Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2015 | Nov. 10, 2015 | |
Document and Entity Information: | ||
Entity Registrant Name | DIAMONDHEAD CASINO CORP | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2015 | |
Trading Symbol | dhcc | |
Amendment Flag | false | |
Entity Central Index Key | 844,887 | |
Current Fiscal Year End Date | --12-31 | |
Entity Common Stock, Shares Outstanding | 36,297,576 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Current Reporting Status | Yes | |
Entity Voluntary Filers | No | |
Entity Well-known Seasoned Issuer | No | |
Document Fiscal Year Focus | 2,015 | |
Document Fiscal Period Focus | Q3 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) | Sep. 30, 2015 | Dec. 31, 2014 |
Current assets | ||
Cash | $ 87,599 | $ 843,083 |
Other current assets | 4,432 | 36,655 |
Total current assets | 92,031 | 879,738 |
Land held for development (Note 3) | 5,476,097 | 5,476,097 |
Deferred financing costs (net of amortization of $46,715 at September 30, 2015 and $18,518 at December 31, 2014) | 154,385 | 182,582 |
Other assets | 80 | 80 |
Total assets | 5,722,593 | 6,538,497 |
Current liabilities | ||
Notes payable | 1,962,500 | 1,962,500 |
Short term financing agreement | 14,905 | |
Accounts payable and accrued expenses | 3,747,634 | 3,304,479 |
Total current liabilities | 5,710,134 | 5,281,884 |
Debenture payable (net of unamortized discount of $48,096 at September 30, 2015 and $48,887 at December 31, 2014) | 1,914 | 1,113 |
Convertible debentures payable (net of unamortized discount of $1,744,285 at September 30, 2015 and $1,778,859 at December 31, 2014 ) | 55,715 | 21,141 |
Derivative liability | 2,965,722 | 3,754,233 |
Total liabilities | $ 8,733,485 | $ 9,058,371 |
Commitments and contingencies (Notes 8 and 9) | ||
Stockholders' deficiency | ||
Preferred stock, $.01 par value; shares authorized 5,000,000, outstanding 2,086,000 at September 30,2015 and December 31, 2014 (aggregate liquidation preference of $2,519,080 at September 30, 2015 and December 31, 2014) | $ 20,860 | $ 20,860 |
Common stock, $.001 par value; shares authorized 50,000,000, Issued: 39,052,472 at September 30, 2015 and December 31, 2014, outstanding: 36,297,576 at September 30, 2015 and December 31, 2014 | 39,052 | 39,052 |
Additional paid-in capital | 35,863,871 | 35,568,649 |
Unearned ESOP shares | (3,558,078) | (3,558,078) |
Accumulated Deficit | (35,247,791) | (34,461,551) |
Treasury stock, at cost, 368,526 shares at September 30, 2015 and December 31, 2014 | (128,806) | (128,806) |
Total stockholders' deficit | (3,010,892) | (2,519,874) |
Total liabilities and stockholder' deficit | $ 5,722,593 | $ 6,538,497 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (PARENTHETICAL) - USD ($) | Sep. 30, 2015 | Dec. 31, 2014 |
Deferred financing costs, amortization | $ 46,715 | $ 18,518 |
Preferred stock, par or stated value | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | 2,086,000 | 2,086,000 |
Preferred stock, shares outstanding | 2,086,000 | 2,086,000 |
Preferred stock, aggregate liquidation preference | $ 2,519,080 | $ 2,519,080 |
Common stock, par or stated value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 50,000,000 | 50,000,000 |
Common stock, shares issued | 39,052,472 | 39,052,472 |
Common stock, shares outstanding | 36,297,576 | 36,297,576 |
Treasury stock, shares | 368,526 | 368,526 |
Corporate Debt Securities | ||
Unamortized discount | $ 48,096 | $ 48,887 |
Convertible Debt Securities | ||
Unamortized discount | $ 1,744,285 | $ 1,778,859 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF (LOSS) INCOME - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
COSTS AND EXPENSES | ||||
Administrative and General | $ 197,945 | $ 272,642 | $ 822,502 | $ 694,351 |
Stock-based compensation | 295,222 | 295,222 | ||
Amortization | 9,503 | 6,193 | 28,198 | 12,325 |
Other | 15,532 | 13,990 | 52,691 | 41,970 |
Costs and Expenses | 518,202 | 292,825 | 1,198,613 | 748,646 |
OTHER (EXPENSE) INCOME | ||||
Amortization of Debt Discount | (9,595) | (3,094) | (35,375) | (18,541) |
Interest Expense | (95,478) | (74,681) | (264,563) | (221,424) |
Change in Fair Value of Derivative Liability | (87,461) | 445,042 | 788,511 | (849,148) |
Other | 6,214 | |||
Other (Expense) Income | (192,534) | 367,267 | 488,573 | (1,082,899) |
NET INCOME (LOSS) | (710,736) | 74,442 | (710,040) | (1,831,545) |
PREFERRED STOCK DIVIDENDS | (25,400) | (25,400) | (76,200) | (76,200) |
NET (LOSS) INCOME APPLICABLE TO COMMON STOCKHOLDERS | $ (736,136) | $ 49,042 | $ (786,240) | $ (1,907,745) |
Net (loss) earnings per common share, basic | $ (0.020) | $ 0.001 | ||
Net (loss) earnings per common share, fully diluted | $ (0.020) | $ 0.001 | ||
Net (loss) per common share, basic and fully diluted | $ (0.020) | $ (0.053) | ||
Weighted average number of common shares, basic | 36,297,576 | 36,297,576 | ||
Weighted average number of common shares, basic and fully diluted | 36,297,576 | 36,297,576 | ||
Weighted average number of common shares, fully diluted | 36,297,576 | 44,971,075 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
OPERATING ACTIVITIES | ||
Net loss | $ (710,040) | $ (1,831,545) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Amortization | 28,198 | 12,325 |
(Decrease) increase in fair value of derivative liability | (788,511) | 849,148 |
Amortization of debt discount | 35,375 | 18,541 |
Stock-based compensation | 295,222 | |
Increase (decrease) in other current assets | 32,223 | (8,381) |
Increase in accounts payable and accrued expenses | 366,954 | 305,071 |
Net cash used in operating activities | (740,579) | (654,841) |
FINANCING ACTIVITIES | ||
Proceeds from Private Placements, net of financing costs | 885,000 | |
Proceeds from Short Term Note | 1,836 | |
Payment of Short Term Note | (14,905) | (12,161) |
Net cash (used in) provided by financing activities | (14,905) | 874,675 |
Net (decrease) increase in cash | (755,484) | 219,834 |
Cash beginning of period | 843,083 | 7,106 |
Cash end of period | 87,599 | 226,940 |
Cash paid for interest | 10,835 | 1,884 |
Non-Cash Financing activities: | ||
Warrants included in deferred financing costs | 25,100 | 16,210 |
Unpaid preferred stock dividends included in accounts payable and accrued expenses | $ 431,800 | $ 330,200 |
Note 1. Organization and Busine
Note 1. Organization and Business | 9 Months Ended |
Sep. 30, 2015 | |
Notes | |
Note 1. Organization and Business | Note 1. Organization and Business Diamondhead Casino Corporation and Subsidiaries (the Company) own a total of approximately 404.5 acres of unimproved land in Diamondhead, Mississippi on which the Company plans, unilaterally, or in conjunction with one or more partners, to construct a casino resort and hotel and associated amenities. The Company was originally formed to principally own, operate and promote gaming vessels offering day and evening cruises in international waters. The Company's Common Stock was previously registered with the Securities and Exchange Commission and traded on the over-the-counter (OTC) market under the symbol DHCC. The Company's stock registration was revoked effective September 4, 2014, at which time the Company's Common Stock ceased trading in the public market. On March 31, 2015, the Company filed a registration statement on Form 10 to again register its stock with the SEC. The registration became effective May 30, 2015. On or about October 15, 2015, the Company's Common Stock resumed trading on the over-the-counter (OTC) market under the symbol "DHCC". |
Note 2. Liquidity and Going Con
Note 2. Liquidity and Going Concern | 9 Months Ended |
Sep. 30, 2015 | |
Notes | |
