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Acquisition of eSignLive
 6 Months Ended
Jun. 30, 2016
Business Combinations [Abstract]  
Acquisition of eSignLive

Note 4 – Acquisition of eSignLive

On November 25, 2015, the Company completed its acquisition of Silanis Technology, Inc. (“eSignLive”), a privately-held provider of electronic signature and digital transaction solutions used to sign, send, and manage documents. Pursuant to the arrangement agreement, we acquired all of the issued and outstanding shares of eSignLive for an aggregate purchase price of $75,000. The aggregate purchase price may be subject to further adjustment as provided in the arrangement agreement.

 

Upon acquisition, eSignLive became our wholly-owned subsidiary. The acquisition is accounted for as a business combination using the acquisition method accounting in accordance with FASB ASC Topic No. 805, Business Combinations, whereby the net assets acquired are recognized based on their estimated fair values on the acquisition date.

Aggregate Purchase Price Allocation

The Company initially recognized the acquired assets and liabilities based on preliminary estimates of acquisition date fair values. The initial aggregate purchase price allocation is described in Note 4 of our Audited Consolidated Financial Statements for the year ended December 31, 2015. As additional information becomes known concerning the acquired assets and assumed liabilities, management may make adjustments to the opening balance sheet of the acquired company up to the end of the measurement period, which is no longer than a one-year period following the acquisition date. The determination of the fair values of the acquired assets and liabilities assumed (and the related determination of estimated lives of depreciable tangible and identifiable intangible assets) requires significant judgment. As of June 30, 2016, the Company has not completed its fair value analysis and calculations in sufficient detail necessary to arrive at the final estimates of the fair value of certain working capital and non-working capital acquired assets and assumed liabilities, including the allocations to goodwill and intangible assets, deferred revenue and resulting deferred taxes. All information presented with respect to certain working capital and non-working capital acquired assets and liabilities assumed as it relates to these acquisitions is preliminary and subject to revision pending the final fair value analysis.

As of June 30, 2016, the estimated acquisition-date fair value preliminary estimated purchase price allocation is summarized in the following table:

 

Tangible assets and liabilities

  

Cash

    $ 514   

Accounts receivable, net

      4,471   

Other current assets

      4,234   

Property and equipment

      416   

Current liabilities

      (15,820 ) 

Intangible assets

      30,000   

Goodwill

      51,185   
  

 

 

  

Net assets acquired

    $ 75,000   
  

 

 

  

In the three months ended March 31, 2016, a measurement period adjustment was recorded related to the valuation allowance for acquired deferred tax assets. The valuation allowance was reduced from amounts previously reported as of December 31, 2015 by $9,146 thereby reducing goodwill by the same amount. The measurement period adjustment resulted in a provision for income taxes of $311 for the three months ended March 31, 2016. Had the change in the valuation allowance been recorded as of the acquisition date, the provision for income taxes of $311 would have been recorded in prior periods.

The excess of purchase consideration over net assets assumed was recorded as goodwill, which represents the strategic value assigned to eSignLive, including expected benefits from synergies resulting from the acquisition, as well as the knowledge and experience of the workforce in place. In accordance with applicable accounting standards, goodwill is not amortized and will be tested for impairment at least annually, or more frequently, if certain indicators are present. Goodwill and intangible assets related to this acquisition are not deductible for tax purposes.

Based on preliminary estimates of the acquisition valuation, $30,000 of the purchase price has been allocated to identifiable intangible assets. The following table summarizes the major classes of intangible assets, as well as the respective estimated weighted-average amortization periods:

 

            Weighted-  
            Average  
            Amortization  
     Estimated      Period  
     Fair Value      (Years)  
     (000s)         

Identifiable Intangible Assets

      

Trademarks and tradenames

    $ 200         2.0   

Technology

      29,000         5.0   

Patents

      100         5.0   

Non-compete agreements

      300         5.0   

Customer Relationships

      400         5.0   
  

 

 

     
   $ 30,000