><font style="font-size: 8pt">639,100</font></td><td style="width: 1%; text-align: left"><font style="font-size: 8pt"> </font></td><td style="width: 2%"><font style="font-size: 8pt"> </font></td> <td style="width: 1%; text-align: left"><font style="font-size: 8pt">$</font></td><td style="width: 11%; text-align: right"><font style="font-size: 8pt">75,700</font></td><td style="width: 1%; text-align: left"><font style="font-size: 8pt"> </font></td></tr> <tr style="vertical-align: bottom; background-color: rgb(238,238,238)"> <td style="text-align: left; padding-bottom: 1pt"><font style="font-size: 8pt">Derivative liability</font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td> <td style="border-bottom: Black 1pt solid; text-align: left"><font style="font-size: 8pt"> </font></td><td style="border-bottom: Black 1pt solid; text-align: right"><font style="font-size: 8pt">10,421</font></td><td style="padding-bottom: 1pt; text-align: left"><font style="font-size: 8pt"> </font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td> <td style="border-bottom: Black 1pt solid; text-align: left"><font style="font-size: 8pt"> </font></td><td style="border-bottom: Black 1pt solid; text-align: right"><font style="font-size: 8pt">–</font></td><td style="padding-bottom: 1pt; text-align: left"><font style="font-size: 8pt"> </font></td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: left"><font style="font-size: 8pt">Total deferred tax assets before valuation allowance:</font></td><td><font style="font-size: 8pt"> </font></td> <td style="text-align: left"><font style="font-size: 8pt">$</font></td><td style="text-align: right"><font style="font-size: 8pt">649,521</font></td><td style="text-align: left"><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td> <td style="text-align: left"><font style="font-size: 8pt">$</font></td><td style="text-align: right"><font style="font-size: 8pt">75,700</font></td><td style="text-align: left"><font style="font-size: 8pt"> </font></td></tr> <tr style="vertical-align: bottom; background-color: rgb(238,238,238)"> <td style="text-align: left; padding-bottom: 1pt"><font style="font-size: 8pt">Valuation allowance</font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td> <td style="border-bottom: Black 1pt solid; text-align: left"><font style="font-size: 8pt"> </font></td><td style="border-bottom: Black 1pt solid; text-align: right"><font style="font-size: 8pt">(639,100</font></td><td style="padding-bottom: 1pt; text-align: left"><font style="font-size: 8pt">)</font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td> <td style="border-bottom: Black 1pt solid; text-align: left"><font style="font-size: 8pt"> </font></td><td style="border-bottom: Black 1pt solid; text-align: right"><font style="font-size: 8pt">(75,700</font></td><td style="padding-bottom: 1pt; text-align: left"><font style="font-size: 8pt">)</font></td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: left"><font style="font-size: 8pt">Deferred tax assets, net of valuation allowance</font></td><td><font style="font-size: 8pt"> </font></td> <td style="text-align: left"><font style="font-size: 8pt"> </font></td><td style="text-align: right"><font style="font-size: 8pt">10,421</font></td><td style="text-align: left"><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td> <td style="text-align: left"><font style="font-size: 8pt"> </font></td><td style="text-align: right"><font style="font-size: 8pt">–</font></td><td style="text-align: left"><font style="font-size: 8pt"> </font></td></tr> <tr style="vertical-align: bottom; background-color: rgb(238,238,238)"> <td><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td> <td style="text-align: left"><font style="font-size: 8pt"> </font></td><td style="text-align: right"><font style="font-size: 8pt"> </font></td><td style="text-align: left"><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td> <td style="text-align: left"><font style="font-size: 8pt"> </font></td><td style="text-align: right"><font style="font-size: 8pt"> </font></td><td style="text-align: left"><font style="font-size: 8pt"> </font></td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: left"><font style="font-size: 8pt">Deferred tax liabilities:</font></td><td><font style="font-size: 8pt"> </font></td> <td style="text-align: left"><font style="font-size: 8pt"> </font></td><td style="text-align: right"><font style="font-size: 8pt"> </font></td><td style="text-align: left"><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td> <td style="text-align: left"><font style="font-size: 8pt"> </font></td><td style="text-align: right"><font style="font-size: 8pt"> </font></td><td style="text-align: left"><font style="font-size: 8pt"> </font></td></tr> <tr style="vertical-align: bottom; background-color: rgb(238,238,238)"> <td style="text-align: left; padding-bottom: 1pt"><font style="font-size: 8pt">Convertible debt</font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td> <td style="border-bottom: Black 1pt solid; text-align: left"><font style="font-size: 8pt"> </font></td><td style="border-bottom: Black 1pt solid; text-align: right"><font style="font-size: 8pt">(10,421</font></td><td style="padding-bottom: 1pt; text-align: left"><font style="font-size: 8pt">)</font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td> <td style="border-bottom: Black 1pt solid; text-align: left"><font style="font-size: 8pt"> </font></td><td style="border-bottom: Black 1pt solid; text-align: right"><font style="font-size: 8pt">–</font></td><td style="padding-bottom: 1pt; text-align: left"><font style="font-size: 8pt"> </font></td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: left"><font style="font-size: 8pt">Total deferred tax liabilities</font></td><td><font style="font-size: 8pt"> </font></td> <td style="text-align: left"><font style="font-size: 8pt"> </font></td><td style="text-align: right"><font style="font-size: 8pt">(10,421</font></td><td style="text-align: left"><font style="font-size: 8pt">)</font></td><td><font style="font-size: 8pt"> </font></td> <td style="text-align: left"><font style="font-size: 8pt"> </font></td><td style="text-align: right"><font style="font-size: 8pt">–</font></td><td style="text-align: left"><font style="font-size: 8pt"> </font></td></tr> <tr style="vertical-align: bottom; background-color: rgb(238,238,238)"> <td><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td> <td style="text-align: left"><font style="font-size: 8pt"> </font></td><td style="text-align: right"><font style="font-size: 8pt"> </font></td><td style="text-align: left"><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td> <td style="text-align: left"><font style="font-size: 8pt"> </font></td><td style="text-align: right"><font style="font-size: 8pt"> </font></td><td style="text-align: left"><font style="font-size: 8pt"> </font></td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: left; padding-bottom: 2.5pt"><font style="font-size: 8pt">Net deferred tax asset (liability)</font></td><td style="padding-bottom: 2.5pt"><font style="font-size: 8pt"> </font></td> <td style="border-bottom: Black 2.5pt double; text-align: left"><font style="font-size: 8pt">$</font></td><td style="border-bottom: Black 2.5pt double; text-align: right"><font style="font-size: 8pt">–</font></td><td style="padding-bottom: 2.5pt; text-align: left"><font style="font-size: 8pt"> </font></td><td style="padding-bottom: 2.5pt"><font style="font-size: 8pt"> </font></td> <td style="border-bottom: Black 2.5pt double; text-align: left"><font style="font-size: 8pt">$</font></td><td style="border-bottom: Black 2.5pt double; text-align: right"><font style="font-size: 8pt">–</font></td><td style="padding-bottom: 2.5pt; text-align: left"><font style="font-size: 8pt"> </font></td></tr> </table> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><font style="font-size: 8pt"> </font></p>
