Acquisitions

12 Months Ended

Jul. 31, 2022

Business Combination and Asset Acquisition [Abstract]

UHP Networks Inc.

On March 2, 2021, we completed our acquisition of UHP Networks Inc. ("UHP"), a leading provider of innovative and disruptive satellite ground station technology solutions, pursuant to a stock purchase agreement initially entered into in November 2019 and last amended on March 1, 2021. With end-markets for high-speed satellite-based networks anticipated to significantly grow, our acquisition allows us to enhance our Satellite and Space Communications segment's offerings with time division multiple access ("TDMA") satellite modems.

The acquisition had a final purchase price for accounting purposes of $37,470,000, which represents the sum of $23,979,000 paid at closing, $4,991,000 paid on August 1, 2021 and $8,500,000 related to the acquisition date estimated fair value of a $9,000,000 contingent earn-out payment.

At closing, we funded the $23,979,000 and $4,991,000 payments with 1,026,567 shares of our common stock, based on a volume weighted average stock price of approximately $28.14 per share, plus $87,000 in cash. As of July 31, 2022, 132,005 of the 1,026,567 shares of our common stock issued at closing were held in escrow to satisfy potential indemnification obligations of the seller.

In addition, the specified sales milestones were met and the full $9,000,000 earn-out payment was settled on July 12, 2022 with 961,302 newly issued shares of our common stock, based on a volume weighted average stock price of approximately $9.36 per share. Upon payment, twenty-percent, or 192,260 of the 961,302 newly issued shares were placed into escrow and are anticipated to be released to the seller equally on March 2, 2023 and 2024. The terms of the stock purchase agreement provide an ability for us to substitute cash in lieu of the common stock that was initially placed into escrow.

The following table summarizes the final fair value of assets acquired and liabilities assumed in connection with the UHP acquisition:


	Purchase Price Allocation
Initial upfront payment	$	23,979,000
Hold back amount	4,991,000
Contingent earn-out consideration	8,500,000
Purchase price at fair value	$	37,470,000
Allocation of aggregate purchase price:
Cash and cash equivalents	$	1,391,000
Current assets	1,367,000
Property, plant and equipment	10,000
Deferred tax assets	310,000
Contract liabilities	(648,000)
Accrued warranty obligations	(750,000)
Other current liabilities	(1,175,000)
Non-current liabilities	(160,000)
Net tangible assets at fair value	$	345,000
Identifiable intangibles, deferred taxes and goodwill:			Estimated Useful Lives
Technology	$	15,300,000	15 years
Customer relationships	15,500,000		15 years
Trade name	800,000		20 years
Deferred tax liabilities	(8,374,000)
Goodwill	13,899,000		Indefinite
Allocation of aggregate purchase price	$	37,470,000

We accounted for the acquisition under the acquisition method of accounting in accordance with FASB ASC 805, "Business Combinations" ("ASC 805"). Acquisition plan expenses were not included as a component of consideration transferred and were expensed in the period incurred. The final purchase price was allocated to the assets acquired and liabilities assumed, based on their fair value as of March 2, 2021 pursuant to the business combination accounting rules. Our consolidated statements of operations for the fiscal years ended July 31, 2022 and 2021 include a nominal amount of revenue contribution from the acquisition. Pro forma financial information is not disclosed, as the acquisition is not material.

Acquisition Plan Expenses

During fiscal 2021 and 2020, we incurred acquisition plan expenses of $100,292,000 and $20,754,000, respectively. Of the amount recorded in fiscal 2021, $88,343,000 related to the previously announced litigation and merger termination with Gilat Satellite Networks, Ltd. ("Gilat"), including $70,000,000 paid in cash to Gilat. The remaining costs primarily related to the April 2021 settlement of litigation associated with the 2019 acquisition of GD NG-911 as well as our acquisition of UHP, which closed in March 2021. Additionally, during fiscal 2021, we recorded $1,178,000 of incremental interest expense related to a now terminated financing commitment letter.