x
|
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
For the quarterly period ended June 30, 2013
|
o
|
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
|
For the transition period from ________to_______
|
Illinois
|
65-0254624
|
|
(State or other jurisdiction of
incorporation or organization)
|
(IRS Employer
Identification No.)
|
Large accelerated filer o
|
Accelerated filer o
|
Non-accelerated filer o
|
Smaller reporting company x
|
(Do not check if a smaller reporting company)
|
PART I. FINANCIAL INFORMATION
|
||
Item 1.
|
3
|
|
3
|
||
4
|
||
5
|
||
Notes to Consolidated Financial Statements | 6 | |
Item 2.
|
11
|
|
Item 3.
|
19
|
|
Item 4.
|
19
|
|
Part II. OTHER INFORMATION
|
||
Item 1.
|
20
|
|
Item1A.
|
20
|
|
Item 2.
|
20
|
|
Item 3.
|
20
|
|
Item 4.
|
20
|
|
Item 5.
|
20
|
|
Item 6.
|
21
|
|
22
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Item 1.
|
June 30, 2013
|
December 31, 2012
|
|||||||
(Unaudited)
|
(Audited)
|
|||||||
ASSETS
|
||||||||
Current Assets
|
||||||||
Cash
|
$
|
68,471
|
$
|
86,770
|
||||
Accounts Receivables (net of allowance for doubtful accounts of $ 782,966
and $ 603,442 for June 30, 2013 and December 31, 2012 respectively)
|
6,572,856
|
4,267,766
|
||||||
Other current assets
|
736,193
|
1,199,907
|
||||||
Total current assets
|
7,377,520
|
5,554,443
|
||||||
Property and equipment - net
|
11,239
|
3,500
|
||||||
Other assets
|
2,839,022
|
2,566,470
|
||||||
Intangible assets, net
|
19,165,837
|
9,785,019
|
||||||
TOTAL ASSETS
|
$
|
29,393,618
|
$
|
17,909,432
|
||||
LIABILITIES AND STOCKHOLDERS' EQUITY
|
||||||||
Current Liabilities
|
||||||||
Accounts payable and accrued expenses
|
$
|
6,563,299
|
$
|
2,962,421
|
||||
Note payable - Revolver
|
4,400,600
|
2,857,396
|
||||||
Current maturities - long term debts, less debt discount
|
1,889,458
|
688,891
|
||||||
Total current liabilities
|
12,853,357
|
6,508,708
|
||||||
Long term debt less current maturities
|
9,047,026
|
7,536,781
|
||||||
Common stock payable
|
1,304,423
|
1,163,673
|
||||||
Contingent Earn Outs
|
2,900,000
|
-
|
||||||
Derivative liability
|
134,152
|
249,164
|
||||||
Total liabilities
|
26,238,958
|
15,458,326
|
||||||
Stockholders' Equity
|
||||||||
Common stock - $0.001 par value; authorized: 200,,000,000 shares:
issued and outstanding 63,065,071and 54,609,615 at June 30, 2013
and December 31, 2012, respectively
|
63,065
|
54,609
|
||||||
Additional paid-in capital
|
14,175,648
|
11,631,644
|
||||||
Accumulated Deficit
|
(11,084,053
|
)
|
(9,235,147
|
)
|
||||
Total stockholders' equity
|
3,154,660
|
2,451,106
|
||||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
|
$
|
29,393,618
|
$
|
17,909,432
|
Three Months Ending June 30,
|
Six Months Ending June 30,
|
|||||||||||||||
2013
|
2012
|
2013
|
2012
|
|||||||||||||
Revenue
|
$
|
9,097,604
|
$
|
6,656,920
|
$
|
19,005,059
|
$
|
13,384,559
|
||||||||
Cost of revenue
|
6,681,494
|
5,369,565
|
14,225,345
|
10,685,688
|
||||||||||||
Gross Margin
|
2,416,110
|
1,287,355
|
4,779,714
|
2,698,871
|
||||||||||||
General and administrative expenses
|
(1,264,312
|
)
|
(793,019
|
)
|
(2,340,831
|
)
|
(1,524,935
|
)
|
||||||||
Amortization and depreciation expense
|
(1,342,605
|
)
|
(1,011,559
