v3.26.1
Acquisitions
 3 Months Ended
Mar. 31, 2026
Acquisitions [Abstract]  
Acquisitions

Note 4 — Acquisitions

Acquisition of Korean Operating Companies

Concurrent with the reverse recapitalization, on January 5, 2026, in exchange for 6,461 non-voting membership units of EM LLC and $48.2 million of purchase consideration payable to dissenting shareholders, EM LLC acquired 100% of the voting equity interests in four Korean operating companies: Handa Lab Co., Ltd. (“Handa”), KMMI Inc. (“KMMI”), NS World Co., Ltd. (“NS World” or “NSW”), and KCM Industry Co., Ltd. (“KCM”) (collectively, the “Operating Companies”). The primary purpose for the acquisitions is to build a complete and integrated global supply chain focused on midstream processing of critical materials, including precious metals, battery metals, magnets & rare earth elements, and its related products. Descriptions of the Operating Companies are as follows:

—     Handa specializes in the manufacturing and sale of intelligent monitoring systems, machine vision and laser testing systems, data gathering systems;

—     KMMI focuses on the production of sintered magnets, using the NdPr alloy;

—     NS World specializes in the production of bonded magnets, using NdPr alloy; and

—     KCM specializes in the manufacturing and sale of neodymium-iron-boron (“NdFeb”) powder for NdFeb permanent magnets.

The following table summarizes the total consideration transferred for each acquisition:

in thousands

  

Handa

  

KMMI

  

NSW

  

KCM

  

Total

Equity

  

$

2,026

  

$

12,106

  

$

4,864

  

$

4,068

 

  

$

23,064

Purchase consideration payable to dissenting shareholders(1)

  

 

4,798

  

 

27,920

  

 

6,499

  

 

8,996

 

  

 

48,213

Settlement of preexisting relationship(2)

  

 

—

  

 

—

  

 

643

  

 

(643

)

  

 

—

Total estimated consideration

  

$

6,824

  

$

40,026

  

$

12,006

  

$

12,421

 

  

$

71,277

(1)      The purchase consideration payable will be settled in Korean Won (KRW)

(2)      Represents the effective settlement of NSW’s existing accounts payable to KCM and KCM’s existing accounts receivable from NSW in connection with their concurrent acquisitions by EM LLC, which was determined based on the respective carrying values at the Closing Date.

EM LLC issued 6,461 non-voting membership units of EM LLC to assenting shareholders, which immediately converted into 3,075,185 shares of the Company’s common stock in connection with the Business Combination, with a total fair value of $23.1 million. The fair value of the equity consideration was determined based on the closing market price of the Company’s shares of common stock on the date of acquisition.

The following table summarizes the preliminary allocation of the purchase price to the assets acquired and liabilities assumed. The initial accounting for this business combination is incomplete as the Company is still in the process of finalizing the valuation of certain intangible assets, property, plant, and equipment, and liabilities assumed. Accordingly, the provisional amounts are subject to change, and any adjustments are expected to be completed within the one-year measurement period from the acquisition date.

in thousands

  

Handa

  

KMMI

  

NSW

  

KCM

  

Total

Cash and cash equivalents

  

$

457

 

  

$

125

 

  

$

701

 

  

$

95

 

  

$

1,378

 

Non-trade accounts receivable

  

 

18

 

  

 

70

 

  

 

930

 

  

 

17

 

  

 

1035

 

Non-trade accounts receivable – related parties

  

 

—

 

  

 

—

 

  

 

—

 

  

 

—

 

  

 

—

 

Accounts receivable

  

 

70

 

  

 

—

 

  

 

1,527

 

  

 

—

 

  

 

1,597

 

Accounts receivable – related parties

  

 

—

 

  

 

—

 

  

 

—

 

  

 

—

 

  

 

—

 

Inventories

  

 

12

 

  

 

—

 

  

 

918

 

  

 

437

 

  

 

1,367

 

Prepaid expenses and other current
assets

  

 

4

 

  

 

17

 

  

 

110

 

  

 

—

 

  

 

131

 

Property, plant and equipment, net

  

 

661

 

  

 

1,654

 

  

 

3,152

 

  

 

2,698

 

  

 

8,165

 

Intangible assets, net

  

 

4,540

 

  

 

290

 

  

 

1,470

 

  

 

450

 

  

 

6,750

 

Other noncurrent assets

  

 

43

 

  

 

221

 

  

 

51

 

  

 

6

 

  

 

321

 

Total assets acquired

  

 

5,805

 

  

 

2,377

 

  

 

8,859

 

  

 

3,703

 

  

 

20,744

 
   

 

  

 

  

 

  

 

  

 

  

 

  

 

  

 

  

 

  

 

Accounts payable

  

 

(54

)

  

 

(79

)

  

 

(1,273

)

  

 

