Accounting Policies

3 Months Ended

Jun. 30, 2011

Accounting Policies

Fair Value of Financial Instruments, Policy [Policy Text Block]

 FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

The Company accounts for certain assets and liabilities at fair value.  The hierarchy below lists three levels of fair value based on the extent to which inputs in measuring fair value are observable in the market.  We categorize each of our fair value measurements in one of these three levels based on the lowest level input that is significant to the fair value measurement in its entirety.  These levels are:

1.Level 1 - Valuations based on quoted prices in active markets for identical assets that the Company has the ability to access.

2.Level 2 - Valuations based on inputs on other than quoted prices included within Level 1, for which all significant inputs are observable, either directly or indirectly.

3.Level 3 - Valuations based on inputs that are unobservable and significant to the overall fair value measurement. The inputs reflect the Company’s assumptions about the assumptions a market participant would use in pricing the asset.

The carrying amounts of cash and cash equivalents, trade accounts receivable, other assets, trade accounts payable, and accrued expenses at face value approximate fair value because of the short maturity of these instruments.

Investments classified as available for sale are measured using quoted market prices multiplied by the quantity held where quoted market prices were available.

Investments are considered to be impaired when a decline in fair value is judged to be other-than-temporary. Fair value is calculated based on publicly available market information or other estimates determined by management. We employ a systematic methodology on a quarterly basis that considers available quantitative and qualitative evidence in evaluating potential impairment of our investments. If the cost of an investment exceeds its fair value, we evaluate, among other factors, general market conditions, credit quality, the duration and extent to which the fair value is less than cost, and for equity securities, our intent and ability to hold, or plans to sell, the investment. For fixed income securities, we also evaluate whether we have plans to sell the security or it is more likely than not that we will be required to sell the security before recovery. We also consider specific adverse conditions related to the financial health of and business outlook for the investee, including industry and sector performance, changes in technology, and operational and financing cash flow factors. Once a decline in fair value is determined to be other-than-temporary, an impairment charge is recorded to other income (expense) and a new cost basis in the investment is established.

The fair value of goodwill is determined by estimating the expected present value of future cash flows without reference to observable market transactions.

Income Tax, Policy [Policy Text Block]

INCOME TAX

The Company has identified its federal tax return and its state returns in Pennsylvania and California as “major” tax jurisdictions.  Based on the Company’s evaluation, it has been concluded that there are no significant uncertain tax positions requiring recognition in the Company’s financial statements.  The Company’s evaluation was performed for tax years ended 2005 through 2010, the only periods subject to examination. The Company believes that its income tax positions and deductions will be sustained on audit and does not anticipate any adjustments that will result in a material change to its financial position.

The Company’s policy for recording interest and penalties associated with audits is to record such items as a component of income before income taxes.  Penalties are recorded in general and administrative expenses and interest paid or received is recorded in interest expense or interest income, respectively, in the statement of operations.  For the second quarter 2011, there was no interest or penalties related to the settlement of audits.

At June 30, 2011, the Company maintained a 100% valuation allowance for its remaining deferred tax assets, based on the uncertainty of the realization of future taxable income.

In 2008, the Israel Taxing Authority “ITA” notified the Company that it intends to re-examine a 2002 transaction that it had previously approved. The Company is vigorously defending itself in court and based on information to date, does not expect this issue to result in any additional tax to the Company.  It is the opinion of the Company based on current information that

Marketable Securities, Held-to-maturity Securities, Policy [Policy Text Block]

INVESTMENTS AVAILABLE FOR SALE

Investments that the Company designated as available-for-sale are reported at fair value, with unrealized gains and losses, net of tax, recorded in accumulated other comprehensive income (loss).  The Company bases the cost of the investment sold on the specific identification method.  The available-for-sale investments consist of mutual funds.  If an available-for-sale investment is other than temporarily impaired, the loss is charged to either earnings or stockholders’ equity depending on our intent and ability to retain the security until we recover the full cost basis and the extent of the loss attributable to the creditworthiness of the issuer. 

