4. Acquisitions (Tables)

6 Months Ended

Jun. 30, 2015

Interaction Technology, Inc.

Business Acquisition [Line Items]

Schedule of Assets Acquired and Liabilities Assumed

	December 29,
	2014
Consideration:
Cash paid at closing	$	250,000
Subordinated promissory note(1)		150,000
Seller financed note payable (2)		200,000
Fair value of total consideration exchanged	$	600,000
Fair value of identifiable assets/(liabilities) acquired assumed:
Current assets	$	4,175
Software		52,200
Contracts		24,800
Trademark		18,000
Deferred revenue liability		(8,510	)
Total fair value of assets assumed		91,465
Consideration paid in excess of fair value (Goodwill)(3)	$	508,535

______________

⁽¹⁾ $150,000 was financed by way of a Promissory Note (the “Inter Note 1”).   The terms of the Inter Note 1 include interest at 0% per annum, no payments of either principal or interest for thirty (30) days after Closing and four monthly principal payments of $37,500 commencing thereafter, no prepayment penalty. The Inter Note 1 is unsecured.

⁽²⁾ $200,000 was financed by way of a Promissory Note. The terms of the Inter Note 2 include interest at 6% per annum, no payments of either principal or interest for thirty (160) days after Closing and 18 monthly principal and interest payments of $11,881.03 commencing thereafter, no prepayment penalty. The Inter Note 2 is unsecured.

⁽³⁾ The consideration paid in excess of the net fair value of assets acquired and liabilities assumed has been recognized as goodwill.

Unaudited Supplemental Pro Forma Results of Operations

	Combined Pro Forma:
	For the six months ended
	June 30,
	2014
Revenue:	$	874,356
Expenses:
Operating expenses		3,402,291
Net operating loss		(2,527,935	)
Other income (expense)		(1,968,230	)
Net loss	$	(4,496,165	)
Weighted average number of common shares
Outstanding – basic and fully diluted		475
Net loss per share – basic and fully diluted	$	(9,465.61	)

Strand, Inc.

Business Acquisition [Line Items]

Schedule of Assets Acquired and Liabilities Assumed

	July 31,
	2014
Consideration:
Cash paid at, and prior to, closing	$	100,000
Seller financed note payable(1)(2)		85,000
		185,000
Fair value of identifiable liabilities acquired:
Deferred revenue		36,638
Fair value of total consideration exchanged	$	221,638
Fair value of identifiable assets acquired assumed:
Software	$	9,447
Trade name		5,870
Total fair value of assets assumed		15,317
Consideration paid in excess of fair value (Goodwill)	$	206,321

______________

⁽¹⁾ Consideration included an unsecured $85,000 seller financed note payable (“Strand Note”), which bears interest at 6% per annum until the maturity date of July 31, 2015, and provides for equal monthly principal and interest payments of $2,585.86 commencing on August 31, 2014. The Strand Note includes a balloon payment, consisting of the remaining outstanding balance of principal and interest upon maturity at July 31, 2015.

⁽²⁾ The fair value of the seller financed note in excess of the $85,000 principal balance attributable to the deferred payment terms will be amortized to interest expense over the deferred financing period.

⁽³⁾ The consideration paid in excess of the net fair value of assets acquired and liabilities assumed has been recognized as goodwill.

Unaudited Supplemental Pro Forma Results of Operations

	Combined Pro Forma:
	For the six months ended June 30,
	2014
Revenue:	$	651,968
Expenses:
Operating expenses		3,195,637
Net operating income (loss)		(2,543,669	)
Other income (expense)		(1,966,675	)
Net income (loss)	$	(4,510,344	)
Weighted average number of common shares outstanding – basic and fully diluted		475
Net income (loss) per share – basic and fully diluted	$	(9,495.46	)

Zinergy

Business Acquisition [Line Items]

Schedule of Assets Acquired and Liabilities Assumed

	April 4,
	2014
Consideration:
Cash paid at, and prior to, closing	$	75,000
Fair value of identifiable assets acquired assumed:
Software	$	8,035
Trade name		1,826
Total fair value of assets assumed		9,861
Consideration paid in excess of fair value (Goodwill)(1)	$	65,139

______________

⁽¹⁾ The consideration paid in excess of the net fair value of assets acquired and liabilities assumed has been recognized as goodwill.

Jadian, Inc.

