EX-99.2
Published on November 15, 2021
Exhibit 99.2
PandoLogic Ltd.
Interim Condensed Consolidated
Financial Statements
As of June 30, 2021 (Unaudited)
1
PandoLogic Ltd. and its subsidiaries
Interim Condensed Consolidated Financial Statements as of June 30, 2021
Contents
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Page |
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Interim Condensed Consolidated Balance Sheets |
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2 |
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Interim Condensed Consolidated Statements of Operations |
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4 |
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Interim Condensed Consolidated Statement of Changes in Convertible Preferred Shares and Shareholders' Equity (Deficit) |
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5 |
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Interim Condensed Consolidated Statements of Cash Flows |
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6 |
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Notes to the Interim Condensed Consolidated Interim Financial Statements |
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7 |
PandoLogic Ltd. and its subsidiaries
Interim Condensed Consolidated Balance Sheets as of
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June 30, 2021 |
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December 31, 2020 |
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(Unaudited) |
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(Audited) |
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Note |
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US$ thousands |
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US$ thousands |
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Assets |
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Current assets |
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Cash and cash equivalents |
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25,580 |
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6,624 |
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Trade receivable |
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27,668 |
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44,249 |
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Other receivables |
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797 |
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696 |
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Total current assets |
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54,045 |
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51,569 |
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Long-term deposits |
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97 |
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53 |
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Property and equipment, net |
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620 |
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309 |
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Intangible assets, net |
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5 |
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2,141 |
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- |
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Goodwill |
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5 |
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3,410 |
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- |
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Total assets |
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60,313 |
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51,931 |
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The accompanying notes are an integral part of the interim condensed consolidated financial statements.
2
DocuSign Envelope ID: E50E827B-8E4C-4A35-88DB-742A0812554E
PandoLogic Ltd. and its subsidiaries
Interim Condensed Consolidated Balance Sheets as of
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June 30,2021 |
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December 31,2020 |
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(Unaudited) |
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(Audited) |
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Note |
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US$ thousands |
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US$ thousands |
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Liabilities, convertible preferred shares and shareholders’ equity Current liabilities |
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Short term loan and current maturities of long-term loan |
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94 |
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456 |
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Trade payables |
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13,244 |
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14,838 |
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Contingent consideration in respect of acquisition |
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5 |
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1,156 |
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- |
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Other payables and accruals |
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4,375 |
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2,690 |
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Total current liabilities |
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18,869 |
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17,984 |
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Contingent consideration in respect of acquisition |
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5 |
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122 |
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- |
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Total long-term liabilities |
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122 |
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- |
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Convertible preferred shares and shareholders’ equity |
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Series Preferred Junior A shares, NIS 0.01 par value 133,796 shares authorized, issued and outstanding on June 30, 2021 and zero on December 31, 2020 |
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1 |
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- |
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Series A1 preferred shares, NIS 0.01 par value; 13,667 shares authorized, issued and outstanding on June 30, 2021 and December 31, 2020 (liquidation preference of $117 thousand on June 30, 2021 and December 31, 2020) |
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117 |
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117 |
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Series A2 preferred shares, NIS 0.01 par value; 44,528 shares authorized, issued and outstanding on June 30, 2021 and December 31, 2020 (liquidation preference of $380 thousand on June 30, 2021 and December 31, 2020) |
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380 |
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380 |
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Series B preferred shares, NIS 0.01 par value; 1,471,769 shares authorized, 1,170,569 shares issued and outstanding on June 30, 2021 and December 31, 2020 (liquidation preference of $7,557 thousand on June 30, 2021 and December 31,2020) |
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3,222 |
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3,222 |
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Series B-2 preferred shares, NIS 0.01 par value; 992,025 shares authorized; 910,403 shares issued and outstanding on June 30, 2021 and December 31, 2020, (liquidation preference of $5,540 thousand on June 30, 2021 and December 31, 2020) |
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2,900 |
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2,900 |
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Series C preferred shares, NIS 0.01 par value; 1,977,140 shares authorized; 1,903,168 shares issued and outstanding on June 30, 2021 and December 31, 2020 (liquidation preference of $12,432 thousand on June 30, 2021 and December 31, 2020,) |
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6,548 |
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6,548 |
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Series C-1 preferred shares, NIS 0.01 par value; 1,452,755 shares authorized; issued and outstanding on June 31, 2021 and December 31, 2020 (liquidation preference of $12,706 thousand on June 30, 2021 and December 31,2020) |
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7,950 |
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7,950 |
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Total convertible preferred shares |
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21,118 |
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21,117 |
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Ordinary shares, NIS 0.01 par value; 12,515,103 shares authorized on June 30 and 9 December 31, 2020 and 1,083,577 shares issued and outstanding on June 30, 2021 and December 31, 2020 |
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9 |
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3 |
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3 |
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Additional paid-in capital |
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11,806 |
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9,531 |
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Retained earnings |
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8,395 |
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3,296 |
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Total shareholders' equity |
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20,204 |
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12,830 |
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Total convertible preferred shares and shareholder’s equity |
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41,322 |
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33,947 |
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Total liabilities and convertible preferred shares and shareholders’ equity |
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60,313 |
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51,931 |
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DocuSigned by: /s/ Terry Baker |
Terry Baker – Chief Executive Officer |
September 9, 2021 |
The accompanying notes are an integral part of the interim condensed consolidated financial statements.
