v3.21.2
Business Combinations
6 Months Ended 11 Months Ended
Jun. 30, 2021
Dec. 31, 2020
Business Combinations    
Business Combinations

Note C — Business Combinations

Adcole Acquisition

On March 2, 2020, the Successor acquired 100% of the equity interest of Adcole in exchange for cash. The acquisition supports the Company’s growth in its offering of space structures.

The following table summarizes the fair value of the consideration transferred and the fair values of the major classes of assets acquired and liabilities assumed as of the acquisition date.

    

March 2, 2020

Cash paid

$

32,640

Purchase consideration

$

32,640

Assets:

 

  

Cash

$

156

Accounts receivable

 

840

Contract assets

 

1,427

Inventory

 

212

Prepaid expenses and other current assets

 

661

Property, plant and equipment

 

444

Intangible assets

 

9,690

$

13,430

Liabilities:

 

  

Accounts payable

$

894

Accrued expenses

 

644

Deferred revenue

 

777

$

2,315

Fair value of net identifiable assets acquired

 

11,115

Goodwill

$

21,525

The following table summarizes the intangible assets acquired by class:

    

March 2, 2020

Trademark

$

1,000

Technology

 

2,400

Customer relationships

 

6,100

In-process research and development (“IPR&D”)

 

190

Total intangible assets

$

9,690

The fair value of the acquired trademark and technology was estimated using the relief from royalty (“RFR”) method. The fair value of the acquired customer relationships was estimated using the excess earnings method. The fair value of the IPR&D was estimated using the replacement cost method.

The acquisition was accounted for as a business combination, whereby the excess of the consideration paid over the fair value of identifiable net assets was allocated to goodwill. The goodwill reflects the potential synergies and expansion of the Company’s offerings across product lines and markets complementary to its existing products and markets. For tax purposes, the goodwill is deductible over 15 years.

The results of operations of the acquired businesses for the period from March 2, 2020 to June 30, 2020 have been included in the results of operations for the Successor Q2 2020 Period; the post-acquisition revenues and net loss included in the Successor Q2 2020 Period were $3,373 thousand and ($279) thousand, respectively. The acquisition-related costs included in transaction expenses in the condensed consolidated statement of operations for the Successor Q2 2020 Period were $2,055 thousand.

DSS Acquisition

On June 1, 2020, the Successor acquired 100% of the equity interest of DSS in exchange for cash and 1,000,000 units of the Successor’s Parent’s equity (“Parent Units”). The acquisition supports the Company’s growth in its offering of engineering solutions.

The following table summarizes the fair value of the consideration transferred and the fair values of the major classes of assets acquired and liabilities assumed as of the acquisition date.

    

June 1, 2020

Cash paid

$

3,940

Equity issued

 

1,000

Purchase consideration

$

4,940

Assets:

 

  

Cash

$

1,071

Accounts receivable

 

1,282

Contract assets

 

107

Inventory

 

39

Prepaid expenses and other current assets

 

37

Property, plant and equipment

 

710

Intangible assets

 

850

Other non-current assets

 

26

$

4,122

Liabilities:

  

Accounts payable

$

284

Deferred revenue

 

103

Current portion of long-term debt

 

353

Other current liabilities

 

1,178

Long-term debt

 

705

Deferred tax liabilities

 

458

$

3,081

Fair value of net identifiable assets acquired

 

1,041

Goodwill

$

3,899

The following table summarizes the intangible assets acquired by class:

    

June 1, 2020

Trademark

$

150

Customer relationships

 

700

Total intangible assets

$

850

The fair value of the acquired trademark was determined using the RFR method. The fair value of the acquired customer relationships was determined using the excess earnings method.

The acquisition was accounted for as a business combination, whereby the excess of the purchase consideration over the fair value of identifiable net assets was allocated to goodwill. The goodwill reflects the potential synergies and expansion of the Company’s offerings across product lines and markets complementary to its existing products and markets. For tax purposes, the goodwill is not deductible.

The results of operations of the acquired businesses for the period from June 1, 2020 to June 30, 2020 have been included in the results of operations for the Successor Q2 2020 Period; the post-acquisition revenues and net loss included in the Successor Q2 2020 Period were $808 thousand and ($27) thousand, respectively. The acquisition-related costs included in transaction expenses in the condensed consolidated statement of operations for the Successor Q2 2020 Period were $434 thousand.

