Document_and_Entity_Informatio
Document and Entity Information (USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Apr. 01, 2014 | Jun. 30, 2013 | |
SantaBarbaraConcoursdEleganceMember | ' | ' | ' |
Entity Registrant Name | 'RestorGenex Corp | ' | ' |
Entity Central Index Key | '0001053691 | ' | ' |
Document Type | '10-K | ' | ' |
Document Period End Date | 31-Dec-13 | ' | ' |
Amendment Flag | 'false | ' | ' |
Current Fiscal Year End Date | '--12-31 | ' | ' |
Is Entity a Well-known Seasoned Issuer? | 'No | ' | ' |
Is Entity a Voluntary Filer? | 'No | ' | ' |
Is Entity's Reporting Status Current? | 'Yes | ' | ' |
Entity Filer Category | 'Smaller Reporting Company | ' | ' |
Entity Public Float | ' | ' | $26,893,395 |
Entity Common Stock, Shares Outstanding | ' | 8,683,785 | ' |
Document Fiscal Period Focus | 'FY | ' | ' |
Document Fiscal Year Focus | '2013 | ' | ' |
CONSOLIDATED_BALANCE_SHEETS_US
CONSOLIDATED BALANCE SHEETS (USD $) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Current assets | ' | ' |
Cash and equivalents | $254,964 | $312,093 |
Receivable from former officer, net | 2,020 | 71,946 |
Prepaid expenses and deposits | 2,741,299 | 77,599 |
Total current assets | 2,998,283 | 461,638 |
Property and equipment, net | 11,262 | 49,038 |
Intangible assets | 7,691,682 | 0 |
Goodwill | 7,642,825 | 1,935,621 |
Total assets | 18,344,052 | 2,446,297 |
Current liabilities | ' | ' |
Accounts payable | 1,520,206 | 1,203,382 |
Deferred salary | 571,328 | 1,152,933 |
Accrued interest | 89,472 | 213,260 |
Accrued preferred stock dividends | 0 | 733,840 |
Other accrued expenses and other liabilities | 1,697,714 | 1,683,508 |
Payable to officer and former officer | 156,358 | 211,358 |
Rent liability for facilities no longer occupied | 1,121,495 | 1,260,645 |
Notes payable | 1,867,002 | 4,004,103 |
Obligation to issue stock for transfer of liabilities | 1,854,743 | 0 |
Derivative liability | 0 | 10,389,607 |
Total current liabilities | 8,878,318 | 20,852,636 |
Commitments and contingencies | ' | ' |
Shareholders' surplus/(deficit) | ' | ' |
Common stock, $0.001 par value: 1,000,000,000 shares authorized; 5,813,785 and 890,837 shares issued and outstanding | 5,814 | 891 |
Additional paid-in capital | 67,390,493 | 38,329,046 |
Accumulated deficit | -60,937,550 | -56,717,225 |
Total RestorGenex shareholders' surplus/(deficit) | 6,458,757 | -18,387,260 |
Non-controlling interest surplus/(deficit) | 6,401 | -19,079 |
Total shareholders' surplus/(deficit) | 6,465,158 | -18,406,339 |
Total liabilities and shareholders' surplus/(deficit) | 18,344,052 | 2,446,297 |
Series C Preferred Stock [Member] | ' | ' |
Shareholders' surplus/(deficit) | ' | ' |
Preferred stock | 0 | 0 |
Series D Preferred Stock [Member] | ' | ' |
Shareholders' surplus/(deficit) | ' | ' |
Preferred stock | 0 | 19 |
Series E Preferred Stock [Member] | ' | ' |
Shareholders' surplus/(deficit) | ' | ' |
Preferred stock | $0 | $9 |
CONSOLIDATED_BALANCE_SHEETS_US1
CONSOLIDATED BALANCE SHEETS (USD $) (Parenthetical) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Common stock par value (in Dollars per share) | $0.00 | $0.00 |
Common stock, shares authorized | 500,000,000 | 500,000,000 |
Common stock, shares issued | 5,813,785 | 890,837 |
Common stock, shares outstanding | 5,813,785 | 890,837 |
Series C Preferred Stock [Member] | ' | ' |
Preferred stock par value | $0.00 | $0.00 |
Preferred stock shares authorized | 1,000,000 | 1,000,000 |
Preferred stock shares issued | 0 | 0 |
Preferred stock shares outstanding | 0 | 0 |
Series D Preferred Stock [Member] | ' | ' |
Preferred stock par value | $0.00 | $0.00 |
Preferred stock shares authorized | 500,000 | 500,000 |
Preferred stock shares issued | 0 | 18,999 |
Preferred stock shares outstanding | 0 | 18,999 |
Series E Preferred Stock [Member] | ' | ' |
Preferred stock par value | $0.00 | $0.00 |
Preferred stock shares authorized | 10,000 | 10,000 |
Preferred stock shares issued | 0 | 9,450 |
Preferred stock shares outstanding | 0 | 9,450 |
CONSOLIDATED_STATEMENTS_OF_OPE
CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Income Statement [Abstract] | ' | ' |
Revenues | $71,667 | $374,542 |
Cost of revenues | 0 | 235,803 |
Gross profit | 71,667 | 138,739 |
Operating expenses | ' | ' |
General, administrative, research and development | 2,008,118 | 4,570,161 |
Impairment of intangible assets | 1,935,621 | 1,423,844 |
Warrants, options and stock | 4,228,317 | 3,643,662 |
Fair value of common stock exchanged for warrants | 3,069,792 | 0 |
Legal and professional services | 1,071,392 | 2,128,898 |
Depreciation and amortization | 675,757 | 164,043 |
Total operating expenses | 12,988,997 | 11,930,608 |
Loss from operations | -12,917,330 | -11,791,869 |
Other (income)/expenses | ' | ' |
Fair value of derivative liabilities in excess of proceeds | 0 | 408,501 |
(Gain)/loss on adjustments to fair value of derivative liability | -8,980,077 | -6,907,748 |
Gain on extinguishment of derivative liability | -1,635,967 | 0 |
Other (income)/expense | -71,631 | 379,188 |
Present value of remaining lease payments for facilities no longer occupied | 0 | 1,010,111 |
Interest expense | 228,294 | 167,894 |
Total other income | -10,459,381 | -4,942,054 |
Net loss | -2,457,949 | -6,849,815 |
Net loss attributed to non-controlling interests | -6,401 | -19,079 |
Net loss attributed to RestorGenex Corporation | -2,464,350 | -6,868,894 |
Preferred dividends | $171,625 | $497,167 |
Net loss attributable to RestorGenex Corporation common shareholders | ($2,635,975) | ($7,366,061) |
Basic and diluted loss per share | ($1) | ($8.16) |
Basic weighted average shares outstanding | 2,646,603 | 903,139 |
Fully-diluted weighted average shares outstanding | 2,646,603 | 1,121,987 |
CONSOLIDATED_STATEMENTS_OF_STO
CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY / (DEFICIT) (USD $) | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Series C 10% Preferred | Series D Preferred | Preferred Stock Series E | Total |
Beginning Balance, Amount at Dec. 31, 2011 | $867 | $33,322,207 | ($49,385,387) | $0 | $19 | $9 | ($16,062,285) |
Beginning Balance, Shares at Dec. 31, 2011 | 866,571 | ' | ' | ' | ' | ' | ' |
Issuance of common stock for cash, Amount | 4 | 144,237 | ' | ' | ' | ' | 144,241 |
Issuance of common stock for cash, Shares | 4,114 | ' | ' | ' | ' | ' | ' |
Issuance of Series E preferred stock for cash | ' | 869,999 | ' | ' | ' | ' | 869,999 |
Conversion of preferred stock to common stock, Amount | 17 | -17 | ' | ' | ' | ' | ' |
Conversion of preferred stock to common stock, Shares | 16,667 | ' | ' | ' | ' | ' | ' |
Stock for services, Amount | 7 | 1,588,236 | ' | ' | ' | ' | 1,588,243 |
Stock for services, Shares | 7,000 | ' | ' | ' | ' | ' | ' |
Adjustments related to acquisition of ProElite | ' | 2,106 | -482,023 | ' | ' | ' | -479,917 |
Stock expense, value of warrants and options, Amount | 9 | 3,284,346 | ' | ' | ' | ' | 3,284,355 |
Stock expense, value of warrants and options, Shares | 9,000 | ' | ' | ' | ' | ' | ' |
Cancellation and reissue of shares, net, Shares | -213 | ' | ' | ' | ' | ' | ' |
Reduction in shares accrued for issuance to former CEO, Amount | -22 | 22 | ' | ' | ' | ' | ' |
Reduction in shares accrued for issuance to former CEO, Shares | 21,613 | ' | ' | ' | ' | ' | ' |
Shares issued in settlement of contract, Amount | 8 | 117,910 | ' | ' | ' | ' | 117,918 |
Shares issued in settlement of contract, Shares | 7,861 | ' | ' | ' | ' | ' | ' |
Shares issued as dividends on preferred stock, Amount | 1 | -1 | ' | ' | ' | ' | ' |
Shares issued as dividends on preferred stock, Shares | 1,450 | ' | ' | ' | ' | ' | ' |
Impact of derivative liability | ' | -999,999 | ' | ' | ' | ' | -999,999 |
Net loss | ' | ' | -6,849,815 | ' | ' | ' | -6,849,815 |
Ending Balance,, Amount at Dec. 31, 2012 | 891 | 38,329,046 | -56,717,225 | 0 | 19 | 9 | -18,387,260 |
Ending Balance,, Shares at Dec. 31, 2012 | 890,837 | ' | ' | ' | ' | ' | ' |
Issuance of common stock for cash, Amount | 143 | 427,358 | ' | ' | ' | ' | 427,501 |
Issuance of common stock for cash, Shares | 142,501 | ' | ' | ' | ' | ' | ' |
Stock compensation, Amount | -8 | 41,757 | ' | ' | ' | ' | 41,749 |
Stock compensation, Shares | -6,827 | ' | ' | ' | ' | ' | ' |
Stock for services, Amount | 2 | 10,498 | ' | ' | ' | ' | 10,500 |
Stock for services, Shares | 1,500 | ' | ' | ' | ' | ' | ' |
Conversion of warrants to common stock, Amount | 1,023 | -1,023 | ' | ' | ' | ' | ' |
Conversion of warrants to common stock, Shares | 1,023,264 | ' | ' | ' | ' | ' | ' |
Conversion of debt to common stock, Amount | 577 | 2,915,922 | ' | ' | ' | ' | 2,916,500 |
Conversion of debt to common stock, Shares | 576,331 | ' | ' | ' | ' | ' | ' |
Adjustments related to acquisition of ProElite | ' | 942,600 | -1,584,350 | ' | ' | ' | -641,750 |
Stock expense, value of warrants and options, Amount | ' | 4,527,067 | ' | ' | ' | ' | 4,527,067 |
Shares issued in settlement of contract, Amount | 2 | 31,998 | ' | ' | ' | ' | 32,000 |
Shares issued in settlement of contract, Shares | 2,000 | ' | ' | ' | ' | ' | ' |
Shares issued as dividends on preferred stock, Amount | 4 | 99,789 | ' | ' | ' | ' | 99,793 |
Shares issued as dividends on preferred stock, Shares | 4,202 | ' | ' | ' | ' | ' | ' |
Net loss | ' | ' | -2,635,975 | ' | ' | ' | -2,635,975 |
Remove accrued dividends for Series E extinguishment | ' | 802,994 | ' | ' | ' | ' | 802,994 |
Remove accrued interest for notes exchanged for stock | ' | 63,602 | ' | ' | ' | ' | 63,602 |
Fair value charge for warrants retired | ' | 3,069,792 | ' | ' | ' | ' | 3,069,792 |
Conversion of Series D Preferred to common stock, amount | 12 | -12 | ' | ' | -19 | ' | -19 |
Conversion of Series D Preferred to common stock, shares | 11,611 | ' | ' | ' | ' | ' | ' |
Conversion of Series E Preferred to common stock, amount | 1,575 | -1,575 | ' | ' | ' | -9 | -9 |
Conversion of Series E Preferred to common stock, shares | 1,575,000 | ' | ' | ' | ' | ' | ' |
Shares issued for acquisition, amount | 1,150 | 12,420,099 | ' | ' | ' | ' | 12,421,249 |
Shares issued for acquisition, shares | 1,150,116 | ' | ' | ' | ' | ' | ' |
Issuance of shares for advisory agreements, amount | 243 | 3,231,482 | ' | ' | ' | ' | 3,231,725 |
Issuance of shares for advisory agreements, shares | 243,250 | ' | ' | ' | ' | ' | ' |
Issuance of shares to third party for assumption of liabilities, amount | 200 | 479,099 | ' | ' | ' | ' | 479,299 |
Issuance of shares to third party for assumption of liabilities, shares | 200,000 | ' | ' | ' | ' | ' | ' |
Ending Balance,, Amount at Dec. 31, 2013 | $5,814 | $67,390,493 | ($60,937,550) | $0 | $0 | $0 | $6,458,757 |
Ending Balance,, Shares at Dec. 31, 2013 | 5,813,785 | ' | ' | ' | ' | ' | ' |
CONSOLIDATED_STATEMENTS_OF_CAS
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Cash flows from operating activities: | ' | ' |
Net loss | ($2,457,949) | ($6,849,815) |
Adjustments to reconcile net loss to net cash used in operating activities: | ' | ' |
Depreciation and amortization | 675,757 | 164,043 |
Impairment of intangible assets | 1,935,621 | 1,423,844 |
Fair value of derivative liabilities in excess of proceeds | 0 | 408,501 |
(Gain)/loss on adjustment to fair value of derivative liabilities | -8,980,077 | -6,907,748 |
Gain on extinguishment of derivative liability | -1,635,967 | 0 |
Warrant, option and stock expense | 4,228,317 | 3,643,662 |
Fair value of common stock exchanged for warrants | 3,069,792 | 0 |
Note issued for services | 50,000 | 0 |
Stock issued for services | 262,813 | 130,000 |
Non-cash gain on reversal of liabilities | 0 | 79,188 |
Increase / (decrease) in: | ' | ' |
Receivable from former officer and director | 69,926 | 71,946 |
Prepaid expenses and deposit | 0 | -9,903 |
Advances to acquisition | 0 | -50,000 |
Accounts payable | 316,824 | 414,361 |
Deferred salary | -581,605 | 1,152,933 |
Accrued interest | -123,788 | 559,694 |
Rent liability for facilities no longer occupied | 0 | 1,260,645 |
Accrued expense for potential property damage | 0 | 300,000 |
Estimated cost of vendor settlement | 0 | 300,000 |
Obligation to issue stock | 1,854,743 | 0 |
Other accrued expenses and liabilities | 130,963 | -401,834 |
Net cash used in operating activities | -1,184,630 | -4,310,483 |
Cash flows from financing activities: | ' | ' |
Proceeds on notes payable | 700,000 | 3,483,103 |
Increase in payables to officers and a director | 0 | 27,195 |
Proceeds from issuance of common stock | 427,501 | 143,829 |
Proceeds from issuance of preferred stock | 0 | 870,000 |
Net cash provided by financing activities | 1,127,501 | 4,524,127 |
(Decrease)/Increase in cash and equivalents | -57,129 | 213,644 |
Cash and equivalents, beginning of period | 312,093 | 98,449 |
Cash and equivalents, end of period | 254,964 | 312,093 |
Supplemental disclosure of cash flow information: | ' | ' |
Cash paid during the period for interest | 0 | 0 |
Cash paid during the period for income taxes | $0 | $0 |
1_Business
1. Business | 12 Months Ended |
Dec. 31, 2013 | |
Business Combinations [Abstract] | ' |
NOTE 1 - Business | ' |
On March 14, 2008, pursuant to an Agreement and Plan of Merger dated August 20, 2007 between Feris International, Inc. (“Feris”) and Pro Sports & Entertainment, Inc. (“PSEI”), Feris issued 49,500,000 shares of its common stock for all issued and outstanding shares of PSEI, resulting in PSEI becoming a wholly-owned subsidiary of Feris and the surviving entity for accounting purposes (“Reverse Merger”). In July 2008, Feris’ corporate name was changed to Stratus Media Group, Inc. (“Company,” “Stratus,” or “SMDI”). PSEI, a California corporation, was organized on November 23, 1998. PSEI acquired the business of Stratus White, LLC (“Stratus White”) in August 2005. | |
In June 2011, the Company acquired shares of Series A Convertible Preferred Stock of ProElite, Inc., a New Jersey corporation (“ProElite” or “PEI”), that organized and promoted mixed martial arts (“MMA”) matches. These holdings of Series A Convertible Preferred Stock provide the Company voting rights on an as-converted basis equivalent to a 95% ownership in ProElite. | |
On March 7, 2014, the Company effected a reverse stock split 100 to 1 with respect to its Common Stock and the Company changed its corporate name from Stratus Media Group, Inc. to RestorGenex Corporation, a biopharmaceutical company. All stock numbers herein are post reverse split. | |
Effective September 30, 2013, Stratus entered into an Agreement and Plan of Merger with Canterbury Acquisition LLC, a wholly owned subsidiary of the Company, Hygeia Acquisition, Inc., a wholly-owned subsidiary of the Company, Canterbury Laboratories, LLC (“Canterbury”), Hygeia Therapeutics, Inc. (“Hygeia”) and Yael Schwartz, Ph.D., as Holder Representative, pursuant to which Stratus will acquire all of the capital stock of Canterbury and Hygeia (the “Mergers”) with Canterbury and Hygeia becoming wholly-owned subsidiaries of Stratus. The consideration for the Mergers was the issuance by Stratus of an aggregate of 1,150,116 restricted shares of Stratus common stock issued to the stakeholders of Canterbury and Hygeia. Closing of the Mergers occurred on November 18, 2013 and is subject to rescission if Stratus has not raised $7.5 million or more in gross financing proceeds by April 30, 2014. | |
Canterbury and Hygeia (the “Canterbury Group”) are related companies engaged in the development of cosmeceuticals that revitalize hormonally-aged skin and hair in women over the age of 45. Cosmeceuticals are the latest addition to the health industry and are sometimes described as cosmetic products with “drug-like benefits.” Generally, cosmeceuticals are products sold over-the-counter, without the regulatory requirement of FDA approval. The Canterbury Group has an exclusive license with Yale University to develop and market 23 synthetic estrogenic ingredients for the treatment of aging skin and four classes of anti-androgenic ingredients for hair loss, excess facial hair, seborrhea and acne. The license from Yale covers 24 patent-protected compounds under U.S. Patent 7,015,211“Estradiol 15-α-Carboxylic Acid Esters as Locally Active Estrogens,” U.S. Patent 6,476,012“Estradiol 16-alpha Carboxylic Acid Esters as Locally Active Estrogens” and U.S. Patent 8,552,061 “Locally active "soft" antiandrogens” (“Yale Patents”). | |
The acquisition of Canterbury and Hygeia was the first step in the Company’s plan to reposition itself as a life sciences company. The total consideration was $12,421,249 for 1,150,116 shares of common stock at the market value of $10.80 as of the execution of the Merger Agreements on September 30, 2013. Based on the valuation of the Yale Patents of $7,779,000, $4,642,249 of the purchase price was allocated to goodwill, which is not tax deductible. The book value of the Yale Patents at the time of purchase was $132,571, giving rise to a gain of $7,646,429. When tax effected at a combined U.S. Federal and California tax rate, the net result of this gain is a deferred tax liability of $3,058,572. Total goodwill of $7,642,825 as of December 31, 2013 consists of the $4,642,249 initial allocation of the purchase price, plus the deferred tax liability of $3,000,576 plus net assets acquired of $190,567. For 2013, additional expenses for Canterbury and Hygeia of $138,320 after the Mergers were included in the consolidated loss attributable to RestorGenex shareholders for 2013 of $2,635,975 and there were no revenues for Canterbury and Hygeia following the Mergers. | |
Hygeia is a Delaware Corporation, based in Holden, Massachusetts was incorporated in November 2005 and was formerly known as Orcas Therapeutics, Inc. Canterbury is a Delaware Limited Liability Company that was formed in October 2011 and began operations in February 22, 2012. Initially, Canterbury was a wholly-owned subsidiary of Hygeia and shareholders of Hygeia currently own 94% of Canterbury. | |
On March 3, 2014, the Company entered into an Agreement and Plan of Merger with Paloma Acquisition, Inc., a wholly owned subsidiary of the Company, Paloma Pharmaceuticals, Inc. (“Paloma”) and David Sherris, Ph.D., as founding stockholder and Holder Representative pursuant to which the Company agreed to acquire all of the capital stock of Paloma with Paloma becoming a wholly owned subsidiary of the Company. On March 28, 2014, the merger with Paloma was closed and the Company issued an aggregate of 2,500,000 post-reverse stock split common shares to the holders of Paloma Common Stock and its derivative securities and assumed promissory notes of Paloma in the aggregate amount (principal and interest) currently of approximately $1,130,500 to be paid on the first anniversary of the closing of the Paloma merger. The merger with Paloma is subject to rescission if the Company has not raised gross proceeds of at least $7.5 million by May 27, 2014. | |
Also on March 3, 2014, the Company entered into an Agreement and Plan of Merger with VasculoMedics Acquisition, Inc., a wholly owned subsidiary of the Company, VasculoMedics, Inc. (“VasculoMedics”) and Dr. Sherris pursuant to which the Company agreed to acquire all of the capital stock of VasculoMedics with VasculoMedics becoming a wholly owned subsidiary of the Company. The VasculoMedics Merger was concurrently closed with and as a condition to the closing of the Paloma Merger on March 28, 2013, with the Company issuing an aggregate of 220,000 post-reverse stock split common shares to the VasculoMedics stockholders. | |
Both Paloma and Vasculomedics are Delaware corporations and both are based in Jamaica Plain, Massachusetts. Paloma was founded in January 2005 and VasculoMedics was founded in November 2007. | |
Paloma has developed a non-steroidal, synthetic, small molecule drug library for dermatology (psoriasis, atopic dermatitis, rosacea, actinic keratosis, keloid and hypertrophic scarring, Dupuytren’s disease, bullous blistering diseases), ocular disease, cancer, pulmonary fibrosis, CNS (Huntington’s disease and infantile spasm, a form of childhood epilepsy), biodefense and anti-viral application. The lead product, P529, targets and inhibits the PI3K/Akt/mTOR signal transduction pathway, specifically as a first-in-class allosteric, dual TORC1/TORC2 dissociative inhibitor. | |
VasculoMedics was founded as a platform epigenetic company to develop orally available small molecular inhibitors of zinc finger transcription factors. Zinc finger transcription factors are a subset of transcription factors utilizing zinc at its core for activity. Transcription factors are proteins that bind to specific parts of DNA that control the transfer of genetic information from DNA to RNA. RNA in turn directs the protein making machinery to manufacture one or more proteins controlled by the transcription factor. Hence, by inhibition of a transcription factor, one can specifically inhibit the synthesis of one or more proteins controlled by the particular transcription factor. Many diseases can be linked to the activation of particular proteins whose synthesis is controlled by transcription factors. Inhibition of such transcription factors could then be able to control disease pathology. |
2_Going_Concern
2. Going Concern | 12 Months Ended |
Dec. 31, 2013 | |
GoingConcernAbstract | ' |
NOTE 2 - Going Concern | ' |
The Company has suffered losses from operations and, without additional capital, currently lacks liquidity to meet its current obligations. The Company had net losses for 2013 and 2012 of $2,635,975 and $7,366,061, respectively. As of December 31, 2013, the Company had negative working capital of $5,880,035 and an accumulated deficit of $60,937,550. The Company had a total of $667,002 of promissory notes that were in default as of December 31, 2013. Unless additional financing is obtained, the Company may not be able to continue as a going concern. In 2013, the Company raised $700,000 through the issuance of two promissory notes and $427,501 through the sale of common stock. In 2012, the Company raised $870,000 through issuance of preferred stock, $143,829 through the issuance of common stock and received $3,483,103 through issuance of promissory notes. The Company is seeking additional capital in connection with current and potential acquisitions. However, due to the current economic environment and the Company’s current financial condition, there can be no assurance that adequate capital will be available when needed and on acceptable terms. | |
The financial statements were prepared on a going concern basis which contemplates the realization of assets and the settlement of liabilities in the normal course of business. The financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result if the Company is unable to continue as a going concern. |
3_Basis_of_Presentation_and_Si
3. Basis of Presentation and Significant Accounting Policies | 12 Months Ended | ||
Dec. 31, 2013 | |||
Accounting Policies [Abstract] | ' | ||
NOTE 3 - Basis of Presentation and Significant Accounting Policies | ' | ||
Basis of Presentation | |||
The financial statements were prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”), pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The balance sheets at December 31, 2013 and December 31, 2012 and the income statements for the years ended December 31, 2013 and 2012 consolidate the accounts of PEI, Canterbury and Hygeia reflecting the acquisition of these entities (see Note 19). All significant intercompany balances were eliminated in consolidation. | |||
Basic and Diluted Earnings/(Loss) Per Share (“EPS”) | |||
