NOTE 14—ACQUISITION

On September 9, 2026 (the “Acquisition Date”), OmniMetrix acquired substantially all of the assets, and assumed certain liabilities, of Generator Solutions, Inc. (“Generator Solutions”), a provider of remote monitoring systems for standby generators under the “Gen-Tracker” brand name, pursuant to an asset purchase agreement dated September 9, 2026 (the “Gen-Tracker Acquisition”). The Company assumed operations of the Gen-Tracker business on September 10, 2026. The acquired assets include customer accounts, dealer relationships, trade names, trademarks, technology, accounts receivable and hardware inventory, and the liabilities assumed consist of obligations to provide monitoring services for which Generator Solutions had collected payment before the Acquisition Date. No value was assigned to the acquired Gen-Tracker technology because market participants would be expected to have their own monitoring devices and customer data portals and to migrate the acquired customers to those existing monitoring platforms and, accordingly, would not ascribe value to the Gen-Tracker technology. At the Acquisition Date, Gen-Tracker served approximately 5,000 active monitoring connections. The four full-time employees of Generator Solutions joined OmniMetrix. The Gen-Tracker Acquisition expands OmniMetrix’s standby generator monitoring customer base and dealer network.

Total contractual consideration is $3,500,000, consisting of $1,000,000 in cash paid on the Acquisition Date and deferred cash payments of $450,000 on each of the first four anniversaries of the Acquisition Date and a final payment of $700,000 on the fifth anniversary of the Acquisition Date. The deferred payments are not contingent on future events, are guaranteed by the Company, and are subject to acceleration upon certain events, including a sale of OmniMetrix or the acquired business. The deferred payments were recorded at their estimated fair value of $2,059,000 as of the Acquisition Date, determined using a discount rate of 6.38%, resulting in total purchase consideration of $3,059,000. The deferred consideration is carried at amortized cost. Its carrying value at September 30, 2026 approximates fair value, because the liability was recorded at fair value on the Acquisition Date using a discount rate based on the Company’s borrowing rate, which has not changed significantly since that date. The fair value is a Level 3 measurement. At September 30, 2026, the deferred consideration liability was $2,067,000, of which $326,000 is classified as a current liability and $1,741,000 is classified as a long-term liability. The discount is accreted to interest expense using the effective interest method, and accretion of $8,000 was recognized for the three and nine months ended September 30, 2026.

The Company accounted for the Gen-Tracker Acquisition as a business combination under Accounting Standards Codification (“ASC”) 805, Business Combinations, using the acquisition method of accounting. The purchase consideration has been allocated on a preliminary basis to the assets acquired and liabilities assumed based on their estimated fair values as of the Acquisition Date as follows:

SCHEDULE OF PURCHASE CONSIDERATION ON BASIS OF ASSETS ACQUIRED AND LIABILITIES ASSUMED 

Goodwill is attributable primarily to the assembled workforce, the elimination of a competitor in the standby generator monitoring market, and the expected synergies of serving Gen-Tracker’s customers and dealers through OmniMetrix’s existing monitoring platform and operations. Goodwill has been assigned to the Company’s PG segment and is expected to be deductible for income tax purposes over 15 years, except that the portion related to the deferred payments will become deductible as those payments are made. The acquired finite-lived intangible assets, totaling $1,847,000, are being amortized on a straight-line basis over estimated useful lives of 8 eight years for customer relationships, 10 ten years for the trade name and 5 five years for the non-compete agreement, resulting in a weighted-average amortization period of approximately 8 eight years. These finite-lived intangible assets are also expected to be deductible for income tax purposes over 15 years. Acquired accounts receivable had a gross contractual amount of $370,000, of which approximately $185,000 was not expected to be collected at the Acquisition Date. These receivables were accounted for as purchased financial assets with credit deterioration, and an allowance for credit losses of $185,000 was recorded at the Acquisition Date (see Note 4). The purchase price allocation is preliminary and subject to change as the Company completes the independent valuation of the acquired intangible assets, which was in draft form as of the date of this report. The amounts recognized for identifiable intangible assets and goodwill are provisional and may be adjusted during the measurement period, which will not exceed one year from the Acquisition Date.

The results of the acquired Gen-Tracker operations have been included in the Company’s PG segment from September 10, 2026, the date the Company assumed operations. Revenue and gross profit attributable to the acquired operations from September 10, 2026 through September 30, 2026 were $78,000 and $62,000, respectively. Revenue consisted of $68,000 of monitoring revenue recognized from the deferred revenue assumed in the acquisition and $10,000 of hardware sales. Upon acquisition, the Gen-Tracker operations and employees were integrated into OmniMetrix, and former Generator Solutions personnel also perform services for OmniMetrix’s existing operations. Acquisition-related costs of $71,000 were expensed as incurred and are included in selling, general and administrative expenses for the three and nine months ended September 30, 2026. In connection with the acquisition, OmniMetrix entered into a short-term lease of the Gen-Tracker facility with an affiliate of Generator Solutions and employed the four full-time former employees of Generator Solutions. These arrangements are accounted for separately from the business combination, and the related costs are expensed as incurred.

The operating results of Gen-Tracker have been included in the Company’s condensed consolidated financial statements from September 10, 2026, the date the Company assumed operations. Because the Gen-Tracker operations were integrated into OmniMetrix upon acquisition, former Generator Solutions personnel also perform services for OmniMetrix’s existing operations, and operating expenses are not separately tracked by product line, any allocation of operating expenses to Gen-Tracker would be arbitrary. Accordingly, it is impracticable to determine the earnings attributable to Gen-Tracker since the Acquisition Date, and only the revenue and gross profit of the acquired operations are disclosed above.

The following unaudited supplemental pro forma information presents the combined results of operations of the Company and Gen-Tracker as if the acquisition had occurred on January 1, 2025 (in thousands, except per share data):

SCHEDULE OF BUSINESS ACQUISITION PRO FORMA INFORMATION 

The supplemental pro forma information reflects adjustments for (i) amortization of the acquired intangible assets, (ii) accretion of the discount on the deferred purchase consideration, (iii) Gen-Tracker’s historical results adjusted to U.S. GAAP and to exclude assets and costs not acquired or continued, including the replacement of historical personnel and facility costs with the compensation of the employees retained and the facility lease entered into in connection with the acquisition, and (iv) the reclassification of acquisition-related costs of $71,000 incurred in the three months ended September 30, 2026 to the nine months ended September 30, 2025. The reclassification of acquisition-related costs is the only material nonrecurring pro forma adjustment; the amortization and accretion adjustments are recurring in nature. The pro forma adjustments were tax-effected at the Company’s estimated blended statutory rates of 22.4% and 23.2% for 2026 and 2025, respectively. The supplemental pro forma information is not necessarily indicative of the results that would have been achieved had the acquisition occurred on January 1, 2025, nor of future results.