2.	Basis of Presentation and Significant Accounting Policies

Basis of Presentation

The unaudited financial statements presented in this report represent the consolidation of RestorGenex Corporation and its consolidated subsidiaries.

The accompanying unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) applicable to interim financial statements. Accordingly, certain information related to significant accounting policies and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been condensed or omitted. These unaudited condensed consolidated financial statements reflect, in the opinion of management, all material adjustments (which include only normally recurring adjustments) necessary to fairly state, in all material respects, the Company’s financial position, results of operations and cash flows for the periods presented.

Operating results for interim periods are not necessarily indicative of the results that can be expected for any subsequent interim period or for a full year. These interim financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto included in its annual report on Form 10-K for the year ended December 31, 2014.

On June 18, 2015, the Company changed its state of incorporation from the State of Nevada to the State of Delaware.

Correction of Prior Period Misstatements

In the fourth quarter of 2014, the Company recorded certain adjustments for misstatements related to prior 2014 interim and prior annual periods that had been deemed immaterial. See Note 2 to the Company’s consolidated financial statements for the year ended December 31, 2014, included in the Company’s annual report on Form 10-K for the year ended December 31, 2014, for further information as to the nature of the adjustments recorded in the fourth quarter of 2014.

In the prior year presentation of research and development expenses for the three months ended June 30, 2014, the Company presented expenses of $403,413. Such amount included $169,332 of general and administrative expenses for the three month period ended June 30, 2014, which was included in research and development expenses in the period as a classification offset to the inclusion of $169,332 of research and development expenses in general and administrative expenses for the three month period ended March 31, 2014. The Company did not separately present research and development expenses in its condensed consolidated statements of operations for the three months ended March 31, 2014 as presented in the prior year. The inclusion of this $169,332 classification offset in the prior period presentation of research and development expenses for the three months ended June 30, 2014 was not appropriate, and represents an immaterial misstatement in the prior year. The prior year presentation of research and development expenses for the six month period ended June 30, 2014 was correct as presented. In the current period presentation of the condensed consolidated statements of operations for the three months ended June 30, 2014, this item has been corrected by decreasing research and development expenses and increasing general and administrative expenses by $169,332.

$2,706,105 of expense recognized in the three and six months ended June 30, 2014 condensed consolidated statements of operations from notes payable settlements was reclassified to “loss on settlement of notes payable – related parties” expenses for $1,829,562 and “loss on settlement of notes payable” expense for $876,543 in the current period condensed consolidated statements of operations presentation from “fair value of common stock exchanged for warrants and notes payable” expense in the prior period presentation. Furthermore, the presentation of these amounts in the current period presentation was moved to other expense from operating expenses reflecting the correction of an immaterial prior period misstatement related to the classification of losses on settlement of notes payable.

$186,470 and $238,129 of income tax benefit recognized in the three and six months ended June 30, 2014 was reclassified to benefit from income taxes in the current period condensed consolidated statements of operations from other (income) expense in the prior year presentation, representing the correction of a prior period immaterial misstatement related to the presentation of income tax benefit.

Reclassifications

Certain 2014 amounts were reclassified to conform to the manner of presentation in the current period. These reclassifications included:

$286,774 and $573,548 of amortization expense recognized in the three and six months ended June 30, 2014 condensed consolidated statements of operations from amortizing the prepaid expense asset for general financial advisory and investment banking services described in Note 4 to these condensed consolidated financial statements was reclassified to “general and administrative” expense in the current period condensed consolidated statements of operations presentation from “depreciation and amortization” expense where it was presented in the prior year. In the condensed consolidated statements of cash flows, the same amount was reclassified within the “cash flows used in operating activities” section from “depreciation and amortization” in the prior period presentation to “prepaid expenses, deposits and other assets” in the current period presentation.

