NOTE 8 – Acquisition of TA Pipeline LLC

On August 6, 2025 (the “Closing Date”), the Company entered into a membership interest purchase agreement (the “TA MIPA”) with TA Pipeline LLC (“TA”) and the members of TA (the “TA Members”), pursuant to which the Company purchased all of the issued and outstanding membership interests of TA from the TA Members (the “TA Acquisition”), resulting in TA becoming a wholly-owned subsidiary of the Company.

Pursuant to the TA MIPA, as consideration for the TA Acquisition, at closing, the Company (i) paid the TA Members an aggregate of $443,168 in cash (the “TA Closing Payment”), $118,169 of which (the “Estimated Additional Closing Payment”) was paid as a purchase price adjustment based on the Members’ Deficit (as defined in the TA MIPA) set forth in the closing balance sheet; and (ii) issued an aggregate of 96,774 restricted shares of Company common stock (the “TA Closing Shares,” and together with the TA Closing Payment, the “TA Closing Consideration”) to the TA Members, valued at $387,000, based on a price per share of $4.00, the closing price of the Company’s common stock on August 6, 2025. The Estimated Additional Closing Payment was subject to adjustment, upward or downward, to the extent that the Members’ Deficit as of the Closing Date was determined to be less than or exceed $175,000, as provided in the TA MIPA. The adjustment was finalized on November 6, 2025, and no adjustment had been made to the Members' Deficit.

In addition to the TA Closing Consideration, and as further consideration for the TA Acquisition, the Company was required to make an additional payment to the TA Members in the form of an earnout (the “TA Milestone Payment”) in an amount equal to five percent (5%) of the Net Revenue (as defined in the TA MIPA) generated by TA during the twelve-month period following the Closing Date (the “Milestone Period”), up to a maximum of $200,000. The TA Milestone Payment was payable within ten days following completion of the Milestone Period, fifty percent (50%) in cash and fifty percent (50%) in restricted shares of Company common stock valued at $3.10 per share (the “TA Milestone Shares”). The Company recognized the TA Milestone Payment as contingent consideration at its acquisition-date fair value, determined using an earnout option pricing model. Until the contingency was resolved, the TA Milestone Payment was remeasured at fair value at each reporting date, with changes in fair value recognized in earnings in accordance with ASC 805-30-35-1. Its resolution is described below under “TA Milestone Payment.”

The TA MIPA also granted each TA Member a limited, one-time option (the “Put Option”), exercisable if the Fair Market Value of the Company’s common stock is less than $3.10 (the “Base Price”) during the applicable Exercise Period, to exercise one of the following rights under Section 7.5(a) of the TA MIPA as to some or all of the TA Member’s TA Closing Shares and TA Milestone Shares (together, the “TA Acquisition Shares”) by delivering notice to the Company: (i) the right to require the Company to repurchase  all or any portion of the TA Member’s TA Acquisition Shares at the Base Price; (ii) the right to require the Company to issue additional shares of Company common stock sufficient to make the aggregate Fair Market Value of the TA Acquisition Shares specified in the notice equal to their aggregate value at the Base Price; and (iii) the right to require the Company to pay  in cash the excess, if any, of the Base Price over the Fair Market Value, multiplied by the number of TA Acquisition Shares specified in the notice. “Exercise Period” means, for each of the TA Closing Shares and the TA Milestone Shares, the three-month period beginning on the earlier of (x) the date those shares first become eligible for public resale and (y) the first anniversary of the Closing Date. “Fair Market Value” means the volume weighted average price per share of the Company’s common stock for the twenty consecutive trading days immediately preceding the notice date. During the Exercise Period, each of the TA Members is prohibited from engaging in certain transactions in the Company’s stock, as more particularly set forth in the TA MIPA. The Put Option was recognized as a derivative liability at its acquisition-date fair value, determined using the Black-Scholes option pricing model, and was remeasured at fair value at each reporting date until exercised, as described below.

In accordance with the acquisition method of accounting, the purchase price was allocated to the assets acquired and the liabilities assumed based on their estimated fair values at the acquisition date. In connection with the acquisition, the Company incurred $25,855 in acquisition-related expenses, which were expensed as incurred. The Company has completed its allocation of the purchase price to all assets acquired and liabilities assumed. The table below sets forth the consideration paid and the fair value of the assets acquired and liabilities assumed:

The fair value of the working capital items, including cash and deferred merchant bookings, approximates their respective carrying values at the date on which control was obtained.

The fair values of the acquired tradename, acquired supplier agreements, and acquired travel agency agreements were determined using the relief from royalty method, with or without method and multi-period excess earnings method, respectively, which utilized projected financial information. The acquired intangible assets consist of the tradename of $160,000, and supplier and agency agreements of $750,000 (Note 10 – Intangible Assets). The goodwill recognized in the acquisition primarily represents synergies with the existing operations of the Company, and the value of yet-to-be-acquired/developed customers, technology, assembled workforce, and any other assets. 

Classification of TA Closing Shares Prior to Exercise

Although the 96,774 TA Closing Shares were legally issued common stock, they were classified as mezzanine equity because they were subject to contingent redemption rights under the Put Option that could require cash or share settlement upon the occurrence of events outside the Company’s control. Accordingly, they were presented outside of permanent stockholders’ equity and below total liabilities, and were carried at their initial measurement of $387,000, or $4.00 per share, being the closing price of the Company’s common stock on the Closing Date.

