Business Combinations |
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| Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Business combinations |
Pacific Sun Packaging Inc.
On July 7, 2025, the Company completed the acquisition of 100% of the outstanding shares of Pacific Sun Packaging Inc. (“Pacific Sun”). The acquisition was accounted for under ASC 805, Business Combinations. Refer to Note 5 in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 for further details of the acquisition and related purchase price allocation.
The acquisition included contingent consideration with a maximum potential payment of $250,000, which was recognized at fair value as of the acquisition date and is classified as a liability. The fair value was initially estimated using a probability-weighted discounted cash flow approach.
The contingent consideration was recognized at fair value as of the acquisition date and is classified as a liability. The fair value was estimated using a probability-weighted discounted cash flow approach, incorporating management’s revenue projections and an estimated discount rate of approximately 11%.
As of June 30, 2026, the estimated fair value of the contingent consideration liability was $217,204. The Company remeasures the contingent consideration liability at each reporting date. Changes in the liability due to the passage of time are recognized as accretion expense, while other changes in fair value, if any, are recognized in earnings. For the three months ended June 30, 2026, the Company recognized accretion expense of $5,578. For the six months ended June 30, 2026, the Company recognized accretion expense of $10,955.
AGA
On July 18, 2025, the Company acquired 100 percent of the membership interests of AGA. The acquisition was accounted for under ASC 805. Refer to Note 5 in the Form 10-K for the year ended December 31, 2025 for further details of the acquisition and related purchase price allocation.
Indarg Engineering, Inc.
On October 26, 2025, AGA acquired substantially all of the operating assets of Indarg Engineering, Inc. The transaction was accounted for as a business combination under ASC 805. Refer to Note 5 in the Form 10-K for the year ended December 31, 2025 for further details, including the purchase price allocation.
As part of the acquisition, the Company issued a promissory note with a principal amount of $170,000, bearing interest at 8% per annum and payable in equal quarterly installments over a two-year term. As of June 30, 2026, the Company made repayments of $172,576 to settle the promissory note.
SVM
On February 2, 2026, the Company completed the acquisition of 100% of the outstanding common stock of SVM. As consideration for the acquisition, the Company paid cash of $2,000,000, recognized an indemnification holdback of $250,000, included a cash balance component of $130,000, recorded a net working capital adjustment of $69,148, and recognized contingent consideration with an acquisition-date fair value of $555,000. Total consideration was $3,004,148.
The contingent consideration is based on SVM’s 2026 revenue performance and has a maximum payout of $1,250,000. The contingent consideration was recognized at fair value as of the acquisition date and is classified as a liability. The fair value was estimated using a probability-weighted discounted cash flow approach based on projected revenue outcomes and a risk-adjusted discount rate of 14%. The liability will be remeasured at each reporting date, with changes in fair value recognized in earnings. The following table summarizes the fair value of consideration transferred and the preliminary allocation of the purchase price to the assets acquired and liabilities assumed:
Goodwill recognized primarily reflects expected synergies from integrating SVM’s operations and workforce and is not expected to be deductible for tax purposes. The results of SVM’s operations are included in the consolidated financial statements beginning February 2, 2026.
A&B Aerospace, Inc.
On May 11, 2026, the Company completed the acquisition of 100% of the issued and outstanding shares of A&B, a California-based precision machining business serving aerospace customers, on a cash-free, debt-free basis. The transaction was accounted for as a business combination under ASC 805. Consideration comprised cash of $4,500,000, of which $4,275,000 was paid to the sellers at closing and $225,000 was retained by the Company as an indemnification holdback, plus the estimated closing cash balance of $748,717 and a net working capital adjustment of $89,357, being the amount by which estimated closing net working capital of $945,026 exceeded the net working capital target of $855,669. Total consideration was $5,338,073.
The purchase price allocation is provisional. The final adjustment amount contemplated by the stock purchase agreement had not been determined as of June 30, 2026, and the Company is continuing to evaluate the fair values assigned to the assets acquired and the liabilities assumed. Measurement period adjustments, if any, will be recognized within one year of the acquisition date. The following table summarizes the fair value of consideration transferred and the preliminary allocation of the purchase price to the assets acquired and liabilities assumed:
Goodwill recognized primarily reflects expected synergies from integrating A&B’s operations, its assembled workforce and its qualification and certification base, and is not expected to be deductible for tax purposes. The results of A&B’s operations are included in the consolidated financial statements beginning May 11, 2026. |