10-Q

FORM 10-Q

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

x   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For Quarter Ended September 30, 2013

OR

¨   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period from _______ to _______

Commission file number 0-3338

INERGETICS, INC.

(Exact Name of Registrant as Specified in its Charter)

Delaware	22-1558317
(State or other Jurisdiction of	(IRS Employer
Incorporation or Organization)	Identification No.)

  550 Broad Street, Suite 1212, Newark, NJ 07102

(Address of Principal Executive Office)  (Zip Code)

(908) 604-2500

(Registrant’s telephone number including area code)

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.

Yes   x           No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes   x             No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ¨	Accelerated filer ¨
Non-accelerated filer ¨	Smaller reporting company x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes  ¨ No   x  

As of November 12, 2013, 61,850,448 shares of Common Stock, $0.001 par value.

INERGETICS, INC. AND SUBSIDIARY

INDEX

	Page
	Number
PART  1  -  FINANCIAL INFORMATION
Item 1 Financial Statements (unaudited):
Condensed Consolidated Balance Sheets - September 30, 2013 and December 31, 2012	3
Condensed Consolidated Statements of Operations - Three and nine months ended September 30, 2013 and 2012	4
Condensed Consolidated Statements of Cash Flows - Nine months ended September 30, 2013 and 2012	5
Notes to Condensed Consolidated Financial Statements	6 – 14
Item 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
Item 3 Quantitative and Qualitative Disclosures about Market Risk	17
Item 4 Controls and Procedures	18
PART II  -  OTHER INFORMATION	19
Item 1  Legal Proceedings	19
Item 1A. Risk Factors	19
Item 2  Unregistered Sales of Equity Securities and Use of Proceeds	19
Item 3  Defaults Upon Senior Securities	19
Item 4  Mine Safety Disclosures	19
Item 5  Other Information	19
Item 6  Exhibits	20
SIGNATURES	21

2

 

PART I - Item 1

INERGETICS, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

	September 30,		December 31,
	2013		2012
Assets
Current Assets:
Cash	$	975,062	$	8,846
Accounts receivable, net		844,321		-
Receivable from the Technology Business Tax Certificate Transfer Program		-		2,209,715
Deferred cost of goods sold		607,806		-
Inventories, net		320,911		4,176
Prepaid expenses		598,524		522,041
Total Current Assets		3,346,624		2,744,778
Patents, net		4,511		4,942
Intangible assets, net		145,274		-
Goodwill		135,000		-
Deposits		424,165		2,299
Total Assets	$	4,055,574	$	2,752,019
Liabilities and Stockholders’ Deficit
Current Liabilities:
Accounts payable and accrued expenses	$	4,547,201	$	2,846,181
Deferred Revenue		1,358,186		-
Obligations to be settled in stock		695,309		564,500
Customer Prepayments		-		39,970
Derivative liability		163,000		227,000
Short-term debt, net of debt discount		1,282,979		1,144,375
Short-term debt – related parties, net of debt discount		4,105,606		2,441,622
Total Current Liabilities		12,152,281		7,263,648
Long-term debt, net of debt discount		63,889		39,584
		12,216,170		7,303,232
Commitments and Contingencies
Preferred stock, Convertible Series G, authorized 200,000, par $1, stated Value $50:     182,158 and 150,938 shares issued and outstanding		8,306,843		7,147,465
Stockholders’ Deficit
Preferred stock:
Convertible Series B, par value $2; 65,141 shares issued and outstanding		130,282		130,282
Cumulative Series C, par value $1; 64,763 shares issued and outstanding		64,763		64,763
Convertible Series D, par value $1; 0 shares issued and outstanding		-		-
Convertible Series E, par value$1; 0 shares issued and outstanding		-		-
Convertible Series F, par value $1; 0 shares issued and outstanding		-		-
Common stock, par value $0.001; authorized 2,000,000,000 shares; issued and     outstanding 59,594,996 and 48,707,103 shares, respectively		59,595		48,708
Additional paid-in capital		69,025,650		68,606,679
Accumulated Deficit		(85,747,729)		(80,549,110)
Total Stockholders’ Deficit		(16,467,439)		(11,698,678)
Total Liabilities and Stockholders’ Deficit	$	4,055,574	$	2,752,019

The accompanying notes are an integral part of the condensed consolidated financial statements.

3

 

INERGETICS, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2013		2012		2013		2012
Total Revenues	$	203,348	$	9,199	$	276,790	$	30,381
Cost of Goods Sold		228,117		6,993		283,362		20,396
		(24,769)		2,206		(6,572)		9,985
Research and development cost		5,807		-		5,807		45,578
Selling, general and administrative expenses		2,209,577		1,212,990		4,468,260		3,620,571
Total operating expenses		2,215,384		1,212,990		4,474,067		3,666,149
Loss from Operations		(2,240,153)		(1,210,784)		(4,480,639)		(3,656,164)
Other Income (Expense)
Amortization of debt discount		(165,271)		(64,181)		(247,403)		(180,042)
Gain on extinguishment of debt		-		-		46,978		-
Loss from warrants / derivatives issued with debt greater     than debt carrying value		-		-		-		(736,000)
Gain on fair market valuation of derivatives		100,000		122,000		64,000		588,000
Interest and financing cost, net		(376,747)		(183,574)		(576,056)		(471,881)
Total Other Income (Expense)		(442,018)		(125,755)		(712,481)		(799,923)
Loss before Provision for Income taxes		(2,682,171)		(1,336,539)		(5,193,120)		(4,456,087)
Provision for Income Taxes		(1,500)		-		(5,499)		-
Net loss		(2,683,671)		(1,336,539)		(5,198,619)		(4,456,087)
Preferred Dividend		(374,900)		(312,150)		(1,118,800)		(739,450)
Net Loss applicable to common shareholders	$	(3,058,571)	$	(1,648,689)	$	(6,317,419)	$	(5,195,537)
Net Loss per Common Share Basic and Diluted	$	(0.05)	$	(0.04)	$	(0.12)	$	(0.15)
Weighted Average Number of Common Shares Outstanding –     Basic And Diluted		58,692,339		41,480,080		53,365,095		35,477,027

The accompanying notes are an integral part of the condensed consolidated financial statements.

4

INERGETICS, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	For the Nine Months Ended September 30,
	2013		2012
Cash Flows from Operating Activities
Net Loss	$	(5,198,619)	$	(4,456,087)
Adjustments to Reconcile Net Loss to
Net Cash Used In Operations
(Gain) on fair market valuation of derivatives		(64,000)		(588,000)
Depreciation and amortization		1,158		432
Common Stock issued for financing expenses		16,026		150,226
Preferred Stock issued for financing expenses		-		96,000
Common Stock issued for services		269,600		136,700
Common stock issued for compensation		450,600		-
Amortization of Prepaid expenses paid for in stock		-		2,087,035
Gain on extinguishment of debt		(46,978)		-
Loss on issuance of convertible debt and warrants		-		736,000
Accretion of debt discount		247,403		180,042
Warrants issued for compensation		73,800		-
Change in inventory and receivables reserve		-		2,700
Changes in Assets and Liabilities
(Increase) in accounts receivable		(844,321)		(362)
Decrease in receivable from Technology Business Tax Certificate Transfer Program		2,209,715		-
(Increase) Decrease in inventories		(316,735)		76,135
(Increase) in deferred cost of goods sold		(607,806)		-
Decrease in prepaid expenses		239,837		150,213
(Increase) of intangible assets		(41,000)		-
(Increase) in deposits		(421,866)		-
Increase in accounts payable and accrued expenses		1,701,020		519,409
Increase in deferred Revenue		1,358,186		-
(Decrease) in customer deposits		(39,970)		-
Net Cash Used In Operating Activities		(1,013,950)		(909,557)
Cash Flows from Investing Activities
Acquisition of business		(100,000)		-
Net Cash Used in Investing Activities		(100,000)		-
Cash Flows from Financing Activities
Proceeds from debt		3,331,688		810,000
Proceeds from Preferred stock		-		135,000
Repayment of debt		(1,251,522)		(35,000)
Net Cash Provided by Financing Activities		2,080,166		910,000
Net Increase in Cash		966,216		443
Cash at beginning of period		8,846		2,517
Cash at end of period	$	975,062	$	2,960
Supplemental Disclosure of Cash Flow information:
Cash paid during the period for:
Interest Expense	$	85,575	$	-
Income Taxes	$	5,499	$	-
Non-cash
Convertible Preferred Stock G issued for prepaid services (20,500 shares)	$	-	$	1,045,250
Common Stock issued for prepaid services (8,037,500 shares)	$	-	$	1,902,451
Issuance of G shares as Preferred dividend (22,376 and 14,789 shares)	$	1,118,800	$	739,450
Change in liability of stock to be Issued	$	130,809	$	217,000
Issuance of G shares for Business Acquisition	$	140,000	$	-
Common stock issued for accrued expenses (2,125,000 shares)	$	-	$	380,000

The accompanying notes are an integral part of the condensed consolidated financial statements.

5

 

INERGETICS, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization

On March 15, 2010 the Company changed its name to Inergetics, Inc. Inergetics, Inc. (the Company or "Inergetics"), formerly Millennium Biotechnologies Group, Inc., is a holding company for its subsidiary Millennium Biotechnologies, Inc. ("Millennium").

Millennium was incorporated in the State of Delaware on November 9, 2000 and is located in New Jersey.  Millennium is a research based bio-nutraceutical corporation involved in the field of nutritional science.  Millennium’s principal source of revenue is from sales of its nutraceutical supplements, Resurgex Select® and Resurgex Essential™ and Resurgex Essential Plus™ which serve as a nutritional support for immuno-compromised individuals undergoing medical treatment for chronic debilitating diseases. Millennium has developed Surgex for the sport nutritional market. The Company acquired Bikini Ready®, a leader in weight loss lifestyle solutions and SlimTrim™, the affordable, premium value diet brand. The Company has a licensing agreement to sell the Martha Stewart Essentials line of supplements. The Company’s efforts going forward will focus on sales of Martha Stewart Essentials™ line of supplements, Surgex in powder and pill forms as well as powder and pills for Bikini Ready and pills for SlimTrim.

The accompanying unaudited condensed consolidated financial statements include the accounts of Inergetics, Inc. and its subsidiary. These condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Regulation S-X. Certain information in footnote disclosures normally included in financial statements prepared in conformity with accounting principles generally accepted in the United States of America has been condensed or omitted pursuant to such principles and the financial results for the periods presented may not be indicative of the full year’s results. The Company believes that the disclosures are adequate to make the information presented not misleading. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation have been included. These condensed consolidated financial statements should be read in conjunction with the December 31, 2012 audited financial statements and the accompanying notes thereto filed with the Securities and Exchange Commission on Form 10-K.

