Annual report pursuant to Section 13 and 15(d)

Acquisition of business

v3.7.0.1
Acquisition of business
 12 Months Ended
Dec. 31, 2016
Business Combinations [Abstract]  
Acquisition of business

Note 7 - Acquisition of business

 

On October 25, 2016, the Company, through its wholly-owned subsidiary (the "Subsidiary"), entered into and closed two Asset Purchase Agreements (collectively, the "Purchase Agreements") with ABC Services Inc. (“ABC I”), a New York corporation, and ABC Services II Inc. ("ABC II" and collectively with ABCI, "ABC"), a New York Corporation, pursuant to which the Subsidiary purchased certain assets from ABC, including tangible assets and service agreements, in consideration of an aggregate 64,669,936 shares of common stock of the Company (the "Shares"). The Closing occurred on October 25, 2016

 

On October 25, 2016, the Company acquired the assets of ABC of Melville, N Y for a preliminary purchase price of $1.75 million in the Company’s common stock. The purchase price is preliminary pending final purchase accounting adjustments, and the stock consideration to the seller was approved and executed by the Company’s board of directors.

 

ABC Services was a leading server and network solutions provider empowering their customers with innovative business technology, and helping them to prosper and surpass their competition with the ability and resources to meet all their IT systems integration needs, quickly and cost effectively.

 

Through October 25, 2016, the Company had a 50% non-controlling ownership interest in Secure Infrastructure & Services, LLC who provides Infrastructure-as-a-Service (IaaS) for IBM iSeries and AIX v7 systems, Power HA services and network infrastructure hardware and services as needed to support the IaaS and PowerHA implementation and ongoing needs for customers and services sold under the Company. The Company acquired control over the other 50% owner, so it now owns the JV 100% since the acquisition date.

 

The acquisition was accounted for as a business combination using the acquisition method. The Company is in the process of obtaining an independent appraisal. Therefore, a preliminary allocation of the purchase price to the acquired assets, liabilities, and goodwill is presented in the table below.

  

Cash   $ 241,583  
         
Accounts receivable     433,963  
         
Prepaid and other assets     41,448  
         
Property, plant and equipment     25,292  
         
Intangible assets     10,000  
         
Goodwill     1,783,872  
         
Current liabilities     (772,206 ) 
         
Purchase price   $ 1,763,952  

  

Goodwill is calculated as the excess of the purchase price over the fair value of the net assets recognized. The goodwill recorded as part of the acquisition primarily reflects the value of the potential to expand. A portion of the goodwill balance is expected to be deductible for income tax purposes. The Company recognized approximately $45,000 of transaction costs related to the acquisition and the charges were reported in selling, general and administrative expense in the Company’s Consolidated Statements of Operations.

 

Operating results for this acquisition have been included in the Company’s Consolidated Statements of Operations from the date of acquisition.

 

    2016     2015  
Revenue     8,474,143       8,143,567  
                 
Loss from operations     (591,393 )     (614,410 )
                 
Net Loss     (692,667 )     (614,410 )
                 
Preferred dividend     (106,065 )     (96,013 )
                 
Net loss attributable to common shareholders     (798,732 )     (710,423 )
                 
Net loss per share     (0.01 )     (0.01 )