UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q/A

~~(Amendment No. 1)~~

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, ~~2017~~2018

Commission file number ~~000-26460~~001-38286

AMERI Holdings, Inc.

(Exact name of registrant as specified in its charter)

Delaware		95-4484725
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

100 Canal Pointe Boulevard, Suite 108, Princeton, New Jersey		08540
(Address of principal executive offices)		(Zip Code)

~~Registrant's~~Registrant’s telephone number, including area code:732-243-9250

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class		Name of Each Exchange on Which Registered
~~N/A~~Common Stock $0.01 par value per share		~~N/A~~The NASDAQ Stock Market LLC
Warrants to Purchase Common Stock		The NASDAQ Stock Market LLC

Securities registered pursuant to Section 12(g) of the Act:

~~Common Stock, $0.01 par value per share~~None

(Title of class)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of ~~"large~~“large accelerated filer,~~" "accelerated filer"~~” “accelerated filer”, “smaller reporting company” and ~~"smaller reporting company"~~“emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated ~~filer~~ ☐ filer☐	Accelerated ~~filer~~ ☐ filer☐

Non-accelerated ~~filer~~ ☐ filer☐	Smaller reporting ~~company~~ ☑ company☑

Emerging growth company ☑

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

As of May ~~3, 2017, 14,608,017~~8, 2018, 18,790,998 shares of the ~~registrant's~~registrant’s common stock were issued and outstanding.

~~EXPLANATORY NOTE~~

The purpose of this Amendment No. 1 to AMERI Holdings, Inc.'s (the “Company”) Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2017, filed with the Securities and Exchange Commission on May 12, 2017 (the "Form 10-Q"), is solely to amend and restate Part I, Item 1, Part I, Item 2 and Part II, Item 3 to correct the disclosure in those sections related to the reclassification of certain general and administrative expenses as costs of revenue for the quarter ended March 31, 2016 and the payment of an in-kind dividend on the Company’s Series A Preferred Stock, as well as certain typographical errors. No other sections were affected, but for the convenience of the reader, this report on Form 10-Q/A restates in its entirety, as amended, the original Form 10-Q.

No other changes have been made to the Form 10-Q. This Amendment No. 1 to the Form 10-Q speaks as of the original filing date of the Form 10-Q, does not reflect events that may have occurred subsequent to the original filing date, and does not modify or update in any way disclosures made in the original Form 10-Q.

AMERI Holdings, Inc.

QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED MARCH 31, ~~2017~~2018

TABLE OF CONTENTS

		Page

PART I - FINANCIAL INFORMATION

Item 1 - Financial Statements		3

	Unaudited Condensed Consolidated Balance Sheets as of March 31, ~~2017~~2018 and December 31, ~~2016~~2017	3
	Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the Three Months Ended March 31, ~~2017~~2018 and ~~2016~~2017	4
	Unaudited Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, ~~2017 and 2016~~2018	5
	Notes to Unaudited Condensed Consolidated Financial Statements	6

Item 2 - ~~Management's~~Management’s Discussion and Analysis of Financial Condition and Results of Operations		1416

Item 3 - Quantitative and Qualitative Disclosures About Market Risk		2123

Item 4 - Controls and Procedures		2123

PART II - OTHER INFORMATION

Item 1 - Legal Proceedings		2325

Item 1A - Risk Factors		2325

Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds		2326

Item 3 - Defaults upon Senior Securities		2326

Item 4 - Mine Safety Disclosures		2327

Item 5 – Other Information		2327

Item 6 – Exhibits		2428

Signatures		2629

Table of Contents

PART I

ITEM 1.

FINANCIAL STATEMENTS

AMERI HOLDINGS, INC.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

		March 31, 2017			December 31, 2016				March 31, 2018				December 31, 2017
Assets	Assets							Assets
Current assets:
Cash and cash equivalents		$	1,812,600		$	1,379,887			$	1,763,448		$	4,882,084
Accounts receivable			9,590,446			8,059,910				8,457,627			8,838,453
Investments			82,908			82,908
Other current assets			866,505			542,237				955,400			924,266
Total current assets			12,352,459			10,064,942				11,176,475			14,644,803

Other assets:
Property and equipment, net			113,505			100,241				83,878			95,048
Intangible assets, net			11,845,910			8,764,704				8,675,793			9,469.703
Acquired goodwill			21,879,572			17,089,076				21,898,323			21,898,323
Deferred income tax assets, net			3,488,960			3,488,960				6,088,751			6,088,751
Total other assets			37,327,947			29,442,981				36,746,745			37,551,825
Total assets		$	49,680,406		$	39,507,923			$	47,923,220		$	52,196,628

Liabilities
Current liabilities:
Line of credit			3,956,494			3,088,890			$	3,264,809			4,053,318
Accounts payable			4,468,533			5,130,817				5,318,493			5,324,872
Other accrued expenses			3,147,210			2,165,088				2,218,851			2,582,661
Bank Term Loan			399,996			405,376
Consideration payable – Cash			4,199,238			1,854,397
Consideration payable – Equity			596,763			64,384
Dividend Payable			499,965			-
Current portion-long term notes										406,376			749,551
Consideration payable – cash										3,430,659			5,509,427
Consideration payable – equity										11,271,000			12,148,053
Dividend payable										557,417			-
Total current liabilities			17,268,199			12,708,952				26,467,605			30,367,882

Long term liabilities:
Long-term Liabilities:
Convertible notes			1,250,000			-				1,250,000			1,250,000
Bank Term Loan – Net of Current Portion			1,023,474			1,536,191
Consideration payable – Cash			3,375,000			2,711,717
Consideration payable – Equity			11,993,723			10,887,360
Total Long-term Liabilities			17,642,197			15,135,268
Long term notes – net of current portion										1,028,840			1,130,563
Total long-term liabilities										2,278,840			2,380,563
Total liabilities			34,910,396			27,844,220				28,746,445			32,748,445

Stockholders' equity:
Preferred stock, $0.01 par value; 1,000,000 authorized, 363,611 issued and outstanding as of March 31, 2017 and as of December 31, 2016			3,636			3,636
Common stock, $0.01 par value; 100,000,000 shares authorized, 14,579,417 and 13,885,972 issued and outstanding as of March 31, 2017 and December 31, 2016 respectively.			145,794			138,860
Stockholders’ equity:
Preferred stock, $0.01 par value; 1,000,000 authorized, 405,395 issued and outstanding as of each of March 31, 2018 and December 31, 2017										4,054			4,054
Common stock, $0.01 par value; 100,000,000 shares authorized, 18,790,998 and 18,162,723 issued and outstanding as of March 31, 2018 and December 31, 2017, respectively										187,908			181,625
Additional paid-in capital			19,850,002			15,358,839				36,044,869			34,223,181
Accumulated deficit			(5,226,646	)		(3,833,588	)			(17,126,722	)		(14,997,552	)
Accumulated other comprehensive income (loss)			740			(7,426	)			66,666			36,875
Non-Controlling Interest			(3,516	)		3,382
Total stockholders' equity			14,770,010			11,663,703
Total liabilities and stockholders' equity		$	49,680,406		$	39,507,923
Total stockholders’ equity										19,176,775			19,448,183
Total liabilities and stockholders’ equity									$	47,923,220		$	52,196,628

See accompanying notes to the unaudited condensed consolidated financial statements.