During the Successor 2021 Period, there was a measurement period adjustment to goodwill of $85 thousand, decreasing the balance to $3,899 thousand. Refer to Footnote H — Goodwill for further discussion.

MIS Acquisition

On June 22, 2020, the Successor acquired 100% of the equity interest of MIS in exchange for cash and 2,615,726 Parent Units. The acquisition supports the Company’s growth in its offering of space structures.

The purchase agreement with the sellers of MIS has a contingent earnout payment from the Company upon the achievement of certain revenue milestones over the year ended December 31, 2020. The earnout amount is computed at $1.50 for every $1.00 of MIS revenue, as defined in the purchase agreement, in excess of $40,000 thousand for the year ended December 31, 2020, and the contingent earnout shall not exceed $15,000 thousand or be less than $0. The Company executed a settlement agreement on August 20, 2021 with the sellers. Per the settlement agreement, the Company agreed to issue 1,354,088 Class A units of the Parent and pay $1,552 thousand in cash. The fair value of the Class A units as of June 30, 2021 is $9,939 thousand. The fair value is arrived at using the following assumptions:

MIS Black-Scholes Option Pricing Model Assumptions

    

 

Risk-free interest rate

 

0.05

%

Revenue volatility

 

51.7

%

The total fair value of the contingent earnout payment as of June 30, 2021, including the equity component is $11,491 thousand. The change in the fair value of the earnout payment, $10,889 thousand, is reflected in contingent earnout expense on the condensed consolidated statement of operations for the Successor 2021 Period as the adjustment in fair value occurred subsequent to the MIS measurement period.

The following table summarizes the fair value of the consideration transferred and the fair values of the major classes of assets acquired and liabilities assumed as of the acquisition date.

    

June 22, 2020

Cash paid

$

42,177

Equity issued

 

2,616

Contingent consideration

 

600

Purchase consideration

$

45,393

Assets:

 

  

Cash

$

13,559

Accounts receivable

 

1,097

Contract assets

 

665

Property, plant and equipment

 

451

Intangible assets

 

35,000

Other non-current assets

 

676

$

51,448

Liabilities:

 

  

Accounts payable

$

3,689

Deferred revenue

 

7,128

Other current liabilities

 

2,749

Deferred tax liabilities

 

7,297

$

20,863

Fair value of net identifiable assets acquired

 

30,585

Goodwill

$

14,808

The following table summarizes the intangible assets acquired by class:

    

June 22, 2020

Trademarks

$

3,400

Technology

 

16,000

Customer relationships

 

15,600

Total intangible assets

$

35,000

The fair value of the acquired trademark and technology was estimated using the RFR method. The fair value of the acquired customer relationships was estimated using the excess earnings method.

The acquisition was accounted for as a business combination, whereby the excess of the purchase consideration over the fair value of identifiable net assets was allocated to goodwill. The goodwill reflects the potential synergies and expansion of the Company’s offerings across product lines and markets complementary to its existing products and markets. For tax purposes, the goodwill is not deductible.

The results of operations of the acquired businesses for the period from June 22, 2020 to June 30, 2020 have been included in the results of operations for the Successor Q2 2020 Period; the post-acquisition revenues and net income included in the Successor Q2 2020 Period were $990 thousand and $793 thousand, respectively. The acquisition-related costs included in transaction expenses in the condensed consolidated statement of operations for the Successor Q2 2020 Period were $4,132 thousand.

During the Successor 2021 Period, there was a measurement period adjustment to goodwill of $512 thousand, decreasing the balance to $14,808 thousand. Refer to Footnote H — Goodwill for further discussion.

Roccor Acquisition

On October 28, 2020, the Successor acquired 100% of the equity interest of Roccor in exchange for cash and 1,564,531 Parent Units. The acquisition supports the Company’s growth in its offering of space structures.

