4. Business Combinations

HCL Expense Management Services, Inc.

In December 2010, the Company entered into an Asset Purchase Agreement (the "HCL-EMS APA") to acquire substantially all of the assets and certain liabilities of HCL Expense Management Services, Inc. ("HCL-EMS"). Pursuant to the terms of the HCL-EMS APA, the Company paid $3.0 million in cash at closing, which took place on January 25, 2011 ("HCL-EMS Closing Date"). In addition, the Company was obligated to pay deferred cash consideration following each of the first and second anniversaries of the HCL-EMS Closing Date, pursuant to an earn-out formula based upon specified revenues from specified customers acquired from HCL-EMS, subject to set-off rights of the Company with respect to indemnities given by HCL-EMS under the HCL-EMS APA. The Company valued this contingent consideration at $3.4 million. In May 2012, the Company and HCL-EMS agreed that the amount of the first year earn-out would be $1.9 million and the Company paid that amount to HCL-EMS. In April 2013, the Company and HCL-EMS agreed that the gross amount of the second year earn-out would be $1.9 million. In early August 2013, the Company paid $1.0 million of the second year earn-out to HCL-EMS, and retained the balance of the second year earn-out in the amount of $0.9 million pending resolution of an outstanding indemnity matter. In connection with this transaction, the Company has recorded on its consolidated statement of operations in 2011 and 2013 a restructuring charge related to terminating the use of the former HCL-EMS leased facility in Rutherford, New Jersey that is subject to a lease assumed by the Company in connection with the acquisition.

HCL-EMS Purchase Price Allocation

The allocation of the total purchase price of HCL-EMS' net tangible and identifiable intangible assets was based upon the estimated fair value of those assets as of the HCL-EMS Closing Date. The Company allocated the excess of purchase price over the identifiable intangible and net tangible assets to goodwill. The following table presents the breakdown between cash and contingent consideration and the allocation of the total purchase price (in thousands):


Cash	$	3,000
Fair value of contingent consideration		3,390


	$	6,390




Allocation of Purchase Consideration:
Accounts receivable	$	2,269
Prepaid and other current assets		125
Property and equipment		273
Intangible assets		2,700
Goodwill		2,243
Deposits and non-current assets		170
Accounts payable		(229	)
Accrued expenses		(1,042	)
Deferred revenue		(119	)


	$	6,390

The goodwill related to the HCL-EMS acquisition is tax deductible. The Company estimated the fair value of intangible assets using the income, cost and market approaches to value the identifiable intangible assets, which are subject to amortization. The following table presents the Company's estimates of fair value of the intangible assets acquired:

Description	Fair Value (in thousands)		Weighted Average Useful Life (in years)

Technology	$	840	4.0
Customer relationships		1,860	9.0


Total intangible assets	$	2,700

Telwares, Inc.

On March 16, 2011, the Company entered into an Asset Purchase Agreement (the "Telwares APA") with Telwares, Inc. to purchase certain assets and liabilities of Telwares, Inc. and its subsidiary Vercuity, Inc. as defined in the Telwares APA (such acquired assets and liabilities, "Telwares"). Pursuant to the terms of the agreement, the Company paid $5.2 million in cash at closing, which amount included a working capital adjustment of $0.7 million. In addition, $1.25 million was payable on March 16, 2012 and $1.25 million on March 16, 2013. The Company paid the first installment of $1.25 million on March 16, 2012. The installment payable on March 16, 2013 was subject to a potential reduction of up to $0.5 million relating to the achievement of certain recurring revenue goals during the three months ended June 30, 2012. The Company and Telwares agreed that the amount of that reduction would be $0.4 million and the Company paid the resulting installment of deferred cash consideration of $0.9 million in March 2013.