Table of Contents

AMERI HOLDINGS, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

Three Months
Ended
March 31,

2017 2016

Net revenue $ 12,340,927 $ 7,012,964
Cost of revenue 9,039,577 5,757,307
Gross profit 3,301,350 1,255,657

Operating expenses:
Selling and marketing 332,310 31,350
General and administration 2,701,145 1,718,590
Acquisition related expenses 209,344 375,405
Depreciation and amortization 689,100 111,628
Operating expenses 3,931,899 2,236,973
Operating income (loss): (630,549 ) (981,316 )

Interest expense (90,806 ) (113,746 )
Interest income/other income - 2,005
Other expense (4,149 ) (2,304 )
Total other income (expenses) (94,955 ) (114, 045 )
Income (loss) before income taxes (725,504 ) (1,095,361 )
Income tax benefit (provision) (2,020 )
Net income (loss) after tax (725,504 ) (1,097,381 )
Dividend on Preference Shares (499,965 ) -
Net income (loss) attributable to the Company (1,225,469 ) (1,097,381 )
Non-Controlling Interest 3,516
Foreign exchange translation adjustment 5,335 (62,890 )
Net income (loss) $ (1,216,618 ) (1,160,271 )
Basic income (loss) per share attributable to the Company $ (0.09 ) $ (0.09 )
Diluted income (loss) per share attributable to the Company $ (0.09 ) $ (0.09 )

Basic weighted average number of shares 14,094,536 11,874,361
Diluted weighted average number of shares 14,094,536 11,874,361

	Three Months Ended March 31, 2018			Three Months Ended March 31, 2017

Revenue	$	11,063,010		$	12,340,927
Cost of revenue		8,720,125			9,039,577
Gross profit		2,342,885			3,301,350

Operating expenses
Selling, general and administration		2,878,942			3,033,455
Acquisition related expenses		10,000			209,344
Depreciation and amortization		820,736			689,100
Operating expenses		3,709,678			3,931,899
Operating (loss)		(1,366,793	)		(630,549	)
Interest expenses		(211,159	)		(90,806	)
Others, net		6,199			(4,149	)
Total other income (expenses)		(204,960	)		(94,955	)
(Loss) before income taxes		(1,571,753	)		(725,504	)
Tax benefit / (provision)		-			-
(Loss) after income taxes		(1,571,753	)		(725,504	)
Net income attributable to non-controlling interest		-			3,516
Net (loss) attributable to the Company		(1,571,353	)		(721,988	)
Dividend on preferred stock		(557,417	)		(499,965	)
Net (loss) attributable to common stock holders		(2,129,170	)		(1,221,953	)
Other comprehensive income (loss), net of tax
Foreign exchange translation		29,791			5,335
Comprehensive (loss)	$	(2,099,379	)	$	(1,216,618	)
Comprehensive income/(loss) attributable to the Company		(2,099,379	)		(1,220,134	)
Comprehensive income/(loss) attributable to the non-controlling interest		-			3,516
		(2,099,379	)		(1,216,618	)

Basic income (loss) per share	$	(0.11	)	$	(0.09	)
Diluted income (loss) per share	$	(0.11	)	$	(0.09	)

Basic weighted average number of common shares outstanding		18,654,197			14,094,536
Diluted weighted average number of common shares outstanding		18,654,197			14,094,536

See accompanying notes to the unaudited condensed consolidated financial statements.

Table of Contents

AMERI HOLDINGS, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

	Three Months Ended March 31,						Three Months Ended March 31,
	2017			2016			2018			2017

Cash flow from operating activities
Net income/(loss)	$	(1,216,618	)	$	(1,160,271	)
Adjustment to reconcile income/(loss) to net cash used in operating activities
Comprehensive income/(loss)							$	(2,099,379	)	$	(1,216,618	)
Adjustment to reconcile comprehensive income/(loss) to net cash used in operating activities
Depreciation and amortization		689,100			111,628			820,736			689,100
Provision for Preference dividend		499,965			-
Stock, option, restricted stock unit and warrant expense		566,427			101,677
Provision for preferred stock dividend								557,417			499,965
Stock, option and restricted stock unit expense								297,814			566,427
Foreign exchange translation adjustment		5,335			(62,890	)		29,791			5,335
Changes in assets and liabilities:
Increase (decrease) in:
Accounts receivable		(1,530,536	)		(57,216	)		380,826			(1,530,536	)
Other current assets		(324,267	)		24,983			(31,134	)		(324,267	)
Increase (decrease) in:
Accounts payable and accrued expenses		472,661			1,195,226			(415,635	)		472,661
Net cash provided by (used in) operating activities		(837,933	)		153,137			(459,564	)		(837,933	)
Cash flow from investing activities
Acquisition of intangible and fixed assets		(10,493	)		(131,580	)
Acquisition consideration payable		(311,470	)		(1,718,777	)
Investments		-			82,908
Purchase of fixed assets								-			(10,493	)
Acquisition consideration								(1,069,259	)		(55,687	)
Net cash used in investing activities		(321,963	)		(1,767,449	)		(1,069,259	)		(66,180	)
Cash flow from financing activities
Proceeds from bank and convertible notes		1,599,507			241,451
Non-Controlling Interests		(6,898	)
Proceeds from bank loan and convertible notes, net								(1,233,407	)		1,599,507
Additional stock issued								619,032			-
Contingent consideration for acquisitions								(975,438	)		(255,783	)
Non-controlling interest								-			(6,898	)
Net cash provided by financing activities		1,592,609			241,451			(1,589,813	)		1,336,826
Net increase (decrease) in cash and cash equivalents		432,713			(1,372,861	)		(3,118,636	)		432,713
Cash and cash equivalents as at beginning of the period		1,379,887			1,878,034			4,882,084			1,379,887
Cash at the end of the period	$	1,812,600		$	505,173		$	1,763,448		$	1,812,600

See accompanying notes to the unaudited condensed consolidated financial statements.

Table of Contents

AMERI HOLDINGS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, ~~2017~~2018

NOTE 1.

ORGANIZATION:

AMERI Holdings, Inc. (“AMERI”, the “Company”, “we” or “our”) is a fast-growing ~~technology services~~ company ~~which~~that, through the operations of its eleven subsidiaries, provides SAP^TM cloud and digital ~~and~~ enterprise services to clients worldwide. Headquartered in Princeton, New Jersey, ~~Ameri100 has offices in New York, Atlanta, Dallas, Phoenix, Kansas City, Folsom,~~we typically go to market both vertically by industry and ~~Toronto. The Company additionally has global delivery centers in India. With its bespoke engagement model, Ameri100 delivers transformational value~~horizontally by product/technology specialties and provide our customers with a wide range of business and technology offerings. We work with customers, primarily within North America, to ~~its clients across industry verticals.~~improve process, reduce costs and increase revenue through the judicious use of technology.

NOTE 2.

BASIS OF PRESENTATION:

The accompanying unaudited condensed consolidated financial statements have been prepared by ~~AMERI pursuant to~~ the ~~rules~~Company in accordance with generally accepted accounting principles in the United States of America, or U.S. GAAP, and ~~regulations~~Article 10 of Regulation S-X under the Securities ~~and~~ Exchange ~~Commission (the "SEC") regarding interim financial reporting.~~Act of 1934, as amended. Certain information and disclosure notes normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been omitted pursuant to those rules and regulations, although we believe that the disclosures made are adequate to ensure the information presented is not misleading.

The accompanying unaudited condensed consolidated financial statements reflect all adjustments (which were of a normal, recurring nature) that, in the opinion of management, are necessary to present fairly our financial position, results of operations and cash flows as of and for the interim periods presented. All intercompany transactions have been eliminated in the accompanying unaudited condensed consolidated financial statements. ~~These financial statements should be read in conjunction with the unaudited financial statements and notes thereto.~~

Our comprehensive income (loss) consists of net income (loss) plus or minus any periodic currency translation adjustments.

