NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING
BASIS OF PRESENTATION AND PRINCIPLES
consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States
of America ("US GAAP"). The consolidated financial statements include the accounts of the Company and 800 Commerce,
which was wholly owned until June 1, 2011 when 800 Commerce began to sell shares of its common stock.
All material intercompany balances and transactions have been eliminated
On January 1, 2011, the Company
adopted authoritative accounting guidance that requires the ownership interests in subsidiaries held by parties other than the
parent, and income attributable to those parties, be clearly identified and distinguished in the parents consolidated financial
statements. The Companys noncontrolling interest is now disclosed as a separate component of the Companys consolidated
equity on the balance sheets. Earnings and other comprehensive income are separately attributed to both the controlling and noncontrolling
interests. Earnings per share is calculated based on net income attributable to the Companys controlling interest.
From January 1, 2011 through May 31,
2011 the Company owned 100% of 800 Commerce. From June 1, 2011 through October 1, 2011 800 Commerce sold 155,000 shares of its
common stock and issued 1,000,000 and 178,000 shares of its common stock to its officers as compensation. As of October 1, 2011
and December 31, 2011 the Company owned 60% of 800 Commerce.
USE OF ESTIMATES
The preparation of consolidated financial
statements in conformity with accounting principles generally accepted in the United States of America requires management to make
estimates and assumptions 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 amount of revenues and expenses during the reported period.
Actual results could differ from those estimates.
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid
investments with an original term of three months or less to be cash equivalents.
The Company records accounts receivable from
amounts due from its processors. The Company charges certain merchants for processing services at a bundled rate based on a percentage
of the dollar amount of each transaction and, in some instances, additional fees are charged for each transaction. The Company
charges other merchant customers a flat fee per transaction, and may also charge miscellaneous fees to our customers, including
fees for returns, monthly minimums, and other miscellaneous services. All the charges and collections thereon flow through our
processors who then remit the fee due the Company within the month following the actual charges.
DEFERRED FINANCING COSTS
The costs related to the issuance of debt are
capitalized and amortized to interest expense using the straight-line method over the lives of the related debt.
The Company evaluates the collectability of
its notes receivable, and either creates or adjusts its allowance for doubtful notes receivable accordingly. Based on this assessment
of the collectability of each individual note receivable, as well as the aging of the notes receivable, the Company may determine
that after all attempts to collect a note receivable have failed, the note receivable is written-off against the allowance, if
one exists, or directly written off against the note receivable. Based on this review during 2011, the Company has determined that
two notes in the aggregate amount of $121,182 are uncollectible. Accordingly, the Company has included $121,182 in bad debt expense
for the year ended December 31, 2011.
. IMPAIRMENT OF LONG-LIVED
ASSETS TO BE DISPOSED OF
We evaluate long-lived assets and identifiable
intangible assets with finite useful lives in accordance with ASC 350-30 and ASC 360 (formerly SFAS No. 144, Accounting for the
Impairment or Disposal of Long-Lived Assets), and accordingly, management reviews our long-lived assets and identifiable intangible
assets with finite useful lives for impairment whenever events or changes in circumstances indicate that the carrying amount of
such assets may not be recoverable. We recognize an impairment loss when the sum of the future undiscounted net cash flows expected
to be realized from the asset is less than its carrying amount. If an asset is considered to be impaired, the impairment to be
recognized is measured by the amount by which the carrying amount of the asset exceeds its fair value. Considerable judgment is
necessary to estimate the fair value of the assets and accordingly, actual results could vary significantly from such estimates.
Our most significant estimates and judgments relating to the long-lived asset impairments include the timing and amount of projected
future cash flows.
During the year ended December 31, 2011
the Company reviewed its other assets in the amount of $122,364. Upon this review it was determined that this entire amount is
not recoverable. Accordingly, the Company has included $122,364 in bad debt expense for the year ended December 31, 2011.
The Company recognizes revenue in accordance
with the Securities and Exchange Commission, Staff Accounting Bulletin (SAB) No. 104, Revenue Recognition (SAB
No. 104). SAB 104 clarifies application of generally accepted accounting principles related to revenue transactions. The
Company also follows the guidance in EITF Issue No. 00-21, Revenue Arrangements with Multiple Deliverables ("EITF Issue No. 00-21"),
in arrangements with multiple deliverables.
The Company recognizes revenues when
all of the following criteria are met: (1) persuasive evidence of an arrangement exists, (2) delivery of products and services
has occurred, (3) the fee is fixed or determinable and (4) collectability is reasonably assured.
The Company recognizes revenue during the month in which
commissions are earned.
