Note 5 - Acquisition of Complytrust Inc. (Formerly Ocl Technologies Corp.)

9 Months Ended

Sep. 30, 2021

Notes to Financial Statements

Mergers, Acquisitions and Dispositions Disclosures [Text Block]

5. ACQUISITION OF COMPLYTRUST INC. (FORMERLY OCL TECHNOLOGIES CORP.)

During the year ended December 31, 2020, the Company acquired a 100% interest in ComplyTrust Inc. (formerly OCL Technologies Corp.) (“CTI”) by issuing 12,500,000 shares with a fair value of $1,380,427 and contingent consideration consisting of 12,500,000 non-transferable warrants with a fair value of $414,128. The transaction does not meet the definition of a business as defined in ASC 805-10. As a result, the acquisition of CTI has been accounted for as an asset acquisition, whereby all of the assets acquired and liabilities assumed are assigned a carrying amount based on their relative fair values. Upon closing of the transaction, CTI became a subsidiary of the Company. The net assets acquired pursuant to the acquisition are as follows:

Purchase Price
Issuance of 12,500,000 shares	$	1,380,427
Contingent consideration – warrants		414,128
Transaction costs		54,532
Total Purchase Price	$	1,849,087

Contingent consideration consists of 12,500,000 non-transferable warrants that are exercisable into 12,500,000 common shares if certain criteria are met at an exercise price of $0.001 for a period of five years from the date of issuance expiry June 4, 2025. No share purchase warrants are exercisable until specific performance criteria have been met. Such criteria being 1) revenue sales projections per CTI’s 5 year proformas, or 2) listing on a major US exchange, or 3) change of control. The Company has estimated the fair value of the contingent consideration to be $414,128.

Purchase Price Allocation
Cash	$	114,169
Accounts payable and due from related party		(232,021	)
Intangible asset		1,966,939
Total Purchase Price	$	1,849,087

During the year ended December 31, 2020, the Company impaired the intangible asset resulting an expense on the consolidated statement of operations of $1,966,939.