Annual report pursuant to Section 13 and 15(d)

Business Combinations

v3.22.1
Business Combinations
12 Months Ended
Dec. 31, 2021
Business Combination and Asset Acquisition [Abstract]  
Business Combinations Business Combinations
During the year ended December 31, 2021, the Company completed two acquisitions. Both acquisitions were accounted for as business combinations. The goodwill for both acquisitions represents the future economic benefits expected to arise from other intangible assets acquired that do not qualify for separate recognition, including expected future synergies and technical expertise of the acquired workforce

For the aforementioned acquisitions, the intangible assets acquired primarily relate to existing technology, customer relationships and brand names. The useful life of these intangible assets range from 3-12 years. The Company valued the intangible assets using the relief from royalty method and the multi-period excess earnings method, both under the income approach.

For both acquisitions, the Company’s allocation of purchase price was based upon valuations performed to determine the fair value of the net assets as of the acquisition date and is therefore subject to adjustments for up to one year after the closing date of the acquisition to reflect final valuations.

As a result of both acquisitions, the Company recognized $1,391 of acquisition-related costs during the year ended December 31, 2021, which are recorded in general and administrative within the consolidated statement of operations. Revenues and operating loss related to these acquisitions for the year ended December 31, 2021 were insignificant to the consolidated financial statements.

Refer below for additional details on the acquisitions.
Whyline, Inc.
On December 29, 2021, Alclear acquired 100% of Whyline, Inc., a provider of virtual queuing and appointment technology that the Company operates under the product name, Reserve powered by CLEAR.

The cash consideration was $67,500 transferred upon closing, and an estimated contingent consideration of $100. The acquisition was accounted for as a business combination. Of the total purchase consideration, $54,792 was recorded as goodwill, $16,601 as acquired intangible assets, $3,792 as net deferred tax liabilities and $100 as net operating assets on the consolidated balance sheets. None of the goodwill recognized is expected to be deductible for tax purposes.

In conjunction with the acquisition, the Company entered into an agreement to issue Class A Shares of Common Stock upon satisfaction of terms related to the contingent consideration and remuneration for post-combination services (collectively referred to as the “Earn-Out”). The first tranche will be settled upon the achievement of specified operating metrics during the twelve month period ended December 31, 2022. The second tranche will be settled upon the achievement of specified operating metrics during the twelve month period ended December 31, 2023.

The maximum settlement of the contingent consideration is $6,666, which is not subject to the satisfaction of service based criteria. For remuneration for post-combination services, there is a maximum settlement of $13,334 that is based on performance and service based criteria being met; portions of these amounts will automatically be forfeited if the employment of specified individuals terminates prior to the end of the Earn-Out period. The post-combination remuneration amount is allocated evenly to the 2022 operating metrics and 2023 operating metrics targets. The Company has not recorded any compensation expense for the year ended December 31, 2021 as the performance criteria is not probable.
The estimated fair value of the contingent consideration is determined using an option pricing model and is based upon available information and certain assumptions, known as of the reporting date, which management believes are reasonable. Any differences in the actual contingent consideration liability compared to the fair value as of the previous reporting date will be recorded within general and administrative within the consolidated statements of operations.

The final number of shares to be issued upon satisfaction of the Earn-Out will be based on the average of the volume-weighted average trading price on the New York Stock Exchange for one share of Class A Common Stock for each of the 30 full trading days ending on and including the full trading day immediately prior to the applicable Earn-Out payment date.
Atlas Certified, LLC.
On December 30, 2021, Alclear acquired certain assets of Atlas Certified LLC., which provides an automated solution to verify professional licenses and certification data across industries by communicating with certifying organizations for on demand, current and trusted data.

The fair value of the purchase consideration was $9,000. The acquisition was accounted for as a business combination. Of the total purchase consideration, $5,000 was recorded as goodwill and $4,000 as acquired intangible assets on the consolidated balance sheets. The goodwill recognized is expected to be deductible for tax purposes.