NOTE 3 - Investments

Investments are presented within “Equity investments” in non-current assets on the consolidated balance sheets. The caption comprises the Company’s equity method investment in YADA Commerce, Inc. ("YADA") and equity securities without readily determinable fair values that are measured under the measurement alternative in ASC 321. The composition of the caption by measurement basis is as follows:

Equity Securities Without Readily Determinable Fair Values

The Company holds a 10% interest in each of BlueFysh (see Note 5) and Playbook Investors Network. Neither investment provides the Company with the ability to exercise significant influence, and neither has a readily determinable fair value; accordingly, both are measured at cost less impairment, adjusted for observable price changes in orderly transactions for identical or similar investments of the same issuer, under the measurement alternative in ASC 321-10-35-2. No upward or downward adjustments resulting from observable price changes and no impairments have been recognized with respect to either investment during the periods presented or cumulatively since acquisition.

Equity Method Investment in YADA

YADA is the Company’s only investment accounted for under the equity method.

Description of the Transaction

On June 10, 2026, the Company entered into a Stock Purchase Agreement with YADA, a Florida corporation, and YADA’s founding shareholders, High Class Holdings LLC and Carbon Capital Corp (collectively, the “Founding Shareholders”). Pursuant to the agreement, the Company acquired 1,020 shares of YADA common stock, representing 51% of YADA’s issued and outstanding shares, in exchange for 50,000 fully vested restricted shares of the Company’s common stock. No cash consideration was paid. YADA operates a social commerce, influencer marketing, creator engagement and TikTok Partner Agency business.

The Company entered into the transaction to expand its presence in social commerce and influencer marketing and to gain access to YADA’s creator network, agency relationships, and relationships within the music and live-event industry.

Basis for Accounting as an Equity Method Investment

Notwithstanding its 51% voting interest, the Company has concluded that it does not hold a controlling financial interest in YADA and is not required to consolidate YADA.

YADA is not a variable interest entity for which the Company is the primary beneficiary, because the Company does not have the power to direct the activities that most significantly impact YADA’s economic performance. Under the voting interest model, the presumption of control arising from majority ownership is overcome by substantive participating rights held by the Founding Shareholders. Specifically, the Stock Purchase Agreement provides that YADA retains full operational control over its day-to-day business, including creator recruitment and management, agency operations, employment matters, vendor relationships, and execution of its business plan and establishes a five-member board of directors comprised of two directors designated by the Company, two directors designated by the Founding Shareholders, and one yet-to-be appointed independent director, with no director removable except by the party entitled to designate that director. These governance provisions remain in effect for so long as the Founding Shareholders collectively own at least 40% of YADA’s outstanding shares, or until three years following closing, whichever occurs first.

The Company has concluded that it has the ability to exercise significant influence over YADA’s operating and financial policies through its ownership interest, board representation, and related contractual rights. Accordingly, the investment is accounted for under the equity method in accordance with ASC 323-10 as of June 10, 2026. The Company has not elected the fair value option under ASC 825-10 for this investment. YADA does not meet the definition of a joint venture, as it is not under the joint control of its investors.

Initial Measurement and Basis Difference

The Company recorded the investment at $112,000, representing the fair value of the 50,000 shares of common stock issued, based on the Company’s closing share price of $2.24 on June 10, 2026. No broker, finder or investment banking fees were payable in connection with the transaction, and each party bore its own fees and expenses. The Company incurred no direct transaction costs eligible for capitalization, and the cost basis of the investment is therefore $112,000.

At the acquisition date, the carrying amount of the Company’s investment of $112,000 exceeded its proportionate share of the underlying equity in YADA’s net assets by the full $112,000. YADA was recently formed and had no significant assets or liabilities at the acquisition date. Management evaluated whether any portion of the basis difference was attributable to identifiable assets of YADA, including its TikTok Partner Agency status and its creator, customer and agency relationships, and concluded that no portion of the difference was attributable to separately identifiable assets having a fair value that is both separable and reliably measurable. Accordingly, the entire basis difference is treated as equity method goodwill, which is not amortized, is not tested for impairment separately under ASC 350, and is evaluated as part of the Company’s assessment of the investment as a whole for other-than-temporary impairment in accordance with ASC 323-10-35-32. As a result, no basis difference amortization is recognized within the Company’s share of YADA’s earnings or losses.

Subsequent Measurement and Allocation of Earnings

In connection with the Stock Purchase Agreement, the Company and YADA entered into a Cooperation and Earnout Agreement that establishes a 50/50 allocation of net profits between the Company and the Founding Shareholders with respect to specified travel gift card, travel club and membership, music artist promotional event, sponsorship and advertising activities (the “Activities”). Management has concluded that this allocation is substantive and determines the parties’ economic interests in the results of the Activities. Accordingly, the Company recognizes its share of YADA’s earnings and losses based on the 50% contractual allocation rather than its 51% ownership interest.

Under the Cooperation and Earnout Agreement, all travel commissions, booking fees, markups, overrides and supplier commissions arising from travel bookings generated through YADA channels belong exclusively to the Company. The Company eliminates intra-entity profits on transactions with YADA to the extent of its ownership interest.

The following summarizes the activity in the investment for the period from June 10, 2026 through August 31, 2026:

The Company recorded equity in net loss of YADA of $35,200 for each of the three and six months ended  August 31, 2026, presented as a single line item below operating loss in the consolidated statements of operations. Because the investment was acquired on June 10, 2026, the amounts for the three-month and six-month periods are the same. 

The Company evaluated the investment for impairment as of  August 31, 2026 and concluded that no other-than-temporary decline in value had occurred. Losses in excess of the carrying amount of the investment are not recognized unless the Company has other financial support at risk with respect to YADA.

Other Rights and Contingencies

The Company holds a right of first refusal with respect to event business opportunities requiring a capital commitment, exercisable within 48 hours, and a right of first refusal on any proposed transfer of shares by a Founding Shareholder. As of  August 31, 2026, no additional shares had been issued and no rights of first refusal had been exercised.