Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Intangible Assets

v3.8.0.1
Intangible Assets
12 Months Ended
Dec. 31, 2017
Goodwill And Intangible Assets Disclosure [Abstract]  
Intangible Assets

Note E – Intangible Assets

In August 2017, the Company acquired a customer list from Ascend Genomics (“Ascend”) in exchange for 450,000 shares of restricted stock.  See Note O to our consolidated financial statements included in this Annual Report for further disclosure.  We recorded $4.1 million in intangible assets comprised of customer relationships which are being amortized over 15 years.  As part of this transaction, Ascend signed a non-compete agreement which was also recorded as an intangible asset and is being amortized over 2 years.  

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 amortized 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.  Path Logic was sold in August of 2017 and a loss of $1.1 million was recorded.

In January 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).  We have not made any milestone payments to HDC.  In 2016, the Company determined that these assets were impaired and recorded an impairment loss in the amount of $1.9 million (see Note P).  

Intangible assets as of December 31, 2017 and 2016 consisted of the following (in thousands):  

 

 

 

 

 

December 31, 2017

 

 

 

 

 

 

 

Amortization

Period

 

Cost

 

 

Accumulated

Amortization

 

 

Net

 

 

 

 

 

Trade Name

 

24 months

 

$

3,000

 

 

$

3,000

 

 

$

-

 

 

 

 

 

Non-Compete Agreement

 

36 months

 

 

26

 

 

 

4

 

 

 

22

 

 

 

 

 

Customer Relationships

 

156-180 months

 

 

85,068

 

 

 

10,925

 

 

 

74,143

 

 

 

 

 

Total

 

 

 

$

88,094

 

 

$

13,929

 

 

$

74,165

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

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

 

 

For the Years Ended December 31,

 

 

 

2017

 

 

2016

 

 

2015

 

Amortization of intangible assets

 

$

6,995

 

 

$

7,272

 

 

$

412

 

 

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, 2017 is as follows (in thousands):

 

Years Ending December 31,

 

As of December 31,

 

2018

 

$

5,685

 

2019

 

 

5,680

 

2020

 

 

5,671

 

2021

 

 

5,671

 

2022

 

 

5,671

 

Thereafter

 

 

45,787

 

Total

 

$

74,165