The purchase agreement with the sellers of Roccor awarded such sellers with a contingent right to an earnout payment from the Company upon the achievement of certain revenue milestones for the year ended December 31, 2021. The earnout amount would be based on one of the following: (i) $0 if Roccor revenue for the year ended December 31, 2021 is less than $30,000 thousand, (ii) $1,000 thousand if Roccor revenue for the year ended December 31, 2021 is equal to or greater than $30,000 thousand but less than $40,000 thousand, (iii) $2,000 thousand if Roccor revenue for the year ended December 31, 2021 is equal to or greater than $40,000 thousand. The fair value of the Roccor contingent earnout was estimated using the Black-Scholes OPM; the fair value of the Roccor contingent earnout was $550 thousand as of the acquisition date. The assumptions used in the Black-Scholes OPM were as follows:

Roccor Black-Scholes OPM Assumptions

    

    

 

Risk-free interest rate

 

0.1

%

Revenue discount rate

 

7.0

%

Revenue volatility

 

30.0

%

Earnout payment discount rate

 

4.0

%

During the Successor 2021 Period, the revenue based earnout of $225 thousand was recorded in contingent earnout expense on the condensed consolidated statement of operations.

The purchase agreement also stipulated that certain funds in the amount of $466 thousand were to be held in escrow (the “PBR Escrow”), subject to a variance (the “PBR Variance”), for the benefit of the sellers. The PBR Variance was defined as the excess revenue recorded by Roccor for the year ended December 31, 2020, based on the difference between Roccor’s forecasted revenues

and Roccor’s actual revenues for the eight months ended August 31, 2020. Upon determination of the PBR Variance, an amount equal to (i) the PBR Escrow less (ii) the PBR Variance will be disbursed to the sellers of Roccor; any remaining PBR Escrow funds will be disbursed to the Company. Since the transfer of the PBR Escrow funds is contingent upon the PBR Variance, the Company’s obligation to deliver the PBR Escrow funds net of PBR Variance was determined to be a contingent consideration. The fair value of the PBR Variance was determined to be $359 thousand as of the acquisition date, therefore contingent consideration related to PBR Escrow was determined to be $107 thousand. PBR Escrow amount of $107 thousand was paid to sellers of Roccor in March 2021.

The following table summarizes the fair value of the consideration transferred and the estimated fair values of the major classes of assets acquired and liabilities assumed as of the acquisition date.

    

October 28, 2020

Cash paid

$

14,999

Equity issued

 

1,565

Contingent consideration

 

657

Purchase consideration

$

17,221

Assets:

 

  

Cash

$

6,161

Accounts receivable

 

517

Contract assets

 

1,797

Property, plant and equipment

 

1,128

Intangible assets

 

13,400

Other non-current assets

 

361

$

23,364

Liabilities:

 

  

Accounts payable

$

1,880

Deferred revenue

 

3,240

Other current liabilities

 

5,112

Deferred tax liabilities

 

1,952

$

12,184

Fair value of net identifiable assets acquired

 

11,180

Goodwill

$

6,041

The following table summarizes the intangible assets acquired by class:

    

October 28, 2020

Trademarks

$

1,200

Technology

 

6,500

Customer relationships

 

5,700

Total intangible assets

$

13,400

The amounts above represent the current preliminary fair value estimates but the measurement period is still open and subject to further adjustments as additional information becomes available and as additional analyses and final allocations are completed.

The fair value of the acquired trademark and technology was estimated using the RFR method. The fair value of the acquired customer relationships was estimated using the excess earnings method.

The acquisition was accounted for as a business combination, whereby the purchase consideration over the fair value of identifiable net assets was allocated to goodwill. The goodwill reflects the potential synergies and expansion of the Company’s

offerings across product lines and markets complementary to its existing products and markets. For tax purposes, the goodwill is not deductible.

During the Successor 2021 Period, there was a measurement period adjustment to goodwill of $684 thousand, decreasing the balance to $6,041 thousand. Refer to Footnote H — Goodwill for further discussion.

LoadPath Acquisition

On December 11, 2020, the Successor acquired 100% of the equity interest of LoadPath in exchange for cash and 800,000 Parent Units. The acquisition supports the Company’s growth in its offering of engineering solutions.

The following table summarizes the fair value of the consideration transferred and the estimated fair values of the major classes of assets acquired and liabilities assumed as of the acquisition date.

