Note 4 - Business Combination |
9 Months Ended |
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Sep. 30, 2026 | |
| Notes to Financial Statements | |
| Business Combination [Text Block] |
NOTE 4: BUSINESS COMBINATION
Evoke Neuroscience, Inc.
On April 30, 2025, the Company entered into a Securities Purchase Agreement (the “Securities Purchase Agreement”) with Evoke Neuroscience, Inc. (“Evoke”) and stockholders of Evoke (the “Sellers”) to increase Firefly Neuroscience, Inc.’s capacity and expand its customer base. The Sellers sold and the Company purchased all of the issued and outstanding shares of Evoke, for a total purchase price consisting of: (i) $3,000 in cash (the “Cash Purchase Price”); (ii) shares of the Company’s common stock having an aggregate value of $3,000 priced at $3.50 per share (the “Shares”); and (iii) an earn-out payment in the form of additional shares of the Company’s common stock with an aggregate value of $500, contingent upon the achievement of specified revenue targets during a thirty-six (36) month earn-out period, all as further described in the Securities Purchase Agreement (the “Earn-Out Shares,” and collectively with the Cash Purchase Price and Share Consideration, the “Purchase Price”).
The contingent consideration associated with the Earn-Out Shares of $478 reflects the estimated fair value, at the acquisition date, of contingent future payments in shares of common stock of up to $500 to the Sellers under an “earn-out” provision of the Securities Purchase Agreement. The Company determined the estimated acquisition date of fair value of the contingent consideration using a Monte Carlo simulation. Significant assumptions included a discount rate of 3.5% and an assumed income tax rate of 26.5% as well as projected net sales derived from internal forecasts and a three-month revenue volatility rate of 1.6%.
This contingent consideration liability is remeasured at fair value for each reporting period until the contingency is resolved, with changes in fair value recognized in operating expenses. During the nine months ended September 30, 2026, the Company evaluated in current quarter and noted immaterial difference hence no adjustments. Significant assumptions included a discount rate of 3.6% and an assumed income tax rate of 26.5% as well as projected net sales derived from internal forecasts and a three-month revenue volatility rate of 2.4%.
The condensed consolidated financial statements of the Company include the results of operations of Evoke from April 30, 2025 to September 30, 2026 and do not include results of operations for periods prior to April 30, 2025.
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