Rosetta Stone 2015 Annual Report Download - page 77

Table of Contents
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2014 Acquisitions:
In January 2014, the Company acquired Vivity Labs, Inc. and Tell Me More S.A. Under the acquisition method of accounting, the total purchase price
was allocated to the tangible and intangible assets acquired on the basis of their respective estimated fair values at the date of acquisition. The valuation of
the identifiable intangible assets and their useful lives acquired reflects management's estimates.
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On January 2, 2014, the Company completed its acquisition of Vivity Labs Inc. (the "Vivity Merger" and "Vivity"). Vivity’s principal business activity
is the development of brain fitness games aimed at improving the user’s cognitive function through activity, awareness and motivation through its flagship
product, Fit Brains. The applications are designed for use on mobile, web and social platforms. Vivity’s emphasis on mobile solutions is especially
compatible with Rosetta Stone’s focus on cloud-based technology to enable on-the-go learning. The aggregate amount of consideration paid by the
Company was $12.2 million in cash.
The acquisition of Vivity resulted in goodwill of approximately $9.3 million, none of which is deductible for tax purposes. This amount represents the
residual amount of the total purchase price after allocation to the assets acquired and liabilities assumed.
All expenditures incurred in connection with the Vivity Merger were expensed and are included in general and administrative expenses. Transaction
costs incurred in connection with the Vivity Merger were $57 thousand and $51 thousand during the years ended December 31, 2014 and 2013, respectively.
The results of operations for Vivity have been included in the consolidated results of operations since January 2, 2014.
The Company has allocated the purchase price based on current estimates of the fair values of assets acquired and liabilities assumed in connection with
the Vivity Merger. The table below summarizes the estimates of fair value of the Vivity assets acquired, liabilities assumed and related deferred income taxes
as of the acquisition date.
The Company finalized its allocation of the purchase price for Vivity as of December 31, 2014. The purchase price was allocated as follows (in
thousands):
Cash
$ 14
Accounts receivable
452
Other current assets
(3)
Accounts payable and accrued expenses
(307)
Net deferred tax liability
(919)
Net tangible assets acquired
(763)
Goodwill
9,336
Amortizable intangible assets
3,577
Purchase price
$ 12,150
The acquired amortizable intangible assets and the related estimated useful lives consist of the following (in thousands):
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
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Tradename
3 years
$ 188
Technology platform
5 years
2,448
Customer relationships
3 years
941
Total assets
$ 3,577
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On January 9, 2014, the Company completed its acquisition of Tell Me More S.A., (the "Tell Me More Merger" and "Tell Me More") a company
organized under the laws of France. Tell Me More provides online language-learning subscriptions and
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