• Filing Date: 2019-11-15
  • Form Type: 10-Q/A
  • Description: Quarterly report (Amendment)
v3.19.3
INTANGIBLE ASSETS
9 Months Ended
Sep. 30, 2019
Goodwill and Intangible Assets Disclosure [Abstract]  
INTAGIBLE ASSETS

Goodwill

 

Changes in the carrying amount of goodwill by reportable business segment for the nine months ended September 30, 2019 were as follows (dollars in thousands):

 

 

Segment

 

Balance as of

December 31,

2018

   

Open ALPR

Acquisition

   

Balance as of

September 30,

2019

 
Goodwill from continuing operations  Technology   $ 1,402     $ 4,934     $ 6,336  
Goodwill from held for sale operations  Professional Services     1,691       -       1,691  
Total goodwill     $ 3,093     $ 4,934     $ 8,027  

 

Intangible Assets Subject to Amortization

 

The following summarizes the change in intangible assets from December 31, 2018 to September 30, 2019 (dollars in thousands):     

 

   

Balance as of

December 31,

2018

    Additions     Amortization     Impairment     Sale of BCM    

Balance as of

September 30,

2019

 
Intangible assets subject to amortization from continuing operations                                    
Customer relationships   $ 2,475     $ 90     $ (363 )   $ (1,549 )   $ (249 )   $ 404  
Marketing related     69       223       (45 )     -       -       247  
Technology based     83       7,123       (557 )     -       -       6,649  
Intangible assets subject to amortization from continuing operations     2,627       7,436       (965 )     (1,549 )     (249 )     7,300  
Intangible assets subject to amortization from held for sale operations     2,208       -       (214 )     -       -       1,994  
Total intangible assets subject to amortization   $ 4,835     $ 7,436     $ (1,179 )   $ (1,549 )   $ (249 )   $ 9,294  

 

The following provides a breakdown of identifiable intangible assets as of September 30, 2019 (dollars in thousands):

 

    Customer Relationships     Marketing Related     Technology Based     Total  
Identifiable intangible assets   $ 461     $ 327     $ 7,207     $ 7,995  
Accumulated amortization     (57 )     (80 )     (558 )     (695 )
Identifiable intangible assets from continuing operations, net     404       247       6,649       7,300  
Identifiable intangible assets from operations held for sale, net     1,685       309       -       1,994  
Identifiable intangible assets, net   $ 2,089     $ 556     $ 6,649     $ 9,294  

 

With the acquisition of OpenALPR Technology, the Company identified technology-based intangible assets of $11,845,000 in its preliminary purchase price allocation. The final purchase price allocation, completed in the second quarter of 2019, resulted in adjustments to intangible assets of approximately $4,934,000, since the Company’s previous estimates as of March 31, 2019, and primarily related to fair value adjustments to technology-based intangible assets. The final purchase price allocation of the acquisition of OpenALPR is as follows: technology-based intangible assets of $7,123,000, marketing-related intangible assets of $223,000, customer-related intangible assets of $90,000 and goodwill of $4,934,000 along with net assets acquired of $27,000.

 

These intangible assets are being amortized on a straight-line basis over their weighted average estimated useful life of 6.7 years. Amortization expense attributable to continuing operations for the three months ended September 30, 2019 and 2018 was $280,000 and $127,000, respectively, and for the nine months ended September 30, 2019 and 2018 was $965,000 and $557,000, respectively, and is presented as part of general and administrative expenses in the accompanying unaudited condensed consolidated statements of operations. Amortization expense attributable to operations held for sale for the three months ended September 30, 2019 and 2018 was $72,000, respectively, and for the nine months ended September 30, 2019 and 2018 was $214,000, and is presented as part of income (loss) from operations held for sale in the accompanying unaudited condensed consolidated statements of operations.

 

Firestorm, the Company's wholly owned subsidiary, provided services related to crisis management, crisis communications, emergency response, and business continuity and other emergency, crisis and disaster preparedness initiatives. Its fully owned subsidiary, BC Management was an executive search firm for business continuity, disaster recovery, crisis management and risk management professionals and a provider of business continuity research with annual studies covering compensation assessments, program maturity effectiveness, event impact management reviews, IT resiliency and critical supply analyses. Its other wholly owned subsidiary, Secure Education was comprised of an expert team of highly trained, former U.S. Secret Service Agents and assists clients by designing customized plans, conducting security assessments, delivering training, and responding to critical incidents.

 

On June 1, 2019, the Company completed the sale of Secure Education, which included $249,000 of intangible assets (see Note 4).

 

On June 28, 2019 the Company discontinued the operations of BC Management, resulting in an impairment of $242,000 of intangible assets related to its acquisition in December 2018. The discontinued operation of BC Management does not constitute a significant strategic shift that will have a material impact on the Company’s ongoing operations and financial results.

 

On June 30, 2019, the Company recorded an intangible assets impairment of $1,307,000 of customer relationship intangible assets from the Firestorm acquisition. In the second quarter of 2019, the Company evaluated the performance of all the franchisees of Firestorm Franchising, LLC and notified them of the termination of their agreements on the basis of non-performance. The discontinued operation of Firestorm Franchising, LLC does not constitute a significant strategic shift that will have a material impact on the Company's ongoing operations and financial results.

 

As of September 30, 2019, the estimated annual amortization expense from continuing operations for each of the next five fiscal years and thereafter is as follows (dollars in thousands):

  

2019   $ 287  
2020     1,150  
2021     1,141  
2022     1,117  
2023     1,096  
Thereafter     2,509  
Total   $ 7,300