License Agreements

6 Months Ended

Jun. 30, 2014

NOTE C – LICENSE AGREEMENTS

The Company began operating the online game, The Great Merchant, in open beta testing in January 2010. During the six months ended June 30, 2014 and 2013, the Company generated revenues of $35,012 and $48,891, respectively, from this beta testing.

The Company has acquired license agreements for online games for use in South Korea. Each license also has a royalty fee which varies for each license. The licenses have terms of 2 to 3 years, beginning when they are launched commercially. Under the license agreements, the Company is required to pay the licensor 24%- 25% of gross sales.

During the three months ended June 30, 2014, the Company decided to no longer utilize its licenses in South Korea and to focus on the Great Merchant and other gaming opportunities in the US. As such, the license agreements were written off and an impairment of $70,000 was recognized during the three months ended June 30, 2014. The licenses are comprised as follows:

	June 30,		December 31,			Estimated
	2014		2013			Useful Life
License agreements	$	-	$	122,500		2-3 years
Accumulated amortization		-		(42,500	)
	$	-	$	80,000

Amortization expense was $10,000 and $16,458 for the six months ended June 30, 2014 and 2013, respectively.

The Company engaged a Korea-based service provider to support and maintain the online game, and collect payments from customers. Under this agreement the service provider is required to pay the Company 29% of the gross sales on the contracted games. For the six months ended June 30, 2014 and 2013, the Company billed such 29%, or $708 and $28,510, respectively. For the six months ended June 30, 2014 and 2013, the Company was billed $586 and $23,827, respectively, by the licensor on these games.

At December 31, 2013, a note holder agreed to assume the amounts due from the Korea-based service provider, up to $150,000. As such, the Company reduced the note by $708 and $138,897 at June 30, 2014 and December 31, 2013, respectively.