Note 14. United Business Combination

6 Months Ended

Jun. 30, 2011

Business Combination Disclosure [Text Block]

Note 14.  United Business Combination

On January 1, 2010, the Company entered into an agreement to purchase a 100% of the issued and outstanding capital stock of United (the "Purchase Agreement") in exchange for forgiveness of debt in the amount of $520,000, $150,000 in stock and a promissory note in the aggregate principal amount of $500,000 payable to Debbie and Mike Werner, bearing interest at 5.0% per annum and maturing on December 31, 2011. The promissory note contains a provision that allows for the profits from the operations of United to be used towards payment of the note.  Payments on the note from profits from the operations are evaluated on a quarterly basis and as of April 13, 2011 no payments have been made.  The stock was issued on February 11, 2011 in the amount of 60 million shares.

Until such time as the promissory notes issued in these transactions are repaid in full, all cash generated from the operation of United will be managed and controlled by the managers of United. The Company is not entitled to utilize the cash proceeds from United for any purpose other than to provide working capital for United without the consent of United’s manager.

The following table summarizes the final allocation of the purchase price:

Consideration Provided by USOG
Forgiveness of Receivable	$	170,000
Forgiveness of Note Receivable		350,000
Note payable issued to Deb and Mike Werner		500,000
Stock Payable		150,000
Total Consideration Provided:		1,170,000
Net Liabilities Assumed
Current assets assumed		179,920
Current liabilities assumed		(342,431	)
Long term liabilities assumed		(101,959	)
Consideration paid in excess of working capital and long-term liabilities assumed:		1,434,470
Fixed assets		575,359
Customer relationships		656,000
Trade name		128,000
Residual goodwill		75,111
Total Allocation:	$	1,434,470

Impairment of goodwill is evaluated annually. There was no impairment for the twelve months ended December 31, 2010. The Company noted no impairment indicators during the three and six months ended June 30, 2011. The intangible assets included the fair value of trade name, customer relationships, residual goodwill, and non-compete. The useful lives of the acquired intangibles are as follows:

	Useful Lives (Years)
Trade name	10
Customer relationships	10
Residual goodwill	Indefinite

The financial results of the acquired business are included in the Company's consolidated financial statements from date of acquisition.

The purchase transaction was negotiated at arm's length and was accounted for as a purchase transaction. As required by the applicable guidance in effect at the time of the acquisition, the Company valued all assets and liabilities acquired at their fair values on the date of acquisition. An independent valuation expert was hired to assist the Company in determining these fair values. Accordingly, the assets and liabilities of the acquired entity were recorded at their estimated fair values at the date of the acquisition.

In addition, the Company entered into an employment agreement effective January 1, 2010 with Mike Werner to serve as President of United for three years ended January 1, 2013. His base salary is $36,000 on an annualized basis.

The Company entered into an employment agreement effective January 1, 2010 with Deb Werner to serve as Vice President of United for three years ended January 1, 2013. Her base salary is $18,000 on an annualized basis.