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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)
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9 Months Ended |
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Sep. 30, 2012
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| Summary Of Significant Accounting Policies Policies | |
| Basis of Presentation | The consolidated financial statements include the accounts of the Company and our wholly owned subsidiaries. Intercompany balances and transactions have been eliminated upon consolidation.
In June 2011, we effected a four-for-one forward-split of the shares of our common stock. All references to common stock activity in these financial statements have been retroactively restated so as to incorporate the effects of this stock-split. |
| Use of Estimates | The preparation of consolidated financial statements in conformity with the generally accepted accounting principles in the United States (“U.S. GAAP”) requires management to make estimates and assumptions in certain circumstances that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. The more significant estimates include, but are not limited to, the recognition of certain, valuation of intangible assets, goodwill and long-lived asset impairment charges, stock-based compensation, loss contingencies and the allowance for doubtful accounts receivable. Actual results could differ from those estimates. |
| Revenue Recognition | We derive our revenues from the sale of software and mobile applications through various platforms. We recognize revenue when all of the following conditions are satisfied: (i) there is persuasive evidence of an arrangement; (ii) delivery of the product or provision of the service has occurred; (iii) the fee is fixed or determinable; and (iv) collectability of the fee is reasonably assured.
Mobile Phone Applications
Mobile phone applications are sold using multiple platforms. Each platform handles the sale, distribution or download, as well as the collection and remittance of payment for the company. We recognize mobile application revenue net of the amounts retained by the platform companies. There is no warranty or money-back guarantee related to the sale of mobile phone applications, therefore no deferred revenue or allowance for sales returns has been recorded. |
| Cash and Cash Equivalents | We consider all highly liquid investments with remaining maturities of three months or less at the date of purchase to be cash and cash equivalents. Cash and cash equivalents consist primarily of money market funds and other short-term investments with original maturities of not more than three months stated at cost, which approximates market value. |
| Accounts Receivable and Allowance for Doubtful Accounts | Accounts receivable are presented at their face amount, less an allowance for doubtful accounts, on the consolidated balance sheets. Accounts receivable consist of revenue earned and currently due from customers. We evaluate the collectability of accounts receivable based on a combination of factors. We recognize reserves for bad debts based on estimates developed using standard quantitative measures that incorporate historical write-offs and current economic conditions. |
| Goodwill | Goodwill represents the excess of the purchase price of an acquired enterprise or assets over the fair value of the identifiable net assets acquired. We test goodwill for impairment in each quarter of the year, and whenever events or changes in circumstances arise during the year that indicate the carrying amount of goodwill may not be recoverable. In evaluating whether an impairment of goodwill exists, we first compare the estimated fair value of a reporting unit against its carrying value. If the estimated fair value is lower than the carrying value, then a more detailed assessment is performed comparing the fair value of the reporting unit to the fair value of the assets and liabilities plus the goodwill carrying value of the reporting unit. If the fair value of the reporting unit is less than the fair value of its assets and liabilities plus goodwill, then an impairment charge is recognized to reduce the carrying value of goodwill by the difference. The gross amount of goodwill at September 30, 2012 was $7,106,355 (December 31, 2011 - $2,977,934) with accumulated impairment of $6,332,308 (December 31, 2011 - $2,350,800). The net amount of goodwill at September 30, 2012 was $774,047 (December 31, 2011 - $627,134).
During the nine months ended September 30, 2012, we recorded an impairment charge totaling $3,981,508 related to purchased goodwill whose carrying amount exceeded its implied fair value (December 31, 2011 - $2,350,800). |
| Software Development Costs | We capitalize costs incurred during the application development stage relating to the development of our mobile applications. Costs related to preliminary project activities and post-implementation activities are expensed as incurred. We capitalized $54,491 and $-0- in software development costs for the nine month period ended September 30, 2012 and for the year ended December 31, 2011, respectively. Once placed into service, we anticipate amortizing these costs over a period of three years. Prior to 2011, costs incurred during the application development stage were not material and were expensed as incurred. |
| Business Acquisitions | Business acquisitions are accounted for under the purchase method of accounting. Under that method, assets and liabilities of the business acquired are recorded at their estimated fair values as of the date of the acquisition, with any excess of the cost of the acquisition over the estimated fair value of the net tangible and intangible assets acquired recorded as goodwill. We make significant judgments and assumptions in determining the fair value of acquired assets and assumed liabilities, especially with respect to acquired intangibles. Using different assumptions in determining fair value could materially impact the purchase price allocation and our financial position and results of operations. Results of operations for acquired businesses are included in the consolidated financial statements from the date of acquisition. |
| Net Loss per Share Attributable to Common Stockholders | Basic and diluted net loss per share attributable to common stockholders is computed by dividing net loss attributable to common stockholders by the weighted-average number of common shares outstanding during the period. Our potentially dilutive shares, which include outstanding common stock options, common stock warrants and convertible debentures, have not been included in the computation of diluted net loss per share attributable to common stockholders for all periods presented, as the results would be anti-dilutive. Such potentially dilutive shares are excluded when the effect would be to reduce net loss per share. There were 1,479,938 such potentially dilutive shares excluded as of September 30, 2012. |
| Fair Value of Financial Instruments | As of September 30, 2012 and December 31, 2011, cash and cash equivalents were comprised of cash in bank accounts and money market funds totaling $199,759 and $181,725, respectively. In addition, the carrying amount of certain financial instruments, including accounts receivable, accounts payable and accrued expenses approximates fair value due to their short maturities. |
| Concentration of Credit Risk | Financial instruments that potentially subject us to concentrations of credit risk consist primarily of cash and cash equivalents, to the extent balances exceed limits that are insured by the Federal Deposit Insurance Corporation, and accounts receivable.
At September 30, 2012, two customers comprised more than 83 percent of accounts receivable. At December 31, 2011, one customer comprised 85 percent of accounts receivable. |
| Recent Accounting Pronouncements | The Company has evaluated recent pronouncements and does not expect their adoption to have a material impact on the Company’s financial position, or statements. |