    

December 11, 2020

Cash paid

$

7,598

Equity issued

 

800

Purchase consideration

$

8,398

Assets

 

  

Cash

$

995

Accounts receivable

 

1,208

Contract assets

 

187

Prepaid expenses and other current assets

 

2

Property, plant and equipment

 

42

Intangible assets

 

4,230

$

6,664

Liabilities

 

  

Accounts payable

$

334

Deferred revenue

 

394

Other current liabilities

 

1,203

Deferred tax liabilities

 

1,148

$

3,079

Fair value of net identifiable assets acquired

 

3,585

Goodwill

$

4,813

The following table summarizes the intangible assets acquired by class:

    

December 11, 2020

Trademarks

$

560

Technology

 

370

Customer relationships

 

3,300

Total intangible assets

$

4,230

The amounts above represent the current preliminary fair value estimates but the measurement period is still open and subject to further adjustments as additional information becomes available and as additional analyses and final allocations are completed.

The fair value of the acquired trademark and technology was estimated using the RFR method. The fair value of the acquired customer relationships was estimated using the excess earnings method.

The acquisition was accounted for as a business combination, whereby the excess of purchase consideration over the fair value of identifiable net assets was allocated to goodwill. The goodwill reflects the potential synergies and expansion of the Company’s offerings across product lines and markets complementary to its existing products and markets. For tax purposes, the goodwill is not deductible.

Oakman Acquisition

On January 15, 2021, the Successor acquired 100% of the equity interest of Oakman for cash and 1,000,000 Parent Units. The acquisition supports the Company’s growth in its offering of engineering solutions.

The following table summarizes the fair value of the consideration transferred and the estimated fair values of the major classes of assets acquired and liabilities assumed as of the acquisition date.

    

January 15, 2021

Cash paid

$

12,142

Equity issued

 

2,110

Purchase consideration

$

14,252

Assets:

 

  

Accounts receivable

$

1,279

Contract assets

 

121

Inventory

 

40

Prepaid expenses and other current assets

 

50

Property, plant and equipment

 

493

Intangible assets

 

10,600

$

12,583

Liabilities:

 

  

Accounts payable

$

46

Accrued expenses

 

2,022

Deferred revenue

 

253

Other current liabilities

 

45

Deferred tax liabilities

 

2,831

$

5,197

Fair value of net identifiable assets acquired

 

7,386

Goodwill

$

6,866

The following table summarizes the intangible assets acquired by class:

    

January 15, 2021

Trademark

$

100

Technology

 

5,600

Customer relationships

 

4,900

Total intangible assets

$

10,600

The amounts above represent the current preliminary fair value estimates but the measurement period is still open and subject to further adjustments as additional information becomes available and as additional analyses and final allocations are completed.

The fair value of the acquired trademark and technology was estimated using the RFR method. The fair value of the acquired customer relationships was estimated using the excess earnings method.

The acquisition was accounted for as a business combination, whereby the excess of the consideration paid over the fair value of identifiable net assets was allocated to goodwill. The goodwill reflects the potential synergies and expansion of the Company’s offerings across product lines and markets complementary to its existing products and markets. For tax purposes, the goodwill is not deductible.

The results of operations of the acquired businesses for the period from January 15, 2021 to June 30, 2021 have been included in the results of operations for the Successor 2021 Period; the post-acquisition revenues and net loss included in the period were $2,688 thousand and ($564) thousand, respectively. The acquisition-related costs included in transaction expenses in the condensed consolidated statement of operations for the Successor 2021 Period were $657 thousand.

DPSS Acquisition

On February 17, 2021, the Successor acquired 100% of the equity interest of DPSS in exchange for cash. The acquisition supports the Company’s growth in its offering of deployable technology.

The following table summarizes the fair value of the consideration transferred and the estimated fair values of the major classes of assets acquired and liabilities assumed as of the acquisition date.

    

February 17, 2021

Cash paid

$

27,305

Purchase consideration

$

27,305

Assets:

 

  

Cash

$

711

Accounts receivable

 

1,270

Contract assets

 

1,534

Inventory

 

3

Prepaid expenses and other current assets

 

53

Property, plant and equipment

 

734

Intangible assets

 

24,160

Other non-current assets

 

48

$

28,513

Liabilities:

 

  

Accounts payable

$

1,186

Accrued expenses

 

1,282

Deferred revenue

 

3,830

Deferred tax liabilities

 

6,058

$

12,356

Fair value of net identifiable assets acquired

 

16,157

Goodwill

$

11,148

The following table summarizes the intangible assets acquired by class:

    

February 17, 2021

Trademark

$

160

Technology

 

11,900

Customer relationships

 

12,100

Total intangible assets

$

24,160

The amounts above represent the current preliminary fair value estimates but the measurement period is still open and subject to further adjustments as additional information becomes available and as additional analyses and final allocations are completed.

