(3) Business Combination

On October 8, 2025, the Company entered into the Purchase Agreement with DEFJ pursuant to which the Company acquired 100% of the issued and outstanding membership interests of ABCJ. Prior to the Acquisition, ABCJ was a wholly-owned subsidiary of DEFJ and an indirect wholly-owned subsidiary of CKLS. The Company determined that ABCJ was a VIE) and the Company is the primary beneficiary and the accounting acquirer.

Under the terms of the Purchase Agreement, on October 8, 2025, (the “Closing”) in exchange for all the issued and outstanding membership interests of ABCJ immediately prior to the effective time of the Closing (the “Effective Time”), the Company issued to DEFJ, as sole member of ABCJ, an aggregate of (A) 83,285 shares of the Company’s unregistered Common Stock, which shares represented no more than 9.99% of the outstanding shares of the Company’s Common Stock immediately before the Effective Time and (B) 1,152.9568 shares of the Company’s unregistered Series A Non-Voting Convertible Preferred Stock, par value $0.0001 per share, (“Series A Preferred Stock”) (as described below). Each share of Series A Preferred Stock is convertible into 10,000 shares of Common Stock, subject to certain conditions described in the Purchase Agreement.

​

The Board approved the Purchase Agreement and the related transactions, and consummation of the Acquisition was not subject to approval of Company stockholders. Under Nasdaq rules, stockholder approval was required in connection with the conversion of the Preferred Stock into Common Stock. On July 20, 2026, the Company’s stockholders approved (i) the conversion of shares of Series A Preferred Stock into shares of Common Stock; (ii) the conversion of shares of Series B Preferred Stock into shares of Common Stock in accordance with Nasdaq rules; and (iii) a “change of control” under Nasdaq Listing Rules 5110 and 5635(b).

The fair value of the consideration totaled approximately $140.0 million, summarized as follows:

​

​

(3) Business Combination (continued)

The transaction was accounted for as a Business Combination. Under this method, the total purchase price of the Acquisition is allocated to the net tangible and the identifiable intangible assets acquired and liabilities assumed based on fair values as of the date of the Acquisition. Consideration paid comprises the estimated fair value of various securities issued including the Series A  Preferred Stock and the Common Stock issued to DEFJ. In the fourth quarter of 2025, the preliminary purchase price allocation was updated, including the related determination of fair value of the securities issued as consideration, the allocation of consideration to the specific IPR&D programs acquired and the tax implications related to the updates to the purchase price allocation.  

The Company recorded the assets acquired and liabilities assumed as of the date of the Acquisition based on the information available at that date. The following table presents the allocation of the purchase price to the estimated fair values of the assets acquired and liabilities assumed as of the Acquisition date:

​

​

The fair value of IPR&D assets was capitalized as of the Acquisition date and accounted for as indefinite-lived intangible assets until completion or disposition of the assets or abandonment of the associated research and development efforts. Upon successful completion of the development efforts, the useful lives of the IPR&D assets will be determined based on the anticipated period of regulatory exclusivity. Those IPR&D assets will be amortized within operating expenses over their useful lives. Until that time, the IPR&D assets will be subject to impairment testing and will not be amortized. The goodwill recorded related to the Acquisition is the excess of the fair value of the consideration transferred by the acquirer over the fair value of the net identifiable assets acquired and liabilities assumed at the date of the Acquisition. The goodwill recorded is not deductible for tax purposes.

The following table summarizes the Company’s intangible assets and goodwill acquired in connection with the Acquisition and their carrying values as of June 30, 2026:

​

​

​

(3) Business Combination (continued)

Intangible asset fair values for the IPR&D program were determined using the Multi-Period Excess Earnings Method (“MPEEM”) which is a form of the income approach. Under the MPEEM, the fair value of an intangible asset is equal to the present value of the asset's incremental after-tax cash flows (excess earnings) remaining after deducting the market rates of return on the estimated value of contributory assets (contributory charge) over its remaining useful life. To calculate fair value of acquired IPR&D programs under the MPEEM, the Company uses probability-weighted cash flows discounted at a rate considered appropriate given the significant inherent risks associated with drug development by development-stage companies. Cash flows were calculated based on estimated projections of revenues and expenses related to each program and then reduced by a contributory charge on requisite assets employed. Contributory assets included debt-free working capital, net fixed assets and assembled workforce. Rates of return on the contributory assets were based on rates used for comparable market participants. Cash flows were assumed to extend through the market exclusivity period expected to be provided by trade-secrets and patents or for products related to the indication to be treated. The resultant cash flows were then discounted to present value using a weighted-average cost of equity capital for companies with profiles substantially similar to that of the acquired IPR&D program, which the Company believes represents the rate that market participants would use to value the assets. The Company compensated for the phase of development of the program by probability-adjusting its estimation of the expected future cash flows. The projected cash flows were based on significant assumptions, such as the time and resources needed to complete development and approval of the IPR&D program, estimates of revenues and operating profits related to the program considering its stage of development, the life of the potential commercialized product and associated risks, including the inherent difficulties and uncertainties in drug development, such as obtaining marketing approval from the U.S. Food and drug Administration (“FDA”) and other regulatory agencies, and risks related to the viability of and potential alternative treatments in any future target markets.

The Company’s transaction costs of approximately $8.8 million include direct expenses incurred in connection with the Acquisition, as well as integration-related professional fees and other incremental costs directly associated with the Acquisition. Transaction costs were expensed as incurred and are included in General and Administration expenses in the Company’s consolidated statements of operations.