Business Acquisition

12 Months Ended

Dec. 31, 2019

7. Business Acquisition

Effective May 24, 2019, the Company purchased all the issued and outstanding shares of 1684567. The acquisition was accounted for as a business combination using the acquisition method of accounting. The purchase price paid in the acquisition has been preliminarily allocated to record the assets acquired and liabilities assumed based on their estimated fair value. When determining the fair values of assets acquired and liabilities assumed, management made significant estimates. The transaction closed on May 28, 2019. The purchase consideration consisted of cash from working capital of $209,952 ($282,308 CAD) and cash from a third-party mortgage obtained in the amount of $1,258,273 ($1,691,910 CAD, net of financing fees of $80,387 ($108,090 CAD)). The total purchase price includes the original offer of $1,314,304 ($1,767,250 CAD) and acquisition costs of $153,922 ($206,968 CAD).

The allocation of the purchase price is as follows:

Purchase consideration
Cash ($1,974,218 CAD)	$	1,468,225
Assets acquired
Accounts receivable ($ 7,573 CAD)		5,632
Land ($1,850,892 CAD)		1,376,508
Automotive equipment and machinery ($16,525 CAD)		12,290
Customer list ($10,205 CAD)		7,589
Environmental compliance approval ($100,000 CAD)		74,370
		1,476.389

Liabilities assumed
Accounts payable ($10,977 CAD)		8,164

Net assets acquired ($1,974,218 CAD)	$	1,468,225

Included in the Consolidated Statements of Operations and Comprehensive Loss, is revenue of $137,247 ($182,098 CAD) and expenses of $217,620 ($288,735) since the date of acquisition. During the year ended December 31, 2018, 1684567 generated revenue of $212,473 ($275,188 CAD) and incurred expenses of $173,206 ($224,331 CAD).