2.4.0.800000009 - Disclosure - 4. Asset Purchase Acquisitionstruefalsefalse1false falsefalsefrom-2013-01-01-to-2013-06-30.12129.0.0.0.0.0.0.0http://www.sec.gov/CIK0001335239duration2013-01-01T00:00:002013-06-30T00:00:001true 1us-gaap_BusinessCombinationsAbstractus-gaap_truenadurationfalsefalsefalsefalsefalsefalsefalsefalse1falsefalsefalse00falsefalsefalsexbrli:stringItemTypestringfalse0Business Combinations [Abstract]2false 2us-gaap_BusinessCombinationDisclosureTextBlockus-gaap_truenadurationfalsefalsefalsefalsefalsefalsefalsefalse1falsefalsefalse00Note 4 Asset Purchase Acquisitions   Asset Purchase Acquisition MS Health, Inc., March 28, 2012 On March 28, 2012, we, through a newly-formed wholly-owned Illinois subsidiary, MS Health, Inc. (MS Health), closed on an Asset Purchase Agreement (APA) with MS Health Software Corporation, a New Jersey corporation (MSHSC). Pursuant to the APA, we purchased all of MSHSCs assets, including all of its intellectual property, its business trademarks and copyrights, furniture, fixtures, equipment and software in consideration for an aggregate of $500,000, of which $39,200 was paid in cash at the closing, $360,800 was financed using a small business loan and $100,000 was paid by way of a Promissory Note (the MSHSC Note). The terms of the MSHSC Note include interest at 6% per annum, a ten (10) year amortization, a right of offset, no payments of either principal or interest for two (2) years and equal payments of principal and interest commencing in year 3, no prepayment penalty, and full payment of all amounts due after five (5) years. The MSHSC Note is secured by a security interest over the assets of MS Health. We did not purchase and MSHSC agreed to retain and be responsible for any and all liabilities of MSHSC. The acquisition was financed in part with a $360,800 Small Business Administration (SBA) loan, bearing interest at fixed and variable rates. The initial interest rate is 5.5% per year for three (3) years, consisting of the Prime Rate in effect on the first business day of the month in which the SBA loan application was received, plus 2.25%. The loan terms then transition to a variable interest rate over the remaining seven (7) years of the ten (10) year maturity term, calculated at 2.25% above the Prime Rate, as adjusted quarterly. The Company must pay principal and interest payments of $3,916 monthly. The SBA Loan is guaranteed by PRMI, K9 Bytes, Desk Flex, Inc., MS Health and the Company, and secured by the assets of MS Health and the Company.   MSHSC developed and sells CHMCi, an enterprise wide solution that includes tools to effectively provide, manage, bill, and track behavioral healthcare and social services. With CMHCi, an organization will realize the benefits of increased efficiency, accountability, and productivity. CMHCi offers server-based, internet, and secure cloud computing enabling the user to access information as required. By maintaining a complete electronic client record, including data collection and reporting across multiple programs, locations, episodes of care, and service providers, CMHCi helps eliminate redundant record keeping. The scheduler component tracks client, staff, and group appointments. Easy to use, it interfaces seamlessly with service authorization tracking, service history, and billing. The integrated financial reporting component provides the basis for an efficient and comprehensive accounting system, including electronic claims and remittance, third party insurance, and client, municipality, and grantor billing.   In connection with the Asset Purchase, the shareholders of MSHSC and the Company (through MS Health) entered into a Covenant Not to Compete; Consulting Agreement, Non-Competition and Consulting Agreement, pursuant to which the shareholders of MSHSC agreed to provide consulting services to the Company for a period of six months following closing. Pursuant to the agreement, the shareholders of MSHSC agreed not to compete against the Company for two years from the closing of the acquisition.   This acquisition was accounted for as a business combination under the purchase method of accounting, given that substantially all of the Companys assets and ongoing operations were acquired. The purchase resulted in $114,627 of goodwill. According to the purchase method of accounting, the Company recognized the identifiable assets acquired and liabilities assumed as follows:   <table cellspacing="0" cellpadding="0" style="font: 8pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td style="padding-top: 3pt; text-align: justify"> </td> <td style="padding-top: 3pt"> </td> <td colspan="2" style="padding-top: 3pt; text-align: center">March 28,</td> <td style="padding-top: 3pt"> </td></tr> <tr style="vertical-align: bottom"> <td style="padding-top: 3pt; text-align: justify"> </td> <td style="padding-top: 3pt; padding-bottom: 1pt"> </td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center">2012</td> <td style="padding-top: 3pt; padding-bottom: 1pt"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCFFCC"> <td style="padding-top: 3pt; text-align: justify">Consideration:</td> <td style="padding-top: 3pt"> </td> <td style="padding-top: 3pt"> </td> <td style="padding-top: 3pt; text-align: right"> </td> <td style="padding-top: 3pt"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="width: 84%; padding-top: 3pt; text-align: justify">Cash paid at closing</td> <td style="width: 1%; padding-top: 3pt"> </td> <td style="width: 1%; padding-top: 3pt">$</td> <td style="width: 13%; padding-top: 3pt; text-align: right">39,200</td> <td style="width: 1%; padding-top: 