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3. ACQUISITION OF MINIM, INC.

12 Months Ended

Dec. 31, 2020

On November 12, 2020, Zoom executed an Agreement and Plan of Merger (the “Merger Agreement”) with Minim, Inc. (“Minim”), a privately held company based in Manchester, New Hampshire that designs, develops, sells and supports an IoT security platform that enables and secures a better-connected home. Upon closing of the Merger Agreement on December 4, 2020, an acquisition subsidiary of Zoom merged into Minim with Minim being the surviving entity of the merger. Upon completion of the merger, all property, assets, other legal rights, debts, obligations, and all other liabilities of Minim transferred. The Agreement was structured as a non-cash, stock transaction. The stockholders of Minim received 10,784,534 shares of Zoom in exchange for the cancelation of 100% of the issued and outstanding shares of common stock of Minim. In addition, the holders of Minim stock options received 1,657,909 of Zoom stock options in exchange for 2,069,644 Minim stock options. The vesting terms of the Minim stock options agreements were transferred to stock option agreements under the Zoom stock options issued.

Immediately prior to execution of the Agreement, the majority stockholder of the Company was also the majority stockholder of Minim. As a result of the common ownership upon closing of the transaction, the acquisition was considered a common-control transaction and was outside the scope of the business combination guidance in ASC 805-50. The entities are deemed to be under common control as of October 9, 2020, which was the date that the majority stockholder acquired control of the Company and, therefore, held control over both companies.

Pursuant to ASC 250-10 and ASC 805-50, the transaction did not result in a change in the reporting entity and was recognized retrospectively for all periods during which the entities were under common control. For common-control transactions where both receiving entity and the transferring entity were not under common control during the entire reporting period, it is necessary to determine which entity is the predecessor. The predecessor is the reporting entity deemed to be the receiving entity for accounting purposes in a common-control transaction. The predecessor is not always the entity that legally receives the net assets or equity interests transferred. Comparative financial information shall only be adjusted for periods during which the entities were under common control. Since common control between the Company and Minim occurred in the current period, the comparative information of the prior period does not include the financial results of Minim prior to October 9, 2020. Accordingly, for periods in which the combining entities were not under common control, the comparative financial statements presented are those of the entity that is determined to be the predecessor up to the date at which the entities became under common control. Zoom was determined to be the predecessor entity and, therefore, was deemed to be the receiving entity for accounting purposes. Additionally, the consolidated financial statements and financial information presented for prior periods are not required to be restated to reflect the financial position and results of operations of Minim.

Assets acquired and liabilities assumed are reported at their historical carrying amounts and any difference between the proceeds transferred is recognized in additional paid-in capital. These consolidated financial statements include the historical accounts of the Company since inception and the accounts of Minim since the date common control commenced.

The following table summarizes the historical balances of the assets acquired and liabilities assumed as of October 9, 2020:

Assets acquired
Cash and cash equivalents	$	501,845
Accounts receivable, net		60,301
Inventories		192,688
Total current assets acquired		754,834

Equipment, net		4,550
Operating lease right-of-use asset, net		24,437
Goodwill		58,872
Intangible assets, net		97,122
Other assets		45,810
Total assets acquired	$	985,625

Liabilities assumed
Accounts Payables	$	46,392
Current maturities of long-term debt		554,500
Current maturities of operating lease liabilities		24,437
Accrued other expenses		97,679
Total current liabilities	$	723,008

Net Assets	$	262,617

Minim held $550,662 aggregate principal amount of promissory notes issued by employees during 2019 and 2018 in connection with the exercise of Minim stock options. In connection with the transactions contemplated by the Merger Agreement, the $550,622 aggregate principal amount of the promissory notes was repaid in full. Of the $550,622, the Company received $320,290 in cash. The remaining balance of $230,332 was net settled with 103,842 shares of Minim common stock shares. These shares of common stock are incorporated in the issuance of 10,784,534 shares of Zoom common stock that were issued to Minim stockholders. This repayment occurred before the merger effective date of December 4, 2020 but after the October 9, 2020 commencement of common control. The $320,290 repayment is represented in the consolidated statement of stockholders’ equity and consolidated statement of cash flows for the year end December 31, 2020.

Minim repurchased 33,809 shares of Minim common stock for $14,860 from a stockholder who is an immediate family member to the Company’s Executive Chairman of the Board. This repurchase remains unpaid as of December 31, 2020 and is recorded in accrued other expenses in the consolidated balance sheet as of December 31, 2020. This repurchase occurred before the merger effective date of December 4, 2020 but after the October 9, 2020 commence of common control. The $14,860 repurchase is represented in the consolidated statement of stockholders’ equity and consolidated statement of cash flows under accrued other expenses as the amount was not paid as of December 31, 2020.

The Company incurred transaction costs of approximately $1,594,042 related to this acquisition which were expensed as incurred and are included in general and administrative expenses in the Company’s consolidated statements of operations for the year ended December 31, 2020.