The Company paid interest of $10,295 and $7,517 during the three months ended March 31, 2014 and 2013, respectively. The Company did not pay any taxes for the three months ended March 31, 2014 or 2013, respectively.
Promissory notes with principal of $1,053,387 and accrued interest of $63,341 for a total of $1,116,728 were converted to preferred stock during the three months ended March 31, 2014.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ORGANIZATION
(A)
Organization
LivingVentures, Inc. ("LV"), formerly known as Green Global Investments (GGI), was incorporated under the laws of the State of Florida on December 17, 1999. LV was originally organized to provide business services and financing to emerging growth entities involved in energy projects, and later redirected its business focus to market and to distribute energy-efficient products in China.
GGI (Asia) Limited (GGIA), a wholly owned subsidiary of LV, formerly known as C B Resources Limited (CBRL), was incorporated on July 6, 2010 under the laws of Hong Kong, China. The company was organized to build critical strategic relationships in the Asian capital markets, which will, in turn, provide funding for future investment projects to be undertaken by the Company. Management de-registered GGIA in December 2013.
CommerCenters, LLC (CC) was incorporated under the laws of the State of Florida on September 6, 2007. CC is a fully integrated, real estate investment and development firm, headquartered in Orlando, Florida, with clients and joint venture partners in properties located principally in Central Florida. CC is a wholly owned subsidiary of LV. The Company sold this entity on July 11, 2013 as more fully explained in NOTE 8 to the financial statements.
CommerCenters EB5 Regional Center Investments, LLC (CCEB), d/b/a Orlando EB5 Investments, is a Florida Limited Liability Company formed in 2009 as a 50%-owned subsidiary of CC. Orlando EB5 Investments was formed with the purpose of operating as a Regional Center through the United States Citizenship and Immigration Services EB5 program. The EB5 program was established to act as an incentive for foreign investors to invest in business opportunities in the U.S.A. by granting the foreign investor a conditional visa upon investment, and a permanent visa if the underlying investment results in the creation of ten jobs within the U.S.A. The Company sold this entity on July 11, 2013 as more fully explained in NOTE 8 to the financial statements.
LivingVentures Management, LLC (LVM), a wholly owned subsidiary of LV, was formed on March 22, 2012 as a Florida limited company. The company was formed for the carrying out of the operations of property and facility management. The initial phase of operations was implemented through collaborating with other business partners, until the acquisitions of ICMS Canada and US were completed.
LivingVentures Development, LLC (LVD), a wholly owned subsidiary of CC, was formed on June 29, 2012, as a Florida limited company. It is involved in the development of assisted living and other real estate projects.
2040177 Ontario Limited (ICMS-Canada), a 90% owned subsidiary of LV, was formed on January 30, 2004 as an Ontario corporation in Canada. The company was formed for the carrying out of the operations of property and facility management under the trade name of International Care Management Services (ICMS) and was acquired on September 12, 2012.
International Care Management Services Ltd. (ICMS-US), a 90% owned subsidiary of LV, was incorporated under the laws of the State of Washington on September 5, 2002. This company was acquired on September 12, 2012 and continued its operations under the trade name of LivingVentures Management.
LV and all of its subsidiaries, GGIA, CC, CCEB, LVM, LVD, ICMS-Canada, and ICMS-US, are hereafter referred to as the Company.
(B)
Interim Unaudited Financial Statements
The consolidated balance sheets of Living Ventures, Inc. and subsidiaries (the Company) as of March 31, 2014, and the consolidated statements of operations and cash flows for the three months ended March 31, 2014 and 2013, and the consolidated statement of stockholders equity for the three months ended March 31, 2014, have not been audited. However, in the opinion of management, such information includes all adjustments (consisting only of normal recurring adjustments) which are necessary to properly reflect the financial position of the Company as of March 31, 2014, and the results of its operations and cash flows for the three months then ended, and its changes in stockholders equity for the three months ended March 31, 2014.
6
LIVINGVENTURES, INC. AND SUBSIDIARIES
(FORMERLY KNOWN AS GREEN GLOBAL INVESTMENTS, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Certain information and notes normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted, although management believes that the disclosures are adequate to make the information presented not misleading and in conformity with the rules of the Securities and Exchange Commission. Interim period results are not necessarily indicative of the results to be achieved for an entire year. These financial statements should be read in conjunction with the financial statements and notes to financial statements included in the Companys financial statements as filed on Form 10-K for the year ended December 31, 2013.
(C)
Basis of Presentation
The accompanying audited consolidated financial statements include the accounts of LV, GGIA, CC, CCEB, LVM, LVD, ICMS-Canada, and ICMS-US. For the periods presented, GGIA did not have any business transactions recorded. All significant intercompany accounts and transactions have been eliminated.
