v2.4.0.6
RESTATEMENT OF FINANCIAL STATEMENTS (Tables)
3 Months Ended
Mar. 31, 2013
RESTATEMENT OF FINANCIAL STATEMENTS [Abstract]  
Restatement of financial statements

In connection with the audit of the Company's financial statements for the fiscal year ended December 31, 2012, adjustments were made to the Company's equity accounting for certain first quarter 2012 transactions. The effects of these adjustments were included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2012, as filed with the Commission. The financial statements for the quarter ended March 31, 2012 has been restated to include the effects of these adjustments. The following details the effects of the changes on the statement of operations and comprehensive loss and statement of cash flows for the quarter ended March 31, 2012:

 

    Three Months
Ended 
March 31, 2012
    Adjustment     Three Months
Ended
March 31, 2012
(As Restated)
 
                         
 Net Revenues   $ 74,810     $ -     $ 74,810  
                         
Operating Expenses                        
Cost of revenues     100,585       -       100,585  
 Business development     185,519       -       185,519  
    General and administrative     1,641,516       2,140,001       3,781,517  
 Product development     50,711       -       50,711  
 Depreciation and amortization     68,663       -       68,663  
 Total operating expenses     2,046,994       2,140,001       4,186,995  
             Loss from operations     (1,972,184 )     (2,140,001 )     (4,112,185 )
                         
Non-operating expense                        
Interest income (expense)     (72,674 )     -       (72,674 )
Other income (expense)     (411,225 )     -       (411,225 )
Loss before income tax provision     (2,456,083 )     (2,140,001 )     (4,596,084 )
Income tax provision     -       -       -  
Net Loss from operations     (2,456,083 )     (2,140,001 )     (4,596,084 )
Net loss attributable to                        
   the noncontrolling interest     72,088       -       72,088  
Net loss   $ (2,383,995 )   $ (2,140,001 )   $ (4,523,996 )
                         
Other comprehensive income                        
Foreign currency translation gain     100       -       100  
Comprehensive loss   $ (2,383,895 )   $ (2,140,001 )   $ (4,523,896 )
                         
Net loss per share - basic and diluted   $ (0.00 )   $ (0.00 )   $ (0.01 )
                         
Weighted average number of common shares                        
outstanding - basic and diluted     752,792,562       752,792,562       752,792,562  

 

The adjustment of $2,140,001 is comprised of $1,333,334 in non-cash compensation expense related to a subscription agreement entered into with one of our current directors, Kenges Rakishev, pursuant to which shares of common stock were sold to Mr. Rakishev below the market price at the time of sale and $806,667 in non-cash compensation expense related to a subscription agreement entered into with one of our current directors, Felix Vulis, pursuant to which shares of common stock and warrants were sold to Mr. Vulis below the market price at the time of sale.

 

                Three Months  
    Three Months           Ended  
    Ended           3/31/2012  
    March 31, 2012     Adjustment     (As Restated)  
Cash flows from operating activities:                        
Net loss   $ (2,383,995 )   $ (2,140,001 )   $ (4,523,996 )
Adjustments to reconcile net loss to net                        
cash used in operating activities:                        
Loss attributable to Investment in Subsidiary     411,225       -       411,225  
Decrease in noncontrolling interests     (72,088 )     -       (72,088 )
Loan discount interest expense     2,859       -       2,859  
Depreciation and amortization     68,663       -       68,663  
Non-cash compensation     521,771       2,140,001       2,661,772  
                         
Changes in assets and liabilities, net of acquisitions                        
and the effect of consolidation of equity affiliates:                        
Prepaid expenses and other assets     (8,994 )     -       (8,994 )
Contract receivable, net     346       -       346  
Accounts payable     160,278       -       160,278  
Accrued expenses     23,923       -       23,923  
Total adjustments     1,107,983       2,140,001       3,247,984  
Net cash used in operating activities     (1,276,012 )     -       (1,276,012 )
                         
Cash flows from investing activities                        
Capitalized web development and patent costs     (168,738 )     -       (168,738 )
Purchase of fixed assets     (21,886 )     -       (21,886 )
Net cash used in investing activities     (190,624 )     -       (190,624 )
                         
Cash flows from financing activities:                        
Due from related parties     (46,492 )     -       (46,492 )
Contributed capital from non-controlling equity investors     2,140,000       -       2,140,000  
Payments on related party note     (75,000 )     -       (75,000 )
Net cash provided by financing activities     2,018,508       -       2,018,508  
                         
Effect of exchange rate changes on cash     100       -       100  
Net increase (decrease) in cash     551,972       -       551,972  
                         
Cash at beginning of period     83,173       -       83,173  
Cash at end of period   $ 635,145     $ -     $ 635,145