Quarterly report pursuant to Section 13 or 15(d)

12. Acquisition

12. Acquisition
6 Months Ended
Jun. 30, 2019
Business Combinations [Abstract]  

Note 12 – Acquisition


On March 15, 2019, the Company entered into and closed an asset purchase agreement with AVX Design & Integration, Inc. (“AVX”) as stated in Note 1, whereby the Company purchased 100% of the outstanding stock of AVX, an Internet of Things (“IoT”) installation company (the “Acquisition Transaction”). Pursuant to the Acquisition Transaction, the Company will purchase all 2,000 shares of the outstanding common stock of AVX for $875,000. The purchase price was paid as follows: (1) $550,000 payable in cash at closing; (2) $290,716 payable in 39,286 shares of the Company’s common stock issued upon closing; and (3) $50,000 payable in the form of a secured promissory note at 6% interest over 12 months secured by six shares of AVX common stock.


A summary of the purchase price and the purchase price allocations at fair value is below. The purchase price allocation is a preliminary and subject to change. The Company has not yet completed its analysis to determine the fair value of the assets acquired on the acquisition date. Once this analysis is complete, the Company will adjust, if necessary, the provisional amounts assigned to the assets purchased in the accounting period in which the analysis is completed.


Purchase price    
Cash   $ 550,000  
29,286 shares of common stock(1)     290,716  
Secured promissory note     50,000  
Total purchase price   $ 890,716  


Allocation of purchase price        
Cash   $ 201,482  
Accounts receivable     436,554  
Inventories     11,282  
Prepaid expenses     2,478  
Property and equipment     10,381  
Operating lease right-of-use assets     186,449  
Deposits     5,968  
Goodwill     307,572  
Accounts payable and accrued liabilities     (73,787 )
Operating lease liability     (197,663 )
Purchase price   $ 890,716  


(1) – the fair value of the common stock was calculated based on the closing market price of the Company’s common stock at the date of acquisition.