XML 25 R12.htm IDEA: XBRL DOCUMENT
v3.24.3

BUSINESS COMBINATION | 9 Months Ended
--- | ---
Sep. 30, 2024
Business Combinations [Abstract] |
BUSINESS COMBINATION | NOTE 5: BUSINESS COMBINATION On August 11, 2023, pursuant to an Agreement and Plan of Merger among LI, AlterG, Inc., Merger Sub, and Shareholder Representative Services LLC, LI, August 8, 2023, the Company acquired AlterG, Inc.and AlterG, Inc.became a wholly owned subsidiary of the Company. With the rebranding of the Company, AlterG, Inc. was renamed as LCAI. LCAI develops, manufactures, and markets anti-gravity systems for use in physical and neurological rehabilitation and athletic training, both in the United States and internationally. The aggregate purchase price was a total of approximately $19 million in cash, subject to working capital and other customary purchase price adjustments. Additional cash earnouts (initially estimated to be approximately $4.0 million in the aggregate) may be paid based upon a percentage of LCAI’s year-over-year future revenue growth over the next two years subject to working capital and other customary purchase price adjustments.
The total consideration transferred is as follows (in thousands): |  |  |
Cash |  | $ | 18,493 |
Earnout payments |  | $ | 3,607 |
Total consideration |  | $ | 22,100 |
Earnout payments The Company will pay an amount of cash equal to 65% of the amount, if any, by which LCAI revenue attributable to the first 12 months period exceeds revenue target ("first earnout payment"), and an amount in cash equal to 65% of the amount, if any, by which LCAI revenue attributable to the following 12 months period exceeds the revenue from the first 12 month period ("second earnout payment"). However, the company did not meet the revenue target for the first year of the earnout, and as a result, no payment will be made for the first year. At the date of acquisition, management estimated fair value of the earnout payment based on the actual up to date performance of the acquired entity and the probability of the earn out payment occurrence to be at approximately $3.6 million. The earn-out was accounted for as a liability and will be remeasured at each reporting period through consolidated statement of operations. The Company has accounted for the LCAI acquisition as a business combination. The Company has preliminarily allocated the purchase price of approximately $22.1 million fair values, and the excess of the purchase price over the aggregate fair values is recorded as goodwill. The following table summarizes the preliminary fair value of assets acquired and liabilities assumed as of the acquisition date (in thousands):
Cash and cash equivalent |  | $ | 478 |
Restricted cash |  |  | 51 |
Accounts receivable |  |  | 1,773 |
Inventory |  |  | 3,330 |
Prepaid expenses and other current assets |  |  | 470 |
Right of use asset |  |  | 1,151 |
Property and equipment, net |  |  | 827 |
Other non-current assets |  |  | 30 |
Goodwill |  |  | 7,538 |
Intangible assets |  |  | 14,133 |
Accounts payable |  |  | (2,082 | )
Accrued compensation |  |  | (766 | )
Other accrued liabilities |  |  | (1,059 | )
Deferred revenue |  |  | (2,088 | )
Warranty Obligations |  |  | (535 | )
Leases Liability |  |  | (1,151 | )
Total purchase consideration |  | $ | 22,100 |
The following table presents the details of the intangible assets acquired at the date of LCAI acquisition (in thousands):
|  | Estimated Fair Value |  |  | Estimated Useful Life (Years) |
Trademark |  | $ | 795 |  |  |  | 3 |
Technology |  |  | 6,161 |  |  |  | 4 |
Customer relationship - Warranty |  |  | 201 |  |  |  | 2 |
Customer relationship - Rental |  |  | 2,102 |  |  |  | 4 |
Customer relationship - Distribution |  |  | 4,578 |  |  |  | 5 |
Backlog |  |  | 296 |  |  |  | 1 |
Under the purchase price allocation, the Company allocates the purchase price to tangible and identified intangible assets acquired and liabilities assumed based on the estimates of their fair values. The fair values for the intangible assets acquired were primarily based on significant inputs that are not observable in the market and thus represent a Level 3 measurement in the fair value hierarchy. Customer relationships, distributor relationships, backlog, trademark and developed technology were valued using the income approach, based on estimated projections of expected cash flows to be generated by the assets, discounted to the present value at discount rates commensurate with perceived risk. The discounted cash flow analyses factor in assumptions on revenue and expense growth rates including estimates of customer growth and attrition rates, distributor growth and attrition rates, technology obsolescence, and relief from royalty projections. Additionally, these discounted cash flow analyses factor in expected amounts of working capital, fixed assets, assembled workforce and cost of capital for each intangible asset.

X
- 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
Name: | us-gaap_BusinessCombinationDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- References No definition available. + Details
Name: | us-gaap_BusinessCombinationsAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration