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Note 12: Creation of Limited Liability Company
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12 Months Ended |
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Dec. 31, 2011
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| Business Combination Disclosure [Text Block] |
Note
12: Creation of Limited Liability Company
On
September 20, 2010, the Company entered into a joint venture
agreement between the Company and Dr. Shulamit Ritblatt to
form Circle of Education, LLC, a California limited liability
company, for the purpose of creation and distribution of a
curriculum to promote school readiness for children ages 0-5
years. The Company obtained an initial voting and
economic interest of seventy-five percent of the outstanding
units of the newly formed company in exchange for the
contribution of all intellectual property rights the Company
had in the Circle of Education program.
The
Company has consolidated the results for the twelve month
period ended December 31, 2011 and December 31, 2010 with the
results of COE. COE is currently developing
products which have an estimated introduction for sale in the
third quarter of 2012, resulting in no sales or cost of sales
in the twelve month period ended December 31, 2011 and
December 31, 2010. COE had general and
administrative costs of $21,461 for the twelve month period
ended December 31, 2011, including legal costs related to the
creation of the agreements and registration of the entity in
the aggregate of $14,761, sales and marketing costs of $1,181
and product development costs of $2,212 for a total loss of
$21,461. As the Company has an economic interest
of 75 percent of the total subsidiary, the Company recognized
100 percent of the loss and recorded 25 percent of the loss,
or $5,366, as noncontrolling interest on the financial
statements for the twelve months ended December 31,
2011. There were no expenses in the fiscal year
ended December 31, 2010.
In
March 2012, the Company and Dr. Shulamit Ritblatt agreed to
terminate the joint venture agreement. COE
transferred equal right of ownership in the intellectual
property developed as of the date of termination
(“IP”) to each of the Company and Dr. Ritblatt,
and in exchange for the rights to the IP, Dr. Ritblatt
transferred her units of COE to the Company. Each
party will have the right to continue development of the IP
and products based on the IP with no further obligation to
the other party. Subject to certain limitations
for specific channels of distribution reserved for each party
for a period of twelve months from the execution of the
agreements, both parties have non-exclusive and
non-restrictive rights to the use, sublicense or sale of the
IP and products created based on the IP.
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