v3.26.1
Merger and Acquisition
 3 Months Ended
Mar. 31, 2026
Business Combination, Asset Acquisition, Transaction between Entities under Common Control, and Joint Venture Formation [Abstract]  
Merger and Acquisition
Note 2: Merger and Acquisition
Merger
On May 29, 2023 and subsequently amended on June 23, 2023, October 5, 2023, October 17, 2023, November 3, 2023, January 16, 2024, March 7, 2024 and April 15, 2024, the Company, now known as Atlantic International Corp a Delaware corporation (“SeqLL”), a Delaware corporation, SeqLL Merger, LLC, a Delaware limited liability company (“SeqLL Merger Sub”), Atlantic Acquisition Corp., a Delaware corporation (“Atlantic”), Atlantic Merger LLC, a Delaware limited liability company and a majority-owned subsidiary of Atlantic (“Atlantic Merger Sub”), Lyneer, IDC Technologies, Inc., a California corporation (“IDC”) and Lyneer Management Holdings, LLC (“LMH”), a Delaware limited liability company (“Lyneer Management”), entered into an Agreement and Plan of Merger (the “Merger Agreement”), pursuant to which (i) Atlantic Merger Sub was merged with and into Lyneer with Lyneer continuing as the surviving entity and as an approximately 41.7%-owned subsidiary of Atlantic, and an approximately 58.3%-owned subsidiary of IDC, and (ii) SeqLL
Merger Sub was subsequently to be merged with and into Lyneer, with Lyneer continuing as the surviving entity and a wholly-owned subsidiary of the Company (collectively referred to as the “Merger”).
On June 4, 2024, the Company entered into an Amended and Restated Agreement and Plan of Reorganization (the “Amended Merger Agreement”), which amended certain provisions of the Merger Agreement: (i) fixed the number of shares of SeqLL common stock to be issued, (ii) replaced the Cash Consideration that was to be paid with a short-term promissory note, (iii) deleted the requirements of the closing of the Capital Raise and the listing of SeqLL common stock on a national securities exchange as conditions to the closing of the Merger, and (iv) provided for certain additional issuances of SeqLL common stock to IDC if such common stock is not listed on a national securities exchange on or prior to September 30, 2024. On June 12, 2024, the Amended Merger Agreement was amended (“Amendment 1”) to reflect a per share price change from the previous $3.10 to $2.36 and to reflect the Merger price determined by the parties at the time of the Merger.
On June 18, 2024 (the “Closing Date”), Atlantic International Corp (“Atlantic” or the “Company,” formerly known as SeqLL Inc.) completed the acquisition (the “Merger”) of Lyneer.
Pursuant to the terms of the Merger, the Company changed its corporate name from SeqLL Inc. to Atlantic International Corp and its trading symbol to ATLN.
The consideration for the Acquisition was the issuance to IDC, the then current owner of Lyneer: (a) a convertible promissory note in the principal amount of $35,000,000 that was originally due on or before September 30, 2024, which has been extended to March 31, 2027 (see Note 8: Debt for further information); and (b) 25,423,729 shares of the Company’s common stock at a market value of $2.36 per share, or $60,000,000 in the aggregate. The stockholders of Atlantic Acquisition Corp. were issued an aggregate of 18,220,338 shares of Company’s common stock at a market value of $2.36 per share or $43,000,000 in the aggregate (the “Atlantic Consideration”). In the event of default, IDC shall be issued $10 million of additional shares of Atlantic common stock, valued at the then current price of ATLN common stock. The Company is currently not in default of the convertible promissory note.
In addition, upon the closing of the Merger:
•Atlantic Acquisition Corp (“AAC”) entered into an Assignment and Assumption Agreement pursuant to which AAC irrevocably assigned and transferred to the Company all of AAC’s rights, title and interest to various intangible assets in exchange for a portion of the Atlantic Consideration. The Company assumed all of the employment and consulting agreements of AAC personnel and paid or expects to pay approximately $4.4 million of accrued wages and bonuses. The Company assumed obligations of AAC to issue 593,221 shares to certain advisors upon completion of the Merger, and an additional 1.3 million shares under a directors agreement. See Note 9: Accrued Expenses and Other Current Liabilities for further information.
•The Company escrowed 4,704,098 shares of common stock that may be issued to certain of the Company’s stockholders of record as of September 26, 2023, as part of a settlement offer (the “Settlement Offer”) to be commenced within 90 days of the closing of the Merger to settle any claims for the failure to declare and pay certain previously-announced dividends of cash and common stock.
