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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☐
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Accelerated
filer
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☐
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Non-accelerated
filler
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☐
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Smaller
reporting company
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☑
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(do not
check if a smaller reporting company)
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|
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PART
I
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3
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Item
1.
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Business.
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3
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Item
1A.
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Risk
Factors.
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13
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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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21
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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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22
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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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22
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Item
6.
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Selected Financial
Data.
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23
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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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23
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Item
7A.
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Quantitative and
Qualitative Disclosures about Market Risk.
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31
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Item
8.
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Financial
Statements.
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32
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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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32
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Item
9A.
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Controls and
Procedures.
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32
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Item
9B.
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Other
Information.
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32
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PART
III
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33
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Item
10.
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Directors,
Executive Officers and Corporate Governance.
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33
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Item
11.
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Executive
Compensation.
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33
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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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33
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Item
13.
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Certain
Relationships and Related Transactions, and Director
Independence.
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33
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Item
14.
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Principal
Accounting Fees and Services.
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33
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PART
IV
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34
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Item
15.
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Exhibits, Financial
Statement Schedules.
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34
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SIGNATURES
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39
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INDEX TO
EXHIBITS
|
41
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Location
|
|
Lease Expiration
Date
|
|
Annual
Rent
|
|
Business
Use
|
|
Approx. Sq.
Ft.
|
420
Lexington Avenue, Suite 1718, New York, NY 10170
|
|
October
2020
|
|
$666,000
|
|
Lease
of principal executive offices
|
|
9,956
|
|
|
|
|
|
|
|
|
|
3565
Piedmont Road, N.E., Suite 300, Atlanta, GA 30005
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|
August
2022
|
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$261,000
|
|
Lease
of network facilities and office space
|
|
10,509
|
|
|
|
|
|
|
|
|
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155
Willowbrook Boulevard, Wayne, NJ 07470
|
|
October
2017
|
|
$140,000
|
|
Lease
of network facilities and office space
|
|
10,757
|
|
|
|
|
|
|
|
|
|
13921
Park Center Road Herndon, VA 20171
|
|
November
2017
|
|
$345,000
|
|
Lease
of network facilities and office space
|
|
13,364
|
|
|
|
|
|
|
|
|
|
1475 W.
Cypress Creek Rd., Suite 204 Fort Lauderdale, FL 33309
|
|
August
2017
|
|
$82,000
|
|
Lease
of network facilities and office space
|
|
5,183
|
|
|
|
|
|
|
|
|
|
23250
Chagrin Blvd. Suite 250 Beachwood, OH 44122
|
|
May
2019
|
|
$93,000
|
|
Lease
of sales and administrative office space
|
|
5,638
|
|
|
|
|
|
|
|
|
|
1621
Euclid Avenue, Suite 730 Cleveland, OH 44122
|
|
April
2019
|
|
$93,000
|
|
Lease
of network facilities and office space
|
|
10,000
|
Year Ended
December 31, 2016
|
High
|
Low
|
First
Quarter
|
$
3.80
|
$
1.69
|
Second
Quarter
|
$
2.09
|
$
1.20
|
Third
Quarter
|
$
2.46
|
$
1.30
|
Fourth
Quarter
|
$
1.71
|
$
0.96
|
Year Ended
December 31, 2015
|
|
|
First
Quarter
|
$
4.64
|
$
3.52
|
Second
Quarter
|
$
4.75
|
$
2.07
|
Third
Quarter
|
$
3.16
|
$
1.88
|
Fourth
Quarter
|
$
3.44
|
$
1.99
|
|
2016
|
2015
|
||
|
$
|
%
|
$
|
%
|
Revenues
|
$
122,045,320
|
100.0
|
$
101,694,516
|
100.0
|
Cost
of revenues *
|
68,058,432
|
55.8
|
56,724,121
|
55.8
|
Gross profit
|
53,986,888
|
44.2
|
44,970,395
|
44.2
|
Depreciation
and amortization
|
13,096,587
|
10.7
|
12,975,981
|
12.8
|
Selling,
general and administrative expenses
|
48,524,923
|
39.8
|
41,009,107
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40.3
|
Total
operating expenses
|
61,621,510
|
50.5
|
53,985,088
|
53.1
|
Operating loss
|
( 7,634,622
)
|
(6.3
)
|
( 9,014,693
)
|
(8.9
)
|
Other (expenses) income:
|
|
|
|
|
Interest
expense
|
( 6,742,143
)
|
(5.5
)
|
( 6,062,923
)
|
(6.0
)
|
Loss
on extinguishment of debt
|
( 214,294
)
|
(0.2
)
|
( 2,720,355
)
|
(2.7
)
|
Gain
on change in fair value of derivative liability
|
265,383
|
0.2
|
1,843,997
|
1.8
|
Loss
on disposal of property and equipment
|
( 129,119
)
|
(0.1
)
|
( 37,444
)
|
(0.0
)
|
Other
income, net
|
128,987
|
0.1
|
101,057
|
0.1
|
Total
other expenses
|
( 6,691,186
)
|
(5.5
)
|
( 6,875,668
)
|
(6.8
)
|
Loss before income taxes
|
( 14,325,808
)
|
(11.7
)
|
( 15,890,361
)
|
(15.6
)
|
Income
tax benefit
|
1,609,485
|
1.3
|
7,660,536
|
7.5
|
Net loss
|
$
(12,716,323
)
|
(10.4
)
|
$
(8,229,825
)
|
(8.1
)
|
|
Year ended December 31,
|
|
|
2016
|
2015
|
Net
cash provided by (used in) operating activities
|
$
326,287
|
$
(152,603
)
|
Net
cash used in investing activities
|
(27,460,035
)
|
(30,863,462
)
|
Net
cash provided by financing activities
|
26,815,115
|
32,111,925
|
Net
(decrease) increase in cash and cash equivalents
|
(318,633
)
|
1,095,860
|
Cash
and cash equivalents, beginning of year
|
7,540,543
|
6,444,683
|
Cash
and cash equivalents, end of year
|
$
7,221,910
|
$
7,540,543
|
Exhibit No.
