Impairment of Technology Licensing Agreements

12 Months Ended

Dec. 31, 2012

Impairment of Technology Licensing Agreements [Abstract]

Impairment of Technology Licensing Agreements

Note 4. Impairment of Technology Licensing Agreements

On September 29, 2010, GEM entered into a technology licensing agreement (the "PMP Agreement") with PMP and Juan Carlos Bocos, the inventor of the patent pending water valve technology licensed under the PMP Agreement (the "Technology").Effective as of February 23, 2012, we modified the PMP Agreement, including having the Technology assigned to the Company.

The Technology is designed to reduce the amount of air flowing through water pipes allowing a customer's water meter to measure more precisely the exact amount of water used. The PMP Agreement allows the Company to market and distribute exclusively and to sell and service the water valve products manufactured through the use of the Technology to customers within various territories within the United States and a number of foreign countries.

We will periodically evaluate the value of the assigned technology and will adjust the value based upon periodic impairment analysis. As of December 31, 2012and 2011, the value was $0 and $580,800.  We evaluated the assigned technology for impairment as of December 31, 2012 and determined that the future expected undiscounted cash flows were insufficient for recoverability.  As such, the asset was deemed to be fully impaired as of December 31, 2012.  The impairment loss of $549,120 was recorded in our statement of income for the year ended December 31, 2012.