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Acquisition | 9 Months Ended
--- | ---
Dec. 31, 2024
Business Combinations [Abstract] |
Acquisition | NOTE 2 – ACQUISITION: On November 9, 2023, the Company completed its acquisition of P3, a privately-owned custom turbomachinery engineering, product development, and manufacturing business located in Jupiter, Florida that serves the space, new energy, defense, and medical industries. The Company believes this acquisition advances its growth strategy, further diversifies its market and product offerings, and broadens its turbomachinery solutions. P3 is managed through the Company's Barber-Nichols, LLC ("BN") subsidiary and is highly complementary to BN's technology and enhances its turbomachinery solutions. This transaction was accounted for as a business combination which requires that assets acquired and liabilities assumed be recognized at their fair value as of the acquisition date. The purchase price of $11,238 was comprised of 125 shares of the Company's common stock, representing a value of $1,930, and cash consideration of $7,268. The cash consideration was funded through borrowings on the Company's line of credit. The purchase agreement included a contingent earn-out dependent upon certain financial measures of P3 post-acquisition, in which the sellers are eligible to receive up to $3,000 in additional cash consideration. A rollforward of the P3 contingent earn-out liability since the date of acquisition is as follows:
Balance at November 9, 2023 |  | $ | 2,040 |
Change in fair value |  |  | 80 |
Payments |  |  | — |
Balance at March 31, 2024 |  |  | 2,120 |
Change in fair value |  |  | (130 | )
Payments |  |  | — |
Balance at June 30, 2024 |  |  | 1,990 |
Change in fair value |  |  | (596 | )
Payments |  |  | — |
Balance at September 30, 2024 |  |  | 1,394 |
Change in fair value |  |  | (220 | )
Payments |  |  | — |
Balance at December 31, 2024 |  | $ | 1,174 |
The change in fair value of the contingent earn-out liability was included in other operating income in the Condensed Consolidated Statements of Operations. The cost of the acquisition was allocated to the assets acquired and liabilities assumed based upon their estimated fair value at the date of acquisition and the amount exceeding the fair value of $1,997 was recorded as goodwill, which is deductible for tax purposes. Goodwill generated in the acquisition is related to P3’s assembled workforce, synergies between the Company’s other operations and P3 that are expected to occur as a result of the combined engineering knowledge, the ability of each of the operations to leverage each other’s technology solutions, and the Company’s ability to utilize acquired management knowledge in providing complementary product offerings to the Company’s customers. The following table summarizes the final purchase price allocation of the assets acquired and liabilities assumed:
|  | November 9, |
|  | 2023 |
Assets acquired: |  |  |
Cash and cash equivalents |  | $ | 286 |
Trade accounts receivable, net of allowances |  |  | 465 |
Unbilled revenue |  |  | 302 |
Inventories |  |  | 808 |
Prepaid expenses and other current assets |  |  | 93 |
Property, plant & equipment, net |  |  | 542 |
Operating lease assets |  |  | 130 |
Goodwill |  |  | 1,997 |
Customer relationships |  |  | 4,400 |
Technology and technical know-how |  |  | 2,500 |
Tradename |  |  | 300 |
Total assets acquired |  |  | 11,823 |
Liabilities assumed: |  |  |
Accrued compensation |  |  | 62 |
Customer deposits |  |  | 389 |
Operating lease liabilities |  |  | 134 |
Total liabilities assumed |  |  | 585 |
Purchase price |  | $ | 11,238 |
The fair value of acquisition-related intangible assets includes customer relationships, technology and technical know-how, and tradename. The tradename is included in the line item other intangible assets, net in the Condensed Consolidated Balance Sheets. The fair value of customer relationships was calculated using an income approach, specifically the Multi Period Excess Earnings method, which incorporates assumptions regarding retention rate, new customer growth and customer related costs. The fair value of tradename and technology and technical know-how were both calculated using a Relief from Royalty method, which develops a market based royalty rate used to reflect the after tax royalty savings attributable to owning the intangible asset. Customer relationships and tradename are amortized in selling, general and administrative expense on a straight line basis over their estimated useful lives of eight years and three years respectively. Technology and technical know-how is amortized in cost of products sold on a straight line basis over its estimated useful life of ten years. During the three months ended June 30, 2024, the seller received $170 for tax liabilities owed in accordance with the purchase agreement. The Condensed Consolidated Statement of Operations for the three and nine months ended December 31, 2024 includes net sales for P3 of $963 and $3,400, respectively and net (loss) income of ($92) and $184, respectively. The following unaudited pro forma information presents the consolidated results of operations of the Company as if the P3 acquisition had occurred at the beginning of each of the fiscal periods presented:
|  | Three Months Ended |  |  | Nine Months Ended |
|  | December 31, |  |  | December 31, |
|  | 2024 |  |  | 2023 |  |  | 2024 |  |  | 2023 |
Net sales |  | $ | 47,037 |  |  | $ | 44,186 |  |  | $ | 150,551 |  |  | $ | 140,019 |
Net income |  |  | 1,588 |  |  |  | 464 |  |  |  | 7,835 |  |  |  | 4,554 |
Income per share |  |  |  |  |  |  |  |  |  |  |  |
Basic |  | $ | 0.15 |  |  | $ | 0.04 |  |  | $ | 0.72 |  |  | $ | 0.42 |
Diluted |  | $ | 0.14 |  |  | $ | 0.04 |  |  | $ | 0.71 |  |  | $ | 0.42 |
The unaudited pro forma information presents the combined operating results of the Company and P3 with the results prior to the acquisition date adjusted to include the pro forma impact of the adjustment of depreciation of fixed assets based on the preliminary purchase price allocation, the adjustment to interest expense reflecting the cash paid in connection with the acquisition, including acquisition-related expenses, at the Company’s weighted average interest rate, amortization expense related to the fair value adjustments for intangible assets, non-recurring acquisition-related costs, and the impact of income taxes on the pro forma adjustments utilizing the applicable statutory tax rate. The unaudited pro forma results are presented for illustrative purposes only. These pro forma results do not purport to be indicative of the results that would have actually been obtained if the acquisition occurred as of the beginning of each of the periods presented, nor does the pro forma data intend to be a projection of results that may be obtained in the future.

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- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 805 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 5 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org/1943274/2147479907/805-20-50-5 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 805 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/805/tableOfContent + Details
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