Intangible Assets and Goodwill |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Intangible Assets and Goodwill |
NOTE 7 - INTANGIBLE ASSETS AND GOODWILL
The Company accounts for intangible assets and goodwill in accordance with ASC 350. Goodwill and Other Intangible Assets, are evaluated on an annual basis, and when there is reason to believe that their values have been diminished or impaired write-downs will be included in results from operations.
The identifiable intangible assets acquired and their carrying value at January 31, 2011 and October 31, 2010 is:
Our acquisition of Dragon Design Ltd (Dragon) in December 2008 resulted in the valuation of Dragons customer relationships and covenants not to compete as intangible assets, which have an estimated useful life of 3 years each, and as such are being amortized on a straight-line basis over that period. In addition, we recognized goodwill of $282,533 that represents the excess of the purchase price we paid over the fair value of Dragons net tangible and intangible assets we acquired. See Note 15 for current information on the status of Dragon Design Ltd.
Our acquisition of the assets of Tactical Intelligence, LLC (Tactical) In November 2008 resulted in the valuation of Tacticals customer relationships and covenants not to compete as intangible assets, which have an estimated useful life of 3 years each, and as such are being amortized monthly over that period. In addition, we recognized goodwill of $142,430 that represents the excess of the purchase price we paid over the fair value of Tacticals net tangible and intangible assets acquired. See Note 15 for current information on the status of Tactical Intelligence, LLC.
Estimated annual amortization expense as of January 31, 2011 is as follows:
Amortization of patents, customer relationships, non-compete agreements and licenses included as a charge to operations amounted to $19,533 and $38,477 for the period ended January 31, 2011 and 2010, respectively. Goodwill is not being amortized.
As a result of the acquisitions of Martech, Colmek, Dragon and Tactical, the Company has goodwill in the amount of $3,350,168 as of January 31, 2011.The carrying amount of goodwill as of January 31, 2011 and October 31, 2010 is recorded below.
Considerable management judgment is necessary to estimate fair value. We enlist the assistance of an independent valuation consultant to determine the values of our intangible assets and goodwill, both at the dates of acquisition and at specific dates annually. Based on various market factors and projections used by management, actual results could vary significantly from managements estimates.
See Note 15 of the Unaudited Condensed Consolidated Financial Statement for current information on the status of Dragon and Tactical. |