Note 2. Liquidity and Going Concern | Note 2. Liquidity and Going Concern These condensed consolidated financial statements have been prepared on the basis that the Company is a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has incurred losses over the past several years, has no operations and generates no operating revenues. During the nine months ended September 30, 2015 and 2014 the Company incurred net losses applicable to common shareholders, exclusive of the recording of change in the fair value of derivatives, of $1,574,751 and $1,058,597, respectively. The Company has had no operations since it ended its gambling cruise ship operations in 2000. Since that time, the Company has concentrated its efforts on the development of its Diamondhead, Mississippi Property . In the recent past, in order to raise capital to continue to pay on-going costs and expenses, the Company has borrowed funds and offered, through Private Placements, convertible instruments more fully described in Notes 5 and 6 to these condensed consolidated financial statements. |
Note 3. Summary of Significant
Note 3. Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2015 | |
Notes | |
Note 3. Summary of Significant Accounting Policies | Note 3. Summary of Significant Accounting Policies The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP) for interim financial information pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). In the opinion of management, all adjustments, consisting of normal recurring adjustments considered necessary for a fair presentation of the financial statements, have been included. Interim results are not necessarily indicative of results to be expected for the full year. The interim financial information should be read in conjunction with information included in the 2014 year-end financial statements attached to our registration statement filed on Form 10 as Exhibit 99.1. Principles of Consolidation The condensed consolidated financial statements include the accounts of Diamondhead Casino Corporation and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. Estimates The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Cash and Cash Equivalents The Company considers all short term highly liquid investments with a maturity of three months or less to be cash equivalents. Land Held for Development Land held for development is carried at cost. Costs directly related to site development, such as licenses, permitting, engineering, and other costs, are capitalized. Land development costs, which have been capitalized, consist of the following: Land under development $4,934,323 Licenses 77,000 Engineering and costs associated with permitting 464,774 $5,476,097 Fair Value Measurements The Company follows the provisions of ASC Topic 820 Fair Value Measurements for financial assets and liabilities. This standard defines fair value, provides guidance for measuring fair value and requires certain disclosures. The standard discusses valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flow), and the cost approach (cost to replace the service capacity of an asset or replacement cost). The standard utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels: Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2: Input other than quoted prices that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active. Level 3: Unobservable input that reflects The table listed below provides a reconciliation of the beginning and ending net balances for the derivative liability measured at fair value using significant unobservable inputs (Level 3) for the nine months ended September 30, 2015 and for the year ended December 31, 2014: September 30, December 31, 2015 2014 Beginning balance $3,754,233 $- Total decrease in unrealized appreciation (depreciation) included in net assets (788,511) 1,904,233 Purchases, other settlements and issuances, net - 1,850,000 Ending balance $2,965,722 $3,754,233 Sensitivity Analysis to Changes in Level 3 Assumptions Significant inputs include the expected dates when required conditions are met under the conversion terms of the debentures, the underlying market cap due to borrowings and losses, and discount for lack of marketability inasmuch as the stock was not trading during the nine months ending September 30, 2015. In addition, use of different ranges of bond discount rates and changes in historical volatility rates would also result in a higher or lower fair value. Current assets and current liabilities are financial instruments and management believes that their carrying amounts are reasonable estimates of their fair values due to their short term nature. The convertible debentures and derivative liability are further discussed in Note 6. Long-Lived Assets The Company reviews long-lived assets whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. Recoverability of long-lived assets is measured by comparing the carrying amount of the assets to the estimated undiscounted future cash flows projected to be generated by the assets. If such assets are considered impaired, the impairment to be recognized is measured by the amount the carrying value exceeds the fair value of such assets determined by appraisal, discounted cash flow projections, or other means. No impairment existed as of September 30, 2015. Net Earnings (Loss) per Common Share Basic earnings/(loss) per share is computed by dividing net income/(loss) available to common stockholders by the weighted average number of common shares outstanding. Fully diluted earnings per share are calculated by using the weighted average number of common shares outstanding, plus other potentially dilutive securities. Common shares outstanding consist of issued shares, including allocated and committed shares held by the ESOP trust, less shares held in treasury. The dilutive securities below do not include 5,055,555 potentially Convertible Debentures since the requirements for possible conversion have not yet, and may never be, met. The table below summarizes the components of potential dilutive securities at September 30, 2015 and 2014. Sept. 30, Sept. 30, Description 2015 2014 Convertible Preferred Stock 260,000 260,000 Options to Purchase Common Shares 3,440,000 3,440,000 Private Placement Warrants 2,086,500 3,011,500 Convertible Promissory Notes 1,925,000 1,925,000 Total 7,711,500 8,636,500 Segment Information Operating segments are components of a company about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. The Company currently operates solely in one segment, development of land, which relates to planned future operations. Stock Based Compensation The Company follows the provisions of ASC Topic 718 Compensation - Stock Compensation which requires the measurement and recognition of compensation expense for all share-based payment awards either modified or granted to employees and directors based upon estimated fair values. In the third quarter of 2015, the Board of Directors voted to extend the expiration date of a previously-awarded option to the President to purchase 750,000 shares of common stock at $0.30 per share from October 27, 2015 to March 13, 2018 and voted to extend the expiration date of a previously-awarded option to the President to purchase 75,000 shares of common stock at $0.75 per share from October 27, 2015 to March 13, 2018. In addition, in the third quarter of 2015, the Board of Directors voted to extend the expiration date of a previously-awarded option granted to the current Chairman to purchase 150,000 shares of common stock at $1.25 per share, from October 27, 2015 to March 13, 2018 and to extend the expiration date of a previously-awarded option to purchase common stock granted to a Director of the Company to purchase 75,000 shares of common stock at $0.75, from October 27, 2015 to March 13, 2018. The Company also extended the expiration date on options issued to former employees of the Company and an Honorary Director of the Company to purchase a combined total of 90,000 shares of common stock at $0.75 per share, from October 27, 2015 to March 13, 2018. In determining the fair value of each option modified, the Black-Scholes option-pricing model, consistent with the provisions of ASC Topic 718, was used. The valuations were determined using the weighted-average assumptions of 0% dividend yield, expected volatility of 209% and risk-free interest rates ranging from 0.027 to 0.97%. This resulted in a charge to the statement of loss in the amount of $295,222, increasing the loss per share of common stock $0.008 for the nine months ending September 30, 2015. Option valuation models require the input of highly subjective assumptions, including the expected stock price volatility. The Company uses projected volatility rates, which are based upon historical volatility rates, trended into future years. Because the Companys employee stock options have characteristics significantly different from those of traded options, and because changes in the subjective input assumptions can materially affect the fair value estimate, in managements opinion, the existing models do not necessarily provide a reliable single measure of the fair value of the Companys options. |