</us-gaap:IncomeTaxDisclosureTextBlock>
<us-gaap:ScheduleOfComponentsOfIncomeTaxExpenseBenefitTableTextBlock contextRef="From2013-01-01to2013-12-31">
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt"> </font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td> <td colspan="6" style="text-align: center; border-bottom: Black 1pt solid"><font style="font-size: 8pt">December 31,</font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt"> </font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td> <td colspan="2" style="text-align: center; border-bottom: Black 1pt solid"><font style="font-size: 8pt">2013</font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td> <td colspan="2" style="text-align: center; border-bottom: Black 1pt solid"><font style="font-size: 8pt">2012</font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td></tr> <tr style="vertical-align: bottom; background-color: rgb(238,238,238)"> <td><font style="font-size: 8pt">Current</font></td><td><font style="font-size: 8pt"> </font></td> <td style="text-align: left"><font style="font-size: 8pt"> </font></td><td style="text-align: right"><font style="font-size: 8pt"> </font></td><td style="text-align: left"><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td> <td style="text-align: left"><font style="font-size: 8pt"> </font></td><td style="text-align: right"><font style="font-size: 8pt"> </font></td><td style="text-align: left"><font style="font-size: 8pt"> </font></td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="padding-left: 11pt"><font style="font-size: 8pt">Federal</font></td><td><font style="font-size: 8pt"> </font></td> <td style="text-align: left"><font style="font-size: 8pt">$</font></td><td style="text-align: right"><font style="font-size: 8pt">–</font></td><td style="text-align: left"><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td> <td style="text-align: left"><font style="font-size: 8pt">$</font></td><td style="text-align: right"><font style="font-size: 8pt">–</font></td><td style="text-align: left"><font style="font-size: 8pt"> </font></td></tr> <tr style="vertical-align: bottom; background-color: rgb(238,238,238)"> <td style="padding-bottom: 1pt; padding-left: 11pt"><font style="font-size: 8pt">State</font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td> <td style="border-bottom: Black 1pt solid; text-align: left"><font style="font-size: 8pt"> </font></td><td style="border-bottom: Black 1pt solid; text-align: right"><font style="font-size: 8pt">–</font></td><td style="padding-bottom: 1pt; text-align: left"><font style="font-size: 8pt"> </font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td> <td style="border-bottom: Black 1pt solid; text-align: left"><font style="font-size: 8pt"> </font></td><td style="border-bottom: Black 1pt solid; text-align: right"><font style="font-size: 8pt">–</font></td><td style="padding-bottom: 1pt; text-align: left"><font style="font-size: 8pt"> </font></td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td> <td style="border-bottom: Black 1pt solid; text-align: left"><font style="font-size: 8pt"> </font></td><td style="border-bottom: Black 1pt solid; text-align: right"><font style="font-size: 8pt">–</font></td><td style="padding-bottom: 1pt; text-align: left"><font style="font-size: 8pt"> </font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td> <td style="border-bottom: Black 1pt solid; text-align: left"><font style="font-size: 8pt"> </font></td><td style="border-bottom: Black 1pt solid; text-align: right"><font style="font-size: 8pt">–</font></td><td style="padding-bottom: 1pt; text-align: left"><font style="font-size: 8pt"> </font></td></tr> <tr style="vertical-align: bottom; background-color: rgb(238,238,238)"> <td><font style="font-size: 8pt">Deferred</font></td><td><font style="font-size: 8pt"> </font></td> <td style="text-align: left"><font style="font-size: 8pt"> </font></td><td style="text-align: right"><font style="font-size: 8pt"> </font></td><td style="text-align: left"><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td> <td style="text-align: left"><font style="font-size: 8pt"> </font></td><td style="text-align: right"><font style="font-size: 8pt"> </font></td><td style="text-align: left"><font style="font-size: 8pt"> </font></td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="width: 70%; padding-left: 11pt"><font style="font-size: 8pt">Federal</font></td><td style="width: 2%"><font style="font-size: 8pt"> </font></td> <td style="width: 1%; text-align: left"><font style="font-size: 8pt"> </font></td><td style="width: 11%; text-align: right"><font style="font-size: 8pt">(491,900</font></td><td style="width: 1%; text-align: left"><font style="font-size: 8pt">)</font></td><td style="width: 2%"><font style="font-size: 8pt"> </font></td> <td style="width: 1%; text-align: left"><font style="font-size: 8pt"> </font></td><td style="width: 11%; text-align: right"><font style="font-size: 8pt">(66,000</font></td><td style="width: 1%; text-align: left"><font style="font-size: 8pt">)</font></td></tr> <tr style="vertical-align: bottom; background-color: rgb(238,238,238)"> <td style="padding-bottom: 1pt; padding-left: 11pt"><font style="font-size: 8pt">State</font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td> <td style="border-bottom: Black 1pt solid; text-align: left"><font style="font-size: 8pt"> </font></td><td style="border-bottom: Black 1pt solid; text-align: right"><font style="font-size: 8pt">(71,500</font></td><td style="padding-bottom: 1pt; text-align: left"><font style="font-size: 8pt">)</font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td> <td style="border-bottom: Black 1pt solid; text-align: left"><font style="font-size: 8pt"> </font></td><td style="border-bottom: Black 1pt solid; text-align: right"><font style="font-size: 8pt">(9,700</font></td><td style="padding-bottom: 1pt; text-align: left"><font style="font-size: 8pt">)</font></td></tr> <tr style="vertical-align: bottom; background-color: White"> <td><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td> <td style="text-align: left"><font style="font-size: 8pt"> </font></td><td style="text-align: right"><font style="font-size: 8pt">(563,400</font></td><td style="text-align: left"><font style="font-size: 8pt">)</font></td><td><font style="font-size: 8pt"> </font></td> <td style="text-align: left"><font