NOTE 7. SALE OF BRIGADIER

On June 17, 2025, the independent members of the Board of Directors of the Company were presented with a proposed transaction for the sale of the Company’s wholly owned subsidiary, Brigadier Security Systems (2000) Ltd., a Canadian registered corporation (“Brigadier”). The independent members of the Board of Directors reviewed an independent valuation of the fair market value of Brigadier and based upon such valuation and their review of the terms of the proposed transaction, approved the transaction.

On June 19, 2025, the Company entered into a stock purchase agreement (“Agreement”) with SKCAL LLC, an Arizona limited liability company (“SKCAL”), pursuant to which the Company agreed to sell to SKCAL all of the shares of stock (“Shares”) that it owns in its wholly owned subsidiary, Brigadier. Scott Schoenberger, a director and a 10.9% shareholder of the Company, is the sole member of SKCAL. The closing (“Closing”) of the sale of Shares took place on July 1, 2025 (“Closing Date”).

Pursuant to the Agreement, the purchase price for the Shares acquired by SKCAL at Closing was $2.2 million subject to certain adjustments thereto. An initial payment of $0.2 million was paid within a few days of the execution and delivery of the Agreement by the parties. An additional $1.0 million was paid near the Closing Date, of which $0.5 million was received as of June 30, 2025. A final payment of $1.0 million was payable on September 1, 2025, subject to adjustment upward or downward thereto in the event of a difference between the Closing Date schedule of Brigadier’s current assets and liabilities as of June 30, 2025 (“Target Balance Sheet”), and the schedule of Brigadier’s audited current assets and liabilities as of June 30, 2025 (“Final Balance Sheet”), including adjustments in the event accounts receivable become uncollectable, cash balances increase or decrease, and/or any liabilities arise prior to Closing but which were not set forth on such Target Balance Sheet. After a comparison of the Final Balance Sheet and the Target Balance Sheet, it was determined and agreed that an upwards adjustment of $0.1 million be added to the purchase price resulting in the final payment amount being $1.1 million.

The audit committee of the Company continued to have oversight of the transaction through the Closing Date of July 1, 2025, and the final payment adjustment procedures concluding on September 1, 2025. While the Chief Operating Decision Maker evaluated the security systems segment for operational purposes through June 30, 2025, this was not considered a significant operation to the Company during the years ended June 30, 2025 and 2024, respectively. The Company received total proceeds of $2.3 million for the sale and had a cost basis in Brigadier of $1.7 million and thus recorded a gain on the sale of Brigadier of $0.6 million.