Note 4. Accounts Payable and Ac
Note 4. Accounts Payable and Accrued Expenses | 9 Months Ended |
Sep. 30, 2015 | |
Notes | |
Note 4. Accounts Payable and Accrued Expenses | Note 4 Accounts Payable and Accrued Expenses The table below outlines the elements included in accounts payable and accrued expenses at September 30, 2015 and December 31, 2014: September 30, December 31, Description 2015 2014 Accrued payroll due officers 1,394,711 1,288,136 Accrued interest due officers 352,682 270,166 Accrued interest 927,616 756,405 Accrued dividends 432,800 355,600 Other accounts payable and accrued expenses 639,825 634,172 Total accounts payable and accrued expenses 3,747,634 3,304,479 Included in other accounts payable and accrued expenses are accrued director fees at September 30, 2015 and December 31, 2014 of $195,000 and $131,250, respectively, and rents payable to the President of the Company in the amounts of $74,654 and $62,062 at September 30, 2015 and December 31, 2014, respectively. |
Note 5. Notes Payable
Note 5. Notes Payable | 9 Months Ended |
Sep. 30, 2015 | |
Notes | |
Note 5. Notes Payable | Note 5. Notes Payable Line of Credit On October 23, 2008, the Company entered into an agreement with an unrelated third party for an unsecured Line of Credit up to a maximum of $1,000,000. The Line of Credit provided for funds to be drawn as needed and carries an interest rate on amounts borrowed of 9% per annum originally payable quarterly based on the pro rata number of days outstanding. All funds originally advanced under the facility were due and payable by November 1, 2012. As an inducement to provide the facility, the lender was awarded an immediate option to purchase 50,000 shares of common stock of the Company at $1.75 per share. In addition, the lender received an option to purchase a maximum of 250,000 additional shares of common stock of the Company at $1.75 per share. The options expire following repayment in full by the Company of the amount borrowed. As of December 31, 2009, the Company had borrowed all of the $1,000,000 available to it under the Line of Credit. Interest on this debt incurred prior to June 30, 2009 has been paid in full. The Company was unable to satisfy the principal obligation of $1,000,000 by the due date of November 1, 2012 or any interest which accrued on the obligation after June 30, 2009 and is in default under the repayment terms of the note. Convertible Notes and Warrants Pursuant to a Private Placement Memorandum dated March 1, 2010, the Company offered Units consisting of a two year unsecured, convertible promissory note in the principal amount of $25,000 with interest at 12% per annum, together with a five year Warrant to purchase 50,000 shares of the Companys common stock at an exercise price of $1.00 per share. The Promissory Note is convertible into 50,000 shares of common stock of the Company immediately upon issuance at the option of the investor. Interest on the notes was originally payable either in cash or common stock at the option of the Company. However, interest may now be required to be paid in cash. The Company ultimately accepted subscriptions totaling $450,000 from unrelated subscribers and an additional $25,000 for one Unit purchased by a Director of the Company. The five-year Warrants issued in connection with the Units have expired. Pursuant to an additional Private Placement Memorandum dated October 25, 2010, the Company offered Units consisting of a two year unsecured, convertible promissory note in the principal amount of $25,000 together with a five year Warrant to purchase 50,000 shares of the Companys common stock at an exercise price of $1.00 per share. The Promissory Notes bear interest at 9% per annum and are convertible into 50,000 shares of common stock of the Company. Interest on the notes was originally payable in either cash or common stock at the option of the Company. However, interest may now be required to be paid in cash. The Company accepted subscriptions totaling $512,500 from unrelated accredited investors. On July 2, 2011, the Company redeemed a note in the principal amount of $25,000 by issuing 50,000 shares of common stock. The Convertible Notes issued via the Private Placements discussed above total $962,500 in aggregate and became due and payable beginning in March 2012 and extending at various dates through June 2013. As of the date of the filing of this report, all of the aforementioned debt obligations remain unpaid and in default under the repayment terms of the notes. The table below summarizes the Companys notes payable at September 30, 2015 and December 31, 2014: Gross Amount Loan Facility Owed Line of Credit $1,000,000 Private Placements: March 1, 2010 475,000 October 25, 2010 487,500 Total Private Placements 962,500 Total Note Payable $1,962,500 |
Note 6. Convertible Debentures
Note 6. Convertible Debentures and Derivative Liability | 9 Months Ended |
Sep. 30, 2015 | |
Notes | |
Note 6. Convertible Debentures and Derivative Liability | Note 6. Convertible Debentures and Derivative Liability Pursuant to a Private Placement Memorandum dated February 14, 2014 (the "Private Placement"), the Company offered up to a maximum of $3,000,000 of Collateralized Convertible Senior Debentures to accredited or institutional investors. The Offering was conducted contingent on the deposit into Escrow of the purchase price for all of the Debentures offered in the principal amount of $3,000,000. The Debentures, once issued, bear interest at 4% per annum after 180 days , (a) $1,000,000 of First Tranche Collateralized Convertible Senior Debentures convertible into an aggregate of 3,333,333 shares of Common Stock of the Company at a conversion price of $.30 per share (the First Tranche Debentures); (b) $1,000,000 of Second Tranche Collateralized Convertible Senior Debentures, convertible into an aggregate of 2,222,222 shares of Common Stock of the Company at a conversion price of $.45 per share (the Second Tranche Debentures); and (c) $1,000,000 of Third Tranche Collateralized Convertible Senior Debentures, convertible into either 1,818,182 shares of Common Stock or 1,333,333 shares of Common Stock of the Company, at a conversion price of $.55 or $.75 per share depending upon certain conditions described in the Private Placement Memorandum (the Third Tranche Debentures). On March 31, 2014, the First Closing occurred when subscriptions in the amount of $3,000,000 were received in Escrow and accepted by the Company. The Escrow Agent released $1,000,000 to the Company and the Company issued First Tranche Debentures in the aggregate principle amount of $1,000,000. The Company's stock registration was revoked effective September 4, 2014. Therefore, on December 4, 2014, the Company extended