Acquisitions

6 Months Ended

Sep. 30, 2020

Business Combinations [Abstract]

Acquisitions

5. Acquisitions

On April 7, 2020, the Company consummated the Business Combination that resulted in the acquisition of Computex. The acquisition qualified as a business combination under ASC 805. Accordingly, the Company recorded assets acquired and liabilities assumed at their acquisition-date fair values. The excess of the purchase price over the fair value of assets acquired and liabilities assumed was recorded as goodwill. The goodwill, which is not deductible for tax purposes, results from factors such as an assembled workforce and management's industry knowledge.

The following table represents the allocation of the preliminary purchase consideration among the assets acquired and liabilities assumed at their estimated acquisition-date fair values. Management's evaluation and allocation of such purchase consideration is preliminary and subject to working capital and other adjustments.

Consideration paid:
Convertible debentures with warrants that grant the right to acquire 2,000,000 shares of common stock at an exercise price of $0.01 per share	$	20,000
Assumed debt		16,643
AVCT common stock (8,189,490 shares at $3.00 per share)		24,568
Working capital adjustment satisfied by the issuance of AVCT common stock (117,231 shares at $4.75 per share)		557
Total consideration paid	$	61,768
Net assets acquired:
Current assets	$	16,972
Customer relationships (weighted average life  - 10 years)		17,300
Trade names (weighted average life  - 10 years)		7,000
Furniture & equipment		6,435
Leasehold improvements		2,375
Other assets		88
Current liabilities		(26,965	)
Deferred tax liability		(3,450	)
Other liabilities		(116	)
Total net assets acquired	$	19,639
Goodwill		42,129
Total consideration paid	$	61,768

Identifiable intangible assets acquired consist of customer relationships of $17,300 and trade names of $7,000. Both the customer relationships and the trade names were valued using a form of the income approach. The customer relationship was valued using the Multi-Period Excess Earnings Method (or MPEEM) and the method used for the trade names was the Relief from Royalty Method. AVCT incurred transaction costs of $142 between April 7, 2020 and September 30, 2020, which was net of a credit of $903 granted by a creditor whose account was settled by the issuance of $2,500 in Debentures, $1,500 in shares of common stock and cash of $100.

Since the results of operations prior to April 7, 2020 relate to the operations of Computex, excluded from the Predecessor statement of operations are investment income earned and transaction costs incurred by AVCT. Accordingly, excluded are the following:

	January 1, 2020		July 1, 2019		January 1, 2019
	through		through		through
	April 6, 2020		September 30, 2019		September 30, 2019
	Predecessor		Predecessor		Predecessor
Investment income	$	1,365	$	133	$	1,352
Transaction costs		6,887		2,731		3,428

Unaudited Pro Forma Financial Information

The following unaudited pro forma financial information presents the combined results of operations for the Company and gives effect to the Computex business combination as if the business combination had occurred on January 1, 2019 (in thousands):

	Three months ended						Nine months ended
	September 30, 2020			September 30, 2019			September 30, 2020			September 30, 2019
Revenues	$	25,968		$	20,332		$	64,102		$	66,156
Net loss		(4,838	)		(1,458	)		(10,625	)		(3,927	)

The pro forma financial information is not necessarily indicative of the results of operations that would have been realized if the Business Combination had been completed on January 1, 2019. Such pro forma financial information does not give effect to any integration costs related to the acquired company.

The combined net loss in the table above was adjusted for the transaction costs related to the Business Combination (included as an expense in the nine months ended September 30, 2019 and excluded as an expense in the nine months ended September 30, 2020) and the incremental change in the amortization of intangible assets (adjustment relates to the three and nine months ended September 30, 2019 and the portion of the nine months ended September 30, 2020 that relates to the Predecessor period).