FAIR VALUE OF FINANCIAL INSTRUMENTS
Fair value measurements are determined
under a three-level hierarchy for fair value measurements that prioritizes the inputs to valuation techniques used to measure fair
value, distinguishing between market participant assumptions developed based on market data obtained from sources independent of
the reporting entity (observable inputs) and the reporting entitys own assumptions about market participant
assumptions developed based on the best information available in the circumstances (unobservable inputs).
Fair value is the price that would be
received to sell an asset or would be paid to transfer a liability (i.e., the exit price) in an orderly transaction
between market participants at the measurement date. In determining fair value, the Company primarily uses prices and other relevant
information generated by market transactions involving identical or comparable assets (market approach). The Company
also considers the impact of a significant decrease in volume and level of activity for an asset or liability when compared with
normal activity to identify transactions that are not orderly.
The highest priority is given to unadjusted
quoted prices in active markets for identical assets (Level 1 measurements) and the lowest priority to unobservable inputs (Level
3 measurements). Securities are classified in their entirety based on the lowest level of input that is significant to the fair
The three hierarchy levels are defined
Level 1 Quoted
prices in active markets that are unadjusted and accessible at the measurement date for identical, unrestricted assets or liabilities;
Level 2 Quoted
prices for identical assets and liabilities in markets that are not active, quoted prices for similar assets and liabilities in
active markets or financial instruments for which significant inputs are observable, either directly or indirectly;
Level 3 Prices
or valuations that require inputs that are both significant to the fair value measurement and unobservable.
Credit risk adjustments are applied to
reflect the Companys own credit risk when valuing all liabilities measured at fair value. The methodology is consistent
with that applied in developing counterparty credit risk adjustments, but incorporates the Companys own credit risk as observed
in the credit default swap market.
The Company's financial instruments
consist primarily of cash, accounts payable and accrued expenses, and convertible debt. The carrying amounts of such financial
instruments approximate their respective estimated fair value due to the short-term maturities and approximate market interest
rates of these instruments. The estimated fair value is not necessarily indicative of the amounts the Company would
realize in a current market exchange or from future earnings or cash flows.
We account for income taxes in
accordance with ASC 740-10, Income Taxes. We recognize deferred tax assets and liabilities to reflect the estimated future tax
effects, calculated at the tax rate expected to be in effect at the time of realization. We record a valuation allowance related
to a deferred tax asset when it is more likely than not that some portion of the deferred tax asset will not be realized. Deferred
tax assets and liabilities are adjusted for the effects of the changes in tax laws and rates of the date of enactment.
ASC 740-10 prescribes a recognition
threshold that a tax position is required to meet before being recognized in the financial statements and provides guidance on
recognition, measurement, classification, interest and penalties, accounting in interim periods, disclosure and transition issues.
We classify interest and penalties as a component of interest and other expenses. To date, we have not been assessed, nor have
we paid, any interest or penalties.
We measure and record uncertain
tax positions by establishing a threshold for the financial statement recognition and measurement of a tax position taken or expected
to be taken in a tax return. Only tax positions meeting the more-likely-than-not recognition threshold at the effective date may
be recognized or continue to be recognized. The Companys tax years prior to 2005 remain subject to examination by federal
and state tax jurisdictions.
EARNINGS (LOSS) PER SHARE
Earnings (loss) per share is computed
in accordance with SFAS No. 128, "Earnings per Share". Basic earnings (loss) per share is computed by dividing net income (loss),
after deducting preferred stock dividends accumulated during the period, by the weighted-average number of shares of common stock
outstanding during each period. Diluted earnings per share is computed by dividing net income by the weighted-average number of
shares of common stock, common stock equivalents and other potentially dilutive securities, if any, outstanding during the period.
There were not any outstanding warrants or options for the years ended December 31, 2011 and 2010. As of December 31, 2011,
the Companys outstanding convertible debt is convertible into 75,298,196 shares of common stock.
ACCOUNTING FOR STOCK-BASED COMPENSATION
The Company accounts for stock awards
issued to non-employees in accordance with ASC 505-50, Equity-Based Payments to Non-Employees. The measurement date is the earlier
of (1) the date at which a commitment for performance by the counterparty to earn the equity instruments is reached, or (2) the
date at which the counterparty's performance is complete. Stock awards granted to non-employees are valued at their respective
measurement dates based on the trading price of the Companys common stock and recognized as expense during the period in
which services are provided.
For the year ended December 31, 2011
and 2010, the Company did not grant any stock options. As of December 31, 2011 we do not have any outstanding stock options or