Principles of Consolidation

The condensed consolidated financial statements include the accounts of the Company and its subsidiary.  All significant inter-company transactions and balances have been eliminated.

Use of Estimates

The preparation of the financial statements in conformity with United States generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

6

INERGETICS, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued

Goodwill

Goodwill and other acquired intangible assets with indefinite lives are not amortized, but are tested for impairment annually and when an event occurs or circumstances change such that it is more likely than not that an impairment may exist. Our annual testing date is December 31. We test goodwill for impairment by first comparing the carrying value of net assets to the fair value of the related operations. If the fair value is determined to be less than carrying value, a second step is performed to compute the amount of the impairment. In this process, a fair value for goodwill is estimated, based in part on the fair value of the operations, and is compared to its carrying value. The shortfall of the fair value below carrying value represents the amount of goodwill impairment. Intangibles consist of brand and trade names acquired in business combinations. We test these intangibles for impairment by comparing their carrying value to current projections of discounted cash flows attributable to the brand and trade names. Any excess carrying value over the amount of discounted cash flows represents the amount of the impairment.

Revenue Recognition

Revenue is recognized net of discounts, rebates, promotional adjustments, price adjustments and estimated returns and upon transfer of title and risk to the customer which occurs at shipping (F.O.B. terms). Upon shipment to various customers when all performance obligations are met and collectability is reasonably assured revenue is recognized. Upon shipment to specific customers with the right of return the Company defers revenues as returns are not reasonably estimable. As of September 30, 2013, deferred revenue totaled $1,358,186.

Deferred Revenue and Deferred Cost of Goods Sold

Deferred revenue consists substantially of amounts billed or payments received in advance of revenue recognition. Deferred cost of goods sold as of September 30, 2013 of $607,806, related to deferred product revenues includes direct product costs. Once all revenue recognition criteria have been met, the deferred revenues and associated cost of goods sold are recognized.

Income Taxes

The Company provides for income taxes based on enacted tax law and statutory tax rates at which items of income and expenses are expected to be settled in the Company’s income tax return. Certain items of revenue and expense are reported for Federal income tax purposes in different periods than for financial reporting purposes, thereby resulting in deferred income taxes. Deferred taxes are also recognized for operating losses that are available to offset future taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.

Loss Per Common Share

Net loss per share, in accordance with the provisions of ASC 260, “Earnings Per Share” is computed by dividing net loss by the weighted average number of shares of Common Stock outstanding during the period. Common Stock equivalents have not been included in this computation since the effect would be anti-dilutive. During a loss period, the effect of the potential exercise of stock options, warrants, convertible preferred stock and convertible debt are not considered in the diluted income (loss) per share calculation since the effect would be anti-dilutive.

Fair Value of Financial Instruments

For financial instruments including cash, accounts receivable, prepaid expenses, debt, accounts payable and accrued expenses, the carrying values approximated their fair value.

Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial statement. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates.

7

 

INERGETICS, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

2 . GOING CONCERN AND LIQUIDITY ISSUES

The Company’s future success is dependent upon its ability to achieve profitable operations and generate cash from operating activities, and upon additional financing.  Management believes they can raise the appropriate funds needed to support their business plan and develop an operating company which is cash flow positive.

However, the Company has a working capital deficit, significant debt outstanding, incurred substantial net losses for the nine months ended September 30, 2013 and 2012 and has accumulated a deficit of approximately $86 million at September 30, 2013. The Company has not been able to generate sufficient cash from operating activities to fund its ongoing operations. There is no guarantee that the Company will be able to generate enough revenue and/or raise capital to support its operations.  These factors raise substantial doubt about the Company’s ability to continue as a going concern.

The condensed consolidated financial statements do not include any adjustments relating to the recoverability or classification of recorded assets and liabilities that might result should the Company be unable to continue as a going concern.

3. BUSINESS ACQUISITION

On January 9, 2013 (the “Acquisition date”), the Company entered into a definitive agreement pursuant to which it acquired, through its Millennium Biotechnologies, Inc. wholly-owned subsidiary, the trademark of Bikini Ready® and the brand SlimTrim™. Under the agreement the Company acquired the URL’s, formula and customer list. Under the terms of this agreement the Company paid $100,000 cash and 8,000 shares of Series G preferred stock valued at $140,000.

The transaction was accounted for as a purchase business combination. The results from operations for the period from acquisition date to September 30, 2013 have been included in the Company’s condensed consolidated statement of operations. Pro forma information with respect to the acquisition are not included in these financial statements as the information is not material.

In accordance with generally accepted accounting principles, intangible assets are recorded at fair values as of the date of the transaction. The Company’s preliminarily allocation to identifiable intangible assets and liabilities according to their respective fair values, which may be adjusted upon finalization of the valuation of net assets acquired, is as follows:

Intangible assets, trademarks	$	100,000
Intangible assets, customer list		5,000
Goodwill		135,000
Purchase Price	$	240,000

Intangible assets with estimated useful lives are amortized over a 5 year period. The goodwill is not amortized for financial statement purposes in accordance with generally accepted accounting principles.

4. CONCENTRATIONS OF BUSINESS AND CREDIT RISK

The Company maintains cash balances in several financial institutions which are insured by the Federal Deposit Insurance Corporation up to certain federal limitations.

The Company provides credit in the normal course of business to customers located throughout the U. S. The Company performs ongoing credit evaluations of its customers and maintains allowances for doubtful accounts based on factors surrounding the credit risk of specific customers, historical trends, and other information.

8

 

INERGETICS, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

5. INVENTORIES

Inventories are stated at the lower of cost or market on a first in, first out basis. Inventories consist of work-in-process, raw materials, finished goods, and packaging for the Company’s Martha Stewart Essentials, SURGEX®, RESURGEX ESSENTIAL ®, Bikini Ready® and SlimTrim™ product lines. Cost-of-goods sold are calculated using the average costing method. Inventories consist of the following:

	September 30,		December 31,
	2013		2012
Finished Goods	$	267,963	$	2,344
Work in Process		-		49,200
Packaging		52,948		1,832
		320,911		53,376
Less: Reserve for obsolescence		-		(49,200)
Total	$	320,911	$	4,176

6. PREPAID EXPENSES

Prepaid expenses are for services that have been paid in advance primarily with stock that are amortized over the life of the contract. The agreements pertain to pricing structure, distribution, warehousing, inventory management, financial advisory services, pro athlete endorsements and licensing agreements.

7. ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable and accrued expenses consisted of the following:

	September 30,		December 31,
	2013		2012
Accounts payable	$	2,643,256	$	1,224,313
Owed to officer		10,050		-
Accrued interest		837,039		669,035
Accrued rent expense		135,874		135,874
Accrued salaries, bonuses and payroll taxes		726,784		612,712
Accrued professional fees		194,198		204,247
	$	4,547,201	$	2,846,181

9

 

INERGETICS, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

8. SHORT TERM DEBT, NET OF DEBT DISCOUNT

In the first nine months of 2013, the Company realized gross proceeds of $555,000 in new cash. Repayment in the amount of $30,000 was made in January 2013. Proceeds from the sale of its 15.0% twelve month Unsecured Convertible Notes, in the aggregate original principal amount of $525,000 (the “Notes”) to accredited investors (the “Investors”).  Interest on the outstanding principal balance of the Notes is payable upon maturity of the note. The outstanding principal balance of the Notes and all accrued but unpaid interest thereon may be converted at any time at the option of each Investors into shares of Common Stock at the Conversion Price of $.20 per share.  The Company may prepay the Notes at any time without penalty to the Investors.

Unsecured Notes, net debt discount, consist of the following:

	September 30,		December 31,
	2013		2012
Unsecured Convertible Notes	$	1,450,333	$	1,319,376
Debt discount		(103,465)		(135,417)
		1,346,868		1,183,959
Less long term portion		63,889		1,144,375
Short term portion	$	1,282,979	$	39,584

The Company issued 656,250 shares of common stock for origination fees during the nine months ended September 30, 2013 and recorded a debt discount of $76,305.

Gain on Troubled Debt Restructuring

The Company entered into restructuring agreements with an accredited investor. Due to the Company’s inability to repay debt, the debtholder chose to grant concessions to the Company. In accordance with ASC 470 “Debt” the Company treated the following transaction as troubled debt restructuring.

At December 31, 2012, the Company had Unit Notes issued to the accredited investor in November 2009 with an outstanding balance of $67,021, which were in default and due on demand. In April 2013, the Company reached an agreement with the investor to convert this debt into Series G Preferred in full settlement of the note plus interest. The Series G preferred are convertible into 250 shares of common stock. At the date of conversion the debt payable and accrued interest was $102,166. The debt and accrued interest of $102,166 was converted into 2,044 shares of Series G preferred valued at $102,200 which exceeded the fair market value by $46,978. The difference resulted in a gain on troubled debt restructuring of $46,978 has been included in the Statement of Operations in the nine months ended September 30, 2013. The gain incurred with debt restructuring approximates $0.00 per share.

10

INERGETICS, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SHORT TERM DEBT, Continued

The Secured Promissory Unit Note issued in November 2009 with the principal amount outstanding of $85,726 and accrued interest of $51,876 as of September 30, 2013 is in default due to non-payment. The Secured Promissory Unit Note in the original amount of $85,726 and interest accrued thereon was originally repayable in five quarterly installments beginning 18 months after issue.

9. SHORT TERM DEBT – RELATED PARTIES, NET OF DEBT DISCOUNT

In the first nine months of 2013, the Company realized gross proceeds of $2,776,688 in new cash. Proceeds from the sale of its 12.0% and 15.0% twelve month Unsecured Convertible Notes and Secured Promissory Notes, in the aggregate original principal amount of $2,776,688 (the “Notes”) to an accredited investor (the “Investor”).  Interest on the outstanding principal balance of the Notes is payable upon maturity of the note. The Company may prepay the Notes at any time without penalty to the Investors.

The Company issued 2,093,750 shares of common stock and 4,307 shares of Series G preferred stock for origination fees during the nine months ended September 30, 2013 and recorded a debt discount of $385,349.

10. DERIVATIVE LIABILITY

Secured Convertible Notes Conversion Option

In 2012, the Company issued notes that are convertible into shares of the Company’s common stock, par value $0.001 per share (the “Common Stock”) at a conversion price of $0.20 per share (the “Conversion Price.”)  The conversion feature was bifurcated from the Notes due to a down round provision in the terms of the conversion feature and accounted for as a derivative liability in the accompanying condensed balance sheet.

The Company recorded the conversion feature as a liability based upon its fair value on each reporting date.

