Quantum Cyber N.V 8-K/A, filed Sep 25, 2026
Quantum Cyber N.V. (QUCY)
About this 8-K/A
Quantum Cyber N.V filed this 8-K/A on September 25, 2026, reporting on events of July 15, 2026.
Items reported
- Item 9.01: Financial statements and exhibits
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Amendment No. 1)
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
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Securities registered pursuant to Section 12(b) of the Act:
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check
mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange Act.
Introductory Note
This Current Report on Form 8-K/A (this “Amendment”) amends the Original Form 8-K to provide the historical financial statements and pro forma financial information required by Items 9.01(a) and (b) of Form 8-K, which were omitted from the Original Form 8-K as permitted by paragraphs (a)(3) and (b)(2) of Item 9.01 of Form 8-K.
The presentation of the Target Financial Statements (as defined below), including the level of detail provided therein, is not necessarily indicative of how the Company intends to present its financial results in the future. The pro forma financial information included in this Amendment has been presented for informational purposes only, as required by Form 8-K. Such pro forma financial information does not purport to represent the actual results of operations that the Company would have achieved had it completed the Acquisition prior to the periods presented in the pro forma financial information, and it is not intended as a projection of the future results of operations that the Company may achieve after the Acquisition. No other amendments are being made to the Original Form 8-K by this Amendment. This Amendment should be read in conjunction with the Original Form 8-K, which provides a more complete description of the Acquisition.
Item 9.01 Financial Statements and Exhibits.
(a) Financial statements of businesses or funds acquired.
The (i) audited combined financial statements of Arcade Realty and Arcade Technology and accompanying notes related thereto as of and for the years ended December 31, 2025 and December 31, 2024 are filed herewith as Exhibit 99.1 and are incorporated by reference herein and the (ii) unaudited combined financial statements of Arcade Realty and Arcade Technology for the six month periods ended June 30, 2026 and 2025 are filed herewith as Exhibit 99.2 and are incorporated by reference herein (together, the “Target Financial Statements”).
(b) Pro forma financial information.
The unaudited pro forma condensed combined balance sheet of the Company as of June 30, 2026, the unaudited pro forma condensed combined statement of operations for the fiscal year ended December 31, 2025 and the six months ended June 30, 2026 and the accompanying notes related thereto are filed herewith as Exhibit 99.3 and are incorporated by reference herein.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Quantum Cyber N.V. | ||
| By: | /s/ David Lazar | |
| Name: | David Lazar | |
| Title: | Chief Executive Officer | |
| Dated: September 25, 2026 | ||
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Exhibit 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors and Shareholders
Quantum Cyber N.V.
We consent to the incorporation by reference in the Registration Statement on Form S-3 (File No. 333-296480) and the Registration Statement on Form S-8 (File No. 333-293603) of Quantum Cyber N.V. of our report dated September 25, 2026 with respect to the combined balance sheets of Arcade Technology LLC and Arcade Realty LLC as of December 31, 2025 and 2024, and the related combined statements of operations, changes in members’ equity, and cash flows for the years then ended, and the related notes to the financial statements, which report appears in the Form 8-K/A of Quantum Cyber N.V. dated September 25, 2026.
| /s/ Haskell & White LLP | |
| HASKELL & WHITE LLP |
Irvine, California
September 25, 2026
Exhibit 99.1
ARCADE TECHNOLOGY LLC AND ARCADE REALTY LLC
Combined Financial Statements
For the Years Ended December 31, 2025 and 2024
To the Board of Directors and Members of
Arcade Technology LLC and Arcade Realty LLC
Opinion
We have audited the accompanying combined financial statements of Arcade Technology LLC and Arcade Realty LLC (together, the “Company”), which comprise the combined balance sheets as of December 31, 2025 and 2024, the related combined statements of operations, changes in members’ equity, and cash flows for the years then ended, and the related notes to the combined financial statements (collectively, the “financial statements”).
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for the years then ended, in accordance with accounting principles generally accepted in the United States of America.
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the Company and to meet our other ethical responsibilities in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Responsibilities of Management for the Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate,
that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the
financial statements are available to be issued.
Auditors’ Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with generally accepted auditing standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.
In performing an audit in accordance with generally accepted auditing standards, we:
| ● | Exercise professional judgment and maintain professional skepticism throughout the audit. | |
| ● | Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. | |
| ● | Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. Accordingly, no such opinion is expressed. | |
| ● | Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements. | |
| ● | Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern for a reasonable period of time. |
We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control related matters that we identified during the audit.
| /s/ Haskell & White LLP | |
| HASKELL & WHITE LLP |
Irvine, California
September 25, 2026
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ARCADE TECHNOLOGY LLC AND ARCADE REALTY LLC
Combined Balance Sheets
| December 31, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Assets | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | 577,252 | $ | 980,783 | ||||
| Accounts receivable, net | 473,306 | 451,667 | ||||||
| Inventory, net | 866,909 | 847,837 | ||||||
| Prepaid expenses | 20,889 | 59,410 | ||||||
| Total current assets | 1,938,356 | 2,339,697 | ||||||
| Property, plant and equipment, net | 655,199 | 697,315 | ||||||
| Total assets | $ | 2,593,555 | $ | 3,037,012 | ||||
| Liabilities and members’ equity | ||||||||
| Current liabilities | ||||||||
| Accounts payable and accrued liabilities | $ | 156,846 | $ | 199,637 | ||||
| Loan payable - current portion | 3,521 | 3,393 | ||||||
| Total current liabilities | 160,367 | 203,030 | ||||||
| Loan payable - net of current portion | 138,117 | 141,856 | ||||||
| Total liabilities | 298,484 | 344,886 | ||||||
| Commitments and contingencies (note 8) | - | - | ||||||
| Members’ equity | ||||||||
| Members’ capital contributions | 89,838 | 89,838 | ||||||
| Accumulated earnings | 2,205,233 | 2,602,288 | ||||||
| Total members’ equity | 2,295,071 | 2,692,126 | ||||||
| Total liabilities and members’ equity | $ | 2,593,555 | $ | 3,037,012 | ||||
The accompanying notes are an integral part of these combined financial statements.
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ARCADE TECHNOLOGY LLC AND ARCADE REALTY LLC
Combined Statements of Operations
| Years Ended December 31, | ||||||||
| 2025 | 2024 | |||||||
| Revenue | $ | 4,339,242 | $ | 4,491,899 | ||||
| Cost of revenue | 3,969,080 | 3,894,458 | ||||||
| Gross profit | 370,162 | 597,441 | ||||||
| Operating expenses: | ||||||||
| Selling, general and administrative | 521,414 | 519,076 | ||||||
| Total operating expenses | 521,414 | 519,076 | ||||||
| (Loss) income from operations | (151,252 | ) | 78,365 | |||||
| Other income (expense): | ||||||||
| Miscellaneous income | 31,480 | 17,055 | ||||||
| Interest income | 6,316 | 8,337 | ||||||
| Interest expense | (5,390 | ) | (5,528 | ) | ||||
| Total other income | 32,406 | 19,864 | ||||||
| Net (loss) income | $ | (118,846 | ) | $ | 98,229 | |||
The accompanying notes are an integral part of these combined financial statements.
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ARCADE TECHNOLOGY LLC AND ARCADE REALTY LLC
Combined Statements of Changes in Members’ Equity
| Members’ | Total | |||||||||||
| Capital | Accumulated | Members’ | ||||||||||
| Contribution | Earnings | Equity | ||||||||||
| Balance, December 31, 2023 | $ | 89,838 | $ | 2,816,092 | $ | 2,905,930 | ||||||
| Distribution to members | - | (312,033 | ) | (312,033 | ) | |||||||
| Net income | - | 98,229 | 98,229 | |||||||||
| Balance, December 31, 2024 | $ | 89,838 | $ | 2,602,288 | $ | 2,692,126 | ||||||
| Distribution to members | - | (278,209 | ) | (278,209 | ) | |||||||
| Net loss | - | (118,846 | ) | (118,846 | ) | |||||||
| Balance, December 31, 2025 | $ | 89,838 | $ | 2,205,233 | $ | 2,295,071 | ||||||
The accompanying notes are an integral part of these combined financial statements.
