On January 3, 2019, (the “HALO Acquisition Date”), ZAGG Hampton LLC, a Delaware limited liability company and wholly owned subsidiary of the Company, entered into a membership interest purchase agreement (the “HALO Purchase Agreement”) with HALO and its equity owners to acquire all of the outstanding equity interests of HALO (the “HALO Acquisition”). HALO is a leading direct-to-consumer mobile accessories company with an extensive intellectual property portfolio that specializes in wireless charging, car and wall chargers, portable power, and other accessories. The Company acquired HALO to expand its product and intellectual property portfolio, and to enter into new distribution channels.

The total purchase consideration for the HALO Acquisition was $23,649 in cash, 1,458 shares of the Company’s common stock valued at $12,968, and contingent consideration (the “HALO Earnout Consideration”) estimated at $1,544. The initial purchase price was subject to adjustment within 90 days of the HALO Acquisition Date based upon the final determination of HALO’s (i) working capital, (ii) indebtedness, and (iii) transaction expenses as set forth in the HALO Purchase Agreement.

As noted in the HALO Purchase Agreement, the Company retained $2,130 from the cash due to the sellers and will hold this amount for 18 months following the HALO Acquisition Date as security for HALO’s indemnification obligations. The $2,130 retained by the Company that is due HALO is recorded in accrued liabilities in the consolidated balance sheets.

HALO is also entitled to the HALO Earnout Consideration from the Company if HALO achieves the target Adjusted EBITDA set forth in the HALO Purchase Agreement for the year ending December 31, 2019. HALO's Adjusted EBITDA for the year ended December 31, 2019 achieved the target Adjusted EBITDA and as a result, the Company accrued an additional $2,544 for a total of $4,088 for the HALO Earnout Consideration and is included in accrued liabilities as of December 31, 2019.


	Preliminary Allocation January 3, 2019		Adjustments to Working Capital and Fair Value		Final Allocation January 3, 2019

Cash consideration	$	23,943	$	(294)	$	23,649
Company common stock	12,968		—		12,968
Contingent consideration	1,593		(49)		1,544
Total purchase price	$	38,504	$	(343)	$	38,161

The total purchase price of $38,161 has been allocated to identifiable assets acquired and liabilities assumed based on their respective fair values. The excess of the purchase price over the fair value of the tangible and intangible assets acquired and liabilities assumed is recorded as goodwill.


	Preliminary Allocation January 3, 2019		Adjustments to Working Capital and Fair Value		Final Allocation January 3, 2019

Cash	$	1,151	$	4	$	1,155
Accounts receivable (gross contractual receivables of $2,217)	2,436		(219)		2,217
Inventory	2,889		—		2,889
Inventory step up	494		—		494
Prepaid expenses and other assets	1,310		17		1,327
Property and equipment	627		—		627
Amortizable identifiable intangible assets	27,554		507		28,061
Goodwill	15,922		9		15,931
Operating lease right of use assets	—		649		649
Other assets	546		(546)		—
Accounts payable	(2,867)		126		(2,741)
Income tax payable	(501)		119		(382)
Accrued expenses	(217)		36		(181)
Notes payable	—		(42)		(42)
Accrued wages and wage related expenses	(324)		55		(269)
Sales return liability	(2,728)		—		(2,728)
Deferred tax liability, net	(6,177)		(894)		(7,071)
Lease liabilities	—		(1,775)		(1,775)
Other long-term liabilities	(1,611)		1,611		—
Total	$	38,504	$	(343)	$	38,161

Classes of acquired intangible assets include technologies, trade names, and customer relationships. The fair value of the identifiable intangible assets was determined using the income valuation method. For assets valued under the income approach, the estimate of the present value of expected future cash flows for each identifiable asset 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 using available historical data adjusted based on the Company’s historical experience and the expectations of market participants.


	Intangible Asset Class		Weighted Average Amortization Period

Patents and technology	$	11,307	8.8 years
Trade names	4,408		10.0 years
Customer relationships	12,346		8.0 years
Total	$	28,061

Goodwill represents the excess of the HALO purchase price over the fair value of the assets acquired and liabilities assumed. The Company believes that the primary factors supporting the amount of goodwill recognized are the significant growth opportunities and expected synergies of the combined entity.