The table below summarizes the fair values of the Company’s financial liabilities:

	Fair Value at
	September 30,		Fair Value Measurement Using
	2013		Level 1		Level 2		Level 3
Derivative liability – Conversion Feature	$	32,000		-		-	$	32,000
	$	32,000		-		-	$	32,000

11

INERGETICS, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

DERIVATIVE LIABILITY, Continued

The table below sets forth a summary of changes in the fair value of the Company’s Level 3 financial liabilities (Derivative liability – Conversion Feature) for the nine months ended September 30, 2013:

	September 30,
	2013
Balance at December 31, 2012	$	49,000
Additions to derivative instruments		-
Change in fair market value of Conversion Feature		(17,000)
Balance at September 30, 2013	$	32,000

The Company computed the fair value of the conversion feature using the Black-Scholes model.

The following are the key assumptions used in connection with this computation:

	September 30, 2013
Number of shares	625,000
Conversion Price	.20
Volatility	123.00 – 125.62%
Risk-free interest rate	2%
Expected dividend yield	0%
Life of Notes	18 months

Warrant Liability

In connection with the issuance of the Notes, the Company issued warrants to purchase up to 2,625,000 shares of Common Stock (the “Warrants”).  The Warrants are exercisable for a 36 month period of time since the date of issuance and have an exercise price of $0.20 per share (the “Exercise Price”).

The Warrants provide for anti-dilution protection in the event that any shares of Common Stock, or securities convertible into Common Stock, are issued at less than the Exercise Price. The Company accounts for the Warrants as derivative liabilities in the accompanying condensed balance sheet.

The Company computed the value of the warrants using the Black-Scholes model.

The following are the key assumptions used in connection with this computation:

	September 30, 2013
Number of shares	2,625,000
Conversion Price	.20
Volatility	120.60-126.70%
Risk-free interest rate	2%
Expected dividend yield	0%
Life of Warrants	15 - 18 months

12

INERGETICS, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

DERIVATIVE LIABILITY, Continued

The Company recognizes their derivative financial instruments as assets or liabilities in the financial statements and measures them at fair value with changes in fair value reflected as current period income or loss.

The table below summarizes the fair values of the Company’s financial liabilities:

	Fair Value at
	September 30,		Fair Value Measurement Using
	2013		Level 1		Level 2		Level 3
Derivative liability – Warrants	$	131,000		-		-	$	131,000
	$	131,000		-		-	$	131,000

The table below sets forth a summary of changes in the fair value of the Company’s Level 3 financial liabilities Derivative Liability - Warrant for the nine months ended September 30, 2013:

	September 30,
	2013
Balance at December 31, 2012	$	178,000
Canceled warrants		(19,000)
Change in fair market value of Warrants		(28,000)
Balance at September 30, 2013	$	131,000

11. PREFERRED DIVIDEND

The Series G Preferred pays a dividend, quarterly, at an annual rate of 10% (as a percentage of the Stated Value per share) payable in G Preferred based on the equivalent of 90% of the average of the last ten trading day closing price of the Common Stock prior to the dividend payment date. The amount of the dividend paid during the nine months ended September 30, 2013 and 2012 was $1,118,800 and $739,450, respectively. The amount of the dividend paid during the quarter ended September 30, 2013 and 2012 was $374,900 and $312,150, respectively.

13

 

INERGETICS, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

12. WARRANTS

Warrant activity for the nine months ended September 30, 2013 is as follows:

			Weighted
			Average			Aggregate
	Number of		Exercise		Remaining	Intrinsic
	Warrants		Price		Contractual Term In Months	Value
Outstanding at December 31, 2012		18,190,906	$	0.225	73	$	-
Granted		1,140,000		0.185	47		-
Exercised		-		-	-		-
Expired or cancelled		(7,500)		60.00	-		-
Outstanding and exercisable at September 30, 2013		19,323,406	$	0.200	63	$	300,000

13. COMMITMENTS AND CONTINGENCIES

The Company entered into a license agreement with minimum royalty payments totaling $1,800,000, $2,100,000, $2,700,000, $3,200,000 and $3,800,000 for each of the years ended 2014, 2015, 2016, 2017 and 2018, respectively. $450,000 was paid as of September 30, 2013 and recorded in prepaid expenses. The balance which has not been amortized is $14,179 as of September 30, 2013.

14

 

Item 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Cautionary Statement Pursuant To "Safe Harbor" Provisions

Of Section 21e Of The Securities Exchange Act Of 1934

Except for historical information, the Company's reports to the Securities and Exchange Commission on Form 10-K and Form 10-Q and periodic press releases, as well as other public documents and statements, contain "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act of 1934. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied by the statements. These risks and uncertainties include general economic and business conditions, development and market acceptance of the Company's products, current dependence on the willingness of investors to continue to fund operations of the Company and other risks and uncertainties identified in the risk factors discussed below and in the Company's other reports to the Securities and Exchange Commission, periodic press releases, or other public documents or statements.

Readers are cautioned not to place undue reliance on forward-looking statements. The Company undertakes no obligation to republish or revise forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrences of unanticipated events.

Results of Operations for the quarter ended September 30, 2013 compared to the quarter ended September 30, 2012:

Total revenues generated from the sales of Surgex™, Bikini Ready®, SlimTrim™ and Martha Stewart Essentials™ for the quarter ended September 30, 2013 totaled $203,348 an increase of 2,111% from the quarter ended September 30, 2012 which totaled $9,199. The primary reason for the increase was due to the Company’s introduction of Martha Stewart Essentials and the newly formulated Surgex brand along with the introduction of Bikini Ready and SlimTrim to the retailers during the quarter ended September 30, 2013. The introduction of these brands continues to show growth into the fourth quarter of 2013.

At this stage in the Company’s development, revenues are not yet sufficient to cover ongoing operating expenses.

Gross profit (loss) for the quarter ended September 30, 2013 amounted to negative $24,769 for a -12% gross margin. Gross profit decreased $26,975 or 1,223% for the quarter ended September 30, 2013 compared to $2,206 for the quarter ended September 30, 2012.  The decrease in gross profit is a result of higher freight cost in the quarter ended September 30, 2013.

After research and development cost and selling, general and administrative expenses of $2,215,384, the Company realized an operating loss of $2,240,153 for the quarter ended September 30, 2013.  Operating losses of $2,240,153 increased $1,029,369 or 85% as compared to the third quarter of 2012 operating loss of $1,210,784.  The majority of the increase was due to the increase in promotion and royalty for the launch of the various products into the retail in the amount of $1,245,520. The Company had to install software to interface with the retailers in the amount of $49,977. Additional employees were hired to support the infrastructure of the business in the amount of $255,995. There was an reduction in other professional fees in the amount of $630,251.

Non-operating expenses totaled $442,018 for the quarter ended September 30, 2013 an increase of 251% or $316,263 as compared to $125,755 for the quarter ended September 30, 2012.  The increase in non-operating expenses of $316,263 was due to the accretion of debt discount in the amount of $101,090 and a reduction in gain associated with the fair value of the derivative instruments issued with the convertible debt and warrants in the amount of $22,000. There was an increase in interest expense of $193,173 due to more debt outstanding.

The net result for the quarter ended September 30, 2013 was a loss of $3,058,571 or $0.05 per share which included a preferred dividend on the Series G stock in the amount of $374,900, compared to a loss of $1,648,689 or $0.04 per share for the third quarter of 2012. The net loss for the third quarter of 2013 increased by $1,409,882 or 86% as compared to the third quarter of 2012, primarily due to an increase in selling, general and administrative expenses and accretion of debt discount and increased interest expense due to additional debt outstanding. Management will continue to make an effort to lower operating expenses and increase revenue.  The Company will continue to invest in further expanding its operations and a comprehensive marketing campaign with the goal of accelerating the education of potential clients and promoting the name and products of the Company. Given the fact that most of the operating expenses are fixed or have quasi-fixed character management expects them to significantly decrease as a percentage of revenues as revenues increase.

15

Results of Operations for the nine months ended September 30, 2013 compared to the nine months ended September 30, 2012:

Total revenues generated from the sales of Surgex™, Bikini Ready®, SlimTrim™ and Martha Stewart Essentials™ for the nine months ended September 30, 2013 totaled $276,790, an increase of 811% from the nine months ended September 30, 2012 which totaled $30,381. The primary reason for the increase was due to the Company’s introduction of Martha Stewart Essentials and the newly formulated Surgex brand along with the introduction of Bikini Ready and SlimTrim to the retailers during the nine months ended September 30, 2013. The introduction of these brands continues to show growth into the fourth quarter of 2013.

At this stage in the Company’s development, revenues are not yet sufficient to cover ongoing operating expenses.

Gross profit (loss) for the nine months ended September 30, 2013 amounted to negative $6,572 for a -2% gross margin. Gross profit decreased $16,557 or 166% for the nine months ended September 30, 2013 compared to $9,985 for the nine months ended September 30, 2012.  The decrease in gross profit is a result of higher freight cost in the nine months ended September 30, 2013.

After research and development cost and selling, general and administrative expenses of $4,474,067, the Company realized an operating loss of $4,480,639 for the nine months ended September 30, 2013. The majority of the increase was due to the increase in promotion and royalty for the launch of the various products into the retail in the amount of $1,529,063. The Company had to install software to interface with the retailers in the amount of $70,143. Additional employees were hired to support the infrastructure of the business in the amount of $852,916. There was a reduction in other professional fees in the amount of $1,696,458.

Operating losses of $4,480,639 increased $824,475 or 23% as compared to the nine months of 2012 operating loss of $3,656,164.

Non-operating expenses totaled $712,481 for the nine months ended September 30, 2013 a decrease of 11% or $87,442 as compared to expense of $799,923 for the nine months ended September 30, 2012.  The decrease in non-operating expenses of $87,442 was due to the prior year’s gain associated with the fair value of the derivative instruments issued with the convertible debt and warrants in the amount of $524,000 offset by a decrease of $736,000 from the loss from issuance of convertible debt. There was a increase in interest expense of $104,175 due to more debt outstanding.

The net result for the nine months ended September 30, 2013 was a loss of $6,317,419 or $0.12 per share which included a preferred dividend on the Series G stock in the amount of $1,118,800, compared to a loss of $5,195,537 or $0.15 per share for the nine months of 2012. The net loss for the nine months of 2013 increased by $1,121,882 or 22% as compared to the nine months of 2012, primarily due to an increase in selling, general and administrative expenses. Management will continue to make an effort to lower operating expenses and increase revenue.  The Company will continue to invest in further expanding its operations and a comprehensive marketing campaign with the goal of accelerating the education of potential clients and promoting the name and products of the Company. Given the fact that most of the operating expenses are fixed or have quasi-fixed character management expects them to significantly decrease as a percentage of revenues as revenues increase.

Disclosure About Off-Balance Sheet Arrangements

We do not have any transactions, agreements or other contractual arrangements that constitute off-balance sheet arrangements.

