Purchase Agreement

9 Months Ended

Apr. 30, 2018

Purchase Agreement [Abstract]

PURCHASE AGREEMENT

NOTE 9 – PURCHASE AGREEMENT

On December 1, 2017, Shift8 and Synergy Telecom, Inc., a Delaware corporation ("Synergy"), closed a transaction to acquire all the assets, assumed all customers, and critical vendor arrangements from Synergy. Shift8 acquired Synergy to increase its customer base and obtain higher efficiency of its existing infrastructure. Shift8 paid $125,000 upon execution of the agreement, issued 500,000 shares of common stock with a market value of $175,000, and entered into a promissory note for $125,000 with an effective annual interest rate of 6% with 5 quarterly payments and a maturity date of February 28, 2019.

The total purchase price was $425,000, the acquisition was accounted for under the purchase method of accounting, with Digerati identified as the acquirer. Under the purchase method of accounting, the aggregate amount of consideration assumed by Digerati was allocated to customer contracts acquired, software licenses, and intangible assets based on their estimated fair values as of December 1, 2017. Allocation of the purchase price is based on the best estimates of management.

The following information summarizes the allocation of the fair values assigned to the assets at the purchase date. The allocation of fair values is preliminary and is subject to change in the future during the measurement period.

	Synergy
Non-compete Agreement	$	100,000
Customer contracts		220,000
License - software		105,000
Total identifiable assets	$	425,000
Total Purchase price	$	425,000

The following table summarizes the cost of amortizable intangible assets related to the acquisition:

	Estimated		Useful life
	Cost		(years)
License - software	$	105,000		2
Non-compete Agreement		100,000		5
Customer contracts		220,000		2
Total	$	425,000

The Company incurred approximately $10,000 in costs associated with the acquisition. These included legal, and accounting.

The Company expensed these cost during the nine months ended April 30, 2018.

Proforma

The results of Synergy Telecom, are included in the consolidated financial statements effective December 1, 2017.

The following schedule contains pro-forma consolidated results of operations for the nine months ended April 30, 2018 and 2017 as if the acquisition occurred on August 1, 2017. The pro forma results of operations are presented for informational purposes only and are not indicative of the results of operations that would have been achieved if the acquisition had taken place on August 1, 2017, or of results that may occur in the future.

	Nine months ended April 30,
	2018						2017
	Reported			Pro Forma			Reported			Pro Forma
Revenue	$	403		$	541		$	137		$	470
Income (loss) from operations		(2,452	)		(2,480	)		(1,556	)		(1,463	)
Net income (loss)	$	(2,547	)	$	(2,575	)	$	(1,556	)	$	(1,463	)
Earnings (loss) per common share-Basic and Diluted	$	(0.26	)	$	(0.26	)	$	(0.26	)	$	(0.24	)