The Company hasrecorded goodwill and intangible assets as a result of the business combinations that were completed during 2011 and that are discussed throughout this 10-Q.2011. These assets were valued with the assistance of a valuation consultant and consisted of Level 3 valuation techniques

The Company’s financial instruments consist of cash, and cash equivalents, accounts receivable, accounts payable, accrued liabilities and long-term debt.notes payable. The estimated fair value of cash, accounts receivable, accounts payable and accrued liabilities approximate their carrying amounts due to the short-term nature of these instruments. The carrying value of long-term debtnotes payable also approximates fair value sincebecause their terms are similar to those in the lending market for comparable loans with comparable risks. None of these instruments are held for trading purposes.

Accounts receivable are carried at their estimated collectible amounts. The Company grants unsecured credit to substantially all of its customers. Ongoing credit evaluations are performed and potential credit losses are charged to operations at the time the account receivable is estimated to be uncollectible. Since the Company cannot necessarily predict future changes in the financial stability of its customers, the Company cannot guarantee that its reserves will continue to be adequate.

From time to time, the Company may have a limited number of customers with individually large amounts due. Any unanticipated change in one of the customer’s credit worthiness could have a material effect on the results of operations in the period in which such changes or events occurred. TheAs of March 31, 2013 and December 31, 2012, the Company recorded an allowance for doubtful accounts of $43,875$33,102 and $18,050 as$44,700, respectively. As of September 30, 2012March 31, 2013 and December 31, 2011, respectively.  As of September 30, 2012, the Company had one customer whosecustomer’s balance represented 41%11% and 43%, respectively, of total accounts receivable.  As

In connection with a factoring agreement that the Company entered into during the three months ended March 31, 2013, the Company transfers ownership of Decembereligible accounts receivable with recourse to a third party purchaser in exchange for cash. The Company receives a percentage of the proceeds immediately upon sale of the account, and receives the remaining proceeds once the third party purchaser collects on the account. Proceeds from the transfer reflect the face value of the account less a discount. The discount is recorded as a loss in operations in the period of the sale.

Factoring discount fees, which increase based on the time frame of receivables outstanding, approximate 2% of the invoice amount as of March 31, 2011, there were no single customers2013, with balances greater than 10%.the customer repaying the invoice within 90 days from the invoice date.

The Company periodically reviews the carrying value of intangible assets not subject to amortization, including goodwill, to determine whether impairment may exist. Goodwill and certain intangible assets are assessed annually, or when certain triggering events occur, for impairment using fair value measurement techniques. These events could include a significant change in the business climate, legal factors, a decline in operating performance, competition, sale or disposition of a significant portion of the business, or other factors. Specifically, goodwill impairment is determined using a two-step process. The first step of the goodwill impairment test is used to identify potential impairment by comparing the fair value of a reporting unit with its carrying amount, including goodwill. The Company uses Level 3 inputs and a discounted cash flow methodology to estimate the fair value of a reporting unit. A discounted cash flow analysis requires one to make various judgmental assumptions including assumptions about future cash flows, growth rates, and discount rates. The assumptions about future cash flows and growth rates are based on the Company’s budget and long-term plans. Discount rate assumptions are based on an assessment of the risk inherent in the respective reporting units. If the fair value of a reporting unit exceeds its carrying amount, goodwill of the reporting unit is considered not impaired and the second step of the impairment test is unnecessary. If the carrying amount of a reporting unit exceeds its fair value, the second step of the goodwill impairment test is performed to measure the amount of impairment loss, if any. The second step of the goodwill impairment test compares the implied fair value of the reporting unit’s goodwill with the carrying amount of that goodwill. If the carrying amount of the reporting unit’s goodwill exceeds the implied fair value of that goodwill, an impairment loss is recognized in an amount equal to that excess. The implied fair value of goodwill is determined in the same manner as the amount of goodwill recognized in a business combination. That is, the fair value of the reporting unit is allocated to all of the assets and liabilities of that unit (including any unrecognized intangible assets) as if the reporting unit had been acquired in a business combination and the fair value of the reporting unit was the purchase price paid to acquire the reporting unit.

The Company has adopted Accounting Standards Codification subtopic 360-10, Property,“Property, Plant and EquipmentEquipment” ("ASC 360-10"). ASC 360-10 requires that long-lived assets and certain identifiable intangibles held and used by the Company be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The Company evaluates its long-lived assets for impairment annually or more often if events and circumstances warrant. Events relating to recoverability may include significant unfavorable changes in business conditions, recurring losses or a forecasted inability to achieve break-even operating results over an extended period. The Company evaluates the recoverability of long-lived assets based upon forecasted undiscounted cash flows. Should impairment in value be indicated, the carrying value of intangible assets will be adjusted, based on estimates of future discounted cash flows resulting from the use and ultimate disposition of the asset. ASC 360-10 also requires that those assets to be disposed of are reported at the lower of the carrying amount or the fair value less costs to sell.

