Note 1 - Nature of Business

6 Months Ended

Jun. 30, 2013

Notes

Note 1 - Nature of Business

Note 1 - Nature of Business

Business Overview

Current Business

After Liveplex Co., Ltd. obtained a 60% controlling interest of the Company, Social Cube has refocused itself as a holding company of social gaming, mobile gaming and social networking companies.  Social Cube’s strategy is to grow both organically and by acquisition, and to leverage its existing network of social gaming and networking assets together with other social networking companies and their related technologies.

Our majority shareholder is Liveplex Co., Ltd., an on-line game developer and publisher in Korea, which is publicly listed on the Korea Securities Dealers Automated Quotations (KOSDAQ:050120), a trading board of the Korea Exchange (KRX).  Liveplex Co., Ltd. is a leading developer and service provider of massively multiplayer online role-playing games.

We conduct our business through two operating segments as follows:

Social Cube Networks Co., Ltd.

We have a 73% ownership interest in Social Cube Networks Co., Ltd. (formerly AsiaNet Co., Ltd.), a privately held company incorporated in the Republic of Korea, which publishes the following game titles, primarily in the Philippines:  Dragona, Genghis Khan, Weapons of War, Cross Fire, Special Force, Twelve Sky 2 and iDate.

Social Cube Media.com, Inc.

We have a 100% ownership interest in Social Cube Media.com, Inc.(formerly Gameclub.com, Inc.), a privately held company incorporated in the state of California, which publishes online games in the United States.

While our chief decision makers monitor the revenue streams of our various products and services, operations are managed and financial performance is evaluated on a company-wide basis. Accordingly, we consider our operations to be aggregated in one reportable operating segment.

Corporate History

Lexon Technologies, Inc. ("the Company", "Lexon" or “Social Cube”) was incorporated in April 1989 under the laws of state of Delaware, and owned 90.16% of Lexon Semiconductor Corporation ("Lexon Semi" or formerly known as Techone Co., Ltd ("Techone")) which had developed and manufactured Low Temperature Cofired Ceramic (LTCC) components, including LTCC wafer probe cards, LTCC circuit boards, LTCC Light Emitting Diode (LED) displays and related products for the semiconductor testing and measurement, custom Printed Circuit Board (PCB), and cellular phone industries.  

Initially registered as California Cola Distributing Company, Inc., the Company changed its name four times; first to Rexford, Inc. in October 1992, second to Lexon Technologies, Inc. in July 1999, third to Social Planet Inc. in January 2012 and to the current name Social Cube Inc. in February 2012.  From July 1999 through October 2009, the Company performed three reverse acquisitions and recapitalizations, which resulted in the change of the control of the Company each time.

On January 1, 2011, all assets and all of the liabilities of the Paragon Toner Division of Lexon were exchanged for existing Lexon shares, specifically 133,300,000 shares held by James Park and 66,700,000 shares held by Young Won.  The Internet properties namely 7inkjet.com, nanoninket.com and Yourcartidges.com remained with Lexon, and became the main operation of the Company.

The Company’s Board of Directors and a majority of shareholders on June 6, 2011 approved a reverse share split of the Company’s common stock at a ratio of 641:1 from 315,789,721 shares to 492,535 issued and outstanding shares.

On October 3, 2011, Lexon entered into four subscription agreements: (1) Senderbell Holdings Limited subscribed to 900,000 common unregistered shares for $77,143; (2) Treasure Chest Holdings Limited subscribed to 900,000 common unregistered shares for $77,143; (3) Blueberry Enterprises Limited subscribed to 900,000 common unregistered shares for $77,143; and (4) Hockworth Holdings Limited subscribed to 800,000 common unregistered shares for $68,571.

On October 26, 2011, a shareholder resolution was executed to nominate and accept Byung Jin Kim, Eugene Lee and KyuSeok Lee as Directors (effective as of November 26, 2011) and to change the corporate name from Lexon to Social Planet Inc.