style="font-size: 8pt"> </font></td><td style="text-align: right"><font style="font-size: 8pt">(75,700</font></td><td style="text-align: left"><font style="font-size: 8pt">)</font></td></tr> <tr style="vertical-align: bottom; background-color: rgb(238,238,238)"> <td style="text-align: left; padding-bottom: 1pt"><font style="font-size: 8pt">Change in valuation allowance</font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td> <td style="border-bottom: Black 1pt solid; text-align: left"><font style="font-size: 8pt"> </font></td><td style="border-bottom: Black 1pt solid; text-align: right"><font style="font-size: 8pt">563,400</font></td><td style="padding-bottom: 1pt; text-align: left"><font style="font-size: 8pt"> </font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td> <td style="border-bottom: Black 1pt solid; text-align: left"><font style="font-size: 8pt"> </font></td><td style="border-bottom: Black 1pt solid; text-align: right"><font style="font-size: 8pt">75,700</font></td><td style="padding-bottom: 1pt; text-align: left"><font style="font-size: 8pt"> </font></td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: left; padding-bottom: 2.5pt; padding-left: 11pt"><font style="font-size: 8pt">Total income tax provision</font></td><td style="padding-bottom: 2.5pt"><font style="font-size: 8pt"> </font></td> <td style="border-bottom: Black 2.5pt double; text-align: left"><font style="font-size: 8pt">$</font></td><td style="border-bottom: Black 2.5pt double; text-align: right"><font style="font-size: 8pt">–</font></td><td style="padding-bottom: 2.5pt; text-align: left"><font style="font-size: 8pt"> </font></td><td style="padding-bottom: 2.5pt"><font style="font-size: 8pt"> </font></td> <td style="border-bottom: Black 2.5pt double; text-align: left"><font style="font-size: 8pt">$</font></td><td style="border-bottom: Black 2.5pt double; text-align: right"><font style="font-size: 8pt">–</font></td><td style="padding-bottom: 2.5pt; text-align: left"><font style="font-size: 8pt"> </font></td></tr> </table>
</us-gaap:ScheduleOfComponentsOfIncomeTaxExpenseBenefitTableTextBlock>
<us-gaap:ScheduleOfEffectiveIncomeTaxRateReconciliationTableTextBlock contextRef="From2013-01-01to2013-12-31">
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt"> </font></td><td style="font-weight: bold; padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td> <td colspan="6" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><font style="font-size: 8pt">December 31,</font></td><td style="padding-bottom: 1pt; font-weight: bold"><font style="font-size: 8pt"> </font></td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt"> </font></td><td style="font-weight: bold; padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><font style="font-size: 8pt">2013</font></td><td style="padding-bottom: 1pt; font-weight: bold"><font style="font-size: 8pt"> </font></td><td style="font-weight: bold; padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><font style="font-size: 8pt">2012</font></td><td style="padding-bottom: 1pt; font-weight: bold"><font style="font-size: 8pt"> </font></td></tr> <tr style="vertical-align: bottom; background-color: rgb(238,238,238)"> <td style="width: 70%; text-align: left"><font style="font-size: 8pt">U.S. federal statutory rate</font></td><td style="width: 2%"><font style="font-size: 8pt"> </font></td> <td style="width: 1%; text-align: left"><font style="font-size: 8pt"> </font></td><td style="width: 11%; text-align: right"><font style="font-size: 8pt">(34.00</font></td><td style="width: 1%; text-align: left"><font style="font-size: 8pt">)%</font></td><td style="width: 2%"><font style="font-size: 8pt"> </font></td> <td style="width: 1%; text-align: left"><font style="font-size: 8pt"> </font></td><td style="width: 11%; text-align: right"><font style="font-size: 8pt">(34.00</font></td><td style="width: 1%; text-align: left"><font style="font-size: 8pt">)%</font></td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: left"><font style="font-size: 8pt">State income tax rate, net of federal benefit</font></td><td><font style="font-size: 8pt"> </font></td> <td style="text-align: left"><font style="font-size: 8pt"> </font></td><td style="text-align: right"><font style="font-size: 8pt">(4.95</font></td><td style="text-align: left"><font style="font-size: 8pt">)</font></td><td><font style="font-size: 8pt"> </font></td> <td style="text-align: left"><font style="font-size: 8pt"> </font></td><td style="text-align: right"><font style="font-size: 8pt">(5.00</font></td><td style="text-align: left"><font style="font-size: 8pt">)</font></td></tr> <tr style="vertical-align: bottom; background-color: rgb(238,238,238)"> <td style="text-align: left"><font style="font-size: 8pt">Other permanent differences</font></td><td><font style="font-size: 8pt"> </font></td> <td style="text-align: left"><font style="font-size: 8pt"> </font></td><td style="text-align: right"><font style="font-size: 8pt">2.47</font></td><td style="text-align: left"><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td> <td style="text-align: left"><font style="font-size: 8pt"> </font></td><td style="text-align: right"><font style="font-size: 8pt">–</font></td><td style="text-align: left"><font style="font-size: 8pt"> </font></td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: left; padding-bottom: 1pt"><font style="font-size: 8pt">Less: valuation allowance</font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td> <td style="border-bottom: Black 1pt solid; text-align: left"><font style="font-size: 8pt"> </font></td><td style="border-bottom: Black 1pt solid; text-align: right"><font style="font-size: 8pt">36.48</font></td><td style="padding-bottom: 1pt; text-align: left"><font style="font-size: 8pt"> </font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td> <td style="border-bottom: Black 1pt solid; text-align: left"><font style="font-size: 8pt"> </font></td><td style="border-bottom: Black 1pt solid; text-align: right"><font style="font-size: 8pt">39.00</font></td><td style="padding-bottom: 1pt; text-align: left"><font style="font-size: 8pt"> </font></td></tr> <tr style="vertical-align: bottom; background-color: rgb(238,238,238)"> <td style="text-align: left; padding-bottom: 2.5pt"><font style="font-size: 8pt">Provision for income taxes</font></td><td style="padding-bottom: 2.5pt"><font style="font-size: 8pt"> </font></td> <td style="border-bottom: Black 2.5pt double; text-align: left"><font style="font-size: 8pt"> </font></td><td style="border-bottom: Black 2.5pt double; text-align: right"><font style="font-size: 8pt">–</font></td><td style="padding-bottom: 2.5pt; text-align: left"><font style="font-size: 8pt">%</font></td><td style="padding-bottom: 2.5pt"><font style="font-size: 8pt"> </font></td> <td style="border-bottom: Black 2.5pt double; text-align: left"><font style="font-size: 8pt"> </font></td><td style="border-bottom: Black 2.5pt double; text-align: right"><font style="font-size: 8pt">–</font></td><td style="padding-bottom: 2.5pt; text-align: left"><font style="font-size: 8pt">%</font></td></tr> </table>
