Delaware
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58-2342021
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(State or Other Jurisdiction of Incorporation or Organization)
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(IRS Employer Identification No.)
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Title of each class
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Name of each exchange on which registered
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Common Stock, par value $0.01 per share
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The Nasdaq Capital Market
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Large accelerated filler
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o
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Accelerated filer
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o
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Non-accelerated filler
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o
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Smaller reporting company
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þ
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(do not check if a smaller reporting company)
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PART I
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1
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Item 1.
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Business
.
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1
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Item 1A.
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Risk Factors
.
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12
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Item 1B.
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Unresolved Staff Comments.
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21
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Item 2.
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Properties.
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22
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Item 3.
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Legal Proceedings.
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22
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Item 4.
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Mine Safety Disclosures.
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22
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PART II
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23
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Item 5.
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Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities.
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23
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Item 6.
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Selected Financial Data.
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24
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Item 7.
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Management’s Discussion and Analysis of Financial Condition and Results of Operations.
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24
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Item 7A.
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Quantitative and Qualitative Disclosures about Market Risk.
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35
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Item 8.
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Financial Statements.
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35
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Item 9.
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Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
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35
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Item 9A.
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Controls and Procedures.
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35
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Item 9B.
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Other Information.
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36
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PART III
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36
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Item 10.
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Directors, Executive Officers and Corporate Governance.
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36
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Item 11.
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Executive Compensation.
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36
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Item 12.
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Security Ownership Of Certain Beneficial Owners and Management and Related Stockholder Matters.
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36
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Item 13.
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Certain Relationships and Related Transactions, and Director Independence.
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36
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Item 14.
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Principal Accounting Fees and Services.
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36
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PART IV
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37
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Item 15.
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Exhibits, Financial Statement Schedules.
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37
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SIGNATURES
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42
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INDEX TO EXHIBITS
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44
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●
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Fusion®
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●
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V.o.I.C.E. the one that works!®
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●
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Fusion (Logo®
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●
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Clear Connections in the Cloud®
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●
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PingTone Communications®
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●
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diversion of management time and attention from daily operations;
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●
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difficulties integrating the acquired business, technologies and personnel into our business;
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●
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potential loss of key employees, key contractual relationships or key customers of the acquired businesses; and
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●
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in the case of a stock acquisition, exposure to unforeseen liabilities.
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●
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ability to obtain securities analyst coverage;
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●
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changes in securities analysts’ recommendations or estimates of our financial performance;
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●
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changes in the market valuations of companies similar to us;
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●
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announcements by us or our competitors of significant contracts, new offerings, acquisitions, commercial relationships, joint ventures, or capital commitments; and
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●
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failure to meet analysts’ expectations regarding financial performance.
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●
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dividend and liquidation preferences;
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voting rights;
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conversion privileges;
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●
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redemption terms; and
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●
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other privileges and rights of the shares of each authorized series.
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Location
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Lease Expiration Date
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Annual Rent
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Business Use
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Approx. Sq. Ft.
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||||
420 Lexington Avenue, Suite 1718, New York, NY 10170
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October 2020
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$666,000
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Lease of principal executive offices
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9,656
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||||
3565 Piedmont Road N.E., Suite 300, Atlanta, GA 30005
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August 2022
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$265,000
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Lease of network facilities and office space
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10,509
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||||
155 Willowbrook Boulevard, Wayne, NJ 07470
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October 2017
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$140,000
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Lease of network facilities and office space
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10,757
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||||
13921 Park Center Road, Herndon, VA 20171
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November 2017
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$345,000
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Lease of network facilities and office space
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13,364
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||||
1475 W. Cypress Creek Road, Suite 204, Fort Lauderdale, FL 33309
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August 2016
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$82,000
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Lease of network facilities and office space
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5,183
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||||
23250 Chagrin Blvd., Suite 250, Beachwood, OH 44122
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May 2019
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$93,000
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Lease of sales and admistrative office space
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5,638
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||||
1621 Euclid Avenue, Suite 730, Cleveland, OH 44122
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April 2019
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$83,000
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Lease of network facilities and office space
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10,000
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Year Ended December 31, 2015
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High
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Low
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||||||
First Quarter
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$ | 4.64 | $ | 3.52 | ||||
Second Quarter
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$ | 4.75 | $ | 2.07 | ||||
Third Quarter
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$ | 3.16 | $ | 1.88 | ||||
Fourth Quarter
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$ | 3.44 | $ | 1.99 | ||||
Year Ended December 31, 2014
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High
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Low
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||||||
First Quarter
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$ | 7.75 | $ | 4.78 | ||||
Second Quarter
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$ | 7.47 | $ | 2.50 | ||||
Third Quarter
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$ | 5.41 | $ | 3.33 | ||||
Fourth Quarter
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$ | 4.24 | $ | 3.10 |
Year Ended December 31,
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||||||||||||||||
2015
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% Sales
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2014
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% Sales
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|||||||||||||
Revenues
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$ | 101,694,516 | 100.0 | % | $ | 92,052,600 | 100.0 | % | ||||||||
Cost of revenues*
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56,724,121 | 55.8 | % | 49,598,373 | 53.9 | % | ||||||||||
Gross profit
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44,970,395 | 44.2 | % | 42,454,227 | 46.1 | % | ||||||||||
Depreciation and amortization
|
12,975,981 | 12.8 | % | 11,004,884 | 12.0 | % | ||||||||||
Selling, general and administrative expenses
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41,009,107 | 40.3 | % | 33,224,374 | 36.1 | % | ||||||||||
Total operating expenses
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53,985,088 | 53.1 | % | 44,229,258 | 48.0 | % | ||||||||||
Operating loss
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(9,014,693 | ) | (8.9 | %) | (1,775,031 | ) | (1.9 | %) | ||||||||
Other (expenses) income:
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||||||||||||||||
Interest expense
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(6,062,923 | ) | -6.0 | % | (5,988,411 | ) | (6.5 | %) | ||||||||
Gain on change in fair value of derivative liability
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1,843,997 | 1.8 | % | 5,161,901 | 5.6 | % | ||||||||||
Loss on extinguishment of debt
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(2,720,355 | ) | -2.7 | % | - | 0.0 | % | |||||||||
Other income, net
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63,613 | 0.1 | % | 60,450 | 0.1 | % | ||||||||||
Total other expenses
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(6,875,668 | ) | (6.8 | %) | (766,060 | ) | (0.8 | %) | ||||||||
Loss before income taxes
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(15,890,361 | ) | (15.6 | %) | (2,541,091 | ) | (2.8 | %) | ||||||||
Benefit (provision) for income taxes
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7,660,536 | 8 | % | (26,051 | ) | 0.0 | % | |||||||||
Net loss
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$ | (8,229,825 | ) | (8.1 | %) | $ | (2,567,142 | ) | (2.8 | %) |
●
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Series A and B Notes.
The Company sold $6.5 million aggregate principal amount of Series A notes, bearing interest at the original rate of 10.0% annually, and $10.0 million aggregate principal amount of Series B notes bearing interest at the rate of 11.5% annually in October 2012, the proceeds of which were used to finance the acquisition of NBS.
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●
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Series C and D Notes.
The Company sold $0.5 million aggregate principal amount of Series C notes and $25.0 million aggregate principal amount of Series D notes in December 2013, to finance the acquisition of certain assets of Broadvox.
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●
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Series E Notes.
The Company sold $5.0 million aggregate principal amount of Series E notes in October 2014 to fund its acquisition of PingTone.
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●
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Series F Notes
. The Company sold $9.0 million aggregate principal amount of Series F notes in August 2015 to retire a portion of the approximately $20.0 million of notes held by Plexus.
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Year Ended December 31,
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||||||||
2015
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2014 | |||||||
Net cash (used in) provided by operating activities
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$ | (152,603 | ) | $ | 2,160,915 | |||
Net cash used in investing activities
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(30,863,462 | ) | (9,327,900 | ) | ||||
Net cash provided by financing activities
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32,111,925 | 7,435,093 | ||||||
Net increase in cash and cash equivalents
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1,095,860 | 268,108 | ||||||
Cash and cash equivalents, beginning of period
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6,444,683 | 6,176,575 | ||||||
Cash and cash equivalents, end of period
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$ | 7,540,543 | $ | 6,444,683 |
Year Ended December 31,
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||||||||
2015
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2014
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|||||||
Net loss
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$ | (8,229,825 | ) | $ | (2,567,142 | ) | ||
Non-cash expenses, gains and losses
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7,421,855 | 8,135,273 | ||||||
Accounts receivable
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(883,253 | ) | (1,406,348 | ) | ||||
Accounts payable and accrued expenses
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2,005,632 | (1,534,841 | ) | |||||
Other
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(467,012 | ) | (466,027 | ) | ||||
Cash (used in) provided by operating activities
|
$ | (152,603 | ) | $ | 2,160,915 |
Exhibit No.
