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NOTE 1 - Business

On March 14, 2008, pursuant to an Agreement and Plan of Merger dated August 20, 2007 between Feris International, Inc. (“Feris”) and Pro Sports & Entertainment, Inc. (“PSEI”), Feris issued 49,500,000 shares of its common stock for all issued and outstanding shares of PSEI, resulting in PSEI becoming a wholly-owned subsidiary of Feris and the surviving entity for accounting purposes (“Reverse Merger”). In July 2008, Feris’ corporate name was changed to Stratus Media Group, Inc. (“Company,” “Stratus,” or “SMDI”). PSEI, a California corporation, was organized on November 23, 1998. PSEI acquired the business of Stratus White, LLC (“Stratus White”) in August 2005.

In June 2011, the Company acquired Series A Convertible Preferred Stock of ProElite, Inc., a New Jersey corporation (“ProElite” or “PEI”), that organizes and promotes mixed martial arts (“MMA”) matches. These holdings of Series A Convertible Preferred Stock provide the Company voting rights on an as-converted basis equivalent to a 95% ownership in ProElite.

Stratus has no events currently scheduled pending receipt of sufficient funds from financings which it is currently pursuing. In the absence of obtaining sufficient funds, Stratus will be unable to schedule or reschedule some or all of its events and implement its business plan. Given the Company’s current financial status, the Company plans to focus its current efforts on its MMA business and temporarily suspend development of its other businesses.

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).

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3. Basis of Presentation and Significant Accounting Policies

2. Going Concern

12 Months Ended

Dec. 31, 2012

Going Concern

NOTE 2 - Going Concern

The Company has suffered losses from operations and, without additional capital, currently lacks liquidity to meet its current obligations. The Company had net losses for 2012 and 2011 of $7,346,982 and $23,026,032, respectively. As of December 31, 2012, the Company had negative working capital of $20,390,998 and an accumulated deficit of $56,717,225. Unless additional financing is obtained, the Company may not be able to continue as a going concern. During 2012, the Company raised a net of $870,000 through issuance of preferred stock, $143,829 through the issuance of common stock and received a net of $3,483,103 through issuance of promissory notes. During 2011, the Company raised $3,989,359 of common stock and raised $9,406,051 of preferred stock, along with net proceeds from promissory notes of $387,983. The Company is seeking additional capital to establish operations, restart the MMA event businesses and complete and integrate targeted acquisitions. However, due to the current economic environment and the Company’s current financial condition, we cannot assure current and future stockholders there will be adequate capital available when needed and on acceptable terms.

The financial statements were prepared on a going concern basis which contemplates the realization of assets and the settlement of liabilities in the normal course of business. The financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result if the Company be unable to continue as a going concern.

3. Basis of Presentation and Significant Accounting Policies

12 Months Ended

Dec. 31, 2012

Accounting Policies [Abstract]

Basis of Presentation

The financial statements were prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”), pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The balance sheet at December 31, 2012 and 2011 and the income statement for the years ended December 31, 2012 and 2011 consolidate the accounts of PEI reflecting the close of the acquisition (see Note 20). All significant intercompany balances were eliminated in consolidation.

Basic and Diluted Earnings Per Share (“EPS”)

Basic EPS is computed by dividing income available to common shareholders by the weighted average number of common shares outstanding for the period. Diluted EPS is computed similar to basic net income per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if all the potential common shares, warrants and stock options had been issued and if the additional common shares were dilutive. Diluted EPS is based on the assumption that all dilutive convertible shares were converted into common stock. Dilution is computed by applying the if-converted method for the outstanding convertible preferred shares. Under the if-converted method, convertible outstanding instruments are assumed to be converted into common stock at the beginning of the period (or at the time of issuance, if later).

The Company’s losses in 2012 and 2011 resulted in the convertible preferred stock to purchase up to 31,500,000 shares of common stock was anti-dilutive for 2012 and convertible preferred stock to purchase up 21,750,000 was anti-dilutive for 2011.

Noncontrolling Interest

The Company follows Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 810, “Consolidation,” which governs the accounting for and reporting of non-controlling interests (“NCIs”) in partially owned consolidated subsidiaries and the loss of control of subsidiaries. Certain provisions of this standard indicate, among other things, that NCIs be treated as a separate component of equity, not as a liability, that increases and decreases in the parent’s ownership interest that leave control intact be treated as equity transactions rather than as step acquisitions or dilution gains or losses, and that losses of a partially owned consolidated subsidiary be allocated to the NCI even when such allocation might result in a deficit balance. This standard also required changes to certain presentation and disclosure requirements. The net income (loss) attributed to the NCI is separately designated in the accompanying statements of operations and other comprehensive income (loss). Losses attributable to the NCI in a subsidiary may exceed the NCI’s interests in the subsidiary’s equity. The excess attributable to the NCI is attributed to those interests. The NCI shall continue to attribute its share of losses even if that attribution results in a deficit NCI balance.

Use of Estimates

The preparation of our consolidated financial statements in accordance with U.S. GAAP requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities in our consolidated financial statements and accompanying notes. Although these estimates are based on our knowledge of current events and actions we may undertake in the future, actual results may differ from such estimates and assumptions.

Derivative Liabilities

On May 24, 2011, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with eight investors (collectively, the “Investors”) pursuant to which the Company sold 8,700 shares of a new series of convertible preferred stock designated as Series E Convertible Preferred Stock (“Original Series E”), the terms of which are set forth in the Certificate of Designations of Series E Preferred Stock (the “Certificate”), for $1,000 per share, or $8,700,000 in the aggregate. In October 2012, the Company sold 1,000 shares of Series E for $1,000,000 (“New Series E”). The Original Series E and New Series E together are referred to herein as “Series E”.

These Series E contain “full ratchet-down” liquidity protection that provides that if the Company issues securities for less than the existing conversion price for the Series E Preferred Stock or the strike price of the Series E warrants, then the conversion price for Series E Preferred Stock will be lowered to that lower price. Also, the strike price for Series E warrants will be decreased to that lower price and the number of Series E warrants will be increased such that the product of the original strike price times the original quantity equals the lower strike price times the higher quantity.

Subsequent to the issuance of this Series E, the Company has determined that the warrants for these financings included certain embedded derivative features as set forth in ASC 815, “Derivatives and Hedging,” (“ASC 815”) and that this conversion feature of the Series E was not an embedded derivative because this feature was clearly and closely related to the host (Series E) as defined in ASC 815. These derivative liabilities were initially recorded at their estimated fair value on the date of issuance and are subsequently adjusted each quarter to reflect the estimated fair value at the end of each period, with any decrease or increase in the estimated fair value of the derivative liability for each period being recorded as other income or expense. Since the value of the embedded derivative feature for the related warrants was higher than the value of both Series E transactions, there was no beneficial conversion feature recorded for either transaction, and the excess of the value of the embedded derivative feature over the value of the transaction was recorded in each year on the Statement of Operations as a separate line item for each year presented.

The fair value of these derivative liabilities is calculated using the commonly-accepted Black Scholes pricing model that is based on the following as of the date of calculation: the closing price of the common stock, the strike price of the underlying instrument, the risk-free interest rate for the applicable remaining life of the underlying instrument (i.e., the U.S. treasury rate for that period) and the historical volatility of the Company’s common stock. These fair value results are extremely sensitive to all these input variables, particularly the closing price of the company’s common stock and the volatility of the Company’s common stock. Accordingly, the fair value of these derivative liabilities are subject to significant changes.

Event Revenues

Event revenue consists of ticket sales, participant entry fees, corporate sponsorships, advertising, television broadcast fees, athlete management, concession and merchandise sales, commissions and hospitality functions. The Company recognizes admissions and other event-related revenues when the events are held in accordance with Financial Accounting Standards Board (”FASB”) Accounting Standards Codification (“ASC”) Topic 605, “Revenue Recognition.” Revenues received in advance and related direct expenses pertaining to specific events are deferred until the events are actually held.

Allowance for Uncollectible Receivables

Accounts receivable are recorded at their face amount, less an allowance for doubtful accounts. We review the status of our uncollected receivables on a regular basis. In determining the need for an allowance for uncollectible receivables, we consider our customers financial stability, past payment history and other factors that bear on the ultimate collection of such amounts.

Cash Equivalents

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

Fair Value of Financial Instruments

Our financial instruments include cash and equivalents, accounts receivables, accounts payable and accrued liabilities. The carrying amounts of financial instruments approximate fair value 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 related to ProElite that we acquired in June 2011. Goodwill is the excess of the cost of an acquired entity over the net amounts assigned to tangible and intangible assets acquired and liabilities assumed. We apply ASC Topic 350 “Goodwill and Other Intangible Assets,” which requires allocating goodwill to each reporting unit and testing for impairment using a two-step approach.

The Company purchased several events prior to 2005, and Stratus Rewards LLC, and recorded their values on the Company’s balance sheet as intangible assets 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, except for Stratus White card program and the value of the consideration paid for each event is considered to be the original value for each related intangible asset. Each event has separate accounts for tracking revenues and expenses per event and a separate account to track the asset valuation.

A portion of the consideration used to purchase the Stratus White Visa card program and ProElite was allocated to specific assets, with the difference between the specific assets and the total consideration paid for the program being allocated to goodwill.

Goodwill and intangible assets were as follows:

	December 31,
	2012		2011
Licensing rights for events	$	–	$	350,500
Goodwill for ProElite		1,935,621		1,935,621
Goodwill for Stratus Rewards		–		1,073,345
Total intangible assets and goodwill	$	1,935,621	$	3,359,466

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 year. In between valuations, the Company conducts additional tests if circumstances warrant such testing.

To review the value of intangible assets and related goodwill as of December 31, 2012, the Company followed Accounting Standards Update (“ASU”) 2011-08 “Intangibles-Goodwill and Other (Topic 350)” and first examined the facts and circumstances for each event or business to determine if it was more likely than not that an impairment had occurred. If this examination suggested it was more likely that an impairment had occurred, the Company then compares discounted cash flow forecasts related to the asset with the stated value of the asset on the balance sheet. The objective is to determine the value of each asset to an industry participant who is a willing buyer not under compulsion to buy and the Company is a willing seller not under compulsion to sell.

The events are forecasted based on the assumption they are standalone entities and adjusted for historical performance and the facts and circumstances surrounding the event and the macroeconomic conditions that affect the event.

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 to small companies in general, for factors specific to the Company and the business for a total discount rate of 35%. Terminal values are determined by taking cash flows in year five of the forecast, then applying an annual growth of 4% and discounting that stream of cash flows by the discount rate used for that section of the business.

If the Company determines the discount factor for cash flows should be substantially increased, or the event will not be able to begin operations when planned, or that facts and circumstances for each asset have changed, it is possible that the values for the intangible assets currently on the balance sheet could be substantially reduced or eliminated, which could result in a maximum charge to operations equal to the current carrying value of the intangible assets of $1,935,621.

As of December 31, 2012, the Company determined that the fair value of its ProElite MMA business for accounting purposes was approximately $2,400,000, which was 124% of the goodwill on the balance sheet as of December 31, 2012. We perform a goodwill impairment test annually or whenever a change has occurred that would more likely than not reduce the fair value of an intangible asset below its carrying amount. We engaged an outside service provider, which computed the estimated fair value of our intangible assets at December 31, 2012, using several valuation techniques, including discounted cash flow analysis. The service provider computed future projected cash flows using information we provided, including estimated future results of the events and card operations. We then compared the estimated fair value of the reporting unit to the carrying value of the reporting unit.

Given the Company’s current financial status, the Company plans to focus its current efforts on its MMA business and suspend development of its other businesses. Accordingly, the Company determined the total impairment charge of $1,423,884 as of December 31, 2012. The $53,000 of value assigned to Santa Barbara Concours was considered to be impaired in full and the Company reduced the carrying value to $0. The $100,000 value assigned to Core Tour was considered to be impaired in full and the Company reduced the carrying value to $0. The $1,073,345 of goodwill assigned to Stratus White was considered to be impaired in full and the Company reduced the Stratus White goodwill to $0.

As of December 31, 2011, the Company determined the following to arrive at a total impairment charge of $1,859,778. The $86,019 of value assigned to Stratus White for technology, membership list and corporate partner list was considered to be impaired in full given the development of the current program had replaced these existing items with new technology and corporate partner list. The $169,958 of intangible assets for the Rodeo Drive Concours was considered to be impaired in full and the Company took $167,458 of impairment charges to reduce the carrying value of this asset to its estimated current market value of $2,500. The $243,000 of intangible assets for the Santa Barbara Concours was considered to be impaired in full and the Company took $190,000 of impairment charges to reduce the carrying value of this asset to its estimated current market value of $53,000. The $1,067,069 of intangible assets for the Core Tour had been impaired and the Company took $967,069 of impairment charges to reduce the carrying value of this asset to its estimated current market value of $100,000. The $344,232 of intangible assets for the Freedom Bowl had been impaired and the Company took $154,232 of impairment charges to reduce the carrying value of this asset to its estimated current market value of $190,000. The Company determined that the $300,000 of intangible assets for the Maui Music Festival had been impaired and the Company took $295,000 of impairment charges to reduce the carrying value of this asset to its estimated current market value of $5,000.

Income Taxes

The Company utilizes ASC 740 "Accounting for Income Taxes," which requires 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.

As of December 31, 2012, the Company had a deferred tax asset of $19,230,179, that was fully reserved and a net operating loss carryforward of $43,181,944 for Federal purposes and $40,714,060 for state tax purposes. The Company will continue to monitor all available evidence and reassess the potential realization of its deferred tax assets. If the Company continues to meet its financial projections and improve its results of operations, or if circumstances otherwise change, it is possible that the Company may release all or a portion of its valuation allowance in the future. Any such release would result in recording a tax benefit that would increase net income in the period the valuation is released.

Stock-Based Compensation

As of December 31, 2005 we adopted 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 fair value of the stock option as determined by the Black-Scholes option pricing model. We amortize stock-based compensation for such awards on a straight-line method over the related service period of the awards taking into account the effects of the employees’ expected exercise and post-vesting employment termination behavior.

We account for equity instruments issued to non-employees in accordance with ASC Topic 718 and EITF Issue No. 96-18. The fair value of each option granted is estimated as of the grant date using the Black-Scholes option pricing model.