The fair value of the acquired trademark was determined using the RFR method. The fair value of the acquired customer relationships was determined using the excess earnings method.

The acquisition was accounted for as a business combination, whereby the excess of the purchase consideration over the fair value of identifiable net assets was allocated to goodwill. The goodwill reflects the potential synergies and expansion of the Company’s offerings across product lines and markets complementary to its existing products and markets. For tax purposes, the goodwill is not deductible. During the Successor 2021 Period, there was a measurement period adjustment to goodwill of $244 thousand, increasing the balance to $11,148 thousand. The change primarily related to the settlement of net working capital adjustments. Refer to Footnote H — Goodwill for further discussion.

The results of operations of the acquired businesses for the period from February 17, 2021 to June 30, 2021 have been included in the results of operations for the Successor 2021 Period; the post-acquisition revenues and net loss included in the Successor 2021 Period were $10,888 thousand and ($294) thousand, respectively. The acquisition-related costs, which are included in transaction expenses in the condensed consolidated statement of operations for the Successor 2021 Period were $1,566 thousand.

Pro Forma Financial Data (Unaudited)

The following table presents the pro forma combined results of operations for the business combinations for the six month periods ended June 30, 2021 and 2020 as though the acquisitions of Adcole, DSS, MIS, Roccor, and LoadPath (the “2020 business combinations”) had been completed as of January 1, 2019, and the acquisitions of Oakman and DPSS (the “2021 business combinations”) had been completed as of January 1, 2020. The pro forma six month period ended June 30, 2021 includes the pre-acquisition 2021 period, and Successor 2021 period for all entities. The pro forma six month period ended June 30, 2020 includes the Predecessor 2020 Period, the Successor Q2 2020 Period, and the pre-acquisition period for all business combinations.

Pro forma for the six month period ended

    

June 30, 2021

    

June 30, 2020

Revenues

$

68,153

$

57,290

Net (loss) income

 

(22,066)

 

(3,908)

The amounts included in the pro forma information are based on the historical results and do not necessarily represent what would have occurred if the 2021 business combinations had taken place as of January 1, 2020 and the 2020 business combinations had taken place as of January 1, 2019, nor do they represent the results that may occur in the future. Accordingly, the pro forma financial information should not be relied upon as being indicative of the results that would have been realized had the business combination occurred as of the date indicated or that may be achieved in the future.

During the Successor 2021 Period, the Company incurred $2,419 thousand of acquisition related costs attributable to the business combinations, included in the Successor 2021 Period transaction expenses on the condensed consolidated statement of operations. These expenses are reflected in the pro forma earnings for the six month period ended June 30, 2020, in the table above.

Note C – Business Combinations

Adcole Acquisition

On March 2, 2020, the Successor acquired 100% of the equity interest of Adcole for cash. The acquisition supports the Company’s growth in its offering of space structures.

The following table summarizes the fair value of the consideration transferred and the estimated fair values of the major classes of assets acquired and liabilities assumed as of the acquisition date.

    

March 2, 2020

Cash paid

$

32,640

Purchase consideration

$

32,640

Assets:

 

  

Cash

$

156

Accounts receivable

 

840

Contract assets

 

1,427

Inventory

 

212

Prepaid expenses and other current assets

 

661

Property, plant and equipment

 

444

Intangible assets

 

9,690

$

13,430

Liabilities:

 

  

Accounts payable

$

894

Accrued expenses

 

644

Deferred revenue

 

777

$

2,315

Fair value of net identifiable assets acquired

 

11,115

Goodwill

$

21,525

The following table summarizes the intangible assets acquired by class:

    

March 2, 2020

Trademark

$

1,000

Technology

 

2,400

Customer relationships

 

6,100

In-process research and development (“IPR&D”)

 

190

Total intangible assets

$

9,690

The fair value of the acquired trademark and technology was estimated using the relief from royalty (“RFR”) method. The fair value of the acquired customer relationships was estimated using the excess earnings method. The fair value of the IPR&D was estimated using the replacement cost method.

