7. Commitments and Contingencies

6 Months Ended

Dec. 31, 2012

Commitments And Contingencies

7. Commitments and Contingencies

In connection with the purchase from Trusted Opinion Inc. of the Loyalize assets, the Company is also obligated to fund as a purchase price adjustment the difference, if any, by which $1,839 exceeds the calculated value (computed based on the average closing price of its common shares during the 20 days prior to December 31, 2012) of the 137,519 shares on December 31, 2012, either in cash or in common shares of the Company, at the Company's election, provided that such additional consideration shall not be payable until claims, if any, which remain subject to determination and which are secured by the 104,892 shares that are held in escrow are no longer outstanding, and the additional consideration shall be eliminated to the extent final claims exceed the value of the shares then remaining in escrow.  The guarantee was recorded at $120 at the time of the acquisition and subsequently has been marked to market to a fair value of $1,465 at December 31, 2012. The Company has recorded a gain of $109 and a charge of $502 which is reflected in other income,net in the Consolidated Statement of Operations for the three and six months ended December 31, 2012, respectively.  The Company has recorded a $1,465 liability for the guarantee in the Consolidated Balance Sheet as of December 31, 2012.

On August 17, 2012, the Company was served with a patent infringement lawsuit filed on August 13, 2012 by Blue Spike, LLC ("Blue Spike") in the United States District Court for the Eastern District of Texas, Tyler Division (Civil Action No. 6:12-CV-526). The lawsuit claims patent infringement under U.S. Patent numbers 7,346,472, 7,660,700, 7,949,494, and 8,214,715 in connection with the Company's audio recognition technology.  Blue Spike has commenced suits against numerous other companies involving the same patent family. The Company denies that it is infringing any valid, enforceable claims of the asserted patents and intends to vigorously defend itself against the lawsuit.  The Company filed its answer on October 3, 2012.

We are subject to litigation and other claims that arise in the ordinary course of business. While the ultimate result of our outstanding legal matters cannot presently be determined, the Company does not expect that the ultimate disposition will have a material adverse effect on our results of operations or financial condition. However, legal matters are inherently unpredictable and subject to significant uncertainties, some of which are beyond our control. As such, there can be no assurance that the final outcome will not have a material adverse effect upon our financial condition and results of operations.