On May 3, 2021, the Company entered into a definitive agreement to purchase all of the outstanding membership interest units in Picky Bars, LLC (“Picky Bars”), innovators in the healthy snack industry focused on nutritionally balanced, real-food products to fuel performance, for a debt-free purchase price of $11,111,830 in cash, subject to customary working capital adjustments, and 53,133 shares of Company common stock, subject to certain vesting conditions. The transaction closed simultaneously with execution of the agreement. Picky Bars results of operations were included in the Company’s results beginning May 2021. The fair value of the shares of common stock issued as part of the consideration paid for Picky Bars was determined on the basis of the closing price of the Company’s common stock on the acquisition date.

The following table summarizes the consideration paid for Picky Bars and the amounts of the assets acquired and liabilities assumed recognized at the acquisition date:


Consideration
Cash	$	11,111,830
Equity instruments		1,834,857
Fair value of total consideration transferred	$	12,946,687
Recognized amounts of identifiable assets acquired and liabilities assumed
Cash	$	662,243
Accounts receivable		48,517
Prepaid expenses and other current assets		237,166
Deposits		6,000
Inventory		726,006
Property and equipment, net		55,378
Intangible assets		4,930,000
Total assets acquired		6,665,310
Accounts payable		47,323
Accrued expenses		131,661
Payroll liabilities		9,189
Contract liabilities		16,450
Total liabilities assumed		204,623
Total identifiable net assets		6,460,687
Goodwill	$	6,486,000

The transaction is aligned with Laird Superfood’s strategic goals, specifically the addition of unique and innovative daily-use products across the Company’s omnichannel platform, and the acquisition of highly complementary assets such as a recurring direct-to-consumer customer base, and is expected to support continued net sales growth and improve the gross margin profile of the Company. Goodwill arising as a result of the acquisition of Picky Bars is primarily the result of synergies in business strategy, target market, and values, from expected cost savings from consolidating operations, and from the anticipated growth that the Company’s supply chain and resources will bring to Picky Bars’ operations. Operations have been fully integrated under management of the Company in Sisters, Oregon. The Company continues to operate as one segment. Our estimates of fair value of intangible assets are based upon assumptions believed to be reasonable, yet are inherently uncertain and, as a result, may differ from actual performance. During the measurement period, not to exceed one year from the date of acquisition, we may record adjustments to the estimated fair values of the assets acquired and liabilities assumed with a corresponding adjustment to goodwill, as appropriate, in the period in which such revised estimates are identified. The measurement period is complete, and the Company recorded goodwill and intangible asset impairment charges in the first quarter of 2022 of $6,846,000 and $1,540,000, respectively. See Note 9 of the notes to these consolidated unaudited financial statements.

The following table summarizes the components of the intangible assets acquired as of the acquisition date and their estimated useful lives:


	Estimated Useful Life	Fair Value
Trade names	10 years	$	2,530,000
Customer relationships	10 years		1,990,000
Recipes	10 years		330,000
Social media agreements	3 years		80,000
Total intangible assets acquired		$	4,930,000

The following unaudited pro forma summary presents the results of the Company as if the acquisition of Picky Bars had occurred on January 1 of the year of the acquisition:


	Three Months Ended			Six Months Ended
	June 30, 2021			June 30, 2021
Net Sales	$	9,618,798		$	18,174,961
Net Loss	$	(6,444,721	)	$	(11,946,430	)

This unaudited pro forma financial data is included only for the purpose of illustration and does not necessarily indicate what the operating results would have been if the acquisition had occurred on January 1 of the year prior to the acquisition. Moreover, this information is not indicative of what the Company’s future operating results will be. The information prior to the acquisition is included based on prior accounting records maintained by Picky Bars. The pro forma amounts have been calculated after applying the Company’s accounting policies and adjusting the results of Picky Bars to reflect the accrual of payroll related costs and depreciation. The unaudited pro forma financial information includes non-recurring adjustments to remove transaction costs directly attributable to the acquisition.