Goodwill and Subscriber Acquisition Costs

12 Months Ended

Jun. 30, 2013

Goodwill and Subscriber Acquisition Costs [Abstract]

Goodwill and Subscriber Acquisition Costs

4. Goodwill and Subscriber Acquisition Costs

Goodwill

The Company performs a qualitative evaluation of goodwill annually or more frequently when indicators of impairment exist, and if that evaluation indicates an impairment has occurred, the following two-step process is applied. The first step is used to identify a potential impairment by comparing the fair value of a reporting unit with its net book value (or carrying amount) including goodwill. If the fair value exceeds the carrying amount, goodwill of the reporting unit is not considered impaired and the second step of the impairment test is unnecessary. If the carrying amount of the reporting unit exceeds its fair value, the second step of the goodwill impairment test compares the implied value of the reporting unit's goodwill with the carrying amount of that goodwill. If the carrying amount exceeds the implied fair value, an impairment loss is recognized in an amount equal to that excess.

Determining the fair value of a reporting unit under the first step of the goodwill impairment test and determining the fair value of individual assets and liabilities of a reporting unit (including previously unrecognized intangible assets) under the second test of the goodwill impairment test uses Level 3 inputs and includes multiple estimates and assumptions. These estimates and assumptions could have a significant impact on whether an impairment charge is recognized and the magnitude of any such charge. Estimates of fair value are primarily determined using future net cash flows discounted at 4.75% and are based on management's best estimate and general market conditions. This approach uses significant assumptions, including projected future earnings and a subscription growth rate.

The Company's goodwill impairment analysis as of June 30, 2012 indicated no impairment of goodwill existed; accordingly, no impairment losses were recognized during the year ended June 30, 2012.

The Company performed its annual goodwill impairment assessment as of June 30, 2013 and determined an impairment of goodwill existed, resulting in an impairment loss of $69,000 for the year ended June 30, 2013. The fiscal 2013 impairment loss related to potential reduction in future cash flows of non-wireless subscribers acquired with our 1999 acquisitions of NeoSoft and PDQ.Net.

Subscriber Acquisition Costs

The amortization period for subscriber acquisition costs is 48 months for both dial-up and wireless customers. Total subscriber acquisition costs, net of accumulated amortization, were approximately $420,000 and $417,000 for the years ended June 30, 2013 and 2012, respectively. Amortization expense for the years ended June 30, 2013 and 2012 was approximately $156,000 and $92,000, respectively. As of June 30, 2013, expected amortization expense for future fiscal years is approximately as follows:

Fiscal year ending June 30,:
2014	$	171,000
2015		151,000
2016		83,000
2017		15,000
Total expected future amortization expense	$	420,000

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

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