This excerpt taken from the SNWL 10-K filed Mar 14, 2007.
On November 28, 2005, the Company purchased Lasso Logic, Inc. (Lasso), a continuous data protection for backup and recovery solutions for the small and medium business market. The Company acquired Lasso for approximately $15.8 million in purchase consideration, consisting of cash, assumed stock options in the amount of $109,000 and $194,000 in direct transactions costs incurred in connection with the acquisition. The Company believes that Lassos data backup solutions will provide a strong entry point to the growing data protection segment. In addition, certain employees of Lasso became employees of the Company. Of the total purchase price of $15.8 million, $3.7 million was allocated to purchased technology that will be amortized over its estimated useful life of five years, approximately $100,000 was allocated to customer relationship and customer backlog that was amortized over 3 months to one year, $1.3 million was recorded for net tangible assets acquired, and $10.7 million was allocated to goodwill.
On November 28, 2005, the Company also acquired certain assets from enKoo Inc. (enKoo) for approximately $2.4 million in consideration, consisting of cash and transaction costs. The Company acquired the enKoo assets for its secure remote access technology and plans to integrate the key features of enKoos technology into its SSL-VPN products. The assets acquired from enKoo included certain intangible assets. In addition, certain employees of enKoo became employees of the Company. Of the total purchase price of $2.4 million, $1.1 million was allocated to purchased technology and will be amortized over its estimated useful life of five years, and less than $50,000 was allocated to customer relationship and will be amortized over three months. The remaining $1.3 million was allocated to goodwill.
On February 22, 2006, the Company completed the acquisition of MailFrontier, Inc. (MailFrontier) for approximately $29.8 million in purchase consideration, consisting of cash of approximately $29.3 million, assumed stock options with a fair value of $109,000 and direct transaction costs incurred in connection with the acquisition of approximately $450,000. The Company acquired MailFrontier to expand its offering in secure content management, especially in the email security market. MailFrontiers email security solutions protect organizations against inbound and outbound threats such as spam, phishing, viruses, directory harvest attacks and policy violations, provide control for content compliance, and enable consolidation of email infrastructure. In addition, certain employees of MailFrontier became employees of the Company. Of the total purchase price of $29.8 million,
$1.6 million was allocated to in-process research and development, $2.7 million was allocated to purchased technology that will be amortized over its estimated useful life of four years, approximately $600,000 was allocated to customer relationship that will be amortized over six years, approximately $300,000 was allocated to technology licenses and non-compete covenants that will be amortized over a period of 4 to 24 months, and $3.6 million was recorded for net liabilities assumed. The remaining $28.2 million was allocated to goodwill.
The Consolidated Financial Statements include the operating results of each business from the date of acquisition. In accordance with SFAS 141, Business Combinations, the above transactions were accounted for as a purchase business combination. The Company allocated the purchase price based upon the fair value of the assets acquired and liabilities assumed. The excess of the purchase price over the fair value of the assets acquired and liabilities assumed has been allocated to the identified intangible assets in accordance with the requirements of SFAS 141 and SFAS 142, Goodwill and Other Intangible Assets.
Commercialization of acquired technologies carries a significant risk due to the remaining efforts to achieve technical viability, rapidly changing customer markets, uncertain standards for new products, and significant competitive threats. The nature of the efforts to develop these technologies into commercially viable products consists primarily of planning, designing, experimenting, and testing activities necessary to determine that the technologies can meet market expectations, including functionality and technical requirements. Failure to bring products to market in a timely manner could result in a loss of market share or a lost opportunity to capitalize on emerging markets and could have a material adverse impact on our business and operating results.