Business Acquisition [Line Items]

Schedule of Assets Acquired and Liabilities Assumed

	May 9,
	2014
Consideration:
Cash paid at, and prior to, closing	$	215,000
Seller financed note payable(1)(2)		210,000
Adjustments to cash paid at closing(3)		(7,055	)
		417,945
Fair value of identifiable liabilities acquired:
Deferred revenue		86,423
Fair value of total consideration exchanged	$	504,368
Fair value of identifiable assets acquired assumed:
Accounts receivable	$	42,382
Software		37,180
Trade name		24,941
Total fair value of assets assumed		104,503
Consideration paid in excess of fair value (Goodwill)(4)	$	399,865

______________

⁽¹⁾ Consideration included an unsecured $210,000 seller financed note payable (“Jadian Note”), which bears interest at 6% per annum until the maturity date of May 9, 2017, and provides for equal monthly principal and interest payments of $6,389 commencing on June 1, 2014. The Jadian Note includes a balloon payment, consisting of the remaining outstanding balance of principal and interest upon maturity at May 9, 2017. The interest rate shall be 8% per annum with an additional 5% late payment fee upon default.

⁽²⁾ The fair value of the seller financed note in excess of the $210,000 principal balance attributable to the deferred payment terms will be amortized to interest expense over the deferred financing period.

⁽³⁾ The Company agreed to adjust the purchase price in connection with the Closing by paying an additional $33,705 for the accounts receivable acquired, less $40,760 attributable to deferred revenues recognized on previously collected sales for which services are still pending. The net total of $7,055 was credited as payment at the Closing.

⁽⁴⁾ The consideration paid in excess of the net fair value of assets acquired and liabilities assumed has been recognized as goodwill.

Unaudited Supplemental Pro Forma Results of Operations

	Combined Pro Forma:
	For the six months ended June 30,
	2014
Revenue:	$	748,952
Expenses:
Operating expenses		3,254,873
Net operating income (loss)		(2,505,921	)
Other income (expense)		(1,969,551	)
Net income (loss)	$	(4,475,472	)
Weighted average number of common shares outstanding – basic and fully diluted		475
Net income (loss) per share – basic and fully diluted	$	(9,422.05	)

Revenue earn-out amounts

Revenue for the Relevant Year	Earn-Out
$-0- to $500,000	$	–
$500,000 to $600,000	$	25,000
$600,000 to $700,000	$	50,000
$700,000 to $800,000	$	75,000
$800,000 or more	$	100,000

Telecorp Products, Inc.

Business Acquisition [Line Items]

Schedule of Assets Acquired and Liabilities Assumed

	February 28,
	2014
Consideration:
Cash paid at, and prior to, closing	$	200,000
Seller financed note payable(1)(2)		120,000
Excess liability adjustment to seller financed note payable(3)		(18,000	)
		302,000
Fair value of identifiable liabilities acquired:
Accounts payable and accrued expenses		43,500
Deferred revenue		162,016
Line of credit		24,500
Fair value of total consideration exchanged	$	532,016
Fair value of identifiable assets acquired assumed:
Cash	$	736
Other current assets		823
Technology-based intangible assets		72,490
Trade name		29,390
Total fair value of assets assumed		103,439
Consideration paid in excess of fair value (Goodwill)(4)	$	428,577

______________

⁽¹⁾ Consideration included an unsecured $120,000 seller financed note payable (“Telecorp Note”), which provides for six (6) equal monthly payments of $20,000 commencing thirty (30) days after the Closing. The Telecorp Note is non-interest bearing except upon default, in which case the interest rate shall be 10% per annum.

⁽²⁾ The fair value of the seller financed note in excess of the $102,000 principal balance attributable to the deferred payment terms will be amortized to interest expense over the deferred financing period.

⁽³⁾ The Company agreed to assume aggregate outstanding Telecorp liabilities of up to $50,000 in connection with the Closing. A total of $68,000 of liabilities was actually acquired, and the resulting $18,000 of excess liabilities was credited as payment against the Telecorp Note.

⁽⁴⁾ The consideration paid in excess of the net fair value of assets acquired and liabilities assumed has been recognized as goodwill.

Unaudited Supplemental Pro Forma Results of Operations

	Combined Pro Forma:
	For the six months ended June 30,
	2014
Revenue:	$	669,098
Expenses:
Operating expenses		3,186,003
Net operating loss		(2,516,905	)
Other income (expense)		(1,968,250	)
Net loss	$	(4,485,155	)
Weighted average number of common shares Outstanding – basic and fully diluted		475
Net loss per share – basic and fully diluted	$	(9,442.43	)