|
)
|
(2,499,677
|
)
|
(2,023,121
|
)
|
||||||||
Legal Judgment -Financing
|
(692,000
|
)
|
-
|
(692,000
|
)
|
-
|
||||||||||
Interest expense
|
(638,148
|
)
|
(407,903
|
)
|
(1,211,124
|
)
|
(840,039
|
)
|
||||||||
Derivative gain
|
57,508
|
93,336
|
115,012
|
6
|
||||||||||||
Net loss before income taxes
|
(1,463,447
|
)
|
(831,790
|
)
|
(1,848,906
|
)
|
(1,689,218
|
)
|
||||||||
Income taxes
|
-
|
-
|
-
|
-
|
||||||||||||
Net loss
|
$
|
(1,463,447
|
)
|
$ |
(831,790
|
)
|
$ |
(1,848,906
|
)
|
$ |
(1,689,218
|
)
|
||||
Net loss per common share - basic and diluted
|
$
|
(0.02
|
)
|
$
|
(0.02
|
)
|
$
|
(0.03)
|
$
|
(0.03
|
)
|
|||||
Weighted average common shares - basic and diluted
|
60,010,126
|
51,740,448
|
58,358,431
|
51,740,448
|
For the Six Months Ending June 30,
|
||||||||
2013
|
2012
|
|||||||
Cash flows from operating activities: | ||||||||
Net loss
|
$
|
(1,848,906
|
)
|
$
|
(1,689,219
|
)
|
||
Adjustments to reconcile net loss to net cash
provided by operating activities:
|
||||||||
Derivative gain
|
(115,012
|
)
|
(6
|
)
|
||||
Accretion of interest
|
134,443
|
111,110
|
||||||
Amortization and depreciation
|
2,499,677
|
2,023,631
|
||||||
Doubtful accounts
|
179,524
|
136,867
|
||||||
Issuance of Stock for services
|
27,550
|
-
|
||||||
Changes in assets and liabilities
|
||||||||
Accounts receivable
|
(2,484,614
|
)
|
224,331
|
|||||
Other current assets
|
463,714
|
(925,460
|
)
|
|||||
Other assets
|
(272,552
|
)
|
128,524
|
|||||
Accounts payable and accrued expenses
|
1,768,878
|
419,753
|
||||||
Net cash provided by operating activities
|
352,702
|
429,531
|
||||||
Cash flows from investing activities:
|
||||||||
Purchase of fixed assets
|
(8,239
|
)
|
-
|
|||||
Acquisition of assets (net of liabilities assumed of $1,832,000, notes payable assumed of $3,268,000,
contingent payments of $2,900,000 and accrual/issuance of common stock of $2,330,000)
|
(1,550,000
|
)
|
-
|
|||||
Net cash used in investing activities
|
(1,558,239
|
)
|
-
|
|||||
Cash flows from financing activities:
|
||||||||
Proceeds from sales of common stock
|
300,000
|
-
|
||||||
Proceeds from Long Term Debt
|
840,000
|
-
|
||||||
(Decrease) increase in note payable - revolver
|
1,543,204
|
(811,415
|
)
|
|||||
Payments of long-term debt
|
(1,495,966
|
)
|
(436,189
|
)
|
||||
Payments of notes payable
|
-
|
(140,000
|
)
|
|||||
Net cash (used in) provided by financing activities
|
1,187,238
|
(1,387,604
|
)
|
|||||
Net decrease in cash
|
(18,299
|
)
|
(958,073
|
)
|
||||
Cash - Beginning of year
|
86,770
|
1,079,248
|
||||||
Cash - End of year
|
$
|
68,471
|
$
|
121,175
|
||||
Supplemental disclosure of noncash information
|
||||||||
Cash paid for:
|
||||||||
Interest
|
$
|
750,962
|
$
|
871,632
|
||||
Income taxes
|
$
|
-
|
$
|
-
|
||||
Noncash transactions
|
||||||||
Increase in common stock payable
|
$
|
140,750
|
|
$
|
-
|
|||
Noncash considerations for acquisitions
|
$
|
5,230,000
|
$ | - |
Fair value of consideration transferred from the acquisitions:
|
||||||||||||||||
TTS
|
Momentum
|
BlazerFish
|
Total
|
|||||||||||||
Cash
|
$
|
900,000
|
$
|
400,000
|
$
|
250,000
|
$
|
1,550,000
|
||||||||
Common stock
|
1,000,000
|
330,000
|
1,000,000
|
2,330,000
|
