Acquisition of subsidiary

6 Months Ended

Jun. 30, 2017

Notes to Financial Statements

Acquisition of subsidiary

4. Acquisition of subsidiary

On February 14, 2017, the Company acquired 100% of the equity of CCH, from Leon Developments, a company wholly owned by our CEO. The total consideration paid by the Company was CDN$3,517,062, including the assumption of certain liabilities of CCH, which was funded by the assignment to Leon Developments of certain indebtedness owing to the Company in the amount of CDN$659,918 (US$504,442) on the disposal of a subsidiary, 1816191 Ontario, which principal amount had previously been fully provided for during 2015; and the issuance of 60,000,000 shares of the Company’s common stock at US$0.0364 per share for proceeds of $2,184,000.

During the current quarter, on June 1, 2017, the Company had the property owned by CCH appraised by an independent valuer, the appraisal obtained was for CDN$10,000,000, which resulted an increase in the value of the assets acquired by $930,600 and a corresponding reduction in the excess purchased consideration allocated to the shareholder. 

The allocation of the purchase price is as follows:

	Amount
Purchase price paid:
Common shares issued to Seller	$	2,184,000
Receivable assumed by the Seller		504,442
		2,688,442
Allocated as follows:
Assets acquired:
Property		7,644,000
Receivable from Ethema Health Corporation		299,743
		7,943,743
Liabilities assumed:
Accounts payable and other accruals		158,094
Related party payable to Leon Developments		2,057,392
Mortgage liability owing to Ethema Health Corporation		267,540
Mortgage liability		3,145,549
		5,628,575
Net assets acquired		2,315,168
Excess purchase consideration allocated to shareholders compensation	$	373,274