Acquisition

On May 15, 2018, we acquired WriteLab, Inc. (WriteLab), an AI-enhanced writing platform, based in Berkeley, California, that teaches students grammar, sentence structure, writing style, and offers instant feedback to help students revise, edit, and improve their written work. This acquisition helps to strengthen our existing Chegg Writing service with the addition of new tools, features, and functionality. The total fair value of the purchase consideration was $14.5 million which included an escrow amount of $2.6 million for general representations and warranties and potential post-closing adjustments. Any remaining escrow amount will be released twenty months after the acquisition date.

The acquisition date fair value of the purchase consideration for the above transaction consisted of the following (in thousands):



Initial cash consideration	$	12,450
Escrow	2,550
Net working capital adjustment	(483		)
Fair value of purchase consideration	$	14,517

Included in the purchase agreement for the acquisition of WriteLab are additional contingent payments of up to $5.0 million subject to continued employment of the sellers. These payments are expensed ratably as research and development expenses on our condensed consolidated statement of operations. These contingent payments may be settled by us, at our sole discretion, either in cash or shares of our common stock. We have recorded approximately $0.2 million as of June 30, 2018 included within accrued liabilities on our condensed consolidated balance sheet for these contingent payments.

The fair value of the intangible assets acquired was determined under the acquisition method of accounting for business combinations. The excess of the purchase consideration paid over the fair value of net identifiable assets acquired was recorded as goodwill. Goodwill is primarily attributable to the potential for future product offerings as well as our expanded student reach. The amounts recorded for intangible assets and goodwill are not deductible for tax purposes.

The following table presents the total allocation of purchase consideration recorded in our condensed consolidated balance sheets as of the acquisition date (in thousands):



Cash	$	82
Accounts receivable	14
Acquired intangible assets:
Developed technology	4,450
Total identifiable assets acquired	4,546
Liabilities assumed	(826		)
Goodwill	10,797
Total fair value of purchase consideration	$	14,517

During the three months ended June 30, 2018, we incurred $0.4 million of acquisition-related expenses which have been included in general and administrative expenses in our condensed consolidated statement of operations.

We have not presented supplemental pro forma financial information as the revenues and earnings of WriteLab were immaterial during the six months ended June 30, 2018. Further, we have recorded no revenues and an immaterial amount of earnings from WriteLab since the acquisition date.