Advertising

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

Reclassification

Certain prior year amounts were reclassified to conform to the manner of presentation in the current year.

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 adoption of this pronouncement did not have a material impact on our financial statements.

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 did not have a material impact on our financial statements.

4. Litigation

12 Months Ended

Dec. 31, 2012

Litigation

NOTE 4 - Litigation

In March 2011, four of the Company’s shareholders filed a securities action in Superior Court of California, in Santa Barbara County, against the Company and its former Chief Executive Officer, Chief Financial Officer, and outside directors. Pursuant to a November 6, 2012 settlement agreement, this matter has been resolved to the mutual satisfaction of the parties.

In November of 2011, twelve additional shareholders of the Company filed a securities action in Santa Barbara Superior Court, against the Company and its former Chief Executive Officer, Chief Financial Officer, and outside directors. Pursuant to a November 6, 2012 settlement agreement, this matter has been resolved to the mutual satisfaction of the parties.

In September of 2011, Maier & Company, Inc., filed a lawsuit in the Santa Barbara Superior Court against the Company and PSEI for alleged breach of a consulting agreement. On or about March 20, 2013, the plaintiff sought entry of judgment in the amount of $45,830. The parties entered into a settlement agreement allowing for a stipulation for entry of judgment.

On February 24, 2012, Maverick Apparel Printing, LLC, filed a complaint in the Santa Barbara Superior Court against the Company for collection on an alleged $25,695 debt. Pursuant to a September 14, 2012 settlement agreement, this matter has been resolved to the parties’ mutual satisfaction.

On April 19, 2012, Ned Sands filed a wrongful termination lawsuit in the Los Angeles Superior Court against the Company. On or about March 11, 2013, the plaintiff sought and obtained entry of judgment in the amount of $22,500. The parties entered into a settlement agreement allowing for a stipulation for entry of judgment.

5. Acquisition of Stratus White, LLC

12 Months Ended

Dec. 31, 2012

Acquisition Of Stratus White Llc

NOTE 5 - Acquisition of Stratus White, LLC

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

The total 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 amount 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 Pro Sports and the value of the computer hardware and software that was 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 value in the 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 have been 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. Subsequent to December 31, 2012, the Company decided to suspend development activities for the Stratus White program.

6. Receivable from former chairman and CEO

12 Months Ended

Dec. 31, 2012

Receivable From Former Chairman And Ceo

NOTE 6 - Receivable from former chairman and CEO

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 investors and he caused the delivery of 2,540,000 shares of common stock to be issued directly by the Company while Mr. Feller kept the cash proceeds (the “European Transactions”). Accordingly, the Company recorded a gross receivable of $640,000 from Mr. Feller in connection with the European Transactions. Mr. Feller resigned from the Company on June 28, 2012. During the course of 2012, it was determined that Mr. Feller kept in his possession a vintage automobile that the Company had paid for, so his receivable was increased to $678,100.

As of December 31, 2012, this receivable of $678,100 was increased by $71,946, which is the value of 378,661 shares owed by Mr. Feller to the Company at the $0.19 closing price of common stock on December 31, 2012 and $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 $754,668 was presented net of the offset of $538,515 of the receivable related to stock issuance (see below), $30,540 of approved business expenses and $113,667 in deferred salary.

As of December 31, 2011, the then outstanding receivable of $640,000 increased by $38,100 for a vintage automobile purchased with Company funds but retained by Mr. Feller and 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.

These impacts are summarized as follows:

	December 31,
	2012			2011
Gross receivable
Sale of Company common stock, net proceeds retained by Mr. Feller	$	640,000		$	640,000
Value of 378,661 shares of common stock owed by Mr. Feller to the Company, valued at December 31, 2012 price of $0.19		71,946			–
Vintage automobile retained by Mr. Feller		38,100			38,100
Other		4,622			–
Total		754,668			678,100

Offsets to receivable
Alleged commission on stock sales per Mr. Feller's written declaration		–			(115,000	)
Deferred salary		(113,667	)		(398,790	)
Expense reports submitted and approved		(30,540	)		(30,540	)
Expense reports to be submitted		–			(133,770	)
Offset of receivable from stock transactions		(538,515	)		–
Net receivable	$	71,946		$	–

Additional evidence obtained in October 2012 confirmed that the $115,000 in commissions relating to the European Transactions were not valid commissions and this amount was removed as an offset to the gross receivable for December 31, 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 an offset to the gross receivable was reduced from $398,790 at December 31, 2011 to $113,667 at December 31, 2012, which represents $125,000 in deferred salary between October 1, 2011 and June 28, 2012, less $11,333 paid in salary during that period. In addition, Mr. Feller did not submit expense reports to support the $133,770 of expenses in the time provided for in the Separation Agreement, so that amount was removed as an offset to his receivable as of December 31, 2012.

This offset of the $538,515 receivable from Mr. Feller resulted from the decision by the Company to treat 2,161,339 shares of stock owed to Mr. Feller from 2008 and 2009, that were approved by the board but never completed, as having been satisfied when he had the Company issue 2,540,000 million shares of stock in connection with the European Transactions.

The 2,161,339 shares were due to Mr. Feller as payment for $2,768,652 in accrued salary, interest, vacation and rental payments for 2008, 2009 and prior years, and repayment of $729,439 in loans Mr. Feller from those periods. The Company is satisfied that it properly recorded and disclosed the 2008 and 2009 transactions in its financial reports filed with the SEC and the only adjustment needed was to reduce shares outstanding as of December 31 2012 by these 2,161,339 shares. The Company has accrued the employer taxes on this taxable income as of December 31, 2012. While Mr. Feller was owed 2,161,339 shares from 2008 and 2009, he had the Company issue 2,540,000 shares related to the European transactions, leaving a balance due to the Company of 378,661 shares, which are valued at December 31, 2012 for $71,946, based on the closing price of the Company’s common stock on that date.

The Company has recorded an accrued expense pursuant to Mr. Feller’s consulting agreement that provides for $125,000 of payments in 2012, subject to certain conditions, and has not recorded an allowance for doubtful accounts for this receivable given the accrued expense of a higher value. The Company has informed Mr. Feller that it reserves all rights with regards to this consulting agreement, given the events that led to his resignation on June 28, 2012. In the event that the Company determines that Mr. Feller’s consulting agreement is not valid, the Company will reverse the accrual for $125,000 for his consulting agreement for 2012 and will fully reserve the receivable from Mr. Feller.

7. Property and Equipment

12 Months Ended

Dec. 31, 2012

Property, Plant and Equipment [Abstract]

NOTE 7 - Property and Equipment

Property and equipment were as follows:

	December 31,
	2012			2011
Computers and peripherals	$	97,660		$	97,660
Office machines		49,370			49,370
Furniture and fixtures		73,905			79,484
		220,935			226,514
Less accumulated depreciation		(171,897	)		(148,379	)
Property and equipment, net	$	49,038		$	78,135

For the years ended December 31, 2012 and 2011, depreciation was $26,771 and $24,395, respectively.

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.

Goodwill and Intangible Assets Disclosure [Abstract]

8. Goodwill and Intangible assets

12 Months Ended

Dec. 31, 2012

NOTE 8 - Goodwill and Intangible assets

Goodwill and intangible assets were as follows:

	December 31,
	2012		2011
Beverly Hills Concours d'Elegance	$	–	$	2,500
Santa Barbara Concours d'Elegance		–		53,000
Core Tour		–		100,000
Freedom Bowl		–		190,000
Maui Music Festival		–		5,000
Total intangible assets		–		350,500
Goodwill for Stratus Rewards		–		1,073,345
Goodwill for ProElite		1,935,621		1,935,621
Total goodwill and intangible assets	$	1,935,621	$	3,359,466

In accordance with ASC Topic 350, “Intangibles-Goodwill and Other,” the Company’s goodwill and intangible assets are considered to have indefinite lives and are therefore not amortized, but rather are subject to annual impairment tests. 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 an impairment if warranted by adverse changes in facts and circumstances. As a result of these impairment tests, the Company recorded impairment charges of $1,423,844 in 2012 and $1,859,778 in 2011.

The following is a summary of goodwill, intangible assets and impairment charges:

	December 31,		Impairment Charges		December 31,		Impairment Charges		Amortization of Intangibles		December 31,
	2012		in 2012		2011		in 2011		in 2011		2010
Intangible assets:
Beverly Hills Concours d'Elegance	$	–	$	2,500	$	2,500	$	167,458	$	–	$	169,958
Santa Barbara Concours d'Elegance		–		53,000		53,000		190,000		–		243,000
Core Tour		–		100,000		100,000		967,069		–		1,067,069
Freedom Bowl		–		190,000		190,000		154,232		–		344,232
Stratus Rewards		–		–		–		86,019		45,410		131,430
Maui Music Festival		–		5,000		5,000		295,000		–		300,000
Total intangible assets		–		350,500		350,500		1,859,778		45,410		2,255,689
Goodwill:
Stratus Rewards		–		1,073,345		1,073,345		–		–		1,073,345
ProElite		1,935,621		–		1,935,621		n/a		–		n/a
Total goodwill and intangible assets	$	1,935,621	$	1,423,845	$	3,359,466	$	1,859,778	$	45,410	$	3,329,034

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.

Other Accrued Expenses And Other Liabilities

9. Deferred salary

12 Months Ended

Dec. 31, 2012

DeferredSalaryDisclosureAbstract

Note 9 - Deferred salary

Capital constraints necessitated that the Company reduce staff since February 16, 2012 and the Company has not been able to pay employees on a regular basis, resulting in unpaid salaries of $1,152,933 as of December 31, 2012. During this period, a limited number of employees continued to provide services to the Company.

10. Other accrued expenses and other liabilities

12 Months Ended

Dec. 31, 2012

NOTE 10 - Other accrued expenses and other liabilities

Other accrued expenses and other liabilities consisted of the following:

	December 31,
	2012		2011
Payroll related	$	329,191	$	640,208
Estimated damage liability that may not be covered by insurance		300,000		–
Estimate settlement with vendor in Europe		300,000		–
Professional fees		269,710		494,767
Accrued board fees		241,011		–
Consultant fees		133,777		227,178
Accrued legal judgments		84,899		90,732
Other		14,920		49,884
Travel expenses		10,000		38,546
	$	1,683,508	$	1,541,315

11. Amounts payable to officers

12 Months Ended

Dec. 31, 2012

Amounts Payable To Officers

NOTE 11 - Amounts payable to officers

The amounts payable to officers were:

	December 31,
	2012		2011
Loan from former chairman and president	$	–	$	78,919
Officer pursuant to employment agreement		156,358		50,244
Promissory note to officer		55,000		55,000
	$	211,358	$	184,163

The loan and promissory note are unsecured, due on demand, have no priority or subordination features, do not bear any restrictive covenants and contain no acceleration provisions. Interest expense on these loans for 2012 and 2011 was $0 and $19,949, respectively.

In connection with the employment agreement for its Senior Vice President and Chief Operating Officer, the Company assumed a promissory note of $231,525 formerly owed to him by PEI and agreed to pay the promissory note with $121,525 payable to him upon the closing of the acquisition of PEI by the Company, $55,000 due 90 days after the closing of the acquisition, and $55,000 due 180 days after the closing of the acquisition. Any unpaid amounts after 180 days following the closing of the acquisition will bear interest at 5%. In June 2011, upon closing the acquisition of PEI, the Company paid the first installment of $121,525 and $55,000 was paid in September 2011.

In 2012, a review of the employment contract for an officer revealed that the non-salary amounts due to him were $156,358 as of December 31, 2012 from $50,244 as of December 31, 2011.

During 2011, $45,000 was paid to a director to pay down the last portion of the principal balance of a loan made to the Company in 2005. The former chairman and president provided the Company with $557,650 from December 2010 through June 2011, he was repaid $564,363 during the first six months of 2011. During 2011, $77,176 was paid to an officer pursuant to an employment agreement and another officer was paid $176,525 pursuant to an employment agreement.

12. Notes payable

12 Months Ended

Dec. 31, 2012

Debt Disclosure [Abstract]

NOTE 12 - Notes payable

Notes payable were as follows:

	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. Secured by the assets of ProElite. These notes are currently in default.	$	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 December 31, 2012, he had a resulting warrant to purchase 27.5 percent of ProElite. This note is currently in default.		1,000,000		–

Note payable from ProElite to one holder dated October 19, 2012 with maturity of the earlier of October 19, 2013 or completion of an equity offering by Stratus, at which time the note will convert into equity based on the terms of that offering at 50% of the price of that offering. Bears interest at 7% and is secured by the assets of ProElite.		500,000		–

Note payable to the Company's outside law firm. This note is presented net of $249,824 of assumed reimbursements from the Company's D&O carrier. This note bears interest at 3% and is due December 31, 2012. This note is currently in default.		486,104		–

Notes payable to three holders dated May 11, 2012 with maturity of the earlier of November 11, 2012 or when a financing is completed of $2,000,000 or more, plus interest at 10%, secured by the assets of the Company. This note is currently in default.		350,000		–

Notes payable to 11 investors dated July 9, 2012 with maturity on the earlier of a $2 million capital raise by the Company, or February 6, 2013 and bear interest at 8%. This note is currently in default.		275,000		–

Notes payable to one holder dated April 4, 2012 with original maturity on October 4, 2012, plus interest at 10%. Unsecured. An amendment to this note on October 2, 2012 changed the maturity date to January 4, 2013. This note is currently 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 currently 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 currently in default.		10,000		10,000

Notes payable, unsecured, non-interest bearing		–		60,000
	$	4,004,103	$	555,000

For 2012 and 2011, the Company incurred interest expenses on these Notes Payable of $62,645 and $13,351, respectively.

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.

13. Derivative Liabilities

12 Months Ended

Dec. 31, 2012

13. Derivative Liabilities

The fair value of these derivative liabilities is calculated using the commonly-accepted Black Scholes pricing model that is based on the following as of the date of calculation: the closing price of the common stock, the strike price of the underlying instrument, the risk-free interest rate for the applicable remaining life of the underlying instrument (i.e., the U.S. treasury rate for that period) and the historical volatility of the Company’s common stock. These fair value results are extremely sensitive to all these input variables, particularly the closing price of the company’s common stock and the volatility of the Company’s common stock. Accordingly, the fair values of these derivative liabilities are subject to significant changes.

