Note 3. Acquisition of Verus Title Inc.

On November 24, 2020 the Company purchased 100% of outstanding capital stock of  Verus.

The Company accounted for the Verus acquisition as a business combination. The purchase price consisted of $720,639 cash consideration and $252,341 common stock consideration for a total purchase price of $972,980. The aggregate purchase price exceeded the fair value of the net tangible and intangible assets acquired, and accordingly the Company recorded goodwill of approximately $799,058. Furthermore, the Company issued 33,915 restricted stock awards to the former founder of Verus, who is now an employee of the Company.The restricted stock awards will vest ratably over 18 months from the grant date and will be recognized as a post-combination compensation expense.

The total purchase consideration and the fair values of the assets and liabilities at the acquisition date were as follows:

The Company recognized approximately $117,000 of acquisition related costs that were expensed in the current period and are included in general and administrative expenses.

Goodwill was assigned to the affiliated reporting unit and is attributable primarily to the real estate agent and attorney relationships that Verus brings.

None of the goodwill is expected to be deductible for income tax purposes.

The Company’s consolidated financial statements for the year ended December 31, 2020 include the results of operations of Verus since November 24, 2020 during which period Verus contributed approximately $153,000 and $26,000 of revenues and net loss, respectively.

On an unaudited pro forma basis, the revenues and net income of the Company assuming the acquisition had occurred on January 1, 2019, are shown below. The unaudited pro forma information does not purport to present what the Company’s actual results would have been had the acquisition occurred on January 1, 2019, nor is the financial information indicative of the results of future operations. The unaudited pro forma financial information includes the estimated amortization expense based on the fair value and estimated useful lives of intangible assets and reflects share-based compensation expense related to restricted shares issued as part of the acquisition of Verus.