3
PandoLogic Ltd. and its subsidiaries
Interim Condensed Consolidated Statements of Operations
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For the six months ended June 30, |
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2021 |
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2020 |
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(Unaudited) |
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(Unaudited) |
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Note |
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US$ thousands |
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US$ thousands |
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Revenues |
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20,501 |
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10,115 |
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Operating expenses: |
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Cost of revenues |
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942 |
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|
506 |
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Research and development |
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3,856 |
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1,947 |
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Sales and marketing |
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5,493 |
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1,622 |
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General and administrative |
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3,416 |
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|
855 |
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Total operating expenses |
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13,707 |
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4,930 |
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Profit from operations |
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6,794 |
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5,185 |
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Finance expenses, net |
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19 |
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71 |
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Profit before taxes on income |
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6,775 |
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5,114 |
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Taxes on income |
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1,676 |
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12 |
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Net profit |
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5,099 |
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|
5,102 |
|
The accompanying notes are an integral part of the interim condensed consolidated financial statements.
4
PandoLogic Ltd. and its subsidiaries
Interim Condensed Consolidated Statement of Changes in Convertible Preferred Shares and Shareholders’ Equity (Deficit)
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Convertible preferred shares |
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Ordinary shares |
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Additional paid-in capital |
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Retained earnings (accumulated deficit) |
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Total shareholders' equity/ (deficit) |
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Number of shares |
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US$ thousands |
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Number of shares |
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US$ thousands |
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US$ thousands |
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US$ thousands |
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US$ thousands |
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|||||||
Six-month period ended June 30, 2021 (Unaudited) |
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Balance at January 1, 2021 |
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5,495 |
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21,117 |
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|
1,084 |
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|
3 |
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|
|
9,531 |
|
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|
3,296 |
|
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|
12,830 |
|
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Share-based compensation |
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- |
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|
- |
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- |
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|
- |
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|
|
9 |
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|
|
- |
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|
9 |
|
Issuance of Preferred Junior A shares (*) |
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|
134 |
|
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|
1 |
|
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|
- |
|
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|
- |
|
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|
2,266 |
|
|
|
- |
|
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|
2,266 |
|
Net profit |
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|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
5,099 |
|
|
|
5,099 |
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|
|
|
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|
|
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|
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|
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Balance at June 30, 2021 |
|
5,629 |
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|
21,118 |
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|
1,084 |
|
|
3 |
|
|
11,806 |
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|
8,395 |
|
|
20,204 |
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Six-month period ended June 30, 2020 (Unaudited) |
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Balance at January 1, 2020 |
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5,495 |
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|
21,117 |
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|
1,081 |
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|
3 |
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|
9,517 |
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|
(29,161 |
) |
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|
(19,641 |
) |
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|
|
|
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|
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|
|
|
|
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Share-based compensation |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
5 |
|
|
|
- |
|
|
|
5 |
|
Net profit |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
5,102 |
|
|
|
5,102 |
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
Balance at June 30, 2020 |
|
5,495 |
|
|
21,117 |
|
|
1,081 |
|
|
3 |
|
|
9,522 |
|
|
(24,059) |
|
|
(14,534) |
|
* See Note 5
The accompanying notes are an integral part of the interim condensed consolidated financial statements.