Basic EPS is computed by dividing the income/(loss) available to common shareholders by the weighted average number of common shares outstanding for the period. Diluted EPS is computed similar to basic income/(loss) per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if all the potential common shares, warrants and stock options had been issued and if the additional common shares were dilutive. Diluted EPS is based on the assumption that all dilutive convertible shares were converted into common stock. Dilution is computed by applying the if-converted method for the outstanding convertible preferred shares. Under the if-converted method, convertible outstanding instruments are assumed to be converted into common stock at the beginning of the period (or at the time of issuance, if later). | |||
For purposes of calculating EPS, the number of common shares on December 31, 2012 did not include 281,667 shares of common stock issuable upon conversion by the holders of Series E Preferred. These conversion shares were not included in the EPS calculation because they were antidilutive given the losses by the Company for the year ended December 31, 2012. As of June 30, 2013 the Series E Preferred had been extinguished and the basic and fully-diluted shares are the same from that point forward; and the number of shares used for basic and fully-diluted EPS calculations in 2013 are the same. | |||
Non-controlling Interest | |||
The Company follows Accounting Standards Codification (“ASC”) Topic 810 “Consolidation,” which governs the accounting for and reporting of Non-Controlling Interests (“NCIs”) in partially owned consolidated subsidiaries and the loss of control of subsidiaries. Certain provisions of this standard indicate, among other things, that NCIs be treated as a separate component of equity, not as a liability, that increases and decreases in the parent’s ownership interest that leave control intact be treated as equity transactions rather than as step acquisitions or dilution gains or losses, and that losses of a partially owned consolidated subsidiary be allocated to the NCI even when such allocation might result in a deficit balance. This standard also required changes to certain presentation and disclosure requirements. The net income (loss) attributed to the NCI is separately designated in the accompanying statements of operations and other comprehensive income (loss). Losses attributable to the NCI in a subsidiary may exceed the NCI’s interests in the subsidiary’s equity. The excess attributable to the NCI is attributed to those interests. The NCI shall continue to attribute its share of losses even if that attribution results in a deficit NCI balance. | |||
Use of Estimates | |||
The preparation of our consolidated financial statements in accordance with U.S. GAAP requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities in our consolidated financial statements and accompanying notes. Although these estimates are based on our knowledge of current events and actions we may undertake in the future, actual results may differ from such estimates and assumptions. | |||
Derivative Liabilities | |||
On May 24, 2011, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with eight investors (collectively, the “Investors”) pursuant to which the Company sold 8,700 shares of a new series of convertible preferred stock designated as Series E Convertible Preferred Stock (“Original Series E”), the terms of which are set forth in the Certificate of Designations of Series E Preferred Stock (the “Certificate”), for $1,000 per share, or $8,700,000. In October 2012, the Company sold 1,000 shares of Series E for $1,000,000 (“New Series E”). The Original Series E and New Series E together are referred to herein as “Series E”. | |||
These Series E contained “full ratchet-down” liquidity protection, which provided that if the Company issues securities for less than the existing conversion price for the Series E Preferred Stock or the strike price of the Series E warrants, then the conversion price for Series E Preferred Stock will be lowered to that lower price. Also, the strike price for Series E warrants would be decreased to that lower price and the number of Series E warrants would be increased such that the product of the original strike price times the original quantity equals the lower strike price times the higher quantity. | |||
Subsequent to the issuance of this Series E, the Company determined that the warrants for these financings included certain embedded derivative features as set forth in ASC Topic 815 “Derivatives and Hedging,” (“ASC 815”) and that this conversion feature of the Series E was not an embedded derivative because this feature was clearly and closely related to the host (Series E) as defined in ASC 815. These derivative liabilities were initially recorded at their estimated Fair Value (“FV”) on the date of issuance and were subsequently adjusted each quarter to reflect the estimated FV at the end of each period, with any decrease or increase in the estimated FV of the derivative liability for each period being recorded as other income or expense. Since the value of the embedded derivative feature for the related warrants was higher than the value of both Series E transactions, there was no beneficial conversion feature recorded for either transaction, and the excess of the value of the embedded derivative feature over the value of the transaction was recorded in each period on the Statement of Operations as a separate line item. | |||
The FV of these derivative liabilities was calculated using the Black Scholes pricing model that was based on the closing price of the common stock, the strike price of the underlying instrument, the risk-free interest rate for the applicable remaining life of the underlying instrument (i.e., the U.S. treasury rate for that period) and the historical volatility of the Company’s common stock. These FV results were extremely sensitive to all these input variables, particularly the closing price of the company’s common stock and the volatility of the Company’s common stock. Accordingly, the FV of these derivative liabilities was subject to significant changes. | |||
The Series E and related warrants were extinguished in May 2013 when the Series E and related warrants were exchanged for common stock, at which time the derivative liability was extinguished. | |||
Allowance for Uncollectible Receivables | |||
Accounts receivable are recorded at their face amount, less an allowance for doubtful accounts. We review the status of our uncollected receivables on a regular basis. In determining the need for an allowance for uncollectible receivables, we consider our customers financial stability, past payment history and other factors that bear on the ultimate collection of such amounts. | |||
Cash Equivalents | |||
We consider all highly liquid investments purchased with maturities of three months or less to be cash equivalents. | |||
Fair Value of Financial Instruments | |||
Our financial instruments include cash and equivalents, receivables, accounts payable and accrued liabilities. The carrying amounts of financial instruments approximate FV due to their short maturities. | |||
Property and Equipment | |||
Property and equipment are stated at cost less accumulated depreciation. We record depreciation using the straight-line method over the following estimated useful lives: | |||
Equipment | 3 – 5 years | ||
Furniture and fixtures | 5 years | ||
Software | 3 years | ||
Leasehold improvements | Lesser of lease term or life of improvements | ||
Goodwill and Intangible Assets | |||
Intangible assets as of December 31, 2013 consisted of goodwill and intangible assets related to the acquisition of Canterbury and Hygeia in November 2013. Goodwill as of December 31, 2012 was related to goodwill for ProElite that we acquired in June 2011 but suspended development of this business in June 2013. Goodwill is the excess of the cost of an acquired entity over the net amounts assigned to tangible and intangible assets acquired and liabilities assumed. We apply ASC Topic 350 “Goodwill and Other Intangible Assets,” which requires allocating goodwill to each reporting unit and testing for impairment using a two-step approach. | |||
The Company reviewed the value of intangible assets and related goodwill as part of its annual reporting process, which occurs in February or March of each year. In between valuations, the Company conducted additional tests to determine if circumstances warranted additional testing for impairment. The Company decided to suspend development of its ProElite business as of June 30, 2013 and the goodwill was considered to be fully impaired at that time. | |||
To review the value of intangible assets and related goodwill as of December 31, 2013, the Company followed ASC Topic 350 “Intangibles-Goodwill and Other” and first examined the facts and circumstances for each event or business to determine if it was more likely than not that an impairment had occurred. If this examination suggested it was more likely that impairment had occurred, the Company then compared discounted cash flow forecasts related to the asset with the stated value of the asset on the balance sheet. The objective was to determine the value of each asset to an industry participant who is a willing buyer not under compulsion to buy and the Company is a willing seller not under compulsion to sell. Revenue from goodwill and intangible assets were forecasted based on the assumption they are standalone entities. These forecasts were discounted at a range of discount rates determined by taking the risk-free interest rate at the time of valuation, plus premiums for equity risk to small companies in general, for factors specific to the Company and the business. | |||
As of December 31, 2013, Company Management determined that the fair value of its businesses for accounting purposes was equal to its market capitalization of approximately $19,600,000, which was 128% of the $15,334,507 goodwill and intangible assets on the balance sheet as of December 31, 2013. Based on this determination, Company Management concluded that no impairment had occurred as of December 31, 2013. | |||
Income Taxes | |||
The Company utilizes ASC Topic 740 “Accounting for Income Taxes,” which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each year-end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. The provision for income taxes represents the tax payable for the period and the change during the period in deferred tax assets and liabilities. | |||
As of December 31, 2013, the Company had a deferred tax asset of $26,274,933 that was fully reserved and a net operating loss carryforward of $47,728,300 for Federal purposes and $44,482,850 for state tax purposes. The Company will continue to monitor all available evidence and reassess the potential realization of its deferred tax assets. | |||
The net operating loss carry-forwards for 2013 and 2012 begin expiring in 2021 and 2020, respectively. During 2013, the outstanding shares of common stock increased from 890,837 to 5,813,785. The utilization of net operating loss carry-forwards is likely to be limited due to this ownership change under the provisions of Internal Revenue Code Section 382 and similar state provisions. The Company recorded a 100% valuation allowance on the deferred tax assets at December 31, 2013 and 2012 because of the uncertainty of their realization. | |||
Stock-Based Compensation | |||
We follow ASC Topic 718 “Share Based Payment,” using the modified prospective transition method. New awards and awards modified, repurchased or cancelled after January 1, 2006 trigger compensation expense based on the FV of the stock option as determined by the Black-Scholes option pricing model. We amortize stock-based compensation for such awards on a straight-line method over the related service period of the awards taking into account the effects of the employees’ expected exercise and post-vesting employment termination behavior. We account for equity instruments issued to non-employees in accordance with ASC Topic 718 and EITF Issue No. 96-18. The FV of each option granted is estimated as of the grant date using the Black-Scholes option pricing model. | |||
Advertising | |||
We expense the cost of advertising as incurred. Such amounts have not historically been significant. | |||
Reclassifications | |||
Certain prior year amounts were reclassified to conform to the manner of presentation in the current period. These reclassifications had no effect on the net loss or the shareholder’s deficit. | |||
Recent Accounting Pronouncements | |||
On July 27, 2012, the FASB issued ASC 2012-02 “Intangibles-Goodwill and Other (Topic 350)” Testing Indefinite-Lived Intangible Assets for Impairment. The ASC provides entities with an option to first assess qualitative factors to determine whether events or circumstances indicate that it is more likely than not that the indefinite-lived intangible asset is impaired. If an entity concludes that it is more than 50% likely that an indefinite-lived intangible asset is not impaired, no further analysis is required. However, if an entity concludes otherwise, it would be required to determine the FV of the indefinite-lived intangible asset to measure the amount of actual impairment, if any, as currently required under U.S. GAAP. The ASC is effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. Early adoption is permitted. The adoption of this pronouncement did not have a material impact on our financial statements. | |||
The FASB has issued ASU No. 2013-04, Liabilities (Topic 405), “Obligations Resulting from Joint and Several Liability Arrangements for Which the Total Amount of the Obligation Is Fixed at the Reporting Date.” ASU 2013-04 provides guidance for the recognition, measurement, and disclosure of obligations resulting from joint and several liability arrangements for which the total amount of the obligation within the scope of this ASU is fixed at the reporting date, except for obligations addressed within existing guidance in US GAAP. The guidance requires an entity to measure those obligations as the sum of the amount the reporting entity agreed to pay on the basis of its arrangement among its co-obligors and any additional amount the reporting entity expects to pay on behalf of its co-obligors. The amendments in this ASU are effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. The Company does not expect the adoption of this guidance to have a material impact on the Company’s consolidated financial statements. | |||
In July 2013, the FASB issued ASU 213-11, Income Taxes (Topic 740): “Presentation of Unrecognized Tax Benefit When a Net Operating Loss Carryforward, A Similar Tax Loss, or a Tax Credit Carryforward Exists (A Consensus the FASB Emerging Issues Task Force)”. ASU 2013-11 provides guidance on financial statement presentation of unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. The FASB’s objective in issuing this ASU is to eliminate diversity in practice resulting from a lack of guidance on this topic in current U.S. GAAP. This ASU applies to all entities with unrecognized tax benefits that also have tax loss or tax credit carryforwards in the same tax jurisdiction as of the reporting date. This amendment is effective for public entities for fiscal years beginning after December 15, 2013 and interim periods within those years. The company does not expect the adoption of this standard to have a material impact on the Company’s consolidated financial statements. | |||
Other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the AICPA, and the SEC did not or are not believed by management to have a material impact on the Company’s present or future consolidated financial statements. |
4_Litigation
4. Litigation | 12 Months Ended |
Dec. 31, 2013 | |
Warrants and options | ' |
NOTE 4 - Litigation | ' |
In January 2013, the Company signed a term sheet (“Term Sheet”) with an outside financial firm (“Financial Firm”) to have that firm acquire certain portions of the Company’s liabilities to creditors, employees and former employees (“Creditors”). The Financial Firm entered into agreements in July 2013 with such Creditors to acquire $1,865,386 in liabilities (“Liability Settlement”) of the Company and filed a complaint on July 29, 2013 with the Second Judicial Circuit, Leon County, Florida seeking a judgment against the Company for the Liability Settlement. A court order based on this complaint was issued on October 7, 2013. Based on conditions agreed to in the Term Sheet, the Company will settle that judgment by issuing common stock to the Financial Firm. Under an exemption from registration in the SEC regulations, common stock issued pursuant to this court order is tradable without restrictions. This common stock will be issued in tranches such that the Financial Firm will not own more than 9.99% of outstanding shares at any time and will be priced at 80% of average closing bids during such period of time in which the dollar trading volume of the stock is three times the Liability Settlement (“Settlement Period”). The Financial Firm will sell the shares to generate proceeds to pay the Creditors. | |
Until the Financial Firm repays all the creditors, the Company will have a liability on its balance sheet for the value of amount still owed by the Financial Firm to the creditors plus 20% to recognize the discount stock owed to the Financial Firm. The selling activities of the Financial Firm could put downward pressure on the stock price. As of December 31, 2013, the Company had a liability of $1,854,743 on its balance sheet, which would have required the issuance of 618,248 shares to satisfy this liability given the $3.00 price for the Company’s common stock on that date, or 10.6% of the 5,813,785 shares outstanding at that time. The Financial Firm held a promissory note for $50,000 that was converted into 8,333 shares of common stock on October 3, 2013 and received a fee of 1,500 shares of common stock on October 7, 2013 and both were recorded as consulting fees. An initial tranche of 200,000 shares was issued to the Financial Firm in November 2013 and a subsequent tranche of 150,000 shares was issued in February 2014. | |
In July 2013, the Company received notice that a complaint for property damage had been filed by the Truck Insurance Exchange against the Company for $393,592 related to water damage incurred by a printing company on the ground floor of the Company’s former office space in Los Angeles. This damage is alleged to have occurred in connection with a water leak in the Company’s former office in February 2013. The Company has filed an answer to this complaint that includes, but not be limited to, the defense of culpability of the building’s management in this leak. The Company has a dispute with its insurance carrier at that time regarding coverage for this incident and the Company intends to pursue this dispute to ensure that it had proper insurance coverage at that time. The $300,000 accrued for this issue as of December 31, 2012 was increased to $393,592 in the Company’s financial statements as of June 30, 2013. |
5_Prepaid_Expenses
5. Prepaid Expenses | 12 Months Ended |
Dec. 31, 2013 | |
Prepaid Expenses | ' |
5. Prepaid Expenses | ' |
In July 2013, the Company entered into an agreement with Maxim Group LLC to provide general financial advisory and investment banking services to the Company for three years on a non-exclusive basis. Under this agreement, Maxim received common stock equal to 4.99% of the outstanding common stock of the Company as of that date, or 21,025,000 shares of common stock. These shares were valued at $0.15, which was the closing price of the Company’s common stock on the date of the agreement, for a total expense of $3,153,750. This expense is being recognized ratably over the life of the three-year term of the agreement at $262,813 per quarter. As of December 31, 2013, $2,628,125 remained in prepaid expenses. |
6_Receivable_From_Former_Chair
6. Receivable From Former Chairman and Chief Executive Officer | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Notes to Financial Statements | ' | ||||||||
6. Receivable From Former Chairman and Chief Executive Officer | ' | ||||||||
Pursuant to an investigation directed by the Company’s Board of Directors (“Board”) in March 2012, it was determined that Paul Feller, the Company’s former chairman and Chief Executive Officer (“CEO”), received $640,000 in December 2010 in connection with a sale of the Company’s common stock he arranged with outside investors and he caused 25,400 shares of common stock to be issued directly by the Company while Mr. Feller kept the cash proceeds (the “European Transactions”). Accordingly, the Company recorded a gross receivable of $640,000 from Mr. Feller in connection with the European Transactions. Mr. Feller resigned from the Company on June 28, 2012. During 2012, it was determined that Mr. Feller kept in his possession a vintage automobile that the Company paid $38,100 for, increasing his receivable to $678,100. | |||||||||
As of December 31, 2012, this receivable of $678,100 was increased by $71,946, which is the value of 3,787 shares owed by Mr. Feller to the Company at the $19.00 closing price of common stock on December 31, 2012, along with $4,622 of personal expenses for Mr. Feller paid with Company funds. This receivable of $754,668 was presented net of the offset of $538,515 of the receivable related to stock issuance (see below), $30,540 of approved business expenses and $113,667 in deferred salary. As of December 31, 2013, this receivable was reduced to $2,020, which is the value of the 673 shares owed by Mr. Feller to the Company at the $3.00 closing price of the Company’s shares as of December 31, 2013. | |||||||||
These impacts are summarized as follows: | |||||||||
December 31, | December 31, | ||||||||
2013 | 2012 | ||||||||
Gross receivable | |||||||||
Sale of Company common stock, net proceeds retained by Mr. Feller | $ | 640,000 | $ | 640,000 | |||||
Value of 3,787 shares of common stock owed by Mr. Feller to the Company valued at December 31, 2012 price of $19.00 and 673 shares valued at December 31, 2013 price of $3.00 | 2,020 | 71,946 | |||||||
Vintage automobile retained by Mr. Feller | 38,100 | 38,100 | |||||||
Other | 4,622 | 4,622 | |||||||
Total | 684,742 | 754,668 | |||||||
Offsets to receivable | |||||||||
Deferred salary | (113,667 | ) | (113,667 | ) | |||||
Expense reports submitted and approved | (30,540 | ) | (30,540 | ) | |||||
Net amount owed | 540,535 | 610,461 | |||||||
Write off receivable based on stock offsets (a) | (538,515 | ) | (538,515 | ) | |||||
Net receivable | $ | 2,020 | $ | 71,946 | |||||
Pursuant to a Separation and Release Agreement dated June 28, 2012 and signed by Mr. Feller on August 9, 2012 (“Separation Agreement”), Mr. Feller agreed to waive his rights to any deferred salary prior to October 1, 2011. Accordingly, the amount of deferred salary eligible for an offset to the gross receivable was reduced from $398,790 at December 31, 2011 to $113,667 at December 31, 2012, which is $125,000 in deferred salary between October 1, 2011 and June 28, 2012, less $11,333 paid in salary during that period. In addition, Mr. Feller did not submit expense reports to support the $133,770 of expenses in the time provided for in the Separation Agreement, so that amount was removed as an offset to his receivable as of December 31, 2012. | |||||||||
This offset of the $538,515 receivable from Mr. Feller resulted from the decision by the Company to treat 21,613 shares of stock owed to Mr. Feller from 2008 and 2009 that were approved by the Board but never issued, as having been satisfied when he had the Company issue 25,400 shares of stock in connection with the European Transactions. | |||||||||
