Annual report pursuant to Section 13 and 15(d)

Acquisitions

v3.7.0.1
Acquisitions
12 Months Ended
Dec. 31, 2016
Acquisitions [Abstract]  
Acquisitions

2. Acquisitions



We completed the following acquisitions in furtherance of our strategy to acquire small, privately owned enterprises in the mobile marketing sector through asset purchase structures. We made the acquisitions to expand our market presence and product offerings.



The purchase consideration for each acquisition was allocated to the tangible assets and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values on the acquisition date, with the remaining unallocated consideration recorded as goodwill. An independent valuation expert assisted us in determining these fair values.



We have included the financial results of these acquisitions in our consolidated financial statements from the date of acquisition.



LiveLenz Acquisition 

 

On January 15, 2016, we acquired all of the outstanding capital stock of LiveLenz Inc., a Nova Scotia corporation (“LiveLenz”), pursuant to an agreement dated January 15, 2016 among the Company and the stockholders of LiveLenz. Pursuant to the agreement, we acquired all of the capital stock of LiveLenz in consideration of our issuance of 1,000,000 shares (“Consideration Shares”) of our common stock to the LiveLenz stockholders, our issuance of an additional 15,000 shares of our common stock in satisfaction of certain liabilities of LiveLenz, and the assumption of their existing liabilities. The agreement included customary representations, warranties, and covenants by us and the LiveLenz stockholders, including the LiveLenz stockholders’ agreement to indemnify us against certain claims or losses resulting from certain breaches of representations, warranties or covenants by the LiveLenz stockholders in the agreement. Pursuant to the agreement, the LiveLenz stockholders have agreed to adjust the number of Consideration Shares downward based on LiveLenz’ working capital as of the closing and in the event of any claims for indemnification by us. The LiveLenz stockholders have agreed that 100% of the Consideration Shares will be escrowed for a period of 18 months and subject to forfeiture based on indemnification claims by us or the final determination of LiveLenz’ working capital as of the closing date. As of the date of this report, no adjustments have been made to the working capital.



The acquisition was accounted for as a business combination and we valued all assets and liabilities acquired at their fair values on the date of acquisition. An independent valuation expert assisted us in determining these fair values. The assets and liabilities of the acquired entity were recorded at their estimated fair values at the date of the acquisition.



The allocation of the purchase price to assets and liabilities based upon fair value determinations was as follows:







 

 

 



 

 

 

Cash

 

$

11,088 

Accounts receivable, net

 

 

718 

Other assets

 

 

2,617 

Fixed assets

 

 

4,407 

Intangible assets

 

 

20,300 

Goodwill

 

 

1,129,493 

Total assets acquired

 

 

1,168,623 

Liabilities assumed

 

 

(458,123)

Net assets acquired

 

$

710,500 



The purchase price consists of the following:







 

 

 



 

 

 

Common stock

 

$

710,500 

Total purchase price

 

$

710,500 



The following information presents unaudited pro forma consolidated results of operations for the year ended December 31, 2016, as if the Livelenz acquisition described above had occurred on January 1, 2015. The pro forma financial information is not necessarily indicative of the operating results that would have occurred if the acquisition been consummated as of the date indicated, nor are they necessarily indicative of future operating results.



Mobivity Holdings Corp.

Unaudited Pro Forma Condensed Consolidated Statement of Operations

For the year ended December 31, 2016







 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mobivity

 

Livelenz

 

Pro forma
adjustments

 

Pro forma
combined

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

8,432,616 

 

$

4,300 

 

$

 -

 

 

$

8,436,916 

Cost of revenues

 

 

2,096,392 

 

 

120 

 

 

 -

 

 

 

2,096,512 

Gross profit

 

 

6,336,224 

 

 

4,180 

 

 

 -

 

 

 

6,340,404 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

General and administrative

 

 

4,385,763 

 

 

20,071 

 

 

 -

 

 

 

4,405,834 

Sales and marketing

 

 

5,038,041 

 

 

7,087 

 

 

 -

 

 

 

5,045,128 

Engineering, research, and development

 

 

1,712,750 

 

 

 -

 

 

 -

 

 

 

1,712,750 

Depreciation and amortization

 

 

709,456 

 

 

76 

 

 

 -

 

 

 

709,532 

Total operating expenses

 

 

11,846,010 

 

 

27,234 

 

 

 -

 

 

 

11,873,244 

Loss from operations

 

 

(5,509,786)

 

 

(23,054)

 

 

 -

 

 

 

(5,532,840)

Other income/(expense)

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

2,780 

 

 

 -

 

