Acquisitions

Growlr

On March 5, 2019, the Company acquired 100% of the issued and outstanding units of Initech, LLC, a privately held company that owns and operates Growlr (“Growlr”), a leading same-sex social app, for cash consideration of $11.8 million, plus an earnout of up to $2.0 million (the “Growlr Acquisition”). The Growlr Acquisition was funded by $4.8 million of cash on hand and a draw down of $7.0 million from the Company’s Revolving Credit Facility. See Note 6— Long-Term Debt for further details on the Revolving Credit Facility. The earnout of $2.0 million is to be paid in annual $1.0 million installments over the next two years if certain revenue metrics are achieved in each year. The Company expects goodwill to be deductible for tax purposes.

The acquisition-date fair value of the consideration transferred is as follows:



	At March 5, 2019

Cash consideration ⁽¹⁾	$	11,807,925
Contingent consideration	1,718,000
Total consideration	$	13,525,925

(1) Cash consideration includes a $1.0 million escrow payment to be paid out 18 months from the date of the transaction.

The following is the preliminary purchase price allocation as of the March 5, 2019 acquisition date:



	At March 5, 2019
Accounts receivable	$	544,632
Intangible assets	3,480,000
Accrued expenses and other current liabilities	(10,000		)
Deferred revenue	(102,058		)
Net assets acquired	3,912,574
Goodwill	9,613,351
Total consideration	$	13,525,925

The preliminary fair values of the Growlr trademarks were determined using an income approach. The preliminary fair value of software acquired, which represents the primary platform on which the Growlr apps operate, was determined using a cost approach. The preliminary fair value of customer relationships was determined using an excess earnings approach. The amounts assigned to the identifiable intangible assets are as follows:



	Fair Value		Weighted Average Amortization Period (Years)
Trademark	$	1,200,000	10.0
Software	865,000		3.0
Customer relationships	1,415,000		3.6
Total identifiable intangible assets	$	3,480,000	5.7

The operating results of Growlr for the period from March 5, 2019 to June 30, 2019 are included in the Company’s consolidated statements of operations and comprehensive income (loss) for the three and six months ended June 30, 2019. Results include revenues of $0.9 million and $1.1 million and net income of approximately $0.2 million for each of the three and six months ended June 30, 2019, respectively. The Company incurred a total of $0.3 million in transaction costs in connection with the Growlr Acquisition, which were included in acquisition and restructuring costs within the consolidated statement of operations and comprehensive income (loss) for the six months ended June 30, 2019.

The following pro forma information shows the results of the Company’s operations for the three and six months ended June 30, 2019 and 2018 as if the Growlr Acquisition had occurred on January 1, 2018. The pro forma information is presented for informational purposes only and is not necessarily indicative of what would have occurred if the Growlr Acquisition had been made as of that date.



	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
Revenues	$	52,232,377	$	43,978,616	$	102,819,067	$	82,788,321
Net income (loss)	2,387,322		26,823		4,052,879		(3,904,885		)