The 21,613 shares were due to Mr. Feller as payment for $2,768,652 in accrued salary, interest, vacation and rental payments for 2008, 2009 and prior years, and repayment of $729,439 of outstanding loans made by Mr. Feller to the Company in those periods. The Company is satisfied that it properly recorded and disclosed the 2008 and 2009 transactions in its financial reports filed with the SEC and the only adjustment needed was to reduce shares outstanding as of December 31 2012 by these 21,613 shares. The Company has accrued the employer taxes on this taxable income as of December 31, 2012. While Mr. Feller was owed 21,613 shares from 2008 and 2009, he had the Company issue 25,400 shares related to the European Transactions, leaving a balance due to the Company of 3,787 shares. In consideration for a legal judgment paid by Mr. Feller, the Company agreed to reduce the number of shares of common stock owed by him to the Company from 3,787 shares to 673 shares. | |||||||||
As of December 31, 2013, the Company had recorded an accrued expense of $375,000 pursuant to Mr. Feller’s consulting agreement that provides for $62,500 per quarter through June 30, 2014, subject to certain conditions. These consulting payments were conditioned on the Company raising $2,000,000 of equity and that Mr. Feller provide consulting services under this agreement at the direction of the Company’s board of directors. Given that the Company has not raised this amount of equity and given that Mr. Feller has not provided any consulting services to the Company, the Company elected to reverse this accrued expense, resulting in a gain of $375,000. |
7_Property_and_Equipment
7. Property and Equipment | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Property, Plant and Equipment [Abstract] | ' | ||||||||
NOTE 7 - Property and Equipment | ' | ||||||||
Property and equipment were as follows: | |||||||||
December 31, | December 31, | ||||||||
2013 | 2012 | ||||||||
Computers, peripherals and office machines | $ | 145,245 | $ | 147,030 | |||||
Furniture and fixtures | 78,833 | 73,905 | |||||||
224,078 | 220,935 | ||||||||
Less accumulated depreciation | (212,816 | ) | (171,897 | ) | |||||
Property and equipment, net | $ | 11,262 | $ | 49,038 | |||||
For the years ended December 31, 2013 and 2012, depreciation expense was $40,919 and $26,771, respectively, reflecting accelerated depreciation in 2013 for assets deemed to have shorter useful lives given the Company’s financial situation. |
8_Goodwill
8. Goodwill | 12 Months Ended |
Dec. 31, 2013 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ' |
NOTE 8 - Goodwill | ' |
Goodwill was $7,642,825 at December 31, 2013 and $1,935,621 at December 31, 2012. Given the Company’s decision as of June 30, 2013 to suspend development of its MMA business, the goodwill for ProElite was considered to be fully impaired as of that date. In accordance with ASC Topic 350, “Intangibles-Goodwill and Other,” the Company’s goodwill is considered to have indefinite lives and were therefore not amortized, but rather is subject to annual impairment tests. As of December 31, 2013, Company Management determined that the fair value of its businesses for accounting purposes was equal to its market capitalization of approximately $19,600,000, which was 128% of the $15,334,507 goodwill and intangible assets on the balance sheet as of December 31, 2013. Based on this determination, Company Management concluded that goodwill was not impaired as of December 31, 2013. |
9_Deferred_Salary
9. Deferred Salary | 12 Months Ended |
Dec. 31, 2013 | |
Notes to Financial Statements | ' |
Note 9. Deferred Salary | ' |
Capital constraints necessitated that the Company reduce staff starting February 16, 2013 and the Company has not been able to pay employees on a regular basis since that point, resulting in unpaid salaries of $571,328 and $1,152,933 as of December 31, 2013 and December 31, 2012, respectively, net of any advances. During 2013 $1,035,514 of deferred salary liability was transferred to a third party |
10_Other_accrued_expenses_and_
10. Other accrued expenses and other liabilities | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Other Accrued Expenses And Other Liabilities | ' | ||||||||
NOTE 10 - Other accrued expenses and other liabilities | ' | ||||||||
Other accrued expenses and other liabilities consisted of the following: | |||||||||
December 31, | December 31, | ||||||||
2013 | 2012 | ||||||||
Payroll related | $ | 479,087 | $ | 329,191 | |||||
Estimated damage liability that may not be covered by insurance | 393,592 | 300,000 | |||||||
Estimated settlement with vendor in Europe | – | 300,000 | |||||||
Professional fees | 110,000 | 269,710 | |||||||
Accrued board fees | 657,934 | 241,011 | |||||||
Consultant fees | – | 133,777 | |||||||
Other | 57,101 | 109,819 | |||||||
$ | 1,697,714 | $ | 1,683,508 | ||||||
The estimated damage liability that may not be covered by insurance was increased to the amount of the legal complaint disclosed in footnote 4 that is related to this amount. The estimated settlement with vendor in Europe was transferred to a third party. As of December 31, 2013, the Company had recorded an accrued expense of $375,000 pursuant to Mr. Feller’s consulting agreement that provides for $62,500 per quarter through June 30, 2014, subject to certain conditions. These consulting payments were conditioned on the Company raising $2,000,000 of equity and that Mr. Feller provide consulting services under this agreement at the direction of the Company’s board of directors. Given that the Company has not raised this amount of equity and given that Mr. Feller has not provided any consulting services to the Company, the Company elected to reverse this accrued consulting liability as of December 31, 2013. |
11_Payable_to_Officer_and_Form
11. Payable to Officer and Former Officer | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Working Capital | ' | ||||||||
NOTE 11 - Payable to Officer and Former Officer | ' | ||||||||
The amounts payable to an officer and a former officer pursuant to their employment agreements: | |||||||||
December 31, | December 31, | ||||||||
2013 | 2012 | ||||||||
Officer pursuant to employment agreement | $ | 156,358 | $ | 156,358 | |||||
Promissory note to former officer | – | 55,000 | |||||||
$ | 156,358 | $ | 211,358 | ||||||
In connection with the 2010 employment agreement for its then Senior Vice President and Chief Operating Officer, the Company owed this former officer $55,000, which is the remaining portion of a promissory note assumed by the Company in connection with this employment agreement. This liability was transferred to a third party during 2013. In connection with the 2010 employment agreement for the Company’s Chief Financial Officer, the Company owes this officer $156,358 for unpaid amounts consisting of consulting fees prior to employment, expenses, salary increases and signing bonus. |
12_Notes_payable
12. Notes payable | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Notes Payable [Abstract] | ' | ||||||||
NOTE 12 - Notes payable | ' | ||||||||
Notes payable were as follows: | |||||||||
2013 | 2012 | ||||||||
Notes payable from ProElite to various individuals dated October 20, 2011 with maturity of July 20, 2012, plus interest at 8%, convertible into common stock of ProElite at noteholder's election. Secured by the assets of ProElite. These notes were converted into common stock in November 2013. | $ | – | $ | 1,063,000 | |||||
Note payable to a shareholder with original maturity of May 24, 2012, plus interest at 0.19%, that was secured by the assets of ProElite. This note was converted into common stock in May 2013. | – | 1,000,000 | |||||||
Note payable from ProElite to one party dated October 19, 2012 with original maturity of October 19, 2013. Bears interest at 7% and was secured by the assets of ProElite. This note was converted into common stock in May 2013. | – | 500,000 | |||||||
Note payable to the Company's outside law firm and represents the corporate and litigation fees due as of June 30, 2012. This note originally bore interest at 3% and was due December 31, 2012. Starting on January 1, 2013, this note bears interest at 10%. This note is currently in default. | 467,002 | 486,104 | |||||||
Notes payable to three holders dated May 11, 2012 with original maturity of the earlier of November 11, 2012 and was secured by the assets of the Company. This note was converted into common stock in May 2013. | – | 350,000 | |||||||
Notes payable to 11 investors dated July 9, 2012 with maturity date on the earlier of a $2 million capital raise by the company, or February 6, 2013 and bears interest at 8%. $225,000 of these notes were converted by 9 investors to common stock in November 2013. The remaining two notes are currently in default. | 50,000 | 275,000 | |||||||
Notes payable to one holder dated April 4, 2012 with original maturity on October 4, 2012 that was changed to January 4, 2013. This note was converted into common stock in May 2013. | – | 249,999 | |||||||
Notes payable to a director of the Company dated March 5, 2013 with maturity on the earlier of September 5, 2013 or receipt by the Company of $200,000 in net proceeds from a private placement of Company securities. This note does not bear interest and is not secured. This note is currently in default. | 200,000 | – | |||||||
Note payable to a high-yield fund. This note bears interest at 10% and matures on June 19, 2014. Upon the closing of a financing of at least $7,500,000 on or before the applicable maturity date, this note will be converted into securities issued in such financing at a conversion price equal to 50% of the purchase price per share or unit of the securities. This note is secured by the assets of the Company. | 500,000 | – | |||||||
Note payable to the Company's chairman of the board dated August 9, 2013. Bears interest at 7% and matures on August 9, 2014. Contains mandatory conversion into security or securities totaling $10 million or more at the lesser of 50% of the selling price of such securities or the equivalent of $0.04 per share of common stock. This note is secured by the assets of the Company. | 500,000 | – | |||||||
Note payable to the Company's chairman of the board dated December 19, 2013. This note bears interest at 10% and matures on June 19, 2014. Upon the closing of a financing of at least $7,500,000 on or before the applicable maturity date, this note will be converted into securities issued in such financing at a conversion price equal to 50% of the purchase price per share or unit of the securities. This note is secured by the assets of the Company. | 150,000 | – | |||||||
Note payable to a shareholder dated January 14, 2005, with original maturity of May 14, 2005, plus interest at 10%. Unsecured. This note was written off in June 2013. | – | 70,000 | |||||||
Note payable to a shareholder dated February 1, 2005 with original maturity of June 1, 2005, plus interest at 10%. Unsecured. This note was written off in June 2013. | – | 10,000 | |||||||
$ | 1,867,002 | $ | 4,004,103 | ||||||
The notes of $70,000 and $10,000 outstanding as of December 31, 2012 were written off in June 2013 since there have been no actions taken to collect on these notes and the statute of limitations for collecting on these notes has passed. The gain of $80,000 for the writeoff of these notes was reflected in other income for the year ended December 31, 2013. | |||||||||
Interest expense on these notes was $228,294 in 2013 and $167,894. in 2012 |
13_Obligation_to_issue_stock_f
13. Obligation to issue stock for transfer of liabilities | 12 Months Ended |
Dec. 31, 2013 | |
Notes to Financial Statements | ' |
13. Obligation to issue stock for transfer of liabilities | ' |
In January 2013, the Company signed a term sheet (“Term Sheet”) with an outside financial firm (“Financial Firm”) to have that firm acquire certain portions of the Company’s liabilities to creditors, employees and former employees (“Creditors”). The Financial Firm entered into agreements in July 2013 with such Creditors to acquire $1,865,386 in liabilities (“Liability Settlement”) of the Company and filed a complaint on July 29, 2013 with the Second Judicial Circuit, Leon County, Florida seeking a judgment against the Company for the Liability Settlement. A court order based on this complaint was issued on October 7, 2013, resulting in the transfer of these $1,865,386 million of liabilities to the Financial Firm (see Footnote 4 for additional information). Of the amount transferred to the Financial Firm, $1,035,514 was related to deferred salary and paid time off for current and former employees and $829,872 was for amounts owed to vendors. | |
Based on conditions agreed to in the Term Sheet, the Company will settle that judgment by issuing common stock to the Financial Firm. Under an exemption from registration in the SEC regulations, common stock issued pursuant to this court order is tradable without restrictions. This common stock will be issued in tranches such that the Financial Firm will not own more than 9.99% of outstanding shares at any time and will be priced at 80% of average closing bids during such period of time in which the dollar trading volume of the stock is three times the Liability Settlement (“Settlement Period”). The Financial Firm will sell the shares to generate proceeds to pay the Creditors. | |
Until the Financial Firm repays all the creditors, the Company will have a liability on its balance sheet for the value of amount still owed by the Financial Firm to the creditors plus 20% to recognize the discount stock owed to the Financial Firm. The selling activities of the Financial Firm could put downward pressure on the stock price. As of December 31, 2013, the Company had a liability of $1,854,743 on its balance sheet, which would have required the issuance of 618,248 shares to satisfy this liability given the $3.00 price for the Company’s common stock on that date, or 10.6% of the 5,813,785 shares outstanding at that time. | |
The Financial Firm held a promissory note for $50,000 that was converted into 8,333 shares of common stock on October 3, 2013 and received a fee of 1,500 shares of common stock on October 7, 2013 and both were recorded as consulting fees. An initial tranche of 200,000 shares was issued to the Financial Firm in November 2013 and a subsequent tranche of 150,000 shares was issued in February 2014. |
14_Derivative_Liabilities
14. Derivative Liabilities | 12 Months Ended | ||||
Dec. 31, 2013 | |||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ' | ||||
14. Derivative Liabilities | ' | ||||
On May 24, 2011, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with eight investors (collectively, the “Investors”) pursuant to which the Company sold 8,700 shares of a new series of convertible preferred stock designated as Series E Convertible Preferred Stock (“Original Series E”), the terms of which are set forth in the Certificate of Designations of Series E Preferred Stock (the “Certificate”), for $1,000 per share, or $8,700,000. In October 2012, the Company sold 1,000 shares of Series E for $1,000,000 (“New Series E”). The Original Series E and New Series E together are referred to herein as “Series E”. | |||||
These Series E contained “full ratchet-down” liquidity protection that provided that if the Company issues securities for less than the existing conversion price for the Series E Preferred Stock or the strike price of the Series E warrants, then the conversion price for Series E Preferred Stock will be lowered to that lower price. Also, the strike price for Series E warrants were decreased to that lower price and the number of Series E warrants will be increased such that the product of the original strike price times the original quantity equaled the lower strike price times the higher quantity. | |||||
Subsequent to the issuance of this Series E, the Company determined that the warrants for these financings included certain embedded derivative features as set forth in ASC Topic 815 and that this conversion feature of the Series E was not an embedded derivative because this feature was clearly and closely related to the host (Series E) as defined in ASC 815. These derivative liabilities were initially recorded at their estimated FV on the date of issuance and were subsequently adjusted each quarter to reflect the estimated fair value at the end of each period, with any decrease or increase in the estimated FV of the derivative liability for each period being recorded as other income or expense. Since the value of the embedded derivative feature for the related warrants was higher than the value of both Series E transactions, there was no beneficial conversion feature recorded for either transaction, and the excess of the value of the embedded derivative feature over the value of the transaction was recorded in each period on the Statement of Operations as a separate line item. | |||||
The fair value of these derivative liabilities was calculated using the Black Scholes pricing model that was based on the closing price of the common stock, the strike price of the underlying instrument, the risk-free interest rate for the applicable remaining life of the underlying instrument (i.e., the U.S. treasury rate for that period) and the historical volatility of the Company’s common stock. These fair value results were extremely sensitive to all these input variables, particularly the closing price of the company’s common stock and the volatility of the Company’s common stock. Accordingly, the fair value of these derivative liabilities were subject to significant changes. During 2013, the Series E and related warrants were converted into common stock and extinguished and the company recorded a gain of $8,980,077 on the decrease in fair value for the derivative security and recorded a gain of $1,635,967 on extinguishment of the derivative liability. | |||||
The following assumptions were used to calculate the Black Scholes values of this derivative liability as of the measurement dates of March 31, 2013 and as of May 6, 2013. The fair value of the underlying common stock was based on the sale of 139,166 shares of common stock at $3.00 by the Company during 2013. | |||||
Estimated fair value of underlying common stock | $3.00 | ||||
Remaining life in years | 3.05 - 3.15 | ||||
Risk-free interest rate | 0.35% - 0.38% | ||||
Expected volatility | 141% - 142% | ||||
Dividend yield | – | ||||
15_Shareholders_Deficit
15. Shareholders' Deficit | 12 Months Ended | |||||||||||||||||||||||||||||
Dec. 31, 2013 | ||||||||||||||||||||||||||||||
Shareholders Deficit | ' | |||||||||||||||||||||||||||||
NOTE 15 - Shareholders' Deficit | ' | |||||||||||||||||||||||||||||
Common Stock | ||||||||||||||||||||||||||||||
Following a majority vote of shareholders to approve, an information statement was distributed to shareholders of record as of June 30, 2013. After the appropriate waiting period after such mailing, the authorized number of shares was increased from 500,000,000 to 1,000,000,000 in August 2013. During the 2013, the Company issued a total of 4,922,948 shares of Common Stock, resulting in an increase in outstanding shares from 890,836 shares as of December 31, 2012 to 5,813,785 shares as of December 31, 2013: | ||||||||||||||||||||||||||||||
Number of Common Shares | ||||||||||||||||||||||||||||||
Balance at December 31, 2012 | 890,837 | |||||||||||||||||||||||||||||
Conversion of Series E Preferred to common stock | 1,575,000 | |||||||||||||||||||||||||||||
Shares issued for acquisition | 1,150,116 | |||||||||||||||||||||||||||||
Conversion of warrants to common stock | 1,023,264 | |||||||||||||||||||||||||||||
Conversion of debt to common stock | 576,331 | |||||||||||||||||||||||||||||
Issuance of shares for advisory agreements | 243,250 | |||||||||||||||||||||||||||||
Issuance of shares to third party for assumption of liabilities | 200,000 | |||||||||||||||||||||||||||||
Issuance of common stock for cash | 142,501 | |||||||||||||||||||||||||||||
Other | 12,486 | |||||||||||||||||||||||||||||
Balance at December 31, 2013 | 5,813,785 | |||||||||||||||||||||||||||||
Series C 10% Preferred Stock | ||||||||||||||||||||||||||||||
There were no shares of Series C 10% Preferred Stock outstanding as of December 31, 2013 or December 31, 2012. | ||||||||||||||||||||||||||||||
Series D 10% Preferred Stock | ||||||||||||||||||||||||||||||
As of December 31, 2013 and 2012, 0 and 18,999 shares of Series D were outstanding, respectively. Each share of Series D sold for $30, could be converted at any time into 0.6 shares of common stock and had voting rights equal to 0.6 shares of common stock. In connection with the issuance of Series D, the Company issued warrants to purchase 1,799 shares of common stock. The warrants have a life of five years to purchase a share of common stock for $100 per share. The Series D had liquidation preference over common stock at a liquidation value equal to its par value of $30 and paid a cumulative dividend of 10% per year. Given the losses recorded by the Company, the stock equivalents related to the Series D are not included in the calculation of earnings per share since the effect of such inclusion would be antidilutive. During 2013, 18,999 shares of Series D were converted into a total of 14,138 shares of common stock: 11,399 shares for direct conversion of the Series D into common stock, 2,528 shares for dividends and 211 shares for the price protection feature. | ||||||||||||||||||||||||||||||
Series E 5% Preferred Stock | ||||||||||||||||||||||||||||||
As of December 31, 2013 and December 31, 2012, there were 0 and 9,450 shares of Series E were outstanding, respectively. On May 6, 2013 all shares of Series E were exchanged for 1,575,000 shares of common stock and were extinguished, thereby removing the “overhang” created by the terms of the Series E that provided for the conversion price into common stock to be reduced to the price of any subsequent financing done at a lower price. | ||||||||||||||||||||||||||||||
In October 2012, the Company raised $870,000 through the issuance of 1,000 shares of Series E 5% Preferred Stock (“Series E”) and common stock and warrants to purchase shares of common stock at $0.65 to $1.00. On May 24, 2011, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with eight investors (collectively, the “Investors”) pursuant to which the Company sold 8,700 shares of a new series of convertible preferred stock designated as Series E Convertible Preferred Stock (“Original Series E”), the terms of which are set forth in the Certificate of Designations of Series E Preferred Stock (the “Certificate”), for $1,000 per share, or $8,700,000. In October 2012, the Company sold 1,000 shares of Series E for $1,000,000 (“New Series E”). The Original Series E and New Series E together are referred to herein as “Series E”. | ||||||||||||||||||||||||||||||
In connection with the sale of the Series E, the Company also agreed to issue to the Investors (a) warrants (“A Warrants”) to purchase up to one additional share of Common Stock for each share of Common Stock issuable upon conversion of the Preferred Shares, and (b) warrants (“B Warrants”) to purchase up to 0.50 additional shares of Common Stock for each share of Common Stock issuable upon conversion of the Preferred Shares. The Warrants were exercisable for five years commencing on the date of first issuance. For the Original Series E, exercise price of the A Warrant was $65.00 per share and the B Warrant had an exercise price of $100.00 per share, subject in each case to full ratchet anti-dilution protection. | ||||||||||||||||||||||||||||||
The Original Series E were adjusted pursuant to the full ratchet anti-dilution protection when $249,999 of notes were issued on April 4, 2012 that contained a $3.00 conversion feature, so that the Original Series E had a conversion price of $3.00 and an exercise price of $3.00 for the warrants. The New Series E were issued with a conversion and exercise price of $30.00 for the warrants. The impact of this ratchet-down provision in April 2012 increased the number of shares that would be issued upon conversion on that date from 211,250 shares of common stock to 281,667 and to increase the number of shares that would be issued upon full exercise of the warrants on that date from 379,750 shares of common stock to 949,667. All of the Series E have been converted into the Company’s common stock. | ||||||||||||||||||||||||||||||
