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Acquisition of 3dent Technologies, LLC

12 Months Ended

Apr. 30, 2021

Business Combination and Asset Acquisition [Abstract]

(17) Acquisition of 3dent Technologies, LLC

On February 1, 2021, the Company acquired all of the outstanding equity interest of 3Dent, a Houston, Texas based company that offers offshore energy engineering and design services that are complementary to OPT’s technology and products. In consideration for the purchase, the Company issued 361,991 shares of its common stock to the seller, subject to a 12-month post acquisition employment. In addition, the former owners of 3Dent will be eligible for awards of performance stock with a potential value of $360,000 if certain revenue targets are achieved over the next 12 months.

The Company accounted for the transaction as a business combination under ASC 805, “Business Combinations.” Accordingly, the assets and liabilities acquired were recorded at their estimated fair value on the date of acquisition. Under ASC 805, acquisition-related transaction costs (such as advisory, legal, valuation, other professional fees) were expensed in the Consolidated Statement of Operations in the period incurred. The Company recognized $152,000 of acquisition-related costs and these costs are included in the Consolidated Statement of Operations in Selling, general and administrative expenses.

The fair value of common stock issued by the Company in connection with the 3Dent acquisition was as follows (in thousands):

Fair value of base purchase price	$	1,452
Less discount for lack of marketability		(290	)
Adjusted fair value		1,162

The adjusted fair value of $1.2M represents the fair value of the shares issued to the sellers adjusted for the lack of marketability since the shares are restricted for one year from the date of acquisition. The Company has a right of return of the shares if any one of the sellers terminates his employment with the Company (other than for Good Reason) or has his employment terminated by the Company (for Cause), in each case prior to the one-year anniversary of the date of the agreement. In such case, the applicable seller will automatically surrender to the Company and forfeit all ownership of his shares. As such, the adjusted fair value of the common stock to the extent of the estimated fair value of the identifiable tangible and intangible net assets acquired has been reflected as the acquisition price and the remainder will be recognized as compensation expense over the course of the one year period of this contract.

The following table summarizes the fair value of the net assets acquired (in thousands):

Cash	$	100
Accounts receivable		94
Prepaid expenses		5
Right of use asset		95
Fixed assets		20
Identifiable intangibles		280
Accounts payable and accrued expenses		(21	)
Lease liability		(96	)
Total net assets acquired, excluding goodwill	$	477

The acquisition date fair values of identifiable intangible assets acquired are as follows (in thousands):

Trade name	$	130
Customer relationships		150
Fair value of identifiable intangibles assets	$	280

The fair value of the acquired identified intangibles assets were calculated with the assistance of an independent third-party valuation firm and were determined through a variety of valuation techniques. The identifiable intangibles consist of 3Dent trade name and customer relationships. The intangible assets are being amortized using the straight-line method over the estimated useful lives of the assets. The trade name and customer relationship intangible are being amortized over 12 years and 10 years respectively, which is consistent with the pattern of economic benefit of the assets.

The amounts of revenue and net loss of 3Dent included in the Company’s Consolidated Statement of Operations from the date of acquisition to April 30, 2021 were as follows (in thousands):

Revenue		$	35
Net loss			(463	)

Net loss includes $231,201 equity compensation expense related to the performance stock issued to the sellers as part of the acquisition.

The unaudited pro forma financial information in the table below summarizes the combined results of operations for the Company and 3Dent as if the companies had been combined as of May 1, 2019. These amounts have been calculated after applying the Company’s accounting policies and adjusting the results of 3Dent to reflect the additional amortization that would have been charged assuming the fair value adjustments to intangible assets had been applied on May 1, 2019. The following unaudited pro forma financial information is for informational purposes only and is not necessarily indicative of the results of operations that would have been achieved as if the acquisition had taken place as of May 1, 2019.

	Twelve months ended April 30,
	2021			2020

Revenue	$	1,600		$	2,772
Net loss		(14,915	)		(10,406	)
Basic and diluted net loss per share	$	(0.50	)	$	(1.44	)