Acquisition

3 Months Ended

Mar. 31, 2018

Business Combinations [Abstract]

Acquisition

Note 3 - Acquisition

On March 16, 2018, the Company entered into and closed an asset purchase agreement dated March 1, 2018 with ECS Prepaid LLC (“ECS”), a Missouri limited liability company, pursuant to which the Company purchased certain assets from ECS, including, but not limited to, the processing prepaid platform, servers, POS terminals, customer list, a processing software program and goodwill, in consideration of $1,100,000 of which $100,000 was paid on the Closing Date and the balance is to be paid pursuant to a secured promissory note in the amount of $1,000,000. In addition, the Company issued 500,000 shares of common stock of the Company and warrants to purchase 500,000 shares of common stock that are exercisable for a period of five years at a fixed exercise price of $1.85 per share. The note is secured by the assets acquired by the Company from ECS and the Company is required to make ten equal principal payments of $100,000 commencing on April 15, 2018. The Company may prepay the note at any time without penalty.

The Company entered into this asset purchase agreement to acquire the software need to process transactions for its prepaid business and to acquire additional terminal locations by which the Company will deploy its technology.

A summary of the purchase price and the purchase price allocations at fair value is below. The purchase price allocation is a preliminary and subject to change. The Company has not yet completed its analysis to determine the fair value of the assets acquired on the acquisition date. Once this analysis is complete, the Company will adjust, if necessary, the provisional amounts assigned to the assets purchased in the accounting period in which the analysis is completed.

Purchase price
Cash	$	100,000
500,000 shares of common stock (1)		1,010,000
Secured promissory note		1,000,000
500,000 warrants (2)		992,958
	$	3,102,958
Allocation of purchase price
Property and equipment	$	50,000
Software		1,000,000
Goodwill		2,052,958
Purchase price	$	3,102,958

(1) – the fair value of the common stock was calculated based on the closing market price of the Company’s common stock at the date of acquisition.

(2) -- the fair value of the 9,000,000 warrants was determined using the Black-Scholes option pricing model with the following assumptions:

● Expected life of 5.0 years

● Volatility of 210%;

● Dividend yield of 0%;

● Risk free interest rate of 2.65%

The revenue from the acquisition of the ECS assets included in the results of operations from the date of acquisition on to March 31, 2018 was $4,027,614.

The unaudited pro forma information below present statement of operations data as if the acquisition of the ECS assets took place on January 1, 2017.

	Three Months Ended March 31,
	2018			2017
Sales	$	13,192,736		$	6,531,712
Cost of goods sold		12,919,309			6,571,859
Gross profit		273,427			(40,147	)
Operating expenses		14,237,155			421,255
Loss from operations		(13,963,728	)		(461,402	)
Net loss		(14,163,024	)		(462,407	)
Loss per share		(0.16	)		(0.02	)