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Note 5 - Business Acquisition - Provisional | 6 Months Ended
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Jun. 30, 2024
Notes to Financial Statements |
Business Combination Disclosure [Text Block] | Note 5. Business Acquisition - Provisional On March 25, 2024, the Company entered into a Stock Purchase Agreement with James T. McKinley, pursuant to which the Company agreed to purchase all of the issued and outstanding shares of common stock of Out fitter. The closing of the transaction occurred on April 1, 2024. Outfitter provides consumers, commercial and government customers, with advanced satellite-based connectivity solutions from leading brands, including Iridium, Inmarsat and Globalstar. Final purchase accounting adjustments may be materially different from the amount presented below in the purchase price allocation. Increases or decreases in the fair value of the net assets may change the amount of the purchase price allocated to goodwill and other assets and liabilities. Measurement period adjustments will be recognized prospectively. The measurement period is not to exceed 12 months from the respective dates of acquisition. The following table summarizes the consideration transferred to acquire Outfitter and the amounts of identified assets acquired and liabilities assumed at the acquisition date (in thousands):
|  | Purchase Price Allocation (in thousands) |
Total purchase consideration |  | $ | 1,094 |
Identifiable net assets acquired - Provisional: |  |  |  |
Cash |  | $ | 236 |
Accounts receivable, net |  |  | 73 |
Inventory |  |  | 137 |
Prepaid expenses |  |  | 11 |
Property and equipment, net |  |  | 5 |
Right of use assets, net |  |  | 109 |
Intangible assets, net: |  |  |  |
Trade name (1) |  |  | 185 |
Customer records (2) |  |  | 415 |
Accounts payable and accrued expenses |  |  | (124 | )
Notes payable and accrued interest - current portion |  |  | (53 | )
Lease liabilities - current portion |  |  | (56 | )
Deferred tax liabilities (3) |  |  | (145 | )
Net assets acquired |  | $ | 793 |
Goodwill |  | $ | 301 |
(1) 10 year amortization period (2) 5 year amortization period (3) Under federal tax law, previously unidentified finite lived intangible assets recognized from a business combination have no tax basis and therefore are not amortized for tax purposes. This tax position created a book/tax basis difference at April 1, 2024, the date of the business combination transaction. Therefore, an approximate $0.1 million deferred tax liability was recorded at April 1, 2024 as a result of the book/tax basis difference for the finite lived intangible assets. The goodwill is attributable to the workforce of the acquired business and the significant synergies expected to arise after NextPlat’s acquisition of Outfitter. The goodwill is not deductible for tax purposes. The initial recognition of Outfitter's identifiable intangible assets, resulting from the acquisition on April 1, 2024, were measured using Level 3 inputs. The fair value at the date of acquisition was approximately $0.6 million and were estimated by applying an income approach. The fair value estimates for the identifiable intangible assets are based on (1) an assumed discount rate of 37.3% (2) an assumed capitalization rate of 34.3% (3) assumed long-term growth rate of 3.0% (4) an assumed royalty rate of 1.8% (5) an assumed tax rate of 26.3% (6) an assumed risk free rate of 4.5% (7) an assumed equity risk premium of 6.5% (8) an assumed company specific risk premium rate of 22.5% (9) an assumed beta of 0.82.

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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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