Stock Options | ||||||||||||||||||||||||||||||
On March 27, 2013 the Board approved an option to the Company’s CEO to purchase 250,000 shares of common stock at $3.00 and an option to the Company’s General Counsel to purchase 60,000 shares of common stock at $3.00. These options have a five-year life and vested in the three months ended June 30, 2013, resulting in Black Scholes option expense of $824,600 for this quarter. The Black Scholes expense for these March 27, 2013 options was calculated using the following assumptions. The fair value of the underlying common stock was based on the sale of 139,167 shares of common stock at $3.00 by the Company during 2013. | ||||||||||||||||||||||||||||||
Estimated fair value of underlying common stock | $3.00 | |||||||||||||||||||||||||||||
Remaining life | 5 | |||||||||||||||||||||||||||||
Risk-free interest rate | 0.35% | |||||||||||||||||||||||||||||
Expected volatility | 141% | |||||||||||||||||||||||||||||
Dividend yield | – | |||||||||||||||||||||||||||||
During 2012, the Company cancelled 46,609 options for employees whose employment had been terminated and granted 23,000 options to Jerold Rubinstein, the Company’s new Chairman of the Board and CEO on June 28, 2012, pursuant to an employment contract, 4,500 options to a director and 3,000 options to an officer. These options have a strike price of $35.00 - $38.00, which were the closing prices of the Company’s common stock on the day of grant and a five-year life. Mr. Rubinstein’s options vest monthly over a 12-month period unless the employment contract is terminated for any reason, at which time the options vest in full. The director’s options vest ratably over a 36-month period, and the officer’s options vest one third at grant, one third after the first year and one third after the second year. The Black Scholes value of these options was $706,250 which is being amortized over the respective vesting periods. The Black Scholes expense for these 2012 options was calculated using the following assumptions. The fair value of the underlying common stock was determined by closing price on the Bulletin Board stock exchange. | ||||||||||||||||||||||||||||||
Estimated fair value of underlying common stock | $35.00 - $38.00 | |||||||||||||||||||||||||||||
Remaining life | 5 | |||||||||||||||||||||||||||||
Risk-free interest rate | 0.69% - 0.80% | |||||||||||||||||||||||||||||
Expected volatility | 80% - 89% | |||||||||||||||||||||||||||||
Dividend yield | – | |||||||||||||||||||||||||||||
The following table sets forth the activity of our stock options to purchase common stock: | ||||||||||||||||||||||||||||||
Options Outstanding | Options Exercisable | |||||||||||||||||||||||||||||
Weighted | Weighted | |||||||||||||||||||||||||||||
Average | Weighted | Average | Weighted | |||||||||||||||||||||||||||
Range of | Remaining | Average | Remaining | Average | ||||||||||||||||||||||||||
Options | Exercise | Life in | Exercise | Options | Life in | Exercise | ||||||||||||||||||||||||
Outstanding | Prices | Years | Price | Exercisable | Years | Price | ||||||||||||||||||||||||
As of December 31, 2011 | 121,699 | $14.00 - $150.00 | 2.9 | $49.00 | 87,577 | 2.9 | $ | 40 | ||||||||||||||||||||||
Cancelled | (72,763 | ) | – | – | – | (46,610 | ) | – | – | |||||||||||||||||||||
Exercised | – | – | – | – | – | – | – | |||||||||||||||||||||||
Granted | 30,500 | $35.00 - $38.00 | 4.2 | $36.00 | 16,343 | 4.2 | $ | 36 | ||||||||||||||||||||||
As of December 31, 2012 | 79,436 | $35.00 - $54.00 | 3 | $46.00 | 57,310 | 2.6 | $ | 48 | ||||||||||||||||||||||
Cancelled | – | – | – | – | – | – | – | |||||||||||||||||||||||
Exercised | – | – | – | – | – | – | – | |||||||||||||||||||||||
Granted | 310,000 | $3.00 | 4.2 | $3.00 | 310,000 | 4.2 | $3.00 | |||||||||||||||||||||||
As of December 31, 2013 | 389,436 | $0.03 - $0.54 | 3.9 | $11.77 | 367,310 | 3.9 | $11.10 | |||||||||||||||||||||||
Warrants | ||||||||||||||||||||||||||||||
During 2013 the Board approved warrants to three financial advisors to purchase 173,917 shares of common stock at $3.00. These warrants have a five-year life and vested immediately, resulting in Black Scholes warrant expense of $462,618. The Black Scholes expense for these March 27, 2013 warrants was calculated using the following assumptions. The fair value of the underlying common stock was based on the sale of 139,167 shares of common stock at $3.00 by the Company during the three months ended June 30, 2013. | ||||||||||||||||||||||||||||||
Estimated fair value of underlying common stock | $3.00 | |||||||||||||||||||||||||||||
Remaining life | 5 | |||||||||||||||||||||||||||||
Risk-free interest rate | 0.35% | |||||||||||||||||||||||||||||
Expected volatility | 141% | |||||||||||||||||||||||||||||
Dividend yield | – | |||||||||||||||||||||||||||||
In May 2013 Series E warrants, along with related warrants with similar terms, were exchanged for 1,023,264 shares of common stock and these warrants were extinguished, thereby removing the “overhang” created by the full-ratchet provisions of these warrants that would have increased the number of warrants outstanding and reduced the strike price of these warrants to the price of any subsequent financing done at a lower price. This exchange of common stock for the Series E warrants resulted in a fair value charge of $3,069,792 in 2013. These 1,023,264 shares of common stock were valued at $3.00 per share, which was the price at which the Company sold 139,167 shares during 2013, resulting in the fair value charge for $3,069,792. | ||||||||||||||||||||||||||||||
During 2012, the Company issued warrants to purchase 50,000 shares of common stock at $30.00 in connection with the sale of 1,000 shares of Series E. The Original Series E were adjusted pursuant to the full ratchet anti-dilution protection when $249,999 of notes were issued on April 4, 2012 that contained a $30.00 conversion feature, so that the Original Series E now has an exercise price of $0.30 for the warrants. The New Series E was issued with an exercise price of $30.00 for the warrants. The Company also issued six five-year warrants to purchase 135,300 shares at $38.00 to $75.00 in connection with consulting and advisory contracts. The Black Scholes value of these warrants is $4,133,690, which is being recognized over the 12 months of the contracts. The Black Scholes expense for these 2012 warrants was calculated using the following assumptions. The fair value of the underlying common stock was determined by closing price on the Bulletin Board stock exchange. | ||||||||||||||||||||||||||||||
Estimated fair value of underlying common stock | $38.00 - $75.00 | |||||||||||||||||||||||||||||
Remaining life | 5 | |||||||||||||||||||||||||||||
Risk-free interest rate | 0.74% - 1.80% | |||||||||||||||||||||||||||||
Expected volatility | 84% - 132% | |||||||||||||||||||||||||||||
Dividend yield | – | |||||||||||||||||||||||||||||
A summary of the warrants: | ||||||||||||||||||||||||||||||
Warrants Outstanding | Warrants Exercisable | |||||||||||||||||||||||||||||
Weighted | Weighted | |||||||||||||||||||||||||||||
Average | Weighted | Average | Weighted | |||||||||||||||||||||||||||
Range of | Remaining | Average | Remaining | Average | ||||||||||||||||||||||||||
Warrants | Exercise | Life in | Exercise | Warrants | Life in | Exercise | ||||||||||||||||||||||||
Outstanding | Prices | Years | Price | Exercisable | Years | Price | ||||||||||||||||||||||||
As of December 31, 2011 | 595,302 | $65.00 - $200.00 | 3.2 | $200.00 | 595,302 | 3.2 | $200.00 | |||||||||||||||||||||||
Exercised | – | – | – | – | – | – | – | |||||||||||||||||||||||
Ratchet-down impact | 569,917 | $30.00 | – | $30.00 | 569,917 | – | $30.00 | |||||||||||||||||||||||
Granted | 157,633 | $30.00 - $75.00 | 4.3 | $38.00 | 103,883 | 4.3 | – | |||||||||||||||||||||||
As of December 31, 2012 | 1,322,852 | $30.00 - $200.00 | 3.2 | $40.00 | 1,269,102 | 3.2 | $38.00 | |||||||||||||||||||||||
Exercised | (978,700 | ) | $30.00 | – | $30.00 | (939,950 | ) | – | $30.00 | |||||||||||||||||||||
Ratchet-down impact | – | – | – | – | – | – | – | |||||||||||||||||||||||
Granted | 173,917 | $3.00 | 4.2 | $3.00 | 173,917 | 4.2 | $3.00 | |||||||||||||||||||||||
As of December 31, 2013 | 518,069 | $3.00 - $200.00 | 3.3 | $44.07 | 503,069 | 3.3 | $44.07 | |||||||||||||||||||||||
16_Commitments_and_contingenci
16. Commitments and contingencies | 12 Months Ended | ||||||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | ' | ||||||||||||||||||||
NOTE 16 - Commitments and contingencies | ' | ||||||||||||||||||||
Office Space Rental | |||||||||||||||||||||
On May 1, 2009, we entered into a lease for 1,800 square feet of office space in Santa Barbara, California for use as our executive offices. This lease was amended on July 21, 2009 and expired on December 31, 2013 with a three-year renewal term available at an initial rent plus common area charges of $5,767 per month. This property was vacated in August 2012 and the Company has recorded a liability of $139,000 to cover unpaid rent and the present value of rents due for the remainder of the lease term. During 2013, a settlement amount of $110,700 was negotiated with the lease holder and transferred to a third party, resulting in a reduction of the accrued liability of $139,150. | |||||||||||||||||||||
On August 1, 2011, we entered into a lease for 7,000 square feet of office space in Los Angeles, California. The lease continues through November 30, 2014. Initially, the lease had a fixed monthly rent of $19,326 and was subject to annual increases of 3%. The Company was not required to pay a fixed monthly rent for months two through five. Prior to this, the Company was leasing the same office space on a month-to-month basis. This property was vacated in April 2012 and the Company recorded a liability of $892,000 to cover unpaid rent and the present value of rents due for the remainder of the lease term. As of April 2013, this space was released, but the terms and conditions of the new lease are unknown, so the Company did not adjust the accrued liability. | |||||||||||||||||||||
On November 1, 2011, we entered into a lease for 3,000 square feet of office space in Santa Barbara, California for use by our operating units. This lease expires on October 31, 2014 with two additional three-year renewal terms available. The initial rent plus common area charges were $7,157 per month. This property was vacated in June 2012 and the Company recorded a liability of $229,000 to cover unpaid rent and the present value of rents due for the remainder of the lease term. As of June 2013, this space was released, but the terms and conditions of the new lease are unknown, so the Company did not adjust the accrued liability. | |||||||||||||||||||||
From May 2012 to May 2013, the Company was in a month-to-month lease for office space in Los Angeles, California. Rent for this facility was $2,300 per month. Given reductions in staff, the Company is now operating with a “virtual office.” The Company believes this virtual office structure is adequate for our current needs and suitable additional or substitute space will be available as needed. | |||||||||||||||||||||
Contractual Obligations | |||||||||||||||||||||
Set forth below is information concerning our known contractual obligations as of December 31, 2013 that are fixed and determinable by year starting with the year ending December 31, 2014. | |||||||||||||||||||||
2017 and | |||||||||||||||||||||
Total | 2014 | 2015 | 2016 | Later | |||||||||||||||||
Notes Payable | $ | 1,867,002 | $ | 1,867,002 | $ | – | $ | – | $ | – | |||||||||||
Rent Obligations | 1,121,495 | 878,546 | 242,949 | – | – | ||||||||||||||||
Deferred Salary | 571,328 | 571,328 | – | – | – | ||||||||||||||||
Accrued Interest | 89,472 | 89,472 | – | – | – | ||||||||||||||||
Employee Contracts | 3,931,156 | 1,181,411 | 1,341,000 | 1,273,732 | 135,013 | ||||||||||||||||
Employee Contracts: Other | 156,358 | 156,358 | – | – | – | ||||||||||||||||
Total | $ | 7,736,811 | $ | 4,744,117 | $ | 1,583,949 | $ | 1,273,732 | $ | 135,013 | |||||||||||
Employment Agreements | |||||||||||||||||||||
Effective June 28, 2012, Jerold Rubinstein was elected by the Board as Chairman of the Board, CEO and a director of the Company’s subsidiaries. The Board of Directors of PEI also elected him as Chairman of the Board and CEO of PEI. Under the terms of an employment agreement dated June 28, 2012, Mr. Rubinstein will receive an annual salary of $250,000 per year. Mr. Rubinstein continues to serve on the Board and receive $50,000 annually for such services, along with $100,000 annually as Chairman of the Board. The term of this agreement is six months with an automatic six month extension unless the Company provides written notice of non-renewal 30 days prior to the end of the initial six-month term. This executive was granted options to purchase 2,300,000 shares of the Company’s common stock at $0.35 per share, which was the closing price of the Company’s common stock on the day of option grant. These options vest monthly over a 12-month period. In the event the Company does not renew the second six month period, the executive resigns or the Company terminates the executive’s employment without cause, all options will immediately vest and the executive will receive all unpaid salary for the full 12 month period. In March 2013, Mr. Rubinstein received an option grant to purchase 25,000,000 shares at $0.03 with a five-year life and vesting occurring in the three months ended June 30, 2013. Mr. Rubinstein’s contract expired on June 28, 2013 and he is currently working without a contract. As of December 31, 2013, Mr. Rubinstein was owed unpaid salary of $36,458 and unpaid board fees of $199,771. | |||||||||||||||||||||
On August 8, 2011, the Company entered into any employment contract with Timothy Boris as the Company’s General Counsel and Vice President of Legal Affairs at an annual salary of $180,000. In December 2011 received options to purchase 300,000 shares of common stock at $0.54 that had 100,000 shares vested upon grant, 100,000 shares vested at the end of year one and 100,000 shares vest at the end of year two. This contract expired on August 8, 2012 and was renewed under the same terms until August 8, 2013. In August 2012 Mr. Boris received options to purchase 300,000 shares of common stock at $0.38 that had 100,000 shares vest upon grant, 100,000 shares vest at the end of year one and 100,000 shares vest at the end of year two. Both of these option grants have a five-year life. In March 2013, Mr. Boris received an option grant to purchase 6,000,000 shares at $0.03 with a five-year life and vesting occurring in the three months ended June 30, 2013. Mr. Boris’s contract expired on August 8, 2013 and he is currently working without a contract. As of December 31, 2013, Mr. Boris was owed unpaid salary of $75,000. | |||||||||||||||||||||
On November 1, 2010, the Company entered into an employment agreement with John Moynahan, who provided accounting and financial services to the Company as a consultant pursuant to a consulting agreement dated November 14, 2007. Under the agreement, Mr. Moynahan was to receive an annual salary of $220,000 for the first year of the contract, subject to an annual increase of the Consumer Price Index plus 2%, and will be eligible for a $50,000 bonus in the first year of this contract. Under this agreement, Mr. Moynahan received a grant of 300,000 shares and a five-year stock option grant to purchase 15,600 shares of common stock at $200.00 per share, with 10,400 shares that vested upon the signing of the agreement and 5,200 shares that vested on September 1, 2011. The strike price on these options was adjusted to $54.00 in December 2011 by the Board. After a review of this contract during 2012, the Company determined that the non-salary amounts due to Mr. Moynahan were $156,358 as of December 31, 2012. Mr. Moynahan’s contract expired on August 1, 2012 and he is currently working without a contract. As of December 31, 2013, Mr. Moynahan was owed the $156,358 under his employment contract and $87,083 in unpaid salary, not including any other claims that Mr. Moynahan may have under his employment contract or otherwise. | |||||||||||||||||||||
On February 22, 2010, the Company entered into an employment contract with William Kelly, the Company’s former Senior Vice President and Chief Operating Officer of ProElite, and the Chief Operating Officer of the Company whose employment was terminated in March 2013. In connection with Mr. Kelly’s employment, the Company assumed a promissory note of $231,525 formerly owed to Mr. Kelly by ProElite, Inc. and agreed to pay the promissory note with $121,525 payable to Mr. Kelly upon the closing of the acquisition of ProElite by the Company, $55,000 due 90 days after the closing of the acquisition, and $55,000 due 180 days after the closing of the acquisition. In 2011, $176,525 of these amounts were paid to Mr. Kelly. During 2013, this $55,000 obligation to Mr. Kelly was transferred to a third party. | |||||||||||||||||||||
Consulting Agreement | |||||||||||||||||||||
On June 28, 2012, Paul Feller, the Company’s former Chairman of the Board and CEO, resigned from all positions with the Company and its subsidiaries, including PEI. In connection therewith, pursuant to a Separation and Release Agreement, the Company and Mr. Feller entered into a new Consulting Agreement for a term of two years at an annual compensation of $250,000, As of December 31, 2013, the Company had recorded an accrued expense of $375,000 pursuant to Mr. Feller’s consulting agreement that provides for $62,500 per quarter through June 30, 2014. These consulting payments were conditioned on the Company raising $2,000,000 of equity and that Mr. Feller provide consulting services under this agreement at the direction of the Company’s board of directors. Given that the Company has not raised this amount of equity and given that Mr. Feller has not provided any consulting services to the Company, the Company elected to reverse this accrued expense. |
17_Segment_Information
17. Segment Information | 12 Months Ended | ||||||||||||||||||||||||||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||||||||||||||||||||||||||
Segment Information | ' | ||||||||||||||||||||||||||||||||||||||||
NOTE 17 - Segment Information | ' | ||||||||||||||||||||||||||||||||||||||||
In 2013, ProElite, Stratus White and Hygeia/Canterbury were considered operating segments pursuant to ASC Topic 280 “Segment Reporting” since each was budgeted separately and tracked separately to provide the chief operating decision maker information to assess and manage ProElite, Stratus White and Hygeia/Canterbury. In 2012, ProElite and Stratus White were considered operating segments. In 2012, the Company decided to suspend development of all business activities other than ProElite and effective June 30, 2013, the Company decided to suspend development of its ProElite business. | |||||||||||||||||||||||||||||||||||||||||
A summary of results by segments is as follows: | |||||||||||||||||||||||||||||||||||||||||
As of/for the Year Ended December 31, 2013 | As of /for the Year Ended December 31, 2012 | ||||||||||||||||||||||||||||||||||||||||
Stratus Rewards | ProElite | Life Sciences | Other | Total | Stratus Rewards | ProElite | Other Events | Other | Total | ||||||||||||||||||||||||||||||||
Revenues | $ | – | $ | 72 | $ | – | $ | – | $ | 72 | $ | – | $ | 375 | $ | – | $ | – | $ | 375 | |||||||||||||||||||||
Cost of sales | – | – | – | – | – | – | 236 | – | – | 236 | |||||||||||||||||||||||||||||||
Gross margin | – | 72 | – | – | 72 | – | 139 | – | – | 139 | |||||||||||||||||||||||||||||||
Deprec. & Amort | – | 2 | 87 | 587 | 676 | – | 2 | – | 32 | 34 | |||||||||||||||||||||||||||||||
Segment profit | – | 70 | (87 | ) | (587 | ) | (604 | ) | – | 137 | – | (32 | ) | 105 | |||||||||||||||||||||||||||
Operating expenses | 85 | 192 | 80 | 12,371 | 12,728 | 1,724 | 990 | – | 9,183 | 11,897 | |||||||||||||||||||||||||||||||
Other (income) expenses | – | (714 | ) | – | 643 | (71 | ) | – | 97 | – | 1,763 | 1,859 | |||||||||||||||||||||||||||||
Impact of derivative securities | – | – | – | (10,459 | ) | (10,459 | ) | (6,801 | ) | (6,801 | ) | ||||||||||||||||||||||||||||||
Net loss | $ | (85 | ) | $ | 592 | $ | (167 | ) | $ | (3,142 | ) | (2,802 | ) | $ | (1,724 | ) | $ | (950 | ) | $ | – | $ | (4,177 | ) | $ | (6,850 | ) | ||||||||||||||
Net loss attributable to non-controlling interests | – | – | – | (6 | ) | (6 | ) | – | – | – | (19 | ) | (19 | ) | |||||||||||||||||||||||||||
Preferred dividend | – | – | – | (172 | ) | (172 | ) | – | – | – | 497 | 497 | |||||||||||||||||||||||||||||
Net loss attributable to common shareholders | $ | (85 | ) | $ | 592 | $ | (167 | ) | $ | (2,976 | ) | $ | (2,636 | ) | $ | (1,724 | ) | $ | (950 | ) | $ | – | $ | (4,693 | ) | $ | (7,366 | ) | |||||||||||||
Assets | $ | – | $ | 230 | $ | 572 | $ | 17,542 | $ | 18,344 | $ | – | $ | 2,161 | $ | – | $ | 285 | $ | 2,446 | |||||||||||||||||||||
Liabilities | $ | 52 | $ | 2,779 | $ | 587 | $ | 5,460 | $ | 8,878 | $ | 122 | $ | 2,632 | $ | 2,271 | $ | 15,828 | $ | 20,853 | |||||||||||||||||||||
18_Income_taxes
18. Income taxes | 12 Months Ended | ||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||
Income Tax Disclosure [Abstract] | ' | ||||||||||||||||
18. Income taxes | ' | ||||||||||||||||
Significant components of the Company's deferred tax assets for federal income taxes consisted of the following: | |||||||||||||||||
December 31, | |||||||||||||||||
2013 | 2012 | ||||||||||||||||
Net operating loss carryforward | $ | 21,492,311 | $ | 18,050,294 | |||||||||||||
Amortization | (823,367 | ) | (580,145 | ) | |||||||||||||
Stock option compensation | 5,841,333 | 904,334 | |||||||||||||||
Deferred compensation | 1,563,754 | 883,794 | |||||||||||||||
Deferred state tax | (1,904,277 | ) | (477,307 | ) | |||||||||||||
Other | 105,179 | 449,209 | |||||||||||||||
Valuation allowance | (26,274,933 | ) | (19,230,179 | ) | |||||||||||||
Net deferred tax asset | $ | – | $ | – | |||||||||||||
The Company had net operating loss carry-forwards (“NOL”) for federal and state income tax purposes of approximately: | |||||||||||||||||
December 31, | |||||||||||||||||
2013 | 2012 | ||||||||||||||||
Combined NOL Carryforwards: | |||||||||||||||||
Federal | $ | 47,728,300 | $ | 40,240,679 | |||||||||||||
California | 44,482,850 | 36,995,229 | |||||||||||||||
The net operating loss carry-forwards for 2013 and 2012 begin expiring in 2021 and 2020, respectively. During 2013, the outstanding shares of common stock increased from 890,837 to 5,813,785. The utilization of net operating loss carry-forwards is likely to be limited due to this ownership change under the provisions of Internal Revenue Code Section 382 and similar state provisions. The Company recorded a 100% valuation allowance on the deferred tax assets at December 31, 2013 and 2012 because of the uncertainty of their realization. | |||||||||||||||||
A reconciliation of the income tax credit computed at the federal statutory rate to that recorded in the financial statements for 2013 and 2012 is as follows: | |||||||||||||||||
2013 | 2012 | ||||||||||||||||
Rate reconciliation: | |||||||||||||||||
Federal tax benefit at statutory rate | $ | (922,591 | ) | (35.0% | ) | $ | (2,578,121 | ) | (35.0% | ) | |||||||
State tax, net of Federal benefit | (761,237 | ) | 28.90% | (782,767 | ) | 10.60% | |||||||||||
