XML 20 R10.htm IDEA: XBRL DOCUMENT

Business Combinations

9 Months Ended

Sep. 30, 2022

Business Combination and Asset Acquisition [Abstract]

4. Business Combinations

On April 1, 2022, we entered into an asset purchase agreement to acquire substantially all of the assets of Yellow Folder. The acquisition was accounted for in accordance with GAAP and was made to expand our market share in the digital transformation industry and due to synergies of product lines and services between the Companies.

The purchase price has been preliminarily allocated to assets acquired and liabilities assumed based on the estimated fair value of such assets and liabilities at the date of acquisitions as follows:


Assets acquired:
Accounts receivable	$	68,380
Prepaid expenses		38,913
Property and equipment		30,018
Intangible assets (see Note 5)		3,888,000
Assets		4,025,311
Liabilities assumed:
Accounts payable		36,446
Deferred revenue		1,072,530
Liabilities		1,108,976

Total identifiable net assets		2,916,335

Purchase price		6,383,269

Goodwill - Excess of purchase price over fair value of net assets acquired	$	3,466,934

The purchase price of $6,383,269 was paid in cash. Goodwill in the amount of $3,466,934 was recognized in the acquisition of Yellow Folder and is attributable to the cash flows of the business derived from our potential to outperform the market due to its existing relationship and other synergies created within the Company.

Acquisition costs which include legal and other professional fees of $0 and $355,281 for the three and nine months ended September 30, 2022, respectively, were expensed as nonrecurring transaction costs and are included in transaction costs in the accompanying condensed consolidated statements of operations.

As the Company finalizes the fair value of assets acquired and liabilities assumed, additional purchase price adjustments may be recorded. The finalization of the purchase accounting assessment may result in changes in the valuation of assets acquired and liabilities assumed and may have an impact on the Company’s results of operations and financial position.

The following unaudited pro forma information presents a summary of the condensed consolidated results of operations for the Company as if the acquisition of Yellow Folder had occurred on January 1, 2021.

Schedule of Pro Forma Information


	For the Three months ended
	(unaudited)		(unaudited)
	September 30, 2022		September 30, 2021
Total revenues	$	3,859,627	$	3,880,298

Net income	$	217,536	$	289,676

Basic net income per share	$	0.05	$	0.07
Diluted net income per share	$	0.05	$	0.06


	For the Nine months ended
	(unaudited)			(unaudited)
	September 30, 2022			September 30, 2021
Total revenues	$	10,756,634		$	10,762,099

Net (loss) income	$	(142,241	)	$	963,866

Basic net (loss) income per share	$	(0.03	)	$	0.24
Diluted net (loss) income per share	$	(0.03	)	$	0.22

The unaudited pro forma consolidated results are based on our historical financial statements and those of Yellow Folder and do not necessarily indicate the results of operations that would have resulted had the acquisition actually been completed at the beginning of the applicable period presented. The pro forma financial information assumes that the companies were combined as of January 1, 2021.

The following tables present the amounts of revenue and earnings of Yellow Folder since the acquisition date included in the condensed consolidated income statement for the reporting period.

	For the three months ended September 30,		For the nine months ended September 30,
	2022		2022
Yellow Folder:
Total revenues	$	829,856	$	1,620,224
Net income	$	178,973	$	375,531