The ~~Company's year-end is December 31. Ameri and Partners Inc,~~results for the ~~Company's wholly-owned operating subsidiary that was~~interim periods presented are not necessarily indicative of the ~~accounting acquirer~~results expected for any future period. The following information should be read in ~~connection~~conjunction with the ~~Company's May 2015 reverse merger, changed its~~audited financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ~~end from March 31 to~~ended December 31, ~~pursuant~~2017.

Recent Accounting Pronouncements

New Standards to Be Implemented

In May 2014, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2014-09, “Revenue from Contracts with Customers (Topic 606),” which supersedes the revenue recognition requirements in “Revenue Recognition (Topic 605).” This ASU requires an entity to recognize revenue when goods are transferred or services are provided to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. This ASU also requires disclosures enabling users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. In August 2015, the FASB issued ASU 2015-14, “Revenue from Contracts with Customers (Topic 606), deferral of the Effective Date.” With the issuance of ASU 2015-14, the new revenue guidance ASU 2014-09 will be effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2018, using one of two prescribed retrospective methods. In April 2016, the FASB issued ASU 2016-10, “Revenue from Contracts with Customer (Topic 606), Identifying Performance Obligations and Licensing.” The guidance is applicable from the date of applicability of ASU 2014-09. This ASU finalizes the amendments to the ~~merger, so~~guidance on the new revenue standard on the identification of performance obligations and accounting for licenses of intellectual property. In December 2016, the FASB issued ASU 2016-20, “Technical Corrections and Improvements (Topic 606)” which is applicable from the date of applicability of ASU 2014-09. This guidance provides optional exemptions from the disclosure requirement for remaining performance obligations for specific situations in which an entity need not estimate variable consideration to recognize revenue. In May 2016, FASB issued ASU No. 2016-12, “Narrow-Scope Improvements and Practical Expedients”. This amendment clarified certain aspects of Topic 606 and will be applicable from the date of applicability of ASU 2014-09. Based on the Company’s preliminary assessment of the foregoing updates, it does not anticipate such updates will have a material impact its financial statements.

In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842)”. This new standard replaces the existing guidance on leases and requires the lessee to recognize a right-of-use asset and a lease liability for all leases with lease terms equal to or greater than twelve months. For finance leases, the lessee would recognize interest expense and amortization of the right-of-use asset, and for operating leases, the lessee would recognize total lease expense on a straight-line basis. This standard is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2018. Upon adoption, entities will be required to use a modified retrospective transition which provides for certain practical expedients. Entities are required to apply the new standard at the beginning of the earliest comparative period presented. Early adoption of this new standard is permitted. The Company is currently evaluating the effect this new standard will have on its consolidated financial statements and related disclosures. The Company does not expect the requirement to recognize a right-of-use asset and a lease liability for operating leases to have a material impact on the presentation of its consolidated statements of financial position.

Table of Contents

On November 17, 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash, which is intended to reduce diversity in the presentation of restricted cash and restricted cash equivalents in the statement of cash flows. This new standard requires that restricted cash and restricted cash equivalents be included as components of total cash and cash equivalents as presented on the statement of cash flows. As a result, entities will no longer present transfers between cash and cash equivalents and restricted cash and restricted cash equivalents in the statement of cash flows. ASU 2016-18 is effective for annual periods beginning after December 15, 2017 including interim periods within those fiscal years, but earlier adoption is permitted. The Company does not believe the adoption of this new standard will have a material impact on its consolidated financial statements.

In January 2017, the FASB issued ASU No. 2017-04, simplifying the Test for Goodwill Impairment. Under this new standard, goodwill impairment would be measured as the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying value of goodwill. This ASU eliminates existing guidance that requires an entity to determine goodwill impairment by calculating the implied fair value of goodwill by hypothetically assigning the fair value of a reporting unit to all of its assets and liabilities as if that reporting unit had been acquired in a business combination. This update is effective for annual periods beginning after December 15, 2019, and interim periods within those periods. Early adoption is permitted for interim or annual goodwill impairment test performed on testing dates after January 1, 2017. Based on the ~~Company's subsidiaries' year-ends are consistent with the year-end~~Company’s preliminary assessment of the ~~Company.~~foregoing update, it does not anticipate such update will have a material impact its financial statements.

~~During first quarter of~~Standards Implemented

In August 2016, the ~~Company erroneously classified approximately $1.9 million~~FASB issued ASU 2016-15, Statement of ~~expenses as general~~Cash Flows (Topic 230): Classification of Certain Cash Receipts and ~~administrative expenses~~Cash Payments (ASU 2016-15), which ~~should have been classified as cost of revenue. The Company has corrected this error~~clarifies how companies present and classify certain cash receipts and cash payments in the ~~current filing.~~statement of cash flows. The ~~reclassification did not change~~guidance is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. The company has implemented the ~~Company’s net income or loss for~~above standard effective this quarter and has made the ~~period reported.~~respective disclosures in Statement of Cash Flow.

NOTE 3.

BUSINESS COMBINATIONS:

Acquisition of ~~Bellsoft, Inc.~~Ameri Georgia

On November 20, 2015, we completed the acquisition of Bellsoft, Inc., a consulting company based in Lawrenceville, Georgia, ~~with over 175 consultants specialized~~which specializes in ~~the areas of~~ SAP software, business intelligence, data warehousing and other enterprise resource planning services. Following the acquisition, the name of Bellsoft, Inc. was changed to Ameri100 Georgia Inc. (“Ameri Georgia”). Ameri Georgia has operations in the United States, Canada and India. For financial accounting purposes, we recognized September 1, 2015 as the effective date of the acquisition. The total consideration for the acquisition of Ameri Georgia was $9,910,817, consisting of:

~~(a)~~

~~A cash payment in the amount of $3,000,000, which was paid at closing;~~

~~(b)~~

~~235,295 shares of our common stock issued at closing;~~

~~(c)~~

~~$250,000 quarterly cash payments paid on the last day of each calendar quarter of 2016;~~

~~Table of Contents~~

~~(d)~~

~~A $1,000,000 cash reimbursement paid 5 days following closing to compensate Ameri Georgia for a portion of its approximate cash balance as of September 1, 2015;~~

~~(e)~~

~~Approximately $2,910,817 paid within 30 days of closing in connection with the excess of Ameri Georgia’s accounts receivable over its accounts payable as of September 1, 2015; and~~

~~(f)~~

Earn-out payments of approximately $500,000 a year for 2016 and 2017, if earned through the achievement of annual revenue and earnings before interest taxes, depreciation and amortization (“EBITDA”) targets specified in the purchase agreement, subject to downward or upward adjustment depending on actual results.

The earn-out for 2016 was 30% higher than the previously agreed targets, resulting in a higher than anticipated earn-out payment, and the excess of the 2016 earn-out payment over what was planned was made as an adjustment to our income statement.

The valuation of Ameri Georgia was made on the basis of its projected revenues. The accounting acquisition date for Ameri Georgia was determined on the basis of the date when the Company acquired control of Ameri Georgia, in accordance with FASB codification ASU 805-10-25-6 for business combinations. That ASU provides that the date on which the acquirer obtains control of the acquiree generally is the date on which the acquirer legally transfers the consideration, acquires the assets, and assumes the liabilities of the acquiree—the closing date. However, the acquirer might obtain control on a date that is either earlier or later than the closing date. For example, the acquisition date precedes the closing date if a written agreement provides that the acquirer obtains control of the acquiree on a date before the closing date. An acquirer shall consider all pertinent facts and circumstances in identifying the acquisition date. The term sheet and the Share Purchase Agreement that were entered into by the Company and Ameri Georgia contained agreements by the parties that the Company acquired control of Ameri Georgia's accounts payable, accounts receivable and business decisions as of September 1, 2015. In addition, on that date, the Company became responsible for performance of Ameri Georgia's existing contracts. Accordingly, the Company has recognized September 1, 2015 as the accounting acquisition date.