Change in valuation allowance | 7,044,754 | (267.3% | ) | 5,495,845 | (74.6% | ) | |||||||||||
Derivative accounting and other | (5,360,926 | ) | 273.40% | (2,134,957 | ) | 99.00% | |||||||||||
Total provision | $ | – | –% | $ | – | –% | |||||||||||
19_Pro_Forma_Financials_for_Ac
19. Pro Forma Financials for Acquisition of Canterbury and Hygeia | 12 Months Ended | ||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||
Pro Forma Financials For Acquisition Of Canterbury And Hygeia | ' | ||||||||||||||||
NOTE 19 - Pro Forma Financials for Acquisition of Canterbury and Hygeia | ' | ||||||||||||||||
Effective September 30, 2013, the Company entered into a Merger Agreement with Canterbury Acquisition LLC, a wholly owned subsidiary of the Company, Hygeia Acquisition, Inc., a wholly-owned subsidiary of the Company, Canterbury, Hygeia and Yael Schwartz, Ph.D., as Holder Representative, pursuant to which the Company acquired all of the capital stock of Canterbury and Hygeia with Canterbury and Hygeia becoming wholly-owned subsidiaries of the Company. The Mergers were closed on November 18, 2013 and 1,150,115 shares were issued to the stakeholders of Canterbury and Hygeia. The Mergers are subject to rescission if RestorGenex has not raised $7.5 million or more in gross financing proceeds by April 30, 2014. The Company has consolidated the balance sheets of Canterbury and Hygeia as of December 31, 2013. | |||||||||||||||||
If the Mergers had occurred on January 1, 2012, the combined statement of operations for the year ended December 31, 2013 would be as follows: | |||||||||||||||||
RestorGenex Corporation, Canterbury and Hygeia | |||||||||||||||||
Pro Forma Income Statements | |||||||||||||||||
For the Year Ended December 31, 2013 | |||||||||||||||||
Year Ended December 31, 2013 (a) | |||||||||||||||||
Pro Forma | |||||||||||||||||
Adjustments | Other | ||||||||||||||||
for Canterbury | Pro Forma | Pro Forma | |||||||||||||||
RestorGenex | and Hygeia (b) | Adjustments | Combined | ||||||||||||||
(Audited) | |||||||||||||||||
Revenues | $ | 71,667 | $ | 127,167 | $ | – | $ | 198,834 | |||||||||
Cost of revenues | – | 89,387 | – | 89,387 | |||||||||||||
Gross profit | 71,667 | 37,780 | – | 109,447 | |||||||||||||
Operating expenses | |||||||||||||||||
General, administrative, research and development | 2,008,118 | 265,260 | 503,732 | (c) | 2,777,110 | ||||||||||||
Impairment of intangible assets | 1,935,621 | – | – | 1,935,621 | |||||||||||||
Warrants, options and stock | 4,228,317 | – | – | 4,228,317 | |||||||||||||
Fair value of common stock exchanged for warrants | 3,069,792 | – | – | 3,069,792 | |||||||||||||
Legal and professional services | 1,071,392 | 326,646 | – | 1,398,038 | |||||||||||||
Depreciation and amortization | 675,757 | 14,781 | 659,958 | (d) | 1,350,496 | ||||||||||||
Total operating expenses | 12,988,997 | 606,687 | 1,163,690 | 14,759,374 | |||||||||||||
Loss from operations | (12,917,330 | ) | (568,907 | ) | (1,163,690 | ) | (14,649,927 | ) | |||||||||
Other (income)/expenses | |||||||||||||||||
(Gain)/loss on adjustments to fair value of derivative liability | (8,980,077 | ) | – | – | (8,980,077 | ) | |||||||||||
Gain on extinguishment of derivative liability | (1,183,093 | ) | – | – | (1,183,093 | ) | |||||||||||
Other (income)/expenses | (524,505 | ) | – | – | (524,505 | ) | |||||||||||
Interest expense | 228,294 | 20,267 | – | 248,561 | |||||||||||||
Total other (income)/expenses | (10,459,381 | ) | 20,267 | – | (10,439,114 | ) | |||||||||||
Net loss | (2,457,949 | ) | (589,174 | ) | (1,163,690 | ) | (4,210,813 | ) | |||||||||
Net loss attributed to non-controlling interests | (6,401 | ) | – | – | (6,401 | ) | |||||||||||
Net loss attributed to RestorGenex Corporation | (2,464,350 | ) | (589,174 | ) | (1,163,690 | ) | (4,217,214 | ) | |||||||||
Preferred dividends | 171,625 | – | – | 171,625 | |||||||||||||
Net income/(loNet income/(loss) attributable to RestorGenexss) attributable to RestorGenex Corporation common shareholders | $ | (2,635,975 | ) | $ | (589,174 | ) | $ | (1,163,690 | ) | $ | (4,388,839 | ) | |||||
Basic and diluted earnings per share | $ | (1.00 | ) | $ | (1.20 | ) | |||||||||||
Basic and fully-diluted weighted average shares outstanding | 2,646,603 | 1,014,623 | (e) | 3,661,226 | |||||||||||||
(a) | Assumes the mergers with Canterbury and Hygeia occurred on January 1, 2012. | ||||||||||||||||
(b) | Results of operations from January 1, 2013 to November 18, 2013, when the mergers were closed. | ||||||||||||||||
(c) | Impact of employment agreements from January 1, 2013 to November 18, 2013. | ||||||||||||||||
(d) | Impact of amortization of intangible assets from January 1, 2013 to November 18, 2013. | ||||||||||||||||
(e) | Impact on weighted average shares if the 1,150,116 shares issued for the mergers were outstanding for the full year. | ||||||||||||||||
If the Mergers had occurred on January 1, 2012, the combined statement of operations for the year ended December 31, 2012 would be as follows: | |||||||||||||||||
RestorGenex Corporation, Canterbury and Hygeia | |||||||||||||||||
Pro Forma Income Statements | |||||||||||||||||
For the Year Ended December 31, 2012 | |||||||||||||||||
Year Ended December 31, 2012 (a) | |||||||||||||||||
Other | |||||||||||||||||
Canterbury | Pro Forma | Pro Forma | |||||||||||||||
RestorGenex | and Hygeia | Adjustments | Combined | ||||||||||||||
(Audited) | |||||||||||||||||
Revenues | $ | 374,542 | $ | 246,731 | $ | – | $ | 621,273 | |||||||||
Cost of revenues | 235,803 | 123,374 | – | 359,177 | |||||||||||||
Gross profit | 138,739 | 123,357 | – | 262,096 | |||||||||||||
Operating expenses | |||||||||||||||||
General, administrative, research and development | 4,570,161 | 324,261 | 503,732 | (b) | 5,398,154 | ||||||||||||
Impairment of intangible assets | 1,423,844 | – | – | 1,423,844 | |||||||||||||
Warrants, options and stock | 3,643,662 | – | – | 3,643,662 | |||||||||||||
Legal and professional services | 2,128,898 | 77,965 | – | 2,206,863 | |||||||||||||
Depreciation and amortization | 164,043 | 17,196 | 747,276 | (c) | 928,515 | ||||||||||||
Total operating expenses | 11,930,608 | 419,422 | 1,251,008 | 13,601,038 | |||||||||||||
Loss from operations | (11,791,869 | ) | (296,065 | ) | (1,251,008 | ) | (13,338,942 | ) | |||||||||
Other (income)/expenses | |||||||||||||||||
Fair value of derivative liabilities in excess of proceeds | 408,501 | ||||||||||||||||
(Gain)/loss on adjustments to fair value of derivative liability | (6,907,748 | ) | – | – | (6,907,748 | ) | |||||||||||
Other (income)/expenses | 379,188 | – | – | 379,188 | |||||||||||||
Present value of remaining lease payments for facilities no longer occupied | 1,010,111 | ||||||||||||||||
Interest expense | 167,894 | – | – | 167,894 | |||||||||||||
Total other (income)/expenses | (4,942,054 | ) | – | – | (6,360,666 | ) | |||||||||||
Net loss | (6,849,815 | ) | (296,065 | ) | (1,251,008 | ) | (6,978,276 | ) | |||||||||
Net loss attributed to non-controlling interests | (19,079 | ) | – | – | (19,079 | ) | |||||||||||
Net loss attributed to RestorGenex Corporation | (6,868,894 | ) | (296,065 | ) | (1,251,008 | ) | (6,997,355 | ) | |||||||||
Preferred dividends | 497,167 | – | – | 497,167 | |||||||||||||
Net income/(loss) attributable to RestorGenex Corporation common shareholders | $ | (7,366,061 | ) | $ | (296,065 | ) | $ | (1,251,008 | ) | $ | (7,494,522 | ) | |||||
Basic and diluted earnings per share | $ | (8.16 | ) | $ | (3.65 | ) | |||||||||||
Basic and fully-diluted weighted average shares outstanding | 903,139 | 1,150,116 | (d) | 2,053,255 | |||||||||||||
Fully-diluted weighted average shares outstanding | 1,121,987 | 1,150,116 | (d) | 2,272,103 | |||||||||||||
(a) | Assumes the mergers with Canterbury and Hygeia occurred on January 1, 2012. | ||||||||||||||||
(b) | Impact of employment agreements for the full year. | ||||||||||||||||
(c) | Impact of amortization of intangible assets for the full year. | ||||||||||||||||
(d) | Impact on weighted average shares if the 1,150,116 shares issued for the mergers were outstanding for the full year. | ||||||||||||||||
20_Subsequent_Events
20. Subsequent Events | 12 Months Ended | ||||||||||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||||||||||
Subsequent Events [Abstract] | ' | ||||||||||||||||||||||||
NOTE 20 - Subsequent Events | ' | ||||||||||||||||||||||||
Reverse Split and Name Change | |||||||||||||||||||||||||
On March 7, 2014, the Company effected a reverse stock split of 1 to 100 with respect to its Common Stock and the Company changed its corporate name from Stratus Media Group, Inc. to RestorGenex Corporation, a biopharmaceutical company. All stock numbers herein are post reverse split. | |||||||||||||||||||||||||
Issuance of Note and Settlement of Amounts Owed (Unaudited) | |||||||||||||||||||||||||
In April 2014, the Company agreed to issue to our law firm a non-interest bearing convertible note in the aggregate principal amount of $875,000 (the “Note”) as payment in full for the amounts owed to them at that time, contingent on the Company successfully concluding a Cash Proceeds Event, including the $467,200 note that was issued on July 1, 2012. The Note is due in full on March 31, 2015, provided that the Company is required to prepay (i) $1.00 in principal amount of the Note for each $15.00 raised by the Company in all Cash Proceeds Events (as defined in the Note), up to the first $7.5 million raised, for total repayments of up to $500,000; (b) an additional $100,000 in principal amount of the Note when the cumulative amounts so raised in all Cash Proceeds Events equal $10.0 million; and (c) the balance due under the Note when the cumulative amounts so raised in all Cash Proceeds Events equal $12.5 million. The Note also provides that the holder may, at its option, convert all or any portion of the outstanding balance thereunder into the securities issued and sold in certain securities offerings by the Company, including the offering currently underway by the Company (the “Offering”). In connection with the issuance of the Note, the Company also agreed to issue to the holder of the Note, for no additional consideration, $213,827 worth of the Company’s securities sold in the Offering (valued at the offering price of the securities) upon the closing of the Offering. The holder will be entitled to the same registration and other rights with respect to such securities as are granted to the purchasers of securities in the Offering. In the event that the Company does not repay at least $500,000 principal amount of the Note by July 1, 2014, the Note will be deemed to be in default and will automatically convert into a non-convertible note in the principal amount of $1,188,827, which note will bear interest at the annual rate of 10% and be due and payable upon demand. | |||||||||||||||||||||||||
The Company is currently in negotiations with other vendors, former directors and employees to reduce the amounts owed to them and use a combination of stock and cash to settle these reduced amounts, but there can be no assurance that the Company will be successful in doing so or that such settlements will amount to a material reduction in the amounts owed to these vendors, former directors and employees. | |||||||||||||||||||||||||
Acquisitions | |||||||||||||||||||||||||
On March 28, 2014, the Company acquired Paloma Pharmaceuticals, Inc. (“Paloma”) for consideration of 2,500,000 shares of common stock and VasculoMedics, Inc. (“VasculoMedics”) for consideration of 220,000 shares of common stock. In connection with the acquisition of Paloma, the Company agreed to assume three promissory notes which have been extended to a maturity date of March 28, 2015. The notes have a current balance (principal and interest) of approximately $1,132,000. | |||||||||||||||||||||||||
The following pro forma financial information has been prepared as if the Merger with Paloma occurred on December 31, 2013. The information in these pro forma financials for Paloma and VasculoMedics has been derived from the unaudited financial statements for Paloma and VasculoMedics for the years ended December 31, 2013 and 2012. The information in these pro forma financials for Stratus has been derived from the audited financial statements for the year ended December 31, 2013. | |||||||||||||||||||||||||
RestorGenex Corporation, VasculoMedics and Paloma Pharmaceuticals Inc. | |||||||||||||||||||||||||
Pro Forma Statement of Financial Position | |||||||||||||||||||||||||
31-Dec-13 | |||||||||||||||||||||||||
As of December 31, 2013 (a) | |||||||||||||||||||||||||
Pro Forma | Pro Forma | ||||||||||||||||||||||||
RestorGenex | Paloma | VasculoMedics | Adjustments | Combined | |||||||||||||||||||||
(Audited) | |||||||||||||||||||||||||
ASSETS | |||||||||||||||||||||||||
Current assets | |||||||||||||||||||||||||
Cash and equivalents | $ | 254,964 | $ | 96,719 | $ | – | $ | – | $ | 351,683 | |||||||||||||||
Accounts receivable | 2,020 | – | – | – | 2,020 | ||||||||||||||||||||
Investment in VasculoMedics | – | 100,000 | – | (100,000 | ) | (b) | – | ||||||||||||||||||
Prepaid expenses and deposits | 2,741,299 | 19,632 | – | – | 2,760,931 | ||||||||||||||||||||
Total current assets | 2,998,283 | 216,351 | – | (100,000 | ) | 3,114,634 | |||||||||||||||||||
Property and equipment, net | 11,262 | 72,331 | – | – | 83,593 | ||||||||||||||||||||
Intangible assets | 7,691,682 | 747,559 | – | 1,744,701 | (c) | 10,183,942 | |||||||||||||||||||
Goodwill | 7,642,825 | – | – | 7,129,154 | (d) | 14,771,979 | |||||||||||||||||||
Total assets | $ | 18,344,052 | $ | 1,036,241 | $ | – | $ | 8,773,855 | $ | 28,154,148 | |||||||||||||||
LIABILITIES AND SHAREHOLDERS' DEFICIT | |||||||||||||||||||||||||
Current liabilities | |||||||||||||||||||||||||
Accounts payable | $ | 1,520,206 | $ | 175 | $ | – | $ | – | $ | 1,520,381 | |||||||||||||||
Deferred salary | 571,328 | – | – | – | 571,328 | ||||||||||||||||||||
Accrued interest | 89,472 | 456,800 | – | – | 546,272 | ||||||||||||||||||||
Other accrued expenses and other liabilities | 1,697,714 | – | – | – | 1,697,714 | ||||||||||||||||||||
Amounts payable to officers | 156,358 | – | – | – | 156,358 | ||||||||||||||||||||
Rent liability for facilities no longer occupied | 1,121,495 | – | – | – | 1,121,495 | ||||||||||||||||||||
Notes payable | 1,867,002 | 665,000 | – | – | 2,532,002 | ||||||||||||||||||||
Obligation to issue stock for transfer of liabilities | 1,854,743 | – | – | 1,854,743 | |||||||||||||||||||||
Total current liabilities | 8,878,318 | 1,121,975 | – | – | 10,000,293 | ||||||||||||||||||||
Deferred tax liability | 3,000,576 | – | – | 697,880 | (e) | 3,698,456 | |||||||||||||||||||
Total long-term liabilities | 3,000,576 | – | – | 697,880 | 3,698,456 | ||||||||||||||||||||
Commitments and contingencies | |||||||||||||||||||||||||
Shareholders' deficit | |||||||||||||||||||||||||
Series C 10% Preferred Stock, $0.001 par value: 1,000,000 shares authorized, 0 shares issued and outstanding | – | – | – | – | – | ||||||||||||||||||||
Series D 10% Preferred Stock, $0.001 par value: 500,000 shares authorized, 0 shares issued and outstanding | – | – | – | – | – | ||||||||||||||||||||
Series E 5% Preferred Stock, $0.001 par value: 10,000 shares authorized, 0 shares issued and outstanding | – | – | – | – | – | ||||||||||||||||||||
Common stock | 5,814 | 7,839 | 5,625 | (10,744 | ) | (f) | 8,534 | ||||||||||||||||||
Additional paid-in capital | 67,390,493 | 7,524,343 | 94,375 | 368,803 | (g) | 75,378,014 | |||||||||||||||||||
Accumulated deficit | (60,937,550 | ) | (7,617,916 | ) | (100,000 | ) | 7,717,916 | (h) | (60,937,550 | ) | |||||||||||||||
Total shareholders' deficit | 6,458,757 | (85,734 | ) | – | 8,075,975 | 14,448,998 | |||||||||||||||||||
Non-controlling interest/(deficit) | 6,401 | – | – | – | 6,401 | ||||||||||||||||||||
Total shareholders' deficit | 6,465,158 | (85,734 | ) | – | 8,075,975 | 14,455,399 | |||||||||||||||||||
Total liabilities and shareholders' deficit | $ | 18,344,052 | $ | 1,036,241 | $ | – | $ | 8,773,855 | $ | 28,154,148 | |||||||||||||||
(a) | Assumes the mergers with Paloma and VasculoMedics occurred on December 31, 2013. | ||||||||||||||||||||||||
(b) | To eliminate investment by Paloma in VasculoMedics upon the mergers. | ||||||||||||||||||||||||
(c) | Total consideration for the acquisition of Paloma was $8,307,534, which includes $7,000,000 for the value of the 2,500,000 shares of stock issued at a value of $2.80 a share upon entering into the merger on February 25, 2014 plus $1,121,800 for debt assumed by the Company plus $185,734 in negative net assets required. There has not been a valuation of the intangible assets of Paloma performed by a third party, but for these purposes, the Company has assumed that 30% of the total consideration is allocated to intangible assets and 70% is allocated to goodwill. Using this assumption, $5,815,274 of the consideration to Paloma was allocated to goodwill and $2,492,260 was allocated to intangible assets. This assumed allocation of $2,492,260 was reduced by the $747,559 value on Paloma’s balance sheet for a net adjustment of $1,744,701. The Company plans to have a valuation of the intangible assets of Paloma performed by a third party and when that occurs, the allocation may change from the assumption used herein. | ||||||||||||||||||||||||
(d) | As noted above, $5,815,274 of the consideration paid to Paloma was allocated to goodwill. The consideration paid for the merger with VasculoMedics was $616,000 for the 220,000 shares issued at $2.80, which was the market price of the Company’s common stock when the merger agreement was executed on February 25, 2014. All of the consideration to VasculoMedics was allocated to goodwill, resulting in a total increase of $7,129,154 for goodwill, including $697,880 for the deferred tax liability. | ||||||||||||||||||||||||
(e) | As noted above, there was a net gain on the intangible assets of $1,744,701, which is tax effected at 40% to arrive at the deferred tax liability of 697,880. The deferred tax liability will change if the third party valuation of intangible assets differs from the 30% allocation used herein. | ||||||||||||||||||||||||
(f) | Eliminates $7,839 for common stock of Paloma and $5,625 for VasculoMedics and adds $2,500 for the par value of the 2,500,000 shares issued for the merger with Paloma and $220 for the par value of the 220,000 shares issued for the merger with VasculoMedics. | ||||||||||||||||||||||||
(g) | Eliminates $7,524,343 for the additional paid-in capital at Paloma and $94,375 at VasculoMedics and adds $6,997,500 for the additional paid-in capital for the shares issued for the merger with Paloma and $615,780 for the additional paid-in capital for the shares issued for the merger with VasculoMedics along with $374,241 for the net adjustments required to balance the impacts of the mergers with Paloma and VasculoMedics. | ||||||||||||||||||||||||
(h) | Eliminates the accumulated deficit of $7,617,916 at Paloma and $100,000 at VasculoMedics and adds the $1,764,731of expenses associated with employment agreements for Canterbury and Paloma executives that would be incurred from January 1, 2012, along with $1,407,234 in expenses related to amortizing the value of intangible assets at Canterbury. The $2,492,260 of intangible assets at Paloma would not be subject to amortization since the primary patent has not been issued as of the date of this report. | ||||||||||||||||||||||||
The following pro forma financial information has been prepared as if the mergers with Canterbury, Hygeia, Paloma and VasculoMedics occurred on January 1, 2013. The information in these pro forma financials for Paloma and VasculoMedics has been derived from the unaudited financial statements for Paloma and VasculoMedics for the year ended December 31, 2013. The information in these pro forma financials for Stratus has been derived from the audited financial statements for the year ended December 31, 2013. | |||||||||||||||||||||||||
RestorGenex Corporation and Paloma Pharmaceuticals Inc. | |||||||||||||||||||||||||
Pro Forma Income Statements | |||||||||||||||||||||||||
For the Year Ended December 31, 2013 | |||||||||||||||||||||||||
Year Ended December 31, 2013 (a) | |||||||||||||||||||||||||
Pro Forma Adjustments for | |||||||||||||||||||||||||
Canterbury | Other | ||||||||||||||||||||||||
and | Pro Forma | Pro Forma | |||||||||||||||||||||||
RestorGenex | Paloma | VasculoMedics | Hygeia (b) | Adjustments | Combined | ||||||||||||||||||||
(Audited) | |||||||||||||||||||||||||
Revenues | $ | 71,667 | $ | – | $ | – | $ | 127,167 | $ | – | $ | 198,834 | |||||||||||||
Cost of revenues | – | – | – | 89,387 | – | 89,387 | |||||||||||||||||||
Gross profit | 71,667 | – | – | 37,780 | – | 109,447 | |||||||||||||||||||
Operating expenses | |||||||||||||||||||||||||
General, administrative, research and development | 2,008,118 | 411,514 | – | 265,260 | 848,732 | (c) | 3,533,624 | ||||||||||||||||||
Impairment of intangible assets | 1,935,621 | – | – | – | – | 1,935,621 | |||||||||||||||||||
Warrants, options and stock | 4,228,317 | – | – | – | – | 4,228,317 | |||||||||||||||||||
Fair value of common stock exchanged for warrants | 3,069,792 | – | – | – | – | 3,069,792 | |||||||||||||||||||
Legal and professional services | 1,071,392 | 44,264 | – | 326,646 | – | 1,442,302 | |||||||||||||||||||
Depreciation and amortization | 675,757 | 2,977 | – | 14,781 | 659,958 | (d) | 1,353,473 | ||||||||||||||||||
Total operating expenses | 12,988,997 | 458,755 | – | 606,687 | 1,508,690 | 15,563,129 | |||||||||||||||||||
Loss from operations | (12,917,330 | ) | (458,755 | ) | – | (568,907 | ) | (1,508,690 | ) | (15,453,682 | ) | ||||||||||||||
Other (income)/expenses | |||||||||||||||||||||||||
(Gain)/loss on adjustments to fair value of derivative liability | (8,980,077 | ) | – | – | – | – | (8,980,077 | ) | |||||||||||||||||
Gain on extinguishment of derivative liability | (1,183,093 | ) | – | – | – | – | (1,183,093 | ) | |||||||||||||||||
Other (income)/expenses | (524,505 | ) | (85,881 | ) | – | – | – | (610,386 | ) | ||||||||||||||||
Interest expense | 228,294 | 119,700 | – | 20,267 | – | 368,261 | |||||||||||||||||||
Total other (income)/expenses | (10,459,381 | ) | 33,819 | – | 20,267 | – | (10,405,295 | ) | |||||||||||||||||
Net loss | (2,457,949 | ) | (492,574 | ) | – | (589,174 | ) | (1,508,690 | ) | (5,048,387 | ) | ||||||||||||||
Net loss attributed to non-controlling interests | (6,401 | ) | – | – | – | – | (6,401 | ) | |||||||||||||||||
Net loss attributed to RestorGenex Corporation | (2,464,350 | ) | (492,574 | ) | – | (589,174 | ) | (1,508,690 | ) | (5,054,788 | ) | ||||||||||||||
Preferred dividends | 171,625 | – | – | – | – | 171,625 | |||||||||||||||||||
Net income/(loss) attributable to RestorGenex Corporation common shareholders | $ | (2,635,975 | ) | $ | (492,574 | ) | $ | – | $ | (589,174 | ) | $ | (1,508,690 | ) | $ | (5,226,413 | ) | ||||||||
Basic and diluted earnings per share | $ | (1.00 | ) | $ | (0.82 | ) | |||||||||||||||||||
Basic and fully-diluted weighted average shares outstanding | 2,646,603 | 1,014,623 | (e) | 2,720,000 | (f) | 6,381,226 | |||||||||||||||||||
(a) | Assumes the mergers with Canterbury, Hygeia, Paloma and VasculoMedics occurred on January 1, 2013. | ||||||||||||||||||||||||
(b) | Results of operations for Canterbury and Hygeia from January 1, 2013 to November 18, 2013, when the mergers were closed. | ||||||||||||||||||||||||
(c) | Adds the $848,732 of expenses associated with employment agreements for Canterbury and Paloma executives that would be incurred from January 1, 2013. | ||||||||||||||||||||||||
(d) | Adds $659,958 of additional amortization for intangible assets at Canterbury that would be incurred if amortization began on January 1, 2013 rather than the November 18, 2013 merger date. | ||||||||||||||||||||||||