||||||||||||
Contingent payments
|
1,500,000
|
800,000
|
600,000
|
2,900,000
|
||||||||||||
$
|
3,400,000
|
$
|
1,530,000
|
$
|
1,850,000
|
$
|
6,780,000
|
|||||||||
Recognized amounts of identifiable assets acquired and liabilities assumed:
|
||||||||||||||||
Customer lists intangibles
|
$
|
7,650,000
|
$
|
1,530,000
|
$
|
185,000
|
$
|
9,365,000
|
||||||||
Technology stack intangibles
|
850,000
|
-
|
1,665,000
|
2,515,000
|
||||||||||||
Certain accounts payable and accrued liabilities
|
(1,832,000
|
)
|
-
|
-
|
(1,832,000
|
)
|
||||||||||
Notes payable
|
(3,268,000
|
)
|
-
|
-
|
(3,268,000
|
)
|
||||||||||
$
|
3,400,000
|
$
|
1,530,000
|
$
|
1,850,000
|
$
|
6,780,000
|
Gross Sales:
|
$
|
20,562,012
|
||
Net Loss:
|
$
|
(1,955,536
|
)
|
June 30,
2013
|
December 31,
2012
|
|||||||
Customer list – Q4 Consulting
|
$
|
7,131,196
|
$
|
7,131,196
|
||||
Customer list – Q4 Solutions
|
5,561,000
|
5,561,000
|
||||||
Technology stack – Q4 Solutions
|
5,600,000
|
5,600,000
|
||||||
Technology stack – Empower HR
|
175,000
|
175,000
|
||||||
Customer list – Q4 Cloud
|
7,650,000
|
-
|
||||||
Technology stack – Q4 Cloud
|
850,000
|
-
|
||||||
Customer list – Q4 Mobility
|
1,715,000
|
-
|
||||||
Technology stack – Q4 Mobility
|
1,665,000
|
-
|
||||||
30,347,196
|
18,467,196
|
|||||||
Accumulated amortization
|
(11,181,359
|
)
|
(8,682,177
|
)
|
||||
$
|
19,165,837
|
$
|
9,785,019
|
Beginning of the Year
|
$
|
9,785,019
|
||
Additions
|
11,880,000
|
|||
Amortization
|
(2,499,182
|
)
|
||
End of the quarter
|
$
|
19,165,837
|
June 30,
2013
|
December 31,
2012
|
|||||||
Note payable due December 31, 2014, as extended, plus interest at 5% per annum
|
$
|
1,160,825
|
$
|
1,153,658
|
||||
Seller note payable due December 31, 2014, as extended, plus interest at 5% per annum
|
5,110,807
|
5,850,807
|
||||||
Convertible debenture payable to a finance company due April 1, 2014, plus interest at 16% per annum
|
350,000
|
350,000
|
||||||
Convertible Debenture payable to a finance company due July 1, 2013, plus interest at 16% per annum (c)
|
679,867
|
679,867
|
||||||
Note payable due December 31, 2014 plus interest at 15% per annum
|
283,207
|
364,671
|
||||||
Note payable due February 6, 2015 plus interest at 10% per annum (a)
|
1,000,000
|
-
|
||||||
Note payable due May 6, 2014 plus interest at 16% per annum (a)
|
1,585,500
|
-
|
||||||
Note payable due May 9, 2013 plus interest at 16% per annum (a)(c)
|
558,471
|
-
|
||||||
Note payable due June 30, 2013 plus interest at 12% per annum (b)(c)
|
246,695
|
-
|
||||||
Less Discount
|
(38,888
|
) |
(173,331
|
)
|
||||
Total debts
|
10,936,484
|
8,225,672
|
||||||
Less: Current maturities
|
(1,889,458
|
)
|
(688,891
|
)
|
||||
Total long-term debt
|
$
|
9,047,026
|
$
|
7,536,781
|
(a)
|
On February 8th, 2013, the Company issued three separate notes of varying maturity and varying amounts for the purchase of Teledata Technology Solutions’ assets.
|
(b)
|
During the first quarter, the Company borrowed short term funds of $314,833 at the interest rate of 12% per annum to be retired in full on or before June 30th, 2013.
|
(c)
|
For these notes, management is working with noteholders to extend these notes based on their current terms.
