Business Combination and Asset Purchase

6 Months Ended

Jun. 30, 2026

Business Combination, Asset Acquisition, Transaction between Entities under Common Control, and Joint Venture Formation [Abstract]

Business Combination and Asset Purchase

On May 20, 2025, the Company completed its previously announced asset purchase of technology assets, customer contracts, trademarks, and other intellectual property (collectively, the “CSI Acquired Assets”) from CompuSystems, Inc. (“CSI”). At the closing (the “CSI Closing”), pursuant to an asset purchase agreement, by and between the Company and CSI, dated as of December 19, 2024, as amended by that certain amendment to the asset purchase agreement, dated as of December 30, 2024, and as further amended by that certain second amendment to the asset purchase agreement, dated as of February 25, 2025, and as further amended by that certain third amendment to the asset purchase agreement, dated March 31, 2025, and as further amended by that certain fourth amendment to the asset purchase agreement, dated May 14, 2025 (the “CSI Asset Purchase Agreement”), the Company acquired the CSI Acquired Assets for an aggregate purchase consideration of $32.8 million consisting of (i) exclusivity fee of $1.0 million paid in the fourth fiscal quarter of 2024 (the “Exclusivity Fee”), (ii) amount in cash of $1.0 million paid to an escrow account in January 2025 (the “Escrow Amount”) (iii) an amount in cash equal to $5.0 million, (iv) 10,600,000 validly issued, fully paid and nonassessable shares of restricted common stock of the Company, (the “Closing Stock Consideration”), (v) $5.0 million payable in the form of the convertible note (the “Initial Convertible Note”) issued by the Company to CSI, (vi) $5.0 million payable in the form of the convertible note (the “First Convertible Note”) issued by the Company to CSI, (vii) $5.0 million payable in the form of convertible note (the “Second Convertible Note”, and together with the Initial Convertible Note and First Convertible Note, the “CSI Convertible Notes”) issued by the Company to CSI, (viii) $500,000 for the reimbursement of fees incurred by CSI due to the acquisition, and (ix) the assumption of certain transferred liabilities, as described in the CSI Asset Purchase Agreement.

The fair values assigned to the identifiable intangible assets acquired were estimated using valuation techniques consistent with the income and cost approaches described in ASC 820. Customer relationships were valued using the multi-period excess earnings method, which incorporates significant assumptions including projected revenue growth, customer attrition, operating margins, contributory asset charges, and discount rates. Trade names and trademarks were valued using the relief-from-royalty method, which incorporates assumptions regarding estimated royalty rates, projected revenues, expected useful life, and discount rates. Developed technology was valued using the cost approach, which incorporates assumptions regarding the estimated time and cost to recreate the technology, entrepreneurial profit, economic obsolescence, and the expected remaining useful life of the technology. These estimates are based on management's assumptions regarding future operating performance and market participant assumptions and are inherently subject to uncertainty.

Pursuant to the CSI Asset Purchase Agreement, in connection with the CSI Closing, the Company issued the CSI Convertible Notes in an aggregate principal amount of $15.0 million, each due on the second anniversary of the closing (the “Maturity Date”). For additional information on the CSI Convertible Notes, refer to Note 5, Borrowings.

The acquisition was accounted for under ASC 805, Business Combinations and uses preliminary purchase price allocations, with adjustments permitted within the measurement period (not exceeding one year). Adjustments beyond the measurement period are recorded in earnings.

A summary of the purchase consideration follows:


Cash	$	7,500
Closing Stock Consideration	10,283
Convertible Notes	9,717
Total purchase price consideration	$	27,500

Cash of $7.5 million includes initial cash paid of $1.0 million as Exclusivity Fee in December 2024, $1.0 million escrow amount paid in January 2025, and cash paid at closing in May 2025 amounting to $5.5 million

The final purchase price and purchase price allocation of assets acquired and liabilities assumed follows:


Unbilled receivable	$	300
Inventory	163
Other assets	202
Equipment	275
Intangible assets	8,870
Goodwill	19,135
Accrued expenses	(104)
Loan for purchase of equipment	(141)
Deferred revenue	(1,200)
Total purchase consideration	$	27,500

The acquired intangible assets values were estimated using the discounted cash flow method and estimated discount rate. The useful lives are based on estimates of benefits derived from the future cash flows.

