On May 28, 2021 (“Closing Date”), the Company entered into an Asset Purchase Agreement (“APA”) with Additive Orthopaedics, LLC (“Additive” or “Seller”) and completed an acquisition of substantially all of the operating and intangible assets of Additive, for total cash consideration of $15,000 at closing. The APA also provided for potential earn-out consideration to the Seller in connection with the achievement of certain milestones, including both project-based and revenue-based milestones, with various expiration dates through the fourth anniversary of the Closing Date. The earn-out has a maximum payment not to exceed $9,500, in the aggregate. If an individual milestone is not met by the specified milestone expiration date, no earn-out related to that specific milestone is due. The contingent earn-out consideration had an estimated fair value of $2,870 as of the Closing Date. Acquisition related costs were approximately $822 during the year ended December 31, 2021 and are included in Selling, general, and

administrative expenses in the Consolidated Statements of Operations and Comprehensive (Loss) Income. No acquisition related costs were incurred in the years ended December 31, 2020 and 2019.

Additive’s 3D-printed Patient Specific Talus Spacer is the only U.S. Food and Drug Administration-approved patient-specific total talus replacement implant authorized in the U.S. for the treatment of avascular necrosis. The acquisition of Additive allowed the Company to further expand into the patient specific implant market.

The Company has accounted for the acquisition of Additive under ASC Topic 805, Business Combinations (“ASC 805”). Additive’s results of operations are included in the Consolidated Financial Statements beginning after May 28, 2021, the acquisition date.

The following table summarizes the preliminary fair values of the assets acquired and liabilities assumed as of the Closing Date:


	Preliminary allocation		Measurement period adjustments			Adjusted allocation
Assets acquired:
Accounts receivable	$	761	$	—		$	761
Inventory		113		—			113
Intangible assets		11,560		—			11,560
Goodwill		7,872		(1,543	)		6,329
Total Assets Acquired	$	20,306	$	(1,543	)	$	18,763

Liabilities assumed:
Accounts payable	$	796	$	—		$	796
Accrued expenses		600		(503	)		97
Total Liabilities Assumed	$	1,396	$	(503	)	$	893
Net assets acquired	$	18,910	$	(1,040	)	$	17,870

Due to a change in the estimated accrued expenses as of the date of acquisition, we made a measurement period adjustment of $503 during the year ended December 31, 2021. Additionally, based on further evaluation of inputs within the valuation model, we made a measurement period adjustment of $1,040 that decreased the contingent consideration fair value recorded as of the date of acquisition.

Identified intangible assets consist of noncompete arrangements, customer relationships, and developed technology. The fair value of each were determined with the assistance of an external valuation specialist using a combination of the income, market, and asset approach valuation methodologies, in accordance with ASC 805. The purchase consideration was allocated to the identifiable net assets acquired based on estimated fair values at the date of the acquisition. The purchase consideration and its allocation are preliminary, pending finalization of certain tax matters, and may be adjusted to reflect new information obtained about facts and circumstances that existed as of the acquisition date. The excess of the fair value of the purchase consideration over the fair value of the identifiable assets and liabilities, if any, was recorded as goodwill. The goodwill is attributable to the expected synergies with the Company’s existing operations. The entire amount of the purchase price allocated to goodwill will be deductible for income tax

purposes pursuant to Internal Revenue Code Section 197 over a 15-year period. The useful life determination was made by management in line with the Company’s policy on assets. Both determinations are outlined in the table below:

There is no supplemental proforma presentation of operating results of the acquisition of Additive due to the immaterial impact on the Company’s Consolidated operations for the years ended December 31, 2021 and 2020.

Fair Value

Estimated Useful Life (in years)

Noncompete arrangements

Customer relationships

Developed technology