16

Critical Accounting Estimates

Our Management's Discussion and Analysis of Financial Condition and Results of Operations section discusses our consolidated condensed financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On an on-going basis, management evaluates its estimates and judgments, including those related to revenue recognition, accrued expenses, financing operations, and contingencies and litigation. Management bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. The most significant accounting estimates inherent in the preparation of our financial statements include estimates as to the appropriate carrying value of certain assets and liabilities which are not readily apparent from other sources. These accounting policies are described at relevant sections in this discussion and analysis and in the notes to the consolidated financial statements included in this report.

Liquidity and Capital Resources

The Company’s future success is dependent upon its ability to achieve profitable operations and generate cash from operating activities, and upon additional financing.  Management believes they can raise the appropriate funds needed to support their business plan and develop an operating, cash flow positive company. The Company has been operating with negative cash flows for the past 12 years.

The Company incurred substantial net losses for the nine months ended September 30, 2013 and the year ended December 31, 2012 and has accumulated a deficit of $85,747,729 at September 30, 2013. The Company has not been able to generate sufficient cash from operating activities to fund its ongoing operations. There is no guarantee that the Company will be able to generate enough revenue and/or raise capital to support its operations.  These factors raise substantial doubt about the Company’s ability to continue as a going concern. The Company has never reported Net Income.

The condensed consolidated financial statements do not include any adjustments relating to the recoverability or classification of recorded assets and liabilities that might result should the Company be unable to continue as a going concern.

The Company’s business operations generally have been financed by debt investments through promissory notes with accredited investors.  During the nine months of 2013, the Company obtained new debt from the issuance of promissory notes that supplied the funds that were needed to finance operations during the reporting period. The new issuance of debt requires conversion of existing debt which may not be able to convert on favorable terms. Such new borrowings resulted in the receipt by the Company of $3,331,688.  While these funds sufficed to compensate for the negative cash flow from operations they were not sufficient to build up a liquidity reserve.  As a result, the Company’s financial position at the end of the reporting period showed a working capital deficit of $8,805,657.  During the first nine months of 2013 the Company obtained new financing sufficient to fund ongoing working capital requirements.  We need to continue to raise funds to cover working capital requirements until we are able to raise revenues to a point of positive cash flow.

The Company entered into a license agreement with minimum royalty payments totaling $1,800,000, $2,100,000, $2,700,000, $3,200,000 and $3,800,000 for each of the years ended 2014, 2015, 2016, 2017 and 2018, respectively. $450,000 was paid as of September 30, 2013. Total royalaties due through September 30, 2014 of $1,350,000 are to be paid quarterly on the first day of the quarter commencing January 1, 2014.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Not Applicable

17

Item 4. Control and Procedures

Evaluation of disclosure controls and procedures

Management of the Company has evaluated, with the participation of the Chief Executive Officer and Chief Financial Officer of the Company, the effectiveness of the Company's disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) promulgated by the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended (the "Exchange Act")) as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as a result of the material weakness and significant deficiencies in our internal control over financial reporting, our disclosure controls and procedures were not effective, as of the September 30, 2013, to ensure that information required to be disclosed by us in the reports we file under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms, and that the information required to be disclosed by us in such reports is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

Management of the Company has evaluated, with the participation of the Chief Executive Officer of the Company, any change in the Company's internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the period covered by this Quarterly Report on Form 10-Q. There was no change in the Company's internal control over financial reporting identified in that evaluation that occurred during the period covered by this Quarterly Report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting, other than what has been reported above.

18

PART II - OTHER INFORMATION

Item 1 Legal Proceedings

Creative Healthcare Solutions, LLC vs. Millennium Biotechnologies Inc, Ct. of Common Pleas of Delaware County Ohio, Case No. 07 CV H 11 1420) Millennium was not satisfied with the service rendered by Creative Healthcare Solutions, LLC in 2005 which were associated with the development of Resurgex Select collateral materials developed in December of 2005. Millennium subsequently was forced to destroy and dispose of over 80% of the materials provided by Creative Healthcare Solutions due to the poor quality of the materials. Millennium has been unsuccessful in resolving the dispute and subsequently Creative Healthcare Solutions, LLC has filed legal action for demand of payment in the amount of $63,718 for services rendered. Millennium continues to negotiate a settlement through counsel with regards to this legal proceeding.

Robert Half International vs. Millennium Biotechnologies, Inc. filed on September 30, 2009 in the Superior Court of New Jersey, Law Division, Middlesex County. Robert Half International claims a total of $18,507 plus costs and fees based upon the Millennium Biotechnologies, Inc.’s failure to pay the plaintiff the fees associated with the full time hiring of an employee.

Item 1A Risk Factors

Not Applicable

Item 2 Unregistered Sales of Equity Securities and Use of Proceeds

See Note 3 and Note 8 to the Condensed Consolidated Financial Statements in Part I above.

Item 3 Defaults Upon Senior Securities

See Note 8 to the Condensed Consolidated Financial Statements in Part I above.

Item 4 Mine Safety Disclosures

Not Applicable

Item 5 Other Information

- None

19

Item 6 a) Exhibits

31.1 Certification of Michael C. James, Chief Executive Officer and Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1 Certification of Michael C. James, Chief Executive Officer and Chief Financial Officer, pursuant to Sections 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350.

20

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	INERGETICS, INC.
Date:   November 14, 2013	By:	/s/ Michael C. James
		Michael C. James
		Chief Executive Officer
		Chief Financial Officer

21

 

EX-31.1

EXHIBIT 31.1

Certifications pursuant to Securities and Exchange Act of 1934

Rule 13a-14 as adopted pursuant to Section 302 of Sarbanes-Oxley Act of 2002

I, Michael C. James, certify that:

1. I have reviewed this quarterly report on Form 10-Q of the Inergetics, Inc. (the “Registrant”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;

4. The Registrant's other certifying officer(s) and I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e)) for the Registrant and have:

a.     Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.     Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.    Evaluated the effectiveness of the Registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.     Disclosed in this report any change in the Registrant's internal control over financial reporting that occurred during the Registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Registrant's internal control over financial reporting; and

5. The Registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant's auditors and the audit committee of the Registrant's board of directors (or persons performing the equivalent functions):

a.     All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant's ability to record, process, summarize and report financial information; and

b.     Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant's internal control over financial reporting.

Date: November 14, 2013	By:	/s/  Michael C. James
		Chief Executive Officer and Chief Financial Officer

 

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Inergetics, Inc. (the "Company") on Form 10-Q for the quarter ended September 30, 2013 (the "Form 10-Q"), I, Michael C. James, Chief Executive Officer and Chief Financial Officer of the Company, certify, as of the date hereof, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge, that the Company's Form 10-Q fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the information contained in the Form 10-Q, fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: November 14, 2013	/s/ Michael C. James
	Michael C. James
	Chief Executive Officer and Chief Financial Officer

 

XML

PREFERRED DIVIDEND

9 Months Ended

Sep. 30, 2013

Dividends Disclosure [Abstract]

PREFERRED DIVIDEND

11. PREFERRED DIVIDEND

The Series G Preferred pays a dividend, quarterly, at an annual rate of 10% (as a percentage of the Stated Value per share) payable in G Preferred based on the equivalent of 90% of the average of the last ten trading day closing price of the Common Stock prior to the dividend payment date. The amount of the dividend paid during the nine months ended September 30, 2013 and 2012 was $1,118,800 and $739,450, respectively. The amount of the dividend paid during the quarter ended September 30, 2013 and 2012 was $374,900 and $312,150, respectively.

XML

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Total Revenues	$ 203,348	$ 9,199	$ 276,790	$ 30,381
Cost of Goods Sold	228,117	6,993	283,362	20,396
Gross Profit	(24,769)	2,206	(6,572)	9,985
Research and development cost	5,807	0	5,807	45,578
Selling, general and administrative expenses	2,209,577	1,212,990	4,468,260	3,620,571
Total operating expenses	2,215,384	1,212,990	4,474,067	3,666,149
Loss from Operations	(2,240,153)	(1,210,784)	(4,480,639)	(3,656,164)
Other Income (Expense)
Amortization of debt discount	(165,271)	(64,181)	(247,403)	(180,042)
Gain on extinguishment of debt	0	0	46,978	0
Loss from warrants / derivatives issued with debt greater than debt carrying value	0	0	0	(736,000)
Gain on fair market valuation of derivatives	100,000	122,000	64,000	588,000
Interest and financing cost, net	(376,747)	(183,574)	(576,056)	(471,881)
Total Other Income (Expense)	(442,018)	(125,755)	(712,481)	(799,923)
Loss before Provision for Income taxes	(2,682,171)	(1,336,539)	(5,193,120)	(4,456,087)
Provision for Income Taxes	(1,500)	0	(5,499)	0
Net loss	(2,683,671)	(1,336,539)	(5,198,619)	(4,456,087)
Preferred Dividend	(374,900)	(312,150)	(1,118,800)	(739,450)
Net Loss applicable to common shareholders	$ (3,058,571)	$ (1,648,689)	$ (6,317,419)	$ (5,195,537)
Net Loss per Common Share Basic and Diluted	$ (0.05)	$ (0.04)	$ (0.12)	$ (0.15)
Weighted Average Number of Common Shares Outstanding - Basic And Diluted	58,692,339	41,480,080	53,365,095	35,477,027

XML

CONCENTRATIONS OF BUSINESS AND CREDIT RISK

9 Months Ended

Sep. 30, 2013

Risks and Uncertainties [Abstract]

CONCENTRATIONS OF BUSINESS AND CREDIT RISK

4. CONCENTRATIONS OF BUSINESS AND CREDIT RISK

The Company maintains cash balances in several financial institutions which are insured by the Federal Deposit Insurance Corporation up to certain federal limitations.

The Company provides credit in the normal course of business to customers located throughout the U. S. The Company performs ongoing credit evaluations of its customers and maintains allowances for doubtful accounts based on factors surrounding the credit risk of specific customers, historical trends, and other information.