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Description
|
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3.1 |
Amended and Restated Certificate of Incorporation (*)
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3.2 |
Bylaws (*)
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10.1 |
1998 Stock Option Plan (*)
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10.1.1 |
2009 Stock Option Plan(1)
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10.2 |
Employment Agreement, dated as of November 5, 2015, between registrant and Matthew D. Rosen (16)
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10.3 |
Form of Warrant to Purchase Common Stock (*)
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10.4 |
Lease Agreement between registrant and SLG Graybar Sublease, LLC for Suite 1718 at 420 Lexington Avenue, New York, NY office (*)
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10.4.1 |
Lease Modification Agreement dated November 19, 2014, between registrant and SLG Graybar Sublease, LLC for the 420 Lexington Avenue, New York, NY office (13)
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10.5 |
Lease Agreement between registrant and Fort Lauderdale Crown Center, Inc. for the Fort Lauderdale, Florida office, as amended (*)
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10.5.1 |
Sixth Amendment dated July 23, 2014, to Lease Agreement between registrant and Fort Lauderdale Crown Center, Inc., for the Fort Lauderdale, Florida office (13)
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10.6 |
Warrant to Purchase Common Stock issued by registrant to Marvin Rosen, dated July 31, 2002 (*)
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10.7 |
Form of Promissory Note and Security Agreement (2)
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10.8 |
Non-Competition Agreement between registrant and Marvin Rosen (*)
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10.9 |
Form of Warrant (3)
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10.10 |
Purchase and Sale Agreement dated September 12, 2011 between registrant and Prestige Capital Corporation (4)
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10.11 |
Membership Interest Purchase and Sale Agreement dated January 30th, 2012 between the registrant, Network Billing Systems, LLC, Jonathan Kaufman, and Christiana Trust as trustee of the LK Trust (5)
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10.12 |
Asset Purchase and Sale Agreement dated January 30th, 2012 between the registrant, Interconnect Systems Group II LLC, Jonathan Kaufman, Lisa Kaufman as trustee of the JK Trust and Jonathan Kaufman as trustee of the LKII Trust (5)
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10.13 |
Amendment No. 1 dated June 6, 2013 to the Asset Purchase and Sale Agreement dated January 30th, 2012 between the registrant, Interconnect Systems Group II LLC, Jonathan Kaufman, Lisa Kaufman as trustee of the JK Trust and Jonathan Kaufman as trustee of the LKII Trust (12)
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10.14 |
Amendment No. 1 dated June 6, 2013 to the Membership Interest Purchase and Sale Agreement dated January 30th, 2012 between the registrant, Network Billing Systems, LLC, Jonathan Kaufman, and Christiana Trust as trustee of the LK Trust (12)
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10.15 |
Amendment No. 2 dated August 20, 2012 to the Asset Purchase and Sale Agreement dated January 30, 2012 between the registrant, Fusion NBS Acquisition Corp., Interconnect Services Group II LLC, Jonathan Kaufman, Lisa Kaufman as trustee of the JK Trust and Jonathan Kaufman as trustee of the LKII Trust (6)
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10.16 |
Amendment No. 2 dated August 20, 2012 to the Membership Interest Purchase and Sale Agreement dated January 30, 2012 between the registrant, Fusion NBS Acquisition Corp., Network Billing Systems, LLC, Jonathan Kaufman and Christiana Trust as trustee of the LK Trust (6)
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10.17 |
Amendment No. 3 dated September 21, 2012 to the Asset Purchase and Sale Agreement dated January 30, 2012 between the registrant, Fusion NBS Acquisition Corp., Interconnect Services Group II LLC, Jonathan Kaufman, Lisa Kaufman as trustee of the JK Trust and Jonathan Kaufman as trustee of the LKII Trust (6)
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10.18 |
Amendment No. 3 dated September 21, 2012 to the Membership Interest Purchase and Sale Agreement dated January 30, 2012 between the registrant, Fusion NBS Acquisition Corp., Network Billing Systems, LLC, Jonathan Kaufman and Christiana Trust as trustee of the LK Trust (6)
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10.19 |
Amendment No. 4 dated October 24, 2012 to the Asset Purchase and Sale Agreement dated January 30, 2012 between the registrant, Fusion NBS Acquisition Corp., Interconnect Services Group II LLC, Jonathan Kaufman, Lisa Kaufman as trustee of the JK Trust and Jonathan Kaufman as trustee of the LKII Trust (6)
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10.20 |
Amendment No. 4 dated October 24, 2012 to the Membership Interest Purchase and Sale Agreement dated January 30, 2012 between the registrant, Fusion NBS Acquisition Corp., Network Billing Systems, LLC, Jonathan Kaufman and Christiana Trust as trustee of the LK Trust (6)
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10.21 |
Lease Agreement dated October 1, 2012 by and between Manchester Realty, LLC and Fusion NBS Acquisition Corp (8)
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10.21.1 |
Lease Modification Agreement, dated October 1, 2014 by and between 280 Holdings, LLC (successor in interest to Manchester Realty, LLC) and Fusion NBS Acquisition Corp (13)
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10.22 |
Series A Promissory Note dated October 29, 2012 payable to Praesidian Fund III (6)
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10.23 |
Series B Promissory Note dated October 29, 2012 payable to Praesidian Fund III Praesidian Fund III Series B Note (6)
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10.24 |
Series A Promissory Note dated October 29, 2012 payable to Praesidian Fund III-A (6)
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10.25 |
Series B Promissory Note dated October 29, 2012 payable to Praesidian Fund III-A (6)
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10.26 |
Praesidian Fund III Common Stock Purchase Warrant dated October 29, 2012 (6)
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10.27 |
Praesidian Fund III-A Common Stock Purchase Warrant dated October 29, 2012 (6)
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10.28 |
Plexus Fund II Common Stock Purchase Warrant dated October 29, 2012 (6)
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10.29 |
Intellectual Property Security Agreement dated as of October 29, 2012 by Fusion Telecommunications International, Inc. and Network Billing systems, LLC, in favor of Praesidian Capital Opportunity Fund III, LP, Praesidian Capital Opportunity Fund III-A, LP, and Plexus Fund II, LP (6)
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10.30 |
Intercreditor and Subordination Agreement, dated as of August 28, 2015, by and among Marvin Rosen, Fusion Telecommunications International, Inc., and Opus Bank, as agent (1)
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10.31 |
Intercreditor Agreement dated as of October 29, 2012, by and among Prestige Capital Corporation, Praesidian Capital Opportunity Fund III, LP, Praesidian Capital Opportunity Fund III-A, LP, and Plexus Fund II, LP (6)
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10.32 |
Pledge Agreement dated as of October 29, 2012 by and among Fusion Telecommunications International, Inc., Fusion NBS Acquisition Corp., Praesidian Capital Opportunity Fund III, LP, Praesidian Capital Opportunity Fund III-A, LP, Plexus Fund II, LP and Praesidian Capital Opportunity Fund III as agent (6)
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10.33 |
Right of First Refusal Agreement dated as of October 29, 2012 by and among Fusion Telecommunications International, Inc., Praesidian Capital Opportunity Fund III, LP, Praesidian Capital Opportunity Fund III-A, LP, Plexus Fund II, LP and Praesidian Capital Opportunity Fund III as agent (6)
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10.34 |
Management Rights Agreement dated as of October 29, 2012 by and among Fusion Telecommunications International, Inc., Fusion NBS Acquisition Corp. and Praesidian Capital Opportunity Fund III (6)
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10.35 |
Management Rights Agreement dated as of October 29, 2012 by and among Fusion Telecommunications International, Inc., Fusion NBS Acquisition Corp. and Praesidian Capital Opportunity Fund III-A (6)
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10.36 |
Management Rights Agreement dated as of October 29, 2012 by and among Fusion Telecommunications International, Inc., Fusion NBS Acquisition Corp., and Plexus Fund II, LP (6)
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10.37 |
Asset Purchase and Sale Agreement effective as of August 30, 2013 by and among Fusion Telecommunications International, Inc., Fusion Broadvox Acquisition Corp.; BroadvoxGo!, LLC; and Cypress Communications, LLC (7)
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10.38 |
First Amendment to the Asset Purchase and Sale Agreement effective as of November 15, 2013 by and among Fusion Telecommunications International, Inc., Fusion Broadvox Acquisition Corp.; BroadvoxGo!, LLC,; and Cypress Communications, LLC (8)
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10.39 |
Second Amendment to the Asset Purchase and Sale Agreement effective as of December 16, 2013 by and among Fusion Telecommunications International, Inc., Fusion Broadvox Acquisition Corp.; BroadvoxGo!, LLC,; and Cypress Communications, LLC (9)
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10.40 |
Third Amendment to Securities Purchase Agreement is entered into as of December 16, 2013, by and among Fusion NBS Acquisition Corp, Fusion Telecommunications International, Inc., Network Billing Systems, LLC, Praesidian Capital Opportunity Fund III, LP, Praesidian Capital Opportunity Fund III-A, LP, and Plexus Fund II, LP, and Praesidian Capital Opportunity Fund III, LP as agent (9)
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10.41 |
Form of Common Stock Purchase Warrant (10)
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10.42 |
Form of Registration Rights Agreement (10)
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10.43 |
Form of Series C Note (10)
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10.44 |
First Amendment To Intercreditor Agreement dated as of December 31, 2013 by and among Prestige Capital Corporation, Praesidian Capital Opportunity Fund III, LP, Praesidian Capital Opportunity Fund III-A, LP, Plexus Fund II, L.P., Plexus Fund III QP, L.P., United Insurance Company of America, Fusion NBS Acquisition Corp., Fusion Telecommunications International, Inc., Network Billing Systems, LLC and Fusion BVX LLC (10)
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10.45 |
Form of Series D Note dated December 31, 2013 (10)
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10.46 |
Form of Management Rights Letter dated December 31, 2013 (10)
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10.47 |
Form of Lenders’ Warrant dated December 31, 2013 (10)
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10.48 |
Joinder Agreement dated as of December 31, 2013 by and among Fusion Telecommunications International, Inc., Fusion NBS Acquisition Corp., Fusion BVX LLC in favor of Praesidian Capital Opportunity Fund III, LP, Praesidian Capital Opportunity Fund III-A, LP, Plexus Fund II, L.P., Plexus Fund III, L.P., Plexus Fund QP III, L.P., and United Insurance Company Of America (10)
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10.49 |
Assignment and Assumption Agreement dated as of December 31, 2013 by and among BroadvoxGo!, LLC, Cypress Communications, LLC, Fusion Telecommunications International, Inc., and Fusion BVX, LLC (10)
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10.50 |
Bill of Sale dated as of December 31, 2013 delivered by BroadvoxGo!, LLC and Cypress Communications, LLC (10)
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10.51 |
Limited Trademark License Agreement dated as of December 31, 2013 by and among Broadvox, LLC; Fusion Telecommunications International, Inc. and Fusion BVX LLC (10)
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10.52 |
Form of Series E Note, dated as of October 31, 2014 (13)
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10.53 |
Agreement and Plan of Merger, dated as of October 15, 2014, by and among Fusion Telecommunications International, Inc., Fusion PTC Acquisition Inc., PingTone Communications, Inc., the Majority Stockholders of PingTone Communications, Inc. and J Shelby Bryan, as Stockholders Representative (13)
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10.54 |
Amended and Restated Credit Agreement, dated as of December 8, 2015, by and between Fusion NBS Acquisition Corp., as borrower, Opus Bank, as administrative agent and a lender, and each other lender from time to time a party thereto (16)
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10.55 |
Fourth Amended and Restated Securities Purchase Agreement and Security Agreement, dated as of December 8, 2015, by and among Fusion NBS Acquisition Corp., as borrower, Fusion Telecommunications International, Inc., Network Billing Systems, L.L.C., Fusion BVX, LLC, PingTone Communications, Inc., Fidelity Access Networks, LLC, Fidelity Connect LLC, Fidelity Voice Services, LLC, Fidelity Access Networks, Inc., Praesidian Capital Opportunity Fund III, L.P., Praesidian Capital Opportunity Fund III-A, LP and United Insurance Company of America (16)
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10.56 |
Stock Purchase and Sale Agreement, dated as of December 8, 2015, by and among Fusion NBS Acquisition Corp., Mitch Marks, Ron Kohn and Robert Marks (16)
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|
14 |
Code of Ethics of Registrant (13)
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21.1 |
List of Subsidiaries (1)
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23.1 |
Consent of EisnerAmper LLP(1)
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31.1 |
Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (1)
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31.2 |
Certification of President Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (1)
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32.1 |
Section 1350 Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (1)
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32.2 |
Section 1350 Certification of President Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (1)
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101.INS***
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XBRL Instance Document
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101.SCH***
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XBRL Taxonomy Extension Schema Document
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101.CAL***
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XBRL Taxonomy Extension Calculation Linkbase Document
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101.DEF***
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XBRL Taxonomy Extension Definition Linkbase Document
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101.LAB***
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XBRL Taxonomy Extension Label Linkbase Document
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101.PRE***
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XBRL Taxonomy Extension Presentation Linkbase Document
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* |
Originally filed with the Company’s Registration Statement no. 33-120412 and incorporated herein by reference.
