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Acquisitions

6 Months Ended

Jun. 30, 2024

Note 5 Acquisitions

Credova

On March 13, 2024, the Company entered into the Credova Merger Agreement.

Pursuant to the Credova Merger Agreement, on March 13, 2024, Merger Sub merged with and into Credova. In connection with the Merger, each share of Credova’s equity was converted into the right to receive newly-issued shares of PSQ Class A common stock, and was delivered to the Credova stockholders at the closing (“Credova Stockholders”).

Credova Merger Consideration

As consideration for the Credova Merger, Credova Stockholders received 2,920,993 newly-issued shares of Class A Common Stock (the “Consideration Shares”). A number of Consideration Shares equal to ten percent (10%) of the Consideration Shares (the “Escrow Shares”) was placed in an escrow account for indemnity claims made under the Credova Merger Agreement. Assuming they are not subject to indemnity claims, the Escrow Shares remaining in escrow upon the 12-month anniversary of the closing will be released and distributed pro rata to the former Credova Stockholders.

The acquisition of Credova was accounted for as a business combination using the acquisition method pursuant to FASB ASC Topic 805. As the acquirer for accounting purposes, the Company estimated the purchase price, assets acquired and liabilities assumed as of the acquisition date, with the excess of the purchase price over the fair value of net assets acquired recognized as goodwill.

The purchase price allocation as of the acquisition date is presented as follows:

	March 13, 2024
Purchase consideration:
Common Stock, at fair value	$	14,137,606
Assumption of notes payable		8,449,500
Cash paid		1,587,184
Total purchase consideration	$	24,174,290

Purchase price allocation:
Cash	$	1,728,400
Loans held for investment		7,027,678
Fixed assets		243,879
Intangible assets		11,720,000
Prepaid expenses		1,269,933
Goodwill		10,930,978
Operating lease right of use asset		341,121
Accounts payable and other current liabilities		(3,430,171	)
Lease liability		(341,121	)
Revolving line of credit		(5,316,407	)
Fair value of net assets acquired	$	24,174,290

The excess of purchase consideration over the fair value of net tangible and identifiable intangible assets acquired was recorded as goodwill and is primarily attributed to the synergies expected from expanded market opportunities when integrating the acquired developed technologies with the Company’s offerings as well as acquiring an assembled workforce. The goodwill balance is not deductible for income tax purposes.

Acquisition-related costs of $2.3 million associated with the Credova Merger were included in general and administrative expenses in the condensed consolidated statement of operations for the three and six months ended June 30, 2024.

Since the acquisition date, $2.9 million of revenue and $0.8 million of net losses have been included in the condensed consolidated statement of operations for the three months ended June 30, 2024 and $3.3 million of revenue and $1.1 million of net loss have been included in the condensed consolidated statement of operations for the six months ended June 30, 2024.

The following table sets forth the components of identifiable intangible assets acquired and their estimated useful lives as of the date of acquisition (in years):

	Fair value		Useful life
Trademarks and Tradenames	$	1,700,000	5
Internally developed software		3,600,000	3
Merchant relationships		5,900,000	5
State operating licenses		520,000	Indefinite
Total intangible assets	$	11,720,000

The following unaudited supplemental pro forma combined financial information presents the Company’s combined results of operations for the three and six months ended June 30, 2024 and 2023 as if the Credova Merger had occurred on January 1, 2023. The pro forma financial information is presented for comparative purposes only and is not necessarily indicative of the Company’s operating results that may have occurred had the Credova Merger been completed on January 1, 2023. In addition, the unaudited pro forma financial information does not give effect to any anticipated cost savings, operating efficiencies or other synergies that may be associated with the merger, or any estimated costs that have been or will be incurred by the Company to integrate the assets and operations of Credova.

	Three months ended June 30, 2024			Six months ended June 30, 2024
Revenue	$	5,985,228		$	12,364,682
Net loss	$	(11,156,867	)	$	(22,420,823	)

	Three months ended June 30, 2023			Six months ended June 30, 2023
Revenue	$	4,277,206		$	8,294,162
Net loss	$	(20,423,401	)	$	(31,121,753	)

The unaudited pro forma financial information reflects pro forma adjustments to present the combined pro forma results of operations as if the acquisition had occurred on January 1, 2023 to give effect to certain events the Company believes to be directly attributable to the acquisition. These pro forma adjustments primarily include:

(i)

the elimination of Credova historical depreciation and amortization expense and the recognition of new depreciation and amortization expense;

(ii)

an adjustment to present acquisition-related transaction costs and other one-time costs directly attributable to the acquisition as if they were incurred in the earliest period presented; and

(iii)

the related income tax effects of the adjustments noted above, as applicable.

EveryLife

In February 2023, the Company acquired the assets of EveryLife, by way of a stock for stock exchange with a company wholly owned by an insider. Pursuant to that agreement, the Company acquired a brand name in exchange for 1,071,229 shares of the Company’s common stock. Through the stock for stock exchange agreement, the Company acquired EveryLife’s marketing related intangibles which consist of a brand name. On July 13, 2023, the Company launched the brand and began generating revenue from sales of diapers and wipes from this operation.

This acquisition was accounted for as an asset purchase. The cost of a group of assets acquired in an asset acquisition shall be allocated to the individual assets acquired or liabilities assumed based on their relative fair values and shall not give rise to goodwill.

The following table presents the acquisition date fair value of the asset acquired:

Assets acquired:
Balance - January 1, 2023	$	-
Issuance of common stock at fair value		1,334,850
Legal costs capitalized		42,611
Balance - December 31, 2023	$	1,377,461