View Filing Data

Document and Entity Information - shares	9 Months Ended
Document and Entity Information - shares	Sep. 30, 2012	Nov. 16, 2012
Document And Entity Information
Entity Registrant Name	STRATUS MEDIA GROUP, INC.
Entity Central Index Key	0001053691
Document Type	10-Q
Document Period End Date	Sep. 30, 2012
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 Common Stock, Shares Outstanding		90,458,897
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2012

CONSOLIDATED BALANCE SHEETS (USD $) - USD ($)	Sep. 30, 2012	Dec. 31, 2011
Current assets
Cash and equivalents	$ 156,912	$ 98,449
Receivable from former officer and director	538,515
Prepaid expenses and deposits	38,209	87,502
Total current assets	733,636	185,951
Property and equipment, net	48,523	78,135
Goodwill and intangible assets	3,161,966	3,359,466
Acquisition deposit		50,000
Total assets	3,944,125	3,673,552
Current liabilities
Accounts payable	971,730	789,021
Deferred salary	1,225,441
Accrued interest	1,115,367	716,718
Other accrued expenses and other liabilities	2,582,118	1,541,315
Loans payable to officers and a director	208,055	184,163
Rent liability for facilities no longer occupied	452,041
Notes payable	3,426,316	555,000
Total current liabilities	9,981,068	3,786,217
Commitments and contingencies
Shareholders' deficit
Common stock, $0.001 par value: 200,000,000 shares authorized 90,313,894 and 88,157,055 shares issued and outstanding	90,314	88,157
Additional paid-in capital	45,445,094	41,964,908
Accumulated deficit	(51,566,427)	(42,196,523)
Total Stratus Stockholders' deficit	(6,030,992)	(143,430)
Non-Controlling interest/(deficit)	(5,951)	30,765
Total shareholders' deficit	(6,036,943)	(112,665)
Total liabilities and shareholders' deficit	3,944,125	3,673,552
Series C Preferred Stock [Member]
Shareholders' deficit
Preferred stock
Series D Preferred Stock [Member]
Shareholders' deficit
Preferred stock	19	19
Series E Preferred Stock [Member]
Shareholders' deficit
Preferred stock	$ 8	$ 9

CONSOLIDATED BALANCE SHEETS (USD $) (Parenthetical) - $ / shares	Sep. 30, 2012	Dec. 31, 2011
Shareholders' deficit
Common stock par value (in Dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized	200,000,000	200,000,000
Common stock, shares issued	90,313,894	88,157,055
Common stock, shares outstanding	90,313,894	88,157,055
Series C Preferred Stock [Member]
Shareholders' deficit
Preferred stock par value	$ .001	$ .001
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]
Shareholders' deficit
Preferred stock par value	$ .001	$ .001
Preferred stock shares authorized	500,000	500,000
Preferred stock shares issued	18,999	18,999
Preferred stock shares outstanding	18,999	18,999
Series E Preferred Stock [Member]
Shareholders' deficit
Preferred stock par value	$ .001	$ .001
Preferred stock shares authorized	10,000	10,000
Preferred stock shares issued	8,450	8,500
Preferred stock shares outstanding	8,450	8,500

CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) - USD ($)	3 Months Ended		9 Months Ended
CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) - USD ($)	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Income Statement [Abstract]
Net revenues	$ 143,334	$ 250,201	$ 374,542	$ 250,201
Cost of revenues	850	253,810	235,803	253,810
Gross profit/(loss)	142,484	(3,609)	138,739	(3,609)
Operating expenses
General and administrative	1,055,527	2,551,878	3,818,022	4,697,621
Impairment of intangible assets	197,500		197,500
Warrants, options and stock	1,877,144	331,519	2,311,297	1,214,624
Legal and professional services	428,708	1,231,463	2,003,398	1,906,958
Depreciation and amortization	9,855	21,814	29,613	48,572
Total operating expenses	3,568,734	4,136,674	8,359,830	7,867,775
Loss from operations	(3,426,250)	(4,140,283)	(8,221,091)	(7,871,384)
Other (income)/expenses
Other (income)/expense	(133,770)		626,926
Interest expense	172,057	195,705	469,848	324,544
Total other expenses	38,287	195,705	1,096,774	324,544
Net loss	$ (3,464,537)	$ (4,335,988)	$ (9,317,865)	$ (8,195,928)
Basic and diluted loss per share	$ (0.04)	$ (0.06)	$ (0.1)	$ (0.11)
Basic and diluted weighted-average common shares	89,748,496	77,535,263	89,220,298	71,652,187

CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) - USD ($)	9 Months Ended
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) - USD ($)	Sep. 30, 2012	Sep. 30, 2011
Cash flows from operating activities:
Net loss	$ (9,317,865)	$ (8,195,928)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	29,613	48,572
Impairment of intangible assets	197,500
Warrant, option and stock expense	1,363,054	1,214,624
Amortization of stock previously issued for services	948,243
Stock issued for services	221,000
Increase / (decrease) in:
Receivable from former officer and director	538,515
Accounts receivable		(58,500)
Deposits and prepaid expenses	(16,793)	(683,636)
Accounts payable	182,709	(309,093)
Deferred salary	1,225,441	14,904
Accrued interest	398,649	278,551
Rent liability for facilities no longer occupied	452,041
Other accrued expenses and liabilities	965,040	(1,111,331)
Net cash used in operating activities	(2,812,853)	(8,801,837)
Cash flows from investing activities:
Capital expenditures		(130,578)
Advances to acquisition targets		(860,895)
Net cash used in investing activities		(991,473)
Cash flows from financing activities:
Bank overdraft		(62,790)
Payments on loans payable to officers and a director		(603,668)
Proceeds/(Payments) on notes payable, net	2,871,316	(426,509)
Proceeds from issuance of preferred stock		9,406,051
Proceeds from issuance of common stock		3,609,359
Net cash provided by financing activities	2,871,316	11,922,437
Increase in cash and equivalents	58,463	2,129,127
Cash and equivalents, beginning of period	98,449
Cash and equivalents, end of period	156,912	2,129,127
Supplemental disclosure of cash flow information:
Cash paid during the period for interest
Cash paid during the period for income taxes

1. Business

9 Months Ended

Sep. 30, 2012

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 of the 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. (“SMDI,” “Stratus” or the “Company”).

PSEI, a California corporation, was organized on November 23, 1998 and specializes in sports and entertainment events it owns, operates, manages, markets and sells in national markets. PSEI acquired the business of Stratus Rewards, LLC (“Stratus Rewards”) in August 2005 and Stratus Rewards is a wholly-owned subsidiary of PSEI. Stratus Rewards is a credit card rewards program using the Visa card platform that offers a luxury rewards redemption program, including private jet travel, premium travel opportunities, exclusive events and luxury merchandise. In May 2010, the Company entered into an agreement with a private bank in Switzerland for it to be the processing bank for Stratus Rewards in Europe.

ProElite, Inc. (“PEI”) is a subsidiary of the Company. PEI specializes in the operation and management of Mixed Martial Arts events.

- Definition

The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable).

+ References

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+ Details

2. Going Concern

9 Months Ended

Sep. 30, 2012

Going Concern

NOTE 2 - Going Concern

The Company has suffered losses from operations and without additional capital, lacks liquidity to meet its current obligations. The Company had a net loss for 2011 of $15,837,168 and a net loss of $9,317,865 for the nine months ended September 30, 2012. As of September 30, 2012, the Company had negative working capital of $9,247,432 and accumulated deficit of $51,566,427. Unless additional financing is obtained, the Company will not be able to continue as a going concern. Because of the lack of working capital, the Company has ceased operations and furloughed its employees.

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 be unable to continue as a going concern.

3. Basis of Presentation and Significant Accounting Policies

9 Months Ended

Sep. 30, 2012

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 unaudited balance sheet at September 30, 2012 consolidates the accounts of PEI. All significant intercompany balances were eliminated in consolidation.

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.

Event Revenues

Event revenue consists of ticket sales, participant entry fees, corporate sponsorships, advertising, television broadcast fees, athlete management, concession and merchandise sales, charity receipts, commissions and hospitality functions. The Company recognizes admissions and other event-related revenues when the events are held in accordance with SEC Staff Accounting Bulletin (“SAB”) 104. Revenues received in advance and related direct expenses pertaining to specific events are deferred until the events are held.

Stratus White

Stratus White (formerly Stratus Rewards), the Company’s affiliate redemption credit card rewards program, is expected to generate revenues from transaction fees generated by member purchases using the card, initiation fees and annual membership fees. Revenue is recognized when transaction fees are received and membership fees are amortized and recognized ratably over the twelve-month membership period from the time of receipt.

Cash Equivalents

We consider all highly liquid investments purchased with original maturities of three months or less to be cash equivalents.

Accounts Receivable

Accounts receivable arise principally from royalties from television networks for pay-per-view presentations.

Fair Value of Financial Instruments

Our financial instruments include cash and equivalents, accounts receivable, accounts payable, notes payable and accrued liabilities. The carrying amounts of financial instruments approximate fair value (“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 consist of goodwill from certain events and the Stratus White Visa Card (“Stratus White”) we acquired. 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 FASB 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 purchased several events that are recorded on the Company’s balance sheet as intangible assets with a value at the consideration paid for such assets, which generally include licensing rights, naming rights, merchandising rights and the right to hold such event in particular geographic locations. There was no goodwill assigned to any of these events and the value of the consideration paid for each event is the value for each related intangible asset. Each event has separate accounts for tracking revenues and expenses and a separate account to track the asset valuation.

A portion of the consideration used to purchase the Stratus White program was allocated to specific assets, as disclosed in the footnotes to the financial statements, with the difference between the specific assets and the total consideration paid for the program being allocated to goodwill.

The Company reviews the value of intangible assets and related goodwill as part of its annual reporting process, which generally occurs in February or March of each calendar year. Between valuations, the Company conducts additional tests if circumstances warrant such testing. For example, the Company determined that as of September 30, 2012, the value of the Beverly Hills Concours, Maui Music Festival and Freedom Bowl were impaired when the Company elected not to continue these events and $197,500 of impairment charges were taken to reduce the value of these three events to zero.

To review the value of intangible assets and related goodwill, the Company compares discounted cash flow forecasts with the amounts of the assets on the balance sheet.

The events are forecasted based on historical results for those events, adjusted over time for the assumed synergies expected from discounts from purchases of goods and services from a number of events rather than from each event on its own, and for synergies resulting from the expected ability to provide sponsors with benefits from sponsoring multiple events with a single point of contact.

These forecasts are 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 and small companies in general, and factors specific to the Company and its business.

If the Company determines the discount factor for cash flows should be increased, or the event will not be able to begin operations when planned, it is possible the amounts for the intangible assets currently on the balance sheet could be reduced or eliminated, which could result in a maximum charge to operations equal to the current carrying value of the intangible assets of $3,162,466.

Research and Development

Research and development costs not related to contract performance are expensed as incurred. We did not incur any research and development expenses for 2011 or the nine months ended September 30, 2012.

Capitalized Software Costs

We did not capitalize any software development costs during 2011 or the nine months ended September 30, 2012. Costs related to the development of new software products and significant enhancements to existing software products are expensed as incurred until technological feasibility has been established and are amortized over three years.

Valuation of Long-Lived Assets

We account for long-lived assets in accordance with the provisions of FASB ASC Topic 360 Accounting for the Impairment or Disposal of Long-Lived Assets, which requires that long-lived assets and certain identifiable intangibles be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets is measured by comparing the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds their FV. Assets to be disposed of by sale are reflected at the lower of their carrying amount or FV less cost to sell.

Net Loss Per Share

We compute net loss per share in accordance with FASB ASC Topics 260 Earnings Per Share. Basic per share data is computed by dividing loss available to common stockholders by the weighted average number of shares outstanding during the period. Diluted per share data is computed by dividing loss available to common stockholders by the weighted average shares outstanding during the period increased to include, if dilutive, the number of additional common share equivalents that would have been outstanding if potential common shares had been issued using the treasury stock method. Diluted per share data would also include the potential common share equivalents relating to convertible securities by application of the if-converted method.

The effect of common stock equivalents (which include outstanding warrants and stock options) are not included for the nine months ended September 30, 2012 or 2011, as they are antidilutive to loss per share.

Stock-Based Compensation

We follow FASB 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 the provisions of FASB ASC Topic 718.

The risk-free interest rate is based on U.S. Treasury interest rates, the terms of which are consistent with the expected life of the stock options. Future option grants will be calculated using expected volatility based upon the average volatility of our common stock.

Advertising

We expense the cost of advertising as incurred. Such amounts have not historically been significant to our operations.

Income Taxes

The Company utilizes FASB ASC Topics 740-10 and 740-30 Accounting for Income Taxes, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that were 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.

Recent Accounting Pronouncements

In June 2011, FASB issued ASU 2011-05, Comprehensive Income (ASC Topic 220): Presentation of Comprehensive Income. Under the amendments in this update, an entity has the option to present the total of comprehensive income, the components of net income and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. Under both options, an entity is required to present each component of net income along with total net income, each component of other comprehensive income along with a total for other comprehensive income and a total amount for comprehensive income. In a single continuous statement, the entity is required to present the components of net income and total net income, the components of other comprehensive income and a total for other comprehensive income, along with the total of comprehensive income in that statement. In the two-statement approach, an entity is required to present components of net income and total net income in the statement of net income. The statement of other comprehensive income should immediately follow the statement of net income and include the components of other comprehensive income and a total for other comprehensive income, along with a total for comprehensive income. In addition, the entity is required to present on the face of the financial statements reclassification adjustments for items that are reclassified from other comprehensive income to net income in the statement(s) where the components of net income and the components of other comprehensive income are presented. The amendments in this update should be applied retrospectively and are effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. The Company evaluated this pronouncement and determined that it is not applicable to the Company’s financial presentation at this time.

In September 2011, FASB issued ASU 2011-08 Intangibles—Goodwill and Other (Topic 350), which requires that a company should first examine 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 an impairment had occurred, the company then compares discounted cash flow forecasts related to the asset with the stated value of the assets on the balance sheet. The Company adopted this accounting standard for the year ended December 31, 2011 and utilized it in the analysis for impairment of intangible assets.

On July 27, 2012, the FASB issued ASU 2012-02, Intangibles-Goodwill and Other (Topic 350) - Testing Indefinite-Lived Intangible Assets for Impairment. The ASU 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 US GAAP. The ASU 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 will not have a material impact on our financial statements.

