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Adjustment to Stockholders' Equity
12 Months Ended
Dec. 31, 2015
Equity [Abstract]  
Adjustment to Stockholders' Equity

Note 12 - Adjustment to Stockholders’ Equity

 

In September 2013, the Company engaged the services of a consultant or finder for the acquisition of S&G Holdings, Inc. (doing business as High Five Entertainment) (SG) (see Note 3). In December 2013, the acquisition of SG was completed, and as a result, the Company granted the consultant 400,000 shares of common stock for services rendered. The fair value of these shares was not recorded in 2013. The shares were issued in 2014.

 

As the acquisition was completed in December 2013, the Company determined that the appropriate treatment is to account for the 400,000 shares of common stock, with a fair value of $400,000 in December 2013. As such, the Company adjusted the previously reported balances in the Statement of Stockholders’ Equity (Deficit) as of December 31, 2013 to account for the fair value of the 400,000 shares of common stock.

 

The impact of this error was an overstatement of expenses and net loss for the three-month period ended March 31, 2014 and twelve-month period ended December 31, 2014, and an understatement of expenses for the three and twelve month periods ended December 31, 2013.

 

The Company assessed the materiality of this error on the three and twelve month ended periods ended December 31, 2013 in accordance with the SEC’s Staff Accounting Bulletin No. 99 (“SAB 99”) and concluded that the error was not material to either period. However, the Company did conclude that the error was material to the three-month period ended March 31, 2014 and twelve-month period ended December 31, 2014, as it affected the results for that period. Therefore, in accordance with the SEC’s Staff Accounting Bulletin No. 108 (“SAB 108”), the 2014 financial statements were revised in the 2015 Annual Report to correct for the immaterial error and to allow for the correct recording of this transaction in the 2013 consolidated financial statements.

 

The correction has been reflected in these consolidated financial statements for the year ended December 31, 2014 and resulted in a $400,000 decrease in expenses resulting in a $7,609,153 net loss ($0.12 per basic and diluted share).