Telwares Purchase Price Allocation

The allocation of the total purchase price of Telwares' net tangible and identifiable intangible assets was based upon the estimated fair value of those assets as of March 16, 2011. The Company allocated the excess of purchase price over the identifiable intangible and net tangible assets to goodwill. The following table presents the breakdown between cash and deferred purchase price and the allocation of the total purchase price (in thousands):


Cash	$	5,166
Fair value of deferred purchase price		2,154


	$	7,320




Accounts receivable	$	1,975
Prepaid and other current assets		72
Property and equipment		355
Intangible assets		2,428
Goodwill		3,014
Deposits and non-current assets		76
Accounts payable		(88	)
Accrued expenses		(444	)
Deferred revenue		(68	)


	$	7,320

The goodwill related to the Telwares acquisition is tax deductible. The Company estimated the fair value of intangible assets using the income, cost and market approaches to value the identifiable intangible assets, which are subject to amortization. The following table presents the Company's estimates of fair value of the intangible assets acquired:

Description	Fair Value (in thousands)		Weighted Average Useful Life (in years)

Non-compete agreements	$	58	2.0
Technology		350	3.0
Customer relationships		2,020	8.0


Total intangible assets	$	2,428

ProfitLine, Inc.

On December 19, 2011, the Company and Snow Acquisition Sub, Inc., a Delaware corporation and a wholly owned subsidiary of the Company (the "Acquisition Sub"), entered into an Agreement and Plan of Merger (the "Merger Agreement") with ProfitLine, Inc., a Delaware corporation ("ProfitLine"), and Doug Carlisle, solely in his capacity as Stockholder Representative under the Merger Agreement, under which the parties agreed to the merger of the Acquisition Sub with and into ProfitLine (the "Merger") with ProfitLine surviving the Merger as a wholly owned subsidiary of the Company. Pursuant to the terms of the agreement, the Company paid $14.5 million in cash at closing. In addition, $9.0 million was payable in cash in installments of $4.5 million each on December 19, 2012 and June 19, 2013, subject to set-off rights of the Company and the surviving corporation with respect to indemnities given by the former stockholders of ProfitLine under the Merger Agreement. The Company paid $4.1 million in December 2012, which represented the first installment of $4.5 million less indemnity claims of $0.4 million. The Company paid $4.1 million in July 2013, which represented the second and final installment of $4.5 million less indemnity claims of $0.4 million.

ProfitLine Purchase Price Allocation

The allocation of the total purchase price of ProfitLine's net tangible and identifiable intangible assets was based upon the estimated fair value of those assets as of December 19, 2011. The Company allocated the excess of purchase price over the identifiable intangible and net tangible assets to goodwill. The following table presents the breakdown between cash and deferred purchase price and the allocation of the total purchase price (in thousands):


Purchase consideration:
Cash	$	14,500
Deferred cash consideration		8,674


	$	23,174




Allocation of Purchase Consideration:
Current assets	$	3,183
Property and equipment		675
Other assets		117
Identifiable intangible assets		8,717
Goodwill		13,801


Total assets acquired		26,493
Accounts payable and accrued expenses		(3,167	)
Deferred revenue		(152	)


	$	23,174

The goodwill amount has been revised from the preliminary purchase price allocation previously disclosed in the Company's 2011 audited financials as a result of an unfavorable leasehold interest related to the Company's office lease in San Diego. The leasehold interest amount of $0.4 million will be amortized over the remaining term of the facility lease.

The goodwill and identifiable intangible assets related to the ProfitLine acquisition are not tax deductible. The Company estimated the fair value of intangible assets using the income, cost and market approaches to value the identifiable intangible assets, which are subject to amortization. The following table presents the Company's estimates of fair value of the intangible assets acquired:

Description	Fair Value (in thousands)		Weighted Average Useful Life (in years)

Tradenames	$	335	4.0
Technology		1,612	2.5
Customer relationships		6,770	9.0


Total intangible assets	$	8,717

Anomalous Networks, Inc.

