Quarterly report pursuant to sections 13 or 15(d)

Acquisitions (Tables)

Acquisitions (Tables)

9 Months Ended

Sep. 30, 2013

Summary of Preliminary Purchase Price Allocation to Assets Acquired

The following summarizes the preliminary purchase price allocation to the acquired assets. The final allocation will be completed within one year of the acquisition:


Customer revenue contracts	$	1,599,000
Gain on bargain purchase		(742,750	)

Preliminary purchase price	$	856,250

Business Acquisition Proforma Information

The following supplemental proforma information assumes the acquisitions referred to above had been completed as of January 1, 2012 and is not indicative of the results of operations that would have been achieved had the transactions been consummated on such date or of results that might be achieved in the future.


	Nine Months Ended September 30, 2013			Year Ended December 31, 2012
Revenues	$	24,085,000		$	18,485,000
Loss from Continuing Operations		(20,252,000	)		(22,395,000	)
Net Loss		(20,252,000	)		(22,394,000	)

Pro Forma Loss from Continuing Operations not Attributable to Aquisitions

The pro forma loss from continuing operations and net loss reflect the following charges recorded included in the historical results of the Company and Seesmart that are not directly attributed to the acquisitions:


	Nine Months Ended September 30, 2013			Year Ended December 31, 2012
Change in fair value of embedded derivative	$	(6,990,000	)	$	—
Impairment charge		—			(3,397,000	)

Gain on debt restructuring		—			1,048,000

Relume loss on extinguishment of debt pre acquisition					(1,700 000	)

	$	(6,990,000	)	$	(4,049,000	)

Pro Forma Loss from Continuing Operations Atributable to Acquisitions

The pro forma loss from continuing operations and net loss also reflect the following charges and credit directly attributable to the acquisitions:


	Nine Months Ended September 30, 2013			Year Ended December 31, 2012
Recorded by Company:
Gain on bargain purchase of business	$	743,000		$	—
Recorded by Seesmart pre acquisition:
Fee paid by sellers in connection with the transaction		—			(1,934,000	)
Change in control premium related to debt settled		—			(530,000	)
Recorded by Relume pre acquisition:
Fees incurred by the sellers		(350,000	)		—
Change in control payment from sellers to management		(737,000	)		—
Loss on settlement of debt from proceeds of merger		(4,157,000	)		—
Gain on deconsolidation of subsidiary		1,573,000			—

	$	(2,928,000	)	$	(2,464,000	)

Relume Technologies Inc

Preliminary Values Assigned to Assets Acquired and Liabilities Assumed

The following amounts represent the preliminary determination of the fair value of identifiable assets acquired and liabilities assumed from the Relume acquisition. The final determination of the fair value of certain assets and liabilities including income taxes and contingencies will be completed within the one-year measurement period from the date of acquisition as required by the FASB ASC Topic 805, “Business Combinations.”


Cash	$	61,000
Accounts receivable		851,000
Inventory		2,499,000
Goodwill		7,184,000
Technology		2,020,000
Trademarks		1,200,000
Customer relationships		680,000
Other assets		618,000

Assets acquired	$	15,113,000


Accounts payable	$	2,574,000
Accrued liabilities		795,000
Other current liabilities		26,000
Capital lease obligations		110,000

Liabilities assumed	$	3,505,000

Preliminary purchase price (enterprise value)	$	11,608,000

Seesmart Technologies Incorporated

Preliminary Values Assigned to Assets Acquired and Liabilities Assumed

The following amounts represent the preliminary determination of the fair value of identifiable assets acquired and liabilities assumed from the Seesmart acquisition. The final determination of the fair value of certain assets and liabilities including income taxes and contingencies, including the litigation discussed in Note 13, will be completed within the one-year measurement period from the date of acquisition.


Cash	$	68,661
Accounts receivable		1,048,345
Inventory		1,352,326
Goodwill		10,165,993
Customer relationships		7,273,000
Trademarks		3,434,000
Other assets		333,470

Assets acquired	$	23,675,795


Accounts payable	$	2,692,065
Accrued liabilities		1,137,045
Deferred revenue		104,000
Customer deposits		1,466,750

Liabilities assumed	$	5,399,860


Preliminary purchase price	$	18,275,935