3. Mergers and Acquisitions

Syndicated Solar, Inc.

On August 9, 2013, the Company purchased certain assets and assumed certain current liabilities of Syndicated Solar, Inc. (“Syndicated”). The acquired assets include executed end user customer agreements together with associated solar energy systems in various stages of completion and various systems used by Syndicated to acquire new customers. The acquisition enables the Company to expand its residential solar operations in Colorado and California and to expand its sales presence into the state of Missouri. In connection with the acquisition, the former chief executive officer of Syndicated joined the Company as president of the residential division. The purchase consideration comprised cash of $250,000 and 400,000 shares of the Company’s Class A common stock, with an aggregate fair value of $916,000 based on the closing price of the Company’s Class A common stock on the acquisition date.

The table below summarizes the determination of fair value of the purchase consideration in the acquired business as of the acquisition date (in thousands):


Cash	$	250
Common stock		916

Total purchase consideration	$	1,166

The table below summarizes the assessment of the estimated fair values of the assets acquired and liabilities assumed at the acquisition date (in thousands). The Company has obtained a third-party valuation of the assets acquired and liabilities assumed.


Cash	$	90
Accounts receivable, net		580
Other current assets		1,188
Property and equipment		185
Intangible assets		480
Accounts payable		(2,220	)
Deferred revenue		(946	)
Other current liabilities		(58	)

Total identifiable net liabilities at fair value		(701	)
Goodwill		1,867

Total purchase consideration	$	1,166

The Company assumed $2.2 million in accounts payable on the date of acquisition, including $1.6 million owed to a single vendor. Concurrent with the acquisition, the Company paid $1.0 million to the vendor and recorded an accrued liability in the amount of $600,000. The vendor’s terms require six monthly payments of $100,000 through February 2014. The accrued liability recorded was $200,000 and zero as of December 31, 2013 and March 21, 2014, respectively.

Intangible assets consist of the value of contractual arrangements entered into between Syndicated and its customers to install solar energy systems for which installation had not yet commenced at the acquisition date.

Syndicated also has the potential to earn up to $250,000 in additional earn-out payments following the close of the 2013 fiscal year and an additional 1.3 million shares of unregistered Class A common stock in performance based earn-outs over the period August 9, 2013 to December 31, 2015. If earned, these payments will be recorded as compensation expense as earned.

The Company includes results from operations of acquired companies in its consolidated financial statements from their respective effective acquisition dates. Pro forma financial information is not presented as the acquisition is not material to the condensed consolidated statements of operations. The revenue and earnings of the acquired business were not material to the condensed consolidated financial statements.

Subsequent Events

Mercury Energy, Inc.

On January 14, 2014, the Company obtained financial control, through an Agreement and Plan of Merger, of 100% of the voting equity interests of Mercury Energy, Inc. (“Mercury”). The total consideration transferred was comprised of 8.3 million shares of the Company’s Class A common stock valued at $32.0 million based on the closing market price of $3.83 per share on January 13, 2014. The consideration excluded $1.2 million of expenses that are reported as acquisition-related costs in the consolidated statement of operations for the year ended December 31, 2013.

Elemental Energy, LLC d/b/a Sunetric.

The Company entered into a definitive agreement to obtain financial control, through a Membership Interest Purchase Agreement (“Purchase Agreement”), of 100% of the membership interests of Elemental Energy, LLC d/b/a Sunetric on March 26, 2014. For further details about the acquisition, see Item 9B in this Form 10-K.