XML 21 R8.htm IDEA: XBRL DOCUMENT

ACQUISITIONS

12 Months Ended

Dec. 31, 2017

On February 8, 2017, the Company acquired substantially all of the assets of NextGen in exchange for $750,000 in cash, plus 1,523,809 unregistered shares of Class B Common Stock of the Company, which were issued at a negotiated fair value of $1.75 per share and a subordinated secured promissory note issued by the Company in favor of NextGen in the amount of $1,333,334 (the “NextGen Note”). The NextGen Note matures on the third anniversary of the closing date (the “Maturity Date”). During the fourth quarter of 2017, the company finalized the preliminary purchase price allocation recorded at the acquisition date and made a measurement period adjustment to the preliminary purchase price allocation which included:(i) an increase to technology development of $1,500,000; (ii) a decrease in goodwill of $1,390,000; (iii) a decrease to customer contracts of $10,000; and (iv) a decrease to non-compete agreements of $100,000. The measurement period adjustment also resulted in a $166,250 net increase in accumulated amortization and amortization expense previously recorded for the nine-months ended September 30, 2017. This measurement period adjustment has been recorded as of December 31, 2017 and is reflected in the table below. The company made these measurement period adjustments to reflect facts and circumstances that existed as of the acquisition date and did not result from intervening events subsequent to such date. The measurement period adjustment did not have a material impact on the Company’s net loss in any period during the year ended December 31, 2017.

The following table presents the purchase price consideration as of December 31, 2017:

		Preliminary Purchase Price Allocation			Cumulative Measurement Period Adjustment			Final Purchase Price Allocation
Net tangible assets acquired:

Technology development		1,400,000			1,500,000			2,900,000

Customer contracts		10,000			(10,000	)		-

Non-compete agreements		100,000			(100,000	)		-

Tangible assets acquired		1,510,000			1,390,000			2,900,000

Goodwill		3,240,000			(1,390,000	)		1,850,000

Total purchase price		4,750,000			-			4,750,000

Less: Issuance of shares		(2,666,666	)		-			(2,666,666	)

Less: Debt issued		(1,333,334	)		-			(1,333,334	)

Cash paid	$	750,000		$	-		$	750,000

Supplemental pro forma information

The results of operations of NextGen since the acquisition date are included in the accompanying consolidated financial statements.

The following supplemental pro forma information presents the financial results as if the acquisition of NextGen was made as of January 1, 2017 for the year ended December 31, 2017 and on January 1, 2016 for the year ended December 31, 2016.

Pro forma adjustments for the year ended December 31, 2017 and 2016 primarily include adjustments to reflect additional depreciation and amortization of $61,866 and $352,576, respectively, related to technology development and identifiable intangible assets recorded as part of the acquisition, and interest expense related to the NextGen Note of $27,353 and $85,772, respectively.

		2017			2016
Pro forma revenue	$	7,312,428		$	138,141
Pro forma net loss	$	(8,710,513	)	$	(2,450,829	)

Loss per share-basic and fully diluted	$	(0.86	)	$	(0.34	)

Weighted average common shares and common stock equivalents outstanding-Basic and fully diluted		10,076,227			7,105,179