RARUS TECHNOLOGIES INC

In August 2012, the Financial Accounting Standards Board ('FASB') issued Accounting Standards Update ('ASU') 2012-03, "Technical Amendments and Corrections to SEC Sections Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 114, Technical Amendments Pursuant to SEC Release No. 33-9250, and Corrections Related to FASB Accounting Standards Update 2010-22." This Update clarifies certain technical issues included in a previous Securities and Exchange Commission ('SEC') Staff Accounting Bulletin and related FASB Update. The Company has adopted ASU 2012-03 and the adoption of ASU 2012-03 is not expected to have a material impact on our financial position or results of operations.

In July 2012, FASB issued ASU 2012-02, "Testing Indefinite-Lived Intangible Assets for Impairment" to address the recurring cost and complexity of performing a quantitative impairment test for indefinite-lived intangible assets other than goodwill, especially when the facts and circumstances indicated a low likelihood of impairment. The objective of the amendments in this Update is to reduce the cost and complexity of performing an impairment test for indefinite-lived intangible assets by simplifying how an entity tests those assets for impairment and to improve consistency in impairment testing guidance among long-lived asset categories. The amendments permit an entity first to assess qualitative factors to determine whether it is more likely than not that an indefinite-lived intangible asset is impaired as a basis for determining whether it is necessary to perform the quantitative impairment test in accordance with Subtopic 350-30, Intangibles—Goodwill and Other—General Intangibles Other than Goodwill. The more-likely-than-not threshold is defined as having a likelihood of more than 50 percent. The Company has adopted ASU 2012-03 and the adoption of ASU 2012-02 is not expected to have a material impact on our financial position or results of operations.

On May 8, 2012 (the "Effective Date") the Company entered into a software property, technical information and trademark license agreement (the "License Agreement") with ThinkCorp AG, (the "Licensor"). Under the License Agreement, the Company acquired software properties and software property applications to a Internet Social Media technology business concept called “Zngle”. During the twelve month period ended June 30, 2012, we made a payment of $350,000 toward our first scheduled installment of $2,000,000 for the License. To conform with generally accepted accounting principles ('GAAP') pertaining to the classification of assets, an impairment charge of $(350,000) was entered against this asset based on the Company’s impairment analysis as of June 30, 2012. There were no payments made regarding the License Agreement during the three and six month periods ended December 31, 2012 and there were no software impairments losses recorded for the three and six month periods ended December 31, 2011. Software impairment charges for the Development Stage Period totaled $350,000. In the next twelve months, we project further software impairment charges as we continue to make payments to the Licensor. At such time as we determine that the underlying software meets GAAP standards for qualifying as an asset, we will record it as such at that time.  

The Company has issued four promissory notes (the 'Notes') to an unrelated corporation. All four promissory notes accrue simple interest of 10% per annum and are due upon ten days written from the Lender. Total loan interest of $3,014 and $6,028 respectively accrued on the Notes during the three and six month periods ended December 31, 2012 versus $2,759 and $4,652 respectively during the three and six month periods ended December 31, 2011. Total accrued interest on the Notes as of December 31, 2012 totaled $16,689. Interest expense during the three and six month period ended December 31, 2012 also included $373 and $746 respectively of imputed interest on a shareholder advance due to our CEO, this compared with imputed interest of $nil and $nil for the three and six month periods ended December 31, 2011. In aggregate, interest expense totaled $3,387 and $6,774 respectively for the three and six month periods ended December 31, 2012 versus $2,759 and $4,652 respectively for the three and six month periods ended December 31, 2011. Interest expense for the Development Stage period totaled $18,915.

Because materials may be downloaded from mobile phone Internet services operated or facilitated by the Company, or by the companies with which the Company has relationships, and such materials may be subsequently distributed to others, there is a potential that claims will be made against the Company  for defamation, negligence, copyright or trademark infringement or other theories based on the nature and content of such  materials. Such claims have been brought against online  services in the past and such claims could be material in the future. The Company could also be exposed to liability with respect to  third-party information that may be accessible through the Company's phone App or website, or through content and materials that may be posted by users. Such claims might include, among others, that, by directly or indirectly providing hyperlink text links to Web sites operated by third parties or by  providing  discussion forums for users, the Company is liable for copyright or trademark infringement or other  wrongful actions by such third parties through such websites. It is also possible that, if any third-party content  information  provided on the Company's App contains errors, third parties could make claims against the Company for losses incurred in reliance on such information.