Enom 2011 Annual Report Download - page 87

Company’s consolidated statements of operations. Affiliated companies are not material individually or in the aggregate to the Company’s financial position,
results of operations or cash flows for any period presented.
Use of Estimates
The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of
America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets
and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. Significant items subject
to such estimates and assumptions include revenue, allowance for doubtful accounts, investments in equity interests, fair value of issued and acquired stock
warrants, the assigned value of acquired assets and assumed liabilities in business combinations, useful lives and impairment of property and equipment,
intangible assets and goodwill, the fair value of the Company’s equity-based compensation awards, and deferred income tax assets and liabilities. Actual
results could differ materially from those estimates. On an ongoing basis, the Company evaluates its estimates compared to historical experience and trends,
which form the basis for making judgments about the carrying value of assets and liabilities.
Cash and Cash Equivalents
The Company considers all highly liquid investments with a maturity of 90 days or less at the time of purchase to be cash equivalents. The
Company considers funds transferred from its credit card service providers but not yet deposited into its bank accounts at the balance sheet dates, as funds in
transit and these amounts are recorded as unrestricted cash, since the amounts are generally settled the day after the outstanding date. Cash and cash
equivalents consist primarily of checking accounts, money market accounts, money market funds, and short-term certificates of deposit.
Investments in Marketable Securities
Investments in marketable securities are classified as available for sale and are recorded at fair value, with the unrealized gains and losses if any,
net of taxes, reported as a component of shareholders' deficit until realized or until a determination is made that an other-than-temporary decline in market
value has occurred.
When the Company does not intend to sell a debt security, and it is more likely than not that the Company will not have to sell the security before
recovery of its cost basis, it recognizes the credit component of an other-than-temporary impairment of a debt security in earnings and the remaining portion
in other comprehensive income. The credit loss component recognized in earnings is identified as the amount of principal cash flows not expected to be
received over the remaining term of the security as projected based on cash flow projections. The Company did not have any securities with other-than-
temporary impairment at December 31, 2010 and 2011.
In determining whether other-than-temporary impairment exists for equity securities, management considers: (1) the length of time and the extent
to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer and (3) the intent and ability of the Company
to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value. The Company has determined that there
has been no impairment of its equity marketable securities to date.
The cost of marketable securities sold is based upon the specific identification method and any realized gains or losses on the sale of investments
are reflected as a component of interest income or expense. The unrealized gains or losses on short-term marketable securities were not significant for the
years ended December 31, 2009, 2010 and 2011.
In addition, the Company classifies marketable securities as current or non-current based upon whether such assets are reasonably expected to be
realized in cash or sold or consumed during the normal operating cycle of the business.
Revenue Recognition
The Company recognizes revenue when four basic criteria are met: persuasive evidence of a sales arrangement exists; performance of services has
occurred; the sales price is fixed or determinable; and collectability is reasonably assured. The Company considers persuasive evidence of a sales arrangement
to be the receipt of a signed contract or insertion order. Collectability is assessed based on a number of factors, including transaction history with the customer
and the credit worthiness of the customer. If it is determined that the collection is not reasonably assured, revenue is not recognized until collection becomes
reasonably assured, which is generally upon receipt of cash. The Company records cash received in advance of revenue recognition as deferred revenue.
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