Asset Acquisitions

3 Months Ended

Apr. 30, 2019

Notes to Financial Statements

Note 4. Asset Acquisitions

(a)

Thrudermic Transdermal Nanotechnology

On March 2, 2018, the Company entered into an exchange agreement with Thrudermic, LLC (“Thrudermic”) and the members of Thrudermic whereby the Company paid $1.00 for the issued and outstanding units of Thrudermic and issued 500,000 shares of common stock to the members of Thrudermic for their intellectual property portfolio, including unpatented technology, goodwill and know-how in connection with the Thrudermic Transdermal Nanotechnology. The Company evaluated this acquisition in accordance with ASC 805, Business Combinations to discern whether the assets and operations of Thrudermic met the definition of a business. The Company concluded there were not a sufficient number of key processes obtained to develop the inputs into outputs, nor could such processes be easily obtained by the Company. Accordingly, the Company accounted for this transaction as an asset acquisition at cost of $830,000 (Note 6).

(b)

Ready-to-Infuse Cannabis Patents (“RTIC Patents”)

On February 28, 2018, the Company completed the acquisition of Pivot Naturals, LLC (previously ERS Holdings, LLC) (“Pivot Naturals”) pursuant to an exchange agreement dated as of February 10, 2018. As consideration for the purchase, the Company paid $430,420 (US$333,333) in cash on closing, issued 5,000,000 shares of common stock and will pay an additional $430,420 (US$333,333) six (6) and twelve (12) months after closing. Financial consideration include royalties on future annual net sales. On September 28, 2018, a payment of $429,370 (US$326,666), representing a portion of the payment due six (6) months after closing, was made. The Company extended the payment date for the payment due twelve (12) months after closing from February 28, 2019 to May 31, 2019. As consideration for the extension, the Company issued 60,515 shares of common stock (Note 10(c)) and paid $3,358 (US$2,500) in cash, representing the extension fee for March and April 2019, during the three months ended April 30, 2019. The acquisition obligation outstanding as at April 30, 2019 is $456,382 (US$340,000). On May 17, 2019, the last payment due twelve (12) months after closing was made. The Company evaluated this acquisition in accordance with ASC 805, Business Combinations (10-55-4) to discern whether the assets and operations of Pivot Naturals met the definition of a business. The Company concluded there were not a sufficient number of key processes obtained to develop the inputs into outputs, nor could such processes be easily obtained by the Company. Accordingly, the Company accounted for this transaction as an asset acquisition. The consideration transferred, assets acquired and liabilities assumed recognized is as follows:

Consideration paid:	$
Cash paid		430,420
Cash to be paid		778,662
Common stock issued		6,650,000
Transaction costs		154,951
Total purchase price		8,014,033
Net assets acquired:		$
Cash		2,779
Equipment		5,213
Ready-to-infuse cannabis (“RTIC”) patents		8,008,411
Accounts payable and accrued liabilities		(2,370	)
Net value of business purchased		8,014,033

The RTIC patents acquired are amortized over an estimated useful life of ten (10) years.