On November 23, 2011, the Company issued 6,000,000 shares of its common stock to Liveplex Co., Ltd. at a purchase price of approximately $0.417 per share for an aggregate of $2,500,000 representing approximately 60% of the total outstanding common stock.

On November 25, 2011, James Park, Young Won, Bong S. Park and Hyung Soon Lee resigned as the Directors and Officers of the Company.

Pursuant to a share subscription agreement dated November 30, 2011, the Company subscribed to 335,574 shares of Social Cube Networks Co., Ltd. (formerly Asianet Co., Ltd.), a company incorporated in the Republic of Korea, for a consideration of $1,500,000.  As a result of this subscription, the Company owns 73% of Social Cube Networks Co., Ltd.

On December 30, 2011, a majority of the Company’s directors appointed Byung Jin Kim as Chief Executive Officer and Jonathan Lee as Chief Financial Officer of the Company effective as of January 1, 2012.

On January 31, 2012, the Company filed a Certificate of Amendment to the Company’s Certificate of Incorporation under the laws of the state of Delaware, changing the name of the Company from Lexon to Social Planet Inc.

On February 6, 2012, a majority of the Company’s directors and a majority of the Company’s shareholders approved changing the name of the Company from Social Planet Inc. to Social Cube Inc.

On February 16, 2012, the Company filed a Certificate of Amendment to the Company’s Certificate of Incorporation under the laws of the state of Delaware, changing the name of the Company from Social Planet Inc. to Social Cube Inc.

On March 22, 2012, a majority of all outstanding shares voted in favor of reducing the authorized shares of common stock of the Company from 2,000,000,000 shares to 30,000,000 shares.

The Financial Industry Regulatory Authority, Inc. (FINRA) approved the Company’s corporate name change to Social Cube Inc., effective as of March 28, 2012, and its ticker symbol change to “SOCC”, effective as of April 2, 2012.

On June 3, 2013, the board of directors of the Company decided to delist the Company’s common stock from the OTC and deregister from the reporting requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

On June 7, 2013, the Company announced the delisting through a press release and filing of a current report on Form 8-K with the U.S. Securities and Exchange Commission (“SEC”).

On June 18, 2013, the Company filed a Form 25 with the SEC to delist its common stock from the OTC and to deregister the Company’s common stock from Section 12(b) of the Exchange Act.

On June 28, 2013 the Company filed a Form 15 with the SEC to suspend the Company’s reporting requirements under Section 15(d) of the Exchange Act.  

Note 2 - Summary of Significant Accounting Policies

This summary of significant accounting policies of the Company is presented to assist in understanding the Company’s financial statements.  The financial statements and notes are representations of the Company’s management, who is responsible for their integrity and objectivity.  These accounting policies conform to accounting principles generally accepted in the United States of America and have been consistently applied in the preparation of the financial statements.

Use of Estimates

The preparation of the 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 amounts reported in the financial statements and accompanying notes. Estimates are primarily used for depreciation of property and equipment, amortization of intangible assets, allowances for doubtful accounts. Actual results could differ from those estimates.

Revenue Recognition

Online game revenue

We derive, and expect to continue to generate, most of our revenues from online game subscription revenue generated in the countries where our games are offered by us. We recognize revenue in accordance with Accounting Standard Codification (ASC) 605, Revenue Recognition and other related pronouncements. Online game revenue is deferred until prepaid subscription cards are consumed by users.

Cash and Cash Equivalents

The Company considers all highly liquid investments purchased with original maturities of three months or less to be categorized as cash and cash equivalents.

Allowance for Doubtful Accounts

The allowance for doubtful accounts is computed based upon the management’s estimate of uncollectible accounts and historical experience.  The Company performs ongoing credit evaluations of its customers to estimate potential credit losses.  Amounts are written off against the allowance in the period the Company determines that the receivable is uncollectible.