The acquisition was accounted for as a business combination, whereby the excess of the consideration paid over the fair value of identifiable net assets was allocated to goodwill. The goodwill reflects the potential synergies and expansion of the Company’s offerings across product lines and markets complementary to its existing products and markets. For tax purposes, the goodwill is deductible over 15 years.

The results of operations of the acquired businesses for the period from March 2, 2020 to December 31, 2020 have been included in the results of operations for the Successor 2020 Period; the post-acquisition net revenues and net loss included in the Successor 2020 Period were $8,096 thousand and ($1,878) thousand, respectively. The acquisition-related costs included in transaction expenses in the consolidated statement of operations for the Successor 2020 Period were $2,055 thousand.

DSS Acquisition

On June 1, 2020, the Successor acquired 100% of the equity interest of DSS for cash and 1,000,000 units of the Successor’s Parent’s equity (“Parent Units”). The acquisition supports the Company’s growth in its offering of engineering solutions.

The following table summarizes the fair value of the consideration transferred and the estimated fair values of the major classes of assets acquired and liabilities assumed as of the acquisition date.

    

June 1,

2020

Cash paid

$

3,940

Equity issued

 

1,000

Purchase consideration

$

4,940

Assets:

 

  

Cash

$

1,071

Accounts receivable

 

1,282

Contract assets

 

107

Inventory

 

39

Prepaid expenses and other current assets

 

37

Property, plant and equipment

 

710

Intangible assets

 

850

Other non-current assets

 

26

$

4,122

Liabilities:

 

  

Accounts payable

$

284

Deferred revenue

 

188

Current Portion of long-term debt

 

353

Other current liabilities

 

1,178

Long-term debt

 

705

Deferred tax liabilities

 

458

$

3,166

Fair value of net identifiable assets acquired

 

956

Goodwill

$

3,984

The following table summarizes the intangible assets acquired by class:

    

June 1,

2020

Trademark

$

150

Customer relationships

 

700

Total intangible assets

$

850

The amounts above represent the current preliminary fair value estimates but the measurement period is still open.

The fair value of the acquired trademark was determined using the RFR method. The fair value of the acquired customer relationships was determined using the excess earnings method.

The acquisition was accounted for as a business combination, whereby the excess of the purchase consideration over the fair value of identifiable net assets was allocated to goodwill. The goodwill reflects the potential synergies and expansion of the Company’s offerings across product lines and markets complementary to its existing products and markets. For tax purposes, the goodwill is not deductible.

The results of operations of the acquired businesses for the period from June 1, 2020 to December 31, 2020 have been included in the results of operations for the Successor 2020 Period; the post-acquisition net revenues and net loss included in the Successor 2020 Period were $5,381 thousand and ($1,707) thousand, respectively. The acquisition-related costs included in transaction expenses in the consolidated statement of operations for the Successor 2020 Period were $434 thousand.

MIS Acquisition

On June 22, 2020, the Successor acquired 100% of the equity interest of MIS for cash and 2,615,726 Parent Units. The acquisition supports the Company’s growth in its offering of space structures.

The purchase agreement with the sellers of MIS awarded them a contingent right to an earnout payment from the Company upon the achievement of certain revenue milestones over the year ended December 31, 2020. The earnout amount would be computed as $1.50 for every $1.00 of MIS revenue, as defined in the purchase agreement with the sellers of MIS, in excess of $40,000 thousand for the year ended December 31, 2020; the contingent earnout shall not exceed $15,000 thousand or be less than $0. The fair value of the MIS contingent earnout was estimated using the Black-Scholes OPM. The assumptions used in the Black-Scholes OPM were as follows:

MIS Black-Scholes OPM Assumptions

Risk-free interest rate

    

0.2

%

Revenue discount rate

 

6.5

%

Revenue volatility

 

30.0

%

Earnout payment discount rate

 

5.9

%

The following table summarizes the fair value of the consideration transferred and the estimated fair values of the major classes of assets acquired and liabilities assumed as of the acquisition date.

