CHANGES IN BUSINESS

9 Months Ended

Sep. 30, 2024

CHANGES IN BUSINESS

CHANGES IN BUSINESS

NOTE 4 — CHANGES IN BUSINESS

On September 12, 2024, the consumer segment entered into a purchase agreement relating to the acquisition of the assets of Steven Kretchmer, Inc. (the “Kretchmer Transaction”), which amended, restated, and replaced the original terms and conditions of the stock purchase agreement entered into on September 12, 2023. The Kretchmer Transaction qualified as a business combination for accounting purposes, which involves the application of the acquisition method described in ASC 805, Business Combinations. The new asset purchase agreement was entered into by Steven Kretchmer, LLC a 100% owned subsidiary of the Company. Along with a change in the nature of the acquisition, the purchase price was amended

from $300 thousand to $150 thousand. The purchase consideration transferred for the Kretchmer Transaction was $100 thousand in cash, paid on September 12, 2023, and the remaining $50 thousand through a note payable obligation.

See Note 14 – Debt for further details.

The primary purpose of the Kretchmer Transaction was to broaden customer offerings with a complimentary brand and provide another outlet for the reuse of ethically sourced precious metals and gemstones in the manufacturing of new products.

The results of operations relating to the Kretchmer Transaction have been reflected in the Company’s consolidated financial statements from the initial date of acquisition. The Kretchmer Transaction was not material to the Company’s consolidated financial statements, and therefore, pro forma operating results and other disclosures for the Kretchmer Transaction are not presented except as referenced below.

As part of the Kretchmer Transaction, on September 12, 2023 the consumer segment recorded goodwill of $300 thousand as part of the initial purchase price allocation. During the three months ended September 30, 2024, with the finalization of the terms of the Kretchmer Transaction, the Company made certain measurement period adjustments to the preliminary purchase price allocation, which resulted in a $300 thousand decrease to goodwill, a $150 thousand decrease due to the amendment of the purchase price, and a $150 thousand decrease due to the recognition of the assets acquired as part of the acquisition. As of September 30, 2024, the accounting for the Kretchmer Transaction is complete.

See Note 6 – Goodwill for further details.

In accordance with ASC 805, Business Combinations, the table presented below represents the final allocation of purchase price consideration.

The following table summarizes the fair values that were allocated to the Kretchmer Transaction:

	Fair Value
Property and equipment, net	$	127,000
Intangible assets, net		23,000
	$	150,000

The impacts of the measurement period adjustments to the Kretchmer Transaction as it pertains to the condensed consolidated statements of income were to depreciation and amortization expense, and are immaterial to the financial statements.