|
|
Description
|
|
|
|
3.1
|
|
Amended and Restated Certificate of Incorporation (*)
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3.1.1
|
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Certificate of Amendment to Certificate of
Incorporation(14)
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3.2
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|
Bylaws (*)
|
10.1
|
|
1998 Stock Option Plan (*)
|
10.1.1
|
|
2009 Stock Option Plan(16)
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10.1.2
|
|
2016 Equity Incentive Plan (14)
|
10.2
|
|
Employment Agreement, dated as of November 5, 2015, between
registrant and Matthew D. Rosen (12)
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10.3
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|
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
(*)
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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)
|
10.5
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|
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)
|
10.5.2
|
|
Seventh Amendment, dated August 2015, to Lease Agreement between
registrant and Fort Lauderdale Crown Center, Inc., for the Fort
Lauderdale, Florida office(1)
|
10.5.3
|
|
Eight Amendment, dated July 8, 2016, to Lease Agreement between
registrant and Fort Lauderdale Crown Center, Inc., for the Fort
Lauderdale, Florida office(1)
|
|
|
|
10.6
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|
Form of Promissory Note and Security Agreement (2)
|
10.7
|
|
Non-Competition Agreement between registrant and Marvin Rosen
(*)
|
10.8
|
|
Form of Warrant (3)
|
10.9
|
|
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
(4)
|
10.10
|
|
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 (4)
|
10.11
|
|
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 (10)
|
10.12
|
|
Warrant to Purchase Common Stock issued by registrant to Marvin
Rosen, dated July 31, 2002 (*)
|
10.13
|
|
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 (10)
|
10.14
|
|
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 (5)
|
10.15
|
|
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 (5)
|
10.16
|
|
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 (5)
|
10.17
|
|
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 (5)
|
10.18
|
|
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 (5)
|
10.19
|
|
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 (5)
|
10.20
|
|
Lease Agreement dated October 1, 2012 by and between Manchester
Realty, LLC and Fusion NBS Acquisition Corp (7)
|
10.20.1
|
|
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 (11)
|
10.21
|
|
Series A Promissory Note dated October 29, 2012 payable to
Praesidian Fund III (5)
|
10.22
|
|
Series B Promissory Note dated October 29, 2012 payable to
Praesidian Fund III Praesidian Fund III Series B Note
(5)
|
10.23
|
|
Series A Promissory Note dated October 29, 2012 payable to
Praesidian Fund III-A (5)
|
10.24
|
|
Series B Promissory Note dated October 29, 2012 payable to
Praesidian Fund III-A (5)
|
10.25
|
|
Praesidian Fund III Common Stock Purchase Warrant dated October 29,
2012 (5)
|
10.26
|
|
Praesidian Fund III-A Common Stock Purchase Warrant dated October
29, 2012 (5)
|
10.27
|
|
Intellectual Property Security Agreement dated as of October 29,
2012 by the registrant 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 (5)
|
10.28
|
|
Right of First Refusal Agreement dated as of October 29, 2012 by
and among F
the
registrant
, 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
(5)
|
10.29
|
|
Management Rights Agreement dated as of October 29, 2012 by and
among
the registrant,
Fusion NBS Acquisition Corp. and Praesidian
Capital Opportunity Fund III (5)
|
10.30
|
|
Management Rights Agreement dated as of October 29, 2012 by and
among
the registrant
, Fusion NBS Acquisition Corp. and Praesidian
Capital Opportunity Fund III-A (5)
|
10.31
|
|
Management Rights Agreement dated as of October 29, 2012 by and
among the registrant, Fusion NBS Acquisition Corp., and Plexus Fund
II, LP (5)
|
10.32
|
|
Asset Purchase and Sale Agreement effective as of August 30, 2013
by and among the registrant, Fusion Broadvox Acquisition Corp.;
BroadvoxGo!, LLC; and Cypress Communications, LLC (6)
|
10.33
|
|
First Amendment to the Asset Purchase and Sale Agreement effective
as of November 15, 2013 by and among
the registrant
, Fusion Broadvox Acquisition Corp.;
BroadvoxGo!, LLC; and Cypress Communications, LLC (7)
|
10.34
|
|
Second Amendment to the Asset Purchase and Sale Agreement effective
as of December 16, 2013 by and among
the registrant
, Fusion Broadvox Acquisition Corp.;
BroadvoxGo!, LLC,; and Cypress Communications, LLC (8)
|
10.35
|
|
Third Amendment to Securities Purchase Agreement is entered into as
of December 16, 2013, by and among Fusion NBS Acquisition
Corp,
the registrant
, 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)
|
10.36
|
|
Form of Common Stock Purchase Warrant (9)
|
10.37
|
|
Form of Registration Rights Agreement (9)
|
10.38
|
|
Form of Series C Note (9)
|
10.39
|
|
Form of Series D Note dated December 31, 2013 (9)
|
10.40
|
|
Form of Management Rights Letter dated December 31, 2013
(9)
|
10.41
|
|
Form of Lenders’ Warrant dated December 31, 2013
(9)
|
10.42
|
|
Joinder Agreement dated as of December 31, 2013 by and among
the registrant
, 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 (9)
|
10.43
|
|
Assignment and Assumption Agreement dated as of December 31, 2013
by and among BroadvoxGo!, LLC, Cypress Communications, LLC,
the registrant
, and Fusion BVX, LLC (9)
|
10.44
|
|
Bill of Sale dated as of December 31, 2013 delivered by
BroadvoxGo!, LLC and Cypress Communications, LLC (9)
|
10.45
|
|
Limited Trademark License Agreement dated as of December 31, 2013
by and among Broadvox, LLC; the registrant and Fusion BVX LLC
(9)
|
10.46
|
|
Form of Series E Note, dated as of October 31, 2014
(11)
|
10.47
|
|
Agreement and Plan of Merger, dated as of October 15, 2014, by and
among
the registrant
, Fusion PTC Acquisition Inc., PingTone
Communications, Inc., the Majority Stockholders of PingTone
Communications, Inc. and J Shelby Bryan, as Stockholders
Representative (11)
|
10.48
|
|
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 (13)
|
10.49
|
|
Credit Agreement dated as of November 14, 2016 by and among Fusion
NBS Acquisition Corp., and East West Bank and the Other Lenders
from time to time party hereto (15)
|
10.50
|
|
Subordination Agreement dated as of November 14, 2016 by and among
Fusion NBS Acquisition Corp.,
the registrant
, Network Billing Systems, LLC, PingTone
Communications, Inc., Fusion BVX LLC, Fidelity Telecom, LLC,
Fidelity Access Networks, Inc., Fidelity Connect, LLC, Fidelity
Voice Services, LLC, Apptix, Inc., Praesidian Capital Opportunity
Fund III, LP, and East West Bank (15)
|
10.51
|
|
Intercreditor and Subordination Agreement dated as of November 14,
2016 by and among Marvin Rosen, the registrant and East West Bank
(15)
|
|
Pledge and Security Agreement dated as of November 14, 2016 by and
among each of the Grantors Party thereto and East West Bank
(15)
|
|
Guaranty dated as of November 14, 2016 from
the registrant
, Network Billing Systems, LLC, PingTone
Communications, Inc., Fusion BVX LLC, Fidelity Telecom, LLC,
Fidelity Access Networks, Inc., Fidelity Connect, LLC, Fidelity
Voice Services, LLC and Apptix, Inc. to East West Bank
(15)
|
|
10.54
|
|
Intellectual Property Security Agreement dated as of November 14,
2016 by and among Fusion NBS Acquisition Corp., Fusion
Telecommunications International, Inc., Network Billing Systems,
LLC, PingTone Communications, Inc., Fusion BVX LLC, Fidelity
Telecom, LLC, Fidelity Access Networks, Inc., Fidelity Connect,
LLC, Fidelity Voice Services, LLC, Apptix, Inc., and East West Bank
(15)
|
10.55
|
|
Fifth Amended and Restated Securities Purchase Agreement and
Security Agreement, dated as of November 14, 2016, by and among
Fusion NBS Acquisition Corp., as borrower,
the registrant
, 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., Apptix, Inc., Praesidian Capital Opportunity Fund
III, L.P., Praesidian Capital Opportunity Fund III-A, LP and United
Insurance Company of America (15)
|
10.56
|
|
Stock Purchase and Sale Agreement dated November 14, 2016 by and
among Fusion NBS Acquisition Corp.,
the registrant
and Apptix ASA (15)
|
10.57
|
|
Registration Rights Agreement dated as of November 14, 2016 by and
between
the registrant
and Apptix ASA (15)
|
10.58
|
|
Common Stock Purchase Agreement dated November 14, 2016 by and
among
the registrant
and the Purchasers (15)
|
|
Office Lease, as amended between Chagrin-Green, LLC and Fidelity
Access Networks, LLC (1)
|
|
|
First Amendment to Lease Agreement dated as of August 2015 by and
between Piedmont Center, 1-4 LLC and
the registrant
(1)
|
|
14
|
|
Code of Ethics of registrant (11)
|
|
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 Annual Report on Form
10-K filed March 30, 2012 and incorporated herein by
reference.
