8-K/A: Latch Completes Acquisition of Honest Days Work, Inc.; Pro Forma Financials Released

Latch, Inc. finalizes its acquisition of Honest Days Work, Inc. (HDW) and releases pro forma financial statements reflecting the combined entity.

Summary

• Latch, Inc. has completed the acquisition of Honest Days Work, Inc. (HDW) on July 3, 2023.
• The acquisition involved a merger of HDW with a subsidiary of Latch, with Latch ultimately acquiring all of HDW's assets.
• The merger consideration included $22.0 million in unsecured promissory notes and approximately 29.0 million shares of Latch's common stock.
• Pro forma financial statements, including a balance sheet as of March 31, 2023, and statements of operations for the year ended December 31, 2022, and the three months ended March 31, 2023, have been prepared to reflect the acquisition.
• The pro forma statements combine the historical financials of Latch and HDW as if the acquisition occurred on January 1, 2022, for the statements of operations and on March 31, 2023, for the balance sheet.
• The unaudited pro forma condensed combined balance sheet as of March 31, 2023 shows total assets of $325.378 million and total liabilities and stockholders equity of $325.378 million.
• The unaudited pro forma combined statement of operations for the year ended December 31, 2022 shows total revenue of $42.955 million and a net loss of $165.629 million.
• The unaudited pro forma combined statement of operations for the three months ended March 31, 2023 shows total revenue of $11.150 million and a net loss of $35.082 million.

Sentiment

Score: 4

Explanation: The sentiment is neutral to slightly negative. While the acquisition itself is a positive strategic move, the significant pro forma losses and the delayed filing of the pro forma financials raise concerns. The company's delisting from Nasdaq is also a negative factor.

Positives

• Latch acquired HDW's intellectual property and $8.0 million in cash.
• Approximately 35 HDW team members joined Latch, potentially bringing valuable expertise.
• The acquisition is expected to create revenue and cost synergies.

Negatives

• The pro forma statements show significant net losses for both the year ended December 31, 2022, and the three months ended March 31, 2023.
• Latch incurred approximately $1.1 million in expenses related to the acquisition.

Risks

• The pro forma financial statements do not reflect any cost savings, operating synergies, or revenue enhancements that may be achieved as a result of the Acquisition.
• The pro forma financial statements do not reflect the costs to integrate the operations of HDW.
• The final determination of the fair value of assets acquired and liabilities assumed is subject to change.
• The company's delisting from Nasdaq could trigger an event of default on the promissory notes.

Future Outlook

The Pro Forma Financial Statements are presented for illustrative purposes only and are not necessarily indicative of the financial position or results of operations that would have been realized if the Acquisition had been completed on the dates indicated, nor are they indicative of future operating results or the financial position of Latch or HDW.

Industry Context

The acquisition of HDW could be seen as a move to expand Latch's product offerings or market share in the smart building technology sector. However, the pro forma losses suggest that the integration and realization of synergies will be critical for the acquisition to be successful.

Comparison to Industry Standards

• It's difficult to assess the performance without knowing the specific details of HDW's business and how it complements Latch's existing operations.
• Comparable companies in the smart building technology space include Allegion, Assa Abloy, and Honeywell.
• A thorough analysis would require comparing Latch's pro forma financials to the performance of these competitors and industry benchmarks for growth, profitability, and efficiency.

Management Changes

Stakeholder Impact

• Shareholders will be impacted by the dilution from the issuance of new shares.
• Employees of both Latch and HDW may experience changes as a result of the integration.
• Customers may benefit from a broader product offering and improved service.

Key Dates

Keywords

acquisition, pro forma, financial statements, merger, Latch, Honest Days Work, HDW