Note 2 — Acquisitions and Divestiture

Acquisition of Lumo Energia, Oyj

On January 2, 2019 (the “Lumo Closing Date”), the Company completed the purchase of an 80.0% controlling interest in Lumo Energia Oyj ("Lumo"), a Finnish public limited company. The Company paid the sellers a total of €1.6 million (equivalent to $1.9 million at closing). The Company contributed €1.3 million (equivalent to $1.5 million at closing) as a capital loan to fund Lumo's working capital requirements. The Company also provided Lumo with a secured loan for €2.0 million (equivalent to $2.3 million at closing) to pay off and replace Lumo's remaining debt. The secured loan matures in 4 years and bears interest at annual rate of 4.0%, payable monthly. The Company also issued 176,104 shares of its class B common stock to certain of the sellers which are subject to restrictions (the "Lumo Restricted Shares"). The Lumo Restricted Shares are subject to vesting conditions related to employment and services to be provided by the recipients of up to two years following the Lumo Closing Date.The Lumo Restricted Shares are accounted for as a share-based compensation and is amortized to the consolidated statement of income over the vesting period of two years.

Of the remaining 20.0% noncontrolling interest retained by the sellers, 12.5% is subject to restrictions, which will lapse over a period of up to three years following the Lumo Closing Date, subject to employment and service conditions.

The Company has a conditional continuing call option to purchase a portion or the entire noncontrolling interest from the sellers during the period beginning at the third anniversary of the Lumo Closing Date and ending three years later.

The sellers, as a group, have a one-time option to sell a portion or all of their noncontrolling interest to the Company, which subject to certain conditions, may be exercised on one occasion only, at any time during the two-year period beginning at the fourth anniversary of the Lumo Closing Date.

The Company recorded revenue for Lumo of approximately $15.2 million in its consolidated statements of operations and comprehensive income for the year ended December 31, 2019. The net income or loss attributable to this acquisition cannot be identified on a stand-alone basis because it is in the process of being integrated into the Company's operations.

The impact of the acquisition’s purchase price allocations on the Company’s consolidated balance sheet and the acquisition date fair value of the total consideration transferred were as follows:

(in thousands)
Cash	$	1,539
Trade accounts receivable		2,520
Other current assets		411
Intangible assets:
Trademark (5-year useful life)		294
Non-compete agreements (3-year useful life)		34
Customer relationship (2-year useful life)		1,924
Goodwill		1,744
Other assets		95
Accounts payable and other current liabilities		(2,403)
Short-term debts		(2,260)
Other liabilities		(97)
Noncontrolling interest		(410)
Net assets	$	3,391

(in thousands)
Supplemental information
Cash paid to Sellers	$	1,869
Cash contributed to Lumo		1,522
Total consideration	$	3,391

Goodwill was allocated to the GRE International segment. Goodwill is the excess of the consideration transferred over the net assets recognized and represents the expected revenue and cost synergies of the combined company and assembled workforce. Goodwill recognized as a result of the acquisition is not deductible for income tax purposes.

During the fourth quarter of 2019, the Company obtained information relevant to determining the fair value of minority interest related to the acquisition of Lumo and adjusted its' purchase price allocation. Based on this information, the Company reduced the allocation of the purchase price in noncontrolling interest by $0.5 million with corresponding adjustments to goodwill and intangible assets.

In November 2019, the Company acquired additional 9.0% interest in Lumo increasing the aggregate ownership to 89.0% for $0.2 million.

Acquisition of Prism

Prism is a solar solutions company that is engaged in U.S.-based panel manufacturing, installation design and project management. Prism’s solar panels feature high efficiency N-type silicon solar cells designed into bifacial solar modules which result in systems with a reduction in the average cost per kilowatt hour, while their glass-on-glass design increases the durability and lifetime value of Prism’s panels.

Between August and October 2018, the Company extended an aggregate of $1.3 million bridge loans to Prism. The bridge loans, which were secured by a subordinated security interest in Prism’s assets as well as a second mortgage and assignment of rents on Prism’s plant and facility, bore fixed annual interest rate of 12.0%.

On October 25, 2018, the Company acquired a 60.0% controlling interest in Prism in exchange for a total consideration of $4.0 million, which included (i) the conversion of $1.4 million of principal amount of bridge loans, including accrued interest, into equity of Prism, (ii) a $1.1 million cash contribution to Prism, and (iii) an obligation to fund Prism an additional $1.5 million within 60 days.

The Company recorded revenue for Prism of approximately $10.1 million and $3.3 million in its consolidated statements of operations and comprehensive income for year ended December 31, 2019 and 2018, respectively. The net income or loss attributable to this acquisition cannot be identified on a stand-alone basis because it is in the process of being integrated into the Company's operations.

