Annual report pursuant to Section 13 and 15(d)

Acquisition

v2.4.0.8
Acquisition
 12 Months Ended
Dec. 31, 2013
Acquisition [Abstract]  
Acquisition
Note 15 - Acquisition
 
On October 31, 2012, our wholly owned subsidiary DSC, a Delaware corporation (“Data Storage DE”) and Message Logic, INC, a Delaware Corporation (“MessageLogic”) entered into an Asset Purchase Agreement (the “Agreement”); setting forth the acquisition of MessageLogic’s assets. Data Storage DE and its parent Data Storage Corporation is hereinafter referred to as the “Company” or “Data Storage.”
 
As described above, on October 31, 2012, MessageLogic agreed to sell, transfer, assign, and deliver to the Company all right, title and interest in the end user customer base, software and source code of MessageLogic (the “Business”) and all related current and fixed assets and contracts related to the Business.  These assets include, but not limited to, all of MessageLogic’s intellectual property, customers, customer contracts, software and other assets (collectively, but excluding the Excluded Assets (as hereinafter defined), the Message Logic Assets).  Additionally, MessageLogic transferred to the Company their current liabilities to the extent arising out of the business or the assets totaling $102,109.
 
Pursuant to the Agreement, the Company paid $211,003 through the issuance of 725,960 shares of its common stock and the assumption of $102,109 of MessageLogic’s liabilities.  The contingent purchase price provides for up to $800,000 in cash and an additional 769,230 of Data Storage common stock.  The first contingent payment was April 30, 2013 and required that sales of Message Logic archival software be at least $325,000.  If that benchmark was achieved the Company would  make a payment of $25,000.  The second contingent payment was October 31, 2013 and required sales of Message logic archival software be at least $1,000,000.  If that benchmark was achieved the Company would make a payment of $375,000.  The Company has not achieved either of the first two benchmarks.  The third contingent payment becomes due on April 30, 2014 if sales of Message Logic archival software are at least $2,000,000.  If that benchmark is met the company will have to make a payment of $150,000.  The fourth and final contingent payment becomes due on October 31, 2014 if Message Logic sales are at least $3,000,000.  If the last benchmark is met the company will make a payment of $250,000.  All benchmark related payments shall be made on a pro-rate basis and may be made if the benchmark is still achieved before the end of the next succeeding measurement period provided that a minimum achievement level of 50% of the benchmark is achieved. Payment of any contingent purchase price payment would first be paid against the outstanding contingent collateral obligation.
 
The following sets forth the components of the purchase price:
Purchase price:
      
Stock issued to seller at closing
  
$
80,764
  
Stock issued to creditor of seller at closing
    
28,130
  
Assumption of liabilities of seller
    
102,109
  
Contingent collateral obligation
    
368,624
  
Total purchase price
    
579,627
  
         
Assets acquired:
        
Trade Name/Trade Mark
    
15,000
  
Customer Agreements
    
153,175
  
Software and Source Code
    
406,581
  
Fixed Assets
    
4,870
  
Total assets acquired
  
$
579,627
  
         
Liabilities assumed:
        
Accounts payable
  
$
23,051
  
Deferred Revenue
    
79,058
  
Total liabilities assumed
    
102,109
  
         
Net assets acquired
    
477,518
  
         
Excess purchase price
  
$
-
  
 
The intangible assets subject to amortization have been assigned useful lives as follows:
 
Customer list
5 years
Non-compete agreements
4 years