(D)
Use of Estimates
In preparing financial statements in conformity with generally accepted accounting principles, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the reported period. Actual results could differ from those estimates.
(E)
Cash and Cash Equivalents
For purposes of the cash flow statements, the Company considers all highly liquid investments with original maturities of three months or less at the time of purchase to be cash equivalents.
(F)
Bank in Trust and Trust Funds Held
Cash funds held and controlled on behalf of customers/owners of certain facilities managed by the Company are classified as both an asset (Bank in Trust) and liability (Trust Funds Held) in the accompanying consolidated balance sheets.
(G)
Accounts Receivable
The Company extends unsecured credit to its customers in the ordinary course of business but mitigates the associated credit risk by actively pursuing past due accounts. There was no allowance for doubtful accounts provided as of March 31, 2014 and 2013.
(H)
Long-Lived Assets
In accordance with the ASC 360-10, Property, Plant, And Equipment , the Company reviews long-lived assets for
impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. If the Company determines that the sum of the undiscounted cash flows expected from the assets use and eventual disposal is less than the carrying amount of the asset, an impairment charge is recorded to the extent that the carrying amount exceeds the assets fair value. The Company did not experience any impairment losses on its long-lived assets during the three months ended March 31, 2014 and 2013.
(I)
Goodwill
Goodwill represents the excess of the cost of an acquired entity over the fair value of the acquired net assets. In accordance with ASC 350-20, Intangibles - Goodwill and Other, goodwill is not amortized, but is evaluated annually or when indicators of a potential impairment are present. The annual evaluation for impairment of goodwill is based on valuation models that incorporate assumptions and internal projections of expected future cash flows and operating plans. The Company determined that no impairment of goodwill was incurred for the nine months ended March 31, 2014 and 2013.
7
LIVINGVENTURES, INC. AND SUBSIDIARIES
(FORMERLY KNOWN AS GREEN GLOBAL INVESTMENTS, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(J)
Concentrations of Credit Risk
Financial instruments, which potentially subject the Company to concentration of credit risk, consist principally of cash and trade receivables. The Company places its cash with high credit quality institutions. At times such amounts may be in excess of the FDIC insurance limits. The Company has not experienced any losses in such account and believes that it is not exposed to any significant credit risk on the account. With respect to the trade receivables, the Company performs ongoing credit evaluations of its customers financial condition and maintains allowances for potential credit losses. Actual losses and allowances, if any, have historically been within managements expectations.
(K)
Earnings (Loss) per Share
Basic and diluted net earnings per common share is computed based upon the weighted average common shares outstanding as defined by FASB ASC Topic 260
"Earnings per Share."
As of March 31, 2014 and 2013, those securities that were common stock equivalents were not considered in computing basic and diluted earnings per share because of their antidilutive effect.
(L)
Income Taxes
The Company accounts for income taxes under FASB ASC Topic 740
Income Taxes.
Under Topic 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under Topic 740, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
(M)
Property and Equipment
The Company values its property and equipment at cost and depreciates these assets using the straight-line method over their expected useful life. The Company uses a three to seven-year life for various office equipment.
(N)
Business Segments
The Company has determined that it has two reporting segments for management purposes. One segment is property and facility management and services; the second is real estate investment and development.
(O)
Revenue Recognition
The Company recognized revenue on arrangements in accordance with Securities and Exchange Commission Staff Accounting Bulletin No. 101,
Revenue Recognition in Financial Statements and
No. 104,
Revenue Recognition"
. In all cases, revenue is recognized only when the price is fixed and determinable, persuasive evidence of an arrangement exists, the service is performed and collectability of the resulting receivable is reasonably assured.
(P)
Recent Accounting Pronouncements
No recent accounting pronouncements that affect the Company were issued. The adoption of the accounting pronouncements, including those not yet effective, is not anticipated to have a material effect on the financial position or results of operations of the Company.
(Q)
Financial Statement Reclassifications
Certain items in the Companys 2013 financial statements have been reclassified to conform to the Companys 2014 financial statement presentation format. The reclassifications did not have a material effect on the financial statements.
8
LIVINGVENTURES, INC. AND SUBSIDIARIES
(FORMERLY KNOWN AS GREEN GLOBAL INVESTMENTS, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2.
ACQUISITIONS
On March 5, 2012, LV entered into and closed a Membership Interest and Share Exchange Agreement (the Agreement) with CC, pursuant to which, the Company acquired 100% of the outstanding units of CC from its members. Under the terms of the Agreement, the Company paid the selling members of CC by issuing the members 24,580,000 of its common shares.
The fair value of the consideration transferred consisted of the following:
|
|
|
|
Fair value of 24,580,000 shares issued
|
|
$
|
307,250
|
In addition, 946,330 shares were issued to a board member as compensation for completing the transaction.
