Acquisitions

12 Months Ended

Dec. 31, 2021

Acquisitions [Abstract]

Acquisitions

4. Acquisitions

Computex

On April 7, 2020, the Company consummated the Computex 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, resulted 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.

Consideration paid:
Convertible Debentures with warrants that granted 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 (estimated useful life  - 10 years)		17,300
Trade names (estimated useful life  - 10 years)		7,000
Furniture & equipment		6,435
Leasehold improvements		2,375
Other assets		88
Current liabilities		(26,965	)
Other liabilities		(116	)
Total net assets acquired	$	23,089
Goodwill		38,679
Total consideration paid	$	61,768

Identifiable intangible assets acquired consisted 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. With respect to the Computex acquisition, AVCT incurred transaction costs of $142 during the Successor period April 7, 2020 to December 31, 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 were investment income earned and transaction costs incurred by AVCT of $1,365 and $6,887, respectively.

Kandy

On December 1, 2020, the Company acquired Kandy from Ribbon, by acquiring certain assets, assuming certain liabilities and acquiring all of the outstanding interests of Kandy Communications LLC. 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 deductible for tax purposes, resulted 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.

Consideration paid:
Convertible Debentures with warrants that granted the right to acquire 4,377,800 shares of common stock at an exercise price of $0.01 per share	$	43,778
Net assets acquired:
Current assets	$	3,659
Acquired technology		8,200
Customer relationships		7,600
Trade names		2,500
Property, plant & equipment		3,034
Current liabilities		(5,245	)
Other liabilities		(114	)
Total net assets acquired	$	19,634
Goodwill		24,144
Total consideration paid	$	43,778

Identifiable intangible assets acquired consisted of acquired technology of $8,200, customer relationships of $7,600 and trade names of $2,500. The intangible assets were valued using a form of the income approach. The customer relationship was valued using the Multi-Period Excess Earnings Method (or MPEEM) while the method used for the acquired technology and trade names was the Relief from Royalty Method. With respect to the Kandy acquisition, AVCT incurred transaction costs of $2,649 during the Successor period April 7, 2020 to December 31, 2020.

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 and Kandy acquisitions as if the acquisitions had occurred on January 1, 2020 (in thousands):

	Year ended December 31, 2020
	Continuing			Discontinued
	Operations			Operations
Revenues	$	14,297		$	85,917
Net loss		(44,426	)		(2,140	)

The pro forma financial information included herein are not necessarily indicative of the results of operations that would have been realized if the acquisitions had been completed on January 1, 2020. Such pro forma financial information do not give effect to any integration costs related to the acquired companies.

The combined net loss in the table above was adjusted for the incremental changes in the amortization of intangible assets.