Fathom OpCo Predecessor Period Acquisitions | Note 4 - Fathom OpCo Predecessor Period Acquisitions In the Predecessor Periods, Fathom OpCo completed a series of acquisitions that were each accounted for under the acquisition method in accordance with ASC 805. Acquisition of Incodema, LLC and Newchem, LLC Fathom OpCo completed acquisitions of Incodema, LLC (“Incodema”) and Newchem, LLC (“Newchem”) on July 27, 2020 in which it acquired 100 percent of the membership interests of Incodema and Newchem. Incodema is a prototype and short run sheet metal stamping provider, and Newchem is a photochemical milling company whose process involves coating material specified with a light sensitive polymer, imaging with a photo tool using UV light, developing and then chemically etching. The acquisition was consistent with Fathom OpCo's mission to expand its high-quality manufacturing and industrial technology capabilities in North America. The transaction was accounted for using the acquisition method of accounting and the fair value of the total purchase consideration transferred consisted of the following: Consideration Incodema Newchem Total Cash $ 30,948 $ 6,320 $ 37,268 Equity instruments 920 183 1,103 Contingent consideration 8,696 - 8,696 Fair value of total consideration transferred $ 40,564 $ 6,503 $ 47,067 The consideration excluded $ 1,489 of buyer transaction expenses that were included in other expenses within the 2020 Predecessor Period consolidated statements of comprehensive loss. In addition, Fathom OpCo paid a transaction fee of $ 400 to an affiliate of the majority member of Fathom OpCo in conjunction with the transaction. The following table sets forth the fair values of the assets acquired and liabilities assumed in connection with the acquisition of Incodema and Newchem: Acquisition Date Fair Value Recognized amounts of identifiable assets acquired and liabilities assumed Incodema Newchem Cash $ 63 $ 69 Accounts receivable, net 2,370 741 Inventory 735 487 Other current assets 3 1 Prepaid expenses 77 8 Fixed assets, net 2,277 1,949 Intangible assets 19,300 2,800 Total assets acquired 24,825 6,055 Accounts payable 324 223 Accrued expenses 110 35 Other current liabilities 286 61 Total liabilities assumed 720 319 Total identifiable net assets 24,105 5,736 Goodwill $ 16,459 $ 767 Additional contingent consideration is due to the seller of Incodema based upon the gross profit of a specified product sold by Incodema for the periods en ding December 31, 2020 (Predecessor), December 31, 2021 (Successor), and December 31, 2022. The Company paid $ 1,984 in 2021 in contingent consideration for the period ended December 31, 2020 and expects that the remaining undiscounted payments under the under the contingent consideration arrangement will be $ 2,720 and $ 850 in the periods ended December 31, 2022, and December 31, 2023, respectively. Below is a summary of the intangible assets acquired in the acquisition: Acquisition Date Fair Value - Incodema Estimated Life (Years) Trade name $ 2,700 15 Customer relationships 11,500 9 Developed software 5,100 5 Total intangible assets $ 19,300 Acquisition Date Fair Value - Newchem Estimated Life (Years) Trade name $ 300 5 Customer relationships 2,500 16 Total intangible assets $ 2,800 The amounts of revenue and net (loss) of Incodema since the acquisition date included in the 2020 Predecessor Period consolidated statement of comprehensive loss was as follows: Period From January 1 - December 31, 2020 (Predecessor) Revenue $ 6,900 Net (loss) $ ( 1,085 ) The amounts of revenue and net income of Newchem since the acquisition date included in the 2020 Predecessor Period consolidated statement of comprehensive loss was as follows: Period From January 1 - December 31, 2020 (Predecessor) Revenue $ 2,369 Net income $ 184 Acquisition of Dahlquist Machine, LLC Fathom OpCo completed an acquisition of Dahlquist Machine, LLC (“Dahlquist”) on December 16, 2020 in which it acquired 100 percent of the membership interest of Dahlquist. In conjunction with the equity purchase, Fathom OpCo acquired the real estate in which Dahlquist Machine, LLC performs their operations. Dahlquist is a precision machining company with state-of-the-art computer numerical control ("CNC") mills and lathes, specializing in high-speed precision machining of light metals, aluminum, and plastics. The acquisition was consistent with Fathom OpCo's mission to acquire high-quality manufacturing and industrial technology companies in North America. The transaction was accounted for using the acquisition method of accounting and the fair value of the total purchase consideration transferred consisted of the following: Consideration Total Cash $ 16,098 Equity instruments 368 Contingent consideration 1,166 Fair value of total consideration transferred $ 17,632 The consideration excludes $ 804 of buyer transaction expenses that are included in other expenses within the 2020 Predecessor Period consolidated statements of comprehensive loss. In addition, Fathom Opco paid a transaction fee of $ 252 to an affiliate of the majority member of Fathom OpCo as part of the transaction. The following table sets forth the fair values of the assets acquired and liabilities assumed in connection with the acquisition of Dahlquist: Recognized amounts of identifiable assets acquired and liabilities assumed Total Cash $ 357 Accounts receivable, net 1,215 Inventory 1,597 Indemnification asset - PPP loan 518 Prepaid expenses 8 Fixed assets, net 3,753 Intangible assets 8,300 Total assets acquired 15,748 Accounts payable 68 Paycheck Protection Program (PPP) loan 518 Accrued expenses 475 Total liabilities assumed 1,061 Total identifiable net assets 14,687 Goodwill $ 2,945 The earnout is based upon the Dahlquist's reported earnings before interest, taxes, depreciation, and amortization for the trailing twelve-month period ending June 30, 2021. All contingent consideration balances related to the Dahlquist acquisition ($ 2,600 ) have been paid as of December 31, 2021 (Successor). Below is a summary of the intangible assets acquired in the acquisition: Acquisition Date Fair Value Estimated Life (Years) Trade name $ 500 5 Customer relationships 7,800 14 Total intangible assets $ 8,300 The amounts of revenue and net (loss) of Dahlquist since the acquisition date included in the 2020 Predecessor Period consolidated statement of comprehensive loss was a follows: Period From January 1 - December 31, 2020 (Predecessor) Revenue $ 310 Net (loss) $ ( 940 ) Acquisition of Majestic Metals, LLC Fathom OpCo completed an acquisition of Majestic Metals, LLC (“Majestic”) on December 17, 2020 in which it acquired 100 percent of the membership interest of Majestic. Majestic is a precision sheet metal fabricator and has evolved into one of the most progressive precision sheet metal products manufacturers in the nation. The acquisition is consistent with the Fathom OpCo's mission to expand its high-quality manufacturing and industrial technology capabilities in North America. The transaction was accounted for using the acquisition method of accounting and the fair value of the total purchase consideration transferred consisted of the following: Consideration Total Cash $ 33,557 Equity instruments 1,471 Fair value of total consideration transferred $ 35,028 The consideration excludes $ 1,145 of buyer transaction expenses that are included in other expenses within the 2020 Predecessor Period consolidated statement of comprehensive loss. In addition, Fathom OpCo paid a transaction fee of $ 361 to an affiliate of the majority member of Fathom OpCo. The following table sets forth the fair values of the assets acquired and liabilities assumed in connection with the acquisition: Recognized amounts of identifiable assets acquired and liabilities assumed Total Cash $ ( 1 ) Accounts receivable, net 2,646 Inventory 1,184 Other current assets 30 Prepaid expenses 201 Fixed assets, net 4,229 Intangible assets 20,100 Total assets acquired 28,389 Accounts payable 244 Accrued expenses 231 Other current liabilities 644 Total liabilities assumed 1,119 Total identifiable net assets 27,270 Goodwill $ 7,758 Below is a summary of the intangible assets acquired in the acquisition: Acquisition Date Fair Value Estimated Life (Years) Trade name $ 1,500 5 Customer relationships 18,600 16 Total intangible assets $ 20,100 The amounts of revenue and net (loss) of Majestic since the acquisition date included in the 2020 Predecessor Period statement of comprehensive loss for the reporting periods are as follows: Period From January 1 - December 31, 2020 (Predecessor) Revenue $ 911 Net (loss) $ ( 1,129 ) Acquisition of Summit Tooling, Inc., and Summit Plastics, LLC: Fathom OpCo completed an acquisition of Summit Tooling Inc. ("Summit Tooling") and Summit Plastics LLC (“Summit Plastics”, together with Summit Tooling, “Summit”) on February 1, 2021 in which it acquired 100 percent of the equity interests of Summit. In conjunction with the equity purchase, Fathom OpCo acquired the real estate in which Summit performs their operations. Summit Tooling designs and manufactures plastic injection molds and Summit Plastics provides molding of precision plastic components for a variety of industries. The primary reason for the acquisition was to expand Fathom OpCo's capabilities in manufacturing and expand its customer base of high-quality manufacturing and industrial technology companies in North America. The transaction was accounted for using the acquisition method of accounting and the fair value of the total purchase consideration transferred consisted of the following: Consideration Total Cash $ 10,875 Fair value of total consideration transferred $ 10,875 The consideration excluded $ 892 of buyer transaction expenses that are included in other expenses within the 2021 Predecessor Period consolidated statement of comprehensive loss. In addition, Fathom OpCo paid a transaction fee of $ 225 to an affiliate of the majority member of Fathom OpCo. The goodwill recognized as part of the acquisition primarily reflects the value of the assembled workforce acquired and the value of future growth prospects and expected business synergies realized as a result of combining and integrating the acquired business into