Quarterly report pursuant to Section 13 or 15(d)

Acquisition

v3.3.0.814
Acquisition
9 Months Ended
Sep. 30, 2015
Business Combinations [Abstract]  
Acquisition

NOTE 3 – ACQUISITION

 

On February 23, 2015 the Company entered into an agreement whereby, the Company issued an aggregate of 2.5 million shares of its 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”), an internet company that began operations in September 2014.

 

The acquisition of Franklin has been accounted for as a purchase and the operations of Franklin have been consolidated since February 23, 2015, the effective date of the acquisition. The $1.7 million purchase price was allocated based upon the fair value of the acquired assets, as determined by management with the assistance of an independent valuation firm. The allocation of the purchase price was as follows:

 

Intangible assets:    
·         Domains and websites   $ 591,229  
·         Covenants not to compete     79,902  
Deferred tax liability     (117,741 )
Goodwill     1,146,610  
Purchase price   $ 1,700,000  

 

The Company estimates that the intangible assets will have a life of 3.5 to 10 years.

 

During the period ended September 30, 2015, the Company recorded amortization expense of $40,976. As of September 30, 2015, the unamortized balance of these intangible assets amounted to $630,155. The recorded goodwill of $1,146,610 is not amortized and will be subject to impairment analysis at least annually.

 

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 by December 2015. 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.