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Business Combination
 3 Months Ended
Mar. 31, 2014
Business Combinations [Abstract]  
Business Combination

Note 2.  Business Combination

 

 On February 18, 2014, the Company acquired the Hazard Engineering, Inc. wireless hazard monitoring technology system and Insta-Link product family, together with related technology and intellectual property rights, for a total purchase price of $1,643.

 

The fair value of the consideration transferred on the acquisition date consisted of the following:

 

 

 

 

Cash consideration

$
400 

Note payable issued to seller (Note 9)

 
771 

Contingent earn-out liability

 
472 

Total consideration

$
1,643 

 

The transaction was recorded as a business combination and the results of operations have been included in the consolidated statement of comprehensive income (loss) since the date of acquisition. Acquisition fees of approximately $15 incurred in connection with the transaction were recorded in operating expenses for the three months ended March 31, 2014. 

 

In connection with the acquisition, the Company recorded a contingent earn-out liability on the balance sheet of $472 at March 31, 2014.  This contingent liability represents the Company’s fair value estimate of an earn-out, of up to $550, issued in connection with the acquisition that is payable if specified revenue targets are met in the four calendar years following closing.  In determining total consideration, the Company assessed the fair value of this contingent consideration, estimating the likelihood of meeting the revenue targets.  

 

The following table summarizes the estimated fair values of the assets acquired at the acquisition date:

 

 

 

 

Technology

$
1,478 

Not-to-compete agreement

 
120 

Deferred service costs

 
45 

Total assets acquired

$
1,643 

 

The not-to-compete agreement will be amortized over a five-year period.  The fair value of the not-to-compete agreement was estimated using a discounted cash flow model.  The inputs are considered Level 3 inputs in the fair value hierarchy.

 

The Company has not presented pro forma results of operations for the current acquisition because the acquisition is not material to the Company’s consolidated results of operations, financial position or cash flows.