Acquisition

12 Months Ended

Dec. 31, 2022

Acquisition

Acquisition

17. Acquisition

On August 3, 2022, the Company entered into a share purchase and transfer agreement and completed its acquisition of 100% of the registered share capital of Trace, for total purchase price consideration of $17.3 million, comprised of (i) a $14.4 million initial cash payment, (ii) up to $2.0 million contingent cash consideration upon achievement of certain milestones over a twenty four month period and (iii) $0.9 million contingent pension liability holdback to be released upon discharging or transferring of such liability from Trace.

Trace is a leading provider of online analysis systems for biotech applications in research, development, and production. Trace’s products are used for monitoring and controlling of complex processes in industrial pharmaceutical productions under continuous measurement conditions. The Company expects to integrate acquired sampling technology within future product offerings.

The Company has accounted for the acquisition of Trace as a purchase of a business under U.S. GAAP. Under the acquisition method of accounting, the assets acquired and liabilities assumed from Trace have been recorded as of the acquisition date, at their respective fair values, and consolidated with those of the Company.

The Company has preliminarily allocated the purchase price to the net tangible and intangible assets based on their estimated fair values as of August 3, 2022. The valuation of assets acquired and liabilities assumed has not yet been finalized as of December 31, 2022. Finalization of the valuation during the measurement period could result in a change in the amounts recorded for the acquired intangible assets, assumed pension liability, indemnification assets, goodwill

and income taxes among other items. The completion of the valuation will occur no later than one year from the acquisition date.

The following table presents the preliminary allocation of the acquisition date purchase consideration for the transaction including the contingent consideration and the preliminary allocation of the purchase consideration (in thousands):

Consideration Transferred:
Cash paid	$	14,400
Net cash and working capital adjustment		113
Contingent consideration - pension liability		900
Contingent consideration - earnout		737
Total consideration transferred	$	16,150
Assets acquired and liabilities assumed:
Cash and cash equivalents	$	638
Accounts receivable		168
Inventory		364
Prepaid expenses and other current assets		11
Property and equipment, net		32
Intangible assets
Customer Relationships		3,142
Developed Technology		4,967
Software		254
Trade Name		61
Goodwill		9,566
Indemnification assets		917
Pension liability		(917)
Accounts payable, accrued expenses and other current liabilities		(306)
Deferred tax liability, net		(2,672)
Other liabilities		(75)
Total	$	16,150

The excess of the purchase price over the fair value of the acquired businesses' net assets represents cost and revenue synergies specific to the companies, and has been allocated to goodwill, which is not tax deductible. Intangible assets acquired have finite life and are amortized per our accounting policy. See Note 2 for the amortization periods.

Revenue and net loss related to Trace’s operations was $0.8 million and $0.1 million, respectively, for the period following the acquisition date through December 31, 2022, and is included in the Company’s consolidated statements of operations.

The following unaudited pro forma information presents the consolidated results of operations of the Company and Trace for the year ended December 31, 2022 and 2021 as if the acquisition of Trace had been completed on January 1, 2021 and have been calculated after applying the Company’s accounting policies. These pro forma consolidated financial results have been prepared for comparative purposes only and include certain adjustments that reflect pro forma results of operations, such as increased amortization for the fair value of acquired intangible assets, transaction related costs that were incurred in 2022 related to the acquisition which are reflected in the pro forma results for 2021, and consequential adjustments relating to the tax effect of these adjustments in combining the Company and Trace businesses.

The unaudited pro forma results do not reflect any operating efficiencies or potential cost savings which may result from the consolidation of the operations of the Company and Trace. Accordingly, these unaudited pro forma results are

presented for informational purposes only and are not necessarily indicative of the results of operations that would have been achieved had the acquisition occurred as of January 1, 2021, nor are they intended to represent or be indicative of future results of operations (in thousands):

	December 31,
	2022		2021
Revenue (unaudited)	$	47,982	$	44,046
Pre-tax loss (unaudited)		(33,191)		(22,894)