| ACQUISITIONS | GPS Global On March 12, 2014, the Company entered into a Share Purchase Agreement
(the GPS Global SPA GPS Global The purchase price for the issued and outstanding shares of GPS
Global was $7,811,404, payable in cash and shares of the Company's common stock as follows:
●
Cash to Mr. Sabag of $311,404 at the closing;
●
Shares of the Company's common stock valued at $7,500,000, delivered
to Mr. Sabag as follows:
●
Common stock valued at $1,600,000 delivered to Mr. Sabag at the
closing;
● Common stock valued at $2,900,000, delivered to an escrow agent to be released by Bank to Mr. Sabag after six months from the closing;
● Common stock valued at $1,000,000, the number of shares to be determined by dividing $1,000,000 by the weighted average closing price of the Companys common stock for the 60 consecutive trading days preceding the third business day prior to release of such shares, to be issued to Mr. Sabag within 30 days of certification that GPS Global has sold or leased a minimum of 1,500 of its Devices under revenue-generating contracts; and
● Common stock valued at $2,000,000, the number of shares to be determined by dividing $2,000,000 by the weighted average closing price of the Companys common stock for the 60 consecutive trading days preceding the third business day prior to release of such shares, to be issued to Mr. Sabag within 30 days of certification that GPS Global has sold or leased a minimum of 2,500 of its Devices under revenue-generating contracts, in addition to the 1,500 Devices previously mentioned (i.e., a minimum of 4,000 Devices sold or leased). As described above, shares of common stock valued at $3,000,000
may be payable based on sales of the GPS Global devices sold or leased. Management determined that it was probable that sales of
GPS Global devices would exceed the number of units specified in the GPS Global SPA, and has therefore, recognized a stock
payable liability for the entire $3,000,000 value of common shares payable. The total purchase price for the GPS Global acquisition was allocated
to the net tangible and intangible assets based upon their fair values as of June 30, 2014 as set forth below. The excess of the
purchase price over the net assets was recorded as goodwill. This acquisition provided the Company with additional research and
development capabilities and enhanced technology which are expected to benefit current and future products. The following table summarizes the fair values of the assets and
liabilities assumed at the acquisition date of GPS Global (in thousands).
Current assets $ 217
Inventory 17
Property and equipment 47
Monitoring equipment 48
Other non-current assets 21
Intangible assets 4,856
Tradename 192
Accounts payable and accrued expenses (215 )
Loan payable (753 )
Goodwill 3,381
Total fair value of assets acquired $ 7,811 Emerge On June 2, 2014, the Company entered into a Stock Purchase Agreement
(the Emerge SPA Emerge Emerge LLC Emerge Acquisition The purchase price for the Emerge Acquisition was $7,739,167, all
of which was paid in cash during the year ended September 30, 2014. The total purchase price for the Emerge Acquisition was
allocated to the net tangible and intangible assets based upon their fair values as of June 1, 2014 as set forth below. The excess
of the purchase price over the net assets was recorded as goodwill. The Emerge Acquisition provided the Company with significant
customer relationships, an experienced sales and management team and additional alcohol monitoring product offerings. The following table summarizes the fair values of the assets and
liabilities assumed at the Emerge Acquisition date (in thousands).
Inventory $ 451
Property and equipment 227
Other assets 109
Developed technology 1,600
Customer contracts/relationships 1,860
Tradename /trademarks 110
Goodwill 3,382
Total fair value of assets acquired $ 7,739 Track Group Analytics Limited On November 26, 2014 (the
Closing Date TGA Purchase Agreement TGA TGA Acquisition During
the third quarter of fiscal 2015, the Company received the final valuation report for the TGA Acquisition. The Consolidated Balance
Sheet at June 30, 2015 has been retrospectively adjusted to include the effect of the measurement period adjustments as required
under ASC 805, Business Combinations, ( ASC 805 The fair
value of patents, developed technology, customer contracts/relationship, tradename and trademarks were capitalized as of the acquisition
date and will be subsequently amortized using a straight-line method to depreciation and amortization expense over their estimated
useful lives. The Company
has retrospectively adjusted the previously reported fair values to reflect these amounts as follows (in thousands)
As Initially Reported Measurement Period Adjustments As Retrospectively Adjusted
Assets
Current assets $ 477 $ (85 ) $ 392
Property and equipment 5 2 7
Intangible assets:
Patents / developed technology - 975 975
Customer contracts / relationships - 807 807
Trade names / trademarks - 35 35
Goodwill 4,037 (2,384 ) 1,653
Total assets acquired 4,519 (650 ) 3,869
Liabilities
Current liabilities 65 (3 ) 62
Loans payable 381 (7 ) 374
Total liabilities assumed 446 (10 ) 436
Total purchase consideration $ 4,073 $ (640 ) $ 3,433 Summary of Unaudited Pro-Forma Information The unaudited pro-forma information below for the three and nine
months ended June 30, 2015 and 2014 gives effect to each of the acquisitions described herein as, if the acquisitions had occurred
on October 1, 2013. The pro-forma financial information is not necessarily indicative of the results of operations if the
acquisitions had been effective as of this date.
Three Months Ended Nine months ended
June 30, June 30,
Unaudited Unaudited
2015 2014 2015 2014
Revenues 5,441,669 4,577,030 15,243,552 12,100,251
Income (loss) from operations (2,481,870 ) (3,172,048 ) (6,401,970 ) (6,530,696 )
Net income (loss) attributable to the Company (2,906,410 ) (3,515,362 ) (1,838,776 ) (6,582,856 )
Basic income (loss) per share (0.29 ) (0.35 ) (0.18 ) (0.65 )
Net income (loss) attributable to common shareholders (2,906,410 ) (3,515,417 ) (1,838,776 ) (6,597,441 )
Basic income (loss) per share (0.29 ) (0.35 ) (0.18 ) (0.65 ) |