On January 10, 2012 (the "Anomalous Acquisition Date"), the Company entered into a Share Purchase Agreement (the "Anomalous Purchase Agreement") with Anomalous Networks Inc., a corporation incorporated under the laws of Canada ("Anomalous"), and the shareholders of Anomalous, under which the Company agreed to purchase all of the outstanding equity of Anomalous (the "Anomalous Share Purchase"). This acquisition reflects the Company's strategy to broaden its suite of offerings and to provide real-time telecommunication expense management capabilities. On the same day, the Anomalous Share Purchase was effected in accordance with the terms of the Anomalous Purchase Agreement with the Company acquiring all of the outstanding equity of Anomalous for aggregate consideration of (i) approximately $3,500,000 in cash paid at the closing, (ii) $979,000 in cash payable on the first anniversary of the closing, (iii) 165,775 unregistered shares of the Company's common stock and (iv) 132,617 unvested and unregistered shares of the Company's common stock with vesting based on achievement of revenue targets relating to sales of Anomalous products and services for periods through January 31, 2013. The Company paid the full $979,000 of deferred cash consideration in January 2013. In March 2013, the 132,617 unvested and unregistered shares of the Company's common stock were cancelled and retired because the revenue targets related to sales of Anomalous products and services were not achieved.

Anomalous Purchase Price Allocation

The allocation of the total purchase price of Anomalous' net tangible and identifiable intangible assets was based upon the estimated fair value of those assets as of January 10, 2012. In accordance with Accounting Standards Classification ("ASC") 805, Business Combinations, the Company valued the 165,775 of unregistered shares of common stock by using the closing price of the Company's common stock on the NASDAQ Global Market on the acquisition date and applying a 20% marketability discount to the fair value of the unregistered shares. The marketability discount was applied since the unregistered shares were subject to a lock-up period of one year. The Company allocated the excess of purchase price over the identifiable intangible and net tangible assets to goodwill. The following table presents the breakdown between cash and deferred purchase price and the allocation of the total purchase price (in thousands):


Purchase consideration:
Cash	$	3,521
Common stock		1,984
Deferred cash consideration		1,495


	$	7,000




Allocation of Purchase Consideration:
Current assets	$	1,140
Property and equipment		47
Other assets		10
Identifiable intangible assets		2,857
Goodwill		4,477


Total assets acquired		8,531
Accounts payable and accrued expenses		(394	)
Deferred taxes		(767	)
Deferred revenue		(370	)


	$	7,000

The goodwill and identifiable intangible assets related to the Anomalous acquisition are not tax deductible. The Company estimated the fair value of intangible assets using the income, cost and market approaches to value the identifiable intangible assets, which are subject to amortization. The following table presents the Company's estimates of fair value of the identifiable intangible assets acquired (in thousands):

Description	Fair Value (in thousands)		Weighted Average Useful Life (in years)

Technology	$	2,017	5.0
Non-compete covenants		553	2.0
Customer relationships		236	4.0
Tradenames		51	3.0


Total identifiable intangible assets	$	2,857

ttMobiles Limited

On February 21, 2012 (the "ttMobiles Acquisition Date"), the Company entered into a Share Purchase Agreement (the "ttMobiles Purchase Agreement"), with the holders of all of the issued share capital of ttMobiles Limited, a private limited company incorporated in England ("ttMobiles"), under which the Company agreed to purchase all of the issued share capital of ttMobiles (the "ttMobiles Share Purchase"). On the same day, the ttMobiles Share Purchase was effected in accordance with the terms of the ttMobiles Purchase Agreement, with the Company acquiring all of the outstanding equity of ttMobiles for aggregate consideration of (i) £4.0 million in cash paid at the closing, and (ii) £1.5 million in cash payable on the first anniversary of the closing (the "Deferred Consideration"). The Company paid the full £1.5 million of Deferred Consideration in February 2013.

ttMobiles Purchase Price Allocation

The allocation of the total purchase price of ttMobiles' net tangible and identifiable intangible assets was based upon the estimated fair value of those assets as of February 21, 2012. The Company allocated the excess of purchase price over the identifiable intangible and net tangible assets to goodwill. The following table presents the breakdown between cash and deferred purchase price and the allocation of the total purchase price (in thousands):


Purchase consideration:
Cash	$	6,359
Deferred cash consideration		2,315


	$	8,674




Allocation of Purchase Consideration:
Current assets	$	2,469
Property and equipment		188
Identifiable intangible assets		4,288
Goodwill		3,557