XML

SHORT TERM DEBT, NET OF DEBT DISCOUNT (Tables)

9 Months Ended

Sep. 30, 2013

Short-term Debt [Abstract]

Unsecured Notes, net debt discount

Unsecured Notes, net debt discount, consist of the following:

	September 30,		December 31,
	2013		2012
Unsecured Convertible Notes	$	1,450,333	$	1,319,376
Debt discount		(103,465)		(135,417)
		1,346,868		1,183,959
Less long term portion		63,889		1,144,375
Short term portion	$	1,282,979	$	39,584

XML

WARRANTS

9 Months Ended

Sep. 30, 2013

Stock Warrants Disclosure [Abstract]

WARRANTS

12. WARRANTS

Warrant activity for the nine months ended September 30, 2013 is as follows:

			Weighted
			Average			Aggregate
	Number of		Exercise		Remaining	Intrinsic
	Warrants		Price		Contractual Term In Months	Value
Outstanding at December 31, 2012		18,190,906	$	0.225	73	$	-
Granted		1,140,000		0.185	47		-
Exercised		-		-	-		-
Expired or cancelled		(7,500)		60.00	-		-
Outstanding and exercisable at September 30, 2013		19,323,406	$	0.200	63	$	300,000

XML

Summary Of Changes In Fair Value Of Level Three Financial Liabilities (Detail) (USD $)	9 Months Ended
	Sep. 30, 2013
Convertible Debt Conversion Option Liability
Derivative [Line Items]
Balance at December 31, 2012	$ 49,000
Additions to derivative instruments	0
Change in fair market value	(17,000)
Balance at September 30, 2013	32,000
Warrant
Derivative [Line Items]
Balance at December 31, 2012	178,000
Canceled warrants	(19,000)
Change in fair market value	(28,000)
Balance at September 30, 2013	$ 131,000

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Additional Information (Detail) (USD $)	Sep. 30, 2013	Dec. 31, 2012
Deferred Revenue	$ 1,358,186	$ 0
Deferred Cost Of Goods Sold	$ 607,806	$ 0

XML

WARRANTS (Tables)

9 Months Ended

Sep. 30, 2013

Stock Warrants Disclosure [Abstract]

Warrant Activity

Warrant activity for the nine months ended September 30, 2013 is as follows:

			Weighted
			Average			Aggregate
	Number of		Exercise		Remaining	Intrinsic
	Warrants		Price		Contractual Term In Months	Value
Outstanding at December 31, 2012		18,190,906	$	0.225	73	$	-
Granted		1,140,000		0.185	47		-
Exercised		-		-	-		-
Expired or cancelled		(7,500)		60.00	-		-
Outstanding and exercisable at September 30, 2013		19,323,406	$	0.200	63	$	300,000

XML

Unsecured Notes Net Debt Discount (Detail) (USD $)	Sep. 30, 2013	Dec. 31, 2012
Debt Instrument [Line Items]
Unsecured Convertible Notes	$ 1,450,333	$ 1,319,376
Debt discount	(103,465)	(135,417)
Unsecured debt	1,346,868	1,183,959
Less long term portion	63,889	39,584
Short term portion	$ 1,282,979	$ 1,144,375

XML

Preferred Dividend - Additional Information (Detail) (Series G Preferred Stock, USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Series G Preferred Stock
Class of Stock [Line Items]
Preferred stock dividend rate			10.00%
Percentage of closing price of common stock	90.00%		90.00%
Number of trading days			10 days
Dividends paid	$ 374,900	$ 312,150	$ 1,118,800	$ 739,450

XML

Inventories (Detail) (USD $)	Sep. 30, 2013	Dec. 31, 2012
Inventory Disclosure [Line Items]
Finished Goods	$ 267,963	$ 2,344
Work in Process	0	49,200
Packaging	52,948	1,832
Inventory, gross, total	320,911	53,376
Less: Reserve for obsolescence	0	(49,200)
Total	$ 320,911	$ 4,176

XML

DERIVATIVE LIABILITY (Tables)

9 Months Ended

Sep. 30, 2013

Convertible Debt Conversion Option Liability

Fair Values of Financial Liabilities Conversion Feature

The table below summarizes the fair values of the Company’s financial liabilities:

	Fair Value at
	September 30,		Fair Value Measurement Using
	2013		Level 1		Level 2		Level 3
Derivative liability – Conversion Feature	$	32,000		-		-	$	32,000
	$	32,000		-		-	$	32,000

Summary of Changes in Fair Value of Level 3 Financial Liabilities

The table below sets forth a summary of changes in the fair value of the Company’s Level 3 financial liabilities (Derivative liability – Conversion Feature) for the nine months ended September 30, 2013:

	September 30,
	2013
Balance at December 31, 2012	$	49,000
Additions to derivative instruments		-
Change in fair market value of Conversion Feature		(17,000)
Balance at September 30, 2013	$	32,000

Key Assumptions Used in Connection with Computation Conversion Feature

The following are the key assumptions used in connection with this computation:

	September 30, 2013
Number of shares	625,000
Conversion Price	.20
Volatility	123.00 – 125.62%
Risk-free interest rate	2%
Expected dividend yield	0%
Life of Notes	18 months

Warrant

Fair Values of Financial Liabilities Conversion Feature

The table below summarizes the fair values of the Company’s financial liabilities:

	Fair Value at
	September 30,		Fair Value Measurement Using
	2013		Level 1		Level 2		Level 3
Derivative liability – Warrants	$	131,000		-		-	$	131,000
	$	131,000		-		-	$	131,000

Summary of Changes in Fair Value of Level 3 Financial Liabilities

The table below sets forth a summary of changes in the fair value of the Company’s Level 3 financial liabilities Derivative Liability - Warrant for the nine months ended September 30, 2013:

	September 30,
	2013
Balance at December 31, 2012	$	178,000
Canceled warrants		(19,000)
Change in fair market value of Warrants		(28,000)
Balance at September 30, 2013	$	131,000

Key Assumptions Used in Connection with Computation Conversion Feature

The following are the key assumptions used in connection with this computation:

	September 30, 2013
Number of shares	2,625,000
Conversion Price	.20
Volatility	120.60-126.70%
Risk-free interest rate	2%
Expected dividend yield	0%
Life of Warrants	15 - 18 months

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) (USD $)	9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012
Issuance of redeemable preferred stock shares	22,376	14,789
Common stock issued	$ 0	$ 380,000
Convertible Preferred Stock
Stock issued for services, shares	20,500
Common Stock
Stock issued for services, shares	8,037,500
Accrued Expenses
Common stock issued	$ 2,125,000

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GOING CONCERN AND LIQUIDITY ISSUES

9 Months Ended

Sep. 30, 2013

Going Concern and Liquidity Issues [Abstract]

GOING CONCERN AND LIQUIDITY ISSUES

2 . GOING CONCERN AND LIQUIDITY ISSUES

The Company’s future success is dependent upon its ability to achieve profitable operations and generate cash from operating activities, and upon additional financing.  Management believes they can raise the appropriate funds needed to support their business plan and develop an operating company which is cash flow positive.

However, the Company has a working capital deficit, significant debt outstanding, incurred substantial net losses for the nine months ended September 30, 2013 and 2012 and has accumulated a deficit of approximately $86 million at September 30, 2013. The Company has not been able to generate sufficient cash from operating activities to fund its ongoing operations. There is no guarantee that the Company will be able to generate enough revenue and/or raise capital to support its operations.  These factors raise substantial doubt about the Company’s ability to continue as a going concern.

The condensed consolidated financial statements do not include any adjustments relating to the recoverability or classification of recorded assets and liabilities that might result should the Company be unable to continue as a going concern.

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INVENTORIES

9 Months Ended

Sep. 30, 2013

Disclosure - Inventories [Abstract]

INVENTORIES

5. INVENTORIES

Inventories are stated at the lower of cost or market on a first in, first out basis. Inventories consist of work-in-process, raw materials, finished goods, and packaging for the Company’s Martha Stewart Essentials, SURGEX®, RESURGEX ESSENTIAL ®, Bikini Ready® and SlimTrim™ product lines. Cost-of-goods sold are calculated using the average costing method. Inventories consist of the following:

	September 30,		December 31,
	2013		2012
Finished Goods	$	267,963	$	2,344
Work in Process		-		49,200
Packaging		52,948		1,832
		320,911		53,376
Less: Reserve for obsolescence		-		(49,200)
Total	$	320,911	$	4,176

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BUSINESS ACQUISITION

9 Months Ended

Sep. 30, 2013

Business Acquisition Cost Of Acquired Entity Purchase Prices [Abstract]

BUSINESS ACQUISITION

3. BUSINESS ACQUISITION

On January 9, 2013 (the “Acquisition date”), the Company entered into a definitive agreement pursuant to which it acquired, through its Millennium Biotechnologies, Inc. wholly-owned subsidiary, the trademark of Bikini Ready® and the brand SlimTrim™. Under the agreement the Company acquired the URL’s, formula and customer list. Under the terms of this agreement the Company paid $100,000 cash and 8,000 shares of Series G preferred stock valued at $140,000.

The transaction was accounted for as a purchase business combination. The results from operations for the period from acquisition date to September 30, 2013 have been included in the Company’s condensed consolidated statement of operations. Pro forma information with respect to the acquisition are not included in these financial statements as the information is not material.

In accordance with generally accepted accounting principles, intangible assets are recorded at fair values as of the date of the transaction. The Company’s preliminarily allocation to identifiable intangible assets and liabilities according to their respective fair values, which may be adjusted upon finalization of the valuation of net assets acquired, is as follows:

Intangible assets, trademarks	$	100,000
Intangible assets, customer list		5,000
Goodwill		135,000
Purchase Price	$	240,000

Intangible assets with estimated useful lives are amortized over a 5 year period. The goodwill is not amortized for financial statement purposes in accordance with generally accepted accounting principles.

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Warrant Activity (Detail) (USD $)	9 Months Ended
	Sep. 30, 2013
Class of Warrant or Right [Line Items]
Number of Warrants, Outstanding at December 31, 2012	18,190,906
Granted, Number of Warrants	1,140,000
Exercised, Number of Warrants	0
Expired or cancelled, Number of Warrants	(7,500)
Number of Warrants, Outstanding and exercisable at September 30, 2013	19,323,406
Weighted Average Exercise Price, Outstanding at December 31, 2012	$ 0.225
Granted, Weighted Average Exercise Price	$ 0.185
Exercised, Weighted Average Exercise Price	$ 0
Expired or cancelled, Weighted Average Exercise Price	$ 60.00
Weighted Average Exercise Price, Outstanding and exercisable at September 30, 2013	$ 0.200
Remaining Contractual Term, Outstanding at December 31, 2012	73 months
Granted, Remaining Contractual Term	47 months
Exercised, Remaining Contractual Term	0 months
Expired or cancelled, Remaining Contractual Term	0 months
Remaining Contractual Term, Outstanding and exercisable at September 30, 2013	63 months
Aggregate Intrinsic Value, Outstanding at December 31, 2012	$ 0
Granted, Aggregate Intrinsic Value	0
Exercised, Aggregate Intrinsic Value	0
Expired or cancelled, Aggregate Intrinsic Value	0
Aggregate Intrinsic Value, Outstanding and exercisable at September 30, 2013	$ 300,000

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Going Concern and Liquidity Issues- Additional Information (Detail) (USD $)	Sep. 30, 2013	Dec. 31, 2012
Going Concern [Line Items]
Accumulated Deficit	$ (85,747,729)	$ (80,549,110)

