Acquisition

12 Months Ended

Dec. 31, 2025

Acquisition [Abstract]

Acquisition

3. Acquisition

On the Closing Date, the Company acquired NTS through a two-step merger process to enter a new line of business. As a result of the Acquisition, the Company acquired all of the issued and outstanding equity interests of NTS. The Acquisition was accounted for as a business combination using the acquisition method of accounting in accordance with ASC Topic 805, Business Combinations. Substantially all of the Company’s revenue and operating results from continuing operations for the year ended December 31, 2025 were attributed to the operations of NTS.

The aggregate purchase price delivered by the Company to Newtek was $12,904,000, which consisted of (i) $4,000,000 in cash and (ii) 4,000,000 shares of Series A Preferred Stock, which had a fair value of $8,200,000 on the Closing Date. Newtek is also entitled to earnout payments under certain circumstances of up to $5,000,000 (the “Earn-Out” or “Earn-Out Liability”) based on the Company’s achievement of certain cumulative average adjusted EBITDA thresholds for the 2025 and 2026 fiscal years, which had a fair value of $704,000 on the Closing Date. The Company financed the cash portion of the purchase price using existing cash on-hand.

The Series A Preferred Stock will automatically convert into one share of the Company’s common stock, par value $0.001 per share (subject to certain customary anti-dilution adjustments), upon the occurrence of certain qualifying transfers by Newtek to third parties. The Earn-Out may be paid, in the Company’s sole discretion, in cash, in shares of Series A Preferred Stock (the “Acquisition Earn-Out Stock Consideration”) or in a combination thereof. Pursuant to the Acquisition Agreement, to the extent that all or a portion of the Acquisition Earn-Out Amount is paid in shares of Series A Preferred Stock, the number of shares of Series A Preferred Stock to be issued to Newtek will be calculated based on the average of the daily volume weighted average prices of the Company’s common stock during each trading day during a 60 calendar-day period ending on December 31, 2026; provided, that in no event shall such price be less than $1.00.

Pursuant to the Acquisition Agreement, if the issuance of the Acquisition Earn-Out Stock Consideration would cause Newtek’s “total equity” (as calculated under the Bank Holding Company Act of 1956, as amended (the “BHCA”), and as implemented and interpreted by the Board of Governors of the Federal Reserve System) in the Company to exceed one-third of the Company’s total equity (the “Total Equity Cap”), then the number of shares of Series A Preferred Stock issuable as Acquisition Earn-Out Stock Consideration will be adjusted so that the Company will issue to Newtek the maximum number of shares of Series A Preferred Stock that would not cause Newtek’s total equity to exceed the Total Equity Cap, with a corresponding increase to the Acquisition Earn-Out Amount paid in cash.

The Company recorded a non-current liability of $704,000 for the fair value of the contingent consideration related to the expected Earn-Out. The Earn-Out Liability is classified as a Level 3 measurement for which fair value is derived from inputs that are unobservable and significant to the overall fair value measurement. The fair value of such Earn-Out Liability was estimated using a Monte Carlo simulation model that utilizes key assumptions including forecasted average EBITDA and volatilities of the underlying financial metrics during the Earn-Out periods.

The Company determined its initial allocation of the purchase price at the date of acquisition based upon its understanding of the fair value of the acquired assets and assumed liabilities. The Company obtained the information used for the purchase price allocation during due diligence and through other sources. In the months after the Closing Date, as the Company obtained additional information about the acquired assets and liabilities, including results of operations, and as it learned more about the newly acquired business, it was able to refine the estimates of fair value and more accurately allocate the purchase price. Only facts and circumstances that existed as of the acquisition date are considered for subsequent adjustment. For the year ended December 31, 2025, the Company determined that it should revise the Earn-Out liability by lowering it to $0, based on facts and circumstances that existed at the Acquisition date, but were discovered within the remeasurement period. The Company adjusted this Earn-Out Liability with a corresponding decrease to goodwill. In addition, the Company revised the accounts receivable opening balance by $257,293 as amounts originally estimated to be uncollectible, were collected. The measurement period for this acquisition closed on January 2, 2026.

The Company made appropriate adjustments to the purchase price allocation prior to completion of the measurement period, as required. The Company has included tables for the respective acquired identifiable assets and assumed liabilities as of the Closing Date and December 31, 2025 below.

