Other Assets and Goodwill

9 Months Ended

Sep. 30, 2011

NOTE 6

Other Assets and Goodwill:

Gold Project JV

The Company entered into a joint venture with a third party to obtain exploring and exporting gold license from the Republic of Ghana. The Company utilized its contacts, know-how and expertise to obtain the desire licensing. After the end of the year, it was decided, based on the results of findings gathered in due diligence, to put the development of the joint venture on hold indefinitely, and as such all accrued costs were amortized in the 2010 financial statements.

Capitalization of Offering Costs

The Company determined that it had booked certain costs associated with its offering (mostly legal expenses, and expenses associated with producing its financial statements) as expenses in error, which caused a restatement of the financials in 2010, where the net amount to be capitalized is $50,625 at December 31, 2010 and $410,625 at September 30, 2011. This amount includes the commitment fee for Centurion Private Equity and $210,000 for brand building and investor relations expense that were erroneously expensed in the prior quarter.

Debt Discount on Convertible Note, Net

The Company recognizes a debt discount for the difference in the face value of the ATL notes issued and received by the Company: $100,000. Said Note Discount will be amortized over the life of the Company note: two years. The current portion of Note Discount was presented as current assets, while in 2010 the remaining long term balance was presented in Other Assets.

Divesting of the Acquisition of 20% of FOREX NYC

On December 18, 2010, the “Company entered into a Securities Purchase Agreement with Forex NYC pursuant to which the Company acquired 20% of the issued and outstanding equity of FNYC Interest on a fully diluted basis. In consideration for the FNYC Interest, the Company issued and sold to Forex NYC 1,000,000 shares of common stock of the Company, at a valuation of $200,000. Forex NYC is a limited liability company organized under the laws of the State of New York with headquarters located at One Grand Central Place. Forex NYC is a based Forex investment training facility. On July 2011, the Company unwound its agreement with Forex NYC, as well as with Wheatley. Forex NYC surrendered their 1,000,000 shares back to the Company. Due to the fact that the Company knew that there the shares would be surrendered, the shares have been treated as returned to Treasury Stock as of June 30, 2011.

Goodwill - Acquisition of VI

On November 17, 2010, the Company entered into the APH Agreement with APH. The goodwill recorded in the transaction was $26,594,710 (as appears on the December 31, 2010 balance sheet). As part of its due diligence process, the Company hired an outside firm to conduct a fairness opinion on the valuation of Operation Unite. One of the methods employed by that firm for assessing the fairness of the transaction to the Company was the Net Adjusted Asset method, which assumes as its premise that the fair market value of the assets is equal to the cost and book value of those assets. VI’s balance sheet was audited at December 31, 2010 by a separate auditing firm, and it was determined that no additional write-up (or write-down) to the value of the assets and liabilities of VI was needed to bring those assets and liabilities from audited book value to fair market value, because there was only one buyer for those assets, and the assets, particularly the Property Plant and Equipment, had a very specific use. Therefore, the premium in purchase price over the book value of the net assets acquired was allocated entirely to goodwill.

On or around April 6, 2011, the Company acquired approximately an additional 5% interest in VI, and booked an additional $1,736,777 in goodwill as a result of that transaction, bringing the total goodwill in connection with Asset to $28,331,487.

Given that the Company’s cannot continue to consolidate Asset’s financial statements going forward, we have performed an analysis to assess the impairment to goodwill. Based on available market data, and discussions with possible buyers, the Company has determined that it could potentially sell the investment in 49.9% of VI for approximately $4-6MM. The Company has therefore impaired the goodwill by $24.4MM, and switched the cost method going forward. The carrying value of the investment (shown in Other Assets) is at the lower end of the probable sale range, which is $4MM. The Company also evaluated impairment using a combination of publicly-traded comparables and discounted cash flow analysis, but chose to use the sale price method, because of the more conservative carrying value, and because of the diminished value from no longer having operating control, and in fact being denied certain key information such as financial statements for the third fiscal quarter, the consequence of which is to make the equity method of accounting for the investment untenable in this quarter and going forward.

White Label License & Websites, Net

On April 19, 2010, the Company entered into a Software Licensing Agreement with VI which was dated April 12, 2010, whereby the Company will license Asset’s proprietary trading software (the “Software”) for the purpose of developing a Forex Trading Platform and introducing prospective clients (“End Users”). Asset created a website for the Company, which was funded by the Company at a cost of $50,000 (the “Setup Fee”). Upon the Company and Asset generating $100,000 in revenue under the agreement, the Company will be reimbursed 50% of the Setup Fee ($25,000). The Company will receive 30% of the net profit generated from End Users, which will be increased to 50% in the event that the monthly volume generated by the Company is in excess of $250 million. Said agreement with Asset was considered by the Company as a mid-term-solution and in order to examine the system closely, the Company evaluate the platforms capabilities and flexibility to create a custom trading platform for the Company’s future clients. While the Company is developing its own custom software platform, it began operating said affiliate program with Asset’s existing trading platform. The custom platform will be designed to help clients evaluate risk not only on a per trade basis, but also from a portfolio perspective. The Company will then add additional features to their platform such as: (i) Easy deposit and withdrawal or funds transfers between existing banking/investment accounts; (ii) Total portfolio integration of client’s currency accounts with other investment accounts; and (iii) Detailed real time calculations of profits and losses, among others. Costs of software acquired along with payroll costs and consulting fees relating to the development of internal use software, including that used to provide internet solutions, are capitalized.

Total Other Assets as presented in the Balance Sheet, is as follows, as of September 30, 2011 (consolidated, unaudited):

	Consolidated			Consolidated
	September 30, 2011			December 31, 2010
	UNAUDITED			AUDITED
Capitalization of offering costs		410,625			50,625
Acquisition of 20% of FOREX NYC		-			200,000
Debt Discount on Convertible Note, Net		-			25,890
White Label License & Websites		30,729			70,239
Investment in 49.9% of VI		4,000,000			-
Equity interest in Subsidiary		394,309			-
Foreign currency translation for the quarter ended March 31, 2011		(32,272	)		-
Foreign currency translation for the quarter ended June 30, 2011		30,739			-
		4,834,130			346,754

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

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