ACQUISITIONS, GOODWILL, AND ACQUIRED INTANGIBLE ASSETS

Verify Investor, LLC

On February 12, 2018, tZERO acquired 81% of the total equity interests of Verify Investor, LLC, an accredited investor verification company, for a total purchase price of $12.0 million in cash. We estimated the fair value of the acquired assets based on Level 3 inputs, which were unobservable (see Note 2—Accounting Policies, Fair value of financial instruments). These inputs included our estimate of future revenues, operating margins, discount rates, royalty rates and assumptions about the relative competitive environment.

The fair values of the assets acquired and liabilities assumed at the acquisition date are as follows (in thousands):



Purchase Price	Fair Value
Cash paid, net of cash acquired	$	11,769
Allocation
Intangible assets	$	7,400
Goodwill	7,360
Other assets acquired	3
Other liabilities assumed	(179		)
Total net assets, net of cash acquired	14,584
Less: noncontrolling interest	(2,815		)
Total net assets attributable to tZERO, net of cash acquired	$	11,769

The following table details the identifiable intangible assets acquired at their fair value and remaining useful lives as of December 31, 2018 (amounts in thousands):



Intangible Assets	Fair Value		Weighted Average Useful Life (years)
Technology and developed software	$	6,300	10
Trade names	700		10
Customer relationships	400		0.5
Total acquired intangible assets as of the acquisition date	7,400
Less: accumulated amortization of acquired intangible assets	1,105
Total acquired intangible assets, net	$	6,295

The expense for amortizing intangible assets acquired in connection with this acquisition was $1.1 million for the year ended December 31, 2018.

Acquired intangible assets primarily include technology, trade name, and customer relationships. As described above, we determined the fair value of these assets using an income approach method to determine the present value of expected future cash flows for each identifiable intangible asset. This method was based on discount rates which incorporate a risk premium to take into account the risks inherent in those expected cash flows. The expected cash flows were estimated based on the company's historical operating results.

The acquired assets, liabilities, and associated operating results were consolidated into our financial statements at the acquisition date. The goodwill recognized arises from intangible assets that do not qualify for separate recognition and expected synergies with our tZERO operations. The total amount of goodwill expected to be deductible for tax purposes is our share of the goodwill recognized at the acquisition date. The carrying amount of goodwill has not changed since the acquisition date.

Pro forma results of operations have not been presented because the effects of this acquisition were not material to our consolidated results of operations.

Mac Warehouse, LLC

On June 25, 2018, we acquired 100% of the total equity interests of Mac Warehouse, LLC, an electronics retailer of refurbished Apple products, to complement our retail business for a total purchase price of $1.2 million in cash and the assumption of a loan of $3.1 million. We estimated the fair value of the acquired assets and liabilities based on Level 3 inputs, which were unobservable (see Note 2-Accounting Policies, Fair value of financial instruments). These inputs included our estimate of future revenues, operating margins, discount rates, royalty rates and assumptions about the relative competitive environment.

Determination and allocation of the purchase price to net tangible and intangible assets is based upon preliminary estimates. These preliminary estimates and assumptions could change significantly during the measurement period as we finalize the valuations of the intangible assets acquired and related tax impact. Any change could result in variances between our future financial results and the amounts recognized in the financial information presented below, including variances in fair values recorded, as well as expenses associated with these items.

The preliminary estimated fair values of the assets acquired and liabilities assumed at the acquisition date are as follows (in thousands):



Purchase Price	Fair Value
Cash paid, net of cash acquired	$	1,143
Allocation
Accounts receivable, net	$	399
Inventories, net	1,033
Prepaids and other current assets	29
Fixed assets	154
Intangible assets	3,502
Goodwill	837
Accounts payable and accrued liabilities	(905		)
Long-term debt, net	(3,069		)
Deferred tax liabilities	(837		)
Total net assets, net of cash acquired	$	1,143

Acquired intangible assets primarily include trade name and customer relationships which have an estimated useful life of 18 months.

The acquired assets, liabilities, and associated operating results were consolidated into our financial statements at the acquisition dates. The carrying amount of goodwill includes the amount of deferred tax liability recognized.

The following unaudited pro forma financial information presents our results as if the current year acquisitions of Mac Warehouse, LLC had occurred at the beginning of 2016 (amounts in thousands), however, it should not be taken as indicative of our future consolidated results of operations:



(unaudited)	Years ended December 31,
	2018			2017			2016
Total revenue	$	1,825,776		$	1,759,503		$	1,809,418
Consolidated net income (loss)	$	(222,597	)	$	(111,848	)	$	11,380