| Schedule of Assets and Liabilities Acquired |
Under the acquisition method of accounting, the total estimated purchase consideration was allocated to the acquired tangible and intangible assets and assumed liabilities based on their estimated fair values as of the acquisition date. Following was the allocation of the purchase consideration:
|
Cash and cash equivalents
|
|
$
|
17,000
|
|
|
Accounts receivable
|
|
|
21,000
|
|
|
Inventory
|
|
|
379,000
|
|
|
Prepaid and other assets
|
|
|
51,000
|
|
|
Equipment
|
|
|
1,000
|
|
|
Identifiable intangible assets:
|
|
|
|
|
|
Trademarks (5 year estimated useful life)
|
|
|
99,000
|
|
|
Customer base (6 year estimated useful life)
|
|
|
37,000
|
|
|
Developed technology (4 year estimated useful life)
|
|
|
1,864,000
|
|
|
Total identifiable intangible assets
|
|
|
2,000,000
|
|
|
Goodwill
|
|
|
430,000
|
|
|
Accounts payable
|
|
|
(118,000
|
)
|
|
Accrued and other liabilities
|
|
|
(175,000
|
)
|
|
Non-controlling interest
|
|
|
(29,000
|
)
|
|
Purchase price
|
|
$
|
2,577,000
|
|
|
| Schedule of Intangible rights acquired |
Intangible assets acquired consisted of the following as of December 31, 2016:
|
Trademarks
|
|
$
|
99,000
|
|
|
Customer base
|
|
|
37,000
|
|
|
Developed technology
|
|
|
1,864,000
|
|
|
Total
|
|
|
2,000,000
|
|
|
Less accumulated amortization
|
|
|
(148,264
|
)
|
|
Balance at December 31, 2016
|
|
$
|
1,851,736
|
|
|
| Schedule of Operation and Assets and Liabilities Related to Discontinued Operations |
The Company's historical financial statements have been revised to present the operating results of the BDI business as a discontinued operation. Assets and liabilities related to the discontinued operations of BDI are approximately as follows as of September 30, 2017 and December 31, 2016:
|
|
|
September 30, 2017
|
|
|
December 31, 2016
|
|
|
Current assets:
|
|
|
|
|
|
|
|
Accounts receivable
|
|
$
|
8,000
|
|
|
$
|
5,000
|
|
|
Inventories
|
|
|
-
|
|
|
|
416,000
|
|
|
Prepaid expenses
|
|
|
4,000
|
|
|
|
66,000
|
|
|
Total current assets
|
|
$
|
12,000
|
|
|
$
|
487,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Equipment and furnishings, net
|
|
$
|
-
|
|
|
$
|
36,000
|
|
|
Intangible assets, net
|
|
|
-
|
|
|
|
2,281,000
|
|
|
Deposit
|
|
|
-
|
|
|
|
37,000
|
|
|
Total noncurrent assets
|
|
$
|
-
|
|
|
$
|
2,354,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
37,000
|
|
|
$
|
174,000
|
|
|
Accrued expenses
|
|
|
28,000
|
|
|
|
85,000
|
|
|
Deferred revenue
|
|
|
137,000
|
|
|
|
-
|
|
|
Total current liabilities
|
|
$
|
202,000
|
|
|
$
|
259,000
|
|
Summarized results of the discontinued operation are as follows for the three and nine months ended September 30, 2017:
|
|
|
Three Months
|
|
|
Nine Months
|
|
|
|
|
|
|
|
|
|
|
Sales
|
|
$
|
7,000
|
|
|
$
|
37,000
|
|
|
Cost of sales
|
|
|
2,000
|
|
|
|
6,000
|
|
|
Gross margin
|
|
|
5,000
|
|
|
|
31,000
|
|
|
Operating expenses (credit)
|
|
|
(26,000
|
)
|
|
|
975,000
|
|
|
Operating income (loss)
|
|
|
31,000
|
|
|
|
(944,000
|
)
|
|
Escrow forfeiture gain
|
|
|
-
|
|
|
|
135,000
|
|
|
Impairment (loss)
|
|
|
-
|
|
|
|
(2,754,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from discontinued operations
|
|
$
|
31,000
|
|
|
$
|
(3,563,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|