The impact of the acquisition’s purchase price allocations on the Company’s consolidated balance sheet and the acquisition date fair value of the total consideration transferred were as follows:

(in thousands)
Cash	$	931
Trade accounts receivable		11
Inventories		1,142
Other current assets		260
Property plant and equipment (19-year weighted average useful life)		3,564
Intangible assets:
Trademark (10-year useful life)		320
Patent (10-year useful life)		370
Customer contract (3-year useful life)		1,600
Goodwill		804
Accounts payable accrued expenses		(1,723	)
Notes payable — current portion		(63	)
Other current liabilities		(1,164	)
Notes payable — net of current portion		(885	)
Noncontrolling interest		(2,667	)
Net assets	$	2,500

(in thousands)
Supplemental information
Cash contributed to Prism	$	899
Notes receivable from Prism, including accrued interest, converted to Prism's equity		1,351
Cash payment to previous equity holders of Prism		250
		2,500
Notes payable issued to Prism		1,500
Total considerations	$	4,000

Goodwill was allocated to the GES segment. Goodwill is the excess of the consideration transferred over the net assets recognized and represents the expected revenue and cost synergies of the combined company and assembled workforce. Goodwill recognized as a result of the acquisition is not deductible for income tax purposes.

During the first quarter of 2019, the Company obtained information relevant to determining the fair value of certain intangible assets related to the acquisition of Prism and adjusted its' purchase price allocation. Based on this information, the Company recognized an increased allocation of the purchase price to intangibles of $0.3 million with a corresponding decrease to goodwill.

Prism's noncurrent notes payable consisted of the following:

	December 31, 2018		October 25, 2018
	(in thousands)
5.95% note payable, due in monthly payments of $7,184 including interest, through November 2019 when the balloon payment is due, collateralized by Prism's assets	$	893	$	918
20.00% demand note payable, uncollaterlized		30		30
		923		948
Less: Current maturities		923		63
Noncurrent portion	$	—	$	885

On April 12, 2019, Prism restructured its ownership. The Company how holds a 60.0% interest in Plus EnerG, Inc. ("Plus EnerG") which owns 100% of Prism.

In December 11, 2019, the Company refinanced the 5.95% notes payable from Catskill Hudson Bank described above that was due in November 2019. The outstanding balance of notes payable of $0.8 million at December 31, 2019 will be payable in equal monthly installments for period of ten years. The outstanding principal amount incurs fixed interest at 4.75% per annum. The notes payable are secured by Prism's commercial property in Highland, New York. At December 31, 2019, $0.8 million was outstanding under notes payable with $0.1 million included in the current portion of notes payables.

Prism's noncurrent notes payable consisted of the following as of December 31, 2019 (in thousands):

4.75% notes payable	$	863
Less: Current portion		86
Total	$	777

The annual maturities of the Term Loan, as of December 31, 2019, are as follows (in thousands):

2020	$	86
2021		86
2022		86
2023		86
2024		86
Thereafter		433
Total	$	863

Divestiture of Majority Interest in Atid Drilling Ltd.

Following the Company’s decision to suspend oil and gas exploration drilling activities at its Afek subsidiaries, in June 2018, the Company initiated a plan to sell primarily all of Atid Drilling Ltd’s ("Atid") assets and liabilities. In 2018, the Company recorded a write-down to fair value of Atid’s net assets in the amounts of $2.7 million. On September 1, 2018, Genie Israel Holdings Ltd., a wholly-owned subsidiary of GOGAS (“Genie Israel”) contributed to Atid 613, the equity of Atid with net book value of $1.0 million in exchange for 37.5% interest in Atid 613. The remaining interests in Atid 613 are held by Howard Jonas, the Company’s Chairman (37.5%) and by Geoffrey Rochwarger, the Company’s former Vice Chairman (25.0%) and the Chief Executive Officer of Atid 613.

Genie Israel also entered into a Shareholder Agreement with Atid 613's other shareholders to govern certain issues regarding management of the new company. Under the Shareholder Agreement, among other things, Genie Israel has agreed to make available Atid 613 working capital financing up to $0.4 million ("Credit Facility"). The credit Facility bears a variable interest rate as defined in the Shareholder Agreement. As of December 31, 2019, the outstanding balance of Credit Facility was nil.

Genie Israel accounts for its investments in the newly formed contracted drilling services company in Israel using the equity method of accounting.

Pro Forma Results (unaudited)

The following unaudited pro forma financial information summarizes the results of operations for the years ended December 31, 2019 and 2018 as if the acquisitions of Lumo and Prism and divestiture of a majority interest Atid, had been completed as of the beginning of 2018 and 2017, respectively. The pro forma results are based upon certain assumptions and estimates, and they give effect to actual operating results prior to the acquisitions and adjustments to reflect (i) the change in depreciation expense and intangible assets amortization, (ii) timing of recognition for certain expenses that will not be recurring in the post-acquisition period, (iii) impairment of assets related to Atid, and (iv) income taxes at a rate consistent with the Company’s statutory rate at the date of the acquisitions. No effect has been given to other cost reductions or operating synergies. As a result, these pro forma results do not necessarily represent results that would have occurred if the acquisitions had taken place on the basis assumed above, nor are they indicative of the results of future combined operations.

	Year ended December 31,
	2019		2018
	(in thousands)
Total revenues	$	293,694	$	281,847
Net income		217,746		21,524
Net income attributable to Genie Energy Ltd. common stockholders		20,634		22,511
Earnings per share attributable to Genie energy Ltd. common stockholders
Basic		0.81		0.89
Diluted		0.80		0.88