The total purchase price of ~~$9,910,817~~$9.9 million was allocated to net working capital of $4.6 million, intangibles of $1.8 million, taking into consideration projected revenue from the acquired list of Ameri Georgia customers over a period of three years, and goodwill. The excess of total purchase price over the net working capital and intangibles allocations has been allocated to goodwill.

On January 17, 2018, we completed all payment obligations to the former shareholders of Ameri Georgia in connection with the Ameri Georgia share purchase agreement, and we have no further payment obligations pursuant thereto.

Acquisition of Bigtech Software Private Limited

On June 23, 2016, we entered into a definitive agreement to purchase Bigtech Software Private Limited ~~("Bigtech"~~(“Bigtech”), a pure-play SAP services company providing a ~~complete~~wide range of SAP services including turnkey implementations, application management, training and basis ABAP support. Based in Bangalore, India, Bigtech offers SAP services to improve business operations at companies of all sizes and verticals.

The acquisition of Bigtech was effective as of July 1, 2016, and the total consideration for the acquisition of Bigtech was $850,000, consisting of:

(a)

A cash payment in the amount of $340,000 which was due within 90 days of closing and was paid on September 22, 2016;

(b)

Warrants for the purchase of 51,000 shares of our common stock (valued at approximately $250,000 based on the $6.51 closing price of our common stock on the closing date of the acquisition), with such warrants exercisable for two years; and

(c)

$255,000, which may become payable in cash earn-outs to the sellers of Bigtech, if Bigtech achieves certain pre-determined ~~Revenue~~revenue and EBITDA targets in 2017 and 2018. We estimate the earn-out payments to be earned at 100% of the targets set forth in the purchase agreement.

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Bigtech’s financial results are included in our condensed consolidated financial results starting July 1, 2016. The Bigtech acquisition did not constitute a significant acquisition for the ~~Company.~~Company for purposes of Regulation S-X. The valuation of Bigtech was made on the basis of its projected revenues.

The total purchase price of $850,000 was allocated to intangibles of $595,000, taking into consideration projected revenue from the acquired list of Bigtech customers over a period of three years, and goodwill. The excess of total purchase price over the intangibles allocation has been allocated to goodwill. ~~The Bigtech acquisition did not constitute a significant acquisition for the Company.~~

Acquisition of Virtuoso

On July 22, 2016, we ~~through wholly-owned acquisition subsidiaries,~~ acquired all of the outstanding membership interests of Virtuoso, L.L.C. ~~("Virtuoso"~~(“Virtuoso”), a Kansas limited liability company, pursuant to the terms of an Agreement of Merger and Plan of Reorganization, by and among us, Virtuoso Acquisition Inc., Ameri100 Virtuoso Inc., Virtuoso and thethe sole member of Virtuoso (the ~~"Sole Member"~~“Sole Member”). Virtuoso is aan SAP consulting firm specialized in providing services on SAP S/4 HANA finance, enterprise mobility and cloud migration and is based in Leawood, Kansas. In connection with the merger, Virtuoso’s name was changed to Ameri100 Virtuoso Inc. The Virtuoso acquisition did not constitute a significant acquisition for the ~~Company.~~

~~Table~~Company for purposes of ~~Contents~~

~~The total purchase price paid to the Sole Member for the acquisition of Virtuoso was $1,831,881consisting of:~~Regulation S-X.

~~(a)~~

~~A cash payment in the amount of $675,000 which was due within 90 days of closing and was paid on October 21, 2016;~~

~~(b)~~

~~101,250 shares of our common stock at closing; and~~

~~(c)~~

~~Earn-out payments in cash and stock of $450,000 and approximately $560,807, respectively, to be paid, if earned, in 2017, 2018 and 2019.~~

~~The valuation of Virtuoso was made on the basis of its projected revenues. The Virtuoso earn-out payment for 2016 amounted to $64,736 in cash and 12,408 shares of common stock.~~

The total purchase price of ~~$1,831,881~~$1.8 million was allocated to intangibles of $0.9 million, taking into consideration projected revenue from the acquired list of Virtuoso customers over a period of three years, and ~~goodwill. The excess of total purchase price over intangibles allocation has been~~the balance was allocated to goodwill. The Virtuoso earn-out payments for 2016 amounted to $0.06 million in cash and 12,408 shares of common stock, which were delivered to the Sole Member during the twelve months ended December 31, 2017. As of January 23, 2018, we had resolved all remaining payments under the Virtuoso merger agreement with the Sole-Member and we have no further payment obligations pursuant thereto.

Acquisition of ~~DC&M~~Ameri Arizona

On July 29, 2016, we acquired 100% of the membership interests of DC&M Partners, L.L.C. ~~("DCM"~~(“Ameri Arizona”), an Arizona limited liability company, pursuant to the terms of a Membership Interest Purchase Agreement by and among us, ~~DCM,~~Ameri Arizona, all of the members of ~~DCM,~~Ameri Arizona, Giri Devanur and Srinidhi “Dev” Devanur, our former President and Chief Executive Officer and Executive Vice Chairman, respectively. ~~DCM~~In July 2017, the name of DC&M Partners, L.L.C. was changed to Ameri100 Arizona LLC. Ameri Arizona is aan SAP consulting company headquartered in Chandler, Arizona. ~~DCM~~Ameri Arizona provides its clients with a wide range of information technology development, consultancy and management services with an emphasis on the design, build and rollout of SAP implementations and related products. ~~DCM is also~~ a SAP-certified software partner, having launched its SAP reporting, extraction and distribution tool called “IRIS”. DCM services clients in diverse industries, including retail, apparel/footwear, third-party logistics providers, chemicals, consumer goods, energy, high-tech electronics, media/entertainment and aerospace.

The aggregate purchase price for the acquisition of ~~DCM~~Ameri Arizona was ~~$15,816,000~~$15.8 million, consisting of:

(a)

A cash payment in the amount of $3,000,000 at closing;

(b)

1,600,000 shares of our common stock (valued at approximately $10.4 million based on the $6.51 closing price of our common stock on the closing date of the acquisition), which are to be issued on July 29, 2018 or upon a change of control of our company (whichever occurs earlier);. At the election of the former members of Ameri Arizona, in lieu of receiving shares of our common stock, each former member may elect to receive a cash payment of $2.40 per share. One former member has indicated an intention to make such an election which would require a payment of $1,344,000 in lieu of issuing 560,000 of such shares to such member. If the election is made, such payment would be due on or about September 28, 2018; and

(c)

Earn-out payments of $1,500,000 payable in cash each year to be paid, if earned, through the achievement of annual revenue and gross margin targets in 2017 and 2018.

The total purchase price of ~~$15,816,000~~$15.8 million was allocated to intangibles of $5.4 million, taking into consideration projected revenue from the acquired list of ~~DCM~~Ameri Arizona customers over a period of three years, and the balance was allocated to goodwill. In January 17, 2018, the Company resolved the payment of all earn-out payments to the former members of Ameri Arizona with respect to the 2016 earn-out period in connection with the Ameri Arizona membership interest purchase agreement, and the Company has no further payment obligations with respect to the 2016 earn-out period.

The Company has not yet paid the earn-out payments in respect of the 2017 earn-out period to the former members of Ameri Arizona. As of the date of this quarterly report, the Company owed approximately $0.7 million to the former members of Ameri Arizona for such earn-out payments. As of the date of this quarterly report, the Company was unable to pay the 2017 earn-out payments due to limited available cash for payment. As a result of such non-payment of the 2017 earn-out, one of the former members of Ameri Arizona filed suit against the Company on May 1, 2018 seeking damages in an amount equal to such former member’s potion of the unpaid 2017 earn-out payments, plus attorneys’ fees and expenses. The Company intends to resolve such suit in as timely and cost efficient a manner as is commercially reasonable. The Company is working to raise capital from which it would be able to pay the amounts owed; however, there can be no assurance that the Company will be able to raise any capital or pay the 2017 earn-out amounts.

