XML 18 R24.htm IDEA: XBRL DOCUMENT
v2.4.0.8

19. Subsequent Events | 9 Months Ended
--- | ---
Sep. 30, 2013
Subsequent Events [Abstract] |
NOTE 19 - Subsequent Events | Effective September 30, 2013, Stratus entered into a Merger Agreement with Canterbury Acquisition LLC, a wholly owned subsidiary of the Company (“Canterbury Merger Sub”), Hygeia Acquisition, Inc., a wholly owned subsidiary of the Company (“Hygeia Merger Sub”), Canterbury Laboratories, LLC (“Canterbury”), Hygeia Therapeutics, Inc. (“Hygeia”) and Yael Schwartz, Ph.D., as Holder Representative, pursuant to which Stratus will acquire all of the capital stock of Canterbury and Hygeia (the “Mergers”) with Canterbury and Hygeia becoming wholly owned subsidiaries of Stratus. The consideration for the Mergers will be the issuance by Stratus of an aggregate of 115,011,563 restricted shares of Stratus common stock to be issued to the stakeholders of Canterbury and Hygeia. The Mergers were closed on November 18, 2013, resulting in a value of $4,933,996 for the 115,011,563 shares to be issued for the Mergers based on the closing market price of $0.0429 on that date. An independent valuation firm has been engaged by the Company to value the assets being acquired through the Merger. While this valuation has not been finalized, a valuation has been performed by the Company which indicates that the entire fair value of $4,933,996 for the Mergers will be allocated to the Yale License with no goodwill. The Company expects that the independent valuation will verify this allocation, although there can be no certainty that this will be the case. The Mergers are subject to rescission if Stratus has not raised $7.5 million or more in gross financing proceeds by January 15, 2014. The Mergers are part of the Company’s plan to enter new businesses through acquisitions. If the Mergers had occurred on January 1, 2013, the combined statement of operations for the nine months ended September 30, 2013 would be as follows:
|  | Nine Months Ended September 30, 2013 (unaudited) |
|  | Stratus Media |  |  | Hygeia/Canterbury |  |  | Pro Forma |  |  | Pro Forma Stratus, Canterbury |
|  | Group, Inc. |  |  | Combined |  |  | Adjustments |  |  | & Hygeia |
Revenues |  | $ | 71,667 |  |  | $ | 127,167 |  |  | $ | – |  |  | $ | 198,834 |
Cost of revenues |  |  | – |  |  |  | 89,387 |  |  |  | – |  |  |  | 89,387 |
Gross profit |  |  | 71,667 |  |  |  | 37,780 |  |  |  | – |  |  |  | 109,447 |
Operating expenses |  |  | 12,045,616 |  |  |  | 594,059 |  |  |  | 695,486 | (a) |  |  | 13,335,161 |
Loss from operations |  |  | (11,973,949 | ) |  |  | (556,279 | ) |  |  | (695,486 | ) |  |  | (13,225,714 | )
Other (income)/expenses |  |  | (10,291,317 | ) |  |  | 20,267 |  |  |  | – |  |  |  | (10,271,050 | )
Net loss attributed to non-controlling interests |  |  | 28,065 |  |  |  | – |  |  |  | – |  |  |  | 28,065 |
Preferred dividends |  |  | 171,625 |  |  |  | – |  |  |  | – |  |  |  | 171,625 |
Net loss attributable to Stratus Media Group common shareholders |  | $ | (1,826,192 | ) |  | $ | (576,546 | ) |  | $ | (695,486 | ) |  | $ | (3,098,224 | )
Basic and diluted earnings per share |  | $ | (0.01 | ) |  |  |  |  |  |  |  |  |  | $ | (0.01 | )
Basic and fully-diluted weighted average shares outstanding |  |  | 264,660,276 |  |  |  |  |  |  |  | 115,011,563 | (b) |  |  | 379,671,839 |
__________________________
(a) | Represents $340,007 for additional salaries and related taxes that would be due under employment contracts for two officers for nine months ended September 30, 2013 and $355,479 amortization of the $4,993,996 value for Yale License that is amortized over the remaining average 132 month life of the patents.
(b) | Represents shares issued for Mergers with Canterbury and Hygeia.
