Acquisition of subsidiaries

9 Months Ended

Sep. 30, 2022

Business Combination and Asset Acquisition [Abstract]

Acquisition of subsidiaries

4. Acquisition of subsidiaries

On June 30, 2020, the Company entered into an agreement whereby the Company agreed to acquire 51% of American Treatment Holdings, Inc. (“ATHI”) from The Q Global Trust (“Seller”) and Lawrence B Hawkins (“Hawkins”), which in turn owns 100% of Evernia Health Services LLC. (“Evernia”), which operates drug rehabilitation facilities. The consideration for the acquisition was a loan to be provided by the purchaser to Evernia in the amount of $500,000. As of the date of acquisition, July 1, 2021, the Company had advanced Evernia approximately $1,140,985.

The Company originally had a 180 day option, from the advancement of the first tranche to Evernia, to purchase an additional 9% of ATHI for a purchase consideration of $50,000.

On April 28, 2021, the Stock Purchase Agreement date June 30, 2020 between the Company and the Q Global Trust, and ATHI was amended whereby the option to purchase an additional 9% of ATHI for $50,000 was amended to purchase an additional 24%, an increase of 15% over the prior option, for 100,000,000 shares of common stock. The remaining condition to closing, the receipt of approval for the change of ownership of the license from the Department of Children and Family Services of Florida, was satisfied by the probationary approval, which was received on June 30, 2021. The Company exercised the option and issued the 100,000,000 shares of common stock and paid $42,500 of the $50,000 due to the Seller, in terms of the amended agreement as of the date of this report. In addition to the consideration paid for the additional equity the Company agreed to execute a promissory note for the payment of any unpaid management fees at the time of Closing such that the unpaid fees shall be paid pari-passu with the repayment of the Loan Agreement and Seller agrees that any funds advanced to the Company by Behavioural Health Holdings, LLC shall be forgiven and considered contributed capital to ATHI. The Company agrees to advance up to $1,100,000 under the Loan Agreement for the funding of the operations of ATHI as required without any contribution required by the Seller. As at the date of acquisition, July 1, 2021, the Company had advanced Evernia $1,140,985, subsequent to July 1, 2021 to September 30, 2022, Evernia had repaid $294,598. The balance owing to the company at September 30, 2022 was $846,387.

Pursuant to the terms of the Purchase Agreement, the consideration paid for 75% of the equity of ATHI was $50,000 in cash plus the issuance of 100,000,000 shares of the Company’s common stock with a market value of $410,000 on the date of acquisition.

In terms of the agreement, the preliminary purchase price was allocated to the fair market value of tangible and intangible assets acquired and liabilities assumed as follows:

	Amount
Consideration
Cash	$	50,000
100,000,000 shares of common stock at fair market value		410,000
Total purchase consideration	$	460,000
Recognized amounts of identifiable assets acquired and liabilities assumed
Cash	$	60,324
Other Current assets		198,133
Property, plant and equipment		130,234
Right of use asset		1,772,560
Intangibles		1,789,903
Total assets		3,951,154
Less: liabilities assumed
Current liabilities assumed		(50,040	)
Intercompany advance		(1,140,985	)
Operating lease liabilities assumed		(1,836,151	)
Imputed Deferred taxation on identifiable intangible acquired		(310,645	)
Total liabilities		(3,337,821	)
Net identifiable assets acquired and liabilities assumed		613,333
Fair value of non-controlling interest		(153,333	)
Total	$	460,000

The amount of revenue and earnings include in the Company’s condensed consolidated statements of operations and comprehensive income (loss) for the nine months ended September 30, 2022 and the revenue and earnings of the combined entity had the acquisition date been January 1, 2021.

	Revenue		Earnings
Actual from January 1, 2022 to September 30, 2022	$	3,263,987	$	157,276
2021 Supplemental pro forma from January 1, 2021 to September 30, 2021	$	2,135,092	$	(3,838,726	)

The 2021 Supplemental pro forma earnings information was adjusted to account for amortization of intangibles on acquisition of $178,990.