Acquisition

6 Months Ended

Jun. 30, 2019

Business Combinations [Abstract]

Acquisition

(6) Acquisition

On May 20, 2019, Corrent Resources, LLC (“Corrent”), a wholly owned subsidiary of the Company, entered into an asset purchase agreement with each of Echo Environmental, LLC and its wholly owned subsidiary ITAD USA, LLC (collectively, the “Echo Entities”), pursuant to which the Echo Entities agreed to sell all of the assets, rights and interests of the Echo Entities (the “Acquired Assets”) for $6,925,979 (the “Echo Transaction”). The Echo Entities are wholly owned subsidiaries of Elemetal, LLC (“Elemetal”). John R. Loftus is the Company’s CEO, President and Chairman and owned approximately one-third of the equity interests of Elemetal prior to the Echo Transaction.

On the same day, Mr. Loftus became the largest beneficial owner of the Company’s stock by purchasing all of the Company’s stock beneficially owned by Elemetal. As part of the transaction of acquiring the stock from Elemetal, Mr. Loftus no longer owns an equity interest in Elemetal, LLC. As an interested party, Mr. Loftus was familiar with the operations of the Echo Entities.

In connection with the Echo Transaction, on May 20, 2019, Corrent executed and delivered to Mr. Loftus, a promissory note to which Corrent borrowed from Mr. Loftus $6,925,979, the proceds of which were used to purchase the Acquired Assets.

Goodwill is not amortized but evaluated for impairment on an annual basis during the fourth quarter of our fiscal year or earlier if events or circumstances indicate the carrying value may be impaired. The Company’s goodwill is related to the Echo Entities only and not the whole Company. The Echo Entities’ have their own separate financial information to perform goodwill impairment testing going forward. The Company will evaluate goodwill based on cash flows for the Echo Entities’ segment. For tax purposes, goodwill is amortized and deductible over fifteen years.

Due to time constraints and other variables, the purchase price allocation listed below is considered a preliminary allocation and is subject to change.

The preliminary purchase price is allocated as follows:

Description	Amount
Assets
Cash	$	1,049,462
Account receivables		1,025,615
Inventories		1,209,203
Prepaids		88,366
Fixed assets		191,208
Right-of-use assets		2,350,781
Other assets		88,998
Liabilities
Account payables		(723,043	)
Accrued liabilities		(721,483	)
Operating lease liabilities		(2,350,781	)
Other long-term liabilities		(5,457	)
Net assets		2,202,869
Goodwill		4,723,110
Purchase Price	$	6,925,979

The following proforma combines the results of the Echo Entities and the Company’s results of operations for the three months ended June 30, 2019 and 2018 as if they were combined the whole quarter:

	Proforma Combined		Proforma Combined
	For the Three Months Ended		For the Three Months Ended
	June 30, 2019		June 30, 2018
		(unaudited)		(unaudited)
Revenue	$	23,169,924	$	24,325,768
Income from continuing operations	$	69,197	$	1,593,361
Net income	$	69,197	$	1,593,361
Basic net income per common share	$	-	$	0.06
Diluted net income per common share	$	-	$	0.06