If the Mergers had occurred on January 1, 2012, the combined statement of operations for the nine months ended September 30, 2012 would be as follows:
|  | Nine Months Ended September 30, 2012 (unaudited) |
|  |  |  |  |  |  |  |  |  |  | Pro Forma |
|  | Stratus Media |  |  | Hygeia/Canterbury |  |  | Pro Forma |  |  | Stratus, Canterbury |
|  | Group, Inc. |  |  | Combined |  |  | Adjustments |  |  | & Hygeia |
Revenues |  | $ | 374,542 |  |  | $ | 80,245 |  |  | $ | – |  |  | $ | 454,787 |
Cost of revenues |  |  | 235,803 |  |  |  | 38,505 |  |  |  | – |  |  |  | 274,308 |
Gross profit |  |  | 138,739 |  |  |  | 41,740 |  |  |  | – |  |  |  | 180,479 |
Operating expenses |  |  | 8,359,830 |  |  |  | 196,070 |  |  |  | 702,547 | (a) |  |  | 9,258,447 |
Loss from operations |  |  | (8,221,091 | ) |  |  | (154,330 | ) |  |  | (702,547 | ) |  |  | (9,077,968 | )
Other (income)/expenses |  |  | 14,576,565 |  |  |  | – |  |  |  | – |  |  |  | 14,576,565 |
Net loss attributed to non-controlling interests |  |  | 5,951 |  |  |  | – |  |  |  | – |  |  |  | 5,951 |
Preferred dividends |  |  | 365,417 |  |  |  | – |  |  |  | – |  |  |  | 365,417 |
Net loss attributable to Stratus Media Group common shareholders |  | $ | (23,157,122 | ) |  | $ | (154,330 | ) |  | $ | (702,547 | ) |  | $ | (24,013,999 | )
Basic and diluted earnings per share |  | $ | (0.01 | ) |  |  |  |  |  |  |  |  |  | $ | (0.12 | )
Basic and fully-diluted weighted average shares outstanding |  |  | 89,220,298 |  |  |  |  |  |  |  | 115,011,563 | (b) |  |  | 204,231,861 |
__________________________
(a) | Represents $347,068 for additional salaries and related taxes that would be due under employment contracts for two officers for nine months ended September 30, 2013 and $355,479 amortization of the $4,993,996 value for Yale License that is amortized over the remaining average 132 month life of the patent.
(b) | Represents shares issued for Mergers with Canterbury and Hygeia.
On October 4, 2013, the Company and Histogen, Inc. (“Histogen”) executed a non-binding letter of intent pursuant to which the Company agreed to acquire all of the capital stock of Histogen for 350,000,000 pre-reverse split shares of the Company’s common stock. Discussions regarding this potential acquisition have halted and the Company does not intend to further pursue this potential acquisition. In connection with the acquisition of Canterbury/Hygeia and the ongoing efforts to convert the Company’s liabilities into common stock, the Company intends to conduct private placements of its securities (the “Private Placements”) requiring the issuance of additional shares of common stock and/or securities convertible into or exercisable for common shares. On October 31, 2013, the Company filed a preliminary Information Statement on Form 14C to notify stockholders that stockholders holding a majority of the voting power of the common stock of the Company have executed a written consent in lieu of a meeting to approve an amendment to our articles of incorporation to approve a reverse split of the Company’s outstanding common stock at a ratio of between 1-for-50 and 1-for-100, based on the decision of the Company’s board of directors given the facts and circumstances in effect at that time. Based on the number of shares of common stock outstanding as of the record date of October 15, 2013, there will be a reduction in the number of outstanding common shares to a range of approximately 4,223,000 shares to 8,446,000 shares, depending on the stock split ratio determined by the board as mentioned above, before giving effect to the issuance of common shares from the Canterbury/Hygeia acquisitions, any additional acquisitions and the Private Placements. On November 1, 2013, the Company filed a Report on Form 8-K to report that effective November 1, 2013, Sol J. Barer, Ph.D. and Isaac Blech were elected by the Company’s board of directors (the “Board”) as new directors. Dr. Barer was also named Chairman of the Board and Mr. Blech was named