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Acquisition of Ameri California

On March 10, 2017, we acquired 100% of the shares of ATCG Technology Solutions, Inc. (“Ameri California”), a Delaware corporation, pursuant to the terms of a Share Purchase Agreement among the Company, Ameri California, all of the stockholders of Ameri California (the “Stockholders”), and the Stockholders’ representative. In July 2017, the name of ATCG Technology Solutions, Inc. was changed to Ameri100 California Inc. Ameri California provides U.S. domestic, offshore and onsite SAP consulting services and has its main office in Folsom, California. Ameri California specializes in providing SAP Hybris, SAP Success Factors and business intelligence services.

The aggregate purchase price for the acquisition of Ameri California was $8.8million, consisting of:

(a)

576,923 shares of our common stock, valued at approximately $3.8 million based on the closing price of our common stock on the closing date of the acquisition;

(b)

Unsecured promissory notes issued to certain of Ameri California’s selling stockholders for the aggregate amount of $3,750,000 (which notes bear interest at a rate of 6% per annum and mature on June 30, 2018);

(c)

Earn-out payments in shares of our common stock (up to an aggregate value of $1.2 million worth of shares) to be paid, if earned, in each of 2018 and 2019 based on certain revenue and earnings before interest taxes, depreciation and amortization (“EBITDA”) targets as specified in the purchase agreement. We estimate those targets will be fully achieved; and

(d)

An additional cash payment of $0.06 million for cash that was left in Ameri California at closing.

The total purchase price of $8.8 million was allocated to intangibles of $3.75 million, taking into consideration projected revenue from the acquired list of Ameri California customers over a period of three years, and goodwill. The excess of total purchase price over the intangibles allocation has been allocated to goodwill. For this acquisition, the net cash outflow in 2017 was $0.2 million.

~~Payment~~On February 28, 2018, we entered into an Amendment to 6% Unsecured Promissory Note and Waiver Agreement (the “Amendment”) by and between the Company and Moneta Ventures Fund I, L.P. (“Moneta”). The Amendment amended the terms of the ~~DCM earn-out~~Company’s 6% Unsecured Promissory Note Due June 30, 2018, issued on March 20, 2017, by and between the Company and Moneta (the “Moneta Note”). Among other things, the Amendment provided for ~~2016 was due on April 10, 2017 but has not yet been paid. We are currently in discussions with~~ the ~~former members of DCM regarding the timing and amount~~extension of the ~~earn-out payment. The valuation of DCM was made on the basis of its projected revenues.~~

~~Acquisition of ATCG~~

~~On March 10, 2017, we acquired 100%~~maturity of the ~~shares~~Moneta Note to August 31, 2018, amendment of ~~ATCG Technology Solutions, Inc. ("ATCG"), a Delaware corporation,~~the payment terms of the Moneta Note, waiver by Moneta of the existence of any Company event of default pursuant to the ~~terms~~Moneta Note as of ~~a Share Purchase Agreement among~~February 28, 2018 and waiver by the Company ~~ATCG, all~~of certain restrictions with respect to the resale of certain restricted common stock of the ~~stockholders~~Company held by Moneta. Pursuant to the Amendment, the Company was obligated to pay $0.5 million to Moneta on April 30, 2018; however, the Company has been unable to make such payment due to a lack of ~~ATCG (the "Stockholders"), and~~available cash. The Company is working to raise capital from which it would be able to pay the Stockholders' representative. ATCG provides U.S. domestic, offshore and onsite SAP consulting services and has its main office in Folsom, California. ATCG specializes in providing SAP Hybris, SAP Success Factors and business intelligence services.amount owed; however, there can be no assurance that the Company will be able to raise any capital or pay the amounts owed pursuant to the Amendment.

Presented below is the summary of the foregoing acquisitions:

~~The aggregate~~Allocation of purchase price ~~for the acquisition~~in millions of ~~ATCG of $8,784,533, consisting of:~~U.S. dollars

~~(a)~~

~~576,923 shares of our common stock;~~

~~(b)~~

Unsecured promissory notes issued to ATCG's selling Stockholders for the aggregate amount of $3,750,000 (which notes bear interest at a rate of 6% per annum with a payment schedule of 50% on December 31, 2017 and 50% on June 30, 2018);

Asset Component	Ameri Georgia		Bigtech		Virtuoso		Ameri Arizona		Ameri California
Intangible Assets		1.8		0.6		0.9		5.4		3.8
Goodwill		3.5		0.3		0.9		10.4		5.0
Working Capital
Current Assets
Cash		1.4		-		-		-		-
Accounts Receivable		5.6		-		-		-		-
Other Assets		0.2		-		-		-		-
		7.3		-		-		-		-
Current Liabilities
Accounts Payable		1.3		-		-		-		-
Accrued Expenses & Other Current Liabilities		1.3		-		-		-		-
		2.7		-		-		-		-
Net Working Capital Acquired		4.6		-		-		-		-

Total Purchase Price		9.9		0.9		1.8		15.8		8.8

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~~(c)~~

~~Earn-out payments in shares of our common stock (up to an aggregate value of $1,200,000 worth of shares) to be paid, if earned, in each of 2018 and 2019; and~~

~~(d)~~

~~An additional cash payment of $55,687 for cash that was left in ATCG at closing.~~

~~The total purchase price of~~ ~~$8,784,533~~ was allocated to intangibles of $3.75 million, taking into consideration projected revenue from the acquired list of ATCG customers over a period of three years, and goodwill. The excess of total purchase price over the intangibles allocation has been allocated to goodwill.

~~ATCG's financial statements will be filed by amendment~~As of the ~~Current Report on Form 8-K filed on March 13, 2017 to disclose~~date of this quarterly report, the ~~closing~~Company owed an aggregate of ~~the acquisition.~~

~~The Company has $20,164,724,~~$14,701,659, in ~~total towards~~ consideration, ~~payable~~ including contingent consideration payable, for its ~~acquisitions, consisting~~acquisitions. Such consideration payable consisted of ~~$7,574,238~~$3,430,659 in cash obligations and ~~$12,590,486~~$11,271,000 worth of common stock to be issued ~~(assuming a per share price of $6.51).~~in future periods. Out of ~~$20,164,724, $5,743,724 is towards~~such $14,701,659, $1,493,322 represents contingent consideration payable ~~on earn outs.~~upon the achievement of earn-outs.

NOTE 4.

REVENUE RECOGNITION:

~~The Company recognizes~~We recognize revenue primarily through the provision of consulting services. We generate revenue by providing consulting services under written service contracts with our customers. The service contracts we enter generally fall into two categories: (1) time-and-materials contracts and (2) fixed-price contracts.

We consider amounts to be earned once evidence of an arrangement has been obtained, services are delivered, fees are fixed or determinable and collectability is reasonably assured. We establish billing terms at the time at which the project deliverables and milestones are agreed. Our standard payment terms are 60 days from invoice date.

When a customer enters into a time-and-materials or fixed-price (or a periodic retainer-based) contract, the Company recognizes revenue in accordance with its evaluation of the deliverables in each contract. If the deliverables represent separate units of accounting, the Company then measures and allocates the consideration from the arrangement to the separate units, based on vendor specific objective evidence of the value for each deliverable.