|
(5)
|
Filed as an Exhibit to the Company’s Current Report on Form
8-K filed on November 2, 2012 and incorporated herein by
reference.
|
(6)
|
Filed as an Exhibit to the Company’s Current Report on Form
8-K filed on September 4, 2013 and incorporated herein by
reference.
|
(7)
|
Filed as an Exhibit to the Company’s Current Report on Form
8-K filed on November 21, 2013 and incorporated herein by
reference.
|
(8)
|
Filed as an Exhibit to the Company’s Current Report on Form
8-K filed on December 19, 2013 and incorporated herein by
reference.
|
(9)
|
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.
|
(10)
|
Filed as an Exhibit to the Company’s Quarterly Report on Form
10-Q filed on August 14, 2013 and incorporated herein by
reference.
|
(11)
|
Filed as an Exhibit to the Company’s Current Report on Form
8-K dated November 3, 2014 and incorporated herein by
reference.
|
(12)
|
Filed as an Exhibit to the Company’s Current Report on Form
8-K filed on November 10, 2015 and incorporated herein by
reference.
|
(13)
|
Filed as an Exhibit to the Company’s Current Report on Form
8-K filed on December 14, 2015, and incorporated herein by
reference.
|
(14)
|
Filed as an Exhibit to the Company’s Current Report on Form
8-K filed on November 18, 2016, and incorporated herein by
reference.
|
(15)
|
Filed as an Exhibit to the Company’s Form 10-K filed on March
28, 2016 and incorporated herein by reference.
|
|
FUSION TELECOMMUNICATIONS INTERNATIONAL,
IN
C.
|
||
|
|
|
|
Date: March 20,
2017
|
By:
|
/s/
MATTHEW
D. ROSEN
|
|
|
|
Matthew D.
Rosen
|
|
|
|
Chief Executive
Officer and Principal Executive Officer
|
|
|
|
|
|
|
|
|
|
Date: March 20,
2017
|
By:
|
/s/
MICHAEL
R. BAUER
|
|
|
|
Michael R.
Bauer
|
|
|
|
Chief Financial
Officer
, Principal Financial Officer
|
|
|
|
|
|
|
By:
|
/s/
Lisa Taranto
|
|
|
|
Lisa Taranto
|
|
|
|
Vice President of
Finance and Accounting, Principal Accounting
Officer
|
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/
MARVIN S. ROSEN
|
|
Chairman
of the Board
|
|
|
Marvin
S. Rosen
|
|
|
|
March
20, 2017
|
|
|
|
|
|
/s/
PHILIP D. TURITS
|
|
Director
|
|
|
Philip
D. Turits
|
|
|
|
March
20, 2017
|
|
|
|
|
|
/s/
MATTHEW D. ROSEN
|
|
Chief
Executive Officer and Director
|
|
|
Matthew
D. Rosen
|
|
|
|
March
20, 2017
|
|
|
|
|
|
/s/
JACK ROSEN
|
|
Director
|
|
|
Jack
Rosen
|
|
|
|
March
20, 2017
|
|
|
|
|
|
/s/
WILLIAM RUBIN
|
|
Director
|
|
|
William
Rubin
|
|
|
|
March
20, 2017
|
|
|
|
|
|
/s/
LARRY BLUM
|
|
Director
|
|
|
Larry
Blum
|
|
|
|
March
20, 2017
|
|
|
|
|
|
/s/
PAUL C. O’BRIEN
|
|
Director
|
|
|
Paul C.
O'Brien
|
|
|
|
March
20, 2017
|
|
|
|
|
|
/s/
MICHAEL J. DEL GIUDICE
|
|
Director
|
|
|
Michael
J. Del Giudice
|
|
|
|
March
20, 2017
|
Exhibit No.
|
|
Description
|
|
|
|
3.1
|
|
Amended and Restated Certificate of Incorporation (*)
|
3.1.1
|
|
Certificate of Amendment to Certificate of
Incorporation(14)
|
3.2
|
|
Bylaws (*)
|
10.1
|
|
1998 Stock Option Plan (*)
|
10.1.1
|
|
2009 Stock Option Plan(16)
|
10.1.2
|
|
2016 Equity Incentive Plan (14)
|
10.2
|
|
Employment Agreement, dated as of November 5, 2015, between
registrant and Matthew D. Rosen (12)
|
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)
|
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)
|
10.5.2
|
|
Seventh Amendment, dated August 2015, to Lease Agreement between
registrant and Fort Lauderdale Crown Center, Inc., for the Fort
Lauderdale, Florida office(1)
|
10.5.3
|
|
Eight Amendment dated July 8, 2016, to Lease Agreement between
registrant and Fort Lauderdale Crown Center, Inc., for the Fort
Lauderdale, Florida office(1)
|
|
|
|
10.6
|
|
Form of Promissory Note and Security Agreement (2)
|
10.7
|
|
Non-Competition Agreement between registrant and Marvin Rosen
(*)
|
10.8
|
|
Form of Warrant (3)
|
10.9
|
|
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
(4)
|
10.10
|
|
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 (4)
|
10.11
|
|
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 (10)
|
10.12
|
|
Warrant to Purchase Common Stock issued by registrant to Marvin
Rosen, dated July 31, 2002 (*)
|
10.13
|
|
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 (10)
|
10.14
|
|
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 (5)
|
10.15
|
|
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 (5)
|
10.16
|
|
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 (5)
|
10.17
|
|
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 (5)
|
10.18
|
|
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 (5)
|
10.19
|
|
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 (5)
|
10.20
|
|
Lease Agreement dated October 1, 2012 by and between Manchester
Realty, LLC and Fusion NBS Acquisition Corp (7)
|
10.20.1
|
|
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 (11)
|
10.21
|
|
Series A Promissory Note dated October 29, 2012 payable to
Praesidian Fund III (5)
|
10.22
|
|
Series B Promissory Note dated October 29, 2012 payable to
Praesidian Fund III Praesidian Fund III Series B Note
(5)
|
10.23
|
|
Series A Promissory Note dated October 29, 2012 payable to
Praesidian Fund III-A (5)
|
10.24
|
|
Series B Promissory Note dated October 29, 2012 payable to
Praesidian Fund III-A (5)
|
10.25
|
|
Praesidian Fund III Common Stock Purchase Warrant dated October 29,
2012 (5)
|
10.26
|
|
Praesidian Fund III-A Common Stock Purchase Warrant dated October
29, 2012 (5)
|
10.27
|
|
Intellectual Property Security Agreement dated as of October 29,
2012 by the registrant 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 (5)
|
10.28
|
|
Right of First Refusal Agreement dated as of October 29, 2012 by
and among the registrant 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
(5)
|
10.29
|
|
Management Rights Agreement dated as of October 29, 2012 by and
among the registrant, Fusion NBS Acquisition Corp. and Praesidian
Capital Opportunity Fund III (5)
|
10.30
|
|
Management Rights Agreement dated as of October 29, 2012 by and
among the registrant, Fusion NBS Acquisition Corp. and Praesidian
Capital Opportunity Fund III-A (5)
|
10.31
|
|
Management Rights Agreement dated as of October 29, 2012 by and
among the registrant, Fusion NBS Acquisition Corp., and Plexus Fund