 

 -

 

 

 

2,780 

Interest expense

 

 

(77,361)

 

 

(3,452)

 

 

 -

 

 

 

(80,813)

Intangible asset impairment

 

 

(1,684,203)

 

 

 -

 

 

 -

 

 

 

(1,684,203)

Goodwill impairment

 

 

(2,247,447)

 

 

 -

 

 

 -

 

 

 

(2,247,447)

Foreign currency gain/(loss)

 

 

1,556 

 

 

 -

 

 

 -

 

 

 

1,556 

Total other income/(expense)

 

 

(4,004,675)

 

 

(3,452)

 

 

 -

 

 

 

(4,008,127)

Loss before income taxes

 

 

(9,514,461)

 

 

(26,506)

 

 

 -

 

 

 

(9,540,967)

Income tax expense

 

 

 -

 

 

 -

 

 

 -

 

 

 

 -

Net loss

 

$

(9,514,461)

 

$

(26,506)

 

$

 -

 

 

$

(9,540,967)

Other comprehensive loss, net of income tax

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustments

 

 

(32,999)

 

 

 -

 

 

 -

 

 

 

(32,999)

Comprehensive loss

 

$

(9,547,460)

 

$

(26,506)

 

$

 -

 

 

$

(9,573,966)

Net loss per share - basic and diluted

 

$

(0.29)

 

 

 

 

 

 

 

 

$

(0.29)

Weighted average number of shares during the period -basic and diluted

 

 

32,797,631 

 

 

 

 

 

 

 

 

 

32,797,631 





The following information presents unaudited pro forma consolidated results of operations for the year ended December 31, 2015,  as if the Livelenz acquisition described above had occurred on January 1, 2015. The pro forma financial information is not necessarily indicative of the operating results that would have occurred if the acquisition been consummated as of the date indicated, nor are they necessarily indicative of future operating results.



Mobivity Holdings Corp.

Unaudited Pro Forma Condensed Consolidated Statement of Operations

For the year ended December 31, 2015







 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mobivity

 

Livelenz

 

Pro forma
adjustments

 

Pro forma
combined

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

4,618,988 

 

$

230,214 

 

$

 -

 

 

$

4,849,202 

Cost of revenues

 

 

1,066,669 

 

 

71,301 

 

 

 -

 

 

 

1,137,970 

Gross profit

 

 

3,552,319 

 

 

158,913 

 

 

 -

 

 

 

3,711,232 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

General and administrative

 

 

4,555,895 

 

 

70,633 

 

 

 -

 

 

 

4,626,528 

Sales and marketing

 

 

4,150,793 

 

 

222,747 

 

 

 -

 

 

 

4,373,540 

Engineering, research, and development

 

 

728,741 

 

 

 -

 

 

 -

 

 

 

728,741 

Depreciation and amortization

 

 

361,840 

 

 

3,705 

 

 

 -

 

 

 

365,545 

Total operating expenses

 

 

9,797,269 

 

 

297,085 

 

 

 -

 

 

 

10,094,354 

Loss from operations

 

 

(6,244,950)

 

 

(138,172)

 

 

 -

 

 

 

(6,383,122)

Other income/(expense)

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

1,540 

 

 

 -

 

 

 -

 

 

 

1,540 

Interest expense

 

 

(847)

 

 

(45,403)

 

 

 -

 

 

 

(46,250)

Intangible asset impairment

 

 

(21,188)

 

 

 -

 

 

 -

 

 

 

(21,188)

Change in fair value of derivative liabilities

 

 

42,659 

 

 

 -

 

 

 -

 

 

 

42,659 

Gain on adjustment of contingent consideration

 

 

89,740 

 

 

 -

 

 

 -

 

 

 

89,740 

Foreign currency gain/(loss)

 

 

 -

 

 

39,118 

 

 

 -

 

 

 

39,118 

Total other income/(expense)

 

 

111,904 

 

 

(6,285)

 

 

 -

 

 

 

105,619 

Loss before income taxes

 

 

(6,133,046)

 

 

(144,457)

 

 

 -

 

 

 

(6,277,503)

Income tax expense

 

 

 -

 

 

 -

 

 

 -

 

 

 

 -

Net loss

 

$

(6,133,046)

 

$

(144,457)

 

$

 -

 

 

$

(6,277,503)

Net loss per share - basic and diluted

 

$

(0.23)

 

 

 

 

 

 

 

 

$

(0.24)

Weighted average number of shares during the period -basic and diluted

 

 

26,684,927 

 

 

 

 

 

 

 

 

 

26,684,927