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Acquisition Accounting | 3 Months Ended
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Mar. 31, 2018
Acquisition Accounting [Abstract] |
Acquisition Accounting | 4. Acquisition Accounting The identifiable assets and liabilities of Inotek are allocated in the Company’s consolidated financial statements at their provisional fair values at the acquisition date, January 4, 2018. Goodwill, is calculated as the excess value of consideration paid over the fair value of assets acquired and liabilities assumed. The acquisition-date fair value of the consideration transferred is as follows:
Number of shares of the combined company owned by Inotek shareholders |  |  | 6,805,608 |
Number of shares issuable in connection with fully vested RSUs of Inotek immediately prior to the Reverse Merger |  |  | 271,718 |
Inotek common stock on the acquisition date |  |  | 7,077,326 |
Price per share of Inotek common stock on acquisition date |  | $ | 12.16 |
Total purchase price |  | $ | 86,060 |
The following table summarizes the provisional fair value purchase price allocation of the assets acquired and liabilities assumed at the date of acquisition which is subject to adjustment as the Company finalizes it valuation:
Cash and cash equivalents |  | $ | 76,348 |
Short term investments |  |  | 21,292 |
Prepaid expense and other assets |  |  | 1,041 |
Property and equipment |  |  | 256 |
Deposits |  |  | 168 |
Goodwill |  |  | 30,815 |
Accounts payable and accrued expenses |  |  | (4,961 | )
Convertible notes |  |  | (38,388 | )
Unfavorable lease liability |  |  | (511 | )
Net assets acquired |  | $ | 86,060 |
The goodwill of $30,815 represents the premium over the purchase price. Goodwill is mainly attributable to the value of cash and cash equivalents and short term investments acquired as of the acquisition date and access to capital markets. The allocation of the purchase price with the assistance of a third party valuation, is based on certain management assumptions. The Company incurred acquisition costs of $132 for the three months ended March 31, 2018. The following supplemental unaudited pro forma information presents the Company’s financial results as if the acquisition of Inotek had occurred on January 1, 2017:
|  | Three Months Ended March 31, |
|  | 2018 |  |  | 2017 |
Revenue |  | $ | - |  |  | $ | - |
Net loss |  |  | (15,998 | ) |  |  | (15,670 | )
The above unaudited pro forma information was determined based on the historical US GAAP results of the Company and Inotek. The unaudited pro forma consolidated results are not necessarily indicative of what the Company’s consolidated results of operations actually would have been if the acquisition was completed on January 1, 2017. The unaudited pro forma consolidated net loss includes pro forma adjustments primarily relating to the following non-recurring items directly attributable to the business combination:
(1) | Elimination of $4,512 of transaction costs for both the Company and Inotek from the three months ended March 31, 2018;
(2) | Elimination of $3,459 of stock-based compensation expense related to the acceleration of vesting and modification of certain previously unvested Inotek awards in connection with the Reverse Merger from the three months ended March 31, 2018;
(3) | Elimination of $1,622 of expense related to severance and stay bonuses from the three months ended March 31, 2018;
(4) | To adjust interest expense incurred in connection with the 2021 Convertible Notes assumed in connection with the Reverse Merger based on the fair value of the 2021 Convertible Notes on the date of the Reverse Merger, as if it occurred on January 1, 2017;
(5) | To adjust depreciation expense associated with property and equipment acquired in connection with the Reverse Merger based on the fair value of the property and equipment on the date of the Reverse Merger, as if it occurred on January 1, 2017; and
(6) | To adjust expense associated with operating lease obligations assumed in connection with the Merger based on the fair value of the leases on the date of the Merger, as if it occurred on January 1, 2017.

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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/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI http://asc.fasb.org/topic&trid=2303972 + Details
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- References No definition available. + Details
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