Quarterly report pursuant to Section 13 or 15(d)

Goodwill and Purchased Intangibles

Goodwill and Purchased Intangibles
6 Months Ended
Jun. 30, 2012
Notes to Financial Statements  
NOTE 4 - Goodwill and Purchased Intangibles

As required under ASC 350, Intangibles - Goodwill and Other, goodwill is separately disclosed from other intangible assets on the consolidated balance sheet and not amortized, and is tested for impairment on at least an annual basis.


The following table presents details of the Company’s total purchased intangible assets as of June 30, 2012:


    Balance at                 Balance at  
    December 31, 2011     Additions     Amortization     June 30, 2012  
Patents and trademarks   $ 120,016     $ -     $ (4,198 )   $ 115,818  
Customer contracts     103,000       -       (12,118 )     90,882  
Customer relationships     496,999       -       (174,547 )     322,452  
Trade name     70,750       -       (32,206 )     38,544  
Technology / IP     322,116       -       (63,347 )     258,770  
Non-compete     3,625       -       (1,583 )     2,042  
    $ 1,116,506     $ -     $ (287,999 )   $ 828,508  


During the three and six months ended June 30, 2012, the Company recorded amortization expense related to purchased intangibles of $139,999 and $287,999  , respectively, which is included in Depreciation & amortization in the Consolidated Statement of Operations.



The estimated future amortization expense of purchased intangible assets as of June 30, 2012 is as follows:


Year ending December 31,   Amount  
2012   $ 294,337  
2013   $ 307,690  
2014   $ 101,361  
2015   $ 32,631  
2016   $ 14,455  
Thereafter   $ 78,034  
Total   $ 828,508  


Beginning in 2011, the Company performed its annual goodwill impairment test outlined under ASC 350 which requires the assessment of goodwill for impairment on an annual basis. The assessment of goodwill impairment will be conducted by determining and comparing the fair value of our reporting units, as defined in ASC 350, to the reporting unit’s carrying value as of that date. The fair value will be determined using an income approach under which the fair value of the asset is based on the value of the cash flows that the asset can be expected to generate in the future. These estimated future cash flows will be discounted to arrive at their respective fair values.


Beginning in 2011, the Company evaluated its purchased intangibles for possible impairment on an ongoing basis. When impairment indicators exist, the Company will perform an assessment to determine if the intangible asset has been impaired and to what extent. The assessment of purchased intangibles impairment is conducted by first estimating the undiscounted future cash flows to be generated from the use and eventual disposition of the purchased intangibles and comparing this amount with the carrying value of these assets. If the undiscounted cash flows are less than the carrying amounts, impairment exists and future cash flows are discounted at an appropriate rate and compared to the carrying amounts of the purchased intangibles to determine the amount of the impairment.