v3.26.1
Acquisitions
 9 Months Ended
Jun. 30, 2026
Acquisitions  
Acquisitions

3. Acquisitions

Honeywell Autopilot Agreement

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On March 27, 2026, the Company entered into the Honeywell Autopilot Agreement with Honeywell, pursuant to which Honeywell sold, assigned or licensed certain assets related to its general aviation autopilots and nav/com, multifunction display and transponder radios, granted exclusive and non-exclusive licenses to use certain Honeywell intellectual property related to its general aviation autopilots and nav/com, multifunction display and transponder radios to repair, overhaul, manufacture, sell, import, export and distribute certain products and granted certain other intellectual property rights to the Company for consideration of $22.0 million in cash.

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The Company determined that the transaction met the definition of a business under ASC 805; therefore, the Company accounted for the transaction as a business combination and applied the acquisition method of accounting. The Company financed the Honeywell Autopilot Agreement with borrowings against the Company’s delayed draw term loan. Please see Note 9, “Loan Agreement” for more details.

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The allocation of the purchase price was based upon certain preliminary valuations and other analyses. The allocation of the purchase price has not been finalized as of the date of this filing due to the fact that while legal control has occurred, the Company has not yet received physical possession of the prepaid inventory, equipment and intellectual property, and thus these assets will be subject to settlement adjustments upon transfer, which is expected to occur during the transition period, as outlined in the Honeywell Autopilot Agreement. During the measurement period, there may be value ascribed to the fair market value of any inventory and equipment expected to be received which will reduce goodwill. As a result, the purchase price amount for the transaction and the allocation of the preliminary purchase consideration are preliminary estimates, which may be subject to change within the measurement period.

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The allocation of the preliminary purchase consideration as of the acquisition date is as follows:

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Preliminary

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Purchase Price

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Allocation

Total consideration

$

22,000,000

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Intangible assets (a)

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18,190,000

Goodwill (b)

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3,810,000

Net assets acquired

$

22,000,000

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(a)Intangible assets consists of backlog ($1,420,000), customer relationships ($8,360,000), and license agreements ($8,410,000) related to the license rights to use certain Honeywell intellectual property and are recorded at estimated fair values. Backlog assets are amortized according to the timing of order fulfillment. The customer relationships are amortized over 10 years. The license agreements have an indefinite life and is not subject to amortization. The estimated fair value of these license agreements are based on a variation of the income valuation approach and are determined using the relief from royalty method. The estimated fair value of the backlog and customer relationships are based on a variation of the income valuation approach known as the multi-period excess earnings method. Refer to Note 2, “Supplemental Balance Sheet Disclosures” for further details.

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(b)Goodwill represents the excess of the purchase consideration over the preliminary fair value of the net assets acquired. During the measurement period, there may be value ascribed to the fair market value of any inventory and equipment expected to be received which will reduce goodwill. The goodwill recognized is primarily attributable to the expected synergies from the Honeywell Autopilot Agreement. Goodwill resulting from the Honeywell Autopilot Agreement has been assigned to the Company’s one reporting unit and is fully deductible for U.S. income tax purposes.

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Transition services agreement

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Concurrent with the Honeywell Autopilot Agreement, the Company entered into a transition services agreement with Honeywell, at no additional cost, to receive certain transitional services and technical support during the transition service period.

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Honeywell Generators Agreement

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On March 28, 2026, the Company entered into the Honeywell Generators Agreement with Honeywell, pursuant to which Honeywell sold, assigned or licensed certain assets related to its electronic generator and generator control unit for the F-15 and 767 tanker/freight platforms, including a sale of certain inventory, equipment and customer-related documents; an assignment of certain contracts; and a grant of exclusive and non-exclusive licenses to use certain Honeywell intellectual property related to its electronic generator and generator control unit for the F-15 and 767 tanker/freight platforms to repair, overhaul, manufacture, sell, import, export and distribute certain products to the Company for consideration of $8.0 million in cash.

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The Company determined that the transaction met the definition of a business under ASC 805; therefore, the Company accounted for the transaction as a business combination and applied the acquisition method of accounting. The Company financed the Honeywell Generators Agreement with borrowings against the Company’s delayed draw term loan. Please see Note 9, “Loan Agreement” for more details.

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The allocation of the purchase price was based upon certain preliminary valuations and other analyses. The allocation of the purchase price has not been finalized as of the date of this filing due to the fact that while legal control has occurred, the Company has not yet received physical possession of the prepaid inventory, equipment and intellectual property, and thus these assets will be subject to settlement adjustments upon transfer, which is expected to occur during the transition period, as outlined in the Honeywell Generators Agreement. During the measurement period, there may be value ascribed to the fair market value of any inventory and equipment expected to be received which will reduce goodwill. As a result, the purchase price amount for the transaction and the allocation of the preliminary purchase consideration are preliminary estimates, which may be subject to change within the measurement period.