14. Other (income)/expenses

12 Months Ended

Dec. 31, 2012

Other Income Disclosure, Nonoperating [Abstract]

Note 13 - Other (income)/expenses

Other (income)/expenses for 2012 was net other expense of $379,188, an increase in expense of $1,392,097 from net other income of $1,012,909 in 2011. The net other expense for 2012 primarily resulted from the offset of a $538,515 receivable from Paul Feller, the Company’s former chairman and president (see Footnote 6 to the Financial Statements for more information). Other expenses in 2012 were increased by an accrual of $300,000 estimated to be needed to settle a dispute with a vendor in Europe, and $300,000 accrued for water damage in the building formerly occupied by the Company for which the Company may be liable. These expenses were offset by: the writeoff of $346,974 in accrued liabilities related to Paul Feller that are no longer required; $256,449 in reductions in accrued interest related to debt that has been paid or settled; $102,435 in accrued interest related to preferred stock that has been converted to common stock and $72,078 in gains on negotiated settlement of certain payables for less than book value.

Net other (income)/expenses in 2011 of $1,012,909 were primarily for the writeoff of $1,000,000 in debt related to the acquisition of Stratus White for which agreed-upon assets were never received by the Company and the statute of limitations had expired on the obligation to pay this debt.

The following is a table of the components of other (income)/expense for 2012 and 2011:

	Years Ended December 31,
	2012			2011
Writeoff note related to Stratus White acquisition that related to items the Company did not receive in the acquisition and is past the state of limitations	$	–		$	(1,000,000	)
Reduction in liabilities related to Paul Feller that are no longer needed		(346,974	)		–
Reduction in accrued interest related to debt that has been repaid or settled		(256,449	)		–
Reduction in accrued interest related to preferred stock that has been converted to common stock		(102,435	)		–
Gain on negotiated settlement of account payable below book value		(72,078	)		–
Other income items		–			(12,909	)
Offset of receivable from Paul Feller from stock transactions		538,515			–
Accrued estimated property damage that may be the Company's liability		300,000			–
Estimated cost to settle dispute with vendor in Europe		300,000			–
Other expense items, net		18,610			–
Other (income)/expense, net	$	379,188		$	(1,012,909	)

15. Related Party Transactions

12 Months Ended

Dec. 31, 2012

NOTE 15 - Related Party Transactions

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 outside investors. Mr. Feller caused the delivery of 2,540,000 shares of common stock to be issued directly by the Company while Mr. Feller kept the cash proceeds. 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. During 2012, it was determined that Mr. Feller kept in his possession a vintage automobile that the Company had paid for, so his receivable was increased to $678,100.

As of December 31, 2011, the then-outstanding receivable of $640,000 increased by $38,100 for a vintage automobile purchased with Company funds but retained by Mr. Feller and 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. For more information see Footnote 6.

During the year ended December 31, 2011, $45,000 was paid to a director to pay down the last portion of the principal balance of a loan made to the Company in 2005. During 2011, $77,176 was paid to an officer pursuant to an employment agreement and another officer was paid $176,525 pursuant to a promissory note.

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 that vests over a 36 month period as chairman of the compensation committee. 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 equal to 50% of the number of vested options as of July 1, 2011. These grants vested one-third on January 1, 2012, one-third on January 1, 2013 and vest 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.

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.

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.

NOTE 16 - Shareholders' Deficit

16. Shareholders' Deficit

12 Months Ended

Dec. 31, 2012

Shareholders Deficit

Common Stock

During 2012, the Company sold 411,429 shares of common stock for net proceeds of $143,829.

Series C 10% Preferred Stock

As of December 31, 2011, all Series C 10% Preferred Stock had been converted into common stock. During 2011, 18,365 shares of Series C were converted into 367,300 shares of common stock and 1,101,900 shares were issued in connection with the price protection feature.

Series D 10% Preferred Stock

During 2010, the Company issued 5,700 shares of Series D 10% Preferred Stock (“Series D”) for $170,921. Each share of Series D sold for $30, can be converted at any time into 60 shares of common stock and has voting rights equal to 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 5 years to purchase a share of common stock for $1.00 per share. The Series D has liquidation preference over common stock at a liquidation value equal to its par 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 Topic 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 beneficial conversion feature 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 beneficial conversion feature was calculated as the difference of the fair value 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 30-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 Company determined that derivative accounting for the embedded conversion and the share adjustment features was not required pursuant to ASC Topic 815 “Derivatives and Hedging,” 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 December 31, 2012 and 2011, 18,999 shares of Series D were outstanding. During 2011, 25,667 shares of Series D were converted into 1,540,000 shares of common stock and 2,043,840 shares were issued in connection with the price protection feature. No shares of Series D were converted during 2012.

Series E 5% Preferred Stock

In 2012, the Company raised $870,000 through the issuance of 1,000 shares of Series E 5% Preferred Stock (“Series E”) and common stock and warrants to purchase shares of common stock at $0.65 to $1.00.

In connection with the sale of the Series E, the Company also agreed to issue to the Investors (a) warrants (“A Warrants”) to purchase up to one additional share of Common Stock for each share of Common Stock issuable upon conversion of the Preferred Shares, and (b) warrants (“B Warrants”) to purchase up to 0.50 additional shares of Common Stock for each share of Common Stock issuable upon conversion of the Preferred Shares. The Warrants 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. For the Original Series E, exercise price of the A Warrant was $0.65 per share and the B Warrant had an exercise price of $1.00 per share, subject in each case to full ratchet anti-dilution protection.

The Original Series E were adjusted pursuant to the full ratchet anti-dilution protection when $249,999 of notes were issued on April 4, 2012 that contained a $0.30 conversion feature, so that the Original Series E now has a conversion price of $0.30 and an exercise price of $0.30 for the warrants. The New Series E were issued with a conversion and exercise price of $0.30 for the warrants. The impact of this ratchet-down provision in April 2012 increased the number of shares that would be issued upon conversion on that date from 21,125,000 shares of common stock to 28,166,667 and to increased the number of shares that would be issued upon full exercise of the warrants on that date from 37,975,000 shares of common stock to 94,966,667. If the Company issues equity securities in the future below $0.30, this full-ratchet anti-dilution protection will, absent a waiver of this protection, result in significant amounts of additional stock and warrants.

Pursuant to the Certificate, the Series E bears 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 Original Series E was $0.40 per share of Common Stock, subject to full ratchet anti-dilution protection, which was triggered in April 2012 so that the conversion rate for the Original Series E and the New Series E is $0.30. The Series E has 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 for so long as at least 50% of the total number of Series E purchased pursuant to the Purchase Agreement are outstanding, and the right to elect one member to the Company’s Board of Directors for so long as at least 25% but less than 50% of the total number of Series E issued pursuant to the Purchase Agreement are outstanding. The Company is required to redeem any unconverted Series E on the fifth anniversary of the date of first issuance of the Original Series E and the New Series E, 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 twenty consecutive trading days.

To secure the Company’s obligation to redeem the Series E, the Company entered into a Security Agreement, pursuant to which the Company has agreed to grant the holders of the Series E 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 in February 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 an amount of cash equal to 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. The Company intends to file a post-effective amendment as soon as possible after the filing of this Annual Report on Form 10-K.

As of December 31, 2012, 9,450 shares of Series E were outstanding. During 2012, 50 shares of Series E were converted into 166,666 shares of common stock. As of December 31, 2011, 8,500 shares of Series E were outstanding. During 2011, 200 shares of Series E were converted into 500,000 shares of common stock.

Stock Options

During 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			–

During 2011, the Company issued options to purchase 2,800,000 shares of common stock in connection with employment agreements and canceled 1,550,000 options granted to certain directors. The Black Scholes value of these options was $910,000 which is being amortized over the respective vesting periods and $303,333 was recorded as an expense in 2011. These options have a life of five years and a strike price of $0.54 per share, which was the closing stock price for the Company’s common stock on the date of issuance. During 2011, the Company modified the strike price on 3,310,000 options that had been outstanding for one and a half years. The effect of these modifications was to reduce the strike price from a range of $2.00 to $3.50 to $0.54 per share, which was the closing stock price for the Company’s common stock on the date of this modification. The Black Scholes value of these options was $1,075,750 which is being amortized over the respective vesting periods and $1,075,750 was recorded as an expense in 2011. The following assumptions were used for the Black Scholes calculations to determine these expenses:

Estimated fair value of underlying common stock			$0.54
Remaining life			5.0
Risk-free interest rate			0.83%
Expected volatility			100%
Dividend yield			–

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

	Options Outstanding									Options Exercisable
						Weighted							Weighted
						Average		Weighted					Average		Weighted
				Range of		Remaining		Average					Remaining		Average
	Options			Exercise		Life in		Exercise		Options			Life in		Exercise
	Outstanding			Prices		Years		Price		Exercisable			Years		Price
As of December 31, 2010		10,269,852			$0.54 - $0.84		2.4	$	0.94		8,512,684			2.0	$	0.94
Cancelled		(3,110,000	)		–		–		–		(3,110,000	)		–		–
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			$0.54 - $0.84		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		4.5	$	0.36		1,634,333			4.5	$	0.36
As of December 31, 2012		7,943,523			$0.35 -$0.84		3.3	$	0.46		5,731,023			2.9	$	0.48

Warrants

During 2012, the Company issued warrants to purchase 5,000,000 shares of common stock at $0.30 in connection with the sale of 1,000 shares of Series E. The Original Series E were adjusted pursuant to the full ratchet anti-dilution protection when $249,999 of notes were issued on April 4, 2012 that contained a $0.30 conversion feature, so that the Original Series E now has an exercise price of $0.30 for the warrants. The New Series E was issued with an exercise price of $0.30 for the warrants. The Company also 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			–

During 2011, the Company issued warrants to purchase 52,709,283 shares of common stock in connection with the sale of common and preferred stock. These warrants have a strike prices that range from $0.65 to $1.00 per share, vest upon issuance and a life of five years. These warrants contained full ratchet-down antidilution protection. In connection with the sale of the Series E preferred shares, we issued placement agent warrants that permit the placement agent or its designees to purchase for a five-year period, 3,600,000 shares of Common Stock at an exercise price of $0.65 per share. We also issued to a financial advisor warrants to purchase 1,000,000 shares of our Common Stock of which 950,000 shares were directed to Cary Succof and 50,000 shares were directed to Francis Anderson and to another financial advisor warrants to purchase 750,000 shares of our common stock on substantially similar terms. The shares underlying these warrants are included in this prospectus and contain full ratchet-down antidilution protection and cashless exercise provisions.

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 with a strike price of $0.30 and the number of warrants were increased 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

A summary of the warrants:

	Warrants Outstanding								Warrants Exercisable
					Weighted						Weighted
					Average		Weighted				Average		Weighted
			Range of		Remaining		Average				Remaining		Average
	Warrants		Exercise		Life in		Exercise		Warrants		Life in		Exercise
	Outstanding		Prices		Years		Price		Exercisable		Years		Price
As of December 31, 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		15,763,330		$0.30 - $0.75		4.6	$	0.38		10,388,330		4.6		-
As of December 31, 2012		132,285,242		$0.30 - $2.00		3.5	$	0.40		126,910,242		3.5	$	0.38

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.

Reference 1: http://www.xbrl.org/2003/role/presentationRef
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-Publisher AICPA
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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.

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-Number 210
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-Article 3

Commitments and Contingencies Disclosure [Abstract]

17. Commitments and contingencies

12 Months Ended

Dec. 31, 2012

NOTE 17 - Commitments and contingencies

Office space rental

On May 1, 2009, we entered into a lease agreement for approximately 1,800 square feet of office space in Santa Barbara, California for use as our executive offices. This lease was amended on July 21, 2009 and 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. This property was vacated in August 2012 and the Company has recorded a liability of approximately $139,000 to cover unpaid rent and the present value of rents due for the remainder of the lease term. The Company is in active negotiations to settle the unpaid rent for a lower amount, but there can be no assurance of success in doing so.

On August 1, 2011, we entered into a lease agreement for approximately 7,000 square feet of office space in Los Angeles, California. The lease continues through November 30, 2014. Initially, the lease has a fixed monthly rent of $19,326 and is subject to annual increases of 3% per year. The Company was not required to pay a fixed monthly rent for months two through five. Prior to this, the Company was leasing the same office space on a month-to-month basis. This property was vacated in April 2012 and the Company has recorded a liability of approximately $892,000 to cover unpaid rent and the present value of rents due for the remainder of the lease term. The Company is in active negotiations to settle the unpaid rent for a lower amount, but there can be no assurance of success in doing so.

On November 1, 2011, we entered into a lease agreement 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. This property was vacated in June 2012 and the Company has recorded a liability of approximately $229,000 to cover unpaid rent and the present value of rents due for the remainder of the lease term. In January 2013, the landlord for this property has obtained a judgment against the Company for $74,486. The Company is in active negotiations to settle the unpaid rent for a lower amount, but there can be no assurance of success in doing so.

In May 2012, the Company entered into a month-to-month lease for office space for three people in Los Angeles, California. Rent for this facility is approximately $2,300 per month.

We believe our existing facilities are adequate for our current needs and suitable additional or substitute space will be available as needed to accommodate expansion of our operations.

Contractual obligations

Set forth below is information concerning our known contractual obligations as of December 31, 2012 that are fixed and determinable by year.

									2015 and
	Total		2013		2014		2015		Later
Notes Payable	$	4,004,103	$	4,004,103	$	–	$	–	$	–
Rent obligations		1,260,645		677,738		339,958		242,949		–
Deferred Salary		1,152,933		1,152,933		–		–		–
Accrued interest		947,100		947,100		–		–		–
Employee Contracts: Salary		363,750		363,750		–		–		–
Employee Contracts: Other		231,299		231,299		–		–		–
Total	$	7,959,830	$	7,376,923	$	339,958	$	242,949	$	–

Employment Agreements

Effective June 28, 2012, Jerold Rubinstein 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 also 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 12-month period. In the event the Company does not renew the second six month period, the executive resigns or the Company terminates the executive’s employment without cause, all options will immediately vest and the executive will receive all unpaid salary for the full twelve month period.