(168

)

  

 

(1,574

)

Accounts payable – related parties

  

 

—

 

  

 

—

 

  

 

(869

)

  

 

—

 

  

 

(869

)

Short term debt

  

 

—

 

  

 

(1,121

)

  

 

(367

)

  

 

(303

)

  

 

(1,791

)

Short term debt – related parties

  

 

—

 

  

 

—

 

  

 

(2,165

)

  

 

(573

)

  

 

(2,738

)

Current portion of long-term debt

  

 

(7

)

  

 

(16

)

  

 

(137

)

  

 

(398

)

  

 

(558

)

Accrued expenses and other current liabilities

  

 

(67

)

  

 

(80

)

  

 

(1,025

)

  

 

(153

)

  

 

(1,325

)

Long term debt

  

 

(338

)

  

 

(525

)

  

 

(280

)

  

 

(1,920

)

  

 

(3,063

)

Other noncurrent liabilities

  

 

(153

)

  

 

(135

)

  

 

(369

)

  

 

(127

)

  

 

(784

)

Total liabilities assumed

  

 

(619

)

  

 

(1,956

)

  

 

(6,485

)

  

 

(3,642

)

  

 

(12,702

)

Net assets acquired

  

 

5,186

 

  

 

421

 

  

 

2,374

 

  

 

61

 

  

 

8,042

 

Goodwill

  

 

1,648

 

  

 

39,605

 

  

 

9,632

 

  

 

12,360

 

  

 

63,245

 

Noncontrolling interest

  

 

(10

)

  

 

—

 

  

 

—

 

  

 

—

 

  

 

(10

)

Total purchase price

  

$

6,824

 

  

$

40,026

 

  

$

12,006

 

  

$

12,421

 

  

$

71,277

 

Finite-lived intangible assets that are being amortized using the straight-line method over their estimated useful lives as of January 5, 2026 consist of the following:

in thousands

  

Handa

  

KMMI

  

NSW

  

KCM

  

Total

  

Weighted
Average
Useful
Life
(Years)

Developed technology

  

$

4,540

  

$

—

  

$

970

  

$

450

  

$

5,960

  

14.7

Existing customer relationships

  

 

—

  

 

290

  

 

500

  

 

—

  

 

790

  

12.8

Total intangible assets

  

$

4,540

  

$

290

  

$

1,470

  

$

450

  

$

6,750

  

14.5

Goodwill represents the excess of consideration transferred over the fair value of identifiable assets acquired and liabilities assumed and is primarily attributable to strategic synergies, future growth opportunities, the assembled workforce and other intangible assets that do not qualify for separate recognition.

Valuation Methodologies

The fair values of assets acquired and liabilities assumed were determined in accordance with ASC 820, Fair Value Measurement, using market participant assumptions. The Company applied a combination of income, market and cost approaches, as appropriate, based on the nature of the respective assets acquired and liabilities assumed.

•        Inventory was valued using methodologies that considered estimated selling prices, costs to complete, costs to dispose, holding costs and a reasonable profit allowance, as applicable.

•        Property, plant and equipment were valued using cost or market approaches, as appropriate.

•        Identifiable intangible assets consisted primarily of developed technology and customer relationships and represent Level 3 fair value measurements.

•        Developed technology was valued using either a cost approach or an income-based methodology, depending on the nature and stage of development of the underlying technology.

•        Customer relationships were valued using an income approach, specifically the with-and-without method, which estimates value based on the incremental cash flows attributable to existing customer relationships.

Acquisition-related costs

During the three months ended March 31, 2026, and the three months ended March 31, 2025, the Company incurred $0.0 million and $0.6 million, respectively, in acquisition-related costs for the Operating Companies. These are recorded in selling, general and administrative.

Pro forma financial information

The following unaudited pro forma financial information presents the combined results of the Company and the Operating Companies as if the acquisitions of the Operating Companies had occurred on January 1, 2025. This pro forma information is for informational purposes only and is not necessarily indicative of the results of operations that would have occurred had the acquisitions been completed on that date, nor is it indicative of future results.

 

Three Months Ended
March 31,
(Unaudited)

in thousands

  

2026

  

2025

Pro Forma Revenue(1)

  

$

1,879

 

  

$

1,592

 

Pro Forma Net Loss

  

 

(440,313

)

  

 

(20,322

)

____________

(1)      Since the acquisition of the Operating Companies on January 5, 2026, the unaudited condensed consolidated statement of operations for the three months ended March 31, 2026 includes revenue of $1.9 million and losses of $1.2 million.

These pro forma combined historical results were adjusted for: an increase in interest expense for liabilities incurred by the Company for deferred payments to dissenting shareholders, increased depreciation and amortization expense due to the fair value of fixed assets and intangible assets, and the reclassification of transaction expenses to the beginning of the respective pro forma period.