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Acquisition of JP3 Measurement LLC | 6 Months Ended
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Jun. 30, 2020
Business Combinations [Abstract] |
Acquisition of JP3 Measurement LLC | Acquisition of JP3 Measurement LLC During the second quarter of 2020, the Company acquired 100% ownership of JP3, a privately-held data and analytics technology company, in a cash-and-stock transaction. JP3’s real-time data platforms combine the energy industry’s only field-deployable, inline optical analyzer with proprietary cloud visualization and analytics, targeting an increase of processing efficiencies and valuation of natural gas, crude oil, and refined fuels. The transaction was valued at approximately $36.6 million, as of the transaction closing date, comprised of $25.0 million in cash, subject to certain adjustments and contingent consideration as described below, and 11.5 million shares in Flotek common stock with an estimated fair value of $8.5 million, net of a discount for marketability due to a lock-up period. The payment of $25.0 million was subject to certain purchase price adjustments, and the total non-equity consideration at closing was comprised of $25.0 million plus net working capital in excess of the target net working capital of $1.9 million and contingent consideration of an estimated $1.2 million for two potential earn-out provisions totaling $5.0 million based on certain stock performance targets. The following table summarizes the fair value of JP3’s assets acquired as of the closing date of May 18, 2020 (in thousands) :
Tradenames and trademarks |  | $ | 1,100 |
Technology and know-how |  | 5,000 |
Customer relationships |  | 6,800 |
Inventory |  | 7,100 |
Cash |  | 604 |
Net working capital, net of cash and inventory |  | (1,063 | )
Fixed assets |  | 426 |
Long-term debt assumed and other assets (liabilities) |  | (893 | )
Goodwill |  | 17,522 |
Net assets acquired |  | $ | 36,596 |
These amounts are preliminary in nature and subject to adjustments from the final determination of working capital, which could be material. Any necessary adjustments are expected to be finalized within one year from the date of acquisition. The Company recorded transaction costs of $0.5 million for professional services including legal, accounting, and other professional or consulting fees to the Company’s Operating expenses (excluding depreciation and amortization) in the consolidated statement of income for the three and six months ended June 30, 2020. Pro forma information for JP3 is not provided as the impact is not considered material.

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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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI http://asc.fasb.org/topic&trid=2303972 + Details
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