Acquisition of Miway Finance Inc. |
3 Months Ended | |||||||||||||||||||||||
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May 31, 2022 | ||||||||||||||||||||||||
Business Combination and Asset Acquisition [Abstract] | ||||||||||||||||||||||||
Acquisition of Miway Finance Inc. |
On June 10, 2020, the Company purchased Miway Finance Inc. (“Miway”) at $0.001 per share for a purchase price of $20,000, representing a 48.66% ownership interest. The Company previously accounted for its investment under the equity method. shares of
Pursuant to the Share Purchase and Separation Agreement described in Note 11, the Company received 3,700,000 shares of common stock of MiWay Finance, Inc. from the former CEO on March 2, 2022, increasing the Company’s ownership interest to 57.66%. As a result, the Company obtained control over Miway and consolidated the balances and results of Miway effective March 2, 2022.
Assets acquired and liabilities assumed are reported at their historical carrying amounts and any difference between the proceeds transferred is recognized in additional paid-in capital. These consolidated financial statements include the accounts of Miway since the date of acquisition and the historical accounts of the Company since inception.
The assets and liabilities of Miway acquired are as follows:
At the time of acquisition, the Company had paid a total of $24,685 for its ownership interest in Miway. Upon consolidation, the difference between the investment of $24,685 and the net assets assumed of $3,140 was recognized in additional paid-in capital.
Effective
May 31, 2022, the Company’s ownership interest in Miway decreased to 48.32% and the CEO of the Company became the majority shareholder
of both the Company and Miway. As a result of the common ownership, the change in control was considered a common-control transaction
and was outside the scope of the business combination guidance in ASC 805-50. The entities are deemed to be under common control as of
May 31, 2022, which was the date that the majority shareholder acquired control of the Company and Miway and, therefore, held control
over both companies.
The accompanying notes are an integral part of these unaudited consolidated financial statements.
Pursuant to ASC 250-10 and ASC 805-50, the transaction resulted in a change in the reporting entity and was recognized retrospectively for all periods during which the entities were under common control. For common-control transactions that result in a change in the reporting entity and for which both receiving entity and the transferring entity were not under common control during the entire reporting period, it is necessary to determine which entity is the predecessor. The predecessor is the reporting entity deemed to be the receiving entity for accounting purposes in a common-control transaction. The predecessor is not always the entity that legally receives the net assets or equity interests transferred. Comparative financial information shall only be adjusted for periods during which the entities were under common control. Since common control between the Company and Miway did not occur until the current period, the comparative information does not need to be combined. Accordingly, for periods in which the combining entities were not under common control, the comparative financial statements presented are those of the entity that is determined to be the predecessor up to the date at which the entities became under common control. The Company was determined to be the predecessor entity and, therefore, was deemed to be the receiving entity for accounting purposes. Since the entities were consolidated immediately prior to the change of control, there was no impact from the common control transaction. |