5. Sale of Assets of Discontinued Operations (Tables)

9 Months Ended

Sep. 30, 2013

Discontinued Operations and Disposal Groups [Abstract]

Discontinued operations results of operations

On April 2, 2013 Company entered into an Asset Purchase agreement With Blackwatch International, Inc as follows :

Consideration received from sale of Government assets:
Cash	$	200,000
Seller notes assumed by buyer		282,456
Note receivable from buyer**		700,000
Total consideration	$	1,182,456
Other Contingencies considerations:
3% of gross revenues on Phase II of an SBIR contract for 24 months if awarded.		–
Pay up to $100,000 for each of the next two years in the event that certain contract are  rebid and funded		–
Total consideration received on sale of assets		1,182,456
Carrying value of Lattice Government assets sold (see below)		661,013
Gain (loss) on sale of Government segment assets	$	521,443
Carrying value of assets disposed of:
Goodwill and intangibles		842,933
Non-controlling interest		(120,133	)
Deferred tax liability		(61,787	)
		661,013

** 3% annum interest rate,  12 equal quarterly installments payments of $61,216.03 over a 3 year period first installment being 7/31/2013 with each successive payment being on the 15th day of the month following close each calendar quarter.

With the Company’s decision to exit the Government services business, the results of operations and cash flows from this business have been classified as discontinued operations.

The following table shows the results of operations of Lattice Government Services segment for the nine months ended September 30, 2013 and 2012 which are included in the net income (loss) from discontinued operations: 

	Three Months Ended  September 30,						Nine Months Ended  September 30,
	2013			2012			2013			2012
Revenue	$	–		$	608,947		$	603,616		$	2,569,966
Cost of Revenue		–			349,046			300,033			1,503,896
Gross Profit		–			259,891			303,583			1,066,070
					42.7%			50.3%			41.5%
Selling, general and administrative expenses		10,257			311,229			414,010			913,864
Amortization expense		–			80,448			80,448			241,344
Income (loss) from operations		(10,257	)		(131,786	)		(190,875	)		(89,138	)
Interest expense		(1,016	)		(23,246	)		(11,897	)		(83,394	)
Gain on sale of discontinue operation		–			–			521,443			–
Income (Loss) before taxes		(11,273	)		(155,032	)		318,671			(172,532	)
Income taxes (benefit)		–			(32,397	)		(32,397	)		(97,191	)
Net income (loss) from Discontinued operations	$	(11,273	)	$	(122,635	)	$	351,068		$	(75,341	)

Assets and liabilities to be disposed

As a result of the decision to exit the Government services business, the assets and liabilities to be disposed of are comprised of the following:

	September 30,		December 31,
	2013		2012
	(unaudited)
Goodwill		–		690,871
Intangible assets, net		–		232,510
Note payable		–		282,456
Deferred tax liability		–		61,787
Non-controlling interest		–		120,133