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Note 2 - Business Acquisition
 12 Months Ended
Dec. 31, 2025
Notes to Financial Statements  
Business Combination [Text Block]

NOTE 2 – BUSINESS ACQUISITION

 

ATD Acquisition

 

On  January 2, 2024 (the “Closing Date”), the Company acquired All Traffic Data Services, LLC, a Colorado limited liability company (“ATD”), pursuant to that certain Interest Purchase Agreement (the “ATD Purchase Agreement”), dated as of the Closing Date, by and among the Company, ATD and All Traffic Holdings, LLC (the “Seller”). The Seller is a portfolio company of Seaport Capital, a private equity firm. ATD is engaged in the business of advanced traffic data collection. Under the terms of the ATD Purchase Agreement, the Company acquired all of the issued and outstanding limited liability company interests of ATD (the “ATD Acquisition”).

 

The acquisition met the criteria to be accounted for as a business combination in accordance with ASC 805, Business Combinations (“ASC 805”). This method requires, among other things, that assets acquired, and liabilities assumed be recognized at their fair values as of the acquisition date and that the difference between the fair value of the consideration paid for the acquired entity and the fair value of the net assets acquired be recorded as goodwill, which is not amortized but is tested at least annually for impairment. The aggregate purchase price for the interests of ATD was approximately $20,576,000. The purchase price comprised approximately $10,048,000 in cash, which included closing adjustments and 3,496,464 unregistered shares of the Company’s common stock (the “Stock Consideration”), based on a volume weighted average trading price of the Company’s common stock over a thirty consecutive trading day period prior to the date of the ATD Purchase Agreement, which was $2.86. 2,832,135 of the Stock Consideration was issued at closing, while the other 664,329 shares of the Stock Consideration were issued and delivered to the Seller on January 2, 2025. Subsequent to this transaction these shares were registered on a Form S-3. See Note 13 for additional information. As the total number of ATD Holdback Shares to be issued to the Seller was not fixed, the ATD Holdback Shares were deemed to be liability classified and were measured at fair value each reporting period. As a result of the transaction, ATD became a wholly-owned subsidiary of the Company and ATD’s key employees have agreed to continue employment with the Company or one of its affiliates.

 

The Company incurred $548,000 in legal and professional fees related to the acquisition which were expensed as incurred and recognized in general and administrative expenses in the consolidated statement of operations, during the year ended December 31, 2024.

 

In accordance with the acquisition method of accounting for a business combination, the purchase price has been allocated to the assets acquired and liabilities assumed based on their fair values as of the Closing Date. Since the acquisition of ATD occurred on  January 2, 2024, the results of operations for ATD from the date of acquisition have been included in the Company’s consolidated statement of operations for the year ended  December 31, 2024. The table below shows the breakdown related to the purchase price allocation for the acquisition (dollars in thousands):

 

Cash paid

 $10,048 

Liability classified holdback shares (664,329 shares measured at fair value as of the Closing Date)

  1,635 

Common stock issued (2,832,135 shares at closing price of $3.14 per share)

  8,893 

Total Consideration

 $20,576 

Recognized amounts of identifiable assets acquired and liabilities assumed

    

Assets

    

Cash and cash equivalents

 $826 

Accounts receivable

  3,183 

Property and equipment

  1,565 

Right-of-use operating lease assets

  269 

Other current assets

  154 

Intangible assets

  12,100 

Total assets acquired

 $18,097 

Liabilities

    

Accounts payable and accrued expenses

 $715 

Lease liability operating, short-term

  269 

Other current liabilities

  257 

Total liabilities assumed

 $1,241 

Fair value of identifiable net assets acquired

  16,856 

Purchase price consideration

  20,576 

Goodwill

 $3,720 

 

 

Operations of Combined Entities

 

The following unaudited pro forma combined financial information gives effect to the acquisition of ATD and the Series A Prime Revenue Sharing Notes interest expense, as if they were consummated as of  January 1, 2024. A portion of the proceeds from the Series A Prime Revenue Sharing Notes was used to fund the acquisition of ATD and therefore the Company has included the impact of the issuance of the debt in its unaudited pro forma financial information. This unaudited pro forma financial information is presented for information purposes only and is not intended to present actual results that would have been attained had the acquisition and the issuance of the Series A Prime Revenue Sharing Notes been completed as of  January 1, 2024 (the beginning of the earliest period presented) or to project potential operating results as of any future date or for any future periods.

 

  

Year ended December 31, 2024

 
  

(Dollars in thousands, except per share data)

 

Total revenue

 $46,028 

Net loss

 $(61,410)

Basic and diluted loss per share

 $(0.71)

Basic and diluted number of shares

  86,717,724