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Business Combination | 3 Months Ended
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Aug. 31, 2023
Business Combination and Asset Acquisition [Abstract] |
Business Combination | Note 13 – Business Combination On June 16, 2022, the Company completed the acquisition of certain assets of AXIL, a Delaware corporation, pursuant to the Asset Purchase Agreement dated May 1, 2022 and amended on June 15, 2022 and September 8, 2022. by and among the Company, its subsidiary, AXIL, and certain of AXIL’s stockholders, providing for the acquisition of AXIL’s hearing protection business and ear bud business. The business constituted substantially all of the business operations of AXIL but did not include AXIL’s hearing aid line of business. One of the stockholders of AXIL is Intrepid. As of June 16, 2022, Intrepid held 4.68% of the outstanding common stock of AXIL and 22.33% of the outstanding Common Stock of the Company. As of August 31, 2023, Intrepid held no outstanding common shares of AXIL, as they were distributed with the Asset Purchase Agreement. Jeff Toghraie, Chairman and Chief Executive Officer of the Company, is a managing director of Intrepid. As consideration for the Asset Purchase, AXIL received a total of 323,183,893 shares comprised of (a) 73,183,893 shares of the Company’s Common Stock and (b) 250,000,000 shares of non-voting Series A Preferred Stock, which are convertible into shares of Company Common Stock on a one-to-one ratio. The Preferred Shares may not be converted or transferred for a period of two years following the closing of the acquisition. Thereafter, no holder of Preferred Shares may convert such shares into a number of shares of Company Common Stock that would cause the holder to beneficially own more than 5% of the Company’s Common Stock, as determined in accordance with Sections 13(d) and (g) of the Exchange Act. The purchase price was computed to be $4,007,480 based on a fair value of $0.0124 per share on the date of acquisition. The Company is utilizing the AXIL assets to expand into the hearing enhancement business through its newly incorporated subsidiary. The acquisition is accounted for by the Company in accordance with the acquisition method of accounting pursuant to ASC 805 “Business Combinations” and pushdown accounting is applied to record the fair value of the assets acquired by the Company. Under this method, the purchase price is allocated to the identifiable assets acquired and liabilities assumed based on their estimated fair values at the date of acquisition. Any excess of the amount paid over the estimated fair values of the identifiable net assets acquired was allocated to goodwill. The following is a summary of the fair value of the assets acquired and liabilities assumed at the date of acquisition:
Schedule of estimated fair value of the assets acquired |  |  |
Cash |  | $ | 1,066,414 |
Accounts receivable |  |  | 227,786 |
Inventory |  |  | 1,342,461 |
Prepaid expenses |  |  | 62,452 |
Other assets |  |  | 108,030 |
Accounts payable |  |  | (285,665 | )
Contract liabilities |  |  | (1,043,332 | )
Other current liabilities |  |  | (79,826 | )
Net tangible assets acquired |  | $ | 1,398,320 |
Identifiable intangible assets |  |  |  |
Licensing rights |  | $ | 11,945 |
Customer relationships |  |  | 70,000 |
Tradenames |  |  | 275,000 |
Website |  |  | 100,000 |
Total Identifiable intangible assets |  | $ | 456,945 |
Consideration paid |  | $ | 4,007,480 |
Total net assets acquired |  |  | 1,855,265 |
Goodwill purchased |  | $ | 2,152,215 |

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- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 805 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 5 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org//1943274/2147479907/805-20-50-5 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 805 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//805/tableOfContent + Details
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