On July 11, 2013 the Company sold its interest in CC to related parties discussed in NOTE 6.
On September 12, 2012, LV entered into and closed the following two contracts with Mr. David B. Edwards, who was the owner of 100% of the issued and outstanding shares of all classes of stock of ICMS-Canada and ICMS-US:
Stock Exchange Agreement - under the terms and conditions of this agreement, GGI acquired 90% of the capital stock of ICMS-US from Mr. David Edwards. In exchange for the 90% capital stock of ICMS-US, LV issued 7,315,000 of its common shares to Mr. Edwards.
The fair value of the consideration transferred consisted of the following:
|
|
|
|
|
|
Fair value of 7,315,000 shares issued
|
|
$
|
1,097,250
|
Stock Purchase Agreement - under the terms and conditions of this agreement, GGI acquired 1,100 of the total 1,223 shares of issued and outstanding voting common stock of ICMS-Canada from Mr. David Edwards for a cash purchase price of US$250,000.
The Company recorded the acquired tangible and identifiable intangible assets and liabilities assumed based on their estimated fair values. The excess of the consideration transferred over the aggregate fair values of the assets acquired and liabilities assumed is recorded as goodwill. The amount of goodwill recognized is primarily attributable to the operating synergies and business expansion expected to be realized through the acquisitions of CC, ICMS-Canada, ICMS-US and the business expertise of the acquired businesses. The fair value assigned to identifiable intangible assets acquired was based on estimates and assumptions made by the management.
9
LIVINGVENTURES, INC. AND SUBSIDIARIES
(FORMERLY KNOWN AS GREEN GLOBAL INVESTMENTS, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The estimated fair values of the assets acquired and liabilities assumed in the three aforementioned acquisition transactions are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CC Group
|
|
|
ICMS-Canada
|
|
|
ICMS-US
|
|
|
Total
|
|
Assets Acquired:
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
30,759
|
|
|
$
|
23,645
|
|
|
$
|
1,156
|
|
|
$
|
55,560
|
|
Accounts Receivable
|
|
|
51,314
|
|
|
|
42,976
|
|
|
|
624
|
|
|
|
94,914
|
|
Subscription Receivable
|
|
|
200,000
|
|
|
|
|
|
|
|
|
|
|
|
200,000
|
|
Other Current Assets
|
|
|
|
|
|
|
13,785
|
|
|
|
|
|
|
|
13,785
|
|
Deposits and Other Assets
|
|
|
192,970
|
|
|
|
217,799
|
|
|
|
1,060
|
|
|
|
411,829
|
|
Amount due from Affiliates
|
|
|
|
|
|
|
265,726
|
|
|
|
|
|
|
|
265,726
|
|
Furniture, Fixtures and Equipment, net
|
|
|
1,529
|
|
|
|
12,718
|
|
|
|
|
|
|
|
14,247
|
|
Total Assets Acquired
|
|
$
|
476,572
|
|
|
$
|
576,649
|
|
|
$
|
2,840
|
|
|
$
|
1,056,061
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities Assumed:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts Payable
|
|
$
|
(11,704
|
)
|
|
$
|
(514,217
|
)
|
|
$
|
(6,625
|
)
|
|
$
|
(532,546
|
)
|
Notes Payable
|
|
|
(344,474
|
)
|
|
|
|
|
|
|
(81,122
|
)
|
|
|
(425,596
|
)
|
Amount due to Affiliates
|
|
|
(253,869
|
)
|
|
|
|
|
|
|
(265,726
|
)
|
|
|
(519,595
|
)
|
Shareholder Advances
|
|
|
|
|
|
|
|
|
|
|
(65,450
|
)
|
|
|
(65,450
|
)
|
Total Liabilities Assumed
|
|
|
(610,047
|
)
|
|
|
(514,217
|
)
|
|
|
(418,923
|
)
|
|
|
(1,543,187
|
)
|
Non-Controlling Interest:
|
|
|
(48,983
|
)
|
|
|
(6,243
|
)
|
|
|
21,213
|
|
|
|
(34,013
|
)
|
Total Identifiable Liabilities
|
|
|
(182,458
|
)
|
|
|
56,189
|
|
|
|
(394,870
|
)
|
|
|
(521,139
|
)
|
Goodwill
|
|
|
489,708
|
|
|
|
193,811
|
|
|
|
1,492,120
|
|
|
|
2,175,639
|
|
Total Acquisition Price
|
|
$
|
307,250
|
|
|
$
|
250,000
|
|
|
$
|
1,097,250
|
|
|
$
|
1,654,500
|
|
The acquisitions allow LV to diversify its business from marketing and distributing energy-saving products in China into the acquisition, development and operation of senior housing communities in North America.
Management believes that the benefit derived from the acquisitions in the form of goodwill will be fully recoverable over the future periods of operations.
