Annual report pursuant to Section 13 and 15(d)

Other Transaction

Other Transaction
12 Months Ended
Dec. 31, 2020
Business Combinations [Abstract]  
On October 31, 2019, the Company and ST Engineering Hackney, Inc. (“Hackney”) entered into an Asset Purchase Agreement to purchase certain assets and assume certain liabilities of Hackney. Upon execution of the agreement, the Company deposited $1.0 million in cash and shares of its common stock having an initial value of $6.6 million into an escrow account. The number of shares held in escrow is subject to adjustment if the value of the shares is less than $5.28 million or greater than $7.92 million on certain dates.

The purchase price for the acquired assets was $7.0 million, $1.0 million of which was released from the escrow account in January 2020 upon satisfaction of certain conditions, and the remaining $6.0 million (the “Second Payment”) is payable in cash within 45 days if additional conditions are met. The Company is required to make additional payments to Hackney in the event the Second Payment is not made within 45 days of when the payment is due. In the event the Second Payment is not made within 105 days of when the payment is due, Hackney may require that the Escrow Agent release the shares held in escrow with a value (based on the then-current market price of the shares) equal to $6.0 million in satisfaction of the Second Payment.

The transaction was accounted for as customer acquisition costs as the primary asset acquired is the right to bid on a customer contract. As each payment is made, the Company will determine if there is future benefit associated with the contract. If it is determined that there is future benefit, the payment will be capitalized as a customer acquisition cost and expensed over the period of benefit.