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Fair Value Measurements (Tables)

3 Months Ended

Mar. 31, 2013

Fair Value, Liabilities Measured on Recurring Basis [Table Text Block]

The following table summarizes the Company’s measurement of fair value on a recurring basis for seller financed promissory notes as categorized by GAAP’s valuation hierarchy at the end of each reporting periods presented below:

Amount

Quoted Prices

Significant

Recorded on

in Active

Other

Significant

Consolidated

Markets for

Observable

Unobservable

Balance

Identical Assets

Inputs

Sheets

(Level 1)

(Level 2)

(Level 3)

(Unaudited)

Liabilities as of March 31, 2013 Contingent obligation (1)

1,030,000

—

1,030,000

Liabilities as of December 31, 2012 Contingent obligation (1)

1,250,000

—

1,250,000

Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Table Text Block]

Changes in the fair value measurement of 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 the period then ended:

	THREE MONTHS ENDED
	MARCH 31,
	2013			2012
	(Unaudited)
Balance, January 1,	$	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)		(220,000	)		-

Balance, March 31,	$	1,030,000		$	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. For the three months ended March 31, 2013, the Company measured the fair value of its contingent obligation and recorded a non-cash gain fair value adjustment of approximately $0.2 million to reflect a reduction in fair value of its contingent obligation. The principal factor affecting the reduction in fair value is a change in timing of expected revenues due to client implementation delays. There were no significant changes in discount rate used in the calculation of fair value. There were changes in probability payout weightings used in the calculation to account for client implementation delays. The potential payout of consideration for the year ending 2013 is up to $1.5 million of face value of the contingent obligation.

- Definition

Tabular disclosure of liabilities, including [financial] instruments measured at fair value that are classified in stockholders' equity, if any, by class that are measured at fair value on a recurring basis. The disclosures contemplated herein include the fair value measurements at the reporting date by the level within the fair value hierarchy in which the fair value measurements in their entirety fall, segregating fair value measurements using quoted prices in active markets for identical assets (Level 1), significant other observable inputs (Level 2), and significant unobservable inputs (Level 3). Where the quoted price in an active market for the identical liability is not available, the Level 1 input is the quoted price of an identical liability when traded as an asset.

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- Definition

Tabular disclosure of the fair value measurement of liabilities using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes attributable to the following: (1) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets), and gains or losses recognized in other comprehensive income (loss) and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (2) purchases, sales, issues, and settlements (each type disclosed separately); and (3) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs) by class of liability.

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