    

June 22, 

2020

Cash paid

$

42,177

Equity issued

 

2,616

Contingent consideration

 

600

Purchase consideration

$

45,393

Assets:

 

  

Cash

$

13,559

Accounts receivable

 

585

Contract assets

 

665

Property, plant and equipment

 

451

Intangible assets

 

35,000

Other non-current assets

 

676

$

50,936

Liabilities:

 

  

Accounts payable

$

3,689

Deferred revenue

 

7,128

Other current liabilities

 

2,749

Deferred tax liabilities

 

7,297

$

20,863

Fair value of net identifiable assets acquired

 

30,073

Goodwill

$

15,320

The following table summarizes the intangible assets acquired by class:

    

June 22,

2020

Trademarks

$

3,400

Technology

 

16,000

Customer relationships

 

15,600

Total intangible assets

$

35,000

The amounts above represent the current preliminary fair value estimates but the measurement period is still open.

The fair value of the acquired trademark and technology was estimated using the RFR method. The fair value of the acquired customer relationships was estimated using the excess earnings method.

The acquisition was accounted for as a business combination, whereby the excess of the purchase consideration over the fair value of identifiable net assets was allocated to goodwill. The goodwill reflects the potential synergies and expansion of the Company’s offerings across product lines and markets complementary to its existing products and markets. For tax purposes, the goodwill is not deductible.

The results of operations of the acquired businesses for the period from June 22, 2020 to December 31, 2020 have been included in the results of operations for the Successor 2020 Period; the post-acquisition net revenues and net loss included in the Successor 2020 Period were $22,061 thousand and $(1,186) thousand, respectively. The acquisition-related costs included in transaction expenses in the consolidated statement of operations for the Successor 2020 Period were $4,132 thousand.

Roccor Acquisition

On October 28, 2020, the Company acquired 100% of the equity interest of Roccor for cash and 1,564,531 Parent Units. The acquisition supports the Company’s growth in its offering of space structures.

The purchase agreement with the sellers of Roccor awarded them a contingent right to an earnout payment from the Company upon the achievement of certain revenue milestones for the year ended December 31, 2021. The earnout amount would be based on one of the following: (i) $0 if Roccor revenue for the year ended December 31, 2021 is less than $30,000 thousand, (ii) $1,000 thousand if Roccor revenue for the year ended December 31, 2021 is equal to or greater than $30,000 thousand but less than $40,000 thousand, (iii) $2,000 thousand if Roccor revenue for the year ended December 31, 2021 is equal to or greater than $40,000 thousand. The fair value of the Roccor contingent earnout was estimated using the Black-Scholes OPM; the fair value of the Roccor contingent earnout was $550 thousand as of the acquisition date. The assumptions used in the Black-Scholes OPM were as follows:

    

Roccor

 

Risk-free interest rate

 

0.1

%  

Revenue discount rate

 

7.0

%  

Revenue volatility

 

30.0

%  

Earnout payment discount rate

 

4.0

%  

The purchase agreement with the sellers of Roccor also stipulated that certain funds in the amount of $466 thousand were to be held in escrow (the “PBR Escrow”), subject to a variance (the “PBR Variance”), for the benefit of the sellers. The PBR Variance was defined as the excess revenue recorded by Roccor for the year ended December 31, 2020, based on the difference between Roccor’s forecasted revenues and Roccor’s actual revenues for the eight months ended August 31, 2020. Upon determination of the PBR Variance, an amount equal to (i) the PBR Escrow less (ii) the PBR Variance will be disbursed to the sellers of Roccor; any remaining PBR Escrow funds will be disbursed to the Company. Since the transfer of the PBR Escrow funds is contingent upon the PBR Variance, the Company’s obligation to deliver the PBR Escrow funds net of PBR Variance was determined to be a contingent consideration. The fair value of the PBR Variance was determined to be $359 thousand as of the acquisition date, therefore contingent

consideration related to PBR Escrow was determined to be $107 thousand. PBR Escrow amount of $107 thousand was paid to sellers of Roccor in March 2021.

The following table summarizes the fair value of the consideration transferred and the estimated fair values of the major classes of assets acquired and liabilities assumed as of the acquisition date.

    

October 28,

2020

Cash paid

$

15,683

Equity issued

 

1,565

Contingent consideration

 

657

Purchase consideration

$

17,905

Assets:

 

  

Cash

 

6,161

Accounts receivable

$

517

Contract assets

 

1,797

Property, plant and equipment

 

1,128

Intangible assets

 

13,400

Other non-current assets

 

361

$

23,364

Liabilities:

 

  

Accounts payable

$

1,880

Deferred revenue

 

3,240

Other current liabilities

 

5,112

Deferred tax liabilities

 

1,952

$

12,184

Fair value of net identifiable assets acquired

 

11,180

Goodwill

$

6,725

The following table summarizes the intangible assets acquired by class:

October 28, 

    

2020

Trademarks

$

1,200

Technology

 

6,500

Customer relationships

 

5,700

Total intangible assets

$

13,400

The amounts above represent the current preliminary fair value estimates but the measurement period is still open.

