Business Acquisition |
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| Business Combination, Asset Acquisition, and Joint Venture Formation [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Business Acquisition |
7. Business Acquisition
On November 6, 2024, the Company acquired the remaining 50% of the common units of LeoStella, and LeoStella became a wholly-owned subsidiary of the Company. Purchase consideration of $0.9 million consisted of the value of the Company's 50% ownership in LeoStella at the time of the business combination. It is expected that this acquisition will allow the Company to improve its control over the Gen-3 supply chain and production operations. Prior to obtaining a controlling interest, the Company accounted for its 50% ownership in LeoStella as an equity method investment (see Note 2 for information regarding the previous treatment of LeoStella). This transaction was accounted for as a “step acquisition” (as defined by GAAP) and, as such, the Company remeasured its pre-existing equity interest in LeoStella immediately prior to the completion of the acquisition to its estimated fair value. The results of LeoStella since the acquisition date have been included in the Company’s consolidated financial statements.
The following table presents the preliminary purchase price allocation, which summarizes the fair values of the assets acquired and liabilities assumed at the date of acquisition. The purchase price allocation is preliminary and is subject to change during the measurement period, which is generally one year from the acquisition date. All intra-entity deferred profits have been excluded from the table (see Note 2—“Basis of
Presentation and Summary of Significant Accounting Policies” for discussion of the Company's pre-existing relationship with LeoStella).
Goodwill of $0.9 million from the business acquisition was primarily attributed to the value expected from the workforce acquired from the acquisition. In addition, $0.5 million of the goodwill recognized is expected to be deductible for income tax purposes.
Intangible assets acquired included in-process research and development, which has an indefinite life until development is complete, and various finite-lived intangible assets that are subject to amortization, including trade names and trademarks with estimated useful lives of 5 years.
The acquisition-date fair value was determined using a combination of cost approaches and discounted cash flow methods. With respect to intangible assets, the estimated fair values were determined based on relief from royalty and multi-period excess earnings methods. These models used primarily Level 3 inputs, including estimates of projected revenue growth rates, projected EBITDA margins, and an estimated discount rate.
In accordance with accounting for a step acquisition, the Company recognized a gain of $0.9 million as a result of remeasuring its pre-existing interest in LeoStella held immediately before the business combination, which is included in income on equity method investments in the consolidated statements of operations and comprehensive loss. During the year ended December 31, 2024, the Company incurred $0.5 million of acquisition-related transactions costs, which is included in selling, general and administrative costs in the consolidated statements of operations and comprehensive loss. The amounts of LeoStella's revenue and net loss included in the Company’s consolidated statements of operations and comprehensive loss for the year ended December 31, 2024 were not significant.
Unaudited Pro Forma Financial Information
The following unaudited pro forma financial information summarizes the combined results of the Company and LeoStella as if the acquisition had occurred on January 1, 2023. The pro forma results have been prepared for comparative purposes only, and do not necessarily represent what the results of operations would have been had the acquisition been completed on January 1, 2023. In addition, these pro forma results are not intended to be a projection of future operating results and do not reflect synergies that might be achieved.
The unaudited pro forma financial information includes adjustments for the pro forma impact of the Company's preliminary purchase price allocation, including the amortization of newly acquired intangible assets; the impact of transaction costs; and the alignment of accounting policies.
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