XML 25 R14.htm IDEA: XBRL DOCUMENT v3.25.3
Acquisition of TA Pipeline LLC
 6 Months Ended
Aug. 31, 2025
Business Combination [Line Items]  
Acquisition of TA Pipeline LLC

Note 4 – Acquisition of FSA Travel, LLC

 

On February 6, 2025, the Company acquired a 49% non-controlling interest in FSA Travel, LLC (“FSA”) pursuant to a Membership Purchase Agreement (the “FSA Purchase Agreement”) and accounted for the investment under the equity method. The Company recorded its proportional share of FSA’s net loss from February 7, 2025 through February 28, 2025, the Company’s fiscal year-end.

 

On April 9, 2025, the Company exercised its option to purchase the remaining 51% interest in FSA for additional consideration of $1.0 million comprised of $0.5 million in cash, and $0.5 million in shares of Series O Preferred (161,291 shares at $3.10 per share), pursuant to the FSA Purchase Agreement. In addition, on April 28, 2025, the Company paid an additional $0.8 million in contingent consideration (comprised of both cash and shares of Series O Preferred stock) to the former owners of FSA (the “FSA Unitholders”) pursuant to the FSA Purchase Agreement.

 

The contingent consideration issued as purchase consideration provides for additional distributions to the FSA Unitholders, the amount of which is dependent on the acquired business’ achievement of certain milestones. The Company determined the fair value of the contingent consideration as of the acquisition date (April 9, 2025) based on the probability and timing of achieving the respective milestones.

 

 

Upon completion of the acquisition of the remaining 51% of FSA membership units, the acquisition of the remaining 51% interest together with the initial 49% interest acquired on February 6, 2025 was accounted for as a step acquisition (business combination) under ASC 805, Business Combinations, with the Company identified as the acquirer. A step acquisition occurs when a shareholder obtains control over an entity (that is considered a business) by acquiring an additional interest in that entity. Under step acquisition accounting, the acquirer’s previously held equity interest is remeasured to its fair value as of the date in which control was obtained and included as part of the total consideration when determining goodwill. Given the short duration between the initial equity purchase of FSA (which was accounted for under the equity method of accounting) and the purchase of the remaining outstanding shares of FSA, it was determined that the book value of such equity method accounting equaled its fair value at the time control was obtained. In accordance with the acquisition method of accounting, the purchase price has been assigned to the assets acquired, and the liabilities assumed, based on their estimated fair value at the acquisition date. The Company did not incur any acquisition-related costs in connection with the acquisition.

 

The Company has completed a preliminary analysis to assign fair values to all assets acquired and liabilities assumed. The table below sets forth the consideration paid and the fair value of the assets acquired and liabilities assumed for the acquisition:

 

Consideration paid     
Cash  $500,000 
Series O Preferred stock   500,000 
Earnout Payment   800,000 
Fair value of Initial Purchase   981,303 
Total consideration  $2,781,303 
      
Assets acquired and liabilities assumed     
Cash and cash equivalents  $471,660 
Accounts receivable   13,460 
Intangibles   960,000 
Goodwill   1,669,058 
Total assets  $3,114,178 
      
Accounts payable   12,474 
Due to FSA Unitholders   221,481 
SBA Loan   98,920 
Total liabilities  $332,875 
Total net assets  $2,781,303 

 

The fair value of the working capital items, including accounts receivable, other receivables, trade payables and deferred revenue, approximates their respective carrying values at the date in which control was obtained. Effective January 1, 2021, the Company has adopted ASU 2021-08, Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which created an exception to the recognition and measurement principles of ASC 805, Business Combinations, for the Company’s contract assets and liabilities, including deferred revenue, essentially resulting in the carryover of the historical amounts determined in accordance with ASC 606, Revenue from Contracts with Customers, rather than fair value.

 

The fair value of the acquired tradename and acquired technology was determined using the relief from royalty method, which utilized projected financial information. The goodwill recognized in the acquisition primarily represents synergies with the existing operations of the Company, and the value of yet-to-be-acquired/developed customers, technology, assembled workforce, and any other assets.

 

The Company is currently finalizing its valuation of the acquired assets and liabilities and has recorded these preliminary amounts as of the acquisition date. The final purchase price allocation may result in adjustments to the amounts presented.

 

 
TAPipeline LLC [Member]  
Business Combination [Line Items]  
Acquisition of TA Pipeline LLC

NOTE 6 – Acquisition of TA Pipeline LLC

 

On August 6, 2025 (the “Closing Date”), the Company entered into the TA MIPA with TA and the TA Members, pursuant to which the Company purchased all of the issued and outstanding membership interests of TA from the TA Members (the “TA Acquisition”), resulting in TA becoming a wholly-owned subsidiary of the Company.

