NOTE 3: DUE TO SELLER |
9 Months Ended | ||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2025 | |||||||||||||||||||||||
| Notes | |||||||||||||||||||||||
| NOTE 3: DUE TO SELLER | NOTE 3: DUE TO SELLER
RAN CoPacking Solutions LLC
The Company evaluated the Ranco Agreement pursuant to ASC 805 and ASU 2017-01, Topic 805, Business Combinations.
Total fair value of the preliminary purchase price consideration as of July 1, 2023 was determined as follows:
On July 1, 2023, the Company issued 4,000,000 shares of common stock pursuant to the Asset Purchase Agreement for a fair value of $8,000,000, or $2.00 per share.
Pursuant to the Asset Purchase Agreement, the Company owes the Seller $1,000,000 in cash consideration. The amount was recorded as a due to seller liability on the consolidated balance sheet. As of September 30, 2025, no payments were made.
In accordance with the Earn Out provisions per the Asset Purchase Agreement, the Company determined an initial fair value of $208,000 based on the fair value of the shares at the acquisition date and probabilities of the respective Earn Out terms. There was no change in fair value of the contingent consideration at September 30, 2025.
J Street Capital Partners, LLC
On May 29, 2025, the Company entered into a Securities Purchase Agreement to acquire 100% of the equity interests of J Street. The acquisition closed on July 1, 2025. In connection with the acquisition, the Company issued 150,000 shares of its common stock to the J Street Seller as consideration for the acquisition.
J Street was historically engaged in the import and wholesale distribution of wines and alcoholic beverages in various U.S. states, including Nevada, New York, New Jersey, Florida, and California. The Company intends to restructure J Street’s activities and integrate the acquired assets into its existing operations rather than continue J Street’s prior operations, which were minimal at the time of acquisition.
The assets acquired primarily consisted of inventory, export and distribution licenses, and intellectual property (trademarks and formulations). No workforce, operating platform, or other substantive processes were acquired. There is no continuation of J Street’s standalone operations after the transaction. The Company’s intent is to repurpose the assets acquired as part of a broader restructuring strategy, and utilize CFN and Ranco’s relationships to commercialize the underlying inventory and licenses obtained. Lastly, substantially all the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets. As such, the transaction did not meet the definition of a business under ASC 805, Business Combinations, and has been accounted for as an asset acquisition under ASC 805-50.
The fair value of the consideration transferred was determined based on the market price of the Company’s common stock on the acquisition date:
The purchase price was allocated to the identifiable assets acquired based on their relative fair values as follows:
|