|
3. Acquisition
On August 6, 2012, we acquired the assets of Cloud 9 Wireless, Inc. (“Cloud 9”), for $3,500 plus the assumption of certain liabilities. Cloud 9 provides Wi-Fi sponsorship and location-based advertising at hotels, bars and restaurants, and recreational areas at over 6,000 locations in the U.S. and Canada. In accordance with FASB ASC 805 Business Combinations, we accounted for the acquisition as a business combination and the assets and liabilities of Cloud 9 we acquired are included in our unaudited condensed consolidated financial statements from the date of acquisition.
The following table summarizes the allocation of the purchase price to the acquired tangible and identifiable intangible assets and liabilities assumed based on their fair values at the date of acquisition:
|
Current assets |
|
$ |
899 |
|
|
Property, plant and equipment |
|
65 |
|
|
Intangible and other assets |
|
1,758 |
|
|
Goodwill |
|
1,232 |
|
|
Current liabilities |
|
(454 |
) |
|
|
|
|
|
|
Total purchase price |
|
$ |
3,500 |
|
The fair value of the acquired assets and liabilities at the time of the acquisition was estimated at $3,185, net of cash acquired. As the acquired entity is a private company, the fair value was based on significant inputs that are not observable in the market and thus represents a Level 3 measurement as defined in FASB ASC 820, Fair Value Measurements and Disclosures.
The following table summarizes the acquired intangible assets at September 30, 2012:
|
|
|
Weighted-
average
Remaining
Life |
|
Gross
Carrying
Amount |
|
Accumulated
Amortization |
|
Net Book
Value |
|
|
|
|
|
|
(unaudited, in thousands) |
|
|
Technology |
|
5 yrs |
|
$ |
1,110 |
|
$ |
36 |
|
$ |
1,074 |
|
|
Other |
|
5 to 10 yrs |
|
640 |
|
12 |
|
628 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
|
$ |
1,750 |
|
$ |
48 |
|
$ |
1,702 |
|
The intangibles assets are all definite-lived intangibles and are recognized on a straight-line basis over their weighted average lives of approximately 6.4 years.
The excess of the purchase price over the net tangible and intangible assets acquired resulted in goodwill of $1,232. Goodwill is not deductible for income tax purposes. The acquisition increased goodwill from $25,512 million at December 31, 2011 to $26,744 million at September 30, 2012. |