Business Combinations

6 Months Ended

Jun. 30, 2013

Business Combinations [Abstract]

Business Combinations

Business Combinations

At December 31, 2012, the Company owned 27% of the voting stock in Spigit and accordingly, recorded its investment as an unconsolidated affiliate using the equity method of accounting. However, the Company had not recorded any losses reported by Spigit since 2011, as previous losses had reduced the carrying value of the Company’s investment in Spigit to zero at December 31, 2011.

Effective January 31, 2013, the Company acquired its initial investment of Series F preferred stock (“Series F preferred stock”) and obtained effective control of Spigit for $5 million and obtained additional common stock by converting existing outstanding term loans with Spigit. Simultaneous with the Company’s initial acquisition of the Series F preferred stock, Spigit completed a one-for-five reverse split of certain other preferred shares outstanding. All issuances of Spigit’s preferred stock prior to the Series F preferred stock were then converted to common stock such that Spigit’s capitalization consisted only of Series F preferred stock, which is owned entirely by the Company, and common stock. In accordance with applicable accounting guidance, the initial acquisition was accounted for under the acquisition method of accounting and as such, the results of Spigit were consolidated with the Company's results of operations from the initial date of acquisition.

In conjunction with the initial acquisition, the Company also agreed to invest an additional $5 million by May 31, 2013 if Spigit, as of April 30, 2013, achieved certain pre-determined operational cash flow targets established by the Company. Spigit met the pre-determined targets and accordingly, during the three months ended June 30, 2013, the Company invested a further $1.8 million and received additional Series F preferred stock. The balance was invested subsequent to June 30, 2013 as Spigit required the cash to fund its operations. The Company owns approximately 69% of the total outstanding voting interest of Spigit at June 30, 2013.

The allocation of the acquired assets and liabilities requires extensive use of accounting estimates and judgments to allocate the purchase price to tangible and intangible assets acquired and liabilities assumed based on respective fair values. The Company’s purchase price allocations are preliminary and subject to revision as more detailed analyses are completed and additional information about the fair value of assets and liabilities becomes available, including information relating to tax matters and finalization of the Company’s valuation of identified intangible assets. The major classes of assets to which the Company preliminarily allocated the purchase price were goodwill of $5.1 million and identifiable intangible assets of $11 million. The measurement periods for purchase price allocations end as soon as information on the facts and circumstances becomes available, but do not exceed 12 months. Adjustments in purchase price allocations may require a recasting of the amounts allocated to goodwill, retroactive to the periods in which the acquisitions occurred.

The following table summarizes the consideration transferred and the estimated fair values of net assets acquired and liabilities assumed (in thousands):

Consideration transferred:
Cash paid	$	5,000
Term loan converted to common stock	820
Fair value of the noncontrolling interest	248
Fair value of the Company’s existing investment prior to the acquisition	88
	$	6,156
Net assets acquired:
Cash	$	5,174
Property, plant and equipment	1,524
Accounts receivable	3,608
Goodwill	5,101
Intangible assets	10,976
Other assets	877
Total assets	27,260
Debt	(8,038		)
Deferred revenue	(8,271		)
Accounts payable and accrued liabilities	(4,795		)
Total liabilities	(21,104		)
Net assets acquired	$	6,156

The following table summarizes the proforma financial information of the Company as if the acquisition occurred January 1, 2012:

	Six Months Ended
	June 30, 2013			June 30, 2012
Revenue	$	163,551		$	27,465
Net loss	$	(23,469	)	$	(24,823	)
Basic and diluted loss per share	$	(1.03	)	$	(1.09	)