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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)
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6 Months Ended |
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Jun. 30, 2012
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| Summary Of Significant Accounting Policies Policies | |
| Basis of Presentation |
The consolidated financial statements include the accounts of the Company and our wholly owned subsidiaries. Intercompany balances and transactions have been eliminated upon consolidation.
In June 2011, we effected a four-for-one forward-split of the shares of our common stock. All references to common stock activity in these financial statements have been retroactively restated so as to incorporate the effects of this stock-split.
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| Use of Estimates | The preparation of consolidated financial statements in conformity with the generally accepted accounting principles in the United States (“U.S. GAAP”) requires management to make estimates and assumptions in certain circumstances that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. The more significant estimates include, but are not limited to, the recognition of certain, valuation of intangible assets, goodwill and long-lived asset impairment charges, stock-based compensation, loss contingencies and the allowance for doubtful accounts receivable. Actual results could differ from those estimates. |
| Revenue Recognition | We derive our revenues from the sale of mobile applications through various platforms and through the sale of developer tools related to the mobile application industry. We recognize revenue when all of the following conditions are satisfied: (i) there is persuasive evidence of an arrangement; (ii) delivery of the product or provision of the service has occurred; (iii) the fee is fixed or determinable; and (iv) collectability of the fee is reasonably assured.
Mobile Phone Applications
Mobile phone applications are sold using multiple platforms. Each platform handles the sale, distribution or download, as well as the collection and remittance of payment for the company. We recognize mobile application revenue net of the amounts retained by the platform companies. There is no warranty or money-back guarantee related to the sale of mobile phone applications, therefore no deferred revenue or allowance for sales returns has been recorded.
Developer Tools
Developer tools revenue represents the Company’s revenue derived from the sale of educational videos, webinars, e-books and other materials developed by the Company and sold to customers seeking to develop and sell mobile phone applications to end users. Most of these products are sold with a 30-day money back guarantee. Therefore, we recognize revenue from the sale of developer tools ratably over the term of the contract, usually six weeks. Cash receipts in advance of revenue recognized are recorded within deferred revenue. |
| Cash and Cash Equivalents | We consider all highly liquid investments with remaining maturities of three months or less at the date of purchase to be cash and cash equivalents. Cash and cash equivalents consist primarily of money market funds and other short-term investments with original maturities of not more than three months stated at cost, which approximates market value. |
| Accounts Receivable and Allowance for Doubtful Accounts | Accounts receivable are presented at their face amount, less an allowance for doubtful accounts, on the consolidated balance sheets. Accounts receivable consist of revenue earned and currently due from customers. We evaluate the collectability of accounts receivable based on a combination of factors. We recognize reserves for bad debts based on estimates developed using standard quantitative measures which incorporate historical write-offs and current economic conditions. |
| Goodwill | Goodwill represents the excess of the purchase price of an acquired enterprise or assets over the fair value of the identifiable net assets acquired. We test goodwill for impairment in each quarter of the year, and whenever events or changes in circumstances arise during the year that indicate the carrying amount of goodwill may not be recoverable. In evaluating whether an impairment of goodwill exists, we first compare the estimated fair value of a reporting unit against its carrying value. If the estimated fair value is lower than the carrying value, then a more detailed assessment is performed comparing the fair value of the reporting unit to the fair value of the assets and liabilities plus the goodwill carrying value of the reporting unit. If the fair value of the reporting unit is less than the fair value of its assets and liabilities plus goodwill, then an impairment charge is recognized to reduce the carrying value of goodwill by the difference. The gross amount of goodwill at June 30, 2012 was $7,106,355 (December 31, 2011 - $2,977,934) with accumulated impairment of $6,332,308 (December 31, 2011 - $2,350,800). The net amount of goodwill at June 30, 2012 was $774,047 (December 31, 2011 - $627,134).
During the six months ended June 30, 2012, we recorded an impairment charge totaling $3,981,508 million related to purchased goodwill whose carrying amount exceeded its implied fair value (December 31, 2011 - $2,350,800). |
| Software Development Costs | We capitalize costs incurred during the application development stage relating to the development of our mobile applications. Costs related to preliminary project activities and post-implementation activities are expensed as incurred. We capitalized $54,119 and $-0- in software development costs for the six-month period ended June 30, 2012 and for the year ended December 31, 2011, respectively. Once placed into service, we anticipate amortizing these costs over a period of three years. Prior to 2011, costs incurred during the application development stage were not material and were expensed as incurred. |
| Going Concern | The Company's financial statements are prepared using generally accepted accounting principles in the United States of America applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs and allow it to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease operations.
In order to continue as a going concern, the Company will need, among other things, additional capital resources. Management's plan is to obtain such resources for the Company by seeking equity and/or debt financing. However management cannot provide any assurances that the Company will be successful in accomplishing any of its plans.
The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and attain profitable operations. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. |