NOTE 4: 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 (post-split) 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 December 31, 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. In connection with the discontinuation of Ranco’s operations and the passage of H.R. 5371, management determined that the Earn Out conditions were no longer probable of being achieved. Accordingly, the contingent consideration liability of $208,000 was reversed in full during the year ended December 31, 2025, and the reversal was recognized as other income in the consolidated statement of operations for continuing operations.