the future, actual results ultimately may differ from the estimates.
The Company does not expect changes in the estimates
and assumptions used in these financial statements to
materially affect these results within the next year.
(l) Fair Value of Financial Instruments
The carrying amounts of cash and cash equivalents, accounts
receivable, accounts payable and accrued expenses approximate
fair value because of the shor t-term maturity of
these items.
(m) Segment Information
The Company previously considered itself to have two separate
strategic business units that offer different products.
They were managed separately because each business
required different knowledge, skills and marketing strategies.
These two business segments were pesticides and insecticides
and sustainable solutions. In the first half of 2010, the
Company decided to discontinue the business conducted in
the sustainable solutions segment. The effect of that decision
is discussed in the Discontinued Operations footnote (see
Note 3).
(n) Recently Issued Accounting Standards
Revenue Recognition
In April 2010, the AS B issued ASU 2010-17, Milestone Method
of Revenue Recognition, a consensus of the FAS B Emerging
Task Force (ASU 2010-17), which provides guidance on the
criteria that should be met for determining whether the milestone
method of revenue recognition is appropriate. ASU
2010-17 is effective on a prospective basis for milestones
achieved in fiscal years, and interim periods within those years,
beginning on or before June 15, 2010. The effect of ASU
2010-17 on the Company's expected future revenues will
depend upon the structure of the Company's customer contracts
and is still being analyzed.
In October 2009, the FAS B issued 2009-13, Multiple-
Deliverable Revenue Arrangements (ASU 2009-13). The new
standard changes the requirements for establishing separate
units of accounting in a multiple element arrangement and
requires the allocation of arrangement consideration to each
deliverable based on the relative selling price. The selling
price for each deliverable is based on vendor-specific objective
evidence (VSOE ) if available, third-party evidence if VSOE is
not available, or estimated selling price if neither VSOE or
third-party evidence is available. ASU 2009-13 is effective for
revenue arrangement entered into in fiscal years beginning on
or after June 15, 2010. The effect of this new guidance on the
Company's expected revenues, which in turn depends upon
the final structure of the Company's contracts with customers,
is still being analyzed.
(2) Li quidit y and Capit al Resources
As of December 31, 2010, the Company had US $3,343,581
(2009: US $1,264,661) in cash and cash equivalents and had no
indebtedness.
The Company has had significant negative cash flows from
operating activities since inception. The Company has produced
monthly forecasts to the end of 2013 and based upon
cash expected to be received through existing contracts, new
contracts to be closed and the ability to control costs as a
result of the Company's cost minimization program, with existing
cash on hand and cash received from a share placing in
May and December 2010, the Company's Directors believe
that the Company will have sufficient cash to meet its working
capital needs through the next twelve months. For this reason,
the Company continues to apply the going concern basis
of accounting.
(3) Disconti nued Op erati ons
During 2010, the Company discontinued the Sustainable
Solutions segment which is reported as discontinued operations
in the consolidated statements of operations for the
twelve months ended December 31, 2010 and December 31,
2009. The assets and liabilities of discontinued operations
have been reclassified and are segregated in the consolidated
balance sheets for the years ended December 31, 2010 and
December 31, 2009.
The Company ceased operations of the Sustainable Solutions,
LLC subsidiary effective March 31, 2010 and began liquidating
the product inventory and settling the remaining liabilities
with suppliers. This subsidiary was discontinued because its
operations did not align with the Company's strategic plans.
The consolidated statements of operations for the years
ended December 31, 2010 and December 31, 2009 exclude
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