FAIR VALUE OF FINANCIAL INSTRUMENTS |
6 Months Ended | |||||||||||||||||||||||
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Jun. 30, 2015 | ||||||||||||||||||||||||
| Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||
| Fair Value Disclosures [Text Block] |
As of June 30, 2015 and December 31, 2014, the carrying amounts of cash, receivables, and accounts payable and accrued expenses approximated their estimated fair values because of the short term nature of these financial instruments. Our long-term debt and notes payable are carried at cost and approximate fair value since the interest rate being charged approximates market rates. The fair value of related party transactions including the note payable to the CEO cannot be determined based upon the related party nature of the transactions. (See Note 15.) Contingent Consideration
The Company’s potential contingent considerations of $1,843,387 and $2,626,323 as of June 30, 2015 and December 31, 2014, respectively, related to the 2014 acquisitions are Level 3 liabilities. The fair value of the contingent consideration is primarily driven by the price of the Company’s common stock on the NASDAQ Capital Market, an estimate of revenue to be recognized by the Company from the Acquired Businesses during the first twelve months after acquisition compared to the trailing twelve months’ revenue from customers in good standing as of March 31, 2014 shown in the Company’s prospectus dated July 22, 2014, the passage of time and the associated discount rate. If revenue from an acquisition exceeds the trailing revenue shown in the Company’s prospectus, or the Company’s stock price exceeds the price on July 28, 2014, the date of the acquisitions, the consideration could exceed the original estimated contingent consideration. Discount rates are estimated by using government bond yields (0.02%).
The following table provides a reconciliation of the beginning and ending balances for the contingent consideration measured at fair value using significant unobservable inputs (Level 3): Financial instruments measured at fair value on a recurring basis:
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