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ACQUISITIONS | 12 Months Ended
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Dec. 31, 2021
ACQUISITIONS |
ACQUISITIONS | NOTE 6 — ACQUISITIONS On June 9, 2021, ECHG, entered into the CExchange Transaction, 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 was expected to be repaid with any accrued and unpaid interest during the third or fourth fiscal quarters of 2021. As mentioned in Note 4 -- Notes Receivable, we subsequently performed impairment evaluations on the remaining $900,000 principal owed after management learned that it is more likely than not 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. Subsequent to the reserve established for the notes receivable, the Company received $61,353 as partial payment against the notes receivable. This payment was used to reduce the notes receivable reserved amount to $838,647. Management still believes it is more likely than not that the remaining balance is uncollectable. The remaining notes receivable of $838,647 and $49,174 of accrued interest receivable were charged to other expense during Fiscal 2021. As part of the CExchange Transaction, goodwill was originally recorded as $1,891,477, which is the purchase price less the approximate fair value of the net assets and liabilities purchased. Adjustments were made to the acquiring assets and liabilities of the CExchange Transaction through management evaluation and a third party valuation. The Company’s goodwill is related to the ECHG segment. 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 is allocated as follows:
Description |  | Amount |
Assets |  |  |
Cash |  | $ | 13,136 |
Account receivables |  |  | 93,970 |
Prepaids |  |  | 2,594 |
Deposits |  |  | 21,419 |
Intangible assets, trademarks/tradenames |  |  | 114,000 |
Intangible assets, customer relationships |  |  | 345,000 |
Fixed assets - net |  |  | 30,697 |
Liabilities |  |  |  |
Account payables |  |  | (345,057 | )
Accrued liabilities |  |  | (1,939 | )
Net assets |  |  | 273,820 |
Goodwill |  |  | 1,282,072 |
Total Purchase Price |  | $ | 1,555,892 |
On October 29, 2021, ECHG entered into the Avail Transaction to purchase all of the assets, liabilities and rights and interests for $4,500,000. The purchase was facilitated by an initial payment of $2,500,000 at closing, and the remaining $2,000,000 to be paid out by 12 quarterly payments starting April 1, 2022, of $166,667 each. See Note 10 to our consolidated financial statements for more information on this loan. The Installment note payable for the Avail transaction imputed at 3.1%. As part of the Avail Transaction, goodwill was preliminarily recorded as $3,491,284, which is the purchase price less the approximate fair value of the net assets and liabilities purchased, as shown in the purchase price allocation in the following table. The Company’s goodwill is related to the ECHG segment. 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 |  | $ | 988,870 |
Account receivables |  |  | 395,144 |
Inventories |  |  | 486,736 |
Prepaid expenses |  |  | 93,727 |
Fixed assets - net |  |  | 247,038 |
Right-of-use assets |  |  | 609,511 |
Other assets |  |  | 13,268 |
Liabilities |  |  |  |
Account payables |  |  | (562,778 | )
Accrued liabilities |  |  | (653,289 | )
Operating lease liabilities |  |  | (609,511 | )
Net assets |  |  | 1,008,716 |
Goodwill |  |  | 3,491,284 |
Total Purchase Price |  | $ | 4,500,000 |

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