| Schedule of Fair Value of Assets Assumed and Liabilities Acquired |
The allocation of the purchase price
was completed on December 31, 2019 through the assistance of a valuation specialist. The following table summarizes the assets
acquired, liabilities assumed and purchase price allocation:
| Assets Acquired: |
|
|
|
|
|
|
|
|
| Other current assets |
|
$ |
2,004,000 |
|
|
|
|
|
| Property and equipment |
|
|
58,000 |
|
|
|
|
|
| Other assets |
|
|
1,302,000 |
|
|
$ |
3,364,000 |
|
| Liabilities Assumed: |
|
|
|
|
|
|
|
|
| Current liabilities |
|
|
(2,153,000 |
) |
|
|
|
|
| Long-term liabilities |
|
|
(1,068,000 |
) |
|
|
(3,221,000 |
) |
| Intangible assets |
|
|
|
|
|
|
6,340,000 |
|
| Goodwill |
|
|
|
|
|
|
16,337,000 |
|
| Purchase Price |
|
|
|
|
|
$ |
22,820,000 |
|
|
| Schedule of Amortization Expense for Future Periods for Intangible Assets |
The following table summarizes the
amortization expense to be recorded in future periods for intangible assets that are subject to amortization:
| Year ending |
|
Amortization |
|
| 2020 |
|
|
1,255,000 |
|
| 2021 |
|
|
1,195,000 |
|
| 2022 |
|
|
1,135,000 |
|
| 2023 |
|
|
1,075,000 |
|
| 2024 and thereafter |
|
|
265,000 |
|
| Total amortization |
|
$ |
4,925,000 |
|
|
| Schedule of Pro Forma Statements of Operations |
The unaudited pro forma statements
of operations for the year ended December 31, 2019 and 2018 give effect to the transaction to the merger as if it had occurred
on January 1, 2018.
| |
|
Year Ended
December 31,
2019
|
|
|
Year Ended
December 31,
2018 |
|
| |
|
(Proforma,
unaudited)
|
|
|
(Proforma,
unaudited)
|
|
| Digital |
|
$ |
5,290,000 |
|
|
$ |
3,734,000 |
|
| Welcome kits and fulfilment |
|
|
6,178,000 |
|
|
|
7,258,000 |
|
| Shipping |
|
|
1,624,000 |
|
|
|
1,774,000 |
|
| Total Revenue |
|
|
13,092,000 |
|
|
|
12,766,000 |
|
| |
|
|
|
|
|
|
|
|
| Cost of revenue |
|
|
7,088,000 |
|
|
|
7,173,000 |
|
| |
|
|
|
|
|
|
|
|
| Gross margin |
|
|
6,004,000 |
|
|
|
5,593,000 |
|
| |
|
|
|
|
|
|
|
|
| Operating expenses |
|
|
22,048,000 |
|
|
|
14,295,000 |
|
| |
|
|
|
|
|
|
|
|
| Other expense, net |
|
|
(99,000 |
) |
|
|
(4,326,000 |
) |
| |
|
|
|
|
|
|
|
|
| Loss before income tax provision |
|
|
(16,143,000 |
) |
|
|
(13,028,000 |
) |
| |
|
|
|
|
|
|
|
|
| Income tax provision |
|
|
2,000 |
|
|
|
1,000 |
|
| |
|
|
|
|
|
|
|
|
| Net loss |
|
$ |
(16,145,000 |
) |
|
$ |
(13,029,000 |
) |
| |
|
|
|
|
|
|
|
|
| Loss per share |
|
$ |
(0.76 |
) |
|
$ |
(0.99 |
) |
| Weighted average number of common shares outstanding - basic and diluted |
|
|
21,116,207 |
|
|
|
13,198,681 |
|
|
| Schedule of Results of Operation of Subsidiary |
Results of operation of Verb Direct subsequent
to the acquisition are as follows:
| |
|
Period April 1,
2019 through
December 31,
2019
|
|
| |
|
|
|
| Revenue |
|
$ |
9,041,000 |
|
| Cost of revenue |
|
|
4,766,000 |
|
| Operating expenses |
|
|
6,308,000 |
|
| Other income expense |
|
|
(11,000 |
) |
| Net income loss |
|
$ |
(2,044,000 |
) |
|