As part of the HALO Acquisition, the Company incurred legal, accounting, and other due diligence fees that were expensed when incurred. Total fees incurred related to the HALO Acquisition for the year ended December 31, 2019 was $795, which was included as a component of transaction costs on the consolidated statements of income.

The results of operations of HALO were included in the Company’s results of operations beginning on January 4, 2019. For HALO’s results of operations from January 4, 2019 through December 31, 2019, HALO generated net sales of $34,608 and had net income before tax of $1,879.

On November 30, 2018 (the “Gear4 Acquisition Date”), Patriot Corporation Unlimited Company, an entity registered and incorporated in Ireland and a wholly-owned subsidiary of the Company, entered into a share purchase agreement (the “Gear4 Purchase Agreement”) with STRAX Holding GmbH, an entity registered and incorporated in Germany (“STRAX”), and Gear4 HK Limited, an entity registered and incorporated in Hong Kong and a wholly-owned subsidiary of STRAX (“Gear4”), to acquire from STRAX all of the issued and outstanding equity securities of Gear4 (the “Gear4 Acquisition”). With its expansive global distribution channels, the Company believes that the Gear4 Acquisition will strengthen its case product profile to drive increased sales and profitability.

The purchase consideration for the Gear4 Acquisition was $32,200 in cash, 638 shares of the Company's common stock valued at $6,001, and contingent consideration (the “Gear4 Earnout Consideration”) estimated at $1,629. The initial purchase price was subject to adjustment based on the results of Gear4's net sales as defined in the Gear4 Purchase Agreement for the year ended December 31, 2018. The Gear4 Earnout Consideration was recorded in accrued liabilities in the consolidated balance sheets as of December 31, 2019. The Company transferred to STRAX 413 shares of the Company's common stock valued at $3,886 in 2019 as part of the consideration for the Gear4 Acquisition.

As agreed in the Gear4 Purchase Agreement, cash consideration of $1,725 and 225 shares of the Company's common stock valued at $2,116 was retained by the Company and will be held by the Company for 18 months following the Gear4 Acquisition Date as security for STRAX's indemnification obligations. The $3,841 retained by the Company that is due to STRAX is recorded in accrued liabilities in the consolidated balance sheets as of December 31, 2019.

STRAX was also entitled to the Gear4 Earnout Consideration from the Company if the Gear4 net sales as reported in audited financial statements for the year ended December 31, 2019, reported under U.S. GAAP, exceeded certain targets. Specifically, if the Gear4's net sales as reported under U.S. GAAP for the year ended December 31, 2019 were equal to or exceeded $60,000 but less than $90,000, STRAX was entitled to $5,000. If the Gear4's net sales for the year ended December 31, 2019 were equal to or exceeded $90,000, STRAX was entitled to $10,000. The Gear4's net sales for the year ended December 31, 2019 did not exceed $60,000 and thus, no Gear4 Earnout Consideration was earned or paid. As a result, the Company reduced the contingent consideration payable of $1,629 to zero and recorded this amount in selling, general and administrative in the consolidated statements of income for the year ended December 31, 2019.

The total purchase price of $39,830 was allocated to identifiable assets acquired and liabilities assumed based on their respective fair values. The excess of the purchase price over the fair value of the tangible and intangible assets acquired and liabilities assumed is recorded as goodwill.


Cash	$	2,124
Accounts receivable (gross contractual receivables of $203)	104
Prepaids and other current assets	671
Inventory	2,831
Inventory step-up	96
Property and equipment	1,427
Amortizable identifiable intangible assets	23,024
Goodwill	15,068
Accounts payable	(2,584)
Accrued liabilities	(773)
Sales return liability	(932)
Taxes payable	(1,226)
Total	$	39,830

Classes of acquired intangible assets include trade names, customer relationships, and backlog. The fair value of the identifiable intangible assets was determined using the income valuation method. For assets valued under the income approach, the estimate of the present value of expected future cash flows for each identifiable asset 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 using available historical data adjusted based on the Company’s historical experience and the expectations of market participants. The amounts assigned to each class of intangible asset and the related weighted average amortization periods are as follows:

Goodwill represents the excess of the Gear4 purchase price over the fair value of the assets acquired and liabilities assumed. The Company believes that the primary factors supporting the amount of the goodwill recognized are the significant growth opportunities and expected synergies of the combined entity.

