On October 31, 2022 (the “Closing Date”), the Company completed the acquisition of all outstanding equity in Nestwave, a privately held French company that is a global leader in low-power geolocation. The acquisition is expected to significantly accelerate the availability of resilient 3D position, navigation and timing, release the underlying spectrum’s capacity for additional data-oriented services and enables broader penetration of NextNav’s applications and technology across the handset and device ecosystem for all of its products and target markets. The acquisition is accounted for under the acquisition method of accounting in accordance with Accounting Standard Codification (“ASC”) 805 Business Combinations.

The Company acquired Nestwave for $21.6 million, net of cash acquired of $0.4 million. The purchase price for financial reporting purpose includes $3.2 million cash paid upfront and $0.8 million payable on or prior to first anniversary of the Closing Date, an aggregate of 5,170,495 shares of the Company's common stock valued at $17.7 million, and cash contingent consideration of up to $0.3 million. The fair value of the Company's common stock was determined on the basis of its closing market price on the Closing Date. Contingent consideration was measured based on government grants and tax credits Nestwave expects to receive, and will be settled within one year of Closing Date. During the six months ended June 30, 2023, the Company increased the fair value of contingent consideration liability by $0.1 million. The Company paid $0.1 million in cash to settle a portion of the contingent consideration liability. The Company incurred acquisition-related costs of $0.9 million associated with the acquisition and were included in the selling, general and administrative expenses in the 2022 Consolidated Statements of Comprehensive Loss.

The earnings of Nestwave have been included in the consolidated financial statements of the Company beginning November 1, 2022. The pro forma financial information, assuming the acquisition had taken place on January 1, 2021, as well as the revenue and earnings generated during the period after the acquisition date, were not material for separate disclosure and, accordingly, have not been presented.

The fair value measurements of the identified intangible assets on acquisition date were based primarily on significant unobservable inputs and thus represent a Level 3 measurement as defined in ASC 820 Fair Value Measurements. The fair values of technology and software were determined using the replacement cost method under the cost approach. The excess of the purchase price over the fair value of the tangible net assets and intangible assets acquired was recognized as goodwill and is attributable to a number of business factors, including but not limited to, the acquired workforce and expanded market opportunities when integrating Nestwave’s software and technology with the Company’s other offerings. Goodwill generated from the acquisition is not deductible for tax purposes.

As of October 31, 2022, the purchase price assigned to the acquired assets and assumed liabilities is summarized as follows. The Company provided estimates of balances as of December 31, 2022 and updated these estimates as more information become available. The Company has completed this exercise. The assets and liabilities of Nestwave recorded in the Company's financial statements at the acquisition date are summarized below:

		Preliminary		Adjustments			Final
		(in thousands)
Cash acquired	$	433	$	—		$	433
Other current assets		436		—			436
Property and equipment		69		—			69
Other noncurrent assets		50		—			50
Intangible assets:
Technology		541		—			541
Software		5,128		—			5,128
Goodwill		16,317		(96	)		16,221
Total assets acquired	$	22,974	$	(96	)	$	22,878
Current liabilities		760		—			760
Noncurrent liabilities		501		(96	)		405
Net assets acquired	$	21,713	$	—		$	21,713

The estimated useful lives of the identified finite-lived intangible assets from the acquisition is 12 years for technology and software.

Certain shareholders of Nestwave hold warrants for Nestwave shares that remained unexercised and outstanding as of the Closing Date. The Company and the holders of unexercised warrants entered into Put & Call Option Agreements whereas upon exercising the warrants, the Company will issue a total of 1.1 million shares of the Company's common stock in exchange for Nestwave shares to the exercising warrant holders. The Company recognized the warrants at acquisition date fair value of $3.9 million as non-controlling interests in the Company’s Consolidated Balance Sheet as of June 30, 2023.