Investment in Life Settlement Policies

3 Months Ended

Sep. 30, 2012

Investments, All Other Investments [Abstract]

Investment in Life Settlement Policies

On March 15, 2012, the Company entered into its first contract to acquire four life settlement policies for the aggregate sum of $570,000, payable on or before April 23, 2012. Pursuant to the agreement the Company is responsible for all premiums payable pursuant to the terms of the policies and are entitled to fifty percent of the death benefits of those policies not formally closed pursuant to the terms of the agreement. The remaining fifty percent of the death benefits of those policies will be paid to Universal Settlements International, Inc., a Company with common shareholders. ASC 325-30, Investments in Insurance Contracts, provides that a purchaser may elect to account for its investments in life settlement contracts based on the initial investment at the purchase price plus all initial direct costs. Continuing costs (e.g., policy premiums, statutory interest and direct external costs, if any) to keep the policy in force are capitalized. The Company has elected to use the investment method and refer to the recorded amount as the carrying value of the policies.

On June 19, 2012, the Company acquired one of the four life settlement policies. The face value of the policy is $500,000 with a remaining life expectancy of 3.25 years. As of September 30, 2012, the carrying value of the policy is $127,726.

The Company evaluates the carrying value of their investment in life settlement policies on a regular basis and adjusts their total basis in the policies using new or updated information that affects their assumptions about remaining life expectancy, credit worthiness of the policy issuer, funds needed to maintain the asset until maturity, discount rates and potential return. The Company recognizes impairment on individual policies if the expected undiscounted cash flows are less than the carrying amount of the investment, plus anticipated undiscounted future premiums and capitalizable direct external costs, if any. Impairment of policies is generally caused by the insured significantly exceeding the estimate of the original life expectancy, which causes the original policy costs and projected future premiums to exceed the estimated maturity value. The Company does not believe the life settlement policy to be impaired as of September 30, 2012.

Estimated premiums to be paid for each of the five succeeding fiscal years to keep all four policies in force as September 30, 2012, are as follows.

Year 1	$	249,296
Year 2		332,394
Year 3		332,394
Year 4		298,194
Year 5		298,194
Total estimated premiums	$	1,510,472

As of September 30, 2012, $347,238 of policy premiums has been paid on the remaining three policies and premium payments have been capitalized in the financial statements as of September 30, 2012.

On April 27, 2012, the Company amended the original life settlement contract to extend the $570,000 payable due date to May 10, 2012, the contract was further amended on May 23, 2012 to extend the $570,000 payable due date to September 17, 2012, and on September 24, 2012, the contract was amended again to extend the $570,000 payable due date to October 17 2012.

As of November 6, 2012, the Company has paid a total of $325,000 towards the $570,000 payable and amended the contract to extend the due date for the remaining payable of $245,000 to November 23, 2012.