The acquired intangible assets, useful lives and a final estimate of fair value at the acquisition date follows:


	Useful Life (years)	Fair Value
Tradename	10	$	900
Customer relationships	10	5,160
Internal use technology	4	2,810
Total		$	8,870

API Media Innovations

On January 22, 2026, the Company completed its previously announced acquisition of all of the outstanding shares of API Media Innovations Inc. (“API Media”) pursuant to a Stock Purchase Agreement dated October 28, 2025, by and among the Company, API Media, and its shareholders. The aggregate purchase price was $14 million paid in cash, including a $1 million non-refundable deposit paid upon execution of the agreement, which was credited toward the purchase price at closing. The acquisition was accounted for as a business combination in accordance with ASC 805, Business Combinations. The purchase price allocation is preliminary and subject to adjustment during the measurement period (not to exceed one year from the acquisition date). Any such adjustments will be recorded in the period in which they are identified.

The fair values assigned to the identifiable intangible assets acquired were estimated using valuation techniques consistent with the income and cost approaches described in ASC 820. Customer relationships were valued using the multi-period excess earnings method, which incorporates assumptions regarding projected revenue growth, customer attrition, operating margins, contributory asset charges, and discount rates. The trade name was valued using the relief-from-royalty method, which incorporates assumptions regarding estimated royalty rates, projected revenues, useful life, and discount rates. Developed technology was valued using the cost approach, which incorporates assumptions regarding the estimated time and cost to recreate the technology, entrepreneurial profit, and economic obsolescence. These estimates are based on management's assumptions regarding future operating performance and market participant assumptions and are inherently subject to uncertainty.

The following table summarizes the preliminary allocation of the purchase price to the estimated fair values of assets acquired and liabilities assumed at the acquisition date:


Cash	$	51
Accounts receivable	396
Prepaid expenses	39
Other receivable	2
Right of use asset	87
Property and equipment	231
Intangible assets	5,490
Goodwill	8,150
Accrued expenses	(271)
Right of use liability	(87)
Accounts payable	(88)
Total	$	14,000

The acquired intangible assets, useful lives and a final estimate of fair value at the acquisition date follows:


	Useful Life (years)	Fair Value
Tradename	5	$	170
Customer relationships	5	4,080
Internal use technology	3	1,240
Total		$	5,490

The Company expects to derive synergy from the acquired intangibles from API with it's own intellectual property. The goodwill recorded in the API acquisition is not deductible for tax purposes. The Company recorded fees in the six months ended June 30, 2026 of $84,000.

Supplemental Pro Forma Information:

The revenue and net loss of API included in consolidated statement of operations since the acquisition date were $1.2 million and $0.1 million, respectively. Revenue and net income for the 3 months ended June 30, 2026 were $1.0 million and $0.4 million, respectively. Had the acquisition occurred on January 1, 2025, consolidated pro forma revenue, net loss and net loss per common share, basic and diluted would have been as follows:


	Pro Forma (Unaudited) for the three months ended June 30,				Pro Forma (Unaudited) for the six months ended June 30,
	2026		2025		2026		2025
Net revenue	$	5,701	$	2,792	$	9,170	$	3,675
Net loss	(88,228)		(37,494)		(140,943)		(47,881)

Other Intangible Asset Acquisitions

During the six months ended June 30, 2026, the Company acquired an additional patent from three inventors for an aggregate fair value of $5.4 million and a useful life of 10 years, based on expected future economic benefit, in exchange for the issuance of 7,500,000 shares of common stock. This transaction was considered a related party transaction as described in the related party note.

Salieri Platform Acquisition

During the six months ended June 30, 2026, the Company acquired the Salieri platform, including related developed technology, software, source code, documentation, algorithms, and associated intellectual property, pursuant to an agreement with an individual developer for an aggregate purchase price of £0.6 million (approximately $0.8 million). The acquired technology was capitalized as an intangible asset and is being amortized over its estimated useful life based on the expected period of future economic benefit. The Company also entered into a separate four-year consulting agreement with the seller for ongoing platform support, maintenance, and development, which is accounted for separately as services are received.