Property and Equipment

Property and equipment are stated at cost. The straight-line method is used to calculate depreciation over their estimated useful lives ranging as follows:

Automobile	3 to 5 years
Furniture & fixture	4 to 7 years
Leasehold improvement	5 years
Machinery and equipment	4 to 5 years

Leasehold improvements are depreciated to expense over the shorter of the life of the improvement or the remaining lease term. Capital expenditures that enhance the value or materially extend the useful life of the related assets are reflected as additions to property and equipment. Expenditures for repairs and maintenance are charged to expense as incurred. Upon a sale or disposition of assets, a gain or a loss is included in the statement of operations.

Impairment of Long-lived Assets

The Company periodically reviews the recoverability of its long-lived assets using the methodology prescribed in accounting guidance now codified as FASB ASC Topic 360, “Property, Plant and Equipment.” The Company also reviews these assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of these assets is determined by comparing the forecasted undiscounted future net cash flows from the operations to which the assets relate, based on management’s best estimates using appropriate assumptions and projections at the time, to the carrying amount of the assets. If the carrying value is determined not to be recoverable from future operating cash flows, the asset is deemed impaired and an impairment loss is recognized equal to the amount by which the carrying amount exceeds the estimated fair value of the asset. In management’s opinion, no such impairment existed as of June 30, 2013 and December 31, 2012

Accrued Expenses

The Company’s accrued expenses consist of amounts payable for professional fee, corporate income tax and interest.

Income Taxes

The Company uses the asset and liability method of accounting for income taxes. Under the asset and liability method, 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 and net operating loss and tax credit carry-forwards. Deferred tax assets and liabilities are measured using enacted income tax rates expected to apply to taxable income in the years in which those differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in income tax rates is recognized in the results of operations in the period that includes the enactment date. The realizability of deferred tax assets is evaluated based on a “more likely than not” standard, and to the extent this threshold is not met, a valuation allowance is recorded. See Note 9 Income Taxes for more information about the Company’s income taxes.

Recent Accounting Pronouncements

Indefinite-lived intangible assets impairment

In July 2012, the FASB issued an update to the authoritative guidance related to testing indefinite-lived intangible assets for impairment. This update gives an entity the option to first consider certain qualitative factors to determine whether the existence of events and circumstances indicates that it is more likely than not that the fair value of an indefinite-lived intangible asset is less than its carrying amount as a basis for determining whether it is necessary to perform the quantitative impairment test. This update is effective for the indefinite-lived intangible asset impairment test performed for fiscal years beginning after September 15, 2012. Early adoption is permitted. We do not expect that the adoption of this guidance will have a material impact on our consolidat

ed financial statements.

Fair value measurements and disclosures

Effective January 1, 2012, we adopted an update to the accounting rules for fair value measurement. The new accounting principal establishes a consistent definition of fair value in an effort to ensure that the fair value measurement and disclosure requirements between U.S. GAAP and International Financial Reporting Standards (“IFRS”) are comparable. This update changes certain fair value measurement principles and enhances the disclosure requirements for fair value measurements. This update does not extend the use of fair value accounting, but provides guidance on how it should be applied where its use was already required or permitted by other standards within U.S. GAAP or IFRS. This update is effective for interim and annual periods beginning after December 15, 2011 and is applied prospectively. The adoption of this pronouncement did not have a material impact on the Company’s Consolidated Financial Statements and accompanying disclosures.

Statement of comprehensive income

Effective January 1, 2012, we adopted the FASB issued authoritative guidance on the presentation of comprehensive income. This update requires that all non-owner changes in stockholders’ equity be presented either in a single continuous statement of comprehensive income or in two separate but consecutive statements. This update does not change the items that must be reported in other comprehensive income or when an item of other comprehensive income must be reclassified to net income. The adoption of this pronouncement did not have a material impact on the Company’s Consolidated Financial Statements and accompanying disclosures.