GAP Acquisition

On January 31, 2022 (the “G.A.P. Closing Date”), the Company completed its acquisition (the “G.A.P. Acquisition”) of substantially all of the assets of G.A.P. Promotions, LLC (the “G.A.P. Acquired Assets”), pursuant to the Asset Purchase Agreement by and among the Company, G.A.P. Promotions, and Gayle Piraino and Stephen Piraino, dated as of January 21, 2022 as amended on January 31, 2022 (as amended, the “G.A.P. Purchase Agreement”).

The aggregate consideration required to be paid by the Company to G.A.P. Promotions for the purchase of the G.A.P. Acquired Assets (the “G.A.P. Purchase Price”) was: (a) $500 paid on the G.A.P. Closing Date; (b) an amount paid on the G.A.P. Closing Date equal to the amount paid by G.A.P. Promotions (at cost) for all of the Inventory (as defined in the G.A.P. Purchase Agreement) that was on hand as of the date and time of the G.A.P. Closing Date; (c) following the G.A.P. Closing Date, two annual installment payments, consisting of (i) $180 within 45 days of the first anniversary of the G.A.P. Closing Date and (ii) $300 within 45 days of the second anniversary of the G.A.P. Closing Date; and (d) required earnout payments within a certain period after each of the first two anniversaries of the G.A.P. Closing Date, in an amount equal to 70% of annual Gross Profit (as defined in the G.A.P. Purchase Agreement) to the extent that Gross Profit during the immediately trailing 12-month period prior to the applicable G.A.P. Closing Date anniversary exceeded $1,500.

The G.A.P. Purchase Price was approximately $1,981, as detailed below.

Additionally, the Company issued restricted shares of common stock on the G.A.P. Closing Date in an amount equal to the quotient of $100 divided by the closing price of the common stock at the close of trading on the date of the public announcement of the G.A.P. Purchase Agreement, which were determined to be post-combination expense as they were subject to forfeiture under certain conditions resulting in the termination of continuous employment during the vesting period, and therefore excluded from the G.A.P Purchase Price.

The G.A.P. Acquisition was accounted for as a business combination in accordance with U.S. GAAP, with the Company as the accounting acquirer. Under this method of accounting, the G.A.P. Acquired Assets are recorded at estimated fair value as of the G.A.P. Closing Date. The excess of the purchase price over the estimated fair value of the net assets acquired, if applicable, is recognized as goodwill.

The following table summarizes the estimated fair value of the total consideration required to be paid pursuant to the G.A.P. Purchase Agreement as of the G.A.P. Closing Date:

The Company determined the estimated fair value of the earn-out payments based on a discounted cash flow method.

The following table summarizes the purchase price allocations relating to the G.A.P. Acquisition:

The G.A.P. Acquired Assets were valued using a combination of a multi-period excess earnings methodology, a discounted cash flow approach, and present value of cash flows approach. The goodwill represents the excess fair value after the allocation of intangibles, of which approximately $580 is expected to be deductible for tax purposes.

Pro forma disclosure for the GAP Acquisition

The financial results of this acquisition are included in the Company’s statements of operations from the date of acquisition. As a privately held company, G.A.P. Promotions’ historic cash basis financial statements were unaudited and not prepared under US GAAP, including, but not limited to, differences in revenue recognition. The disclosure of supplemental pro forma financial information required under ASC 805 for a public business entity has been deemed impracticable by management due to these reasons.

Trend Acquisition

On August 31, 2022 (the “Trend Closing Date”), the Company completed its acquisition (the “Trend Acquisition”) of substantially all of the assets of Trend Brand Solutions (the “Trend Acquired Assets”), pursuant to the Asset Purchase Agreement by and among the Company, Trend Brand Solutions, and Michael Krausner, dated as of July 13, 2022 (as amended on August 31, 2022, the “Trend Purchase Agreement”).