On June 30, 2011 and December 31, 2010 the fair value for all of the Company’s investments was determined based upon quoted prices in active markets for identical assets (Level 1).

Marketable Securities, Available-for-sale Securities, Policy [Policy Text Block]

INVESTMENTS AVAILABLE FOR SALE

Investments that the Company designated as available-for-sale are reported at fair value, with unrealized gains and losses, net of tax, recorded in accumulated other comprehensive income (loss).  The Company bases the cost of the investment sold on the specific identification method.  The available-for-sale investments consist of mutual funds.  If an available-for-sale investment is other than temporarily impaired, the loss is charged to either earnings or stockholders’ equity depending on our intent and ability to retain the security until we recover the full cost basis and the extent of the loss attributable to the creditworthiness of the issuer. 

On June 30, 2011 and December 31, 2010 the fair value for all of the Company’s investments was determined based upon quoted prices in active markets for identical assets (Level 1).

The carrying amount, gross unrealized holding gains, gross unrealized holding losses, and fair value of available-for-sale debt securities by major security type and class of security at June 30, 2011 and December 31, 2010 were as follows:

		Aggregate cost basis		Gross unrealized holding gains		Gross unrealized holding (losses)		Aggregate fair value
At June  30, 2011
Available-for-sale:
Mutual Funds	$	634,000	$	1,000	$	(6,000)	$	629,000
	$	634,000	$	1,000	$	(6,000)	$	629,000
At December 31, 2010
Available-for-sale:
Mutual Funds	$	205,000	$	1,000		—	$	206,000
	$	205,000	$	1,000		—	$	206,000

The aggregate fair value of mutual funds as of June 30, 2011 was $629,000. Included in this total were $529,000 of mutual funds which contained an unrealized loss of $6,000. These mutual funds contain investments that seek a high level of current income. The funds normally invest at least 80% of net assets, plus the amount of any borrowings for investment purposes, in floating or adjustable rate senior loans of any maturity or credit quality, including those rated below investment grade or determined by the fund's advisor to be of comparable quality. The unrealized loss on the mutual funds is due to the credit quality of the senior loans in the portfolio.   Based upon the Company’s ability and intent to hold these investments for a reasonable period of time sufficient for a forecasted recovery of fair value, the Company does not consider those investments to be other-than-temporarily impaired at June 30, 2011

Earnings Per Share, Policy [Policy Text Block]

 LOSS PER SHARE

Loss per share is computed on the basis of the weighted average number of shares and common stock equivalents outstanding during the period.  In the calculation of diluted earnings per share, shares outstanding are adjusted to assume conversion of the Company’s non-interest bearing convertible stock and exercise of options as if they were dilutive.  In the calculation of basic loss per share, weighted average numbers of shares outstanding are used as the denominator.

In the calculation of basic loss per share, weighted average numbers of shares outstanding are used as the denominator.  The Company had a  net loss allocable to the common stockholders for the three months ended June 30, 2011 and 2010 and for the first six months ended June 30, 2011 and  2010.  Loss per share is computed as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
		2011			2010			2011			2010
Numerator:
Net loss available to common shareholders	$	(839,000	)	$	(1,337,000	)	$	(281,000	)	$	(2,501,000	)
Denominator:
Weighted average shares used to compute net loss available to common shareholders per     common share-basic		3,560,000			3,555,000			3,557,000			3,555,000
Effect of dilutive stock options		-			-			-			-
Weighted average shares used to compute net loss available to shareholders per common     share-dilutive		3,560,000			3,555,000			3,557,000			3,555,000
Basic net loss per share to common     shareholder	$	(0.24	)	$	(0.37	)	$	(0.08	)	$	(0.70	)
Dilutive net loss per share to common     shareholder	$	(0.24	)	$	(0.37	)	$	(0.08	)	$	(0.70	)

All options outstanding at June 30, 2011 and 2010 to purchase shares of common stock and shares of common stock issued on the assumed conversion of the eligible preferred stock were excluded from the diluted loss per common share calculation as the inclusion of these options would have been antidilutive.