ACQUISITION OF SORC

12 Months Ended

May 31, 2022

Business Combination and Asset Acquisition [Abstract]

ACQUISITION OF SORC

NOTE 4 – ACQUISITION OF SORC

Purchase Price Allocation

Effective December 31, 2020, the Company acquired a 100% equity interest in SORC (see Note 1). We have accounted for the acquisition of SORC as a business combination using the acquisition method. The following table represents the allocation of the total purchase price of SORC to the identifiable assets acquired and the liabilities assumed based on the fair values as of the acquisition date, as updated for identified adjustments to current assets and liabilities. The preliminary allocations of the purchase price with less than a year of ownership are subject to revisions as additional information is obtained about the facts and circumstances that existed as of the acquisition date. The purchase price allocation was preliminary and was subject to revision through the end of the measurement period on December 31, 2021. The original purchase price is final and no further adjustments are necessary.

	Purchase Price Allocation
Consideration:
Cash	$	55,000
Working capital adjustment		17,678
Total Consideration	$	72,678
Fair Value of Assets Acquired:
Cash and cash equivalents	$	448,457
Prepaid expenses and other assets		99,415
Property and equipment		447,176
Amounts attributable to assets acquired	$	995,048
Fair Value of Liabilities Assumed:
Current Liabilities	$	436,076
Amounts attributable to liabilities assumed	$	436,076
Total identifiable net asset	$	558,972
Bargain purchase gain	$	486,294

Financial Information

Pursuant to Topic 2, section 2010 of the SEC financial reporting manual, the Company evaluated the business combination. Prior to the acquisition by the Company, SORC sold all operating assets, terminated all employees and no longer maintained any of the business processes that previously existed. Accordingly, the Company has determined the transaction is considered an asset acquisition only. As a result, historical consolidated financial statements are not considered relevant to the ongoing operations and are not required.

In accordance with the Securities Purchase Agreement, Laredo agreed to pay to Alleghany a revenue royalty of 5.0% of the Company’s future revenues and net profits relating to oil, gas, gas liquids and all other hydrocarbons, subject to certain adjustments, for a period of seven years after the closing. The Company has not attributed a value to this potential liability in the preliminary purchase price allocation as eligible revenues or net profits do not currently exist and are not estimable.

In connection with the acquisition, the Company received tangible assets which had previously been written off by the Seller. This previous reduction in asset values in combination with the Seller’s desire to close the transaction on an accelerated basis enabled the Company to obtain the assets at a lower price resulting in the recognition of a bargain purchase gain.

For the years ended May 31, 2022 and 2021, respectively, SORC recognized no revenues and $17,629 and $12,439 interest expense recorded related to the debt discount amortization and $12,782 and $0 interest expense on the note payable, included in the Consolidated Statement of Operations.