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Business Combination
12 Months Ended
Dec. 31, 2021
Business Combination and Asset Acquisition [Abstract]  
Business Combination Business Combination
ACH Alert, LLC

On October 4, 2020, the Company announced the acquisition of substantially all of the assets of ACH Alert for approximately $25 million in cash consideration. The integrated set of assets and activities acquired from ACH Alert through the acquisition meet the definition of a business under ASC 805, as updated by ASU 2017-01. A term loan of $25.0 million (“Term Loan”) was borrowed on October 16, 2020 to partially fund the acquisition of ACH Alert (see Note 8).

The ACH Alert acquisition also involved $4.9 million of additional cash consideration that the Company placed on deposit with an escrow agent to be paid upon the continued employment of one of the owners of ACH Alert, of which $2.5 million was paid in October 2021 and $2.4 million is to be paid in October 2022. Since the payouts are contingent upon the continued and future employment of the former owner, these amounts have been excluded from the purchase price. The Company has classified the amounts held in escrow as restricted cash on the consolidated balance sheets and is accruing the estimated payouts over the requisite service period as a component of general and administrative expense on the consolidated statements of operations. For the years ended December 31, 2021 and 2020, the Company recognized compensation expense of $2.5 million and $0.6 million, respectively, related to this agreement.
The Company’s preliminary fair value estimates and assumptions to measure the assets acquired and liabilities assumed were subject to change as the Company obtained additional information during the measurement period. The following table summarizes the fair value amounts recognized as of the acquisition date for each major class of asset acquired or liability assumed, as well as adjustments made during the measurement period:

(in thousands) Preliminary Fair Value as of October 4, 2020Measurement Period AdjustmentsAdjusted Fair Value as of March 31, 2021
Trade accounts receivables$915 $— $915 
Other current assets47 (14)33 
Property and equipment20 — 20 
Goodwill16,218 324 16,542 
Intangible assets8,450 — 8,450 
Total assets acquired$25,650 $310 $25,960 
Accounts payable$61 $$66 
Accrued liabilities— 
Deferred revenues, current170 — 170 
Deferred revenues, net of current346 (25)321 
Total liabilities assumed577 (16)561 
Net assets acquired$25,073 $326 $25,399 

As of March 31, 2021, the allocation of the purchase price for ACH Alert was finalized.

The table below outlines the purchased identifiable intangible assets:

Weighted Average Amortization PeriodTotal
(in years)(in thousands)
Identifiable intangible assets acquired:
Customer relationships15$5,100 
Developed technology73,300 
Trade name250 
Total identifiable intangible assets$8,450 

Goodwill is mainly attributable to advantages expected from the acquisition such as giving the Company a complimentary solution to its existing platform offering, especially for banks. It is also expected to position the Company to better penetrate the banking market. This goodwill is expected to be deductible for tax purposes.

No material transaction costs are included within the consolidated statements of operations for the year ended December 31, 2021. Included within the consolidated statements of operations are transaction expenses of approximately $0.2 million for the year ended December 31, 2020.

MK Decisioning Systems, LLC

On September 10, 2021, the Company acquired substantially all of the assets of MK for approximately $20 million in cash consideration due at closing subject to a $2 million holdback provision held in escrow with $1 million to be released at the 12-month anniversary of close and the remainder to be released at the 18-month anniversary of close. The Company also agreed to assume certain liabilities associated with MK’s business. The integrated set of assets and activities acquired from MK through the acquisition meet the definition of a business under ASC 805, as updated by ASU 2017-01.

In addition to the base purchase price, the MK acquisition also included a potential earn-out that is tied to revenue of MK from sales of its products and services within two 12-month periods (the “First Earn-Out Period” and “Second Earn-Out Period”), with the First Earn-Out Period beginning on January 1, 2022 and ending on December 31, 2022 and the Second Earn-Out Period beginning on January 1, 2023 and ending on December 31, 2023. Pursuant to the terms and conditions set forth in the purchase agreement, the earn-out amount payable, if any, to the former owners, will be a maximum of $7.5 million and $17.5 million for the First Earn-Out Period and Second Earn-Out Period, respectively, contingent on achievement of certain revenue milestones. In certain circumstances within both Earn-Out Periods, the earn-out amounts are payable in a mix of cash and shares (based on a reference price of $35 and limited to $20 million in earn-out shares) of the Company’s common stock subject to the election of the former owners. Earn-out amounts, if any, would be payable no later than 170 days after the end of each Earn-Out Period.

The Company has classified the amounts held in escrow as restricted cash on the consolidated balance sheets. The fair value of the contingent earn-out as of December 31, 2021 is $15.5 million for which the balance is included in Other non-current liabilities on the consolidated balance sheets. The fair value of the contingent earn-out is included as contingent consideration in the total purchase price. The Company will remeasure the fair value of the contingent consideration on an ongoing basis and will record the adjustment to operating income or loss.
Assumptions used to estimate the fair value of contingent consideration include various financial metrics (revenue performance targets and stock price forecasts) and the probability of achieving the specific targets using a geometric binomial model. Based on the final purchase accounting, the Company determined that approximately 62% of the maximum $25 million contingent consideration would be paid to the seller in accordance with the terms of the purchase agreement.

The Company’s preliminary fair value estimates and assumptions to measure the assets acquired and liabilities assumed are subject to change as the Company obtains additional information during the measurement period. The following table summarizes the fair value amounts recognized as of the acquisition date for each major class of asset acquired or liability assumed:
(in thousands) Preliminary Fair Value as of September 10, 2021Measurement Period AdjustmentsAdjusted Fair Value as of December 31, 2021
Trade accounts receivables$437 $— $437 
Other current assets56 — 56 
Property and equipment41 — 41 
Goodwill31,849 (300)31,549 
Intangible assets3,670 300 3,970 
Total assets acquired$36,053 $— $36,053 
Accounts payable and other current liabilities $43 $— $43 
Deferred revenues, net of current510 — 510 
Total liabilities assumed553 — 553 
Net assets acquired$35,500 $— $35,500 

As of December 31, 2021, the allocation of the purchase price for MK was finalized.

The table below outlines the purchased identifiable intangible assets:
Weighted Average Amortization PeriodTotal
(in years)(in thousands)
Customer relationships15$170 
Developed technology53,800 
Total identifiable intangible assets$3,970 

Goodwill is mainly attributable to advantages expected from the acquisition such as giving the Company a complimentary solution to its existing platform offering, especially for banks. This goodwill is expected to be deductible for tax purposes.

Transaction costs were $0.5 million for the year ended December 31, 2021 and were included in the consolidated statements of operations. For the year ended December 31, 2021, the Company had noncash investing activities of $17.5 million related to unpaid consideration for the acquisition of MK.