Vice Chairman of the Board. Dr. Barer and Mr. Blech have also been appointed to serve on the Company’s Audit and Compensation Committees. Their compensation as board members has not yet been determined. Also effective November 1, 2013, Jerold Rubinstein resigned as Chairman of the Board but remains as Chairman of the Board’s Audit Committee and Chief Executive Officer. In January 2013, the Company signed a term sheet (“Term Sheet”) with an outside financial firm (“Financial Firm”) to have the Financial Firm acquire certain portions of the Company’s liabilities to creditors, employees and former employees (“Creditors”) in exchange for common stock. The Financial Firm entered into agreements in July 2013 with such Creditors to acquire $1,865,386 of liabilities and filed a complaint on July 29, 2013 with the Second Judicial Circuit, Leon County, Florida seeking a judgment against the Company for this amount. A court order based on this complaint was issued on October 7, 2013, resulting in the transfer of these $1,865,386 million of liabilities to the Financial Firm (see Footnote 4 for additional information). Subsequent to September 30, 2013, the Company entered into agreement with holders of $225,000 of promissory notes to extinguish those notes in exchange for the issuance of 3,750,000 shares of common stock. If the transfer of $1,865,386 of liabilities to the Financial Firm and the exchange of 3,750,000 shares of common stock for $225,000 of promissory notes had occurred on September 30, 2013, the following would be the pro forma change in the Consolidated Balance Sheets and Consolidated Statements of Operations:
|  |  |  |  | Pro Forma Impact of |  |  |  |
|  |  |  |  |  |  |  | Reduction |  |  |  |  |  | Pro Forma |
|  | As Reported for |  |  | Transfer of |  |  | of Rent |  |  | Note |  |  | Adjusted for |
|  | September 30, 2013 |  |  | Liabilities |  |  | Accrual |  |  | Conversion |  |  | September 30, 2013 |
Current liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Accounts payable |  | $ | 1,540,706 |  |  | $ | (764,172 | ) |  | $ | – |  |  | $ | – |  |  | $ | 776,534 |
Deferred salary |  |  | 1,425,365 |  |  |  | (1,000,514 | ) |  |  | – |  |  |  | – |  |  |  | 424,851 |
Accrued interest |  |  | 207,593 |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | 207,593 |
Other accrued expenses and liabilities |  |  | 2,350,011 |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | 2,350,011 |
Payable to officer and former officer |  |  | 211,358 |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | 211,358 |
Rent liability for facilities no longer occupied |  |  | 1,260,644 |  |  |  | (100,700 | ) |  |  | (38,449 | ) |  |  | – |  |  |  | 1,121,495 |
Notes payable |  |  | 2,575,002 |  |  |  | – |  |  |  | – |  |  |  | (225,000 | ) |  |  | 2,350,002 |
Total current liabilities |  | $ | 9,570,679 |  |  | $ | (1,865,386 | ) |  | $ | (38,449 | ) |  | $ | (225,000 | ) |  | $ | 7,441,844 |
Shareholder's deficit |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Common stock |  |  | 420,966 |  |  |  | 20,727 |  |  |  | – |  |  |  | 3,750 |  |  |  | 445,443 |
Additional paid-in capital |  |  | 53,237,549 |  |  |  | 2,217,736 |  |  |  | – |  |  |  | 401,250 |  |  |  | 55,856,535 |
Accumulated Deficit |  |  | (59,966,621 | ) |  |  | (373,077 | ) |  |  | 38,449 |  |  |  | (180,000 | ) |  |  | (60,481,249 | )
Total Stratus shareholder's deficit |  |  | (6,308,106 | ) |  |  | 1,865,386 |  |  |  | 38,449 |  |  |  | 225,000 |  |  |  | (4,179,271 | )
Non-controlling interest deficit |  |  | (28,065 | ) |  |  | – |  |  |  | – |  |  |  | – |  |  |  | (28,065 | )
Total shareholder's deficit |  |  | (6,336,171 | ) |  |  | 1,865,386 |  |  |  | 38,449 |  |  |  | 225,000 |  |  |  | (4,207,336 | )
Total liabilities and shareholder's deficit |  | $ | 3,234,508 |  |  | $ | – |  |  | $ | – |  |  | $ | – |  |  | $ | 3,234,508 |
|  |  |  |  | Pro Forma Impact of |  |  | Pro Forma |
|  | As Reported for |  |  |  |  |  | Reduction |  |  |  |  |  | Adjusted for |
