ACQUISITIONS

The Company has completed multiple acquisitions since it began operations in August 2008. The acquisitions were made to increase the Company’s skill sets and to create sufficient critical mass to be able to serve as prime contractor on significant contracts. Most of the acquisitions resulted in the Company recording goodwill and other intangibles. The goodwill was primarily a result of the acquisitions focusing on acquiring cleared personnel to expand our presence with our main customers. The value of having that personnel generated the majority of the goodwill from the transactions and drove much of the purchase price in addition to other identified intangibles including contracts, customer relationships, contract rights and intellectual property. Several of the acquisitions involved issuance of Company common stock. The stock price for acquisition accounting was determined by the fair value on the acquisition date.

Details of the acquisition completed since January 1, 2014 are outlined below:

2014 Acquisitions

During the second and third quarters of 2014, the Company acquired the assets of NetClarity, Inc. ("NetClarity") and certain assets of Architecture Technology Corporation ("ATC") in two separate transactions. The total consideration paid for these two purchases was $2.9 million in cash and 99,851 shares of KEYW stock valued at $1.1 million. Neither of these acquisitions are considered material to the financial results of KEYW.

2015 Acquisitions

During the first and second quarters of 2015, the Company acquired Milestone Intelligence Group, Inc. ("Milestone"), Ponte Technologies, LLC ("Ponte Tech") and certain assets of Innovative Engineering Solutions, Inc. in three separate transactions. The total consideration paid for these three acquisitions was $21.2 million in cash and 242,250 shares of KEYW stock valued at $1.9 million. These acquisitions are not considered material to the financial results of KEYW.

The total purchase price paid for the acquisitions described above have been allocated as follows (in thousands):

(The final accounting for the 2015 acquisitions are still in progress and the numbers presented below are preliminary and subject to change.)



	NetClarity /ATC		2015 Acquisitions

Cash	$	—	$	643
Current assets, net of cash acquired	63		1,498
Fixed assets	24		155
Intangibles	3,928		4,834
Goodwill	—		16,741
Total Assets Acquired	4,015		23,871
Total Liabilities Assumed	59		844
Net Assets Acquired	$	3,956	$	23,027
Net Cash Paid	$	2,890	$	20,526
Equity Issued	1,066		1,858
Actual Cash Paid	$	2,890	$	21,169

All acquisitions were accounted for using the acquisition method of accounting. Results of operations for each acquired entity were included in the consolidated financial statements from the date of each acquisition.

Pro forma income statements are not presented for the nine months ended September 30, 2015 and 2014 as there have been no material acquisitions during these periods.