v3.25.3
ACQUISITION
 9 Months Ended
Sep. 30, 2025
ACQUISITION  
ACQUISITION

4.   ACQUISITION

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On May 1, 2025, for the purpose of entering into the insurance brokerage business, the Company acquired 100% membership interest of Truckers Best Insurance LLC (“TBI”), a company incorporated in South Carolina. The aggregate purchase price is subject to certain performance based earn-out targets set forth in the membership interest purchase agreement. Total purchase consideration was as follows:

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Amount

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USD

Cash consideration

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$

1,000

Contingent consideration (1)

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1,826

Total purchase consideration

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$

2,826

(1)The Company agreed to pay a cash earnout to the former sole shareholder of TBI based on the achievement against certain operational metrics in the 12-month and 24-month periods beginning on the closing date on which the TBI ceases to be subject to its S corporation election status under applicable law. The actual earnout is estimated to range between zero and $2,723. The fair value of the earnout was included in the initial purchase consideration and will be revalued and recorded at each reporting date until the end of the earnout period as a fair value adjustment within “Revaluation of contingent liabilities” in the Company’s consolidated statements of operations. As of September 30, 2025, the fair value of the earnout was $1,826, of which $928 was included in “Accrued expenses and other current liabilities”, and $898 was included in “Other non-current liabilities”, on the Company’s condensed consolidated balance sheets, respectively. The preliminary acquisition date fair value of the earnout is subject to subsequent measurement period adjustment as valuation is finalized. There are no deferred tax liabilities at acquisition as there is no difference between the tax and book basis of the contingent consideration.

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As of September 30, 2025, $1,000 of total cash consideration has been paid.

The acquisition was accounted for as a business combination by applying the acquisition method. Accordingly, the acquired assets and liabilities were recorded at their fair value on the date of acquisition. Fair value of net assets, aside from intangible assets, are valued at net book value with no fair value adjustments identified. The purchase price allocation on intangible assets was based on a valuation analysis that utilized and considered generally accepted valuation methodologies such as the income and cost approach. The Company engaged a third-party valuation firm to assist with the valuation of assets acquired and liabilities assumed in this business combination. The determination and allocation of fair values to the identifiable assets acquired and liabilities assumed are based on various assumptions and valuation methodologies requiring considerable judgment from management. The most significant variables in these valuations are discount rates, terminal values, the number of years on which to base the cash flow projections, and the assumptions and estimates used to determine the cash inflows and outflows. The Company determine discount rates to be used based on the risk inherent in the related activity’s current business model and industry comparisons. Terminal values are based on the expected life of assets, forecasted life cycle and forecasted cash flows over that period.

The following table summarizes the fair value assigned to the assets acquired and liabilities assumed at the acquisition date. These amounts reflect various preliminary fair value estimates and assumptions and are subject to change within the measurement period as valuations are finalized. The primary area of preliminary purchase price allocation subject to change relates to the valuation of intangible assets and residual goodwill.

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Amount

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USD

Cash consideration

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$

1,000

Contingent consideration

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1,826

Total purchase consideration

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$

2,826

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Cash acquired from acquisition of TBI

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$

6

Intangible assets - licenses and carrier appointments (1)

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582

Intangible assets - customer relationship (1)

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241

Total Identifiable Net Assets

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829

Goodwill (2)

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$

1,997

(1)The intangible assets, including the licenses and carrier appointments, and customer relationship. The licenses and carrier appointments and customer relationship were valued using the multi-period excess earning method under income approach, which represents the excessive earnings generated by the asset that remains after a deduction for a return on other contributory assets. The estimated life of licenses and carrier appointments, customer relationship are indefinite and seven years, respectively. The screen test was not met, as the fair value was distributed across multiple distinct intangible assets rather than concentrated in a single identifiable asset or group of similar identifiable assets. There are no deferred tax assets at acquisition as there is no difference between the tax and book basis of the intangibles assets.
(2)Goodwill arose in the acquisition of TBI was attributable to the benefit of expected synergies, revenue growth, future market development and the assembled workforce as of the date of acquisition and assigned to the Trucker Path segment as a separate Trucker Path Insurance reporting unit. These benefits are not recognized separately from goodwill because they do not meet the recognition criteria for identifiable intangible assets. Goodwill arising from the acquisition is not expected to be deductible for tax purposes.

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The net revenue and net loss of TBI since the acquisition date and that were included in the Company’s consolidated statements of operations for the three months ended September 30, 2025 are $50 and $735, respectively. The net revenue and net loss of TBI since the acquisition date and that were included in the Company’s consolidated statements of operations for the nine months ended September 30, 2025 are $71 and $1,200, respectively.

Pro forma results of operations for the TBI acquisition have not been presented as they are not material to the Company’s consolidated results.