Total assets acquired		10,502
Accounts payable and accrued expenses		(848	)
Deferred taxes		(954	)
Deferred revenue		(26	)


	$	8,674

The goodwill and identifiable intangible assets related to the ttMobiles acquisition are not tax deductible. The Company estimated the fair value of intangible assets using the income, cost and market approaches to value the identifiable intangible assets, which are subject to amortization. The following table presents the Company's estimates of fair value of the identifiable intangible assets acquired (in thousands):

Description	Fair Value (in thousands)		Weighted Average Useful Life (in years)

Customer relationships	$	2,606	9.0
Technology		1,178	5.0
Tradenames		388	4.0
Non-compete covenants		116	2.0


Total identifiable intangible assets	$	4,288

Symphony Teleca Services, Inc.

On August 8, 2012, the Company entered into an Asset Purchase Agreement (the "Symphony Purchase Agreement") with Symphony Teleca Services, Inc., a Delaware corporation ("Symphony"), under which the parties agreed to the purchase by the Company of Symphony's telecommunications expense management business (the "TEM Business") through an asset purchase (the "Symphony Acquisition"). As part of the Symphony Acquisition and also on August 8, 2012, a newly formed subsidiary of the Company, Tangoe India Softek Services Private Limited, an Indian private limited company ("Tangoe India"), entered into a Business Purchase Agreement (the "Indian Purchase Agreement") with Symphony Services Corporation (India) Private Limited ("Symphony India") with respect to the purchase of certain assets and hiring of employees of the acquired business located in India. On the same day, the Symphony Acquisition was effected in accordance with the terms of the Symphony Purchase Agreement. At the closing of the Symphony Acquisition, the Company acquired the TEM Business for net consideration of $40.2 million, subject to certain adjustments (the "Cash Purchase Price"), payable as described below, plus an earn-out payable in the amount of up to $4.0 million based on achievement of revenue targets for the acquired business for periods through June 30, 2013. No earn-out became payable because the revenue targets were not achieved. The Cash Purchase Price, after giving effect to certain adjustments, was payable as follows: (i) approximately $29.2 million in cash paid at the closing, (ii) approximately $4.4 million in cash payable on the six-month anniversary of the closing, which included $2.5 million related to the Indian Purchase Agreement, and (iii) approximately $6.4 million in cash payable on the one-year anniversary of the closing. As part of the Symphony Acquisition, the Company acquired a balance sheet for the TEM Business, which included net assets of approximately $5.4 million. The Company made the six-month anniversary payment of $4.4 million in February 2013. The full installment due on August 8, 2013 of approximately $6.4 million, and amounts that became payable under the earn-out, were subject to set-off rights of the Company with respect to indemnities given by Symphony under the Symphony Purchase Agreement. Among other things, these indemnity obligations related to representations and warranties given by Symphony under the Symphony Purchase Agreement and by Symphony India under the Indian Purchase Agreement. Certain of the indemnities were subject to limitations, including a threshold and deductible, certain caps and limited survival periods. The Company made a payment on the one-year anniversary of the closing in the amount of $4.9 million, consisting of the one-year anniversary payment of $6.4 million less $1.3 million withheld pending the resolution of certain indemnity matters, and less a net asset adjustment based on the final closing balance sheet of $0.2 million. In October 2013, the Company and Symphony resolved the indemnity matters and the Company paid the $1.3 million that it had previously deducted from the one-year anniversary payment. During a post-closing transition period that lasted through February 2013, Symphony and Symphony India provided to the Company certain transition services, pending completion of the opening of certain Tangoe India facilities, the procurement of certain Indian tax registrations and the subsequent transfer to Tangoe India of the Indian assets and employees being hired. These services included making available to the Company on a continuing basis the services previously provided by Symphony India to the TEM Business.

