Note 16 - Business Combination

12 Months Ended

Dec. 31, 2025

Notes to Financial Statements

Business Combination [Text Block]

16. BUSINESS COMBINATION

SecureWise LLC

On February 19, 2025, the Company entered into an Equity Purchase Agreement (the “Purchase Agreement”) with Telit IOT Solutions Inc., a Delaware corporation (the “Seller”), and SecureWise, pursuant to which the Company agreed to acquire the Seller’s SecureWise business (the “Business”) by means of a purchase of all of the outstanding equity interests of SecureWise held by the Seller (the “Transaction”).

On March 7, 2025, the Company completed the acquisition of the Business from the Seller pursuant to the Purchase Agreement for a cash purchase price of $130.0 million, subject to customary adjustments in respect of indebtedness, transaction expenses, cash and working capital of the Business, in each case, in accordance with the terms of the Purchase Agreement. The Company financed the Transaction using a combination of cash on hand and borrowings under the Credit Facilities.

The Company expects the Transaction to accelerate equipment makers’ ability to derive value from equipment data by enabling them to leverage the Company’s Exensio analytics software and to expand the capability of the Company’s secure data exchange (“DEX”) outsourced semiconductor assembly and test (“OSAT”) network by allowing equipment makers, fab operators, and fabless companies to collaborate to optimize chip manufacturing and test.

The Company accounted for the Transaction as a business combination in accordance with FASB ASC Topic 805, Business Combinations. This method requires that assets acquired and liabilities assumed in a business combination be recognized at their respective estimated fair values as of the acquisition date. The Company allocated the purchase price to identifiable assets acquired based on their estimated fair values. The fair value of the consideration transferred and the assets acquired and liabilities assumed was determined by the Company and in doing so management engaged a third-party valuation specialist to assist with the measurement of the fair value of identifiable intangible assets. The estimated fair value of the identifiable assets acquired and liabilities assumed was based on management’s best estimates. The fair value of the customer relationships was determined using the multi-period excess earnings income approach or cost approach. The fair value of trade names and developed technology was determined using the relief-from-royalty method. The fair value of acquired technology was determined using the cost approach. The excess of purchase consideration over the fair value of net tangible and identifiable intangible assets acquired was recorded as goodwill. The goodwill recorded from this acquisition represents business benefits the Company anticipates from the acquired workforce and expectation for expanded sales opportunities to foster further business growth. The goodwill associated with the acquisition is deductible for tax purposes.

The Company expensed all transaction costs in the period in which they were incurred. The total acquisition and integration costs related to the acquisition of SecureWise amounted to $5.4 million, of which $4.5 million was recorded for the year ended December 31, 2025, and $0.9 million in the fourth quarter of 2024.

The purchase price allocation for the acquisition of SecureWise were as follows (in thousands, except amortization period):

				Amortization
	Amount			Period (Years)
Allocation of Purchase Price:
Fair value estimates of assets acquired and liabilities assumed
Cash	$	1,049
Accounts receivable		2,970
Prepaid and other assets		2,896
Property and equipment		1,535
Fair value of intangible assets:
Trademark		6,600			5
Customer relationships		28,900			13
Developed technology		11,600			7
Goodwill		80,008			N/A
Accounts payable and other current liabilities		(4,791	)
Total purchase price allocation	$	130,767

The estimated fair value of the accounts receivable acquired approximates the contractual value of $3.0 million.

The purchase price has been allocated to assets acquired and liabilities assumed based on the Company’s best estimates and assumptions using the information available as of the acquisition date and throughout measurement period, not to exceed one year from the acquisition date. The provisional measurements of identifiable assets and liabilities, and the resulting goodwill related to the acquisition are subject to adjustments in subsequent periods as the Company finalizes its purchase price allocation to the individual assets acquired. The Company believes that information gathered to date provides a reasonable basis for estimating the fair values of assets acquired and liabilities assumed. The Company expects to finalize the valuation as soon as practicable, but no later than one year from the acquisition date. The purchase price allocation has been updated for measurement period adjustments which decreased goodwill by $1.7 million, primarily related to revised assessments of pre-acquisition amounts including prepaid and other current assets, and other current liabilities adjustment. 

Pro forma information reflecting the impact of the Transaction has not been presented as the Transaction was not material to the Company’s financial results.