NOTE 3 - ACQUISITIONS | CR Labs, Inc., On September 17, 2015 the Company performed a share exchange for 80% ownership of CR Labs, Inc., from its founders. CR Labs is an Oregon company engaged in providing analytical testing services for the medical marijuana industry in compliance with the Oregon Health Authority. The costs related to the transaction were $42,193 and were expensed during 2015. The Company applied the acquisition method to the business combination and valued each of the assets acquired (cash, accounts receivable, and property, plant and equipment) and liabilities assumed (accounts payable) at fair value as of the acquisition date. The cash, accounts receivable and accounts payable were deemed to be recorded at fair value as of the acquisition date. The Company determined the fair value of property, plant and equipment to be historical book value. The preliminary allocation of the purchase price was based on estimates of the fair value of the assets and liabilities assumed. Under the purchase agreement, the Company issued 40,000,000 shares of common stock. These shares had an acquisition date fair value of $400,000. The following table shows the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition: ASSETS ACQUIRED: CASH $ 2,970 ACCOUNT RECEIVABLE 3,550 PROPERTY PLANT AND EQUIPMENT 43,360 CUSTOMER LIST 67,428 GOODWILL 446,743 TOTAL ASSETS ACQUIRED 564,051 LESS LIABILITIES ASSUMED ACCOUNTS PAYABLE AND ACCRUED LIABILITIES (36,421 ) NOTES PAYABLE (27,630 ) TOTAL LIABILITIES ASSUMED (64,051 ) LESS NONCONTROLLING INTEREST (100,000 ) NET ASSETS ACQUIRED FROM CR LABS ACQUISITION $ 400,000 Oregon Analytical Services, LLC On May 24, 2016 the Company through its subsidiary EVIO Inc., executed an asset purchase agreement to acquire 100% of the assets of Oregon Analytical Services, LLC. from its founder. Oregon Analytical Services, LLC was an Oregon company engaged in providing analytical testing services for the medical marijuana industry in compliance with the Oregon Health Authority. The costs related to the transaction were $2,780 and were expensed during 2016. The Company applied the acquisition method as a business combination and valued each of the assets acquired and liabilities assumed at fair value as of the acquisition date. The notes payable was deemed to be recorded at fair value as of the acquisition date. The Company determined the fair value of property, plant and equipment to be market value. The preliminary allocation of the purchase price was based on estimates of the fair value of the assets and liabilities assumed. Under the purchase agreement, the Company issued a promissory note in the amount of $700,000 which is due and payable by May 23, 2010, the company is required to make annual payments of $100,000 if the minimum trailing revenue for EVIO Labs Eugene exceeds $700,000 annually during the term of the promissory note, the Company issued another promissory note in the amount of $72,500 in connection with the acquisition, and 200,000 shares of Preferred Series C Stock. These shares had an acquisition date fair value of $80,000. The following table shows the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition: Oregon Analytical Services PPA ASSETS ACQUIRED: PROPERTY PLANT AND EQUIPMENT $ 123,143 CUSTOMER LIST 696,153 GOODWILL 60,704 TOTAL ASSETS ACQUIRED 880,000 LESS LIABILITIES ASSUMED NOTES PAYABLE (27,500 ) TOTAL LIABILITIES ASSUMED (27,500 ) NET ASSETS ACQUIRED FROM OREGON ANALYTICAL SERVICES $ 852,500 Smith Scientific Industries, Inc. On June 1, 2016 the Company through its subsidiary EVIO Inc. executed a share purchase agreement for 80% ownership of Smith Scientific Industries, Inc. d/b/a Kenevir Research., from a related party, Anthony Smith, Company Director. Smith Scientific Industries is an Oregon company engaged in providing analytical testing services for the medical marijuana industry in compliance with the Oregon Health Authority. The costs related to the transaction were $2,780 and were expensed during 2016. The Company applied the acquisition method to the business combination and valued each of the assets acquired and liabilities assumed at fair value as of the acquisition date. The cash and accounts payable were deemed to be recorded at fair value as of the acquisition date. The Company determined the fair value of property, plant and equipment to be historical book value. The preliminary allocation of the purchase price was based on estimates of the fair value of the assets and liabilities assumed. Under the purchase agreement, the Company issued a promissory note for $336,000, with required $25,000 to be paid at closing, $75,000 to be paid in two installments within 180 days, and the remaining balance in three annual installments of $58,475, and 300,000 shares of Preferred Series C Stock. These shares had an acquisition date fair value of $135,000. The following table shows the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition: Smith Scientific Industries ("SSI") PPA ASSETS ACQUIRED: CASH $ 9,055 PROPERTY PLANT AND EQUIPMENT 11,076 CUSTOMER LIST 433,425 GOODWILL 151,824 TOTAL ASSETS ACQUIRED 605,380 LESS LIABILITIES ASSUMED ACCOUNTS PAYABLE AND ACCRUED LIABILITIES (430 ) NOTES PAYABLE (16,200 ) TOTAL LIABILITIES ASSUMED (16,630 ) LESS NONCONTROLLING INTEREST (117,750 ) NET ASSETS ACQUIRED FROM SSI ACQUISITION $ 471,000 In accordance with ASC 805-10-50, the Company is providing the following unaudited pro-forma to present a summary of the combined results of the Companys consolidated operations with all acquisitions. as if the acquisitions had been completed as of the beginning of the reporting period. Adjustments were made to eliminate any inter-company transactions in the periods presented. SIGNAL BAY, INC. AND SUBSIDIARIES STATEMENTS OF CONSOLIDATED OPERATIONS (Unaudited) Nine months ended June 30, 2016 June 30, 2015 (Pro Forma) (Pro Forma) Revenues Testing Services $ 470,504 $ 253,948 Consulting Services 228,612 16,812 Total Revenue 699,116 270,760 Selling, general and administrative expenses 1,048,722 1,195,942 Depreciation and Amortization 72,717 106,951 Operating Expenses 1,121,439 1,302,893 Loss from Operations (422,323 ) (1,032,133 ) Other expense Other (income) expense - (11,036 ) Interest expense 185,363 185,372 Loss on disposal of assets 720 720 Loss on derivatives 238,038 238,038 Other (income) expense 424,121 413,094 Net Loss $ (846,444 ) $ (1,445,227 ) Future Amortization The future amortization associated with the intangible assets acquired in the above mentioned acquisitions is as follows: For the years ended September 30, Amortization 2017 $ 239,401 2018 239,401 2019 239,401 2020 239,401 2021 146,232 Thereafter - Total $ 1,103,836 |