4. Litigation

9 Months Ended

Sep. 30, 2012

Litigation

NOTE 4 - Litigation

In March 2011, four of our shareholders filed an action in Superior Court of California, in Santa Barbara County (lead plaintiff is Howell Douglas Wood (“Wood”)), against us, our Chief Executive Officer at that time (“CEO”), Chief Financial Officer (“CFO”) and its outside directors. The complaint alleges violations of the California Corporations Code relating to the issuance of securities to the plaintiffs, fraud, breach of fiduciary duty, breach of contract, and breach of the covenant of good faith and fair dealing relating to the handling of requests by the plaintiffs to sell their shares. The complaint seeks unspecified compensatory and punitive damages, recovery of attorney fees and costs and certain equitable relief. In motions filed with the Court, the Company took the position that the claims were without merit, and aggressively defended the action. In October 2012, the parties reached an agreement whereby the matter has been resolved to the parties’ mutual satisfaction, and the Company anticipates that the lawsuit will be dismissed within the next 60 days of the filing of this report.

In November 2011, 12 additional shareholders filed an action in Superior Court of California, in Santa Barbara County (lead plaintiff is Jeffrey Tuttle), against us, our then CEO, CFO and its outside directors. This complaint was filed by the same law firms as the Wood complaint, and is similar to the Wood complaint. As with the Wood complaint, the Tuttle complaint alleges violations of the California Corporations Code relating to the issuance of securities to the plaintiffs, fraud, breach of fiduciary duty, breach of contract, and breach of the covenant of good faith and fair dealing relating to the handling of requests by the plaintiffs to sell their shares. The complaint seeks unspecified compensatory and punitive damages, recovery of attorney fees and costs and certain equitable relief. In motions filed with the Court, the Company took the position that the claims were without merit, and aggressively defended the action. In October 2012, the parties reached an agreement whereby the matter has been resolved to the parties’ mutual satisfaction, and the Company anticipates that the lawsuit will be dismissed within the next 60 days of the filing of this report.

In April 2012, Ned Sands filed a lawsuit against the Company for alleged discrimination based on religion and age in an employee termination, as well as fraud in inducing him to join the company. The plaintiff has filed his second amended complaint, which adds as additional defendants a current and former officer of the Company. The Company took the position that the claims were without merit, and aggressively defended the action. In October 2012, the parties reached an agreement whereby the matter has been resolved to the parties’ mutual satisfaction, and the Company anticipates that the lawsuit will be dismissed within the next 60 days of the filing of this report.

5. Acquisition of Stratus White

9 Months Ended

Sep. 30, 2012

Acquisition Of Stratus White

NOTE 5 - Acquisition of Stratus White

In accordance with the Asset Purchase Agreement dated August 15, 2005, between the Company and Stratus White LLC (“Stratus Purchase Agreement”), the Company acquired the business of Stratus White, a credit card rewards program.

The consideration for this acquisition was $3,000,000, with Stratus entering into a note payable of $1,000,000 and issuing 666,667 common shares valued at $2,000,000. The note is payable in eight quarterly equal payments over a 24 month period, with the first payment due upon completion of the first post-public merger funding of a minimum of $3,000,000.

The Stratus Purchase Agreement included the transfer to the Company of tangible personal property such as computers and all intellectual property, goodwill associated therewith, licenses and sublicenses. Stratus White had at least $1.4 million of computer hardware and at least $0.2 million of computer software, all of which should have been transferred to the Company pursuant to the Stratus Purchase Agreement. These computer and software assets were not included in the accounting for the acquisition of Stratus White by PSEI and the value of the computer hardware and software not received was allocated to goodwill. The owner of Stratus White received notice on May 15, 2006 that if he did not deliver this hardware and software within 30 days, that the amount of consideration he was entitled to would be reduced by at least the $1,000,000 amount of the note, if not an additional $1,000,000 in common stock issued as consideration. The owner responded on June 2, 2006 that his former law firm owned the computer hardware and software and he did not have the authority to release these items to the Company.

Given this situation and the expiration for the statute of limitations, the Company wrote off this liability as of December 31, 2011.

The results of operations of the business acquired were included in the Company’s Statements of Operations from the date of acquisition. Depreciation and amortization related to the acquisition were calculated based on the estimated fair values and estimated useful lives for property and equipment and an independent valuation for certain identifiable intangible assets acquired.

Effective May 14, 2010, the Company entered into a Co-branded Card Agreement (the “Agreement”) with Cornèr Banca SA (the “Bank”), located in Lugano, Switzerland. Under the Agreement, the parties agreed to jointly launch a co-branded consumer card payment solution targeted at high net worth individuals and a co-branded commercial payment solution targeted at small and mid-sized businesses. The cards, to be issued by the Bank, will include a loyalty rewards program. The cards are targeted to residents of Europe. The initial term of the Agreement is five years. The Company, among other things, will be responsible for marketing and administration of, and expenses relating to, the rewards program. The Bank will be responsible for issuing the cards. The Company will receive a share of purchase transactions generated by a card holder and membership and initiation fees. This program has been on hold pending receipt of sufficient capital by the Company to resume development of the Stratus White program or a decision by Company management to not develop this business.

6. Receivable from Former Officer and Director

9 Months Ended

Sep. 30, 2012

Receivable From Former Officer And Director

NOTE 6 - Receivable from Former Officer and Director

Pursuant to an investigation conducted in March 2012 directed by the Company’s Board of Directors, it was determined that Paul Feller, the Company’s former Chairman and CEO, received $640,000 in December 2010 in connection with a sale of the Company’s common stock he arranged with an outside investor. This sale was fulfilled with issuance of 2,540,000 shares of common stock issued directly by the Company. Accordingly, the Company recorded a gross receivable of $640,000 from Mr. Feller in connection with this transaction. Mr. Feller resigned from the Company on June 28, 2012.

As of December 31, 2011, this receivable of $640,000 was presented net of $398,790 of accrued salary, $115,000 of commissions that Mr. Feller represented in writing were paid in this transaction, $30,540 of business expenses submitted by Mr. Feller that met Company and IRS guidelines and $133,770 of business expenses that Mr. Feller represented in writing he would provide, for a net receivable of zero.

As of September 30, 2012, this receivable of $640,000 was increased by $4,622 of personal expenses for Mr. Feller paid with Company funds, including $4,355 of registration fees paid by the Company for the vintage automobile that remains in Mr. Feller’s possession. This receivable of $682,722 is presented net of $30,540 of approved business expenses and $113,667 in deferred salary:

	September 30,			December 31,
	2012			2011
Gross receivable
Sale of Company common stock, proceeds retained by Mr. Feller	$	640,000		$	640,000
Vintage automobile retained by Mr. Feller		38,100			38,100
Other		4,622			–
Total		682,722			678,100

Offsets to receivable
Alleged commission on stock sales per Mr. Feller's written representation		–			(115,000	)
Deferred salary		(113,667	)		(398,790	)
Expense reports submitted and approved		(30,540	)		(30,540	)
Expense reports to be submitted per Mr. Feller's written representation		–			(133,770	)
Expense reports actually submitted		–			–
Net receivable	$	538,515		$	–

Additional evidence obtained in October 2012 confirmed that the $115,000 in commissions for the stock sales were not valid commissions and this amount was removed as an offset to the gross receivable for September 30, 2012. 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 offset to the gross receivable was reduced from $398,790 at December 31, 2011 to $113,667 at September 30, 2012, which consists of $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 September 30, 2012.

7. Property and Equipment

9 Months Ended

Sep. 30, 2012

Property, Plant and Equipment [Abstract]

NOTE 7 - Property and Equipment

Property and equipment were as follows:

	September 30,			December 31,
	2012			2011
Computers and peripherals	$	97,660		$	97,660
Office machines		49,370			49,370
Furniture and fixtures		79,484			79,484
		226,514			226,514
Less accumulated depreciation		(177,991	)		(148,379	)
	$	48,523		$	78,135

For the nine months ended September 30, 2012 and 2011, depreciation expense was $19,758 and $4,054, respectively. For the three months ended September 30, 2012 and 2011, depreciation expense was $7,995 and $10,461, respectively.

- Definition

The entire disclosure for long-lived, physical assets that are used in the normal conduct of business to produce goods and services and not intended for resale. Examples include land, buildings, machinery and equipment, and other types of furniture and equipment including, but not limited to, office equipment, furniture and fixtures, and computer equipment and software. This disclosure may include property plant and equipment accounting policies and methodology, a schedule of property, plant and equipment gross, additions, deletions, transfers and other changes, depreciation, depletion and amortization expense, net, accumulated depreciation, depletion and amortization expense and useful lives, income statement disclosures, assets held for sale and public utility disclosures.

+ References + Details

8. Goodwill and Intangible assets

9 Months Ended

Sep. 30, 2012

Goodwill and Intangible Assets Disclosure [Abstract]

NOTE 8 - Goodwill and Intangible assets

Goodwill and intangible assets of the Company were as follows:

	September 30,		December 31,
	2012		2011
Intangible Assets
Events
Beverly Hills Concours	$	–	$	2,500
Santa Barbara Concours d'Elegance		53,000		53,000
Cour Tour/Action Sports Tour		100,000		100,000
Freedom Bowl		–		190,000
Maui Music Festival		–		5,000
Total - Events		153,000		350,500

Goodwill
ProElite, Inc.		1,935,621		1,935,621
Stratus White Visa Card		1,073,345		1,073,345
Total Goodwill		3,008,966		3,008,966
Total Goodwill and Intangible Assets	$	3,161,966	$	3,359,466

In accordance with FASB ASC Topic 350 Goodwill and Other Intangible Assets, the Company’s intangible assets are considered to have indefinite lives and are therefore no longer amortized, but rather are subject to annual impairment tests. The purchased licensed technology and membership list for Stratus Rewards were amortized over their estimated useful life of 10 years but impairment charges were taken as of December 31, 2011 to reduce the carrying value of these items to zero. For the nine months ended September 30, 2012 and 2011, amortization of these items was $0 and $34,057, respectively. For the three months ended September 30, 2012 and 2011, amortization was $0 and $11,353, respectively.

The Company’s annual impairment testing date is December 31, but the Company monitors the facts and circumstances for all intangible properties and will record impairment if warranted by adverse changes in facts and circumstances. As of September 30, 2012, the Company elected to not pursue the Beverly Hills Concours, Maui Music Festival and Freedom Bowl events and took $197,500 of impairment charges to bring the value of these events to zero.

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

+ References + Details

9. Other accrued expenses and other liabilities

9 Months Ended

Sep. 30, 2012

Other Accrued Expenses And Other Liabilities

NOTE 9 - Other accrued expenses and other liabilities

Other accrued expenses and other liabilities consisted of the following:

	September 30,		December 31,
	2012		2011
Professional fees	$	694,710	$	494,767
Payroll related		876,372		640,208
Estimated damage liability that may not be covered by insurance		300,000		–
Accrued board fees		285,365		–
Consultant fees		205,129		227,178
Accrued legal judgments		84,899		90,732
Travel expenses		69,866		38,546
Other		65,777		49,884
	$	2,582,118	$	1,541,315

The Estimated damage liability that may not be covered by insurance was determined based on a property damage estimate related to leaks from a broken pipe at a Company facility that was occupied at the time.

10. Loans payable to officers and a director

9 Months Ended

Sep. 30, 2012

Loans Payable To Officers And Director

NOTE 10 - Loans payable to officers and a director

The Loans payable to officers and directors are as follows:

	September 30,		December 31,
	2012		2011

Former president and director, interest at 9.5%	$	–	$	78,919
An officer, non-interest bearing		153,055		50,244
An officer, interest at 5.0% if not repaid on timely basis		55,000		55,000
	$	208,055	$	184,163

11. Notes payable

9 Months Ended

Sep. 30, 2012

Notes Payable [Abstract]

NOTE 11 - Notes payable

	September 30,		December 31,
	2012		2011
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. These notes are currently in default. Secured by the assets of ProElite.	$	1,063,000	$	415,000

Note payable to a shareholder upon the earlier of completion of $1,000,000 in funding, or May 24, 2012, plus interest at 0.19%, secured by the assets of ProElite. This note is in default. The noteholder has a warrant to purchase ProElite shares at $0.05 per share that increases each month when the loan is in default. As of September 30, 2012, the noteholder had a resulting warrant to purchase 15.5 percent of ProElite.		1,000,000		–

Note payable to the Company's outside law firm and represents the corporate and litigation fees as of June 30, 2012. This note is presented net of $249,824 of assumed remibursements from the Company's D&O carrier. This note bears interest at 3% and is due December 31, 2012.		364,317		–

Notes payable to three holders dated May 11, 2012 with maturity of the earlier of November 11, 2012 or when a finacing is completed of $2,000,000 or more, plus interest at 10%, secured by the assets of the Company. This note is in default.		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 bear interest at 8%.		309,000		–

Notes payable to one holder dated April 4, 2012 with maturity on October 4, 2012, plus interest at 10%. Unsecured. This note is in default.		249,999		–

Note payable to a shareholder dated January 14, 2005, with maturity of May 14, 2005, plus interest at 10%. Unsecured. This note is in default.		70,000		70,000

Note payable to a shareholder dated February 1, 2005 with maturity of June 1, 2005, plus interest at 10%. Unsecured. This note is in default.		10,000		10,000

Note payable to non-shareholder. Payable on demand and does not bear interest		10,000		60,000
	$	3,426,316	$	555,000

On April 4, 2012, SMDI issued a promissory note for $249,999. This note bears interest at 10% with principal and interest due on October 4, 2012. Until the note is paid, the holder has the right to convert some or all of the principal balance of the note into the Company’s common stock at $0.30 per share. In consideration of the loan to the Company, the Company issued a five-year warrant to purchase 833,330 shares of the Company’s common stock at $0.40 per share and a five-year warrant to purchase from the Company 12,500,000 shares of the common stock of PEI owned by the Company at an exercise price of $0.02 per share. The warrant shares are before the anticipated 1:25 reverse split of the Common Stock of PEI. All of the underlying shares related to this note carry “piggyback” registration rights. As of the filing of this report, this note is in default.

On May 11, 2012, SMDI issued three promissory notes in the aggregate principal amount of $350,000. These notes bear interest at 10% with principal and interest due on the earlier of November 11, 2012, or the receipt by the Company of $2,000,000 or more of gross proceeds from the sale of equity securities. These notes are secured by the assets of the Company on a pari passu basis with the holders of the Company’s Series E Preferred Stock. As of the filing of this report, this note is in default.

Between July and September 2012, the Company issued 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 bear interest at 8%. These notes are unsecured.

Interest expense on these notes for the nine months ended September 30, 2012 and 2011 was $36,484 and $26,510, respectively. Interest expense on these notes for the three months ended September 30, 2012 was $22,161 and $4,500, respectively.

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

+ References + Details

12. Shareholders' Deficit

9 Months Ended

Sep. 30, 2012

Shareholders Deficit

NOTE 12 - Shareholders' Deficit

Series C 10% Preferred Stock

As of December 31, 2011, all Series C Preferred Stock had been converted into common stock.