offers to the investors to amend the Private Placement. The Company offered to amend certain terms and conditions, including the conversion terms of the First Tranche Debentures, which were issued on March 31, 2014 (Amendment I). The Company separately offered to amend certain terms and conditions, including those relating to issuance and conversion of the Second and Third Tranche Debentures, as well as the period of time within which to perform the Third Tranche Closing Obligations, as amended (Amendment II). On December 31, 2014, investors who had purchased $950,000 of First Tranche Debentures consented to the amended conversion terms of Amendment I. The remaining Debenture in the amount of $50,000 remains as originally issued with no conversion rights. Thus, the First Tranche Debentures can be converted into a total of 3,166,666 shares of common stock. On December 31, 2014, the Second Closing occurred when investors representing $850,000 of Second Tranche Debentures consented to Amendment II. The Escrow Agent released $850,000 to the Company and the Company issued Second Tranche Debentures in the aggregate principle amount of $850,000. Thus, the Second Tranche Debentures can be converted into 1,888,889 shares of common stock. The Escrow Agent refunded $300,000 to those investors who did not consent to Amendment II. The Company did not meet the closing obligations for the Third Tranche Debentures as of June 30, 2015, as was required, pursuant to the terms of the Private Placement, as amended. Therefore, the remaining $850,000 being held in escrow for the purchase of the Third Tranche Debentures was returned to the investors in July 2015. For purposes of determining the proper accounting treatment and valuation of the instruments, the Company applied the provisions set forth in ASC Topic 820, "Fair Value in Financial Instruments" and ASC Topic 815, "Accounting for Derivative Instruments and Hedging Activities." Since the Notes issued have derivative features, the embedded derivatives should be bundled and valued as a single, compound embedded derivative, bifurcated from the debt host and treated as a liability. In addition, the valuation is required to be conducted for each reporting period the instrument was in existence. As previously noted, the Companys stock registration was revoked effective September 4, 2014. Therefore the Company engaged an independent valuation expert to determine the fair value of its shares of common stock for each quarter beginning with the quarter ended September 30, 2014 through the quarter ended September 30, 2015. For periods after September 3, 2014, the fair value was estimated by adjusting the most recent market price by changes in the underlying market cap due to changes in the value of net assets and applying a discount for lack of marketability inasmuch as the stock was not trading. Monte Carlo models were developed to value the derivative liability within the Notes using a historical volatility rate of 209% at September 30, 2015 and 172% at December 31, 2014, and using discount bond rates based on the expected remaining term of each instrument ranging from 6.45% to 7.07% at September 30, 2015 and 5.78% to 9.85% at December 31, 2014, with expected conversion requirements being met by October 31, 2015. The estimated September 30, 2015 December 31, 2014 Tranche 1 $1,585,461 $2,014,733 Tranche 2 1,380,261 1,739,500 Derivative Liability $2,965,722 $3,754,233 At the initial valuation date of each Tranche, a portion of the derivative liability was allocated to the Convertible Debentures as debt discount, with the remainder being recorded as other income/expense. At March 31, 2014, the initial valuation of First Tranche Debentures, $1,000,000, was allocated to debt discount and at December 31, 2014, the initial valuation of Second Tranche Debentures, $850,000, was allocated to debt discount. The debt discount is subsequently amortized to expense using an effective interest methodology. Amortization of debt discount amounted to $34,574 for the First Tranche and Second Tranche Convertible Debentures and $801 for the non-convertible Debenture for the nine months ended September 30, 2015. The Company recorded a decrease in the fair value of the derivative liability of $788,511 for the nine months ended September 30, 2015. In the event the Company fails to meet the conditions for conversion of the Debentures, the First Tranche Convertible Debentures, which total $950,000, would be due on March 31, 2020 and the Second Tranche Convertible Debentures, which total $850,000, would be due December 31, 2020. The sole remaining non-convertible Debenture in the amount of $50,000 is due March 31, 2020. As discussed more fully in Note 9, on August 6, 2015 , |
Note 7. Related Party Transacti
Note 7. Related Party Transactions | 9 Months Ended |
Sep. 30, 2015 | |
Notes | |
Note 7. Related Party Transactions | Note 7. Related Party Transactions As of September 30, 2015, the President of the Company, a current Director of the Company, is owed deferred salary in the amount of $1,191,996 and a Vice President, the current Chairman of the Board of Directors of the Company, is owed deferred salary in the amount of $121,140. The Board of directors had previously agreed to pay interest at 9% on the amounts owed. Accrued interest under this agreement for the nine months ended September 30, 2015 and 2014 amounted to $82,797 and $76,540, respectively. Effective September 1, 2011, the Company entered into a month-to-month lease with the President and then-Chairman of the Board of Directors of the Company, for office space in a furnished and fully equipped townhouse office building owned by the President in Alexandria, Virginia. The lease required base rent in the amount of $4,534 per month and payment of associated costs of insurance, real estate taxes, expenses and utilities. Rent expense associated with this lease amounted to $50,779 and $52,982 for the nine months ended September 30, 2015 and 2014, respectively. The President received direct cash payments totaling $36,272 for current rents in the first nine months of 2015. The President received direct cash payments of $100,000 of the $168,665 total for accumulated rents for the period from September 1, 2011 through March 31, 2014 and an additional $27,204 for base rents due April 1, 2014 through September 30, 2014. Directors of the Company are entitled to a Director fee of $15,000 per year for their services. The Company has been unable to pay directors' fees to date. As of September 30, 2015 and 2014 a total of $195,000 and $131,250, respectively, was due and owing to the Companys directors and former directors. Directors have previously been compensated and may, in the future, be compensated for their services with common stock or options to purchase common stock of the Company. |
Note 8. Commitments and Conting
Note 8. Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2015 | |
Notes | |
