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BUSINESS COMBINATION | 9 Months Ended
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Sep. 30, 2023
Business Combination and Asset Acquisition [Abstract] |
BUSINESS COMBINATION | 3. BUSINESS COMBINATION On January 31, 2023, we completed the acquisition of certain net assets of Ibeo, a lidar hardware and software provider based in Hamburg, Germany. The purpose of the acquisition was to acquire certain Ibeo assets, intellectual property, and teams, which will enable us to expand our total addressable market and diversify our revenue profile. Total consideration related to this transaction, subject to settlement of working capital adjustments, was approximately EUR 19.9 million or $21.6 million, consisting of approximately (i) EUR 7.0 million or $7.6 million in cash paid at closing, (ii) EUR 6.6 million or $7.1 million in cash advanced to Ibeo prior to closing, (iii) EUR 3.0 million or $3.3 million held in escrow for 13 months to be available to cover properly established claims by MicroVision, (iv) EUR 0.6 million or $0.7 million in costs paid on behalf of the seller, and (v) EUR 2.7 million or $2.9 million in cash held back at closing and to be offset by any working capital adjustments, which the parties continue to work through. The remaining balance of EUR 2.7 million will be paid once the seller has accepted and approved all the associated holdback calculations, which we expect to incur during the fourth quarter of 2023. In addition, we incurred $0.6 million of acquisition-related costs associated with the acquisition during the three months ended March 31, 2023, which were included in Sales, marketing, general and administrative expense. The transaction has been accounted for as a business combination. The results of operations for the acquisition are included in our consolidated financial statements from the date of acquisition onwards. The following table summarizes the preliminary purchase price allocation to assets acquired and liabilities assumed (in thousands): SCHEDULE OF RECOGNIZED IDENTIFIED ASSETS ACQUIRED AND LIABILITIES ASSUMED
|  |  |  |  | Weighted Average |
|  | Amount |  |  | Useful Life (in years) |
Purchase consideration: |  |  |  |  |  |  |  |
Cash paid at closing(1) |  | $ | 8,245 |  |  |  |  |
Cash in escrow(2) |  |  | 3,263 |  |  |  |  |
Holdback amount(3) |  |  | 2,928 |  |  |  |  |
Advances to Ibeo(4) |  |  | 7,120 |  |  |  |  |
Total purchase consideration |  | $ | 21,556 |  |  |  |  |
Inventory |  | $ | 1,197 |  |  |  |  |
Other current assets |  |  | 703 |  |  |  |  |
Operating lease right-of-use asset |  |  | 234 |  |  |  |  |
Property and equipment, net |  |  | 5,330 |  |  |  |  |
Intangible assets: |  |  |  |  |  |  |  |
Acquired technology |  |  | 17,987 |  |  |  | 13 |
Order backlog |  |  | 26 |  |  |  | 1 |
Contract liabilities |  |  | (1,178 | ) |  |  |  |
Operating lease liabilities |  |  | (234 | ) |  |  |  |
Deferred tax liabilities |  |  | (803 | ) |  |  |  |
Total identifiable net assets |  | $ | 23,262 |  |  |  |  |
Bargain purchase gain(5) |  |  | (1,706 | ) |  |  |  |
| (1) | Represents $7.6 million in cash paid at closing and $0.7 million in cash paid shortly after close.
| (2) | Recorded as restricted cash and accrued liability to Ibeo in our condensed consolidated balance sheet. Pursuant to the terms of the Asset Purchase Agreement, $3.3 million will be withheld from the Purchase Price and held in escrow for a maximum period of 13 months post-Closing as partial security for potential claims arising out of or in connection with the Asset Purchase Agreement.
| (3) | Recorded in accrued liability to Ibeo in our condensed consolidated balance sheet. Payment of this amount is pending review of holdback from the sellers.
| (4) | Represents $4.1 million and $3.0 million in cash advanced to Ibeo in December 2022 and January 2023, respectively.
| (5) | The bargain purchase gain represents the excess of the fair value of the underlying net assets acquired and liabilities assumed over the purchase consideration and is included in bargain purchase gain in the Condensed Consolidated Statement of Operations. The bargain purchase gain was attributable to the negotiation process with Ibeo during its insolvency proceedings resulting in cash consideration paid being less than the fair value of the net assets.
The estimated fair value of acquired technology was calculated through the income approach using the multi-period excess earnings and relief from royalty methodologies. The estimated fair value of the order backlog was calculated through the income approach using the multi-period excess earnings methodology. The initial allocation of the purchase price was based on preliminary valuations and assumptions and is subject to change within the measurement period. We expect to finalize the allocation of the purchase price as soon as practicable and no later than one year from the acquisition date. Supplemental Unaudited Pro Forma Information The below unaudited pro forma financial information summarizes the combined results of operations for the Company and Ibeo as if the acquisition had been completed on January 1, 2022. The unaudited pro forma information presented below is for informational purposes only and is not necessarily indicative of our consolidated results of operations of the combined business had the acquisition actually occurred at the beginning of fiscal year 2022 or the results of our future operations of the combined businesses. Nonrecurring pro forma adjustments include:
● | Recognition of the bargain purchase gain as if incurred in the first quarter of 2022;
● | Acquisition-related costs of $1.1 million are assumed to have been incurred on January 1, 2022.
The following table summarizes the unaudited pro forma results (in thousands): SCHEDULE OF BUSINESS ACQUISITION, PRO FORMA INFORMATION
|  | 2023 |  |  | 2022 |  |  | 2023 |  |  | 2022 |
|  | Three Months Ended |  |  | Nine Months Ended |
|  | September 30, |  |  | September 30, |
|  | 2023 |  |  | 2022 |  |  | 2023 |  |  | 2022 |
Total revenue |  | $ | 1,047 |  |  |  | 63 |  |  |  | 2,707 |  |  |  | 5,580 |
Net loss |  |  | (23,469 | ) |  |  | (34,874 | ) |  |  | (60,506 | ) |  |  | (91,963 | )

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- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 805 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 5 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org//1943274/2147479907/805-20-50-5 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 805 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//805/tableOfContent + Details
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