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21. ProElite, Inc.
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Dec. 31, 2011
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| Consolidation, Subsidiary Stock Issuances, Policy [Policy Text Block] |
21. ProElite,
Inc.
Effective
October 21, 2009, the Company entered into a Strategic
Investment Agreement with ProElite, Inc.
(“PEI”) pursuant to which PEI sold to the
Company, shares of PEI’s Series A Preferred Stock
(the “Preferred Shares”). The transaction
closed on June 14, 2011. The Preferred Shares are
convertible into the Common Stock of PEI. The amount of
shares of Common Stock issuable upon conversion on a
cumulative basis is equal to 95% of the sum of (a) the
issued and outstanding shares of PEI as of the closing
plus (b) any shares of PEI Common Stock issued after
the closing upon exercise or conversion of any
derivative securities of PEI outstanding as of the
closing, subject to any adjustment for stock splits,
stock dividends, recapitalizations etc. and, in all
cases, after giving effect to the shares issuable upon
conversion of the Preferred Shares. The purchase price
of the Preferred Shares was $2,000,000 which was used
by PEI for payment of outstanding liabilities of PEI,
general working capital and other corporate purposes
and repayment of all amounts due under a note of PEI
with respect to advances made to PEI by the Company of
$100,000. At the close, all of the previous directors
of PEI resigned and the board of directors of PEI
consists of two designees of the Company and one
designee of PEI. Paul Feller, the Company’s Chief
Executive Officer, became PEI’s Chief Executive
Officer. Certain present and former key PEI executives
continued with PEI. Upon the close of the transaction,
the Company recorded goodwill of $2,034,867. The
Company also recorded non-controlling interest of
$105,263 due to negative equity of PEI at June 30,
2011. The Company has consolidated the balance sheet of
PEI as of December 31, 2011. The results of operations
of PEI for the six months ended December 31, 2011 have
been consolidated into the Company’s results of
operations.
The
pro forma financial information presented below show the
consolidated operations of the Company as if the PEI
acquisition had occurred as of January 1, 2010:
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