II, LP (5)
|
10.32
|
|
Asset Purchase and Sale Agreement effective as of August 30, 2013
by and among the registrant, Fusion Broadvox Acquisition Corp.;
BroadvoxGo!, LLC; and Cypress Communications, LLC (6)
|
10.33
|
|
First Amendment to the Asset Purchase and Sale Agreement effective
as of November 15, 2013 by and among the registrant, Fusion
Broadvox Acquisition Corp.; BroadvoxGo!, LLC,; and Cypress
Communications, LLC (7)
|
10.34
|
|
Second Amendment to the Asset Purchase and Sale Agreement effective
as of December 16, 2013 by and among the registrant, Fusion
Broadvox Acquisition Corp.; BroadvoxGo!, LLC,; and Cypress
Communications, LLC (8)
|
10.35
|
|
Third Amendment to Securities Purchase Agreement is entered into as
of December 16, 2013, by and among Fusion NBS Acquisition Corp, the
registrant, 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)
|
10.36
|
|
Form of Common Stock Purchase Warrant (9)
|
10.37
|
|
Form of Registration Rights Agreement (9)
|
10.38
|
|
Form of Series C Note (9)
|
10.39
|
|
Form of Series D Note dated December 31, 2013 (9)
|
10.40
|
|
Form of Management Rights Letter dated December 31, 2013
(9)
|
10.41
|
|
Form of Lenders’ Warrant dated December 31, 2013
(9)
|
10.42
|
|
Joinder Agreement dated as of December 31, 2013 by and among the
registrant, 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 (9)
|
10.43
|
|
Assignment and Assumption Agreement dated as of December 31, 2013
by and among BroadvoxGo!, LLC, Cypress Communications, LLC, the
registrant, and Fusion BVX, LLC (9)
|
10.44
|
|
Bill of Sale dated as of December 31, 2013 delivered by
BroadvoxGo!, LLC and Cypress Communications, LLC (9)
|
10.45
|
|
Limited Trademark License Agreement dated as of December 31, 2013
by and among Broadvox, LLC; Fusion Telecommunications
International, Inc. and Fusion BVX LLC (9)
|
10.46
|
|
Form of Series E Note, dated as of October 31, 2014
(11)
|
10.47
|
|
Agreement and Plan of Merger, dated as of October 15, 2014, by and
among the registrant, Fusion PTC Acquisition Inc., PingTone
Communications, Inc., the Majority Stockholders of PingTone
Communications, Inc. and J Shelby Bryan, as Stockholders
Representative (11)
|
10.48
|
|
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 (13)
|
10.49
|
|
Credit Agreement dated as of November 14, 2016 by and among Fusion
NBS Acquisition Corp., and East West Bank and the Other Lenders
from time to time party hereto (15)
|
10.50
|
|
Subordination Agreement dated as of November 14, 2016 by and among
Fusion NBS Acquisition Corp., the registrant, Network Billing
Systems, LLC, PingTone Communications, Inc., Fusion BVX LLC,
Fidelity Telecom, LLC, Fidelity Access Networks, Inc., Fidelity
Connect, LLC, Fidelity Voice Services, LLC, Apptix, Inc.,
Praesidian Capital Opportunity Fund III, LP, and East West Bank
(15)
|
10.51
|
|
Intercreditor and Subordination Agreement dated as of November 14,
2016 by and among Marvin Rosen, Fusion Telecommunications
International, Inc. and East West Bank (15)
|
|
Pledge and Security Agreement dated as of November 14, 2016 by and
among each of the Grantors Party thereto and East West Bank
(15)
|
|
|
Guaranty dated as of November 14, 2016 from the registrant, Network
Billing Systems, LLC, PingTone Communications, Inc., Fusion BVX
LLC, Fidelity Telecom, LLC, Fidelity Access Networks, Inc.,
Fidelity Connect, LLC, Fidelity Voice Services, LLC and Apptix,
Inc. to East West Bank (15)
|
10.54
|
|
Intellectual Property Security Agreement dated as of November 14,
2016 by and among Fusion NBS Acquisition Corp.,
the registrant,
Network Billing Systems, LLC, PingTone
Communications, Inc., Fusion BVX LLC, Fidelity Telecom, LLC,
Fidelity Access Networks, Inc., Fidelity Connect, LLC, Fidelity
Voice Services, LLC, Apptix, Inc., and East West Bank
(15)
|
10.55
|
|
Fifth Amended and Restated Securities Purchase Agreement and
Security Agreement, dated as of November 14, 2016, by and among
Fusion NBS Acquisition Corp., as borrower, the registrant, 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., Apptix, Inc.,
Praesidian Capital Opportunity Fund III, L.P., Praesidian Capital
Opportunity Fund III-A, LP and United Insurance Company of America
(15)
|
10.56
|
|
Stock Purchase and Sale Agreement dated November 14, 2016 by and
among Fusion NBS Acquisition Corp., Fusion Telecommunications
International, Inc. and Apptix ASA (15)
|
10.57
|
|
Registration Rights Agreement dated as of November 14, 2016 by and
between
the
registrant
and Apptix ASA (15)
|
10.58
|
|
Common Stock Purchase Agreement dated November 14, 2016 by and
among
the
registrant
and the Purchasers (15)
|
|
Office
Lease, as amended between Chagrin-Green, LLC and Fidelity Access
Networks, LLC (1)
|
|
|
First
Amendment to Lease Agreement dated as of August 2015 by and between
Piedmont Center, 1-4 LLC and
the
registrant.
(1)
|
|
14
|
|
Code of Ethics of registrant (11)
|
|
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 Annual Report on Form
10-K filed March 30, 2012 and incorporated herein by
reference.
|
(5)
|
Filed as an Exhibit to the Company’s Current Report on Form
8-K filed on November 2, 2012 and incorporated herein by
reference.
|
(6)
|
Filed as an Exhibit to the Company’s Current Report on Form
8-K filed on September 4, 2013 and incorporated herein by
reference.
|
(7)
|
Filed as an Exhibit to the Company’s Current Report on Form
8-K filed on November 21, 2013 and incorporated herein by
reference.
|
(8)
|
Filed as an Exhibit to the Company’s Current Report on Form
8-K filed on December 19, 2013 and incorporated herein by
reference.
|
(9)
|
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.
|
(10)
|
Filed as an Exhibit to the Company’s Quarterly Report on Form
10-Q filed on August 14, 2013 and incorporated herein by
reference.
|
(11)
|
Filed as an Exhibit to the Company’s Current Report on Form
8-K dated November 3, 2014 and incorporated herein by
reference.
|
(12)
|
Filed as an Exhibit to the Company’s Current Report on Form
8-K filed on November 10, 2015 and incorporated herein by
reference.
|
(13)
|
Filed as an Exhibit to the Company’s Current Report on Form
8-K filed on December 14, 2015, and incorporated herein by
reference.