</us-gaap:ScheduleOfEffectiveIncomeTaxRateReconciliationTableTextBlock>
<us-gaap:ScheduleOfDeferredTaxAssetsAndLiabilitiesTableTextBlock contextRef="From2013-01-01to2013-12-31">
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt"> </font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td> <td colspan="6" style="text-align: center; border-bottom: Black 1pt solid"><font style="font-size: 8pt">December 31,</font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt"> </font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td> <td colspan="2" style="text-align: center; border-bottom: Black 1pt solid"><font style="font-size: 8pt">2013</font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td> <td colspan="2" style="text-align: center; border-bottom: Black 1pt solid"><font style="font-size: 8pt">2012</font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td></tr> <tr style="vertical-align: bottom; background-color: rgb(238,238,238)"> <td style="text-align: left"><font style="font-size: 8pt">Deferred tax assets:</font></td><td><font style="font-size: 8pt"> </font></td> <td style="text-align: left"><font style="font-size: 8pt"> </font></td><td style="text-align: right"><font style="font-size: 8pt"> </font></td><td style="text-align: left"><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td> <td style="text-align: left"><font style="font-size: 8pt"> </font></td><td style="text-align: right"><font style="font-size: 8pt"> </font></td><td style="text-align: left"><font style="font-size: 8pt"> </font></td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="width: 70%; text-align: left"><font style="font-size: 8pt">Net operating loss carryforward</font></td><td style="width: 2%"><font style="font-size: 8pt"> </font></td> <td style="width: 1%; text-align: left"><font style="font-size: 8pt">$</font></td><td style="width: 11%; text-align: right"><font style="font-size: 8pt">639,100</font></td><td style="width: 1%; text-align: left"><font style="font-size: 8pt"> </font></td><td style="width: 2%"><font style="font-size: 8pt"> </font></td> <td style="width: 1%; text-align: left"><font style="font-size: 8pt">$</font></td><td style="width: 11%; text-align: right"><font style="font-size: 8pt">75,700</font></td><td style="width: 1%; text-align: left"><font style="font-size: 8pt"> </font></td></tr> <tr style="vertical-align: bottom; background-color: rgb(238,238,238)"> <td style="text-align: left; padding-bottom: 1pt"><font style="font-size: 8pt">Derivative liability</font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td> <td style="border-bottom: Black 1pt solid; text-align: left"><font style="font-size: 8pt"> </font></td><td style="border-bottom: Black 1pt solid; text-align: right"><font style="font-size: 8pt">10,421</font></td><td style="padding-bottom: 1pt; text-align: left"><font style="font-size: 8pt"> </font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td> <td style="border-bottom: Black 1pt solid; text-align: left"><font style="font-size: 8pt"> </font></td><td style="border-bottom: Black 1pt solid; text-align: right"><font style="font-size: 8pt">–</font></td><td style="padding-bottom: 1pt; text-align: left"><font style="font-size: 8pt"> </font></td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: left"><font style="font-size: 8pt">Total deferred tax assets before valuation allowance:</font></td><td><font style="font-size: 8pt"> </font></td> <td style="text-align: left"><font style="font-size: 8pt">$</font></td><td style="text-align: right"><font style="font-size: 8pt">649,521</font></td><td style="text-align: left"><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td> <td style="text-align: left"><font style="font-size: 8pt">$</font></td><td style="text-align: right"><font style="font-size: 8pt">75,700</font></td><td style="text-align: left"><font style="font-size: 8pt"> </font></td></tr> <tr style="vertical-align: bottom; background-color: rgb(238,238,238)"> <td style="text-align: left; padding-bottom: 1pt"><font style="font-size: 8pt">Valuation allowance</font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td> <td style="border-bottom: Black 1pt solid; text-align: left"><font style="font-size: 8pt"> </font></td><td style="border-bottom: Black 1pt solid; text-align: right"><font style="font-size: 8pt">(639,100</font></td><td style="padding-bottom: 1pt; text-align: left"><font style="font-size: 8pt">)</font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td> <td style="border-bottom: Black 1pt solid; text-align: left"><font style="font-size: 8pt"> </font></td><td style="border-bottom: Black 1pt solid; text-align: right"><font style="font-size: 8pt">(75,700</font></td><td style="padding-bottom: 1pt; text-align: left"><font style="font-size: 8pt">)</font></td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: left"><font style="font-size: 8pt">Deferred tax assets, net of valuation allowance</font></td><td><font style="font-size: 8pt"> </font></td> <td style="text-align: left"><font style="font-size: 8pt"> </font></td><td style="text-align: right"><font style="font-size: 8pt">10,421</font></td><td style="text-align: left"><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td> <td style="text-align: left"><font style="font-size: 8pt"> </font></td><td style="text-align: right"><font style="font-size: 8pt">–</font></td><td style="text-align: left"><font style="font-size: 8pt"> </font></td></tr> <tr style="vertical-align: bottom; background-color: rgb(238,238,238)"> <td><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td> <td style="text-align: left"><font style="font-size: 8pt"> </font></td><td style="text-align: right"><font style="font-size: 8pt"> </font></td><td style="text-align: left"><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td> <td style="text-align: left"><font style="font-size: 8pt"> </font></td><td style="text-align: right"><font style="font-size: 8pt"> </font></td><td style="text-align: left"><font style="font-size: 8pt"> </font></td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: left"><font style="font-size: 8pt">Deferred tax liabilities:</font></td><td><font style="font-size: 8pt"> </font></td> <td style="text-align: left"><font style="font-size: 8pt"> </font></td><td style="text-align: right"><font style="font-size: 8pt"> </font></td><td style="text-align: left"><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td> <td style="text-align: left"><font style="font-size: 8pt"> </font></td><td style="text-align: right"><font style="font-size: 8pt"> </font></td><td style="text-align: left"><font style="font-size: 8pt"> </font></td></tr> <tr style="vertical-align: bottom; background-color: rgb(238,238,238)"> <td style="text-align: left; padding-bottom: 1pt"><font style="font-size: 8pt">Convertible debt</font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td> <td style="border-bottom: Black 1pt solid; text-align: left"><font style="font-size: 8pt"> </font></td><td style="border-bottom: Black 1pt solid; text-align: right"><font style="font-size: 8pt">(10,421</font></td><td style="padding-bottom: 1pt; text-align: left"><font style="font-size: 