Note 17 - Acquisition Of U-swirl, Inc.

12 Months Ended

Feb. 28, 2013

Business Combination Disclosure [Text Block]

NOTE 17 – ACQUISITION OF U-SWIRL, INC.

On January 14, 2013 the Company entered into an agreement to acquire a 60% controlling equity interest in U-Swirl, Inc., a publicly traded company (OTCQB: SWRL).  U-Swirl, Inc. is a franchisor and operator of self-serve frozen yogurt locations.  In exchange for our 60% interest we contributed our recently acquired franchise rights in YHI, Inc. and Yogurtini International, LLC (collectively, “Yogurtini”) as well as the franchise rights for Aspen Leaf Yogurt, LLC.  With the addition of Yogurtini and Aspen Leaf Yogurt we believe that U-Swirl, Inc. will have the “critical mass” necessary to achieve profitability.

We accounted for this business combination in accordance with ASC 805 – Business Combinations, which requires the acquiring entity in a business combination to recognize all the assets acquired and liabilities assumed in the transaction.

The purchase price was allocated as follows:

Assets acquired	$	1,763,110
Liabilities assumed		(746,585	)
Non-controlling interest		(664,612	)
Total purchase price	$	351,913

The consideration for the purchase price was made up of 40% of the following assets:

Yogurtini franchise rights	$	320,000
Cash		31,913
Total consideration paid	$	351,913

On the acquisition date, the fair value of the non-controlling interest was $664,612.  The fair value of the non-controlling interest was based upon reference to quoted market valued of U-Swirl, Inc. stock plus bargain purchase adjustment of approximately $258,000 resulting from the allocation of the purchase price.

Fair valuation methods used for the identifiable net assets acquired in the acquisition make use of quoted prices in active markets and discounted cash flows.  The fair value of franchise rights is provisional pending contingent payment, as outlined in Note 5, above.

At the same time that the Company entered into this agreement, we also entered into an agreement to sell substantially all of the assets held by Aspen Leaf Yogurt, LLC to U-Swirl, Inc.  In exchange for these assets, the company holds notes receivable (payable by U-Swirl, Inc.) in the amount of $900,000, which are eliminated on consolidation.  Those assets are carried at historical cost.

As a part of these transactions we recognized $635,168 as acquisition related costs in the line item “Restructuring charges” on our Income Statement.

Included in our consolidated earnings are U-Swirl’s losses between January 14, 2013 and February 28, 2013 of $(320,446).