|
June 30,
2013
|
December 31,
2012
|
|||||||
Warrants
|
$
|
134,152
|
$
|
249,164
|
||||
Conversion feature
|
-
|
-
|
||||||
Derivative liability
|
$
|
134,152
|
$
|
249,164
|
June 30,
2013
|
December 31,
2012
|
||||||||||
Risk free interest rate
|
.41 | % | - |
.72
|
%
|
.72
|
%
|
||||
Expected volatility
|
433
|
%
|
449
|
%
|
|||||||
Expected dividend yield
|
0
|
0
|
Warrants – financing and stock subscription
|
9,966,944
|
|||
Conversion – financing
|
2,059,734
|
|||
Warrants – Proposed, but unissued, for directors, management and consultants
|
2,500,000
|
|||
14,526,678
|
Three months ending June 30,
|
||||||||||||||||
2013
|
2012
|
Increase/ (Decrease)
|
Percent
|
|||||||||||||
Revenue
|
$
|
9,097,604
|
6,656,920
|
2,440,684
|
37
|
%
|
||||||||||
Cost of Revenue
|
(6,681,494
|
)
|
(5,369,565
|
)
|
(1,311,929
|
)
|
24
|
%
|
||||||||
Gross Margin
|
2,416,110
|
1,287,355
|
1,128,755
|
88
|
%
|
|||||||||||
General and administrative expenses
|
(1,264,312
|
)
|
(793,019
|
)
|
(471,293
|
) |
59
|
%
|
||||||||
Amortization of intangible assets
|
(1,342,605
|
)
|
(1,011,559
|
)
|
(331,046
|
) |
33
|
%
|
||||||||
Interest, Legal Judgment –Financing and derivative gain
|
(1,272,640
|
)
|
(314,567
|
)
|
(958,073
|
) |
305
|
%
|
||||||||
Net loss
|
$
|
(1,463,447
|
)
|
$
|
(831,790
|
)
|
$
|
(631,657
|
) |
76
|
%
|
Six months ending June 30,
|
||||||||||||||||
2013
|
2012
|
Increase/ (Decrease)
|
Percent
|
|||||||||||||
Revenue
|
$
|
19,005,059
|
$
|
13,384,559
|
$
|
5,620,500
|
42
|
%
|
||||||||
Cost of Revenue
|
(14,225,345
|
)
|
(10,685,688
|
)
|
(3,539,657
|
)
|
33
|
%
|
||||||||
Gross Margin
|
4,779,714
|
2,698,871
|
2,080,843
|
77
|
%
|
|||||||||||
General and administrative expenses
|
(2,340,831
|
)
|
(1,524,935
|
)
|
(815,896
|
)
|
54
|
%
|
||||||||
Amortization of intangible assets
|
(2,499,677
|
)
|
(2,023,121
|
)
|
(476,556
|
)
|
24
|
%
|
||||||||
Interest, Legal Judgment –Financing and derivative gain
|
(1,788,112
|
)
|
(840,033
|
)
|
(948,079
|
)
|
113
|
%
|
||||||||
Net loss
|
$
|
(1,848,906
|
)
|
$
|
(1,689,218
|
)
|
$
|
(159,688
|
)
|
9
|
%
|
June 30, 2013
|
June 30, 2012
|
|||||||
Net Loss (GAAP Basis)
|
$
|
(1,463,447
|
)
|
$
|
(831,790
|
)
|
||
Interest, Legal Judgment –Financing and derivative gain
|
1,272,640
|
314,567
|
||||||
Amortization expense
|
1,342,605
|
1,011,559
|
||||||
Income Taxes
|
-
|
-
|
||||||
EBITDA
|
$
|
1,151,798
|
$
|
494,336
|
June 30, 2013
|
June 30, 2012
|
|||||||
Net Loss (GAAP Basis)
|
$
|
(1,848,906
|
)
|
$
|
(1,689,218
|
)
|
||
Interest, Legal Judgment –Financing and derivative gain
|
1,788,112
|
840,033
|
||||||
Amortization expense
|
2,499,677
|
2,023,125
|
||||||
Income Taxes
|
-
|
-
|
||||||
EBITDA
|
$
|
2,438,883
|
$
|
1,173,940
|
Item 4.
|
Item 1.
|
Item 1A.
|
Item 3.
|
Item 4.
|
Item 5.
|
Item 6.