$141,315 and $291,200 of expense recognized in the three and six months ended June 30, 2014 condensed consolidated statements of operations presentation from stock-based compensation and warrant expense described in Notes 9 and 10 to these condensed consolidated financial statements was reclassified to “general and administrative” ($108,490 and $258,375 for the three and six months ended June 30, 2014) and “research and development” ($32,825 for the three and six months ended June 30, 2014) in the current period condensed consolidated statements of operations presentation from “warrants, options and stock compensation” expense in the prior period presentation. In the condensed consolidated statements of cash flows, the same amount was reclassified within the “cash flows used in operating activities” section from “warrants, options and stock compensation” in the prior period presentation to “employee and director stock-based compensation – non-cash” in the amount of $291,200 in the current period presentation.

$384,604 and $516,290 of legal and professional services expense recognized in the three and six months ended June 30, 2014 condensed consolidated statements of operations was reclassified to “general and administrative” expense in the current period condensed consolidated statements of operations presentation from “legal and professional services” expense in the prior period presentation.

In the condensed consolidated statements of cash flows within net cash (used in) operating activities, $1,285,493 from loss on settlement of issuing shares for liabilities in the prior year presentation was reclassified to loss on settlement of note payable in the amount of $876,543 and accounts payable and accrued liabilities in the amount of $408,950 in the current year presentation.

Use of Estimates

The preparation of the Company’s condensed consolidated financial statements in accordance with U.S. GAAP requires the Company 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 the Company’s condensed consolidated financial statements and accompanying notes. Although these estimates are based on the Company’s knowledge of current events and actions that the Company may undertake in the future, actual results may differ from such estimates and assumptions.

Income Taxes

The Company has no current tax provision due to its current and accumulated losses, which result in net operating loss carryforwards. The Company’s deferred tax liability relates to indefinite lived intangible assets. See Note 18 to the Company’s consolidated financial statements for the year ended December 31, 2014 included in the Company’s annual report on Form 10-K for the year ended December 31, 2014.

Comprehensive Income (Loss)

The Company does not have items of other comprehensive income (loss) for the three and six months ended June 30, 2015 or June 30, 2014; and therefore, comprehensive loss equals net loss for those periods.

Recently Issued Accounting Pronouncements

In April 2014, the Financial Accounting Standards Board (the “FASB”) issued guidance that changes the criteria for determining which disposals can be presented as discontinued operations and modifies related disclosure requirements. Under the new guidance, a discontinued operation is defined as a component or group of components that is disposed of or is classified as held for sale and represents a strategic shift that has or will have a major effect on an entity’s operations and financial results. The change is effective for fiscal years, and interim reporting periods within those years, beginning on or after December 15, 2014, which means the Company’s first quarter of 2015, with early adoption permitted. The guidance applies prospectively to new disposals and new classifications of disposal groups as held for sale after the effective date. The adoption of this new guidance did not affect the Company’s consolidated financial position, results of operations or cash flows.

In May 2014, the FASB issued Accounting Standards Update (“ASU”) 2014-09, “

Revenue from Contracts with Customers

(Accounting Standards Codification (“ASC”) Topic 606).” In July 2015, the FASB deferred the effective date of ASU 2014-09 by one year. The core principle

of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve that core principle, an entity should apply the following steps:

Step 1: Identify the contract(s) with a customer.

Step 2: Identify the performance obligation in the contract.

Step 3: Determine the transaction price.

Step 4: Allocate the transaction price to the performance obligations in the contract.

Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation.

For public entities, ASU 2014-09 is now effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. Early adoption is permitted as of January 1, 2017. Entities have the option of applying either a full retrospective approach or a modified approach to adopt the guidance in ASU 2014-09. The Company is evaluating the potential impact of adoption of this ASU on its consolidated financial statements.

In August 2014, the FASB issued ASU 2014-15,

Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern

(“ASU 2014-15”). This pronouncement provides additional guidance surrounding the disclosure of going concern uncertainties in the financial statements and implementing requirements for management to perform interim and annual assessments of an entity’s ability to continue as a going concern within one year of the date the financial statements are issued. The Company will adopt this guidance as of January 1, 2016. The Company does not anticipate that the adoption of this guidance will result in additional disclosures; however, management will begin performing the periodic assessments required by ASU 2014-15 on its effective date.