(e) | Impact on weighted average shares if the 1,150,116 shares issued for the mergers with Canterbury and Hygeia were outstanding for the full year. | ||||||||||||||||||||||||
(f) | Impact on weighted average shares if the 2,500,000 shares issued for the Paloma merger and the 220,000 shares issued for the VasculoMedics merger were outstanding for the full year. | ||||||||||||||||||||||||
The following pro forma financial information has been prepared as if the mergers with Canterbury, Hygeia, Paloma and VasculoMedics occurred on January 1, 2012. The information in these pro forma financials for Paloma and VasculoMedics has been derived from the unaudited financial statements for Paloma and VasculoMedics for the year ended December 31, 2012. The information in these pro forma financials for Stratus has been derived from the audited financial statements for the year ended December 31, 2012. | |||||||||||||||||||||||||
Year Ended December 31, 2012 (a) | |||||||||||||||||||||||||
RestorGenex | Paloma | VasculoMedics | Canterbury and Hygeia | Pro Forma Adjustments | Pro Forma Combined | ||||||||||||||||||||
(Audited) | |||||||||||||||||||||||||
Revenues | $ | 374,542 | $ | – | $ | – | $ | 246,731 | $ | – | $ | 621,273 | |||||||||||||
Cost of revenues | 235,803 | – | – | 123,374 | – | 359,177 | |||||||||||||||||||
Gross profit | 138,739 | – | – | 123,357 | – | 262,096 | |||||||||||||||||||
Operating expenses | |||||||||||||||||||||||||
General, administrative, research and development | 4,570,161 | 501,652 | – | 324,261 | 916,000 | (b) | 6,312,074 | ||||||||||||||||||
Impairment of intangible assets | 1,423,844 | – | – | – | – | 1,423,844 | |||||||||||||||||||
Warrants, options and stock | 3,643,662 | – | – | – | – | 3,643,662 | |||||||||||||||||||
Fair value of common stock exchanged for warrants | – | – | – | – | – | – | |||||||||||||||||||
Legal and professional services | 2,128,898 | 51,681 | – | 77,965 | – | 2,258,544 | |||||||||||||||||||
Depreciation and amortization | 164,043 | 3,438 | – | 17,196 | (747,276 | ) | (c) | (562,599 | ) | ||||||||||||||||
Total operating expenses | 11,930,608 | 556,771 | – | 419,422 | 168,724 | 13,075,525 | |||||||||||||||||||
Loss from operations | (11,791,869 | ) | (556,771 | ) | – | (296,065 | ) | (168,724 | ) | (12,813,429 | ) | ||||||||||||||
Other (income)/expenses | |||||||||||||||||||||||||
Fair value of derivative liabilities in excess of proceeds | 408,501 | 408,501 | |||||||||||||||||||||||
(Gain)/loss on adjustments to fair value of derivative liability | (6,907,748 | ) | – | – | – | – | (6,907,748 | ) | |||||||||||||||||
Other (income)/expenses | 379,188 | (182,200 | ) | – | – | – | 196,988 | ||||||||||||||||||
Present value of remaining lease payments for facilities no longer occupied | 1,010,111 | 1,010,111 | |||||||||||||||||||||||
Interest expense | 167,894 | 150,069 | – | – | – | 317,963 | |||||||||||||||||||
Total other (income)/expenses | (4,942,054 | ) | (32,131 | ) | – | – | – | (4,974,185 | ) | ||||||||||||||||
Net loss | (6,849,815 | ) | (524,640 | ) | – | (296,065 | ) | (168,724 | ) | (7,839,244 | ) | ||||||||||||||
Net loss attributed to non-controlling interests | (19,079 | ) | – | – | – | – | (19,079 | ) | |||||||||||||||||
Net loss attributed to RestorGenex Corporation | (6,868,894 | ) | (524,640 | ) | – | (296,065 | ) | (168,724 | ) | (7,858,323 | ) | ||||||||||||||
Preferred dividends | 497,167 | – | – | – | – | 497,167 | |||||||||||||||||||
Net income/(loss) attributable to RestorGenex Corporation common shareholders | $ | (7,366,061 | ) | $ | (524,640 | ) | $ | – | $ | (296,065 | ) | $ | (168,724 | ) | $ | (8,355,490 | ) | ||||||||
Basic and diluted earnings per share | $ | (8.16 | ) | $ | (1.75 | ) | |||||||||||||||||||
Basic weighted average shares outstanding | 903,139 | 2,500,000 | (d) | 220,000 | (d) | 1,150,116 | (d) | – | 4,773,255 | ||||||||||||||||
Fully-diluted weighted average shares outstanding | 1,121,987 | 2,500,000 | (d) | 220,000 | (d) | 1,150,116 | (d) | – | 4,992,103 | ||||||||||||||||
(a) | Assumes the mergers with Canterbury, Hygeia, Paloma and VasculoMedics occurred on January 1, 2012. | ||||||||||||||||||||||||
(b) | Adds the $916,000 of expenses associated with employment agreements for Canterbury and Paloma executives that would be incurred from January 1, 2012. | ||||||||||||||||||||||||
(c) | Adds $747,276 of additional amortization for intangible assets at Canterbury that would be incurred if amortization began on January 1, 2012. | ||||||||||||||||||||||||
(d) | Impact on weighted average shares if the shares issued for the mergers with Canterbury, Hygeia, Paloma and VasculoMedics were outstanding for the full year. | ||||||||||||||||||||||||
Issuance of Additional Shares | |||||||||||||||||||||||||
Subsequent to December 31, 2013, the Company issued 150,000 shares to the Financial Firm who assumed certain liabilities of the Company as described in footnote 13 above. | |||||||||||||||||||||||||
Employment Agreements | |||||||||||||||||||||||||
Subsequent to December 31, 2013, On March 5, 2014, the Company entered into an Employment Agreement with Stephen M. Simes (the “Simes Employment Agreement”) pursuant to which Mr. Simes was appointed Chief Executive Officer of the Company. The Simes Employment Agreement is for an initial term of three years, subject to extension as provided therein. Mr. Simes is to receive a base salary at an annual rate of $425,000 with at least annual review and base salary increases as approved by the Board of Director or its Compensation Committee. He will have the opportunity to earn a bonus with respect to each year during his employment based upon achievement of performance objectives set by the Board or the Compensation Committee after consultation with Mr. Simes with a target bonus opportunity of 60% of base salary for each year. He also has received an initial grant of options to purchase 500,000 shares at an exercise price of $2.50 which will vest quarterly over the initial three-year term of his employment. | |||||||||||||||||||||||||
In connection with the closing of the mergers with Paloma and VasculoMedics, RestorGenex Corporation entered into an employment agreement on March 31, 2014 with David Sherris, Ph.D. on pursuant to which Dr. Sherris was appointed Chief Scientific Officer of the Company and President of the Company’s Paloma/VasculoMedics divisions. Under the agreement, he is to be employed for an initial period of three years. During the term he is to receive a base salary of $345,000 and is eligible for a bonus of up to 50% of his base salary upon meeting certain milestones established by the Board of Directors or Compensation Committee upon consultation with Dr. Sherris. Dr. Sherris is also eligible for grants under the Company’s Incentive Compensation Plan. |
3_Basis_of_Presentation_and_Si1
3. Basis of Presentation and Significant Accounting Policies (Policies) | 12 Months Ended | ||
Dec. 31, 2013 | |||
FreedomBowlMember | ' | ||
Basis of Presentation | ' | ||
The financial statements were prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”), pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The balance sheets at December 31, 2013 and December 31, 2012 and the income statements for the years ended December 31, 2013 and 2012 consolidate the accounts of PEI, Canterbury and Hygeia reflecting the acquisition of these entities (see Note 19). All significant intercompany balances were eliminated in consolidation. | |||
Basic and Diluted Earnings/(Loss) Per Share | ' | ||
Basic EPS is computed by dividing the income/(loss) available to common shareholders by the weighted average number of common shares outstanding for the period. Diluted EPS is computed similar to basic income/(loss) per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if all the potential common shares, warrants and stock options had been issued and if the additional common shares were dilutive. Diluted EPS is based on the assumption that all dilutive convertible shares were converted into common stock. Dilution is computed by applying the if-converted method for the outstanding convertible preferred shares. Under the if-converted method, convertible outstanding instruments are assumed to be converted into common stock at the beginning of the period (or at the time of issuance, if later). | |||
For purposes of calculating EPS, the number of common shares on December 31, 2012 did not include 281,667 shares of common stock issuable upon conversion by the holders of Series E Preferred. These conversion shares were not included in the EPS calculation because they were antidilutive given the losses by the Company for the year ended December 31, 2012. As of June 30, 2013 the Series E Preferred had been extinguished and the basic and fully-diluted shares are the same from that point forward; and the number of shares used for basic and fully-diluted EPS calculations in 2013 are the same. | |||
Noncontrolling Interest | ' | ||
The Company follows Accounting Standards Codification (“ASC”) Topic 810 “Consolidation,” which governs the accounting for and reporting of Non-Controlling Interests (“NCIs”) in partially owned consolidated subsidiaries and the loss of control of subsidiaries. Certain provisions of this standard indicate, among other things, that NCIs be treated as a separate component of equity, not as a liability, that increases and decreases in the parent’s ownership interest that leave control intact be treated as equity transactions rather than as step acquisitions or dilution gains or losses, and that losses of a partially owned consolidated subsidiary be allocated to the NCI even when such allocation might result in a deficit balance. This standard also required changes to certain presentation and disclosure requirements. The net income (loss) attributed to the NCI is separately designated in the accompanying statements of operations and other comprehensive income (loss). Losses attributable to the NCI in a subsidiary may exceed the NCI’s interests in the subsidiary’s equity. The excess attributable to the NCI is attributed to those interests. The NCI shall continue to attribute its share of losses even if that attribution results in a deficit NCI balance. | |||
Use of Estimates | ' | ||
The preparation of our consolidated financial statements in accordance with U.S. GAAP requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities in our consolidated financial statements and accompanying notes. Although these estimates are based on our knowledge of current events and actions we may undertake in the future, actual results may differ from such estimates and assumptions. | |||
Deriviative liabilities | ' | ||
On May 24, 2011, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with eight investors (collectively, the “Investors”) pursuant to which the Company sold 8,700 shares of a new series of convertible preferred stock designated as Series E Convertible Preferred Stock (“Original Series E”), the terms of which are set forth in the Certificate of Designations of Series E Preferred Stock (the “Certificate”), for $1,000 per share, or $8,700,000. In October 2012, the Company sold 1,000 shares of Series E for $1,000,000 (“New Series E”). The Original Series E and New Series E together are referred to herein as “Series E”. | |||
These Series E contained “full ratchet-down” liquidity protection, which provided that if the Company issues securities for less than the existing conversion price for the Series E Preferred Stock or the strike price of the Series E warrants, then the conversion price for Series E Preferred Stock will be lowered to that lower price. Also, the strike price for Series E warrants would be decreased to that lower price and the number of Series E warrants would be increased such that the product of the original strike price times the original quantity equals the lower strike price times the higher quantity. | |||
Subsequent to the issuance of this Series E, the Company determined that the warrants for these financings included certain embedded derivative features as set forth in ASC Topic 815 “Derivatives and Hedging,” (“ASC 815”) and that this conversion feature of the Series E was not an embedded derivative because this feature was clearly and closely related to the host (Series E) as defined in ASC 815. These derivative liabilities were initially recorded at their estimated Fair Value (“FV”) on the date of issuance and were subsequently adjusted each quarter to reflect the estimated FV at the end of each period, with any decrease or increase in the estimated FV of the derivative liability for each period being recorded as other income or expense. Since the value of the embedded derivative feature for the related warrants was higher than the value of both Series E transactions, there was no beneficial conversion feature recorded for either transaction, and the excess of the value of the embedded derivative feature over the value of the transaction was recorded in each period on the Statement of Operations as a separate line item. | |||
The FV of these derivative liabilities was calculated using the Black Scholes pricing model that was based on the closing price of the common stock, the strike price of the underlying instrument, the risk-free interest rate for the applicable remaining life of the underlying instrument (i.e., the U.S. treasury rate for that period) and the historical volatility of the Company’s common stock. These FV results were extremely sensitive to all these input variables, particularly the closing price of the company’s common stock and the volatility of the Company’s common stock. Accordingly, the FV of these derivative liabilities was subject to significant changes. | |||
The Series E and related warrants were extinguished in May 2013 when the Series E and related warrants were exchanged for common stock, at which time the derivative liability was extinguished. | |||
Allowance for uncollectible receivables | ' | ||
Accounts receivable are recorded at their face amount, less an allowance for doubtful accounts. We review the status of our uncollected receivables on a regular basis. In determining the need for an allowance for uncollectible receivables, we consider our customers financial stability, past payment history and other factors that bear on the ultimate collection of such amounts. | |||
Cash Equivalents | ' | ||
We consider all highly liquid investments purchased with maturities of three months or less to be cash equivalents. | |||
Fair Value of Financial Instruments | ' | ||
Our financial instruments include cash and equivalents, receivables, accounts payable and accrued liabilities. The carrying amounts of financial instruments approximate FV due to their short maturities. | |||
Property and Equipment | ' | ||
Property and equipment are stated at cost less accumulated depreciation. We record depreciation using the straight-line method over the following estimated useful lives: | |||
Equipment | 3 – 5 years | ||
Furniture and fixtures | 5 years | ||
Software | 3 years | ||
Leasehold improvements | Lesser of lease term or life of improvements | ||
Goodwill and Intangible Assets | ' | ||
Intangible assets as of December 31, 2013 consisted of goodwill and intangible assets related to the acquisition of Canterbury and Hygeia in November 2013. Goodwill as of December 31, 2012 was related to goodwill for ProElite that we acquired in June 2011 but suspended development of this business in June 2013. Goodwill is the excess of the cost of an acquired entity over the net amounts assigned to tangible and intangible assets acquired and liabilities assumed. We apply ASC Topic 350 “Goodwill and Other Intangible Assets,” which requires allocating goodwill to each reporting unit and testing for impairment using a two-step approach. | |||
The Company reviewed the value of intangible assets and related goodwill as part of its annual reporting process, which occurs in February or March of each year. In between valuations, the Company conducted additional tests to determine if circumstances warranted additional testing for impairment. The Company decided to suspend development of its ProElite business as of June 30, 2013 and the goodwill was considered to be fully impaired at that time. | |||
To review the value of intangible assets and related goodwill as of December 31, 2013, the Company followed ASC Topic 350 “Intangibles-Goodwill and Other” and first examined the facts and circumstances for each event or business to determine if it was more likely than not that an impairment had occurred. If this examination suggested it was more likely that impairment had occurred, the Company then compared discounted cash flow forecasts related to the asset with the stated value of the asset on the balance sheet. The objective was to determine the value of each asset to an industry participant who is a willing buyer not under compulsion to buy and the Company is a willing seller not under compulsion to sell. Revenue from goodwill and intangible assets were forecasted based on the assumption they are standalone entities. These forecasts were discounted at a range of discount rates determined by taking the risk-free interest rate at the time of valuation, plus premiums for equity risk to small companies in general, for factors specific to the Company and the business. | |||
As of December 31, 2013, Company Management determined that the fair value of its businesses for accounting purposes was equal to its market capitalization of approximately $19,600,000, which was 128% of the $15,334,507 goodwill and intangible assets on the balance sheet as of December 31, 2013. Based on this determination, Company Management concluded that no impairment had occurred as of December 31, 2013. | |||
Income Taxes | ' | ||
The Company utilizes ASC Topic 740 “Accounting for Income Taxes,” which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each year-end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. The provision for income taxes represents the tax payable for the period and the change during the period in deferred tax assets and liabilities. | |||
As of December 31, 2013, the Company had a deferred tax asset of $26,274,933 that was fully reserved and a net operating loss carryforward of $47,728,300 for Federal purposes and $44,482,850 for state tax purposes. The Company will continue to monitor all available evidence and reassess the potential realization of its deferred tax assets. | |||
The net operating loss carry-forwards for 2013 and 2012 begin expiring in 2021 and 2020, respectively. During 2013, the outstanding shares of common stock increased from 890,837 to 5,813,785. The utilization of net operating loss carry-forwards is likely to be limited due to this ownership change under the provisions of Internal Revenue Code Section 382 and similar state provisions. The Company recorded a 100% valuation allowance on the deferred tax assets at December 31, 2013 and 2012 because of the uncertainty of their realization. | |||
Stock-Based Compensation | ' | ||
We follow ASC Topic 718 “Share Based Payment,” using the modified prospective transition method. New awards and awards modified, repurchased or cancelled after January 1, 2006 trigger compensation expense based on the FV of the stock option as determined by the Black-Scholes option pricing model. We amortize stock-based compensation for such awards on a straight-line method over the related service period of the awards taking into account the effects of the employees’ expected exercise and post-vesting employment termination behavior. We account for equity instruments issued to non-employees in accordance with ASC Topic 718 and EITF Issue No. 96-18. The FV of each option granted is estimated as of the grant date using the Black-Scholes option pricing model. | |||
Advertising | ' | ||
We expense the cost of advertising as incurred. Such amounts have not historically been significant. | |||
Reclassifications | ' | ||
Certain prior year amounts were reclassified to conform to the manner of presentation in the current period. These reclassifications had no effect on the net loss or the shareholder’s deficit. | |||
Recent Accounting Pronouncements | ' | ||
On July 27, 2012, the FASB issued ASC 2012-02 “Intangibles-Goodwill and Other (Topic 350)” Testing Indefinite-Lived Intangible Assets for Impairment. The ASC provides entities with an option to first assess qualitative factors to determine whether events or circumstances indicate that it is more likely than not that the indefinite-lived intangible asset is impaired. If an entity concludes that it is more than 50% likely that an indefinite-lived intangible asset is not impaired, no further analysis is required. However, if an entity concludes otherwise, it would be required to determine the FV of the indefinite-lived intangible asset to measure the amount of actual impairment, if any, as currently required under U.S. GAAP. The ASC is effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. Early adoption is permitted. The adoption of this pronouncement did not have a material impact on our financial statements. | |||
The FASB has issued ASU No. 2013-04, Liabilities (Topic 405), “Obligations Resulting from Joint and Several Liability Arrangements for Which the Total Amount of the Obligation Is Fixed at the Reporting Date.” ASU 2013-04 provides guidance for the recognition, measurement, and disclosure of obligations resulting from joint and several liability arrangements for which the total amount of the obligation within the scope of this ASU is fixed at the reporting date, except for obligations addressed within existing guidance in US GAAP. The guidance requires an entity to measure those obligations as the sum of the amount the reporting entity agreed to pay on the basis of its arrangement among its co-obligors and any additional amount the reporting entity expects to pay on behalf of its co-obligors. The amendments in this ASU are effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. The Company does not expect the adoption of this guidance to have a material impact on the Company’s consolidated financial statements. | |||
In July 2013, the FASB issued ASU 213-11, Income Taxes (Topic 740): “Presentation of Unrecognized Tax Benefit When a Net Operating Loss Carryforward, A Similar Tax Loss, or a Tax Credit Carryforward Exists (A Consensus the FASB Emerging Issues Task Force)”. ASU 2013-11 provides guidance on financial statement presentation of unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. The FASB’s objective in issuing this ASU is to eliminate diversity in practice resulting from a lack of guidance on this topic in current U.S. GAAP. This ASU applies to all entities with unrecognized tax benefits that also have tax loss or tax credit carryforwards in the same tax jurisdiction as of the reporting date. This amendment is effective for public entities for fiscal years beginning after December 15, 2013 and interim periods within those years. The company does not expect the adoption of this standard to have a material impact on the Company’s consolidated financial statements. | |||
Other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the AICPA, and the SEC did not or are not believed by management to have a material impact on the Company’s present or future consolidated financial statements. |
3_Basis_of_Presentation_and_Si2
3. Basis of Presentation and Significant Accounting Policies (Tables) | 12 Months Ended | ||
Dec. 31, 2013 | |||
BasisOfPresentationAndSignificantAccountingPoliciesTablesAbstract | ' | ||
Property and Equipment | ' | ||
Equipment | 3 – 5 years | ||
Furniture and fixtures | 5 years | ||
Software | 3 years | ||
Leasehold improvements | Lesser of lease term or life of improvements |
6_Receivable_from_Former_Offic
6. Receivable from Former Officer and Director (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Receivable From Former Officer And Director Tables | ' | ||||||||
Receivable | ' | ||||||||
December 31, | December 31, | ||||||||
2013 | 2012 | ||||||||
Gross receivable | |||||||||
Sale of Company common stock, net proceeds retained by Mr. Feller | $ | 640,000 | $ | 640,000 | |||||
Value of 3,787 shares of common stock owed by Mr. Feller to the Company valued at December 31, 2012 price of $19.00 and 673 shares valued at December 31, 2013 price of $3.00 | 2,020 | 71,946 | |||||||
Vintage automobile retained by Mr. Feller | 38,100 | 38,100 | |||||||
Other | 4,622 | 4,622 | |||||||
Total | 684,742 | 754,668 | |||||||
Offsets to receivable | |||||||||
Deferred salary | (113,667 | ) | (113,667 | ) | |||||
Expense reports submitted and approved | (30,540 | ) | (30,540 | ) | |||||
Net amount owed | 540,535 | 610,461 | |||||||
Write off receivable based on stock offsets (a) | (538,515 | ) | (538,515 | ) | |||||
Net receivable | $ | 2,020 | $ | 71,946 |
7_Property_and_Equipment_Table
7. Property and Equipment (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Property And Equipment Tables | ' | ||||||||
Property and Equipment | ' | ||||||||
December 31, | December 31, | ||||||||
2013 | 2012 | ||||||||
Computers, peripherals and office machines | $ | 145,245 | $ | 147,030 | |||||
Furniture and fixtures | 78,833 | 73,905 | |||||||
224,078 | 220,935 | ||||||||
Less accumulated depreciation | (212,816 | ) | (171,897 | ) | |||||
Property and equipment, net | $ | 11,262 | $ | 49,038 |
10_Other_accrued_expenses_and_1
10. Other accrued expenses and other liabilities (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Other Accrued Expenses And Other Liabilities Tables | ' | ||||||||
Other accrued expenses and other liabilities | ' | ||||||||
December 31, | December 31, | ||||||||
2013 | 2012 | ||||||||
Payroll related | $ | 479,087 | $ | 329,191 | |||||
Estimated damage liability that may not be covered by insurance | 393,592 | 300,000 | |||||||
Estimated settlement with vendor in Europe | – | 300,000 | |||||||
Professional fees | 110,000 | 269,710 | |||||||
Accrued board fees | 657,934 | 241,011 | |||||||
Consultant fees | – | 133,777 | |||||||
Other | 57,101 | 109,819 | |||||||
$ | 1,697,714 | $ | 1,683,508 |
11_Payable_to_Officer_and_Form1
11. Payable to Officer and Former Officer (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Payable To Officer And Former Officer Tables | ' | ||||||||
Loans payable to officers and a director | ' | ||||||||
December 31, | December 31, | ||||||||
2013 | 2012 | ||||||||
Officer pursuant to employment agreement | $ | 156,358 | $ | 156,358 | |||||
Promissory note to former officer | – | 55,000 | |||||||
$ | 156,358 | $ | 211,358 |
12_Notes_payable_Tables
12. Notes payable (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Notes Payable Tables | ' | ||||||||
Debt Disclosure | ' | ||||||||
2013 | 2012 | ||||||||
Notes payable from ProElite to various individuals dated October 20, 2011 with maturity of July 20, 2012, plus interest at 8%, convertible into common stock of ProElite at noteholder's election. Secured by the assets of ProElite. These notes were converted into common stock in November 2013. | $ | – | $ | 1,063,000 | |||||
Note payable to a shareholder with original maturity of May 24, 2012, plus interest at 0.19%, that was secured by the assets of ProElite. This note was converted into common stock in May 2013. | – | 1,000,000 | |||||||
Note payable from ProElite to one party dated October 19, 2012 with original maturity of October 19, 2013. Bears interest at 7% and was secured by the assets of ProElite. This note was converted into common stock in May 2013. | – | 500,000 | |||||||
Note payable to the Company's outside law firm and represents the corporate and litigation fees due as of June 30, 2012. This note originally bore interest at 3% and was due December 31, 2012. Starting on January 1, 2013, this note bears interest at 10%. This note is currently in default. | 467,002 | 486,104 | |||||||
Notes payable to three holders dated May 11, 2012 with original maturity of the earlier of November 11, 2012 and was secured by the assets of the Company. This note was converted into common stock in May 2013. | – | 350,000 | |||||||
Notes payable to 11 investors dated July 9, 2012 with maturity date on the earlier of a $2 million capital raise by the company, or February 6, 2013 and bears interest at 8%. $225,000 of these notes were converted by 9 investors to common stock in November 2013. The remaining two notes are currently in default. | 50,000 | 275,000 | |||||||
Notes payable to one holder dated April 4, 2012 with original maturity on October 4, 2012 that was changed to January 4, 2013. This note was converted into common stock in May 2013. | – | 249,999 | |||||||
Notes payable to a director of the Company dated March 5, 2013 with maturity on the earlier of September 5, 2013 or receipt by the Company of $200,000 in net proceeds from a private placement of Company securities. This note does not bear interest and is not secured. This note is currently in default. | 200,000 | – | |||||||
Note payable to a high-yield fund. This note bears interest at 10% and matures on June 19, 2014. Upon the closing of a financing of at least $7,500,000 on or before the applicable maturity date, this note will be converted into securities issued in such financing at a conversion price equal to 50% of the purchase price per share or unit of the securities. This note is secured by the assets of the Company. | 500,000 | – | |||||||
Note payable to the Company's chairman of the board dated August 9, 2013. Bears interest at 7% and matures on August 9, 2014. Contains mandatory conversion into security or securities totaling $10 million or more at the lesser of 50% of the selling price of such securities or the equivalent of $0.04 per share of common stock. This note is secured by the assets of the Company. | 500,000 | – | |||||||
Note payable to the Company's chairman of the board dated December 19, 2013. This note bears interest at 10% and matures on June 19, 2014. Upon the closing of a financing of at least $7,500,000 on or before the applicable maturity date, this note will be converted into securities issued in such financing at a conversion price equal to 50% of the purchase price per share or unit of the securities. This note is secured by the assets of the Company. | 150,000 | – | |||||||
Note payable to a shareholder dated January 14, 2005, with original maturity of May 14, 2005, plus interest at 10%. Unsecured. This note was written off in June 2013. | – | 70,000 | |||||||
Note payable to a shareholder dated February 1, 2005 with original maturity of June 1, 2005, plus interest at 10%. Unsecured. This note was written off in June 2013. | – | 10,000 | |||||||
$ | 1,867,002 | $ | 4,004,103 |
14_Derivative_Liabilities_Tabl
14. Derivative Liabilities (Tables) | 12 Months Ended | ||||
Dec. 31, 2013 | |||||
DerivativeLiabilitiesTablesAbstract | ' | ||||
Fair value assumptions schedule | ' | ||||
Estimated fair value of underlying common stock | $3.00 | ||||
Remaining life in years | 3.05 - 3.15 | ||||
Risk-free interest rate | 0.35% - 0.38% | ||||
Expected volatility | 141% - 142% | ||||
Dividend yield | – |
15_Shareholders_Equity_Tables
15. Shareholders' Equity (Tables) | 12 Months Ended | |||||||||||||||||||||||||||||
Dec. 31, 2013 | ||||||||||||||||||||||||||||||
Shareholders Deficit | ' | |||||||||||||||||||||||||||||
Common stock outstanding | ' | |||||||||||||||||||||||||||||
Number of Common Shares | ||||||||||||||||||||||||||||||
Balance at December 31, 2012 | 890,837 | |||||||||||||||||||||||||||||
Conversion of Series E Preferred to common stock | 1,575,000 | |||||||||||||||||||||||||||||
Shares issued for acquisition | 1,150,116 | |||||||||||||||||||||||||||||
Conversion of warrants to common stock | 1,023,264 | |||||||||||||||||||||||||||||
Conversion of debt to common stock | 576,331 | |||||||||||||||||||||||||||||
Issuance of shares for advisory agreements | 243,250 | |||||||||||||||||||||||||||||
Issuance of shares to third party for assumption of liabilities | 200,000 | |||||||||||||||||||||||||||||
Issuance of common stock for cash | 142,501 | |||||||||||||||||||||||||||||
Other | 12,486 | |||||||||||||||||||||||||||||
Balance at December 31, 2013 | 5,813,785 | |||||||||||||||||||||||||||||
Stock Options- Assumptions | ' | |||||||||||||||||||||||||||||
The Black Scholes expense for these March 27, 2013 options was calculated using the following assumptions. The fair value of the underlying common stock was based on the sale of 139,167 shares of common stock at $3.00 by the Company during the three months ended June 30, 2013. | ||||||||||||||||||||||||||||||
Estimated fair value of underlying common stock | $3.00 | |||||||||||||||||||||||||||||
Remaining life | 5 | |||||||||||||||||||||||||||||
Risk-free interest rate | 0.35% | |||||||||||||||||||||||||||||
Expected volatility | 141% | |||||||||||||||||||||||||||||
Dividend yield | – | |||||||||||||||||||||||||||||
The Black Scholes expense for these 2012 options was calculated using the following assumptions. The fair value of the underlying common stock was determined by closing price on the Bulletin Board stock exchange. | ||||||||||||||||||||||||||||||
Estimated fair value of underlying common stock | $35.00 - $38.00 | |||||||||||||||||||||||||||||
Remaining life | 5 | |||||||||||||||||||||||||||||
Risk-free interest rate | 0.69% - 0.80% | |||||||||||||||||||||||||||||
Expected volatility | 80% - 89% | |||||||||||||||||||||||||||||
Dividend yield | – | |||||||||||||||||||||||||||||
Stock Options - Activity | ' | |||||||||||||||||||||||||||||
Options Outstanding | Options Exercisable | |||||||||||||||||||||||||||||
Weighted | Weighted | |||||||||||||||||||||||||||||
Average | Weighted | Average | Weighted | |||||||||||||||||||||||||||
Range of | Remaining | Average | Remaining | Average | ||||||||||||||||||||||||||
Options | Exercise | Life in | Exercise | Options | Life in | Exercise | ||||||||||||||||||||||||
Outstanding | Prices | Years | Price | Exercisable | Years | Price | ||||||||||||||||||||||||
As of December 31, 2011 | 121,699 | $14.00 - $150.00 | 2.9 | $49.00 | 87,577 | 2.9 | $ | 40 | ||||||||||||||||||||||
Cancelled | (72,763 | ) | – | – | – | (46,610 | ) | – | – | |||||||||||||||||||||
Exercised | – | – | – | – | – | – | – | |||||||||||||||||||||||
Granted | 30,500 | $35.00 - $38.00 | 4.2 | $36.00 | 16,343 | 4.2 | $ | 36 | ||||||||||||||||||||||
As of December 31, 2012 | 79,436 | $35.00 - $54.00 | 3 | $46.00 | 57,310 | 2.6 | $ | 48 | ||||||||||||||||||||||
Cancelled | – | – | – | – | – | – | – | |||||||||||||||||||||||
Exercised | – | – | – | – | – | – | – | |||||||||||||||||||||||
Granted | 310,000 | $3.00 | 4.2 | $3.00 | 310,000 | 4.2 | $3.00 | |||||||||||||||||||||||
As of December 31, 2013 | 389,436 | $0.03 - $0.54 | 3.9 | $11.77 | 367,310 | 3.9 | $11.10 | |||||||||||||||||||||||
Warrants -Assumptions | ' | |||||||||||||||||||||||||||||
The Black Scholes expense for these March 27, 2013 warrants was calculated using the following assumptions. The fair value of the underlying common stock was based on the sale of 139,167 shares of common stock at $3.00 by the Company during the three months ended June 30, 2013. | ||||||||||||||||||||||||||||||
Estimated fair value of underlying common stock | $3.00 | |||||||||||||||||||||||||||||
Remaining life | 5 | |||||||||||||||||||||||||||||
Risk-free interest rate | 0.35% | |||||||||||||||||||||||||||||
Expected volatility | 141% | |||||||||||||||||||||||||||||
Dividend yield | – | |||||||||||||||||||||||||||||
The Black Scholes expense for these 2012 warrants was calculated using the following assumptions. The fair value of the underlying common stock was determined by closing price on the Bulletin Board stock exchange. | ||||||||||||||||||||||||||||||
Estimated fair value of underlying common stock | $38.00 - $75.00 | |||||||||||||||||||||||||||||
Remaining life | 5 | |||||||||||||||||||||||||||||
Risk-free interest rate | 0.74% - 1.80% | |||||||||||||||||||||||||||||
Expected volatility | 84% - 132% | |||||||||||||||||||||||||||||
Dividend yield | – | |||||||||||||||||||||||||||||
Warrants - Summary | ' | |||||||||||||||||||||||||||||
Warrants Outstanding | Warrants Exercisable | |||||||||||||||||||||||||||||
Weighted | Weighted | |||||||||||||||||||||||||||||
Average | Weighted | Average | Weighted | |||||||||||||||||||||||||||
Range of | Remaining | Average | Remaining | Average | ||||||||||||||||||||||||||
Warrants | Exercise | Life in | Exercise | Warrants | Life in | Exercise | ||||||||||||||||||||||||
Outstanding | Prices | Years | Price | Exercisable | Years | Price | ||||||||||||||||||||||||
As of December 31, 2011 | 595,302 | $65.00 - $200.00 | 3.2 | $200.00 | 595,302 | 3.2 | $200.00 | |||||||||||||||||||||||
Exercised | – | – | – | – | – | – | – | |||||||||||||||||||||||
Ratchet-down impact | 569,917 | $30.00 | – | $30.00 | 569,917 | – | $30.00 | |||||||||||||||||||||||
Granted | 157,633 | $30.00 - $75.00 | 4.3 | $38.00 | 103,883 | 4.3 | – | |||||||||||||||||||||||
As of December 31, 2012 | 1,322,852 | $30.00 - $200.00 | 3.2 | $40.00 | 1,269,102 | 3.2 | $38.00 | |||||||||||||||||||||||
Exercised | (978,700 | ) | $30.00 | – | $30.00 | (939,950 | ) | – | $30.00 | |||||||||||||||||||||
Ratchet-down impact | – | – | – | – | – | – | – | |||||||||||||||||||||||
Granted | 173,917 | $3.00 | 4.2 | $3.00 | 173,917 | 4.2 | $3.00 | |||||||||||||||||||||||
As of December 31, 2013 | 518,069 | $3.00 - $200.00 | 3.3 | $44.07 | 503,069 | 3.3 | $44.07 |
16_Commitments_and_contingenci1
16. Commitments and contingencies (Tables) | 12 Months Ended | ||||||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||||||
Office machines | ' | ||||||||||||||||||||
Contractual obligations | ' | ||||||||||||||||||||
2017 and | |||||||||||||||||||||
Total | 2014 | 2015 | 2016 | Later | |||||||||||||||||
Notes Payable | $ | 1,867,002 | $ | 1,867,002 | $ | – | $ | – | $ | – | |||||||||||
Rent Obligations | 1,121,495 | 878,546 | 242,949 | – | – | ||||||||||||||||
Deferred Salary | 571,328 | 571,328 | – | – | – | ||||||||||||||||
Accrued Interest | 89,472 | 89,472 | – | – | – | ||||||||||||||||
Employee Contracts | 3,931,156 | 1,181,411 | 1,341,000 | 1,273,732 | 135,013 | ||||||||||||||||
Employee Contracts: Other | 156,358 | 156,358 | – | – | – | ||||||||||||||||
Total | $ | 7,736,811 | $ | 4,744,117 | $ | 1,583,949 | $ | 1,273,732 | $ | 135,013 |
17_Segment_Information_Tables
17. Segment Information (Tables) | 12 Months Ended | ||||||||||||||||||||||||||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||||||||||||||||||||||||||
Segment Information Tables | ' | ||||||||||||||||||||||||||||||||||||||||
Segment Information | ' | ||||||||||||||||||||||||||||||||||||||||
As of/for the Year Ended December 31, 2013 | As of /for the Year Ended December 31, 2012 | ||||||||||||||||||||||||||||||||||||||||
Stratus Rewards | ProElite | Life Sciences | Other | Total | Stratus Rewards | ProElite | Other Events | Other | Total | ||||||||||||||||||||||||||||||||
Revenues | $ | – | $ | 72 | $ | – | $ | – | $ | 72 | $ | – | $ | 375 | $ | – | $ | – | $ | 375 | |||||||||||||||||||||
Cost of sales | – | – | – | – | – | – | 236 | – | – | 236 | |||||||||||||||||||||||||||||||
Gross margin | – | 72 | – | – | 72 | – | 139 | – | – | 139 | |||||||||||||||||||||||||||||||
Deprec. & Amort | – | 2 | 87 | 587 | 676 | – | 2 | – | 32 | 34 | |||||||||||||||||||||||||||||||
Segment profit | – | 70 | (87 | ) | (587 | ) | (604 | ) | – | 137 | – | (32 | ) | 105 | |||||||||||||||||||||||||||
Operating expenses | 85 | 192 | 80 | 12,371 | 12,728 | 1,724 | 990 | – | 9,183 | 11,897 | |||||||||||||||||||||||||||||||
Other (income) expenses | – | (714 | ) | – | 643 | (71 | ) | – | 97 | – | 1,763 | 1,859 | |||||||||||||||||||||||||||||
Impact of derivative securities | – | – | – | (10,459 | ) | (10,459 | ) | (6,801 | ) | (6,801 | ) | ||||||||||||||||||||||||||||||
Net loss | $ | (85 | ) | $ | 592 | $ | (167 | ) | $ | (3,142 | ) | (2,802 | ) | $ | (1,724 | ) | $ | (950 | ) | $ | – | $ | (4,177 | ) | $ | (6,850 | ) | ||||||||||||||
Net loss attributable to non-controlling interests | – | – | – | (6 | ) | (6 | ) | – | – | – | (19 | ) | (19 | ) | |||||||||||||||||||||||||||
Preferred dividend | – | – | – | (172 | ) | (172 | ) | – | – | – | 497 | 497 | |||||||||||||||||||||||||||||
Net loss attributable to common shareholders | $ | (85 | ) | $ | 592 | $ | (167 | ) | $ | (2,976 | ) | $ | (2,636 | ) | $ | (1,724 | ) | $ | (950 | ) | $ | – | $ | (4,693 | ) | $ | (7,366 | ) | |||||||||||||
Assets | $ | – | $ | 230 | $ | 572 | $ | 17,542 | $ | 18,344 | $ | – | $ | 2,161 | $ | – | $ | 285 | $ | 2,446 | |||||||||||||||||||||
Liabilities | $ | 52 | $ | 2,779 | $ | 587 | $ | 5,460 | $ | 8,878 | $ | 122 | $ | 2,632 | $ | 2,271 | $ | 15,828 | $ | 20,853 |
18_Income_taxes_Tables
18. Income taxes (Tables) | 12 Months Ended | ||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||
Income Tax Disclosure [Abstract] | ' | ||||||||||||||||
Significant components of deferred tax assets | ' | ||||||||||||||||
December 31, | |||||||||||||||||
2013 | 2012 | ||||||||||||||||
Net operating loss carryforward | $ | 21,492,311 | $ | 18,050,294 | |||||||||||||
Amortization | (823,367 | ) | (580,145 | ) | |||||||||||||
Stock option compensation | 5,841,333 | 904,334 | |||||||||||||||
Deferred compensation | 1,563,754 | 883,794 | |||||||||||||||
Deferred state tax | (1,904,277 | ) | (477,307 | ) | |||||||||||||
Other | 105,179 | 449,209 | |||||||||||||||
Valuation allowance | (26,274,933 | ) | (19,230,179 | ) | |||||||||||||
Net deferred tax asset | $ | – | $ | – | |||||||||||||
Summary of Operating Loss Carryforwards | ' | ||||||||||||||||
December 31, | |||||||||||||||||
2013 | 2012 | ||||||||||||||||
Combined NOL Carryforwards: | |||||||||||||||||
Federal | $ | 47,728,300 | $ | 40,240,679 | |||||||||||||
California | 44,482,850 | 36,995,229 | |||||||||||||||
Schedule of Effective Income Tax Rate Reconciliation | ' | ||||||||||||||||
2013 | 2012 | ||||||||||||||||
Rate reconciliation: | |||||||||||||||||
Federal tax benefit at statutory rate | $ | (922,591 | ) | (35.0% | ) | $ | (2,578,121 | ) | (35.0% | ) | |||||||
State tax, net of Federal benefit | (761,237 | ) | 28.90% | (782,767 | ) | 10.60% | |||||||||||
Change in valuation allowance | 7,044,754 | (267.3% | ) | 5,495,845 | (74.6% | ) | |||||||||||
Derivative accounting and other | (5,360,926 | ) | 273.40% | (2,134,957 | ) | 99.00% | |||||||||||
Total provision | $ | – | –% | $ | – | –% |
19_Pro_Forma_Financials_for_Ac1
19. Pro Forma Financials for Acquisition of Canterbury and Hygeia (Tables) | 12 Months Ended | ||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||
Pro Forma Financials For Acquisition Of Canterbury And Hygeia Tables | ' | ||||||||||||||||
Business Acquisition, Pro Forma Information | ' | ||||||||||||||||
If the Mergers had occurred on January 1, 2012, the combined statement of operations for the year ended December 31, 2013 would be as follows: | |||||||||||||||||
RestorGenex Corporation, Canterbury and Hygeia | |||||||||||||||||
Pro Forma Income Statements | |||||||||||||||||
For the Year Ended December 31, 2013 | |||||||||||||||||
Year Ended December 31, 2013 (a) | |||||||||||||||||
Pro Forma | |||||||||||||||||
Adjustments | Other | ||||||||||||||||
for Canterbury | Pro Forma | Pro Forma | |||||||||||||||
RestorGenex | and Hygeia (b) | Adjustments | Combined | ||||||||||||||
(Audited) | |||||||||||||||||
Revenues | $ | 71,667 | $ | 127,167 | $ | – | $ | 198,834 | |||||||||
Cost of revenues | – | 89,387 | – | 89,387 | |||||||||||||
Gross profit | 71,667 | 37,780 | – | 109,447 | |||||||||||||
Operating expenses | |||||||||||||||||
General, administrative, research and development | 2,008,118 | 265,260 | 503,732 | (c) | 2,777,110 | ||||||||||||
Impairment of intangible assets | 1,935,621 | – | – | 1,935,621 | |||||||||||||
Warrants, options and stock | 4,228,317 | – | – | 4,228,317 | |||||||||||||
Fair value of common stock exchanged for warrants | 3,069,792 | – | – | 3,069,792 | |||||||||||||
Legal and professional services | 1,071,392 | 326,646 | – | 1,398,038 | |||||||||||||
Depreciation and amortization | 675,757 | 14,781 | 659,958 | (d) | 1,350,496 | ||||||||||||
Total operating expenses | 12,988,997 | 606,687 | 1,163,690 | 14,759,374 | |||||||||||||
Loss from operations | (12,917,330 | ) | (568,907 | ) | (1,163,690 | ) | (14,649,927 | ) | |||||||||
Other (income)/expenses | |||||||||||||||||
(Gain)/loss on adjustments to fair value of derivative liability | (8,980,077 | ) | – | – | (8,980,077 | ) | |||||||||||
Gain on extinguishment of derivative liability | (1,183,093 | ) | – | – | (1,183,093 | ) | |||||||||||
Other (income)/expenses | (524,505 | ) | – | – | (524,505 | ) | |||||||||||
Interest expense | 228,294 | 20,267 | – | 248,561 | |||||||||||||
Total other (income)/expenses | (10,459,381 | ) | 20,267 | – | (10,439,114 | ) | |||||||||||
Net loss | (2,457,949 | ) | (589,174 | ) | (1,163,690 | ) | (4,210,813 | ) | |||||||||
Net loss attributed to non-controlling interests | (6,401 | ) | – | – | (6,401 | ) | |||||||||||
Net loss attributed to RestorGenex Corporation | (2,464,350 | ) | (589,174 | ) | (1,163,690 | ) | (4,217,214 | ) | |||||||||
Preferred dividends | 171,625 | – | – | 171,625 | |||||||||||||
Net income/(loNet income/(loss) attributable to RestorGenexss) attributable to RestorGenex Corporation common shareholders | $ | (2,635,975 | ) | $ | (589,174 | ) | $ | (1,163,690 | ) | $ | (4,388,839 | ) | |||||
Basic and diluted earnings per share | $ | (1.00 | ) | $ | (1.20 | ) | |||||||||||
Basic and fully-diluted weighted average shares outstanding | 2,646,603 | 1,014,623 | (e) | 3,661,226 | |||||||||||||
(a) | Assumes the mergers with Canterbury and Hygeia occurred on January 1, 2012. | ||||||||||||||||
(b) | Results of operations from January 1, 2013 to November 18, 2013, when the mergers were closed. | ||||||||||||||||
(c) | Impact of employment agreements from January 1, 2013 to November 18, 2013. | ||||||||||||||||
(d) | Impact of amortization of intangible assets from January 1, 2013 to November 18, 2013. | ||||||||||||||||
(e) | Impact on weighted average shares if the 1,150,116 shares issued for the mergers were outstanding for the full year. | ||||||||||||||||
If the Mergers had occurred on January 1, 2012, the combined statement of operations for the year ended December 31, 2012 would be as follows: | |||||||||||||||||
RestorGenex Corporation, Canterbury and Hygeia | |||||||||||||||||
Pro Forma Income Statements | |||||||||||||||||
For the Year Ended December 31, 2012 | |||||||||||||||||
Year Ended December 31, 2012 (a) | |||||||||||||||||
Other | |||||||||||||||||
Canterbury | Pro Forma | Pro Forma | |||||||||||||||
RestorGenex | and Hygeia | Adjustments | Combined | ||||||||||||||
(Audited) | |||||||||||||||||
Revenues | $ | 374,542 | $ | 246,731 | $ | – | $ | 621,273 | |||||||||
Cost of revenues | 235,803 | 123,374 | – | 359,177 | |||||||||||||
Gross profit | 138,739 | 123,357 | – | 262,096 | |||||||||||||
Operating expenses | |||||||||||||||||
General, administrative, research and development | 4,570,161 | 324,261 | 503,732 | (b) | 5,398,154 | ||||||||||||
Impairment of intangible assets | 1,423,844 | – | – | 1,423,844 | |||||||||||||
Warrants, options and stock | 3,643,662 | – | – | 3,643,662 | |||||||||||||
Legal and professional services | 2,128,898 | 77,965 | – | 2,206,863 | |||||||||||||
Depreciation and amortization | 164,043 | 17,196 | 747,276 | (c) | 928,515 | ||||||||||||
Total operating expenses | 11,930,608 | 419,422 | 1,251,008 | 13,601,038 | |||||||||||||
Loss from operations | (11,791,869 | ) | (296,065 | ) | (1,251,008 | ) | (13,338,942 | ) | |||||||||