|
Exhibit No.:
|
Exhibit
|
|
31.1
|
||
31.2
|
||
32.1
|
||
101
|
The following financial information from Quadrant 4 Systems Corporation’s Quarterly Report on Form 10-Q for the quarter ending June 30, 2013, formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets at June 30, 2013 (unauditied) and December 31, 2012; (ii) Consolidated Statements of Income (Unaudited) for the six months ending June 30, 2013 and 2012, (iii) Consolidated Statements of Cash Flows (Unaudited) for the six months ending June 30, 2013 and 2012
|
QUADRANT 4 SYSTEMS CORPORATION
|
||||
August 12, 2013
|
By:
|
/s/ Dhru Desai
|
||
Dhru Desai
|
||||
Chief Financial Officer and Director
|
Date: August 12, 2013
|
/s/ Nandu Thondavadi
|
|
Nandu Thondavadi
|
||
Chief Executive Officer and Director
|
Date: August 12, 2013
|
/s/ Dhru Desai
|
|
Dhru Desai
|
||
Chief Financial Officer
|
(1)
|
The report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
August 12, 2013
|
By:
|
/s/ Nandu Thondavadi
|
||
Nandu Thondavadi
|
||||
Chief Executive Officer and Director
|
August 12, 2013
|
By:
|
/s/ Dhru Desai
|
||
Dhru Desai
|
||||
Chief Financial Officer and Director
|
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NOTE 11 - FOREIGN OPERATIONS
|
6 Months Ended |
---|---|
Jun. 30, 2013
|
|
Foreign Operations [Abstract] | |
Foreign Operations [Text Block] |
NOTE
11 – FOREIGN OPERATIONS
The
Company’s headquarters and operations are located in
the United States. However, the Company does have some key
suppliers and subcontractors located in India. The Company
and its management team have no ownership, directly or
indirectly, in these key suppliers and subcontractors.
Payments made to India suppliers and subcontractors were
$975,000 and $1,200,000 for the three months ending June 30,
2013 and June 30, 2012, respectively and $1,840,000 and
$1,610,000 for the six months ending June 30, 2013 and June
30, 2012, respectively.
|
CONSOLIDATED STATEMENTS OF OPERATIONS (USD $)
|
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2013
|
Jun. 30, 2012
|
Jun. 30, 2013
|
Jun. 30, 2012
|
|
Revenue | $ 9,097,604 | $ 6,656,920 | $ 19,005,059 | $ 13,384,559 |
Cost of revenue | 6,681,494 | 5,369,565 | 14,225,345 | 10,685,688 |
Gross Margin | 2,416,110 | 1,287,355 | 4,779,714 | 2,698,871 |
General and administrative expenses | (1,264,312) | (793,019) | (2,340,831) | (1,524,935) |
Amortization and depreciation expense | (1,342,605) | (1,011,559) | (2,499,677) | (2,023,121) |
Legal Judgment -Financing | (692,000) | 0 | (692,000) | 0 |
Interest expense | (638,148) | (407,903) | (1,211,124) | (840,039) |
Derivative gain | 57,508 | 93,336 | 115,012 | 6 |
Net loss before income taxes | (1,463,447) | (831,790) | (1,848,906) | (1,689,218) |
Income taxes | 0 | 0 | 0 | 0 |
Net loss | $ (1,463,447) | $ (831,790) | $ (1,848,906) | $ (1,689,218) |
Net loss per common share - basic and diluted (in Dollars per share) | $ (0.02) | $ (0.02) | $ (0.03) | $ (0.03) |
Weighted average common shares - basic and diluted (in Shares) | 60,010,126 | 51,740,448 | 58,358,431 | 51,740,448 |
NOTE 4 - ACQUISITIONS
|
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
|
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Business Combinations [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combination Disclosure [Text Block] |
NOTE
4 – ACQUISITIONS
Teledata
Technology Solutions, Inc.
Effective
February 1, 2013, the Company acquired the assets of Teledata
Technology Solutions, Inc. and its subsidiaries, Abaris,
Inc., Alphasoft Services Corporation and TTS Consulting, Inc.
(collectively “TTS”). Upon consummation of the
transaction, whereby the Company acquired certain assets
including but not limited to client contracts, trademarks,
software technology, employees and other resources in
exchange for: (i) the assumption of certain liabilities of
$5,100,000; (ii) cash of $900,000; (iii) earn-out payments
equal to $1,500,000 as defined in the Agreement; (iv)
3,000,000 common shares valued at $1,000,000.
TTS
had revenues of approximately $20 million for the
calendar year 2012.
Acquisition
of Momentum Mobile, LLC
On
February 26, 2013, effective February 1, 2013, the Company
completed acquisition of certain the assets of Momentum
Mobile, LLC. The assets including client contracts and
employees were transferred in exchange for: (i) cash of
$400,000; (ii) earn-out payments up to $800,000 as defined in
the Agreement; (iii) 1,000,000 common shares valued at
$330,000.
Momentum
Mobile had revenues of approximately $1,100,000 for the
calendar year 2012.
Acquisition
of BlazerFish, LLC
On
February 26, 2013, effective February 1, 2013, the Company
completed acquisition of certain assets of BlazerFish, LLC.