Series D 10% Preferred Stock

The Company had 18,999 shares of its Series D 10% Preferred Stock (“Series D”) outstanding as of September 30, 2012 and December 31, 2011. Each share of Series D sold for $30, can be converted at any time into 60 shares of common stock and has voting rights of 60 shares of common stock. In connection with the issuance of Series D, the Company issued warrants to purchase 179,970 shares of common stock. The warrants have a life of five years to purchase a share of common stock for $1.00 and expire between November 2015 and April 2016. The Series D has liquidation preference over common stock at a liquidation value of $30 and pays a cumulative dividend of 10% per year, payable on July 31 and December 31 of each year that the Series D is outstanding. Interest payments may be made in cash or in common stock at the discretion of the Company. The Series D automatically convert into 60 shares of common stock when the closing price for a share of common stock is $5.00 or above and the average daily trading volume for the 10 previous trading days is above 200,000 shares. 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.

Since the Series D contains an embedded conversion feature, the Company performed an analysis of the Series C under ASC 815 “Derivatives and Hedging.” This analysis determined that the embedded conversion feature was not required to be bifurcated and accounted separately from the Series D because the economic risks and characteristics of the embedded conversion feature were clearly and closely related to the economic risks and characteristics of the host contract Series D, namely the risks of the common stock. The value of the BCF was $26,945 which was charged to equity at the time of issuance and was not included in the calculation of earnings per share. The BCF was calculated as the difference of the FV of the conversion price and the intrinsic value of the preferred shares.

The Series D contains a share adjustment provision that provides for additional shares to be issued if the thirty-day volume weighted average price of the Company’s common stock (“VWAP”) is between $0.50 and $1.00 180 days after the purchase of Series D. If the VWAP is above $1.00, no action is taken. If the VWAP is between $0.50 to $1.00, additional shares are issued to the holder such that the total of the number of common shares issuable upon conversion, which is the number of Series D shares times 60 (“Conversion Shares”), plus the additional shares together equals the VWAP price equals the Conversion Shares times $1.00. If the VWAP is below $0.50 the number of additional shares are calculated as if the price were $0.50, not the actual VWAP. Once this 180-day period passes and the Company has issued the appropriate shares, if any, then Price Protection provisions of this Agreement will expire and the Company will be completely released from any future claims by the Purchaser related to this share adjustment provision. The price protection provisions have expired.

The Company determined that derivative accounting for the embedded conversion and the share adjustment features was not required pursuant to ASC 815-10-15-74 because these features are indexed to the Company’s own stock under ASC 815-40-15 (EITF Issue 07-5); the features can be classified in shareholders’ equity under ASC 815-40 (EITF Issue 00-19, paragraphs 1-11) and that Series D is classified as a conventional convertible so the features can be classified in stockholders’ equity under ASC 815-40 (Issue 00-19, paragraphs 12-32). The determination was made by the Company that the Series D is a conventional convertible because the freestanding warrant is indexed to the company’s own stock under ASC 815-40-15 (EITF Issue 07-5); the freestanding warrant is classified in shareholders’ equity under ASC 815-40 (Issue 00-19, paragraphs 1-32); and the financial instrument does not include embedded puts and/or calls or other features that require bifurcation from the host contract under ASC 815.

As of September 30, 2012 there were 18,999 shares of Series D Preferred Stock outstanding.

Series E 5% Preferred Stock

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 the Investors 8,700 shares of a new series of convertible preferred stock designated as Series E Convertible Preferred Stock (the “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 the aggregate. As of September 30, 2012 and December 31, 2011, there were 8,450 and 8,500 shares of Series E outstanding.

In connection with the sale of the Preferred Shares, 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 are exercisable for five years commencing on the date of first issuance and are exercisable only for cash if there is an effective registration statement covering the resale of the shares issuable upon exercise of the Warrants. In the absence of such a registration statement, the Warrants are exercisable for cash or on a cashless basis at the option of the holder thereof. The exercise price of the A Warrant is $0.30 per share and the B Warrant has an exercise price of $0.30 per share, subject in each case to full ratchet anti-dilution protection. The exercise price of the A Warrant was originally $0.65 and the exercise price of the B Warrant was originally $1.00 but were adjusted pursuant to the full ratchet anti-dilution protection when $249,999 of notes were issued on April 4, 2012 that contained a $0.30 conversion feature.

Pursuant to the Certificate, the Preferred Shares bear a dividend of 5%, payable quarterly in cash, or, if the dividend shares are registered for resale, in shares of the Company’s Common Stock. The effective conversion rate for the Preferred Shares was originally is $0.40 per share of Common Stock, but was adjusted to $0.30 pursuant to the full ratchet anti-dilution protection mentioned above. The Preferred Shares have voting rights on an as-converted to Common Stock basis, with the Investors (subject to certain exceptions) having the right to elect two members to the Company’s Board of Directors (“BOD”) for so long as at least 50% of the total number of Preferred Shares purchased pursuant to the Purchase Agreement are outstanding, and the right to elect one member to the Company’s BOD for so long as least 25% but less than 50% of the total number of Preferred Shares issued pursuant to the Purchase Agreement are outstanding. The Company is required to redeem any unconverted Preferred Shares on the fifth anniversary of the date of first issuance of the Preferred Shares, and has the right to require conversion at any time if the average daily trading value for any 20 consecutive trading days exceeds $250,000 and the weighted average price per share is at least $2.50 for each of those 20 consecutive trading days.

To secure the Company’s obligation to redeem the Preferred Shares, the Company entered into a Security Agreement dated May 24, 2011, pursuant to which the Company agreed to grant the holders of the Preferred Shares a first priority security interest in all of its assets.

The Company filed a registration statement with the SEC covering the resale of the shares (a) issuable upon conversion of the Preferred Shares or exercise of the Warrants, (b) issued as dividends payable in shares of Common Stock pursuant to the Certificate, and (c) issuable upon exercise of the Placement Agent Warrants. This registration statement was declared effective on February 13, 2012. Upon the occurrence of certain events set forth in the Purchase Agreement, including the failure to timely file the registration statement or have the registration statement timely declared effective, the Company will pay to the Investors cash of 1% of the aggregate purchase price of the Series E Preferred Stock and Warrants for each 30-day period during such default; provided, however, that the payments will not exceed 10% of the aggregate purchase price.

As of September 30, 2012 there were 8,450 shares of Series D Preferred Stock outstanding.

Common Stock

During the nine months ended September 30, 2012, there were no sales of the Company’s common stock. During the nine months ended September 30, 2011, the Company raised $3,609,359 from the issuance of 7,957,141 shares of common stock.

Stock Options

During the nine months ended September 30, 2012, the Company cancelled 4,660,994 options for employees whose employment had been terminated and granted 2,300,000 options to Jerold Rubinstein, the Company’s new Chairman of the Board and CEO on June 28, 2012, pursuant to an employment contract, 450,000 options to a director and 300,000 options to an officer. These options have a strike price of $0.35 - $0.38, 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 twelve-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 following assumptions were used for the Black Scholes calculation to determine this expense:

Estimated fair value of underlying common stock			$0.35 - $0.38
Remaining life			5.0
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:

	Options Outstanding									Options Exercisable
				Range of		Weighted Average Remaining		Weighted Average					Weighted Average Remaining		Weighted Average
	Options			Exercise		Life in		Exercise		Options			Life in		Exercise
	Outstanding			Prices		Years		Price		Exercisable			Years		Price
As of December 31, 2010		10,269,852			$0.14 - $3.50		2.4	$	0.94		8,512,684			2.0	$	0.94
Cancelled		(3,110,000	)		–		–	$	0.43		(3,110,000	)		–	$	0.00
Exercised
Granted		5,010,000		$	0.54		5.0	$	0.54		3,355,000			5.0	$	0.54
As of December 31, 2011		12,169,852			$0.14 - $1.50		3.2	$	0.49		8,757,684			3.2	$	0.40
Cancelled		(7,276,329	)		–		–		–		(4,660,994	)		–		–
Exercised		–			–		–		–		–			–		–
Granted		3,050,000			$0.35 - $0.38		4.8	$	0.36		734,333			4.8	$	0.36
As of September 30, 2012		7,943,523			$0.35 -$0.54		3.6	$	0.46		4,831,023			2.9	$	0.50

Warrants

During the nine months ended September 30, 2012, the Company issued six five-year warrants to purchase a total of 13,530,000 shares at prices of $0.38 to $0.75 in connection with consulting and advisory contracts. The Black Scholes value of these warrants is $4,133,690, which is being recognized over the twelve to twenty-four months of the contracts. The following assumptions were used for the Black Scholes calculation to determine this expense:

Estimated fair value of underlying common stock			$0.38 - $0.75
Remaining life			5.0
Risk-free interest rate			0.74% - 1.80%
Expected volatility			84% - 132%
Dividend yield			–

A summary of the warrants:

	Warrants Outstanding								Warrants Exercisable
			Range of		Weighted Average Remaining		Weighted Average				Weighted Average Remaining		Weighted Average
	Warrants		Exercise		Life in		Exercise		Warrants		Life in		Exercise
	Outstanding		Prices		Years		Price		Exercisable		Years		Price
As of December 31, 2010		2,472,676		$1.00 - $2.00		4.4	$	1.37		2,472,676		4.4	$	1.37
Exercised		–		–		–		–		–		–		–
Granted		57,057,569		$0.65 - $1.00		4.5	$	0.75		57,057,569		4.5	$	0.75
As of December 31, 2011		59,530,245		$0.65 - $2.00		3.5	$	2.00		59,530,245		3.5	$	2.00
Exercised		–		–		–		–		–		–		–
Ratchet-down impact		56,991,667	$	0.30		–	$	0.30		56,991,667		–	$	0.30
Granted		14,363,330		$0.30 - $0.40		4.6	$	0.40		6,488,330		4.6	$	0.40
As of September 30, 2012		130,885,242		$0.30 - $2.00		3.7	$	0.40		123,010,242		3.7	$	0.40

The exercise price of the A Warrant for Series E Preferred was originally $0.65 and the exercise price of the B Warrant for Series E Preferred was originally $1.00, but both warrants were adjusted pursuant to the full ratchet anti-dilution protection when $249,999 of notes were issued on April 4, 2012 that contained a $0.30 conversion feature.

Calculations of the ratchet-down impact:

	Original					After Ratchet Down
	Shares x		Strike =		Aggregate Exercise Price		Shares x		Strike =		Aggregate Exercise Price

Series A warrants	21,750,000	$	0.65	$	14,137,500		47,125,000	$	0.30	$	14,137,500
Series B warrants	10,875,000	$	1.00	$	10,875,000		36,250,000	$	0.30	$	10,875,000
Placement agent warrant	3,600,000	$	0.65	$	2,340,000		7,800,000	$	0.30	$	2,340,000
Broker-dealer warrant	1,000,000	$	0.65	$	650,000		2,166,667	$	0.30	$	650,000
Advisory warrant	750,000	$	0.65	$	487,500		1,625,000	$	0.30	$	487,500
	37,975,000						94,966,667

Additional warrants from ratchet-down							56,991,667

- Definition

The entire disclosure for shareholders' equity, comprised of portions attributable to the parent entity and noncontrolling interest, if any, including other comprehensive income (as applicable). Including, but not limited to: (1) balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings; (2) accumulated balance for each classification of other comprehensive income and total amount of comprehensive income; (3) amount and nature of changes in separate accounts, including the number of shares authorized and outstanding, number of shares issued upon exercise and conversion, and for other comprehensive income, the adjustments for reclassifications to net income; (4) rights and privileges of each class of stock authorized; (5) basis of treasury stock, if other than cost, and amounts paid and accounting treatment for treasury stock purchased significantly in excess of market; (6) dividends paid or payable per share and in the aggregate for each class of stock for each period presented; (7) dividend restrictions and accumulated preferred dividends in arrears (in aggregate and per share amount); (8) retained earnings appropriations or restrictions, such as dividend restrictions; (9) impact of change in accounting principle, initial adoption of new accounting principle and correction of an error in previously issued financial statements; (10) shares held in trust for Employee Stock Ownership Plan (ESOP); (11) deferred compensation related to issuance of capital stock; (12) note received for issuance of stock; (13) unamortized discount on shares; (14) description, terms, and number of warrants or rights outstanding; (15) shares under subscription and subscription receivables, effective date of new retained earnings after quasi-reorganization and deficit eliminated by quasi-reorganization and, for a period of at least ten years after the effective date, the point in time from which the new retained dates; and (16) retroactive effective of subsequent change in capital structure.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08.(d),(e))
-URI http://asc.fasb.org/extlink&oid=6881521&loc=d3e23780-122690

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 4
-URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21484-112644

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 310
-SubTopic 10
-Section S99
-Paragraph 2
-Subparagraph (SAB TOPIC 4.E)
-URI http://asc.fasb.org/extlink&oid=6228006&loc=d3e74512-122707

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 5
-URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21488-112644

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 210
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.5-02.29-31)
-URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section S99
-Paragraph 4
-Subparagraph (SAB TOPIC 4.C)
-URI http://asc.fasb.org/extlink&oid=6959260&loc=d3e187143-122770

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
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-SubTopic 10
-Section 50
-Paragraph 6
-URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21506-112644

Reference 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.3-04)
-URI http://asc.fasb.org/extlink&oid=6959260&loc=d3e187085-122770

Reference 9: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 30
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-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=6405834&loc=d3e23285-112656

Reference 10: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21475-112644

Reference 11: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Glossary Preferred Stock
-URI http://asc.fasb.org/extlink&oid=6521494

Reference 12: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
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-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21463-112644

Reference 13: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 11
-URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21564-112644

Reference 14: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Accounting Research Bulletin (ARB)
-Number 43
-Section B
-Paragraph 7, 11A
-Chapter 1
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 15: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Accounting Principles Board Opinion (APB)
-Number 12
-Paragraph 10
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 16: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 5
-Paragraph 15
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 17: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 08
-Paragraph d
-Article 4

Reference 18: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 02
-Paragraph 29, 30, 31
-Article 5

Reference 19: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Staff Accounting Bulletin (SAB)
-Number Topic 4
-Section E

Reference 20: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 08
-Article 4

Reference 21: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Staff Accounting Bulletin (SAB)
-Number Topic 4
-Section C

Reference 22: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 129
-Paragraph 2, 3, 4, 5, 6, 7, 8
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 23: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 04
-Article 3

+ Details

13. Commitments and contingencies

9 Months Ended

Sep. 30, 2012

Commitments and Contingencies Disclosure [Abstract]

NOTE 13 - Commitments and contingencies

Office Space Rental

On May 1, 2009, the Company entered into a lease for approximately 1,800 square feet of office space in Santa Barbara, California for use as its executive offices. This lease was amended on July 21, 2009 and expires on December 31, 2013 with a three-year renewal term available at an initial rent plus common area charges of $5,767 per month. The Company has vacated this space as of August 31, 2012 and accrued a year of rent payments as of June 30, 2012 to provide for the Company’s estimated liability before a new tenant takes over the lease liability. There was no cash impact from this accrual of rent payments.