On August 8, 2011, the Company entered into any employment contract with Timothy Boris as the Company’s General Counsel and Vice President of Legal Affairs at an annual salary of $180,000. In December 2011 received options to purchase 300,000 shares of common stock at $0.54 that had 100,000 shares vested upon grant, 100,000 shares vested at the end of year one and 100,000 shares vest at the end of year two. This contract expired on August 8, 2012 and was renewed under the same terms until August 8, 2013. In August 2012 Mr. Boris received options to purchase 300,000 shares of common stock at $0.38 that had 100,000 shares vest upon grant, 100,000 shares vest at the end of year one and 100,000 shares vest at the end of year two. Both of these option grants have a five-year life.

On February 22, 2010, the Company entered into an employment contract with William Kelly, the Company’s Senior Vice President and Chief Operating Officer of ProElite, and the Chief Operating Officer of the Company. This contract expired on February 22, 2012 and his employment with the Company was terminated on March 18, 2013. Under the agreement, Mr. Kelly was to receive an annual salary of $240,000 and shall be eligible for bonuses based on objectives established by the Company’s board of directors and Mr. Kelly’s performance against those objectives. The proposed agreement further provides that Mr. Kelly received a grant of options to purchase 1,200,000 shares of the Company’s common stock, with a five-year life, a strike price of $2.00 the following vesting schedule: 396,000 shares vest immediately, 396,000 shares vest on October 1, 2010 and 408,000 shares will vest on October 1, 2011. The strike price on these options was adjusted to $0.54 in December 2011 by the Company’s Board of Directors. Such options shall terminate forty-five (45) days after the Executive’s employment with the Company is terminated if such termination is for Cause or is the result of a resignation by Executive for reasons other than Good Reason, as that term is defined in the contract. Such options shall not be assignable by Executive. Each option described above is subject to customary anti-dilution provision with respect to any stock splits, mergers, reorganizations or other such events. In connection with Mr. Kelly’s employment, the Company assumed a promissory note of $231,525 formerly owed to Mr. Kelly by ProElite, Inc. and agreed to pay the promissory note with $121,525 payable to Mr. Kelly upon the closing of the acquisition of ProElite by the Company, $55,000 due 90 days after the closing of the acquisition, and $55,000 due 180 days after the closing of the acquisition. In 2011, $176,525 of these amounts were paid to Mr. Kelly. As of December 31, 2012, Mr. Kelly was owed $55,000 under this contract.

On November 1, 2010, the Company entered into an employment agreement with John Moynahan, who had been providing accounting and financial services to the Company as a consultant pursuant to a consulting agreement dated November 14, 2007. This agreement expired on August 1, 2012. Under the agreement, Mr. Moynahan is to receive an annual salary of $220,000 for the first year of the contract, subject to an annual increase of the Consumer Price Index plus 2%, and will be eligible for a $50,000 bonus in the first year of this contract, with bonuses thereafter based on objectives established by the Company’s board of directors and Mr. Moynahan’s performance against those objectives. Under this agreement, Mr. Moynahan received a grant of 300,000 shares and a five-year stock option grant to purchase 1,560,000 shares of common stock at $2.00 per share, with 1,040,000 shares that vested upon the signing of the agreement and 520,000 shares that will vest on September 1, 2011. The strike price on these options was adjusted to $0.54 in December 2011 by the Company’s Board of Directors. Such options shall terminate 45 days after the Executive’s employment with the Company is terminated if such termination is for Cause or is the result of a resignation by Executive for reasons other than Good Reason. Such options shall not be assignable by Executive. Each option described above is subject to customary anti-dilution provision with respect to any stock splits, mergers, reorganizations or other such events. After a review of this contract during 2012, the Company determined that the non-salary amounts due to Mr. Moynahan were $156,358 as of December 31, 2012. Mr. Moynahan received $77,126 in non-salary payments under this contract in 2011.

Charles Bearchell, the Company's former Chief Accounting Officer and former Chief Financial Officer of ProElite, resigned from those positions on April 19, 2012.

Consulting agreement

On June 28, 2012, Paul Feller, the Company’s former Chairman of the Board and Chief Executive Officer, resigned from all positions with the Company and its subsidiaries, including PEI. In connection therewith, pursuant to a Separation and Release Agreement, the Company and Mr. Feller entered into a new Consulting Agreement for a term of two years at an annual compensation of $250,000, subject to the Company raising at least $2,000,000 in funding. Under the Consulting Agreement, Mr. Feller 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. The Company has informed Mr. Feller that it reserves all rights with regards to this consulting agreement, given the events that led to his resignation on June 28, 2012.

The entire disclosure for commitments and contingencies.

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-Name FASB Interpretation (FIN)
-Number 14
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Reference 7: http://www.xbrl.org/2003/role/presentationRef
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-Name Statement of Financial Accounting Standard (FAS)
-Number 5
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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.

NOTE 18 - Segment Information

18. Segment Information

12 Months Ended

Dec. 31, 2012

Segment Information

Events other than ProElite and the Stratus Reward program are considered an operating segment pursuant to ASC 280 since each is budgeted separately and results of events other than ProElite, ProElite and the Stratus program are tracked separately to provide the chief operating decision maker information to assess and manage events other than ProElite and the Stratus Program.

The characteristics of the Stratus Reward program and ProElite are different than the non-ProElite 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. Subsequent to December 31, 2012, the Company decided to suspend all activities other than ProElite.

A summary of results by segments is as follows:

	As of/for the Year Ended December 31, 2012														As of /for the Year Ended December 31, 2011
	Stratus						Other								Stratus						Other
	Rewards			ProElite			Events		Other			Total			Rewards			ProElite			Events			Other			Total
Revenues	$	–		$	375		$	–	$	–		$	375		$	–		$	377		$	194		$	–		$	571
Cost of sales		–			236			–		–			236			–			536			1,773			–			2,309
Gross margin		–			139			–		–			139			–			(159	)		(1,579	)		–			(1,738	)
Deprec. & Amort		–			2			–		32			34			45			–			–			25			70
Segment profit		–			137			–		(32	)		105			(45	)		(159	)		(1,579	)		(25	)		(1,808	)
Operating expenses		1,724			990			–		9,183			11,897			485			1,339			2,016			10,781			14,621
Other expenses		–			97			–		(5,039	)		(4,942	)		–			–			–			6,206			6,206
Net loss	$	(1,724	)	$	(950	)	$	–	$	(4,176	)		(6,850	)	$	(530	)	$	(1,498	)	$	(3,595	)	$	(17,012	)	$	(22,635	)
Preferred dividends		–			–			–	$	497			497			–			–			–		$	391			391
Net loss attributable to common shareholders	$	(1,724	)	$	(950	)	$	–	$	(4,673	)	$	(7,347	)	$	(530	)	$	(1,498	)	$	(3,595	)	$	(17,403	)	$	(23,026	)

Assets	$	–		$	2,161		$	–	$	285		$	2,446		$	1,073		$	2,020		$	351		$	230		$	3,674
Liabilities	$	122		$	2,632		$	2,271	$	18,460		$	20,853		$	–		$	1,511		$	169		$	17,995		$	19,675

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.

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19. Income taxes

12 Months Ended

Dec. 31, 2012

Income Tax Disclosure [Abstract]

Note 19 - Income taxes

Significant components of the Company's deferred tax assets for federal income taxes consisted of the following:

	December 31, 2012
Net operating loss carryforward	$	18,050,294
Amortization		(580,145	)
Stock option compensation		904,334
Deferred compensation		883,794
Deferred state tax		(477,307	)
Other		449,209
Valuation allowance		(19,230,179	)
Net deferred tax asset	$	–

The Company had net operating loss carry-forwards (“NOL”) for federal and state income tax purposes of approximately:

	December 31,
	2012		2011
Combined NOL Carryforwards:
Federal	$	43,181,944	$	35,361,835
California		40,714,060		32,893,951

The net operating loss carry-forwards for 2012 and 2011 begin expiring in 2021 and 2020, respectively. The utilization of net operating loss carry-forwards may be limited due to the ownership change under the provisions of Internal Revenue Code Section 382 and similar state provisions. The Company recorded a 100% valuation allowance on the deferred tax assets at December 31, 2011 and 2010 because of the uncertainty of their realization.

A reconciliation of the income tax credit computed at the federal statutory rate to that recorded in the financial statements for 2011 and 2010 is as follows

	December 31, 2012						December 31, 2011
Rate reconciliation:
Federal credit at statutory rate	$	(4,846,180	)	$	166.75%		$	(5,415,468	)	$	258.71%
State tax, net of Federal benefit		(782,767	)		26.93%			(926,363	)		44.25%
Change in valuation allowance		5,495,845			(189.11%	)		6,338,928			(302.82%	)
Other		133,102			(4.58%	)		2,903			(0.14%	)
Total provision	$	–			–%		$	–		$	–%

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

20. ProElite, Inc.

12 Months Ended

Dec. 31, 2012

Proelite Inc.

Note 20 - ProElite, Inc.

Effective October 21, 2009, the Company entered into a Strategic Investment Agreement with ProElite, Inc. (“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 which was used by PEI for payment of outstanding liabilities of PEI, general working capital and other corporate purposes and repayment of all amounts due under a note of PEI with respect to advances made to PEI by the Company of $100,000. At the close, all of the previous directors of PEI resigned and the board of directors of PEI consisted of two designees of the Company and one designee of PEI. The Company’s Chief Executive Officer, became PEI’s Chief Executive Officer.

The Company has consolidated the balance sheet of PEI as of December 31, 2012 and 2011. The results of operations of PEI for the fiscal year ended December 31, 2012 have been consolidated into the Company’s results of operations. The results of operations of PEI for the six months ended December 31, 2011 have been consolidated into the Company’s results of operations for 2011.

The pro forma financial information presented below show the consolidated operations of the Company as if the PEI acquisition had occurred as of January 1, 2011:

	Years Ended December 31,
	2012			2011
Revenues	$	374,542		$	829,476
Gross profit/(loss)		138,739			(1,479,134	)
Loss from operations		(11,791,869	)		(17,232,185	)
Provision for income taxes		–			–
Gain/(loss) related to derivative liabilities		6,907,748			(7,188,864	)
Net loss		(7,346,982	)		(23,860,566	)
Basic loss per share	$	(0.15	)	$	(0.27	)

21. Restatement of financial statements

12 Months Ended

Dec. 31, 2012

21. Restatement of financial statements

In preparing the financial statements for 2012, the Company has determined that the warrants for these financings included certain embedded derivative features as set forth in ASC 815, “Derivatives and Hedging,” (“ASC 815”) and that this conversion feature of the Series E was not an embedded derivative because this feature was clearly and closely related to the host (Series E) as defined in ASC 815. These derivative liabilities were initially recorded at their estimated fair value on the date of issuance and are subsequently adjusted each quarter to reflect the estimated fair value at the end of each period, with any decrease or increase in the estimated fair value of the derivative liability for each period being recorded as other income or expense. Since the value of the embedded derivative feature for the related warrants was higher than the value of both Series E transactions, there was no beneficial conversion feature recorded for either transaction, and the excess of the value of the embedded derivative feature over the value of the transaction was recorded in each year on the Statement of Operations as a separate line item for each year presented.

As the result of this determination, the Company had incorrectly accounted for the derivative liabilities embedded in the Series E and related warrants issued in the year 2011. The consolidated balance sheet as of December 31, 2011 and the related consolidated statements of operations for the year then ended were restated to reflect the correct treatment. The following table presents the effect of the restatement adjustment on the accompanying consolidated balance sheet as of December 31, 2011:

Consolidated Balance Sheet at December 31, 2011	As Previously Reported			Restated			Net Adjustment
Derivative liability	$	–		$	15,888,855		$	15,888,855
Other current liabilities		3,786,217			3,786,217			–
Total current liabilities	$	3,786,217		$	19,675,072		$	15,888,855

Shareholders’ deficit
Series C 10% Preferred Stock, $0.001 par value: 1,000,000 shares authorized, 0 shares outstanding	$	–		$	–		$	–
Series D 10% Preferred Stock, $0.001 par value: 500,000 shares authorized,18,999 shares outstanding		19			19			–
Series E 5% Preferred Stock, $0.001 par value: 10,000 shares authorized; 9,450 and 8,500 shares issued and outstanding		9			9			–
Common stock, $0.001 par value: 200,000,000 shares authorized 89,083,677 and 88,157,055 shares issued and outstanding		88,157			88,157			–
Additional paid-in capital		41,964,908			33,264,917			(8,699,991	)
Accumulated deficit		(42,196,523	)		(49,385,387	)		(7,188,864	)
Total Stratus shareholders' deficit	$	(143,430	)	$	(16,032,285	)	$	(15,888,855	)

The flowing table presents the effect of the restatement adjustment on the accompanying consolidated statement of operations for the year ended December 31, 2011:

Consolidated Statement of Operations for 2011	As Previously Reported			Restated			Net Adjustment
Loss from operations	$	(16,429,344	)	$	(16,429,344	)	$	–

Other (income)/expenses
Fair value of derivative liabilities in excess of proceeds		–			19,642,867			19,642,867
Adjustments to fair value of derivative securities		–			(12,454,003	)		(12,454,003	)
Other (income)/expenses		(1,012,909	)		(1,012,909	)		–
Interest expense		420,733			30,535			(390,198	)
Total other (income)/expenses		(592,176	)		6,206,490			6,798,666

Net loss	$	(15,837,168	)	$	(22,635,834	)	$	(6,798,666	)

Preferred dividends		–			390,198			390,198
Net loss attributable to common shareholders	$	(15,837,168	)	$	(23,026,032	)	$	(7,188,864	)

Basic and diluted loss attributable to common shareholders per share	$	(0.18	)	$	(0.26	)	$	(0.08	)
Basic weighted average shares outstanding		88,157,055			88,157,055
Fully-diluted weighted average shares outstanding		88,157,055			101,023,493			12,866,438

These corrections will be made to applicable prior period financial information in future filings with the SEC, including this filing.