The Company reviews the terms of the common stock, warrants and convertible debt it issues to determine whether there are embedded derivative instruments, including embedded conversion options, which are required to be bifurcated and accounted for separately as derivative financial instruments. In circumstances where the host instrument contains more than one embedded derivative instrument, including the conversion option, that is required to be bifurcated, the bifurcated derivative instruments are accounted for as a single, compound derivative instrument.

Bifurcated embedded derivatives are initially recorded at fair value and are then revalued at each reporting date with changes in the fair value reported as non-operating income or expense. When the equity or convertible debt instruments contain embedded derivative instruments that are to be bifurcated and accounted for as liabilities, the total proceeds received are first allocated to the fair value of all the bifurcated derivative instruments. The remaining proceeds, if any, are then allocated to the host instruments themselves, usually resulting in those instruments being recorded at a discount from their face value.

The discount from the face value of the convertible debt, together with the stated interest on the instrument, is amortized over the life of the instrument through periodic charges to interest expense, using the effective interest method.

The fair value of the derivatives is estimated using a Monte Carlo simulation model. The model utilizes a series of inputs and assumptions to arrive at a fair value at the date of inception and each reporting period. Some of the key assumptions include the likelihood of future financing, stock price volatility, and discount rates.

The Company accounts for stock-based compensation in accordance with Financial Accounting Standards Board (“FASB”) ASC Topic 718 Stock Compensation, which establishes accounting for equity instruments exchanged for employee services. Under such provisions, stock-based compensation cost is measured at the grant date, based on the calculated fair value of the award, and is recognized as an expense, under the straight-line method, over the employee’s requisite service period (generally the vesting period of the equity grant). In accordance with ASC 718, the Company estimates forfeitures at the time of grant and revises the estimates if necessary, if actual forfeiture rates differ from those estimates. Stock options issued to employees are accounted for at their estimated fair value determined using the Black-Scholes option-pricing model. The Company recorded employee stock based compensation of $314,990 and $303,913 for the nine monthsperiods ended September 30,March 31, 2013 and 2012 of $64,960 and 2011,$92,255, respectively.

The company had recorded amounts pertainingCompany accounts for equity instruments, including restricted stock or stock warrants, issued to non-employees in accordance with authoritative guidance for equity based payments made prior to non-employees. Stock warrants issued to non-employees are accounted for as derivative liabilities at their estimated fair value determined using a Monte Carlo simulation. At the acquisitionsdate of Boomtext as well as amounts due to it fromissuance, the sellers of Boomtext in accounts that are included in Other Assets and Long Term Accounts Payable asfair value of the year ended December 31, 2011.stock warrants is expensed to change in fair value of derivative liabilities. The amount recordedfair value of options granted to non-employees is re-measured as a receivable from the sellers of Boomtext totaled $248,930,they vest, and the amount dueresulting change in value, if any, is recognized as change in fair value of derivative liabilities during the period the related services are rendered. Restricted stock issued to these sellers totaled $125,846non-employees is accounted for at December 31, 2011.  As of September 30, 2012 these amounts have been reclassified to Other Current Assets and Other Current Liabilities, since these balances will be settled in March of 2013 when the Earn-out payable to Boomtext is paid.  The amount recordedits estimated fair value as a receivable from the sellers of Boomtext totaled $153,317 and the amount due to these sellers totaled $136,617 at September 30, 2012.it vests. See Note 4.

Comprehensive income (loss) is defined as the change in equity during a period from transactions and other events and circumstances from non-owner sources. The Company is required to record all components of comprehensive income (loss) in the consolidated financial statements in the period in which they are recognized. Net income (loss) and other comprehensive income (loss), including foreign currency translation adjustments and unrealized gains and losses on investments, are reported, net of their related tax effect, to arrive at comprehensive income (loss). For the threeperiods ended March 31, 2013 and nine months ended September 30, 2012, and 2011, the comprehensive loss was equal to the net loss.

Net loss per share is presented as both basic and diluted net loss per share. Basic net loss per share excludes any dilutive effects of options, shares subject to repurchase and warrants. Diluted net loss per share includes the impact of potentially dilutive securities. During 2012the periods ended March 31, 2013 and 2011,2012, the Company had securities outstanding which could potentially dilute basic earnings per share in the future, but were excluded from the computation of diluted net loss per share, as their effect would have been anti-dilutive. These outstanding securities consist of 1,973,748 outstanding employee options, 930,000 outstanding non-employee warrants and 842,142 outstanding warrants attached to the private placement offering. In addition, see potential issuances associated with warrants and convertible debt in Notes 5 and 6.