5
PandoLogic Ltd. and its subsidiaries
Interim Condensed Consolidated Statements of Cash Flows
|
|
For the six months ended June 30, |
|
|||||
|
|
2021 |
|
|
2020 |
|
||
|
|
(Unaudited) |
|
|
(Unaudited) |
|
||
|
|
US$ thousands |
|
|
US$ thousands |
|
||
Cash flows from operating activities |
|
|
|
|
|
|
|
|
Net profit |
|
|
5,099 |
|
|
|
5,102 |
|
|
|
|
|
|
|
|
|
|
Adjustments to reconcile net profit to net cash flows provided by operating activities: |
|
|
|
|
|
|
|
|
Finance expenses, net |
|
|
19 |
|
|
|
71 |
|
Tax expenses |
|
|
1,676 |
|
|
|
12 |
|
Depreciation |
|
|
118 |
|
|
|
42 |
|
Share based compensation |
|
|
9 |
|
|
|
5 |
|
|
|
|
|
|
|
|
|
|
Decrease (increase) in trade receivables |
|
|
16,581 |
|
|
|
(7,191 |
) |
Decrease in other receivables |
|
|
28 |
|
|
|
717 |
|
(Decrease) increase in trade payables |
|
|
(1,596 |
) |
|
|
1,600 |
|
Increase (decrease) in other payables and accruals |
|
|
764 |
|
|
|
(129 |
) |
Interest expense paid |
|
|
(8 |
) |
|
|
(78 |
) |
Taxes paid |
|
|
(899 |
) |
|
|
(12 |
) |
|
|
|
|
|
|
|
|
|
Net cash - operating activities |
|
|
21,791 |
|
|
|
139 |
|
|
|
|
|
|
|
|
|
|
Cash flows used in investing activities |
|
|
|
|
|
|
|
|
Acquisition of W&W (See Note 5) |
|
|
(2,000 |
) |
|
- |
|
|
Changes in long-term deposits, net |
|
|
(44 |
) |
|
|
(4 |
) |
Acquisition of property and equipment |
|
|
(418 |
) |
|
|
(80 |
) |
|
|
|
|
|
|
|
|
|
Net cash - investing activities |
|
|
(2,462 |
) |
|
|
(84 |
) |
|
|
|
|
|
|
|
|
|
Cash flows from (used in) financing activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Changes in short term loans |
|
- |
|
|
|
1,500 |
|
|
Repayment of long-term loan |
|
|
(354 |
) |
|
|
(173 |
) |
|
|
|
|
|
|
|
|
|
Net cash - financing activities |
|
|
(354 |
) |
|
|
1,327 |
|
|
|
|
|
|
|
|
|
|
Increase in cash and cash equivalents |
|
|
18,975 |
|
|
|
1,382 |
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at the beginning of the period |
|
|
6,624 |
|
|
|
1,321 |
|
|
|
|
|
|
|
|
|
|
Exchange differences on balances of cash and cash equivalents |
|
|
(19 |
) |
|
|
(36 |
) |
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of the period |
|
|
25,580 |
|
|
|
2,667 |
|
The accompanying notes are an integral part of the interim condensed consolidated financial statements.
6
PandoLogic Ltd. and its subsidiaries
Notes to the Interim Financial Statements as of June 30, 2021
Note 1 - Nature of the Business
PandoLogic Ltd. along with its Subsidiaries (the “Company”), is a leading recruitment technology company that specializes in performance-based recruitment solutions, delivering the first truly programmatic solution for the recruitment industry. PandoLogic brings the advantages and efficiencies of programmatic technology to the recruitment industry through a comprehensive offering that includes AI and machine learning powered programmatic campaign management, predictive campaign analytics, and access to many hundreds of job posting sites. Each application is built on PandoLogic’s proprietary taxonomy which delivers industry leading performance. Through this unique offering, PandoLogic delivers superior recruitment results, reducing cost, improving time to hire and providing visibility of key data metrics in the sourcing process.
PandoLogic was founded in 2007 to serve internet job boards, providing white-label job site software to the publishing industry. The Company’s unique foundation has provided it with over 10 years of historical job campaign data, which cannot be replicated by new competitors. Recruitment data from millions of job campaigns throughout the Company’s history has delivered scale to its robust taxonomy, which is constantly refined by machine learning and natural language processing. As the recruitment landscape evolved, PandoLogic expanded its product offering beyond job site software, building programmatic and predictive solutions to efficiently connect employers and qualified job seekers in innovative ways. PandoLogic’s mission is to make online recruitment advertising, an efficient and results-driven process for employers.
Note 2 - Summary of Significant Accounting Policies
The significant accounting policies followed in the preparation of the financial statements, applied on a consistent basis, are as follows:
|
A. |
Basis of presentation |
The accompanying consolidated financial statements have been prepared in accordance with US generally accepted accounting principles (“GAAP”) for interim financial information. As permitted under those rules, certain footnotes or other financial information that are normally required by GAAP have been condensed or omitted, and accordingly the balance sheet as of December 31, 2020, and related disclosures, have been derived from the audited consolidated financial statements at that date but do not include all of the information required by GAAP for complete consolidated financial statements.
|
B. |
Basis of consolidation |
The consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, PandoLogic Inc. All intercompany accounts and transactions have been eliminated in consolidation.
