NOTE

– Acquisition of Business

BAMKO

March 8, 2016,

the Company closed on the acquisition of substantially all of the assets of BAMKO, Inc. The transaction had an effective date of

March 1, 2016.

The purchase price for the asset acquisition consisted of approximately

$15.2

million in cash, net of cash acquired, the issuance of approximately

324,000

restricted shares of Superior’s common stock that vests over a

five

-year period, potential future payment of approximately

$5.5

million in additional contingent consideration through

2021,

and the assumption of certain liabilities of BAMKO, Inc. The transaction also included the acquisition of BAMKO, Inc.’s subsidiaries in Hong Kong, China, Brazil and England as well as an affiliate in India.

Fair Value of Consideration Transferred

A summary of the purchase price is as follows (in thousands):

Cash consideration at closing, net of cash acquired	$	15,161

Restricted shares of Superior common stock issued		4,558

Contingent consideration		5,205

Total Considerations	$	24,924

Assets Acquired and Liabilities Assumed

The total purchase price was allocated to the acquired tangible and intangible assets and assumed liabilities of BAMKO, Inc. based on their estimated fair values as of

March 1, 2016.

The excess of the purchase price over the estimated fair values of the assets acquired and liabilities assumed was allocated to goodwill.

The following table presents the allocation of the total fair value of consideration transferred, as shown above, to the acquired tangible and intangible assets and assumed liabilities of BAMKO, Inc. based on their fair values as of the effective date of the transaction.

The following is our assignment of the aggregate consideration (in thousands):

Accounts receivable	$	4,885

Prepaid expenses and other current assets		3,200

Inventories		236

Property, plant and equipment		199

Other assets		100

Identifiable intangible assets		11,360

Goodwill		6,994

Total assets	$	26,974

Accounts payable		1,314

Other current liabilities		736

Total liabilities	$	2,050

The Company recorded

$11.4

million in identifiable intangibles at fair value, consisting of

$2.1

million in acquired customer relationships,

$0.4

million in non-compete agreements from the former owners of BAMKO, Inc., and

$8.9

million for the acquired trade name.

The estimated fair value for acquisition-related contingent consideration payable was

$5.1

million as of

March 31, 2018.

The current portion of

$1.1

million is expected to be paid in the

second

quarter of

2018.

Goodwill was calculated as the difference between the fair value of the consideration and the values assigned to the assets acquired and liabilities assumed.

The intangible assets associated with the customer relationships are being amortized for

seven

years beginning on

March 1, 2016

and the non-compete agreement is being amortized for

five

years and

ten

months. The trade name is considered an indefinite-life asset and as such is

not

being amortized.

The Company recognized amortization expense on these acquired intangible assets of

$0.1

million for the each of

three

-month periods ended

March 31, 2018

and

2017.

Public Identity

August 21, 2017,

BAMKO acquired substantially all of the assets and assumed certain liabilities of PublicIdentity, Inc. (“Public Identity”) of Los Angeles, CA. Public Identity is a promotional products and branded merchandise agency that provides innovative, high quality merchandise and promotional products to corporate clients and universities across the country.

The purchase price for the acquisition consisted of

$0.8

million in cash, the issuance of approximately

54,000

restricted shares of Superior’s common stock and future payments of approximately

$0.4

million in additional consideration through

2020.

The majority of the shares issued vest over a

three

-year period. The preliminary estimated fair value of the consideration transferred is approximately

$2.3

million. Based upon our preliminary estimates of their acquisition date fair values, we have assigned approximately

$1.7

million to identifiable intangible assets and approximately

$0.6

million to goodwill. Our final fair value determinations

may

be significantly different.

Tangerine Promotions

November 30, 2017,

BAMKO closed on the acquisition of substantially all of the assets of Tangerine Promotions, Ltd and Tangerine Promotions West, Inc. (collectively “Tangerine”). The transaction had an effective date of

December 1, 2017.

Tangerine is a promotional products and branded merchandise agency that serves many well-known brands. The company is

one

of the leading providers of Point-of-Purchase (POP) and Point-of-Sale (POS) merchandise in the country. The purchase price for the asset acquisition consisted of approximately

$7.2

million in cash, subject to adjustment, the issuance of approximately

83,000

restricted shares of Superior’s common stock that vests over a

four

-year period, the potential future payments of approximately

$5.5

million in additional contingent consideration through

2021,

and the assumption of certain liabilities.

Fair Value of Consideration Transferred

A Summary of the purchase price is as follows (in thousands):

Cash consideration at closing	$	7,222

Restricted shares of Superior common stock issued		1,657

Contingent consideration		3,209

Total Considerations	$	12,088

Assets Acquired and Liabilities Assumed

The total purchase price was allocated to the acquired tangible and intangible assets and assumed liabilities of Tangerine based on their estimated fair values as of

December 1, 2017.

The excess of the purchase price over the estimated fair values of the assets acquired and liabilities assumed was allocated to goodwill.

The following table presents the allocation of the total fair value of consideration transferred, as shown above, to the acquired tangible and intangible assets and assumed liabilities of Tangerine based on their estimated fair values as of the effective date of the transaction.

The assets and liabilities of Tangerine shown below are based on our preliminary estimates of their acquisition date fair values. Our final fair value determinations

may

be significantly different than those shown below.

The following is our preliminary assignment of the aggregate consideration (in thousands):

Accounts receivable	$	5,051

Prepaid expenses and other current assets		969

Property, plant and equipment		131

Identifiable intangible assets		6,495

Goodwill		4,169

Total assets	$	16,815

Accounts payables		3,374

Other current liabilities		1,353

Total liabilities	$	4,727

The Company recorded

$6.5

million in identifiable intangibles at fair value, consisting of

$3.1

million in acquired customer relationships,

$0.2

million in non-compete agreements from the former owners of Tangerine, and

$3.2

million for the acquired trade name.

The estimated fair value for acquisition-related contingent consideration payable is

$3.4

million as of

March 31, 2018.

The Company will continue to evaluate this liability for remeasurement at the end of each reporting period and any change will be recorded in the Company’s consolidated statement of comprehensive income. The carrying amount of the liability

may

fluctuate significantly and actual amounts paid

may

be materially different from the estimated value of the liability.

Goodwill was calculated as the difference between the fair value of the consideration and the values assigned to the assets acquired and liabilities assumed.

The intangible assets associated with the customer relationships will be amortized for

seven

years beginning on

December 1, 2017

and the non-compete agreement will be amortized for

seven

years. The trade name is considered an indefinite-life asset and as such will

not

be amortized.

The Company recognized amortization expense on these acquired intangible assets of

$0.1

million for the

three

months ended

March 31, 2017.

On a pro forma basis as if the results of this acquisition had been included in our consolidated results for the

three

months ended

March 31, 2017

net sales would have increased approximately

$7.8

million. Net income would have increased

$0.1

million in

2017,

$0.01

per share.