Note 5 - Goodwill

12 Months Ended

Dec. 31, 2012

Goodwill Disclosure [Text Block]

Note 5—Goodwill

Goodwill represents the fair value of the intangible assets, not subject to amortization, from the acquisitions of Quepasa Games and Insider Guides, Inc.  At December 31, 2011, management assessed relevant events and circumstances in evaluating whether it was more likely than not that its fair values were less than respective carrying amounts of the acquired subsidiaries pursuant to ASC 350 Intangibles, Goodwill and Other.  After evaluation of Quepasa Games’ performance for the period ended December 31, 2011 and projected 2012 performance, management determined that Quepasa Games could not achieve the performance necessary for the earn-out provision of the stock-purchase agreement and would require an impairment adjustment.  A valuation of the Quepasa Games was performed and a $2.5 million fair value was determined. A comparison of the Company’s approximately $3.8 million carrying value of the Quepasa Games and the $2.4 million implied value of goodwill resulted in a loss on impairment of approximately $1.4 million in 2011. Quepasa Games operations were discontinued on June 30, 2012 and accordingly a loss on impairment of goodwill of approximately $ 2.2 million was recorded as loss from discontinued operations for the year ended December 31, 2012.  The translated value of goodwill for Quepasa Games varied at each interim reporting period due to changes in the foreign exchange rates.

Management’s assessment of the events and circumstance since the acquisition of Insider Guides, Inc. shows positive operating performance, key metrics, customer retention, and no indicators that its fair value was less than its carrying amount at December 31, 2011.  No impairment to goodwill occurred during the year ended December 31, 2012 for Insider Guides.

Goodwill consists of the following:

	Continuing operations		Discontinued operations
Goodwill, opening balance January 1, 2011	$	-	$	-
Additions:
Goodwill, Quepasa Games		-		4,280,618
Goodwill, translation adjustments				(469,045	)
Goodwill, Insider Guides, Inc.		70,646,036		-
Less impairment losses for Quepasa Games		-		(1,409,127	)
Total Goodwill—net at December 31, 2011	$	70,646,036	$	2,402,446
Additions:		-		-
Goodwill, translation adjustments				(113,670	)
Less impairment losses for Quepasa Games		-		(2,288,776	)
Total Goodwill—net at December 31, 2012	$	70,646,036	$	-