NOTE 3 - BUSINESS COMBINATIONS

9 Months Ended

Sep. 30, 2025

Notes

NOTE 3 - BUSINESS COMBINATIONS

NOTE 3 – BUSINESS COMBINATIONS

The Company evaluated the acquisition of 42 Telecom Ltd, with its subsidiaries 42 Telecom AB Ltd , 42 Telecom UK Ltd., Arcus Technologies Ltd. pursuant to ASC 805 and ASU 2017-01, Topic 805, Business Combinations. The acquisition method of accounting requires, among other things, that the assets acquired and liabilities assumed in a business combination be measured at their estimated respective fair values as of the closing date of the acquisition. Goodwill recognized in connection with this transaction represents primarily the potential economic benefits that the Company believes may arise from the acquisition.

The following is a summary of the preliminary purchase price consideration:

Common stock issued	$ 18,400,000(1)
Contingent consideration	2,300,000(2)
Purchase price consideration	$ 20,700,000

(1)Represents the 8,000,000 shares of the Company’s common stock issued to the former shareholders of 42 Telecom Ltd. as part of the purchase consideration. The fair value of these shares was determined to be $18,400,000 based on the closing market price of the Company’s common stock on the acquisition date. 

(2)Represents the preliminary fair value of contingent consideration based on potential Escrow Shares to be issued pursuant to the terms of the 42 Telecom acquisition agreement. These shares are issuable upon the achievement of specified post-acquisition performance milestones by 42 Telecom Ltd. and its subsidiaries. 

The Company initially estimated a $1.5 million net profit for fiscal year 2025 when completing the Form 8-K/A based on preliminary discussions with 42 Telecom management. During preparation of the September 30, 2025 Form 10-Q, the Company obtained detailed FY2025 projections for 42 Telecom and refined its contingent consideration liability to be included in the preliminary purchase price allocation.

Under the acquisition agreement, one million Escrow Shares (“Bonus Shares”) are to be released for each US$1,000,000 in consolidated net profit above the US$1,000,000 threshold, with pro-rata releases for fractional increments. Based on updated projections and performance results available as of the acquisition date, the Company determined that issuance of 1,000,000 Bonus Shares was probable. The fair value of the contingent consideration was estimated at $2,300,000 based on estimated net profits and the fair value of the Company’s common stock at the acquisition date.

The Company has made an estimated allocation of the purchase price in regards to the 42 Telecom acquisition related to the assets acquired and the liabilities assumed as of the purchase date. The following table summarizes the preliminary purchase price allocation:

	Total
Cash and cash equivalents	$276,716
Restricted cash	20,705
Accounts receivables, net	1,273,324
Contract assets	832,755
Prepaid expenses and other current assets	412,319
Property, plant and equipment, net	112,034
Internally developed software	320,898
Capital work-in-progress	278,893
Intangible assets:
Developed technology	13,000,000
Customer relationships	1,750,000
Goodwill	4,432,318
Other receivable, related party	417,095
Right of use asset	179,624
Accounts payable	(1,288,922)
Accrued expenses and other current liabilities	(804,610)
Contract liabilities	(250,509)
Operating lease liability	(179,624)
Loan payable	(915)
Deferred tax liability	(82,101)
Purchase price consideration	$20,700,000

Goodwill is primarily attributable to the go-to-market synergies that are expected to arise as a result of the acquisition and other intangible assets that qualify for separate recognition. The goodwill is not deductible for tax purposes.

The Company is currently evaluating any potential deferred tax liability effects as part of the purchase price allocation.

The allocation of the purchase price, including the valuation of identifiable intangible assets and other acquired assets and liabilities, is preliminary and subject to adjustment. The Company intends to engage an independent valuation specialist to assist in determining the final fair values of identifiable intangible assets and other acquired assets and liabilities. The final purchase price allocation is expected to be completed within the measurement period of 12 months from the acquisition date.

The results of 42 Telecom have been included in the consolidated financial statements since the date of its acquisitions. 42 Telecom’s revenue and net income included in the consolidated financial statements since the acquisition date were $3,139,246 and $151,374, respectively.

Unaudited Pro Forma Financial Information

The following unaudited pro forma financial information presents the Company’s financial results as if the 42 Telecom acquisition had occurred as of January 1, 2024. The unaudited pro forma financial information is not necessarily indicative of what the financial results actually would have been had the acquisitions been completed on this date. In addition, the unaudited pro forma financial information is not indicative of, nor does it purport to project, the Company’s future financial results. The unaudited pro forma information does not give effect to any estimated and potential cost savings or other operating efficiencies that could result from the acquisition:

		Three Months Ended				Nine Months Ended
		September 30,				September 30,
		2025		2024		2025		2024
Net revenues	$	4,179,820	$	5,897,476	$	10,631,715	$	24,342,888
Net loss	$	(1,250,105)	$	(1,700,968)	$	(4,106,759)	$	(3,703,456)
Net loss per common share	$	(0.02)	4	(0.02)	$	(0.06)	$	(0.06)