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** |
Originally filed with the Company’s Registration Statement no. 33-120206 and incorporated herein by reference.
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*** |
Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, except as expressly set forth by specific reference in such filing, are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.
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(1) |
Filed herewith.
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(2) |
Filed as an Exhibit to the Company’s Annual Report on Form 10-K filed April 13, 2011, and incorporated herein by reference.
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(3) |
Filed as an Exhibit to the Company’s Current Report on Form 8-K filed on December 15, 2006, and incorporated herein by reference.
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(4)
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Filed as an Exhibit to the Company’s Quarterly Report on Form 10-Q for the period ended September 30, 2011 filed on November 15, 2011 and incorporated herein by reference.
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(5)
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Filed as an Exhibit to the Company’s Annual Report on Form 10-K filed March 30, 2012 and incorporated herein by reference.
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(6)
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Filed as an Exhibit to the Company’s Current Report on Form 8-K filed on November 2, 2012 and incorporated herein by reference.
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(7)
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Filed as an Exhibit to the Company’s Current Report on Form 8-K filed on September 4, 2013 and incorporated herein by reference.
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(8)
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Filed as an Exhibit to the Company’s Current Report on Form 8-K filed on November 21, 2013 and incorporated herein by reference.
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(9)
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Filed as an Exhibit to the Company’s Current Report on Form 8-K filed on December 19, 2013 and incorporated herein by reference.
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(10)
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Filed as an Exhibit to the Company’s Current Report on Form 8-K/A filed on January 7, 2014 and incorporated herein by reference.
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(11)
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Filed as an Exhibit to the Company’s Annual Report on Form 10-K filed on March 31, 2006, and incorporated herein by reference.
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(12)
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Filed as an Exhibit to the Company’s Quarterly Report on Form 10-Q filed on August 14, 2013 and incorporated herein by reference.
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(13)
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Filed as an Exhibit to the Company’s Current Report on Form 8-K dated November 3, 2014 and incorporated herein by reference.
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(14)
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Filed as an Exhibit to the Company’s Annual Report on Form 10-K filed on March 30, 2015 and incorporated herein by reference.
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(15)
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Filed as an Exhibit to the Company’s Annual Report on Form 8-K filed on November 10, 2015 and incorporated herein by reference.
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(16)
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Filed as an Exhibit to the Company’s Annual Report on Form 8-K filed on December 14, 2015, and incorporated herein by reference.
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FUSION TELECOMMUNICATIONS INTERNATIONAL, IN
C.
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|||
Date: March 28, 2016
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By:
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/s/ MATTHEW D. ROSEN
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Matthew D. Rosen
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|||
Chief Executive Officer and Principal Executive Officer
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|||
Date: March 28, 2016
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By:
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/s/ GORDON HUTCHINS, JR.
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Gordon Hutchins, Jr.
|
|||
President, Chief Operating Officer,
Principal Accounting Officer and Acting Chief Financial Officer
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Signature
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Title
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Date
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||
/s/ MARVIN S. ROSEN
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Chairman of the Board
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|||
Marvin S. Rosen
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March 28, 2016
|
|||
/s/ PHILIP D. TURITS
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Director
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|||
Philip D. Turits
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March 28, 2016
|
|||
/s/ MATTHEW D. ROSEN
|
Chief Executive Officer and Director
|
|||
Matthew D. Rosen
|
March 28, 2016
|
|||
/s/ E. ALAN BRUMBERGER
|
Director
|
|||
E. Alan Brumberger
|
March 28, 2016
|
|||
Director
|
||||
Jack Rosen
|
March 28, 2016
|
|||
/s/ WILLIAM RUBIN
|
Director
|
|||
William Rubin
|
March 28, 2016
|
|||
Director
|
||||
Larry Blum
|
March 28, 2016
|
|||
Director
|
||||
Paul C. O’Brien
|
March 28, 2016
|
|||
/s/ MICHAEL J. DEL GIUDICE
|
Director
|
|||
Michael J. Del Giudice
|
March 28, 2016
|
3.1 |
Amended and Restated Certificate of Incorporation (*)
|
|
3.2 |
Bylaws (*)
|
|
10.1 |
1998 Stock Option Plan (*)
|
|
10.1.1 |
2009 Stock Option Plan(1)
|
|
10.2 |
Employment Agreement, dated as of November 5, 2015, between registrant and Matthew D. Rosen (16)
|
|
10.3 |
Form of Warrant to Purchase Common Stock (*)
|
|
10.4 |
Lease Agreement between registrant and SLG Graybar Sublease, LLC for Suite 1718 at 420 Lexington Avenue, New York, NY office (*)
|
|
10.4.1 |
Lease Modification Agreement dated November 19, 2014, between registrant and SLG Graybar Sublease, LLC for the 420 Lexington Avenue, New York, NY office (13)
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|
10.5 |
Lease Agreement between registrant and Fort Lauderdale Crown Center, Inc. for the Fort Lauderdale, Florida office, as amended (*)
|
|
10.5.1 |
Sixth Amendment dated July 23, 2014, to Lease Agreement between registrant and Fort Lauderdale Crown Center, Inc., for the Fort Lauderdale, Florida office (13)
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|
10.6 |
Warrant to Purchase Common Stock issued by registrant to Marvin Rosen, dated July 31, 2002 (*)
|
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10.7 |
Form of Promissory Note and Security Agreement (2)
|
|
10.8 |
Non-Competition Agreement between registrant and Marvin Rosen (*)
|
|
10.9 |
Form of Warrant (3)
|
|
10.10 |
Purchase and Sale Agreement dated September 12, 2011 between registrant and Prestige Capital Corporation (4)
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10.11 |
Membership Interest Purchase and Sale Agreement dated January 30th, 2012 between the registrant, Network Billing Systems, LLC, Jonathan Kaufman, and Christiana Trust as trustee of the LK Trust (5)
|
|
10.12 |
Asset Purchase and Sale Agreement dated January 30th, 2012 between the registrant, Interconnect Systems Group II LLC, Jonathan Kaufman, Lisa Kaufman as trustee of the JK Trust and Jonathan Kaufman as trustee of the LKII Trust (5)
|
|
10.13 |
Amendment No. 1 dated June 6, 2013 to the Asset Purchase and Sale Agreement dated January 30th, 2012 between the registrant, Interconnect Systems Group II LLC, Jonathan Kaufman, Lisa Kaufman as trustee of the JK Trust and Jonathan Kaufman as trustee of the LKII Trust (12)
|
10.14 |
Amendment No. 1 dated June 6, 2013 to the Membership Interest Purchase and Sale Agreement dated January 30th, 2012 between the registrant, Network Billing Systems, LLC, Jonathan Kaufman, and Christiana Trust as trustee of the LK Trust (12)
|
|
10.15 |
Amendment No. 2 dated August 20, 2012 to the Asset Purchase and Sale Agreement dated January 30, 2012 between the registrant, Fusion NBS Acquisition Corp., Interconnect Services Group II LLC, Jonathan Kaufman, Lisa Kaufman as trustee of the JK Trust and Jonathan Kaufman as trustee of the LKII Trust (6)
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|
10.16 |
Amendment No. 2 dated August 20, 2012 to the Membership Interest Purchase and Sale Agreement dated January 30, 2012 between the registrant, Fusion NBS Acquisition Corp., Network Billing Systems, LLC, Jonathan Kaufman and Christiana Trust as trustee of the LK Trust (6)
|
|
10.17 |
Amendment No. 3 dated September 21, 2012 to the Asset Purchase and Sale Agreement dated January 30, 2012 between the registrant, Fusion NBS Acquisition Corp., Interconnect Services Group II LLC, Jonathan Kaufman, Lisa Kaufman as trustee of the JK Trust and Jonathan Kaufman as trustee of the LKII Trust (6)
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|
10.18 |
Amendment No. 3 dated September 21, 2012 to the Membership Interest Purchase and Sale Agreement dated January 30, 2012 between the registrant, Fusion NBS Acquisition Corp., Network Billing Systems, LLC, Jonathan Kaufman and Christiana Trust as trustee of the LK Trust (6)
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|
