Goodwill and Intangible Assets

12 Months Ended

Dec. 31, 2016

Goodwill And Intangible Assets Disclosure [Abstract]

5. Goodwill and Intangible Assets

Goodwill

The following table presents goodwill by reporting unit, which is the same as operating segment, for the years ended December 31, 2016 and 2015 (in thousands):

	PACS			Credentials		Identity			All Other		Total
Balance at December 31, 2014	$	7,783		$	—	$	1,070		$	—	$	8,853
Goodwill impairment		(7,783	)		—		(988	)		—		(8,771	)
Currency translation adjustment		—			—		(82	)		—		(82	)
Balance at December 31, 2015	$	—		$	—	$	—		$	—	$	—
Goodwill impairment		—			—		—			—		—
Currency translation adjustment		—			—		—			—		—
Balance at December 31, 2016	$	—		$	—	$	—		$	—	$	—

In the second quarter of 2015, the Company noted certain indicators of impairment, including a sustained decline in its stock price and continued reduced performance in its Identity reporting unit. Based on the results of step one of the goodwill impairment analysis, it was determined that the Company’s net adjusted carrying value exceeded its estimated fair value for the Identity reporting unit. As a result, the Company concluded that the carrying value of goodwill for the Identity reporting unit was fully impaired and recorded an impairment charge of approximately $1.0 million in its consolidated statements of operations during the second quarter of 2015.

In the fourth quarter of 2015, the Company’s stock price declined significantly which resulted in a significant reduction in its fair value and market capitalization. The stock price declined from $3.64 as of October 1, 2015 to $1.99 as of December 31, 2015, and subsequently dropped further, reaching a low of $1.56 in February 2016. Additionally, the Company’s net losses continued in the quarter ended December 31, 2015. As a result, based on qualitative factors, the Company concluded that the carrying value of goodwill for the PACS reporting unit was fully impaired and recorded an impairment charge of $7.8 million in its consolidated statement of operations in the fourth quarter of 2015.

Intangible Assets

The following table summarizes the gross carrying amount and accumulated amortization for intangible assets resulting from acquisitions (in thousands):

	Existing			Customer
	Technology			Relationship			Total
Amortization period (in years)		11.75		4.0 – 11.75

Gross carrying amount at December 31, 2015	$	4,600		$	10,639		$	15,239
Accumulated amortization		(2,361	)		(5,603	)		(7,964	)

Intangible Assets, net at December 31, 2015	$	2,239		$	5,036		$	7,275

Gross carrying amount at December 31, 2016	$	4,600		$	10,639		$	15,239
Accumulated amortization		(2,809	)		(6,610	)		(9,419	)

Intangible Assets, net at December 31, 2016	$	1,791		$	4,029		$	5,820

Each period, the Company evaluates the estimated remaining useful lives of purchased intangible assets and whether events or changes in circumstances warrant a revision to the remaining period of amortization. If a revision to the remaining period of amortization is warranted, amortization is prospectively adjusted over the remaining useful life of the intangible asset. Intangible assets subject to amortization are amortized on a straight-line basis over their useful lives as outlined in the table above. The Company performs an evaluation of its amortizable intangible assets for impairment at the end of each reporting period. The Company did not identify any impairment indicators during the year ended December 31, 2016.

The following table illustrates the amortization expense included in the consolidated statements of operations for the years ended December 31, 2016 and 2015 (in thousands):

	Year Ended December 31,
	2016		2015
Cost of revenue	$	448	$	448
Selling and marketing		1,007		1,007
Total	$	1,455	$	1,455

The estimated annual future amortization expense for purchased intangible assets with definite lives over the next five years is as follows (in thousands):

2017	$	1,455
2018		1,455
2019		1,455
2020		1,455
Thereafter		—
Total	$	5,820

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

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