NOTE 14 - RELATED PARTY TRANSACTIONS

12 Months Ended

Dec. 31, 2015

NOTE 14 – RELATED PARTY TRANSACTIONS

Q4 India

The Company’s headquarters and operations are located in the United States. However, the Company has a key supplier and subcontractor known as Quadrant 4 Software Solutions (Pvt.) Limited located in India (“Q4 India”). The Company has no ownership, directly or indirectly, in Q4 India. Until May 2016, Q4 India was, according to public records, wholly-owned by Stonegate Holdings, Inc., which, according to the Schedule 13G filed with the SEC by Stonegate Holdings, Inc. on May 11, 2011, is a shareholder of the Company holding 6,695,959 shares of the Company’s common stock, equal to 6.15% of the shares issued and outstanding. According to Maryland public records, Stonegate Holdings, Inc. has been dissolved. Based on information available to the Company, Stonegate Holdings, Inc. was acquired by another entity that has no relationship to the Company or its affiliates in or around 2010. Stonegate Assets, Inc., which, based on information available to the Company, is an affiliate of Stonegate Holdings, Inc., holds an additional 7,000,000 shares of the Company’s common stock, equal to 6.43% of the shares issued and outstanding. The Company also markets its activities through Q4 India. Q4 India billed the Company $8,215,000 and $6,749,000 for the years ended December 31, 2015 and 2014, respectively. The Company owed Q4 India $700,000 and $630,000 as of December 31, 2015 and 2014, respectively. The Company believes that the relationship is structured on an arm’s length basis.

The Company has entered into a long-term master services agreement with Q4 India that ends on December 31, 2018 with customary options for termination with 30 days notice. Q4 India provides captive services to the Company and is paid on a cost-plus basis. The Company is the sole customer of Q4 India. The Company paid the following amounts to Q4 India for providing different classes of services:

	Year Ending		Year Ending
Description of Cost	December 31, 2015		December 31, 2014

Client delivery and support	$	3,335,450	$	2,688,316
Platform development (capitalized by the Company)		2,340,000		1,890,000
Sales support		176,470		150,530
Back office support		2,039,990		1,642,892
Research & Development		323,090		377,262
	$	8,215,000	$	6,749,000

Surrex Solutions Corporation (Surrex)

The Company has been doing business with Surrex Solutions Corporation (Surrex), a provider of information technology consulting, project and IT staffing, and contract programming services, since 2010. The Company attempted to acquire Surrex in 2014 but subsequently abandoned the transaction. Since September 2014, the Company has provided broad management services and advice to Surrex and for the years ended December 31, 2015 and 2014, recorded approximately $3,200,000 and $1,700,000 in revenue and $517,000 and $1,491,000 in accounts receivable, respectively, from this customer. Since December 23, 2014, Philip Firrek, an independent director of the Company, has served as assignee for the benefit of creditors (akin to a bankruptcy trustee) for Surrex. Nandu Thondavadi, CEO and a director of the Company, held signatory authority on one of Surrex’s bank accounts for two months in early 2015 to ensure collection of receivables being properly credited. The Company believes that the relationship is structured on an arm’s length basis.

Core Information Technology Solutions, Inc. (CITS)

The Company has been doing business with Core Information Technology Solutions, Inc. (CITS), a provider of integration and optimization services for formative assessment solutions, technology infrastructure, management applications, special education compliance, outsourced staffing solutions and technical career education programs since early 2014. The Company entered into a licensing agreement June 2014 with Core Education and Consulting Solutions, Inc., an affiliate of CITS (both owned by Core Education Group of Singapore (CEGS)). During 2014, the Company negotiated to acquire CITS but subsequently abandoned the transaction. Since May 2014, the Company’s executive officers and directors, Nandu Thondavadi and Dhru Desai have provided management advice and consulting services to the owners of CEGS and have received compensation of $130,000, each, for the year ended December 31, 2015 and $0 in 2014 for their services. The compensation was remitted to Global Technology Ventures Corporation and Congruent Ventures LTD., inactive entities owned by Mr. Thondavadi and Mr. Desai, respectively. The Company has been conducting regular business with CITS on an arm’s length basis and as of December 31, 2015 and 2014, recorded approximately $4,600,000 and $2,900,000 in revenue and $1,517,000 and $1,648,000 in accounts receivable, respectively, from this customer. Mr. Thondavadi and Mr. Desai have personally guaranteed various obligations of CITS, and Mr. Thondavadi held signatory authority on its bank accounts from May 2014 through April 2015 to ensure collection of receivables being properly credited. The Company believes that the relationship is structured on an arm’s length basis.