ACQUISITION

On February 28, 2018, the Company acquired SingleHop LLC ("SingleHop"), a provider of high-performance data center services including colocation, managed hosting, cloud and network services for $132.0 million net of working capital adjustments, liabilities assumed, and net of cash acquired. The transaction was funded with an incremental term loan and cash from the balance sheet. As part of the financing, INAP obtained an amendment to its credit agreement to allow for the incremental term loan and to provide further operational flexibility under the credit agreement covenants. The amendments to the credit agreement are described in more detail in note 8, "Debt".

SingleHop is a recognized leader in the Managed Hosting and Infrastructure as a Service (IaaS) business segment, offering highly automated and on-demand IT infrastructure. This strategic combination allows INAP to immediately offer its customers advanced products and expertise. SingleHop’s enterprise and business customers will also benefit from INAP’s North America and global presence, providing a more expansive integrated footprint.

The Company determined the preliminary fair value of the net assets acquired as follows (in thousands):



	Purchase price allocation
Cash	$	2,857
Prepaid expenses and other assets	1,683
Property, plant and equipment	14,885
Other long term assets	39
Intangible assets:			Weighted Average
Noncompete Agreements	4,000		4 years
Trade name	1,700		8 years
Technology	15,100		7 years
Customer relationship	34,100		10 years
Goodwill	67,868
Total assets acquired	142,232
Accounts payable and accrued liabilities	5,098
Deferred revenue	1,600
Long term liabilities	534
Net assets acquired	$	135,000

The goodwill recorded in connection with this acquisition was based on operating synergies and other benefits expected to result from the combined operations and the assembled workforce acquired. The goodwill acquired is deductible for tax purposes.

Acquisition-related costs recognized during the three months ended March 31, 2018 including transaction costs such as legal, accounting, valuation and other professional services, were $2.5 million and are included in "Sales, general and administrative" expenses on the accompanying unaudited condensed consolidated statements of operations and comprehensive loss.

Pro-Forma Financial Information

The following unaudited pro forma financial information presents the combined results of operations of INAP and SingleHop as if the acquisition had occurred on January 1, 2017. The unaudited pro forma financial information is not intended to represent or be indicative of our consolidated results of operations that would have been reported had the INAP and SingleHop acquisition been completed as of January 1, 2017, and should not be taken as indicative of our future consolidated results of operations.



	Three months ended March 31, 2018 (in thousands except per share amounts)			Three months ended March 31, 2017 (in thousands except per share amounts)

Revenues	$	82,172		$	81,728
Net loss	$	(15,667	)	$	(17,739	)
Basic and diluted net loss per share	$	(0.78	)	$	(0.89	)
Weighted average shares outstanding used in computing basic and diluted net loss per share	20,052			19,877