The fair value of these derivative liabilities is calculated using the commonly-accepted Black Scholes pricing model that is based on the following as of the date of calculation: the closing price of the common stock, the strike price of the underlying instrument, the risk-free interest rate for the applicable remaining life of the underlying instrument (i.e., the U.S. treasury rate for that period) and the historical volatility of the Company’s common stock. These fair value results are extremely sensitive to all these input variables, particularly the closing price of the company’s common stock and the volatility of the Company’s common stock. Accordingly, the fair values of these derivative liabilities are subject to significant changes.

22. Subsequent Events

12 Months Ended

Dec. 31, 2012

Subsequent Events [Abstract]

NOTE 22 - Subsequent Events

Subsequent to December 31, 2012, the holders of 10,666 shares of Series D Preferred converted these shares into 927,736 shares of common stock: 739,920 shares for the conversion of Series D, 179,722 shares for accrued dividends and 8,094 shares for the price protection feature described in footnote 16. Following this conversion, there are 8,333 shares remaining of Series D Preferred that can currently be converted into 649,215 shares of common stock: 499,980 shares for the conversion of Series D, 136,216 shares for accrued dividends and 13,019 shares for the price protection feature described in footnote 16.

On March 5, 2013, the Company issued a promissory note for $200,000. This note does not bear interest and matures on the earlier of September 5, 2013 or the receipt by the Company of $200,000 of net proceeds from sales of equity.

On April 9, 2013, the Company sold 1,666,667 shares of its common stock to a private investor for $50,000, or $0.03 a share. The Company is attempting to obtain waivers from holders of Series E Preferred Stock for the full-ratchet anti-dilution feature for the conversion price and warrants. If the Company is not successful in obtaining these waivers, this full-ratchet anti-dilution feature will result in an additional 283,500,000 shares of common stock issuable upon conversion of Series E Preferred Stock, the repricing of Series E Preferred Stock warrants from $0.30 a share to $0.03 a share and the issuance of an additional 854,700,000 warrants to buy common stock. While the Company believes it can obtain these waivers, there can be no assurance that we will be able to do so. If these waivers are not obtained, the total of shares required to be reserved for the Series E Preferred Stock conversion and warrants is 1,138,200,000. The Company currently has authorized shares of 500,000,000 and would need to either increase the number of authorized shares or do a reverse stock split to be able to reserve enough shares in such event.

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

12 Months Ended

Dec. 31, 2012

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

Basic and Diluted Earnings Per share

Basic and Diluted Earnings Per Share (“EPS”)

Noncontrolling Interest

Noncontrolling Interest

Use of Estimates

Use of Estimates

Derivative Liabilities

Derivative Liabilities

Event Revenues

Event Revenues

Allowance for Uncollectible Receivables

Allowance for Uncollectible Receivables

Cash Equivalents

Cash Equivalents

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

Fair Value of Financial Instruments

Fair Value of Financial Instruments

Property and Equipment

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

Goodwill and Intangible Assets

Goodwill and intangible assets were as follows:

	December 31,
	2012		2011
Licensing rights for events	$	–	$	350,500
Goodwill for ProElite		1,935,621		1,935,621
Goodwill for Stratus Rewards		–		1,073,345
Total intangible assets and goodwill	$	1,935,621	$	3,359,466

Income Taxes

Income Taxes

Stock-Based Compensation

Stock-Based Compensation

Advertising

Advertising

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

Reclassification

Reclassification

Certain prior year amounts were reclassified to conform to the manner of presentation in the current year.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

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

12 Months Ended

Dec. 31, 2012

Basis Of Presentation And Significant Accounting Policies Tables

Property and Equipment 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

	December 31,
	2012		2011
Licensing rights for events	$	–	$	350,500
Goodwill for ProElite		1,935,621		1,935,621
Goodwill for Stratus Rewards		–		1,073,345
Total intangible assets and goodwill	$	1,935,621	$	3,359,466

6. Receivable from Former Officer and Director (Tables)

12 Months Ended

Dec. 31, 2012

Receivable From Former Officer And Director Tables

Receivable

	December 31,
	2012			2011
Gross receivable
Sale of Company common stock, net proceeds retained by Mr. Feller	$	640,000		$	640,000
Value of 378,661 shares of common stock owed by Mr. Feller to the Company, valued at December 31, 2012 price of $0.19		71,946		$	–
Vintage automobile retained by Mr. Feller		38,100			38,100
Other		4,622			–
Total		754,668			678,100

Offsets to receivable
Alleged commission on stock sales per Mr. Feller's written declaration		–			(115,000	)
Deferred salary		(113,667	)		(398,790	)
Expense reports submitted and approved		(30,540	)		(30,540	)
Expense reports to be submitted		–			(133,770	)
Offset receivable from stock transactions		(538,515	)		–
Net receivable	$	71,946		$	–

7. Property and Equipment (Tables)

12 Months Ended

Dec. 31, 2012

Property And Equipment Tables

Property and Equipment

Property and equipment were as follows:

	December 31,
	2012			2011
Computers and peripherals	$	97,660		$	97,660
Office machines		49,370			49,370
Furniture and fixtures		73,905			79,484
		220,935			226,514
Less accumulated depreciation		(171,897	)		(148,379	)
Property and equipment, net	$	49,038		$	78,135

8. Goodwill and Intangible assets (Tables)

12 Months Ended

Dec. 31, 2012

Goodwill And Intangible Assets Tables

Goodwill and Intangible assets

	December 31,
	2012		2011
Licensing rights for events	$	–	$	350,500
Goodwill for ProElite		1,935,621		1,935,621
Goodwill for Stratus Rewards		–		1,073,345
Total intangible assets and goodwill	$	1,935,621	$	3,359,466

Goodwill, intangible assets and impairment charges

	December 31,		Impairment Charges		December 31,		Impairment Charges		Amortization of Intangibles		December 31,
	2012		in 2012		2011		in 2011		in 2011		2010
Intangible assets:
Beverly Hills Concours d'Elegance	$	–	$	2,500	$	2,500	$	167,458	$	–	$	169,958
Santa Barbara Concours d'Elegance		–		53,000		53,000		190,000		–		243,000
Core Tour		–		100,000		100,000		967,069		–		1,067,069
Freedom Bowl		–		190,000		190,000		154,232		–		344,232
Stratus Rewards		–		–		–		86,019		45,410		131,430
Maui Music Festival		–		5,000		5,000		295,000		–		300,000
Total intangible assets		–		350,500		350,500		1,859,778		45,410		2,255,689
Goodwill:
Stratus Rewards		–		1,073,345		1,073,345		–		–		1,073,345
ProElite		1,935,621		–		1,935,621		n/a		–		n/a
Total goodwill and intangible assets	$	1,935,621	$	1,423,845	$	3,359,466	$	1,859,778	$	45,410	$	3,329,034

10. Other accrued expenses and other liabilities (Tables)

12 Months Ended

Dec. 31, 2012

Other Accrued Expenses And Other Liabilities Tables

Other accrued expenses and other liabilities

	December 31,
	2012		2011
Payroll related	$	329,191	$	640,208
Estimated damage liability that may not be covered by insurance		300,000		–
Estimate settlement with vendor in Europe		300,000		–
Professional fees		269,710		494,767
Accrued board fees		241,011		–
Consultant fees		133,777		227,178
Accrued legal judgments		84,899		90,732
Other		14,920		49,884
Travel expenses		10,000		38,546
	$	1,683,508	$	1,541,315

11. Amounts payable to officers (Tables)

12 Months Ended

Dec. 31, 2012

Amounts Payable To Officers Tables

Amounts payable to officers

	December 31,
	2012		2011
Loan from former chairman and president	$	–	$	78,919
Officer pursuant to employment agreement		156,358		50,244
Promissory note to officer		55,000		55,000
	$	211,358	$	184,163

12. Notes payable (Tables)

12 Months Ended

Dec. 31, 2012

Notes Payable Tables

Debt Disclosure

Notes payable were as follows:

	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. Secured by the assets of ProElite. These notes are currently in default.	$	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 December 31, 2012, he had a resulting warrant to purchase 27.5 percent of ProElite. This note is currently in default.		1,000,000		–

Note payable from ProElite to one holder dated October 19, 2012 with maturity of the earlier of October 19, 2013 or completion of an equity offering by Stratus, at which time the note will convert into equity based on the terms of that offering at 50% of the price of that offering. Bears interest at 7% and is secured by the assets of ProElite.		500,000		–

Note payable to the Company's outside law firm. This note is presented net of $249,824 of assumed reimbursements from the Company's D&O carrier. This note bears interest at 3% and is due December 31, 2012. This note is currently in default.		486,104		–

Notes payable to three holders dated May 11, 2012 with maturity of the earlier of November 11, 2012 or when a financing is completed of $2,000,000 or more, plus interest at 10%, secured by the assets of the Company. This note is currently in default.		350,000		–

Notes payable to 11 investors dated July 9, 2012 with maturity on the earlier of a $2 million capital raise by the Company, or February 6, 2013 and bear interest at 8%. This note is currently in default.		275,000		–

Notes payable to one holder dated April 4, 2012 with original maturity on October 4, 2012, plus interest at 10%. Unsecured. An amendment to this note on October 2, 2012 changed the maturity date to January 4, 2013. This note is currently 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 currently 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 currently in default.		10,000		10,000

Notes payable, unsecured, non-interest bearing		–		60,000
	$	4,004,103	$	555,000

14. Other (income)/expenses (Tables)

12 Months Ended

Dec. 31, 2012

Other Incomeexpenses Tables

Components of other (income)/expense

	Years Ended December 31,
	2012			2011
Writeoff note related to Stratus White acquisition that related to items the Company did not receive in the acquisition and is past the state of limitations	$	–		$	(1,000,000	)
Reduction in liabilities related to Paul Feller that are no longer needed		(346,974	)		–
Reduction in accrued interest related to debt that has been repaid or settled		(256,449	)		–
Reduction in accrued interest related to preferred stock that has been converted to common stock		(102,435	)		–
Gain on negotiated settlement of account payable below book value		(72,078	)		–
Other income items		–			(12,909	)
Offset of receivable from Paul Feller from stock transactions		538,515			–
Accrued estimated property damage that may be the Company's liability		300,000			–
Estimated cost to settle dispute with vendor in Europe		300,000			–
Other expense items, net		18,610			–
Other (income)/expense, net	$	379,188		$	(1,012,909	)

16. Shareholders Equity (Tables)

12 Months Ended

Dec. 31, 2012

Shareholders Equity Tables

Stock Options- Assumptions

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			–

Estimated fair value of underlying common stock			$0.54
Remaining life			5.0
Risk-free interest rate			0.83%
Expected volatility			100%
Dividend yield			–

Stock Options - Activity

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

Options Outstanding

Options Exercisable

Weighted

Average

Weighted

Average

Weighted

Range of

Remaining

Average

Remaining

Average

Options

Exercise

Life in

Exercise

Options

Life in

Exercise

Outstanding

Prices

Years

Price

Exercisable

Years

Price

As of December 31, 2010

10,269,852

$0.54 - $0.84

2.4

0.94

8,512,684

2.0

0.94

Cancelled

(3,110,000

)

–

(3,110,000

)

–

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

$0.54 - $0.84

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

4.5

0.36

1,634,333

4.5

0.36

As of December 31, 2012

7,943,523

$0.35 -$0.84

3.3

0.46

5,731,023

2.9

0.48

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			–

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="text-align: center; line-height: 115%"> </td> <td style="text-align: center; line-height: 115%"> </td> <td style="border-bottom: black 1pt solid; text-align: center; line-height: 115%"> </td> <td colspan="10" style="border-bottom: black 1pt solid; font-weight: bold; line-height: 115%; text-align: center"> Original</td> <td style="text-align: center; line-height: 115%"> </td> <td colspan="10" style="border-bottom: black 1pt solid; font-weight: bold; line-height: 115%; text-align: center"> After Ratchet Down</td> <td style="text-align: center; line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="text-align: center; line-height: 115%"> </td> <td style="text-align: center; line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center; line-height: 115%">Shares x</td> <td style="text-align: center; line-height: 115%"> </td> <td style="text-align: center; line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center; line-height: 115%">Strike =</td> <td style="text-align: center; line-height: 115%"> </td> <td style="text-align: center; line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1pt solid; padding-bottom: 1pt"> Aggregate Exercise Price</td> <td style="text-align: center; line-height: 115%"> </td> <td style="text-align: center; line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center; line-height: 115%">Shares x</td> <td style="text-align: center; line-height: 115%"> </td> <td style="text-align: center; line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center; line-height: 115%">Strike =</td> <td style="text-align: center; line-height: 115%"> </td> <td style="text-align: center; line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center; line-height: 115%">Aggregate Exercise Price</td> <td style="text-align: center; line-height: 115%"> </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="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #EEEEEE"> <td style="width: 28%; padding-left: 8.1pt; line-height: 115%">Series A warrants</td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 9%; text-align: right; line-height: 115%">21,750,000</td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%">$</td> <td style="width: 9%; text-align: right; line-height: 115%">0.65</td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%">$</td> <td style="width: 9%; text-align: right; line-height: 115%">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%; text-align: right; line-height: 115%">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%">$</td> <td style="width: 9%; text-align: right; line-height: 115%">0.30</td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%">$</td> <td style="width: 9%; text-align: right; line-height: 115%">14,137,500</td> <td style="width: 1%; line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 8.1pt; line-height: 115%">Series B warrants</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">10,875,000</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%">$</td> <td style="text-align: right; line-height: 115%">1.00</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%">$</td> <td style="text-align: right; line-height: 115%">10,875,000</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">36,250,000</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%">$</td> <td style="text-align: right; line-height: 115%">0.30</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%">$</td> <td style="text-align: right; line-height: 115%">10,875,000</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%">Placement agent warrant</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">3,600,000</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%">$</td> <td style="text-align: right; line-height: 115%">0.65</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%">$</td> <td style="text-align: right; line-height: 115%">2,340,000</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">7,800,000</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%">$</td> <td style="text-align: right; line-height: 115%">0.30</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%">$</td> <td style="text-align: right; line-height: 115%">2,340,000</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%">Broker-dealer warrant</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">1,000,000</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%">$</td> <td style="text-align: right; line-height: 115%">0.65</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%">$</td> <td style="text-align: right; line-height: 115%">650,000</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">2,166,667</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%">$</td> <td style="text-align: right; line-height: 115%">0.30</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%">$</td> <td style="text-align: right; line-height: 115%">650,000</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%">Advisory warrant</td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1pt solid; padding-left: 8.1pt; text-align: right; line-height: 115%"> </td> <td style="border-bottom: black 1pt solid; padding-left: 8.1pt; text-align: right; line-height: 115%">750,000</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%">$</td> <td style="padding-left: 8.1pt; text-align: right; line-height: 115%">0.65</td> <td style="line-height: 115%"> </td> <td style="padding-left: 8.1pt; line-height: 115%"> </td> <td style="padding-left: 8.1pt; line-height: 115%">$</td> <td style="padding-left: 8.1pt; text-align: right; line-height: 115%">487,500</td> <td style="line-height: 115%"> </td> <td style="padding-left: 8.1pt; line-height: 115%"> </td> <td style="border-bottom: black 1pt solid; padding-left: 8.1pt; text-align: right; line-height: 115%"> </td> <td style="border-bottom: black 1pt solid; padding-left: 8.1pt; text-align: right; line-height: 115%">1,625,000</td> <td style="line-height: 115%"> </td> <td style="padding-left: 8.1pt; line-height: 115%"> </td> <td style="padding-left: 8.1pt; line-height: 115%">$</td> <td style="padding-left: 8.1pt; text-align: right; line-height: 115%">0.30</td> <td style="line-height: 115%"> </td> <td style="padding-left: 8.1pt; line-height: 115%"> </td> <td style="line-height: 115%">$</td> <td style="text-align: right; line-height: 115%">487,500</td> <td style="line-height: 115%"> </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="text-align: right; line-height: 115%">37,975,000</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">94,966,667</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </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="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td colspan="11" style="text-align: right; line-height: 115%"> Additional warrants from ratchet-down</td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%"> </td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%"> 56,991,667 </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td></tr> </table>

Warrants - Summary

A summary of the warrants: <table cellspacing="0" cellpadding="0" style="font: 8pt Times New Roman, Times, Serif; width: 100%; background-color: white; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td style="padding-left: 10pt; text-indent: -10pt"> </td> <td> </td> <td> </td> <td colspan="14" style="border-bottom: black 1pt solid; font-weight: bold; text-align: center"> Warrants Outstanding</td> <td> </td> <td> </td> <td colspan="10" style="border-bottom: black 1pt solid; font-weight: bold; text-align: center"> Warrants Exercisable</td> <td> </td></tr> <tr style="vertical-align: bottom"> <td style="padding-left: 10pt; text-indent: -10pt"> </td> <td> </td> <td> </td> <td style="text-align: center"> </td> <td style="text-align: center"> </td> <td style="text-align: center"> </td> <td style="text-align: center"> </td> <td style="text-align: center"> </td> <td style="text-align: center"> </td> <td style="text-align: center"> </td> <td style="font-weight: bold; text-align: center"> </td> <td colspan="2" style="font-weight: bold; text-align: center">Weighted</td> <td style="font-weight: bold; text-align: center"> </td> <td style="text-align: center"> </td> <td style="text-align: center"> </td> <td style="text-align: center"> </td> <td style="text-align: center"> </td> <td style="text-align: center"> </td> <td style="text-align: center"> </td> <td style="text-align: center"> </td> <td style="text-align: center"> </td> <td style="font-weight: bold; text-align: center"> </td> <td colspan="2" style="font-weight: bold; text-align: center"> Weighted</td> <td style="font-weight: bold; text-align: center"> </td> <td style="text-align: center"> </td> <td style="text-align: center"> </td> <td style="text-align: center"> </td> <td style="text-align: center"> </td></tr> <tr style="vertical-align: bottom"> <td style="padding-left: 10pt; text-align: center; text-indent: -10pt"> </td> <td style="text-align: center"> </td> <td style="text-align: center"> </td> <td style="text-align: center"> </td> <td style="text-align: center"> </td> <td style="text-align: center"> </td> <td style="text-align: center"> </td> <td style="text-align: center"> </td> <td style="text-align: center"> </td> <td style="text-align: center"> </td> <td style="font-weight: bold; text-align: center"> </td> <td colspan="2" style="font-weight: bold; text-align: center">Average</td> <td style="font-weight: bold; text-align: center"> </td> <td style="font-weight: bold; text-align: center"> </td> <td colspan="2" style="font-weight: bold; text-align: center"> Weighted </td> <td style="font-weight: bold; text-align: center"> </td> <td style="text-align: center"> </td> <td style="text-align: center"> </td> <td style="text-align: center"> </td> <td style="text-align: center"> </td> <td style="font-weight: bold; text-align: center"> </td> <td colspan="2" style="font-weight: bold; text-align: center"> Average</td> <td style="font-weight: bold; text-align: center"> </td> <td style="font-weight: bold; text-align: center"> </td> <td colspan="2" style="font-weight: bold; text-align: center"> Weighted</td> <td style="font-weight: bold; text-align: center"> </td></tr> <tr style="vertical-align: bottom"> <td style="padding-left: 10pt; text-align: center; text-indent: -10pt"> </td> <td style="text-align: center"> </td> <td style="text-align: center"> </td> <td style="text-align: center"> </td> <td style="text-align: center"> </td> <td style="text-align: center"> </td> <td style="font-weight: bold; text-align: center"> </td> <td colspan="2" style="font-weight: bold; text-align: center">Range of</td> <td style="font-weight: bold; text-align: center"> </td> <td style="font-weight: bold; text-align: center"> </td> <td colspan="2" style="font-weight: bold; text-align: center">Remaining</td> <td style="font-weight: bold; text-align: center"> </td> <td style="font-weight: bold; text-align: center"> </td> <td colspan="2" style="font-weight: bold; text-align: center"> Average</td> <td style="font-weight: bold; text-align: center"> </td> <td style="text-align: center"> </td> <td style="text-align: center"> </td> <td style="text-align: center"> </td> <td style="text-align: center"> </td> <td style="font-weight: bold; text-align: center"> </td> <td colspan="2" style="font-weight: bold; text-align: center"> Remaining</td> <td style="font-weight: bold; text-align: center"> </td> <td style="font-weight: bold; text-align: center"> </td> <td colspan="2" style="font-weight: bold; text-align: center"> Average</td> <td style="font-weight: bold; text-align: center"> </td></tr> <tr style="vertical-align: bottom"> <td style="padding-left: 10pt; text-align: center; text-indent: -10pt"> </td> <td style="text-align: center"> </td> <td style="font-weight: bold; text-align: center"> </td> <td colspan="2" style="font-weight: bold; text-align: center"> Warrants</td> <td style="font-weight: bold; text-align: center"> </td> <td style="font-weight: bold; text-align: center"> </td> <td colspan="2" style="font-weight: bold; text-align: center">Exercise </td> <td style="font-weight: bold; text-align: center"> </td> <td style="font-weight: bold; text-align: center"> </td> <td colspan="2" style="font-weight: bold; text-align: center">Life in</td> <td style="font-weight: bold; text-align: center"> </td> <td style="font-weight: bold; text-align: center"> </td> <td colspan="2" style="font-weight: bold; text-align: center"> Exercise</td> <td style="font-weight: bold; text-align: center"> </td> <td style="font-weight: bold; text-align: center"> </td> <td colspan="2" style="font-weight: bold; text-align: center"> Warrants</td> <td style="font-weight: bold; text-align: center"> </td> <td style="font-weight: bold; text-align: center"> </td> <td colspan="2" style="font-weight: bold; text-align: center"> Life in</td> <td style="font-weight: bold; text-align: center"> </td> <td style="font-weight: bold; text-align: center"> </td> <td colspan="2" style="font-weight: bold; text-align: center"> Exercise</td> <td style="font-weight: bold; text-align: center"> </td></tr> <tr style="vertical-align: bottom"> <td style="padding-left: 10pt; text-align: center; text-indent: -10pt"> </td> <td style="padding-bottom: 1pt; text-align: center"> </td> <td style="padding-bottom: 1pt; font-weight: bold; text-align: center"> </td> <td colspan="2" style="border-bottom: black 1pt solid; font-weight: bold; text-align: center"> Outstanding</td> <td style="padding-bottom: 1pt; font-weight: bold; text-align: center"> </td> <td style="padding-bottom: 1pt; font-weight: bold; text-align: center"> </td> <td colspan="2" style="border-bottom: black 1pt solid; font-weight: bold; text-align: center">Prices</td> <td style="padding-bottom: 1pt; font-weight: bold; text-align: center"> </td> <td style="padding-bottom: 1pt; font-weight: bold; text-align: center"> </td> <td colspan="2" style="border-bottom: black 1pt solid; font-weight: bold; text-align: center">Years</td> <td style="padding-bottom: 1pt; font-weight: bold; text-align: center"> </td> <td style="padding-bottom: 1pt; font-weight: bold; text-align: center"> </td> <td colspan="2" style="border-bottom: black 1pt solid; font-weight: bold; text-align: center"> Price</td> <td style="padding-bottom: 1pt; font-weight: bold; text-align: center"> </td> <td style="padding-bottom: 1pt; font-weight: bold; text-align: center"> </td> <td colspan="2" style="border-bottom: black 1pt solid; font-weight: bold; text-align: center"> Exercisable</td> <td style="padding-bottom: 1pt; font-weight: bold; text-align: center"> </td> <td style="padding-bottom: 1pt; font-weight: bold; text-align: center"> </td> <td colspan="2" style="border-bottom: black 1pt solid; font-weight: bold; text-align: center"> Years</td> <td style="padding-bottom: 1pt; font-weight: bold; text-align: center"> </td> <td style="padding-bottom: 1pt; font-weight: bold; text-align: center"> </td> <td colspan="2" style="border-bottom: black 1pt solid; font-weight: bold; text-align: center"> Price</td> <td style="padding-bottom: 1pt; font-weight: bold"> </td></tr> <tr style="vertical-align: bottom; background-color: #EEEEEE"> <td style="width: 25%; padding-left: 10pt; font-weight: bold; text-indent: -10pt">As of December 31, 2010</td> <td style="width: 1%; font-weight: bold"> </td> <td style="width: 1%; font-weight: bold"> </td> <td style="width: 1%; font-weight: bold"> </td> <td style="width: 8%; font-weight: bold; text-align: right">2,472,676</td> <td style="width: 1%; font-weight: bold"> </td> <td style="width: 1%; font-weight: bold"> </td> <td style="width: 1%; font-weight: bold"> </td> <td style="width: 9%; font-weight: bold; text-align: right">$1.00 - $2.00</td> <td style="width: 1%; font-weight: bold"> </td> <td style="width: 1%; font-weight: bold"> </td> <td style="width: 1%; font-weight: bold"> </td> <td style="width: 7%; font-weight: bold; text-align: right">4.4</td> <td style="width: 1%; font-weight: bold"> </td> <td style="width: 1%; font-weight: bold"> </td> <td style="width: 1%; font-weight: bold">$</td> <td style="width: 7%; font-weight: bold; text-align: right">1.37</td> <td style="width: 1%; font-weight: bold"> </td> <td style="width: 1%; font-weight: bold"> </td> <td style="width: 1%; font-weight: bold"> </td> <td style="width: 8%; font-weight: bold; text-align: right">2,472,676</td> <td style="width: 1%; font-weight: bold"> </td> <td style="width: 1%; font-weight: bold"> </td> <td style="width: 1%; font-weight: bold"> </td> <td style="width: 7%; font-weight: bold; text-align: right">4.4</td> <td style="width: 1%; font-weight: bold"> </td> <td style="width: 1%; font-weight: bold"> </td> <td style="width: 1%; font-weight: bold">$</td> <td style="width: 7%; font-weight: bold; text-align: right">1.37</td> <td style="width: 1%; font-weight: bold"> </td></tr> <tr style="vertical-align: bottom"> <td style="padding-left: 10pt; text-indent: -10pt">Exercised</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">–</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">–</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">–</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">–</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">–</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">–</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">–</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #EEEEEE"> <td style="padding-left: 10pt; text-indent: -10pt">Granted</td> <td style="padding-bottom: 1pt"> </td> <td style="padding-bottom: 1pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right">57,057,569</td> <td style="padding-bottom: 1pt"> </td> <td style="padding-bottom: 1pt"> </td> <td> </td> <td style="text-align: right">$0.65 - $1.00</td> <td style="padding-bottom: 1pt"> </td> <td style="padding-bottom: 1pt"> </td> <td> </td> <td style="text-align: right">4.5</td> <td style="padding-bottom: 1pt"> </td> <td style="padding-bottom: 1pt"> </td> <td>$</td> <td style="text-align: right">0.75</td> <td style="padding-bottom: 1pt"> </td> <td style="padding-bottom: 1pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right">57,057,569</td> <td style="padding-bottom: 1pt"> </td> <td style="padding-bottom: 1pt"> </td> <td> </td> <td style="text-align: right">4.5</td> <td style="padding-bottom: 1pt"> </td> <td style="padding-bottom: 1pt"> </td> <td>$</td> <td style="text-align: right">0.75</td> <td style="padding-bottom: 1pt"> </td></tr> <tr style="vertical-align: bottom"> <td style="padding-left: 10pt; font-weight: bold; text-indent: -10pt">As of December 31, 2011</td> <td style="font-weight: bold"> </td> <td style="font-weight: bold"> </td> <td style="font-weight: bold"> </td> <td style="font-weight: bold; text-align: right">59,530,245</td> <td style="font-weight: bold"> </td> <td style="font-weight: bold"> </td> <td style="font-weight: bold"> </td> <td style="font-weight: bold; text-align: right">$0.65 - $2.00</td> <td style="font-weight: bold"> </td> <td style="font-weight: bold"> </td> <td style="font-weight: bold"> </td> <td style="font-weight: bold; text-align: right">3.5</td> <td style="font-weight: bold"> </td> <td style="font-weight: bold"> </td> <td style="font-weight: bold">$</td> <td style="font-weight: bold; text-align: right">2.00</td> <td style="font-weight: bold"> </td> <td style="font-weight: bold"> </td> <td style="font-weight: bold"> </td> <td style="font-weight: bold; text-align: right">59,530,245</td> <td style="font-weight: bold"> </td> <td style="font-weight: bold"> </td> <td style="font-weight: bold"> </td> <td style="font-weight: bold; text-align: right">3.5</td> <td style="font-weight: bold"> </td> <td style="font-weight: bold"> </td> <td style="font-weight: bold">$</td> <td style="font-weight: bold; text-align: right">2.00</td> <td style="font-weight: bold"> </td></tr> <tr style="vertical-align: bottom; background-color: #EEEEEE"> <td style="padding-left: 10pt; text-indent: -10pt">Exercised</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">–</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">–</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">–</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">–</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">–</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">–</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">–</td> <td> </td></tr> <tr style="vertical-align: bottom"> <td style="padding-left: 10pt; text-indent: -10pt">Ratchet-down impact</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">56,991,667</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">$0.30</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">–</td> <td> </td> <td> </td> <td>$</td> <td style="text-align: right">0.30</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">56,991,667</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">–</td> <td> </td> <td> </td> <td>$</td> <td style="text-align: right">0.30</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #EEEEEE"> <td style="padding-left: 10pt; text-indent: -10pt">Granted</td> <td style="padding-bottom: 1pt"> </td> <td style="padding-bottom: 1pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right">15,763,330</td> <td style="padding-bottom: 1pt"> </td> <td style="padding-bottom: 1pt"> </td> <td> </td> <td style="text-align: right">$0.30 - $0.75</td> <td style="padding-bottom: 1pt"> </td> <td style="padding-bottom: 1pt"> </td> <td> </td> <td style="text-align: right">4.6</td> <td style="padding-bottom: 1pt"> </td> <td style="padding-bottom: 1pt"> </td> <td>$</td> <td style="text-align: right">0.38</td> <td style="padding-bottom: 1pt"> </td> <td style="padding-bottom: 1pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right">10,388,330</td> <td style="padding-bottom: 1pt"> </td> <td style="padding-bottom: 1pt"> </td> <td> </td> <td style="text-align: right">4.6</td> <td style="padding-bottom: 1pt"> </td> <td style="padding-bottom: 1pt"> </td> <td> </td> <td style="text-align: right">-</td> <td style="padding-bottom: 1pt"> </td></tr> <tr style="vertical-align: bottom"> <td style="padding-left: 10pt; font-weight: bold; text-indent: -10pt">As of December 31, 2012</td> <td style="padding-bottom: 2.5pt; font-weight: bold"> </td> <td style="padding-bottom: 2.5pt; font-weight: bold"> </td> <td style="border-bottom: black 2.25pt double; font-weight: bold"> </td> <td style="border-bottom: black 2.25pt double; font-weight: bold; text-align: right">132,285,242</td> <td style="padding-bottom: 2.5pt; font-weight: bold"> </td> <td style="padding-bottom: 2.5pt; font-weight: bold"> </td> <td style="border-bottom: black 2.25pt double; font-weight: bold"> </td> <td style="border-bottom: black 2.25pt double; font-weight: bold; text-align: right">$0.30 - $2.00</td> <td style="padding-bottom: 2.5pt; font-weight: bold"> </td> <td style="padding-bottom: 2.5pt; font-weight: bold"> </td> <td style="border-bottom: black 2.25pt double; font-weight: bold"> </td> <td style="border-bottom: black 2.25pt double; font-weight: bold; text-align: right">3.5</td> <td style="padding-bottom: 2.5pt; font-weight: bold"> </td> <td style="padding-bottom: 2.5pt; font-weight: bold"> </td> <td style="border-bottom: black 2.25pt double; font-weight: bold">$</td> <td style="border-bottom: black 2.25pt double; font-weight: bold; text-align: right">0.40</td> <td style="padding-bottom: 2.5pt; font-weight: bold"> </td> <td style="padding-bottom: 2.5pt; font-weight: bold"> </td> <td style="border-bottom: black 2.25pt double; font-weight: bold"> </td> <td style="border-bottom: black 2.25pt double; font-weight: bold; text-align: right">126,910,242</td> <td style="padding-bottom: 2.5pt; font-weight: bold"> </td> <td style="padding-bottom: 2.5pt; font-weight: bold"> </td> <td style="border-bottom: black 2.25pt double; font-weight: bold"> </td> <td style="border-bottom: black 2.25pt double; font-weight: bold; text-align: right">3.5</td> <td style="padding-bottom: 2.5pt; font-weight: bold"> </td> <td style="padding-bottom: 2.5pt; font-weight: bold"> </td> <td style="border-bottom: black 2.25pt double; font-weight: bold">$</td> <td style="border-bottom: black 2.25pt double; font-weight: bold; text-align: right">0.38</td> <td style="padding-bottom: 2.5pt; font-weight: bold"> </td></tr></table>

