Annual report pursuant to Section 13 and 15(d)

Customer Inducements

Customer Inducements
12 Months Ended
Dec. 31, 2011
Customer Inducements [Abstract]  
Customer Inducements
4. Customer Inducements

Customer inducements assets and customer inducements payable consist of the following:


      00000000       00000000  
    At December 31,  
    2011     2010  

Customer inducements assets

    $                   -          $         30,400  







Customer inducements payable:



    $ -         $ 1,000  


    -         18,806  






      $ -         $ 19,806  







Pursuant to the Agreement with FundQuest, the Company provided FundQuest and its clients with the Company’s platform technology and support services, replacing FundQuest’s technology platform. The Company earned fees based upon a contractual percentage of assets under administration. As a result of the acquisition of FundQuest on December 13, 2011 (Note 3), the Agreement was terminated, and all of the assets and liabilities associated with this Agreement were eliminated. The Company determined the fair value of the Agreement to be approximately $4,897 using a discounted cash flow analysis and as a result, the Company incurred contract settlement charges of approximately $1,183 which is included in other expense in the consolidated statements of operations for the year ended December 31, 2011.

In connection with the Agreement, the Company was required to make various payments to FundQuest during the contract term as defined in the Agreement. These payments included an up-front payment upon completion of the conversion of FundQuest’s clients’ assets to the Company’s technology platform, five annual payments and a payment after the fifth year of the Agreement calculated based on the average annual revenues the Company was to receive from FundQuest during the first five years of the contract term. As of December 31, 2010, the estimate of the present value of these payments was approximately $30,400. The Company also issued to FundQuest a warrant to purchase 1,388,888 shares of its common stock, with an exercise price of $10.80 for an estimated fair value of $2,946 as of December 31, 2010 (see Notes 9 and 13). The present value of all payments and the fair value of the warrant was accounted for as customer inducement costs and were amortized as a reduction to the Company’s revenues from assets under management or administration on a straight-line basis over the contract term of seven years.

Amortization and imputed interest expense was as follows:


    Year ended December 31,  
      2011         2010         2009    

Amortization expense

  $       4,568       $         3,239       $         18  

Imputed interest expense

    771       546       -