 

Pursuant to the TA MIPA, as consideration for the TA Acquisition, at closing, the Company (i) paid the TA Members an aggregate of $443,169 in cash (the “TA Closing Payment”), $118,169 of which (the “Estimated Additional Closing Payment”) was paid as a purchase price adjustment based on the Members’ Deficit (as defined in the TA MIPA) set forth in the closing balance sheet provided by TA in connection with closing, as more particularly provided for by the TA MIPA; and (ii) issued an aggregate of 96,774 restricted shares of Company common stock (the “TA Closing Shares,” and together with the TA Closing Payment, the “TA Closing Consideration”) to the TA Members, valued at $387,000, based on a price per share of $4.00 on August 6, 2025. The Estimated Additional Closing Payment is subject to adjustment, upward or downward, to the extent that the Members’ Deficit as of the closing date is determined to be less than or exceed $175,000, as provided in the TA MIPA.

 

In addition to the TA Closing Consideration, and as further consideration for the TA Acquisition, the Company shall make an additional payment to the TA Members in the form of an earnout (the “TA Milestone Payment”), which shall be in an amount equal to five percent (5%) of the net revenues generated by TA during the 12 month period after the closing date (the “Milestone Period”), up to a maximum of $200,000. The TA Milestone Payment shall be paid to the TA Members within 10 days following completion of the Milestone Period and will be payable fifty percent (50%) in cash and fifty percent (50%) in restricted shares of Company common stock (the “TA Milestone Shares).” The Company determined the fair value of the TA Milestone Payment as of the acquisition date based on an earnout option pricing model. The TA Milestone Payment will be marked to market at each reporting period.

 

 

In addition to the foregoing, in the event that the Fair Market Value of the Company’s common stock is less than $3.10 (the “Base Price”) during the applicable Exercise Period, each TA Member shall have the limited, one time option (the “Put Option”), to exercise one of the following rights as to some or all of their outstanding TA Acquisition Shares by delivering notice to the Company: (i) the right to require the Company to repurchase from the TA Member all or any portion of their outstanding TA Acquisition Shares at the Base Price; (ii) the right to require the Company to issue to such TA Member that number of additional shares of Company common stock (the “Top Up Shares”) as is necessary to make the aggregate value of the number of TA Acquisition Shares specified in the notice (based on the Fair Market Value) equal to the original aggregate value of the number of TA Acquisition Shares specified in the notice (based on the Base Price); and (iii) the right to require the Company to pay to such TA Member, in cash, an amount equal to the product of (x) the number of TA Acquisition Shares specified in the notice and (y) the positive difference, if any, between the Base Price and the Fair Market Value. For purpose of the foregoing rights, the “Exercise Period” means the three month period commencing upon the earlier of: (i) with respect to the TA Closing Shares, (x) the date that the TA Closing Shares first become eligible for public resale and (y) the first anniversary of the closing date; and (ii) with respect to the TA Milestone Shares, (x) the date that the TA Milestone Shares first become eligible for public resale and (y) the first anniversary of the closing date. Additionally, for purpose of the foregoing rights, “Fair Market Value” means the volume weighted average price per share of the Company’s common stock for the twenty consecutive trading days immediately preceding the notice date. During the Exercise Period, each of the TA Members shall be prohibited from engaging in certain transactions in the Company’s stock, as more particularly set forth in the TA MIPA. The fair value of the Put Option was determined using the Black Scholes Pricing Model and will be marked to market at each reporting date.

 

In accordance with the acquisition method of accounting, the purchase price has been assigned to the assets acquired, and the liabilities assumed, based on their estimated fair value at the acquisition date. In connection with the acquisition, the Company incurred $25,855 in acquisition-related expenses, which were expensed as incurred. The Company has completed a preliminary analysis to assign fair values to all assets acquired and liabilities assumed. The table below sets forth the consideration paid and the fair value of the assets acquired and liabilities assumed for the acquisition:

 

Consideration paid     
Cash  $443,168 
Common stock   387,000 
Fair value of TA Milestone Payment   180,000 
Fair value of derivative liability   130,000 
Total consideration  $1,140,168 
      
Assets acquired and liabilities assumed     
Cash and cash equivalents  $1,444,457 
Intangibles   910,000 
Goodwill   286,824 
Total assets  $2,641,281 
      
Deferred merchant bookings   1,501,113 
Total liabilities  $1,501,113 
Total net assets  $1,140,168 

 

The fair value of the working capital items, including cash and deferred merchant bookings, approximates their respective carrying values at the date on which control was obtained.

 

The fair value of the acquired tradename, acquired supplier agreements, and acquired travel agency agreements were determined using the relief from royalty method, with or without method and multi-period excess earnings method, respectively, which utilized projected financial information. The goodwill recognized in the acquisition primarily represents synergies with the existing operations of the Company, and the value of yet-to-be-acquired/developed customers, technology, assembled workforce, and any other assets.

 

 

The Company is currently finalizing its valuation of the acquired assets and liabilities and has recorded these preliminary amounts as of the acquisition date. The final purchase price allocation may result in adjustments to the amounts presented.