NOTE 3.
PROPERTY, PLANT AND EQUIPMENT
As of March 31, 2014 and December 31, 2013, property, plant, and equipment consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
2014
|
|
2013
|
|
Estimated
Useful Life
|
Office Equipment
|
|
$
|
41,724
|
|
$
|
41,724
|
|
3-7 years
|
Less: Accumulated Depreciation
|
|
|
38,777
|
|
|
37,184
|
|
|
|
|
$
|
2,947
|
|
$
|
4,540
|
|
|
Depreciation and amortization expense was $1,593 and $2,000 for the periods ended March 31, 2014 and 2013, respectively, and is included in General and Administrative expense in the accompanying Statements of Operations.
NOTE 4.
NOTES PAYABLE
The United Midwest Savings Bank promissory note bears interest at the rate of 6%, requires monthly payments of interest and principal of $961 and is due upon demand. The note is personally guaranteed by a principal of the Company. The outstanding balance owed as of March 31, 2014 and December 31, 2013 was $40,131 and $43,246 respectively.
The CNL Bank promissory note bears interest at the rate of 7.0%, requires monthly payments of interest and principal in the amount of $10,332 and is due January 21, 2015. The note is personally guaranteed by a principal of the Company as well as its former subsidiary, CCEB. On February 10, 2014 CNL Bank replaced the line of credit with a promissory note in the amount of $119,828. The outstanding balance owed under the promissory note as of March 31, 2014 was $100,495. The outstanding balance owed under the line of credit as of December 31, 2013 was $122,619.
10
LIVINGVENTURES, INC. AND SUBSIDIARIES
(FORMERLY KNOWN AS GREEN GLOBAL INVESTMENTS, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
As part of the terms in the sale of assets agreement discussed in NOTE 1 (B) above, LV agreed to issue a 3-year, unsecured note, in the amount of $582,560, payable to CCRE. The note bears an annual interest at a rate of 4%. Under the terms of the note, LV shall pay the accrued interest yearly and repay the principal of the note on June 15, 2015. On March 31, 2014 with an effective date of January 31, 2014 the entire principal amount of the note plus accrued interest was converted into 62,055 shares of preferred stock.
On March 3, 2011, Mancal Lifestyles Inc. (Mancal), an Alberta, Canada, corporation released its 15% shareholding in both ICMS-Canada and ICMS-US. As part of the change, each of ICMS-Canada and ICMS-US created an unsecured promissory note in the amount of $128,275 and $112,417, respectively. Both of the notes bear an annual interest rate of 7.5% and with a maturity date of July 31, 2014, payable to Mancal. The promissory notes were for the replacement of pre-existing loans owed to Mancal by ICMS-Canada and ICMS-US. The outstanding balance owed by ICMS-Canada as of March 31, 2014 and December 31, 2013 amounted to $16,336 and $29,429 respectively and that by ICMS-US $15,817 and $27,425 respectively.
On December 9, 2013, the Company issued an unsecured convertible note payable to Ironwood Investments, Inc. in the amount of $250,000. The note bears interest at 15% and is payable quarterly, with principal balance due December 9, 2014.
NOTE 5.
RELATED PARTY TRANSACTIONS
In September 2012, the Company issued unsecured notes payable to three of its principals for cash advances made to fund an acquisition and certain operating costs. The notes total $785,827, bear interest at the rate of 5% and $535,827 is due in one year. $250,000 of the above total was transferred to a new note in March 2014 and is due in January 2017. In November 2013 the Company issued an additional unsecured note payable to one of the three principals in the amount of $50,000, bearing interest at 10% and due November 2014.
The Company also has received non-interest bearing advances from time to time from its principals. Such advances were used for operating costs, such as payroll and benefits and amounted to $94,635 and $130,278 at March 31, 2014 and 2013 respectively.
On December 31, 2011, the Company divested its 80% interest in Realvest Development LLC through a transaction whereby its interest was transferred to a principal of the Company who had previously held such interest. As of March 31, 2014 and December 31, 2013 the company owed to this former subsidiary $242,786. Realvest Development, LLC and the principal (as guarantor) will remain obligated under a note of agreement with a bank that substantially provided this funding to the CC subsidiary.
On July 11, 2013, the Company closed a Purchase and Sale Agreement (the Agreement) with Richard A. Asta, the Companys CEO, the Companys Chairman of the Board and other shareholders of the Company along with third parties (the Buyers). The Buyers purchased one hundred percent (100%) of the Membership interests of the Companys 100% subsidiary, CommerCenters, LLC and 100% of the membership interests of the Companys 50% owned subsidiary, CommerCenters EB5 Regional Center Investments, LLC. Pursuant to the terms of the agreement the Company received cash of $59,260, a short term promissory note of $22,222 and accounts receivable of $18,518 and a pledge by the buyer to pay the Company $125,410 at a future date in consideration of the Companys assumption of certain liabilities. As of December 31, 2013 the total amount of $225,410 was received.
