Acquisition of CSI Software

On July 15, 2011, we entered into an agreement with Cellular Spyware, Inc. ("Cellular" or "CSI") and Anthony Sasso ("Sasso"), a former employee of the Company. In connection with the agreement, we purchased all of the intellectual property for the anti-texting software owned by CSI for an aggregate amount of $1,125,000. The Company had previously licensed the software and had all rights to North, Central, and South Americas. As a result of the agreement, the Company now owns all worldwide rights to the software (the "CSI Assets"). As consideration for the CSI Assets, the Company paid CSI $300,000 in cash, a $450,000 promissory note, and 25,000,000 shares of the Company's common stock (initially subject to a Lock-Up/Leak-Out Agreement as described below) (the "Consideration Shares"), valued at $375,000 based on a blended, pro rata, price per share of two then recent private placements of our common stock.
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The $450,000 note payable provided for the payment by us of 18 equal monthly installments of $25,000 beginning in August 2011. The Company made its August - October payments. However, it made a partial November 2011 payment and did not make its December 2011 payment due to insufficient cash flow. In February 2012, we amended the terms of the $450,000 note, such that the $362,500 unpaid balance at the timing of the signing of the amendment would commence in April 2012 in $25,000 monthly installments until repaid. The acquisition of the CSI Assets was treated as an asset purchase.