On August 1, 2011, we entered into a lease for approximately 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, subject to annual increases of 3%. The Company was not required to pay a fixed monthly rent for months 2 through 5. Prior to this, the Company was leasing the same office space on a month-to-month basis. The Company vacated this property in the quarter ended June 30, 2012 and accrued a year of rent payments as of June 30, 2012 to provide for the Company’s estimated liability before a new tenant takes over the lease liability. There was no cash impact from this accrual of rent payments.

On November 1, 2011, we entered into a lease for approximately 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 are $7,157 per month. The Company vacated this property in the quarter ended June 30, 2012 and accrued a year of rent payments as of June 30, 2012 to provide for the Company’s estimated liability before a new tenant takes over the lease liability. There was no cash impact from this accrual of rent payments.

Rent expense for the nine months ended September 30, 2012 and 2011 was $209,749 and $105,193 respectively. Rent expense for the three months ended September 30, 2012 and 2011 was $12,351 and $58,735 respectively.

Employment and Consulting Contracts

Effective June 28, 2012, an existing director of the Company and Chairman of the Company’s Audit Committee, was elected by the Company’s board of directors as Chairman of the Board, CEO and a director of the Company’s subsidiaries. The Board of Directors of PEI elected him as Chairman of the Board and CEO. Under the terms of an employment agreement dated June 28, 2012, this CEO will receive an annual salary of $250,000 per year and will continue to serve on the Company’s board of directors and as Chairman of the Company’s Audit Committee and shall continue to receive his compensation for such services. 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 has been 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 twelve-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 twelve month period.

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 this former employee entered into a new Consulting Agreement for a term of two years at an annual salary of $250,000, subject to the Company raising at least $2,000,000 in funding. Under the Consulting Agreement, this former employee agreed to provide services in the area of business development, fund-raising and the evaluation of asset/event acquisitions to be done at the discretion of the Board of Directors. As noted in Footnote 6 “Receivable from Former Officer and Director,” the Company has a receivable from Mr. Feller of $538,500.

On August 1, 2012, the employment contract between the Company and its CFO expired and the Company and this officer are negotiating a replacement contract.

Set forth below is information concerning our known contractual obligations as of September 30, 2012 that are fixed and determinable by years ending December 31:

											After
	Total		2013		2014		2015		2016		2016
Payroll, payroll tax and personnel	$	1,394,880	$	1,394,880	$	–	$	–	$	–	$	–
Employee and consulting contracts		1,670,661		1,545,661		125,000		–		–		–
Notes payable		2,752,999		2,752,999		–		–		–		–
Legal judgments		90,732		90,732		–		–		–		–
Rent obligations		452,041		452,041				–		–		–
	$	6,361,313	$	6,236,313	$	125,000	$	–	$	–	$	–

- Definition

The entire disclosure for commitments and contingencies.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 825
-SubTopic 20
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=6449706&loc=d3e16207-108621

Reference 2: http://www.xbrl.org/2003/role/presentationRef
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-Name Accounting Standards Codification
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Reference 3: http://www.xbrl.org/2003/role/presentationRef
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-Name Accounting Standards Codification
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-URI http://asc.fasb.org/extlink&oid=6952336&loc=d3e14435-108349

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
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-Subparagraph (SX 210.5-02.25)
-URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682

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-Name Accounting Standards Codification
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-Publisher FASB
-Name FASB Interpretation (FIN)
-Number 14
-Paragraph 3
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 5
-Paragraph 9, 10, 11, 12
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

+ Details

14. Segment Information

9 Months Ended

Sep. 30, 2012

Segment Information

NOTE 14 - Segment Information

Each event and the Stratus White program is considered an operating segment pursuant to ASC 280 since each is budgeted separately and results of each event and the Stratus White program are tracked separately to provide the chief operating decision maker information to assess and manage each event and the Stratus White program.

The characteristics of the Stratus White program are different than the events, so that operating segment is considered a reporting segment. The events share similar economic characteristics and are aggregated into a reporting segment pursuant to paragraph 17 of ASC 280. All of the events provide entertainment and the logistics and production processes and methods for each event are similar: sponsorship sales, ticket and concession sales, security, stages, public address systems and the like. While the demographic characteristics of the audience can vary by event, all events cater to consumer entertainment.

A summary of results by segment is as follows:

	(Amounts in $000)
	As of/for the Nine Months Ended September 30, 2012												As of /for the Nine Months Ended September 30, 2011
	Credit Card			Events			Other			Total			Credit Card			Events			Other			Total
Revenues	$	–		$	375		$	–		$	375		$	–		$	250		$	–		$	250
Cost of sales		–			236			–			236			–			254			–			254
Gross loss		–			139			–			139			–			(4	)		–			(4	)
Deprec. & Amort		–			2			28			30			30			–			19			49
Segment gain/(loss)		–			137			(28	)		109			(30	)		(4	)		(19	)		(53	)
Operating expenses		263			803			7,264			8,360			175			717			6,926			7,818
Other expenses		–			68			1,029			1,096			–			–			325			325
Net loss	$	(263	)	$	(734	)	$	(8,321	)	$	(9,318	)	$	(205	)	$	(721	)	$	(7,270	)	$	(8,196	)

Assets	$	1,073		$	119		$	2,752		$	3,944		$	1,216		$	96		$	7,769		$	9,081
Liabilities	$	300		$	2,271		$	7,410		$	9,981		$	1,000		$	816		$	2,147		$	3,963

- Definition

The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 34
-URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8981-108599

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Reference 15: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
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-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

+ Details

15. ProElite, Inc.

9 Months Ended

Sep. 30, 2012

Proelite Inc.

NOTE 15 - ProElite, Inc.

Effective October 21, 2009, the Company entered into a Strategic Investment Agreement with PEI pursuant to which PEI sold to the Company shares of PEI’s Series A Preferred Stock (the “Preferred Shares”). The transaction closed on June 14, 2011. The Preferred Shares are convertible into the Common Stock of PEI. The amount of shares of Common Stock issuable upon conversion on a cumulative basis is equal to 95% of the sum of (a) the issued and outstanding shares of PEI as of the closing plus (b) any shares of PEI Common Stock issued after the closing upon exercise or conversion of any derivative securities of PEI outstanding as of the closing, subject to any adjustment for stock splits, stock dividends, recapitalizations etc. and, in all cases, after giving effect to the shares issuable upon conversion of the Preferred Shares. The purchase price of the Preferred Shares was $2,000,000. At the close, all of the previous directors of PEI resigned and the board of directors of PEI consists of two designees of the Company and one designee of PEI. Paul Feller, the Company’s CEO at that time, became PEI’s CEO. Certain present and former key PEI executives continued with PEI. Upon the close of the transaction, the Company recorded goodwill of $1,935,621. The Company also recorded non-controlling interest of $105,263 due to negative equity of PEI at June 30, 2011. The Company has consolidated the balance sheet of PEI as of September 30, 2012 and December 31, 2011. The results of operations of PEI for the three months and nine months ended September 30, 2012 were consolidated into the Company’s results of operations.

The pro forma financial information presented below show the consolidated operations for the three and nine months ended September 30, 2011 of the Company as if the PEI acquisition had occurred as of January 1, 2011:

	Periods Ended September 30, 2011
	3 Months			9 Months

Revenues	$	250,201		$	506,201

Gross profit		(3,609	)		181,503

Loss from operations		(4,010,283	)		(8,765,049	)
Interest and other expense		195,705			356,238

Net Loss	$	(3,814,578	)	$	(8,408,811	)

Basic and diluted loss per share	$	(0.06	)	$	(0.07	)

16. Related Party Transactions

9 Months Ended

Sep. 30, 2012

NOTE 16 - Related Party Transactions

As of December 31, 2011, this gross receivable of $640,000 was presented net of $398,790 of accrued salary, $115,000 of commissions that Mr. Feller represented in writing were paid in this transaction, $30,540 of business expenses submitted by Mr. Feller that met Company and IRS guidelines and $133,770 of business expenses that Mr. Feller represented in writing he would provide, for a net receivable of zero. As of September 30, 2012, this gross receivable of $640,000 was increased by $4,622 of personal expenses for Mr. Feller paid with Company funds, including $4,355 of registration fees paid by the Company for the vintage automobile that remains in Mr. Feller’s possession. This gross receivable of $682,722 is presented net of $30,540 of approved business expenses and $113,667 in deferred salary. Additional evidence obtained in October 2012 confirmed that the $115,000 in commissions for the stock sales were not valid commissions and this amount was removed as an offset to the gross receivable for September 30, 2012. 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 offset to the gross receivable was reduced from $398,790 at December 31, 2011 to $113,667 at September 30, 2012, which consists of $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 for September 30, 2012.

Effective July 1, 2011, each board member is entitled to an annual payment of $50,000, with the chairman of the audit committee receiving an additional $100,000 per annum and the chairman of the compensation committee receiving an additional $50,000 per annum. Mr. Rubinstein received a grant of 450,000 shares of restricted common stock that vest over a 36 month period and an additional grant of 450,000 shares of restricted common stock as chairman of the audit committee that vest over a 36 month period. Mr. Golenberg received a grant of 450,000 shares of restricted common stock as chairman of the compensation committee that vests over a 36 month period that started in July 2011. On December 28, 2010, the Board of Directors elected to cancel a total of 1,550,000 options granted to Messrs. Cross and Dunleavy and Golenberg in 2009 for board service and to Mr. Golenberg in 2009 and 2010 as chairman of the audit committee, and replace those options with grants of 540,833 shares of restricted stock, which was equal to 50% of the number of vested options as of July 1, 2011. These grants vest one-third on January 1, 2012, one-third on January 1, 2013 and one-third on January 1, 2014. Pursuant to these grants, Mr. Cross received a grant of 162,500 shares of restricted stock, of which 54,167 shares vested on January 1, 2012; Mr. Dunleavy received a grant of 130,000 shares of restricted stock, of which 43,333 shares vested on January 1, 2012; and Mr. Golenberg received a grant of 248,333 shares of restricted stock, of which 82,778 shares vested on January 1, 2012.

- Definition

The entire disclosure for related party transactions. Examples of related party transactions include transactions between (a) a parent company and its subsidiary; (b) subsidiaries of a common parent; (c) and entity and its principal owners; and (d) affiliates.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 850
-SubTopic 10
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=6457730&loc=d3e39603-107864

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 850
-SubTopic 10
-Section 50
-Paragraph 4
-URI http://asc.fasb.org/extlink&oid=6457730&loc=d3e39622-107864

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 850
-SubTopic 10
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=6457730&loc=d3e39549-107864

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 850
-SubTopic 10
-Section 50
-Paragraph 5
-URI http://asc.fasb.org/extlink&oid=6457730&loc=d3e39678-107864

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08.(k))
-URI http://asc.fasb.org/extlink&oid=6881521&loc=d3e23780-122690

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 850
-SubTopic 10
-Section 50
-Paragraph 6
-URI http://asc.fasb.org/extlink&oid=6457730&loc=d3e39691-107864

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 04
-Paragraph b
-Article 3A

Reference 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 08
-Paragraph k
-Article 4

Reference 9: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 57
-Paragraph 1-4
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

+ Details

17. Subsequent Events

9 Months Ended

Sep. 30, 2012

Subsequent Events [Abstract]

NOTE 17 - Subsequent Events

Subsequent to September 30, 2012, Stratus Media Group, Inc. entered into a Securities Purchase Agreement, dated as of October 3, 2012 with one investor pursuant to which the Company agreed to sell to the Investor shares of the Company's Series E Convertible Preferred Stock the terms of which are set forth in the Amended and Restated Certificate of Designations of Series E Convertible Preferred Stock for a purchase price of $1,000 per share, or $1,000,000 in the aggregate. In connection with the sale of the Preferred Shares, the Company also agreed to issue to the Investor (a) warrants (“A Warrants”) to purchase up to one additional share of the Company’s common stock (“Common Stock”) for each share of Common Stock issuable upon conversion of the Preferred Shares, and (b) warrants (“B Warrants,” and, together with the A Warrants, the "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 are exercisable for five years commencing on the date of first issuance and are exercisable only for cash if there is an effective registration statement covering the resale of the shares issuable upon exercise of the Warrants. In the absence of such a registration statement, the Warrants are exercisable for cash or on a cashless basis at the option of the holder thereof. The exercise price of the Warrants is $0.30 per share, subject to full ratchet anti-dilution protection. Pursuant to the Amended Certificate, the Preferred Shares bear a dividend of 5% per annum, payable quarterly in cash, or, if the dividend shares are registered for resale, in shares of the Company’s Common Stock. The effective conversion rate for the Preferred Shares is $0.30 per share of Common Stock, subject to full ratchet anti-dilution protection. The Preferred Shares have voting rights on an as-converted to Common Stock basis. The Company is required to redeem any unconverted Preferred Shares on the fifth anniversary of the date of first issuance of shares of Preferred Stock, and has the right to require conversion at any time if the average daily trading value of shares of Common Stock for any twenty consecutive trading days exceeds $250,000 and the weighted average price per share is at least $2.50 for each of those twenty consecutive trading days. To secure the Company’s obligation to redeem the Preferred Shares, the Company entered into a Security Agreement dated as of October 3, 2012, pursuant to which the Company has agreed to grant the holders of the Preferred Shares a security interest in all of its assets, subject to the security interest granted by the Company in May 2011 to prior investors in the Preferred Stock. The Company has agreed to file a registration statement with the SEC covering the resale of the shares (a) issuable upon conversion of the Preferred Shares and exercise of the Warrants, and (b) issued as dividends payable in shares of Common Stock pursuant to the Amended Certificate. Upon the occurrence of certain events set forth in the Purchase Agreement, including the failure to timely file the registration statement or have the registration statement timely declared effective, the Company will pay to the Investor an amount of cash equal to 1% of the aggregate purchase price of the Preferred Shares, Warrants and shares of Common Stock issued upon conversion of the Preferred Shares, as the case may be, held by the Investor as of the date of such event, for each 30-day period during such default; provided, however, that the payments will not exceed 10% of the aggregate purchase price.

After September 30, 2012, $500,000 was advanced to ProElite pursuant to a convertible promissory note that bears interest at 7% and is due in October 2013. If ProElite or the Company enter into a financing of greater than $2,000,000 prior to this due date, this note will automatically convert to common stock at 50% of the stock price used in such financing. The note is secured by the assets of ProElite.

