Goodwill and Intangible Assets

3 Months Ended

Oct. 31, 2013

Notes to Financial Statements

Goodwill and Intangible Assets

(8) Goodwill and Intangible Assets

Goodwill:

On March 31, 2009, the Company acquired the assets of MMB for cash plus contingent consideration. The excess of consideration paid over the net assets acquired is recorded as goodwill. We were obligated under the Asset Purchase Agreement to make contingent payments based on the earnings of MMB through March 31, 2013.

No impairments of goodwill have been identified during any of the periods presented. Goodwill is tested for impairment on an annual basis and between annual tests if indicators of potential impairment exist, using a fair-value-based approach. The date of our annual impairment test is approximately March 1.

Intangible Assets:

Intangible assets with determinable lives, other than customer relationships and research and development are amortized on a straight-line basis over their estimated period of benefit, ranging from four to five years. Research and development and customer relationships are amortized over a two-year period at a rate of 65% of the gross value acquired in the first year subsequent to their acquisition and 35% of the gross value acquired in the second year. We evaluate the recoverability of intangible assets periodically and take into account events or circumstances that warrant revised estimates of useful lives or that indicate that impairment exists. All of our intangible assets with definitive lives are subject to amortization. No impairments of intangible assets with definitive lives have been identified during any of the periods presented.

The Company estimates that it has no significant residual value related to its intangible assets. Acquired intangibles generally are amortized on a straight-line basis over weighted average lives. Intangible assets amortization expense for the three and six months ended October 31, 2013 and 2012 totaled approximately $41,000 and $82,000 in each period, respectively. Intangible asset amortization is included in selling, general and administrative expense. Intangible asset amortization is included in selling, general and administrative expense. The components of finite-lived intangible assets acquired are as follows:

	Weighted
	Average		October 31,		April 30,
	Life		2013		2013
Trade names		5 Years	$	733,000	$	733,000
Customer relationships		2 Years		758,000		758,000
Non-compete agreement		4 Years		68,000		68,000
Total gross carrying amount				1,559,000		1,559,000
Less accumulated amortization expense				1,507,534		1,426,034
Net intangible assets			$	51,466	$	132,966

The following table outlines the estimated future amortization expense related to intangible assets:

Year ending April 30:
2014	$   132,966