Business Combinations

12 Months Ended

Dec. 31, 2015

Business Combinations [Abstract]

Business Combinations

Business Combinations

Merger with Parametric Sound

On January 15, 2014, the Company completed the Merger with and into VTBH, pursuant to which VTBH became a wholly-owned subsidiary of the Company (f/k/a Parametric), in an all-stock, tax-free reorganization. VTBH entered into the Merger to acquire and commercialize certain technology and gain access to capital market opportunities as a public company.

Business Transaction Costs

Business transaction costs as a result of the merger of $3.7 million and $3.9 million were recognized for the years ended December 31, 2014 and December 31, 2013, respectively. The components of business transaction costs are presented below.

	Year Ended
	December 31,
	2014		2013
	(in thousands)
Legal fees	$	786	$	1,452
Accounting fees	84		2,254
Advisory fees	2,219		—
Termination and severance	450		—
Other	205		158
Total Transaction Costs	$	3,744	$	3,864

Advisory fees include success based fees payable to investment bankers for both merger parties.

Purchase Consideration and Net Assets Acquired

The fair value of Parametric's common stock used in determining the purchase price was $14.30 per share, the closing market price on January 15, 2014. The fair value of outstanding stock options included in the purchase consideration was determined by calculating the cumulative vesting attributable to Parametric employees for periods prior to the Merger, using the Black-Scholes option pricing model. Assumptions used in Black-Scholes calculations during such periods included: volatility ranging from 87% to 90%; risk-free interest rates ranging between 0.47% and 0.92%; forfeiture rates ranging from 1.1% to 4.1%; and expected lives ranging from 3.28 to 4.61 years.

The purchase price is as follows:

	(in thousands)
Fair Value of Parametric shares outstanding	$	104,027
Fair Value of Parametric stock options	9,755
Purchase Price	$	113,782

The following presents the allocation of the purchase consideration to the assets acquired and liabilities assumed:

	(in thousands)
Cash and cash equivalents	$	4,093
Accounts receivable	47
Deferred tax asset	6,696
Other current assets	710
Property and equipment	206
Intangible assets:
In-process research and development (IPR&D)	27,100
Developed technology	8,880
Customer relationships	270
Trade name	170
Goodwill	80,974
Accounts payable and accrued liabilities	(1,769		)
Capital lease obligation	(120		)
Deferred tax liabilities	(13,475		)
Total Net Assets Acquired	$	113,782

The acquired intangible assets relating to developed technology, customer relationships and trade name are subject to amortization. Developed technology is being amortized over an estimated useful life of approximately seven years with the amortization being included within cost of revenue. Customer relationships and trade name are being amortized over an estimated useful life of two years and five years, respectively, with the amortization being included within sales and marketing expense.

During the year-ended December 31, 2015, the purchased in-process technology for research projects, primarily related to directed audio solutions that beam sound to a specific listening area without the ambient noise of traditional speakers, reached technological feasibility and was reclassified as an amortizable finite-lived asset and is being amortized over an estimated useful life of approximately eight years with the amortization being included within cost of revenue.

The excess purchase consideration over the fair values of assets acquired and liabilities assumed is recorded as goodwill. Goodwill is not amortized but tested for impairment on an annual basis or when the indicator for impairment exists.

The goodwill recorded is not tax deductible since the transaction was structured as a tax-free exchange.