Note 9 –Intangibles

ASC 360 requires that an entity test for the recoverability of long-lived assets if events or changes in circumstances indicate that the carrying value may not be recoverable. As a result of significant adverse changes in the business climate, the Company concluded that triggering events had occurred and the Company tested long-lived assets for impairment as of September 30, 2011, and concluded that the carrying value of certain amortizable intangibles may not be recoverable.

The Company assessed the recoverability of the long-lived asset groups classified as held and used by comparing their undiscounted future cash flows to their individual carrying value. The future undiscounted cash flows associated with certain acquired amortizable intangible assets were determined to be less than the carrying value of such assets.

The Company then determined the fair value of such amortizable intangible assets and recognized an impairment charge of $0.7 million and $3.4 million during the quarter ended September 30, 2011 and December 31, 2010, respectively.

An intangible asset that is not subject to amortization shall be tested for impairment annually or more frequently if events or changes in circumstances indicate that the asset might be impaired in accordance with ASC 350. The Company concluded that triggering events had occurred and performed impairment test for the intangible assets. The impairment test consisted of a comparison of the fair value of intangible assets with their carrying amount. If the carrying amount of the intangible assets exceed their fair value, an impairment loss shall be recognized in an amount equal to that excess. In valuing the intangible assets, the Company applied the relief from royalty method. This method assumes that the assets have value to the extent that their owner is relieved of the obligation to pay royalties for the benefits received from them. Factors used to determine the fair value of the intangible assets included estimates and assumptions of the Company’s projected revenue, cash flows, operating expenses, weighted average cost of capital, operating ratios and valuation of comparable companies. These estimates and assumptions are complex and subject to a significant degree of judgment with respect to certain factors including, but not limited to, the cash flows of our long-term operating plans, market and interest rate risk, and risk-commensurate discount rates and cost of capital.

As a result of the impairment analysis, the Company recorded an impairment loss of $0.7 million and $1.5 million during the quarter ended September 30, 2011 and December 31, 2010, respectively, for its indefinite lived intangible assets.

The carrying amount and accumulated amortization of intangible assets as of September 30, 2011 and December 31, 2010, respectively, are as follows:

	Weighted average	Gross Book		Accumulated				Net Book
(dollars in thousands)	Useful Life in Years	Value		Amortization		Impairment		Value

As of September 30, 2011

Indefinite Lived assets
Tradenames		$	11	$	-	$	-	$	11
Domain names			773		-		689		84

Amortized Intangible Assets
Acquired software technology	0.4		1,809		1,809		-		-
Domain names	0.1		426		426		-		-
Tradenames	5		805		121		669		15
Restrictive covenants	2.1		631		568		63		-
Kazaa Marketing Services Agreement	10		1,373		103		-		1,270

Total		$	5,828	$	3,027	$	1,421	$	1,380

As of December 31, 2010

Indefinite Lived assets
Tradenames		$	918	$	-	$	907	$	11
Domain names			1,298		-		525		773

Amortized Intangible Assets
Acquired software technology	0.4		2,516		1,968		531		17
Domain names	0.1		426		420		-		6
Tradenames	5		3,966		320		2,841		805
Customer lists	0.1		582		570		12		-
Restrictive Covenants	2.1		667		535		34		98
Kazaa Marketing Services Agreement	10		1,373		-		-		1,373

Total		$	11,746	$	3,813	$	4,850	$	3,083