GOODWILL AND OTHER INTANGIBLE ASSETS

12 Months Ended

Dec. 31, 2014

Goodwill and Intangible Assets Disclosure [Abstract]

GOODWILL AND OTHER INTANGIBLE ASSETS

At December 31, 2014 and 2013, the gross carrying amount and accumulated amortization of intangible assets, other than goodwill, are as follows:

		December 31,				Identifiable		December 31,				Identifiable
		2014				Intangible		2013				Intangible
	* Estimated	Gross				Assets, less		Gross				Assets, less
	Useful	Carrying		Accumulated		Accumulated		Carrying		Accumulated		Accumulated
	Life	Amount		Amortization		Amortization		Amount		Amortization		Amortization
Finite-lived intangible assets
Order backlog	2	$	3,460,530	$	(3,027,963)	$	432,567	$	3,673,526	$	(1,377,572)	$	2,295,954
Tradename - Orbital	10		1,860,734		(325,628)	$	1,535,106		1,975,262		(148,141)	$	1,827,121
Trade mark and tradename - V-Infinity	5		1,095,400		(547,700)	$	547,700		1,095,400		(328,620)	$	766,780
Customer list - Orbital	10		7,234,806		(1,266,091)	$	5,968,715		7,680,110		(576,012)	$	7,104,098
Technology rights	20**		652,778		(180,056)	$	472,722		715,863		(122,790)	$	593,073
Technology - Based Asset - Know How	12		2,930,888		(427,421)	$	2,503,467		3,111,286		(194,455)	$	2,916,831
Technology - Based Asset - Software	10		635,259		(111,170)	$	524,089		674,359		(50,574)	$	623,785
Other intangible assets	***		160,638		(98,465)		62,173		156,970		(73,633)		83,337
			18,031,033		(5,984,494)		12,046,539		19,082,776		(2,871,797)		16,210,979
Indefinite-lived intangible assets
Trade mark and tradename - CUI			4,892,856		-		4,892,856		4,892,856		-		4,892,856
Customer list - CUI			1,857,000		-		1,857,000		1,857,000		-		1,857,000
Patents pending technology			551,559		-		551,559		551,559		-		551,559
			7,301,415		-		7,301,415		7,301,415		-		7,301,415

Identifiable intangible assets		$	25,332,448	$	(5,984,494)	$	19,347,954	$	26,384,191	$	(2,871,797)	$	23,512,394

* All intangibles are reviewed annually for impairment, or sooner if circumstances change.

** Technology rights are amortized over a twenty year life or the term of the rights agreement.

*** Other intangible assets are amortized over an appropriate useful life, as determined by management in relation to the other intangible asset characteristics.

Management reviews the goodwill and other intangible assets for impairment when facts or circumstances suggest. As of December 31, 2014, management has evaluated the finite-lived and indefinite-lived goodwill and other intangible assets and believes no additional impairment exists.

Amortization expense from continuing operations for the years ended December 31, 2014, 2013 and 2012 amounted to $3,438,522, $2,522,203 and $150,432, respectively.

As of December 31, 2014, and 2013, the carrying amount of goodwill was $21,886,958 and $22,448,613. The decrease in goodwill during 2014 is related to the foreign exchange rate changes between USD and British Pounds Sterling and their related impact on the goodwill associated with the Orbital Gas Systems acquisition.

Order backlog

As of December 31, 2014, $3,460,530 of costs related to Orbital order backlog have been capitalized. Amortization expense of order backlog during 2014 was $1.8 million compared to $1.3 million and $0 in 2013 and 2012, respectively, as this asset was acquired with the acquisition Orbital in 2013. The estimated annual amortization expense related to order backlog as of December 31, 2014 is expected to be $432,567 in 2015.

Trademarks and trade name

As of December 31, 2014, $4,892,856 of costs related to CUI, $1,095,400 of costs related to the V-Infinity brand, and $1,860,734 related to Orbital trademarks and trade names have been capitalized. Amortization expense of trademarks and trade names during 2014 was approximately $416 thousand compared to $360 thousand and $110 thousand in 2013 and 2012, respectively. During 2012, management determined that the intangible, trademark and trade name V-Infinity within the power and electro-mechanical segment had an estimated useful life remaining of 5 years, and an impairment of $278,428 was necessary. The estimated annual amortization expense related to trademarks and trade names as of December 31, 2014 is expected to be $405,153 in 2015, $405,153 in 2016, $295,613 in 2017, $186,073 in 2018, $186,073 in 2019 and $604,741 thereafter.

Customer lists

As of December 31, 2014, $7,234,806 of costs related to the Orbital customer lists and $1,857,000 related to the CUI customer lists have been capitalized. Amortization expense of customer lists during 2014, 2013 and 2012 was approximately $768 thousand, $548 thousand and $0, respectively. The estimated annual amortization of the intangible, customer list Orbital as of December 31, 2014 is expected to be $723,481 in 2015, $723,481 in 2016, $723,481 in 2017, $723,481 in 2018, $723,481 in 2019 and $2,351,310 thereafter.

Technology rights

As of December 31, 2014, $652,778 of costs related to technology rights have been capitalized. Technology rights are amortized over a twenty year life. Amortization expense of technology rights during 2014 was approximately $68 thousand compared to $44 thousand in 2013 and $27 thousand in 2012. The estimated annual amortization expense related to existing technology rights as of December 31, 2014 is expected to be $59,647 in 2015, $48,777 in 2016, $48,777 in 2017, $48,777 in 2018, $48,777 in 2019 and $217,967 thereafter.

Technology-based assets

As of December 31, 2014, $2,930,888 of technology-based assets know how have been capitalized. Also at December 31, 2014, $635,259 of technology-based assets software have been capitalized. Amortization expense of technology-based assets during 2014, 2013 and 2012 was approximately $327 thousand, $ 233 thousand and $0, respectively, as these assets were acquired in 2013 with the acquisition of Orbital. The estimated annual amortization expense related to existing technology-based assets as of December 31, 2014 is expected to be $307,767 in 2015, $307,767 in 2016, $307,767 in 2017, $307,767 in 2018, $307,767 in 2019 and $1,488,721 thereafter.

Debt offering costs

During the year ended December 31, 2013, the amortization expense related to debt offering costs was $43 thousand and $73 thousand in 2012. There was no amortization expense of debt offering costs in 2014 as the debt offering costs were fully amortized in 2013.

Other intangible assets

As of December 31, 2014, $160,638 of other intangible assets have been capitalized. These assets are amortizing over various estimated useful lives based on their individual characteristics. During 2014, 2013 and 2012, the amortization expense related to other intangible assets was approximately $25 thousand, $25 thousand and $14 thousand, respectively . The estimated annual amortization expense related to existing other intangible assets as of December 31, 2014 is expected to be $25,261 in 2015, $22,620 in 2016, $8,366 in 2017, $1,398 in 2018, $1,031 in 2019 and $3,497 thereafter.

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

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