Note 8. Commitments and Contingencies | Note 8. Commitments and Contingencies Management Agreement On June 19, 1993, two subsidiaries of Diamondhead Casino Corporation, Casino World Inc. and Mississippi Gaming Corporation, entered into a Management Agreement with Casinos Austria Maritime Corporation (CAMC). Subject to certain conditions, under the Management Agreement, CAMC would operate, on an exclusive basis, all of the Companys proposed dockside gaming casinos in the State of Mississippi, including any operation fifty percent (50%) or more of which is owned by the Company or its affiliates. Unless terminated earlier pursuant to the provisions of the Agreement, the Agreement terminates five years from the first day of actual Mississippi gaming operations and provides for the payment of an annual operational term management fee of 1.2% of all gross gaming revenues between zero and $100,000,000; plus 0.75% of gross gaming revenue between $100,000,000 and $140,000,000; plus 0.5% of gross gaming revenue above $140,000,000; plus two percent of the net gaming revenue between zero and $25,000,000; plus three percent of the net gaming revenue above twenty-five million dollars $25,000,000. Management of the Company believes this Agreement is no longer in effect. However, there can be no assurance that CAMC will not attempt to maintain otherwise which would lead to litigation. Related Parties The Company has an agreement with a Director pursuant to which he will be paid a bonus in the event of any recovery received from litigation against BP relating to the oil spill. This Director will receive ten percent of any amounts received by the Company, after deduction of attorney fees and expenses relating to the litigation. Other The Company's obligations under the Collateralized Convertible Senior Debentures are secured by a lien on the Companys Mississippi property (the Investors Lien). Liens were placed on the Property in favor of the Investors for $1,850,000. The Investors Lien is in pari passu The Company is currently delinquent in filing those documents and forms required to be filed in connection with its Employee Stock Ownership Plan ("ESOP") for the years ended December 31, 2010, 2011, 2012, 2013 and 2014. The Company did not have the funds to pay professionals to audit its ESOP and/or prepare and file required documents and forms when due. Although these required filings normally do not result in any tax due to an agency of the government, the Company could be subject to significant penalties for failure to file Litigation College Health & Investment, L.P. v. Diamondhead Casino Corporation (Delaware Superior Court)(C.A. No. N15C-01-119-WCC) On January 15, 2015, the plaintiff, a beneficial owner of in excess of 5% of the common stock of the Company, filed suit for breach of a Promissory Note issued March 25, 2010, in the principle amount of $150,000, with interest payable at 12% per annum, with a maturity date of March 25, 2012. Plaintiff seeks payment of principle of $150,000, interest due through December 31, 2014 in the amount of $45,000, and interest due of 12% per annum from December 31, 2014 until entry of judgment. The Note, as well as the accrued interest thereon, are shown as current liabilities on the Companys balance sheet at September 30, 2015. On January 22, 2015, the defendant forwarded a Notice of Conversion to plaintiff, exercising the Borrower's right to convert the principal and any interest due on the Note into common stock. On February 11, 2015, the Company moved to dismiss the complaint as moot. The plaintiff filed an opposition to the motion to dismiss alleging that the Note was convertible only prior to its maturity date. On July 2, 2015, the Court agreed with the Plaintiff and denied the Company's motion to dismiss. On July 16, 2015, the Company filed an Answer and Grounds of Defense and a demand for a jury trial. On August 18, 2015, the Company filed a Suggestion of Bankruptcy and Automatic Stay. The matter has been stayed due to the below-referenced bankruptcy action (Case No. 15-11647). College Health & Investment, L.P. v. Diamondhead Casino Corporation (In the Court of Chancery of the State of Delaware (C.A. No. 10663-CB) On February 13, 2015, the plaintiff, a beneficial owner in excess of 5% of the common stock of the Company, filed a Verified Complaint Pursuant to 8 Del.C.§211(c), with a Verification signed by the plaintiff's General Partner, Samuel I. Burstyn, seeking an order compelling the Company to hold an annual meeting. The Company agreed to entry of an Order setting a new date for an annual meeting of June 8, 2015, a Record Date of April 24, 2015, and to clarify that there is no advance notice requirement for the submission of stockholder proposals at the Company's annual stockholders' meetings. The plaintiff sought costs and expenses, including attorneys' fees. On or about July 7, 2015, the Plaintiff filed a Motion for an Award of Attorneys' Fees and Reimbursement of Expenses in the total amount of $150,000 for both this case and the following case. The Company filed an opposition to this motion. On August 18, 2015, the Company filed a Suggestion of Bankruptcy and Automatic Stay. The matter has been stayed due to the below-referenced bankruptcy action (Case No. 15-11647). College Health & Investment, L.P. v. Edson R. Arneault, Deborah A. Vitale, Gregory A. Harrison, Martin Blount and Benjamin Harrell(In the Court of Chancery of the State of Delaware)(C.A. No. 10793-CB) On March 14, 2015, the plaintiff, a beneficial owner in excess of 5% of the common stock of the Company, filed a Verified Complaint, with a Verification signed by the plaintiff's General Partner, Samuel I. Burstyn. In Count I, the plaintiff alleges that the defendants breached their fiduciary duty of disclosure. In Count II, the plaintiff alleges that defendants breached their fiduciary duties of loyalty and care. The plaintiff sought injunctive relief, but no monetary damages other than attorneys fees. The defendants believe that plaintiff's claims are without merit and intend to vigorously defend this lawsuit. In addition, on or about July 30, 2015, the defendant directors filed Defendants' Answer and Verified Counterclaims for defamation, breach of fiduciary duty and aiding and abetting a breach of fiduciary duty. On August 19, 2015, the plaintiff filed a Motion to Dismiss the Counterclaims. As noted above, on or about July 7, 2015, the Plaintiff filed a Motion for an Award of Attorneys' Fees and Reimbursement of Expenses in the total amount of $150,000 in this case and the above-referenced case. On or about August 26, 2015, the defendants filed an Opposition to Plaintiff's Motion for an Award of Fees and Reimbursement of Expenses. On September 25, 2015, the parties entered into a Stipulation and [Proposed] Order Staying Litigation pending the below-referenced bankruptcy action. (Case No. 15-11647). In re Diamondhead Casino Corporation (United States Bankruptcy Court)(District of Delaware)(Case No. 15-11647-LSS) On August 6, 2015 , |
Note 3. Summary of Significan14
Note 3. Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2015 | |
Policies | |
Principles of Consolidation | Principles of Consolidation The condensed consolidated financial statements include the accounts of Diamondhead Casino Corporation and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. |
Estimates | Estimates The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all short term highly liquid investments with a maturity of three months or less to be cash equivalents. |
Land Held For Development | Land Held for Development Land held for development is carried at cost. Costs directly related to site development, such as licenses, permitting, engineering, and other costs, are capitalized. Land development costs, which have been capitalized, consist of the following: Land under development $4,934,323 Licenses 77,000 Engineering and costs associated with permitting 464,774 $5,476,097 |
Fair Value Measurements | Fair Value Measurements The Company follows the provisions of ASC Topic 820 Fair Value Measurements for financial assets and liabilities. This standard defines fair value, provides guidance for measuring fair value and requires certain disclosures. The standard discusses valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flow), and the cost approach (cost to replace the service capacity of an asset or replacement cost). The standard utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels: Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2: Input other than quoted prices that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active. Level 3: Unobservable input that reflects The table listed below provides a reconciliation of the beginning and ending net balances for the derivative liability measured at fair value using significant unobservable inputs (Level 3) for the nine months ended September 30, 2015 and for the year ended December 31, 2014: September 30, December 31, 2015 2014 Beginning balance $3,754,233 $- Total decrease in unrealized appreciation (depreciation) included in net assets (788,511) 1,904,233 Purchases, other settlements and issuances, net - 1,850,000 Ending balance $2,965,722 $3,754,233 |
