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ACQUISITIONS

9 Months Ended

Sep. 30, 2022

Business Combination and Asset Acquisition [Abstract]

NOTE 3 – ACQUISITIONS

True Digital Security, Inc.

On January 5, 2022, we entered into the True Digital Stock Purchase Agreement with certain stockholders of True Digital and the True Digital Merger Agreement with True Digital and certain of its other stockholders. On January 19, 2022, the transactions contemplated by the True Digital Stock Purchase Agreement and the True Digital Merger Agreement were consummated, with True Digital becoming a wholly owned subsidiary of our company (the “True Digital Acquisition”). True Digital’s outstanding common stock was exchanged for $6,153,000 in cash and 8,229,000 shares of our common stock.

The following table summarizes the allocation of the purchase price to the fair values of the assets acquired and the liabilities assumed as of the transaction date:


Consideration	$	40,879,380

Tangible assets acquired:
Cash		485,232
Accounts receivable		1,404,386
Contract assets		131,342
Prepaid expenses and other current assets		196,825
Property and equipment		906,006
Other assets		17,505
Total tangible assets		3,141,296

Intangible assets acquired:
Tradename - trademarks		1,744,200
Intellectual property		1,137,000
Non-competes		124,900
Total intangible assets		3,006,100

Assumed liabilities:
Accounts payable and accrued expenses		1,283,003
Deferred revenue		1,956,600
Line of credit		283,244
Loans payable		181,741
Loans payable - shareholder		543,581
Total assumed liabilities		4,248,169

Net assets acquired		1,899,227

Goodwill (a)	$	38,980,153

(a)

Goodwill and intangibles are not deductible for tax purposes.

Creatrix, Inc.

On June 1, 2022, we entered into a stock purchase agreement with the stockholders of Creatrix, pursuant to which Creatrix became our wholly owned subsidiary. We anticipate that this will expand our professional services offerings and capabilities. Creatrix offers recognized expertise in identity management as wells as systems integration and software engineering and specializes in biometrics, vetting, credentialing, and case management.

The following table summarizes the acquisition date fair values of the assets acquired and liabilities assumed:


Consideration paid	$	3,630,000

Tangible assets acquired:
Cash		3,572
Accounts receivable		125,908
Contract assets		33,965
Prepaid expenses and other current assets		3,597
Total tangible assets		167,042

Assumed liabilities:
Accounts payable and accrued expenses		48,001
Loans payable		56,687
Total assumed liabilities		104,688

Net assets acquired		62,354

Goodwill (a)	$	3,567,646

(a)	Goodwill is not deductible for tax purposes.

CyberViking, LLC.

On July 1, 2022, we entered into a stock purchase agreement with CyberViking and its interest holders, pursuant to which we acquired all of the issued and outstanding units of CyberViking, with CyberViking becoming a wholly owned subsidiary of our company. We anticipate that this will expand our professional services offerings and capabilities. CyberViking specializes in application security services, incident response, and threat hunting as well as the creation and management of security operation centers.

We did not acquire assets nor assume liabilities in our purchase of CyberViking, as a result the $1,836,320 of consideration paid is recognized as goodwill. The goodwill is not deductible for tax purposes.

CUATROi.

On August 25, 2022, we entered into a stock purchase agreement with CUATROi and its partners, pursuant to which CUATROi became our wholly owned subsidiary. We anticipate that this will expand our professional services offerings and capabilities. CUATROi is a cloud, managed services provider & cybersecurity company with offices in South America.

The aggregate purchase price was allocated to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values as of the acquisition date, with the excess recorded to goodwill. During the measurement period, which will not exceed one year from closing, we will continue to obtain information to assist us in finalizing the acquisition date fair values. Any qualifying changes to our preliminary estimates will be recorded as adjustments to the respective assets and liabilities, with any residual amounts allocated to goodwill.

The following table summarizes the preliminary estimated acquisition date fair values of the assets acquired and liabilities assumed:


Consideration paid	$	6,847,474

Tangible assets acquired:
Cash		77,804
Accounts receivable		478,210
Prepaid expenses and other current assets		51,464
Property and equipment		434,816
Total tangible assets		1,042,294

Assumed liabilities:
Accounts payable and accrued expenses		242,830
Loans payable		850,199
Total assumed liabilities		1,093,029

Net liabilities assumed		50,735

Goodwill (a)	$	6,898,209

(a)

Goodwill and intangibles are not deductible for tax purposes.

NLT Secure

On September 1, 2022, we entered into a stock purchase agreement with NLT Secure and its interest holders, pursuant to which we acquired all of the issued and outstanding units of NLT Secure with them becoming a wholly owned subsidiary of our company. We anticipate that this will expand our professional services offerings and capabilities. NLT Secure provides a broad range of security solutions and managed services to organizations throughout South America.

The aggregate purchase price was allocated to the tangible and intangible assets acquired and liabilities assumed based on their estimate fair values as of the acquisition date, with the excess recorded to goodwill. During the measurement period, which will not exceed one year from closing, we will continue to obtain information to assist us in finalizing the acquisition date fair values. Any qualifying changes to our preliminary estimates will be recorded as adjustments to the respective assets and liabilities, with any residual amounts allocated to goodwill.

The following table summarizes the preliminary estimated acquisition date fair values of the assets acquired and liabilities assumed:


Consideration paid	$	6,919,597

Tangible assets acquired:
Cash		48,858
Accounts receivable		66,972
Prepaid expenses and other current assets		154,300
Property and equipment		1,071,401
Total tangible assets		1,341,531

Assumed liabilities:
Accounts payable and accrued expenses		791,228
Loans payable		1,778,591
Total assumed liabilities		2,569,819

Net liabilities assumed		1,228,288

Goodwill (a)	$	8,147,885

(a)	Goodwill and intangibles are not deductible for tax purposes.

Pro forma financial information is not presented because the acquisitions were not material to our financial statements, individually or in the aggregate.