Goodwill and Intangible Assets

6 Months Ended

Jun. 30, 2013

Goodwill And Intangible Assets Disclosure [Abstract]

5. Goodwill and Intangible Assets

The changes in the carry amounts of goodwill for six months ended June 30, 2013 are due to the impact of foreign currency translation adjustments related to intangible asset balances that are recorded in non-U.S. currencies.

Changes in goodwill for the six months ended June 30, 2013, are as follows:


Balance, December 31, 2012	$	18,883,449
Foreign currency translation adjustments		(171,502	)


Balance, June 30, 2013	$	18,711,947

Intangible assets consist of the following:


			December 31, 2012						June 30, 2013
	Estimated Useful Life		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount

Trademark		1-5 years	$	665,844	$	665,844	$	—	$	665,844	$	665,844	$	—
Customer base		5-7 years		3,789,117		1,447,297		2,341,820		3,789,117		1,674,063		2,115,054
Domain names		5 years		534,257		137,378		396,879		891,076		257,020		634,056
Software		4 years		298,977		298,977		—		298,977		298,977		—
Technology		4-6 years		2,463,402		1,580,896		882,506		2,463,402		1,708,114		755,288
Technology and know-how		3 years		3,256,803		1,576,600		1,680,203		3,176,431		2,067,097		1,109,334
Non-compete agreements		5 years		161,691		8,721		152,970		161,691		21,407		140,284
Internally developed software		3 years		1,281,589		367,943		913,646		1,837,747		596,250		1,241,497


			$	12,451,680	$	6,083,656	$	6,368,024	$	13,284,285	$	7,288,772	$	5,995,513

As a result of the Bold acquisition, the Company capitalized $1,090,000 of technology, $30,000 of trade names and trademarks, $2,760,000 of customer base and $160,000 of non-compete agreements as intangible assets. Changes in the gross carrying amount of the intangible assets are due to foreign currency translation adjustments. The Company is amortizing the intangible assets based upon the pattern in which their economic benefit will be realized, or if this pattern cannot be reliably determined, using the straight-line method over their estimated useful lives. The intangible assets have estimated useful lives which range from one to seven years.

The Company capitalized $186,676 and $317,125 during the three months ended June 30, 2012 and 2013, respectively, and $294,884 and $556,158 during the six months ended June 30, 2012 and 2013, respectively of costs related to internally developed computer software to be sold as a service incurred during the application development stage and is amortizing these costs over the expected lives of the related services. The Company paid $56,250 and $358,475 to acquire domain names in the three and six months ended June 30, 2013.

The Company is amortizing its intangible assets over the estimated lives noted above. Amortization expense for intangible assets was $516,787 and $632,765 for the three months ended June 30, 2012 and 2013, respectively, and $1,025,420 and $1,244,310 for the six months ended June 30, 2012 and 2013, respectively. Amortization relating to software, technology and internally developed software is recorded within cost of revenues and the amortization of trade name and trademark, customer base, domain names, and non-compete agreements is recorded within operating expenses. Future estimated amortization expense for intangible assets is as follows at June 30, 2013:


Amortization Expense (Years Ending December 31)	Amount
2013 (Six months ending December 31)		1,263,479
2014		2,014,454
2015		1,189,926
2016		735,490
2017		480,534
Thereafter		311,630


Total	$	5,995,513

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

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