PURCHASE OF TELOS ID NON-CONTROLLING INTERESTS

12 Months Ended

Dec. 31, 2022

Noncontrolling Interest [Abstract]

PURCHASE OF TELOS ID NON-CONTROLLING INTERESTS

PURCHASE OF TELOS ID NON-CONTROLLING INTERESTS

Telos ID was formed as a limited liability company under the Delaware Limited Liability Company Act in 2007. Prior to the IPO in November 2020, the Company owned a 50% interest in Telos ID, with the remaining interest owned by Hoya ID Fund A, LLC ("Hoya") as the non-controlling interest.

On October 5, 2020, we entered into a Membership Interest Purchase Agreement between the Company and Hoya to purchase all of the Class B Units of Telos ID ("Telos ID Units") owned by Hoya (the "Telos ID Purchase"). Upon the closing of the Telos ID Purchase, Telos ID became our wholly-owned subsidiary. On November 23, 2020, the Telos ID Purchase was consummated with the Company transferring $30.0 million in cash and issuing 7.3 million shares of our common stock at $20.39 per share (which totals approximately $148.4 million); the total consideration transferred to Hoya was $178.4 million. As part of the common stock issuance, the Company recognized a credit to additional paid-in-capital ("APIC") of $148.4 million. The Company further recognized a debit to APIC of $173.9 million as part of the elimination of Hoya's non-controlling interest in Telos ID. The net impact to APIC associated with the acquisition of the additional 50% interest in Telos ID was a debit of $25.5 million.

In fiscal year 2020, 50% of the profit allocated to the Class B member amounted to $5.2 million. During the year ended December 31, 2020, the Class B member received a total of $2.8 million of distribution and a final distribution of $2.4 million in January 2021.