The Company reported a loss in third quarter of 2013 from the sale of the above CommerCenters, LLC and CommerCenters EB5 Regional Center Investments LLC in the amount of $263,452. The loss includes $489,708 in Goodwill that was written off upon sale of said entities.
The Company was obligated pursuant to a Consulting Agreement with a company owned by its Chairman of the Board for a 12 month period ended November 1, 2013. In 2013 the Company paid the related entity $100,919 with a remaining amount owed of $43,081. After the expiration of the consultancy agreement, the related party continued providing the same services as outlined in said agreement for which the Company accrued $68,000. As of March 31, 2014 and December 31, 2013 the Company owed the related entity $148,082 and $111,081 respectively which is included in the accrued expenses.
11
LIVINGVENTURES, INC. AND SUBSIDIARIES
(FORMERLY KNOWN AS GREEN GLOBAL INVESTMENTS, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 6.
STOCKHOLDERS EQUITY
In March 2012 (and as later amended), the Board authorized a private placement offering of up to 24,000,000 shares at a price of $0.25 per share. Through December 31, 2012, the Company issued 2,200,000 shares under this offering.
In 2013 the Company issued 3,724,000 shares under this offering and received $806,000.
In 2013 the Company issued 300,000 shares to its employees as stock compensation valued at $75,000.
Conversion of Debt to Equity:
On March 31, 2014, LV agreed with the related party holders of promissory notes with an aggregate amount of principal and interest outstanding of approximately $1,116,728 to convert the promissory notes into an aggregate of 111,673 shares of the Companys newly created Series A Preferred Stock, par value $0.001 per share (the Series A Preferred Stock).
On March 31, 2014, the Company filed with the State of Florida an Amendment to the Companys Articles of Incorporation, as amended, designating the preferences, rights and limitations of the Companys newly created Series A Preferred Stock, authorized 1,000,000 shares, par value of $0.001.
The Series A Preferred Stock pays a 2% annual dividend and will have a liquidation preference of $10.00 per share. However, dividends shall be payable only if declared by the Board of Directors. Holders of the Series A Preferred Stock do not have voting rights. Each holder of the Series A Preferred Stock has the right to exercise a put option following March 31, 2019, pursuant to which such holders shares will be purchased at a purchase price equal to $10.00 per share, plus the accrued but unpaid 2% annual dividend. The Company has the right at any time to redeem such shares of Series A Preferred Stock at a purchase price equal to $10.00 per share, plus the accrued but unpaid 2% annual dividend.
With respect to the payment of dividends and amounts upon liquidation, the Series A Preferred Stock will rank senior to the Companys common stock. In the event of the Companys liquidation, dissolution or winding up, the holders of the Series A Preferred Stock are entitled to be paid out of the Companys assets legally available for distribution to its shareholders a liquidating distribution in cash or property equal to a liquidation preference of $10.00 per share, plus an amount equal to any accrued and unpaid dividends to the date of payment, before any distribution of assets is made to holders of the Companys common stock.
In the third quarter 2013 the Company entered into an operating agreement with real estate developers. Pursuant to the terms of the operating agreement the Company will search for land, equity and financing suitable for the development of Senior Housing communities. The parties formed LivingVentures Consortium Group One, LLC a Florida limited liability company. Pursuant to the terms of the agreement, each real estate developer entered into a subscription agreement requiring each to purchase 1,200,000 common shares of the Company for $300,000. In 2013 the Company received $600,000 from the developers, in exchange for 2,400,000 issued shares prior to year end.
NOTE 7.
INCOME TAXES
The Company considers any tax loss carryforwards and temporary differences which constitute a net tax benefit and establishes a valuation reserve if it believes it is more likely than not that the benefit would not be fully utilized in the available carryforward period. This assessment is based on an evaluation of the level of historical taxable income and projections for future taxable income. As of March 31, 2014, the Company provided a 100% valuation allowance against any potential future tax benefits due to the uncertainty of their future realization.
The Company and/or its subsidiaries are subject to US federal and state and Canadian income tax audits. The Company believes that adequate amounts have been reserved for any adjustments that may ultimately result from these examinations.
12
LIVINGVENTURES, INC. AND SUBSIDIARIES
(FORMERLY KNOWN AS GREEN GLOBAL INVESTMENTS, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 8.
EARNINGS (LOSS) PER SHARE
The calculation of earnings (loss) per share is solely based upon the weighted average number of shares outstanding during the respective periods presented. Both basic and diluted earnings (loss) per share were calculated utilizing the weighted average shares of 63,645,330 and 60,052,441 as of March 31, 2014 and 2013, respectively. Common stock equivalents were not considered because of their antidilutive effect.
