6. GOODWILL WEX Asia On May 1, 2014, AWS purchased WEX’s Asia Division for $250,000. The entity had three employees and locations in Hong Kong and Beijing. There were no significant tangible assets being acquired, as such, AWS fully allocated the purchase price to goodwill. Management has determined that an impairment of this goodwill does not exist as of December 31, 2015. Management believes this opportunity gives AWS ground access in China allowing AWS to work closer with existing international agents as well as adding new agents for wider regions coverage. AWS is currently collaborating with governmental agencies interested in certifying welders and providing other programs. The financial statements of AWS include the activities of AWS Asia Ltd. In order to purchase WEX Asia, AWS created a separate legal entity called International Excellence, LLC. International Excellence, LLC is owned by two individuals designated with the responsibility for Asia operations. AWS gave the two individuals complete indemnification as the legal structure of the entity was only created as a result of the legal requirements in Asia. Subsequent to 2015, in an effort to boost performance, activate the Asia target audience and strengthen the AWS brand, AWS engaged a third party to assist with customer and partner channel outreach, marketing initiatives and business development. WEX LLC Effective July 16, 2015, AWS acquired the business assets and operation of WEX LLC for approximately $1,900,000. Previously, AWS held a royalty agreement with WEX LLC to promote, distribute, sell and/or lease AWS’s documents and technical publications (NOTE 16). Prior to the business acquisition, WEX LLC paid royalties to AWS on a quarterly basis and as of the date of the acquisition, the royalty agreement was terminated. Accordingly, the results of the business operations have been included in AWS’s financial statements from the date of acquisition. The following table summarizes the estimated aggregate fair values of the assets acquired and liabilities assumed on the date of acquisition: Tangible and identifiable assets acquired: Property and equipment $ 16,646 Inventory 138,821 Other assets 119,347 Total tangible and identifiable assets acquired 274,814 Goodwill 1,625,186 Total purchase price 1,900,000 Less: amount due to AWS on acquisition date (1,348,491) Cash paid for business acquistion $ 551,509 The goodwill arising from this acquisition results from the established business operations that were acquired. Management has determined that an impairment of this goodwill does not exist as of December 31, 2015. 7. PROPERTY AND EQUIPMENT, NET Property and equipment, net consist of the following as of December 31, 2015: Foundation and Property Fund Operating Fund Total Land $ 6,191,574 $ - $ 6,191,574 Building and improvements 19,758,190 511,046 20,269,236 Furniture, software and equipment - 9,317,482 9,317,482 25,949,764 9,828,528 35,778,292 Less: accumulated depreciation and amortization 1,819,123 6,552,717 8,371,840 $ 24,130,641 $ 3,275,811 $ 27,406,452 Depreciation expense was approximately $1,922,000 for the year ended December 31, 2015. JUNE 2016 / WELDING JOURNAL 53 AMERICAN WELDING SOCIETY, INC., AND AWS FOUNDATION NOTES TO COMBINED FINANCIAL STATEMENTS DECEMBER 31, 2015
Welding Journal | June 2016
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