Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Intangible Assets

v3.6.0.2
Intangible Assets
12 Months Ended
Dec. 31, 2016
Goodwill And Intangible Assets Disclosure [Abstract]  
Intangible Assets

Note E – Intangible Assets

As a result of the acquisition of Clarient in December 2015, see Note D, we recorded $84.0 million in intangible assets comprised of $81.0 million in customer relationships amortized over a fifteen year period and $3.0 million in trade name which we are amortizing over a two year period.  Previously, we acquired Path Logic in July 2014 and recorded $1.93 million in customer relationships as an intangible asset.  We were amortizing these customer relationships over a thirteen year period.  In 2016, the Company determined that the Path Logic customer relationship asset was impaired and recorded an impairment loss in the amount of approximately $1.6 million.  

On January 6, 2012, we entered into a Master License Agreement (the “License Agreement”) with Health Discovery Corporation, a Georgia corporation (“HDC”). We were granted an exclusive worldwide license to certain of HDC’s “Licensed Patents” and “Licensed Know-How” (as defined in the License Agreement).

The License Agreement allows us, among other things, to develop and sell, without limitation, any gene, gene-product or protein-based LDTs using HDC’s technology in the Field and provides for sublicensing rights and the assignment of the License Agreement, in whole or in part, in our sole discretion. The License Agreement further provides us with access to certain HDC personnel and consulting resources in the fields of mathematics and in genetic and molecular test development. The Licensed Know-How also includes, among other things, certain tests, algorithms and computer software which have already been developed by HDC.

We have not made any milestone payments to HDC as of December 31, 2015. In 2016, the Company determined that this asset was impaired and recorded an impairment loss in the amount of $1.9 million.  

Intangible assets as of December 31, 2016 and 2015 consisted of the following (in thousands):  

 

 

 

 

 

December 31, 2016

 

 

 

Amortization

Period

 

Cost

 

 

Accumulated

Amortization

 

 

Impairment

 

 

Net

 

Trade Name

 

24 months

 

$

3,000

 

 

$

1,508

 

 

$

-

 

 

$

1,492

 

Customer Relationships

 

156-180 months

 

 

82,930

 

 

 

5,796

 

 

 

1,562

 

 

 

75,572

 

Support Vector Machine (SVM) technology

 

108 months

 

 

500

 

 

 

269

 

 

 

231

 

 

 

-

 

Laboratory developed test (LDT) technology

 

164 months

 

 

1,482

 

 

 

524

 

 

 

958

 

 

 

-

 

Flow Cytometry and Cytogenetics technology

 

202 months

 

 

1,000

 

 

 

287

 

 

 

713

 

 

 

-

 

Total

 

 

 

$

88,912

 

 

$

8,384

 

 

$

3,464

 

 

$

77,064

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2015

 

 

 

 

 

 

 

Amortization

Period

 

Cost

 

 

Accumulated

Amortization

 

 

Net

 

 

 

 

 

Trade Name

 

24 months

 

$

3,000

 

 

$

8

 

 

$

2,992

 

 

 

 

 

Customer Relationships

 

156-180 months

 

 

82,930

 

 

 

247

 

 

 

82,683

 

 

 

 

 

Support Vector Machine (SVM) technology

 

108 months

 

 

500

 

 

 

213

 

 

 

287

 

 

 

 

 

Laboratory developed test (LDT) technology

 

164 months

 

 

1,482

 

 

 

416

 

 

 

1,066

 

 

 

 

 

Flow Cytometry and Cytogenetics technology

 

202 months

 

 

1,000

 

 

 

228

 

 

 

772

 

 

 

 

 

Total

 

 

 

$

88,912

 

 

$

1,112

 

 

$

87,800

 

 

 

 

 

The Company recorded amortization expense of intangible assets in the consolidated statements of operations as follows (in thousands):

 

 

 

For the Years Ended December 31,

 

 

 

2016

 

 

2015

 

 

2014

 

Amortization of intangible assets

 

$

7,272

 

 

$

412

 

 

$

295

 

 

The Company recorded amortization expense from customer relationships as a general and administrative expense. The amortization expense for the Support Vector Machine (SVM) technology, the Laboratory developed tests (LDT) technology and the Flow Cytometry and Cytogenetics technology intangibles has been recorded as research and development expense as we have not had products, services or cost savings directly attributable to these intangible assets that would require that it be recorded in cost of goods sold.  

The estimated amortization expense related to amortizable intangible assets for each of the five succeeding fiscal years and thereafter as of December 31, 2016 is as follows (in thousands):

 

Years Ending December 31,

 

As of December 31,

 

2017

 

$

6,892

 

2018

 

 

5,400

 

2019

 

 

5,400

 

2020

 

 

5,400

 

2021

 

 

5,400

 

Thereafter

 

 

48,572

 

Total

 

$

77,064