The revenue under time and materials contracts is recognized as services are rendered and performed at contractually agreed upon rates. Revenue pursuant to fixed-price contracts is recognized under the proportional performance method of accounting. We routinely evaluate whether revenue and profitability should be recognized in the current period. We estimate the proportional performance on our fixed-price contracts on a monthly basis utilizing hours incurred to date as a percentage of total estimated hours to complete the project. This method is used because reasonably dependable estimates of costs and revenue earned can be made, based on historical experience and milestones identified in any particular contract. If we do not have a sufficient basis to measure progress toward completion, revenue is recognized upon completion of performance, subject to any warranty provisions or other project management assessments as to the status of work performed.

Estimates of total project costs are continuously monitored during the term of an engagement. There are situations where the number of hours to complete projects may exceed our original estimate, as a result of an increase in project scope, unforeseen events that arise, or the inability of the client or the delivery team to fulfill their responsibilities. Accordingly, recorded revenues and costs are subject to revision throughout the life of a project based on current information and historical trends. Such revisions may result in increases or decreases to revenue and income and are reflected in the consolidated financial statements in the periods in which they are first identified.

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If our initial estimates of the resources required or the scope of work to be performed on a contract are inaccurate, or we do not manage the project properly within the planned time period, a provision for estimated losses on incomplete projects may be made. Any known or probable losses on projects are charged to operations in the period in which such losses are determined. A formal project review process takes place quarterly, although projects are continuously evaluated throughout the period. Management reviews the estimated total direct costs on each contract to determine if the estimated amounts are accurate, and estimates are adjusted as needed in the period identified. No losses were recognized on contracts during the ~~period~~quarter ended March 31, ~~2017.~~2018.

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NOTE 5.

~~SHARE-BASED COMPENSATION:~~

On April 20, 2015, our Board of Directors and the holder of a majority of our outstanding shares of common stock approved the adoption of our 2015 Equity Incentive Award Plan (the "Plan") The Plan allows for the issuance of up to 2,000,000 shares of our common stock for award grants. The Plan provides equity-based compensation through the grant of cash-based awards, nonqualified stock options, incentive stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, performance units and other stock-based awards. We believe that an adequate reserve of shares available for issuance under the Plan is necessary to enable us to attract, motivate and retain key employees and directors and to provide an additional incentive for such individuals through stock ownership and other rights that promote and recognize the financial success and growth of our Company. During the three months ended March 31, 2017, we granted 60,000 options to employees. As of March 31, 2017, aggregate grants under the Plan total to 1,614,898 shares of our common stock, of which 1,024,029 were granted as options, 590,869 were granted as restricted stock units. Share based compensation expense for the period ended March 31, 2017 was $502,254.

~~NOTE 6.~~

INTANGIBLE ASSETS:

The Company’s intangible assets primarily consists of the customer lists it acquired through various acquisitions. We amortize our intangible assets that have finite lives using either the straight-line ~~method.~~method or based on estimated future cash flows to approximate the pattern in which the economic benefit of the asset will be utilized. Amortization expense was ~~$667,296~~$0.8 million and $0.7 million during the ~~three months~~quarter ended March 31, ~~2017.~~2018 and March 31, 2017, respectively. This amortization expense relates to customer lists ~~and products capitalized on our balance sheet,~~ which expire through ~~2020.~~

~~As of March 31, 2017, and December 31, 2016, capitalized intangible assets were as follows:~~

March 31,
2017

December 31,
2016

Capitalized intangible assets $ 12,513,206 $ 10,074,546
Accumulated amortization 667,296 1,309,842
Total intangible assets $ 11,845,910 $ 8,764,704

~~Our amortization schedule is as follows:~~

Years ending December 31,
Amount

2017 $ 2,258,388
2018 2,955,873
2019 2,727,968
2020 2,652,000
2021 1,251,681
Total $ 11,845,910

The Company has its own software products, namely Simple APO, Langer Index and IBP. Total costs incurred for developing these products during the three months ended March 31, 2017 was $0 and have been capitalized and are being amortized over the useful life of the software products.

~~The Company's intangible assets~~ ~~consist~~ of the customer lists acquired from the Company's acquisition of WinHire Inc, Ameri Georgia, DCM, Virtuoso, Bigtech and ATCG. The products acquired from the acquisition of Linear Logics. Corp. and the amount spent on improving those products are also categorized as intangible assets and are being amortized over the useful life of those products.2022.

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NOTE 7.6.

GOODWILL:

Goodwill represents the excess of the aggregate purchase price over the fair value of the net assets acquired in ~~businesses~~business combinations. ~~Goodwill was comprised~~The total value of the ~~following amounts:~~Company’s goodwill was $21.9 million as of March 31, 2018 and December 31, 2017.

March 31,
2017

December 31,
2016

Virtuoso $ 939,881 $ 939,881
DCM 10,416,000 10,416,000
Bigtech 292,808 314,555
Ameri Consulting Service Pvt. Ltd. 1,948,118 1,948,118
Ameri Georgia 3,470,522 3,470,522
ATCG 4,812,243 -
Total $ 21,879,572 $ 17,089,076

As per Company policy, goodwill impairment tests ~~will be~~are conducted on an annual basis and any impairment ~~will be~~is reflected in the Company’s ~~statements~~Statements of ~~operations.~~Operations.

NOTE 8.7.

EARNINGS (LOSS) PER SHARE:

Three Months Ended
March 31,

2017 2016

Net income (loss) attributable to the Company $ (1,225,469 ) $ (1,097,381 )
Weighted average common shares outstanding 14,094,536 11,874,361
Basic net income (loss) per share of common stock $ (0.09 ) $ (0.09 )
Diluted net income (loss) per share of common stock $ (0.09 ) $ (0.09 )

A reconciliation of net income and weighted average shares used in computing basic and diluted net income per share is as follows:

	Three Months Ended March 31, 2018			Three Months Ended March 31, 2017
Net income (loss) attributable to common stock holders	$	(2,129,170	)	$	(1,221,953	)
Weighted average common shares outstanding		18,564,197			14,094,536
Basic net income (loss) per share of common stock	$	(0.11	)	$	(0.09	)
Diluted net income (loss) per share of common stock	$	(0.11	)	$	(0.09	)

~~Due to~~Share based awards, inclusive of all grants made under the ~~Company's net loss, potential~~Plan, for which either the stock option exercise price or the fair value of the restricted share award exceeds the average market price over the period, have an anti- dilutive ~~shares were not included in the calculation of diluted~~effect on earnings per share, and accordingly, are excluded from the diluted computations for ~~the~~all periods ~~ended March 31, 2017 and March 31 2016, as they would have an antidilutive effect.~~presented.

NOTE 9.8.

OTHER ITEMS:

On January 27, 2017, the Company issued 33,333 shares of its common stock to its legal counsel, Olshan Frome Wolosky LLP ("Olshan"), in exchange for the cancellation of a portion of accrued and unpaid legal fees owed by the Company to Olshan.

The Company has ~~yet to make the~~accrued approximately $0.6 million for payment of dividend ~~payment~~ on its Series A Preferred Stock that was payable on March 31, 2017. The Company will pay the sole holder of the Series A Preferred Stock the accrued dividend in-kind pursuant to the terms of the Certificate of Designation contemporaneously with the filing of the Quarterly Report of Form 10-Qdue for the quarter ended March 31, ~~2017.~~2018. The Company has been unable to declare and pay such dividend due to a lack of available cash. The Company is working to raise capital from which it would be able to pay the dividend owed; however, there can be no assurance that the Company will be able to raise any capital or pay the dividend. The Company is also negotiating with its Series A Preferred Stock holders regarding the payment of the accrued dividend and to amend the terms of its Series A Preferred Stock.