|
(14)
|
Filed as an Exhibit to the Company’s Current Report on Form
8-K filed on November 18, 2016, and incorporated herein by
reference.
|
(15)
|
Filed as an Exhibit to the Company’s Form 10-K filed on March
28, 2016 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
|
|
December 31, 2016
|
December 31, 2015
|
ASSETS
|
|
|
Current assets:
|
|
|
Cash
and cash equivalents
|
$
7,221,910
|
$
7,540,543
|
Accounts
receivable, net of allowance for doubtful accounts of
|
|
|
approximately
$427,000 and $309,000, respectively
|
9,359,876
|
7,650,141
|
Inventory
|
|
|
Prepaid
expenses and other current assets
|
1,160,184
|
1,618,603
|
Total current assets
|
17,741,970
|
16,809,287
|
Property
and equipment, net
|
14,248,915
|
14,055,493
|
Security
deposits
|
630,373
|
575,038
|
Restricted
cash
|
27,153
|
165,123
|
Goodwill
|
35,689,215
|
27,060,297
|
Intangible
assets, net
|
63,617,471
|
45,824,399
|
Other
assets
|
77,117
|
9,808
|
Deferred
tax asset
|
-
|
-
|
TOTAL ASSETS
|
$
132,032,214
|
$
104,499,445
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
|
|
|
Current liabilities:
|
|
|
Notes
payable - non-related parties
|
$
2,979,167
|
$
685,780
|
Obligations
under asset purchase agreements - current portion
|
622,463
|
300,000
|
Equipment
financing obligations
|
1,002,578
|
959,380
|
Escrow
payable
|
-
|
-
|
Accounts
payable and accrued expenses
|
19,722,838
|
13,129,225
|
Related
party payable
|
-
|
-
|
Current
liabilities from discontinued operations
|
-
|
-
|
Total current liabilities
|
24,327,046
|
15,074,385
|
Long-term liabilities:
|
|
|
Notes
payable - non-related parties, net of discount
|
31,431,602
|
30,795,746
|
Notes
payable - related parties
|
875,750
|
1,074,829
|
Term
loan
|
60,731,204
|
24,728,762
|
Indebtedness
under revolving credit facility
|
3,000,000
|
15,000,000
|
Obligations
under asset purchase agreements
|
890,811
|
333,333
|
Equipment
financing obligations
|
1,237,083
|
2,085,416
|
Derivative
liabilities
|
348,650
|
953,005
|
Other
long-term liabilities
|
-
|
-
|
Total liabilities
|
122,842,146
|
90,045,476
|
Commitments and contingencies
|
|
|
Stockholders' equity (deficit):
|
|
|
Preferred
stock, $0.01 par value, 10,000,000 shares authorized,
|
|
|
17,299
and 23,324 shares issued and outstanding
|
174
|
234
|
Common
stock, $0.01 par value, 90,000,000 and 50,000,000 shares
authorized,
|
|
|
20,642,028
and 12,788,971 shares issued and outstanding
|
206,422
|
127,890
|
Capital
in excess of par value
|
192,233,032
|
184,859,082
|
Accumulated
deficit
|
(183,249,560
)
|
(170,533,237
)
|
Total stockholders' equity (deficit)
|
9,190,068
|
14,453,969
|
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
|
$
132,032,214
|
$
104,499,445
|
|
For the Year Ended December 31,
|
|
|
2016
|
2015
|
Revenues
|
$
122,045,320
|
$
101,694,516
|
Cost
of revenues, exclusive of depreciation and
|
|
|
amortization,
shown separately below
|
68,058,432
|
56,724,121
|
Gross profit
|
53,986,888
|
44,970,395
|
Depreciation
and amortization
|
13,096,587
|
12,975,981
|
Selling
general and administrative expenses (including
stock-based
|
|
|
compensation
of $878,343 and $639,296 for the years ended
|
|
|
December
31, 2016 and 2015, respectively)
|
48,524,923
|
41,009,107
|
Impairment
charge
|
-
|
-
|
Total
operating expenses
|
61,621,510
|
53,985,088
|
Operating loss
|
(7,634,622
)
|
(9,014,693
)
|
Other (expenses) income:
|
|
|
Interest
expense
|
(6,742,143
)
|
(6,062,923
)
|
Loss
on extinguishment of debt
|
(214,294
)
|
(2,720,355
)
|
Gain
on change in fair value of derivative liabilities
|
265,383
|
1,843,997
|
Loss
on disposal of property and equipment
|
(129,119
)
|
(37,444
)
|
Other
income, net
|
128,987
|
101,057
|
Total
other expenses
|
(6,691,186
)
|
(6,875,668
)
|
Loss
before income taxes
|
(14,325,808
)
|
(15,890,361
)
|
Income
tax benefit
|
1,609,485
|
7,660,536
|
Net loss
|
(12,716,323
)
|
(8,229,825
)
|
Preferred
stock dividends
|
(2,388,007
)
|
(1,578,220
)
|
Net loss attributable to common stockholders
|
(15,104,330
)
|
(9,808,045
)
|
Loss applicable to common stockholders:
|
|
|
Basic and diluted loss per common share:
|
$
(0.98
)
|
$
(1.32
)
|
Weighted average common shares outstanding:
|
|
|
Basic
and diluted
|
15,406,184
|
8,873,766
|
|
Preferred Stock
|
Common Stock |
Capital in
Excess of Par
|
Accumulated Deficit
|
Stockholders' Equity
|
||
|
Shares
|
$
|
Shares
|
$
|
|
|
|
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
|
Net
loss
|
|
|
|
|
|
(12,716,323
)
|
(12,716,323
)
|
Conversion of
preferred stock into common stock
|
(6,025
)
|
(60
)
|
1,205,000
|
12,050
|
(11,990
)
|
|
-
|
Dividends on
preferred stock
|
|
|
1,140,568
|
11,406
|
(11,406
)
|
|
-
|
Proceeds from
the sale of common stock
|
|
|
2,213,700
|
22,137
|
2,323,009
|
|
2,345,146
|
Conversion of
related party note to common stock
|
|
|
217,391
|
2,174
|
247,826
|
|
250,000
|
Adjustment for
prior issuances and conversions of warrants
|
|
|
|
|
338,972
|
|
338,972
|
Adjustment for
fractional shares
|
|
|
685
|
8
|
(8
)
|
|
-
|
Cancellation
of common stock issued to PingTone Sellers
|
|
|
(51,380
)
|
(514
)
|
(179,830
)
|
|
(180,344
)
|
Stock-based
compensation associated with stock incentive
plans
|
|
|
|
|
853,458
|
|
853,458
|
Issuance of
common stock - Apptix acquisition
|
|
|
2,997,926
|
29,979
|
3,597,511
|
|
3,627,490
|
Issuance of
restricted stock
|
|
|
55,000