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ARCADE TECHNOLOGY LLC AND ARCADE REALTY LLC
Combined Statements of Cash Flows
| Years Ended December 31, | ||||||||
| 2025 | 2024 | |||||||
| Cash flows from operating activities | ||||||||
| Net (loss) income | $ | (118,846 | ) | $ | 98,229 | |||
| Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities: | ||||||||
| Depreciation | 65,724 | 61,687 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | (21,639 | ) | 214,651 | |||||
| Inventory | (19,072 | ) | 111,268 | |||||
| Prepaid expenses | 38,521 | (5,638 | ) | |||||
| Accounts payable and accrued liabilities | (42,791 | ) | (223,319 | ) | ||||
| Net cash (used in) provided by operating activities | (98,103 | ) | 256,878 | |||||
| Cash flows from investing activities | ||||||||
| Purchase of property, plant and equipment | (23,608 | ) | - | |||||
| Net cash used in investing activities | (23,608 | ) | - | |||||
| Cash flows from financing activities | ||||||||
| Distribution to members | (278,209 | ) | (312,033 | ) | ||||
| Repayments of loan payable | (3,611 | ) | (3,243 | ) | ||||
| Net cash used in financing activities | (281,820 | ) | (315,276 | ) | ||||
| Change in cash and cash equivalents | (403,531 | ) | (58,398 | ) | ||||
| Cash and cash equivalents, beginning of year | 980,783 | 1,039,181 | ||||||
| Cash and cash equivalents, end of year | $ | 577,252 | $ | 980,783 | ||||
| Supplemental cash flow information: | ||||||||
| Cash paid for interest | $ | 5,390 | $ | 5,528 | ||||
The accompanying notes are an integral part of these combined financial statements.
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ARCADE TECHNOLOGY LLC AND ARCADE REALTY LLC
Notes to the Combined Financial Statements
NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS
Arcade Technology LLC (“Arcade Technology”), a Connecticut limited liability company, has operated as Arcade Metal Stamping since 1948 and is an ISO 9001:2015–certified custom manufacturer of precision metal stampings, tooling, and assemblies, operating from a 53,000-square-foot facility at 38 Union Avenue, Bridgeport, Connecticut. Arcade Technology’s services include progressive and compound-die metal stamping, in-house tool design and manufacturing, and CNC machining and secondary operations (e.g., plating, painting, heat treating, welding, and assembly), serving a diversified customer base across numerous end markets in North America. Arcade Realty LLC (“Arcade Realty”) is a Connecticut limited liability company that owns the 38 Union Avenue facility occupied by Arcade Technology. Arcade Technology and Arcade Realty are under common ownership and management and are presented herein on a combined basis.
Members and their approximate ownership interests as of December 31, 2025 were as follows:
| Member | Ownership % | |||
| Chief Executive Officer, Member | 58.5 | % | ||
| Chief Financial Officer, Member | 14.5 | % | ||
| Other Members (3) | 27.0 | % | ||
| Total | 100.0 | % | ||
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The combined financial statements include the accounts of Arcade Technology and Arcade Realty (collectively, the “Company”), which are entities under common ownership and management. All intercompany balances and transactions between the two entities have been eliminated in combination. The combined financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”).
Use of Estimates
The preparation of combined financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the combined financial statements. The estimates and judgments will also affect the reported amounts for certain expenses during the reporting period. Actual results could differ from these good faith estimates and judgments.
Segment Information
The Company operates as a single operating and reportable segment, providing precision metal stamping, tooling design and manufacturing, and CNC machining and secondary operations (including plating, painting, heat treating, welding, and assembly) to a diversified customer base across multiple end markets in North America.
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The Company’s Chief Executive Officer (“CEO”) is the chief operating decision maker (“CODM”). The CODM reviews financial information for purposes of allocating resources and evaluating financial performance, and assesses performance and allocates resources primarily based on net income (loss), which is reported on the Statements of Operations. Total assets on the combined balance sheets represent the Company’s segment assets.
The significant segment expenses regularly provided to and reviewed by the CODM are the expense categories presented on the face of the combined statements of operations, consisting of cost of revenue, selling, general and administrative expense, and interest expense.
Cash and Cash Equivalents
Cash and cash equivalents include cash in banks, money market funds, and certificates of term deposits with maturities of less than three months from inception, which are readily convertible to known amounts of cash and which, in the opinion of management, are subject to an insignificant risk of loss in value.
Cash and cash equivalents consisted of the following:
| December 31, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Cash | $ | 248,006 | $ | 247,663 | ||||
| Money market funds | 329,246 | 733,120 | ||||||
| $ | 577,252 | $ | 980,783 | |||||
Periodically, the Company may carry cash balances at financial institutions in excess of the federally insured limit of $250,000 per institution in the U.S. The Company has not experienced losses on account balances and management believes, based upon the quality of the financial institutions, that the credit risk with regard to these deposits is not significant.
Accounts Receivable
The Company records accounts receivable at net realizable value. This value includes an appropriate allowance for estimated credit losses, which is charged to the provision for credit losses, to reflect any expected loss on the trade accounts receivable balances. The Company calculates this allowance based on available relevant information, in addition to historical loss information, the level of past-due accounts based on the contractual terms of the receivables, and its relationships with, and the economic status of its customers. The allowance for credit losses was $10,000 as of December 31, 2025 and 2024. The Company believes its exposure to concentrations of credit risk is limited due to the diversity of its customers across numerous industries, including appliance, automotive, electrical and electronics, government and defense, medical, telecommunications, and transportation equipment.
Accounts receivable consisted of the following:
| December 31, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Accounts receivable | $ | 483,306 | $ | 461,667 | ||||
| Less: Allowance for credit losses | (10,000 | ) | (10,000 | ) | ||||
| Accounts receivable, net | $ | 473,306 | $ | 451,667 | ||||
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Inventories
Inventories consist primarily of raw materials (which include steel coil, wire, and other raw material stock), work-in-progress, and finished goods (which include stamped metal parts, components, and assemblies). Inventories are valued at the lower of cost or net realizable value. The Company determines cost of inventory using the first-in, first-out (FIFO) method.
Inventories consisted of the following:
| December 31, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Raw materials | $ | 318,755 | $ | 331,084 | ||||
| Work-in-progress | 489,654 | 463,209 | ||||||
| Finished goods | 283,893 | 278,937 | ||||||
| Less: Inventory reserve | (225,393 | ) | (225,393 | ) | ||||
| Inventory, net | $ | 866,909 | $ | 847,837 | ||||
Property, Plant and Equipment
Property, plant and equipment are stated at cost. Repair and maintenance costs that do not improve service potential or extend economic life are expensed as incurred. Depreciation is recorded principally by the straight-line method over the estimated useful lives of the Company’s assets, which are reviewed periodically and generally have the following ranges:
| Buildings and improvements | 39 years | |
| Machinery and equipment | 15 years | |
| Land | Not depreciated | |
| Furniture and fixtures | 5 years | |
| Computer equipment | 3 years | |
| Leasehold improvements | Remaining lease term |
Construction in progress is not depreciated until ready for service.
Impairment of Long-Lived Assets
Long-lived assets with finite lives, primarily, property, plant and equipment are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If the estimated cash flows from the use of the asset and its eventual disposition are below the asset’s carrying value, then the asset is deemed to be impaired and written down to its fair value.
Debt
Debt is recognized at the amount of proceeds received and subsequently carried at amortized cost. Interest expense is recognized over the term of the debt based on the applicable interest rate. Current maturities of long-term debt are classified as current liabilities, and the remaining balance is classified as long-term debt.
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Financial Instruments
The Company follows Accounting Standards Codification (“ASC”) 820, “Fair Value Measurements and Disclosures,” which defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below:
| ● | Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities. |
| ● | Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data. |
| ● | Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities. |
The carrying values of the Company’s financial instruments include: cash and cash equivalents, accounts receivable and accounts payable and accrued liabilities. These financial instruments approximate their fair values due to their short-term maturities.
Revenue Recognition
The Company derives its revenue primarily from the sale of precision metal stamping products across three product lines: electrical components, tooling, and general metal stamping products, along with related manufactured components and assemblies, to customers across a variety of industries. Revenue is recognized when control of these products is transferred to the Company’s customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those products. The Company records revenue based on a five-step model which includes: (1) identifying a contract with a customer; (2) identifying the performance obligations in the contract; (3) determining the transaction price; (4) allocating the transaction price among the performance obligations; and (5) recognizing revenue as each performance obligation is satisfied.
The Company identifies customer purchase orders as contracts. Pricing for the Company’s products is established on a customer-by-customer basis pursuant to negotiated purchase orders or customer agreements, and may vary across customers based on product specifications, volume, and other negotiated terms. Revenue is measured as the net amount of consideration expected to be received in exchange for fulfilling the Company’s performance obligations, which generally consist of a single performance obligation for each product ordered. The amount of consideration expected to be received includes estimates of variable consideration, consisting of sales discounts and allowances, which are estimated based on historical experience and recorded as a reduction of the transaction price. The Company reviews these estimates at the end of each reporting period, and the impact of any adjustments is recognized in the period identified. In assessing whether collection of consideration from a customer is probable, the Company considers both the customer’s ability and intent to pay the amount of consideration when due.
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Revenue is recognized at the point in time that the Company’s performance obligation is satisfied and control of the ordered product transfers to the customer. For products delivered by the Company, this transfer occurs upon shipment, as the Company’s standard shipping terms are FOB shipping point; for products picked up directly by the customer, this transfer occurs upon pickup from the Company’s facility. Revenue is disaggregated as presented in Note 6, Disaggregated Revenue and Concentrations.