3pt"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCFFCC"> <td style="padding-top: 3pt; text-align: justify">Small business loan(1)</td> <td style="padding-top: 3pt"> </td> <td style="padding-top: 3pt"> </td> <td style="padding-top: 3pt; text-align: right">360,800</td> <td style="padding-top: 3pt"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-top: 3pt; padding-bottom: 1pt; text-align: justify">Seller financed note payable(2)(3)</td> <td style="padding-top: 3pt; padding-bottom: 1pt"> </td> <td style="border-bottom: black 1pt solid; padding-top: 3pt"> </td> <td style="border-bottom: black 1pt solid; padding-top: 3pt; text-align: right">124,697</td> <td style="padding-top: 3pt; padding-bottom: 1pt"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCFFCC"> <td style="padding-top: 3pt; padding-bottom: 2.5pt; text-align: justify; text-indent: 22.95pt">Fair value of total consideration exchanged</td> <td style="padding-top: 3pt; padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double; padding-top: 3pt">$</td> <td style="border-bottom: black 2.25pt double; padding-top: 3pt; text-align: right">524,697</td> <td style="padding-top: 3pt; padding-bottom: 2.5pt"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-top: 3pt; text-align: justify"> </td> <td style="padding-top: 3pt"> </td> <td style="padding-top: 3pt"> </td> <td style="padding-top: 3pt; text-align: right"> </td> <td style="padding-top: 3pt"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCFFCC"> <td style="padding-top: 3pt; text-align: justify">Fair value of identifiable assets acquired assumed:</td> <td style="padding-top: 3pt"> </td> <td style="padding-top: 3pt"> </td> <td style="padding-top: 3pt; text-align: right"> </td> <td style="padding-top: 3pt"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-top: 3pt; text-align: justify">Other current assets</td> <td style="padding-top: 3pt"> </td> <td style="padding-top: 3pt">$</td> <td style="padding-top: 3pt; text-align: right">7,367</td> <td style="padding-top: 3pt"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCFFCC"> <td style="padding-top: 3pt; text-align: justify">Equipment</td> <td style="padding-top: 3pt"> </td> <td style="padding-top: 3pt"> </td> <td style="padding-top: 3pt; text-align: right">2,703</td> <td style="padding-top: 3pt"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-top: 3pt; text-align: justify">Contracts</td> <td style="padding-top: 3pt"> </td> <td style="padding-top: 3pt"> </td> <td style="padding-top: 3pt; text-align: right">258,000</td> <td style="padding-top: 3pt"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCFFCC"> <td style="padding-top: 3pt; text-align: justify">Technology-based intangible assets</td> <td style="padding-top: 3pt"> </td> <td style="padding-top: 3pt"> </td> <td style="padding-top: 3pt; text-align: right">124,000</td> <td style="padding-top: 3pt"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-top: 3pt; padding-bottom: 1pt; text-align: justify">Non-compete agreement</td> <td style="padding-top: 3pt; padding-bottom: 1pt"> </td> <td style="border-bottom: black 1pt solid; padding-top: 3pt"> </td> <td style="border-bottom: black 1pt solid; padding-top: 3pt; text-align: right">18,000</td> <td style="padding-top: 3pt; padding-bottom: 1pt"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCFFCC"> <td style="padding-top: 3pt; padding-bottom: 1pt; text-align: justify; text-indent: 13.05pt">Total fair value of assets assumed</td> <td style="padding-top: 3pt; padding-bottom: 1pt"> </td> <td style="border-bottom: black 1pt solid; padding-top: 3pt"> </td> <td style="border-bottom: black 1pt solid; padding-top: 3pt; text-align: right">410,070</td> <td style="padding-top: 3pt; padding-bottom: 1pt"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-top: 3pt; padding-bottom: 2.5pt; text-align: justify">Consideration paid in excess of fair value (Goodwill)(4)</td> <td style="padding-top: 3pt; padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double; padding-top: 3pt">$</td> <td style="border-bottom: black 2.25pt double; padding-top: 3pt; text-align: right">114,627</td> <td style="padding-top: 3pt; padding-bottom: 2.5pt"> </td></tr> </table>   (1) Consideration included partial proceeds obtained from a $360,800 Small Business Association (SBA) loan, bearing interest at fixed and variable rates. The initial interest rate is 5.5% per year for three (3) years, consisting of the Prime Rate in effect on the first business day of the month in which the SBA loan application was received, plus 2.25%. The loan terms then transition to a variable interest rate over the remaining seven (7) years of the ten (10) year maturity term, calculated at 2.25% above the Prime Rate, as adjusted quarterly. The Company must pay principal and interest payments of $3,916 monthly. The SBA Loan is guaranteed by PRMI, K9 Bytes, Desk Flex, Inc., MS Health and the Company, and secured by the assets of MS Health and the Company. (2) Consideration included an unsecured $100,000 seller financed note payable (MSHSC Note), bearing interest at 6% per annum, a ten (10) year amortization, a right of offset, no payments of either principal or interest for two (2) years and equal payments of principal and interest commencing in year 3, no prepayment penalty, and full payment of all amounts due after five (5) years. The MSHSC Note is secured by a security interest over the assets of MS Health. We did not purchase and MSHSC agreed to retain and be responsible for any and all liabilities of MSHSC. (3) The fair value of the seller financed note in excess of the $100,000 principal balance attributable to the deferred payment terms will be amortized to interest expense over the deferred financing period. (4) The consideration paid in excess of the net fair value of assets acquired and liabilities assumed has been recognized as goodwill.   