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INTERMEDIX HOLDINGS INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2010 ASC Topic 740 prescribes a recognition threshold and measurement attributes for financial statement disclosure of tax positions taken or expected to be taken in a tax return, if that position is "more likely than not" of being sustained upon examination by the relevant taxing authority, based on the technical merits of the position. The tax benefits recognized in the Company's financial statements from such a position are measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate resolution. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. A $0.3 million liability for unrecognized tax benefits as of December 31, 2010 relates to tax positions of acquired entities taken prior to their acquisition by the Company. Changes in acquired tax assets and liabilities will affect the income tax expense in the period of reversal. The Company's policy is to classify interest accrued as interest expense and penalties as operating expenses. (q) Concentration of Credit Risk Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable. The Company attempts to limit its credit risk by maintaining deposit relationships with high credit quality financial institutions. In addition, the Company's excess cash is swept daily into overnight government secured funds. At December 31, 2010, no individual customer accounts receivable balance represented more than 10% of consolidated accounts receivable. No individual customer accounted for more than 10% of revenues in 2010 for either the Successor or Predecessor. (r) New Accounting Standards Improving Disclosures about Fair Value Measurements In January 2010, the FASB issued ASU No. 2010 -06, Fair Value Measurements and Disclosures (Topic No. 820): Improving Disclosures about Fair Value Measurements (ASU 2010 -06). ASU 2010 -06 provides amendments that will require more robust disclosures about the different classes of assets and liabilities measured at fair value, the valuation techniques and inputs used, the activity in Level 3 fair value measurements, and the transfers between Levels 1, 2, and 3. ASU 2010 -06 is effective for interim and annual reporting periods beginning after December 15, 2009. The adoption of ASU 2010 -06 on January 1, 2010, did not have a material impact on the Company's consolidated financial statements. Certain provisions of ASU No. 2010 -06 are effective for fiscal years beginning after December 15, 2010, which is the Company's 2011 first quarter. Those provisions, which amended Subtopic 820 -10, will require the Company to present as separate line items all purchases, sales, issuances, and settlements of financial instruments valued using significant unobservable inputs (Level 3) in the reconciliation of fair value measurements, in contrast to the current aggregate presentation as a single line item. Although this may change the appearance of fair value reconciliations, the Company does not believe the adoption will have a material impact on its financial statements or disclosures. 14 (Continued)