Payment of invoices is due as specified in the underlying customer agreement, which is typically 30 to 60 days from the invoice date. Invoices are generally issued on the date the product is shipped or picked up by the customer.
Sales and other taxes the Company collects concurrent with revenue-producing activities are excluded from revenue. Shipping and handling costs are accounted for as described in Note 2, Shipping and Handling, below, and are not treated as a separate performance obligation. The Company does not have any significant financing components, as payment is received within a short period following satisfaction of the Company’s performance obligations. Except for product nonconformance or defects, no right of return generally exists on the sale of the Company’s products.
Shipping and Handling
The Company incurs shipping and handling costs in connection with the delivery of finished goods. The Company has elected to account for shipping and handling activities performed after control of a promised good has transferred to the customer as a fulfillment cost rather than as a separate performance obligation, consistent with the practical expedient permitted under ASC 606-10-25-18B. Accordingly, shipping and handling costs are expensed as incurred and are included in cost of revenue. Shipping and handling costs were $31,230 and $23,003 for the years ended December 31, 2025 and 2024, respectively.
Advertising and Marketing
Advertising and marketing costs are expensed as incurred. Advertising and marketing expenses were $29,601 and $20,209 for the years ended December 31, 2025 and 2024, respectively.
Income Taxes
The Company itself is not subject to U.S. federal income taxes; each member is individually liable for income taxes, if any, on its share of the Company’s net taxable income. Therefore, taxable income or loss is reported to the individual members for inclusion in their respective tax returns, and no provision for federal and state income taxes is included in these combined financial statements.
Related Parties
The Company follows ASC 850, “Related Party Disclosures” for the identification of related parties and disclosure of related party transactions.
Recently Issued Accounting Pronouncements Not Yet Adopted
In November 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2024-03 Final Standard on Income Statement: Disaggregation of Income Statement Expenses, which requires disaggregated disclosure of income statement expenses for public business entities. The ASU does not change the expense captions an entity presents on the face of the income statement; rather, it requires disaggregation of certain expense captions into specified categories in disclosures within the footnotes to the combined financial statements. This ASU applies to public business entities (“PBEs”) as defined under U.S. GAAP. Because the Company’s combined financial statements are being included in a filing with the U.S. Securities and Exchange Commission, the Company is considered a PBE for purposes of these combined financial statements. Accordingly, this guidance will be effective for the Company for annual reporting periods beginning after December 15, 2026 (i.e., the year ending December 31, 2027) and interim reporting periods beginning after December 15, 2027. The Company is currently evaluating the impact of adopting ASU 2024-03.
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In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements, which clarifies the guidance in Topic 270 to improve the consistency of interim financial reporting. The ASU provides a comprehensive list of required interim disclosures and introduces a disclosure principle requiring entities to disclose events since the end of the last annual reporting period that have a material impact on the entity. ASU 2025-11 is effective for PBEs for interim reporting periods in fiscal years beginning after December 15, 2027, with a one-year deferral (fiscal years beginning after December 15, 2028) for all other entities. Because the Company’s combined financial statements are being included in a filing with the U.S. Securities and Exchange Commission, the Company is considered a PBE for purposes of these combined financial statements and, accordingly, is subject to the earlier effective date applicable to PBEs; early adoption is permitted. The Company is currently evaluating the impact of adopting ASU 2025-11.
The Company has reviewed all other recently issued, but not yet effective, accounting pronouncements and does not believe the future adoption of any such pronouncements may be expected to cause a material impact on the Company’s combined financial statements.
NOTE 3 – PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consisted of the following:
| December 31, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Land | $ | 173,494 | $ | 173,494 | ||||
| Building | 702,739 | 702,739 | ||||||
| Building improvements | 25,000 | 25,000 | ||||||
| Machinery and equipment | 987,048 | 963,440 | ||||||
| Furniture and fixtures | 58,444 | 58,444 | ||||||
| Computer equipment | 19,313 | 19,313 | ||||||
| Total property, plant and equipment | 1,966,038 | 1,942,430 | ||||||
| Accumulated depreciation | (1,310,839 | ) | (1,245,115 | ) | ||||
| Property, plant and equipment, net | $ | 655,199 | $ | 697,315 | ||||
During the years ended December 31, 2025 and 2024, the Company recognized depreciation expenses as follows:
| Years Ended December 31, | ||||||||
| 2025 | 2024 | |||||||
| Depreciation - Cost of revenue | $ | 42,998 | $ | 39,365 | ||||
| Depreciation - Selling, general and administrative | 22,726 | 22,322 | ||||||
| Total depreciation | $ | 65,724 | $ | 61,687 | ||||
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NOTE 4 – LOAN PAYABLE
EIDL Note Payable
On May 5, 2020, the Company executed a U.S. Small Business Administration Economic Injury Disaster Loan (“SBA”) in the original principal amount of $150,000, bearing interest at 3.75% per annum. Installment payments of principal and interest of $731 per month commenced twelve months from the date of the note, with the remaining balance of principal and accrued interest due thirty (30) years from the date of the note. The note is secured by substantially all tangible and intangible personal property of Arcade Technology and contains customary affirmative and negative covenants, including transfers of collateral and changes in ownership or legal structure without the prior written consent of the SBA.
During the years ended December 31, 2025 and 2024, the Company recognized interest expense of $5,390 and $5,528, respectively. The outstanding principal balance was $141,638 and $145,249 as of December 31, 2025 and 2024, respectively. The note was repaid in full on July 16, 2026.
Aggregate future maturities of long-term debt as of December 31, 2025 are as follows:
| For the year ending December 31, | ||||
| 2026 | $ | 3,521 | ||
| 2027 | 3,656 | |||
| 2028 | 3,781 | |||
| 2029 | 3,940 | |||
| 2030 | 4,090 | |||
| Thereafter | 122,650 | |||
| Total | $ | 141,638 | ||
Line of Credit
The Company maintains a $750,000 revolving line of credit. No amounts were outstanding under the line of credit as of December 31, 2025 and 2024.
NOTE 5 – MEMBERS’ CAPITAL
Members’ capital represents the members’ cumulative equity interests in Arcade Technology and Arcade Realty, including capital contributions, cumulative earnings and losses, and distributions. There were no capital contributions during the years ended December 31, 2025 or 2024.
Distributions paid to members totaled $278,209 and $312,033 for the years ended December 31, 2025 and 2024, respectively.
NOTE 6 – DISAGGREGATED REVENUE AND CONCENTRATIONS
During the years ended December 31, 2025 and 2024, disaggregated revenue was as follows:
| Years Ended December 31, | ||||||||
| 2025 | 2024 | |||||||
| Electrical | $ | 253,747 | $ | 221,341 | ||||
| Tooling | 27,825 | 63,920 | ||||||
| Metal stamping | 4,057,670 | 4,206,638 | ||||||
| $ | 4,339,242 | $ | 4,491,899 | |||||
13
Revenue and Accounts Receivable
For the year ended December 31, 2025, three customers accounted for 10% or more of the Company’s total revenue, representing approximately 16%, 16%, and 12% of total revenue, respectively. For the year ended December 31, 2024, two customers accounted for 10% or more of the Company’s total revenue, representing approximately 18% and 12% of total revenue, respectively.
As of December 31, 2025, accounts receivable from four customers accounted for 10% or more of total accounts receivable, representing approximately 18%, 15%, 13%, and 12% of total accounts receivable, respectively. As of December 31, 2024, accounts receivable from three customers accounted for 10% or more of total accounts receivable, representing approximately 21%, 14% and 11% of total accounts receivable, respectively.
Purchases and Accounts Payable
For the year ended December 31, 2025, purchases from three vendors accounted for 10% or more of total raw material purchases, representing approximately 14%, 13%, and 13% of raw material purchases, respectively. For the year ended December 31, 2024, purchases from four vendors accounted for 10% or more of total raw material purchases, representing approximately 16%, 14%, 12% and 11% of raw material purchases, respectively.
As of December 31, 2025, accounts payable due to two vendors accounted for 10% or more of total accounts payable, representing approximately 14% and 10% of total accounts payable, respectively. As of December 31, 2024, accounts payable due to two vendors accounted for 10% or more of total accounts payable, representing approximately 25% and 10% of total accounts payable, respectively.
NOTE 7 – COST OF REVENUE
Cost of revenue consisted of the following:
| Years Ended December 31, | ||||||||
| 2025 | 2024 | |||||||
| Inventory purchases | $ | 1,367,253 | $ | 1,492,143 | ||||
| Labor | 1,743,131 | 1,542,517 | ||||||
| Insurance | 266,359 | 267,682 | ||||||
| Utilities | 175,424 | 140,174 | ||||||
| Supplies and others | 373,915 | 412,577 | ||||||
| Depreciation | 42,998 | 39,365 | ||||||
| $ | 3,969,080 | $ | 3,894,458 | |||||
NOTE 8 – COMMITMENTS AND CONTINGENCIES
Except as disclosed elsewhere in these combined financial statements, the Company had no material commitments or contingencies, and was not subject to any pending or threatened litigation, claims, or governmental investigations, as of December 31, 2025 or 2024.