3. Basis of Presentation and Significant Accounting Policies (Policies)	9 Months Ended
	Sep. 30, 2012
Basis Of Presentation And Significant Accounting Policies 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 unaudited balance sheet at September 30, 2012 consolidates the accounts of PEI. All significant intercompany balances were eliminated in consolidation.
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.
Event Revenues	Event revenue consists of ticket sales, participant entry fees, corporate sponsorships, advertising, television broadcast fees, athlete management, concession and merchandise sales, charity receipts, commissions and hospitality functions. The Company recognizes admissions and other event-related revenues when the events are held in accordance with SEC Staff Accounting Bulletin (“SAB”) 104. Revenues received in advance and related direct expenses pertaining to specific events are deferred until the events are held.
Stratus White	Stratus White (formerly Stratus Rewards), the Company’s affiliate redemption credit card rewards program, is expected to generate revenues from transaction fees generated by member purchases using the card, initiation fees and annual membership fees. Revenue is recognized when transaction fees are received and membership fees are amortized and recognized ratably over the twelve-month membership period from the time of receipt.
Cash Equivalents	We consider all highly liquid investments purchased with original maturities of three months or less to be cash equivalents.
Accounts Receivable	Accounts receivable arise principally from royalties from television networks for pay-per-view presentations.
Fair Value of Financial Instruments	Our financial instruments include cash and equivalents, accounts receivable, accounts payable, notes payable and accrued liabilities. The carrying amounts of financial instruments approximate fair value (“FV”) due to their short maturities.
Property and Equipment	Property and equipment are stated at cost less accumulated depreciation.
Goodwill and Intangible Assets	Intangible assets consist of goodwill from certain events and the Stratus White Visa Card (“Stratus White”) we acquired. 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 FASB 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 purchased several events that are recorded on the Company’s balance sheet as intangible assets with a value at the consideration paid for such assets, which generally include licensing rights, naming rights, merchandising rights and the right to hold such event in particular geographic locations. There was no goodwill assigned to any of these events and the value of the consideration paid for each event is the value for each related intangible asset. Each event has separate accounts for tracking revenues and expenses and a separate account to track the asset valuation. A portion of the consideration used to purchase the Stratus White program was allocated to specific assets, as disclosed in the footnotes to the financial statements, with the difference between the specific assets and the total consideration paid for the program being allocated to goodwill. The Company reviews the value of intangible assets and related goodwill as part of its annual reporting process, which generally occurs in February or March of each calendar year. Between valuations, the Company conducts additional tests if circumstances warrant such testing. For example, the Company determined that as of September 30, 2012, the value of the Beverly Hills Concours, Maui Music Festival and Freedom Bowl were impaired when the Company elected not to continue these events and $197,500 of impairment charges were taken to reduce the value of these three events to zero. To review the value of intangible assets and related goodwill, the Company compares discounted cash flow forecasts with the amounts of the assets on the balance sheet. The events are forecasted based on historical results for those events, adjusted over time for the assumed synergies expected from discounts from purchases of goods and services from a number of events rather than from each event on its own, and for synergies resulting from the expected ability to provide sponsors with benefits from sponsoring multiple events with a single point of contact. These forecasts are 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 and small companies in general, and factors specific to the Company and its business. If the Company determines the discount factor for cash flows should be increased, or the event will not be able to begin operations when planned, it is possible the amounts for the intangible assets currently on the balance sheet could be reduced or eliminated, which could result in a maximum charge to operations equal to the current carrying value of the intangible assets of $3,162,466.
Research and Development	Research and development costs not related to contract performance are expensed as incurred. We did not incur any research and development expenses for 2011 or the nine months ended September 30, 2012.
Capitalized Software Costs	We did not capitalize any software development costs during 2011 or the nine months ended September 30, 2012. Costs related to the development of new software products and significant enhancements to existing software products are expensed as incurred until technological feasibility has been established and are amortized over three years.
Valuation of Long-Lived Assets	We account for long-lived assets in accordance with the provisions of FASB ASC Topic 360 Accounting for the Impairment or Disposal of Long-Lived Assets, which requires that long-lived assets and certain identifiable intangibles be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets is measured by comparing the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds their FV. Assets to be disposed of by sale are reflected at the lower of their carrying amount or FV less cost to sell.
Net Loss Per Share	We compute net loss per share in accordance with FASB ASC Topics 260 Earnings Per Share. Basic per share data is computed by dividing loss available to common stockholders by the weighted average number of shares outstanding during the period. Diluted per share data is computed by dividing loss available to common stockholders by the weighted average shares outstanding during the period increased to include, if dilutive, the number of additional common share equivalents that would have been outstanding if potential common shares had been issued using the treasury stock method. Diluted per share data would also include the potential common share equivalents relating to convertible securities by application of the if-converted method. The effect of common stock equivalents (which include outstanding warrants and stock options) are not included for the nine months ended September 30, 2012 or 2011, as they are antidilutive to loss per share.
Stock-Based Compensation	We follow FASB 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 the provisions of FASB ASC Topic 718. The risk-free interest rate is based on U.S. Treasury interest rates, the terms of which are consistent with the expected life of the stock options. Future option grants will be calculated using expected volatility based upon the average volatility of our common stock.
Advertising	We expense the cost of advertising as incurred. Such amounts have not historically been significant to our operations.
Income Taxes	The Company utilizes FASB ASC Topics 740-10 and 740-30 Accounting for Income Taxes, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that were 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.
Recent Accounting Pronouncements	In June 2011, FASB issued ASU 2011-05, Comprehensive Income (ASC Topic 220): Presentation of Comprehensive Income. Under the amendments in this update, an entity has the option to present the total of comprehensive income, the components of net income and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. Under both options, an entity is required to present each component of net income along with total net income, each component of other comprehensive income along with a total for other comprehensive income and a total amount for comprehensive income. In a single continuous statement, the entity is required to present the components of net income and total net income, the components of other comprehensive income and a total for other comprehensive income, along with the total of comprehensive income in that statement. In the two-statement approach, an entity is required to present components of net income and total net income in the statement of net income. The statement of other comprehensive income should immediately follow the statement of net income and include the components of other comprehensive income and a total for other comprehensive income, along with a total for comprehensive income. In addition, the entity is required to present on the face of the financial statements reclassification adjustments for items that are reclassified from other comprehensive income to net income in the statement(s) where the components of net income and the components of other comprehensive income are presented. The amendments in this update should be applied retrospectively and are effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. The Company evaluated this pronouncement and determined that it is not applicable to the Company’s financial presentation at this time. In September 2011, FASB issued ASU 2011-08 Intangibles—Goodwill and Other (Topic 350), which requires that a company should first examine 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 an impairment had occurred, the company then compares discounted cash flow forecasts related to the asset with the stated value of the assets on the balance sheet. The Company adopted this accounting standard for the year ended December 31, 2011 and utilized it in the analysis for impairment of intangible assets. On July 27, 2012, the FASB issued ASU 2012-02, Intangibles-Goodwill and Other (Topic 350) - Testing Indefinite-Lived Intangible Assets for Impairment. The ASU 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 US GAAP. The ASU 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 will not have a material impact on our financial statements.

3. Basis of Presentation and Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2012

Basis Of Presentation And Significant Accounting Policies Tables

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

6. Receivable from Former Officer and Director (Tables)

9 Months Ended

Sep. 30, 2012

Receivable From Former Officer And Director Tables

Receivable

This receivable of $682,722 is presented net of $30,540 of approved business expenses and $113,667 in deferred salary:

	September 30,			December 31,
	2012			2011
Gross receivable
Sale of Company common stock, proceeds retained by Mr. Feller	$	640,000		$	640,000
Vintage automobile retained by Mr. Feller		38,100			38,100
Other		4,622			–
Total		682,722			678,100

Offsets to receivable
Alleged commission on stock sales per Mr. Feller's written representation		–			(115,000	)
Deferred salary		(113,667	)		(398,790	)
Expense reports submitted and approved		(30,540	)		(30,540	)
Expense reports to be submitted per Mr. Feller's written representation		–			(133,770	)
Expense reports actually submitted		–			–
Net receivable	$	538,515		$	–

7. Property and Equipment (Tables)

9 Months Ended

Sep. 30, 2012

Property And Equipment Tables

Property and Equipment

Property and equipment were as follows:

	September 30,			December 31,
	2012			2011
Computers and peripherals	$	97,660		$	97,660
Office machines		49,370			49,370
Furniture and fixtures		79,484			79,484
		226,514			226,514
Less accumulated depreciation		(177,991	)		(148,379	)
	$	48,523		$	78,135

8. Goodwill and Intangible assets (Tables)

9 Months Ended

Sep. 30, 2012

Goodwill And Intangible Assets Tables

Goodwill and Intangible assets

Goodwill and intangible assets of the Company were as follows:

	September 30,		December 31,
	2012		2011
Intangible Assets
Events
Beverly Hills Concours	$	–	$	2,500
Santa Barbara Concours d'Elegance		53,000		53,000
Cour Tour/Action Sports Tour		100,000		100,000
Freedom Bowl		–		190,000
Maui Music Festival		–		5,000
Total - Events		153,000		350,500

Goodwill
ProElite, Inc.		1,935,621		1,935,621
Stratus White Visa Card		1,073,345		1,073,345
Total Goodwill		3,008,966		3,008,966
Total Goodwill and Intangible Assets	$	3,161,966	$	3,359,466

9. Other accrued expenses and other liabilities (Tables)

9 Months Ended

Sep. 30, 2012

Other Accrued Expenses And Other Liabilities Tables

Other accrued expenses and other liabilities

Other accrued expenses and other liabilities consisted of the following:

	September 30,		December 31,
	2012		2011
Professional fees	$	694,710	$	494,767
Payroll related		876,372		640,208
Estimated damage liability that may not be covered by insurance		300,000		–
Accrued board fees		285,365		–
Consultant fees		205,129		227,178
Accrued legal judgments		84,899		90,732
Travel expenses		69,866		38,546
Other		65,777		49,884
	$	2,582,118	$	1,541,315

10. Loans payable to officers and a director (Tables)

9 Months Ended

Sep. 30, 2012

Loans Payable To Officers And Director Tables

Loans payable to officers and a director

The Loans payable to officers and directors are as follows:

	September 30,		December 31,
	2012		2011

Former president and director, interest at 9.5%	$	–	$	78,919
An officer, non-interest bearing		153,055		50,244
An officer, interest at 5.0% if not repaid on timely basis		55,000		55,000
	$	208,055	$	184,163

11. Notes payable (Tables)

9 Months Ended

Sep. 30, 2012

Notes Payable Tables

Debt Disclosure

September 30,			December 31,
	2012			2011
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. These notes are currently in default. Secured by the assets of ProElite.	$	1,063,000		$	415,000

Note payable to a shareholder upon the earlier of completion of $1,000,000 in funding, or May 24, 2012, plus interest at 0.19%, secured by the assets of ProElite. This note is in default. The noteholder has a warrant to purchase ProElite shares at $0.05 per share that increases each month when the loan is in default. As of September 30, 2012, the noteholder had a resulting warrant to purchase 15.5 percent of ProElite.		1,000,000			–

Note payable to the Company's outside law firm and represents the corporate and litigation fees as of June 30, 2012. This note is presented net of $249,824 of assumed remibursements from the Company's D&O carrier. This note bears interest at 3% and is due December 31, 2012.		364,317			–

Notes payable to three holders dated May 11, 2012 with maturity of the earlier of November 11, 2012 or when a finacing is completed of $2,000,000 or more, plus interest at 10%, secured by the assets of the Company. This note is in default.		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 bear interest at 8%.		309,000			–

Notes payable to one holder dated April 4, 2012 with maturity on October 4, 2012, plus interest at 10%. Unsecured. This note is in default.		249,999			–

Note payable to a shareholder dated January 14, 2005, with maturity of May 14, 2005, plus interest at 10%. Unsecured. This note is in default.		70,000			70,000

Note payable to a shareholder dated February 1, 2005 with maturity of June 1, 2005, plus interest at 10%. Unsecured. This note is in default.		10,000			10,000

Note payable to non-shareholder. Payable on demand and does not bear interest		10,000			60,000
	$	3,426,316		$	555,000

12. Shareholders' Deficit (Tables)

9 Months Ended

Sep. 30, 2012

Shareholders Deficit Tables

Stock Options- Assumptions

The following assumptions were used for the Black Scholes calculation to determine this expense:

Estimated fair value of underlying common stock			$0.35 - $0.38
Remaining life			5.0
Risk-free interest rate			0.69% - 0.80%
Expected volatility			80% - 89%
Dividend yield			–

Stock Options - Activity

The following table sets forth the activity of our stock options:

	Options Outstanding									Options Exercisable
				Range of		Weighted Average Remaining		Weighted Average					Weighted Average Remaining		Weighted Average
	Options			Exercise		Life in		Exercise		Options			Life in		Exercise
	Outstanding			Prices		Years		Price		Exercisable			Years		Price
As of December 31, 2010		10,269,852			$0.14 - $3.50		2.4	$	0.94		8,512,684			2.0	$	0.94
Cancelled		(3,110,000	)		–		–	$	0.43		(3,110,000	)		–	$	0.00
Exercised
Granted		5,010,000		$	0.54		5.0	$	0.54		3,355,000			5.0	$	0.54
As of December 31, 2011		12,169,852			$0.14 - $1.50		3.2	$	0.49		8,757,684			3.2	$	0.40
Cancelled		(7,276,329	)		–		–		–		(4,660,994	)		–		–
Exercised		–			–		–		–		–			–		–
Granted		3,050,000			$0.35 - $0.38		4.8	$	0.36		734,333			4.8	$	0.36
As of September 30, 2012		7,943,523			$0.35 -$0.54		3.6	$	0.46		4,831,023			2.9	$	0.50

Warrants -Assumptions

The following assumptions were used for the Black Scholes calculation to determine this expense:

Estimated fair value of underlying common stock			$0.38 - $0.75
Remaining life			5.0
Risk-free interest rate			0.74% - 1.80%
Expected volatility			84% - 132%
Dividend yield			–