•In addition, following completion of the Merger, subject to the terms and conditions of an Asset Purchase Agreement dated as of May 29, 2023, between the Company and SeqLL Omics, an entity formed by Daniel Jones, the Company’s former Chairman and Chief Executive Officer, and certain other former employees of the Company for the purpose of carrying on the Company’s pre-Merger business following the Merger, SeqLL Omics purchased from the Company for a purchase price of $1,000 all of the Company’s assets, including cash and cash equivalents, and transferred all liabilities other than a promissory note in the principal amount of $1,375,000 to a former co-founder of SeqLL that was due on July 31, 2025 and a one-year leasehold obligation. On January 23, 2026, the Company and St. Laurent Investments LLC (“St. Laurent”) entered into a Confidential Settlement Agreement which satisfied the Promissory Notes in total. See Note 8: Debt for further information.
Determination of Accounting Acquirer
The Merger was accounted for as a reverse recapitalization in accordance with GAAP. Under this method of accounting, although SeqLL acquired all of the outstanding equity interests of Lyneer in the Merger, Atlantic was treated as the “acquiree” and Lyneer was treated as the “acquirer” for financial reporting purposes. Accordingly, the Merger was recorded as the equivalent of Lyneer issuing shares for SeqLL’s net assets, followed by a recapitalization whereby no goodwill or other intangible assets were recorded. The statements of operations presented for periods prior to the Merger were those of Lyneer. There was no change in the historical carrying amount of Lyneer’s assets or liabilities because of the Merger. The Merger did not represent a business combination accounted for under Accounting Standards Codification
(“ASC”) 805 — Business Combinations (“ASC 805”), because neither Atlantic Merger LLC nor SeqLL met the definition of a business.
Having considered Topic 12 of the SEC Financial Reporting Manual, Lyneer was determined to be the continuing entity for accounting purposes and the Merger represents a reverse recapitalization with regard to Atlantic. We considered the following factors in completing the accounting analysis, with greater weight being given to (a), (d) and (e):
a)Lyneer was the largest entity, in terms of substantive operations;
b)Subsequent to SeqLL’s sale of assets to SeqLL Omics, SeqLL had no or nominal assets and no or nominal operations, and did not meet the definition of a business;
c)Atlantic Merger LLC had no operations and did not meet the definition of a business;
d)Following the Merger, it was expected that Lyneer’s operations would comprise the ongoing operations of the combined entity as the only company with historical operations;
e)Upon consummation of the Merger all of Lyneer’s employees continued to have an employment relationship with the combined entity;
f)No affiliate entities or individual stockholders of Lyneer, Atlantic or SeqLL had voting control of the Company’s board of directors immediately following the Merger; and
g)Individuals affiliated with Atlantic were appointed as the Chief Executive Officer and Chief Financial Officer of the Company following the Merger
Circle8 Acquisition
On January 23, 2026, the Company completed the Circle8 Acquisition. Circle8 is a company organized under the laws of the Netherlands. The Circle8 Acquisition was consummated pursuant to the terms of the Acquisition Agreement, dated January 22, 2026 (the “Acquisition Agreement”), by and among the Company, Axiom (or “the Circle8 Seller”) and Circle8. The Company determined it was the accounting acquirer for this transaction because it incurred liabilities payable to the Circle8 Seller, including a Convertible Note, and became contingently obligated to transfer assets to the seller, all in exchange for a controlling financial interest in Circle8. Accordingly, upon the consummation of the Circle8 Acquisition, Circle8 ceased to be under the control of Axiom. This conclusion was reached as Axiom did not control the Company post-acquisition as demonstrated by its inability to appoint the majority of the Company’s directors. The Circle8 Acquisition was accounted for as a business combination using the acquisition method of accounting under ASC 805. Refer to purchase consideration transferred described in more detail below.
The Company is pursuing a strategy of building a global staffing organization through strategic acquisitions. Through the acquisition of Circle8, Atlantic has extended its capabilities into specialized high-growth information technology and other technological staffing capabilities across Europe, complementing the Company’s North American industrial staffing operations.
