Note D - Summary of Significant Accounting Policies
1. Cash and cash equivalents
For Statement of Cash Flows purposes, the Company considers all cash on hand and in banks, certificates of deposit and other highly-liquid investments with maturities of three months or less, when purchased, to be cash and cash equivalents.
2. Property and Equipment
Property and equipment were recorded at historical cost. These costs were depreciated over the estimated useful lives of the individual assets using the straight-line method, generally seven to thirty-nine years.
Gains and losses from disposition of property and equipment are recognized as incurred and are included in operations.
In accordance with the provisions required by the Property, Plant and Equipment Topic of the FASB Accounting Standards Codification whereby the Company follows the policy of evaluating all property and equipment as of the end of each reporting quarter. Effective September 30, 2006, the Company had no assets subject to this accounting pronouncement.
3. Income Taxes
The Company files income tax returns in the United States of America and may file, as applicable and appropriate, various state(s). With few exceptions, the Company is no longer subject to U.S. federal, state and local, as applicable, income tax examinations by regulatory taxing authorities for years ending prior to September 30, 2009. The Company does not anticipate any examinations of returns filed after October 1, 2009.
The Company uses the asset and liability method of accounting for income taxes. At September 30, 2012 and 2011, respectively, the deferred tax asset and deferred tax liability accounts, as recorded when material to the financial statements, are entirely the result of temporary differences. Temporary differences generally represent differences in the recognition of assets and liabilities for tax and financial reporting purposes, primarily accumulated depreciation and amortization, allowance for doubtful accounts and vacation accruals.
The Company has adopted the provisions required by the Income Taxes topic of the FASB Accounting Standards Codification. The Codification Topic requires the recognition of potential liabilities as a result of managements acceptance of potentially uncertain positions for income tax treatment on a more-likely-than-not probability of an assessment upon examination by a respective taxing authority. As a result of the implementation of Codifications Income Tax Topic, the Company did not incur any liability for unrecognized tax benefits.
4. Earnings (loss) per share
Basic earnings (loss) per share is computed by dividing the net income (loss) available to common stockholders by the weighted-average number of common shares outstanding during the respective period presented in our accompanying financial statements.
Fully diluted earnings (loss) per share is computed similar to basic income (loss) per share except that the denominator is increased to include the number of common stock equivalents (primarily outstanding options and warrants).
Common stock equivalents represent the dilutive effect of the assumed exercise of the outstanding stock options and warrants, using the treasury stock method, at either the beginning of the respective period presented or the date of issuance, whichever is later, and only if the common stock equivalents are considered dilutive based upon the Companys net income (loss) position at the calculation date.
At September 30, 2012 and 2011, and subsequent thereto, the Companys outstanding warrants are considered to be common stock equivalents; however, the issued and outstanding warrants are considered anti-dilutive due to the Companys net operating loss position.
5. Treasury Stock
The Company accounts for treasury stock acquisitions and sales pursuant to the tenets of the Equity Topic of the FASB Accounting Standards Codification whereby treasury stock acquisitions are first charged against par value and any excess purchase price is first charged to additional paid-in capital and then to retained earnings. Any subsequent sale of treasury stock is first credited to par value and any excess is credited to additional paid-in capital.
6. Research and development costs
Research and development expenses were charged to operations as incurred. Patents, Licenses and Marketing Agreements acquired from the Companys former parent company were charged to operations as acquired.
7. Pending and/or New Accounting Pronouncements
The Company is of the opinion that any pending accounting pronouncements, either in the adoption phase or not yet required to be adopted, will not have a significant impact on the Company's financial position or results of operations.