Acquisitions

On August 15, 2014, the Company purchased 100% of the outstanding shares of Lumewave, Inc. (“Lumewave”). The acquisition was aimed at expanding the Company’s outdoor lighting business. The assets acquired and liabilities assumed are reflected in the Company’s consolidated balance sheet at December 31, 2017, and the results of operations of Lumewave are included in the consolidated statements of operations since August 16, 2014. The following table summarizes the purchase price allocation based on estimated fair values of assets acquired and liabilities assumed at the acquisition date (amounts in thousands):



	Amount
Cash and cash equivalents	$	630
Accounts receivable	107
Inventory	31
Other current assets	259
Property and equipment	23
Identifiable intangible assets	1,500
Goodwill	1,257
Accounts payable	(352		)
Accrued liabilities	(255		)
	$	3,200

Identifiable intangible assets include $800,000 in developed technology, $500,000 in customer relationships, and $200,000 for trade names. The identifiable intangible assets are being amortized over a period of 6.5 years. Transaction costs associated with the acquisition were not material. The method used to value the identified intangibles was an income method approach which incorporated a discount rate ranging from 21% to 22%.

Pro forma information for this acquisition is not presented as the results of the acquired business are not material to the Company’s consolidated financial statements.

The contingent consideration was measured at fair value based on management’s estimate of achieving the specified targets and discounted to its then present value of $925,000. The contingent consideration was payable in a combination of cash and the Company’s common stock. Both the fair value of the cash and equity portions of the contingent consideration were recorded as a liability and were remeasured each reporting period, with any change in their fair values recorded to earnings. The equity component of the contingent consideration was ultimately intended to be settled by issuing additional equity upon final determination of the targets being achieved.The number of shares to be issued was to be based on the average closing price of the Company's stock during the six days prior to the acquisition date.

As of December 31, 2015, the fair value of the contingent consideration was $318,000, and was recorded in accrued liabilities in the Company's consolidated balance sheets. During the quarter ended December 31, 2015, the Company determined that it was no longer probable that the targets specified in the purchase agreement would be met at a level requiring a full payout of the contingent consideration. Accordingly, the Company reduced the associated liability to management's best estimate of the fair value as of December 31, 2015. This resulted in a $577,000 adjustment, which was recorded as a reduction to general and administrative expenses in the Company's consolidated statements of operations. The remaining change in contingent consideration was due to amortization of interest on the contingent consideration.

During the quarter ended March 31, 2016, the contingent consideration decreased by approximately $318,000. This reduction was due to the Company's determination that it was no longer probable that the minimum targets specified in the purchase agreement would be met due to sales force transitions and scheduling delays for some of our larger lighting projects. Accordingly, the Company reduced the associated liability to $0 as of March 31, 2016. This resulted in a $318,000 adjustment, which was recorded as a reduction to general and administrative expenses in the Company's consolidated statements of operations.