The assets including client contracts, intellectual property
and employees were transferred in exchange for: (i) cash of
$250,000; (ii) earn-out payments equal to $600,000 as defined
in the Agreement; (iii) 3,000,000 common shares valued at
$1,000,000.
BlazerFish
had revenues of approximately $1,500,000 for the calendar
year 2012.
The
following table summarizes the consideration transferred for
the three acquisitions and the estimated amounts of
identified assets acquired and liabilities assumed on the
effective date of the acquisitions:
Each
of the acquisitions include certain contingent consideration
arrangements that require quarterly cash payments beginning
June 30, 2013 through March 31, 2015 if the respective
entity’s revenue run rate (as defined in the
agreements) is 75% or more of its defined base. The range of
undiscounted amounts the Company could owe under these
arrangements is between $0 and $2,900,000. The fair value of
contingent consideration on the acquisition dates(s) of
approximately $2,900,000 was estimated based on the projected
revenues of each asset purchase through 2015. The
calculations and projections are based on significant inputs
not observable in the market, which ASC 820 refers to as
level 3 inputs. Key assumptions include the maintenance of
certain customers as well as utilizing certain technology
across the Company’s existing client base. For the
quarter ended June 30, 2013 each entity achieved their
specific contingent consideration arrangements.
The
following unaudited proforma summary presents consolidated
information of the company as if these business
combinations occurred on January 1, 2013 and includes
the amortization of acquired intangibles:
|
NOTE 1 -ORGANIZATION AND OPERATIONS (Details) (USD $)
|
6 Months Ended | 12 Months Ended |
---|---|---|
Jun. 30, 2013
|
Dec. 31, 2012
|
|
Disclosure Text Block [Abstract] | ||
Number of Operating Wholly-Owned Subsidiaries | 2 | |
Number of Subsidiaries Merged During the Year | 2 | |
Common Stock, Shares Authorized (in Shares) | 200,000,000 | 200,000,000 |
Common Stock, Par or Stated Value Per Share (in Dollars per share) | $ 0.001 | $ 0.001 |
Accounting Policies, by Policy (Policies)
|
6 Months Ended |
---|---|
Jun. 30, 2013
|
|
Accounting Policies [Abstract] | |
Consolidation, Policy [Policy Text Block] | Consolidated
Financial Statements
The
consolidated financial statements include the accounts of the
Company and its wholly-owned subsidiaries, Q4 Consulting,
Inc., Q4 Solutions, Inc., Q4 Cloud, Inc., and Q4 Mobility,
Inc.
All
significant intercompany accounts and transactions have been
eliminated in consolidation. |
Use of Estimates, Policy [Policy Text Block] | Estimates
The
preparation of financial statements in conformity with
accounting principles generally accepted in the United States
requires management to make estimates and assumptions that
affect the reported amounts of assets, liabilities and the
disclosure of contingent assets and liabilities at the date
of the consolidated financial statements and revenues and
expenses during the reporting period. Accordingly, actual
results could differ from those estimates. |
Earnings Per Share, Policy [Policy Text Block] | Loss
per Common Share
Basic
loss per share is calculated using the weighted-average
number of common shares outstanding during each period.
Diluted income per share includes potentially dilutive
securities such as outstanding options and warrants, using
various methods such as the treasury stock or modified
treasury stock method in the determination of dilutive shares
outstanding during each period.