Fathom OpCo's existing platform. The goodwill recognized is partially deductible for tax purposes. The following table sets forth the fair values of the assets acquired and liabilities assumed in connection with the acquisition of Summit: Recognized amounts of identifiable assets acquired and liabilities assumed Total Cash $ 40 Accounts receivable, net 627 Inventory 339 Fixed assets, net 4,371 Intangible assets 5,000 Total assets acquired 10,377 Accounts payable 40 Deferred revenue 776 Other current liabilities 1,418 Total liabilities assumed 2,234 Total identifiable net assets 8,143 Goodwill $ 2,732 Below is a summary of the intangible assets acquired in the acquisition: Acquisition Date Fair Value Estimated Life (Years) Trade name $ 400 5 Customer relationships 4,600 11 Total intangible assets $ 5,000 The amounts of revenue and net loss of Summit since the acquisition date included in the consolidated statements of comprehensive loss for the 2021 Predecessor Period are as follows: Period From January 1 - December 22, 2021 (Predecessor) Revenue $ 6,748 Net (loss) $ ( 370 ) Acquisition of Precision Process Corp.: Fathom OpCo completed an acquisition of Precision Process Corp. ("PPC") on April 30, 2021 in which it acquired 100 percent of the membership interest of PPC. In conjunction with the equity purchase, Fathom Opco acquired the real estate in which PPC performs their operations. PPC is a manufacturing company that offers integrated engineering-to-production services, specializing in making prototype, small-run and mass production of parts and components for medical, high-tech, automotive and metal stamping industries. The primary reason for the acquisition was to expand Fathom OpCo's capabilities into metal stamping with high-quality manufacturing and industrial technology companies in North America. The transaction was accounted for using the acquisition method of accounting and the fair value of the total purchase consideration transferred consisted of the following: Consideration Total Cash $ 25,721 Fair value of total consideration transferred $ 25,721 The consideration excludes $ 984 of buyer transaction expenses that are included in other expenses within the accompanying consolidated statements of comprehensive loss . Fathom OpCo paid a transaction fee of $ 264 to an affiliate of the majority member of Fathom OpCo. The goodwill recognized as part of the acquisition primarily reflects the value of the assembled workforce acquired and the value of future growth prospects and expected business synergies realized as a result of combining and integrating the acquired business into Fathom OpCo's existing platform. The goodwill recognized is partially deductible for tax purposes. The following table sets forth the fair values of the assets acquired and liabilities assumed in connection with the acquisition of PPC: Recognized amounts of identifiable assets acquired and liabilities assumed Total Cash $ 162 Accounts receivable, net 899 Inventory 480 Fixed assets, net 2,413 Intangible assets 14,200 Total assets acquired 18,154 Accounts payable 148 Accrued expenses 79 Total liabilities assumed 227 Total identifiable net assets 17,927 Goodwill $ 7,794 Below is a summary of the intangible assets acquired in the acquisition: Acquisition Date Fair Value Estimated Life (Years) Trade name $ 1,100 5 Customer relationships 13,100 17 Total intangible assets $ 14,200 The amounts of revenue and net loss of PPC since the acquisition date included in the consolidated statements of comprehensive loss for the 2021 Successor Period is as follows: Period From January 1 - December 22, 2021 (Predecessor) Revenue $ 6,993 Net (loss) $ ( 34 ) Acquisition of Centex Machine and Welding, Inc. and Laser Manufacturing, Inc.: Fathom OpCo completed acquisitions of Centex Machine and Welding, Inc. ("Centex") and Laser Manufacturing, Inc. ("Laser") on April 30, 2021 in which it acquired 100 percent of the equity interests of Centex and Laser. Centex is a top tier medical device manufacturing supplier and Laser provides high precision manufacturing services, combining state of the art technology with expert craftsmanship to deliver superior products. The acquisition was completed in order to expand Fathom OpCo's high-quality manufacturing and industrial technology capabilities in North America. The transaction was accounted for using the acquisition method of accounting and the fair value of the total purchase consideration transferred consisted of the following: Consideration Centex Laser Total Cash $ 11,774 $ 6,946 $ 18,720 Fair value of total consideration transferred $ 11,774 $ 6,946 $ 18,720 The consideration excluded $ 1,226 of buyer transaction expenses that are included in other expenses within the 2021 Predecessor period consolidated statements of comprehensive loss . Fathom OpCo also paid a transaction fee of $ 190 to an affiliate of the majority member of the Fathom OpCo in connection with the transaction. The goodwill recognized as part of the acquisition primarily reflects the value of the assembled workforce acquired and the value of future growth prospects and expected