Acquisition of Mann

6 Months Ended

Jun. 30, 2019

Business Combinations [Abstract]

Acquisition of Mann

NOTE 3: ACQUISITION OF MANN

On May 16, 2019, the Company entered into a Share Exchange Agreement with Mann-India Technologies Private Ltd., an Indian Corporation (“Mann”). Pursuant to the Share Exchange Agreement with Mann, the Company acquired 100% of the shares of Mann and assumed certain net liabilities) in exchange for warrants exercisable over a five-years to purchase 1,329,272 shares of common stock of the Company valued at $486,912 (an average of $0.3663 per share). The warrants will be exercisable as follows: (i) 100,771 warrants immediately upon closing (value of $36,912); (ii) 859,951 warrants (value of $315,000) exercisable one-year after the date of closing; and (iii) 368,550 warrants (value of $135,000) exercisable two-years after the date of closing.

The warrants that are exercisable in one-year and two-years are conditioned upon Mann achieving certain revenue figures and pre-tax profit percentages. Mann must achieve target revenue of $1.1 million (US$) and pre-tax profit of 25% (US$). Should Mann be unable to achieve these criteria, the warrants will be reduced proportionately.

The Company acquired the assets and liabilities noted below in exchange for the warrants noted herein and accounted for the acquisition in accordance with ASC 805. As a result, total consideration was equal to the value of the warrants of $486,912, as stated in the agreement, and the Company recognized a gain on bargain purchase in the amount of $304,160. In accordance with ASC 805-20-50-4A, based on the book values which approximate fair values at the effective date of acquisition, the purchase price was recorded as follows:

Cash (including restricted cash of $185,399)	$	185,633
Accounts receivables, net		506,951
Prepaid expenses and other current assets		215,191
Right-of-use asset		576,566
Fixed assets		68,260
Intangible assets		1,019,580
Investment		42,248
Other assets		37,950
Accounts payable and accrued expenses		(173,498	)
Accrued payroll and related taxes		(325,629	)
Accrued duties and taxes		(66,765	)
Lease liability		(585,207	)
Deferred revenue		(3,618	)
Deferred tax liability		(140,143	)
Cash overdraft		(471,017	)
Long-term debt – related parties		(61,358	)
Long-term debt		(28,956	)
Accumulated other comprehensive income (loss)		(5,116	)
	$	791,072

Note that the initial accounting for the business combination is currently incomplete, as fair value amounts are still being determined, therefore all amounts presented herein are provisional and subject to final review and adjustment:

The intangible assets represent software development costs that are being amortized over ten years.

The difference between the net assets acquired of $791,072, and the consideration paid (in the form of warrants) of $486,912 represents a bargain purchase gain of $304,160.

Since the acquisition Mann has recorded $129,913 in revenues and a profit of $296,418 (inclusive of a bargain purchase gain of $304,160) that are included in consolidated results.

The following table shows pro-forma results for the six months June 30, 2019 and year ended December 31, 2018 as if the acquisition had occurred on January 1, 2018. These unaudited pro forma results of operations are based on the historical financial statements and related notes of Mann and the Company.

	For the six months ended June 30, 2019		For the year ended December 31, 2018
Revenues	$	270,920	$	1,236,665
Net income (loss)	$	76,365	$	(726,273	)
Net income (loss) per share	$	0.00	$	(0.03	)