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Acquisitions | 12 Months Ended
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Dec. 31, 2021
Business Combinations [Abstract] |
Acquisitions | 2. Acquisitions Avast Family Safety Mobile Business On April 16, 2021, the Company acquired substantially all the assets and assumed certain specified liabilities related to Avast and its subsidiaries’ family safety mobile software business (the “Family Safety Mobile Business”), including all of the outstanding membership interests of Location Labs, LLC, pursuant to a Membership Interest and Asset Purchase Agreement (the “Purchase Agreement”). The following table summarizes the consideration paid for the Family Safety Mobile Business in 2021 (in thousands):
Fair value of assets acquired |  | $ | 74,818 |
Fair value of liabilities assumed |  |  | 2,085 |
Total purchase price |  | $ | 72,733 |
Components of purchase price: |  |  |  |
Cash |  | $ | 63,216 |
Common stock |  |  | 8,381 |
Contingent consideration |  |  | 1,136 |
Total purchase price |  | $ | 72,733 |
F-14 The Company’s allocation of the purchase price is summarized as follows (in thousands):
Assets: |  |  |  |
Cash |  | $ | 6,351 |
Accounts receivable |  |  | 6,225 |
Prepaid expenses |  |  | 513 |
Fixed assets |  |  | 921 |
Intangible assets |  |  | 38,033 |
Goodwill |  |  | 22,775 |
Total assets |  | $ | 74,818 |
Liabilities: |  |  |  |
Accounts payable |  | $ | 392 |
Accrued payroll and benefits |  |  | 1,662 |
Accrued expenses |  |  | 31 |
Total liabilities |  | $ | 2,085 |
Total purchase price |  | $ | 72,733 |
The Purchase Agreement included an earn-out provision that provided for additional future payments to Avast aggregating up to $14.0 million. Approximately $1.1 million of the earn-out consideration was included in the original purchase price allocation and valued based upon a percentage of the projected revenue stream from a specified contract utilizing a discounted cash flow method. During the third quarter of 2021, the Company recorded the remaining $12.9 million as a charge to operating expenses due to a contract extension becoming probable with a given customer designated in the earn-out provision, resulting in an increase in the contingent consideration due to Avast. Approximately $13.7 million in contingent consideration was included within “other accrued liabilities” in the consolidated balance sheet as of September 30, 2021. In November 2021, the remainder of the earn-out was paid in full and no further earn-out payments will be due in the future. The goodwill recognized is attributable primarily to expected synergies and the assembled workforce of the Family Safety Mobile Business. The goodwill is expected to be deductible for income tax purposes. Approximately $19.7 million in revenues and $6.2 million in cost of revenues from the Family Safety Mobile Business are included in the consolidated statement of operations for the period from April 16, 2021, through December 31, 2021. Unaudited pro forma results of operations for the years ended December 31, 2021 and 2020 are included below as if the acquisition of the Family Safety Mobile business occurred on January 1, 2020. This summary of the unaudited pro forma results of operations is not necessarily indicative of what the Company’s results of operations would have been had the Family Safety Mobile Business been acquired at the beginning of 2020, nor does it purport to represent results of operations for any future periods.
|  | Year Ended December 31, |
|  | 2021 |  |  | 2020 |
|  | (in thousands, except per share amounts) |
Revenues |  | $ | 67,654 |  |  | $ | 87,908 |
Net (loss) income |  |  | (16,304 | ) |  |  | 4,046 |
Earnings per share: |  |  |  |  |  |  |  |
Basic |  | $ | (0.30 | ) |  | $ | 0.08 |
Diluted |  | $ | (0.30 | ) |  | $ | 0.08 |
F-15 The purpose of the Family Safety Mobile Business acquisition was to acquire a portfolio of mobile family safety services including location features, content filtering and screen time management, cementing Smith Micro as a leader in delivering mobile family safety software solutions to wireless carriers and to further expand Smith Micro’s white-label digital safety solutions, positioning the Company as a leading family safety software-as-a-service provider globally while adding critical headcount in the U.S. and Europe. Circle Operator Business On February 12, 2020, the Company acquired the operator business of Circle Media Labs Inc. (“Circle”) pursuant to a certain Asset Purchase Agreement by and between the Company and Circle. The following table summarizes the consideration paid for the Circle acquisition in 2020 (in thousands):
Fair value of assets acquired |  | $ | 14,966 |
Fair value of liabilities assumed |  |  | 1,466 |
Total purchase price |  | $ | 13,500 |
Components of purchase price: |  |  |  |
Cash |  | $ | 13,500 |
Total purchase price |  | $ | 13,500 |
The Company’s allocation of the purchase price is summarized as follows (in thousands):
Assets: |  |  |  |
Inventory, net |  | $ | 14 |
Intangible assets |  |  | 10,483 |
Goodwill |  |  | 4,469 |
Total assets |  | $ | 14,966 |
Liabilities: |  |  |  |
Deferred revenue |  | $ | 1,290 |
Amounts due to seller |  |  | 176 |
Total liabilities |  | $ | 1,466 |
Total purchase price |  | $ | 13,500 |
The purpose of the transaction was to acquire certain assets related to the Circle operator business, including two new customer contracts and a source code license to Circle’s then deployed parental control software and related technology. All of the goodwill acquired as a part of this transaction is deductible for tax purposes.

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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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI http://asc.fasb.org/topic&trid=2303972 + Details
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