The fair value of the acquired trademark and technology was estimated using the RFR method. The fair value of the acquired customer relationships was estimated using the excess earnings method.

The acquisition was accounted for as a business combination, whereby the purchase consideration over the fair value of identifiable net assets was allocated to goodwill. The goodwill reflects the potential synergies and expansion of the Company’s offerings across product lines and markets complementary to its existing products and markets. For tax purposes, the goodwill is not deductible.

The results of operations of the acquired businesses for the period from October 28, 2020 to December 31, 2020 have been included in the results of operations for the Successor 2020 Period; the post-acquisition net revenues and net income included in the Successor 2020 Period were $5,003 thousand and $338 thousand, respectively. The acquisition-related costs included in transaction expenses in the consolidated statement of operations for the Successor 2020 Period were $1,838 thousand.

LoadPath Acquisition

On December 11, 2020, the Successor acquired 100% of the equity interest of LoadPath for cash and 800,000 Parent Units. The acquisition supports the Company’s growth in its offering of engineering solutions.

The following table summarizes the fair value of the consideration transferred and the estimated fair values of the major classes of assets acquired and liabilities assumed as of the acquisition date.

December 11,

    

2020

Cash paid

$

7,598

Equity issued

 

800

Purchase consideration

$

8,398

Assets

 

  

Cash

$

995

Accounts receivable

 

1,208

Contract assets

 

187

Prepaid expenses and other current assets

 

2

Property, plant and equipment

 

42

Intangible assets

 

4,230

$

6,664

Liabilities

 

  

Accounts payable

$

334

Deferred revenue

 

394

Other current liabilities

 

1,203

Deferred tax liabilities

 

1,148

$

3,079

Fair value of net identifiable assets acquired

 

3,585

Goodwill

$

4,813

The following table summarizes the intangible assets acquired by class:

 December 11,

    

2020

Trademarks

$

560

Technology

 

370

Customer relationships

 

3,300

Total intangible assets

$

4,230

The amounts above represent the current preliminary fair value estimates but the measurement period is still open.

The fair value of the acquired trademark and technology was estimated using the RFR method. The fair value of the acquired customer relationships was estimated using the excess earnings method.

The acquisition was accounted for as a business combination, whereby the excess of purchase consideration over the fair value of identifiable net assets was allocated to goodwill. The goodwill reflects the potential synergies and expansion of the Company’s offerings across product lines and markets complementary to its existing products and markets. For tax purposes, the goodwill is not deductible.

The results of operations of the acquired businesses for the period from December 11, 2020 to December 31, 2020 have been included in the results of operations for the Successor 2020 Period; the post-acquisition net revenues and net loss included in the

Successor 2020 Period were $245 thousand and $(32) thousand, respectively. The acquisition-related costs included in transaction expenses in the consolidated statement of operations for the Successor 2020 Period were $1,485 thousand.

Pro Forma Financial Data (Unaudited)

The following table presents the pro forma combined results of operations for the business combinations for the years ended December 31, 2020 and December 31, 2019 as though the acquisitions had been completed as of January 1, 2019. The year ended December 31, 2020 includes the pre-acquisition 2020 period, the Predecessor 2020 Period, and the Successor 2020 Period. The year ended December 31, 2019 includes the pre-acquisition 2019 period and the Predecessor 2019 Period.

Pro forma for the year ended

December 31,

December 31,

    

 2020

    

 2019

Net revenues

$

84,770

$

56,129

Net loss

$

(9,131)

$

(12,978)

The amounts included in the pro forma information are based on the historical results and do not necessarily represent what would have occurred if all the business combinations had taken place as of January 1, 2019, nor do they represent the results that may occur in the future. Accordingly, the pro forma financial information should not be relied upon as being indicative of the results that would have been realized had the acquisition occurred as of the date indicated or that may be achieved in the future.

Transaction expenses of $9,944 incurred in the Successor 2020 period are reflected in the pro forma net loss for the year ended December 31, 2019.