For
the quarters ending June 30, 2013 and 2012, there were
12,026,678 and 10,983,614, respectively,
potentially dilutive securities not included in the
calculation of weighted-average common shares outstanding
since they would be anti-dilutive. |
Derivatives, Policy [Policy Text Block] | Derivatives
We
account for derivatives pursuant to ASC 815. All derivative
instruments are recognized in the financial statements and
measured at fair value regardless of the purpose or intent
for holding them. We record interest rate and foreign
currency swaps at fair value based on discounted cash flow
analysis and for warrants and other option type instruments
based on option pricing models. The changes in fair value of
these instruments are recorded in earnings |
New Accounting Pronouncements, Policy [Policy Text Block] | Recent
Accounting Pronouncements
Management
does not believe that any recently issued, but not yet
effective accounting pronouncements, if adopted, would have a
material effect on the accompanying consolidated financial
statements |
NOTE 10 - CONTINGENCIES (Details) (USD $)
|
6 Months Ended |
---|---|
Jun. 30, 2013
|
|
Loss Contingency [Abstract] | |
Loss Contingency, Damages Sought, Value | $ 692,000 |
NOTE 7 - LONG-TERM DEBT (Details) - Schedule of long-term debt (Parentheticals)
|
6 Months Ended | 12 Months Ended |
---|---|---|
Jun. 30, 2013
|
Dec. 31, 2012
|
|
Note Payable 1 [Member]
|
||
Debt Instrument [Line Items] | ||
Payable due | Dec. 31, 2014 | Dec. 31, 2014 |
Payable interest | 5.00% | 5.00% |
Seller Note Payable [Member]
|
||
Debt Instrument [Line Items] | ||
Payable due | Dec. 31, 2014 | Dec. 31, 2014 |
Payable interest | 5.00% | 5.00% |
Convertible Debenture [Member]
|
||
Debt Instrument [Line Items] | ||
Payable due | Apr. 01, 2014 | Apr. 01, 2014 |
Payable interest | 16.00% | 16.00% |
Convertible debenture 2 [Member]
|
||
Debt Instrument [Line Items] | ||
Payable due | Jul. 01, 2013 | Jul. 01, 2013 |
Payable interest | 16.00% | 16.00% |
Note Payable 2 [Member]
|
||
Debt Instrument [Line Items] | ||
Payable due | Dec. 31, 2014 | Dec. 31, 2014 |
Payable interest | 15.00% | 15.00% |
Note payable 3 [Member]
|
||
Debt Instrument [Line Items] | ||
Payable due | Feb. 06, 2015 | Feb. 06, 2015 |
Payable interest | 10.00% | 10.00% |
Note payable 4 [Member]
|
||
Debt Instrument [Line Items] | ||
Payable due | May 06, 2014 | May 06, 2014 |
Payable interest | 16.00% | 16.00% |
Note payable 5 [Member]
|
||
Debt Instrument [Line Items] | ||
Payable due | May 09, 2013 | May 09, 2013 |
Payable interest | 16.00% | 16.00% |
Note payable 6 [Member]
|
||
Debt Instrument [Line Items] | ||
Payable due | Jun. 30, 2013 | Jun. 30, 2013 |
Payable interest | 12.00% | 12.00% |
NOTE 5 - INTANGIBLE ASSETS (Details) - Schedule of changes in intangible assets (USD $)
|
6 Months Ended |
---|---|
Jun. 30, 2013
|
|
Schedule of changes in intangible assets [Abstract] | |
Beginning of the Year | $ 9,785,019 |
Additions | 11,880,000 |
Amortization | (2,499,182) |
End of the quarter | $ 19,165,837 |
NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details)
|
3 Months Ended | |
---|---|---|
Jun. 30, 2013
|
Jun. 30, 2012
|
|
Accounting Policies [Abstract] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount (in Shares) | 12,026,678 | 10,983,614 |
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (Parentheticals) (USD $)
|
6 Months Ended |
---|---|
Jun. 30, 2013
|
|
Acquisition of assets, liabilities assumed (in Dollars) | $ 1,832,000 |
Acquisition of assets, notes payable (in Dollars) | 3,268,000 |
Acquisition of assets, contingent payments (in Dollars) | 2,900,000 |
Acquisition of assets, issuance of common stock (in Dollars) | $ 2,330,000 |
NOTE 2 - BASIS OF PRESENTATION
|
6 Months Ended |
---|---|
Jun. 30, 2013
|
|
Disclosure Text Block [Abstract] | |
Basis of Accounting [Text Block] |
NOTE
2 – BASIS OF PRESENTATION
The
accompanying unaudited interim financial statements have been
prepared in accordance with generally accepted accounting
principles and the rules and regulations under Regulation S-X
of the U.S. Securities and Exchange Commission for Form
10-Q, and should be read in conjunction with the audited
financial statements and notes thereto contained in the
Annual Report on Form 10-K for Quadrant 4 Systems Corporation
(the “Registrant” or the “Company”)
for the year ended December 31, 2012. Accordingly, they do
not include all of the information and footnotes required by
accounting principles generally accepted in the United States
for complete financial statements presentation. In the
opinion of management, all adjustments, consisting of normal
recurring adjustments, necessary for a fair presentation of
financial position, results of operations and cash flows for
the interim periods presented have been included. Notes to
the financial statements which would substantially duplicate
the disclosures contained in the audited financial statements
for the most recent fiscal year ended December 31, 2012, as
reported in the Form 10-K, have been omitted.