ASC 805 dictates that if the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the acquirer shall report in its financial statements provisional amounts for the items for which the accounting is incomplete. Provisional amounts may be revised during the “measurement period.” The measurement period ends as soon as the acquirer receives all necessary information about the facts and circumstances that existed as of the acquisition date for the provisional amounts (or otherwise learns that more information is not obtainable). However, the measurement period cannot exceed one year from the acquisition date. During the measurement period, the acquirer adjusts the provisional amounts recognized at the acquisition date to reflect new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the measurement of the amounts recognized as of that date. During the measurement period, the acquirer recognizes adjustments to the provisional amounts with a corresponding adjustment to goodwill in the reporting period in which the adjustments to the provisional amounts are determined. Thus, the acquirer shall adjust its financial statements as needed, including recognizing in its current-period earnings, the full effect of changes in depreciation, amortization, or other income effects, by line item, if any, as a result of the change to the provisional amounts calculated as if the accounting had been completed at the acquisition date.
The Company is in the process of obtaining and validating information about Circle8’s balance sheet related to substantially all categories of assets and liabilities, as well as related to the valuation of certain elements of the consideration and other elements of the transaction. Further details are provided below.
On the Circle8 Closing Date, the Company acquired 100% of the outstanding voting equity of Circle8. However, upon the closing of the Circle8 Acquisition, a third party retained a noncontrolling 20% equity interest (“Redeemable NCI”) in Circle8 Consulting GmbH (“Circle8 Consulting”). Circle8 Consulting was a consolidated subsidiary of Circle8 immediately prior to the Circle8 Acquisition and became a consolidated subsidiary of the Company upon the closing thereof. The Company recorded the Redeemable NCI at its estimated fair value as of the Circle8 Closing Date using a discounted cash flow (“DCF”) model. The DCF model utilizes estimated future cash flows which are discounted to present value using a discount rate. Cash flow projections are based on management’s estimates of economic and market conditions, which drive key assumptions of revenue growth rates, operating margins, capital expenditures and working capital requirements. The discount rate is based on the weighted-average cost of capital and may be adjusted for the relevant risks associated with business-specific characteristics and any uncertainty related to the business’ ability to execute on the projected future cash flows. The provisional estimated fair value of the Redeemable NCI on the Circle8 Acquisition Date amounted to $1,255,237. The Company is in the process of validating and verifying certain assumptions and inputs in this valuation and will record any material revisions to the estimated acquisition date fair value during the measurement period. See Note 15: Warrants, Mezzanine Preferred Stock and Mezzanine Equity for more information about the Redeemable NCI.
The provisional fair values assigned to identifiable intangible assets acquired as well as components of the consideration transferred and the Redeemable NCI, were valued based on provisional estimates and assumptions and were determined using variations of the income and market approaches. The provisional fair values of assets acquired and liabilities assumed are as follows:
January 23, 2026
Cash and cash equivalents$33,642,710 
Accounts receivable102,951,695 
Contract assets93,122,923 
Prepaid expenses and other current assets1,647,291 
Customer relationships151,447,142 
Trademarks2,246,866 
Trade name14,649,376 
Software 3,874,655 
Website124,311 
Property and equipment1,529,215 
Operating lease right-of-use assets1,511,191 
Finance lease right-of-use assets2,242,945 
Other assets 658,372 
Accounts payable 151,870,794 
Accrued expenses and other current liabilities127,346,814 
Notes and loans payable280,367,573 
Operating lease liabilities1,519,336 
Finance lease liabilities2,293,156 
Deferred tax liabilities, net33,266,355 
Other liabilities2,653,033 
 Net identifiable liabilities assumed(189,668,369)
Goodwill469,071,654 
Net assets acquired$279,403,285 
Purchase consideration at fair value$278,148,048 
Fair value of redeemable noncontrolling interest retained$1,255,237 
The provisional aggregate fair value of purchase consideration transferred for Circle8 amounted to $278,148,048 on the Circle8 Closing Date and consisted of the following:
•12,516,070 shares of the Company’s common stock, par value $0.00001 per share (“Common Stock”) with an aggregate fair value of $48,312,030 issued to the Circle8 Seller (the “Initial Equity Consideration”). The fair value of these shares was measured using the per share closing price of the Company’s Common Stock, $3.86, on the Circle8 Acquisition Date (the “Per Share Closing Price”), a Level 1 measurement.
•The Company entered into an obligation to issue 4,000,000 shares of the Company’s Common Stock with an aggregate fair value of $15,440,000 on the Circle8 Acquisition Date to settle a liability for transaction expenses incurred by Circle8 (the “Advisor Equity Payment”). The Advisor Equity Payment represents an obligation to the investment banking firm that represented and advised Circle8 in connection with the Circle8 Acquisition and was settled via the issuance of Common Stock on January 28, 2026. The fair value of these shares was also measured using the Per Share Closing Price, a Level 1 measurement.
