| GOODWILL AND INTANGIBLE ASSETS, NET |
The following table sets forth the changes
in the carrying amount of the Company’s goodwill for the six-month period ended June 30, 2015:
The following table sets forth the components
of the Company’s intangible assets at June 30, 2015:
| |
|
Amortization Period (Years) |
|
|
Cost |
|
|
Accumulated Amortization
and Impairment Charges |
|
|
Net Book Value |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Intangible assets subject to amortization: |
|
|
|
|
|
|
|
|
|
|
|
|
| Distribution and license rights |
|
|
5.0 |
|
|
|
1,234,500 |
|
|
|
(820,031 |
) |
|
|
414,469 |
|
| Production backlog |
|
|
0.5 |
|
|
|
108,000 |
|
|
|
(108,000 |
) |
|
|
— |
|
| Non-compete agreements |
|
|
3.0 |
|
|
|
265,000 |
|
|
|
(103,055 |
) |
|
|
161,945 |
|
| Subtotal |
|
|
|
|
|
|
1,607,500 |
|
|
|
(1,031,086 |
) |
|
|
576,414 |
|
| Intangible assets not subject to amortization: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Trade names |
|
|
— |
|
|
|
1,385,000 |
|
|
|
— |
|
|
|
1,385,000 |
|
| Total |
|
|
|
|
|
$ |
2,992,500 |
|
|
$ |
(1,031,086 |
) |
|
$ |
1,961,414 |
|
The Company recorded amortization expense
for intangible assets subject to amortization of $45,544 and $137,870, respectively, during the three and six-month periods ended
June 30, 2015.
On March 5, 2015, the Company and Noveda
agreed to amend the terms of a license agreement entered into on December 1, 2014 which granted the Company exclusive rights over
a five year period to sell, market and distribute Noveda’s technology on LED applications in North America. During 2014,
the Company made payments to Noveda of $142,500 in cash and 25,000 shares of restricted common stock valued at $137,000 under the
provisions of a non-binding letter of intent entered into by the Company to acquire Noveda. During 2015, by mutual agreement, the
acquisition discussions were discontinued, and $279,500 in consideration described above, was applied as payment towards, and in
full satisfaction of, the remaining fees payable to Noveda under the terms of the license agreement.
At June 30, 2015, the Company performed
an interim impairment test for long-lived assets and determined that the carrying amount of its exclusive distribution rights with
Shanghai Lightsky Optoelectronics Technology Co., Ltd. was not recoverable as its undiscounted cash flows were less than its carrying
amount. The Company further determined that the fair value of the asset group was less than its carrying value and therefore impairment
must be recorded. As a result, the Company recorded an impairment charge totaling $377,000.
The following table sets forth the components
of the Company’s intangible assets at December 31, 2014:
| |
|
Amortization Period (Years) |
|
|
Cost |
|
|
Accumulated Amortization |
|
|
Net Book Value |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Intangible assets subject to amortization: |
|
|
|
|
|
|
|
|
|
|
|
|
| Distribution and license rights |
|
|
5.0 |
|
|
|
955,000 |
|
|
|
(366,916 |
) |
|
|
588,084 |
|
| Production backlog |
|
|
0.5 |
|
|
|
108,000 |
|
|
|
(108,000 |
) |
|
|
— |
|
| Non-compete agreements |
|
|
3.0 |
|
|
|
265,000 |
|
|
|
(58,889 |
) |
|
|
206,111 |
|
| Technology |
|
|
15.0 |
|
|
|
1,583,000 |
|
|
|
(250,642 |
) |
|
|
1,332,358 |
|
| Subtotal |
|
|
|
|
|
|
2,911,000 |
|
|
|
(784,447 |
) |
|
|
2,126,553 |
|
| Intangible assets not subject to amortization: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Trade names |
|
|
— |
|
|
|
1,385,000 |
|
|
|
— |
|
|
|
1,385,000 |
|
| Total |
|
|
|
|
|
$ |
4,296,000 |
|
|
|
(784,447 |
) |
|
$ |
3,511,553 |
|
The Company recorded amortization expense
of $43,589 and nil, respectively, during the three and six-month periods ended June 30, 2014.
|