Sensitivity Analysis To Changes in Level 3 Assumptions | Sensitivity Analysis to Changes in Level 3 Assumptions Significant inputs include the expected dates when required conditions are met under the conversion terms of the debentures, the underlying market cap due to borrowings and losses, and discount for lack of marketability inasmuch as the stock was not trading during the nine months ending September 30, 2015. In addition, use of different ranges of bond discount rates and changes in historical volatility rates would also result in a higher or lower fair value. Current assets and current liabilities are financial instruments and management believes that their carrying amounts are reasonable estimates of their fair values due to their short term nature. The convertible debentures and derivative liability are further discussed in Note 6. |
Long-lived Assets | Long-Lived Assets The Company reviews long-lived assets whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. Recoverability of long-lived assets is measured by comparing the carrying amount of the assets to the estimated undiscounted future cash flows projected to be generated by the assets. If such assets are considered impaired, the impairment to be recognized is measured by the amount the carrying value exceeds the fair value of such assets determined by appraisal, discounted cash flow projections, or other means. No impairment existed as of September 30, 2015. |
Net Earnings (loss) Per Common Share | Net Earnings (Loss) per Common Share Basic earnings/(loss) per share is computed by dividing net income/(loss) available to common stockholders by the weighted average number of common shares outstanding. Fully diluted earnings per share are calculated by using the weighted average number of common shares outstanding, plus other potentially dilutive securities. Common shares outstanding consist of issued shares, including allocated and committed shares held by the ESOP trust, less shares held in treasury. The dilutive securities below do not include 5,055,555 potentially Convertible Debentures since the requirements for possible conversion have not yet, and may never be, met. The table below summarizes the components of potential dilutive securities at September 30, 2015 and 2014. Sept. 30, Sept. 30, Description 2015 2014 Convertible Preferred Stock 260,000 260,000 Options to Purchase Common Shares 3,440,000 3,440,000 Private Placement Warrants 2,086,500 3,011,500 Convertible Promissory Notes 1,925,000 1,925,000 Total 7,711,500 8,636,500 |
Segment Information | Segment Information Operating segments are components of a company about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. The Company currently operates solely in one segment, development of land, which relates to planned future operations. |
Stock Based Compensation | Stock Based Compensation The Company follows the provisions of ASC Topic 718 Compensation - Stock Compensation which requires the measurement and recognition of compensation expense for all share-based payment awards either modified or granted to employees and directors based upon estimated fair values. In the third quarter of 2015, the Board of Directors voted to extend the expiration date of a previously-awarded option to the President to purchase 750,000 shares of common stock at $0.30 per share from October 27, 2015 to March 13, 2018 and voted to extend the expiration date of a previously-awarded option to the President to purchase 75,000 shares of common stock at $0.75 per share from October 27, 2015 to March 13, 2018. In addition, in the third quarter of 2015, the Board of Directors voted to extend the expiration date of a previously-awarded option granted to the current Chairman to purchase 150,000 shares of common stock at $1.25 per share, from October 27, 2015 to March 13, 2018 and to extend the expiration date of a previously-awarded option to purchase common stock granted to a Director of the Company to purchase 75,000 shares of common stock at $0.75, from October 27, 2015 to March 13, 2018. The Company also extended the expiration date on options issued to former employees of the Company and an Honorary Director of the Company to purchase a combined total of 90,000 shares of common stock at $0.75 per share, from October 27, 2015 to March 13, 2018. In determining the fair value of each option modified, the Black-Scholes option-pricing model, consistent with the provisions of ASC Topic 718, was used. The valuations were determined using the weighted-average assumptions of 0% dividend yield, expected volatility of 209% and risk-free interest rates ranging from 0.027 to 0.97%. This resulted in a charge to the statement of loss in the amount of $295,222, increasing the loss per share of common stock $0.008 for the nine months ending September 30, 2015. Option valuation models require the input of highly subjective assumptions, including the expected stock price volatility. The Company uses projected volatility rates, which are based upon historical volatility rates, trended into future years. Because the Companys employee stock options have characteristics significantly different from those of traded options, and because changes in the subjective input assumptions can materially affect the fair value estimate, in managements opinion, the existing models do not necessarily provide a reliable single measure of the fair value of the Companys options. |
Note 3. Summary of Significan15
Note 3. Summary of Significant Accounting Policies: Land Held For Development: Land development costs (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Tables/Schedules | |
Land development costs | Land development costs, which have been capitalized, consist of the following: Land under development $4,934,323 Licenses 77,000 Engineering and costs associated with permitting 464,774 $5,476,097 |
Note 3. Summary of Significan16
Note 3. Summary of Significant Accounting Policies: Fair Value Measurements: Schedule of Derivative Liability Reconciliation (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Tables/Schedules | |
Schedule of Derivative Liability Reconciliation | September 30, December 31, 2015 2014 Beginning balance $3,754,233 $- Total decrease in unrealized appreciation (depreciation) included in net assets (788,511) 1,904,233 Purchases, other settlements and issuances, net - 1,850,000 Ending balance $2,965,722 $3,754,233 |
Note 3. Summary of Significan17
Note 3. Summary of Significant Accounting Policies: Net Earnings (loss) Per Common Share: Schedule of Components of Potential Dilutive Securities (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Tables/Schedules | |
Schedule of Components of Potential Dilutive Securities | The table below summarizes the components of potential dilutive securities at September 30, 2015 and 2014. Sept. 30, Sept. 30, Description 2015 2014 Convertible Preferred Stock 260,000 260,000 Options to Purchase Common Shares 3,440,000 3,440,000 Private Placement Warrants 2,086,500 3,011,500 Convertible Promissory Notes 1,925,000 1,925,000 Total 7,711,500 8,636,500 |
Note 4. Accounts Payable and 18
Note 4. Accounts Payable and Accrued Expenses: Schedule of Accounts Payable and Accrued Expenses (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Tables/Schedules | |
