Note 8 - Business Combinations

3 Months Ended

Mar. 31, 2014

Business Combinations [Abstract]

Business Combination Disclosure [Text Block]

8. BUSINESS COMBINATION

On May 22, 2013, Chyron and Hego completed the Business Combination whereby a wholly-owned subsidiary of Chyron acquired all of the issued and outstanding shares of Hego for a total purchase price of $24.6 million. The Company and Hego entered into the Business Combination to create a market leading company in the fields of TV graphics, data visualization and production services for 'Live' and on line news and sports production.

The total purchase price of $24.6 million is comprised of 12.2 million shares of Chyron common stock valued at $16.6 million, contingent consideration of shares of Chyron common stock (the Earn-Out Shares) valued at an estimated $7.5 million and $0.5 million in cash and other consideration. The $7.5 million represents the value of the Earn-Out Shares based on a probability-based model measuring the likelihood of achieving certain revenue milestones as detailed below, and has been recorded as a liability in the balance sheet. In connection with FASB ASC 805, Business Combinations, the fair value of the contingent consideration was established at the date of the Business Combination and included in the total purchase price at fair value. The contingent consideration is then adjusted to the then current fair value as an increase or decrease to earnings in each reporting period. This adjustment has had a material impact on the Company's financial position or results of operations and will continue to impact the Company until all contingencies have been settled. In the quarter ended March 31, 2014 a charge of $2.6 million has been recorded in order to adjust the contingent consideration to $8.3 million, its current fair value at March 31, 2014, in the level 3 category. Based on the revenue milestones, additional shares could be issued as follows:

Revenue milestones	Additional shares
$15.5 million in 2013		2,772,598
$16.0 million in 2014		1,584,342
$16.5 million in 2015		1,742,776
Total		6,099,716
Or, alternatively, if $33.0 million for 2013 and 2014 combined		6,099,716

At December 31, 2013, the 2013 revenue milestone was achieved and 2,772,598 additional shares were issued in March 2014 at a stock price of $2.34 per share.

The following table summarizes the allocation of the purchase price (in thousands):

Net fair value of assets acquired	$	107
Intangible assets, net of tax		9,930
Goodwill		16,321
		26,358
Deferred tax liability		(1,766	)
	$	24,592

The components of the intangible assets acquired are stated below (in thousands):

Definite-lived intangibles:
Customer relationships	$	6,400
Proprietary technology		800
Other intangibles		830
Indefinite-lived intangibles:
Tradename		1,900
	$	9,930