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Note 5 - Goodwill
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12 Months Ended |
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Dec. 31, 2011
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| Goodwill Disclosure [Text Block] |
5. Goodwill
The
carrying amount of goodwill at both December 31, 2011 and
2010 was $16,959,000.
In
October 2009, the Company, through its subsidiary CGL,
acquired certain assets of LRG International, Inc., a Florida
based international forwarding company (“LRG”).
As consideration the former owners of LRG were paid
$2,000,000 in cash at closing, and received $500,000 on the
one year anniversary of the closing, October 1,
2010. Additionally, earn-out consideration of
$450,000 was earned by the former owners of LRG based on
financial criteria being met in 2010. In the first quarter of
2011, the $450,000 earn-out above was paid in cash. The final
earn-out of $450,000 was earned based on 2011 financial
criteria being met. The initial fair value liability of the
potential earn-out payments were based on the Company’s
third-party valuation and was approximately $737,000 as of
December 31, 2009. Increases in the liability of
approximately $81,000 and $82,000 were recorded as interest
expense during 2011 and 2010, respectively. As of December
31, 2011, based on the net present value of the expected cash
payments, the earn-out liability was approximately
$450,000.The last earn-out payment may be made in cash,
shares of the Company’s common stock, or a combination
of the two, at the discretion of the Company.
In
conjunction with the purchase of CGL in January of 2008, the
Company recorded goodwill totaling $7,178,000 of which
$500,000 represented a note payable to the former owners of
CGL payable on the one year anniversary of the
transaction. In addition to the goodwill created
at the time of the initial transaction, the contract provided
for contingent consideration to be paid to the former owners
of CGL in the event certain performance measures were
achieved. Based on the achievement of these
performance measures and negotiations between the Company and
the former owners of CGL, an earn-out of $687,000 was
negotiated. The earn-out was comprised of a $600,000
obligation payable to the former owners of CGL in addition to
the forgiveness of an $87,000 note receivable due from the
former owners of CGL. The $600,000 obligation was paid in the
first quarter of 2009 in addition to the $500,000 note
payable established at the time of purchase. This transaction
resulted in a cash payment of $1.1 million to the former
owners of CGL and an additional $687,000 being added to
goodwill for the year ended December 31, 2009. The negotiated
earn-out represented payment in full for all future earn-out
compensation related to the CGL purchase agreement. For
additional information refer to Note 11 –
Acquisitions.
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