Warrants - Summary

A summary of the warrants: <table cellspacing="0" cellpadding="0" style="font: 8pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td style="line-height: 115%"> </td> <td style="line-height: 115%; font-weight: bold"> </td> <td colspan="14" style="border-bottom: black 1pt solid; line-height: 115%; font-weight: bold; text-align: center">Warrants Outstanding</td> <td style="line-height: 115%; font-weight: bold"> </td> <td style="line-height: 115%; font-weight: bold"> </td> <td colspan="10" style="border-bottom: black 1pt solid; line-height: 115%; font-weight: bold; text-align: center">Warrants Exercisable</td> <td style="line-height: 115%; font-weight: bold"> </td></tr> <tr style="vertical-align: bottom"> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td colspan="2" style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%; font-weight: bold"> </td> <td colspan="2" style="line-height: 115%; font-weight: bold; text-align: right">Range of</td> <td style="line-height: 115%; font-weight: bold"> </td> <td style="line-height: 115%; font-weight: bold"> </td> <td colspan="2" style="line-height: 115%; font-weight: bold; text-align: right">Weighted Average Remaining</td> <td style="line-height: 115%; font-weight: bold"> </td> <td style="line-height: 115%; font-weight: bold"> </td> <td colspan="2" style="line-height: 115%; font-weight: bold; text-align: right">Weighted Average</td> <td style="line-height: 115%; font-weight: bold"> </td> <td style="line-height: 115%"> </td> <td colspan="2" style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%; font-weight: bold"> </td> <td colspan="2" style="line-height: 115%; font-weight: bold; text-align: right">Weighted Average Remaining</td> <td style="line-height: 115%; font-weight: bold"> </td> <td style="line-height: 115%; font-weight: bold"> </td> <td colspan="2" style="line-height: 115%; font-weight: bold; text-align: right">Weighted Average</td> <td style="line-height: 115%; font-weight: bold"> </td></tr> <tr style="vertical-align: bottom"> <td style="line-height: 115%"> </td> <td style="line-height: 115%; font-weight: bold"> </td> <td colspan="2" style="line-height: 115%; font-weight: bold; text-align: right">Warrants</td> <td style="line-height: 115%; font-weight: bold"> </td> <td style="line-height: 115%; font-weight: bold"> </td> <td colspan="2" style="line-height: 115%; font-weight: bold; text-align: right">Exercise</td> <td style="line-height: 115%; font-weight: bold"> </td> <td style="line-height: 115%; font-weight: bold"> </td> <td colspan="2" style="line-height: 115%; font-weight: bold; text-align: right">Life in</td> <td style="line-height: 115%; font-weight: bold"> </td> <td style="line-height: 115%; font-weight: bold"> </td> <td colspan="2" style="line-height: 115%; font-weight: bold; text-align: right">Exercise</td> <td style="line-height: 115%; font-weight: bold"> </td> <td style="line-height: 115%; font-weight: bold"> </td> <td colspan="2" style="line-height: 115%; font-weight: bold; text-align: right">Warrants</td> <td style="line-height: 115%; font-weight: bold"> </td> <td style="line-height: 115%; font-weight: bold"> </td> <td colspan="2" style="line-height: 115%; font-weight: bold; text-align: right">Life in</td> <td style="line-height: 115%; font-weight: bold"> </td> <td style="line-height: 115%; font-weight: bold"> </td> <td colspan="2" style="line-height: 115%; font-weight: bold; text-align: right">Exercise</td> <td style="line-height: 115%; font-weight: bold"> </td></tr> <tr style="vertical-align: bottom"> <td style="line-height: 115%"> </td> <td style="line-height: 115%; font-weight: bold"> </td> <td colspan="2" style="border-bottom: black 1pt solid; line-height: 115%; font-weight: bold; text-align: right">Outstanding</td> <td style="line-height: 115%; font-weight: bold"> </td> <td style="line-height: 115%; font-weight: bold"> </td> <td colspan="2" style="border-bottom: black 1pt solid; line-height: 115%; font-weight: bold; text-align: right">Prices</td> <td style="line-height: 115%; font-weight: bold"> </td> <td style="line-height: 115%; font-weight: bold"> </td> <td colspan="2" style="border-bottom: black 1pt solid; line-height: 115%; font-weight: bold; text-align: right">Years</td> <td style="line-height: 115%; font-weight: bold"> </td> <td style="line-height: 115%; font-weight: bold"> </td> <td colspan="2" style="border-bottom: black 1pt solid; line-height: 115%; font-weight: bold; text-align: right">Price</td> <td style="line-height: 115%; font-weight: bold"> </td> <td style="line-height: 115%; font-weight: bold"> </td> <td colspan="2" style="border-bottom: black 1pt solid; line-height: 115%; font-weight: bold; text-align: right">Exercisable</td> <td style="line-height: 115%; font-weight: bold"> </td> <td style="line-height: 115%; font-weight: bold"> </td> <td colspan="2" style="border-bottom: black 1pt solid; line-height: 115%; font-weight: bold; text-align: right">Years</td> <td style="line-height: 115%; font-weight: bold"> </td> <td style="line-height: 115%; font-weight: bold"> </td> <td colspan="2" style="border-bottom: black 1pt solid; line-height: 115%; font-weight: bold; text-align: right">Price</td> <td style="line-height: 115%; font-weight: bold"> </td></tr> <tr style="vertical-align: bottom; background-color: #EEEEEE"> <td style="width: 14%; padding-left: 11pt; line-height: 115%; font-weight: bold; text-indent: -11pt">As of December 31, 2010</td> <td style="width: 2%; line-height: 115%; font-weight: bold"> </td> <td style="width: 1%; line-height: 115%; font-weight: bold"> </td> <td style="width: 9%; line-height: 115%; font-weight: bold; text-align: right">2,472,676</td> <td style="width: 1%; line-height: 115%; font-weight: bold"> </td> <td style="width: 2%; line-height: 115%; font-weight: bold"> </td> <td style="width: 1%; line-height: 115%; font-weight: bold"> </td> <td style="width: 9%; line-height: 115%; font-weight: bold; text-align: right">$1.00 - $2.00</td> <td style="width: 1%; line-height: 115%; font-weight: bold"> </td> <td style="width: 1%; line-height: 115%; font-weight: bold"> </td> <td style="width: 1%; line-height: 115%; font-weight: bold"> </td> <td style="width: 9%; line-height: 115%; font-weight: bold; text-align: right">4.4</td> <td style="width: 1%; line-height: 115%; font-weight: bold"> </td> <td style="width: 1%; line-height: 115%; font-weight: bold"> </td> <td style="width: 1%; line-height: 115%; font-weight: bold">$</td> <td style="width: 9%; line-height: 115%; font-weight: bold; text-align: right">1.37</td> <td style="width: 1%; line-height: 115%; font-weight: bold"> </td> <td style="width: 1%; line-height: 115%; font-weight: bold"> </td> <td style="width: 1%; line-height: 115%; font-weight: bold"> </td> <td style="width: 9%; line-height: 115%; font-weight: bold; text-align: right">2,472,676</td> <td style="width: 1%; line-height: 115%; font-weight: bold"> </td> <td style="width: 1%; line-height: 115%; font-weight: bold"> </td> <td style="width: 1%; line-height: 115%; font-weight: bold"> </td> <td style="width: 9%; line-height: 115%; font-weight: bold; text-align: right">4.4</td> <td style="width: 1%; line-height: 115%; font-weight: bold"> </td> <td style="width: 1%; line-height: 115%; font-weight: bold"> </td> <td style="width: 1%; line-height: 115%; font-weight: bold">$</td> <td style="width: 9%; line-height: 115%; font-weight: bold; text-align: right">1.37</td> <td style="width: 1%; line-height: 115%; font-weight: bold"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="line-height: 115%">Exercised</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%; text-align: right">–</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%; text-align: right">–</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%; text-align: right">–</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%; text-align: right">–</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%; text-align: right">–</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%; text-align: right">–</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%; text-align: right">–</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #EEEEEE"> <td style="line-height: 115%">Granted</td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right">57,057,569</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right">$0.65 - $1.00</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right">4.5</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1pt solid; line-height: 115%">$</td> <td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right">0.75</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right">57,057,569</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right">4.5</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1pt solid; line-height: 115%">$</td> <td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right">0.75</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 11pt; line-height: 115%; font-weight: bold; text-indent: -11pt">As of December 31, 2011</td> <td style="line-height: 115%; font-weight: bold"> </td> <td style="line-height: 115%; font-weight: bold"> </td> <td style="line-height: 115%; font-weight: bold; text-align: right">59,530,245</td> <td style="line-height: 115%; font-weight: bold"> </td> <td style="line-height: 115%; font-weight: bold"> </td> <td style="line-height: 115%; font-weight: bold"> </td> <td style="line-height: 115%; font-weight: bold; text-align: right">$0.65 - $2.00</td> <td style="line-height: 115%; font-weight: bold"> </td> <td style="line-height: 115%; font-weight: bold"> </td> <td style="line-height: 115%; font-weight: bold"> </td> <td style="line-height: 115%; font-weight: bold; text-align: right">3.5</td> <td style="line-height: 115%; font-weight: bold"> </td> <td style="line-height: 115%; font-weight: bold"> </td> <td style="line-height: 115%; font-weight: bold">$</td> <td style="line-height: 115%; font-weight: bold; text-align: right">2.00</td> <td style="line-height: 115%; font-weight: bold"> </td> <td style="line-height: 115%; font-weight: bold"> </td> <td style="line-height: 115%; font-weight: bold"> </td> <td style="line-height: 115%; font-weight: bold; text-align: right">59,530,245</td> <td style="line-height: 115%; font-weight: bold"> </td> <td style="line-height: 115%; font-weight: bold"> </td> <td style="line-height: 115%; font-weight: bold"> </td> <td style="line-height: 115%; font-weight: bold; text-align: right">3.5</td> <td style="line-height: 115%; font-weight: bold"> </td> <td style="line-height: 115%; font-weight: bold"> </td> <td style="line-height: 115%; font-weight: bold">$</td> <td style="line-height: 115%; font-weight: bold; text-align: right">2.00</td> <td style="line-height: 115%; font-weight: bold"> </td></tr> <tr style="vertical-align: bottom; background-color: #EEEEEE"> <td style="line-height: 115%">Exercised</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%; text-align: right">–</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%; text-align: right">–</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%; text-align: right">–</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%; text-align: right">–</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%; text-align: right">–</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%; text-align: right">–</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%; text-align: right">–</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 11pt; line-height: 115%; text-indent: -11pt">Ratchet-down impact</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%; text-align: right">56,991,667</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%">$</td> <td style="line-height: 115%; text-align: right">0.30</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%; text-align: right">–</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%">$</td> <td style="line-height: 115%; text-align: right">0.30</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%; text-align: right">56,991,667</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%; text-align: right">–</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%">$</td> <td style="line-height: 115%; text-align: right">0.30</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #EEEEEE"> <td style="line-height: 115%">Granted</td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right">14,363,330</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right">$0.30 - $0.40</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right">4.6</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1pt solid; line-height: 115%">$</td> <td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right">0.40</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right">6,488,330</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right">4.6</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1pt solid; line-height: 115%">$</td> <td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right">0.40</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 11pt; line-height: 115%; font-weight: bold; text-indent: -11pt">As of September 30, 2012</td> <td style="line-height: 115%; font-weight: bold"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%; font-weight: bold"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%; font-weight: bold; text-align: right">130,885,242</td> <td style="line-height: 115%; font-weight: bold"> </td> <td style="line-height: 115%; font-weight: bold"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%; font-weight: bold"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%; font-weight: bold; text-align: right">$0.30 - $2.00</td> <td style="line-height: 115%; font-weight: bold"> </td> <td style="line-height: 115%; font-weight: bold"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%; font-weight: bold"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%; font-weight: bold; text-align: right">3.7</td> <td style="line-height: 115%; font-weight: bold"> </td> <td style="line-height: 115%; font-weight: bold"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%; font-weight: bold">$</td> <td style="border-bottom: black 2.25pt double; line-height: 115%; font-weight: bold; text-align: right">0.40</td> <td style="line-height: 115%; font-weight: bold"> </td> <td style="line-height: 115%; font-weight: bold"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%; font-weight: bold"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%; font-weight: bold; text-align: right">123,010,242</td> <td style="line-height: 115%; font-weight: bold"> </td> <td style="line-height: 115%; font-weight: bold"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%; font-weight: bold"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%; font-weight: bold; text-align: right">3.7</td> <td style="line-height: 115%; font-weight: bold"> </td> <td style="line-height: 115%; font-weight: bold"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%; font-weight: bold">$</td> <td style="border-bottom: black 2.25pt double; line-height: 115%; font-weight: bold; text-align: right">0.40 </td> <td> </td></tr> </table>

