21. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

12 Months Ended

Dec. 31, 2014

Quarterly Financial Information Disclosure [Abstract]

21. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

The following is a summary of unaudited quarterly statements of earnings (loss) for the years ended December 31, 2014 and 2013:

2014	March			June			September		December			Year
Revenues		4,138,540.00			11,287,723.00			15,901,907.00		12,147,609.00			43,475,779.00
(Loss) earnings before income taxes		(86,411,460.00	)		(24,903,965.00	)		45,171,054.00		(336,969,185.00	)		(403,113,556.00	)
Net (loss) earnings		(86,411,460.00	)		(367,138.00	)		41,415,402.00		(336,211,762.00	)		(381,574,958.00	)
Net (loss) earnings per share:
Basic	$	(20.38	)	$	(0.07	)	$	7.65	$	(64.37	)	$	(73.06	)
Diluted	$	(20.38	)	$	(0.07	)	$	6.15	$	(64.37	)	$	(73.06	)

Fourth Quarter Adjustments:

During the fourth quarter of 2014, certain events, transactions and economic circumstances resulted in significant adjustments that affected our reported net loss which are summarized as follows:

	Approximate  Amounts  (Millions)
Operating results:
Impairment losses on goodwill and other intangible assets primarily in connection with FIN and Vapestick reporting units	$	135.4
Sales returns, allowances and other customer concessions, credits and price adjustments in connection with FIN acquisition		3.4
Inventory write-downs and disposition		5.2
	$	144.0
Non-operating results:
Fair value adjustments to warrant and derivative liabilities	$	160.0

Operating Expenses

Management believes none of the operating expense amounts are reasonably attributable to previous quarters because the underlying economic factors were not identifiable until the fourth quarter, including declines in the Company’s common stock values which are a significant factor in determining the valuation estimates related to impairment losses and which are an inherent input to the models used to mark-to-market the warrant and embedded derivative liabilities. Because of the significant numbers of warrants and derivatives we have issued in connection with our convertible debt financings, our financial performance has been, and will continue to be, subject to relatively high levels of volatility.

Sales Returns, Allowances and Other Customer Concessions

The e-cigarette segment experienced dramatic change in the United States over the last year. This included the shift in consumer preference from first generation “cigalike” products to vaping products such as refillable liquid and closed vaping systems. As a result, the Company worked with its retail trade partners via pricing incentives, promotional activities and other efforts to facilitate the sales of these slower moving products. The costs associated with these activities amounted to $3.4 million in the fourth quarter.

Inventory Write-Downs and Disposition

The Company entered into an agreement to exchange older slow moving inventory with a third party for media credits which could be used to promote ECIG products. The inventory exchanged for media had a carrying value of approximately $4.5 million. In addition, the Company wrote down $700 thousand in slow moving products not included in the exchange agreement.