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ACQUISITION | 9 Months Ended
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Sep. 30, 2021
ACQUISITION |
NOTE 6 - ACQUISITION | NOTE 6 — ACQUISITION On June 9, 2021, ECHG, entered into the CExchange Asset Purchase Agreement with CExchange, pursuant to which the seller agreed to sell the assets and certain liabilities of CExchange for ECHG’s cancellation and forgiveness of $1,500,000 of the outstanding principal amount under the loan agreement between ECHG and CExchange originally dated February 15, 2020 and accrued and unpaid interest thereunder of $55,892. The remaining $900,000 principal owed to ECHG by CExchange is not a part of the purchase price listed below and is expected to be repaid with any accrued and unpaid interest during the third or fourth fiscal quarters of 2021. As mentioned in Note 5 -- Notes Receivable, we subsequently performed impairment evaluations on the remaining $900,000 principal owed after management learned that the $900,000 may not be recoverable. Using the guidance provided, management has concluded that ECHG should reserve the full amount of the outstanding and unpaid notes receivable of $900,000, and write-off the outstanding and unpaid accrued interest associated with the notes receivable totaling $49,174. The notes receivable of $900,000 and $49,174 of accrued interest receivable were written-off to other expense, write-off of notes receivable and accrued interest receivable as of September 30, 2021. As part of the CExchange Transaction, goodwill was preliminarily recorded as $1,891,477, which is the purchase price less the approximate fair value of the net assets purchased, as shown in the purchase price allocation in the following table. Goodwill is not amortized but evaluated for impairment on an annual basis during the fourth quarter of our fiscal year or earlier if events or circumstances indicate the carrying value may be impaired. The Company’s goodwill is related to the ECHG segment only and not the whole Company. ECHG has its own separate financial information to perform goodwill impairment testing. The Company will evaluate goodwill based on cash flows for the ECHG segment. For tax purposes, goodwill is amortized and deductible over fifteen (15) years. The purchase price allocation listed below is considered to be a preliminary allocation and is subject to change. The preliminary purchase price is allocated as follows:
Description |  | Amount |
Assets |  |  |
Cash |  | $ | 13,136 |
Account receivables |  |  | 93,970 |
Prepaids |  |  | 2,594 |
Fixed assets - net |  |  | 30,697 |
Liabilities |  |  |  |
Account payables |  |  | (474,043 | )
Accrued liabilities |  |  | (1,939 | )
Net assets |  |  | (335,585 | )
Goodwill |  |  | 1,891,477 |
Total Purchase Price |  | $ | 1,555,892 |

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