NOTE ~~10.~~9.

BANK DEBT:

On July 1, 2016, the Company entered into ~~that certain~~a Loan and Security Agreement (the ~~"Loan Agreement"~~“Loan Agreement”), with its wholly-owned subsidiaries Ameri and Partners ~~Inc~~Inc. and ~~Bellsoft, Inc.,~~Ameri Georgia, as borrowers (the ~~"Borrowers"~~“Borrowers”), the Company and its wholly-owned subsidiaries Linear Logics, Corp. and WinHire ~~Inc~~Inc. (dissolved in March 2017) serving as guarantors, the ~~Company's~~Company’s former Chief Executive Officer, ~~Giri Devanur,~~ serving as a validity guarantor, and Sterling National Bank, N.A. (as lender and as agent, ~~"Sterling"~~“Sterling”). The Company joined ~~DCM,~~Ameri California, Virtuoso and ~~ATCG~~Ameri Arizona as borrowers under the Loan Agreement following their respective acquisition.

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Under the Loan Agreement, the Borrowers can borrow up to an aggregate of $10 million, which includes up to $8 million in principal for revolving loans (the ~~"Revolving Loans"~~“Revolving Loans”) for general working capital purposes, up to $2 million in principal pursuant to a term loan (the ~~"Term Loan"~~“Term Loan”) for the purpose of a permitted business acquisition and up to $200,000 for letters of credit. A portion of the proceeds of the Loan Agreement were also used to repay the November 20, 2015 credit facility that was entered into between the Company, its wholly-owned subsidiary ~~Bellsoft, Inc. (Ameri Georgia)~~Ameri Georgia and Federal National Payables, Inc.

The maturity of the loans under the Loan Agreement are as follows:

Revolving Loan Maturity Date: July 1, 2019; provided, however, that the Revolving Loan Maturity Date will extend and renew automatically for successive one-year terms on each anniversary of the initial Revolving Loan Maturity Date (each an ~~"Anniversary Date"~~“Anniversary Date”) thereafter, unless not less than sixty (60) days prior to any such Anniversary Date, written notice of non-renewal is given by either party to the other, in which case the Revolving Loan Maturity Date will be such next Anniversary Date.

Term Loan Maturity Date: The earliest of (a) the date following acceleration of the Term Loan and/or the Revolving Loans; (b) the Revolving Loan Maturity Date; or (c) July 1, 2019.

Interest under the Loan Agreement is payable monthly in arrears and accrues as follows:

~~(a)~~

~~in the case of Revolving Loans, a rate per annum equal to the sum of (i) the Wall Street Journal Prime Rate plus (ii) 2.00%;~~

~~(b)~~

~~in the case of the Term Loan, a rate per annum equal to the sum of (i) the Wall Street Journal Prime Rate plus (ii) 3.75%; and~~

~~(c)~~

~~in the case of other obligations of the Borrowers, a rate per annum equal to the sum of (i) the greater of (A) 3.25% or (B) Wall Street Journal Prime Rate plus (ii) 3.75%.~~

~~The Loan Agreement also requires the payment of certain fees, including, but not limited to letter of credit fees and an unused Revolving Loans fee.~~

The Loan Agreement contains financial and other covenant requirements, including, but not limited to, financial covenants that require the Borrowers to not permit capital expenditures above $150,000 in any fiscal year, maintain a fixed charge coverage ratio of not less than 2.00 to 1.00 and maintain certain debt to EBITDA ratios. The Loan Agreement also requires the Company and Borrowers to obtain Sterling's consent before making any permitted acquisitions. The amounts borrowed by the Borrowers under the Loan Agreement are guaranteed by the guarantors, and the Loan Agreement is secured by substantially all of the Borrowers’ assets.

The principal amount of the Term Loan will be repaid as follows: (i) equal consecutive monthly installments in the amount of $33,333.33 each, paid on the first day of each calendar month and (ii) one final payment of the entire remaining principal balance, together with all accrued unpaid interest on the Term Loan maturity date.

To date, the Company is not in conformance with the financial covenants contained in its Loan Agreement with Sterling National Bank. The Company received a waiver from Sterling National Bank for its non-compliance with the Loan Agreement through March 31, 2017 in exchange for the payment of a fee of $5,000. The Company is currently negotiating a waiver with Sterling National Bank to waive the Company's compliance with the Loan Agreement during the second quarter of 2017 in exchange for the payment of an additional fee that is to be determined. The Company does not expect to be in compliance with the terms of the Loan Agreement following the conclusion of the terms of the waivers granted by Sterling National Bank. The Company is continuing to work with Sterling National Bank to address its non-compliance.

Interest paid during the period ended March 31, 2017 amounted to $79,933 Principal repaid on the term loan during the period ended March 31, 2017 was $100,000. The short term and long term loan outstanding balances on the term loan as of March 31, 2017 is $399,996 and $1,023,474 respectively. The revolving line of credit outstanding balance as of March 31, 2017 was $2,440,971.

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Bigtech, which was acquired as of July 1, 2016, had a term loan of $17,637 and a line of credit for $373,040 as of March 31, 2017. The Bigtech line of credit is with an Indian bank, HDFC Bank Limited and was entered into on June 3, 2015 for Bigtech’s working capital requirements. The line of credit is for up to $416,667 with an interest rate of 11.85% per annum and maturity in June 2020. The Bigtech term loan accrues interest at the rate of 10.30% per annum and matures in 2020. Both the term loan and the line of credit were already in place when the Company acquired Bigtech. Interest paid during the period ended March 31,2017 amounted to $10,873 for the term loan and line of credit held by Bigtech.

~~NOTE 11.~~

~~CONVERTIBLE NOTES:~~

On March 7, 2017, we completed the sale and issuance of 8% Convertible Unsecured Promissory Notes (the “2017 Notes”) for aggregate proceeds to us of $1,250,000 from four accredited investors, including one of the Company's directors, Dhruwa N. Rai. The 2017 Notes were issued pursuant to Securities Purchase Agreements between the Company and each investor. The 2017 Notes bear interest at 8% per annum until maturity in March 2020, with interest being paid annually on the first, second and third anniversaries of the issuance of the 2017 Notes beginning in March 2018. From and after an event of default and for so long as the event of default is continuing, the 2017 Notes will bear default interest at the rate of 10% per annum. The 2017 Notes can be prepaid by us at any time without penalty.

The 2017 Notes are convertible into shares of our common stock at a conversion price of (i) in the event that any registration statement for the public offering of common stock filed by the Company with the SEC in connection with an uplisting to a national stock exchange is declared effective by the SEC on or prior to December 31, 2017, such price per share that is equal to 68% of the price per share of common stock offered and sold pursuant to such registration statement, or (ii) if no such registration statement is declared effective by December 31, 2017, such price per share that is equal to the weighted average closing price per share of the Company's common stock for the 20 trading days immediately preceding December 31, 2017, subject to adjustment under certain circumstances. The 2017 Notes rank junior to our secured credit facility with Sterling National Bank. The 2017 Notes also include certain negative covenants including, without the investors' approval, restrictions on dividends and other restricted payments and reclassification of its stock.

~~NOTE 12.~~

~~COMMITMENTS AND CONTINGENCIES:~~

~~Operating Leases~~

The Company's principal facility is located in Princeton, New Jersey. The Company also leases office space in various locations with expiration dates between 2016 and 2020. The lease agreements often include leasehold improvement incentives, escalating lease payments, renewal provisions and other provisions which require the Company to pay taxes, insurance, maintenance costs, or defined rent increases. All of the Company's leases are accounted for as operating leases. Rent expense is recorded over the lease terms on a straight-line basis. Rent expense was $62,878 and $26,222 for the three months ended March 31, 2017 and 2016, respectively. The increase during the comparative periods is due to the addition of office space through the acquisition of DCM, Virtuoso, Bigtech and ATCG.