7
PandoLogic Ltd. and its subsidiaries
Notes to the Interim Financial Statements as of June 30, 2021
Note 2 - Summary of Significant Accounting Policies (cont’d)
|
C. |
Unaudited Interim Condensed Consolidated Financial Statements |
The accompanying interim condensed consolidated balance sheet as of June 30, 2021, the interim condensed consolidated statements of operations, of cash flows, and of changes in convertible preferred shares and shareholders’ equity (deficit) for the six months ended June 30, 2021 and 2020, and the related notes to such interim condensed consolidated financial statements are unaudited. In management’s opinion, the unaudited interim condensed consolidated financial statements have been prepared on a basis consistent with the annual consolidated financial statements and reflect all adjustments, which include only normal recurring adjustments, necessary for the fair statement of the Company’s financial position as of June 30, 2021 and its results of operations and cash flows for the six months ended June 30, 2021 and 2020. The results of operations for the six months ended June 30, 2021 are not necessarily indicative of the results to be expected for the full year or any other future interim or annual period. The unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the related notes thereto as of and for the year ended December 31, 2020.
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D. |
Use of estimates |
The preparation of the Company consolidated financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities, at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. The most significant estimates relate to assessing the fair value of the Company’s ordinary shares.
The Company bases these estimates on historical and anticipated results, trends and various other assumptions that it believes are reasonable under the circumstances, including assumptions as to future events. Actual results could differ from those estimates.
Note 3 - Financial Instruments
Fair value of financial instruments:
Accounting Standards Codification (“ASC”) 820, Fair Value Measurements and Disclosures, relating to fair value measurements, defines fair value and established a framework for measuring fair value. ASC 820 fair value hierarchy distinguishes between market participant assumptions developed based on market data obtained from sources independent of the reporting entity and the reporting entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances. ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, essentially an exit price. In addition, the fair value of assets and liabilities should include consideration of non-performance risk, which for the liabilities described below includes the Company’s own credit risk.
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PandoLogic Ltd. and its subsidiaries
Notes to the Interim Financial Statements as of June 30, 2021
Note 3 - Financial Instruments (cont’d)
Fair value of financial instruments: (cont’d)
In accordance with ASC 820 when measuring the fair value, an entity shall take into account the characteristics of the asset or liability if a market participant would take those characteristics into account when pricing the asset or liability at the measurement date. Such characteristics include, for example:
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a. |
The condition and location of the asset. |
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b. |
Restrictions, if any, on the sale or the use of the asset. |
As a basis for considering such assumptions, ASC 820 establishes a three-tier value hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value:
Level 1 - Valuations based on quoted prices in active markets for identical assets that the Company has the ability to access. Valuation adjustments and block discounts are not applied to Level 1 instruments. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these products does not entail a significant degree of judgment.
Level 2 - Valuations based on one or more quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly.
Level 3 - Valuations based on inputs that are unobservable and significant to the overall fair value measurement.
At June 30, 2021 and December 31, 2020, the carrying value of cash and cash equivalents, trade receivable, other receivables, short term loan and current maturities of long-term loan, trade payables, other payables and accruals approximates fair value due to the short-term nature of such instruments and the ability to obtain financing on similar terms.
The fair value of the Company's contingent consideration for which a liability is recorded is measured on a recurring basis as a Level 3 measurement, and the change in fair value is recognized in general and administrative expense in the consolidated statements of operations. Refer also to Note 5.
Note 4 - Stock Based Compensation
During the six months ended June 30, 2021, 120,500 options were granted, all to employees of the Company with a total fair value of $218,105. All of the options granted to employees during this period vest over a 4-year period, with 25% thereof vesting on the end of a 12-month period following the date of grant, and the remaining 75% thereof vesting in 12 equal portions at the end of each 3-month period thereafter.
9
PandoLogic Ltd. and its subsidiaries
Notes to the Interim Financial Statements as of June 30, 2021
Note 5 - Business Combinations
On May 20, 2021 the Company acquired the assets and certain liabilities of Wade & Wendy, a privately-owned Delaware corporation for approximately $4 million plus an additional $4 million in potential milestone payments. Wade & Wendy is an AI recruiting provider and the acquisition positions PandoLogic as a programmatic advertising provider that can define a quality applicant without the inherent bias that results from human intervention. The acquisition will accelerate the adoption of programmatic job advertising as a best practice by combining PandoLogic's performance with Wade & Wendy's AI power for candidate engagement and qualification.