Other (income)/expenses | |||||||||||||||||
Fair value of derivative liabilities in excess of proceeds | 408,501 | ||||||||||||||||
(Gain)/loss on adjustments to fair value of derivative liability | (6,907,748 | ) | – | – | (6,907,748 | ) | |||||||||||
Other (income)/expenses | 379,188 | – | – | 379,188 | |||||||||||||
Present value of remaining lease payments for facilities no longer occupied | 1,010,111 | ||||||||||||||||
Interest expense | 167,894 | – | – | 167,894 | |||||||||||||
Total other (income)/expenses | (4,942,054 | ) | – | – | (6,360,666 | ) | |||||||||||
Net loss | (6,849,815 | ) | (296,065 | ) | (1,251,008 | ) | (6,978,276 | ) | |||||||||
Net loss attributed to non-controlling interests | (19,079 | ) | – | – | (19,079 | ) | |||||||||||
Net loss attributed to RestorGenex Corporation | (6,868,894 | ) | (296,065 | ) | (1,251,008 | ) | (6,997,355 | ) | |||||||||
Preferred dividends | 497,167 | – | – | 497,167 | |||||||||||||
Net income/(loss) attributable to RestorGenex Corporation common shareholders | $ | (7,366,061 | ) | $ | (296,065 | ) | $ | (1,251,008 | ) | $ | (7,494,522 | ) | |||||
Basic and diluted earnings per share | $ | (8.16 | ) | $ | (3.65 | ) | |||||||||||
Basic and fully-diluted weighted average shares outstanding | 903,139 | 1,150,116 | (d) | 2,053,255 | |||||||||||||
Fully-diluted weighted average shares outstanding | 1,121,987 | 1,150,116 | (d) | 2,272,103 | |||||||||||||
(a) | Assumes the mergers with Canterbury and Hygeia occurred on January 1, 2012. | ||||||||||||||||
(b) | Impact of employment agreements for the full year. | ||||||||||||||||
(c) | Impact of amortization of intangible assets for the full year. | ||||||||||||||||
(d) | Impact on weighted average shares if the 1,150,116 shares issued for the mergers were outstanding for the full year. | ||||||||||||||||
2_Going_Concern_Details_Narrat
2. Going Concern (Details Narrative) (USD $) | Dec. 31, 2013 |
GoingConcernDetailsNarrativeAbstract | ' |
Working Capital | ($5,880,035) |
3_Basis_of_Presentation_and_Si3
3. Basis of Presentation and Significant Accounting Policies (Details) | 12 Months Ended |
Dec. 31, 2013 | |
Equipment | MinimumMember | ' |
Property and Equipment | ' |
Estimated useful Life | '3 years |
Equipment | MaximumMember | ' |
Property and Equipment | ' |
Estimated useful Life | '5 years |
Furniture And Fixtures | ' |
Property and Equipment | ' |
Estimated useful Life | '5 years |
Software | ' |
Property and Equipment | ' |
Estimated useful Life | '3 years |
LeaseholdImprovementsMember | ' |
Property and Equipment | ' |
Estimated useful Life, description | 'Lesser of lease term or life of improvements |
3_Basis_of_Presentation_and_Si4
3. Basis of Presentation and Significant Accounting Policies (Details Narrative) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
BasisOfPresentationAndSignificantAccountingPoliciesDetailsNarrativeAbstract | ' | ' |
Antidilutive shares | 281,667 | ' |
Deferred tax asset | $26,274,933 | ' |
Net operating loss carryforward | 47,728,300 | 40,240,679 |
Net operating loss carryforward - state | $44,482,850 | ' |
6_Receivable_from_Former_Offic1
6. Receivable from Former Officer and Director (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Gross receivable | ' | ' |
Sale of Company common stock, proceeds retained by Mr. Feller | $640,000 | $640,000 |
Value of 3,787 shares of common stock owed by Mr. Feller to the Company valued at December 31, 2012 price of $19.00 and 673 shares valued at December 31, 2013 price of $3.00 | 2,020 | 71,946 |
Vintage automobile retained by Mr. Feller | 38,100 | 38,100 |
Other | 4,622 | 4,622 |
Gross receivable | 684,742 | 754,668 |
Deferred salary | -113,667 | -113,667 |
Expense reports submitted and approved | -30,540 | -30,540 |
Write off receivable based on stock offsets (see below) | -538,515 | -538,515 |
Net receivable | $2,020 | $71,946 |
6_Receivable_From_Former_Chair1
6. Receivable From Former Chairman and Chief Executive Officer (Details Narrative) (USD $) | Dec. 31, 2013 |
Receivable From Former Chairman And Chief Executive Officer Details Narrative | ' |
Accrued expense pursuant to Mr. Feller's consulting agreement | $375,000 |
7_Property_and_Equipment_Detai
7. Property and Equipment (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Property and Equipment | ' | ' |
Computers, peripherals and office machines | $145,245 | $147,030 |
Furniture and fixtures | 78,833 | 73,905 |
Property and Equipment Gross | 224,078 | 220,935 |
Less accumulated depreciation | -212,816 | -171,897 |
Property and Equipment Net | $11,262 | $49,038 |
7_Property_and_Equipment_Detai1
7. Property and Equipment (Details Narrative) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Property And Equipment Details Narrative | ' | ' |
Depreciation | $40,919 | $26,771 |
9_Deferred_salary_Details_Narr
9. Deferred salary (Details Narrative) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
DeferredSalaryDetailsNarrativeAbstract | ' | ' |
Unpaid salaries | $571,328 | $1,152,933 |
10_Other_accrued_expenses_and_2
10. Other accrued expenses and other liabilities (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Accounts Payable and Accrued Liabilities | ' | ' |
Payroll related | $479,087 | $329,191 |
Estimated damage liability that may not be covered by insurance | 393,592 | 300,000 |
Estimate settlement with vendor in Europe | 0 | 300,000 |
Professional fees | 110,000 | 269,710 |
Accrued board fees | 657,934 | 241,011 |
Consultant fees | 0 | 133,777 |
Other | 57,101 | 109,819 |
Total Accounts Payable and Accrued Liabilities | $1,697,714 | $1,683,508 |
11_Payable_to_Officer_and_Form2
11. Payable to Officer and Former Officer (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Payable To Officer And Former Officer Details | ' | ' |
Officer pursuant to employment agreement | $156,358 | $156,358 |
Promissory note to former officer | 0 | 55,000 |
Total Payable to Officer and Former Officer | $156,358 | $211,358 |
12_Notes_payable_Details
12. Notes payable (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Notes Payable | ' | ' |
Notes Payable | $1,867,002 | $4,004,103 |
ProElite, Inc. to individuals | ' | ' |
Notes Payable | ' | ' |
Notes Payable | 0 | ' |
ShareholderMember | ' | ' |
Notes Payable | ' | ' |
Notes Payable | 0 | 1,000,000 |
ProElite to one party | ' | ' |
Notes Payable | ' | ' |
Notes Payable | 0 | 500,000 |
Outside law firm | ' | ' |
Notes Payable | ' | ' |
Notes Payable | 467,002 | 486,104 |
ThreeHoldersMember | ' | ' |
Notes Payable | ' | ' |
Notes Payable | 0 | 350,000 |
11 Investors | ' | ' |
Notes Payable | ' | ' |
Notes Payable | 50,000 | 275,000 |
OneHolderMember | ' | ' |
Notes Payable | ' | ' |
Notes Payable | 0 | 0 |
One Holder Dated March 2013 | ' | ' |
Notes Payable | ' | ' |
Notes Payable | 200,000 | 249,999 |
Shareholder Dated January 2005 | ' | ' |
Notes Payable | ' | ' |
Notes Payable | 0 | 70,000 |
Shareholder Dated February 2005 | ' | ' |
Notes Payable | ' | ' |
Notes Payable | 0 | 10,000 |
Shareholder Dated February 2005 | ' | ' |
Notes Payable | ' | ' |
Notes Payable | 0 | ' |
ProElite, Inc. | ' | ' |
Notes Payable | ' | ' |
Notes Payable | ' | 1,063,000 |
Shareholder Dated April, 2013 | ' | ' |
Notes Payable | ' | ' |
Notes Payable | ' | 0 |
Note payable, high-yield fund | ' | ' |
Notes Payable | ' | ' |
Notes Payable | 500,000 | 0 |
Note payable, chairman | ' | ' |
Notes Payable | ' | ' |
Notes Payable | 500,000 | 0 |
Note payable, chairman 2 | ' | ' |
Notes Payable | ' | ' |
Notes Payable | $150,000 | $0 |
14_Derivative_Liabilities_Deta
14. Derivative Liabilities (Details) (Derivative Liabilities, USD $) | 12 Months Ended |
Dec. 31, 2013 | |
Derivative Liabilities | ' |
Estimated fair value of underlying common stock | $3 |
Remaining life, min | '3 years 18 days |
Remaining life, max | '3 years 1 month 24 days |
Risk-free interest rate, min | 0.35% |
Risk-free interest rate, max | 0.38% |
Expected volatility, min | 141.00% |
Expected volatility, max | 142.00% |
Dividend yield | 0.00% |
15_Shareholders_Equity_Details
15. Shareholders Equity (Details-Options outstanding and exercisable) (Options, USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Options | ' | ' |
Options Outstanding | ' | ' |
Beginning Balance | 79,436 | 121,699 |
Cancelled | 0 | -72,763 |
Exercised | 0 | 0 |
Granted | 310,000 | 30,500 |
Ending Balance | 389,436 | 79,436 |
Range of Exercise Prices | ' | ' |
Beginning Balance Minimum | $0.35 | $0.14 |
Beginning Balance Maximum | $0.54 | $1.50 |
Cancelled | ' | ' |
Exercised | ' | ' |
Granted, Minimum | $3 | $0.35 |
Granted, Maximum | ' | $0.38 |
Ending Balance Minimum | $0.03 | $0.35 |
Ending Balance Maximum | $0.54 | $0.54 |
Beginning Balance | '3 years | '2 years 10 months 24 days |
Granted | '4 years 2 months 12 days | '4 years 2 months 12 days |
Ending Balance | '3 years 10 months 24 days | '3 years |
Weighted Average Exercise Price | ' | ' |
Beginning Balance | $0.46 | $0.49 |
Cancelled | ' | ' |
Exercised | ' | ' |
Granted | $3 | $0.36 |
Ending Balance | $11.77 | $0.46 |
Options Exercisable | ' | ' |
Beginning Balance | 57,310 | 87,577 |
Cancelled | ' | -46,610 |
Granted | 310,000 | 16,343 |
Ending Balance | 367,310 | 57,310 |
Weighted Average Remaining Life in Years | ' | ' |
Beginning Balance | '2 years 7 months 6 days | '2 years 10 months 24 days |
Granted | '4 years 2 months 12 days | '4 years 2 months 12 days |
Ending Balance | '3 years 10 months 24 days | '2 years 7 months 6 days |
Weighted Average Exercise Price | ' | ' |
Beginning Balance | $0.48 | $0.40 |
Granted | $3 | $0.36 |
Ending Balance | $11.10 | $0.48 |
15_Shareholders_Equity_Details1
15. Shareholders Equity (Details-Warrants outstanding) (Warrants, USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Warrants | ' | ' |
Warrants Outstanding | ' | ' |
Beginning Balance | 1,322,852 | 595,302 |
Exercised | -978,700 | 0 |
Ratchet-down impact | 0 | 569,917 |
Granted | 173,917 | 157,633 |
Ending Balance | 518,069 | 1,322,852 |
Range of Exercise Prices | ' | ' |
Beginning Balance Minimum | $30 | $65 |
Beginning Balance Maximum | $200 | $200 |
Exercised | $30 | ' |
Ratchet-down impact | ' | 30 |
GrantedMinimum | $3 | $30 |
GrantedMaximum | ' | $75 |
Ending Balance Minimum | $3 | $30 |
Ending Balance Maximum | $200 | $200 |
Weighted Average Remaining Life in Years | ' | ' |
Beginning Balance | '3 years 2 months 12 days | '3 years 2 months 12 days |
Exercised | ' | '0 years |
Granted | '4 years 2 months 12 days | '4 years 3 months 18 days |
Ending Balance | '3 years 3 months 18 days | '3 years 2 months 12 days |
Weighted Average Exercise Price | ' | ' |
Beginning Balance | $40 | $200 |
Exercised | $30 | ' |
Ratchet-down impact | ' | $30 |
Granted | $3 | $38 |
Ending Balance | $44.07 | $40 |
Warrants Exercisable | ' | ' |
Beginning Balance | 1,269,102 | 595,302 |
Exercised | -939,950 | 0 |
Ratchet-down impact | ' | 569,917 |
Granted | 173,917 | 103,883 |
Ending Balance | 503,069 | 1,269,102 |
Weighted Average Remaining Life in Years | ' | ' |
Beginning Balance | '3 years 2 months 12 days | '3 years 2 months 12 days |
Granted | '4 years 3 months 18 days | '4 years 3 months 18 days |
Ending Balance | '3 years 3 months 18 days | '3 years 2 months 12 days |
Weighted Average Exercise Price | ' | ' |
Beginning Balance | $38 | $200 |
Exercised | $30 | ' |
Ratchet-down impact | ' | $30 |
Granted | $3 | ' |
Ending Balance | $44.07 | $38 |
15_Shareholders_Equity_Details2
15. Shareholders Equity (Details-Common stock) | 12 Months Ended |
Dec. 31, 2013 | |
Shareholders Equity Details-Common Stock | ' |
Balance at December 31, 2012 | 890,837 |
Conversion of Series E Preferred to common stock | 1,575,000 |
Shares issued for acquisition | 1,150,116 |
Conversion of warrants to common stock | 1,023,264 |
Conversion of debt to common stock | 576,331 |
Issuance of shares for advisory agreements | 243,250 |
Issuance of shares to third party for assumption of liabilities | 200,000 |
Issuance of common stock for cash | 142,501 |
Other | 12,486 |
Balance at December 31, 2013 | 5,813,785 |
16_Commitments_and_contingenci2
16. Commitments and contingencies (Details) (USD $) | Dec. 31, 2013 |
Contractual Obligation | ' |
Total | $7,736,811 |
2014 | 4,744,117 |
2015 | 1,583,949 |
2016 | 1,273,732 |
Beyond 2017 | 135,013 |
Notes payable | ' |
Contractual Obligation | ' |
Total | 1,867,002 |
2014 | 1,867,002 |
2015 | 0 |
2016 | 0 |
Beyond 2017 | 0 |
Rent obligations | ' |
Contractual Obligation | ' |
Total | 1,121,495 |
2014 | 878,546 |
2015 | 242,949 |
2016 | 0 |
Beyond 2017 | 0 |
Deferred salary | ' |
Contractual Obligation | ' |
Total | 571,328 |
2014 | 571,328 |
2015 | 0 |
2016 | 0 |
Beyond 2017 | 0 |
Accrued interest | ' |
Contractual Obligation | ' |
Total | 89,472 |
2014 | 89,472 |
2015 | 0 |
2016 | 0 |
Beyond 2017 | 0 |
Employee Contracts | ' |
Contractual Obligation | ' |
Total | 3,931,156 |
2014 | 1,181,411 |
2015 | 1,341,000 |
2016 | 1,273,732 |
Beyond 2017 | 135,013 |
Employee contracts: other | ' |
Contractual Obligation | ' |
Total | 156,358 |
2014 | 156,358 |
2015 | 0 |
2016 | 0 |
Beyond 2017 | $0 |
17_Segment_Information_Details
17. Segment Information (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Segment Information | ' | ' |
Revenues | $71,667 | $374,542 |
Cost of sales | 0 | 235,803 |
Gross margin | 71,667 | 138,739 |
Deprec. & Amort | 675,757 | 164,043 |
Segment profit | -12,917,330 | -11,791,869 |
Operating expenses | 12,988,997 | 11,930,608 |
Net loss | -2,457,949 | -6,849,815 |
Net loss attributable to non-controlling interests | -6,401 | -19,079 |
Preferred dividends | $171,625 | $497,167 |
Net loss attributable to common shareholders | -2,635,975 | -7,366,061 |
Assets | 18,344,052 | 2,446,297 |
Liabilities | 8,878,318 | 20,852,636 |
Stratus Rewards [Member] | ' | ' |
Segment Information | ' | ' |
Revenues | 0 | 0 |
Cost of sales | 0 | 0 |
Gross margin | 0 | 0 |
Deprec. & Amort | 0 | 0 |
Segment profit | 0 | 0 |
Operating expenses | 85 | 1,724 |
Other (income) expenses | 0 | 0 |
Impact of derivative securities | 0 | ' |
Net loss | -85 | -1,724 |
Net loss attributable to non-controlling interests | 0 | 0 |
Preferred dividends | $0 | $0 |
Net loss attributable to common shareholders | -85 | -1,724 |
Assets | 0 | 0 |
Liabilities | 52 | 122 |
ProElite [Member] | ' | ' |
Segment Information | ' | ' |
Revenues | 72 | 375 |
Cost of sales | 0 | 236 |
Gross margin | 72 | 139 |
Deprec. & Amort | 2 | 2 |
Segment profit | 70 | 137 |
Operating expenses | 192 | 990 |
Other (income) expenses | -714 | 97 |
Impact of derivative securities | 0 | ' |
Net loss | 592 | -950 |
Net loss attributable to non-controlling interests | 0 | 0 |
Preferred dividends | $0 | $0 |
Net loss attributable to common shareholders | 592 | -950 |
Assets | 230 | 2,161 |
Liabilities | 2,779 | 2,632 |
Other Events [Member] | ' | ' |
Segment Information | ' | ' |
Revenues | 0 | 0 |
Cost of sales | 0 | 0 |
Gross margin | 0 | 0 |
Deprec. & Amort | 87 | 0 |
Segment profit | -87 | 0 |
Operating expenses | 80 | 0 |
Other (income) expenses | 0 | 0 |
Impact of derivative securities | 0 | ' |
Net loss | -167 | 0 |
Net loss attributable to non-controlling interests | 0 | 0 |
Preferred dividends | $0 | $0 |
Net loss attributable to common shareholders | -167 | 0 |
Assets | 572 | 0 |
Liabilities | 587 | 2,271 |
Other [Member] | ' | ' |
Segment Information | ' | ' |
Revenues | 0 | 0 |
Cost of sales | 0 | 0 |
Gross margin | 0 | 0 |
Deprec. & Amort | 587 | 32 |
Segment profit | -587 | -32 |
Operating expenses | 12,371 | 9,183 |
Other (income) expenses | 643 | 1,763 |
Impact of derivative securities | -10,459 | -6,801 |
Net loss | -3,142 | -4,177 |
Net loss attributable to non-controlling interests | -6 | -19 |
Preferred dividends | ($172) | $497 |
Net loss attributable to common shareholders | -2,976 | -4,693 |
Assets | 17,542 | 285 |
Liabilities | 5,460 | 15,828 |
Total | ' | ' |
Segment Information | ' | ' |
Revenues | 72 | 375 |
Cost of sales | 0 | 236 |
Gross margin | 72 | 139 |
Deprec. & Amort | 676 | 34 |
Segment profit | -604 | 105 |
Operating expenses | 12,728 | 11,897 |
Other (income) expenses | -71 | 1,859 |
Impact of derivative securities | -10,459 | -6,801 |
Net loss | -2,802 | -6,850 |
Net loss attributable to non-controlling interests | -6 | -19 |
Preferred dividends | ($172) | $497 |
Net loss attributable to common shareholders | -2,636 | -7,366 |
Assets | 18,344 | 2,446 |
Liabilities | $8,878 | $20,853 |
18_Income_taxes_DetailsDeferre
18. Income taxes (Details-Deferred tax assets) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Income Tax Disclosure [Abstract] | ' | ' |
Net operating loss carryforward | $21,492,311 | $18,050,294 |
Amortization | -823,367 | -580,145 |
Stock option compensation | 5,841,333 | 904,334 |
Deferred compensation | 1,563,754 | 883,794 |
Deferred state tax | -1,904,277 | -477,307 |
Other | 105,179 | 449,209 |
Valuation allowance | -26,274,933 | -19,230,179 |
Net deferred tax asset | $0 | $0 |
18_Income_taxes_DetailsNOLs
18. Income taxes (Details-NOLs) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Income Tax Disclosure [Abstract] | ' | ' |
NOL Carryforwards Federal | $47,728,300 | $40,240,679 |
NOL Carryforwards California | $44,482,850 | $36,995,229 |
18_Income_taxes_DetailsRate_re
18. Income taxes (Details-Rate reconciliation) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Income Taxes Details-Rate Reconciliation | ' | ' |
Federal tax benefit at statutory rate | ($922,591) | ($2,578,121) |
State tax, net of Federal benefit | -761,237 | -782,767 |
Change in valuation allowance | 7,044,754 | 5,495,845 |
Derivative accounting and other | -5,360,926 | -2,134,957 |
Total provision | $0 | $0 |
Federal tax benefit at statutory rate percent | -35.00% | -35.00% |
State tax, net of Federal benefit percent | 28.90% | 10.60% |
Change in valuation allowance percent | -267.30% | -174.60% |
Derivative accounting and other percent | 273.40% | 99.00% |
Total provision percent | 0.00% | 0.00% |
19_Pro_Forma_Financials_for_Ac2
19. Pro Forma Financials for Acquisition of Canterbury and Hygeia (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Cost of revenues | $0 | $235,803 |
Gross profit | 71,667 | 138,739 |
Operating expenses | ' | ' |
General, administrative, research and development | 2,008,118 | 4,570,161 |
Impairment of intangible assets | 1,935,621 | 1,423,844 |
Warrants, options and stock | 4,228,317 | 3,643,662 |
Fair value of common stock exchanged for warrants | 3,069,792 | 0 |
Legal and professional services | 1,071,392 | 2,128,898 |
Depreciation and amortization | 675,757 | 164,043 |
Total operating expenses | 12,988,997 | 11,930,608 |
Loss from operations | -12,917,330 | -11,791,869 |
Other (income)/expenses | ' | ' |
(Gain)/loss on adjustments to fair value of derivative liability | -8,980,077 | -6,907,748 |
Gain on extinguishment of derivative liability | -1,635,967 | 0 |
Other (income)/expense | -71,631 | 379,188 |
Interest expense | 228,294 | 167,894 |
Total other income | -10,459,381 | -4,942,054 |
Net loss | -2,457,949 | -6,849,815 |
Net loss attributed to non-controlling interests | -6,401 | -19,079 |
Net loss attributed to RestorGenex Corporation | -2,464,350 | -6,868,894 |
Preferred dividends | $171,625 | $497,167 |
Net loss attributable to RestorGenex Corporation common shareholders | -2,635,975 | -7,366,061 |
Basic and diluted loss per share | ($1) | ($8.16) |
RestorGenex | ' | ' |
Revenues | 71,667 | ' |
Cost of revenues | 0 | ' |
Gross profit | 71,667 | ' |
Operating expenses | ' | ' |
General, administrative, research and development | 2,008,118 | ' |
Impairment of intangible assets | 1,935,621 | ' |
Warrants, options and stock | 4,228,317 | ' |
Fair value of common stock exchanged for warrants | 3,069,792 | ' |
Legal and professional services | 1,071,392 | ' |
Depreciation and amortization | 675,757 | ' |
Total operating expenses | 12,988,997 | ' |
Other (income)/expenses | ' | ' |
(Gain)/loss on adjustments to fair value of derivative liability | -8,980,077 | ' |
Gain on extinguishment of derivative liability | -1,183,093 | ' |
Other (income)/expense | -524,505 | ' |
Interest expense | 228,294 | ' |
Total other income | -10,459,381 | ' |
Net loss | -2,457,949 | ' |
Net loss attributed to non-controlling interests | -6,401 | ' |
Net loss attributed to RestorGenex Corporation | -2,464,350 | ' |
Preferred dividends | $171,625 | ' |
Net loss attributable to RestorGenex Corporation common shareholders | -2,635,975 | ' |
Basic and diluted loss per share | ($1) | ' |
Basic and fully-diluted weighted average shares outstanding | 2,646,603 | ' |
Pro Forma Adjustments forB Canterbury and Hygeia (b) | ' | ' |
Revenues | 127,167 | ' |
Cost of revenues | 89,387 | ' |
Gross profit | 37,780 | ' |
Operating expenses | ' | ' |
General, administrative, research and development | 265,260 | ' |
Impairment of intangible assets | 0 | ' |
Warrants, options and stock | 0 | ' |
Fair value of common stock exchanged for warrants | 0 | ' |
Legal and professional services | 326,646 | ' |
Depreciation and amortization | 14,781 | ' |
Total operating expenses | 606,687 | ' |
Other (income)/expenses | ' | ' |
(Gain)/loss on adjustments to fair value of derivative liability | 0 | ' |
Gain on extinguishment of derivative liability | 0 | ' |
Other (income)/expense | 0 | ' |
Interest expense | 20,267 | ' |
Total other income | 20,267 | ' |
Net loss | -589,174 | ' |
Net loss attributed to non-controlling interests | 0 | ' |
Net loss attributed to RestorGenex Corporation | -589,174 | ' |
Preferred dividends | $0 | ' |
Net loss attributable to RestorGenex Corporation common shareholders | -589,174 | ' |
Other Pro Forma Adjustments | ' | ' |
Revenues | 0 | ' |
Cost of revenues | 0 | ' |
Gross profit | 0 | ' |
Operating expenses | ' | ' |
General, administrative, research and development | 503,732 | ' |
Impairment of intangible assets | 0 | ' |
Warrants, options and stock | 0 | ' |
Fair value of common stock exchanged for warrants | 0 | ' |
Legal and professional services | 0 | ' |
Depreciation and amortization | 659,958 | ' |
Total operating expenses | 1,163,690 | ' |
Other (income)/expenses | ' | ' |
(Gain)/loss on adjustments to fair value of derivative liability | 0 | ' |
Gain on extinguishment of derivative liability | 0 | ' |
Other (income)/expense | 0 | ' |
Interest expense | 0 | ' |
Total other income | 0 | ' |
Net loss | -1,163,690 | ' |
Net loss attributed to non-controlling interests | 0 | ' |
Net loss attributed to RestorGenex Corporation | -1,163,690 | ' |
Preferred dividends | $0 | ' |
Net loss attributable to RestorGenex Corporation common shareholders | -1,163,690 | ' |
Basic and fully-diluted weighted average shares outstanding | 1,014,623 | ' |
Pro Forma Combined | ' | ' |
Revenues | 198,834 | ' |
Cost of revenues | 89,387 | ' |
Gross profit | 109,447 | ' |
Operating expenses | ' | ' |
General, administrative, research and development | 2,777,110 | ' |
Impairment of intangible assets | 1,935,621 | ' |
Warrants, options and stock | 4,228,317 | ' |
Fair value of common stock exchanged for warrants | 3,069,792 | ' |
Legal and professional services | 1,398,038 | ' |
Depreciation and amortization | 1,350,496 | ' |
Total operating expenses | 14,759,374 | ' |
Other (income)/expenses | ' | ' |
(Gain)/loss on adjustments to fair value of derivative liability | -8,980,077 | ' |
Gain on extinguishment of derivative liability | -1,183,093 | ' |
Other (income)/expense | -524,505 | ' |
Interest expense | 248,561 | ' |
Total other income | -10,439,114 | ' |
Net loss | -4,210,813 | ' |
Net loss attributed to non-controlling interests | -6,401 | ' |
Net loss attributed to RestorGenex Corporation | -4,217,214 | ' |
Preferred dividends | $171,625 | ' |
Net loss attributable to RestorGenex Corporation common shareholders | ($4,388,839) | ' |
Basic and diluted loss per share | ($1.20) | ' |
Basic and fully-diluted weighted average shares outstanding | 3,661,226 | ' |