Summary of Combined Results of Operations for Instructure, MasteryConnect and Portfolium

The unaudited pro forma financial information in the table below summarizes the combined results of operations for Instructure, MasteryConnect and Portfolium as if the companies were combined as of January 1, 2018. The unaudited pro forma financial information as presented below is for illustrative purposes and does not purport to represent what the results of operations would actually have been if the business combinations occurred as of the date indicated or what the results would be for any future periods.

	Year Ended December 31,
	2019			2018
	(in thousands)
Pro forma revenue	$	261,957		$	223,325
Pro forma net loss⁽¹⁾		(88,519	)		(55,731	)
Pro forma net loss per common share, basic and diluted	$	(2.40	)	$	(1.63	)

(1)	Pro forma net loss excludes the deferred income tax benefit from business combination in the amount of $4,570,000 for the year ended December 31, 2019.

Summary of Estimated Fair Values of Consideration transferred, Assets Acquired and Liabilities Assumed

The following table summarizes the estimated fair values of the consideration transferred, assets acquired and liabilities assumed as of the date of the Portfolium acquisition (in thousands):

Consideration transferred
Cash paid⁽²⁾	$	25,552
Common stock		17,133
Fair value of assumed Portfolium awards attributable to pre-combination services		715
Total purchase consideration	$	43,400

Identifiable assets acquired
Cash	$	604
Accounts receivable		273
Other assets		31
Intangible assets: developed technology		10,016
Intangible assets: customer relationships		8,560
Intangible assets: trade name		2,710
Total assets acquired	$	22,194

Liabilities assumed
Accounts payable and accrued liabilities	$	115
Deferred revenue		1,535
Deferred tax liability, net ⁽¹⁾		3,911
Total liabilities assumed	$	5,561

Goodwill ^{(1) (2)}		26,767
Total purchase consideration	$	43,400

(1)

During the second quarter of 2019, an adjustment of $1,199,000 was made to the provisional deferred tax liability. During the fourth quarter of 2019, an offsetting adjustment of $280,000 was made to the deferred tax liability, with a corresponding reduction to goodwill, upon finalizing and filing the Portfolium tax return.

(2)	During the third quarter of 2019, we recorded a $330,000 reduction to the provisional cash consideration, with a corresponding reduction to goodwill, as a result of finalizing a working capital adjustment.

Summary of Estimated Fair Values of Consideration transferred, Assets Acquired and Liabilities Assumed

The following table summarizes the estimated fair values of the consideration transferred, assets acquired and liabilities assumed as of the date of the MasteryConnect acquisition (in thousands):

Consideration transferred
Cash paid	$	32,462
Common stock		12,163
Total purchase consideration	$	44,625

Identifiable assets acquired
Cash	$	2,396
Accounts receivable		495
Other assets		1,919
Intangible assets: developed technology		9,191
Intangible assets: customer relationships		4,453
Intangible assets: trade name		656
Total assets acquired	$	19,110

Liabilities assumed
Accounts payable and accrued liabilities	$	936
Deferred revenue		3,384
Deferred tax liability, net ⁽¹⁾		659
Total liabilities assumed	$	4,979

Goodwill ⁽¹⁾		30,494
Total purchase consideration	$	44,625

(1)	During the fourth quarter of 2019, an adjustment of $57,000 was made to the deferred tax liability, with a corresponding reduction to goodwill, upon finalizing and filing the MasteryConnect tax return.

INSTRUCTURE INC 10-K