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13. ACQUISITIONS
VoicenetSolutionsLimited
On November 11, 2013, the Company entered into a share purchase agreement with the shareholders and optionholders of Voicenet Solutions Limited
("Voicenet"), a provider of cloud communications and collaboration services in the United Kingdom. The total consideration transferred for Voicenet was
approximately $19.3 million. The Company recorded $2.9 million of net tangible assets, $4.1 million in current and non-current liabilities, $6.4 million of
identifiable intangible assets, based on their estimated fair values, and $14.1 million of residual goodwill.
DXIGroupLimited
On May 26, 2015, the Company entered into a share purchase agreement with the shareholders of DXI Limited, and its wholly owned subsidiaries, (collectively,
DXI) for the purchase of the entire share capital of DXI. The transaction closed effective May 29, 2015 and was not subject to regulatory approvals. The total
aggregate purchase price was approximately $22.5 million, consisting of $18.7 million in cash paid to the DXI shareholders at closing, and $3.8 million in cash
deposited into escrow to be held for two years as security against indemnity claims made by the Company after the closing date. Approximately 352,000 shares of
common stock valued at approximately $3.0 million were issued only to former management shareholders of DXI as part of the share purchase agreement and are
subject to certain restrictions, including a four-year annual vesting requirement based on the continued employment of such shareholders. The shares are
considered post-acquisition compensation and are not included in the consideration transferred. The value of the shares will be amortized over the vesting period of
forty-eight months. The shares are further subject to indemnity claims asserted by the Company prior to vesting. Vesting of the shares is subject to acceleration in
the event of the shareholder's death or disability, or upon an employment termination without adequate cause, as provided in the share purchase agreement. The
cash escrow also applies only to the management shareholders of DXI and is to be released in annual installments over two years. The share purchase agreement
contains representations and warranties by the management shareholders that are customary in the UK for transactions of this size and nature. The Company also
awarded restricted stock units representing the right to receive approximately 53,000 shares of common stock that were valued at approximately $482,000 to
certain continuing employees of DXI, which will be amortized as stock-based compensation over the requisite service period.
The Company recorded the acquired tangible and identifiable intangible assets and liabilities assumed based on their estimated fair values. The excess of the
consideration transferred over the aggregate fair values of the assets acquired and liabilities assumed is recorded as goodwill. The amount of goodwill recognized is
primarily attributable to the expected contributions of the entity to the overall corporate strategy in addition to synergies and acquired workforce of the acquired
business. The finite-lived intangible assets consist of the following: customer relationships, with an estimated weighted-average useful life of two and five years;
and developed technology, with an estimated weighted-average useful life of six years. The indefinite lived intangible asset consisted of a tradename. The fair
value assigned to identifiable intangible assets acquired was based on estimates and assumptions made by management using various income approach methods.
Intangible assets are amortized on a straight-line basis.
The fair values of the assets acquired and liabilities assumed are as follows (in thousands):
Fair Value
Assets acquired:
Cash $ 1,318
Current assets 2,016
Property and equipment 1,453
Intangible assets 13,374
Total assets acquired 18,161
Liabilities assumed:
Current liabilities and non-current liabilities (5,734)
Total liabilities assumed (5,734)
Net identifiable assets acquired 12,427
Goodwill 10,125
Total consideration transferred $ 22,552
None of the goodwill recognized is expected to be deductible for income tax purposes.
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