Symphony Purchase Price Allocation

The allocation of the total purchase price of Symphony's net tangible and identifiable intangible assets was based upon estimated fair values of those assets as of August 8, 2012. The Company allocated the excess of purchase price over the identifiable intangible and net tangible assets to goodwill. The following table presents the breakdown between cash and deferred purchase price and the allocation of the total purchase price (in thousands):


Purchase consideration:
Cash	$	29,208
Deferred cash consideration		10,793


	$	40,001




Allocation of Purchase Consideration:
Current assets	$	5,628
Property and equipment		602
Identifiable intangible assets		13,790
Goodwill		20,936


Total assets acquired		40,956
Accounts payable and accrued expenses		(335	)
Deferred revenue		(620	)


	$	40,001

The goodwill and identifiable intangible assets related to the Symphony's acquisition are tax deductible. The Company estimated the fair value of intangible assets using the income, cost and market approaches to value the identifiable intangible assets, which are subject to amortization. The following table presents the Company's estimates of fair value of the intangible assets acquired (in thousands):

Description	Fair Value		Weighted Average Useful Life (in years)

Customer relationships	$	9,680	9.0
Technology		4,050	5.0
Tradename		60	3.0


Total identifiable intangible assets	$	13,790

oneTEM GmbH

On April 18, 2013 ("oneTEM Closing Date"), the Company entered into a Share Purchase Agreement (the "oneTEM Purchase Agreement"), with the holders of all of the issued share capital of oneTEM GmbH, a private limited company incorporated in Germany ("oneTEM"), under which the Company agreed to purchase all of the issued share capital of oneTEM (the "oneTEM Share Purchase"). On the oneTEM Closing Date, the oneTEM Share Purchase was effected in accordance with the terms of the oneTEM Purchase Agreement, with the Company acquiring all of the outstanding equity of oneTEM for aggregate consideration of (i) €0.9 million in cash paid at the closing and (ii) deferred consideration of €0.4 million in cash payable on the first anniversary of the closing. In addition, the Company is obligated to pay additional deferred cash consideration following the first four anniversaries of the oneTEM Closing Date, pursuant to an earn-out formula based upon the business, whose historic revenue had been one-time consulting revenue, beginning to generate annual recurring revenue from specified customers and then year-over-year increases in annual recurring revenue from those specified customers during the earn-out periods. The earn-out period begins with the first full month after the oneTEM Closing Date and continues for four consecutive 12-month periods. The Company valued this contingent consideration at €0.2 million. The purchase was subject to a net asset adjustment pursuant to which the purchase price would be increased or decreased to the extent the net asset position of oneTEM is more or less than a specified target. The deferred consideration is subject to set-off rights of the Company with respect to certain indemnities given by the former holders of the issued share capital of oneTEM under the oneTEM Purchase Agreement until the deferred consideration is paid in full. The Company included the operating results of oneTEM in its consolidated financial statements since the date of acquisition, including $0.6 million of strategic consulting, software licenses and other revenue.

oneTEM Purchase Price Allocation

The allocation of the total purchase price of oneTEM's net tangible and identifiable intangible assets was based upon management's preliminary estimate of the fair values of those assets taking into account all relevant information available. Actual amounts for each of the fair values of the assets acquired and liabilities assumed may vary. The Company allocated the excess of purchase price over the identifiable intangible and net tangible assets to goodwill. The following table presents the breakdown between cash and deferred purchase price and the allocation of the total purchase price (in thousands):


Purchase consideration:
Cash	$	1,221
Deferred cash consideration		433
Fair value of contingent consideration		183


	$	1,837




Allocation of Purchase Consideration:
Current assets	$	565
Property and equipment		10
Identifiable intangible assets		870
Goodwill		655


Total assets acquired		2,100
Accounts payable and accrued expenses		(152	)
Taxes payable		(111	)


	$	1,837

The goodwill and identifiable intangible assets related to the oneTEM acquisition are not tax deductible. The Company estimated the fair value of intangible assets using the income, cost and market approaches to value the identifiable intangible assets, which are subject to amortization. The following table presents the Company's estimates of fair value of the identifiable intangible assets acquired (in thousands):

Description	Fair Value		Weighted Average Useful Life (in years)

Customer relationships	$	535	8.0
Covenants not to compete		298	2.0
Tradename		37	2.7


Total identifiable intangible assets	$	870