14
NOTE 9 – SUBSEQUENT EVENTS
Management evaluated subsequent events through the date these combined financial statements were available to be issued and noted no other items requiring disclosure, other than as discussed below.
On June 26, 2026, Arcade Technology entered into an Asset Purchase Agreement (the “APA”) with Quantum Drones Corporation, a Nevada corporation and wholly owned subsidiary of Quantum Cyber N.V. (“Buyer”), pursuant to which Arcade Technology agreed to sell certain assets used in its business, including inventory, equipment, and intangible assets, for a base purchase price of $900,000 plus the value of inventory at closing, subject to adjustment as described in the APA. Concurrently, Arcade Realty entered into a Purchase and Sale Agreement (the “PSA”) with Buyer for the sale of the real property at 38 Union Avenue, Bridgeport, Connecticut for a purchase price of $2,300,000, subject to adjustment. The APA and PSA provide that the aggregate consideration for the business and the real property (prior to adjustment for inventory value) is $3,200,000, and that the closings of the two agreements occur simultaneously.
The APA and PSA each provided for a 10-day due diligence period following the June 26, 2026 effective date, with closing to occur on the third business day following expiration of that period, or such earlier date as the parties agreed. At closing, Buyer agreed to enter into three-year employment agreements with William Rhone, Arcade Technology Chief Financial Officer, Member, and Steven Pepe, Arcade Technology Chief Executive Officer, Member, each with non-compete covenants.
The transactions contemplated by the APA and PSA closed on July 15, 2026. Per the executed settlement statements, the final purchase price for the transactions consisted of $900,000 for the business assets, $980,000 for inventory, and $2,300,000 for the real property, for total contractual consideration of $4,180,000, before closing prorations and Buyer’s own closing costs.
15
Exhibit 99.2
ARCADE TECHNOLOGY LLC AND ARCADE REALTY LLC
Interim Combined Financial Statements
Six-Month Periods Ended June 30, 2026 and 2025
ARCADE TECHNOLOGY LLC AND ARCADE REALTY LLC
Interim Combined Balance Sheets
| June 30, | December 31, | |||||||
| 2026 | 2025 | |||||||
| (Unaudited) | ||||||||
| Assets | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | 533,115 | $ | 577,252 | ||||
| Accounts receivable, net | 619,556 | 473,306 | ||||||
| Inventory, net | 652,783 | 866,909 | ||||||
| Prepaid expenses | 16,307 | 20,889 | ||||||
| Total current assets | 1,821,761 | 1,938,356 | ||||||
| Property, plant and equipment, net | 622,789 | 655,199 | ||||||
| Total assets | $ | 2,444,550 | $ | 2,593,555 | ||||
| Liabilities and members’ equity | ||||||||
| Current liabilities | ||||||||
| Accounts payable and accrued liabilities | $ | 356,822 | $ | 156,846 | ||||
| Loan payable - current portion | 3,587 | 3,521 | ||||||
| Total current liabilities | 360,409 | 160,367 | ||||||
| Loan payable – net of current portion | 136,285 | 138,117 | ||||||
| Total liabilities | 496,694 | 298,484 | ||||||
| Commitments and contingencies (note 8) | - | - | ||||||
| Members’ equity | ||||||||
| Members’ capital contributions | 89,838 | 89,838 | ||||||
| Accumulated earnings | 1,858,018 | 2,205,233 | ||||||
| Total members’ equity | 1,947,856 | 2,295,071 | ||||||
| Total liabilities and members’ equity | $ | 2,444,550 | $ | 2,593,555 | ||||
The accompanying notes are an integral part of these interim combined financial statements.
2
ARCADE TECHNOLOGY LLC AND ARCADE REALTY LLC
Interim Combined Statements of Operations
(Unaudited)
| Six Months Ended June 30, | ||||||||
| 2026 | 2025 | |||||||
| Revenue | $ | 2,481,949 | $ | 2,228,742 | ||||
| Cost of revenue | 2,425,620 | 2,148,610 | ||||||
| Gross profit | 56,329 | 80,132 | ||||||
| Operating expenses: | ||||||||
| Selling, general and administrative | 236,942 | 255,075 | ||||||
| Total operating expenses | 236,942 | 255,075 | ||||||
| Loss from operations | (180,613 | ) | (174,943 | ) | ||||
| Other income (expense): | ||||||||
| Miscellaneous income | 20,652 | 15,528 | ||||||
| Interest income | 1,941 | 3,918 | ||||||
| Interest expense | (2,620 | ) | (2,684 | ) | ||||
| Total other income | 19,973 | 16,762 | ||||||
| Net loss | $ | (160,640 | ) | $ | (158,181 | ) | ||
The accompanying notes are an integral part of these interim combined financial statements.
3
ARCADE TECHNOLOGY LLC AND ARCADE REALTY LLC
Interim Combined Statements of Changes in Members’ Equity
(Unaudited)
| Members’ | Total | |||||||||||
| Capital | Accumulated | Members’ | ||||||||||
| Contribution | Earnings | Equity | ||||||||||
| Balance, December 31, 2024 | $ | 89,838 | $ | 2,602,288 | $ | 2,692,126 | ||||||
| Distribution to members | - | (139,110 | ) | (139,110 | ) | |||||||
| Net loss | - | (158,181 | ) | (158,181 | ) | |||||||
| Balance, June 30, 2025 | $ | 89,838 | $ | 2,304,997 | $ | 2,394,835 | ||||||
| Balance, December 31, 2025 | $ | 89,838 | $ | 2,205,233 | $ | 2,295,071 | ||||||
| Distribution to members | - | (186,575 | ) | (186,575 | ) | |||||||
| Net loss | - | (160,640 | ) | (160,640 | ) | |||||||
| Balance, June 30, 2026 | $ | 89,838 | $ | 1,858,018 | $ | 1,947,856 | ||||||
The accompanying notes are an integral part of these interim combined financial statements.
4
ARCADE TECHNOLOGY LLC AND ARCADE REALTY LLC
Interim Combined Statements of Cash Flows
(Unaudited)
| Six Months Ended June 30, | ||||||||
| 2026 | 2025 | |||||||
| Cash flows from operating activities | ||||||||
| Net loss | $ | (160,640 | ) | $ | (158,181 | ) | ||
| Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||||||||
| Depreciation | 32,410 | 30,523 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | (146,250 | ) | (23,454 | ) | ||||
| Inventory | 214,126 | (6 | ) | |||||
| Prepaid expenses | 4,582 | 125 | ||||||
| Accounts payable and accrued liabilities | 199,976 | (28,213 | ) | |||||
| Net cash provided by (used in) operating activities | 144,204 | (179,206 | ) | |||||
| Cash flows from investing activities | ||||||||
| Purchase of property, plant and equipment | - | (23,608 | ) | |||||
| Net cash used in investing activities | - | (23,608 | ) | |||||
| Cash flows from financing activities | ||||||||
| Distribution to members | (186,575 | ) | (139,110 | ) | ||||
| Repayments of loan payable | (1,766 | ) | (1,702 | ) | ||||
| Net cash used in financing activities | (188,341 | ) | (140,812 | ) | ||||
| Change in cash and cash equivalents | (44,137 | ) | (343,626 | ) | ||||
| Cash and cash equivalents, beginning of period | 577,252 | 980,783 | ||||||
| Cash and cash equivalents, end of period | $ | 533,115 | $ | 637,157 | ||||
| Supplemental cash flow information: | ||||||||
| Cash paid for interest | $ | 2,620 | $ | 2,684 | ||||
The accompanying notes are an integral part of these interim combined financial statements.
5
ARCADE TECHNOLOGY LLC AND ARCADE REALTY LLC
Notes to the Unaudited Interim Combined Financial Statements
NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS
Arcade Technology LLC (“Arcade Technology”), a Connecticut limited liability company, has operated as Arcade Metal Stamping since 1948 and is an ISO 9001:2015–certified custom manufacturer of precision metal stampings, tooling, and assemblies, operating from a 53,000-square-foot facility at 38 Union Avenue, Bridgeport, Connecticut. Arcade Technology’s services include progressive and compound-die metal stamping, in-house tool design and manufacturing, and CNC machining and secondary operations (e.g., plating, painting, heat treating, welding, and assembly), serving a diversified customer base across numerous end markets in North America. Arcade Realty LLC (“Arcade Realty”) is a Connecticut limited liability company that owns the 38 Union Avenue facility occupied by Arcade Technology. Arcade Technology and Arcade Realty are under common ownership and management and are presented herein on a combined basis.
