NOTE 3 - VARIABLE INTEREST ENTITY

9 Months Ended

Sep. 30, 2012

Organization, Consolidation and Presentation of Financial Statements [Abstract]

3. VARIABLE INTEREST ENTITY

3. VARIABLE INTEREST ENTITY

Following is a description of our financial interests in a variable interest entity that we consider significant, those for which we have determined that we are the primary beneficiary of the entity and, therefore, have consolidated the entity into our financial statements.

Szar International, Inc. (dba Cigar & Spirits Magazine) (“Cigar & Spirits”) - On March 1, 2012, we entered into a License Agreement with Cigar & Spirits. Under the terms of the Agreement, we have the right to market the products of Cigar & Spirits including but not limited to the sales, promotion and advertising vehicles. We have agreed to pay a fee of 1.5% of all sales generated plus a management fee of 1.5% based on the total monies paid for employee salaries,benefits and commissions. The Company is responsible for all expenses that relate to sales generated under the License Agreement. Cigar & Spirits may at any time in its sole discretion, with sixty days prior notice, terminate the agreement and revoke the license granted for any reason whatsoever and upon such termination we will immediately stop using the Cigar & Spirits trade names.

We have determined that we are the primary beneficiary of Cigar & Spirits as our interest in the entity is subject to variability based on results from operations and changes in the fair value. After February 29, 2012, all operations of Cigar & Spirits are included in the License Agreement.

The results of operations for Cigar & Spirits have been included in the financial statements of the Company. The Company did not pay consideration to enter into the License Agreement. The acquisition has been accounted for using the purchase method on March 1, 2012 as follows:

Cash $696

Due to related party(2,446)

Notes payable (15,050)

Non-controlling interest 16,800

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$ -

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At September 30, 2012 our consolidated balance sheet includes current assets of$7,231 and current liabilities of $90,154 related to our interests in Cigar & Spirits. Our statement of operations includes sales of $103,546, cost of sales of $17,973 and selling, general and administrative expenses of $151,948 related to our interest in Cigar & Spirits for the period from March 1, 2012 to September 30, 2012. Additionally during the period from March 1, 2012 to September 30, 2012, the Company received $252 in proceeds from issuance of common shares by Szar International, Inc.