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The allocation of the preliminary purchase consideration as of the acquisition date is as follows:

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Preliminary

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Purchase Price

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Allocation

Total consideration

$

8,000,000

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Intangible assets (a)

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4,350,000

Goodwill (b)

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3,650,000

Net assets acquired

$

8,000,000

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(a)Intangible assets consists of backlog ($1,890,000), customer relationships ($800,000), and license agreements ($1,660,000) related to the license rights to use certain Honeywell intellectual property and are recorded at estimated fair values. Backlog assets are amortized according to the timing of order fulfillment. The customer relationships are amortized over 8 years. The license agreements have an indefinite life and is not subject to amortization. The estimated fair value of these license agreements are based on a variation of the income valuation approach and are determined using the relief from royalty method. The estimated fair value of the backlog and customer relationships are based on a variation of the income valuation approach known as the multi-period excess earnings method. Refer to Note 2, “Supplemental Balance Sheet Disclosures” for further details.

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(b)Goodwill represents the excess of the purchase consideration over the preliminary fair value of the net assets acquired. During the measurement period, there may be value ascribed to the fair market value of any inventory and equipment expected to be received which will reduce goodwill. The goodwill recognized is primarily attributable to the expected synergies from the Honeywell Generators Agreement. Goodwill resulting from the Honeywell Generators Agreement has been assigned to the Company’s one reporting unit and is fully deductible for U.S. income tax purposes.

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Transition services agreement

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Concurrent with the Honeywell Generators Agreement, the Company entered into a transition services agreement with Honeywell, at no additional cost, to receive certain transitional services and technical support during the transition service period.

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Other

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In February 2026, the Company acquired the S-TEC® Model 3100 general aviation fixed wing autopilot product line from Moog (NYSE: MOG.A) for a total purchase consideration of $3.5 million in cash. The purchase price of this acquisition was paid in cash.

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The Company determined that the transaction met the definition of a business under ASC 805; therefore, the Company accounted for the transaction as a business combination and applied the acquisition method of accounting.

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The allocation of the purchase price was based upon certain preliminary valuations and other analyses. The allocation of the purchase price has not been finalized as of the date of this filing due to the fact that while transfer of legal control has occurred, the Company has not yet received physical possession of the intellectual property, and thus these assets will be subject to settlement adjustments upon transfer, which is expected to occur later this year. As a result, the allocation of the preliminary purchase consideration are preliminary estimates, which may be subject to change within the measurement period.

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The allocation of the preliminary purchase consideration as of the acquisition date is as follows:

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Preliminary

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Purchase Price

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Allocation

Total consideration

$

3,500,000

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Intangible assets (a)

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1,890,000

Goodwill (b)

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1,610,000

Net assets acquired

$

3,500,000

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(a)Intangible assets consists of backlog ($30,000), customer relationships ($170,000), trade name ($260,000) and license agreements ($1,430,000) related to the license rights to use certain intellectual property and are recorded at estimated fair values. Backlog assets are amortized according to the timing of order fulfillment. The customer relationships are amortized over 3 years. The trade name is amortized over 15 years. The license agreements have an indefinite life and is not subject to amortization. The estimated fair value of these license agreements and trade name are based on a variation of the income valuation approach and are determined using the relief from royalty method. The estimated fair value of the backlog and customer relationships are based on a variation of the income valuation approach known as the multi-period excess earnings method. Refer to Note 2, “Supplemental Balance Sheet Disclosures” for further details.

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(b)Goodwill represents the excess of the purchase consideration over the preliminary fair value of the net assets acquired. During the measurement period, there may be value ascribed to the fair market value of any equipment expected to be received which will reduce goodwill. The goodwill recognized is primarily attributable to the expected synergies from the Moog S-TEC® Agreement. Goodwill resulting from the Moog S-TEC® Agreement has been assigned to the Company’s one reporting unit and is fully deductible for U.S. income tax purposes.

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Transition services agreement

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Concurrent with the Moog S-TEC® Agreement, the Company entered into a transition services agreement with Moog, at no additional cost, to receive certain transitional services and technical support during the transition service period.

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Acquisition and related costs

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For the three and nine months ended June 30, 2026, the Company incurred acquisition costs of approximately $0.3 million and $1.0 million, respectively, which were expensed as incurred and included in selling, general and administrative expenses in the consolidated statements of operations.

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Unaudited actual and pro forma information

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For the nine months ended June 30, 2026, there were $2.3 million of Net sales attributable to the acquired businesses in the consolidated statements of operations.

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The following unaudited pro forma summary presents consolidated information of the Company, including the acquisitions, as if the transaction had occurred on October 1, 2024:

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Nine Months Ended June 30, 

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Nine Months Ended June 30, 

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2026

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2025

Net sales

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$

71,010,096

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$

76,962,638

Net income

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$

10,299,398

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$

12,839,992

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These pro forma results are for illustrative purposes and are not indicative of the actual results of operations that would have been achieved, nor are they indicative of future results of operations. The unaudited pro forma information for all periods presented was adjusted to give effect to pro forma events that are directly attributable to the transaction and are factually supportable. The adjustments are based on information available to the Company currently. Accordingly, the adjustments are subject to change, and the

impact of such changes may be material. The unaudited pro forma results do not include any incremental cost savings that may result from the integration.