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Acquisition

12 Months Ended

Dec. 31, 2022

Acquisition

Note 2 – Acquisition

On October 20, 2022, the Company acquired Moviynt®, a US-based SAP Certified ERP platform software solution provider, that supports handheld mobile phones and scanners used in logistics, warehousing and manufacturing applications. Moviynt, a boutique specialized software firm which was founded in 2018 by three principals, has developed a logistics mobility software platform (Mobilium®) which eliminates traditional middleware, and is device agnostic. With the acquisition, Moviynt becomes a wholly-owned subsidiary of Vuzix.

The Moviynt acquisition was completed pursuant to an agreement and plan of merger by and among the Company and Moviynt, Inc. (the Sellers), a Delaware corporation. Total purchase price consideration paid to the Sellers was $2,469,574, which included $2,300,000 in base merger consideration and $169,574 in net working capital adjustments, in exchange for all shares outstanding. The acquisition agreements contained customary terms and conditions including representations, warranties and indemnification provisions. A portion of the consideration paid to the Sellers was held in escrow for indemnification purposes, which was subsequently released to the Sellers upon the Company completing a 90-day post close review.

The Moviynt acquisition was accounted for in accordance with the accounting treatment of a business combination pursuant to FASB ASC Topic 805, Business Combinations (“ASC 805”). Accordingly, the purchase price was allocated to the tangible and intangible assets acquired and the liabilities assumed based on their estimated fair values on the acquisition date. The excess of the purchase price over the estimated fair value of the separately identifiable assets acquired and liabilities assumed was allocated to goodwill. Management is responsible for determining the acquisition date fair value of the assets acquired and liabilities assumed, which requires the use of various assumptions and judgments that are inherently subjective. The purchase price allocation presented below reflects all known information about the fair value of the assets acquired and liabilities assumed as of the acquisition date.

The following table represents the preliminary assets acquired and liabilities assumed on October 20, 2022:


Cash		$	132,233
Accounts Receivable			44,820
Goodwill			1,601,400
Other Intangible Assets			698,600
Accrued Expenses			(7,479)
Net Assets Acquired		$	2,469,574

The goodwill included in the Company’s purchase price allocation presented above represents the value of Moviynt’s assembled and trained workforce and the incremental value that Moviynt’s technology and deployment

efforts currently in place will add to the Company’s expected revenue growth. No amount of goodwill is considered deductible for tax purposes.

Intangible assets were valued using various income methods based upon management’s approved projections of future cash flows. The following table summarizes the estimated fair value and annual amortization for each of the identifiable intangible assets acquired:


		Estimated Fair			Amortization Period		Annual Amortization
		Value			(Years)		Year 1			Year 2			Year 3			Year 4			Year 5
Tradename-Trademark		$	92,600		5		$	18,520		$	18,520		$	18,520		$	18,520		$	15,433
IP-Technology-License			415,400		5			83,080			83,080			83,080			83,080			69,233
Customer Base			153,400		5			30,680			30,680			30,680			30,680			25,567
Non-Competes			37,200		5			7,440			7,440			7,440			7,440			6,200
Total definite-lived intangible assets		$	698,600				$	139,720		$	139,720		$	139,720		$	139,720		$	116,433

During the year ended December 31, 2022, the Company incurred acquisition-related costs and other non-recurring expenses of $74,723 directly attributable to the acquisition, including one-time accounting, legal and due diligence services, which amounts were expensed as incurred.

In 2022, since the acquisition date, Moviynt generated $76,952 in engineering revenue which was applied against $24,819 related to Cost of Sales, generating a gross margin of $52,133. Revenues and earnings for Moviynt prior to the acquisition date are not presented here as they were considered non-material to the Company’s Consolidated Statement of Operations.