8pt">)</font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td> <td style="border-bottom: Black 1pt solid; text-align: left"><font style="font-size: 8pt"> </font></td><td style="border-bottom: Black 1pt solid; text-align: right"><font style="font-size: 8pt">–</font></td><td style="padding-bottom: 1pt; text-align: left"><font style="font-size: 8pt"> </font></td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: left"><font style="font-size: 8pt">Total deferred tax liabilities</font></td><td><font style="font-size: 8pt"> </font></td> <td style="text-align: left"><font style="font-size: 8pt"> </font></td><td style="text-align: right"><font style="font-size: 8pt">(10,421</font></td><td style="text-align: left"><font style="font-size: 8pt">)</font></td><td><font style="font-size: 8pt"> </font></td> <td style="text-align: left"><font style="font-size: 8pt"> </font></td><td style="text-align: right"><font style="font-size: 8pt">–</font></td><td style="text-align: left"><font style="font-size: 8pt"> </font></td></tr> <tr style="vertical-align: bottom; background-color: rgb(238,238,238)"> <td><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td> <td style="text-align: left"><font style="font-size: 8pt"> </font></td><td style="text-align: right"><font style="font-size: 8pt"> </font></td><td style="text-align: left"><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td> <td style="text-align: left"><font style="font-size: 8pt"> </font></td><td style="text-align: right"><font style="font-size: 8pt"> </font></td><td style="text-align: left"><font style="font-size: 8pt"> </font></td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: left; padding-bottom: 2.5pt"><font style="font-size: 8pt">Net deferred tax asset (liability)</font></td><td style="padding-bottom: 2.5pt"><font style="font-size: 8pt"> </font></td> <td style="border-bottom: Black 2.5pt double; text-align: left"><font style="font-size: 8pt">$</font></td><td style="border-bottom: Black 2.5pt double; text-align: right"><font style="font-size: 8pt">–</font></td><td style="padding-bottom: 2.5pt; text-align: left"><font style="font-size: 8pt"> </font></td><td style="padding-bottom: 2.5pt"><font style="font-size: 8pt"> </font></td> <td style="border-bottom: Black 2.5pt double; text-align: left"><font style="font-size: 8pt">$</font></td><td style="border-bottom: Black 2.5pt double; text-align: right"><font style="font-size: 8pt">–</font></td><td style="padding-bottom: 2.5pt; text-align: left"><font style="font-size: 8pt"> </font></td></tr> </table>
</us-gaap:ScheduleOfDeferredTaxAssetsAndLiabilitiesTableTextBlock>
<us-gaap:CommitmentsAndContingenciesDisclosureTextBlock contextRef="From2013-01-01to2013-12-31">
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><font style="font-size: 8pt"></font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt; font-variant: small-caps"><b><i>Legal Matters</i></b></font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt">From time to time, the Company is subject to legal proceedings arising in the ordinary course of business. Such matters are subject to uncertainties and outcomes are not predictable with assurance. Management believes at this time, there are no ongoing matters that will have a material adverse effect on the Company's business, financial position, results of operations, or cash flows.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt"> </font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt">Subsequent to the acquisition of 3D-ID, the Company licensed sixteen (16) U.S. patents. The Company does not generally conduct exhaustive patent searches to determine whether the technology used in our products infringes patents held by third parties. The Company may face claims by third parties that its products or technology infringe their patents or other intellectual property rights in the future. Any claim of infringement could cause the Company to incur substantial costs defending against the claim, even if the claim is invalid, and could distract the attention of the Company’s management. If any of the Company’s products are found to violate third-party proprietary rights, it may be required to pay substantial damages.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><font style="font-size: 8pt; font-variant: small-caps"><b><i>Commitments</i></b></font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt">Around the date of the Acquisition the Company signed a licensing agreement with Aellipsys Holdings, Inc., an unrelated party, which granted 3D-ID a perpetual sub-licensable, non-exclusive, worldwide license to use their intellectual property, including, but not limited to, those of GeoMetrix, Inc., which has 18 patents in the field of 3D facial recognition and Active ID systems for access control and identification of individuals. 3D-ID is required to pay Aellipsys Holdings a royalty for each product manufactured, sold and installed at a customer by 3D-ID equal to two thousand dollars ($2,000). An additional royalty of ten percent (10%) is payable on recurring revenues from the same installation. The term of the initial agreement is five years. During the years ended December 31, 2013 and 2012 the Company paid $0 and $10,000, respectively, in royalty payments to GeoMetrix, Inc.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt">On August 19, 2011, the Company signed a licensing agreement with Technest Holdings, Inc. and Genex Technologies, Inc., which granted 3D-ID a perpetual sub-licensable, exclusive, worldwide license to use their intellectual property in U.S. Federal and State markets, and a non-exclusive license in all other markets. The Company’s Chief Executive Officer (“CEO”) is a stockholder of and was the former CEO of Technest Holdings, Inc. In consideration of the license of rights affected by this Agreement, 3D-ID is obligated to pay Technest a royalty equal to 5% of net sales with a minimum royalty of $15,000 during the first two years and $20,000 for each contract year thereafter. For the years ended December 31, 2013 and 2012, the Company incurred $15,000 each year, in connection with the agreement. As of December 31, 2013, $35,000 of minimum royalties are included in accrued expenses in the consolidated balance sheet in connection with the agreement.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt"> </font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt">In October 2012, the Company entered into an agreement with a consultant to provide public relations and marketing services to the Company for a period of three months. Pursuant to the agreement, the Company agreed to pay the consultant a monthly cash fee of $5,000 and to issue the consultant shares of common stock per month with a fair value of $10,000 as compensation for services provided. During the year, the Company and the consultant verbally extended the agreement until October 30, 2013, with the same terms and conditions. The Company entered into a new agreement on November 1, 2013 for a period of six months and agreed to pay the consultant a monthly cash fee of $5,000.