Members and their approximate ownership interests as of June 30, 2026 were as follows:
| Member | Ownership % | |||
| Chief Executive Officer, Member | 58.5 | % | ||
| Chief Financial Officer, Member | 14.5 | % | ||
| Other Members (3) | 27.0 | % | ||
| Total | 100.0 | % | ||
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The interim combined financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information. Accordingly, the unaudited interim combined financial statements do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.
The interim combined financial statements include the accounts of Arcade Technology and Arcade Realty (collectively, the “Company”), entities under common ownership and management. All intercompany balances and transactions between the two entities have been eliminated in combination.
Use of Estimates
The preparation of interim combined financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the interim combined financial statements. The estimates and judgments will also affect the reported amounts for certain expenses during the reporting period. Actual results could differ from these good faith estimates and judgments.
6
Segment Information
The Company operates as a single operating and reportable segment, providing precision metal stamping, tooling design and manufacturing, and CNC machining and secondary operations (including plating, painting, heat treating, welding, and assembly) to a diversified customer base across multiple end markets in North America.
The Company’s Chief Executive Officer (“CEO”) is the chief operating decision maker (“CODM”). The CODM reviews financial information for purposes of allocating resources and evaluating financial performance, and assesses performance and allocates resources primarily based on net income (loss), which is reported on the Statements of Operations. Total assets on the interim combined balance sheets represent the Company’s segment assets.
The significant segment expenses regularly provided to and reviewed by the CODM are the expense categories presented on the face of the interim combined statements of operations, consisting of cost of revenue, selling, general and administrative expense, and interest expense.
Cash and Cash Equivalents
Cash and cash equivalents include cash in banks, money market funds, and certificates of term deposits with maturities of less than three months from inception, which are readily convertible to known amounts of cash and which, in the opinion of management, are subject to an insignificant risk of loss in value.
Cash and cash equivalents consisted of the following:
| June 30, | December 31, | |||||||
| 2026 | 2025 | |||||||
| Cash | $ | 226,294 | $ | 248,006 | ||||
| Money market funds | 306,821 | 329,246 | ||||||
| $ | 533,115 | $ | 577,252 | |||||
Periodically, the Company may carry cash balances at financial institutions in excess of the federally insured limit of $250,000 per institution in the U.S. The Company has not experienced losses on account balances and management believes, based upon the quality of the financial institutions, that the credit risk with regard to these deposits is not significant.
Accounts Receivable
The Company records accounts receivable at net realizable value. This value includes an appropriate allowance for estimated credit losses, which is charged to the provision for credit losses, to reflect any expected loss on the trade accounts receivable balances. The Company calculates this allowance based on available relevant information, in addition to historical loss information, the level of past-due accounts based on the contractual terms of the receivables, and its relationships with, and the economic status of its customers. The allowance for credit losses was $10,000 as of June 30, 2026 and December 31, 2025. The Company believes its exposure to concentrations of credit risk is limited due to the diversity of its customers across numerous industries, including appliance, automotive, electrical and electronics, government and defense, medical, telecommunications, and transportation equipment.
Accounts receivable consisted of the following:
| June 30, | December 31, | |||||||
| 2026 | 2025 | |||||||
| Accounts receivable | $ | 629,556 | $ | 483,306 | ||||
| Less: Allowance for credit losses | (10,000 | ) | (10,000 | ) | ||||
| Accounts receivable, net | $ | 619,556 | $ | 473,306 | ||||
7
Inventories
Inventories consist primarily of raw materials (which include steel coil, wire, and other raw material stock), work-in-progress, and finished goods (which include stamped metal parts, components, and assemblies). Inventories are valued at the lower of cost or net realizable value. The Company determines cost of inventory using the first-in, first-out (FIFO) method.
Inventories consisted of the following:
| June 30, | December 31, | |||||||
| 2026 | 2025 | |||||||
| Raw materials | $ | 241,937 | $ | 318,755 | ||||
| Work-in-progress | 332,302 | 489,654 | ||||||
| Finished goods | 303,937 | 283,893 | ||||||
| Less: Inventory reserve | (225,393 | ) | (225,393 | ) | ||||
| Inventory, net | $ | 652,783 | $ | 866,909 | ||||
Property, Plant and Equipment
Property, plant and equipment are stated at cost. Repair and maintenance costs that do not improve service potential or extend economic life are expensed as incurred. Depreciation is recorded principally by the straight-line method over the estimated useful lives of the Company’s assets, which are reviewed periodically and generally have the following ranges:
| Buildings and improvements | 39 years | |
| Machinery and equipment | 15 years | |
| Land | Not depreciated | |
| Furniture and fixtures | 5 years | |
| Computer equipment | 3 years | |
| Leasehold improvements | Remaining lease term |
Construction in progress is not depreciated until ready for service.
Impairment of Long-Lived Assets
Long-lived assets with finite lives, primarily, property, plant and equipment are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If the estimated cash flows from the use of the asset and its eventual disposition are below the asset’s carrying value, then the asset is deemed to be impaired and written down to its fair value.
Debt
Debt is recognized at the amount of proceeds received and subsequently carried at amortized cost. Interest expense is recognized over the term of the debt based on the applicable interest rate. Current maturities of long-term debt are classified as current liabilities, and the remaining balance is classified as long-term debt.
8
Financial Instruments
The Company follows Accounting Standards Codification (“ASC”) 820, “Fair Value Measurements and Disclosures,” which defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below:
| ● | Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities. |
| ● | Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data. |
| ● | Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities. |
The carrying values of the Company’s financial instruments include: cash and cash equivalents, accounts receivable and accounts payable and accrued liabilities. These financial instruments approximate their fair values due to their short-term maturities.
Revenue Recognition
The Company derives its revenue primarily from the sale of precision metal stamping products across three product lines: electrical components, tooling, and general metal stamping products, along with related manufactured components and assemblies, to customers across a variety of industries. Revenue is recognized when control of these products is transferred to the Company’s customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those products. The Company records revenue based on a five-step model which includes: (1) identifying a contract with a customer; (2) identifying the performance obligations in the contract; (3) determining the transaction price; (4) allocating the transaction price among the performance obligations; and (5) recognizing revenue as each performance obligation is satisfied.
The Company identifies customer purchase orders as contracts. Pricing for the Company’s products is established on a customer-by-customer basis pursuant to negotiated purchase orders or customer agreements, and may vary across customers based on product specifications, volume, and other negotiated terms. Revenue is measured as the net amount of consideration expected to be received in exchange for fulfilling the Company’s performance obligations, which generally consist of a single performance obligation for each product ordered. The amount of consideration expected to be received includes estimates of variable consideration, consisting of sales discounts and allowances, which are estimated based on historical experience and recorded as a reduction of the transaction price. The Company reviews these estimates at the end of each reporting period, and the impact of any adjustments is recognized in the period identified. In assessing whether collection of consideration from a customer is probable, the Company considers both the customer’s ability and intent to pay the amount of consideration when due.
Revenue is recognized at the point in time that the Company’s performance obligation is satisfied and control of the ordered product transfers to the customer. For products delivered by the Company, this transfer occurs upon shipment, as the Company’s standard shipping terms are FOB shipping point; for products picked up directly by the customer, this transfer occurs upon pickup from the Company’s facility. Revenue is disaggregated as presented in Note 6, Disaggregated Revenue and Concentrations.
9
Payment of invoices is due as specified in the underlying customer agreement, which is typically 30 to 60 days from the invoice date. Invoices are generally issued on the date the product is shipped or picked up by the customer.
Sales and other taxes the Company collects concurrent with revenue-producing activities are excluded from revenue. Shipping and handling costs are accounted for as described in Note 2, Shipping and Handling, below, and are not treated as a separate performance obligation. The Company does not have any significant financing components, as payment is received within a short period following satisfaction of the Company’s performance obligations. Except for product nonconformance or defects, no right of return generally exists on the sale of the Company’s products.
Shipping and Handling
The Company incurs shipping and handling costs in connection with the delivery of finished goods. The Company has elected to account for shipping and handling activities performed after control of a promised good has transferred to the customer as a fulfillment cost rather than as a separate performance obligation, consistent with the practical expedient permitted under ASC 606-10-25-18B. Accordingly, shipping and handling costs are expensed as incurred and are included in cost of revenue. Shipping and handling costs were $19,178 and $15,649 for the six months ended June 30, 2026 and 2025, respectively.
Advertising and Marketing
Advertising and marketing costs are expensed as incurred. Advertising and marketing expenses were $6,987 and $16,791 for the six months ended June 30, 2026 and 2025, respectively.
Income Taxes
The Company itself is not subject to U.S. federal income taxes; each member is individually liable for income taxes, if any, on its share of the Company’s net taxable income. Therefore, taxable income or loss is reported to the individual members for inclusion in their respective tax returns, and no provision for federal and state income taxes is included in these combined financial statements.
Related Parties
The Company follows ASC 850, “Related Party Disclosures” for the identification of related parties and disclosure of related party transactions.
