Annual report pursuant to Section 13 and 15(d)

Acquisition of Personnel Strategies, Inc.

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Acquisition of Personnel Strategies, Inc. (Personnel Strategies, Inc. [Member])
12 Months Ended
Dec. 31, 2014
Personnel Strategies, Inc. [Member]
 
Business Acquisition [Line Items]  
Acquisitions

5. Acquisition of Personnel Strategies, Inc.

 

On September 20, 2013, the Company completed its acquisition of Personnel Strategies, Inc. (“PSI”) pursuant to an Asset Purchase Agreement, dated September 18, 2013, by and among the Company and PSI, pursuant to which the Company acquired certain assets and assumed certain liabilities of PSI for an aggregate purchase price of $200,000.  The Company concurrently hired PSI's former CEO and committed to pay him an additional $100,000 on each of September 20, 2014 and 2015, contingent upon the former CEO's continued employment on each of those respective dates. Additionally, the former CEO may receive up to an additional $100,000 on each of September 20, 2014 and 2015, provided certain cash flow targets are met. The Company acquired PSI in order to expand its networking capabilities and enhance the Company's diversity recruitment offerings by creating networking events that assist corporations in their compliance initiatives while providing diverse professionals with face-to-face time with corporate recruiters. The Company recorded $125,000 and $25,000 of this contingent liability, which is included in general and administrative expenses in the accompanying statements of comprehensive loss for the years ended December 31, 2014 and 2013, respectively.

 

The acquisition was accounted for under the acquisition method of accounting. Accordingly, the acquired assets and assumed liabilities were recorded at their estimated fair values. The operating results for PSI are included in the consolidated financial statements from the effective date of acquisition of September 20, 2013 and did not have a material impact for the year ended December 31, 2013.

 

The allocation of the purchase price is summarized as follows:

 

Cash consideration paid by the Company

  $ 200,000  
         

Allocated to:

       

Cash

  $ 64,055  

Accounts receivable

    51,186  

Prepaid expenses

    6,667  

Accounts payable

    (4,242 )

Accrued expenses

    (17,323 )

Net assets acquired

    100,343  

Goodwill

    99,657  
    $ 200,000  

 

Goodwill arising from the acquisition mainly consists of the synergies of an ongoing business and an experienced workforce. The Company's goodwill is deductible for tax purposes and will be amortized over a period of 15 years. Goodwill is subject to a test for impairment on an annual basis. Supplemental pro forma information has not been presented because the effect of this acquisition was not material to the Company's consolidated financial results.