Annual report pursuant to Section 13 and 15(d)

GOODWILL AND OTHER INTANGIBLE ASSETS, NET

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GOODWILL AND OTHER INTANGIBLE ASSETS, NET
12 Months Ended
Dec. 31, 2018
Goodwill and Intangible Assets Disclosure [Abstract]  
GOODWILL AND OTHER INTANGIBLE ASSETS, NET
GOODWILL AND OTHER INTANGIBLE ASSETS, NET
a.
Goodwill
Goodwill and indefinite lived assets are assessed annually or more frequently if events or changes in circumstances indicate that the asset might be impaired. For the years ended December 31, 2018 and 2017, respectively, the Company performed a qualitative assessment for its Training and Simulation reporting unit and the Company determined that it was more likely than not that the fair values of its reporting unit exceeded its carrying value.
For its Power Systems reporting unit, the Company determined that it was necessary to perform a quantitative assessment of goodwill for the purpose of determining whether an impairment existed at October 1, 2018. When conducting this analysis, the Company engaged third party valuation experts with a detailed understanding of its Power Systems reporting unit to perform a valuation of the Power Systems reporting unit on a going concern basis. The Company prepared a discounted cash flow analysis over a five year period so as to derive a reasonable view of the cash flows that the Power Systems reporting unit is projected to generate from 2019-2023.
As a result of this analysis, the Company concluded that the goodwill recorded in relation to the Power Systems reporting unit was not impaired at December 31, 2018.
A summary of the goodwill by business segment is as follows:
 
December 31, 2018
 
December 31, 2017
Training and Simulation Division
$
24,435,641

 
$
24,435,641

Power Systems Division
21,702,395

 
21,702,395

Total
$
46,138,036

 
$
46,138,036


b.
Other intangible assets:
 
 
 
December 31,
 
 
 
2018
 
2017
 
Original Useful life
 
Cost
 
Net book value
 
Cost
 
Net book value
Technology
4 - 8 years
 
$
9,988,000

 
$
501,000

 
$
9,988,000

 
$
980,750

Capitalized software costs
3 - 5 years
 
6,499,735

 
1,268,278

 
5,562,119

 
741,355

Trademarks
10 years
 
28,000

 

 
28,000

 

Backlog/customer relationship
1 - 10 years
 
2,844,000

 

 
2,844,000

 

Covenant not to compete
6 years
 
400,000

 
29,000

 
400,000

 
76,000

Customer list
2 - 10 years
 
14,173,645

 
1,868,500

 
14,173,645

 
2,608,500

 
 
 
33,933,380

 
$
3,666,778

 
32,995,764

 
$
4,406,605

Less - accumulated amortization
 
 
(30,266,602
)
 
 
 
(28,589,159
)
 
 
Amortized cost
 
 
3,666,778

 
 
 
4,406,605

 
 
Trademarks (indefinite lives)
 
 
799,000

 
 
 
799,000

 
 
Net book value
 
 
$
4,465,778

 
 
 
$
5,205,605

 
 

Amortization expense amounted to $1,677,443, and $2,205,755, and $2,875,543 for the years ended December 31, 2018, 2017, and 2016, respectively, including amortization of capitalized software costs of $410,693, $397,000, and $88,010, respectively.
c.
Estimated amortization expense, using both straight line and accelerated amortization methods, for the years shown is as follows:
Twelve months ended December 31,
2019
$
1,233,065

2020
789,212

2021
506,213

2022
427,650

2023
520,523

Thereafter
190,115

Total
$
3,666,778