3 BUSINESS COMBINATIONS

9 Months Ended

Sep. 30, 2016

Business Combinations [Abstract]

BUSINESS COMBINATIONS

NOTE 3. BUSINESS COMBINATIONS:

Acquisition of Bellsoft, Inc. 

Bellsoft, Inc. ("Bellsoft") is a consulting company based in Lawrenceville, Georgia with over 175 consultants specialized in the areas of SAP software, business intelligence, data warehousing and other enterprise resource planning services.  Bellsoft has operations in the United States and in India. On November 20, 2015, the Company completed the acquisition of Bellsoft for the consideration listed below.  For financial accounting purposes, the Company recognized September 1, 2015 as the effective date of the acquisition.  The consideration payable for the acquisition of Bellsoft includes:

1. A cash payment in the amount of $3,000,000 at closing,

2. 235,295 shares of AMERI's common stock issued at closing,

3. $250,000 quarterly cash payments to be paid on the last day of each calendar quarter of 2016,

4. A $1,000,000 cash reimbursement to be paid 5 days following closing to compensate Bellsoft for a portion of its approximate cash balance as of September 1, 2015,

5. Approximately $2,500,000 to be paid within 30 days of closing in connection with the excess of Bellsoft's accounts receivable over its accounts payable as of September 1, 2015, and

6. Earn-out payments of approximately $500,000 a year for 2016 and 2017, if earned through the achievement of annual revenue and EBITDA targets specified in the Bellsoft purchase agreement, subject to downward or upward adjustment depending on actual results.  In the first quarter of 2016, the Company adjusted the estimate for the earn-out to be paid from $400,000 to $500,000 a year for each of 2016 and 2017.

As of September 30, 2016, cash earn-out payments of $500,000 for each of 2016 and 2017 and an aggregate of $306,609 in respect of the 2016 quarterly cash payments remain due to Bellsoft's former shareholders.

Entry into Agreement to Acquire Bigtech Software Private Limited. 

On June 23, 2016, the Company entered into a definitive agreement to purchase Bigtech Software Private Limited ("Bigtech"), a pure-play SAP services company providing a complete range of SAP services including turnkey implementations, application management, training and basis ABAP support. Bigtech has been in operation since 2000. Based in Bangalore, India, Bigtech offers SAP services to bring effectiveness in business operations to companies of all sizes and verticals. At the end of June 2016, the Ministry of External Affairs (India) completed the initial validation process for the Bigtech. As of September 30, 2016, the transaction is pending final approval from the Ministry of External Affairs (India). The consideration to be paid for the acquisition of Bigtech is:

1.	$340,000, to be paid on September 22, 2016, which was within 90 days of closing;
2.	Warrants for the purchase of 51,000 shares of the Company's common stock, with such warrants exercisable for two years from the date of closing; and

3. $255,000, which may become payable in cash as a commission to the sellers of Bigtech if Bigtech achieves certain revenue targets within the two years following closing.

The initial acquisition consideration of $340,000 was paid to the owners Bigtech on September 22, 2016 and included in our consolidation effective July 1^st 2016.

 Acquisition of Virtuoso

On July 22, 2015, the Company, through its wholly-owned subsidiaries, acquired all of the outstanding membership interests of Virtuoso, L.L.C. ("Virtuoso"), a Kansas limited liability company, pursuant to the terms of an Agreement of Merger and Plan of Reorganization, by and among the Company, Virtuoso Acquisition Inc., Ameri100 Virtuoso Inc., Virtuoso and the sole member of Virtuoso (the "Sole Member").  Virtuoso is an SAP consulting firm specialized in providing services on SAP S/4 HANA finance, enterprise mobility and cloud migration and is based in Leawood, Kansas. In connection with the merger, Virtuoso's name was changed to Ameri100 Virtuoso Inc.

The purchase price paid to the Sole Member for the acquisition of Virtuoso consisted of: (a) a cash payment in the amount of $675,000 which was due within 90 days of closing and was paid on October 21, 2016, (b) $659,138 or 101,250 shares of the Company's common stock at closing at a market price of $6.51 on July 22, 2016 , and (c) earn-out payments in cash and stock of $225,000 and approximately $280,744 to be paid, if earned, in 2016, 2017 and 2018.

Acquisition of DC&M

On July 29, 2016, the Company acquired 100% of the membership interests of DC&M Partners, L.L.C. ("DCM"), an Arizona limited liability company, pursuant to the terms of a Membership Interest Purchase Agreement among the Company, DCM, all of the members of DCM, Giri Devanur and Srinidhi "Dev" Devanur. DCM is a provider of information technology development, consulting and management services and is located in Chandler, Arizona.

The purchase price for the acquisition of DCM consisted of: (a) a cash payment in the amount of $3,000,000 at closing, (b) 1,600,000 shares of the Company's common stock, which are to be issued on July 29, 2018 or upon a change of control of the Company (whichever occurs earlier), and (c) earn-out payments of $1,500,000 payable in cash each year to be paid, if earned, in 2017 and 2018. Consideration payable for DC&M for the earn out to be paid is $3 million in cash and amounts to be paid in stock for DC&M is $10.416 million as of September 30, 2016.