Recently Issued Accounting Pronouncements Not Yet Adopted
In November 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2024-03 Final Standard on Income Statement: Disaggregation of Income Statement Expenses, which requires disaggregated disclosure of income statement expenses for public business entities. The ASU does not change the expense captions an entity presents on the face of the income statement; rather, it requires disaggregation of certain expense captions into specified categories in disclosures within the footnotes to the interim combined financial statements. This ASU applies to public business entities (“PBEs”) as defined under U.S. GAAP. Because the Company’s interim combined financial statements are being included in a filing with the U.S. Securities and Exchange Commission, the Company is considered a PBE for purposes of these interim combined financial statements. Accordingly, this guidance will be effective for the Company for annual reporting periods beginning after December 15, 2026 (i.e., the year ending December 31, 2027) and interim reporting periods beginning after December 15, 2027. The Company is currently evaluating the impact of adopting ASU 2024-03.
In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements, which clarifies the guidance in Topic 270 to improve the consistency of interim financial reporting. The ASU provides a comprehensive list of required interim disclosures and introduces a disclosure principle requiring entities to disclose events since the end of the last annual reporting period that have a material impact on the entity. ASU 2025-11 is effective for PBEs for interim reporting periods in fiscal years beginning after December 15, 2027, with a one-year deferral (fiscal years beginning after December 15, 2028) for all other entities. Because the Company’s interim combined financial statements are being included in a filing with the U.S. Securities and Exchange Commission, the Company is considered a PBE for purposes of these interim combined financial statements and, accordingly, is subject to the earlier effective date applicable to PBEs; early adoption is permitted. The Company is currently evaluating the impact of adopting ASU 2025-11.
10
The Company has reviewed all other recently issued, but not yet effective, accounting pronouncements and does not believe the future adoption of any such pronouncements may be expected to cause a material impact on the Company’s interim combined financial statements.
NOTE 3 – PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consisted of the following:
| June 30, | December 31, | |||||||
| 2026 | 2025 | |||||||
| Land | $ | 173,494 | $ | 173,494 | ||||
| Building | 702,739 | 702,739 | ||||||
| Building improvements | 25,000 | 25,000 | ||||||
| Machinery and equipment | 987,048 | 987,048 | ||||||
| Furniture and fixtures | 58,444 | 58,444 | ||||||
| Computer equipment | 19,313 | 19,313 | ||||||
| Total property, plant and equipment | 1,966,038 | 1,966,038 | ||||||
| Accumulated depreciation | (1,343,249 | ) | (1,310,839 | ) | ||||
| Property, plant and equipment, net | $ | 622,789 | $ | 655,199 | ||||
During the six months ended June 30, 2026 and 2025, the Company recognized depreciation expenses as follows:
| Six months ended | ||||||||
| June 30, | ||||||||
| 2026 | 2025 | |||||||
| Depreciation – Cost of revenue | $ | 21,060 | $ | 19,363 | ||||
| Depreciation – Selling, general and administrative | 11,350 | 11,160 | ||||||
| Total depreciation | $ | 32,410 | $ | 30,523 | ||||
NOTE 4 – LOAN PAYABLE
EIDL Note Payable
On May 5, 2020, the Company executed a U.S. Small Business Administration Economic Injury Disaster Loan (“SBA”) in the original principal amount of $150,000, bearing interest at 3.75% per annum. Installment payments of principal and interest of $731 per month commenced twelve months from the date of the note, with the remaining balance of principal and accrued interest due thirty (30) years from the date of the note. The note is secured by substantially all tangible and intangible personal property of Arcade Technology and contains customary affirmative and negative covenants, including transfers of collateral and changes in ownership or legal structure without the prior written consent of the SBA.
During the six months ended June 30, 2026 and 2025, the Company recognized interest expense of $2,620 and $2,684, respectively. The outstanding principal balance was $139,872 and $141,638 as of June 30, 2026 and December 31, 2025, respectively. The note was repaid in full on July 16, 2026.
11
Aggregate future maturities of long-term debt as of June 30, 2026 are as follows:
| Year Ending December 31, | Amounts | |||
| 2026 (six months remaining) | $ | 1,755 | ||
| 2027 | 3,656 | |||
| 2028 | 3,781 | |||
| 2029 | 3,940 | |||
| 2030 | 4,090 | |||
| Thereafter | 122,650 | |||
| Total | $ | 139,872 | ||
Line of Credit
The Company maintains a $750,000 revolving line of credit. No amounts were outstanding under the line of credit as of June 30, 2026 and December 31, 2025.
NOTE 5 – MEMBERS’ CAPITAL
Members’ capital represents the members’ cumulative equity interests in Arcade Technology and Arcade Realty, including capital contributions, cumulative earnings and losses, and distributions. There were no capital contributions during the six months ended June 30, 2026 and 2025.
Distributions paid to members totaled $186,575 and $139,110 for the six months ended June 30, 2026 and 2025, respectively.
NOTE 6 – DISAGGREGATED REVENUE AND CONCENTRATIONS
During the six months ended June 30, 2026 and 2025, disaggregated revenue was as follows:
| Six Months Ended | ||||||||
| June 30, | ||||||||
| 2026 | 2025 | |||||||
| Electrical | $ | 136,758 | $ | 118,557 | ||||
| Tooling | 17,775 | 19,125 | ||||||
| Metal stamping | 2,327,416 | 2,091,060 | ||||||
| $ | 2,481,949 | $ | 2,228,742 | |||||
Revenue and Accounts Receivable
For the six months ended June 30, 2026, three customers accounted for 10% or more of the Company’s total revenue, representing approximately 15%, 14%, and 11% of total revenue, respectively. For the six months ended June 30, 2025, two customers accounted for 10% or more of the Company’s total revenue, representing approximately 18% and 16% of total revenue, respectively.
As of June 30, 2026, accounts receivable from three customers accounted for 10% or more of total accounts receivable, representing approximately 14%, 13%, and 10% of total accounts receivable, respectively. As of June 30, 2025, accounts receivable from three customers accounted for 10% or more of total accounts receivable, representing approximately 17%, 13% and 12% of total accounts receivable, respectively.
12
Purchases and Accounts Payable
For the six months ended June 30, 2026, purchases from two vendors accounted for 10% or more of total raw material purchases, representing approximately 20% and 14% of raw material purchases, respectively. For the six months ended June 30, 2025, purchases from three vendors accounted for 10% or more of total raw material purchases, representing approximately 14%, 14% and 12% of raw material purchases, respectively.
As of June 30, 2026, accounts payable due to three vendors accounted for 10% or more of total accounts payable, representing approximately 20%, 19% and 15% of total accounts payable, respectively. As of June 30, 2025, accounts payable due to two vendors accounted for 10% or more of total accounts payable, representing approximately 16% and 12% of total accounts payable, respectively.
NOTE 7 – COST OF REVENUE
Cost of revenue consisted of the following:
| Six Months Ended | ||||||||
| June 30, | ||||||||
| 2026 | 2025 | |||||||
| Inventory purchases | $ | 1,214,228 | $ | 823,616 | ||||
| Labor | 896,890 | 872,033 | ||||||
| Insurance | 64,800 | 113,400 | ||||||
| Utilities | 100,567 | 123,439 | ||||||
| Supplies and others | 128,075 | 196,759 | ||||||
| Depreciation | 21,060 | 19,363 | ||||||
| $ | 2,425,620 | $ | 2,148,610 | |||||
NOTE 8 – COMMITMENTS AND CONTINGENCIES
Except as disclosed elsewhere in these interim combined financial statements, the Company had no material commitments or contingencies, and was not subject to any pending or threatened litigation, claims, or governmental investigations, as of June 30, 2026 or December 31, 2025.
NOTE 9 – SUBSEQUENT EVENTS
Management evaluated subsequent events through the date these interim combined financial statements were available to be issued and noted no other items requiring disclosure, other than as discussed below.
On June 26, 2026, Arcade Technology entered into an Asset Purchase Agreement (the “APA”) with Quantum Drones Corporation, a Nevada corporation and wholly owned subsidiary of Quantum Cyber N.V. (“Buyer”), pursuant to which Arcade Technology agreed to sell certain assets used in its business, including inventory, equipment, and intangible assets, for a base purchase price of $900,000 plus the value of inventory at closing, subject to adjustment as described in the APA. Concurrently, Arcade Realty entered into a Purchase and Sale Agreement (the “PSA”) with Buyer for the sale of the real property at 38 Union Avenue, Bridgeport, Connecticut for a purchase price of $2,300,000, subject to adjustment. The APA and PSA provide that the aggregate consideration for the business and the real property (prior to adjustment for inventory value) is $3,200,000, and that the closings of the two agreements occur simultaneously.