Under the acquisition method of accounting, the assets acquired and liabilities assumed were recorded at their fair values as of the Closing Date. The fair values of intangible assets were based on valuations using various income approaches and methods, such as the multi-period excess earnings method, relief from royalty method, etc., which require the use of significant estimates and assumptions, including estimating future cash flows and developing appropriate discount rates. The excess of the purchase price over the tangible assets, identifiable intangible assets and assumed liabilities was recorded as goodwill. The results of NTS have been included in the Company’s single-segment business.

The fair value of all the acquired identifiable assets and liabilities summarized below were based on preliminary valuations and were updated as the Company obtained additional information during the acquisition measurement period, which ended on January 2, 2026. The purchase price allocation as of the Closing Date and then re-forecasted as of December 31, 2025 was as follows:

	At Closing Date		Change			At December 31, 2025
Assets acquired:
Accounts receivable	$	3,535,343	$	257,293	(1)	$	3,792,636
Prepaid expenses and other current assets		129,233		--			129,233
Property and equipment, net		738,046		--			738,046
Operating lease right-of-use asset		212,452		--			212,452
Intangible assets		7,910,000		--			7,910,000
Other assets		998,228		--			998,228
Total assets acquired		13,523,302		257,293	(1)		13,780,595
Liabilities assumed:
Accounts payable		46,692		--			46,692
Accrued expenses and other current liabilities		370,059		--			370,059
Operating lease liabilities		212,452		--			212,452
Deferred revenue		3,450,000		--			3,450,000
Deferred tax liability		2,056,600		--			2,056,600
Total liabilities assumed		6,135,803		--			6,135,803
Total identifiable net assets acquired		7,387,499		257,293	(1)		7,644,792
Total purchase price: (includes $4,000,000 of cash, 4,000,000 shares of Series A Preferred Stock, which had a fair value of $8,200,000 and $704,000 of contingent consideration at the closing and $4,000,000 of cash, 4,000,000 shares of Series A Preferred Stock, which had a fair value of $8,200,000 and $0 of contingent consideration at December 31, 2025, respectively)		12,904,000		704,000	(2)		12,200,000
Goodwill	$	5,516,501	$	961,293		$	4,555,208

(1) Reflects an adjustment of $257,293 related to valuation of accounts receivable on the Closing Date.

(2) Reflects an adjustment of $704,000 related to the re-measurement of the fair value of the related contingent consideration (earnout) liability

The preliminary purchase price allocation resulted in goodwill of $5,516,501 ($4,555,208 as of December 31, 2025) and will be deductible for income tax purposes. The resulting amount of goodwill is attributed to expected synergies from cross-sale opportunities and future growth. Intangible assets of $7,910,000 include customer relationships of $5,275,000, order backlog of $438,000, and trademarks and trade names of $2,197,000, which are being amortized on a straight-line basis, over weighted-average useful lives of 8 years, 1 year, and 8 years, respectively.

After the closing of the Acquisition, and in the normal course of business, certain amounts were due to the Company by Newtek and its affiliates. For the year ended December 31, 2025, sales to Newtek and its affiliates totaled $7,609,550.

In connection with the Acquisition, the Company entered into a referral arrangement with Newtek pursuant to which Newtek will refer potential clients to the Company for a fee. The referral arrangement with Newtek is terminable by either the Company or Newtek at any time. The Company paid Newtek and its affiliates $344,365 for the year ended December 31, 2025 in connection with the referral arrangement.

Supplemental Pro Forma Information

The following unaudited pro forma consolidated financial information reflects the results of operations of the Company for the year ended December 31, 2024 as if the Acquisition had occurred as of January 1, 2024 and gives effect to transactions that are directly attributable to the Acquisition. These amounts are based on financial information of NTS and are not necessarily indicative of what the Company’s operating results would have been had the Acquisition taken place on the date presented, nor is it indicative of the Company’s future operating results. As the Acquisition occurred on January 2, 2025, the Company’s results of operations for the year ended December 31, 2024 include those results attributable to the acquired operations of NTS.

	Year Ended December 31, 2024 (unaudited)
Total Revenue	$	25,667,135
Net Income from Continuing Operations	$	(328,570	)

The pro forma adjustments for the periods presented include additional amortization expense related to the fair value of the acquired intangible assets as if such assets were acquired on January 1, 2024.