business synergies realized as a result of combining and integrating the acquired businesses into the Company’s existing platform. The goodwill recognized is partially deductible for tax purposes. The following table sets forth the fair values of the assets acquired and liabilities assumed in connection with the acquisition of Centex and Laser: Acquisition Date Fair Value Centex Laser Recognized amounts of identifiable assets acquired and liabilities assumed Cash $ - $ 68 Accounts receivable, net 1,775 900 Inventory 524 622 Prepaid expenses 108 1 Fixed assets, net 1,787 760 Intangible assets 6,243 3,557 Other assets 1 2 Total assets acquired 10,438 5,910 Accounts payable 252 568 Paycheck Protection Program (PPP) loan 649 - Accrued expenses 271 27 Other current liabilities 23 44 Other noncurrent liabilities 1,234 703 Total liabilities assumed 2,429 1,342 Total identifiable net assets 8,009 4,568 Goodwill $ 3,765 $ 2,378 Below is a summary of the intangible assets acquired in the acquisition: Acquisition Date Estimated Life (Years) Trade name $ 510 5 Customer relationships 5,733 17 Total intangible assets $ 6,243 Acquisition Date Estimated Life (Years) Trade name $ 290 5 Customer relationships 3,267 17 Total intangible assets $ 3,557 The amounts of revenue and net loss of Centex and Laser since the acquisition date included in the consolidated statements of comprehensive loss for the 2021 Predecessor Period and is as follows: Period From January 1 - December 22, 2021 (Predecessor) Revenue $ 9,642 Net (loss) $ ( 98 ) Acquisition of Sureshot Precision, LLC: Fathom OpCo completed an acquisition of Sureshot Precision, LLC (d/b/a as "Micropulse West") on April 30, 2021 in which it acquired 100 percent of the membership interest of Micropulse West. Micropulse West is a full-service specialist offering a variety of services such as wire Electrical Discharge Machine (“EDM”), ram EDM, small hole EDM, CNC and manual machining/turning, surface grinding, and inspection. The acquisition was consistent with the Fathom OpCo’s mission to acquire high-quality manufacturing and industrial technology companies in North America. The transaction was accounted for using the acquisition method of accounting and the fair value of the total purchase consideration transferred consisted of the following: Consideration Total Cash $ 12,452 Contingent consideration 1,295 Fair value of total consideration transferred $ 13,747 The consideration excludes $ 869 of buyer transaction expenses that are included in other expenses within the 2021 Predecessor Period consolidated statement of comprehensive loss. In addition, Fathom OpCo paid a transaction fee of $ 130 to an affiliate of the majority member of Fathom OpCo. The goodwill recognized as part of the acquisition primarily reflects the value of the assembled workforce acquired and the value of future growth prospects and expected business synergies realized as a result of combining and integrating the acquired businesses into Fathom OpCo's existing platform. The goodwill recognized is partially deductible for tax purposes. The following table sets forth the fair values of the assets acquired and liabilities assumed in connection with the acquisition of Micropulse West: Recognized amounts of identifiable assets acquired and liabilities assumed Total Cash $ 70 Accounts receivable, net 866 Inventory 333 Other current assets 10 Fixed assets, net 2,490 Intangible assets 7,000 Total assets acquired 10,769 Accounts payable 139 Accrued expenses 13 Other current liabilities 99 Total liabilities assumed 251 Total identifiable net assets 10,518 Goodwill $ 3,229 Below is a summary of the intangible assets acquired in the acquisition: Acquisition Date Fair Value Estimated Life (Years) Trade name $ 600 5 Customer relationships 6,400 17 Total intangible assets $ 7,000 The amounts of revenue and net loss of Micropulse West since the acquisition date included in the 2021 Predecessor Period consolidated statement of comprehensive loss is as follows: Period From January 1 - December 22, 2021 (Predecessor) Revenue $ 4,614 Net (loss) $ ( 115 ) Other acquisitions Fathom OpCo acquired substantially all assets and property, and agreed to assume certain liabilities of GPI Prototype & Manufacturing Services, LLC on August 18, 2020 for a total consideration transferred of $ 2,441 . The primary reason for the acquisition was to expand Fathom OpCo's capabilities in 3D printing as well as expand its customer based with high-quality manufacturing and industrial technology companies in North America. In addition, Fathom OpCo completed an acquisition of Mark Two Engineering, LLC (“Mark Two”) on December 18, 2020 in which it acquired 100 percent of the membership interest of Mark Two for a total consideration transferred of $ 6,639 . Mark Two is a contract manufacturing firm that specializes in rapid prototyping, complex high-precision component machining and manufacturing in the Medical Device and Aerospace industries. The acquisition is consistent with Fathom Opco's mission to expand its high-quality manufacturing and industrial technology capabilities in North America. |