Calculations of the ratchet-down impact

Calculations of the ratchet-down impact: <table cellspacing="0" cellpadding="0" style="font: 8pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom; background-color: white"> <td style="line-height: 115%; text-align: center"> </td> <td style="line-height: 115%; text-align: center"> </td> <td style="border-bottom: black 1pt solid; line-height: 115%; text-align: center"> </td> <td colspan="10" style="border-bottom: black 1pt solid; line-height: 115%; font-weight: bold; text-align: center"> Original</td> <td style="line-height: 115%; text-align: center"> </td> <td colspan="10" style="border-bottom: black 1pt solid; line-height: 115%; font-weight: bold; text-align: center"> After Ratchet Down</td> <td style="line-height: 115%; text-align: center"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="line-height: 115%; text-align: center"> </td> <td style="line-height: 115%; text-align: center"> </td> <td style="border-bottom: black 1pt solid; line-height: 115%; text-align: center"> </td> <td style="border-bottom: black 1pt solid; line-height: 115%; text-align: center">Shares x</td> <td style="line-height: 115%; text-align: center"> </td> <td style="line-height: 115%; text-align: center"> </td> <td style="border-bottom: black 1pt solid; line-height: 115%; text-align: center"> </td> <td style="border-bottom: black 1pt solid; line-height: 115%; text-align: center">Strike =</td> <td style="line-height: 115%; text-align: center"> </td> <td style="line-height: 115%; text-align: center"> </td> <td style="border-bottom: black 1pt solid; line-height: 115%; text-align: center"> </td> <td style="border-bottom: black 1pt solid"> Aggregate Exercise Price</td> <td style="line-height: 115%; text-align: center"> </td> <td style="line-height: 115%; text-align: center"> </td> <td style="border-bottom: black 1pt solid; line-height: 115%; text-align: center"> </td> <td style="border-bottom: black 1pt solid; line-height: 115%; text-align: center">Shares x</td> <td style="line-height: 115%; text-align: center"> </td> <td style="line-height: 115%; text-align: center"> </td> <td style="border-bottom: black 1pt solid; line-height: 115%; text-align: center"> </td> <td style="border-bottom: black 1pt solid; line-height: 115%; text-align: center">Strike =</td> <td style="line-height: 115%; text-align: center"> </td> <td style="line-height: 115%; text-align: center"> </td> <td style="border-bottom: black 1pt solid; line-height: 115%; text-align: center"> </td> <td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right">Aggregate Exercise Price</td> <td style="line-height: 115%; text-align: center"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%; text-align: right"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%; text-align: right"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%; text-align: right"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%; text-align: right"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%; text-align: right"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%; text-align: right"> </td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="width: 25%; padding-left: 8.1pt; line-height: 115%; text-indent: -8.1pt">Series A warrants</td> <td style="width: 2%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 9%; line-height: 115%; text-align: right">21,750,000</td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 2%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%">$</td> <td style="width: 9%; line-height: 115%; text-align: right">0.65</td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 2%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%">$</td> <td style="width: 9%; line-height: 115%; text-align: right">14,137,500</td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 9%; line-height: 115%; text-align: right">47,125,000</td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%">$</td> <td style="width: 9%; line-height: 115%; text-align: right">0.30</td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%">$</td> <td style="width: 9%; line-height: 115%; text-align: right">14,137,500</td> <td style="width: 1%; line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #EEEEEE"> <td style="padding-left: 8.1pt; line-height: 115%; text-indent: -8.1pt">Series B warrants</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%; text-align: right">10,875,000</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%">$</td> <td style="line-height: 115%; text-align: right">1.00</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%">$</td> <td style="line-height: 115%; text-align: right">10,875,000</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%; text-align: right">36,250,000</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%">$</td> <td style="line-height: 115%; text-align: right">0.30</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%">$</td> <td style="line-height: 115%; text-align: right">10,875,000</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 8.1pt; line-height: 115%; text-indent: -8.1pt">Placement agent warrant</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%; text-align: right">3,600,000</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%">$</td> <td style="line-height: 115%; text-align: right">0.65</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%">$</td> <td style="line-height: 115%; text-align: right">2,340,000</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%; text-align: right">7,800,000</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%">$</td> <td style="line-height: 115%; text-align: right">0.30</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%">$</td> <td style="line-height: 115%; text-align: right">2,340,000</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #EEEEEE"> <td style="padding-left: 8.1pt; line-height: 115%; text-indent: -8.1pt">Broker-dealer warrant</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%; text-align: right">1,000,000</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%">$</td> <td style="line-height: 115%; text-align: right">0.65</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%">$</td> <td style="line-height: 115%; text-align: right">650,000</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%; text-align: right">2,166,667</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%">$</td> <td style="line-height: 115%; text-align: right">0.30</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%">$</td> <td style="line-height: 115%; text-align: right">650,000</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 8.1pt; line-height: 115%; text-indent: -8.1pt">Advisory warrant</td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right"> </td> <td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right">750,000</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%">$</td> <td style="line-height: 115%; text-align: right">0.65</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%">$</td> <td style="line-height: 115%; text-align: right">487,500</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right"> </td> <td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right">1,625,000</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%">$</td> <td style="line-height: 115%; text-align: right">0.30</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%">$</td> <td style="line-height: 115%; text-align: right">487,500</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #EEEEEE"> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%; text-align: right">37,975,000</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%; text-align: right"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%; text-align: right"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%; text-align: right">94,966,667</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%; text-align: right"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%; text-align: right"> </td> <td> </td></tr> </table>

13. Commitments and contingencies (Tables)

9 Months Ended

Sep. 30, 2012

Commitments And Contingencies Tables

Contractual obligations

Set forth below is information concerning our known contractual obligations as of September 30, 2012 that are fixed and determinable by years ending December 31:

											After
	Total		2013		2014		2015		2016		2016
Payroll, payroll tax and personnel	$	1,394,880	$	1,394,880	$	–	$	–	$	–	$	–
Employee and consulting contracts		1,670,661		1,545,661		125,000		–		–		–
Notes payable		2,752,999		2,752,999		–		–		–		–
Legal judgments		90,732		90,732		–		–		–		–
Rent obligations		452,041		452,041				–		–		–
	$	6,361,313	$	6,236,313	$	125,000	$	–	$	–	$	–

14. Segment Information (Tables)

9 Months Ended

Sep. 30, 2012

Segment Information Tables

Segment Information

A summary of results by segment is as follows:

	(Amounts in $000)
	As of/for the Nine Months ended September 30, 2012												As of /for the Nine Months ended September 30, 2011
	Credit Card			Events			Other			Total			Credit Card			Events			Other			Total
Revenues	$	–		$	375		$	–		$	375		$	–		$	250		$	–		$	250
Cost of sales		–			236			–			236			–			254			–			254
Gross loss		–			139			–			139			–			(4	)		–			(4	)
Deprec. & Amort		–			2			28			30			30			–			19			49
Segment gain/(loss)		–			137			(28	)		109			(30	)		(4	)		(19	)		(53	)
Operating expenses		263			803			7,264			8,360			175			717			6,926			7,818
Other expenses		–			68			1,029			1,096			–			–			325			325
Net loss	$	(263	)	$	(734	)	$	(8,321	)	$	(9,318	)	$	(205	)	$	(721	)	$	(7,270	)	$	(8,196	)

Assets	$	1,073		$	119		$	2,752		$	3,944		$	1,216		$	96		$	7,769		$	9,081
Liabilities	$	300		$	2,271		$	7,410		$	9,981		$	1,000		$	816		$	2,147		$	3,963

- Definition

Tabular disclosure of the profit or loss and total assets for each reportable segment. An entity discloses certain information on each reportable segment if the amounts (a) are included in the measure of segment profit or loss reviewed by the chief operating decision maker or (b) are otherwise regularly provided to the chief operating decision maker, even if not included in that measure of segment profit or loss.

+ References + Details

15. ProElite, Inc. (Tables)

9 Months Ended

Sep. 30, 2012

Proelite Inc. Tables

ProElite, Inc.

	Periods Ended September 30, 2011
	3 Months			9 Months

Revenues	$	250,201		$	506,201

Gross profit		(3,609	)		181,503

Loss from operations		(4,010,283	)		(8,765,049	)
Interest and other expense		195,705			356,238

Net Loss	$	(3,814,578	)	$	(8,408,811	)

Basic and diluted loss per share	$	(0.06	)	$	(0.07	)

2. Going Concern (Details Narrative) - USD ($)	3 Months Ended		9 Months Ended
2. Going Concern (Details Narrative) - USD ($)	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011	Dec. 31, 2011
Going Concern Details Narrative
Net Income (loss)	$ (3,464,537)	$ (4,335,988)	$ (9,317,865)	$ (8,195,928)
Working Capital	(9,247,432)		(9,247,432)
Accumulated deficit	$ (51,566,427)		$ (51,566,427)		$ (42,196,523)

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Glossary Net Income
-URI http://asc.fasb.org/extlink&oid=6518256

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 230
-SubTopic 10
-Section 45
-Paragraph 28
-URI http://asc.fasb.org/extlink&oid=6943989&loc=d3e3602-108585

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 944
-SubTopic 225
-Section S99
-Paragraph 1
-Subparagraph (SX 210.7-04.19)
-URI http://asc.fasb.org/extlink&oid=6879464&loc=d3e573970-122913

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 260
-SubTopic 10
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=6371337&loc=d3e3550-109257

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 225
-SubTopic 10
-Section S99
-Paragraph 2
-Subparagraph (SX 210.5-03.18)
-URI http://asc.fasb.org/extlink&oid=6880815&loc=d3e20235-122688

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 944
-SubTopic 225
-Section S99
-Paragraph 1
-Subparagraph (SX 210.7-04.22)
-URI http://asc.fasb.org/extlink&oid=6879464&loc=d3e573970-122913

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Glossary Other Comprehensive Income
-URI http://asc.fasb.org/extlink&oid=6519514

Reference 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 220
-SubTopic 10
-Section 45
-Paragraph 6
-URI http://asc.fasb.org/extlink&oid=20435746&loc=d3e565-108580

Reference 9: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Accounting Research Bulletin (ARB)
-Number 51
-Paragraph 38
-Subparagraph d
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 10: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 130
-Paragraph 10, 15
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 11: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Accounting Research Bulletin (ARB)
-Number 51
-Paragraph A7
-Appendix A

Reference 12: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Emerging Issues Task Force (EITF)
-Number 87-21
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 13: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 03
-Paragraph 19
-Article 5

Reference 14: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Accounting Research Bulletin (ARB)
-Number 51
-Paragraph 38
-Subparagraph a
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 15: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 95
-Paragraph 28, 29, 30
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 16: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 04
-Paragraph 20
-Article 9

+ Details

3. Basis of Presentation and Significant Accounting Policies (Details)	3 Months Ended
	Sep. 30, 2012
Furniture And Fixtures
Property and Equipment
Estimated useful Life	5 years
Software
Property and Equipment
Estimated useful Life	3 years
Equipment \| MaximumMember
Property and Equipment
Estimated useful Life	5 years
Equipment \| MinimumMember
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 Significant Accounting Policies (Details Narrative)	Sep. 30, 2012 USD ($)
Basis Of Presentation And Significant Accounting Policies Details Narrative
Intangible Assets	$ 3,162,466
Impairment charges	$ 197,500

6. Receivable from Former Officer and Director (Details) - USD ($)	Sep. 30, 2012	Dec. 31, 2011
Gross receivable
Sale of Company common stock, proceeds retained by Mr. Feller	$ 640,000	$ 640,000
Vintage automobile retained by Mr. Feller	38,100	38,100
Other	4,622
Gross receivable	682,722	678,100
Alleged commission on stock sales per Mr. Feller's written representation		(115,000)
Deferred salary	(113,667)	(398,790)
Expense reports submitted and approved	(30,540)	(30,540)
Expense reports to be submitted per Mr. Feller's written representation		(133,770)
Expense reports actually submitted
Net receivable	$ 538,515

7. Property and Equipment (Details) - USD ($)	Sep. 30, 2012	Dec. 31, 2011
Property and Equipment
Computers and peripherals	$ 97,660	$ 97,660
Office machines	49,370	49,370
Furniture and fixtures	79,484	79,484
Property and Equipment Gross	226,514	226,514
Less accumulated depreciation	(177,991)	(148,379)
Property and Equipment Net	$ 48,523	$ 78,135

- Definition

The cumulative amount of depreciation, depletion and amortization (related to property, plant and equipment, but not including land) that has been recognized in the income statement.

+ References + Details

7. Property and Equipment (Details Narrative) - USD ($)	3 Months Ended		9 Months Ended
7. Property and Equipment (Details Narrative) - USD ($)	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Property And Equipment Details Narrative
Depreciation	$ 7,995	$ 10,461	$ 19,758	$ 4,054

8. Goodwill and Intangible assets (Details) - USD ($)	Sep. 30, 2012	Dec. 31, 2011	Sep. 30, 2011
Intangible Assets Net
Intangible Assets	$ 153,000	$ 350,500
Goodwill			$ 1,935,621
Goodwill and Intangible Assets	3,161,966	3,359,466
Beverly Hills Concours
Intangible Assets Net
Intangible Assets		2,500
Goodwill
Goodwill and Intangible Assets
Santa Barbara Concours d'Elegance
Intangible Assets Net
Intangible Assets	53,000	53,000
Goodwill
Goodwill and Intangible Assets
Cour Tour/Action Sports Tour
Intangible Assets Net
Intangible Assets	100,000	100,000
Goodwill
Goodwill and Intangible Assets
Freedom Bowl
Intangible Assets Net
Intangible Assets		190,000
Goodwill
Goodwill and Intangible Assets
Maui Music Festival
Intangible Assets Net
Intangible Assets		5,000
Goodwill
Goodwill and Intangible Assets
ProElite, Inc.
Intangible Assets Net
Intangible Assets
Goodwill	1,935,621	1,935,621
Goodwill and Intangible Assets
Stratus White Visa Card
Intangible Assets Net
Intangible Assets
Goodwill	$ 1,073,345	1,073,345
Goodwill and Intangible Assets

8. Goodwill and Intangible assets (Details Narrative) - USD ($)	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011	Dec. 31, 2011
Goodwill And Intangible Assets Details Narrative
Licensed technology estimated useful life					10 years
Amortization	$ 0	$ 11,353	$ 0	$ 34,057
Impairment charges	$ 197,500		$ 197,500

9. Other accrued expenses and other liabilities (Details) - USD ($)	Sep. 30, 2012	Dec. 31, 2011
Accounts Payable and Accrued Liabilities
Professional fees	$ 694,710	$ 494,767
Payroll related	876,372	640,208
Estimated damage liability that may not be covered by insurance	300,000
Accrued board fees	285,365
Consultant fees	205,129	227,178
Accrued legal judgments	84,899	90,732
Travel expenses	69,866	38,546
Other	65,777	49,884
Total Accounts Payable and Accrued Liabilities	$ 2,582,118	$ 1,541,315

10. Loans payable to officers and a director (Details) - USD ($)	Sep. 30, 2012	Dec. 31, 2011
Loan Payable
Loan Payable	$ 208,055	$ 184,163
ToFormerPresidentAndDirectorInterestNinePointFivePercentMember
Loan Payable
Loan Payable		78,919
ToOfficerNonInterestMember
Loan Payable
Loan Payable	153,055	50,244
ToOfficerInterestFivePercentMember
Loan Payable
Loan Payable	$ 55,000	$ 55,000

10. Loans payable to officers and a director (Details Narrative) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Loans Payable To Officers And Director Details Narrative
Interest on loans	$ 0	$ 0	$ 0	$ 12,421

11. Notes payable (Details) - USD ($)	Sep. 30, 2012	Dec. 31, 2011
Notes Payable
Notes Payable	$ 3,426,316	$ 555,000
ProElite, Inc.
Notes Payable
Notes Payable	1,063,000	415,000
ShareholderMember
Notes Payable
Notes Payable	1,000,000
ShareholderTwoMember
Notes Payable
Notes Payable	364,317
ThreeHoldersMember
Notes Payable
Notes Payable	350,000
NotesPayableElevenInvestors [Member]
Notes Payable
Notes Payable	309,000
OneHolderMember
Notes Payable
Notes Payable	249,999
ShareholderThreeMember
Notes Payable
Notes Payable	70,000	70,000
ShareholderFour [Member]
Notes Payable
Notes Payable	10,000	10,000
NonShareholderMember
Notes Payable
Notes Payable	$ 10,000	$ 60,000

11. Notes payable (Details Narrative) - USD ($)	3 Months Ended		9 Months Ended
11. Notes payable (Details Narrative) - USD ($)	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Notes Payable Details Narrative
Interest expense on notes	$ 22,161	$ 4,500	$ 36,484	$ 26,510

12. Shareholders' Deficit (Details)	9 Months Ended
12. Shareholders' Deficit (Details)	Sep. 30, 2012 $ / shares
Stock Options
Remaining life	5 years
Dividend yield
MinimumMember
Stock Options
Estimated fair value of underlying common stock	$ 0.35
Risk-free interest rate	0.69%
Expected volatility	80.00%
MaximumMember
Stock Options
Estimated fair value of underlying common stock	$ 0.38
Risk-free interest rate	0.80%
Expected volatility	89.00%