•A convertible promissory note (the “Convertible Note”) payable to the Circle8 Seller with a provisional fair value of $205,706,132. The provisional fair value of Convertible Note at issuance was equal to the product of the Per Share Closing Price and the number of shares into which the Convertible Note is eligible to convert if the conditions described in Note 8: Debt are met. The amount initially recognized is considered provisional as the Company is in the process of evaluating the initial approach selected and the validity of certain assumptions related thereto.
•A contingent consideration arrangement pursuant to which the Company is obligated to pay the Circle8 Seller a fixed amount totaling $2,500,000 if Circle8 revenue equals or exceeds €600 million (the equivalent of approximately $693 million at March 31, 2026) during the calendar year ended December 31, 2026 (the “Circle8 Contingent Consideration”). The Company has assigned a provisional fair value of $2,098,574 to the Circle8 Contingent Consideration as of the Circle8 Acquisition Date. The Circle8 Contingent Consideration was measured using a Monte Carlo Simulation. The amount is provisional as the Company is in the process of evaluating the significant inputs and the valuation approach. See Note 12: Fair Value Measurements for additional information related to the valuation of the contingent consideration.
•In exchange for the Circle8 business, the Company has agreed to make an additional payment (if greater than $0) to the Circle8 Seller equal to the net profit of Circle8 as set forth on the Circle8 financial statements for the year ended December 31, 2025, less any post-acquisition cash payments made to Circle8 in calendar year 2026 by Atlantic to support Circle8’s operations (the “Profit Payment Amount”). The Company has recorded a provisional fair value of $0 for the Circle8 Profit Payment which is subject to revision as the Company is currently evaluating whether this appropriately considers the facts and circumstances of the Circle8 Acquisition Date and accurately reflects the fair value that would be assigned to this obligation by a market participant. The Company and Circle8 are in the process of determining Circle8’s 2025 net profit, which entails the preparation of a set of consolidated audited financial statements to be prepared by Circle8. Because the Profit Payment Amount depends on the level of support provided by Atlantic in 2026, the Company considers the obligation to be a contingent consideration arrangement. There is no contractual cap or limit to the Profit Payment Amount.
•The Company is obligated to issue additional shares of Common Stock to Axiom in the event there is a conversion of the Merger Note issued to IDC on June 18, 2024 (“Share Settled Earnout”). The Company’s provisional accounting for the Share Settled Earnout treats this as a freestanding obligation with respect to the Convertible Note, however the Company is in the process of obtaining additional information to validate and confirm this preliminary conclusion. Because the Share Settled Earnout requires the potential transfer of additional equity securities to the Circle8 Seller upon the occurrence of an uncertain future event, the Company has concluded that it represents a contingent consideration obligation. The Company has assigned a provisional fair value of $5,600,000 to the Share Settled Earnout, but is obtaining additional information regarding the nature of the obligation and whether this provisional fair value reflects the approach and assumptions that a market participant would use in the calculation thereof. The number of additional shares of Common Stock that would be issued to Axiom under this arrangement if the Merger Note were to be settled in shares amounted to 7,498,346 and 9,552,348 on the Circle8 Acquisition Date and March 31, 2026, respectively.
•Consideration transferred in connection with the acquisition consisted of cash payments on behalf of the seller’s benefit. The Company evaluates all payments made in connection with an acquisition to determine whether such amounts represent consideration transferred for the business combination or separate transactions. The Company incurred costs for certain transaction-related costs, including due diligence and advisory fees. These payments were negotiated as part of the overall purchase arrangement and were incurred on behalf of the seller. The total amount of such costs incurred was $991,313. The Company paid $887,400 in March 2026 and the remaining $103,917 has not yet been paid but is included in “accrued expenses and other current liabilities” on the
accompanying unaudited condensed consolidated balance sheets. The Company recorded the $991,313 incurred as an increase to consideration transferred, which resulted in a corresponding increase to goodwill recognized in the transaction. This classification reflects the substance of the payments as part of the exchange for control of the acquiree rather than as separate transaction costs or expenses.
Cash and cash equivalents were recognized at their carrying values which approximate fair value due to their short-term nature.
Accounts receivable, contract assets, prepaid expenses and other current assets, accounts payable and accrued expenses were valued at the existing carrying values as they represented a reasonable approximation of the fair value due to their short-term nature. However, these values are provisional as the Company is in the process of validating the propriety of cutoff and classification of the recorded amounts and other information provided by Circle8 and these balances are subject to potential adjustment within the measurement period.
