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Fair Value Measurements | 9 Months Ended
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Sep. 30, 2013
Fair Value Measurements [Abstract] |
Fair Value Measurements |
3. | Fair Value Measurements
Fair value is defined as 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, based on the Company's principal or, in the absence of a principal, most advantageous market for the specific asset or liability. GAAP provides for a three-level hierarchy of inputs to valuation techniques used to measure fair value, defined as follows:
| Level 1 - | Inputs that are quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity can access.
| Level 2 - | Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability, including:
| § | Quoted prices for similar assets or liabilities in active markets
| § | Quoted prices for identical or similar assets or liabilities in markets that are not active
| § | Inputs other than quoted prices that are observable for the asset or liability
| § | Inputs that are derived principally from or corroborated by observable market data by correlation or other means
| Level 3 - | Inputs that are unobservable and reflect the Company's own assumptions about the assumptions market participants would likely use in pricing the asset or liability based on the best information available in the circumstances (e.g., internally derived assumptions surrounding the timing and amount of expected cash flows).
The Company monitors applicable market conditions and evaluates the fair value hierarchy levels as they pertain to the Company at least quarterly. For any transfers in and out of the levels of the fair value hierarchy, the Company elects to disclose the fair value measurement at the beginning of the reporting period during which the transfer occurred. The Company measured the fair value of a contingent seller financed promissory note ("contingent obligation") presented on the condensed consolidated balance sheets at fair value on a recurring basis using significantly unobservable inputs (Level 3) during the nine months ended September 30, 2013 and during the year ended December 31, 2012. The following table summarizes the Company's measurement of fair value on a recurring basis for seller financed promissory note as categorized by GAAP's valuation hierarchy at the end of each reporting period presented below:
|  | Amount |  |  | Quoted Prices |  |  | Significant |  |  |  |
|  | Recorded on |  |  | in Active |  |  | Other |  |  | Significant |
|  | Consolidated |  |  | Markets for |  |  | Observable |  |  | Unobservable |
|  | Balance |  |  | Identical Assets |  |  | Inputs |  |  | Inputs |
|  | Sheets |  |  | (Level 1) |  |  | (Level 2) |  |  | (Level 3) |
|  | (Unaudited) |
Liabilities as of September 30, 2013 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Contingent obligation (1) |  | $ | - |  |  |  | - |  |  |  | - |  |  | $ | - |
Liabilities as of December 31, 2012 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Contingent obligation (1) |  | $ | 1,250,000 |  |  |  | - |  |  |  | - |  |  | $ | 1,250,000 |
Changes in the fair value measurement of the contingent obligation using significant unobservable inputs classified as Level 3 and valuation method used to estimate fair values are set forth below as of and for each of the periods then ended:
|  | THREE MONTHS ENDED |  |  | NINE MONTHS ENDED |
|  | SEPTEMBER, 30 |  |  | SEPTEMBER, 30 |
|  | 2013 |  |  | 2012 |  |  | 2013 |  |  | 2012 |
|  | (Unaudited) |  |  | (Unaudited) |
Balance, Beginning of Period |  | $ | 661,000 |  |  | $ | 2,150,000 |  |  | $ | 1,250,000 |  |  | $ | 2,150,000 |
Total gains or losses for the period: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Non-cash gain on change in fair value of contingent obligation included in general and administrative expense (1) |  |  | (661,000 | ) |  |  | - |  |  |  | (1,250,000 | ) |  |  | - |
Balance, End of Period |  | $ | - |  |  | $ | 2,150,000 |  |  | $ | - |  |  | $ | 2,150,000 |
| (1) | The Company assesses the estimated fair value of the contingent obligation on a quarterly basis using a probability weighted income approach (discounted cash flow) valuation technique. When preparing discounted cash flow models under the income approach, the Company uses internal forecasts to estimate future cash flows. The Company's internal forecasts are developed using observable (Level 2) and unobservable (Level 3) inputs. The Company previously estimated the fair value of contingent consideration at $3.0 million in connection with an asset purchase agreement with Avalon Global Solutions, Inc. ("AGS") on December 31, 2011. Under the terms of the Asset Purchase Agreement ("APA"), contingent consideration (or "contingent obligation") is payable provided Adjusted Gross Profit(" AGP") targets of $5,428,000 and $6,752,000 are reached in fiscal 2012 and 2013, respectively. AGS did not meet its AGP target in fiscal 2012 and the Company reduced the fair value of its contingent obligation and remeasured the fair value of this contingent obligation to $2.15 million. The Company revised its third and fourth quarter of 2013 forecasted AGP to reflect lower projected revenue growth from slower implementation of recently sold services. The Company believes these factors make it remote that the 2013 AGP target of $6,752,000 will be reached and accordingly revised the fair value of its contingent obligation to a zero value during the three months ended September 30, 2013. For the three and nine months ended September 30, 2013, the Company recorded a non-cash gain within general and administrative expense as a result of a fair value adjustment of approximately $0.66 million and $1.25 million, respectively.
There were no transfers into or out of Level 3 for the three or nine month periods ended September 30, 2013 and 2012.

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- Definition The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=28364263&loc=d3e13537-108611 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 10 -URI http://asc.fasb.org/extlink&oid=28364263&loc=d3e13433-108611 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 28 -URI http://asc.fasb.org/extlink&oid=6957238&loc=d3e14064-108612 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=25499696&loc=d3e19207-110258 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 30 -URI http://asc.fasb.org/extlink&oid=6957238&loc=d3e14172-108612 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 16 -URI http://asc.fasb.org/extlink&oid=28364263&loc=d3e13504-108611 + Details
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