Schedule of Accounts Payable and Accrued Expenses | The table below outlines the elements included in accounts payable and accrued expenses at September 30, 2015 and December 31, 2014: September 30, December 31, Description 2015 2014 Accrued payroll due officers 1,394,711 1,288,136 Accrued interest due officers 352,682 270,166 Accrued interest 927,616 756,405 Accrued dividends 432,800 355,600 Other accounts payable and accrued expenses 639,825 634,172 Total accounts payable and accrued expenses 3,747,634 3,304,479 |
Note 5. Notes Payable_ Schedule
Note 5. Notes Payable: Schedule of Notes Payable (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Tables/Schedules | |
Schedule of Notes Payable | The table below summarizes the Companys notes payable at September 30, 2015 and December 31, 2014: Gross Amount Loan Facility Owed Line of Credit $1,000,000 Private Placements: March 1, 2010 475,000 October 25, 2010 487,500 Total Private Placements 962,500 Total Note Payable $1,962,500 |
Note 6. Convertible Debenture20
Note 6. Convertible Debentures and Derivative Liability: Schedule of Derivative Liabilities at Fair Value (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Tables/Schedules | |
Schedule of Derivative Liabilities at Fair Value | The estimated September 30, 2015 December 31, 2014 Tranche 1 $1,585,461 $2,014,733 Tranche 2 1,380,261 1,739,500 Derivative Liability $2,965,722 $3,754,233 |
Note 1. Organization and Busi21
Note 1. Organization and Business (Details) | Sep. 30, 2015a |
Details | |
Area of Land, owned | 404.5 |
Note 2. Liquidity and Going C22
Note 2. Liquidity and Going Concern (Details) - USD ($) | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Details | ||
Net loss applicable to common shareholders, exclusive of change in fair value of derivative | $ (1,574,751) | $ (1,058,597) |
Note 3. Summary of Significan23
Note 3. Summary of Significant Accounting Policies: Land Held For Development: Land development costs (Details) - USD ($) | 9 Months Ended | |
Sep. 30, 2015 | Dec. 31, 2014 | |
Details | ||
Land under development | $ 4,934,323 | |
Licenses | 77,000 | |
Engineering and costs associated with permitting | 464,774 | |
Land held for development | $ 5,476,097 | $ 5,476,097 |
Note 3. Summary of Significan24
Note 3. Summary of Significant Accounting Policies: Fair Value Measurements: Schedule of Derivative Liability Reconciliation (Details) - Derivative Financial Instruments, Liabilities - USD ($) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2015 | Dec. 31, 2014 | |
Beginning balance | $ 3,754,233 | $ 0 |
Total decrease in unrealized appreciation (depreciation) included in net assets | (788,511) | 1,904,233 |
Purchases, other settlements and issuances, net | 0 | 1,850,000 |
Ending balance | $ 2,965,722 | $ 3,754,233 |
Note 3. Summary of Significan25
Note 3. Summary of Significant Accounting Policies: Net Earnings (loss) Per Common Share (Details) | 9 Months Ended |
Sep. 30, 2015shares | |
Convertible Debt Securities | |
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 5,055,555 |
Note 3. Summary of Significan26
Note 3. Summary of Significant Accounting Policies: Net Earnings (loss) Per Common Share: Schedule of Components of Potential Dilutive Securities (Details) - shares | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Details | ||
Convertible Preferred Stock | 260,000 | 260,000 |
Options to Purchase Common Shares | 3,440,000 | 3,440,000 |
Private Placement Warrants | 2,086,500 | 3,011,500 |
Convertible Promissory Notes | 1,925,000 | 1,925,000 |
Total | 7,711,500 | 8,636,500 |
Note 3. Summary of Significan27
Note 3. Summary of Significant Accounting Policies: Stock Based Compensation (Details) - Employee Stock Option | 9 Months Ended |
Sep. 30, 2015USD ($)$ / sharesshares | |
Fair Value Assumptions, Method Used | Black-Scholes option-pricing model |
Dividend yield | 0.00% |
Expected volatility | 209.00% |
Allocated Share-based Compensation Expense | $ | $ 295,222 |
Increase in loss per share attributable to share based compensation | $ 0.008 |
Minimum | |
Risk-free interest rate | 0.03% |
Maximum | |
Risk-free interest rate | 0.97% |
President | Award 1 | |
Deferred Compensation Arrangement with Individual, Shares Issued | shares | 750,000 |
Deferred Compensation Arrangement with Individual, Exercise Price | $ 0.30 |
President | Award 2 | |
Deferred Compensation Arrangement with Individual, Shares Issued | shares | 75,000 |
Deferred Compensation Arrangement with Individual, Exercise Price | $ 0.75 |
Board of Directors Chairman | |
Deferred Compensation Arrangement with Individual, Shares Issued | shares | 150,000 |
Deferred Compensation Arrangement with Individual, Exercise Price | $ 1.25 |
Director | |
Deferred Compensation Arrangement with Individual, Shares Issued | shares | 75,000 |
Deferred Compensation Arrangement with Individual, Exercise Price | $ 0.75 |
Former Employees and Honorary Director | |
Deferred Compensation Arrangement with Individual, Shares Issued | shares | 90,000 |
Deferred Compensation Arrangement with Individual, Exercise Price | $ 0.75 |
Note 4. Accounts Payable and 28
Note 4. Accounts Payable and Accrued Expenses: Schedule of Accounts Payable and Accrued Expenses (Details) - USD ($) | Sep. 30, 2015 | Dec. 31, 2014 |
Details | ||
Accrued payroll due officers | $ 1,394,711 | $ 1,288,136 |
Accrued interest due officers | 352,682 | 270,166 |
Accrued interest | 927,616 | 756,405 |
Accrued dividends | 432,800 | 355,600 |
Other accounts payable and accrued expenses | 639,825 | 634,172 |
Total accounts payable and accrued expenses | $ 3,747,634 | $ 3,304,479 |
Note 4. Accounts Payable and 29
Note 4. Accounts Payable and Accrued Expenses (Details) - USD ($) | Sep. 30, 2015 | Dec. 31, 2014 | Jun. 30, 2014 |
Accrued payroll due officers | $ 1,394,711 | $ 1,288,136 | |
Director | |||
Accrued payroll due officers | 195,000 | 131,250 | $ 131,250 |
President | |||
Accrued payroll due officers | 1,191,996 | ||
Accrued Rent, Current | $ 74,654 | $ 62,062 |
Note 5. Notes Payable (Details)
Note 5. Notes Payable (Details) - USD ($) | 1 Months Ended | 9 Months Ended | ||||||
Jul. 31, 2011 | Oct. 31, 2008 | Sep. 30, 2015 | Dec. 31, 2014 | Oct. 25, 2010 | Mar. 01, 2010 | Dec. 31, 2009 | Oct. 23, 2008 | |
Line of Credit Facility, Maximum Borrowing Capacity | $ 1,000,000 | |||||||
Notes payable | $ 1,962,500 | $ 1,962,500 | ||||||
Line of Credit | ||||||||
Debt Instrument, Interest Rate, Stated Percentage | 9.00% | |||||||
Debt Instrument, Maturity Date | Nov. 1, 2012 | |||||||
Long-term Line of Credit | $ 1,000,000 | |||||||
Notes payable | $ 1,000,000 | |||||||
Line of Credit | Employee Stock Option | October 23, 2008 | ||||||||
Options, Granted | 50,000 | |||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested, Weighted Average Grant Date Fair Value | $ 1.75 | |||||||
Line of Credit | Employee Stock Option | October 23, 2008 - 2 | ||||||||
Options, Granted | 250,000 | |||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested, Weighted Average Grant Date Fair Value | $ 1.75 | |||||||
Convertible Promissory Note | ||||||||
Notes payable | $ 962,500 | |||||||
Convertible Promissory Note | March 1, 2010 Private Placement | ||||||||
Debt Instrument, Face Amount | 25,000 | |||||||
Interest Expense, Debt | $ 0.1200 | |||||||
Warrants per unit | 50,000 | |||||||
Warrant Exercise Price | $ 1 | |||||||
Debt Instrument, Convertible, Conversion Price | $ 50,000 | |||||||
Notes payable | $ 475,000 | $ 450,000 | ||||||
Convertible Promissory Note | March 1, 2010 Private Placement | Director | ||||||||
Notes payable | $ 25,000 | |||||||
Convertible Promissory Note | October 25, 2010 Private Placement | ||||||||
Debt Instrument, Face Amount | 25,000 | |||||||
Interest Expense, Debt | $ 0.0900 | |||||||
Warrants per unit | 50,000 | |||||||
Warrant Exercise Price | $ 1 | |||||||
Debt Instrument, Convertible, Conversion Price | $ 50,000 | |||||||
Notes payable | $ 487,500 | $ 512,500 | ||||||
