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Share Exchange Agreement with United Securities Specialists, Inc. (USS)
12 Months Ended
Dec. 31, 2022
Share Exchange Agreement with United Securities Specialists, Inc. (USS)  
Share Exchange Agreement with United Securities Specialists, Inc. (USS)

4. Share Exchange Agreement with United Securities Specialists, Inc. (USS)

 

On September 23, 2022 (the “USS Closing date”), USS entered into a share exchange agreement with the Company, in which all the outstanding shares, 100 common shares, no par value, were exchanged for 1,000,000 shares, $0.001 par value of James Maritime common stock.

 

The Company also included contingent considerations if USS meets or exceeds certain earnings before interest, taxes, amortization (“EBITDA”) thresholds:

 

 

-

$20,000,000 and 15% during any consecutive (12) month period commencing on the Closing date and ending on December 31, 2025 (“the Measurement Period”), the Company shall issue an aggregate 500,000 shares of James Maritime stock

 

-

$30,000,000 and 15% during the measurement period, the Company shall issue an aggregate 500,000 shares of James Maritime stock

 

-

$40,000,000 and 15% during the measurement period, the Company shall issue an aggregate 500,000 shares of James Maritime stock

 

-

$50,000,000 and15% during the measurement period, the Company shall issue an aggregate 500,000 shares of James Maritime stock

 

If all criteria are met, an aggregate of 2,000,000 earnout shares will be awarded to the Company.

 

The Company utilized a third-party valuation specialist to calculate the intangible assets and estimate the purchase price of the agreement. The valuation utilized a share purchase price of $1.00, which constitutes a Level 2 fair value measurement.

 

The allocation of the purchase price in connection with the acquisition of USS was calculated as follows:

 

Purchase price (2)

 

$1,000,000

 

Plus: Net liabilities assumed (3)

 

 

2,439,614

 

Intangibles (1)

 

$3,439,614

 

 

(1) Intangibles were determined to consist of two separately identifiable intangible assets to be amortized over their useful lives of 3 years (the average time the Company has maintained customer and employee relationships). 50% of the value or $1,719,807 was attributable to Employee Expertise and 50% of the value or $1,719,807 was attributable to Customer Relationships.

 

(2) The purchase price was calculated by taking the recapitalization of James Maritime Holdings shares of 1,000,000 (previously 100 Company shares) at $1.00 per share, resulting in a total purchase price of $1,000,000.

The following tables present the allocation of the purchase consideration, which includes tangible and intangible assets acquired and liabilities assumed, based on their assessed fair values

 

Assets acquired:

 

Cash

 

$21,437

 

Accounts receivable

 

 

206,536

 

Prepaid expenses

 

 

10,487

 

Property and equipment

 

 

199,584

 

Right-of-use asset

 

 

193,839

 

Intangible assets

 

 

99,609

 

Total assets acquired

 

$731,492

 

 

Liabilities assumed:

Accounts payable and accrued expenses

 

$704,637

 

Accrued payroll

 

 

172,366

 

Notes payable – current and non-current

 

 

1,017,771

 

Loan – current and non-current

 

 

1,066,012

 

Operating lease liability – current and non-current

 

 

210,320

 

Total liabilities assumed

 

$3,171,106

 

 

Net assets (liabilities) acquired/assumed

 

$(2,439,614)

 

If the share exchange agreement had occurred on January 1, 2022, the pro forma consolidated revenues at December 31, 2022 would have amounted to approximately $9,420,417 and the consolidated operating loss would have amounted to approximately $2,301,112.