CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS
Some of the statements in this Quarterly Report on Form 10-Q are
"forward-looking statements" within the meaning of the safe harbor from
liability established by the Private Securities Litigation Reform Act of 1995.
Forward-looking statements include statements regarding our current beliefs,
goals and expectations about matters such as our expected financial position and
operating results, our business strategy and our financing plans. The
forward-looking statements in this report are not based on historical facts, but
rather reflect the current expectations of our management concerning future
results and events. The forward-looking statements generally can be identified
by the use of terms such as "believe," "expect," "anticipate," "intend," "plan,"
"foresee," "may," "guidance," "estimate," "potential," "outlook," "target,"
"forecast," "likely" or other similar words or phrases. Similarly, statements
that describe our objectives, plans or goals are, or may be, forward-looking
statements. Forward-looking statements involve known and unknown risks,
uncertainties and other factors that may cause our actual results, performance
or achievements to be different from any future results, performance and
achievements expressed or implied by these statements. We cannot guarantee that
our forward-looking statements will turn out to be correct or that our beliefs
and goals will not change. Our actual results could be very different from and
worse than our expectations for various reasons. You should review carefully all
information, including the discussion of risk factors under "Part I. Item 1A:
Risk Factors" and "Part II. Item 7: Management'sDiscussion and Analysis of
Financial Condition and Results of Operations" of the Form 10-K for the year
ended
Throughout this Quarterly Report on Form 10-Q, the terms "CLIS," "we,"
"us," "our," "the company" and "our company" refer to
Our corporate history
We were incorporated in
The address of our virtual executive office is
Overview
Over the last few years, there has been a substantial increase in the
availability and quality of applications readily available from sources such as
In
24 Recent Developments
Issuance of Common Stock for Services
During the three months ended
Issuance of Common Stock for Settlement of Employment Agreement
On
Issuance of Common Stock for Cash
During the three months
Results of Operations-Comparison of the Three Months Ended
Research and Development Expenses
During the three months ended
Selling, general and administrative expenses
During the three months ended
Settlement of employment agreement
During the three months ended
Amortization of debt discount
Amortization of debt discount was
25 Interest Expense
During the three months ended
Interest Income
During the three months ended
Liquidity and Capital Resources
As of
Application of Critical Accounting Policies
We believe that our critical accounting policies are as follows:
? Research and Development Costs; ? Stock Based Compensation; ? Fair Value of Financial Instruments ? Equity Method Investments ? Asset Acquisitions
Researchand Development Costs
Research and development costs consist of expenditures for the research and development of new products and technology. These costs are primarily expenses to vendors contracted to perform research projects and develop technology for the Company's mobile gaming applications.Costs incurred for researchand development are expensed asincurred.
Stock-BasedCompensation
We accountfor our stock-basedcompensation to employees and non-employees underASC 718 "Compensation- Stock Compensation" using the fair value-based method. Under this method, compensation cost is measuredat thegrant datebased onthe valueof theaward and isrecognized over therequisite service period, which is usually the vesting period. This guidance establishes standards for theaccounting for transactions in which an entity exchanges it equity instruments for goods orservices. It also addresses transactions in which an entity incurs liabilities in exchange forgoods or services that are based on the fair value of the entity's equity instruments or thatmay be settled bythe issuance of those equityinstruments.
26 Fair Value Measurements
We use fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. We base our fair values on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Additionally, from time to time, we may be required to record certain assets at fair value on a non-recurring basis, such as certain impaired loans held for investment and securities held to maturity that are other-than-temporarily impaired or goodwill. These non-recurring fair value adjustments typically involve write-downs of individual assets due to application of lower-of-cost or market accounting or other accounting standards.
We have established and documented a process for determining fair value. We maximize the use of observable inputs and minimize the use of unobservable inputs when developing fair value measurements. Whenever there is no readily available market data, management uses its best estimate and assumptions in determining fair value, but these estimates involve inherent uncertainties and the application of management's judgment. As a result, if other assumptions had been used, our recorded earnings or disclosures could have been materially different from those reflected in these financial statements. For detailed information on our use of fair value measurements and our related valuation methodologies, see Note 2 to the Consolidated Financial Statements of this report.
Equity Method Investment
The equity method is applied to investments in affiliated companies and joint ventures. An affiliated company is an entity which is not controlled by the Company but for which the Company is able to exert significant influence over the decisions on financial and operating business policies. If the Company has 20% or more but not more than 50% of the voting rights of another entity, the Company is presumed to have significant influence over that entity however, if a company has less than 20% of the voting rights and is able to exert significant influence the equity method should be applied. Under the equity method, the investment in an affiliated company or joint venture is initially recognized at cost and the carrying amount is increased or decreased to recognize the Company's share of the net income or loss of the affiliated company or joint venture. When the Company's share of losses of an affiliated company equals or exceeds it interest in the affiliated company or joint venture, the Company discontinues recognizing its share of further losses. All intercompany profits have been eliminated in proportion to interests in affiliated companies or joint ventures.
Asset Acquisitions
The Company accounts for acquisitions of legal entities that do not meet the definition of a business under ASC 805 as asset acquisitions. Assets acquired and liabilities assumed are recorded at their relative fair value and no goodwill is recorded. Contingent consideration for assets acquired is measured and is recognized as an expense on the date the contingency occurs.
Recently Issued Accounting Standards
See discussion in Note 2 to the condensed consolidated financial statements.
Inflation
We believe that inflation has not had a material adverse impact on our business or operating results during the periods presented.
Off-balanceSheet Arrangements
The Company does not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on the Company's financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.
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