Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2013

Summary of Measurement of Fair Value on a Recurring Basis

Amount

Quoted Prices in Active

Significant

Recorded on

Markets for

Other

Significant

Consolidated

Identical

Observable

Unobservable

Balance

Assets

Inputs

Sheets

(Level 1)

(Level 2)

(Level 3)

(Unaudited)

Liabilities as of June 30, 2013

Contingent obligation(1)

661,000

Liabilities as of December 31, 2012

Contingent obligation(1)

1,250,000

Schedule of Changes in the Fair Value Measurement of Contingent Obligation using Significant Unobservable Inputs

	THREE MONTHS ENDED					SIX MONTHS ENDED
	JUNE 30,					JUNE 30,
	2013			2012		2013			2012
	(Unaudited)					(Unaudited)

Balance, Beginning of Period	$	1,030,000		$	2,150,000	$	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)		(369,000	)		-		(589,000	)		-


Balance, End of Period	$	661,000		$	2,150,000	$	661,000		$	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 and six months ended June 30, 2013, the Company measured the fair value of its contingent obligation and recorded a non-cash gain fair value adjustment of approximately $0.4 million and $0.6 million, respectively, to reflect a reduction in fair value of its contingent obligation. The principal factor affecting the reduction in fair value is lower client implementations than anticipated. There were no significant changes in discount rate used the calculation of fair value. 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.

+ References+ Details

- 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.

+ References+ Details