The APA and PSA each provided for a 10-day due diligence period following the June 26, 2026 effective date, with closing to occur on the third business day following expiration of that period, or such earlier date as the parties agreed. At closing, Buyer agreed to enter into three-year employment agreements with William Rhone, Arcade Technology Chief Financial Officer, Member, and Steven Pepe, Arcade Technology Chief Executive Officer, Member, each with non-compete covenants.
The transactions contemplated by the APA and PSA closed on July 15, 2026. Per the executed settlement statements, the final purchase price for the transactions consisted of $900,000 for the business assets, $980,000 for inventory, and $2,300,000 for the real property, for total contractual consideration of $4,180,000, before closing prorations and Buyer’s own closing costs.
13
Exhibit 99.3
QUANTUM CYBER N.V.
Unaudited Pro Forma Condensed Combined Financial Information
Description of Acquisition
On June 26, 2026, Quantum Drones Corporation, a wholly owned subsidiary of Quantum Cyber N.V. (the “Company”), entered into (i) an Asset Purchase Agreement (the “Asset Purchase Agreement”) with Arcade Technology LLC (“Arcade Technology”) to acquire certain operating assets used in Arcade Technology’s precision metal stamping, tool design, and manufacturing business, and (ii) a related Purchase and Sale Agreement (the “Purchase and Sale Agreement”) with Arcade Realty LLC (“Arcade Realty,” and together with Arcade Technology, “Arcade”) to acquire the real property located at 38 Union Avenue, Bridgeport, Connecticut, an approximately 53,000-square-foot industrial facility (the “Acquisition”). The closings under both the Asset Purchase Agreement and the Purchase and Sale Agreement occurred simultaneously on July 15, 2026.
The aggregate purchase price for the business assets and the real property was $4,180,000, consisting of $900,000 for the business assets (allocated between fixed assets and going-concern value under the Asset Purchase Agreement), $980,000 for inventory, and $2,300,000 for the real property, in each case before customary closing prorations and the Company’s own closing costs.
Following the Acquisition, the Company intends to operate the Bridgeport facility, together with the acquired manufacturing equipment and personnel, as the operational foundation for its domestic autonomous defense manufacturing capability.
The description of the Acquisition above is qualified in its entirety by reference to the Asset Purchase Agreement, the Purchase and Sale Agreement, and the Company’s Current Reports on Form 8-K filed with the Securities and Exchange Commission on July 1, 2026 and July 16, 2026 (including the press release filed as Exhibit 99.1 to the Form 8-K filed July 16, 2026), which are incorporated herein by reference.
Accounting Periods Presented
The unaudited pro forma condensed combined financial information is provided for illustrative purposes only and is not necessarily indicative of what the actual results of operations and financial position would have been had the Acquisition taken place on the dates indicated, nor is it indicative of the future consolidated results of operations or financial position of the combined company.
The unaudited pro forma condensed combined balance sheet as of June 30, 2026 has been prepared using, and should be read in conjunction with, the following:
| ● | Arcade’s unaudited combined balance sheet as of June 30, 2026 and the related notes included elsewhere in this Form 8-K; and |
| ● | the Company’s unaudited condensed balance sheet as of June 30, 2026 and the related notes included in the Form 10-Q as filed on August 14, 2026. |
The unaudited pro forma condensed combined statement of operations for the six months ended June 30, 2026 has been prepared using, and should be read in conjunction with, the following:
| ● | Arcade’s unaudited combined statement of operations for the six months ended June 30, 2026 derived from the historical information of Arcade included elsewhere in this Form 8-K; and |
| ● | the Company’s unaudited condensed statements of operations for the six months ended June 30, 2026 derived from the historical information of the Company included in the Form 10-Q as filed on August 14, 2026. |
The unaudited pro forma condensed combined statement of operations for the year ended December 31, 2025 has been prepared using, and should be read in conjunction with, the following:
| ● | Arcade’s audited statement of operations for the year ended December 31, 2025 derived from the historical information of Arcade included elsewhere in this Form 8-K; and |
| ● | the Company’s audited statements of operations for the year ended December 31, 2025 derived from the historical information of the Company included in the Form 10-K as filed on March 31, 2026. |
QUANTUM CYBER N.V.
Unaudited Pro Forma Condensed Combined Balance Sheet
As of June 30, 2026
| Quantum Cyber N.V. | Arcade (Historical) | Transaction Accounting Adjustments |
Note | Pro Forma Combined | ||||||||||||||||
| Assets | ||||||||||||||||||||
| Current assets | ||||||||||||||||||||
| Cash and cash equivalents | $ | 13,376,044 | $ | 533,115 | $ | (4,713,115 | ) | (a) (b) | $ | 9,196,044 | ||||||||||
| Accounts receivable, net | - | 619,556 | (619,556 | ) | (b) | - | ||||||||||||||
| Inventory, net | - | 652,783 | 327,217 | (a) (b) | 980,000 | |||||||||||||||
| Prepaid expenses | 2,777,995 | 16,307 | (16,307 | ) | (b) | 2,777,995 | ||||||||||||||
| Assets of discontinued operations, held for sale | 538,820 | - | - | 538,820 | ||||||||||||||||
| Total current assets | 16,692,859 | 1,821,761 | (5,021,761 | ) | 13,492,859 | |||||||||||||||
| Property, plant and equipment, net | 136,799 | 622,789 | 2,043,211 | (a) (b) | 2,802,799 | |||||||||||||||
| Intangible assets | 6,538,237 | - | 534,000 | (a) | 7,072,237 | |||||||||||||||
| Total assets | $ | 23,367,895 | $ | 2,444,550 | $ | (2,444,550 | ) | $ | 23,367,895 | |||||||||||
| Liabilities and members’ / stockholders’ equity | ||||||||||||||||||||
| Accounts payable and accrued liabilities | $ | 900,904 | $ | 356,822 | $ | (356,822 | ) | (b) | $ | 900,904 | ||||||||||
| Loan payable | 168,670 | 139,872 | (139,872 | ) | (b) | 168,670 | ||||||||||||||
| Intellectual property acquisition liability | 1,750,000 | - | - | 1,750,000 | ||||||||||||||||
| Liabilities of discontinued operations, held for sale | 184,982 | - | - | 184,982 | ||||||||||||||||
| Total liabilities | 3,004,556 | 496,694 | (496,694 | ) | 3,004,556 | |||||||||||||||
| Total equity | 20,363,339 | 1,947,856 | (1,947,856 | ) | (b) | 20,363,339 | ||||||||||||||
| Total liabilities and equity | $ | 23,367,895 | $ | 2,444,550 | $ | (2,444,550 | ) | $ | 23,367,895 | |||||||||||
2
QUANTUM CYBER N.V.
Unaudited Pro Forma Condensed Combined Statement of Operations
For the Six Months Ended June 30, 2026
| Quantum Cyber N.V. | Arcade (Historical) | Transaction Accounting Adjustments |
Note | Pro Forma Combined | ||||||||||||||||
| Revenue | $ | - | $ | 2,481,949 | $ | - | $ | 2,481,949 | ||||||||||||
| Cost of revenue | - | 2,425,620 | 62,544 | (c) | 2,488,164 | |||||||||||||||
| Gross profit | - | 56,329 | (62,544 | ) | (6,215 | ) | ||||||||||||||
| Operating expenses: | ||||||||||||||||||||
| Sales and marketing | 1,740,373 | - | - | 1,740,373 | ||||||||||||||||
| Research and development | 320,872 | - | - | 320,872 | ||||||||||||||||
| In-process research and development | 4,258,449 | - | - | 4,258,449 | ||||||||||||||||
| Selling, general and administrative | 6,032,282 | 236,942 | 21,594 | (c) | 6,290,818 | |||||||||||||||
| Total operating expenses | 12,351,976 | 236,942 | 21,594 | 12,610,512 | ||||||||||||||||
| Operating loss | (12,351,976 | ) | (180,613 | ) | (84,138 | ) | (12,616,727 | ) | ||||||||||||
| Other income (expense): | ||||||||||||||||||||
| Miscellaneous income | 34,445 | 20,652 | - | 55,097 | ||||||||||||||||
| Interest income | - | 1,941 | - | 1,941 | ||||||||||||||||
| Miscellaneous expense | (218,001 | ) | - | - | (218,001 | ) | ||||||||||||||
| Interest expense | (22,383 | ) | (2,620 | ) | 2,620 | (d) | (22,383 | ) | ||||||||||||
| Total other income (expense) | (205,939 | ) | 19,973 | 2,620 | (183,346 | ) | ||||||||||||||
| Loss from continuing operations before income taxes | (12,557,915 | ) | (160,640 | ) | (81,518 | ) | (12,800,073 | ) | ||||||||||||
| Loss from discontinued operations | (3,540,547 | ) | - | - | (3,540,547 | ) | ||||||||||||||
| Net loss | $ | (16,098,462 | ) | $ | (160,640 | ) | $ | (81,518 | ) | $ | (16,340,620 | ) | ||||||||
| Net loss per ordinary share – basic and diluted | $ | (1.08 | ) | $ | (1.10 | ) | ||||||||||||||
| Loss from continuing operations per ordinary share – basic and diluted | $ | (0.85 | ) | $ | (0.86 | ) | ||||||||||||||
| Loss from discontinued operations per ordinary share – basic and diluted | $ | (0.23 | ) | $ | (0.24 | ) | ||||||||||||||
| Weighted average ordinary shares outstanding – basic and diluted | 14,842,125 | 14,842,125 | ||||||||||||||||||
3
QUANTUM CYBER N.V.
