NOTE 4 - ACQUISITIONS

9 Months Ended

Sep. 30, 2016

Business Combinations [Abstract]

Business Combination Disclosure [Text Block]

NOTE 4 – ACQUISITIONS

Brainchild Corporation

On January 1, 2015, the Company completed the acquisition of 100% of the capital stock of Brainchild Corporation (“Brainchild”).  Brainchild, based in Naples, Florida, is a leading provider of web-based and mobile learning solutions for kindergarten through high school, grades K-12.  The acquisition of Brainchild includes technology, staffing and software solutions developed for providing its educational solutions.

This acquisition represents the Company’s entry into its newest vertical. The Company intends to leverage its experience in building and operating cloud-based exchanges for healthcare and media to the education market.  The Company believes there is a growing demand for platforms that will bring together the delivery of digital instructional content, assessments and analysis of student information and performance data by educators in K-12 schools throughout the U.S.

The Company paid $500,000 in cash, less the assumption of loan balances at closing; issued 250,000 shares of the Company’s common stock with an undertaking to buy back the shares on the third anniversary of the closing at a guaranteed valuation of $2.00 per share, and a subordinated promissory note of $1,000,000 with a three-year term and interest at 8%, per annum.  In addition, the purchase agreement calls for a performance based earn-out of up to $400,000, to be paid on a semi-annual basis on January 1 and July 1 of each year ending with 2017, based on the actual cash received from sales generated by the acquired business line during such period. As of September 30, 2016, the Company has paid $80,469 with respect to the earn-out. The seller has the option to receive any or all of the earn-out in the form of common stock of the Company priced at a five trading day average price. On January 20, 2015, the Company merged Brainchild into the Company.

DialedIn Corporation

On December 1, 2015, the Company acquired 100% of the capital stock of DialedIn Corporation (“DialedIn”) and merged it with the Company. DialedIn built a platform to create, distribute and track enterprise communications. DialedIn’s platform allows organizations to better communicate internally and improve sales and marketing communications by developing web-based, interactive communications and provides in-depth insights into audience engagement.

The Company issued 4,000,000 shares of the Company’s common stock, valued at $760,000, to the sellers of DialedIn. Each outstanding share of stock of DialedIn was cancelled and converted into the right to receive shares of the Company’s common stock.

The following unaudited proforma summary presents consolidated information of the Company as if these business combinations had both occurred on January 1, 2015.

	December 31, 2015
Gross Sales:	$	52,248,554
Net Loss:	$	(1,605,980	)

The Company calculated the significance of the acquisitions based upon the past five year’s losses and determined that audited financial statements were not required.

DUS Corporation

Effective October 1, 2015, the Company entered into an asset purchase agreement with DUS Corporation to acquire certain assets, properties and rights connected with the Intelligent Help Desk™ business, subject to certain liabilities totaling $2,950,000, in exchange for 500,000 shares of the Company’s common stock valued at $75,000. The business provides help desk support services for purchasers of hardware and software solutions. The seller agreed to a non-compete restriction for a period of three years. The Company obtained a valuation report from a consultant who it hired to recommend the correct allocation of the DUS purchase price.

The Company recorded goodwill of $2,004,600 in connection with its acquisition of DUS on October 1, 2015.

Stratitude, Inc.

On November 3, 2016, the Company formally completed the acquisition of Stratitude pursuant to the Stock Purchase Agreement, effective November 3, 2016 (the “Stratitude Purchase Agreement”).  Under the stock purchase agreement, the Company purchased all of the issued and outstanding capital stock of Stratitude.  Simultaneously with the acquisition of Stratitude, Stratitude purchased select assets of Agama Solutions, Inc. (“Agama”). The agreement is effective July 1, 2016 for accounting consolidation purposes since the Company operated the business from that date.

Stratitude and Agama are both California based IT and Software Consulting Service providers.  The acquisition of Stratitude, along with select assets of Agama, gives the Company additional technical resources and operational presence in California. The integration of these assets will help the Company better deliver its products and service across geographies and market segments.

As consideration for the acquisition the Company agreed to an initial cash payment of $4,430,740.76; the issuance of 500,000 shares of the Company’s common stock; and earnout payments of up to $2,400,000 based on a mutually agreed upon post-closing determination of Stratitude’s EBITDA.

The following unaudited proforma summary presents consolidated information of the Company as if these business combinations had both occurred on January 1, 2016. 

	September 30, 2016
Gross Sales:	$	52,248,554
Net Loss:	$	(349,000	)

The table below summarizes the allocation of the purchase price of the foregoing three acquisitions over the estimated fair values of the assets acquired and liabilities assumed.

Fair value of consideration transferred from the acquisitions:
	Brainchild			DialedIn			DUS			Stratitude
Cash	$	500,000		$	-		$	-		$	4,342,425
Subordinated debt		1,000,000			-			-
Common stock		142,500			760,000			75,000			120,000
Contingent earn-out payments		400,000			-			-			2,400,000
	$	2,042,500		$	760,000		$	75,000		$	6,862,425
Recognized amounts of identifiable assets acquired and liabilities assumed:
Cash	$	30,272		$	98,962		$	-		$	730,033
Customer lists/Technology intangibles, net		649,265			695,339			-
Inventory		90,442			-			-
Deposits		2,000			7,163			-			282,109
Accounts receivable		121,715			33,318			-			2,294,578
Fixed assets		12,045			3,676			75,000			104,213
Accounts payable and accrued liabilities		(151,774	)		(161,398	)		(2,950,000	)		(2,125,980	)
Sub total		753,965			677,060			(2,875,000	)		1,284,953
Excess of purchase price allocated to intangible assets		1,288,535			82,940			945,400			5,577,472
Excess of purchase price allocated to Goodwill		-			-			2,004,600			-
Total	$	2,042,500		$	760,000		$	75,000		$	6,862,425