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EX-31 - Psychic Friends Network Inc.ex31.txt
EX-32 - Psychic Friends Network Inc.ex32.txt
v2.4.0.6
SIGNIFICANT ACCOUNTING POLICIES
12 Months Ended
Sep. 30, 2012
SIGNIFICANT ACCOUNTING POLICIES  
SIGNIFICANT ACCOUNTING POLICIES
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
 
The financial  statements  of the Company have been prepared in accordance  with
generally  accepted  accounting  principles  in the  United  States of  America.
Because a precise determination of many assets and liabilities is dependent upon
future  events,  the  preparation  of financial  statements  involves the use of
estimates,  which have been made using  judgment.  Actual  results may vary from
these estimates.
 
The financial statements have, in management's opinion, been prepared within the
framework of the significant accounting policies summarized below:
 
DEVELOPMENT STAGE COMPANY
 
The Company is considered to be in the development stage, as defined under
Accounting Codification Standard, (ASC 915) "Development Stage Entities". Since
its formation, the Company has not yet realized significant revenues from its
planned operations.
 
RECLASSIFICATIONS
 
The Company  reclassified  $780 and $14,377 in "Transfer and filing fees";  $-0-
and  $1,500 in "Travel  and  entertainment",  to  "General  and  administrative"
expenses for the year ended September 30, 2011 and for the period from inception
(May 9, 2007) through September 30, 2011, respectively to conform to the current
presentation.  The  reclassifications  had no effect on the Company's  financial
condition, results of operation, or cash flows.
 
CASH AND CASH EQUIVALENTS
 
The Company  considers  highly liquid  financial  instruments  purchased  with a
maturity of three months or less to be cash equivalents.
 
USE OF ESTIMATES
 
The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect  the  reported  amounts  of assets  and  liabilities  and  disclosure  of
contingent  assets and  liabilities at the date of the financial  statements and
the  reported  amounts of revenues  and expenses  during the  reporting  period.
Actual results could differ from those estimates.
 
FAIR VALUE OF FINANCIAL INSTRUMENTS
 
The fair value of the Company's  financial  instruments,  consisting of cash and
accounts  payable and accrued  liabilities,  is equal to fair value due to their
short-term to maturity.  Unless otherwise noted, it is management's opinion that
the Company is not exposed to  significant  interest,  currency or credit  risks
arising from these financial instruments.
 
REVENUE RECOGNITION
 
The  Company  recognizes  revenue on an  accrual  basis.  Revenue  is  generally
realized or realizable and earned when all of the following criteria are met: 1)
persuasive  evidence  of an  arrangement  exists  between  the  Company  and our
customer(s);  2) services  have been  rendered;  3) our price to our customer is
fixed or determinable;  and 4)  collectability  is reasonably  assured.  For the
years ended September 30, 2012 and 2011, the Company recognized no revenues.
 
PER SHARE DATA
 
In  accordance  with "ASC 260 - Earnings  per Share",  the basic loss per common
share is computed by dividing net loss available to common  stockholders  by the
weighted  average number of common shares  outstanding.  Diluted loss per common
share is  computed  similar  to basic  loss per  common  share  except  that the
denominator is increased to include the number of additional  common shares that
would have been  outstanding if the potential  common shares had been issued and
if the additional  common shares were dilutive.  At September 30, 2012 and 2011,
the Company had no stock equivalents that were anti-dilutive and excluded in the
loss per share computation.
 
STOCK-BASED COMPENSATION
 
The Company records stock based  compensation in accordance with the guidance in
ASC Topic 718 which  requires the Company to recognize  expenses  related to the
fair value of its employee stock option awards.  This eliminates  accounting for
share-based  compensation  transactions  using the intrinsic  value and requires
instead that such transactions be accounted for using a fair-value-based method.
Accordingly,  the Company recognized  expenses of $2,429 and $0 during the years
ended September 30, 2012 and 2011, respectively (see Note 5).
 
WEBSITE DEVELOPMENT COSTS
 
The Company  capitalizes  its costs to develop its website and when  preliminary
development  efforts are successfully  completed,  management has authorized and
committed project funding, and it is probable that the project will be completed
and the  website  will be  used as  intended.  Such  costs  are  amortized  on a
straight-line  basis over the estimated useful life of the related asset,  which
approximates  three  years.  Costs  incurred  prior to meeting  these  criteria,
together  with costs  incurred  for training  and  maintenance,  are expensed as
incurred.  Costs  incurred  for  enhancements  that are  expected  to  result in
additional  material   functionality  are  capitalized  and  expensed  over  the
estimated useful life of the upgrades.
 
The Company capitalized website costs of $46,750 during the year ended September
30,  2012.  The  Company's  capitalized  website  amortization  is  included  in
depreciation  and  amortization  in the  Company's  consolidated  statements  of
operations, and totaled $5,503 for the period.
 
ADVERTISING COSTS
 
Advertising  costs are to be  expensed  as  incurred  in  accordance  to Company
policy;  for the year ended  September 30, 2012,  Advertising  expenses  totaled
$23,778.
 
INCOME TAXES
 
The Company records income taxes under the asset and liability  method,  whereby
deferred  tax  assets and  liabilities  are  recognized  based on the future tax
consequences   attributable  to  temporary  differences  between  the  financial
statement  carrying  amounts  of  existing  assets  and  liabilities  and  their
respective tax bases,  and  attributable  to operating loss and tax credit carry
forwards.  Accounting  standards  regarding income taxes requires a reduction of
the carrying amounts of deferred tax assets by a valuation  allowance,  if based
on the  information  available  it is more likely than not that such assets will
not be realized.  Accordingly,  the need to establish  valuation  allowances for
deferred  tax  assets  is  assessed  at  each   reporting   period  based  on  a
more-likely-than-not  realization  threshold.  This assessment considers,  among
other  matters,  the nature,  frequency  and severity of current and  cumulative
losses,  forecasts of future  profitability,  the  duration of  statutory  carry
forward  periods,  the Company's  experience  with operating loss and tax credit
carry  forwards  not  expiring  unused,  and tax  planning  alternatives.  As of
September  30, 2012 and 2011,  the  Company  did not have any  amounts  recorded
pertaining to uncertain tax positions.
 
RECENT ACCOUNTING PRONOUNCEMENTS
 
In  December  2011,  The  FASB  issued  Accounting   Standards  Update  2011-11,
"Disclosures  about  Offsetting  Assets and  Liabilities."  This update requires
entities  to  disclose  both  gross   information  and  net  information   about
instruments and  transactions  eligible for offset in the statement of financial
position and instruments and transactions  subject to an agreement  similar to a
master netting arrangement. The scope of this update includes derivatives,  sale
and  repurchase  agreements  and  reverse  sale and  repurchase  agreements  and
securities borrowing and lending arrangements.  The Company is required to adopt
this update  retrospectively  for periods  beginning  after January 1, 2013. The
adoption  of this  accounting  standard  update will  become  effective  for the
reporting period beginning January 1, 2013.  Management does not anticipate that
adoption  will have a material  impact on the Company's  consolidated  financial
position, results of operations or cash flows.
 
Other  recent  accounting  pronouncements  issued  by the  FASB  (including  its
Emerging  Issues  Task  Force),  the  American  Institute  of  Certified  Public
Accountants,  and the SEC did not, or are not believed by management  to, have a
material impact on the Company's present or future financial  position,  results
of operations or cash flows.