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BUSINESS COMBINATION
12 Months Ended
Dec. 31, 2022
BUSINESS COMBINATION  
BUSINESS COMBINATION

NOTE 9 – BUSINESS COMBINATIONS

 

Correlate Exchange Agreement

 

On December 28, 2021, Correlate Inc. became a wholly owned subsidiary of the Company. As detailed in Note 1, Correlate was determined to be the accounting acquirer. Additionally, management determined that TCCR did not meet the definition of a business as described in ASC 805, as the only asset of TCCR was cash. The assets and liabilities of TCCR were transferred to the Company on December 28, 2021, as follows:

 

Cash

 

$213,904

 

Accounts payable

 

 

(341,977)

Accrued expenses

 

 

(13,965)

Shareholder advances

 

 

(62,500)

 

Loyal Exchange Agreement

 

On December 28, 2021, Loyal became a wholly owned subsidiary of the Company. The acquisition date fair value of the consideration transferred for Loyal was approximately $1,099,776, which consisted of 2,339,920 common shares.

 

The fair value of the common stock issued by the Company was determined using the closing stock price of the Company’s common shares on December 28, 2021.

 

The following table summarizes the fair values of assets acquired and liabilities assumed as of the date of acquisition:

 

 

 

Fair Value

 

Cash

 

$3,555

 

Accounts receivable

 

 

15,932

 

Intangible assets - trademark/trade name

 

 

139,700

 

Intangible assets - customer relationships

 

 

233,800

 

Intangible assets - developed technology

 

 

27,750

 

Goodwill

 

 

762,851

 

Accounts payable

 

 

(5,333)

Accrued expenses

 

 

(28,079)

Line of credit

 

 

(30,000)

Notes payable

 

 

(20,400)

Net assets acquired

 

$1,099,776

 

 

The excess of purchase consideration over the fair value of assets acquired and liabilities assumed was recorded as goodwill. The resulting goodwill is primarily attributed to the expanded market opportunities, including integrating the Loyal service offerings with existing Company service offerings. The goodwill has no basis for U.S. income tax purposes.

 

The following table sets forth the components of identifiable intangible assets acquired and their estimated useful lives as of the date of acquisition:

 

 

 

 

 

 

 

 

Amortization Schedule

 

 

 

Fair Value

 

 

Useful Life

 

2022

 

 

2023

 

 

2024

 

 

2025

 

 

2026

 

 

Total

 

Trademark/trade name

 

$139,700

 

 

Indefinite

 

$-

 

 

$-

 

 

$-

 

 

$-

 

 

$-

 

 

$-

 

Customer relationships

 

 

233,800

 

 

5 years

 

 

46,760

 

 

 

46,760

 

 

 

46,760

 

 

 

46,760

 

 

 

46,760

 

 

 

233,800

 

Developed technology

 

 

27,750

 

 

2 years

 

 

13,880

 

 

 

13,870

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

27,750

 

 

 

$401,250

 

 

 

 

$60,640

 

 

$60,630

 

 

$46,760

 

 

$46,760

 

 

$46,760

 

 

$261,550

 

The following pro forma financial information summarizes the combined results of operations for the Company and Loyal, as though the companies were combined as of January 1, 2021. The unaudited pro forma financial information was as follows:

 

 

 

2021

 

Total revenues

 

$316,389

 

Net loss

 

$(131,540)

 

The pro forma financial information for all periods presented above has been calculated after adjusting the results of Loyal to reflect the business combination accounting effects resulting from this acquisition, including the amortization expense from acquired intangible assets as though the acquisition occurred as of January 1, 2021. The pro forma financial information is for informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisition had taken place at January 1, 2021.