On July 1, 2020, the Company completed the acquisition of certain assets and liabilities, which comprise the aftermarket vehicle remote start and security systems and connected car solutions (telematics) businesses of Directed LLC and Directed Electronics Canada Inc. (collectively, with Directed LLC, “Directed”) via an asset purchase agreement. The acquired assets included inventory, accounts receivable, certain fixed assets, IT systems, and intellectual property. The cash purchase price was $11,000. Net sales from the Company’s newly formed subsidiaries, VOXX DEI LLC and VOXX DEI Canada, Ltd. (collectively, with VOXX DEI LLC, “DEI”), included in our consolidated results for the three months ended May 31, 2021, represented approximately 8.8% of our consolidated net sales. DEI’s results of operations are included in the consolidated financial statements of Voxx in our Automotive Electronics segment. The purpose of this acquisition was to expand the Company’s market share within the automotive electronics industry.

The following summarizes the allocation of the purchase price based upon the fair value of the assets acquired and liabilities assumed at the date of acquisition:

	July 1, 2020		Measurement Period Adjustments			July 1, 2020 (as adjusted)
Assets acquired:
Inventory	$	7,054		956			8,010
Accounts receivable		5,173		214			5,387
Other current assets		160		-			160
Property and equipment		2,815		-			2,815
Operating lease, right of use asset		1,771		-			1,771
Customer relationships		2,600		(100	)		2,500
Trademarks		4,500		-			4,500
Patented technology		1,030		-			1,030
Goodwill		3,290		(1,240	)		2,050
Total assets acquired	$	28,393	$	(170	)	$	28,223

Liabilities assumed:
Accounts payable		8,144		-			8,144
Accrued expenses		1,406		(181	)		1,225
Contract liabilities		4,872		11			4,883
Warranty accrual		1,200		-			1,200
Operating lease liability		1,771		-			1,771
Total	$	17,393	$	(170	)	$	17,223
Total purchase price	$	11,000	$	-		$	11,000

The purchase allocation presented above is preliminary. We are in the process of refining the valuation of acquired assets and liabilities, including goodwill, and expect to finalize the purchase price allocation prior to June 30, 2021. During Fiscal 2021 and during the three months ended May 31, 2021, the Company recorded a cumulative net measurement period adjustment that decreased goodwill by $1,240, as presented in the table above. The measurement period adjustment would have resulted in an insignificant decrease in amortization expense related to the customer relationships in the prior year. The Company made these measurement period adjustments to reflect facts and circumstances that existed as of the acquisition date and did not result from intervening events subsequent to such date. Goodwill was determined as the excess of the purchase price over the fair value of the assets acquired (including the identifiable intangible assets) and represents synergies expected.

On April 29, 2021, the Company signed a Letter of Intent to acquire the home audio/video business of Onkyo Home Entertainment Corporation (“Onkyo”), along with Sharp Corporation (“Sharp”) as the Company’s partner. On May 28, 2021, the Company and Sharp signed an asset purchase agreement to jointly acquire Onkyo for a total purchase price of $30,800, plus the assumption of certain liabilities. The agreement was approved by Onkyo’s shareholders at its ordinary general meeting of shareholders on June 25, 2021 and on June 28, 2021, the Company announced that it has entered into a joint venture with Sharp in order to execute the transaction. Finalization of the transaction is subject to customary and regulatory closing conditions and is expected to be completed on or about August 30, 2021.

In conjunction with the signing of the Letter of Intent on April 29, 2021, Onkyo signed a promissory note with the Company in the amount of $3,000 for the purpose of funding certain operating requirements of the business, including compensation related expenses and payment of accounts payable during the negotiation process and through the completion date of the transaction. The note was amended on June 22, 2021 to provide for additional borrowings of $2,250. The note bears interest at 4.00% and is due on August 30, 2021, or will be deducted from the cash purchase price paid by the Company upon completion of the transaction. As of May 31, 2021, the outstanding balance of the note was $3,000 and is included within Prepaid expenses and other current assets in the Consolidated Balance Sheet. As collateral for the amounts borrowed under the promissory note, Onkyo has granted a security interest in certain of its trademarks and other assets included in the asset purchase agreement, as defined in the Security Agreement signed on April 29, 2021 and amended on June 22, 2021.