|
550
|
99,000
|
|
99,550
|
Issuance of
common stock for services rendered
|
|
|
74,167
|
742
|
117,408
|
|
118,150
|
Balance at
December 31, 2016
|
17,299
|
$
174
|
20,642,028
|
$
206,422
|
$
192,233,032
|
$
(183,249,560
)
|
$
9,190,068
|
|
Year ended December 31,
|
|
|
2016
|
2015
|
Cash flows from operating activities:
|
|
|
Net
loss
|
$
(12,716,323
)
|
$
( 8,229,825
)
|
Adjustments to reconcile net loss to net cash provided by (used in)
operating activities:
|
|
|
Depreciation
and amortization
|
13,096,587
|
12,975,981
|
Loss
on extinguishment on debt
|
214,294
|
1,682,035
|
Loss
on accounts receivable settlement exchanged for
equipment
|
-
|
111,659
|
Deferred
taxes
|
(1,669,485
)
|
(7,710,536
)
|
Loss
on disposal of property and equipment
|
129,119
|
37,444
|
Bad
debt expense
|
387,667
|
435,376
|
Stock-based
compensation
|
878,343
|
639,296
|
Stock
and warrants issued for services rendered or in settlement of
liabilities
|
118,150
|
245,290
|
Amortization
of debt discount and deferred financing fees
|
663,046
|
849,307
|
Gain
in the change in fair value of derivative liability
|
(265,383
)
|
(1,843,997
)
|
Changes in operating assets and liabilities:
|
|
|
Accounts
receivable
|
190,467
|
(883,253
)
|
Prepaid
expenses and other current assets
|
585,928
|
(22,351
)
|
Other
assets
|
(31,678
)
|
(444,661
)
|
Accounts
payable and accrued expenses
|
(1,254,445
)
|
2,005,632
|
Net cash provided by (used in) operating activities
|
326,287
|
(152,603
)
|
|
|
|
Cash flows from investing activities:
|
|
|
Purchase
of property and equipment
|
(4,766,214
)
|
(3,440,450
)
|
Proceeds
from the sale of property and equipment
|
234,753
|
35,469
|
Payment
for acquisitions, net of cash acquired
|
(23,273,892
)
|
(28,457,739
)
|
Refunds
of purchase price from acquisitions
|
262,683
|
-
|
Payment
of security deposits
|
(55,335
)
|
-
|
Change
in restricted cash
|
137,970
|
999,258
|
Net cash used in investing activities
|
(27,460,035
)
|
(30,863,462
)
|
|
|
|
Cash flows from financing activities:
|
|
|
Proceeds
from sale of common stock, net of offering costs
|
2,345,146
|
5,630,000
|
Proceeds
from notes payable - non-related parties
|
-
|
9,000,000
|
Proceeds
from term loan
|
65,000,000
|
25,000,000
|
Proceeds
from revolving debt
|
3,000,000
|
15,000,000
|
Repayments
of term loan
|
(25,000,000
)
|
|
Repayments
of revolving debt
|
(15,000,000
)
|
|
Payments
for obligations under asset purchase agreements
|
(641,665
)
|
|
Proceeds
from accounts receivable factoring arrangement
|
-
|
1,789,094
|
Repayments
of borrowings to accounts receivable factoring
arrangement
|
-
|
(1,789,094
)
|
Payments
on equipment financing obligations
|
(993,632
)
|
(887,864
)
|
Payment
of financing fees
|
(1,323,250
)
|
(623,745
)
|
Repayments
of notes payable - non-related parties
|
(571,484
)
|
(21,006,466
)
|
Net cash provided by financing activities
|
26,815,115
|
32,111,925
|
Net change in cash and cash equivalents
|
(318,633
)
|
1,095,860
|
Cash and cash equivalents, beginning of year
|
7,540,543
|
6,444,683
|
Cash and cash equivalents, end of year
|
$
7,221,910
|
$
7,540,543
|
|
Balance at Beginning of Period
|
Additions to Reserve
|
Posted Credits and other Adjustments
|
Balance at End of Period
|
Year
ended December 31, 2016
|
$
223,045
|
2,494,986
|
2,415,951
|
$
302,080
|
|
|
|
|
|
Year
ended December 31, 2015
|
$
312,187
|
1,852,168
|
1,941,310
|
$
223,045
|
|
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, 2016
|
$
309
|
388
|
270
|
$
427
|
|
|
|
|
|
Year
ended December 31, 2015
|
$
245
|
435
|
371
|
$
309
|
Balance
at December 31, 2014
|
$
10,397,460
|
RootAxcess
acquisition*
|
159,866
|
Fidelity
acquisition*
|
16,502,971
|
Balance
at December 31, 2015
|
27,060,297
|
Fidelity
purchase price adjustment
|
134,216
|
TFB
acquisition*
|
993,637
|
Apptix
acquisition*
|
7,091,065
|
TOG
acquistion*
|
410,000
|
Balance
at December 31, 2016
|
$
35,689,215
|
* -
See note 5 for discussion of acquisitions
|
|
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
|
|
For the Year Ended December 31,
|
|
|
2016
|
2015
|
Warrants
|
2,902,862
|
3,011,760
|
Convertible
preferred stock
|
2,628,389
|
3,825,942
|
Stock
options
|
2,183,723
|
1,158,251
|
|
7,714,974
|
7,995,953
|
|
Number of Options
|
Weighted Average Exercise Price
|
Weighted Average Remaining Contract Term
|
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
|
Granted
|
1,135,650
|
1.31
|
|
Exercised
|
-
|
-
|
|
Forfeited
|
( 89,826
)
|
2.51
|
|
Expired
|
( 20,352
)
|
69.46
|
|
Outstanding
at December 31, 2016
|
2,183,723
|
2.56
|
8.56
years
|
Exercisable
at December 31, 2016
|
689,963
|
4.52
|
6.85
years
|
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
|
|
$
1.26
to $1.91
|
1,130,250
|
9.64
|
$
1.31
|
|
-
|
-
|
$
-
|
|
|
$
1.93
to $2.94
|
421,950
|
8.73
|
2.14
|
|
186,995
|
8.71
|
2.12
|
|
|
$
3.00
to $4.50
|
496,813
|
7.22
|
3.83
|
|
375,818
|
7.00
|
3.91
|
|
|
$
4.70
to $7.50
|
106,440
|
4.69
|
5.89
|
|
98,880
|
4.50
|
5.84
|
|
|
$
9.00
to $15.50
|
15,530
|
1.25
|
15.43
|
|
15,530
|
1.25
|
15.43
|
|
|
$
19.50
to $34.50
|
12,730
|
0.25
|
34.38
|
|
12,730
|
0.25
|
34.38
|
|
|
$
37.50
to $37.50
|
10
|
0.31
|
37.50
|
|
10
|
0.31
|
37.50
|
|
|
|
|
2,183,723
|
8.56
|
2.56
|
$242,945
|
689,963
|
6.85
|
4.52
|
$196,587
|
Cash
|
$
67,071
|
Accounts
receivable
|
2,207,024
|
Prepaid
expenses and other current assets
|