10.19 |
Amendment No. 4 dated October 24, 2012 to the Asset Purchase and Sale Agreement dated January 30, 2012 between the registrant, Fusion NBS Acquisition Corp., Interconnect Services Group II LLC, Jonathan Kaufman, Lisa Kaufman as trustee of the JK Trust and Jonathan Kaufman as trustee of the LKII Trust (6)
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|
10.20 |
Amendment No. 4 dated October 24, 2012 to the Membership Interest Purchase and Sale Agreement dated January 30, 2012 between the registrant, Fusion NBS Acquisition Corp., Network Billing Systems, LLC, Jonathan Kaufman and Christiana Trust as trustee of the LK Trust (6)
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10.21 |
Lease Agreement dated October 1, 2012 by and between Manchester Realty, LLC and Fusion NBS Acquisition Corp (8)
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|
10.21.1 |
Lease Modification Agreement, dated October 1, 2014 by and between 280 Holdings, LLC (successor in interest to Manchester Realty, LLC) and Fusion NBS Acquisition Corp (13)
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|
10.22 |
Series A Promissory Note dated October 29, 2012 payable to Praesidian Fund III (6)
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10.23 |
Series B Promissory Note dated October 29, 2012 payable to Praesidian Fund III Praesidian Fund III Series B Note (6)
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10.24 |
Series A Promissory Note dated October 29, 2012 payable to Praesidian Fund III-A (6)
|
|
10.25 |
Series B Promissory Note dated October 29, 2012 payable to Praesidian Fund III-A (6)
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|
10.26 |
Praesidian Fund III Common Stock Purchase Warrant dated October 29, 2012 (6)
|
|
10.27 |
Praesidian Fund III-A Common Stock Purchase Warrant dated October 29, 2012 (6)
|
|
10.28 |
Plexus Fund II Common Stock Purchase Warrant dated October 29, 2012 (6)
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|
10.29 |
Intellectual Property Security Agreement dated as of October 29, 2012 by Fusion Telecommunications International, Inc. and Network Billing systems, LLC, in favor of Praesidian Capital Opportunity Fund III, LP, Praesidian Capital Opportunity Fund III-A, LP, and Plexus Fund II, LP (6)
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|
10.30 |
Intercreditor and Subordination Agreement, dated as of August 28, 2015, by and among Marvin Rosen, Fusion Telecommunications International, Inc., and Opus Bank, as agent (1)
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|
10.31 |
Intercreditor Agreement dated as of October 29, 2012, by and among Prestige Capital Corporation, Praesidian Capital Opportunity Fund III, LP, Praesidian Capital Opportunity Fund III-A, LP, and Plexus Fund II, LP (6)
|
10.32 |
Pledge Agreement dated as of October 29, 2012 by and among Fusion Telecommunications International, Inc., Fusion NBS Acquisition Corp., Praesidian Capital Opportunity Fund III, LP, Praesidian Capital Opportunity Fund III-A, LP, Plexus Fund II, LP and Praesidian Capital Opportunity Fund III as agent (6)
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|
10.33 |
Right of First Refusal Agreement dated as of October 29, 2012 by and among Fusion Telecommunications International, Inc., Praesidian Capital Opportunity Fund III, LP, Praesidian Capital Opportunity Fund III-A, LP, Plexus Fund II, LP and Praesidian Capital Opportunity Fund III as agent (6)
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|
10.34 |
Management Rights Agreement dated as of October 29, 2012 by and among Fusion Telecommunications International, Inc., Fusion NBS Acquisition Corp. and Praesidian Capital Opportunity Fund III (6)
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|
10.35 |
Management Rights Agreement dated as of October 29, 2012 by and among Fusion Telecommunications International, Inc., Fusion NBS Acquisition Corp. and Praesidian Capital Opportunity Fund III-A (6)
|
|
10.36 |
Management Rights Agreement dated as of October 29, 2012 by and among Fusion Telecommunications International, Inc., Fusion NBS Acquisition Corp., and Plexus Fund II, LP (6)
|
|
10.37 |
Asset Purchase and Sale Agreement effective as of August 30, 2013 by and among Fusion Telecommunications International, Inc., Fusion Broadvox Acquisition Corp.; BroadvoxGo!, LLC; and Cypress Communications, LLC (7)
|
|
10.38 |
First Amendment to the Asset Purchase and Sale Agreement effective as of November 15, 2013 by and among Fusion Telecommunications International, Inc., Fusion Broadvox Acquisition Corp.; BroadvoxGo!, LLC,; and Cypress Communications, LLC (8)
|
|
10.39 |
Second Amendment to the Asset Purchase and Sale Agreement effective as of December 16, 2013 by and among Fusion Telecommunications International, Inc., Fusion Broadvox Acquisition Corp.; BroadvoxGo!, LLC,; and Cypress Communications, LLC (9)
|
|
10.40 |
Third Amendment to Securities Purchase Agreement is entered into as of December 16, 2013, by and among Fusion NBS Acquisition Corp, Fusion Telecommunications International, Inc., Network Billing Systems, LLC, Praesidian Capital Opportunity Fund III, LP, Praesidian Capital Opportunity Fund III-A, LP, and Plexus Fund II, LP, and Praesidian Capital Opportunity Fund III, LP as agent (9)
|
|
10.41 |
Form of Common Stock Purchase Warrant (10)
|
|
10.42 |
Form of Registration Rights Agreement (10)
|
|
10.43 |
Form of Series C Note (10)
|
|
10.44 |
First Amendment To Intercreditor Agreement dated as of December 31, 2013 by and among Prestige Capital Corporation, Praesidian Capital Opportunity Fund III, LP, Praesidian Capital Opportunity Fund III-A, LP, Plexus Fund II, L.P., Plexus Fund III QP, L.P., United Insurance Company of America, Fusion NBS Acquisition Corp., Fusion Telecommunications International, Inc., Network Billing Systems, LLC and Fusion BVX LLC (10)
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|
10.45 |
Form of Series D Note dated December 31, 2013 (10)
|
|
10.46 |
Form of Management Rights Letter dated December 31, 2013 (10)
|
|
10.47 |
Form of Lenders’ Warrant dated December 31, 2013 (10)
|
|
10.48 |
Joinder Agreement dated as of December 31, 2013 by and among Fusion Telecommunications International, Inc., Fusion NBS Acquisition Corp., Fusion BVX LLC in favor of Praesidian Capital Opportunity Fund III, LP, Praesidian Capital Opportunity Fund III-A, LP, Plexus Fund II, L.P., Plexus Fund III, L.P., Plexus Fund QP III, L.P., and United Insurance Company Of America (10)
|
|
10.49 |
Assignment and Assumption Agreement dated as of December 31, 2013 by and among BroadvoxGo!, LLC, Cypress Communications, LLC, Fusion Telecommunications International, Inc., and Fusion BVX, LLC (10)
|
|
10.50 |
Bill of Sale dated as of December 31, 2013 delivered by BroadvoxGo!, LLC and Cypress Communications, LLC (10)
|
|
10.51 |
Limited Trademark License Agreement dated as of December 31, 2013 by and among Broadvox, LLC; Fusion Telecommunications International, Inc. and Fusion BVX LLC (10)
|
10.52 |
Form of Series E Note, dated as of October 31, 2014 (13)
|
|
10.53 |
Agreement and Plan of Merger, dated as of October 15, 2014, by and among Fusion Telecommunications International, Inc., Fusion PTC Acquisition Inc., PingTone Communications, Inc., the Majority Stockholders of PingTone Communications, Inc. and J Shelby Bryan, as Stockholders Representative (13)
|
|
10.54 |
Amended and Restated Credit Agreement, dated as of December 8, 2015, by and between Fusion NBS Acquisition Corp., as borrower, Opus Bank, as administrative agent and a lender, and each other lender from time to time a party thereto (16)
|
|
10.55 |
Fourth Amended and Restated Securities Purchase Agreement and Security Agreement, dated as of December 8, 2015, by and among Fusion NBS Acquisition Corp., as borrower, Fusion Telecommunications International, Inc., Network Billing Systems, L.L.C., Fusion BVX, LLC, PingTone Communications, Inc., Fidelity Access Networks, LLC, Fidelity Connect LLC, Fidelity Voice Services, LLC, Fidelity Access Networks, Inc., Praesidian Capital Opportunity Fund III, L.P., Praesidian Capital Opportunity Fund III-A, LP and United Insurance Company of America (16)
|
|
10.56 |
Stock Purchase and Sale Agreement, dated as of December 8, 2015, by and among Fusion NBS Acquisition Corp., Mitch Marks, Ron Kohn and Robert Marks (16)
|
|
14 |
Code of Ethics of Registrant (13)
|
|
21.1 |
List of Subsidiaries (1)
|
|
23.1 |
Consent of EisnerAmper LLP(1)
|
|
31.1 |
Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (1)
|
|
31.2 |
Certification of President Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (1)
|
|
32.1 |
Section 1350 Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (1)
|
|
32.2 |
Section 1350 Certification of President Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (1)
|
|
101.INS***
|
XBRL Instance Document
|
|
101.SCH***
|
XBRL Taxonomy Extension Schema Document
|
|
101.CAL***
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
101.DEF***
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
101.LAB***
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
101.PRE***
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
* |
Originally filed with the Company’s Registration Statement no. 33-120412 and incorporated herein by reference.
|
** |
Originally filed with the Company’s Registration Statement no. 33-120206 and incorporated herein by reference.
|
*** |
Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, except as expressly set forth by specific reference in such filing, are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.
|
(1) |
Filed herewith.
|
(2) |
Filed as an Exhibit to the Company’s Annual Report on Form 10-K filed April 13, 2011, and incorporated herein by reference.
|
(3) |
Filed as an Exhibit to the Company’s Current Report on Form 8-K filed on December 15, 2006, and incorporated herein by reference.