NOTE 9.
LEASE COMMITMENTS
Lease commitments refer mainly to office space and include office equipment and vehicle lease. Minimum lease payments as of March 31, 2014 are as follows:
|
|
|
|
|
|
Within one year
|
|
|
$
|
88,101
|
|
In the second year
|
|
|
|
86,747
|
|
In the third to the fifth year
|
|
|
|
166,941
|
|
After the fifth year
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
$
|
341,789
|
|
NOTE 10.
SEGMENT REPORTING
ASC 280 - Segment Reporting establishes annual and interim reporting standards for an enterprise's business segments and related disclosures about its products, services, geographic areas and major customers. The method for determining what information to report is based upon the way management organizes the operating segments within the Company for making operating decisions and assessing financial performance. After the acquisitions and the sale of CCRE, the Company has determined that it has two reportable segments, one of property and facility management; and the other of real estate investment and development. Both of the two segmental operations were acquired in 2012, and revenue and other information for these segments are presented by grouping similar products and services.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months
Ended March 31
|
|
|
|
|
|
|
|
2014
|
|
2013
|
|
Revenue from External Customers:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property and Facility Management
|
|
|
|
|
|
|
|
$
|
62,015
|
|
$
|
194,869
|
|
Real Estate
|
|
|
|
|
|
|
|
|
200,000
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
$
|
262,015
|
|
$
|
194,869
|
|
Interest Expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property and Facility Management
|
|
|
|
|
|
|
|
$
|
1,205
|
|
$
|
2,736
|
|
Real Estate
|
|
|
|
|
|
|
|
|
2,577
|
|
|
4,760
|
|
Total
|
|
|
|
|
|
|
|
$
|
3,782
|
|
$
|
7,496
|
|
Depreciation and Amortization:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property and Facility Management
|
|
|
|
|
|
|
|
$
|
1,344
|
|
$
|
1,519
|
|
Real Estate
|
|
|
|
|
|
|
|
|
249
|
|
|
481
|
|
Total
|
|
|
|
|
|
|
|
$
|
1,593
|
|
$
|
2,000
|
|
13
LIVINGVENTURES, INC. AND SUBSIDIARIES
(FORMERLY KNOWN AS GREEN GLOBAL INVESTMENTS, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 11.
STOCK OPTION PLAN
Overview
On December 18, 2007, our board of directors authorized, and holders of a majority of our outstanding common stock approved and adopted, our 2007 Stock Option and Stock Award Plan covering 3,000,000 shares of common stock.
The purpose of the plan is to encourage stock ownership by our officers, directors, key employees and consultants, and to give such persons a greater personal interest in the success of our business and an added incentive to continue to advance and contribute to us. Our board of directors, or a committee of the board, will administer the Plan including, without limitation, the selection of the persons who will be awarded stock grants and granted options, the type of options to be granted, the number of shares subject to each option and the exercise price.
Plan options may either be options qualifying as incentive stock options under Section 422 of the Internal Revenue Code of 1986, as amended or non-qualified options. In addition, the plan allows for the inclusion of a reload option provision, which permits an eligible person to pay the exercise price of the option with shares of common stock owned by the eligible person and receive a new option to purchase shares of common stock equal in number to the tendered shares. Furthermore, compensatory stock amounts may also be issued. Any incentive option granted under the plan must provide for an exercise price of not less than 100% of the fair market value of the underlying shares on the date of grant, but the exercise price of any incentive option granted to an eligible employee owning more than 10% of our outstanding common stock must not be less than 110% of fair market value on the date of the grant. The term of each plan option and the manner in which it may be exercised is determined by the board of directors or the committee, provided that no option may be exercisable more than 10 years after the date of its grant and, in the case of an incentive option granted to an eligible employee owning more than 10% of the common stock, no more than five years after the date of the grant. During the three months ended March 31, 2014 and 2013 we did not grant any options under the plan, nor were there any options outstanding as of March 31, 2014 and 2013.
Eligibility
Our officers, directors, key employees and consultants are eligible to receive stock grants and non-qualified options under the plan. Only our employees are eligible to receive incentive options.
Administration
The plan will be administered by our board of directors or an underlying committee. The board of directors or the committee determines from time to time those of our officers, directors, key employees and consultants to whom stock grants or plan options are to be granted, the terms and provisions of the respective option agreements, the time or times at which such options shall be granted, the type of options to be granted, the dates such plan options become exercisable, the number of shares subject to each option, the purchase price of such shares and the form of payment of such purchase price. All other questions relating to the administration of the plan, and the interpretation of the provisions thereof and of the related option agreements, are resolved by the board of directors or committee.