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt"> </font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt; color: black">During the year ended December 31, 2013, the Company issued 165,744 shares of common stock with an aggregate fair value of $90,000 and paid $60,000 in cash as compensation for services provided from January 1, 2013 to December 31, 2013</font><font style="font-size: 8pt">. In addition the consultant was paid $41,875 for additional marketing services.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt"> </font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt">In November 2012, the Company entered into an agreement with a technology consulting firm to provide strategic marketing and sales services to the Company with respect to developing business opportunities with the Federal Government through March 2013. Pursuant to the agreement, the Company agreed to pay the consultant a monthly cash fee of $5,500 and a sales commission of 5% on executed contracts. The agreement ended in May, 2013. For the years ended December 31, 2013 and 2012, the Company incurred expenses in connection with this agreement of $11,000 and $5,500, respectively.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt"> </font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt; color: black">In January 2013, the Company entered into an agreement with a consultant to provide business development services to the Company for a period of three months. Pursuant to the agreement, the Company issued the consultant 20,000 shares of common stock with an aggregate fair value of $5,000. </font><font style="font-size: 8pt; color: #FB0007"> </font><font style="font-size: 8pt">The company also entered into an agreement with the same consultant for additional services ending December 31, 2013 in the amount of $65,000 in cash and 4,878 shares of common stock with a fair value of $20,000.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt"> </font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt">In January 2013, the Company entered into an agreement with a development and manufacturing company to provide samples of the Company’s smart card design for an aggregate of $150,000. Unless terminated early, the agreement will continue in full force and effect until the samples have been delivered to the Company. During the year ended December 31, 2013 the Company paid $125,000 and samples are currently in the process of being built.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt"> </font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt">In July 2013, the Company entered into an agreement with a consultant to provide public relations and marketing services to the Company for a period of six months. Pursuant to the agreement, the Company agreed to pay the consultant a monthly cash fee of $4,000 and to issue the consultant 4,000 shares of common stock per month as compensation for services provided. Commencing September 16, 2013, the agreement was amended to a monthly cash fee of $4,000 and to issue the consultant $4,000 in shares of common stock per month. During the year ended December 31, 2013, the consultant was issued 13,767 shares with an aggregate fair value of $42,240.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt"> </font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt">In August 2013, the Company entered into an agreement with a consultant to provide public relations and marketing services to the Company for a period of three months. Pursuant to the agreement, the Company issued the consultant 24,000 shares of common stock with an aggregate fair value of $24,000 as compensation for services provided.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt"> </font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt">On October 16, 2013, the Company entered into a lease agreement for office space in Palm Bay, Florida. The term of the lease is for three years with a monthly rent of $1,250 per month in the first year, increasing 3% annually thereafter. The Company’s rent expense in 2013 was not material, however, it is obligated to pay $15,000 in 2014, 15,450 in 2015 and 15,914 in 2016, for a total remaining lease commitment as of December 31, 2013 of $46,364.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt"> </font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt">On November 7, 2013, the Company entered into a three-year distribution and supply agreement with Voice of Big Data Solutions, Pvt. Ltd. (“VOBD”) for the distribution of the Company’s 3D facial recognition products in India and Sri Lanka on an exclusive basis and The Middle East and Singapore on a non-exclusive basis. The agreement is subject to termination at any time after the initial three-year term by either the Company or VOBD upon sixty (60) days written notice.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt; font-variant: small-caps"><b><i> </i></b></font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt; font-variant: small-caps"><b><i>Employment Agreement</i></b></font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt">Effective October 1, 2012, Nxt-ID entered into an employment agreement with its Chief Executive Officer. The employment agreement provides for:</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p> <table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: top"> <td style="width: 5%"><font style="font-size: 8pt"> </font></td> <td style="width: 5%"><font style="font: 8pt Symbol">·</font></td> <td style="text-align: justify; width: 90%"><font style="font: 8pt Times New Roman, Times, Serif">An initial term of 3 years beginning on October 1, 2012.</font></td></tr> </table> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p> <table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: top"> <td style="width: 5%"><font style="font-size: 8pt"> </font></td> <td style="width: 5%"><font style="font: 8pt Symbol">·</font></td> <td style="text-align: justify; width: 90%"><font style="font: 8pt Times New Roman, Times, Serif">A base salary of $150,000 per year, increasing to $300,000 per year </font></td></tr> </table> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><font style="font-size: 8pt"> </font></p> <table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: top"> <td style="width: 5%"><font style="font-size: 8pt"> </font></td> <td style="width: 5%"><font style="font: 8pt Symbol">·</font></td> <td style="text-align: justify; width: 90%"><font style="font: 8pt Times New Roman, Times, Serif">Payment of all necessary and reasonable out-of-pocket expenses incurred by the executive in the performance of his duties under the agreement.</font></td></tr> </table> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p> <table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: top"> <td style="width: 5%"><font style="font-size: 8pt"> </font></td> <td style="width: 5%"><font style="font: 8pt Symbol">·</font></td> <td style="text-align: justify; width: 90%"><font style="font: 8pt Times New Roman, Times, Serif">Eligibility to participate in bonus or incentive compensation plans that may be established by the board of directors from time to time applicable to the executive's services.</font></td></tr> </table> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><font style="font-size: 8pt"> </font></p> <table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: top"> <td style="width: 5%"><font style="font-size: 8pt"> </font></td> <td style="width: 5%"><font style="font: 8pt Symbol">·</font></td> <td style="text-align: justify; width: 90%"><font style="font: 8pt Times New Roman, Times, Serif">Eligibility to receive equity awards as determined by the board of directors, or a committee of the board of directors, composed in compliance with the corporate governance standards of any applicable listing exchange.</font></td></tr> </table> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p>