Intangible assets recognized as a result of the Circle8 Acquisition consist of customer relationships, trademarks, a trade name and software and these have been recorded using provisional values as of the Circle8 Acquisition Date. These valuations include multiple assumptions about the underlying business as well as various inputs which the Company is evaluating and may refine during the measurement period.
The Company used the multi-period excess earnings method to provisionally value the customer relationship intangible assets. The multi-period excess earning method determines the fair value of an intangible asset as the present value of excess cash flows attributable to a specific intangible asset after an appropriate return for all other assets used in the operation of the business have been accounted for. The significant assumptions used to estimate the fair value of customer relationships included projected future cash flows related to existing customer relationships, customer attrition rates, useful lives, and discount rates. The provisional valuations are based on projected cash flows related to existing customer relationships for each Circle8 sub-group according to the underlying business plans. Determining the useful lives of customer relationships requires judgment, as it involves estimating the retention of existing customer relationships. The Company has provisionally assigned useful lives ranging from 10 to 20 years. The provisional valuations incorporate sub-group-specific weighted-average costs of capital ranging from 10.5% - 11.5%.
The Company’s trademarks relate to “Seven Stars,” “FixedToday” and “Swisslinx” brands and the trade name relates to “Circle8”, which it uses in various geographic locations. The Company has derived a provisional fair value of these trademarks and trade name using the relief-from-royalty method. The principle of the relief-from-royalty method is that the value of the intangible asset is equal to the present value of the after-tax royalty savings attributable to owning the asset as opposed to paying a third party for its use. For the valuation of the identified trademarks and trade name, the significant assumptions used to estimate the fair value include projected revenues, royalty rates, useful lives and discount rates. The revenues of the respective sub-group according to the underlying business plan were taken into account. Accordingly, for the “Circle8” trade name, the valuation was based on the revenues of Circle8 Germany and Circle8 Benelux, as these entities operate under the “Circle8” trade name. For the continuing legacy trademarks “Swisslinx,” “FixedToday,” and “Seven Stars,” the valuation was based on the revenues of the respective sub-groups to which these trademarks directly relate. The provisional valuation incorporates a royalty rate of 0.5% for the Circle8 brand and 0.25% for the other brands. The valuation is based on the period-specific EBITDA margins of the respective sub-groups according to the underlying business plan. The provisional valuation incorporates sub-group-specific weighted-average costs of capital ranging from 10.5% - 11.5%. The Company has provisionally assigned a ten-year useful life to both its trademarks and trade name.
Circle8’s intangible assets representing software have been provisionally recognized at the historical net book value of Circle8 prior to the Circle8 Acquisition. The Company is obtaining information from the Circle8 Seller related to the cost, nature, and age of these assets and will determine within the measurement period if an adjustment to the provisionally recognized amounts is necessary.
Property and equipment have been provisionally recognized using Circle8’s net book value as of the Circle8 Acquisition Date. The Company is in the process of validating certain information provided by Circle8 and considering if the recorded value differs materially from the value that would be assigned by a market participant. The Company is obtaining information about the type, age and location, and condition of the assets acquired and will finalize the acquisition date accounting during the measurement period.
Operating lease right-of-use assets and operating lease liabilities have been recorded using the legacy carrying amounts of Circle8. These amounts are provisional as the Company is in the process of verifying the accuracy of the reported amounts and will evaluate the need to apply an incremental borrowing rate calculation and potential adjustment for off-market lease terms to the initial amount recognized, based on materiality.
Finance lease right-of-use assets and finance lease liabilities have been provisionally recorded using the historical carrying amounts of Circle8. The Company is in the process of obtaining information about these obligations and the underlying assets and determining if adjustments to the recorded amounts are necessary.
Notes and loans payable have been provisionally recognized at the historical carrying amounts of Circle8. The Company is in the process of obtaining information about outstanding balances, recorded items and loan terms in order to evaluate if the recorded value of these instruments approximates the fair value as of the Circle8 Acquisition Date.
Deferred tax assets and deferred tax liabilities are provisional, and the Company is in the process of obtaining and validating information about the initial income tax bases for these assets. Additionally, measurement period changes to other assets and liabilities on Circle8’s opening balance sheet, as well as other items currently being recognized on a provisional basis could materially impact the final deferred tax asset and liability amounts recognized on the Circle8 Acquisition Date.