The results of operations of Gear4 were included in the Company's results of operations beginning on December 1, 2018. For Gear4's results of operations from December 1, 2018 through December 31, 2018, Gear4 generated net sales of $2,955 and had a net income before tax of $1,814.

As part of the Gear4 Acquisition, the Company incurred legal, accounting, investment banking and other due diligence fees that were expensed when incurred. Total fees incurred related to the Gear4 Acquisition for the years ended December 31, 2019 and 2018 were $292 and $595, respectively, which were included as a component of transaction costs on the consolidated statements of income.

The following pro-forma results of operations for the years ended December 31, 2019 and 2018, give pro forma effect as if the acquisitions of HALO and Gear4 and the related borrowings used to finance the acquisitions had occurred on January 1, 2018, after giving effect to certain adjustments including the amortization of intangible assets, interest expense, tax adjustments, specific transaction related expenses incurred prior to the execution date, and assumes the purchase price was allocated to the assets purchased and liabilities assumed based on their fair market values at the date of purchase.

The pro forma information is presented for illustrative purposes only and is not necessarily indicative of the operating results that would have occurred had the transaction been consummated as of January 1, 2018. Furthermore, such pro forma information is not necessarily indicative of future operating results of the combined companies, due to changes in operating activities following the purchase, and should not be construed as representative of the operating results of the combined companies for any future dates or periods.


	For the Years Ended December 31,
	2019		2018

Amortization expense	$	118	$	6,091
Transaction costs	$	(1,086)	$	1,086
Amortization of fair value adjustment to inventory	$	(573)	$	589
Interest from the amended credit facility and amortization of debt issuance costs	$	—	$	1,588

The pro forma results do not reflect events that either have occurred or may occur after the HALO Acquisition and Gear4 Acquisition, including, but not limited to, the anticipated realization of ongoing savings from operating synergies in subsequent periods.

On July 20, 2018 (the “BRAVEN Acquisition Date”), ZAGG Amplified, Inc., a Delaware corporation and wholly-owned subsidiary of the Company, completed its acquisition (the “BRAVEN Acquisition”) of BRAVEN Audio (“BRAVEN”) pursuant to the terms of an asset purchase agreement with Incipio LLC. In connection with the BRAVEN Acquisition, the Company acquired accounts receivable, inventory, property and equipment, intellectual property, a product and engineering team, and certain other assets as well as assumed certain liabilities for cash consideration of $4,451.

The purchase price of $4,451 was allocated to identifiable assets acquired and liabilities assumed based on their respective fair values. The excess of the purchase price over the fair value of the tangible and intangible assets acquired and liabilities assumed is recorded as goodwill.


Accounts receivable (gross contractual receivables of $650)	$	650
Inventory	2,141
Inventory step-up	179
Property and equipment	368
Amortizable identifiable intangible assets	1,774
Goodwill	298
Accounts payable	(959)
Total	$	4,451

Classes of acquired intangible assets include patents and technology, trade names, and backlog. The fair value of the identifiable intangible assets was determined using various valuation methods, including the income approach. For assets valued under the income approach, the estimate of the present value of expected future cash flows for each identifiable asset 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 using available historical data adjusted based on the Company’s historical experience and the expectations of market participants. The amounts assigned to each class of intangible asset and the related weighted average amortization periods are as follows:

Goodwill represents the excess of the BRAVEN purchase price over the fair value of the assets acquired and liabilities assumed. The Company believes that the primary factors supporting the amount of the goodwill recognized are the engineering team, significant growth opportunities, and expected synergies of the combined entity.

The results of operations of BRAVEN were included in the Company's results of operations beginning on July 20, 2018. For BRAVEN's results of operations from July 20, 2018 through December 31, 2018, BRAVEN generated net sales of $2,421 and had a net loss before tax of $2,788.

As part of the BRAVEN Acquisition, the Company incurred legal, accounting, and other due diligence fees that were expensed when incurred. Total fees related to the BRAVEN acquisition for the year ended December 31, 2018 was $60, which was included as a component of transaction costs on the consolidated statements of income.