| 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 |
|
|