NOTE 4 – BUSINESS COMBINATION

On April 24, 2026, the Company completed the Merger. Immediately prior to the Merger, the Company completed a spin-off of substantially all of its legacy biopharmaceutical operations (the “Spin-Out”) to its stockholders of record, other than GEAR Therapeutics, Inc., which remained a subsidiary of the Company. In connection with GEAR Therapeutics remaining a subsidiary of the Company, the Spin-Out subsidiary received 1,000,000 shares of Company common stock and an option to acquire GEAR Therapeutics in the future at its then-fair market value.

Accounting Treatment

The Merger was accounted for as a business combination under ASC 805, Business Combinations, with OpCo treated as the accounting acquirer and the Company treated as the legal acquirer and accounting acquiree for financial reporting purposes. This determination was based on the following facts, each of which was confirmed as of the Closing:

Because the assets retained by the Company following the Spin-Out met the definition of a business under ASC 805-10, the Merger was accounted for as a business combination, with the assets acquired and liabilities assumed recorded at fair value and any excess of consideration over net identifiable assets acquired recorded as goodwill. The contribution of cryptocurrency mining machines by BSG Series CM LLC, which occurred contemporaneously with the Merger, was evaluated separately from the business combination and accounted for in accordance with ASC 805-50, as described below.

Merger Consideration

At Closing, in exchange for their OpCo securities, OpCo securityholders received, in the aggregate, 43,877,497 shares of Company common stock, representing approximately 85% of the Company’s issued and outstanding common stock (the “Merger Consideration”).

The Merger Consideration is measured as the fair value of the Company’s common stock retained by the Company’s stockholders of record immediately prior to the Merger. Because OpCo was determined to be the accounting acquirer and the Company was determined to be the legal acquirer, the consideration transferred is measured based on the number of shares of Company common stock held by the Company’s pre-Merger stockholders, multiplied by the fair value per share of Company common stock as of the Closing date. This approach was used because the fair value of the Company’s publicly quoted stock is more reliably measurable than the fair value of OpCo’s privately held stock. On this basis, the consolidated financial statements reflect total consideration transferred of $107,485,534.

Because the Merger was accounted for as a reverse acquisition under ASC 805, the accounting consideration transferred differs from the legal form of the transaction. Although the Company legally issued shares to the former OpCo stockholders, for accounting purposes the consideration transferred is measured based on the fair value of the equity interests that OpCo is deemed to have issued to obtain control of the Company. Because the Company’s publicly traded common stock provided a more reliable measure of fair value than OpCo’s privately held equity, the Company used the quoted market price of its common stock on the Closing Date to measure the consideration transferred, which totaled $107,485,534.

Substantially all of the Company’s legacy operating assets and liabilities were distributed in the Spin-Out immediately prior to the Merger. Accordingly, the identifiable assets acquired and liabilities assumed in the business combination primarily consisted of the assets and liabilities presented below.

The following table summarizes the acquisition-date fair values of the identifiable assets acquired, liabilities assumed and noncontrolling interest recognized in the business combination. The excess of the consideration transferred over the fair value of the identifiable net assets acquired was recognized as goodwill.

Goodwill Impairment Assessment

During the three months ended June 30, 2026, the Company identified a triggering event with respect to its goodwill resulting from a decline in the Company’s stock price and market capitalization following the Merger. In accordance with ASC 350, management evaluated the relevant qualitative and quantitative factors and determined that a quantitative goodwill impairment test was necessary.

Consistent with the impairment testing sequence prescribed by U.S. GAAP, the Company assessed the recoverability of the long-lived assets prior to performing the goodwill impairment test (see Note 6).

The Company estimated the fair value using the Company’s market capitalization as of June 30, 2026, based on a closing stock price of $10.58 per share. The resulting estimated fair value of approximately $560.7 million exceeded the reporting unit’s carrying amount of approximately $134.5 million by approximately $426.2 million, or 317%. Accordingly, no goodwill impairment was recognized as of June 30, 2026.

Mining Machines

On April 25, 2025, the Company entered into an Asset-for-Share Exchange Agreement (the “Exchange Agreement”) with BSG Series CM LLC (“Transferor”), a South Carolina limited liability company. Pursuant to the terms of the Exchange Agreement, Transferor agreed to contribute certain computer equipment consisting of cryptocurrency mining machines (the “Assets”) to the Company upon the Closing of the Merger.

The Assets consisted of approximately 9,800 cryptocurrency mining machines. The mining machines did not constitute a business under ASC 805-10 and, accordingly, the transfer was accounted for separately from the Merger. Because the Transferor was controlled by the same controlling shareholder before and after the transfer, the transaction was accounted for as a transfer of assets between entities under common control in accordance with ASC 805-50.

Accordingly, the Company recognized the mining machines at the Transferor’s historical carrying amount on the date of transfer as contributed capital.

1,000,0000 shares issued (Spin – Out)

In connection with the Spin-Out, GEAR Therapeutics, Inc., in which the Company holds an 83% ownership interest, remained a subsidiary of the Company rather than being distributed with the Company’s other legacy biopharmaceutical operations. GEAR Therapeutics’ sole asset consists of certain co-development rights, which were independently fair valued at $425,000 in the aggregate. The remaining 17% non-controlling interest in GEAR Therapeutics was initially recorded at $72,250. GEAR Therapeutics recognized a loss of $425,000 during the period, of which $72,250 was attributed to the non-controlling interest, reducing its carrying value to $- in the accompanying consolidated financial statements.

As consideration for Spin-Out subsidiary’s foregone interest in GEAR Therapeutics, the Company issued 1,000,000 shares of Company common stock to Spin-Out subsidiary and granted Spin-Out subsidiary an option to acquire GEAR Therapeutics in the future for its fair market value at the time of exercise (the “GEAR Option”). The 1,000,000 shares were measured at fair value of $16,400,000, based on the Company’s closing stock price of $16.40 per share on the Closing date.

Because the shares were issued to Spin-Out subsidiary as part of the overall Spin-Out distribution to the Company’s pre-Merger stockholders, the issuance was accounted for as a distribution to owners rather than as consideration for the retained ownership interest in GEAR Therapeutics. Accordingly, the Company recorded the issuance as a reduction of additional paid-in capital (after giving effect to the par value of the common stock issued).

The fair value of the shares issued was determined based on the Company’s closing market price on the Closing Date. However, because the issuance represented a distribution to owners in connection with the Spin-Out, the fair value of the shares issued was not required to equal, and does not correspond to, the fair value of GEAR Therapeutics’ underlying net assets or co-development rights.