17. Commitments and contingencies (Tables)

12 Months Ended

Dec. 31, 2012

Commitments And Contingencies Tables

Contractual obligations

Set forth below is information concerning our known contractual obligations as of December 31, 2012 that are fixed and determinable by year.

									2015 and
	Total		2013		2014		2015		Later
Notes Payable	$	4,004,103	$	4,004,103	$	–	$	–	$	–
Rent obligations		1,260,645		677,738		339,958		242,949		–
Deferred Salary		1,152,933		1,152,933		–		–		–
Accrued interest		947,100		947,100		–		–		–
Employee Contracts: Salary		363,750		363,750		–		–		–
Employee Contracts: Other		231,299		231,299		–		–		–
Total	$	7,959,830	$	7,376,923	$	339,958	$	242,949	$	–

18. Segment Information (Tables)

12 Months Ended

Dec. 31, 2012

Segment Information Tables

Segment Information

	As of/for the Year Ended December 31, 2012														As of /for the Year Ended December 31, 2011
	Stratus						Other								Stratus						Other
	Rewards			ProElite			Events		Other			Total			Rewards			ProElite			Events			Other			Total
Revenues	$	–		$	375		$	–	$	–		$	375		$	–		$	377		$	194		$	–		$	571
Cost of sales		–			236			–		–			236			–			536			1,773			–			2,309
Gross margin		–			139			–		–			139			–			(159	)		(1,579	)		–			(1,738	)
Deprec. & Amort		–			2			–		32			34			45			–			–			25			70
Segment profit		–			137			–		(32	)		105			(45	)		(159	)		(1,579	)		(25	)		(1,808	)
Operating expenses		1,724			990			–		9,183			11,897			485			1,339			2,016			10,781			14,621
Other expenses		–			97			–		(5,039	)		(4,942	)		–			–			–			6,206			6,206
Net loss	$	(1,724	)	$	(950	)	$	–	$	(4,176	)		(6,850	)	$	(530	)	$	(1,498	)	$	(3,595	)	$	(17,012	)	$	(22,635	)
Preferred dividends		–			–			–	$	497			497			–			–			–		$	391			391
Net loss attributable to common shareholders	$	(1,724	)	$	(950	)	$	–	$	(4,673	)	$	(7,347	)	$	(530	)	$	(1,498	)	$	(3,595	)	$	(17,403	)	$	(23,026	)

Assets	$	–		$	2,161		$	–	$	285		$	2,446		$	1,073		$	2,020		$	351		$	230		$	3,674
Liabilities	$	122		$	2,632		$	2,271	$	18,460		$	20,853		$	–		$	1,511		$	169		$	17,995		$	19,675

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.

Net operating loss carry-forwards

19. Income taxes (Tables)

12 Months Ended

Dec. 31, 2012

Income Taxes Tables

Deferred tax assets

	December 31, 2012
Net operating loss carryforward	$	18,050,294
Amortization		(580,145	)
Stock option compensation		904,334
Deferred compensation		883,794
Deferred state tax		(477,307	)
Other		449,209
Valuation allowance		(19,230,179	)
Net deferred tax asset	$	–

The Company had net operating loss carry-forwards (“NOL”) for federal and state income tax purposes of approximately:

	December 31,
	2012		2011
Combined NOL Carryforwards:
Federal	$	43,181,944	$	35,361,835
California		40,714,060		32,893,951

Reconciliation of the income tax credit computed at the federal statutory rate

	December 31, 2012						December 31, 2011
Rate reconciliation:
Federal credit at statutory rate	$	(4,846,180	)	$	166.75%		$	(5,415,468	)	$	258.71%
State tax, net of Federal benefit		(782,767	)		26.93%			(926,363	)		44.25%
Change in valuation allowance		5,495,845			(189.11%	)		6,338,928			(302.82%	)
Other		133,102			(4.58%	)		2,903			(0.14%	)
Total provision	$	–			–%		$	–		$	–%

20. ProElite, Inc. (Tables)

12 Months Ended

Dec. 31, 2012

Proelite Inc. Tables

ProElite, Inc.

	Years Ended December 31,
	2012			2011
Revenues	$	374,542		$	829,476
Gross profit/(loss)		138,739			(1,479,134	)
Loss from operations		(11,791,869	)		(17,232,185	)
Provision for income taxes		–			–
Gain/(loss) related to derivative liabilities		6,907,748			(7,188,864	)


Net loss		(7,346,982	)		(23,860,566	)
Basic loss per share	$	(0.15	)	$	(0.27	)

21. Restatement of financial statements (Tables)

12 Months Ended

Dec. 31, 2012

Restatement of Consolidated Balance Sheet

Consolidated Balance Sheet at December 31, 2011	As Previously Reported			Restated			Net Adjustment
Derivative liability	$	–		$	15,888,855		$	15,888,855
Other current liabilities		3,786,217			3,786,217			–
Total current liabilities	$	3,786,217		$	19,675,072		$	15,888,855

Shareholders’ deficit
Series C 10% Preferred Stock, $0.001 par value: 1,000,000 shares authorized, 0 shares outstanding	$	–		$	–		$	–
Series D 10% Preferred Stock, $0.001 par value: 500,000 shares authorized,18,999 shares outstanding		19			19			–
Series E 5% Preferred Stock, $0.001 par value: 10,000 shares authorized; 9,450 and 8,500 shares issued and outstanding		9			9			–
Common stock, $0.001 par value: 200,000,000 shares authorized 89,083,677 and 88,157,055 shares issued and outstanding		88,157			88,157			–
Additional paid-in capital		41,964,908			33,264,917			(8,699,991	)
Accumulated deficit		(42,196,523	)		(49,385,387	)		(7,188,864	)
Total Stratus shareholders' deficit	$	(143,430	)	$	(16,032,285	)	$	(15,888,855	)

Restatement of Consolidated Operations

Consolidated Statement of Operations for 2011	As Previously Reported			Restated			Net Adjustment
Loss from operations	$	(16,429,344	)	$	(16,429,344	)	$	–

Other (income)/expenses
Fair value of derivative liabilities in excess of proceeds		–			19,642,867			19,642,867
Adjustments to fair value of derivative securities		–			(12,454,003	)		(12,454,003	)
Other (income)/expenses		(1,012,909	)		(1,012,909	)		–
Interest expense		420,733			30,535			(390,198	)
Total other (income)/expenses		(592,176	)		6,206,490			6,798,666

Net loss	$	(15,837,168	)	$	(22,635,834	)	$	(6,798,666	)

Preferred dividends		–			390,198			390,198
Net loss attributable to common shareholders	$	(15,837,168	)	$	(23,026,032	)	$	(7,188,864	)

Basic and diluted loss attributable to common shareholders per share	$	(0.18	)	$	(0.26	)	$	(0.08	)
Basic weighted average shares outstanding		88,157,055			88,157,055
Fully-diluted weighted average shares outstanding		88,157,055			101,023,493			12,866,438

2. Going Concern (Details Narrative) - USD ($)	12 Months Ended
2. Going Concern (Details Narrative) - USD ($)	Dec. 31, 2012	Dec. 31, 2011
Going Concern Details Narrative
Working capital	$ (20,390,998)
Proceeds from issuance of preferred stock	870,000	$ 9,406,051
Proceeds from issuance of common stock	143,829	3,989,359
Proceeds from issuance of promissory notes	$ 3,483,103	$ 387,983

3. Basis of Presentation and Significant Accounting Policies (Details)	12 Months Ended
	Dec. 31, 2012
Equipment \| Minimum [Member]
Property and Equipment
Estimated useful Life	3 years
Equipment \| Maximum [Member]
Property and Equipment
Estimated useful Life	5 years
Furniture And Fixtures
Property and Equipment
Estimated useful Life	5 years
Software
Property and Equipment
Estimated useful Life	3 years
LeaseholdImprovementsMember
Property and Equipment
Estimated useful Life, description	Lesser of lease term or life of improvements

3. Basis of Presentation and Significant Accounting Policies (Details 1) - USD ($)	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Licensing rights for events		$ 350,500
Total intangible assets and goodwill	1,935,621	3,359,466	$ 3,239,034
ProElite, Inc.
Goodwill	$ 1,935,621	1,935,621
Stratus Rewards [Member]
Goodwill		$ 1,073,345

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.

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
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-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.

6. Receivable From Former Chairman and CEO (Details) - USD ($)	Dec. 31, 2012	Dec. 31, 2011
Gross receivable
Sale of Company common stock, proceeds retained by Mr. Feller	$ 640,000	$ 640,000
Value of 378,661 shares of common stock owed by Mr. Feller to the Company, valued at December 31, 2012 price of $0.19	71,946
Vintage automobile retained by Mr. Feller	38,100	38,100
Other	4,622
Total	754,668	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		(133,770)
Offset receivable based on stock offsets	(538,515)
Net receivable	$ 71,946

7. Property and Equipment (Details) - USD ($)	Dec. 31, 2012	Dec. 31, 2011
Property and Equipment
Computers and peripherals	$ 97,660	$ 97,660
Office machines	49,370	49,370
Furniture and fixtures	73,905	79,484
Property and Equipment Gross	220,935	226,514
Less accumulated depreciation	(171,897)	(148,379)
Property and Equipment Net	$ 49,038	$ 78,135

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.