Shares Subject to Awards
We have currently reserved 5,000,000 of our authorized but unissued shares of common stock for issuance under the plan, and a maximum of 5,000,000 shares may be issued, unless the plan is subsequently amended, subject to adjustment in the event of certain changes in our capitalization, without further action by our board of directors and stockholders, as required. Subject to the limitation on the aggregate number of shares issuable under the plan, there is no maximum or minimum number of shares as to which a stock grant or plan option may be granted to any person. Shares used for stock grants and plan options may be authorized and unissued shares or shares reacquired by us, including shares purchased in the open market. Shares covered by plan options which terminate unexercised will again become available for grant as additional options, without decreasing the maximum number of shares issuable under the plan, although such shares may also be used by us for other purposes.
14
LIVINGVENTURES, INC. AND SUBSIDIARIES
(FORMERLY KNOWN AS GREEN GLOBAL INVESTMENTS, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The plan provides that, if our outstanding shares are increased, decreased, exchanged or otherwise adjusted due to a share dividend, forward or reverse share split, recapitalization, reorganization, merger, consolidation, combination or exchange of shares, an appropriate and proportionate adjustment will be made in the number or kind of shares subject to the plan or subject to unexercised options and in the purchase price per share under such options. Any adjustment, however, does not change the total purchase price payable for the shares subject to outstanding options. In the event of our proposed dissolution or liquidation, a proposed sale of all or substantially all of our assets, a merger or tender offer for our shares of common stock, the board of directors may declare that each option granted under the Plan terminates as of a date to be fixed by the board of directors; provided that not less than 30 days written notice of the date so fixed shall be given to each participant holding an option, and each such participant shall have the right, during the period of 30 days preceding such termination, to exercise the participant's option, in whole or in part, including as to options not otherwise exercisable.
Terms of Exercise
The plan provides that the options granted thereunder shall be exercisable from time to time in whole or in part, unless otherwise specified by the committee or by the board of directors.
The plan provides that, with respect to incentive stock options, the aggregate fair market value (determined as of the time the option is granted) of the shares of common stock, with respect to which incentive stock options are first exercisable by any option holder during any calendar year shall not exceed $100,000.
Exercise Price
The purchase price for shares subject to incentive stock options must be at least 100% of the fair market value of our common stock on the date the option is granted, except that the purchase price must be at least 110% of the fair market value in the case of an incentive option granted to a person who is a "10% stockholder." A "10% stockholder" is a person who owns, within the meaning of Section 422(b)(6) of the Internal Revenue Code of 1986, at the time the incentive option is granted, shares possessing more than 10% of the total combined voting power of all classes of our outstanding shares. The plan provides that fair market value shall be determined by the board of directors or the committee in accordance with procedures which it may from time to time establish. If the purchase price is paid with consideration other than cash, the Board or the Committee shall determine the fair value of such consideration to us in monetary terms.
The exercise price of non-qualified options shall be determined by the board of directors or the committee, but shall not be less than the par value of our common stock on the date the option is granted.
The per share purchase price of shares issuable upon exercise of a plan option may be adjusted in the event of certain changes in our capitalization, but no such adjustment shall change the total purchase price payable upon the exercise in full of options granted under the plan.
Manner of Exercise
Plan options are exercisable by delivery of written notice to us stating the number of shares with respect to which the option is being exercised, together with full payment of the purchase price therefor. Payment shall be in cash, checks, certified or bank cashier's checks, promissory notes secured by the shares issued through exercise of the related options, shares of common stock or in such other form or combination of forms which shall be acceptable to the board of directors or the committee, provided that any loan or guarantee by us of the purchase price may only be made upon resolution of the board of directors or committee that such loan or guarantee is reasonably expected to benefit us.
Option Period
All incentive stock options shall expire on or before the tenth anniversary of the date the option is granted except as limited above. However, in the case of incentive stock options granted to an eligible employee owning more than 10% of the common stock, these options will expire no later than five years after the date of the grant. Non-qualified options shall expire 10 years and one day from the date of grant unless otherwise provided under the terms of the option grant.
15
LIVINGVENTURES, INC. AND SUBSIDIARIES
(FORMERLY KNOWN AS GREEN GLOBAL INVESTMENTS, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Termination
All plan options are nonassignable and nontransferable, except by will or by the laws of descent and distribution, and during the lifetime of the optionee, may be exercised only by such optionee. If an optionee shall die while our employee or within three months after termination of employment by us because of disability, or retirement or otherwise, such options may be exercised, to the extent that the optionee shall have been entitled to do so on the date of death or termination of employment, by the person or persons to whom the optionee's right under the option pass by will or applicable law, or if no such person has such right, by his executors or administrators.
In the event of termination of employment because of death while an employee or because of disability, the optionee's options may be exercised not later than the expiration date specified in the option or one year after the optionee's death, whichever date is earlier, or in the event of termination of employment because of retirement or otherwise, not later than the expiration date specified in the option or one year after the optionee's death, whichever date is earlier.