Other liabilities consist primarily of a warrant payable to the seller of a business to Circle8 in a prior acquisition. It has been provisionally recognized as a liability in the amount of approximately $1,795,491. This warrant is the “Circle8 Benelux Warrant” discussed in further detail in Note 15: Warrants, Mezzanine Preferred Stock and Mezzanine Equity and Note 12: Fair Value Measurements. The Company is in the process of evaluating the inputs used and certain elements of the valuation methodology and may revise this amount during the measurement period.
The excess of the sum of the fair value of the consideration transferred and fair value of the redeemable noncontrolling interest retained over the fair value of the net tangible and identifiable intangible assets acquired and liabilities assumed was recorded as goodwill. The factors contributing to the recognition of goodwill were based on benefits that were expected to be realized from this acquisition, including an organized workforce and operating synergies. The goodwill recognized was allocated to the Circle8 Group B.V. reporting unit. The Company is currently evaluating whether it will recognize any material tax-deductible goodwill as a result of the Circle8 Acquisition.
The Company incurred acquisition-related expenses of $744,920 which represent legal fees and bonuses and are included in “selling, general and administrative” on the accompanying unaudited condensed consolidated statement of operations for the three months ended March 31, 2026. Costs to issue debt and equity securities in connection with the Circle8 Acquisition were de minimis and charged to expense at the time they were incurred.
Contingent Liabilities
Circle8 and its subsidiaries are subject to various claims and legal proceedings in the ordinary course of business. The Company is evaluating all known claims and potential contingencies in accordance with ASC 450 — Contingencies. As part of its assessment, management is considering the nature of each matter, the progress of the case, the opinions of legal counsel, and management’s experience with similar matters, as well as any available insurance coverage. This assessment is provisional and will be subject to change during the measurement period.
Based on the evaluation performed as of the date of this Form 10-Q filing, other than as disclosed in Note 11: Commitments and Contingencies, management has not identified any pending or threatened legal matters that are probable of resulting in a material loss.
Pro Forma Information
Revenue and net loss of Circle8 included in the accompanying condensed consolidated statement of operations and comprehensive loss for the period from January 23, 2026 through March 31, 2026 amounted to $145,248,041 and $5,008,996, respectively. Components of these amounts in some cases were dependent on the use of provisional values for assets and liabilities on the Circle8 Acquisition Date.
The Company has made reasonable efforts to obtain the information necessary to disclose about Circle8’s operating results for the period from January 1, 2026 through January 23, 2026 pursuant to U.S. GAAP, and has not been able to obtain this information. Reporting this information with accuracy involves the application of U.S. GAAP to financial statements historically prepared under other frameworks for a multitude of legal entities in various overseas jurisdictions, the use of specialists to assist with estimation of fair values for assets acquired in multiple prior business combinations, the identification, calculation and validation of pro-forma adjustments and other information which makes the exercise impracticable given the Company’s filing deadlines. For the same reasons the Company has also found it to be impracticable to obtain the necessary information to present pro forma information. The Company is actively working with Circle8’s legacy reporting team as well as external accounting advisors to obtain and validate this information and fully intends to include it in future filings once it is available.
Board Service Agreement, Employment Agreement and Consulting Agreements
In connection with the Circle8 Acquisition, the Company and Guus Franke entered into an Employment and Board Service Agreement (the “Franke Agreement”) which has provisionally been accounted for separately from the Circle8 Acquisition. Amounts payable under the Franke Agreement during the first quarter of 2026 have been accounted for as compensation expense during the period in which they are incurred. The Company is currently evaluating whether any part of the Franke Agreement should be accounted for as a component of the consideration transferred for Circle8 and will complete this analysis during the measurement period. Amounts recognized as expense under the Franke Agreement during the quarter ended March 31, 2026 amounted to $302,582 and are included in “selling, general and administrative” in the accompanying unaudited condensed consolidated statement of operations.
Axiom and an affiliated entity, Axiom Partners B.V. (“Axiom Netherlands”) each entered into separate consulting agreements with Circle8 on January 20, 2026. These agreements are referred to in these footnotes individually as the “Axiom Consulting Agreement” and the “Axiom Netherlands Consulting Agreement”, and collectively as the “Axiom Consulting Agreements”. The Axiom Consulting Agreements remained in force following the Circle8 Acquisition. The Company is currently evaluating whether any part of either of the Axiom Consulting Agreements should be accounted for as a component of the consideration transferred for Circle8 and will complete this analysis during the measurement period. See Note 16: Related Party Transactions for disclosure of amounts incurred under the Axiom Consulting Agreements from the Circle8 Acquisition Date through March 31, 2026.