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| Acquisitions | 15. Acquisitions Acquisition of KAF Manufacturing Company, Inc. On July 1, 2025, the Company entered into an asset purchase agreement with KAF. The purchase price included an initial payment of $2.0 million in cash, and a contingent obligation to pay an additional $0.75 million in cash in six months following the closing of the transaction if certain operating requirements have been satisfied in accordance with the terms of the asset purchase agreement. The transaction closed on July 1, 2025, at which time certain KAF assets were acquired and 15 employees were hired by the Company. KAF is a precision machining company focused on providing precision components, diamond-turned optics and components for laboratory and medical instrument original equipment manufacturers and for the aerospace industry. The Company believes this acquisition will enable it to strengthen and secure its supply chain for critical FTIR components. The preliminary purchase price allocation related to the acquisition of KAF is complete. The Company has retained an independent valuation firm to assess the fair value of the identified intangible assets and certain tangible assets acquired. The Company has accounted for the acquisition of KAF as a business combination under U.S. GAAP. Under the acquisition method of accounting, the assets of KAF have been recorded as of the acquisition date, at their respective fair values, and consolidated with those of the Company. In June 2025, the Company entered into a Master Supply Agreement with an OEM Customer, who is an existing customer of the Company and a customer of KAF. On July 1, 2025, the Company also entered into a lease agreement, which includes extension options under the Company’s control through March 2028, with the KAF owners for the 11,500 rentable square feet building in Stamford, Connecticut. In accordance with ASC 805-10-25-20 through 25-22, these contractual arrangements were accounted separately from the business combination. See Note 13, Leases for further information. The Company has allocated the purchase price to the net tangible and intangible assets based on their estimated fair values as of July 1, 2025. The results of KAF’s operations have been included in the Company’s consolidated financial statements since the date of the acquisition. Pro forma financial information reflecting the acquisition has not been presented because the impact, individually and collectively, on revenues and net income (loss) is not material. Fair Value of Net Assets Acquired Subsequent to the acquisition date, no measurement period adjustments were recognized. The following table presents the primary allocation of the consideration paid on the acquisition date for the KAF transaction (amounts in thousands):
In December 2025, the $0.75 million contingent consideration was paid following the satisfaction of the certain operating requirements in accordance with the terms of the asset purchase agreement. The fair value of standard tools and machinery was determined using the cost approach which includes assumptions related to replacement cost, physical deterioration, economic obsolescence, and scrap value, or the market approach which includes adjustments for physical condition of comparable standard tools or machinery sold. The fair value of the customer relationships was calculated using a distributor method, a form of the income approach, which incorporates a variation of the multi-period excess earnings method that uses market-based inputs to value an asset. Under this method, the value of the asset is a function of several components, including revenue associated with the existing customers, distributor profit margin, charges for use of other assts and discount rate. Intangible assets acquired have finite life and are amortized per our accounting policy. See Part II, Item 8, Summary of Significant Accounting Policies, of our 2025 Form 10-K, for the amortization periods. |