5. INTANGIBLE ASSETS AND ACQUISITION

9 Months Ended

Sep. 30, 2015

Notes to Financial Statements

5. INTANGIBLE ASSETS AND ACQUISITION

On May 15, 2014, the Company, in order to establish a presence in the solid waste disposal industry, entered into an asset purchase agreement by and among the Company, HTSMWD, Meridian Waste Services, LLC (“MWS”) and the members of MWS, pursuant to which HTSMWD acquired certain assets and liabilities of MWS, in exchange for $11,000,000 cash, 13,191,667 shares of Class A Common Stock of HTSHC and 71,210 shares of Series B Cumulative Convertible Preferred Stock of HTSHC.

The acquisition was accounted for by Here to Serve using business combination accounting.  Under this method, the purchase price paid by the acquirer is allocated to the assets acquired and liabilities assumed as of the acquisition date based on the fair value.  By the application of “push-down” accounting, our assets, liabilities and equity were accordingly adjusted to fair value on May 15, 2014.  Determining the fair value of certain assets and liabilities assumed is judgmental in nature and often involves the use of significant estimates and assumptions.

The purchase of MWS included the acquisition of assets of $22,175,706 and liabilities of $2,075,956.  The aggregate purchase price consisted of the following:

Cash	$	11,000,000
Estimated value of common stock issued to sellers		1,978,750
Estimated value of preferred stock issued to sellers		7,121,000
	$	20,099,750

The following table summarizes the estimated fair value of MWS assets acquired and liabilities assumed at the date of acquisition:

Accounts receivable	$	632,322
Prepaid expenses		123,544
Deposits		8,303
Containers		2,710,671
Furniture and equipment		299,450
Trucks		4,243,964
Customer lists		14,007,452
Non-compete agreement		150,000
Accounts payable and accrued expenses		(54,387	)
Notes payable		(143,464	)
Deferred revenue		(1,878,105	)
	$	20,099,750

Intangible Assets

The following table sets forth the intangible assets, both acquired and developed, including accumulated amortization:

	September 30, 2015
	Remaining			Accumulated		Net Carrying
	Useful Life	Cost		Amortization		Value
Customer list	3.75 years	$	14,007,452	$	3,968,778	$	10,038,674
Loan fees	1.75 years		50,613		23,901		26,712
Non compete agreement	3.75 years		150,000		42,500		107,500
Website	4.25 years		13,920		2,320		11,600
		$	14,221,985	$	4,037,499	$	10,184,486

Amortization expense amounted to $2,138,359 and $1,186,817 for the nine months ending September 30, 2015 and 2014, respectively