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Note 4 - Business Combinations | 9 Months Ended
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Jun. 30, 2024
Notes to Financial Statements |
Business Combination Disclosure [Text Block] | 4. BUSINESS COMBINATIONS On October 4, 2023, the Company completed the acquisition of all of the membership interests in Evertel Technologies, LLC. (“Evertel”), pursuant to a Membership Interest Purchase Agreement (“Purchase Agreement”) with Word Systems Operations, LLC (“Seller”) and Evertel. Evertel offers a secure and compliant mission-critical collaboration platform for the public safety market that connects public safety personnel, information, and tools in one space. The Evertel acquisition was accounted for as a business combination using the acquisition method pursuant to Accounting Standards Codification (“ASC”) Topic 805. As the acquirer for accounting purposes, the Company has estimated the purchase consideration, assets acquired and liabilities assumed as of the acquisition date, with the excess of the purchase consideration over the fair value of net assets acquired recognized as goodwill. The estimated fair value of assets purchased, and liabilities assumed, in certain cases may be subject to revision based on the final determination of fair value. The consideration consisted of the following:
Cash paid |  | $ | 923 |
Common stock issued |  |  | 2,082 |
Contingent consideration |  |  | 890 |
Acquisition holdback liability |  |  | 230 |
Common stock to be issued |  |  | 527 |
Working capital adjustment |  |  | (15 | )
|  | $ | 4,637 |
The Company funded the cash portion of the total consideration with available cash on hand. The Company also issued 986,486 shares of the Company’s common stock to the former owners of Evertel. The fair value of the Company’s stock on the closing date was $1.95, resulting in the addition of $1,924 to additional-paid-in-capital. The contingent consideration liability is a current liability and recorded in the current portion of accrued liabilities. Under the terms of the Purchase Agreement, the Company recorded a $158 credit to additional-paid-in-capital and an addition to goodwill as this is consideration transferred to the former owners of Evertel during the second quarter of 2024, and the Company issued common stock to the former owners of Evertel and three key employees during the third quarter of 2024 to settle the obligation. The Company also recorded a holdback liability and an obligation to issue common stock as security for potential indemnification claims against the seller. The holdback liability and the common stock will be released twelve months from the closing date, subject to amounts withheld for actual, pending or potential claims. The holdback liability was recorded as a current liability at $230, which represented the fair value of the holdback liability as of the acquisition date. The fair value of the holdback liability has and will be adjusted each reporting period with the change in fair value recorded in the condensed consolidated statement of operations. The obligation to issue common stock was recorded as a credit to additional paid in capital for $527 on the acquisition date. During the second quarter of 2024, the Company and the former owners of Evertel, agreed on a working capital adjustment that resulted in a payment of $15 to the Company. The Company incurred $113 in expenses related to this transaction. $39 of the expenses were incurred in the fourth quarter of fiscal year 2023, $12 in the first fiscal quarter of 2024, and $62 in the second fiscal quarter of 2024. The expense was recorded in selling, general and administrative expenses in the consolidated statement of operations. The preliminary allocation of the purchase price as of the acquisition date is as follows:
Assets acquired |  |  |  |
Accounts receivable |  | $ | 142 |
Prepaid expenses |  |  | 27 |
Intangible assets |  |  | 2,550 |
Goodwill |  |  | 2,923 |
Total Assets |  | $ | 5,642 |
Liabilities assumed |  |  |  |
Accrued commissions |  | $ | 10 |
Deferred revenue |  |  | 470 |
Deferred tax liability |  |  | 525 |
Total liabilities |  |  | 1,005 |
Net assets acquired |  | $ | 4,637 |
The estimated fair value of identifiable intangible assets acquired and their estimated useful lives are as follows:
|  | Fair Value |  |  | Est.Useful Life (in years) |
Developed technology |  | $ | 2,290 |  |  |  | 7 |
Customer relationships |  |  | 260 |  |  |  | 5 |
|  | $ | 2,550 |  |  |  |  |
Identifiable intangible assets consist of certain technology and customer relationships purchased from Evertel. Identifiable intangible assets are amortized over their estimated useful lives based upon several assumptions, including the estimated period of economic benefit and utilization. The weighted average amortization period for identifiable intangible assets acquired is 6.8 years. These intangible assets are classified as Level 3 in the ASC Topic 820 three-tier fair value hierarchy. The goodwill for Evertel is attributable to combining the Company’s existing emergency communications solutions with the software and software development capabilities of Evertel to enhance product offerings. Goodwill is also attributable to the skill level of the acquired workforce. The Company will continue to analyze the transaction and refine its calculations, as appropriate during the measurement period, which could affect the value of goodwill. Goodwill from the Evertel acquisition will not be deductible for tax purposes. As of June 30, 2024, $874 of the contingent consideration was issued to the former owners of Evertel. The Company paid $219 in cash and issued 236,343 shares of common stock. During the period since acquisition, the contingent consideration decreased $16 due to remeasurement adjustments. As of June 30, 2024, no contingent consideration liability remained outstanding. The Company has included the operating results of Evertel in continuing operations in its unaudited condensed consolidated financial statements since the acquisition date. $291 in net revenues and $72 in net loss of Evertel were included in the unaudited condensed consolidated financial statements for the three months ending June 30, 2024, and $706 in net revenues and $504 in net loss of Evertel were included in the unaudited condensed consolidated financial statements for the nine months ended June 30, 2024.

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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/disclosureRef -Topic 805 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 5 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org/1943274/2147479907/805-20-50-5 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 805 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/805/tableOfContent + Details
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