Notes receivable

6 Months Ended

Jun. 30, 2011

Notes receivable [Abstract]

Notes receivable

2. Notes receivable

During 2010 the Company entered into a promissory note and security agreement with one of its customers related to the sale of domain names and services. The promissory note totaled $1,000,000, carrying interest at 5% per annum payable in twelve equal quarterly payments of $54,000 beginning on March 31, 2011, and continuing on the last day of each calendar quarter thereafter until December 31, 2013, and three additional annual balloon payments of $80,000, $210,000 and $157,238 due on the 31st day of December of 2011, 2012 and 2013, respectively. The Company considered the credit quality of the customer and determined that no allowance for credit losses is necessary. As of June 30, 2011, no portion of the note receivable balance was past due. The note receivable is secured by the domain names sold to the customer.

During 2011 the Company also loaned Digital Post Interactive, Inc., a Nevada corporation (“DGLP”) a total of $485,000 pursuant to seven separate short term promissory notes. The Company entered into an asset purchase agreement with DGLP by which the Company acquired substantially all of the assets of Rovion, Inc. (“Rovion”) a wholly-owned subsidiary of DGLP. As part of the asset purchase agreement, cash paid by the Company for the acquisition of assets was used to repay the promissory notes in full. No interest was collected on these notes. During the second quarter 2011 the Company also loaned Krillion, Inc. (“Krillion”) a total of $100,000 pursuant to a short term promissory note. Subsequently, the Company entered into a stock purchase agreement with Krillion for the acquisition of all of the outstanding stock of Krillion. As part of the stock purchase agreement, cash paid by the Company for the acquisition of the stock was used to repay the promissory note in full. No interest was collected on the note. Also during the second quarter 2011, the Company loaned Screamin Media Group, Inc. (“SMG”) $500,000 pursuant to a short term promissory note. On July 8, 2011, the Company entered into a merger agreement with SMG pursuant to which a wholly owned subsidiary of the Company formed for purposes of effecting the merger and was merged with and into SMG and SMG became a wholly owned subsidiary of the Company. As part of the merger agreement, cash paid by the Company as consideration to the SMG stockholders in the merger was used to repay the promissory note in full on August 3, 2011.