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Statement of Accounts Payable and Accrued Expenses (Detail) (USD $)	Sep. 30, 2013	Dec. 31, 2012
Accounts Payable and Accrued Liabilities [Line Items]
Accounts payable	$ 2,643,256	$ 1,224,313
Owed to officer	10,050	0
Accrued interest	837,039	669,035
Accrued rent expense	135,874	135,874
Accrued salaries, bonuses and payroll taxes	726,784	612,712
Accrued professional fees	194,198	204,247
Accounts payable and accrued expenses	$ 4,547,201	$ 2,846,181

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Fair Values Of Financial Liabilities (Detail) (USD $)	Sep. 30, 2013
Convertible Debt Conversion Option Liability
Derivative [Line Items]
Derivative liability	$ 32,000
Liabilities, Fair Value Disclosure	32,000
Warrant
Derivative [Line Items]
Derivative liability	131,000
Liabilities, Fair Value Disclosure	131,000
Level I | Convertible Debt Conversion Option Liability
Derivative [Line Items]
Derivative liability	0
Liabilities, Fair Value Disclosure	0
Level I | Warrant
Derivative [Line Items]
Derivative liability	0
Liabilities, Fair Value Disclosure	0
Level II | Convertible Debt Conversion Option Liability
Derivative [Line Items]
Derivative liability	0
Liabilities, Fair Value Disclosure	0
Level II | Warrant
Derivative [Line Items]
Derivative liability	0
Liabilities, Fair Value Disclosure	0
Level III | Convertible Debt Conversion Option Liability
Derivative [Line Items]
Derivative liability	32,000
Liabilities, Fair Value Disclosure	32,000
Level III | Warrant
Derivative [Line Items]
Derivative liability	131,000
Liabilities, Fair Value Disclosure	$ 131,000

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CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)	Sep. 30, 2013	Dec. 31, 2012
Preferred stock, Convertible Series G, authorized	200,000	200,000
Preferred stock, Convertible Series G, par value	$ 1	$ 1
Preferred stock, Convertible Series G, stated value	$ 50	$ 50
Preferred stock, Convertible Series G, shares issued	182,158	150,938
Preferred stock, Convertible Series G, shares outstanding	182,158	150,938
Common stock, par value	$ 0.001	$ 0.001
Common stock, authorized	2,000,000,000	2,000,000,000
Common stock, issued	59,594,996	48,707,103
Common stock, outstanding	59,594,996	48,707,103
Convertible Series B
Preferred stock, par value	$ 2	$ 2
Preferred Stock, shares issued	65,141	65,141
Preferred stock, shares outstanding	65,141	65,141
Cumulative Series C
Preferred stock, par value	$ 1	$ 1
Preferred Stock, shares issued	64,763	64,763
Preferred stock, shares outstanding	64,763	64,763
Convertible Series D
Preferred stock, par value	$ 1	$ 1
Preferred Stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Convertible Series E
Preferred stock, par value	$ 1	$ 1
Preferred Stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Convertible Series F
Preferred stock, par value	$ 1	$ 1
Preferred Stock, shares issued	0	0
Preferred stock, shares outstanding	0	0

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SHORT TERM DEBT, NET OF DEBT DISCOUNT

9 Months Ended

Sep. 30, 2013

Short-Term Debt, Other Disclosures [Abstract]

SHORT TERM DEBT, NET OF DEBT DISCOUNT

8. SHORT TERM DEBT, NET OF DEBT DISCOUNT

In the first nine months of 2013, the Company realized gross proceeds of $555,000 in new cash. Repayment in the amount of $30,000 was made in January 2013. Proceeds from the sale of its 15.0% twelve month Unsecured Convertible Notes, in the aggregate original principal amount of $525,000 (the “Notes”) to accredited investors (the “Investors”).  Interest on the outstanding principal balance of the Notes is payable upon maturity of the note. The outstanding principal balance of the Notes and all accrued but unpaid interest thereon may be converted at any time at the option of each Investors into shares of Common Stock at the Conversion Price of $.20 per share.  The Company may prepay the Notes at any time without penalty to the Investors.

Unsecured Notes, net debt discount, consist of the following:

	September 30,		December 31,
	2013		2012
Unsecured Convertible Notes	$	1,450,333	$	1,319,376
Debt discount		(103,465)		(135,417)
		1,346,868		1,183,959
Less long term portion		63,889		1,144,375
Short term portion	$	1,282,979	$	39,584

The Company issued 656,250 shares of common stock for origination fees during the nine months ended September 30, 2013 and recorded a debt discount of $76,305.

Gain on Troubled Debt Restructuring

The Company entered into restructuring agreements with an accredited investor. Due to the Company’s inability to repay debt, the debtholder chose to grant concessions to the Company. In accordance with ASC 470 “Debt” the Company treated the following transaction as troubled debt restructuring.

At December 31, 2012, the Company had Unit Notes issued to the accredited investor in November 2009 with an outstanding balance of $67,021, which were in default and due on demand. In April 2013, the Company reached an agreement with the investor to convert this debt into Series G Preferred in full settlement of the note plus interest. The Series G preferred are convertible into 250 shares of common stock. At the date of conversion the debt payable and accrued interest was $102,166. The debt and accrued interest of $102,166 was converted into 2,044 shares of Series G preferred valued at $102,200 which exceeded the fair market value by $46,978. The difference resulted in a gain on troubled debt restructuring of $46,978 has been included in the Statement of Operations in the nine months ended September 30, 2013. The gain incurred with debt restructuring approximates $0.00 per share.

The Secured Promissory Unit Note issued in November 2009 with the principal amount outstanding of $85,726 and accrued interest of $51,876 as of September 30, 2013 is in default due to non-payment. The Secured Promissory Unit Note in the original amount of $85,726 and interest accrued thereon was originally repayable in five quarterly installments beginning 18 months after issue.

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)	9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012
Cash Flows from Operating Activities
Net Loss	$ (5,198,619)	$ (4,456,087)
Adjustments to Reconcile Net Loss to Net Cash Used In Operations
(Gain) on fair market valuation of derivatives	(64,000)	(588,000)
Depreciation and amortization	1,158	432
Common Stock issued for financing expenses	16,026	150,226
Preferred Stock issued for financing expenses	0	96,000
Common Stock issued for services	269,600	136,700
Common stock issued for compensation	450,600	0
Amortization of Prepaid expenses paid for in stock	0	2,087,035
Gain on extinguishment of debt	(46,978)	0
Loss on issuance of convertible debt and warrants	0	736,000
Accretion of debt discount	247,403	180,042
Warrants issued for compensation	73,800	0
Change in inventory and receivables reserve	0	2,700
Changes in Assets and Liabilities
(Increase) in accounts receivable	(844,321)	(362)
Decrease in receivable from Technology Business Tax Certificate Transfer Program	2,209,715	0
(Increase) Decrease in inventories	(316,735)	76,135
(Increase) in deferred cost of goods sold	(607,806)	0
Decrease in prepaid expenses	239,837	150,213
(Increase) of intangible assets	(41,000)	0
(Increase) in deposits	(421,866)	0
Increase in accounts payable and accrued expenses	1,701,020	519,409
Increase in deferred Revenue	1,358,186	0
(Decrease) in customer deposits	(39,970)	0
Net Cash Used In Operating Activities	(1,013,950)	(909,557)
Cash Flows from Investing Activities
Acquisition of business	(100,000)	0
Net Cash Used in Investing Activities	(100,000)	0
Cash Flows from Financing Activities
Proceeds from debt	3,331,688	810,000
Proceeds from Preferred stock	0	135,000
Repayment of debt	(1,251,522)	(35,000)
Net Cash Provided by Financing Activities	2,080,166	910,000
Net Increase in Cash	966,216	443
Cash at beginning of period	8,846	2,517
Cash at end of period	975,062	2,960
Cash paid during the period for:
Interest Expense	85,575	0
Income Taxes	5,499	0
Non-cash
Issuance of G shares as Preferred dividend (22,376 and 14,789 shares)	1,118,800	739,450
Common stock issued for accrued expenses (2,125,000 shares)	0	380,000
Convertible Preferred Stock
Non-cash
Stock issued for services	0	1,045,250
Common Stock
Non-cash
Stock issued for services	0	1,902,451
Prepaid Expense
Non-cash
Stock issued for services	130,809	217,000
Business Acquisition
Non-cash
Stock issued for services	$ 140,000	$ 0

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CONDENSED CONSOLIDATED BALANCE SHEETS (USD $)	Sep. 30, 2013	Dec. 31, 2012
Current Assets:
Cash	$ 975,062	$ 8,846
Accounts receivable, net	844,321	0
Receivable from the Technology Business Tax Certificate Transfer Program	0	2,209,715
Deferred cost of goods sold	607,806	0
Inventories, net	320,911	4,176
Prepaid expenses	598,524	522,041
Total Current Assets	3,346,624	2,744,778
Patents, net	4,511	4,942
Intangible assets, net	145,274	0
Goodwill	135,000	0
Deposits	424,165	2,299
Total Assets	4,055,574	2,752,019
Current Liabilities:
Accounts payable and accrued expenses	4,547,201	2,846,181
Deferred Revenue	1,358,186	0
Obligations to be settled in stock	695,309	564,500
Customer Prepayments	0	39,970
Derivative liability	163,000	227,000
Short-term debt, net of debt discount	1,282,979	1,144,375
Short-term debt - related parties, net of debt discount	4,105,606	2,441,622
Total Current Liabilities	12,152,281	7,263,648
Long-term debt, net of debt discount	63,889	39,584
Total Liabilities	12,216,170	7,303,232
Commitments and Contingencies
Preferred stock, Convertible Series G, authorized 200,000, par $1, stated Value $50: 182,158 and 150,938 shares issued and outstanding	8,306,843	7,147,465
Preferred stock:
Common stock, par value $0.001; authorized 2,000,000,000 shares; issued and outstanding 59,594,996 and 48,707,103 shares, respectively	59,595	48,708
Additional paid-in capital	69,025,650	68,606,679
Accumulated Deficit	(85,747,729)	(80,549,110)
Total Stockholders’ Deficit	(16,467,439)	(11,698,678)
Total Liabilities and Stockholders’ Deficit	4,055,574	2,752,019
Convertible Series B
Preferred stock:
Preferred stock	130,282	130,282
Cumulative Series C
Preferred stock:
Preferred stock	64,763	64,763
Convertible Series D
Preferred stock:
Preferred stock	0	0
Convertible Series E
Preferred stock:
Preferred stock	0	0
Convertible Series F
Preferred stock:
Preferred stock	$ 0	$ 0

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Business Acquisition - Additional Information (Detail) (USD $)	9 Months Ended
	Sep. 30, 2013
Business Acquisition [Line Items]
Payments to Acquire Businesses, Gross	$ 100,000
Finite-Lived Intangible Asset, Useful Life	5 years
Series G Preferred Stock
Business Acquisition [Line Items]
Business Acquisition, Equity Interest Issued or Issuable, Number of Shares	8,000
Business Acquisition, Equity Interest Issued or Issuable, Value Assigned	$ 140,000