Management believes the product line of MS Health, customer base and other assets acquired will enable the Company to enhance their business model and strengthen its future cash flows to fund operations and take advantage of additional growth opportunities.   The unaudited supplemental pro forma results of operations of the combined entities had the dates of the acquisitions been January 1, 2013 or January 1, 2012 are as follows:    <table cellspacing="0" cellpadding="0" style="font: 8pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td style="padding-left: 10pt; text-align: justify; text-indent: -10pt"> </td> <td style="padding-bottom: 1pt"> </td> <td colspan="6" style="border-bottom: black 1pt solid; text-align: center">Combined Pro Forma:</td> <td style="padding-bottom: 1pt"> </td></tr> <tr style="vertical-align: bottom"> <td style="padding-left: 10pt; text-align: justify; text-indent: -10pt"> </td> <td> </td> <td colspan="6"> For the six months ended June 30,</td> <td> </td></tr> <tr style="vertical-align: bottom"> <td style="padding-left: 10pt; text-align: justify; text-indent: -10pt"> </td> <td style="padding-bottom: 1pt"> </td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center">2013</td> <td style="padding-bottom: 1pt"> </td> <td style="padding-bottom: 1pt"> </td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center">2012</td> <td style="padding-bottom: 1pt"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCFFCC"> <td style="width: 68%; padding-left: 10pt; text-align: justify; text-indent: -10pt">Revenue:</td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 13%; text-align: right">487,129</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 13%; text-align: right">720,390</td> <td style="width: 1%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 10pt; text-align: justify; text-indent: -10pt"> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #CCFFCC"> <td style="padding-left: 10pt; text-align: justify; text-indent: -10pt">Expenses:</td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-bottom: 1pt; padding-left: 20pt; text-align: justify; text-indent: -10pt">Operating expenses</td> <td style="padding-bottom: 1pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right">2,194,288</td> <td style="padding-bottom: 1pt"> </td> <td style="padding-bottom: 1pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right">1,130,649</td> <td style="padding-bottom: 1pt"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCFFCC"> <td style="padding-left: 10pt; text-align: justify; text-indent: -10pt"> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 10pt; text-align: justify; text-indent: -10pt">Net operating income (loss)</td> <td> </td> <td> </td> <td style="text-align: right">(1,707,159</td> <td>)</td> <td> </td> <td> </td> <td style="text-align: right">(410,259</td> <td>)</td></tr> <tr style="vertical-align: bottom; background-color: #CCFFCC"> <td style="padding-left: 10pt; text-align: justify; text-indent: -10pt"> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-bottom: 1pt; padding-left: 20pt; text-align: justify; text-indent: -10pt">Other income (expense)</td> <td style="padding-bottom: 1pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right">(358,990</td> <td style="padding-bottom: 1pt">)</td> <td style="padding-bottom: 1pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right">(87,396</td> <td style="padding-bottom: 1pt">)</td></tr> <tr style="vertical-align: bottom; background-color: #CCFFCC"> <td style="padding-left: 10pt; text-align: justify; text-indent: -10pt"> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-bottom: 2.5pt; padding-left: 10pt; text-align: justify; text-indent: -10pt">Net income (loss)</td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">(2,066,149</td> <td style="padding-bottom: 2.5pt">)</td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">(497,655</td> <td style="padding-bottom: 2.5pt">)</td></tr> <tr style="vertical-align: bottom; background-color: #CCFFCC"> <td style="padding-left: 10pt; text-align: justify; text-indent: -10pt"> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 10pt; text-align: justify; text-indent: -10pt">Weighted average number of common shares</td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #CCFFCC"> <td style="padding-bottom: 1pt; padding-left: 20pt; text-align: justify; text-indent: -10pt">Outstanding basic and fully diluted</td> <td style="padding-bottom: 1pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right">1,283,603,738</td> <td style="padding-bottom: 1pt"> </td> <td style="padding-bottom: 1pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right">31,586,526</td> <td style="padding-bottom: 1pt"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 10pt; text-align: justify; text-indent: -10pt"> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #CCFFCC"> <td style="padding-bottom: 2.5pt; padding-left: 10pt; text-align: justify; text-indent: -10pt">Net income (loss) per share basic and fully diluted</td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">(0.00</td> <td style="padding-bottom: 2.5pt">)</td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">(0.02</td> <td style="padding-bottom: 2.5pt">)</td></tr> </table>falsefalsefalsenonnum:textBlockItemTypenaThe entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. 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