620,270
|
Property
and equipment
|
2,878,877
|
Deferred
tax liability
|
( 1,633,853
)
|
Covenant
not to compete
|
1,417,000
|
Customer
contracts
|
20,948,000
|
Accrued
liabilities
|
( 6,904,479
)
|
Goodwill
|
7,091,065
|
Total
purchase price
|
$
26,690,975
|
|
2016
|
2015
|
Revenues
|
$
141.3
|
$
136.1
|
Net
loss
|
$
(16.5
)
|
$
(16.6
)
|
Accounts
receivable, net
|
$
80,845
|
Prepaid
expenses and other current assets
|
5,535
|
Proprietary
technology
|
889,000
|
Covenant
not to compete
|
8,000
|
Customer
contracts
|
99,000
|
Current
liabilities
|
( 687,130
)
|
Accrued
royalty
|
( 1,111,606
)
|
Goodwill
|
993,637
|
Total
cash purchase price
|
$
277,281
|
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
|
|
December 31, 2016
|
December 31, 2015
|
||||
|
|
|
|
|
|
|
|
Gross Carrying Amount
|
Accumulated Amortization
|
Total
|
Gross Carrying Amount
|
Accumulated Amortization
|
Total
|
|
|
|
|
|
|
|
Trademarks
and tradename
|
$
1,093,400
|
$
(501,982
)
|
$
591,418
|
$
1,093,400
|
$
(331,651
)
|
$
761,749
|
Proprietary
technology
|
6,670,000
|
(4,036,915
)
|
2,633,085
|
5,781,000
|
(2,756,433
)
|
3,024,567
|
Non-compete
agreement
|
12,128,043
|
(9,891,892
)
|
2,236,151
|
10,703,043
|
(9,220,255
)
|
1,482,788
|
Customer
relationships
|
65,948,181
|
(7,827,697
)
|
58,120,484
|
44,888,181
|
(4,412,819
)
|
40,475,362
|
Favorable
lease intangible
|
218,000
|
(181,667
)
|
36,333
|
218,000
|
(138,067
)
|
79,933
|
Total
acquired intangibles
|
$
86,057,624
|
$
(22,440,153
)
|
$
63,617,471
|
$
62,683,624
|
$
(16,859,225
)
|
$
45,824,399
|
|
|
|
|
|
|
|
Year
|
Amortization Expense
|
2017
|
$
8,471,187
|
2018
|
6,425,463
|
2019
|
5,441,731
|
2020
|
5,401,348
|
2021
|
5,226,981
|
|
2016
|
2015
|
Insurance
|
$
160,262
|
$
93,040
|
Rent
|
5,389
|
101,916
|
Marketing
|
74,665
|
109,455
|
Software
subscriptions
|
419,431
|
498,078
|
Due
from seller of Fidelity
|
-
|
425,963
|
Due
from factoring party
|
-
|
26,018
|
Due
from seller of TOG
|
75,975
|
-
|
Comisssions
|
159,146
|
20,805
|
Other
|
265,316
|
343,328
|
Total
|
$
1,160,184
|
$
1,618,603
|
|
2016
|
2015
|
Trade
accounts payable
|
$
6,358,548
|
$
1,101,393
|
Accrued
license fees
|
2,881,331
|
-
|
Accrued
sales and federal excise taxes
|
2,863,363
|
2,204,098
|
Deferred
revenue
|
1,874,641
|
1,157,036
|
Accrued
network costs
|
1,416,000
|
3,423,483
|
Accrued
sales commissions
|
819,106
|
981,121
|
Property
and other taxes
|
581,956
|
534,388
|
Accrued
payroll and vacation
|
421,733
|
555,493
|
Customer
deposits
|
365,249
|
358,227
|
Interest
payable
|
304,409
|
32,221
|
Credit
card payable
|
265,985
|
384,257
|
Accrued
USF fees
|
249,825
|
494,852
|
Accrued
bonus
|
249,361
|
700,000
|
Professional
and consulting fees
|
164,878
|
274,205
|
Rent
|
127,781
|
82,894
|
Other
|
778,672
|
845,557
|
Total
|
$
19,722,838
|
$
13,129,225
|
|
2016
|
2015
|
Network
equipment
|
$
13,716,468
|
$
7,875,478
|
Furniture
and fixtures
|
421,689
|
292,451
|
Computer
equipment and software
|
5,868,370
|
7,290,577
|
Customer
premise equipment
|
9,695,643
|
9,121,788
|
Vehicles
|
55,884
|
55,884
|
Leasehold
improvements
|
1,188,207
|
1,073,631
|
Assets
in progress
|
383,137
|
190,749
|
Total
|
31,329,398
|
25,900,558
|
Less:
accumulated depreciation
|
(17,080,483
)
|
(11,845,065
)
|
Total
|
$
14,248,915
|
$
14,055,493
|
|
December 31,
|
December 31,
|
|
2016
|
2015
|
Equipment
financing obligations
|
$
2,239,661
|
$
3,044,796
|
Less:
current portion
|
(1,002,578
)
|
(959,380
)
|
Long-term
portion
|
$
1,237,083
|
$
2,085,416
|
Year ending December 31:
|
Principal
|
2017
|
$
1,002,578
|
2018
|
958,845
|
2019
|
268,044
|
2020
|
10,194
|
|
$
2,239,661
|
Supplemental Cash Flow Information
|
2016
|
2015
|
Cash paid for interest
|
$
5,806,910
|
$
5,064,880
|
Cash paid for income taxes
|
$
-
|
$
-
|
|
|
|
Supplemental Non-Cash Investing and Financing
Activities
|
|
|
Property and equipment acquired under capital leases
|
$
188,497
|
$
1,440,816
|
Dividend on Series B-2 preferred stock paid with the issuance of
Fusion common stock
|
$
1,983,301
|
$
1,174,620
|
Obligations under asset purchase agreements
|
$
1,521,606
|
$
633,333
|
Equipment received in exchange for settlement of accounts
receivable
|
$
-
|
$
105,570
|
Common stock issued for acquisitions
|
$
3,627,490
|
$
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,
|
|
2016
|
2015
|
Term
loan
|
$
65,000,000
|
$
25,000,000
|
Less:
|
|
|
Deferred
financing fees
|
(1,289,629
)
|
(271,238
)
|
Current
portion
|
(2,979,167
)
|
|
Term
loan - long-term portion
|
$
60,731,204
|
$
24,728,762
|
|
|
|
Indebtedness
under revolving credit facility
|
$
3,000,000
|
$
15,000,000
|
|
December 31,
|
December 31,
|
|
2016
|
2015
|
Subordinated
notes
|
$
33,588,717
|
$
34,160,200
|
Discount
on subordinated notes
|
(1,368,629
)
|
(1,697,091
)
|
Deferred
financing fees
|
(788,486
)
|
(981,553
)
|
Total
notes payable - non-related parties
|
31,431,602
|
31,481,556
|
Less:
current portion
|
-
|
(685,780
)
|
Long-term
portion
|
$
31,431,602
|
$
30,795,776
|
|
December 31,
|
December 31,
|
|
2016
|
2015
|
Notes
payable to Marvin Rosen
|
$
928,081
|
$
1,178,081
|
Discount
on notes
|
(52,331
)
|
(103,252
)
|
Total
notes payable - related parties
|
$
875,750
|
$
1,074,829
|
|
Series A-1
|
Series A-2
|
Series A-4
|
Series B-2
|
Total
|
|||||
|
Shares
|
$
|
Shares
|
$
|
Shares
|
$
|
Shares
|
$
|
Shares
|
$
|
