CONTINGENT CONSIDERATION PAYABLE

3 Months Ended

Mar. 31, 2015

Notes to Financial Statements

NOTE 5 - CONTINGENT CONSIDERATION PAYABLE

On February 25, 2011, the Company’s wholly owned subsidiary, Dynamic Energy Alliance Corporation (hereafter “DEDC”) and a former director no longer associated with the Company (hereafter “the Director”) entered into a Stock Purchase Agreement (hereafter “Agreement”) and corresponding Amendments No. 1, No. 2 and No. 3, dated December 30, 2011, March 31, 2012 and September 26, 2012, respectively, by which DEDC acquired all of the outstanding shares of Transformation Consulting, Inc. (hereafter “TC”). The purchase price for the shares was $2,000,000, payable from the gross revenues of TC, subject to the following contingent reduction or increase of the purchase price. Pursuant to the Agreement, if TC’s gross revenues during the two years following the closing was less than $2,000,000, then the purchase price for the shares would be reduced to the actual revenue received by TC during the two year period. If TC’s revenues during the same two year period exceed $2,000,000, then the purchase price for the shares would be increased by one-half of the excess revenues over $2,000,000 (hereafter “contingent consideration”).

Pursuant to the contingent consideration of $2,000,000 due to the Director from TC, all revenues generated by TC under the Agency Agreement were disbursed to the former Director. Through December 31, 2012, gross revenues under the TC Stock Purchase Agreement totaled approximately $2,000,000. Through December 31, 2013, payments, net of refunds, made to Director under the TC Stock Purchase Agreement totaled $984,638. On September 30, 2013, the former director assigned the remaining contingent consideration debt note (hereafter the “Note”) to Habanero Properties via an Assignment and Assumption Agreement. The Note was subsequently offset by $108,788 as payment for warrants exercised at their strike price by the former director. Habanero Properties subsequently assigned the remaining contingent consideration due and payable to Rocky Road Capital, Inc.

For the period ended March 31, 2015, the Company entered into three note conversion agreements with Rocky Road capital to convert a total of $244,200 of the note balance into 2,442,000 shares of Common Stock at $0.10 per share, thereby reducing the balance owed to $322,012. The estimated fair value of the common shares was used to measure and record the transaction with the difference between the conversion price and estimated fair value being recorded as loss (gain) on extinguishment of debt. For the period ended, March 31, 2015, the Company recognized a loss of $931,974 on extinguishment of debt as a result of the transactions.

At March 31, 2015 and December 31,2014, the contingent consideration payable is as follows:

	As of March 31, 2015			As of December 31, 2014
Contingent consideration due	$	2,000,000		$	2,000,000
Less payments, net of refunds, to Director		(984,638	)		(984,638	)
Payment of exercise of warrants		(108,788	)		(108,788	)
Conversion of contingent consideration to common stock		(584,562	)		(340,362	)
	$	322,012		$	566,212