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ACCOUNTS PAYABLE AND ACCRUED EXPENSES (Tables)

9 Months Ended

Sep. 30, 2013

Payables and Accruals [Abstract]

Accounts Payable and Accrued Liabilities

Accounts payable and accrued expenses consisted of the following:

	September 30,		December 31,
	2013		2012
Accounts payable	$	2,643,256	$	1,224,313
Owed to officer		10,050		-
Accrued interest		837,039		669,035
Accrued rent expense		135,874		135,874
Accrued salaries, bonuses and payroll taxes		726,784		612,712
Accrued professional fees		194,198		204,247
	$	4,547,201	$	2,846,181

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Key Assumptions Used In Connection With This Computation (Detail) (USD $)	9 Months Ended
	Sep. 30, 2013
Derivative [Line Items]
Number of shares	2,625,000
Convertible Debt Conversion Option Liability
Derivative [Line Items]
Number of shares	625,000
Conversion Price	$ 0.20
Risk-free interest rate	2.00%
Expected dividend yield	0.00%
Life	18 months
Convertible Debt Conversion Option Liability | Maximum
Derivative [Line Items]
Volatility	125.62%
Convertible Debt Conversion Option Liability | Minimum
Derivative [Line Items]
Volatility	123.00%
Warrant
Derivative [Line Items]
Number of shares	2,625,000
Conversion Price	$ 0.20
Risk-free interest rate	2.00%
Expected dividend yield	0.00%
Warrant | Maximum
Derivative [Line Items]
Volatility	126.70%
Life	18 months
Warrant | Minimum
Derivative [Line Items]
Volatility	120.60%
Life	15 months

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Short Term Debt - Related Parties, Net Of Debt Discount - Additional Information (Detail) (USD $)				9 Months Ended
	Sep. 30, 2013	Dec. 31, 2012	Nov. 30, 2009	Sep. 30, 2013 Convertible Notes Payable
Short Term Debt - Related Parties, Net Of Debt Discount [Line Items]
Proceeds from unsecured notes payable				$ 2,776,688
Debt instrument, interest rate, stated percentage	15.00%			12.00%
Debt outstanding			85,726	2,776,688
Debt discount	$ 103,465	$ 135,417		$ 385,349
Issuance of common stock (in shares)				2,093,750
Preferred stock, shares issued				4,307

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Derivative Liability - Additional Information (Detail) (USD $)	9 Months Ended
	Sep. 30, 2013	Dec. 31, 2012
Derivative [Line Items]
Common stock , par value	$ 0.001	$ 0.001
Common stock conversion rate		$ 0.20
Number of shares	2,625,000
Warrant exercisable period	36 months
Exercise price of warrants	$ 0.20

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ACCOUNTS PAYABLE AND ACCRUED EXPENSES

9 Months Ended

Sep. 30, 2013

Payables and Accruals [Abstract]

ACCOUNTS PAYABLE AND ACCRUED EXPENSES

7. ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable and accrued expenses consisted of the following:

	September 30,		December 31,
	2013		2012
Accounts payable	$	2,643,256	$	1,224,313
Owed to officer		10,050		-
Accrued interest		837,039		669,035
Accrued rent expense		135,874		135,874
Accrued salaries, bonuses and payroll taxes		726,784		612,712
Accrued professional fees		194,198		204,247
	$	4,547,201	$	2,846,181

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Purchase Price Allocation (Detail) (USD $)	Sep. 30, 2013
Purchase Price Allocation [Line Items]
Goodwill	$ 135,000
Purchase Price	240,000
Trademarks
Purchase Price Allocation [Line Items]
Intangible assets	100,000
Customer Lists
Purchase Price Allocation [Line Items]
Intangible assets	$ 5,000

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Commitments and Contingencies - Additional Information (Detail) (USD $)	Sep. 30, 2013
Commitments and Contingencies [Line Items]
2014	$ 1,800,000
2015	2,100,000
2016	2,700,000
2017	3,200,000
2018	3,800,000
Minimum royalty payments total	450,000
Debt instrument unamortized discount	$ 14,179

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DERIVATIVE LIABILITY

9 Months Ended

Sep. 30, 2013

Other Liabilities Disclosure [Abstract]

DERIVATIVE LIABILITY

10. DERIVATIVE LIABILITY

Secured Convertible Notes Conversion Option

In 2012, the Company issued notes that are convertible into shares of the Company’s common stock, par value $0.001 per share (the “Common Stock”) at a conversion price of $0.20 per share (the “Conversion Price.”)  The conversion feature was bifurcated from the Notes due to a down round provision in the terms of the conversion feature and accounted for as a derivative liability in the accompanying condensed balance sheet.

The Company recorded the conversion feature as a liability based upon its fair value on each reporting date.

The table below summarizes the fair values of the Company’s financial liabilities:

	Fair Value at
	September 30,		Fair Value Measurement Using
	2013		Level 1		Level 2		Level 3
Derivative liability – Conversion Feature	$	32,000		-		-	$	32,000
	$	32,000		-		-	$	32,000

The table below sets forth a summary of changes in the fair value of the Company’s Level 3 financial liabilities (Derivative liability – Conversion Feature) for the nine months ended September 30, 2013:

	September 30,
	2013
Balance at December 31, 2012	$	49,000
Additions to derivative instruments		-
Change in fair market value of Conversion Feature		(17,000)
Balance at September 30, 2013	$	32,000

The Company computed the fair value of the conversion feature using the Black-Scholes model.

The following are the key assumptions used in connection with this computation:

	September 30, 2013
Number of shares	625,000
Conversion Price	.20
Volatility	123.00 – 125.62%
Risk-free interest rate	2%
Expected dividend yield	0%
Life of Notes	18 months

Warrant Liability

In connection with the issuance of the Notes, the Company issued warrants to purchase up to 2,625,000 shares of Common Stock (the “Warrants”).  The Warrants are exercisable for a 36 month period of time since the date of issuance and have an exercise price of $0.20 per share (the “Exercise Price”).

The Warrants provide for anti-dilution protection in the event that any shares of Common Stock, or securities convertible into Common Stock, are issued at less than the Exercise Price. The Company accounts for the Warrants as derivative liabilities in the accompanying condensed balance sheet.

The Company computed the value of the warrants using the Black-Scholes model.

The following are the key assumptions used in connection with this computation:

	September 30, 2013
Number of shares	2,625,000
Conversion Price	.20
Volatility	120.60-126.70%
Risk-free interest rate	2%
Expected dividend yield	0%
Life of Warrants	15 - 18 months

The Company recognizes their derivative financial instruments as assets or liabilities in the financial statements and measures them at fair value with changes in fair value reflected as current period income or loss.

The table below summarizes the fair values of the Company’s financial liabilities:

	Fair Value at
	September 30,		Fair Value Measurement Using
	2013		Level 1		Level 2		Level 3
Derivative liability – Warrants	$	131,000		-		-	$	131,000
	$	131,000		-		-	$	131,000

The table below sets forth a summary of changes in the fair value of the Company’s Level 3 financial liabilities Derivative Liability - Warrant for the nine months ended September 30, 2013:

	September 30,
	2013
Balance at December 31, 2012	$	178,000
Canceled warrants		(19,000)
Change in fair market value of Warrants		(28,000)
Balance at September 30, 2013	$	131,000

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PREPAID EXPENSES

9 Months Ended

Sep. 30, 2013

Prepaid Expenses Disclosure [Abstract]

PREPAID EXPENSES

6. PREPAID EXPENSES

Prepaid expenses are for services that have been paid in advance primarily with stock that are amortized over the life of the contract. The agreements pertain to pricing structure, distribution, warehousing, inventory management, financial advisory services, pro athlete endorsements and licensing agreements.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

9 Months Ended

Sep. 30, 2013

Accounting Policies [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization

On March 15, 2010 the Company changed its name to Inergetics, Inc. Inergetics, Inc. (the Company or "Inergetics"), formerly Millennium Biotechnologies Group, Inc., is a holding company for its subsidiary Millennium Biotechnologies, Inc. ("Millennium").

Millennium was incorporated in the State of Delaware on November 9, 2000 and is located in New Jersey.  Millennium is a research based bio-nutraceutical corporation involved in the field of nutritional science.  Millennium’s principal source of revenue is from sales of its nutraceutical supplements, Resurgex Select® and Resurgex Essential™ and Resurgex Essential Plus™ which serve as a nutritional support for immuno-compromised individuals undergoing medical treatment for chronic debilitating diseases. Millennium has developed Surgex for the sport nutritional market. The Company acquired Bikini Ready®, a leader in weight loss lifestyle solutions and SlimTrim™, the affordable, premium value diet brand. The Company has a licensing agreement to sell the Martha Stewart Essentials line of supplements. The Company’s efforts going forward will focus on sales of Martha Stewart Essentials™ line of supplements, Surgex in powder and pill forms as well as powder and pills for Bikini Ready and pills for SlimTrim.

The accompanying unaudited condensed consolidated financial statements include the accounts of Inergetics, Inc. and its subsidiary. These condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Regulation S-X. Certain information in footnote disclosures normally included in financial statements prepared in conformity with accounting principles generally accepted in the United States of America has been condensed or omitted pursuant to such principles and the financial results for the periods presented may not be indicative of the full year’s results. The Company believes that the disclosures are adequate to make the information presented not misleading. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation have been included. These condensed consolidated financial statements should be read in conjunction with the December 31, 2012 audited financial statements and the accompanying notes thereto filed with the Securities and Exchange Commission on Form 10-K.

Principles of Consolidation

The condensed consolidated financial statements include the accounts of the Company and its subsidiary.  All significant inter-company transactions and balances have been eliminated.

Use of Estimates

The preparation of the financial statements in conformity with United States generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Goodwill

Goodwill and other acquired intangible assets with indefinite lives are not amortized, but are tested for impairment annually and when an event occurs or circumstances change such that it is more likely than not that an impairment may exist. Our annual testing date is December 31. We test goodwill for impairment by first comparing the carrying value of net assets to the fair value of the related operations. If the fair value is determined to be less than carrying value, a second step is performed to compute the amount of the impairment. In this process, a fair value for goodwill is estimated, based in part on the fair value of the operations, and is compared to its carrying value. The shortfall of the fair value below carrying value represents the amount of goodwill impairment. Intangibles consist of brand and trade names acquired in business combinations. We test these intangibles for impairment by comparing their carrying value to current projections of discounted cash flows attributable to the brand and trade names. Any excess carrying value over the amount of discounted cash flows represents the amount of the impairment.

