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Intangible Assets and Goodwill
12 Months Ended
Dec. 31, 2011
Notes to Financial Statements  
Note 5 - Intangible Assets and Goodwill

During 2011, we tested all reporting units for potential impairment during step 1 of our analysis.  Based on the results of step 1, there were indications of impairment within our web properties segment primarily due to the cessation of our call center activities in 2011.  We completed step 2 of the analysis on the intangible assets in our web properties and we determined that there was an impairment of our goodwill and names database and consequently we recognized an impairment charge of approximately $2.6 million. Additionally, in fiscal 2012 we will amortize the names database costs over nine months as management has determined that the useful life for our names database has decreased due to the cessation of our call center operations.  We will apply this change in estimate prospectively.

 

During 2010, we tested all reporting units for impairment.  Based on the results of these tests, there were no indications of impairment.    However in 2010, the tradenames associated with Morex and Primary Ads were impaired because we are no longer using these names and consequently, we recorded an impairment loss of $400,000.

 

The following is a schedule of our intangible assets from continuing operations as of December 31, 2011:

 

  Term  

Carrying

Value

    Accumulated Amortization and Impairment     Net Carrying Value  
Names database (1) 9 months   $ 16,130,086     $ (15,182,204 )   $ 947,882  
Website development 5 Years     4,210,000       (4,210,000 )     -  
Customer lists 5 Years     3,500,000       (3,500,000 )     -  
Exclusivity agreement 1 Year     150,000       (150,000 )     -  
Tradenames (1) Indefinite     390,000       -       390,000  
   Total intangible assets     $ 24,380,086     $ (23,042,204 )   $ 1,337,882  
Goodwill     $ 3,893,405     $ (2,116,861 )   $ 1,776,544  

 

The following is a schedule of our intangible assets from continuing operations as of December 31, 2010:

 

  Term  

Carrying

Value

    Accumulated Amortization and Impairment     Net Carrying Value  
Names database (1) 1-2 Years   $ 13,563,058     $ (11,600,097 )   $ 1,962,961  
Website development 5 Years     4,210,000       (4,110,729 )     99,271  
Customer lists 5 Years     3,500,000       (3,477,814 )     22,186  
Exclusivity agreement 1 Year     150,000       (112,500 )     37,500  
Tradenames (1) Indefinite     390,000       -       390,000  
   Total intangible assets     $ 21,813,058     $ (19,301,140 )   $ 2,511,918  
Goodwill     $ 3,893,405     $ (542,000 )   $ 3,351,405  

___________

(1) Amortization of Names Database included in cost of revenue for the years ended December 31, 2011 and 2010 was approximately $2.5 million and $2.0 million, respectively.  As of January 1, 2012, the names database will be amortized over nine months due to the change in our estimate of useful life.  The change in estimate resulted in the names database being classified as current in the 2011 consolidated balance sheet.  Per ASC 250, Accounting Changes and Error Corrections, this change in estimate does not require a restatement in amounts in prior periods and will only change classifications prospectively.  We do not amortize the carrying value of our Tradenames.

 

Our amortization expense over the next five years is as follows:

 

2012   $ 947,882  
2013     -  
2014     -  
2015     -  
2016     -  
Total   $ 947,882