In
preparing the interim unaudited consolidated financial
statements, management was required to make certain estimates
and assumptions that affect the reported amounts of assets,
liabilities, revenues, expenses and related disclosures at
the financial reporting date and throughout the periods being
reported upon. Certain of the estimates result from judgments
that can be subjective and complex and consequently actual
results may differ from these estimates. These financial
statements should be read in conjunction with the financial
statements of the Company together with the Company’s
management discussion and analysis in Item 2 of this report
and in the Company’s Form 10-K for the year ended
December 31, 2012.The results of operations for interim
periods are not necessarily indicative of the results to be
expected for the full year.
|
NOTE 5 - INTANGIBLE ASSETS
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
|
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Disclosure Text Block [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Intangible Assets Disclosure [Text Block] |
NOTE
5 – INTANGIBLE ASSETS
Intangible
assets consisted of the following:
For
the six months ending June 30, 2013, the change in intangible
assets was as follows:
For
the quarters ending June 30, 2013 and 2012, amortization
expense was $1,342,605 and $ 1,011,559, respectively.
|
NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|
6 Months Ended |
---|---|
Jun. 30, 2013
|
|
Accounting Policies [Abstract] | |
Significant Accounting Policies [Text Block] |
NOTE
3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Consolidated
Financial Statements
The
consolidated financial statements include the accounts of the
Company and its wholly-owned subsidiaries, Q4 Consulting,
Inc., Q4 Solutions, Inc., Q4 Cloud, Inc., and Q4 Mobility,
Inc.
All
significant intercompany accounts and transactions have been
eliminated in consolidation.
Estimates
The
preparation of financial statements in conformity with
accounting principles generally accepted in the United States
requires management to make estimates and assumptions that
affect the reported amounts of assets, liabilities and the
disclosure of contingent assets and liabilities at the date
of the consolidated financial statements and revenues and
expenses during the reporting period. Accordingly, actual
results could differ from those estimates.
Loss
per Common Share
Basic
loss per share is calculated using the weighted-average
number of common shares outstanding during each period.
Diluted income per share includes potentially dilutive
securities such as outstanding options and warrants, using
various methods such as the treasury stock or modified
treasury stock method in the determination of dilutive shares
outstanding during each period.
For
the quarters ending June 30, 2013 and 2012, there were
12,026,678 and 10,983,614, respectively,
potentially dilutive securities not included in the
calculation of weighted-average common shares outstanding
since they would be anti-dilutive.
Derivatives
We
account for derivatives pursuant to ASC 815. All derivative
instruments are recognized in the financial statements and
measured at fair value regardless of the purpose or intent
for holding them. We record interest rate and foreign
currency swaps at fair value based on discounted cash flow
analysis and for warrants and other option type instruments
based on option pricing models. The changes in fair value of
these instruments are recorded in earnings.
Recent
Accounting Pronouncements
Management
does not believe that any recently issued, but not yet
effective accounting pronouncements, if adopted, would have a
material effect on the accompanying consolidated financial
statements.
|
NOTE 4 - ACQUISITIONS (Details) - Business Acquisition, Pro Forma Information (USD $)
|
6 Months Ended |
---|---|
Jun. 30, 2013
|
|
Business Acquisition, Pro Forma Information [Abstract] | |
Gross Sales: | $ 20,562,012 |
Net Loss: | $ (1,955,536) |
NOTE 6 - NOTE PAYABLE - REVOLVER (Details) (USD $)
|
6 Months Ended |
---|---|
Jun. 30, 2013
|
|
Disclosure Text Block [Abstract] | |
Line of Credit Facility, Maximum Borrowing Capacity | $ 6,500,000 |
Line of Credit Facility, Commitment Fee Amount | $ 65,000 |
Line of Credit Facility, Commitment Fee Percentage | 0.65% |
Line of Credit Facility, Interest Rate Description | prime (at minimum of 5%) plus 2% per annum |
NOTE 9 - STOCKHOLDERS' EQUITY (Details) - Schedule of Stockholders' Equity Note, Warrants or Rights
|
Jun. 30, 2013
|
---|---|
Class of Warrant or Right [Line Items] | |
Warrants | 14,526,678 |
Warrants, Financing and Other [Member]
|
|
Class of Warrant or Right [Line Items] | |
Warrants | 9,966,944 |
Warrants, Financing [Member]
|
|
Class of Warrant or Right [Line Items] | |
Warrants | 2,059,734 |
Warrants, Proposed, but Unissued, for Directors, Management and Consultants [Member]
|
|
Class of Warrant or Right [Line Items] | |
Warrants | 2,500,000 |