Debt Conversion, Original Debt, Amount | $ 25,000 | |||||||
Convertible Promissory Note | October 25, 2010 Private Placement | Common Stock | ||||||||
Debt Conversion, Converted Instrument, Shares Issued | 50,000 |
Note 5. Notes Payable_ Schedu31
Note 5. Notes Payable: Schedule of Notes Payable (Details) - USD ($) | Sep. 30, 2015 | Dec. 31, 2014 | Oct. 25, 2010 | Mar. 01, 2010 |
Notes payable | $ 1,962,500 | $ 1,962,500 | ||
Line of Credit | ||||
Notes payable | 1,000,000 | |||
Convertible Promissory Note | ||||
Notes payable | 962,500 | |||
Convertible Promissory Note | March 1, 2010 Private Placement | ||||
Notes payable | 475,000 | $ 450,000 | ||
Convertible Promissory Note | October 25, 2010 Private Placement | ||||
Notes payable | $ 487,500 | $ 512,500 |
Note 6. Convertible Debenture32
Note 6. Convertible Debentures and Derivative Liability (Details) | 1 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||
Dec. 31, 2014USD ($) | Feb. 28, 2014 | Sep. 30, 2015USD ($)$ / shares | Sep. 30, 2014USD ($) | Sep. 30, 2015USD ($)$ / shares | Sep. 30, 2014USD ($) | Dec. 31, 2014USD ($) | Mar. 31, 2014USD ($) | |
Amortization of debt discount | $ 9,595 | $ 3,094 | $ 35,375 | $ 18,541 | ||||
(Decrease) increase in fair value of derivative liability | $ (788,511) | $ 849,148 | ||||||
Tranche 1 | ||||||||
Unamortized discount | $ 1,000,000 | |||||||
Debt Instrument, Maturity Date | Mar. 31, 2020 | |||||||
Tranche 2 | ||||||||
Unamortized discount | $ 850,000 | |||||||
Debt Instrument, Maturity Date | Dec. 31, 2020 | |||||||
Tranches 1 & 2 | ||||||||
Amortization of debt discount | $ 34,574 | |||||||
Non-convertible Debenture | ||||||||
Amortization of debt discount | $ 801 | |||||||
Debt Instrument, Maturity Date | Mar. 31, 2020 | |||||||
Convertible Debt Securities | ||||||||
Unamortized discount | $ 1,778,859 | $ 1,744,285 | $ 1,744,285 | $ 1,778,859 | ||||
Convertible Debt Securities | February 14, 2014 Private Placement | ||||||||
Maximum Offering Amount | $ 3,000,000 | |||||||
Debt Instrument, Interest Rate, Stated Percentage | 4.00% | 4.00% | ||||||
Debt Instrument, Maturity Date, Description | mature six years from the date of issuance | |||||||
Convertible Debt Securities | February 14, 2014 Private Placement | Derivative Financial Instruments, Liabilities | ||||||||
Fair Value Measurements, Valuation Techniques | Monte Carlo models | |||||||
Fair Value Assumptions, Expected Volatility Rate | 209.00% | 172.00% | ||||||
Convertible Debt Securities | February 14, 2014 Private Placement | Maximum | Derivative Financial Instruments, Liabilities | ||||||||
Fair Value Inputs, Discounted Bond Rates | 7.07% | 9.85% | ||||||
Convertible Debt Securities | February 14, 2014 Private Placement | Minimum | Derivative Financial Instruments, Liabilities | ||||||||
Fair Value Inputs, Discounted Bond Rates | 6.45% | 5.78% | ||||||
Convertible Debt Securities | February 14, 2014 Private Placement | Tranche 1 | ||||||||
Maximum Offering Amount | $ 1,000,000 | |||||||
Debt Instrument, Convertible, Number of Equity Instruments | 3,166,666 | 3,333,333 | ||||||
Debt Instrument, Convertible, Conversion Price | $ / shares | $ 0.30 | $ 0.30 | ||||||
Investors that consented to amended conversion terms, amount of offering | $ 950,000 | $ 950,000 | ||||||
Investors that did not consent to amended conversion terms, amount of offering | $ 50,000 | 50,000 | ||||||
Convertible Debt Securities | February 14, 2014 Private Placement | Tranche 2 | ||||||||
Maximum Offering Amount | $ 1,000,000 | |||||||
Debt Instrument, Convertible, Number of Equity Instruments | 1,888,889 | 2,222,222 | ||||||
Debt Instrument, Convertible, Conversion Price | $ / shares | 0.45 | $ 0.45 | ||||||
Investors that consented to amended conversion terms, amount of offering | $ 850,000 | 850,000 | ||||||
Investors that did not consent to amended conversion terms, amount of offering | $ 300,000 | $ 300,000 | ||||||
Convertible Debt Securities | February 14, 2014 Private Placement | Tranche 3 | ||||||||
Maximum Offering Amount | $ 1,000,000 | |||||||
Convertible Debt Securities | February 14, 2014 Private Placement | Tranche 3 | Maximum | ||||||||
Debt Instrument, Convertible, Number of Equity Instruments | 1,818,182 | |||||||
Debt Instrument, Convertible, Conversion Price | $ / shares | 0.75 | $ 0.75 | ||||||
Convertible Debt Securities | February 14, 2014 Private Placement | Tranche 3 | Minimum | ||||||||
Debt Instrument, Convertible, Number of Equity Instruments | 1,333,333 | |||||||
Debt Instrument, Convertible, Conversion Price | $ / shares | $ 0.55 | $ 0.55 |
Note 6. Convertible Debenture33
Note 6. Convertible Debentures and Derivative Liability: Schedule of Derivative Liabilities at Fair Value (Details) - USD ($) | Sep. 30, 2015 | Dec. 31, 2014 |
Derivative Liability, Current | $ 2,965,722 | $ 3,754,233 |
Tranche 1 | ||
Derivative Liability, Current | 1,585,461 | 2,014,733 |
Tranche 2 | ||
Derivative Liability, Current | $ 1,380,261 | $ 1,739,500 |
Note 7. Related Party Transac34
Note 7. Related Party Transactions (Details) - USD ($) | 6 Months Ended | 9 Months Ended | 31 Months Ended | |||
Sep. 30, 2015 | Sep. 30, 2015 | Sep. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2014 | Jun. 30, 2014 | |
Accrued payroll due officers | $ 1,394,711 | $ 1,394,711 | $ 1,288,136 | |||
Accrued interest | 927,616 | 927,616 | 756,405 | |||
Operating Leases, Rent Expense, Net | 50,779 | $ 52,982 | $ 168,665 | |||
Office Space Lease | ||||||
Debt Instrument, Periodic Payment | 4,534 | |||||
President | ||||||
Accrued payroll due officers | 1,191,996 | 1,191,996 | ||||
Operating Leases, Rent Expense, Net | 27,204 | 36,272 | $ 100,000 | |||
Vice President | ||||||
Accrued payroll due officers | $ 121,140 | $ 121,140 | ||||
Management | ||||||
Debt Instrument, Interest Rate, Stated Percentage | 9.00% | 9.00% | ||||
Accrued interest | $ 82,797 | $ 82,797 | $ 76,540 | |||
Director | ||||||
Accrued payroll due officers | $ 195,000 | 195,000 | $ 131,250 | $ 131,250 | ||
Noninterest Expense Directors Fees | $ 15,000 |
Note 8. Commitments and Conti35
Note 8. Commitments and Contingencies (Details) - USD ($) | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Operating agreement description for CAMC | provides for the payment of an annual operational term management fee of 1.2% of all gross gaming revenues between zero and $100,000,000; plus 0.75% of gross gaming revenue between $100,000,000 and $140,000,000; plus 0.5% of gross gaming revenue above $140,000,000; plus two percent of the net gaming revenue between zero and $25,000,000; plus three percent of the net gaming revenue above twenty-five million dollars $25,000,000 | |
Employee Stock Ownership Plan Penalties | $ 65,121 | $ 42,861 |
Employee Stock Ownership Plan Cumulative Potential Penalties | $ 207,724 | |
College Health & Investment, L.P. v. Diamondhead Casino Corporation | ||
Debt Instrument, Interest Rate, Stated Percentage | 12.00% | |
College Health & Investment, L.P. v. Diamondhead Casino Corporation | Principal | ||
Loss Contingency, Damages Sought, Value | $ 150,000 | |
College Health & Investment, L.P. v. Diamondhead Casino Corporation | Interest | ||
Loss Contingency, Damages Sought, Value | 45,000 | |
College Health & Investment, L.P. v. Diamondhead Casino Corporation 2 | ||
Loss Contingency, Damages Sought, Value | 150,000 | |
College Health & Investment, L.P. v. Edson R. Arneault, Deborah A. Vitale, Gregory A. Harrison, Martin Blount and Benjamin Harrell | ||
Loss Contingency, Damages Sought, Value | 150,000 | |
United States Bankruptcy Court | ||
Loss Contingency, Damages Sought, Value | $ 237,500 | |
College Health & Investment, L.P. | ||
Noncontrolling Interest, Ownership Percentage by Noncontrolling Owners | 5.00% | |
Investor | ||
Lien Amount | $ 1,850,000 | |
Management | ||
Lien Amount | $ 2,000,000 | |
Debt Instrument, Interest Rate, Stated Percentage | 9.00% |