If an optionee's employment by us terminates because of disability and such optionee has not died within the following three months, the options may be exercised, to the extent that the optionee shall have been entitled to do so at the date of the termination of employment, at any time, or from time to time, but not later than the expiration date specified in the option or one year after termination of employment, whichever date is earlier.
If an optionee's employment shall terminate for any reason other than death or disability, optionee may exercise the options to the same extent that the options were exercisable on the date of termination, for up to three months following such termination, or on or before the expiration date of the options, whichever occurs first. In the event that the optionee was not entitled to exercise the options at the date of termination or if the optionee does not exercise such options (which were then exercisable) within the time specified herein, the options shall terminate.
If an optionee's employment shall terminate for any reason other than death, disability or retirement, all right to exercise the option shall terminate not later than 90 days following the date of such termination of employment.
If an optionee's employment with us is terminated for any reason whatsoever, and within three months after the date thereof optionee either (i) accepts employment with any competitor of, or otherwise engages in competition with us, or (ii) discloses to anyone outside our company or uses any confidential information or material of our company in violation of our policies or any agreement between the optionee and our company, the committee, in its sole discretion, may terminate any outstanding stock option and may require optionee to return to us the economic value of any award that was realized or obtained by optionee at any time during the period beginning on that date that is six months prior to the date optionee's employment with us is terminated.
The committee may, if an optionee's employment with us is terminated for cause, annul any award granted under this plan to such employee and, in such event, the committee, in its sole discretion, may require optionee to return to us the economic value any award that was realized or obtained by optionee at any time during the period beginning on that date that is six months prior to the date optionee's employment with us is terminated.
Modification and Termination of Plan
The board of directors or committee may amend, suspend or terminate the plan at any time. However, no such action may prejudice the rights of any holder of a stock grant or optionee who has prior thereto been granted options under the plan. Further, no amendment to this plan which has the effect of (a) increasing the aggregate number of shares subject to this plan (except for adjustments due to changes in our capitalization), or (b) changing the definition of "Eligible Person" under the plan, may be effective unless and until approved by our stockholders in the same manner as approval of this plan is required. Any such termination of the plan shall not affect the validity of any stock grants or options previously granted thereunder. Unless the plan shall theretofore have been suspended or terminated by the board of directors, the plan will terminate on December 18, 2017.
16
LIVINGVENTURES, INC. AND SUBSIDIARIES
(FORMERLY KNOWN AS GREEN GLOBAL INVESTMENTS, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 12.
GOING CONCERN
The Company sustained an accumulated net loss of $4,976,320 for the period from December 17, 1999 (inception) to March 31, 2014. This raises substantial doubt about its ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Companys ability to raise additional capital and implement its business plan. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
NOTE 13.
WARRANTS
During the three months ended March 31, 2014 the Company issued two notes payable that contained, in the aggregate, 125,000 warrants entitling the holders thereof to purchase 125,000 shares of the Companys common stock for a period of five years from the issuance date of the notes payable. The 125,000 warrants were outstanding and exercisable as of March 31, 2014.
The exercise price of each of the warrants is $0.25 per share. At the time of issuance of the warrants, and as of March 31, 2014, the common stock price was lower than the $0.25 exercise price; accordingly, the warrants had no intrinsic value.
The expiration dates of the warrants are as follows: (a) 75,000 warrants expire on February 18, 2019 (b) 50,000 warrants expire on March 4, 2019. Accordingly, as of March 31, 2014 the weighted average remaining contractual term in years is 4.9.
Pursuant to ASC 718, the Company estimates the fair value of warrants based on the grant date using the Black-Scholes valuation model. The fair value of warrants issued with debt is recorded as a debt discount and amortized over the life of the debt. The range of fair value assumptions related to warrants outstanding as of March 31, 2014 were as follows: (a) dividend yield 0% (b) risk-free rate 1.84% to 1.97% (c) expected volatility 71.8% (d) expected term 5 years.
The expected volatility was calculated based on the historical volatility of a publicly traded peer entity as determined by the Company. The risk free interest rate used was based on the U.S. Treasury constant maturity rate in effect at the time of grant for the expected term of the warrants to be valued. The expected dividend yield was zero, as the Company does not anticipate paying a dividend within the relevant time frame. The expected warrant term is the life of the warrant.
The Company determined that the value of the 125,000 warrants, which totaled $8,344, was immaterial and, accordingly, the value of the warrants were not recorded by the Company and not included in its financial statements.
NOTE 14.
SUBSEQUENT EVENTS
The Company has evaluated subsequent events through May 19, 2014, the date of the issuance of the financial statements, and has determined that there are no items to disclose.
17
ITEM 2.