|
(4)
|
Filed as an Exhibit to the Company’s Quarterly Report on Form 10-Q for the period ended September 30, 2011 filed on November 15, 2011 and incorporated herein by reference.
|
(5)
|
Filed as an Exhibit to the Company’s Annual Report on Form 10-K filed March 30, 2012 and incorporated herein by reference.
|
(6)
|
Filed as an Exhibit to the Company’s Current Report on Form 8-K filed on November 2, 2012 and incorporated herein by reference.
|
(7)
|
Filed as an Exhibit to the Company’s Current Report on Form 8-K filed on September 4, 2013 and incorporated herein by reference.
|
(8)
|
Filed as an Exhibit to the Company’s Current Report on Form 8-K filed on November 21, 2013 and incorporated herein by reference.
|
(9)
|
Filed as an Exhibit to the Company’s Current Report on Form 8-K filed on December 19, 2013 and incorporated herein by reference.
|
(10)
|
Filed as an Exhibit to the Company’s Current Report on Form 8-K/A filed on January 7, 2014 and incorporated herein by reference.
|
(11)
|
Filed as an Exhibit to the Company’s Annual Report on Form 10-K filed on March 31, 2006, and incorporated herein by reference.
|
(12)
|
Filed as an Exhibit to the Company’s Quarterly Report on Form 10-Q filed on August 14, 2013 and incorporated herein by reference.
|
(13)
|
Filed as an Exhibit to the Company’s Current Report on Form 8-K dated November 3, 2014 and incorporated herein by reference.
|
(14)
|
Filed as an Exhibit to the Company’s Annual Report on Form 10-K filed on March 30, 2015 and incorporated herein by reference.
|
(15)
|
Filed as an Exhibit to the Company’s Annual Report on Form 8-K filed on November 10, 2015 and incorporated herein by reference.
|
(16)
|
Filed as an Exhibit to the Company’s Annual Report on Form 8-K filed on December 14, 2015, and incorporated herein by reference.
|
Report of Independent Registered Public Accounting Firm
|
F- 1
|
Consolidated Balance Sheets
|
F- 2
|
Consolidated Statements of Operations
|
F- 3
|
Consolidated Statements of Changes in Stockholders' Equity
|
F- 4
|
Consolidated Statements of Cash Flows
|
F- 5
|
Notes to Consolidated Financial Statements
|
F- 6
|
Year Ended December 31,
|
||||||||
2015
|
2014
|
|||||||
Revenues
|
$ | 101,694,516 | $ | 92,052,600 | ||||
Cost of revenues (exclusive of depreciation and amortization, shown separately below)
|
56,724,121 | 49,598,373 | ||||||
Gross profit
|
44,970,395 | 42,454,227 | ||||||
Depreciation and amortization
|
12,975,981 | 11,004,884 | ||||||
Selling, general and administrative expenses (including stock-based compensation of $639,296 for (2015) and $371,758 for (2014))
|
41,009,107 | 33,224,374 | ||||||
Total operating expenses
|
53,985,088 | 44,229,258 | ||||||
Operating loss
|
(9,014,693 | ) | (1,775,031 | ) | ||||
Other (expenses) income:
|
||||||||
Interest expense
|
(6,062,923 | ) | (5,988,411 | ) | ||||
Gain on change in fair value of derivative liability
|
1,843,997 | 5,161,901 | ||||||
Loss on extinguishment of debt
|
(2,720,355 | ) | - | |||||
Other income, net
|
63,613 | 60,450 | ||||||
Total other expenses
|
(6,875,668 | ) | (766,060 | ) | ||||
Loss before income taxes
|
(15,890,361 | ) | (2,541,091 | ) | ||||
Benefit (provision) for income taxes
|
7,660,536 | (26,051 | ) | |||||
Net loss
|
(8,229,825 | ) | (2,567,142 | ) | ||||
Preferred stock dividends in arrears
|
(1,578,220 | ) | (1,746,203 | ) | ||||
Net loss attributable to common stockholders
|
$ | (9,808,045 | ) | $ | (4,313,345 | ) | ||
Basic and diluted loss per common share
|
$ | (1.32 | ) | $ | (0.92 | ) | ||
Weighted average common shares outstanding:
|
||||||||
Basic and diluted
|
8,873,766 | 7,132,427 |
Preferred Stock
|
Common Stock
|
Capital in Excess
|
Accumulated
|
Stockholders' Equity
|
||||||||||||||||||||||||
Shares
|
$
|
Shares
|
$
|
of Par | Deficit | (Deficit) | ||||||||||||||||||||||
Balance at December 31, 2013
|
23,525 | $ | 235 | 6,077,071 | $ | 60,770 | $ | 166,625,595 | $ | (159,736,270 | ) | $ | 6,950,330 | |||||||||||||||
Net loss
|
(2,567,142 | ) | (2,567,142 | ) | ||||||||||||||||||||||||
Proceeds from the sale of preferred stock and warrants, net
|
4,358 | 44 | 3,984,382 | 3,984,426 | ||||||||||||||||||||||||
Warrants issued in conjuction with the issuance of preferred stock deemed not indexed to the Company's common stock
|
(1,301,607 | ) | (1,301,607 | ) | ||||||||||||||||||||||||
Discount on related party note payable, net of exchanges
|
372,551 | 372,551 | ||||||||||||||||||||||||||
Modification of previously issued warrants and reclassification to stockholders' equity
|
2,815,609 | 2,815,609 | ||||||||||||||||||||||||||
Conversion of preferred stock into common stock
|
(1,090 | ) | (11 | ) | 218,000 | 2,180 | (2,169 | ) | - | |||||||||||||||||||
Dividends on preferred stock
|
299,216 | 2,992 | (2,992 | ) | - | |||||||||||||||||||||||
Shares issued as partial purchase price of acquired business
|
712,250 | 7,122 | 2,492,875 | 2,499,997 | ||||||||||||||||||||||||
Issuance of common stock for services rendered
|
38,491 | 385 | 163,457 | 163,842 | ||||||||||||||||||||||||
Stock-based compensation associated with stock incentive plans
|
371,758 | 371,758 | ||||||||||||||||||||||||||
Balance at December 31, 2014
|
26,793 | $ | 268 | 7,345,028 | $ | 73,449 | $ | 175,519,459 | $ | (162,303,412 | ) | $ | 13,289,764 | |||||||||||||||
Net loss
|
(8,229,825 | ) | (8,229,825 | ) | ||||||||||||||||||||||||
Conversion of preferred stock into common stock
|
(3,469 | ) | (34 | ) | 782,550 | 7,826 | (7,792 | ) | - | |||||||||||||||||||
Dividends on preferred stock
|
434,201 | 4,344 | (4,344 | ) | - | |||||||||||||||||||||||
Proceeds from the sale of common stock
|
2,582,568 | 25,826 | 5,604,174 | 5,630,000 | ||||||||||||||||||||||||
Conversion of related party note to common stock
|
137,615 | 1,376 | 298,624 | 300,000 | ||||||||||||||||||||||||
Issuance of common stock in lieu of cash bonus
|
11,468 | 115 | 24,885 | 25,000 | ||||||||||||||||||||||||
Settlement of outstanding debt with common stock
|
3,700 | 37 | 11,840 | 11,877 | ||||||||||||||||||||||||
Exercise of lenders warrants
|
728,333 | 7,282 | 356,885 | 364,167 | ||||||||||||||||||||||||
Common stock issued as part of purchase price - Fidelity acquisition
|
696,508 | 6,965 | 1,493,035 | 1,500,000 | ||||||||||||||||||||||||
Modification of previously issued warrants and reclassification to stockholders' equity
|
678,400 | 678,400 | ||||||||||||||||||||||||||
Issuance of common stock for services rendered
|
67,000 | 670 | 244,620 | 245,290 | ||||||||||||||||||||||||
Stock-based compensation associated with stock incentive plans
|
639,296 | 639,296 | ||||||||||||||||||||||||||
Balance at December 31, 2015
|
23,324 | $ | 234 | 12,788,971 | $ | 127,890 | $ | 184,859,082 | $ | (170,533,237 | ) | $ | 14,453,969 |
Year Ended December 31,
|
||||||||
2015
|
2014
|
|||||||
Cash flows from operating activities:
|
||||||||
Net loss
|
$ | (8,229,825 | ) | $ | (2,567,142 | ) | ||
Adjustments to reconcile net loss to net cash provided by operating activities:
|
||||||||
Depreciation and amortization
|
12,975,981 | 11,004,883 | ||||||
Loss on extinguishment on debt
|
1,682,035 | - | ||||||
Deferred taxes
|
(7,710,536 | ) | - | |||||
Loss on accounts receivable settlement exchanged for equipment
|
111,659 | - | ||||||
Loss on disposal of property
|
37,444 | 116,638 | ||||||
Bad debt expense
|
435,376 | 559,832 | ||||||
Stock-based compensation
|
639,296 | 371,758 | ||||||
Stock based compensation issued for services rendered by third parties
|
245,290 | 179,717 | ||||||
Amortization of debt discount and deferred financing fees
|
849,307 | 1,064,346 | ||||||
Gain in the change in fair value of derivative liability
|
(1,843,997 | ) | (5,161,901 | ) | ||||
Changes in operating assets and liabilities:
|
||||||||
Accounts receivable
|
(883,253 | ) | (1,406,348 | ) | ||||
Prepaid expenses and other current assets
|
(22,351 | ) | (521,002 | ) | ||||
Other assets
|
(444,661 | ) | 54,975 | |||||
Accounts payable and accrued expenses
|
2,005,632 | (1,534,841 | ) | |||||
