Resonant Inc. Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

INTANGIBLE ASSETS, NET, AND GOODWILL

INTANGIBLE ASSETS, NET, AND GOODWILL

12 Months Ended

Dec. 31, 2019

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible assets include patents, domain name and other intangibles purchased from GVR, including customer relationships, technology and a trademark. 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. Intangibles acquired as part of the purchase of GVR 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 11 years as of December 31, 2019. 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.

Intangible assets, net, consists of the following as of December 31, 2019 and 2018:



	2019			2018
Cost:
Patents	$	1,801,000		$	1,507,000
Domain name	22,000			22,000
Client Base ⁽¹⁾	144,000			142,000
Trademark ⁽¹⁾	18,000			17,000
Backlog ⁽¹⁾	13,000			13,000
Technology	77,000			77,000
	2,075,000			1,778,000
Less: Accumulated amortization	(499,000		)	(404,000		)
Intangible assets, net	$	1,576,000		$	1,374,000


(1)	Includes the impact of foreign currency translation. The total impact at December 31, 2018 was $1,000 and there was no impact at December 31, 2019.

During the year ended December 31, 2019 and 2018, we wrote-off $145,000 and $96,000, respectively, of patents we are no longer pursuing. The write-offs are included in research and development expense. There were no impairments to any other intangibles.

Amortization of intangible assets was $115,000 and $136,000 for the years ended December 31, 2019 and 2018, respectively. The following table summarizes the estimated amortization expense relating to the intangible assets as of December 31, 2019:



Years ending December 31,
2020	$	94,000
2021	85,000
2022	75,000
2023	72,000
2024	71,000
2025 and thereafter	554,000
Total amortization expense	$	951,000

Goodwill represents the excess of the purchase price over the fair value of the net assets acquired from GVR Trade. 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.

The following table summarizes goodwill arising from the acquisition of GVR Trade:



	Goodwill
Balance at January 1, 2018	$	824,000
Effect of currency translation	(7,000		)
Balance at December 31, 2018	$	817,000
Effect of currency translation	14,000
Balance at December 31, 2019	$	831,000