3. ACQUISITION OF STRIVE TALENT, INC.

On April 26, 2021 (the Closing Date), through our wholly owned subsidiary Franklin Covey Client Sales, Inc., we purchased all of the issued and outstanding stock of Strive Talent, Inc. (Strive), a San Francisco-based technology company which developed and marketed an innovative learning deployment platform. The Strive platform has greatly enhanced our All Access Pass subscription platform and has enabled improved deployment of our content, services, technology, and metrics to deliver behavioral impact at scale. The aggregate consideration for the purchase of Strive may total up to $20.0 million and is comprised of the following:

Approximately $10.6 million was paid in cash on the Closing Date of the transaction, including $1.0 million placed in escrow for 18 months from the Closing Date to serve as the first source of funds to satisfy certain indemnification obligations of Strive.

Approximately $4.2 million payable in equal cash payments on the first five anniversaries of the Closing Date (Note 7). The note payable is recorded at present value and accrues interest at 3.6 percent until the amount is paid in full.

A maximum of approximately $4.2 million may be earned by the former principal owner of Strive over a five-year period ending in May 2026. The total value of this consideration is contingent upon sales and growth of the AAP subscription and subscription services revenues during the five-year period measurement ending in May 2026. The contingent earn out payments are conditional upon the continued employment of former principal owner of Strive over the first four years of the measurement period. These payments may be made in either cash or shares of our common stock at our sole discretion.

Approximately $1.0 million was paid 18 months following the Closing Date to stockholders and option holders of Strive who were still employed by the Company or its affiliates as of such 18-month date, subject to certain exceptions. The bonus payments were forfeited by the individuals if they voluntarily terminated their employment with the Company prior to the 18-month anniversary of the purchase. These payments were made shares of our common stock and the decision to pay these bonuses in shares of common stock was made at our discretion.

As described above, included in the purchase agreement for the acquisition of Strive are additional contingent payments of up to $5.2 million subject to continued employment of the primary seller and certain employees. These payments are expensed as earned and may be settled by us, at our sole discretion, in shares of our common stock or cash. Based on the relevant accounting literature for business acquisitions, the initial purchase price of Strive is comprised of the following:



Cash paid at closing	$	10,554
Notes payable		3,766
Total purchase price	$	14,320

We have included the operating results of Strive in our financial statements since the Closing Date. However, the acquisition of Strive had an immaterial impact on our results of operations in fiscal 2021 and pro forma financial information for this acquisition was not deemed necessary. For the twelve months ended December 31, 2020, Strive had revenues of $1.3 million (unaudited) and an operating loss of $(1.1) million (unaudited). Strive did not meet the definition of a significant subsidiary as specified by Regulation S-X of the Securities and Exchange Commission. The major classes of assets and liabilities to which we have allocated the purchase price were as follows (in thousands):



Cash acquired	$	345
Accounts receivable		154
Prepaid and other current assets		56
Property and equipment		13
Intangible assets		7,976
Goodwill		7,000
Assets acquired		15,544

Deferred revenue		(52)
Accrued liabilities		(135)
Deferred income tax liability		(1,037)
Notes payable, current portion		(835)
Notes payable, less current portion		(2,931)
Liabilities assumed		(4,990)
	$	10,554

The allocation of the purchase price to the intangible assets acquired was as follows (in thousands):



			Weighted Average
Description		Amount	Life
Non-compete agreements	$	171	2 years
Content		389	5 years
Customer relationships		764	3 years
Tradename		889	5 years
Internally developed software		5,763	8 years
	$	7,976	7 years