Unaudited Pro Forma Condensed Combined Statement of Operations
For the Year Ended December 31, 2025
| Quantum Cyber N.V. | Arcade (Historical) | Transaction Accounting Adjustments | Note | Pro Forma Combined | ||||||||||||||||
| Revenue | $ | 372,932 | $ | 4,339,242 | $ | - | $ | 4,712,174 | ||||||||||||
| Revenue – related party | 164,148 | - | - | 164,148 | ||||||||||||||||
| Total revenue | 537,080 | 4,339,242 | - | 4,876,322 | ||||||||||||||||
| Cost of revenue | 147,288 | 3,969,080 | 124,849 | (c) | 4,241,217 | |||||||||||||||
| Gross profit | 389,792 | 370,162 | (124,849 | ) | 635,105 | |||||||||||||||
| Operating Expenses: | ||||||||||||||||||||
| Sales and marketing | 3,820,509 | - | - | 3,820,509 | ||||||||||||||||
| Research and development | 4,905,791 | - | - | 4,905,791 | ||||||||||||||||
| Research and development – related party | 54,775 | - | - | 54,775 | ||||||||||||||||
| Selling, general and administrative | 5,107,535 | 521,414 | 43,162 | (c) | 5,672,111 | |||||||||||||||
| Impairment of intangible asset | 2,640,280 | - | - | 2,640,280 | ||||||||||||||||
| Total operating expenses | 16,528,890 | 521,414 | 43,162 | 17,093,466 | ||||||||||||||||
| Operating loss | (16,139,098 | ) | (151,252 | ) | (168,011 | ) | (16,458,361 | ) | ||||||||||||
| Other income (expense): | ||||||||||||||||||||
| Other income | 42,180 | 31,480 | - | 73,660 | ||||||||||||||||
| Government grant | 533,503 | - | - | 533,503 | ||||||||||||||||
| Change in fair value of convertible debt | 21,000 | - | - | 21,000 | ||||||||||||||||
| Loss on sales and disposal of assets | (163,248 | ) | - | - | (163,248 | ) | ||||||||||||||
| Interest income | - | 6,316 | - | 6,316 | ||||||||||||||||
| Interest expense | (373,458 | ) | (5,390 | ) | 5,390 | (d) | (373,458 | ) | ||||||||||||
| Other expense | (131,597 | ) | - | - | (131,597 | ) | ||||||||||||||
| Total other income (expense) | (71,620 | ) | 32,406 | 5,390 | (33,824 | ) | ||||||||||||||
| Net loss before income taxes | (16,210,718 | ) | (118,846 | ) | (162,621 | ) | (16,492,185 | ) | ||||||||||||
| Income tax provision | - | - | - | - | ||||||||||||||||
| Net loss | $ | (16,210,718 | ) | $ | (118,846 | ) | $ | (162,621 | ) | $ | (16,492,185 | ) | ||||||||
| Net loss per ordinary share – basic and diluted | $ | (2.70 | ) | $ | (2.75 | ) | ||||||||||||||
| Weighted average ordinary shares outstanding – basic and diluted | 5,996,887 | 5,996,887 | ||||||||||||||||||
4
QUANTUM CYBER N.V.
Notes to the Unaudited Pro Forma Condensed Combined Financial Information
Note 1 — Basis of Pro Forma Presentation
The following unaudited pro forma condensed combined financial information gives effect to the acquisition by Quantum Drones Corporation of certain operating assets of Arcade Technology and the real property of Arcade Realty, pursuant to the Asset Purchase Agreement and Purchase and Sale Agreement, each dated June 26, 2026 (together, the “Acquisition Agreement”).
The acquisition of the operating assets of Arcade has been accounted for as a business combination in accordance with the acquisition method of accounting under U.S. GAAP. Under this method of accounting, the Company has been determined to be the accounting acquirer and the operating assets of Arcade to be the accounting acquiree. The acquisition method of accounting requires, among other things, that the assets acquired in a business combination, including identifiable intangible assets not previously recorded on the historical books of Arcade, be measured and recognized at fair value as of the acquisition date. No liabilities were assumed by the Company in connection with the acquisition. The excess of the consideration over the fair value of assets acquired, if any, is allocated to goodwill.
The unaudited pro forma condensed combined financial information was prepared in accordance with Article 11 of Regulation S-X. Management has elected not to present Management’s Adjustments and will only be presenting Transaction Accounting Adjustments in the unaudited pro forma condensed combined financial information. The adjustments presented in the unaudited pro forma condensed combined financial information have been identified and presented to provide relevant information necessary for an understanding of the combined company reflecting the transaction.
The unaudited pro forma condensed combined financial information is based on the Arcade historical combined financial statements and the Company’s historical consolidated financial statements as adjusted to give effect to the acquisition transaction as outlined in the Acquisition Agreement. The unaudited pro forma condensed combined balance sheet gives pro forma effect to the transaction as if it had been consummated on June 30, 2026. The unaudited pro forma condensed combined statement of operations for the six months ended June 30, 2026 and for the year ended December 31, 2025, gives effect to the transaction as if they had occurred on January 1, 2025, the beginning of the earliest period presented.
The pro forma financial information does not give effect to any synergies, operating efficiencies, tax savings, or cost savings that may be associated with the acquisition and the related transactions. The unaudited pro forma condensed combined financial information does not reflect the income tax effects of the pro forma adjustments, as management believes income tax adjustments to not be meaningful for the combined entity during the historical periods presented. There were no existing contractual relationships between the Company and Arcade during the periods presented in the unaudited pro forma condensed combined financial information.
Note 2 — Preliminary Purchase Price Allocation
The Acquisition closed on July 15, 2026. Under the acquisition method of accounting in accordance with Accounting Standards Codification (ASC) 805, the total consideration for the operating assets of Arcade, and the preliminary allocation of that consideration to the assets acquired are based on the executed settlement statements for the real estate closing (Arcade Realty) and the business-asset closing (Arcade Technology), each dated July 15, 2026:
| Total cash purchase consideration | $ | 4,180,000 | ||||
| Assets acquired | Expected useful life | |||||
| Inventory | $ | 980,000 | - | |||
| Land | 455,000 | Not depreciated | ||||
| Building | 1,845,000 | 39 years | ||||
| Machinery | 366,000 | 7 years | ||||
| Intangible - Customer Relationships | 534,000 | 4 years | ||||
| Total identifiable assets acquired | $ | 4,180,000 |
5
Note 3 — Transaction Accounting Adjustments to Unaudited Pro Forma Condensed Combined Balance Sheet and Statement of Operations
The pro forma adjustments are based on our preliminary estimates and assumptions that are subject to change. The following adjustments have been reflected in the unaudited pro forma condensed combined financial information:
| a) | Reflects cash consideration of $4,180,000 paid for the acquired assets, assumed to be funded from the Company’s cash on hand and the acquired assets at their preliminary estimated fair values. This consideration was allocated $980,000 to inventory, $455,000 to land, $1,845,000 to building, $366,000 to machinery, and $534,000 to identifiable intangible assets, with no residual goodwill (see Note 2). |
| b) | Reflects the elimination of Arcade’s historical assets excluded from the Acquisition (cash, accounts receivable, and prepaid expenses), its historical liabilities not assumed by the Company (accounts payable and accrued liabilities and the EIDL Loan payable), and Arcade’s historical members’ capital and accumulated earnings. Specifically, this adjustment eliminates cash of $533,115, accounts receivable of $619,556, and prepaid expenses of $16,307; accounts payable and accrued liabilities of $356,822 and the EIDL Loan payable of $139,872; and members’ capital and accumulated earnings of $1,947,856. |
| c) | Reflects amortization of identifiable intangible assets and incremental depreciation from the fair-value step-up of acquired property with the useful life for the acquired assets (see Note 2). In the aggregate, this adjustment increased cost of revenue by $124,849 and $62,544, and selling, general and administrative expenses by $43,162 and $21,594, respectively, for the year ended December 31, 2025 and for the six months ended June 30, 2026. |
| d) | Reflects the elimination of interest expense on the EIDL note, which was not assumed by the Company. This adjustment eliminates interest expense of $5,390 for the year ended December 31, 2025 and $2,620 for the six months ended June 30, 2026. |
No pro forma income tax adjustment has been made. Arcade is a pass-through entity, and the Company has incurred losses for which no tax benefit has been recognized; management believes an income tax adjustment would not be meaningful.
6