On November 30, 2018, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with the EllisLab, Inc., Rick Ellis (“Ellis”), and EllisLab Corp., a newly formed Nevada corporation and wholly owned subsidiary of the Company, pursuant to which EllisLab, Inc. merged with and into EllisLab Corp. (the “Merger”). Pursuant to the terms of the Merger Agreement, Ellis received 36,000 shares of the Company’s newly designated Series C Convertible Preferred Stock, with a stated value of $100 per share, in exchange for the cancellation of all common shares of EllisLab, Inc. owned by Ellis, which shares represented 100% of the issued and outstanding capital stock of EllisLab, Inc. The separate legal existence of EllisLab, Inc. ceased, and EllisLab Corp. became the surviving company.

Pursuant to the Merger Agreement, Ellis agreed to a covenant not to compete for a period of two years following the effective date of the Merger (the “Non-Competition Period”). Ellis further agreed that during the Non-Competition Period, he will not directly or indirectly solicit or agree to service for his benefit or the benefit of any third-party, any of the Company’s, Digital Locations’, or EllisLab Corp.’s customers.

Pursuant to the Merger Agreement, during the period beginning on the effective date and ending on the 24 month anniversary thereof, Ellis will not directly or indirectly (i) offer, sell, offer to sell, contract to sell, hedge, pledge, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase or sell, or otherwise transfer or dispose of, any portion of the Series C Convertible Preferred Stock, or any shares of the Company’s common stock underlying the Series C Convertible Preferred Stock, beneficially owned, within the meaning of Rule 13d-3 under the Securities Exchange Act of 1934.

Each of the parties to the Merger Agreement made customary representations and warranties in the Merger Agreement.

On November 30, 2018, in connection with and pursuant to the Merger Agreement, the Company entered into a Nonstatutory Stock Option Agreement (the “Option Agreement”) with Derek Jones (“Jones”), whereby the Company issued to Jones an option to purchase 444,445 shares of the Common stock of the Company, at an exercise price of $1.13 (the “Option”), in exchange for his surrender of an option to purchase 10% of the shares of outstanding common stock of EllisLab, Inc. The Option vested but may not be exercised for two years from the date of the Merger. The option contains a blocker that prevents Jones from exercising the Option if such exercise would result in beneficial ownership of more than 4.99% of the outstanding shares of the Company’s stock, without at least 61 days of prior notice. Under the Option, Jones is also subject to the Rule 144 restrictions of an affiliate.

The acquisition of EllisLab, Inc. in the Merger was accounted for as a purchase, and the accounts of EllisLab Corp. are consolidated with those of the Company as of December 1, 2018. The Company engaged an independent valuation firm to estimate the value of the consideration paid by the Company in the Merger, consisting of the issuance of 36,000 shares of the Company’s $0.001 par value Series C Convertible Preferred Stock to Ellis, valued at $4,345,866, and 444,445 stock options to purchase common shares of the Company to Jones, valued at $599,998.

Based on the report of the independent valuation firm, the total value of the consideration paid of $4,945,864 was allocated as follows:

Cash	$	35,822
Accounts receivable		22,235
Property and equipment, net		4,271
Accounts payable		(74,680	)
Accrued expenses		(14,176	)
Deferred revenue		(27,037	)
Loans payable		(60,000	)
Net liabilities		(113,565	)
Intangible assets:
Intellectual property		37,000
Customer base		79,000
Tradename/marks		8,000
Non-compete agreements		1,000
Goodwill		4,934,429

Total	$	4,945,864

At December 31, 2018, the Company reviewed the goodwill recorded in the Merger and determined that an impairment expense of $4,934,429 was required.

On September 30, 2019, the Company, entered into an Agreement for the Purchase and Sale of Capital Stock of EllisLab Corp. (the “EllisLab Corp. Sale Agreement”) with Ellis to sell to Ellis all of the issued and outstanding shares of EllisLab Corp. for $10,000 and the 36,000 shares of the Company’s Series C Convertible Preferred Stock owned by him, which represents all of the issued and outstanding shares of the Series C Convertible Preferred Stock. In connection with the Sale Agreement, the covenant not to compete and the lockup of stock consideration entered into in connection with the Merger were terminated and the parties’ obligations thereunder released. Also, on September 30, 2019, the Company and Jones entered into an Option Cancellation Agreement pursuant to which the Option was cancelled. Pursuant to the Ellis Lab Corp. Sale Agreement, the Company effectively divested itself of the Ellis Lab business and discontinued it.

The Company recognized a bad debt expense of $356,851 in its statement of operations for the year ended December 31, 2019 as a result of the agreement to forgive the loans made by the Company to EllisLab Corp. for operating funds. In addition, the Company recorded a gain on disposition of subsidiary of $316,985.

Assets and liabilities reclassified as assets and liabilities from discontinued operations at December 31, 2018 consisted of the following:

ASSETS

Current assets from discontinued operations:
Cash	$	37,182
Accounts receivable		3,434
Prepaid expenses		3,635

Total current assets from discontinued operations	$	44,251

Non-current assets from discontinued operations:
Property and equipment, net	$	4,076
Intangible assets, net		122,917

Total non-current assets from discontinued operations	$	126,993

LIABILITIES

Current liabilities from discontinued operations:
Accounts payable	$	77,876
Accrued expenses		16,941
Deferred revenue		25,178

Total current liabilities from discontinued operations	$	120,535