Domain name rights and intangible asset

6 Months Ended

Jun. 30, 2011

Notes to Financial Statements

Domain name rights and intangible asset

Note 5. Domain name rights and intangible asset

The rights to use the domain name bingo.com were acquired in January of 1999 for a cash payment of $200,000 and the issuance of 500,000 shares of common stock of the Company at a value of $2.00 per share. The agreement was signed with Bingo, Inc., an unrelated party at the date of signing of the agreement. Under the terms of the agreement, the Company is required to make quarterly domain name purchase payments to the vendor based on 4% of annual gross revenue (as defined in the agreement), with total minimum payments of $1,100,000 in the first three years, including the initial cash payment, required over the 99 year period ending December 31, 2098. These minimum payment commitments were completed on June 30, 2002. During the year ended December 31, 2002, the agreement was amended so that the remaining domain name purchase payments to the vendor are made monthly, based on 4% of the preceding month's gross revenue. During the year ended December 31, 2010, the Company purchased the remaining Domain Name payments for $900,000, with the issuance of 6,000,000 common shares of the Company, at a value of $0.15 per share. During the quarter ended June 30, 2011, expense payments of $nil (June 30, 2010 - $14,838) were paid in accordance with the amended agreement.

Domain name rights have been capitalized on the balance sheet based on the present value of the future minimum royalty payments. In 2002, the Company suspended the amortization of the domain name in accordance with ASC 350, Intangibles - Goodwill and Others, where companies are no longer permitted to amortize indefinite life intangible assets

. 

June 30, 2011		Cost		Accumulated amortization		Net book Value
Domain name rights	$	2,834,500	$	677,259	$	2,157,241

December 31, 2010		Cost		Accumulated amortization		Net book Value
Domain name rights	$	2,834,500	$	677,259	$	2,157,241