3. BUSINESS COMBINATION Summary On August 6, 2018, our subsidiary, ANI Canada, acquired all the issued and outstanding equity interests of WellSpring, a Canadian company that performs contract development and manufacturing of pharmaceutical products for a purchase price of $18.0 million, subject to certain customary adjustments. Subject to further adjustments, the estimated consideration was $17.3 million. The consideration was paid entirely from cash on hand. In conjunction with the transaction, we acquired WellSprings pharmaceutical manufacturing facility, laboratory, and offices, its current book of commercial business, as well as an organized workforce. Following the consummation of the transaction, WellSpring was merged into ANI Canada with the resulting entitys name being ANI Pharmaceuticals Canada Inc. We acquired WellSpring to provide an additional tech transfer site in order to accelerate the re-commercialization of the previously-approved ANDAs in our pipeline, to expand our contract manufacturing revenue base, and to broaden our manufacturing capabilities to three manufacturing facilities. Transaction Costs In conjunction with the acquisition, we incurred approximately $ 1.0 million in transaction costs, all of which were expensed in 2018. Purchase Consideration and Net Assets Acquired The business combination was accounted for using the acquisition method of accounting, with ANI as the accounting acquirer of WellSpring. The acquisition method requires that acquired assets and assumed liabilities be recorded at their fair values as of the acquisition date. The following presents the preliminary allocation of the preliminary purchase price to the assets acquired and liabilities assumed on August 6, 2018: (in thousands) Total Purchase Consideration $ 17,287 Cash and cash equivalents 220 Accounts receivable 1,311 Inventories 2,197 Prepaid expenses and other current assets 361 Property and equipment 13,935 Goodwill 2,342 Total assets acquired 20,366 Accounts payable and other current liabilities 2,413 Deferred revenue 666 Total liabilities assumed 3,079 Net assets acquired $ 17,287 The net assets were recorded at their estimated fair value. In valuing acquired assets and liabilities, fair value estimates were based primarily on future expected cash flows, market rate assumptions for contractual obligations, and appropriate discount rates. The above allocation of the purchase price is based upon certain preliminary valuations and other analyses that have not been finalized as of the date of this filing. Any changes in the estimated fair values of the net assets recorded for this business combination upon the finalization of more detailed analyses of the facts and circumstances that existed at the date of the transaction may change the allocation of the purchase price. As such, the purchase price allocations for this transaction are preliminary estimates, which may be subject to change within the measurement period. Goodwill is considered an indefinite-lived asset and relates primarily to intangible assets that do not qualify for separate recognition, such as the assembled workforce and synergies between the entities. Goodwill established as a result of the acquisition is not tax deductible in any taxing jurisdiction. There was no value ascribed to any separately identifiable intangible assets. Legacy WellSpring operations g enerated $1.7 million of revenue and recorded a net loss of $0.2 million from the acquisition date through September 30, 2018 . Pro Forma Condensed Combined Financial Information (unaudited) The following unaudited pro forma condensed combined financial information summarizes the results of operations for the periods indicated as if the WellSpring acquisition had been completed as of January 1, 2017. Three Months Ended Nine Months Ended (in thousands) September 30, 2018 September 30, 2017 (1) September 30, 2018 September 30, 2017 (1) Net revenues $ 51,384 $ 51,676 $ 151,091 $ 137,884 Net income $ 4,456 $ 8,683 $ 7,812 $ 10,108 (1) Net income for the three and nine months ended September 30, 2017 includes the impact to WellSpring of $4.4 million of related party debt forgiveness. The pro forma amounts are not necessarily indicative of the results that would have been obtained if the transaction had occurred as of January 1, 2017 or that may be obtained in the future. The unaudited pro forma condensed consolidated financial information includes pro forma adjustments primarily relating to the following non-recurring items directly attributable to the business combination: ? Elimination of amortization expense related to the acquirees historical intangible assets; ? Elimination of transaction costs; ? Elimination of profit on sales from WellSpring to ANI in the periods; and ? Tax impacts of the adjustments to the acquirers net income, calculated as 23 % in 2018 and 37 % in 2017. As the acquiree has a loss in both years, there is no tax impact to adjustments to the acquirees net income. The pro forma financial information does not include the effects of any expected operational efficiencies or synergies resulting from the acquisition.