12. Shareholders' Deficit (Details 1) - $ / shares	9 Months Ended	12 Months Ended
12. Shareholders' Deficit (Details 1) - $ / shares	Sep. 30, 2012	Dec. 31, 2011
Options Outstanding
Beginning Balance	12,169,852	10,269,852
Cancelled	(7,276,329)	(3,110,000)
Exercised
Granted	3,050,000	5,010,000
Ending Balance	7,943,523	12,169,852
Range of Exercise Prices
Beginning Balance Minimum	$ 0.14	$ 0.14
Beginning Balance Maximum	1.50	3.50
Cancelled
Exercised
Granted		0.54
Ending Balance Minimum	0.35	0.14
Ending Balance Maximum	$ 0.54	$ 1.50
Beginning Balance	3 years 2 months 12 days	4 years 4 months 24 days
Cancelled	0 years	0 years
Exercised	0 years	0 years
Granted	4 years 9 months 18 days	5 years
Ending Balance	3 years 7 months 6 days	3 years 2 months 12 days
Weighted Average Exercise Price
Beginning Balance	$ 0.49	$ 0.94
Cancelled		0.43
Exercised
Granted	0.36	0.54
Ending Balance	$ 0.46	$ 0.49
Options Exercisable
Beginning Balance	8,757,684	8,512,684
Cancelled	(4,660,994)	(3,110,000)
Exercised
Granted	734,333	3,355,000
Ending Balance	4,831,023	8,757,684
Weighted Average Remaining Life in Years
Beginning Balance	3 years 2 months 12 days	2 years
Cancelled	0 years	0 years
Exercised	0 years	0 years
Granted	4 years 9 months 18 days	5 years
Ending Balance	2 years 10 months 24 days	3 years 2 months 12 days
Weighted Average Exercise Price
Beginning Balance	$ 0.40	$ 0.94
Cancelled		0.00
Exercised
Granted	0.36	0.54
Ending Balance	0.50	$ 0.40
MinimumMember
Range of Exercise Prices
Granted	0.35
MaximumMember
Range of Exercise Prices
Granted	$ 0.38

12. Shareholders' Deficit (Details 2) - $ / shares	9 Months Ended	12 Months Ended
12. Shareholders' Deficit (Details 2) - $ / shares	Sep. 30, 2012	Dec. 31, 2011	Dec. 31, 2010
Warrants Outstanding
Beginning Balance	7,943,523	12,169,852	10,269,852
Exercised
Granted	3,050,000	5,010,000
Ending Balance	7,943,523	12,169,852	10,269,852
Range of Exercise Prices
Beginning Balance Minimum	$ 0.14	$ 0.14
Beginning Balance Maximum	$ 1.50	$ 3.50
Weighted Average Remaining Life in Years
Beginning Balance	3 years 2 months 12 days	4 years 4 months 24 days
Exercised	0 years	0 years
Granted	4 years 9 months 18 days	5 years
Weighted Average Exercise Price
Beginning Balance	$ 0.46	$ 0.49	$ 0.94
Exercised
Granted	0.36	0.54
Ending Balance	$ 0.46	$ 0.49	$ 0.94
Weighted Average Remaining Life in Years
Beginning Balance	3 years 2 months 12 days	2 years
Exercised	0 years	0 years
Granted	4 years 9 months 18 days	5 years
WarrantMember
Warrants Outstanding
Beginning Balance	130,885,242	59,530,245	2,472,676
Exercised
Ratchet-down impact	56,991,667
Granted	14,363,330	57,057,569
Ending Balance	130,885,242	59,530,245	2,472,676
Range of Exercise Prices
Beginning Balance Minimum	$ 0.65	$ 1
Beginning Balance Maximum	$ 2	2
Exercised
Ratchet-down impact	0.3
GrantedMinimum	$ 0.3
GrantedMaximum	0.4
Ending Balance Minimum	0.3	0.65
Ending Balance Maximum	$ 2	$ 1
Weighted Average Remaining Life in Years
Beginning Balance	3 years 6 months	4 years 4 months 24 days
Exercised	0 years	0 years
Granted	4 years 7 months 6 days	4 years 6 months
Ending Balance	4 years 8 months 12 days	3 years 6 months
Weighted Average Exercise Price
Beginning Balance	$ 0.4	$ 2	$ 1.37
Exercised
Ratchet-down impact	0.3
Granted	0.4	0.75
Ending Balance	$ 0.4	$ 2	$ 1.37
Warrants Exercisable
Beginning Balance	2,472,676
Exercised
Ratchet-down impact	56,991,667
Granted	6,488,330	57,057,569
Ending Balance	123,010,242	59,530,245
Weighted Average Remaining Life in Years
Beginning Balance		3 years 8 months 12 days
Exercised	0 years	0 years
Granted	4 years 7 months 6 days	4 years 6 months
Ending Balance	3 years 8 months 12 days	3 years 6 months
Weighted Average Exercise Price
Exercised
Ratchet-down impact	$ 0.3
Granted	0.4	0.75
Ending Balance	$ 0.4	$ 2

12. Shareholders' Deficit (Details 3)	Sep. 30, 2012 USD ($) $ / shares shares
Class of Warrant or Right [Line Items]
Shares	37,975,000
AfterRatchetDownMember
Class of Warrant or Right [Line Items]
Shares	94,966,667
Additional warrants from ratchet-down	56,991,667
Series A Warrants [Member]
Class of Warrant or Right [Line Items]
Shares	21,750,000
Strike Price \| $ / shares	$ 0.65
Aggregate Exercise Price \| $	$ 14,137,500
Series A Warrants [Member] \| AfterRatchetDownMember
Class of Warrant or Right [Line Items]
Shares	47,125,000
Strike Price \| $ / shares	$ 0.3
Aggregate Exercise Price \| $	$ 14,137,500
Series B Warrants [Member]
Class of Warrant or Right [Line Items]
Shares	10,875,000
Strike Price \| $ / shares	$ 1
Aggregate Exercise Price \| $	$ 10,875,000
Series B Warrants [Member] \| AfterRatchetDownMember
Class of Warrant or Right [Line Items]
Shares	36,250,000
Strike Price \| $ / shares	$ 0.3
Aggregate Exercise Price \| $	$ 10,875,000
PlacementAgentWarrantMember
Class of Warrant or Right [Line Items]
Shares	3,600,000
Strike Price \| $ / shares	$ 0.65
Aggregate Exercise Price \| $	$ 2,340,000
PlacementAgentWarrantMember \| AfterRatchetDownMember
Class of Warrant or Right [Line Items]
Shares	7,800,000
Strike Price \| $ / shares	$ 0.3
Aggregate Exercise Price \| $	$ 2,340,000
BrokerDealerWarrantMember
Class of Warrant or Right [Line Items]
Shares	1,000,000
Strike Price \| $ / shares	$ 0.65
Aggregate Exercise Price \| $	$ 650,000
BrokerDealerWarrantMember \| AfterRatchetDownMember
Class of Warrant or Right [Line Items]
Shares	2,166,667
Strike Price \| $ / shares	$ 0.3
Aggregate Exercise Price \| $	$ 650,000
AdvisoryWarrantMember
Class of Warrant or Right [Line Items]
Shares	750,000
Strike Price \| $ / shares	$ 0.65
Aggregate Exercise Price \| $	$ 487,500
AdvisoryWarrantMember \| AfterRatchetDownMember
Class of Warrant or Right [Line Items]
Shares	1,625,000
Strike Price \| $ / shares	$ 0.3
Aggregate Exercise Price \| $	$ 487,500

12. Shareholders' Deficit (Details Narrative) - USD ($)	9 Months Ended
12. Shareholders' Deficit (Details Narrative) - USD ($)	Sep. 30, 2012	Sep. 30, 2011	Dec. 31, 2011
Common stock issued		7,957,141
Common stock value		$ 3,609,359
Series D 10% Preferred Stock
Preferred Stock Conversion Description	Each share of Series D sold for $30, can be converted at any time into 60 shares of common stock and has voting rights of 60 shares of common stock.
Warrants issued in connection with Series D stock	179,970
Warrants Exercise Price	$ 1.00
Preferred stock liquidation preference	$ 30
Cumulative dividend	10.00%
Additional Conversion Description	The Series D automatically convert into 60 shares of common stock when the closing price for a share of common stock is $5.00 or above and the average daily trading volume for the 10 previous trading days is above 200,000 shares.
Preferred Stock Outstanding	18,999		18,999
Series E 5% Preferred Stock
Preferred Stock Outstanding	8,450		8,500

13. Commitments and contingencies (Details)	Sep. 30, 2012 USD ($)
Contractual Obligation
Total	$ 6,361,313
2013	6,236,313
2014	125,000
2015
2016
After 2016
Payroll, payroll tax and personnel
Contractual Obligation
Total	1,394,880
2013	1,394,880
2014
2015
2016
After 2016
Employee and consulting contracts
Contractual Obligation
Total	1,670,661
2013	1,545,661
2014	125,000
2015
2016
After 2016
Notes payable
Contractual Obligation
Total	2,752,999
2013	2,752,999
2014
2015
2016
After 2016
Legal judgments
Contractual Obligation
Total	90,732
2013	90,732
2014
2015
2016
After 2016
Rent obligations
Contractual Obligation
Total	452,041
2013	452,041
2015
2016
After 2016

13. Commitments and contingencies (Details Narrative) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Commitments And Contingencies Details Narrative
Rent expense	$ 12,351	$ 58,735	$ 209,749	$ 105,193

14. Segment Information (Details) - USD ($)	3 Months Ended		9 Months Ended
14. Segment Information (Details) - USD ($)	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011	Dec. 31, 2011
Segment Information
Revenues	$ 143,334	$ 250,201	$ 374,542	$ 250,201
Cost of revenues	850	253,810	235,803	253,810
Gross loss	142,484	(3,609)	138,739	(3,609)
Deprec. & Amort	9,855	21,814	29,613	48,572
Segment loss	(3,426,250)	(4,140,283)	(8,221,091)	(7,871,384)
Operating expenses	3,568,734	4,136,674	8,359,830	7,867,775
Other expenses	(133,770)		626,926
Net loss	(3,464,537)	(4,335,988)	(9,317,865)	(8,195,928)
Assets	3,944,125		3,944,125		$ 3,673,552
Liabilities	9,981,068		9,981,068		$ 3,786,217
Credit Card [Member]
Segment Information
Revenues
Cost of revenues
Gross loss
Deprec. & Amort				30,000
Segment loss				(30,000)
Operating expenses			263	175,000
Other expenses
Net loss			(263,000)	(205,000)
Assets	1,073,000	1,216,000	1,073,000	1,216,000
Liabilities	300,000	1,000,000	300,000	1,000,000
Events [Member]
Segment Information
Revenues			375	250,000
Cost of revenues			236	254,000
Gross loss			139	(4,000)
Deprec. & Amort			2
Segment loss			137	(4,000)
Operating expenses			803	717,000
Other expenses			68
Net loss			(734,000)	(721,000)
Assets	119,000	96,000	119,000	96,000
Liabilities	2,271,000	816,000	2,271,000	816,000
Total [Member]
Segment Information
Revenues				250,000
Cost of revenues				254,000
Gross loss				(4,000)
Deprec. & Amort			28	49,000
Segment loss			(28)	(53,000)
Operating expenses			7,264	7,818,000
Other expenses			1,029	325,000
Net loss			(8,321,000)	(8,196,000)
Assets	3,944,000	9,081,000	3,944,000	9,081,000
Liabilities	9,981,000	3,963,000	9,981,000	3,963,000
Others [Member]
Segment Information
Revenues			375
Cost of revenues			236
Gross loss			139
Deprec. & Amort			30	19,000
Segment loss			109	(19,000)
Operating expenses			8,360	6,926,000
Other expenses			1,096	325,000
Net loss			(7,318,000)	(7,270,000)
Assets	2,752,000	7,769,000	2,752,000	7,769,000
Liabilities	$ 7,410,000	$ 2,147,000	$ 7,410,000	$ 2,147,000

15. ProElite Inc (Details) - PEI Acquisition - USD ($)	3 Months Ended	9 Months Ended
15. ProElite Inc (Details) - PEI Acquisition - USD ($)	Sep. 30, 2011	Sep. 30, 2011
Business Acquisition [Line Items]
Revenues	$ 250,201	$ 506,201
Gross profit	(3,609)	181,503
Loss from operations	(4,010,283)	(8,765,049)
Interest and other expense	195,705	356,238
Net loss	$ (3,814,578)	$ (8,408,811)
Basic and diluted loss per share	$ (0.06)	$ (0.07)

- Definition

The pro forma basic net income per share for a period as if the business combination or combinations had been completed at the beginning of a period.

+ References + Details

15. ProElite, Inc. (Details Narrative)	Sep. 30, 2011 USD ($)
Proelite Inc. Details Narrative
Goodwill	$ 1,935,621
Non-controlling interest	$ 105,263

- Definition

Carrying amount as of the balance sheet date, which is the cumulative amount paid and (if applicable) the fair value of any noncontrolling interest in the acquiree, adjusted for any amortization recognized prior to the adoption of any changes in generally accepted accounting principles (as applicable) and for any impairment charges, in excess of the fair value of net assets acquired in one or more business combination transactions.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 350
-SubTopic 20
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=14024403&loc=d3e13816-109267

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 350
-SubTopic 20
-Section 45
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=6388280&loc=d3e13770-109266

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 142
-Paragraph 45
-Subparagraph e
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 142
-Paragraph 43
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 141R
-Paragraph 72
-Subparagraph d
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 142
-Paragraph 45
-Subparagraph e
-Clause 1
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 141R
-Paragraph 68
-Subparagraph l
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 141R
-Paragraph 34
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

+ Details

16. Related Party Transactions (Details Narrative) - USD ($)	Sep. 30, 2012	Dec. 31, 2011	Sep. 30, 2011
Related Party Transaction [Line Items]
Gross Receivables	$ 682,722		$ 640,000
Accrued Salary Due	113,667
Commision Due			$ 398,790
Business expenses	30,540
MrFellerMember
Related Party Transaction [Line Items]
Accrued Salary Due	640,000
Commision Due	113,667	$ 115,000
Business expenses	30,540	30,540
Net effect of this receivable and Offset	682,722	$ 133,770
Personal expenses	$ 4,622

Label	Element	Value
WarrantMember
EndingBalanceWarrantsExercisable	SMDI_EndingBalanceWarrantsExercisable	2,472,676
EndingBalanceWeightedAverageExercisePrice	SMDI_EndingBalanceWeightedAverageExercisePrice	$ 1.37
BeginningBalanceWeightedAverageExercisePrice	SMDI_BeginningBalanceWeightedAverageExercisePrice	$ 2