The purchase price was comprised of cash, preferred junior A shares and ordinary shares of the Company. The potential milestone payments would be based on revenue performance provisions which if fully met would result in the issuance of up to 136,820 in preferred junior A shares of the Company. The preferred junior A class of shares were newly issued in conjunction with the transaction. The preferred junior A shares are non-participating and, after the completion of distribution of any proceeds to all other classes of preferred shares, would be entitled to receive, prior and in preference to any distribution of any of the proceeds to the holders of Ordinary Shares of the Company. The acquisition was accounted for as a business combination.
Certain of Wade & Wendy employees will receive a retention bonus as compensation in return for future employment. This compensation was accounted for as share based compensation under ASC 718. Part of the consideration will be fully vested on the date of change in control in PandoLogic Ltd., and the rest will be vested upon meeting the revenue milestones of the earnout mechanism. No share-based compensation expenses were recorded as of June 30, 2021 since no vesting has occurred.
The following table summarizes the consideration paid for the acquisition and the preliminary allocation of the purchase price to the fair value of the assets acquired and liabilities assumed:
(In US$ thousands) |
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|
|
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|
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Consideration: |
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|
|
|
Cash |
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|
2,000 |
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Issuance of preferred Junior A shares |
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|
2,267 |
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Fair value of contingent consideration |
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1,278 |
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Fair value of total consideration transferred |
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|
5,545 |
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|
|
|
|
|
Trade and other receivables |
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|
127 |
|
Property and equipment |
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|
11 |
|
Backlog |
|
|
152 |
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Technology |
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|
1,989 |
|
Goodwill |
|
|
3,410 |
|
Deferred revenue |
|
|
(144 |
) |
|
|
|
|
|
Purchase price |
|
|
5,545 |
|
10
PandoLogic Ltd. and its subsidiaries
Notes to the Interim Financial Statements as of June 30, 2021
Note 5 - Business Combinations (cont’d)
The fair values assigned to assets acquired and liabilities assumed are based on management’s best estimates and assumptions as of the reporting date and are considered preliminary pending finalization of the valuation analyses pertaining to assets acquired and liabilities assumed, which primarily relate to acquired intangible assets and contingent consideration. The goodwill arising from the acquisition consists largely of the synergies expected from combining the operations of Wade & Wendy. We expect to finalize the valuation as soon as practicable, but not later than one year from the acquisition date. We recognized goodwill of $3,410 thousand, which consists largely of workforce and synergies with our existing business. The goodwill is deductible for tax purposes
Acquisition-related intangible assets are generally amortized using the straight-line method over their estimated useful lives, currently from 1 to 6 years. Amortization expenses during the reporting period were immaterial. As a result of the short period from the acquisition until June 30, 2021 and no new information following closing of the transaction, there was no significant change in the fair value of the contingent consideration.
The results of operations of Wade & Wendy and the preliminary fair value of the assets acquired and liabilities assumes have been included in our Interim Condensed Consolidated Financial Statements since the date of acquisition. Pro forma results of operations have not been presented because the effect of the acquisition was not material to our Interim Condensed Consolidated Statements of Operations.
Note 4 - Subsequent Events
On July 21, 2021 the Company entered into a definitive agreement to be acquired by Veritone, Inc. (“Veritone”), a Delaware corporation, that is a NASDAQ exchange listed company (VERI) pursuant to an Agreement and Plan of Merger (the “Merger Agreement”) by and among the Company, Veritone and Melisandra Ltd (“Merger Sub”), a company incorporated under the laws of the State of Israel and a wholly owned subsidiary of Veritone. The Merger Agreement provides that the Merger Sub will merge with and into the Company (the “Merger” and together with the other transactions related thereto, the “Transactions”), with the Company surviving the Merger as a wholly-owned subsidiary of Veritone. The Merger Agreement contains customary representations and warranties, covenants, closing conditions, termination provisions and other terms relating to the Transactions.
During the period between the date of the Merger Agreement and the completion of the transactions contemplated by the Merger Agreement (or, if earlier, the termination of the Merger Agreement), the Company has agreed to conduct its business in the ordinary course of business consistent with past practice, including keeping available the services of certain key employees and preserving relationships with its major customers and suppliers. PandoLogic has also agreed not to take certain actions prior to the completion of the transactions contemplated by the Merger Agreement (or, if earlier, the termination of the Merger Agreement) without the prior written consent of Veritone.
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