XML 20 R9.htm IDEA: XBRL DOCUMENT

Acquisition

9 Months Ended

Sep. 30, 2018

NOTE 3 – ACQUISITION

On September 29, 2018 (the “Closing Date”), the Company entered into an Asset Purchase Agreement (“APA”) with Blind Faith Concepts Holdings, Inc. a Nevada Corporation (the “Seller”) whereby the Company completed the acquisition of 100% of the assets of “NFID” from the Seller which consisted of three trademarks related to the NFID brand, the NFID website, shoe designs and samples, and the assumption of a one-year Brand Ambassador Agreement in exchange for 2,000,000 shares of common capital stock of the Company. NFID is a recently developed unisex footwear brand. The Company plans on continuing product development to fully launch the product. The Company’s acquisition of the NFID assets gives the Company access to the growing market for unisex products.

As a result of the APA, the Company has elected to no longer be deemed a “Business Development Company” as defined by the Investment Company Act of 1940, as amended from time to time (the “Act”). The withdrawal was generally approved by the shareholders of the Company on April 11, 2017, as evidenced on the Definitive Information Statement pursuant to Section 14(c) of the Securities Exchange Act of 1934 filed on June 5, 2017. The Board, under authority granted by the shareholders, approved the withdrawal on September 27, 2018. On September 28, 2018, the Company filed Form N-54C, officially withdrawing its election to be subject to sections 55 through 65 of the Act.

Pursuant to the terms of the APA, the Company issued 2,000,000 shares of common capital stock of the Company in exchange for 100% of the NFID assets. The shares were valued at $300,000, or $0.15 per share, the fair value of the Company’s common stock based on the quoted bid price of the Company’s common stock on the Closing Date.

The fair value of the assets acquired and liabilities assumed were based on management’s initial estimates of the fair values on September 29, 2018. Based upon the purchase price allocation, the following table summarizes the estimated fair value of the assets acquired at the date of acquisition:

Prepaid expenses	$	17,500
Intangible assets		282,500
Total assets acquired at fair value		300,000
Total purchase consideration	$	300,000

The assets acquired are recorded at their initial estimated fair values on the acquisition date with subsequent changes recognized in earnings or loss. These estimates are inherently uncertain and are subject to refinement. Management develops estimates based on assumptions as a part of the purchase price allocation process to value the assets acquired as of the asset acquisition date. As a result, during the purchase price measurement period, which may be up to one year from the asset acquisition date, the Company may record adjustments to the assets acquired, with the corresponding offset to goodwill. After the purchase price measurement period, the Company will record adjustments to assets acquired in operating expenses in the period in which the adjustments were determined.

The purchase price exceeded the fair value of the assets acquired by $282,500 which was initially allocated as follows:

Brand ambassador agreement	$	105,295
Trademarks		29,440
Goodwill		147,765
Total intangible assets acquired	$	282,500

Goodwill recorded is not expected to be deductible for U.S. income tax purposes.

The Company valued the three trademarks acquired at their historical cost of $29,440 which approximates fair market value. The Company valued the Brand Ambassador Agreement using the estimated fair value of required social media posts by the artist/singer Max Schneider, known as Max (“MAX”). MAX is considered a social media influencer with over 600,000 Instagram followers and over 1.5 million YouTube subscribers.

Pursuant to the Brand Ambassador Agreement, the Company will incur a minimum cash payment of $35,000 related to a minimum royalty payment of which $17,500 was paid prior to the Closing Date. The remaining $17,500 is due on January 27, 2019, the six month anniversary of the Effective Date of the Brand Ambassador Agreement.