v3.5.0.2
Acquisitions
 3 Months Ended
Mar. 31, 2016
Business Combinations [Abstract]  
Acquisitions

NOTE 18 ACQUISITIONS

 

On July 16, 2014, we entered into a sales purchase agreement to acquire 100% of the outstanding shares of Lexi Luu Designs, Inc. (“LL”). Bitzio paid 500,000,000 restricted common shares for this acquisition. 300,000,000 shares valued $0.0014, the market price of the Company’s stock on the day of acquisition, or $420,000, was the consideration given. The other 200,000,000 shares were recorded as compensation for the continuing employment for Mr. Blanchette and will be expensed over the service period of 20 months. The value of the shares will be amortized over the service period of approximately 20 months. LL shareholders are able to earn an additional $300,000 in restricted common shares over the course of three years in an earn-out upon hitting certain revenue benchmarks. The Company recorded an earn-out contingent liability of $87,000 as part of the acquisition. We accounted for the transaction as a business combination. Of the purchase price paid as of July 16, 2014 ($183,629) was allocated among the assets and liabilities and the difference was assigned to intangible assets. As of March 31, 2016 and December 31, 2015, the revenue of LL was below the earn-out revenue benchmark, we wrote off $0 and $27,000 in contingent liability, respectively. Per ASC 805-10-50-4, if the acquirer is a public entity, if comparative financial statements are presented, the revenues and earnings of the combined entity for the current reporting period as though the acquisition date as of the beginning of the annual reporting period.

 

The following table summarizes our consolidated results of operations for the year ended December 31, 2014, as well as unaudited pro forma consolidated results of operations as though the Lexi Luu Designs and E-motion Apparel acquisitions had occurred on January 1, 2014:

 

    As Reported 12/31/14     Pro Forma 12/31/14  
             
Net sales   $ 394,511     $ 767,310  
Net income (loss)     (1,187,360 )     (1,174,919 )
Earnings per common share:                
Basic   $ (0.00 )   $ (0.00 )
Diluted   $ (0.00 )   $ (0.00 )

 

The unaudited pro forma information set forth above is for informational purposes only. The pro forma information should not be considered indicative of actual results that would have been achieved if the Lexi Luu Designs and E-motion Apparel acquisitions had occurred on January 1, 2014.

 

On July 18, 2014, we entered into a sales purchase agreement to acquire 100% of the outstanding shares of E-motion Apparel, Inc. (“EA”). Bitzio paid 350,000,000 restricted commons shares for this acquisition. All 350,000,000 shares were recorded as compensation for the continuing employment for Ms. Brassington and Ms. Cunningham and will be expensed over the service period of 20 months. E-motion Apparel shareholders are able to earn an additional $300,000 in restricted common shares over the course of years in an earn-out upon hitting certain revenue benchmarks. The Company recorded an earn-out contingent liability of $48,000 as part of the acquisition. We accounted for the transaction as a business combination. Of the purchase price paid as of July 18, 2014 ($26,235) was allocated among the assets and liabilities and the difference was assigned to intangible assets. This License Agreement between Bitzio and E-motion Apparel was cancelled on July 18, 2014 and was replaced with the sales purchase agreement. As of March 31, 2016 and December 31, 2015, as the revenue of EA was below the earn-out revenue benchmark, we wrote off $0 and $33,000 in contingent liability, respectively.

 

The total purchase price for the LL acquisition was allocated as follows:

 

Assets        
Cash   $ 170  
Accounts receivable     794  
Inventories     64,883  
Property and equipment     2,724  
Other assets     19,503  
Intangible assets-Customer relationships     690,629  
         
Liabilities        
Accounts payable and accrued liabilities     (256,030 )
Due to shareholder     (15,673 )
Earn-out contingent liability     (87,000 )
Net assets acquired   $ 420,000  

 

The total purchase price for the EA acquisition was allocated as follows:

 

Assets        
Inventories   $ 165,807  
Other assets     5,050  
Intangible assets-Customer relationships     74,235  
         
Liabilities        
Accounts payable and accrued liabilities     (197,092 )
Earn-out contingent liability     (48,000 )
Net assets acquired   $ -  

 

The customer relationships are being amortized over their estimated useful lives of 2 years.