Certain amounts from prior periods have been reclassified to conform to the current period presentation.

The Company completed the acquisitionthree acquisitions in furtherance of its strategy to acquire small, privately owned enterprises2011 that resulted in the mobile marketing sector through an asset purchase structure. This acquisitionrecording of goodwill. The carrying value of goodwill at March 31, 2013 and December 31, 2012 was consistent with the Company's purchase price model in which equity will represent most of the purchase price plus a small cash component$2,259,624 and in some cases, the assumption of specific liabilities.

The intangible assets are being amortized on a straight line basis over their estimated useful lives of one to twenty years. During the periods ended March 31, 2013 and 2012, the Company recorded amortization expense related to its purchased intangibles of $31,957 and $147,999, respectively, which is included in depreciation and amortization in the future. Theseconsolidated statement of operations.

Beginning in 2011, the Company evaluated its purchased intangibles for possible impairment on an ongoing basis. When impairment indicators exist, the Company will perform an assessment to determine if the intangible asset has been impaired and to what extent. The assessment of purchased intangibles impairment is conducted by first estimating the undiscounted future cash flows to be generated from the use and eventual disposition of the purchased intangibles and comparing this amount with the carrying value of these assets. If the undiscounted cash flows are less than the carrying amounts, impairment exists and future cash flows are discounted at an appropriate rate and compared to the carrying amounts of the purchased intangibles to determine the amount of the impairment.

As discussed in Note 65 under Bridge Financing, the Company issued convertible notes payable that provide for the issuance of warrants to purchase its common stock at a future date. The conversion term for the convertible notes is variable based on certain factors. The number of warrants to be issued is based on the future price of the Company’s common stock. As of September 30,March 31, 2013 and December 31, 2012, the number of warrants to be issued remainsis indeterminate. Due to the fact that the number of warrants issuable is indeterminate, the equity environment is tainted and all additional warrants and convertible debt are included in the value of the derivative. Pursuant to ASC 815-15 Embedded Derivatives,“Embedded Derivatives”, the fair values of the variable conversion optionVMCO and warrants / shares to be issuedthe ASID were recorded as derivative liabilities on the issuance date.

In March 2011,As discussed in Note 6 under Common Stock, the Company commencedcompleted a private placement.placement in September 2011. The private placement structure consistsconsisted of a series of identical subscription agreements for the sale of units comprised of shares of the Company’s common stock at a price of $1.50 per share and an equivalent number of warrants at an exercise price of $2.00. Both the common shares and the warrants contain anti-dilutive, or down round, price protection.  The common shares down round price protection expired on August 15, 2012; resulting in a gain of $512,345, during 2012, due their removal from the derivative liability. The down round protection for the warrant terminates when the warrant expires or is exercised.  Pursuant to ASC 815-15 Embedded Derivatives and ASC 815-40 Contracts in Entity’s Own Equity, the Company recorded a derivative liability for the warrants issued in the transactions.

The fair values of the Company’s derivative liabilities wereare estimated at the issuance date and are revalued at each subsequent reporting date using a Monte Carlo simulation.simulation discussed below. At September 30,March 31, 2013 and December 31, 2012, the Company recorded current derivative liabilities of $2,810,001.$4,194,373 and $3,074,504. The net change in fair value of the derivative liabilities for the three monthsperiods ended September 30,March 31, 2013 and 2012 and 2011 was a gain of $213,089, and a loss of ($401,710),$1,001,550 and $460,487, respectively, which were reported as other income/(expense) in the consolidated statements of operations.

The Company calculated the fair value of the derivative liabilities forcompound embedded derivatives using a complex, customized Monte Carlo simulation model suitable to value path dependent American options. The model uses the nine months ended September 30, 2012risk neutral methodology adapted to value corporate securities. This model utilized subjective and 2011 was a gain of $407,079, and a loss of ($986,216), respectively, which were also reported as other income/(expense) in the consolidated statements of operations.theoretical assumptions that can materially affect fair values from period to period.

The entire principal amount evidenced by the Bridge Notes (the “Principal Amount”) plus all accrued and unpaid interest iswere due on the earlier of (i) the date the Company completescompleted a financing transaction for the offer and sale of shares of common stock (including securities convertible into or exercisable for its common stock), in an aggregate amount of no less than 125% of the principal amounts evidenced by the NotesPrincipal Amount (a “Qualifying Financing”), and (ii) November 2, 2011. If the Bridge Notes arewere held to maturity, the Company pays,would pay, at the option of the holder: i) in cash or ii) in securities to be issued by the Company in the Qualifying Financing at the same price paid by other investors. The Bridge Notes arewere secured by a first priority lien and security interest in all of the Company’s assets.