|  | 3 Months Ended |  |  | Transfer of |  |  | of Rent |  |  | Note |  |  | 3 Months Ended |
|  | September 30, 2013 |  |  | Liabilities |  |  | Accrual |  |  | Conversion |  |  | September 30, 2013 |
Loss from operations |  | $ | (1,555,152 | ) |  | $ | – |  |  | $ | – |  |  | $ | – |  |  | $ | (1,555,152 | )
Other (income)/expenses |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Other (income)/expenses |  |  | (51,444 | ) |  |  | 373,077 |  |  |  | (38,449 | ) |  |  | 180,000 |  |  |  | 463,184 |
Interest expense |  |  | 35,203 |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | 35,203 |
Total other (income)/expenses |  |  | (16,241 | ) |  |  | 373,077 |  |  |  | (38,449 | ) |  |  | 180,000 |  |  |  | 498,387 |
Net loss/(income) |  |  | (1,538,911 | ) |  |  | (373,077 | ) |  |  | 38,449 |  |  |  | (180,000 | ) |  |  | (2,053,539 | )
Net loss attributed to non-controlling interests |  |  | 13,634 |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | 13,634 |
Net loss attributed to Stratus Media Group common shareholders |  | $ | (1,525,277 | ) |  | $ | (373,077 | ) |  | $ | 38,449 |  |  | $ | (180,000) |  |  | $ | (2,039,905 | )
|  |  |  |  | Pro Forma Impact of |  |  | Pro Forma |
|  | As Reported for |  |  |  |  |  | Reduction |  |  |  |  |  | Adjusted for |
|  | 9 Months Ended |  |  | Transfer of |  |  | of Rent |  |  | Note |  |  | 9 Months Ended |
|  | September 30, 2013 |  |  | Liabilities |  |  | Accrual |  |  | Conversion |  |  | September 30, 2013 |
Loss from operations |  | $ | (11,973,949 | ) |  | $ | – |  |  | $ | – |  |  | $ | – |  |  | $ | (11,973,949 | )
Other (income)/expenses |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
(Gain)/loss on adjustments to fair value of derivative liability |  |  | (8,980,077 | ) |  |  | – |  |  |  | – |  |  |  | – |  |  |  | (8,980,077 | )
Gain on extinguishment of derivative liability |  |  | (1,409,530 | ) |  |  | – |  |  |  | – |  |  |  | – |  |  |  | (1,409,530 | )
Other (income)/expenses |  |  | (54,498 | ) |  |  | 373,077 |  |  |  | (38,449 | ) |  |  | 180,000 |  |  |  | 460,130 |
Interest expense |  |  | 152,788 |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | 152,788 |
Total other (income)/expenses |  |  | (10,291,317 | ) |  |  | 373,077 |  |  |  | (38,449 | ) |  |  | 180,000 |  |  |  | (9,776,689 | )
Net income/(loss) |  |  | (1,682,632 | ) |  |  | (373,077 | ) |  |  | 38,449 |  |  |  | (180,000) |  |  |  | (2,197,260 | )
Net loss attributed to non-controlling interests |  |  | 28,065 |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | 28,065 |
Net income/(loss) attributed to Stratus Media Group |  |  | (1,654,567 | ) |  |  | (373,077 | ) |  |  | 38,449 |  |  |  | (180,000) |  |  |  | (2,169,195 | )
Preferred dividends |  |  | 171,625 |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | 171,625 |
Net income/(loss) attributable to Stratus Media Group common shareholders |  | $ | (1,826,193 | ) |  | $ | (373,077 | ) |  | $ | 38,449 |  |  | $ | (180,000 | ) |  | $ | (2,340,821 | )
With regard to the rent liability for facilities no longer occupied, the landlord for one lease agreed to accept $100,700 in full settlement of a liability that was recorded at $139,149 on the Company’s balance sheet, resulting in an additional reduction of rent liability for facilities no longer occupied of $38,449.

X
- Details
Name: | us-gaap_SubsequentEventsAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for significant events or transactions that occurred after the balance sheet date through the date the financial statements were issued or the date the financial statements were available to be issued. Examples include: the sale of a capital stock issue, purchase of a business, settlement of litigation, catastrophic loss, significant foreign exchange rate changes, loans to insiders or affiliates, and transactions not in the ordinary course of business. + References No definition available. + Details
Name: | us-gaap_SubsequentEventsTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration