BUSINESS ACQUISITION |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| BUSINESS ACQUISITION [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| BUSINESS ACQUISITION |
NOTE 4 – BUSINESS ACQUISITION
Acquisition of World Connect Technologies, LLC
On August 9, 2024, we completed the acquisition of substantially all of the assets and liabilities of WorldConnect Technologies, LLC (“WCT”), which included the source
code, an option agreement dated February 5, 2024, by and between WCT, Perception Group, Inc., Perception TVCDN Ltd., and FORA FOrum RAčunalništva, d.o.o., as amended and restated (each of the parties
thereto other than WCT, collectively, “Perception”), as well as agreements related to the source code purchase and support and maintenance. We incurred $942.6
in non-recurring transaction costs in connection with the acquisition, which were recognized within general and administration expense. We believe the acquisition will allow us to provide ultra-fast streaming technology powered through
our custom-designed, multi-site CDN using our own servers, routers, and software stack, created with the goal of rendering the service uncancellable by Big Tech.
We funded the acquisition in exchange for an estimated aggregate consideration of up to $132,171.0, consisting of:
We estimated 57,230 newly-issued
shares of our common stock will be issued to WCT pursuant to achieving operational milestones related to the opening of future data centers, which are compensatory in nature due to project management services WCT is providing related to opening our
future data centers outside the scope of our written agreement with them. The estimated allocation of shares as compensation was based upon the estimated fair value of services to be provided divided by the closing price of our common stock on
August 9, 2024. Compensation expense related to these shares will be recorded at the fair value of the common stock when the milestones are achieved.
The following table summarizes the preliminary estimated fair values of the WCT assets acquired and liabilities assumed:
The goodwill consists largely of the expected cash flows and future growth anticipated for the Company from acquiring the assets. The goodwill is deductible for tax
purposes.
Preliminary valuation of intangible assets was valued using the cost approach, which estimates value by determining the current cost of replacing an asset with another
of equivalent utility. The cost to replace a given asset reflects the estimated reproduction or replacement cost for the acquired asset. No preliminary fair value has been assigned to other intangible assets that may have been acquired through
the other agreements. The entire preliminary valuation of intangible assets was assigned to purchased software and has an estimated amortization period of 5 years.
The determination of fair value requires considerable judgment and is sensitive to changes in the underlying assumptions. Our estimates are preliminary and subject to
adjustment, which may result in material changes to the final valuation. During the measurement period, which will not exceed one year from closing, we will continue to obtain information to assist us in finalizing the acquisition date fair
values. Any qualifying changes to our preliminary estimates will be recorded as adjustments to the respective assets and liabilities, with any residual amounts allocated to goodwill.
Pro forma financial information is not presented because the acquisition was not material to our financial statements pursuant to Rule 3-05 of Regulation S-X.
As of September 30, 2024, $9,433.5 of the assumed debt
remained outstanding and for the three and nine-months ended September 30, 2024, $120.2 of interest expense was accreted.
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