Net cash (used in) provided by operating activities
|
(152,603 | ) | 2,160,915 | |||||
Cash flows from investing activities:
|
||||||||
Purchase of property and equipment
|
(3,440,450 | ) | (3,819,413 | ) | ||||
Proceeds from the sale of property and equipment
|
35,469 | 53,846 | ||||||
Payment for acquisitions, net of cash acquired
|
(28,457,739 | ) | (7,544,938 | ) | ||||
Returns of security deposits
|
- | 1,983,114 | ||||||
Payment of security deposits
|
- | - | ||||||
Change in restricted cash
|
999,258 | (509 | ) | |||||
Net cash used in investing activities
|
(30,863,462 | ) | (9,327,900 | ) | ||||
Cash flows from financing activities:
|
||||||||
Proceeds from the sale of preferred stock and warrants, net
|
- | 3,984,426 | ||||||
Proceeds from sale of common stock
|
5,630,000 | - | ||||||
Proceeds from notes payable - non-related parties
|
9,000,000 | 5,000,000 | ||||||
Proceeds from term loan
|
25,000,000 | - | ||||||
Proceeds from revolving debt
|
15,000,000 | - | ||||||
Proceeds from accounts receivable factoring arrangement
|
1,789,094 | 3,787,260 | ||||||
Repayments of borrowings to accounts receivable factoring arrangement
|
(1,789,094 | ) | (3,787,260 | ) | ||||
Payments on equipment financing obligations
|
(887,864 | ) | (453,369 | ) | ||||
Payment of financing fees
|
(623,745 | ) | (160,250 | ) | ||||
Repayments of notes payable - related parties
|
- | (310,714 | ) | |||||
Repayments of notes payable - non-related parties
|
(21,006,466 | ) | (625,000 | ) | ||||
Net cash provided by financing activities
|
32,111,925 | 7,435,093 | ||||||
Net change in cash and cash equivalents
|
1,095,860 | 268,108 | ||||||
Cash and cash equivalents, beginning of period
|
6,444,683 | 6,176,575 | ||||||
Cash and cash equivalents, end of period
|
$ | 7,540,543 | $ | 6,444,683 |
Balance at Beginning of Period
|
Additions to reserve
|
Posted Credits and other adjustments
|
Balance at End of Period
|
|||||||||||||
Year ended December 31, 2015
|
$ | 312,187 | $ | 1,852,168 | $ | 1,941,310 | $ | 223,045 | ||||||||
Year ended December 31, 2014
|
$ | 171,425 | $ | 1,986,306 | $ | 1,845,544 | $ | 312,187 |
Balance at Beginning of Period
|
Additions - charged to expense
|
Deductions - Write-offs, Payments and Other Adjustments
|
Balance at End of Period
|
|||||||||||||
Year ended December 31, 2015
|
$ | 245 | $ | 435 | $ | 371 | $ | 309 | ||||||||
Year ended December 31, 2014
|
$ | 381 | $ | 560 | $ | 696 | $ | 245 |
Balance at December 31, 2013
|
$ | 5,124,130 | ||
Increase in goodwill - PingTone acquisition
|
5,175,372 | |||
Adjustment to the preliminary purchase price of Broadvox
|
97,958 | |||
Balance at December 31, 2014
|
10,397,460 | |||
Increase in goodwill - RootAxcess acquisition
|
159,866 | |||
Increase in goodwill - Fidelity acquisition
|
16,502,971 | |||
Balance at December 31, 2015
|
$ | 27,060,297 |
Asset
|
Estimated Useful Lives
|
|
Network equipment
|
5 - 7 Years
|
|
Furniture and fixtures
|
3 - 7 Years
|
|
Computer equipment and software
|
3 - 5 Years
|
|
Customer premise equipment
|
2 - 3 Years
|
●
|
Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.
|
●
|
Level 2 applies to assets or liabilities for which there are inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly, such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets).
|
●
|
Level 3 applies to assets or liabilities for which fair value is derived from valuation techniques in which one or more significant inputs are unobservable, including the Company's own assumptions.
|
Year Ended
|
||||||||
Year Ended December 31,
|
||||||||
2015
|
2014
|
|||||||
Numerator
|
||||||||
Net loss
|
$ | (8,229,825 | ) | $ | (2,567,142 | ) | ||
Dividends on Series A-1, A-2 and A-4 Convertible Preferred Stock
|
(403,600 | ) | (403,600 | ) | ||||
Dividends declared on Series B-2 Convertible Preferred Stock
|
(1,174,620 | ) | (1,342,603 | ) | ||||
Gain on nominal warrants
|
(1,930,083 | ) | (2,254,172 | ) | ||||
Adjusted loss attributable to common stockholders
|
$ | (11,738,128 | ) | $ | (6,567,517 | ) | ||
Denominator
|
||||||||
Basic and diluted weighted average common shares outstanding
|
8,873,766 | 7,132,427 | ||||||
Loss per share
|
||||||||
Basic and diluted
|
$ | (1.32 | ) | $ | (0.92 | ) |
Year Ended December 31,
|
||||||||
2015
|
2014
|
|||||||
Warrants
|
3,011,760 | 3,436,775 | ||||||
Convertible preferred stock
|
3,825,942 | 4,512,316 | ||||||
Stock options
|
1,158,251 | 607,877 | ||||||
7,995,953 | 8,556,968 |
Number of Options
|
Weighted Average Exercise Price
|
Weighted Average Remaining Contract Term
|
|||||||
Outstanding at December 31, 2013
|
351,439 | $ | 16.29 |
7.81 years
|
|||||
Granted
|
283,440 | $ | 3.92 | ||||||
Exercised
|
- | $ | 0.00 | ||||||
Forfeited
|
(14,439 | ) | $ | 4.40 | |||||
Expired
|
(12,563 | ) | $ | 150.73 | |||||
Outstanding at December 31, 2014
|
607,877 | $ | 8.00 |
8.08 years
|
|||||
Granted
|
614,730 | $ | 2.44 | ||||||
Exercised
|
- | $ | - | ||||||
Forfeited
|
(53,280 | ) | $ | 3.81 | |||||
Expired
|
(11,076 | ) | $ | 32.71 | |||||
Outstanding at December 31, 2015
|
1,158,251 | $ | 4.96 |
8.43 years
|
|||||
Exercisable at December 31, 2015
|
351,988 | $ | 9.84 |
6.40 years
|
Year Ended December 31,
|
||||||||
2015
|
2014
|
|||||||
Dividend yield (%)*
|
0.0 | 0.0 | ||||||
Expected volatility (%)
|
132.99 | 106.2 | ||||||
Average Risk-free interest rate (%)
|
1.78 - 2.25 | 1.97 | ||||||
Expected life of stock option term (years)
|
8.43 | 8.0 |
Stock Options Outstanding
|
Stock Options Exercisable
|
||||||||||||||||||||||||||||||||
Range of Exercise Prices
|
Options Outstanding
|
Weighted Average Remaining Contractual Life (Years)
|
Weighted Average Exercise Price
|
Aggregate intrinsic Value
|
Options Exercisable
|
Weighted Average Remaining Contractual Life (Years)
|
Weighted Average Price
|
Aggregate intrinsic Value
|
|||||||||||||||||||||||||
$1.99 to $3.00 | 491,730 | 9.79 | $ | 2.17 | 30 | 5.78 | $ | 3.00 | |||||||||||||||||||||||||
$3.06 to $4.60 | 517,343 | 8.28 | 3.82 | 220,611 | 7.78 | 3.99 | |||||||||||||||||||||||||||
$4.70 to $7.50 | 110,106 | 5.61 | 5.88 | 92,275 | 5.22 | 5.78 | |||||||||||||||||||||||||||
$9.00 to $15.50 | 15,540 | 2.25 | 15.43 | 15,540 | 2.25 | 15.43 | |||||||||||||||||||||||||||
$19.50 to $34.50 | 12,730 | 1.25 | 34.38 | 12,730 | 1.25 | 34.38 | |||||||||||||||||||||||||||
$37.50 to $114.00 | 3,500 | 0.46 | 113.78 | 3,500 | 0.46 | 113.78 | |||||||||||||||||||||||||||
$122.97 to $139.99 | 7,302 | 0.18 | 133.41 | 7,302 | 0.18 | 133.41 | |||||||||||||||||||||||||||
1,158,251 | 8.43 | $ | 4.96 | $ | 564,609 | 351,988 | 6.40 | $ | 9.84 | $ | 9.60 |
Cash
|
$ | 503,059 | ||
Accounts receivable, net
|
273,809 | |||
Prepaids
|
44,735 | |||
Property and equipment
|
1,111,699 | |||
Covenant not to compete
|
618,000 | |||
Customer contracts
|
19,243,000 | |||
Accrued liabilities
|
(692,606 | ) | ||
Deferred tax liability
|
(7,710,536 | ) | ||
Goodwill
|
16,502,971 | |||
Total purchase price
|
$ | 29,894,133 |
2015 | ||||
Revenues
|
$ | 119.2 | ||
Net loss
|
$ | (6.9 | ) |
Covenant not to compete
|
$ | 232,943 | ||
Customer contracts/relationships
|
747,381 | |||
Fixed assets acquired
|
59,810 | |||
Goodwill
|
159,866 | |||
Purchase price
|
$ | 1,200,000 |
Cash
|
$ | 826,035 | ||
Accounts receivable, net
|
273,948 | |||
Other current assets
|
141,256 | |||
Property and equipment
|
481,111 | |||
Other assets
|
60,941 | |||
Deferred tax asset
|
1,688,011 | |||
Intangible assets subject to amortization
|
4,211,300 | |||
Goodwill
|
5,175,372 | |||
Current liabilities
|
(496,417 | ) | ||
Deferred tax liability
|
(1,688,011 | ) | ||
Other liabilities
|
(28,724 | ) | ||
Total purchase price
|
$ | 10,644,822 |
2014
|
||||
Revenues
|
$
|
98.9
|
||
Net loss
|
$
|
(3.1)
|
December 31, 2015
|
December 31, 2014
|
|||||||||||||||||||||||
Gross Carrying Amount
|
Accumulated Amortization
|
Total
|
Gross Carrying Amount
|
Accumulated Amortization
|
Total
|
|||||||||||||||||||
Trademarks and tradename
|
$ | 1,093,400 | $ | (331,651 | ) | $ | 761,749 | $ | 1,093,400 | $ | (161,319 | ) | $ | 932,081 | ||||||||||
Proprietary technology
|
5,781,000 | (2,756,433 | ) | 3,024,567 | 5,781,000 | (1,600,233 | ) | 4,180,767 | ||||||||||||||||
Non-compete agreement
|
10,703,043 | (9,220,255 | ) | 1,482,788 | 9,852,100 | (5,150,228 | ) | 4,701,872 | ||||||||||||||||
Customer relationships
|
44,888,181 | (4,412,819 | ) | 40,475,362 | 24,897,800 | (2,403,637 | ) | 22,494,163 | ||||||||||||||||
Favorable lease intangible
|
218,000 | (138,067 | ) | 79,933 | 218,000 | (94,467 | ) | 123,533 | ||||||||||||||||
Total acquired intangibles
|
$ | 62,683,624 | $ | (16,859,225 | ) | $ | 45,824,399 | $ | 41,842,300 | $ | (9,409,884 | ) | $ | 32,432,416 |
Year
|
Estimated Annual Amortization Expense
|
|||
2016
|
$ | 5,982,084 | ||
2017
|
$ | 5,848,934 | ||
2018
|
$ | 5,105,126 | ||
2019
|
$ | 4,212,644 | ||
2020
and thereafter
|
$ | 4,176,952 |
December 31,
|
December 31,
|
|||||||
2015
|
2014
|
|||||||
Insurance
|
$ | 93,040 | $ | 61,004 | ||||
Rent
|
101,916 | 54,209 | ||||||
Marketing
|
109,455 | 34,482 | ||||||
Sofware subscriptions
|
498,078 | 502,696 | ||||||
Due from seller of Fidelity
|
425,963 | - | ||||||
Due from factoring party
|
26,018 | - | ||||||
Commissions
|
20,805 | 23,015 | ||||||
Other
|
343,328 | 252,366 | ||||||
$ | 1,618,603 | $ | 927,772 |
December 31,
|
December 31,
|
|||||||
2015
|
2014
|
|||||||
Trade accounts payable
|
$ | 1,101,393 | $ | 3,028,902 | ||||
Accrued bonus
|
700,000 | 575,000 | ||||||
Professional and consulting fees
|
274,205 | 132,521 | ||||||
Property and other taxes
|
534,388 | 235,600 | ||||||
Accrued network costs
|
3,423,483 | 1,384,159 | ||||||
Rent
|
82,894 | 131,627 | ||||||
Accrued universal service fund fees
|
494,852 | 538,302 | ||||||
Customer deposits
|
358,227 | 398,111 | ||||||
Credit card payable
|
384,257 | - | ||||||
Accrued payroll and vacation
|
555,493 | 266,595 | ||||||
Accrued sales and federal excise taxes
|
2,204,098 | 1,722,554 | ||||||
Accrued sales commissions
|
981,121 | 864,928 | ||||||
Interest payable
|
32,221 | 33,341 | ||||||
Deferred revenue
|
1,157,036 | 729,618 | ||||||
Other
|
845,557 | 430,256 | ||||||
$ | 13,129,225 | $ | 10,471,514 |
December 31,
|
||||||||
2015
|
2014
|
|||||||
Network equipment
|
$ | 7,875,478 | $ | 8,374,479 | ||||
Furniture and fixtures
|
292,451 | 299,571 | ||||||
Computer equipment and software
|
7,290,577 | 5,962,838 | ||||||
Customer premise equipment
|
9,121,788 | 7,191,008 | ||||||
Vehicles
|
55,884 | 55,884 | ||||||
Leasehold improvements
|
1,073,631 | 1,140,605 | ||||||
Assets in progress
|
190,749 | 118,831 | ||||||
Total
|
25,900,558 | 23,143,216 | ||||||
Less: accumulated depreciation
|
(11,845,065 | ) | (9,664,304 | ) | ||||
Total
|
$ | 14,055,493 | $ | 13,478,912 |
December 31,
|
December 31,
|
|||||||
2015
|
2014
|
|||||||
Equipment financing obligations
|
$ | 3,044,796 | $ | 2,364,835 | ||||
Less: current portion
|
(959,380 | ) | (662,131 | ) | ||||
Long-term portion
|
$ | 2,085,416 | $ | 1,702,704 |
Year ending December 31:
|
Principal | ||||
2016
|
$ | 959,380 | |||
2017
|
956,752 | ||||
2018
|
911,038 | ||||
2019
|
217,626 | ||||
$ | 3,044,796 |
Supplemental Cash Flow Information
|
2015
|
2014
|
||||||
Cash paid for interest
|
$ | 5,064,880 | $ | 5,312,356 | ||||
Cash paid for income taxes
|
$ | - | $ | 71,495 | ||||
Supplemental Non-Cash Investing and Financing Activities
|
||||||||
Property and equipment acquired under capital leases
|
$ | 1,440,816 | $ | 2,187,754 | ||||
Dividend on Series B-2 preferred stock paid with the issuance of Fusion common stock
|
$ | 1,174,620 | $ | 1,342,603 | ||||
Due to Seller of RootAxcess
|
$ | 633,333 | $ | - | ||||
Equipment received in exchange for settlement of accounts receivable
|
$ | 105,570 | $ | - | ||||
Common stock issued in the Fidelity acquisition
|
$ | 1,500,000 | $ | - | ||||
Common stock issued in settlement of debt - related party
|
$ | 300,000 | $ | - | ||||
Common stock issued in lieu of cash bonus
|
$ | 25,000 | $ | - | ||||
Common stock issued to settle oustanding accounts payable
|
$ | 11,877 | $ | - |
December 31,
|
December 31,
|
|||||||
2015
|
2014
|
|||||||
Subordinated Notes
|
$ | 34,160,200 | $ | 46,166,667 | ||||
Discount on Subordinated Notes
|
(1,697,091 | ) | (3,677,733 | ) | ||||
Total notes payable - non-related parties
|
32,463,109 | 42,488,934 | ||||||
Less: current portion
|
(685,780 | ) | (1,225,000 | ) | ||||
Long-term portion
|
$ | 31,777,329 | $ | 41,263,934 |
●
|
Series A and B Notes.
The Company sold $6.5 million aggregate principal amount of Series A notes, bearing interest at the original rate of 10.0% annually, and $10.0 million aggregate principal amount of Series B notes bearing interest at the rate of 11.5% annually in October 2012, the proceeds of which were used to finance the acquisition of NBS.
|
●
|
Series C and D Notes.
The Company sold $0.5 million aggregate principal amount of Series C notes and $25.0 million aggregate principal amount of Series D notes in December 2013, to finance the acquisition of certain assets of Broadvox.
|
●
|
Series E Notes.
The Company sold $5.0 million aggregate principal amount of Series E notes in October 2014 to fund its acquisition of PingTone.
|
●
|
Series F Notes
. The Company sold $9.0 million aggregate principal amount of Series F notes in August 2015 to retire a portion of the approximately $20.0 million of notes held by Plexus.
|
December 31,
|
December 31,
|
|||||||
2015
|
2014
|
|||||||
Notes payable to Marvin Rosen
|
$ | 1,178,081 | $ | 1,478,081 | ||||
Discount on note
|
(103,252 | ) | (185,203 | ) | ||||
Total notes payable - related parties
|
$ | 1,074,829 | $ | 1,292,878 |
Series A-1 Preferred Stock
|
Series A-2 Preferred Stock
|
Series A-4 Preferred Stock
|
Series B-2 Preferred Stock
|
Total
|
||||||||||||||||||||||||||||||||||||
Shares
|
Shares
|
Shares
|
Shares
|
Shares
|
||||||||||||||||||||||||||||||||||||
Balance at December 31, 2013
|
2,375 | $ | 24 | 2,625 | $ | 26 | 45 | $ | - | 18,480 | $ | 185 | 23,525 | $ | 235 | |||||||||||||||||||||||||
Issuance of shares for cash
|
4,358 | 44 | 4,358 | 43.6 | ||||||||||||||||||||||||||||||||||||
Conversion of preferred stock into common stock
|
(1,090 | ) | (11 | ) | (1,090 | ) | (11 | ) | ||||||||||||||||||||||||||||||||
Balance at December 31, 2014
|
2,375 | 24 | 2,625 | 26 | 45 | - | 21,748 | 218 | 26,793 | 268 | ||||||||||||||||||||||||||||||
Conversion of preferred stock into common stock
|
(3,469 | ) | (34 | ) | (3,469 | ) | (34 | ) | ||||||||||||||||||||||||||||||||
Balance at December 31, 2015
|
2,375 | $ | 24 | 2,625 | $ | 26 | 45 | $ | - | 18,279 | $ | 184 | 23,324 | $ | 234 |
Number of Warrants
|
Per Share Exercise Price
|
Weighted Average Exercise Price
|
|||||||||
Outstanding at December 31, 2013
|
4,016,075 | $0.50 to $83.50 | $ | 6.25 | |||||||
Granted in 2014
|
402,997 | $6.25 | $ | 6.25 | |||||||
Expired in 2014
|
(253,964 | ) | $5.50 to $83.50 | $ | 21.18 | ||||||
Exercised in 2014
|
- | - | - | ||||||||
Outstanding at December 31, 2014
|
4,165,108 | $0.50 to $10.50 | $ | 5.48 | |||||||
Granted in 2015
|
- | - | $ | - | |||||||
Expired in 2015
|
(425,015 | ) | $7.0 to $10.50 | $ | 9.30 | ||||||
Exercised in 2015
|
(728,333 | ) | $0.50 | $ | 0.50 | ||||||
Outstanding at December 31, 2015
|
3,011,760 | $3.95 to $10.15 | $ | 6.14 |
Year ended December 31,
|
||||||||
2015
|
2014
|
|||||||
Stock price ($)
|
3.26 | 3.15 | ||||||
Exercise price ($)
|
6.25 | 0 - 6.25 | ||||||
Risk-free interest rate (%)
|
1.78 - 2.25 | 1.97 - 2.52 | ||||||
Expected volatility (%)
|
132.99 | 106.2 | ||||||
Time to maturity (years)
|
3.0 - 4.0 | 7.83 - 9.0 |
Level 1
|
Level 2
|
Level 3
|
Total
|
|||||||||||||
As of December 31, 2015
|
||||||||||||||||
Non-current liabilities:
|
||||||||||||||||
Derivative liability (see note 17)
|
$ | - | $ | - | $ | 953,005 | $ | 953,005 | ||||||||
As of December 31, 2014
|
||||||||||||||||
Non-current liabilities:
|
||||||||||||||||
Derivative liability (see note 17)
|
$ | - | $ | - | $ | 3,839,569 | $ | 3,839,569 |
Balance at December 31, 2013
|
$ | - | ||
Gain for the period:
|
||||
Included in net loss