Exercise of the Put Option — TA Closing Shares

On February 24, 2026, the former TA Members delivered written notice purporting to exercise the Put Right under Section 7.5(a)(i) of the TA MIPA with respect to all 96,774 TA Closing Shares. The Exercise Period applicable to the TA Closing Shares commenced on February 6, 2026, the date those shares first became eligible for public resale. The Fair Market Value of the Company’s common stock as of the notice date was $2.83 per share, below the Base Price. Under the TA MIPA, a valid exercise of the Put Right requires the Company to repurchase the shares at the Base Price, for an aggregate of $300,000, by wire transfer within twenty business days of receipt of the exercise notice and all required information and documents. Under Section 7.5(d), the rights under Section 7.5 terminate with respect to shares that are the subject of an exercise notice. The Company has not repurchased the shares on the grounds that the former TA Members are in material breach of their obligations under the TA MIPA, and the matter, including the validity of the purported exercise, is the subject of a pending arbitration proceeding. See Note 17 – Commitments and Contingencies.

During the three months ended August 31, 2026, based on additional information that became available regarding the dispute with the former TA Members, including the filing of the Demand for Arbitration on July 14, 2026 and the completion of the Milestone Period on August 6, 2026, management reassessed the classification of the TA Closing Shares. As a result of this reassessment, management concluded that, notwithstanding the Company’s position regarding the validity of the purported exercise, the TA Closing Shares should be accounted for as mandatorily redeemable and classified as a liability in accordance with ASC 480-10-25-7, measured as provided in ASC 480-10-30-2. Accordingly, the Company reclassified the TA Closing Shares from mezzanine equity to a liability of $300,000, representing 96,774 shares at the Base Price of $3.10 per share, and recorded the $87,000 difference between the mezzanine carrying value of $387,000 and the redemption amount in additional paid-in capital. No gain or loss was recognized on the reclassification.

The liability is presented within accrued expenses in the consolidated balance sheet at August 31, 2026 and will be derecognized only upon payment or legal release. The TA Closing Shares remain legally outstanding pending repurchase but are excluded from shares outstanding in the computation of basic and diluted earnings (loss) per share in accordance with ASC 260-10-45-70A. Recognition of the liability does not represent an assessment by management of the likely outcome of the arbitration, including the Company’s affirmative defenses and counterclaims.

In connection with the reclassification, the Company derecognized the remaining derivative liability of $30,000 related to the Put Option on the TA Closing Shares and recognized a corresponding credit of $30,000 in other income during the three months ended August 31, 2026.

TA Milestone Payment

The Milestone Period ended on August 6, 2026. The TA Milestone Payment is equal to five percent of Net Revenue generated by TA during the Milestone Period, subject to a maximum of $200,000, and is payable one-half in cash and one-half in shares of the Company’s common stock valued at $3.10 per share. The amount of the TA Milestone Payment has not been finalized, and the Company has recorded the obligation at the $200,000 contractual maximum, consisting of $100,000 in cash and approximately 32,258 shares of Company common stock ($100,000 at $3.10 per share). The former TA Members have asserted a TA Milestone Payment of $197,006. The TA Milestone Payment was due no later than August 16, 2026. It has not been paid, and the TA Milestone Shares have not been issued. See Note 17 – Commitments and Contingencies.

Because the Milestone Period has been completed, the TA Milestone Payment is no longer measured at fair value on a recurring basis. During the three months ended August 31, 2026, the Company adjusted the carrying amount of the obligation from $190,000 to $200,000, recognizing a charge of $10,000 in change in fair value of contingent consideration (a cumulative increase of $20,000 from the acquisition-date fair value of $180,000), and reclassified the obligation to accrued expenses.

The TA Milestone Payment is classified as a liability rather than within equity because the cash-settled portion is an obligation to transfer cash, and the share-settled portion, together with the Put Option described below, obligates the Company to transfer a fixed monetary value of $3.10 per share and may require settlement in cash. In addition, the former TA Members are seeking payment of the TA Milestone Payment as money damages in the pending arbitration. Because the liability is measured at the full amount payable, including the share-settled portion measured at the Base Price of $3.10 per share, no separate derivative liability is recognized for the Put Option applicable to the TA Milestone Shares.

Put Option — TA Milestone Shares

The Exercise Period applicable to the TA Milestone Shares commenced on August 6, 2026, the first anniversary of the Closing Date, and expires on November 6, 2026. The rights under Section 7.5 are exercisable only if the Fair Market Value of the Company’s common stock is less than the Base Price. The TA Milestone Shares have not been issued. If the Put Right were exercised with respect to the TA Milestone Shares, the Company would be required to settle the share-settled portion of the TA Milestone Payment in cash rather than in shares, in an amount of approximately $100,000. No additional liability has been recognized because the obligation is already recorded at that amount.

Amounts Payable to Former TA Members

At August 31, 2026, amounts payable to the former TA Members consist of the $300,000 share repurchase obligation and the $200,000 TA Milestone Payment, or $500,000 in the aggregate. Neither amount has been paid, and both are the subject of the pending arbitration described in Note 17 – Commitments and Contingencies. The Company has not accrued pre- or post-judgment interest, attorneys’ fees, or arbitration costs because it does not believe that such amounts are probable at this time. The Company has asserted counterclaims against the former TA Members. Those counterclaims constitute a gain contingency, have not been recognized, and have not been offset against the liabilities described above.

The fair values of the Put Option and the TA Milestone Payment measured on a recurring basis are as follows:

The following table presents a reconciliation of the derivative liability measured at fair value on a recurring basis using significant unobservable inputs (Level 3):