Quarterly report pursuant to Section 13 or 15(d)

Acquisitions

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Acquisitions
3 Months Ended
Mar. 31, 2015
Business Combinations [Abstract]  
Acquisitions

NOTE 3 - ACQUISITIONS

 

On February 23, 2015 the Company entered into a material definitive agreement whereby, the Company issued an aggregate of 2.5 million shares of the restricted common stock valued at $1,700,000, in exchange for all of the issued and outstanding shares of Franklin Networks, Inc., a Tennessee corporation (“Franklin”), a company that began operations in September 2014.

 

In addition, effective March 2, 2015, the Company entered into an employment contract with Mark McGarrity, a former owner of Franklin, in which Mr. McGarrity agreed to oversee and guide the Company’s information technologies related to the development and maintenance of the Company’s web sites, mobile applications, games, and advertising in connection to software development. The Company agreed to compensate Mr. McGarrity with an annualized base salary of $120,000 and a signing bonus of 250,000 shares of restricted common stock with a fair value of $145,000. The shares of common stock contain provisions restricting Mr. McGarrity to selling no more than 5,000 shares daily for every 250,000 shares of daily trading volume after Mr. McGarrity complies with Rule 144.

 

The assets of Franklin consisted primarily of intangible assets including employment contracts, consulting contracts, customer lists, customer relationships, trade secrets, trade designs, technical expertise, know how, proposals, internet web domains, internet web sites, trade names, other intellectual property, and contractual relationships with Ad Service providers. This acquisition will be accounted for using the purchase method of accounting. The Company’s management estimates that there are identifiable intangible assets, principally, the domains or websites, of approximately $265,000 with the remainder of the purchase price of $1,435,000 recorded to goodwill at March 31, 2015. The Company estimates that the intangible assets will have a life of 3 years. The Company plans to update its purchase price allocation upon completion of an independent valuation firm’s measurement and allocation of the purchase price based upon the fair value of the acquired assets.

 

The Company will amend its Form 8-K filed on February 27, 2015 to include audited financial statements and pro forma information for Franklin. As Franklin did not operate in the corresponding period in the previous year, no pro-forma financial information was available.