Acquisitions

6 Months Ended

Jun. 30, 2018

Business Combinations [Abstract]

Acquisitions

Note 3 - Acquisitions

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.

On April 2, 2018, the Company entered into and closed an asset purchase agreement with Electronic Check, a Missouri corporation, pursuant to which the Company purchased certain assets from Electronic Check, including, but not limited to, assets associated with software that validates written check authenticity. The purchase price was $75,000 in cash, and the Company issued 250,000 shares of common stock of the Company and warrants to purchase 250,000 shares of common stock that are exercisable for a period of five years at a fixed exercise price of $2.70 per share.

On April 2, 2018, the Company entered into and closed an asset purchase agreement with CSLS, a Missouri corporation, pursuant to which the Company purchased certain assets from CSLS, including, but not limited to, assets associated with the a system to recover funds from returned checks, in consideration for $25,000.

The Company entered into these asset purchase agreements to acquire the software needed 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 shown below. The purchase price allocation is 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.

				Electronic
	ECS			Check			CSLS		Total
Purchase price
Cash	$	100,000		$	75,000		$	25,000	$	200,000
Shares of common stock		1,010,000	a		695,000	c		—		1,705,000
Secured promissory note		1,000,000			—			—		1,000,000
Warrants		992,958	b		682,919	d		—		1,675,877
	$	3,102,958		$	1,452,919		$	25,000	$	4,580,877
Allocation of purchase price
Property and equipment	$	50,000		$	15,000		$	—	$	65,000
Software		1,000,000			50,000			25,000		1,075,000
Goodwill		2,052,958			1,387,919			—		3,440,877
Purchase price	$	3,102,958		$	1,452,919		$	25,000	$	4,580,877

a. the fair value of the 500,000 shares of common stock was calculated based on the closing market price of the Company’s common stock at the date of acquisition.

b. the fair value of the 500,000 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%

c. the fair value of the 250,000 shares of common stock was calculated based on the closing market price of the Company’s common stock at the date of acquisition.

d. the fair value of the 250,000 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 assets included in the results of operations from the date of acquisition to June 30, 2018 was $10,845,896.

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

	Six Months Ended June 30,
	2018			2017
Sales	$	26,733,878		$	13,621,042
Cost of goods sold		25,862,148			13,215,967
Gross profit		871,730			405,075
Operating expenses		21,900,805			1,779,178
Loss from operations		(21,029,075	)		(1,374,103	)
Net loss		(21,646,332	)		(2,448,098	)
Loss per share		(0.20	)		(0.06	)