|
(5,161,901 | ) | ||
Modification of warrant contracts
|
(2,815,609 | ) | ||
Issuance of additional warrants
|
1,301,607 | |||
Warrants adjustment - Level 2 transfer
|
10,515,472 | |||
Balance at December 31, 2014
|
3,839,569 | |||
Gain for the period:
|
||||
Included in net loss
|
(1,843,997 | ) | ||
Modification of warrant contracts
|
(678,400 | ) | ||
Reduction in derivative liability due to exercise of Senior Lenders' warrants
|
(364,167 | ) | ||
Balance at December 31, 2015
|
$ | 953,005 |
2015
|
2014
|
|||||||
Current
|
||||||||
Federal
|
$ | (7,710,000 | ) | $ | - | |||
State
|
- | - | ||||||
$ | (7,710,000 | ) | - | |||||
Deferred
|
||||||||
Federal
|
- | - | ||||||
State
|
50,000 | 26,051 | ||||||
50,000 | 26,051 | |||||||
Tax provision
|
$ | (7,660,000 | ) | $ | 26,051 |
2015
|
2014
|
|||||||
%
|
%
|
|||||||
Federal statutory rate
|
(34.0 | ) | (34.0 | ) | ||||
State net of federal tax
|
(3.6 | ) | (2.5 | ) | ||||
Permanent and other items
|
1.1 | 4.5 | ||||||
Change in valuation allowance
|
(11.8 | ) | 33.0 | |||||
(48.3 | ) | 1.0 |
2015
|
2014
|
|||||||
Deferred income tax assets:
|
||||||||
Net operating losses
|
$ | 32,569,000 | $ | 45,250,000 | ||||
Allowance for doubtful accounts
|
77,000 | 67,000 | ||||||
Derivative liability
|
620,000 | 1,460,000 | ||||||
Accrued liabilities and other
|
1,037,000 | 693,000 | ||||||
Intangible assets
|
- | 1,997,000 | ||||||
34,303,000 | 49,467,000 | |||||||
Deferred income tax liabilities:
|
||||||||
Intangible assets
|
3,305,000 | - | ||||||
Property and equipment
|
1,103,000 | 933,000 | ||||||
Debt discount
|
388,000 | 759,000 | ||||||
4,796,000 | 1,692,000 | |||||||
Deferred tax asset, net
|
29,507,000 | 47,775,000 | ||||||
Less: Valuation Allowance
|
(29,507,000 | ) | (47,775,000 | ) | ||||
Net Deferred Tax Assets
|
$ | - | $ | - |
Year ending December 31:
|
||||
2016
|
$ | 1,600,261 | ||
2017
|
1,400,898 | |||
2018
|
954,364 | |||
2019
|
911,285 | |||
2020 and thereafter
|
1,206,441 | |||
$ | 6,073,249 |
2015
|
2014
|
|||||||
United States
|
$ | 88,526,867 | $ | 81,326,000 | ||||
International Customers
|
13,167,649 | 10,726,600 | ||||||
$ | 101,694,516 | $ | 92,052,600 |
Year ended December 31, 2015
|
||||||||||||||||
Carrier Services
|
Business Services
|
Corporate and Unallocated*
|
Consolidated
|
|||||||||||||
Revenues
|
$ | 35,521,679 | 66,172,837 | $ | - | $ | 101,694,516 | |||||||||
Cost of revenues (exclusive of depreciation and amortization)
|
32,596,384 | 24,127,737 | - | 56,724,121 | ||||||||||||
Gross profit
|
2,925,295 | 42,045,100 | - | 44,970,395 | ||||||||||||
Depreciation and amortization
|
185,397 | 12,359,821 | 430,763 | 12,975,981 | ||||||||||||
Selling, general and administrative expenses
|
4,412,087 | 32,810,336 | 3,786,685 | 41,009,107 | ||||||||||||
Interest expense
|
(99,010 | ) | (5,757,609 | ) | (206,304 | ) | (6,062,923 | ) | ||||||||
Gain on change in fair value of derivative liability
|
- | - | 1,843,997 | 1,843,997 | ||||||||||||
Loss on extinguishment of debt
|
(182,083 | ) | (2,538,272 | ) | - | (2,720,355 | ) | |||||||||
Other income (expenses)
|
875,067 | (818,544 | ) | 7,090 | 63,613 | |||||||||||
Benefit for income taxes
|
- | 7,660,536 | - | 7,660,536 | ||||||||||||
Net loss
|
$ | (1,078,215 | ) | $ | (4,578,945 | ) | $ | (2,572,665 | ) | $ | (8,229,825 | ) | ||||
Total assets
|
$ | 4,703,799 | $ | 98,547,943 | $ | 2,500,524 | $ | 105,752,266 | ||||||||
Capital expenditures
|
$ | 73,115 | $ | 3,367,335 | $ | - | $ | 3,440,450 |
Year ended December 31, 2014
|
||||||||||||||||
Carrier Services
|
Business Services
|
Corporate and Unallocated*
|
Consolidated
|
|||||||||||||
Revenues
|
$ | 29,156,799 | $ | 62,895,801 | $ | - | $ | 92,052,600 | ||||||||
Cost of revenues (exclusive of depreciation and amortization)
|
25,970,357 | 23,628,016 | - | 49,598,373 | ||||||||||||
Gross profit
|
3,186,442 | 39,267,785 | - | 42,454,227 | ||||||||||||
Depreciation and amortization
|
445,273 | 10,467,018 | 92,593 | 11,004,884 | ||||||||||||
Selling, general and administrative expenses
|
2,922,989 | 25,153,607 | 5,147,778 | 33,224,374 | ||||||||||||
Interest expense
|
- | (5,659,702 | ) | (328,709 | ) | (5,988,411 | ) | |||||||||
Gain on change in fair value of derivative liability
|
5,161,901 | 5,161,901 | ||||||||||||||
Other (expenses) income
|
(97,560 | ) | 23,719 | 134,291 | 60,450 | |||||||||||
Benefit (provision) for income taxes
|
- | 24,741 | (50,792 | ) | (26,051 | ) | ||||||||||
Net loss
|
$ | (279,380 | ) | $ | (1,964,082 | ) | $ | (323,680 | ) | $ | (2,567,142 | ) | ||||
Total assets
|
$ | 4,553,339 | $ | 66,394,132 | $ | 2,800,023 | $ | 73,747,494 | ||||||||
Capital expenditures
|
$ | 101,872 | $ | 3,717,541 | $ | - | $ | 3,819,413 |
1.
|
I have reviewed this annual report on Form 10-K for the year ended December 31, 2015 of Fusion Telecommunications International, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the consolidated financial statements and other financial information included in this report fairly present, in all material respects, the financial condition, results of operations and cash flows of the registrant as of and for the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures [as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)] and internal control over financial reporting [as defined in Exchange Act Rules 13a-15(f) and 15-d-15(f)] for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under the Company’s supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under the Company’s supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report the Company’s conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer(s) and I have disclosed, based on the Company’s most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
March 28, 2016
|
By:
|
/s/ MATTHEW D. ROSEN
|
|
Matthew D. Rosen
|
|||
Chief Executive Officer
|
1.
|
I have reviewed this annual report on Form 10-K for the year ended December 31, 2015 of Fusion Telecommunications International, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the consolidated financial statements and other financial information included in this report fairly present, in all material respects, the financial condition, results of operations and cash flows of the registrant as of and for the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures [as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)] and internal control over financial reporting [as defined in Exchange Act Rules 13a-15(f) and 15-d-15(f)] for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under the Company’s supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under the Company’s supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report the Company’s conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer(s) and I have disclosed, based on the Company’s most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
March 28, 2016
|
By:
|
/s/ GORDON HUTCHINS, JR.
|
|
Gordon Hutchins, Jr.
|
|||
President, Chief Operating Officer, and Acting Chief Financial Officer
|
March 28, 2016
|
By:
|
/s/ MATTHEW D. ROSEN
|
|
Matthew D. Rosen
|
|||
Chief Executive Officer
|
March 28, 2016
|
By:
|
/s/ GORDON HUTCHINS, JR.
|
|
Gordon Hutchins, Jr.
|
|||
President, Chief Operating Officer, and Acting Chief Financial Officer
|
OPUS BANK
, as Administrative Agent
By:
/s/ Kevin McBride
Name: Kevin McBride
Title: Senior Managing Director
|
FUSION NBS ACQUISITION CORP.
By: /s/ Gordon Hutchins, Jr.
Name: Gordon Hutchins, Jr.
Its: President and COO
|
|
FUSION TELECOMMUNICATIONS INTERNATIONAL, INC.
By: /s/ Gordon Hutchins, Jr.
Name: Gordon Hutchins, Jr.
Its: President and COO
|
|
NETWORK BILLING SYSTEMS, L.L.C.
By: /s/ Gordon Hutchins, Jr.
Name: Gordon Hutchins, Jr.
Its: Executive Vice President
|
|
PINGTONE COMMUNICATIONS, INC.
By: /s/ Gordon Hutchins, Jr.
Name: Gordon Hutchins, Jr.
Its: President and COO
|
|
FUSION BVX LLC
By: /s/ Gordon Hutchins, Jr.
Name: Gordon Hutchins, Jr.
Its: President and COO
|
/s/ Marvin Rosen
|
|
Marvin Rosen
|
$3,922,364.37 | October 25, 2012 |