Annual report pursuant to Section 13 and 15(d)

CONSOLIDATED STATEMENTS OF CASH FLOWS

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CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)
12 Months Ended
Dec. 31, 2015
Dec. 31, 2014
Net loss $ (16,939,859) $ (3,153,615)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:    
Depreciation 7,578 6,233
Amortization of patents and website 10,825,164 5,522,047
Provision for allowance for doubtful accounts 375,750  
Deferred tax asset (7,618,580) (1,774,807)
Deferred tax liability (660,455)  
Impairment of intangible assets 5,793,409 2,144,488
Loss on debt extinguishment 1,416,915  
Stock based compensation 2,490,175 1,751,035
Stock issued for services 1,245,834 1,542,353
Non-cash interest, discount, and financing costs 2,220,992  
Change in fair value of Clouding earnout (6,137,116)  
Deemed Series A dividend beneficial conversion   1,271,492
Income tax benefit   (3,177,502)
Other non-cash adjustments 260,938 71,467
Changes in operating assets and liabilities    
Accounts receivable (295,608) 110,053
Prepaid expenses and other current assets (162,706) (2,346,667)
Accounts payable and accrued expenses 4,216,331 2,488,528
Net cash provided by (used in) operating activities (2,961,238) 4,455,105
Cash flows from investing activities:    
Acquisition of patents   (7,816,832)
Purchase of property, equipment and other intangible assets (58,386) (52,963)
Net cash (used in) investing activities (58,386) (7,869,795)
Cash flows from financing activities:    
Payable (Payment on Mdr Escrow (TLI) (50,000) 50,000
Payment on convertible debt (5,050,000)  
Cash received upon issuance of notes payable (net of issuance costs) 19,600,000  
Payments of notes payable to vendors (181,626)  
Cash received upon issuance of convertible debt securities   5,550,000
Proceeds from sale of preferred and common stock, net of issuance costs   6,388,266
Cash received upon exercise of warrant 18,751 249,222
Net cash provided by financing activities 508,838 4,888,528
Effect of exchange rate changes on cash (16,632) (1,531)
Net increase (decrease) in cash (2,527,418) 1,472,307
Cash at beginning of period 5,082,569 3,610,262
Cash at end of period 2,555,151 5,082,569
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:    
Cash paid for: Interest expenses 1,982,140 280,783
Cash paid for: Taxes paid 168,378 39,078
Cash paid for: Loan fees 400,000 1,050,000
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES    
Common stock issued in conjunction with note payable 1,000,000  
Warrants issued in conjunction with note payable 318,679  
Revenue share liability incurred in conjunction with note payable 1,000,000  
Non-cash interest increase in debt assumed in the acquisition of Orthophoenix 750,000  
Common stock issued in conjunction with debt extinguishment 654,000  
Conversion of accounts payable to notes payable 705,093  
Common stock issued in connection with the acquisition of Clouding Corp   281,000
Earn-out liability in connection with the acquisition of Clouding Corp.   9,452,000
Common stock granted in connection with the acquisition of TLI Communications, LLC   817,800
Series B Preferred stock issued in connection with the acquisition of Dynamic Advances LLC   1,403,690
Series B Convertible Preferred Stock issued in connection with the acquisition of Dynamic Advances LLC and IP Liquidity Ventures, LLC   2,087,380
Common stock issued in connection with the acquisition of Selene Communication Technologies, LLC   980,000
Value of warrants pertaining to equity issuance   11,595
Value of warrants pertaining to convertible debt issuance   146,935
Notes payable in connection with the acquisition of IP Liquidity Ventures LLC, Dynamic Advances LLC, Selene Communications Technologies LLC, Clouding Corp, and Medtech Companies   $ 14,000,000
Issuance of common stock for prepaid services   (298,301)
IP Liquidity    
Cash flows from financing activities:    
Payment of note payable (1,109,375) $ (1,215,625)
Dynamic Advances    
Cash flows from financing activities:    
Payment of note payable (2,624,375) (225,625)
Sarif    
Cash flows from financing activities:    
Payment of note payable (276,250) (23,750)
Orthophoenix LLC    
Cash flows from financing activities:    
Payment of note payable (5,500,000)  
Medtech And Orthophoenix    
Cash flows from financing activities:    
Payment of note payable $ (4,318,287) (2,000,000)
Clouding Corp    
Cash flows from financing activities:    
Payment of note payable   (1,000,000)
Payment on earn-out connected to acquisition of Clouding   $ (2,883,960)