Acquisition of subsidiary

12 Months Ended

Dec. 31, 2018

Notes to Financial Statements

Acquisition of subsidiary

4. Acquisition of subsidiary

In the prior year, 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. 

The transaction was accounted for under ASC 805-50 Transactions between entities under common control, and the assets and liabilities were transferred at their carrying amounts at the date of the transaction.

The allocation of the purchase price is as follows: 

	Year ended December 31, 2017
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 transferred:
Property		2,942,585
Receivable from Ethema Health Corporation		299,743
		3,242,328
Liabilities assumed:
Accounts payable and other accruals		158,093
Related party payable to Leon Developments		2,057,392
Mortgage liability owing to Ethema Health Corporation		267,540
Mortgage liability		3,145,550
		5,628,575
Net liabilities assumed		(2,386,247	)
Excess purchase consideration allocated to shareholders compensation	$	5,074,689