Note 16 - Business Combination |
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| Business Combination [Text Block] |
NOTE 16 - BUSINESS COMBINATION
On January 12, 2026, the Company, Bluebird and Bluebird’s wholly owned subsidiaries entered into the Asset Purchase Agreement. Under the Asset Purchase Agreement, the Company acquired substantially all of Bluebird’s assets, including Bluebird’s brand name, website, related trademarks, inventory, and certain other assets, and assumed certain liabilities. This strategic acquisition brings together two mission-aligned brands and broadens the Company's customer base. The purchase consideration consisted of (i) 425,000 shares of the Company’s restricted common stock issued at closing and (ii) an earnout amount of up to 525,000 shares of the Company’s restricted common stock, subject to earnout share calculations and right of setoff as set forth in the Asset Purchase Agreement. The earnout shares shall be issued to Bluebird on or before the 60th day following the first anniversary of the closing date. The shares issued at closing and the earnout shares are subject to a 180-day lock-up agreement with certain limited transfer exceptions and dribble-out provisions.
The acquisition was accounted for as a business combination in accordance with U.S. GAAP. In connection with the acquisition, the Company engaged an independent third-party valuation firm to assist management in determining the estimated fair values of the assets acquired. The valuation was performed using accepted valuation methodologies and management estimates and assumptions. The following table summarizes the allocation of the purchase consideration to the assets acquired based on their estimated fair values as of the acquisition date:
The identifiable intangible assets acquired consisted primarily of customer relationships and intellectual property. Customer relationship intangible assets represent the estimated fair value attributable to existing customer relationships acquired in the transaction. Intellectual property represents proprietary technology, know-how, trademarks, and related intangible assets acquired as part of the acquisition.
The above purchase price allocation is preliminary and subject to change during the measurement period (which may extend to up to 12 months from the acquisition date) as the Company finalizes its accounting for this transaction.
The excess purchase consideration allocated to goodwill primarily represents the value attributable to the assembled workforce, expected synergies, future growth opportunities, and other intangible benefits that do not qualify for separate recognition. Of the total goodwill recognized, approximately $88,000 was attributable to the assembled workforce and approximately $102,000 represented residual goodwill.
The acquired customer relationships and intellectual property are finite-lived intangible assets and are amortized on a straight-line basis over their estimated useful lives of 5 years. Property and equipment acquired in the acquisition is depreciated over its estimated remaining useful life.
Goodwill is not amortized and is evaluated for impairment annually, or more frequently if events or changes in circumstances indicate that the carrying value may not be recoverable. Finite-lived intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable.
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