Quarterly report pursuant to Section 13 or 15(d)

ACQUISITION OF SUMMIT INNOVATIONS, LLC

v3.19.2
ACQUISITION OF SUMMIT INNOVATIONS, LLC
9 Months Ended
May 31, 2019
ACQUISITION OF SUMMIT INNOVATIONS, LLC  
Business Acquisition [Line Items]  
ACQUISITION OF SUMMIT INNOVATIONS, LLC

NOTE 3 - ACQUISITION OF SUMMIT INNOVATIONS, LLC

 

On May 2, 2018, the Company completed its acquisition of Summit Innovations, LLC (“Summit”), a leading distributor of hydrocarbon gases to the legal cannabis industry. Pursuant to the terms of the merger agreement with Summit, Summit merged with and into KCH Energy, LLC, a wholly-owned subsidiary of the Company.

 

The acquisition was accounted for using the acquisition method of accounting in accordance with ASC 805, Business Combinations.  Total fixed purchase consideration at closing consisted of 1,280 shares of common stock and cash consideration of $905, net of cash received. Cash consideration of $188 and approximately 640 shares of common stock were held back by the Company for a period of 15 months for potential post-closing working capital and/or indemnification claims relating to, among other things, breaches of representations, warranties and covenants contained in the merger agreement. The former members of Summit were entitled to receive earn-out consideration of up to an additional 1,280 shares of the Company’s common stock, in the aggregate, based on the net revenue performance of the Summit business during a one-year period following the closing. As of May 31, 2019, the Company determined that the fair value of the contingent consideration was equal to $2,961. As a result, the Company will issue 707 common shares to the former members of Summit related to the earn-out consideration.