On October 1, 2024, European Distribution Center Motiva BV, or EDC, a wholly owned subsidiary of the Company, acquired 100% of the outstanding common shares of both Motiva Benelux BV, a distribution company in Belgium, and Motiva NL B.V., a distribution company in Netherlands. The acquisition will allow the Company to expand its market in Europe and achieve synergies and cost reductions by removing redundant processes.

The acquisition's total consideration was valued at approximately $7.8 million and consisted of the following: (1) an initial payment of approximately $0.2 million in cash made on October 1, 2024, (2) a payment of $1.2 million in the Company’s common shares made in October 2024; (2) a payment of $0.3 million in cash and $2.6 million in the Company’s common shares made in January 2025; (3) a payment of $0.8 million due in April 2025; (4) a true-up amount payable or receivable in March 2026, based on meeting revenue and operational expense targets for fiscal 2025 currently estimated to be approximately $0.5 million; and (5) $2.2 million receivable settled on the acquisition date. The Company retains the option to settle the outstanding payments either in cash or in the Company’s common shares.

The Company had an established relationship with Motiva Benelux prior to the acquisition, with Motiva Benelux distributing the Company's products in certain European markets. On the acquisition date, the Company had receivables totaling around $2.2 million from Motiva Benelux. Due to the acquisition, this amount was considered settled at its fair value, which the Company assessed to be equal to the book value.

The contingent consideration arrangement requires the Company to pay the former owners an amount equal to the total revenue for fiscal year 2024 and 2025 multiplied by a multiple based on the relevant revenue growth rate realized in that particular fiscal year versus the prior year (ratio ranges from 0.5 to 0.9). The amount will be decreased if the operational expense targets for fiscal 2025 are not met.

The potential undiscounted amount of all future contingent payments that the Company could be required to make is not capped. The fair value of the contingent consideration arrangement of $1.0 million on the acquisition date

was estimated by applying the income approach which used significant inputs that are not observable in the market (Level 3 inputs). Key assumptions included (a) a discount rate of 12.5%; b) 2025 revenue forecasted using a normal distribution with approximately $6.4 million as the base case and a range determined based on volatility of 10%; and c) an assumption that operating expense targets will be met. As of March 31, 2025, the consideration payable related to the 2024 revenue milestone was settled to be $0.9 million and is no longer considered contingent.

As of March 31, 2025, the amount recognized for the contingent consideration arrangement, the range of outcomes, and the assumptions used to develop the estimates had not materially changed.



	(in thousands)

Cash paid	$	221
Equity issued (26,018 common shares)	1,177
Contingent consideration payable	973
Consideration payable	3,262
Fair value of trade receivable considered settled	2,184
Total consideration	$	7,817

The fair value of the common shares issued as part of the consideration paid for the acquisition was determined as the volume-weighted average price of closing market price of Company’s common shares over the 30 days prior to the acquisition date.



	(in thousands)
Recognized amounts of identifiable assets acquired and liabilities assumed:
Financial assets	$	904
Inventory	4,946
Property, plant, and equipment	125
Intangible assets	1,527
Financial liabilities	(482)
Total identifiable net assets	$	7,020

Recognized goodwill:
Goodwill	$	797

Property, plant, and equipment acquired in a business combination is intended to be held and used and was recognized and measured at fair value and primarily consisted of vehicles and furniture and fixtures.

The fair value of the acquired identifiable intangible assets of $1.5 million was related to customer-related intangibles (i.e. customer lists and related customer relationships) and is amortized over the estimated useful life of 10 years. The fair value was determined using the distributor method of the income approach with significant assumptions being discount rate of 17.5% and revenue attrition rate of 25.0%.

Financial liabilities of $0.5 million primarily consisted of accounts payable of $0.2 million, accrued liabilities primarily related to salaries and fringes of $0.2 million and a loan payable of $0.1 million. As of March 31, 2025, there has been no change since October 1, 2024, in the amount recognized for the liability or any change in the range of outcomes or assumptions used to develop the estimates.

The goodwill of $0.8 million arising from the acquisition consists largely of the synergies and economies of scale expected from combining the operations of the Company and the acquired entities. None of the goodwill recognized is expected to be deductible for income tax purposes. As of March 31, 2025, there were no changes in the recognized amounts of goodwill resulting from the acquisition.

Acquisition-related costs of $0.3 million were included in selling, general, and administrative expenses in Company’s income statement for the year ending December 31, 2024.

The Company recognized $1.8 million in revenues and $0.5 million in earnings in its consolidated income statement for the year ended December 31, 2024 from the activities of the acquired entities since the acquisition date of October 1, 2024.