Business Acquisitions

12 Months Ended

Dec. 31, 2022

Business Acquisitions [Abstract]

BUSINESS ACQUISITIONS

NOTE 20 BUSINESS ACQUISITIONS

The Company’s acquisitions are accounted for such that the assets acquired and liabilities assumed are recognized at their acquisition date fair values, with any excess of the consideration transferred over the estimated fair values of the identifiable net assets acquired recorded as goodwill.

FastBack / Skyline Partners Technology LLC

On January 29, 2021, the Company completed the acquisition of FastBack for cash consideration paid of $1.3 million and the issuance of $1.5 million aggregate principal amount of term notes and $11.2 million aggregate principal amount of convertible notes that are convertible into common stock at a conversion price of $522 per share, subject to adjustment. See Note 14 – Debt for further discussion of the notes. FastBack’s products complement and enhance the Company’s 5G connectivity offerings. All resulting goodwill is expected to be tax deductible. The Company incurred acquisition-related costs of $79,000, of which $18,000 was expensed in fiscal year 2021 and $61,000 was expensed in fiscal year 2020, which are included in general and administrative expenses on the Company’s Consolidated Statement of Operations. The purpose of the acquisition was to expand our line of products and technology. The goodwill represents the excess fair value after the allocation to the intangibles. All resulting goodwill and intangibles are tax deductible.

The fair values of the assets acquired and liabilities assumed as of the acquisition date, as set forth below.

(Amounts in thousands)	Fair Value
Cash	$	9
Accounts receivable		245
Inventory		358
Prepaid expenses		1,914
Property & equipment		202
Intangible assets:
Trade name		409
Technology		1,770
Customer relationships		5,000
Software		97
Goodwill		5,849
Total assets		15,853
Accounts payable		1,055
Accrued liabilities		174
Notes payable		210
Contract liabilities, current		213
Accrued warranty liability – long term		236
Total purchase consideration	$	13,965

Sky Sapience Ltd.

On February 25, 2021, the Company completed the acquisition of SKS. The total preliminary purchase price consideration amounted to $11.8 million, subject to working capital and other post-closing adjustments, representing (i) cash paid on the closing date of $2.7 million (ii) 25,552 shares of the Company’s common stock with a fair value of $9.1 million or $355 per share, of which an aggregate of 11,515 shares was held in an escrow fund for purposes of satisfying any post-closing indemnification claims of the sellers under the Stock Purchase Agreement. SKS’s products complement and enhance the Company’s tethered drone product portfolio for commercial communications, defense and national security markets. All resulting goodwill is expected to be tax deductible. The purpose of the acquisition was to expand our line of products and technology. The goodwill represents the excess fair value after the allocation to the intangibles. All resulting goodwill and intangibles are tax deductible. The Company sold SKS on March 20, 2023 (see Note 22 – Subsequent Events – Business Developments for additional information).

The fair values of the assets acquired and liabilities assumed as of the acquisition date, as set forth below.

(Amounts in thousands)	Fair Value
Cash	$	320
Accounts receivable		60
Inventory		1,229
Prepaid expenses		15
Other current assets		334
Property & equipment		148
Operating lease right-of-use assets		457
Intangible assets:
Trade names		440
Technology		2,480
Customer relationships		3,460
Goodwill		6,185
Total assets		15,128
Accounts payable		710
Accrued liabilities		431
Contract liabilities, current		1,759
Operating lease liabilities, current		194
Operating lease liabilities - long term		252
Total purchase consideration	$	11,782

RVision, Inc.

On April 1, 2021, the Company completed the acquisition of RVision. The Company acquired 100% of the outstanding capital stock of RVision in exchange for 20,000 shares of its common stock with a fair value of $275 per share. RVision’s products complement and enhance the Company’s communication offerings and provides additional access to governmental and private sector commercial industries. All resulting goodwill is expected to be tax deductible. The purpose of the acquisition was to expand our line of products and technology. The goodwill represents the excess fair value after the allocation to the intangibles. The Company sold RVision on December 29, 2022.

The fair values of the assets acquired and liabilities assumed as of the acquisition date, as set forth below.