8. Goodwill and Intangible assets (Details) - USD ($)	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Intangible Assets Net
Intangible Assets		$ 350,500	$ 2,255,689
Goodwill and Intangible Assets	1,935,621	3,359,466	3,239,034
Beverly Hills Concours d'Elegance
Intangible Assets Net
Intangible Assets		2,500	169,958
Santa Barbara Concours d'Elegance
Intangible Assets Net
Intangible Assets		53,000	243,000
Cour Tour
Intangible Assets Net
Intangible Assets		100,000	1,067,069
Freedom Bowl
Intangible Assets Net
Intangible Assets		190,000	344,232
Maui Music Festival
Intangible Assets Net
Intangible Assets		5,000	$ 300,000
ProElite, Inc.
Intangible Assets Net
Goodwill	$ 1,935,621	1,935,621
Stratus White Visa Card
Intangible Assets Net
Goodwill		$ 1,073,345

8. Goodwill and intangible assets (Details 2) - USD ($)	12 Months Ended
8. Goodwill and intangible assets (Details 2) - USD ($)	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Intangible assets		$ 350,500	$ 2,255,689
Goodwill and intangible assets	1,935,621	3,359,466	3,239,034
Impairment of intangible assets	350,500	1,859,778
Impairment of intangible and goodwill	1,423,844	1,859,778
Santa Barbara Concours d'Elegance
Intangible assets		53,000	243,000
Impairment of intangible assets	53,000	190,000
Cour Tour
Intangible assets		100,000	1,067,069
Impairment of intangible assets	100,000	967,069
Freedom Bowl
Intangible assets		190,000	344,232
Impairment of intangible assets	190,000	154,232
Maui Music Festival
Intangible assets		5,000	300,000
Impairment of intangible assets	5,000	295,000
Stratus Rewards [Member]
Intangible assets			131,430
Goodwill		1,073,345	1,073,345
Impairment of intangible assets		86,019
Impairment of goodwill	1,073,345
Amortization of Intangible		45,410
ProElite, Inc.
Goodwill	1,935,621	1,935,621
Beverly Hills Concours d'Elegance
Intangible assets		2,500	$ 169,958
Impairment of intangible assets	$ 2,500	$ 167,458

10. Other accrued expenses and other liabilities (Details) - USD ($)	Dec. 31, 2012	Dec. 31, 2011
Accounts Payable and Accrued Liabilities
Payroll related	$ 329,191	$ 640,208
Estimated damage liability that may not be covered by insurance	300,000
Estimate settlement with vendor in Europe	300,000
Professional fees	269,710	494,767
Accrued board fees	241,011
Consultant fees	133,777	227,178
Accrued legal judgments	84,899	90,732
Other	14,920	49,884
Travel expenses	10,000	38,546
Total Accounts Payable and Accrued Liabilities	$ 1,683,508	$ 1,541,315

11. Amounts payable to officers (Details) - USD ($)	Dec. 31, 2012	Dec. 31, 2011
Loan Payable
Amounts payable	$ 208,055	$ 184,163
Loan from former chairman and president
Loan Payable
Amounts payable		78,919
Officer pursuant to employment agreement
Loan Payable
Amounts payable	153,055	50,244
Promissory note to officer
Loan Payable
Amounts payable	$ 55,000	$ 55,000

Amounts due to recorded owners or owners with a beneficial interest of more than 10 percent of the voting interests or officers of the company.

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 942
-SubTopic 210
-Section S99
-Paragraph 1
-Subparagraph (SX 210.9-03.15(4))
-URI http://asc.fasb.org/extlink&oid=6876686&loc=d3e534808-122878

Reference 2: http://www.xbrl.org/2003/role/presentationRef
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-Name Accounting Standards Codification
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-SubTopic 210
-Section S99
-Paragraph 1
-Subparagraph (SX 210.7-03.17)
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Reference 3: http://www.xbrl.org/2003/role/presentationRef
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-Name Accounting Standards Codification
-Topic 235
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-Paragraph 1
-Subparagraph (SX 210.4-08.(k)(1))
-URI http://asc.fasb.org/extlink&oid=6881521&loc=d3e23780-122690

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 850
-SubTopic 10
-Section 50
-Paragraph 1
-Subparagraph (d)
-URI http://asc.fasb.org/extlink&oid=6457730&loc=d3e39549-107864

Reference 5: http://www.xbrl.org/2003/role/presentationRef
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-Name Accounting Standards Codification
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-Section S99
-Paragraph 1
-Subparagraph (SX 210.6-04.12(a)(1))
-URI http://asc.fasb.org/extlink&oid=6488278&loc=d3e603758-122996

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 03
-Paragraph 15
-Subparagraph 4
-Article 9

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 03
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-Article 7

Reference 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 57
-Paragraph 2
-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 9: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 08
-Paragraph k
-Subparagraph 1
-Article 4

12. Notes payable (Details) - USD ($)	Dec. 31, 2012	Dec. 31, 2011
Notes Payable
Notes Payable	$ 4,004,103	$ 555,000
ProElite, Inc.
Notes Payable
Notes Payable	1,063,000	415,000
ShareholderMember
Notes Payable
Notes Payable	1,000,000
OnePartyMember
Notes Payable
Notes Payable	500,000
CompanysOutsideLawFirmMember
Notes Payable
Notes Payable	486,104
ThreeHoldersMember
Notes Payable
Notes Payable	350,000
NotesPayableElevenInvestors [Member]
Notes Payable
Notes Payable	275,000
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
UnsecuredNonInterestBearingMember
Notes Payable
Notes Payable		60,000
ShareholderTwoMember
Notes Payable
Notes Payable

14. Other (income)/expenses (Details) - USD ($)	12 Months Ended
14. Other (income)/expenses (Details) - USD ($)	Dec. 31, 2012	Dec. 31, 2011
Other (income)/expense, net	$ 379,188	$ (1,012,909)
Writeoff note related to Stratus White acquisition that related to items the Company did not receive in the acquisition and is past the state of limitations
Other (income)/expense, net		(1,000,000)
Reduction in liabilities related to Paul Feller that are no longer needed
Other (income)/expense, net	(346,974)
Reduction in accrued interest related to debt that has been repaid or settled
Other (income)/expense, net	(256,449)
Reduction in accrued interest related to preferred stock that has been converted to common stock
Other (income)/expense, net	(102,435)
Gain on negotiated settlement of account payable below book value
Other (income)/expense, net	(72,078)
Other income items
Other (income)/expense, net		(12,909)
Offset of receivable from Paul Feller from stock transactions
Other (income)/expense, net	538,515
Accrued estimated property damage that may be the Company's liability
Other (income)/expense, net	300,000
Estimated cost to settle dispute with vendor in Europe
Other (income)/expense, net	300,000
Other expense items, net
Other (income)/expense, net	$ 18,610

16. Shareholders' Equity (Details) - $ / shares	12 Months Ended
16. Shareholders' Equity (Details) - $ / shares	Dec. 31, 2012	Dec. 31, 2011
Stock Options
Estimated fair value of underlying common stock		$ 0.54
Remaining life	5 years	5 years
Risk-free interest rate		0.83%
Expected volatility		100.00%
Dividend yield
Minimum [Member]
Stock Options
Estimated fair value of underlying common stock	$ .35
Risk-free interest rate	0.69%
Expected volatility	80.00%
Maximum [Member]
Stock Options
Estimated fair value of underlying common stock	$ 0.38
Risk-free interest rate	0.80%
Expected volatility	89.00%

16. Shareholders' Equity (Details 1) - $ / shares	12 Months Ended
16. Shareholders' Equity (Details 1) - $ / shares	Dec. 31, 2012	Dec. 31, 2011
Options Outstanding
Beginning Balance	12,169,852	10,269,852
Cancelled		(3,110,000)
Granted		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 6 days	2 years 4 months 24 days
Granted	4 years 6 months	5 years
Ending Balance	3 years 3 months 18 days	3 years 2 months 6 days
Weighted Average Exercise Price
Beginning Balance	$ 0.49	$ 0.94
Cancelled
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	1,634,333	3,355,000
Ending Balance	5,731,023	8,757,684
Weighted Average Remaining Life in Years
Beginning Balance	3 years 2 months 6 days	2 years
Granted	4 years 6 months
Ending Balance	2 years 10 months 24 days	3 years 2 months 6 days
Weighted Average Exercise Price
Beginning Balance	$ 0.40	$ 0.94
Cancelled
Exercised
Granted	0.36	0.54
Ending Balance	0.48	$ 0.40
Minimum [Member]
Range of Exercise Prices
Granted	0.35
Maximum [Member]
Range of Exercise Prices
Granted	$ 0.38

16. Shareholders' Equity (Details 2) - $ / shares	12 Months Ended
16. Shareholders' Equity (Details 2) - $ / shares	Dec. 31, 2012	Dec. 31, 2011
Estimated fair value of underlying common stock		$ 0.54
Remaining life	5 years	5 years
Risk-free interest rate		0.83%
Expected volatility		100.00%
Dividend yield
Minimum [Member]
Estimated fair value of underlying common stock	$ .35
Risk-free interest rate	0.69%
Expected volatility	80.00%
Maximum [Member]
Estimated fair value of underlying common stock	$ 0.38
Risk-free interest rate	0.80%
Expected volatility	89.00%
Warrant [Member]
Remaining life	5 years
Dividend yield
Warrant [Member] \| Minimum [Member]
Estimated fair value of underlying common stock	$ 0.38
Risk-free interest rate	0.74%
Expected volatility	84.00%
Warrant [Member] \| Maximum [Member]
Estimated fair value of underlying common stock	$ 0.75
Risk-free interest rate	1.80%
Expected volatility	132.00%

16. Shareholders' Equity (Details 3)	Dec. 31, 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

16. Shareholders' Equity (Details 4) - $ / shares	12 Months Ended
16. Shareholders' Equity (Details 4) - $ / shares	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Warrants Outstanding
Beginning Balance	7,943,523	12,169,852	10,269,852
Granted		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 6 days	2 years 4 months 24 days
Granted	4 years 6 months	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 6 days	2 years
Granted	4 years 6 months
Warrant [Member]
Warrants Outstanding
Beginning Balance	132,285,242	59,530,245	2,472,676
Exercised
Ratchet-down impact	56,991,667
Granted	15,763,330	57,057,569
Ending Balance	132,285,242	59,530,245	2,472,676
Range of Exercise Prices
Beginning Balance Minimum	$ 0.65	$ 1.00
Beginning Balance Maximum	2.00	2.00
Exercised
Ratchet-down impact	0.30
GrantedMinimum	$ 0.30	0.65
GrantedMaximum	0.75	1.00
Ending Balance Minimum	0.30	0.65
Ending Balance Maximum	$ 2.00	$ 2.00
Weighted Average Remaining Life in Years
Beginning Balance	3 years 6 months	4 years 4 months 24 days
Granted	4 years 7 months 6 days	4 years 6 months
Ending Balance	3 years 6 months	3 years 6 months
Weighted Average Exercise Price
Beginning Balance	$ 0.40	$ 2.00	$ 1.37
Exercised
Ratchet-down impact	0.30
Granted	0.38	0.75
Ending Balance	$ 0.40	$ 2.00	$ 1.37
Warrants Exercisable
Beginning Balance	59,530,245	2,472,676
Exercised
Ratchet-down impact	56,991,667
Granted	10,388,330	57,057,569
Ending Balance	126,910,242	59,530,245
Weighted Average Remaining Life in Years
Beginning Balance	3 years 6 months	4 years 4 months 24 days
Granted	4 years 7 months 6 days	4 years 6 months
Ending Balance	3 years 6 months	3 years 6 months
Weighted Average Exercise Price
Beginning Balance	$ 2.00	$ 1.37
Exercised
Ratchet-down impact	0.30
Granted		0.75
Ending Balance	$ 0.38	$ 2.00

17. Commitments and contingencies (Details)	Dec. 31, 2012 USD ($)
Contractual Obligation
Total	$ 7,959,830
2013	7,376,923
2014	339,958
2015	242,949
2015 and Later
Notes payable
Contractual Obligation
Total	4,004,103
2013	4,004,103
2014
2015
2015 and Later
Rent obligations
Contractual Obligation
Total	1,260,645
2013	677,738
2014	339,958
2015	242,949
2015 and Later
Deferred Salary
Contractual Obligation
Total	1,152,933
2013	1,152,933
2014
2015
2015 and Later
Accrued interest
Contractual Obligation
Total	947,100
2013	947,100
2014
2015
2015 and Later
Employee Contracts: Salary
Contractual Obligation
Total	363,750
2013	363,750
2014
2015
2015 and Later
Employee Contracts: Other
Contractual Obligation
Total	231,299
2013	231,299
2014
2015
2015 and Later

19. Income taxes (Details)	Dec. 31, 2012 USD ($)
Income Taxes Details
Net operating loss carryforward	$ 18,050,294
Amortization	(580,145)
Stock option compensation	904,334
Deferred compensation	883,794
Deferred state tax	(477,307)
Other	449,209
Valuation allowance	(19,230,179)
Net deferred tax asset

19. Income taxes (Details 1) - USD ($)	Dec. 31, 2012	Dec. 31, 2011
Income Taxes Details
NOL Carryforwards Federal	$ 43,181,944	$ 35,361,835
NOL Carryforwards California	$ 40,714,060	$ 32,893,951

19. Income taxes (Details 2) - USD ($)	Dec. 31, 2012	Dec. 31, 2011
Income Taxes Details
Federal credit at statutory rate	$ (4,846,180)	$ (5,415,468)
State tax, net of Federal benefit	(782,767)	(926,363)
Change in valuation allowance	5,495,845	6,338,928
Other	133,102	2,903
Total provision
Federal credit at statutory rate Percent	166.75%	258.71%
State tax, net of Federal benefit Percent	26.93%	44.25%
Change in valuation allowance Percent	(189.11%)	(302.82%)
Other Percent	(4.58%)	(0.14%)
Total provision Percent	0.00%	0.00%

20. ProElite Inc (Details) - PEI Acquisition - USD ($)	12 Months Ended
20. ProElite Inc (Details) - PEI Acquisition - USD ($)	Dec. 31, 2012	Dec. 31, 2011
Business Acquisition [Line Items]
Revenues	$ 374,542	$ 829,476
Gross profit/(loss)	138,739	(1,479,134)
Loss from operations	(11,791,869)	(17,232,185)
Provision for income taxes
Gain/(loss) related to derviative liabilities	6,907,748	(7,188,864)
Net loss	$ (7,346,982)	$ (23,860,566)
Basic and diluted loss per share	$ (0.15)	$ (027)

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.