The aggregate consideration required to be paid by the Company to Trend Brand Solutions for the purchase of the Trend Acquired Assets (the “Trend Purchase Price”) was: (a) $175 paid on the Trend Closing Date; (b) an amount equal to the amount paid by Trend Brand Solutions (at cost) for all of the Inventory (as defined in the Trend Purchase Agreement) that was on hand as of the Trend Closing Date; (c) an amount equal to the depreciated value of the Fixed Assets (as defined in the Trend Purchase Agreement); (d) four annual installment payments (each, a “Trend Installment Payment” and collectively, the “Trend Installment Payments”), consisting of (i) approximately $38 within 45 days of the first anniversary of the Trend Closing Date, (ii) approximately $38 within 45 days of the second anniversary of the Trend Closing Date, (iii) $25 within 45 days of the third anniversary of the Trend Closing Date, and (iv) $25 within 45 days of the fourth anniversary of the Trend Closing Date; (e) restricted shares of common stock in an amount equal to the quotient of $100 divided by the daily volume-weighted average price of the common stock on The Nasdaq Capital Market for the five trading days prior to the Trend Closing Date; and (f) earn-out payments within a certain period after each of the first four anniversaries of the Trend Closing Date, in an amount equal to 40% of annual Gross Profit (as defined in the Trend Purchase Agreement) to the extent that such Gross Profit during the immediately trailing 12-month period prior to the applicable Trend Closing Date anniversary is in excess of $800.

The Trend Purchase Price was subject to certain adjustments. The Trend Purchase Price was decreased by the amount of any outstanding indebtedness of Trend Brand Solutions for borrowed money existing as of the Trend Closing Date, other than any indebtedness constituting Assumed Liabilities (as defined in the Trend Purchase Agreement) provided that such deducted amount was utilized to pay off such outstanding indebtedness. In addition, the Trend Purchase Price was subject to customary estimated and final working capital adjustment provisions with a target working capital of $0. In the event that any Inventory remained in stock was included in the Purchased Assets (as defined in the Trend Purchase Agreement), and during the first 24 months following the Trend Closing Date it was not purchased or became part of a contractual obligation of a client to purchase, then a deduction for such unsold Inventory required to be made from the next applicable Trend Installment Payment (and if the amount of the next Trend Installment Payment was not sufficient, then from future Trend Installment Payments until fully deducted). In the event that the Inventory is eventually purchased after such 24-month period, the amount that the Company receives for such Inventory will be credited and paid as part of the next applicable Trend Installment Payment.

The Trend Purchase Price was approximately $433, as detailed below.

The Trend Acquisition was accounted for as a business combination in accordance with U.S. GAAP, with the Company as the accounting acquirer. Under this method of accounting, the Trend Acquired Assets are recorded at estimated fair value as of the Trend Closing Date. The excess of the purchase price over the estimated fair value of the net assets acquired, if applicable, is recognized as goodwill.

The following table summarizes the estimated fair value of the total consideration required to be paid pursuant to the Trend Purchase Agreement as of the Trend Closing Date:

The Company determined the estimated fair value of the earn-out payments based on a discounted cash flow method adjusted for the probability of Trend Brand Solutions achieving certain milestones as set forth in the Trend Purchase Agreement.

The following table summarizes the purchase price allocations relating to the Trend Acquisition:

The Trend Acquired Assets were valued using a combination of a multi-period excess earnings methodology, a discounted cash flow approach and present value of cash flows approach. The goodwill represents the excess fair value after the allocation of intangibles, of which approximately $10 is expected to be deductible for tax purposes.

Pro forma disclosure for the Trend Acquisition

The financial results of this acquisition are included in the Company’s statements of operations from the date of acquisition. As a privately held company, Trend’s historic cash basis financial statements were unaudited and not prepared under US GAAP, including, but not limited to, differences in revenue recognition. The disclosure of supplemental pro forma financial information required under ASC 805 for a public business entity has been deemed impracticable by management due to these reasons.

Premier Business Services Acquisition

On December 20, 2022 (the “Premier Closing Date”), the Company completed its acquisition (the “Premier Acquisition”) of substantially all of the assets of Premier NYC (the “Premier NYC Acquired Assets”), pursuant to the Asset Purchase Agreement dated as of November 29, 2022 (the “Premier Purchase Agreement”), by and between the Company and Peter Poser (the “Premier NYC Seller”).

The aggregate consideration required to be paid by the Company to the Premier NYC Seller for the purchase of the Premier NYC Acquired Assets (the “Premier Purchase Price”) was: (a) $100 paid on the Premier Closing Date; (b) restricted shares of common stock issued on the Premier Closing Date that was equal to the quotient of $25 divided by the daily volume-weighted average price of the common stock on The Nasdaq Capital Market for the five trading days prior to the Premier Closing Date; (c) three annual installment payments to the Premier NYC Seller due on each anniversary of the Premier Closing Date equal to $60, $40, and $30, respectively; and (d) three annual earn-out payments payable in cash, in an amount equal to 45% of annual Gross Profit (as defined in the Premier Purchase Agreement) to the extent that such Gross Profit during the immediately trailing 12-month period prior to the applicable Premier Closing Date anniversary is in excess of $350. The Premier Purchase Price was subject to a working capital adjustment and certain other adjustments. The aggregate purchase price was approximately $830.

The Premier Acquisition was accounted for as a business combination in accordance with U.S. GAAP, with the Company as the accounting acquirer. Under this method of accounting, the Premier NYC Acquired Assets are recorded at estimated fair value as of the acquisition date. The excess of the purchase price over the estimated fair value of the net assets acquired, if applicable, is recognized as goodwill.

The following table summarizes the estimated fair value of the total consideration required to be paid pursuant to the Premier Purchase Agreement as of the Premier Closing Date:

The Company determined the estimated fair value of the earn-out payments based on a discounted cash flow method adjusted for the probability of Premier NYC achieving certain milestones as set forth in the Premier Purchase Agreement.

The following table summarizes the purchase price allocations relating to the Premier Acquisition:

The Premier NYC Acquired Assets were valued using a combination of a multi-period excess earnings methodology, a discounted cash flow approach and present value of cash flows approach. The goodwill represents the excess fair value after the allocation of intangibles, of which $0 is expected to be deductible for tax purposes.

Pro forma disclosure for the Premier Acquisition

The financial results of this acquisition are included in the Company’s statements of operations from the date of acquisition. As a privately held company, Premier’s historic cash basis financial statements were unaudited and not prepared under US GAAP, including, but not limited to, differences in revenue recognition. The disclosure of supplemental pro forma financial information required under ASC 805 for a public business entity has been deemed impracticable by management due to these reasons.

T.R. Miller Acquisition

On June 1, 2023 (the “T R Miller Closing Date”), the Company completed its acquisition (the “T R Miller Acquisition”) of substantially all of the assets of T R Miller (the “T R Miller Acquired Assets”), pursuant to the Asset Purchase Agreement, date as of January 25, 2023 (the “T R Miller Purchase Agreement”), among the Company, T R Miller, and Thomas R Miller (the “T R Miller Stockholder”).

The aggregate consideration required to be paid by to T R Miller for the purchase of the T R Miller Acquired Assets was (a) $1,000 payable in cash on the T R Miller Closing Date; (b) an amount equal to the cost basis of Inventory (as defined in the T R Miller Purchase Agreement); (c) four annual installment payments due on each anniversary of the T R Miller Closing Date, equal to $400, $300, $200, and $200, respectively; (d) four annual earn-out payments equal to (i) 45% of the annual Gross Profit (as defined in the T R Miller Purchase Agreement) during the immediately trailing 12-month period prior to the applicable T R Miller Closing Date anniversary with respect to certain customers of T R Miller or primarily resulting from the efforts of the T R Miller Stockholder or certain employees or independent contractors of T R Miller, to the extent that such Gross Profit amount exceeded $4,000, plus (ii) 25% of the annual Gross Profit during the immediately trailing 12-month period prior to the applicable T R Miller Closing Date anniversary with respect to certain customers primarily resulting from the past or future efforts of the Company that are assigned to and the primary responsibility of any employee or independent contractor of T R Miller as designated by the T R Miller Purchase Agreement, to the extent that such Gross Profit amount exceeded $4,000. The aggregate T R Miller Purchase Price was approximately $3,541 and was subject to a working capital adjustment.

The following table summarizes the estimated fair value of the total consideration required to be paid pursuant to the T R Miller Purchase Agreement as of the T R Miller Closing Date:

The Company determined the estimated fair value of the earn-out payments based on a discounted cash flow method adjusted for the probability of T R Miller achieving certain milestones as set forth in the T R Miller Purchase Agreement.

The Company determined the estimated fair value of the installment payments based on the present value of the future cash flows in accordance with the T R Miller Purchase Agreement.

The following table summarizes the purchase price allocations relating to the T R Miller Acquisition:

The T R Miller Acquired Assets were valued using a combination of a multi-period excess earnings methodology, a discounted cash flow approach and present value of cash flows approach. The goodwill represents the excess fair value after the allocation of intangibles, of which approximately $420 is expected to be deductible for tax purposes.

The Company incurred approximately $39 of acquisition-related transaction costs in conjunction with the T R Miller Acquisition.

Pro forma disclosure for the T R Miller Acquisition

The following unaudited pro forma financial information reflects the consolidated results of operations of the Company as if the T R Miller Acquisition had taken place on January 1, 2022. The pro forma financial information is not necessarily indicative of the results of operations as they would have been had the transactions been effected on the assumed date: