Annual report pursuant to Section 13 and 15(d)

INTANGIBLE ASSETS AND GOODWILL

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INTANGIBLE ASSETS AND GOODWILL
12 Months Ended
Dec. 31, 2016
Goodwill and Intangible Assets Disclosure [Abstract]  
INTANGIBLE ASSETS AND GOODWILL
INTANGIBLE ASSETS AND GOODWILL
Intangible assets include patents, a domain name and other intangibles. Certain patents were acquired from STI as a result of an asset contribution and were recorded at their carryover basis. The fair value of the patents remained substantially the same as their carrying value at the exchange date. In addition, we acquired other patents and the domain name www.resonant.com through the normal course of business. Other intangibles were acquired as part of the purchase of GVR and were initially recorded at their fair value. Issued patents are amortized over their approximate useful life of 17 years, or 20 years in the case of new patents, once they are approved by their respective regulatory agency. For the patents acquired from STI, we are amortizing them over the remaining useful life of 1 to 12 years as of December 31, 2016. The domain name is amortized over the approximate useful life of 10 years. The other intangibles acquired from GVR are amortized over their useful life of three to five years (see Note 6). Intangible assets consisted of the following at December 31, 2016:
 
2015
 
2016
Patents
$
856,000

 
$
1,132,000

Domain Name
22,000

 
22,000

Client Base (1)

 
137,000

Trademark (1)

 
17,000

Backlog (1)

 
12,000

Technology (1)

 
84,000

 
878,000

 
1,404,000

Less: accumulated amortization
(63,000
)
 
(151,000
)
Net intangible assets
$
815,000

 
$
1,253,000

(1) Includes the impact of foreign currency translation. The total impact at December 31, 2016 was $5,000.    
During the year ended December 31, 2016, we wrote-off $19,000 of patents we are no longer pursing. The write-off is included in Research and Development expense. There were no write-offs for the year ended December 31, 2015.
Amortization of intangible assets was $27,000 and $89,000 for the years ended December 31, 2015 and 2016, respectively. The following table summarizes the estimated amortization expense relating to the intangible assets as of December 31, 2016:
Years ending December 31,
 
2017
$
116,000

2018
115,000

2019
90,000

2020
63,000

2021
54,000

2022 and thereafter
346,000

Total amortization expense
$
784,000

Goodwill represents the excess of the purchase price over the fair value of the net assets acquired from GVR Trade (see Note 5). Goodwill is not amortized, but is subject to impairment tests on at least an annual basis and whenever circumstances suggest that goodwill may be impaired.


 
Goodwill
Balance at December 31, 2015
$

Acquisition of GVR
824,000

Effect of currency translation
(35,000
)
Balance at December 31, 2016
$
789,000