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
|
Conversion of preferred stock into common stock
|
-
|
-
|
-
|
-
|
-
|
-
|
(6,025
)
|
(60
)
|
(6,025
)
|
(60
)
|
Balance
at December 31, 2016
|
2,375
|
$
24
|
2,625
|
$
26
|
45
|
$
-
|
12,254
|
$
124
|
17,299
|
$
174
|
|
Number of Warrants
|
Per share Exercise Price
|
Weighted Average Exercise Price
|
Outstanding
at December 31, 2014
|
4,165,108
|
$
0.50 to $10.50
|
$
5.48
|
Granted
in 2015
|
-
|
-
|
|
Exercised
in 2015
|
(728,333
)
|
$
0.50
|
$
0.50
|
Expired
in 2015
|
(425,011
)
|
$
7.00 to $10.50
|
$
9.30
|
Outstanding
at December 31, 2015
|
3,011,764
|
$
3.95 to $10.15
|
$
6.14
|
Granted
in 2016
|
-
|
-
|
|
Exercised
in 2016
|
-
|
-
|
|
Expired
|
(105,198
)
|
$
4.00-$7.00
|
$
5.00
|
Outstanding
at December 31, 2016
|
2,906,566
|
$
4.25-$10.15
|
$
6.18
|
|
Level 1
|
Level 2
|
Level 3
|
Total
|
As of December 31, 2016
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Contingent
liability (see note 5)
|
|
|
$
100,000
|
$
100,000
|
Non-current
liabilities:
|
|
|
|
|
Contingent
liability (see note 5)
|
|
|
$
836,606
|
$
836,606
|
Derivative
liability (see note 17)
|
-
|
-
|
$
348,650
|
$
348,650
|
As of December 31, 2015
|
|
|
|
|
Non-current
liabilities:
|
|
|
|
|
Derivative
liability (see note 17)
|
-
|
-
|
$
953,005
|
$
953,005
|
Balance
at December 31, 2014
|
$
3,839,569
|
Change
for the period:
|
|
Change
in fair value included in net loss
|
(1,843,997
)
|
Modification
of warrant contracts reclassified to equity
|
(678,400
)
|
Exercise
of lenders' warrants
|
(364,167
)
|
Balance
at December 31, 2015
|
953,005
|
Change
for the period:
|
|
Change
in fair value included in net loss
|
(1,037,405
)
|
Adjustment
for prior issuances and conversion of warrants
|
433,050
|
Balance
at December 31, 2016
|
$
348,650
|
|
2016
|
2015
|
Current
|
|
|
Federal
|
$
-
|
$
(7,710,000
)
|
State
|
60,000
|
-
|
|
60,000
|
(7,710,000
)
|
|
|
|
Deferred
|
|
|
Federal
|
(1,493,485
)
|
-
|
State
|
(176,000
)
|
50,000
|
|
(1,669,485
)
|
50,000
|
|
|
|
Tax
provision (benefit)
|
$
(1,609,485
)
|
$
(7,660,000
)
|
|
2016
|
2015
|
|
%
|
%
|
Federal
statutory rate
|
(34.0
)
|
(34.0
)
|
State
net of federal tax
|
(3.4
)
|
(3.6
)
|
Permanent
and other items
|
1.2
|
1.1
|
Change
in valuation allowance
|
25.0
|
(11.8
)
|
|
(11.2
)
|
(48.3
)
|
|
2016
|
2015
|
Deferred
income tax assets:
|
|
|
Net
operating losses
|
$
43,292,000
|
$
32,569,000
|
Allowance
for doubtful accounts
|
99,000
|
77,000
|
Derivative
liability
|
391,000
|
620,000
|
Accrued
liabilities
|
910,000
|
1,037,000
|
Other
|
83,000
|
-
|
|
44,775,000
|
34,303,000
|
|
|
|
Deferred
income tax liabilities:
|
|
|
Intangible
assets
|
9,943,000
|
3,305,000
|
Property
and equipment
|
761,000
|
1,103,000
|
Debt
discount
|
-
|
388,000
|
|
10,704,000
|
4,796,000
|
Deferred
tax asset, net
|
34,071,000
|
29,507,000
|
|
|
|
Less:
valuation allowance
|
(34,071,000
)
|
(29,507,000
)
|
|
|
|
Net
deferred tax assets
|
$
-
|
$
-
|
Year
ending December 31:
|
|
2017
|
$
1,543,787
|
2018
|
1,061,075
|
2019
|
1,034,249
|
2020
|
892,842
|
2021
|
283,116
|
Thereafter
|
192,673
|
|
2016
|
2015
|
United
States
|
$
109,254,707
|
$
88,526,867
|
International
Customers
|
12,790,613
|
13,167,649
|
|
$
122,045,320
|
$
101,694,516
|
|
Year ended December 31, 2016
|
|||
|
Carrier Services
|
Business Services
|
Corporate and Unallocated*
|
Consolidated
|
Revenues
|
$
35,484,101
|
$
86,561,219
|
$
-
|
$
122,045,320
|
Cost
of revenues (exclusive of depreciation and
amortization)
|
33,783,130
|
34,275,302
|
-
|
68,058,432
|
Gross
profit
|
1,700,971
|
52,285,917
|
-
|
53,986,888
|
Depreciation
and amortization
|
153,567
|
12,033,551
|
909,469
|
13,096,587
|
Selling,
general and administrative expenses
|
2,710,880
|
40,331,439
|
5,482,604
|
48,524,923
|
Impairment
charge
|
|
-
|
|
-
|
Interest
expense
|
-
|
(6,442,224
)
|
(299,919
)
|
(6,742,143
)
|
Gain
on change in fair value of derivative liability
|
-
|
-
|
265,383
|
265,383
|
Loss
on extinguishment of debt
|
-
|
(214,294
)
|
-
|
(214,294
)
|
Other
income (expenses)
|
-
|
36,763
|
(36,895
)
|
(132
)
|
Income
tax benefit
|
-
|
1,609,485
|
-
|
1,609,485
|
Net
loss
|
$
(1,163,476
)
|
$
(5,089,343
)
|
$
(6,463,504
)
|
$
(12,716,323
)
|
|
|
|
|
|
Total
assets
|
$
6,265,402
|
$
125,766,812
|
$
-
|
$
132,032,214
|
Capital
expenditures
|
$
-
|
$
4,766,214
|
$
-
|
$
4,766,214
|
|
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
|
Income
tax benefit
|
-
|
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
|
Subsidiary Name
|
|
Jurisdiction of Formation
|
Fusion NBS Acquisition Corp.
|
|
Delaware
|
Network Billing Systems, L.L.C. d/b/a Fusion
|
|
New
Jersey
|
Fusion BVX LLC
|
|
Delaware
|
PingTone Communications, Inc.
|
|
Delaware
|
Fidelity Access Networks, Inc.
|
|
Ohio
|
Fidelity Access Networks, LLC
|
|
Ohio
|
Fidelity Connect LLC
|
|
Ohio
|
Fidelity Voice Services, LLC
|
|
Ohio
|
Fidelity Telecom, LLC
|
|
Ohio
|
Apptix, Inc.
|
|
Florida
|
March
20, 2017
|
By:
|
/s/
MATTHEW D. ROSEN
|
|
|
|
Matthew
D. Rosen
|
|
|
|
Chief
Executive Officer
|
|
March
20, 2017
|
By:
|
/s/
MICHAEL R. BAUER
|
|
|
|
Michael
R. Bauer.
|
|
|
|
Chief
Financial Officer
|
|
March
20, 2017
|
By:
|
/s/
MATTHEW D. ROSEN
|
|
|
|
Matthew
D. Rosen
|
|
|
|
Chief
Executive Officer
|
|
March
20, 2017
|
By:
|
/s/
MICHAEL R. BAUER
|
|
|
|
Michael
R. Bauer
|
|
|
|
Chief
Financial Officer
|
|