Ample Hills Business Acquisition

3 Months Ended

Aug. 31, 2020

Business Combination, Step Acquisition [Abstract]

Ample Hills Business Acquisition

As described in Note 1, the Company closed on an acquisition on July 9, 2020. The Company entered into an asset purchase agreement with Ample Hills. The Company paid the sellers $1.0 million dollars for the net assets of Ample Hills. Additionally, the Company paid approximately $0.7 million dollars to certain landlords of the sellers in exchange for the right to assume the associated leases with such landlords.

In accordance with ASC 805 – Business Combinations, the Company has recognized the assets and liabilities of Ample Hills at fair value with the excess of such values over the fair value of consideration transferred to the seller presented as a bargain purchase gain recognized on the accompanying condensed consolidated statement of operations during the three months ended August 31, 2020. The foregoing amounts reflect our current estimates of fair value as of the July 9, 2020 acquisition date.

The following table summarizes the Company’s initial purchase price allocation for the Company’s acquisition of Ample Hills:

Purchase Price
Cash paid to sellers	$	1,000,000
Cure payments	$	668,877
Total Purchase Price	$	1,668,877
Purchase Price Allocation
Assets Acquired
Right-of-use operating lease assets		10,645,098
Website		26,601
Tradename and trademarks		938,863
Proprietary Recipes		152,006
Security deposits		225,180
Machinery and equipment		581,616
Leasehold improvements		852,848
Inventory		665,163
Total Assets Acquired	$	14,087,375
Liabilities Assumed
Right-of-use operating lease liabilities		10,645,098
Deferred Tax Liability		453,238
Customer Deposits		20,204
Gift card liabilities		28,343
Total Liabilities Assumed	$	11,146,883
Net Assets Acquired	$	2,940,492
Gain on bargain purchase	$	1,271,615

Further, please reference Note 9 for further details regarding the results of the Ice Cream segment.