Revenue Recognition

Revenue is recognized net of discounts, rebates, promotional adjustments, price adjustments and estimated returns and upon transfer of title and risk to the customer which occurs at shipping (F.O.B. terms). Upon shipment to various customers when all performance obligations are met and collectability is reasonably assured revenue is recognized. Upon shipment to specific customers with the right of return the Company defers revenues as returns are not reasonably estimable. As of September 30, 2013, deferred revenue totaled $1,358,186.

Deferred Revenue and Deferred Cost of Goods Sold

Deferred revenue consists substantially of amounts billed or payments received in advance of revenue recognition. Deferred cost of goods sold as of September 30, 2013 of $607,806, related to deferred product revenues includes direct product costs. Once all revenue recognition criteria have been met, the deferred revenues and associated cost of goods sold are recognized.

Income Taxes

The Company provides for income taxes based on enacted tax law and statutory tax rates at which items of income and expenses are expected to be settled in the Company’s income tax return. Certain items of revenue and expense are reported for Federal income tax purposes in different periods than for financial reporting purposes, thereby resulting in deferred income taxes. Deferred taxes are also recognized for operating losses that are available to offset future taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.

Loss Per Common Share

Net loss per share, in accordance with the provisions of ASC 260, “Earnings Per Share” is computed by dividing net loss by the weighted average number of shares of Common Stock outstanding during the period. Common Stock equivalents have not been included in this computation since the effect would be anti-dilutive. During a loss period, the effect of the potential exercise of stock options, warrants, convertible preferred stock and convertible debt are not considered in the diluted income (loss) per share calculation since the effect would be anti-dilutive.

Fair Value of Financial Instruments

For financial instruments including cash, accounts receivable, prepaid expenses, debt, accounts payable and accrued expenses, the carrying values approximated their fair value.

Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial statement. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates.

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Short Term Debt, Net of Debt Discount - Additional Information (Detail) (USD $)	9 Months Ended				1 Months Ended		1 Months Ended	9 Months Ended
	Sep. 30, 2013	Apr. 30, 2013	Dec. 31, 2012	Nov. 30, 2009	Apr. 30, 2013 Series G Preferred Stock	Dec. 31, 2012 Notes Payble	Jan. 31, 2013 Convertible Note 15%	Sep. 30, 2013 Convertible Note 15%	Sep. 30, 2013 Convertible Note 15% Accredited Investor
Short-term Debt [Line Items]
Debt outstanding				$ 85,726		$ 67,021
Accrued interest	51,876
Convertible preferred stock, shares issued upon conversion					250
Debt payable and Accrued interest		102,166
Debt conversion, converted instrument, shares issued					2,044
Preferred stock, value, issued					102,200
Gains (losses) on restructuring of debt	46,978
Troubled debt restructuring, debtor, current period, gain (loss) on restructuring, per share, net	$ 0.00
Proceeds from convertible debt								555,000
Repayments of convertible debt							30,000
Proceeds from unsecured notes payable									525,000
Conversion price of note			$ 0.20					$ 0.20
Debt discount	$ 103,465		$ 135,417					$ 76,305
Issuance of common stock (in shares)								656,250

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COMMITMENTS AND CONTINGENCIES

9 Months Ended

Sep. 30, 2013

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

13. COMMITMENTS AND CONTINGENCIES

The Company entered into a license agreement with minimum royalty payments totaling $1,800,000, $2,100,000, $2,700,000, $3,200,000 and $3,800,000 for each of the years ended 2014, 2015, 2016, 2017 and 2018, respectively. $450,000 was paid as of September 30, 2013 and recorded in prepaid expenses. The balance which has not been amortized is $14,179 as of September 30, 2013.

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SHORT TERM DEBT - RELATED PARTIES, NET OF DEBT DISCOUNT

9 Months Ended

Sep. 30, 2013

Debt Disclosure [Abstract]

SHORT TERM DEBT - RELATED PARTIES, NET OF DEBT DISCOUNT

9. SHORT TERM DEBT – RELATED PARTIES, NET OF DEBT DISCOUNT

In the first nine months of 2013, the Company realized gross proceeds of $2,776,688 in new cash. Proceeds from the sale of its 12.0% and 15.0% twelve month Unsecured Convertible Notes and Secured Promissory Notes, in the aggregate original principal amount of $2,776,688 (the “Notes”) to an accredited investor (the “Investor”).  Interest on the outstanding principal balance of the Notes is payable upon maturity of the note. The Company may prepay the Notes at any time without penalty to the Investors.

The Company issued 2,093,750 shares of common stock and 4,307 shares of Series G preferred stock for origination fees during the nine months ended September 30, 2013 and recorded a debt discount of $385,349.

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INVENTORIES (Tables)

9 Months Ended

Sep. 30, 2013

Disclosure - Inventories [Abstract]

Inventory

Inventories consist of work-in-process, raw materials, finished goods, and packaging for the Company’s Martha Stewart Essentials, SURGEX®, RESURGEX ESSENTIAL ®, Bikini Ready® and SlimTrim™ product lines. Cost-of-goods sold are calculated using the average costing method. Inventories consist of the following:

	September 30,		December 31,
	2013		2012
Finished Goods	$	267,963	$	2,344
Work in Process		-		49,200
Packaging		52,948		1,832
		320,911		53,376
Less: Reserve for obsolescence		-		(49,200)
Total	$	320,911	$	4,176

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

9 Months Ended

Sep. 30, 2013

Accounting Policies [Abstract]

Organization

Organization

On March 15, 2010 the Company changed its name to Inergetics, Inc. Inergetics, Inc. (the Company or "Inergetics"), formerly Millennium Biotechnologies Group, Inc., is a holding company for its subsidiary Millennium Biotechnologies, Inc. ("Millennium").

Millennium was incorporated in the State of Delaware on November 9, 2000 and is located in New Jersey.  Millennium is a research based bio-nutraceutical corporation involved in the field of nutritional science.  Millennium’s principal source of revenue is from sales of its nutraceutical supplements, Resurgex Select® and Resurgex Essential™ and Resurgex Essential Plus™ which serve as a nutritional support for immuno-compromised individuals undergoing medical treatment for chronic debilitating diseases. Millennium has developed Surgex for the sport nutritional market. The Company acquired Bikini Ready®, a leader in weight loss lifestyle solutions and SlimTrim™, the affordable, premium value diet brand. The Company has a licensing agreement to sell the Martha Stewart Essentials line of supplements. The Company’s efforts going forward will focus on sales of Martha Stewart Essentials™ line of supplements, Surgex in powder and pill forms as well as powder and pills for Bikini Ready and pills for SlimTrim.

The accompanying unaudited condensed consolidated financial statements include the accounts of Inergetics, Inc. and its subsidiary. These condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Regulation S-X. Certain information in footnote disclosures normally included in financial statements prepared in conformity with accounting principles generally accepted in the United States of America has been condensed or omitted pursuant to such principles and the financial results for the periods presented may not be indicative of the full year’s results. The Company believes that the disclosures are adequate to make the information presented not misleading. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation have been included. These condensed consolidated financial statements should be read in conjunction with the December 31, 2012 audited financial statements and the accompanying notes thereto filed with the Securities and Exchange Commission on Form 10-K.

Principles of Consolidation

Principles of Consolidation

The condensed consolidated financial statements include the accounts of the Company and its subsidiary.  All significant inter-company transactions and balances have been eliminated.

Use of Estimates

Use of Estimates

The preparation of the financial statements in conformity with United States generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Goodwill

Goodwill

Goodwill and other acquired intangible assets with indefinite lives are not amortized, but are tested for impairment annually and when an event occurs or circumstances change such that it is more likely than not that an impairment may exist. Our annual testing date is December 31. We test goodwill for impairment by first comparing the carrying value of net assets to the fair value of the related operations. If the fair value is determined to be less than carrying value, a second step is performed to compute the amount of the impairment. In this process, a fair value for goodwill is estimated, based in part on the fair value of the operations, and is compared to its carrying value. The shortfall of the fair value below carrying value represents the amount of goodwill impairment. Intangibles consist of brand and trade names acquired in business combinations. We test these intangibles for impairment by comparing their carrying value to current projections of discounted cash flows attributable to the brand and trade names. Any excess carrying value over the amount of discounted cash flows represents the amount of the impairment.

Revenue Recognition

Revenue Recognition

Revenue is recognized net of discounts, rebates, promotional adjustments, price adjustments and estimated returns and upon transfer of title and risk to the customer which occurs at shipping (F.O.B. terms). Upon shipment to various customers when all performance obligations are met and collectability is reasonably assured revenue is recognized. Upon shipment to specific customers with the right of return the Company defers revenues as returns are not reasonably estimable. As of September 30, 2013, deferred revenue totaled $1,358,186.

Deferred Revenue and Deferred Cost of Goods Sold

Deferred revenue consists substantially of amounts billed or payments received in advance of revenue recognition. Deferred cost of goods sold as of September 30, 2013 of $607,806, related to deferred product revenues includes direct product costs. Once all revenue recognition criteria have been met, the deferred revenues and associated cost of goods sold are recognized.

Income Taxes

Income Taxes

The Company provides for income taxes based on enacted tax law and statutory tax rates at which items of income and expenses are expected to be settled in the Company’s income tax return. Certain items of revenue and expense are reported for Federal income tax purposes in different periods than for financial reporting purposes, thereby resulting in deferred income taxes. Deferred taxes are also recognized for operating losses that are available to offset future taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.

Loss Per Common Share

Loss Per Common Share

Net loss per share, in accordance with the provisions of ASC 260, “Earnings Per Share” is computed by dividing net loss by the weighted average number of shares of Common Stock outstanding during the period. Common Stock equivalents have not been included in this computation since the effect would be anti-dilutive. During a loss period, the effect of the potential exercise of stock options, warrants, convertible preferred stock and convertible debt are not considered in the diluted income (loss) per share calculation since the effect would be anti-dilutive.

Fair Value of Financial Instruments

Fair Value of Financial Instruments

For financial instruments including cash, accounts receivable, prepaid expenses, debt, accounts payable and accrued expenses, the carrying values approximated their fair value.

Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial statement. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates.

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Document And Entity Information	9 Months Ended
	Sep. 30, 2013	Nov. 01, 2013
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2013
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	Q3
Trading Symbol	NRTI
Entity Common Stock, Shares Outstanding		61,850,448
Entity Registrant Name	INERGETICS INC
Entity Central Index Key	0000072170
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company

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BUSINESS ACQUISITION (Tables)

9 Months Ended

Sep. 30, 2013

Business Combinations [Abstract]

BUSINESS ACQUISITION

The Company’s preliminarily allocation to identifiable intangible assets and liabilities according to their respective fair values, which may be adjusted upon finalization of the valuation of net assets acquired, is as follows:

Intangible assets, trademarks	$	100,000
Intangible assets, customer list		5,000
Goodwill		135,000
Purchase Price	$	240,000