(Amounts in thousands)	Fair Value
Cash	$	449
Accounts receivable		47
Prepaid expenses		53
Inventory		825
Property & equipment		16
Operating lease right-of-use asset		270
Intangible assets:
Trade names		220
Technology		630
Customer relationships		400
Goodwill		3,599
Total assets		6,509
Accounts payable		54
Accrued liabilities		219
Operating lease liabilities, current		74
Contract liabilities, current		13
Notes payable		453
Operating lease liabilities – long term		196
Total purchase consideration	$	5,500

Innovation Digital, LLC

On June 3, 2021, the Company completed the acquisition of Innovation Digital for cash consideration paid of $1.0 million, 31,653 shares of common stock with a fair value of $7.3 million or $235 per share, and a promissory note in the principal amount of $0.6 million that is convertible into common stock at a conversion price of $235. See Note 14 – Debt for further discussion of the notes. Innovation Digital enhances the Company’s portfolio of intellectual property and licensing capabilities. The purpose of the acquisition was to expand our line of products and technology. The goodwill represents the excess fair value after the allocation to the intangibles. The calculated goodwill is deductible for tax purposes. On June 23, 2022, the Company reached an agreement to return fifteen patents and five pending or provisional patents to the former owners of Innovation Digital resulting in the derecognition of an outstanding promissory note of an aggregate $640,000, comprised of $600,000 of principal and $40,000 of interest, the return of 5,000 shares of common stock, and the waiver of certain severance payments.

The fair values of the assets acquired and liabilities assumed as of the acquisition date, as set forth below.

(Amounts in thousands)	Fair Value
Property & equipment		6
Operating lease right-of-use asset		105
Other non-current Assets		2
Intangible assets:
Trade names		59
Technology		610
Customer relationships		500
Goodwill		7,953
Total assets		9,235
Accounts payable		59
Operating lease liabilities, current		32
Notes payable		31
Operating lease liabilities – long term		74
Total purchase consideration	$	9,039

RF Engineering & Energy Resource, LLC

On July 15, 2021, the Company completed the acquisition of RF Engineering for cash consideration paid of $0.6 million and 9,928 shares of common stock with a fair value of $2.2 million or approximately $222 per share. RF Engineering’s position as a leading specialist in high performance antenna design and distribution enhances the Company’s wireless product development capabilities and sales and distribution channels. All resulting goodwill is expected to be tax deductible. See Note 14 – Debt for further discussion of the notes. The purpose of the acquisition was to expand our line of products and technology. The goodwill represents the excess fair value after the allocation to the intangibles.

The fair values of the assets acquired and liabilities assumed as of the acquisition date, as set forth below.

(Amounts in thousands)	Fair Value
Cash	$	41
Accounts receivable		323
Inventory		662
Other current assets		6
Property & equipment, net		72
Intangible assets:
Trade names		80
Customer relationships		470
Goodwill		1,920
Total assets		3,574
Accounts payable		375
Accrued liabilities		4
Contract liabilities, current		20
Notes payable		425
Total purchase consideration	$	2,750

SAGUNA Networks LTD

On October 4, 2021, the Company completed the acquisition of SAGUNA for cash consideration paid of $0.2 million and 64,221 shares of common stock with a fair value of $9.8 million, or approximately $153 per share. SAGUNA is a premier Multi-Access Edge Computing cloud software developer. The acquisition significantly expanded the Company’s software technology offerings powering 5G wireless networks. The purpose of the acquisition was to expand our line of products and technology. The goodwill represents the excess fair value after the allocation to the intangibles. The calculated goodwill is deductible for tax purposes.

The fair value of the assets acquired and liabilities assumed as of the acquisition date, are as set forth below:

(Amounts in thousands)	Fair Value
Cash	$	64
Accounts receivable		61
Property & equipment, net		19
Intangible assets:
Goodwill		10,137
Total assets		10,281
Accounts payable		33
Accrued liabilities		79
Other current liabilities		180
Total purchase consideration	$	9,989

Pro Forma Information (unaudited)

During 2021, the Company completed the acquisitions of FastBack Networks, a telecommunications provider, Sky Sapience Ltd., a tethered drone provider, Rvision, Inc., a video and communications developer, Innovation Digital, a developer of signal processing solutions, RF Engineering and Energy Resource, an antenna and accessories provider, and SAGUNA Networks, a software developer to expand the Company’s product offerings and developments.

The following information represents the unaudited pro forma combined results of operations, giving effect to the acquisitions as if they occurred at the beginning of the year ended December 31, 2021. 

(Amounts in thousands)	For the Year Ended December 31, 2021
Revenue from continuing operations	$	13,599
Net loss from continuing operations	$	(135,016	)
Basic and diluted loss per common share	$	(1.68	)
Weighted-average common shares outstanding		80,138