</us-gaap:CommitmentsAndContingenciesDisclosureTextBlock>
<us-gaap:SubsequentEventsTextBlock contextRef="From2013-01-01to2013-12-31">
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt">The Company evaluates events that have occurred after the balance sheet date but before the financial statements are issued.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt"> </font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt; color: black">In January 2014, </font><font style="font-size: 8pt">upon the successful completion of the Wocket prototype, <font style="color: black">the Chief Executive Officer’s salary was increased to $300,000 from $150,000 pursuant to his employment agreement.</font></font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt"> </font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt">The Company received notice on February 11, 2014 from <font style="color: black">CII </font>requesting the conversion of their outstanding convertible note of $150,000 and accrued interest of $21,485 into common stock on February 17, 2014. Since February 17<sup>th </sup>was a holiday the Company utilized the trading price of its common stock on February 18, 2014 in order to calculate the number of common shares to issue to CII. The company will issue 55,497 shares in full relief of the outstanding debt of $171,485.</font></p>
</us-gaap:SubsequentEventsTextBlock>
<us-gaap:PropertyPlantAndEquipmentEstimatedUsefulLives contextRef="From2013-01-01to2013-12-31_us-gaap_EquipmentMember"> 5 years </us-gaap:PropertyPlantAndEquipmentEstimatedUsefulLives>
<us-gaap:PropertyPlantAndEquipmentEstimatedUsefulLives contextRef="From2013-01-01to2013-12-31_us-gaap_FurnitureAndFixturesMember"> 3 to 5 years </us-gaap:PropertyPlantAndEquipmentEstimatedUsefulLives>
<nxti:InvestmentBankingFees contextRef="AsOf2012-12-31" unitRef="USD" decimals="0"> 0 </nxti:InvestmentBankingFees>
<nxti:InvestmentBankingFees contextRef="AsOf2013-12-31" unitRef="USD" decimals="0"> 45000 </nxti:InvestmentBankingFees>
<us-gaap:FairValueMeasurementWithUnobservableInputsReconciliationRecurringBasisLiabilityTransfersNet contextRef="From2013-01-01to2013-12-31_us-gaap_FairValueInputsLevel3Member" unitRef="USD" decimals="0"> 1531303 </us-gaap:FairValueMeasurementWithUnobservableInputsReconciliationRecurringBasisLiabilityTransfersNet>
<us-gaap:ProceedsFromIssuanceOfPrivatePlacement contextRef="From2013-01-01to2013-12-31" unitRef="USD" decimals="0"> 51000 </us-gaap:ProceedsFromIssuanceOfPrivatePlacement>
<nxti:StockIssuedInPrivatePlacementShares contextRef="From2013-01-01to2013-12-31" unitRef="Shares" decimals="INF"> 204000 </nxti:StockIssuedInPrivatePlacementShares>
<nxti:StockSoldInPublicOfferingShares contextRef="From2013-01-01to2013-12-31_custom_OfferingMayMember" unitRef="Shares" decimals="INF"> 304600 </nxti:StockSoldInPublicOfferingShares>
<nxti:ProceedsFromPublicOffering contextRef="From2013-01-01to2013-12-31_custom_OfferingMayMember" unitRef="USD" decimals="0"> 304600 </nxti:ProceedsFromPublicOffering>
<nxti:OfferingCosts contextRef="From2013-01-01to2013-12-31_custom_OfferingJanMember" unitRef="USD" decimals="0"> 56820 </nxti:OfferingCosts>
<nxti:OfferingCosts contextRef="From2013-01-01to2013-12-31_custom_OfferingMayMember" unitRef="USD" decimals="0"> 109000 </nxti:OfferingCosts>
<us-gaap:SharesHeldInEmployeeStockOptionPlanCommittedToBeReleased contextRef="AsOf2013-12-31" unitRef="Shares" decimals="INF"> 2044949 </us-gaap:SharesHeldInEmployeeStockOptionPlanCommittedToBeReleased>
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<us-gaap:CurrentFederalTaxExpenseBenefit contextRef="From2012-01-01to2012-12-31" unitRef="USD" decimals="0"> 0 </us-gaap:CurrentFederalTaxExpenseBenefit>
<us-gaap:CurrentStateAndLocalTaxExpenseBenefit contextRef="From2013-01-01to2013-12-31" unitRef="USD" decimals="0"> 0 </us-gaap:CurrentStateAndLocalTaxExpenseBenefit>
<us-gaap:CurrentStateAndLocalTaxExpenseBenefit contextRef="From2012-01-01to2012-12-31" unitRef="USD" decimals="0"> 0 </us-gaap:CurrentStateAndLocalTaxExpenseBenefit>
<us-gaap:CurrentIncomeTaxExpenseBenefit contextRef="From2013-01-01to2013-12-31" unitRef="USD" decimals="0"> 0 </us-gaap:CurrentIncomeTaxExpenseBenefit>
<us-gaap:CurrentIncomeTaxExpenseBenefit contextRef="From2012-01-01to2012-12-31" unitRef="USD" decimals="0"> 0 </us-gaap:CurrentIncomeTaxExpenseBenefit>
<us-gaap:DeferredFederalIncomeTaxExpenseBenefit contextRef="From2013-01-01to2013-12-31" unitRef="USD" decimals="0"> -491900 </us-gaap:DeferredFederalIncomeTaxExpenseBenefit>
<us-gaap:DeferredFederalIncomeTaxExpenseBenefit contextRef="From2012-01-01to2012-12-31" unitRef="USD" decimals="0"> -66000 </us-gaap:DeferredFederalIncomeTaxExpenseBenefit>
<us-gaap:DeferredStateAndLocalIncomeTaxExpenseBenefit contextRef="From2013-01-01to2013-12-31" unitRef="USD" decimals="0"> -71500 </us-gaap:DeferredStateAndLocalIncomeTaxExpenseBenefit>
<us-gaap:DeferredStateAndLocalIncomeTaxExpenseBenefit contextRef="From2012-01-01to2012-12-31" unitRef="USD" decimals="0"> -9700 </us-gaap:DeferredStateAndLocalIncomeTaxExpenseBenefit>
<us-gaap:DeferredIncomeTaxExpenseBenefit contextRef="From2013-01-01to2013-12-31" unitRef="USD" decimals="0"> -563400 </us-gaap:DeferredIncomeTaxExpenseBenefit>
<us-gaap:DeferredIncomeTaxExpenseBenefit contextRef="From2012-01-01to2012-12-31" unitRef="USD" decimals="0"> -75700 </us-gaap:DeferredIncomeTaxExpenseBenefit>
<us-gaap:EffectiveIncomeTaxRateReconciliationChangeInDeferredTaxAssetsValuationAllowance contextRef="From2013-01-01to2013-12-31" unitRef="Pure" decimals="INF"> .3648 </us-gaap:EffectiveIncomeTaxRateReconciliationChangeInDeferredTaxAssetsValuationAllowance>
<us-gaap:EffectiveIncomeTaxRateReconciliationChangeInDeferredTaxAssetsValuationAllowance contextRef="From2012-01-01to2012-12-31" unitRef="Pure" decimals="INF"> .39 </us-gaap:EffectiveIncomeTaxRateReconciliationChangeInDeferredTaxAssetsValuationAllowance>
<us-gaap:IncomeTaxExpenseBenefit contextRef="From2013-01-01to2013-12-31" unitRef="USD" decimals="0"> 0 </us-gaap:IncomeTaxExpenseBenefit>
<us-gaap:IncomeTaxExpenseBenefit contextRef="From2012-01-01to2012-12-31" unitRef="USD" decimals="0"> 0 </us-gaap:IncomeTaxExpenseBenefit>
<us-gaap:ValuationAllowanceDeferredTaxAssetChangeInAmount contextRef="From2013-01-01to2013-12-31" unitRef="USD" decimals="0"> 563400 </us-gaap:ValuationAllowanceDeferredTaxAssetChangeInAmount>
<us-gaap:ValuationAllowanceDeferredTaxAssetChangeInAmount contextRef="From2012-01-01to2012-12-31" unitRef="USD" decimals="0"> 75700 </us-gaap:ValuationAllowanceDeferredTaxAssetChangeInAmount>
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<us-gaap:EffectiveIncomeTaxRateContinuingOperations contextRef="From2012-01-01to2012-12-31" unitRef="Pure" decimals="INF"> 0 </us-gaap:EffectiveIncomeTaxRateContinuingOperations>
<us-gaap:EffectiveIncomeTaxRateReconciliationStateAndLocalIncomeTaxes contextRef="From2013-01-01to2013-12-31" unitRef="Pure" decimals="INF"> -.0495 </us-gaap:EffectiveIncomeTaxRateReconciliationStateAndLocalIncomeTaxes>
<us-gaap:EffectiveIncomeTaxRateReconciliationStateAndLocalIncomeTaxes contextRef="From2012-01-01to2012-12-31" unitRef="Pure" decimals="INF"> -.05 </us-gaap:EffectiveIncomeTaxRateReconciliationStateAndLocalIncomeTaxes>
<us-gaap:EffectiveIncomeTaxRateReconciliationAtFederalStatutoryIncomeTaxRate contextRef="From2013-01-01to2013-12-31" unitRef="Pure" decimals="INF"> -.34 </us-gaap:EffectiveIncomeTaxRateReconciliationAtFederalStatutoryIncomeTaxRate>
<us-gaap:EffectiveIncomeTaxRateReconciliationAtFederalStatutoryIncomeTaxRate contextRef="From2012-01-01to2012-12-31" unitRef="Pure" decimals="INF"> -.34 </us-gaap:EffectiveIncomeTaxRateReconciliationAtFederalStatutoryIncomeTaxRate>
<us-gaap:EffectiveIncomeTaxRateReconciliationTaxCredits contextRef="From2013-01-01to2013-12-31" unitRef="Pure" decimals="INF"> .0247 </us-gaap:EffectiveIncomeTaxRateReconciliationTaxCredits>
<us-gaap:EffectiveIncomeTaxRateReconciliationTaxCredits contextRef="From2012-01-01to2012-12-31" unitRef="Pure" decimals="INF"> 0 </us-gaap:EffectiveIncomeTaxRateReconciliationTaxCredits>
<us-gaap:DeferredTaxAssetsOperatingLossCarryforwards contextRef="AsOf2012-12-31" unitRef="USD" decimals="0"> 75700 </us-gaap:DeferredTaxAssetsOperatingLossCarryforwards>
<us-gaap:DeferredTaxAssetsOperatingLossCarryforwards contextRef="AsOf2013-12-31" unitRef="USD" decimals="0"> 639100 </us-gaap:DeferredTaxAssetsOperatingLossCarryforwards>
<us-gaap:DeferredTaxLiabilitiesDerivatives contextRef="AsOf2012-12-31" unitRef="USD" decimals="0"> 0 </us-gaap:DeferredTaxLiabilitiesDerivatives>
<us-gaap:DeferredTaxLiabilitiesDerivatives contextRef="AsOf2013-12-31" unitRef="USD" decimals="0"> 10421 </us-gaap:DeferredTaxLiabilitiesDerivatives>
<us-gaap:DeferredTaxAssetsValuationAllowance contextRef="AsOf2012-12-31" unitRef="USD" decimals="0"> -75700 </us-gaap:DeferredTaxAssetsValuationAllowance>
<us-gaap:DeferredTaxAssetsValuationAllowance contextRef="AsOf2013-12-31" unitRef="USD" decimals="0"> -639100 </us-gaap:DeferredTaxAssetsValuationAllowance>
<us-gaap:DeferredTaxAssetsNet contextRef="AsOf2012-12-31" unitRef="USD" decimals="0"> 0 </us-gaap:DeferredTaxAssetsNet>
<us-gaap:DeferredTaxAssetsNet contextRef="AsOf2013-12-31" unitRef="USD" decimals="0"> 10421 </us-gaap:DeferredTaxAssetsNet>
<us-gaap:DeferredTaxAssetsGross contextRef="AsOf2012-12-31" unitRef="USD" decimals="0"> 75700 </us-gaap:DeferredTaxAssetsGross>
<us-gaap:DeferredTaxAssetsGross contextRef="AsOf2013-12-31" unitRef="USD" decimals="0"> 649521 </us-gaap:DeferredTaxAssetsGross>
<us-gaap:DeferredTaxAssetsLiabilitiesNet contextRef="AsOf2012-12-31" unitRef="USD" decimals="0"> 0 </us-gaap:DeferredTaxAssetsLiabilitiesNet>
<us-gaap:DeferredTaxAssetsLiabilitiesNet contextRef="AsOf2013-12-31" unitRef="USD" decimals="0"> 0 </us-gaap:DeferredTaxAssetsLiabilitiesNet>
<us-gaap:DeferredTaxLiabilitiesDeferredExpense contextRef="AsOf2012-12-31" unitRef="USD" decimals="0"> 0 </us-gaap:DeferredTaxLiabilitiesDeferredExpense>
<us-gaap:DeferredTaxLiabilitiesDeferredExpense contextRef="AsOf2013-12-31" unitRef="USD" decimals="0"> -10421 </us-gaap:DeferredTaxLiabilitiesDeferredExpense>
<us-gaap:OperatingLossCarryforwards contextRef="AsOf2012-12-31" unitRef="USD" decimals="0"> 194000 </us-gaap:OperatingLossCarryforwards>
<us-gaap:OperatingLossCarryforwards contextRef="AsOf2013-12-31" unitRef="USD" decimals="0"> 1641000 </us-gaap:OperatingLossCarryforwards>
<us-gaap:PaymentsForRoyalties contextRef="From2013-01-01to2013-12-31" unitRef="USD" decimals="0"> 0 </us-gaap:PaymentsForRoyalties>
<us-gaap:PaymentsForRoyalties contextRef="From2012-01-01to2012-12-31" unitRef="USD" decimals="0"> 10000 </us-gaap:PaymentsForRoyalties>
<us-gaap:OperatingLeasesFutureMinimumPaymentsDueCurrent contextRef="AsOf2013-12-31" unitRef="USD" decimals="0"> 15000 </us-gaap:OperatingLeasesFutureMinimumPaymentsDueCurrent>
<us-gaap:OperatingLeasesFutureMinimumPaymentsDueInTwoYears contextRef="AsOf2013-12-31" unitRef="USD" decimals="0"> 15450 </us-gaap:OperatingLeasesFutureMinimumPaymentsDueInTwoYears>
<us-gaap:OperatingLeasesFutureMinimumPaymentsDueInThreeYears contextRef="AsOf2013-12-31" unitRef="USD" decimals="0"> 15914 </us-gaap:OperatingLeasesFutureMinimumPaymentsDueInThreeYears>
<us-gaap:OperatingLeasesFutureMinimumPaymentsDue contextRef="AsOf2013-12-31" unitRef="USD" decimals="0"> 46364 </us-gaap:OperatingLeasesFutureMinimumPaymentsDue>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt; font-variant: small-caps"></font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt; font-variant: small-caps"><b><i>Inventory</i></b></font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-size: 8pt">Inventory is valued at the lower of cost or market with cost determined using the first-in, first-out method and with market defined as the lower of replacement cost or realizable value. Inventory is comprised principally of raw materials.</font></p>
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<nxti:RetirementOfStockByFoundersShares contextRef="From2013-01-01to2013-12-31" unitRef="Shares" decimals="INF"> 138463 </nxti:RetirementOfStockByFoundersShares>
<nxti:StockSoldInPrivateOfferingWarrantShares contextRef="From2013-01-01to2013-12-31_custom_OfferingJanMember" unitRef="Shares" decimals="INF"> 138463 </nxti:StockSoldInPrivateOfferingWarrantShares>
<nxti:ProceedsFromPrivateOffering contextRef="From2013-01-01to2013-12-31_custom_OfferingJanMember" unitRef="USD" decimals="0"> 450000 </nxti:ProceedsFromPrivateOffering>
</xbrli:xbrl>

7 Subsequent Filings that Reference this Filing

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

 4/15/22  LogicMark, Inc.                   10-K       12/31/21   62:5.5M                                   EdgarAgents LLC/FA
 9/14/21  LogicMark, Inc.                   S-1/A                  1:1.1M                                   EdgarAgents LLC/FA
 9/14/21  LogicMark, Inc.                   S-1/A       9/13/21    5:1.5M                                   EdgarAgents LLC/FA
 9/03/21  LogicMark, Inc.                   S-3/A                  1:146K                                   EdgarAgents LLC/FA
 8/30/21  LogicMark, Inc.                   S-3         8/27/21    3:690K                                   EdgarAgents LLC/FA
 8/26/21  LogicMark, Inc.                   S-1         8/27/21    3:1M                                     EdgarAgents LLC/FA
 4/15/21  LogicMark, Inc.                   10-K       12/31/20   61:12M                                    EdgarAgents LLC/FA
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