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Acquisition of eSignLive
 12 Months Ended
Dec. 31, 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 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.

The results of operations of eSignLive subsequent to the November 25, 2015 acquisition date have been included in the Consolidated Statements of Operations. eSignLive revenue and net income (loss) included in the results of operations for the year ended December 31, 2015 were $541 and $(2,168), respectively.

Acquisition-related expense recognized during 2015 of approximately $2,374 is recorded in general and administrative expenses in the Consolidated Statements of Operations.

 

Aggregate Purchase Price Allocation

Purchase consideration has been allocated to assets and liabilities based on estimated acquisition-date fair values and are summarized in the following table:

 

     as initially
reported on
December 31,
2015		      Measurement
Period
Adjustments		      as adjusted  

Tangible assets and liabilities

         

Cash

    $ 514      $ 96      $ 610  

Accounts receivable, net

      4,471        (615 )       3,856  

Other current assets

      4,234        (19 )       4,215  

Property and equipment

      416        24        440  

Current liabilities

      (16,896 )       1,576        (15,320 ) 

Other non-current liabilities

      (8,070 )       5,731        (2,339 ) 

Intangible assets

      30,000        17,400        47,400  

Goodwill

      60,331        (24,419 )       35,912  
  

 

 

     

 

 

     

 

 

  

Net assets acquired

    $ 75,000      $ (226 )     $ 74,774  
  

 

 

     

 

 

     

 

 

  

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.

The effect of the measurement period adjustments recorded in the current period have been determined as if such adjustments had been accounted for at the acquisition date. Excluding prior measurement period adjustments reducing liabilities and goodwill each by $9,146, all measurement period adjustments were recorded in the fourth quarter of 2016 and resulted in a credit to the tax provision of $2,344.

The following table summarizes acquired intangible assets, as well as the respective amortization periods:

 

     Estimated
Fair  Value		      Amortization
Period
(Years)		  
     (000s)         

Identifiable Intangible Assets

      

Tradenames

    $ 2,400        10  

Technology

      10,000        5  

Non-compete agreements

      8,000        5  

Customer Relationships

      27,000        12  
  

 

 

     
   $ 47,400     
  

 

 

     

Unaudited Pro Forma Financial Information

The following unaudited pro forma financial information presents the results of operations as if the acquisition had taken place on January 1, 2014. These amounts were prepared in accordance with the acquisition method of accounting under existing standards and are not necessarily indicative of the results of operations that would have occurred if the acquisition had been completed on the first day of 2014, nor are they indicative of our future operating results.

Income tax impacts resulting from pro forma adjustments were calculated utilizing the statutory income tax rate of 35% for the years ended December 31, 2015 and 2014.

These unaudited pro forma amounts include the following adjustments to historical results shown net of tax;

 

  •  

To reflect estimated amortization of acquired identifiable intangible assets of $6,060 and $6,060 for the year ended December 31, 2015 and 2014, respectively.

 

  •  

To reflect estimated amortization of fair value adjustment of acquired deferred revenue of $(4,000) and $0 for the year ended December 31, 2015 and 2014, respectively.

 

  •  

To reclassify non-recurring transaction expenses of $5,812 from 2015 to 2014.

 

  •  

To reverse benefit of certain refundable tax credits of $1,021 and $1,588 for the year ended December 31, 2015 and 2014, respectively.

 

     Year Ended December 31,  
     2015      2014  

Revenue

    $ 256,416      $ 212,595  

Net income

    $ 28,059      $ 14,729