Asset Purchase Agreement

6 Months Ended

Nov. 30, 2022

Asset Purchase Agreement

Asset Purchase Agreement

Note 12 – Asset Purchase Agreement

On June 16, 2022, the Company completed the acquisition of certain assets of Axil & Associated Brands Corp. (“Axil”), a Delaware corporation, pursuant to the Asset Purchase Agreement dated May 1, 2022 and amended on June 15, 2022 and September 8, 2022. by and among the Company, its subsidiary, Axil and certain of Axil’s stockholders, providing for the acquisition of Axil’s hearing protection business and ear bud business. The business constituted substantially all of the business operations of Axil but did not include Axil’s hearing aid line of business.

One of the stockholders of Axil is Intrepid Global Advisors. As of June 16, 2022, Intrepid held 4.68% of the outstanding common stock of Axil and 22.33% of the outstanding common stock of the Company. Jeff Toghraie, Chairman and Chief Executive Officer of the Company is a managing director of Intrepid.

As consideration for the Asset Purchase, Axil received a total of 323,183,893 shares comprised of (a) 73,183,893 shares of the Company’s common stock and (b) 250,000,000 shares of non-voting Series A Preferred Stock, which are convertible into shares of Company common stock on a one-to-one ratio. The Preferred Shares may not be converted or transferred for a period of two years following the closing of the acquisition. Thereafter, no holder of Preferred Shares may convert such shares into a number of shares of Company common stock that would cause the holder to beneficially own more than 5% of the Company’s common stock, as determined in accordance with Sections 13(d) and (g) of the Securities Exchange Act of 1934 (the “Exchange Act”). The purchase price was computed to be $4,007,480 based on a fair value of $0.0124 per share on the date of acquisition.

The Company is utilizing the Axil assets to expand into the hearing enhancement business through its newly incorporated subsidiary.

The acquisition is accounted for by the Company in accordance with the acquisition method of accounting pursuant to ASC 805 “Business Combinations” and pushdown accounting is applied to record the fair value of the assets acquired by the Company. Under this method, the purchase price is allocated to the identifiable assets acquired and liabilities assumed based on their estimated fair values at the date of acquisition. Any excess of the amount paid over the estimated fair values of the identifiable net assets acquired will be allocated to goodwill.

The following is a summary of the estimated fair value of the assets acquired and liabilities assumed at the date of acquisition:

Cash	$	1,066,414
Accounts receivables		227,786
Inventory		1,342,461
Prepaid expenses		62,452
Other assets		108,030
Accounts payables		(285,665	)
Deferred revenues		(1,043,332	)
Other liabilities		(79,826	)
Net tangible assets acquired	$	1,398,320
Identifiable intangible assets
Licensing rights	$	11,945
Customer relationships		70,000
Tradenames		275,000
Website		100,000
Total Identifiable intangible assets	$	456,945
Consideration paid	$	4,007,480
Total net assets acquired		1,855,265
Preliminary goodwill purchased	$	2,152,215

We completed the accounting and preliminary valuations of the assets acquired and liabilities assumed and, accordingly, the estimated fair values are provisional pending the final valuations which will not exceed one year in accordance with ASC 805.

Pro Forma Information (Unaudited)

The unaudited pro forma condensed combined financial statements are based on Reviv3 Procare Company and Axil & Associated Brands Corp.’s unaudited historical consolidated financial statements as adjusted to give effect to the Asset Purchase Agreement. The unaudited pro forma combined statements of operations for the three months and six months ended November 30, 2022 and 2021, for Reviv3 Procare Company and Axil & Associated Brands Corp., give effect to the Asset Purchase Agreement as if it had occurred on June 1, 2022 and 2021, respectively.

	For the Three Months Ended				For the Six Months Ended
	November 30,		November 30,		November 30,		November 30,
	2022		2021		2022		2021
Revenue	$	6,731,999	$	5,085,369	$	11,650,248	$	7,997,583
Net income (loss)	$	726,900	$	101,945	$	863,912	$	(118,533	)
Earnings (loss) per common share
Basic	$	0.01	$	0.00	$	0.01	$	(0.00	)
Diluted	$	0.00	$	0.00	$	0.00	$	(0.00	)

The pro forma financial information is not necessarily indicative of the results that would have occurred if the acquisition had occurred on the date indicated or that result in the future.