Note 4 - Acquisition

3 Months Ended

Mar. 31, 2024

Notes to Financial Statements

Business Combination Disclosure [Text Block]

4. ACQUISITION

On January 3, 2024 (the “Acquisition Date”), the Company acquired 100% of the outstanding capital stock of Axign B.V. (“Axign”), a Dutch company that designs and develops class-D audio ICs, targeting applications ranging from portable consumer speakers to automotive and professional-grade multi-speaker systems. Commencing on the Acquisition Date, Axign became a wholly-owned subsidiary of the Company and its results of operations have been included in the Company’s consolidated financial statements.

Purchase Consideration

The preliminary purchase consideration was approximately $33.7 million in cash and includes an estimated working capital adjustment and other adjustments.

Cash paid at the Acquisition Date included $3.8 million that is being held in an escrow account for a one-year period until Axign’s satisfaction of certain representations and warranties. 

In connection with the acquisition, the Company incurred $0.4 million in transaction costs that were expensed as incurred and included in selling, general and administrative expenses in the Condensed Consolidated Statements of Operations.

Preliminary Purchase Price Allocation

The preliminary purchase price allocation for Axign is as follows (in thousands):

	Preliminary
	Estimated Net Asset
	Fair Value
Inventory	$	720
Other tangible assets acquired, net of liabilities assumed		1,948
Intangible assets:
Developed technology		8,337
IPR&D		1,612
Total identifiable net assets acquired		12,617
Goodwill		21,066
Total net assets acquired	$	33,683

The intangible asset acquired with a finite life includes the core developed technology with an estimated remaining useful life of eight years. The acquired intangible asset with an indefinite life includes an incomplete R&D project that had not reached technological feasibility as of the Acquisition Date. The fair values of the developed technology and the IPR&D were determined using the income approach.

The goodwill arising from the acquisition was primarily attributed to the assembled workforce and synergies that are anticipated to enable the Company to develop solutions with lower power consumption in the consumer and automotive markets using Axign’s digital feedback technology. The goodwill is not expected to be deductible for tax purposes.

The Company is still in the process of determining the final fair values of the assets acquired and liabilities assumed. As a result, the purchase price allocation for Axign is not complete as of March 31, 2024. The Company expects to finalize the allocation by the quarter ending June 30, 2024. Final determination of the fair values could result in an adjustment to the preliminary purchase price allocation with a corresponding adjustment to goodwill.