XML 22 R11.htm IDEA: XBRL DOCUMENT v3.3.1.900

Goodwill and Intangible Assets

12 Months Ended

Dec. 31, 2015

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets

5. GOODWILL AND INTANGIBLE ASSETS

Identifiable intangible assets

The changes in the carrying amount of intangible assets for the year ended December 31, 2015 and 2014 were as follows:

		2015				2014
Balance at beginning of year		$	3,307,797			$	3,724,354
Addition: Acquisition of patent			125,000				-
Addition: Non-compete agreement			-				587,500
Deduction: Disposal of trademarks (Note 6)			(64,819	)			-
Deduction: Amortization expense			(897,851	)			(1,004,057	)
Balance at end of year		$	2,470,127			$	3,307,797

The following table sets forth the components of intangible assets as of December 31, 2015 and 2014:

				As of December 31, 2015
		Estimated		Adjusted
		Useful		Carrying				Accumulated
		Life		Amount				Amortization				Net
Trade name		20 years		$	590,172			$	(271,924	)		$	318,248
Patents and copyrights		17 years			1,242,842				(576,680	)			666,162
Non-compete agreements		15 months			897,500				(897,500	)			-
Developed technology		7 years			3,941,310				(3,941,310	)			-
Non-contractual customer relationships		15 years			3,268,568				(1,782,851	)			1,485,717
				$	9,940,392			$	(7,470,265	)			2,470,127

		As of December 31, 2014
		Adjusted
		Carrying				Accumulated
		Amount				Amortization				Net
Trade name		$	704,458			$	(291,877	)		$	412,581
Patents and copyrights			1,117,842				(511,698	)			606,144
Non-compete agreements			897,500				(427,500	)			470,000
Developed technology			3,941,310				(3,829,900	)			111,410
Non-contractual customer relationships			3,268,568				(1,560,906	)			1,707,662
		$	9,929,678			$	(6,621,881	)			3,307,797

The following summarizes amortization of acquisition related intangible assets included in the statement of operations:

		Years Ended December 31,
		2015				2014
Cost of sales		$	348,061			$	724,044
General and administrative			549,790				280,013
		$	897,851			$	1,004,057

The Company expects that amortization expense for the next five succeeding years will be as follows:

2016		$	315,564
2017		$	315,564
2018		$	315,564
2019		$	290,897
2020		$	241,564

These amounts are subject to change based upon the review of recoverability and useful lives that are performed at least annually.

Goodwill

The excess of the purchase consideration over the fair value of the assets of acquired businesses is considered goodwill. Under authoritative guidance, purchased goodwill is not amortized, but rather it is periodically reviewed for impairment. The Company had goodwill of $8,101,661 at December 31, 2015 and 2014. This goodwill resulted from the acquisition of Mobilisa, Inc. and Positive Access Corporation.

For the years ended December 31, 2015 and 2014, the Company performed its annual impairment test of goodwill in the fourth quarter. Under authoritative guidance, the Company can use industry and Company specific qualitative factors to determine whether it is more likely than not that impairment exists, before using a two-step quantitative analysis. Events or changes in circumstances which could trigger an impairment review include macroeconomic conditions, industry and market conditions, cost factors, overall financial performance, other entity specific events and sustained decrease in share price. As a result of the qualitative factors in 2015 and 2014, specifically as a result of the decline in the stock price and the decrease in market multiples, the Company performed the first step of the goodwill impairment test in order to identify potential impairment by comparing fair value of the Company to its carrying amount, including goodwill. The fair value was determined using the weighting of certain valuation techniques, including both income and market approaches which include a discounted cash flow analysis, an estimation of an implied control premium, in addition to the Company’s market capitalization on the measurement date. The implied control premium selected was developed based on certain observable market data of comparable companies. The market capitalization is sensitive to the volatility of the Company’s stock price. Although the Company believes that the factors considered in the impairment analysis are reasonable, changes in any one of the assumptions used could have produced a different result which may have led to an impairment charge. Any future impairment loss could have a material adverse effect on our long-term assets and operating expenses in the period in which impairment is determined to exist.

As of December 31, 2015, the Company determined that the fair value was in excess of its carrying amount and therefore the second step of the goodwill impairment test was not required.

As of December 31, 2014, the Company determined that the Company’s carrying value was in excess of the fair value and therefore it was necessary to complete Step 2 of the analysis. Completion of Step 2 of the goodwill impairment test indicated a reduction in fair value of goodwill and resulted in the Company recording an impairment of $4,207,000 in the fourth quarter of 2014.

Accumulated impairment charges on goodwill through December 31, 2015 and 2014 are $30,085,862.

X

- References

No definition available.

+ Details

Name:	us-gaap_GoodwillAndIntangibleAssetsDisclosureAbstract
Namespace Prefix:	us-gaap_
Data Type:	xbrli:stringItemType
Balance Type:	na
Period Type:	duration

X

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 350
-SubTopic 30
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=26713463&loc=d3e16373-109275

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 350
-SubTopic 30
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=26713463&loc=d3e16265-109275

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 350
-SubTopic 30
-Section 50
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=26713463&loc=d3e16323-109275

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 350
-SubTopic 20
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=35741047&loc=d3e13816-109267

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 350
-SubTopic 20
-Section 50
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=35741047&loc=d3e13854-109267

+ Details

Name:	us-gaap_GoodwillAndIntangibleAssetsDisclosureTextBlock
Namespace Prefix:	us-gaap_
Data Type:	nonnum:textBlockItemType
Balance Type:	na
Period Type:	duration