15. Acquisitions

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Acquisition of NIRLAB

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On May 4, 2026, the Company completed its acquisition of NIRLAB. Pursuant to the NIRLAB Purchase Agreement, the Sellers agreed to sell and transfer to the Company, on the closing date, all of the issued and outstanding NIRLAB shares in exchange for a preliminary consideration payable by the Company on the closing date with a price of $13.0 million in cash (the “Cash Consideration”) and 293,367 shares of common stock of the Company, par value $0.001 per share (the “Stock Consideration”), which was valued at $2.0 million per the NIRLAB Purchase Agreement at the signing date.

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The Cash and Stock Considerations are subject to customary adjustments. The Company withheld $1.3 million of the Cash Consideration and 10% of the Stock Consideration (together, the “General Holdback Amount”) to secure the Sellers’ post-closing obligations under the NIRLAB Purchase Agreement. Subject to any outstanding claims, the General Holdback Amount shall be released to the Sellers twelve months after the closing date. The General Holdback Amount is classified within other current liabilities in the Company’s balance sheet.

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The Company may also be obligated to issue up to $8.0 million of its common stock as Earn-out Consideration (see Note 14, Commitments and Contingencies).

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The Company has accounted for the acquisition of NIRLAB as a business combination under U.S. GAAP. Under the acquisition method of accounting, the assets and liabilities of NIRLAB have been recorded as of the acquisition date, at their respective fair values, and consolidated with those of the Company.

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The Company has preliminarily allocated the purchase price to the net tangible and intangible assets and liabilities assumed based on their fair values as of May 4, 2026. The valuation of assets acquired and liabilities assumed has not yet been finalized as of June 30, 2026. Finalization of the valuation during the measurement period could result in a change in the amounts recorded for the acquired intangible assets, goodwill and among other items. The completion of the valuation will occur no later than one year from the acquisition date.

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Fair Value of Net Assets Acquired

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The following table presents the preliminary allocation of the consideration paid on the acquisition date for the NIRLAB transaction (amounts in thousands):

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The excess of the purchase price over the fair value of the acquired business's net assets represents cost and revenue synergies specific to the Company and NIRLAB, and has been allocated to goodwill, which is not tax deductible. As the Company operates in a single reportable segment, which consists of only one reporting unit, the entire balance of the acquired goodwill has been allocated to this single reporting unit for the purpose of subsequent impairment testing.

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The fair value of NIRLAB’s technology-based intangible assets were determined using the multi-period excess earnings method which measures economic benefit indirectly by calculating the income attributable to an asset after appropriate returns are paid to complementary assets used in conjunction with the subject asset to produce the earnings associated with the subject assets, commonly referred to as contributory asset charges. Under this method, the value of an asset is a function of several components, including the forecasted revenue, earnings generated by the asset, expected economic life of the asset, contributory asset charges and a discount rate.

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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. The fair value of the developed technology was also calculated using the multi-period excess earnings method that uses market-based inputs to value an asset.

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The fair value of the trade name was calculated using a relief from royalty method, a form of the income approach, which incorporate fair value of a royalty to a third party for the use of that asset. The projected revenue attributable to the products or services using the asset, economic life of the asset and the royalty rate, as a percentage of revenue that would hypothetically be charged by a licensor of the asset to an unrelated licensee and a discount rate are common components of the method.

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Intangible assets acquired have finite life and are amortized per our accounting policy. See Note 2, Summary of Significant Accounting Policies, for the amortization periods.

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The results of NIRLAB’s operations have been included in the Company’s condensed consolidated financial statements since the date of the acquisition. NIRLAB contributed $0.6 million in revenue during the three months ended June 30, 2026. The Company has not disclosed NIRLAB’s net income or loss since the acquisition date because the NIRLAB business is fully integrated into the condensed consolidated Company’s operations and therefore it was impracticable to determine these amounts.

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The unaudited pro forma results do not reflect any operating efficiencies or potential cost savings which may result from the consolidation of the operations of the Company and NIRLAB. Accordingly, these unaudited pro forma results are presented for informational purposes only and are not necessarily indicative of the results of operations that would have been achieved had the acquisition occurred on January 1, 2025, nor are they intended to represent or be indicative of future results of operations (in thousands):

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Supplemental pro forma pre-tax loss for the three and six months ended June 30, 2025 were adjusted to exclude $0.4 million and $1.1 million of acquisition-related costs, respectively, and include additional $0.3 million and $0.5 million of intangible amortization costs, respectively.

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Acquisition of KAF Manufacturing Company, Inc.

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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.

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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.

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The purchase price allocation related to the acquisition of KAF is complete.

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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. 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.

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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.

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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.

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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):

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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 Note 2, Summary of Significant Accounting Policies, for the amortization periods.