On April 16, 2021, the Company acquired substantially all the assets and assumed certain specified liabilities related to Avast and its subsidiaries’ family safety mobile software business (the “Family Safety Mobile Business”), including all of the outstanding membership interests of Location Labs, LLC, pursuant to a Membership Interest and Asset Purchase Agreement (the “Purchase Agreement”).

The following table summarizes the consideration paid for the Family Safety Mobile Business in 2021 (in thousands):

Fair value of assets acquired	$	74,818
Fair value of liabilities assumed		2,085
Total purchase price	$	72,733

Components of purchase price:
Cash	$	63,216
Common stock		8,381
Contingent consideration		1,136
Total purchase price	$	72,733

The Company’s allocation of the purchase price is summarized as follows (in thousands):

Assets:
Cash	$	6,351
Accounts receivable		6,225
Prepaid expenses		513
Fixed assets		921
Intangible assets		38,033
Goodwill		22,775
Total assets	$	74,818
Liabilities:
Accounts payable	$	392
Accrued payroll and benefits		1,662
Accrued expenses		31
Total liabilities	$	2,085
Total purchase price	$	72,733

The Purchase Agreement included an earn-out provision that provided for additional future payments to Avast aggregating up to $14.0 million. Approximately $1.1 million of the earn-out consideration was included in the original purchase price allocation and valued based upon a percentage of the projected revenue stream from a specified contract utilizing a discounted cash flow method. During the third quarter of 2021, the Company recorded the remaining $12.9 million as a charge to operating expenses due to a contract extension becoming probable with a given customer designated in the earn-out provision, resulting in an increase in the contingent consideration due to Avast. Approximately $13.7 million in contingent consideration was included within “other accrued liabilities” in the consolidated balance sheet as of September 30, 2021. In November 2021, the remainder of the earn-out was paid in full and no further earn-out payments will be due in the future.

The goodwill recognized is attributable primarily to expected synergies and the assembled workforce of the Family Safety Mobile Business. The goodwill is expected to be deductible for income tax purposes.

Approximately $19.7 million in revenues and $6.2 million in cost of revenues from the Family Safety Mobile Business are included in the consolidated statement of operations for the period from April 16, 2021, through December 31, 2021.

Unaudited pro forma results of operations for the years ended December 31, 2021 and 2020 are included below as if the acquisition of the Family Safety Mobile business occurred on January 1, 2020. This summary of the unaudited pro forma results of operations is not necessarily indicative of what the Company’s results of operations would have been had the Family Safety Mobile Business been acquired at the beginning of 2020, nor does it purport to represent results of operations for any future periods.

	Year Ended December 31,
	2021			2020
	(in thousands, except per share amounts)
Revenues	$	67,654		$	87,908
Net (loss) income		(16,304	)		4,046
Earnings per share:
Basic	$	(0.30	)	$	0.08
Diluted	$	(0.30	)	$	0.08

The purpose of the Family Safety Mobile Business acquisition was to acquire a portfolio of mobile family safety services including location features, content filtering and screen time management, cementing Smith Micro as a leader in delivering mobile family safety software solutions to wireless carriers and to further expand Smith Micro’s white-label digital safety solutions, positioning the Company as a leading family safety software-as-a-service provider globally while adding critical headcount in the U.S. and Europe.

On February 12, 2020, the Company acquired the operator business of Circle Media Labs Inc. (“Circle”) pursuant to a certain Asset Purchase Agreement by and between the Company and Circle.

The following table summarizes the consideration paid for the Circle acquisition in 2020 (in thousands):

Fair value of assets acquired	$	14,966
Fair value of liabilities assumed		1,466
Total purchase price	$	13,500

Components of purchase price:
Cash	$	13,500
Total purchase price	$	13,500

The Company’s allocation of the purchase price is summarized as follows (in thousands):

Assets:
Inventory, net	$	14
Intangible assets		10,483
Goodwill		4,469
Total assets	$	14,966
Liabilities:
Deferred revenue	$	1,290
Amounts due to seller		176
Total liabilities	$	1,466
Total purchase price	$	13,500

The purpose of the transaction was to acquire certain assets related to the Circle operator business, including two new customer contracts and a source code license to Circle’s then deployed parental control software and related technology. All of the goodwill acquired as a part of this transaction is deductible for tax purposes.