Quarterly report pursuant to Section 13 or 15(d)

BUSINESS COMBINATIONS

v3.23.1
BUSINESS COMBINATIONS
 3 Months Ended
Mar. 31, 2023
Business Combination and Asset Acquisition [Abstract]  
BUSINESS COMBINATIONS BUSINESS COMBINATIONS
WonderBlocks Acquisition
On August 2, 2022, playBLOCKS, Inc., a newly formed wholly-owned subsidiary of the Company ("playBLOCKS") entered into an agreement with WonderBlocks Labs, Inc. (“WonderBlocks"), which provides tools for the development of a play-to-earn loyalty platform for digital entertainment on the Ethereum blockchain, pursuant to which playBLOCKS acquired substantially all of the assets of WonderBlocks. playBLOCKS paid WonderBlocks $2.0 million less Indebtedness (borrowed money and accrued interest, including debt to the Company) at closing and agreed to pay between zero and $3 million subject to the satisfaction of certain product and financial milestones. We believe this acquisition will allow us to enhance our playAWARDS model with new Web3 features and capabilities.
The Company recorded the excess of the fair value of the consideration transferred in the acquisition over the fair value of net assets acquired as goodwill. The goodwill reflects our expectations of favorable future growth opportunities and anticipated synergies through the scale of our operations. The Company expects that none of the goodwill will be deductible for federal income tax purposes. The following table summarizes the consideration paid for WonderBlocks and the amounts of the assets acquired and liabilities assumed recognized at the acquisition date:
Consideration: August 2,
2022
Cash consideration $ 945 
Note receivable plus accrued interest conversion 1,055 
Contingent consideration 1,564 
Total consideration transferred $ 3,564 
Identifiable assets acquired and liabilities assumed:
Developed technology (weighted-average useful life of 5 years)
 2,403 
Liabilities assumed (15)
Total identifiable net assets $ 2,388 
Goodwill $ 1,176 
Brainium Studios Acquisition
On October 7, 2022, PLAYSTUDIOS US, LLC, a direct wholly-owned subsidiary of the Company entered into a membership interest purchase agreement to acquire all of the issued and outstanding membership interests in Brainium Studios LLC (“Brainium"), a mobile game publisher. The closing of the acquisition occurred on October 12, 2022, and Brainium became an indirect wholly-owned subsidiary of the Company. The purchase price for the membership interests was $70.0 million at closing, as adjusted for cash, indebtedness, and working capital.
The Company recorded the excess of the fair value of the consideration transferred in the acquisition over the fair value of net assets acquired as goodwill. The goodwill reflects our expectations of favorable future growth opportunities and anticipated synergies through the scale of our operations. The Company expects that substantially all of the goodwill will be deductible for federal income tax purposes. The following table summarizes the consideration paid for Brainium and the amounts of the assets acquired and liabilities assumed recognized at the acquisition date:
Consideration: October 12,
2022
Cash consideration $ 73,457 
Contingent consideration 1,797 
Total consideration transferred $ 75,254 
Identifiable assets acquired and liabilities assumed:
Cash and cash equivalents $ 3,738 
Accounts receivable 3,190 
Property and equipment 4,042 
Operating lease assets 4,195 
Trade names (weighted-average useful life of 10 years)
 1,500 
Developed technology (weighted-average useful life of 5 years)
 12,600 
Customer relationships (weighted-average useful life of 5 years)
 12,000 
Other assets 740 
Liabilities assumed (7,649)
Total identifiable net assets $ 34,356 
Goodwill $ 40,898