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~~ITEM 2.~~

~~MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS~~

The following information should be read in conjunction with the information contained in the Unaudited Condensed Consolidated Financial Statements and notes thereto appearing elsewhere in this Quarterly Report on Form 10-Q. This Quarterly Report on Form 10-Q contains forward-looking statements that involve risks and uncertainties. See "Risk Factors" and "Special Note Regarding Forward-Looking Statements" included elsewhere herein.

~~We use the terms "we," "our," "us," "AMERI" and "the Company" in this report to refer to AMERI HOLDINGS, Inc. and its wholly-owned subsidiaries.~~

~~Company History~~

We were incorporated under the laws of the State of Delaware in February 1994 as Spatializer Audio Laboratories, Inc., which was a shell company immediately prior to the Merger. On May 26, 2015, we completed the Merger, in which we caused Ameri100 Acquisition, Inc., a Delaware corporation and our newly created, wholly owned subsidiary, to be merged with and into Ameri and Partners (dba Ameri100), a Delaware corporation. As a result of the Merger, Ameri and Partners became our wholly owned operating subsidiary. The Merger was consummated under Delaware law, pursuant to the Merger Agreement, and in connection with the Merger we changed our name to AMERI Holdings, Inc. We are headquartered in Princeton, New Jersey.

~~Overview~~

~~We specialize in delivering SAP~~^TM cloud, digital and enterprise services to clients worldwide. Our SAP focus allows us to provide technological solutions to a broad and growing base of clients. We are headquartered in Princeton, NJ, and we have offices across the United States, which are supported by offices in India. Our model inverts the conventional global delivery model wherein offshore information technology ("IT") service providers are based abroad and maintain a minimal presence in the United States. With a strong SAP focus, our client partnerships anchor around SAP cloud services, artificial intelligence, internet of things and robotic process automation. We pursue an acquisition strategy that seeks to disrupt the established business model of offshore IT service providers.

We generate revenue by providing consulting services under written service contracts with our customers. The service contracts we enter into generally fall into two categories: (1) time-and-materials contracts and (2) fixed-price contracts.

When a customer enters into a time-and-materials or fixed-price (or a periodic retainer-based) contract, the revenue is recognized in accordance with the deliverables of each contract. If the deliverables involve separate units of accounting, the consideration from the arrangement is measured and allocated to the separate units, based on vendor specific objective evidence of the value for each deliverable.

The revenue under time and materials contracts is recognized as services rendered and performed at contractually agreed upon rates. Revenue pursuant to fixed-price contracts is recognized under the proportional performance method of accounting. We routinely evaluate whether revenue and profitability should be recognized in the current period. We estimate the proportional performance on fixed-price contracts on a monthly basis utilizing hours incurred to date as a percentage of total estimated hours to complete the project.

~~For the three months ended March 31, 2017 and March 31,2016, sales to five major customers, accounted for 38.51% and 60.15% of our total revenue, respectively~~.

We continue to explore strategic alternatives to improve the market position and profitability of our product and service offerings in the marketplace, generate additional liquidity for the Company, and enhance our valuation. We expect to pursue our goals during the next twelve months through organic growth and through other strategic alternatives. Some of these alternatives have included, and could continue to include, selective acquisitions. The Company has obtained financing and additional capital from the sale of equity and incurrence of indebtedness in the past, and continues to consider capital raising and financing from the sale of various types of equity and incurrence of indebtedness to provide capital for our business plans and operations in the future. The Company has also provided, and may from time to time in the future provide, information to interested parties.

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~~Matters that May or Are Currently Affecting Our Business~~

~~The main challenges and trends that could affect or are affecting our financial results include:~~

~~Our ability to enter into additional technology-management and consulting agreements, to diversify our client base and to expand the geographic areas we serve;~~

~~Our ability to attract competent, skilled professionals and on-demand technology partners for our operations at acceptable prices to manage our overhead;~~

~~Our ability to acquire other technology services companies and integrate them with our existing business;~~

~~Our ability to raise additional equity capital, if and when we needed; and~~

~~Our ability to control our costs of operation as we expand our organization and capabilities.~~

~~RESULTS OF OPERATIONS~~

~~Results of Operations for the Three Months Ended March 31, 2017 Compared to Three Months Ended March 31, 2016~~

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~~Revenues~~

Revenues for the three months ended March 31, 2017 increased by 76% as compared to the three months ended March 31, 2016. The increase in revenue was primarily attributable to additional revenues from our acquisitions, with DCM contributing 73% percent of the total increase and ATCG, Virtuoso and Bigtech contributing 15%, 4% and 4%, respectively, of the total increase. Our existing customers accounted for the remaining 4% of the total increase in revenues.

~~Gross Margin~~

Our gross margin was 27% for the three months ended March 31, 2017, as compared to 18% for the three months ended March 31, 2016. The improved gross margin is due to additional project based revenues. Our target gross margins are anticipated in the range of 25% to 30% based on the mix of project revenues and professional service revenues. However, there is no assurance that we will achieve the anticipated gross margin.

During first quarter of 2016, the Company erroneously classified approximately $1.9 million of expenses as general and administrative expenses which should have been classified as cost of revenue. The Company has corrected this error in this quarterly report. The reclassification did not change the Company’s net income or loss for the periods reported.

~~Selling and Marketing Expenses~~

Selling and marketing expenses were $332,310 for the three months ended March 31, 2017, compared to $31,350 for the three months ended March 31, 2016. The increase in selling and marketing expenses was directly attributable to our acquisitions, with 82% of the increase attributable to DCM, 6% to ATCG and the remaining 12% of the total increase attributable to increased marketing expenses of Ameri and Partners and Ameri Georgia.

~~General and Administration Expenses~~

General and Administration ("G&A") expenses include all costs, including rent costs, which are not directly associated with revenue-generating activities, as well as the non-cash expense for stock based compensation. These include employee costs, corporate costs and facilities costs. Employee costs include administrative salaries and related employee benefits, travel, recruiting and training costs. Corporate costs include reorganization costs, legal, accounting and outside consulting fees. Facilities costs primarily include rent and communications costs.

~~G&A expenses for the three months ended March 31, 2017 were $2,701,145 as compared to $1,718,590~~ ~~for the three months ended March 31, 2016. $464,750 of the increase was attributable to our stock based compensation expense due to grants made to our employees and $517,805~~ ~~was attributable to additional non-billable staff we added in connection with our acquisitions.~~

~~During first quarter of 2016, the Company erroneously classified approximately $1.9 million~~ of expenses as general and administrative expenses which should have been classified as cost of revenue. The Company has corrected this error in this quarterly report. The reclassification did not change the Company’s net income or loss for the periods reported.

~~Acquisition Related Expenses~~

Acquisition related expenditures of $209,344 and $375,405 occurred during the three months ended March 31, 2017 and March 31, 2016, respectively. These expenditures included legal fees, integration expenses and other acquisition related costs. The decrease is due to the decline in acquisition related activities in the first quarter of 2017 as compared to the first quarter of 2016.

~~Depreciation and Amortization~~

Depreciation and amortization expense amounted to $689,100 for the three months ended March 31, 2017, as compared to $111,628 for the three months ended March 31, 2016. We capitalized the customer lists acquired during various acquisitions between April 2016 and March 31 2017, resulting in increased amortization costs. The customer lists from each acquisition are amortized over a period of 60 months.

~~Operating Income~~

Our operating income (loss) was (630,549) for the three months ended March 31, 2017, as compared to (981,316) for the three months ended March 31, 2016. This reduction was mainly due to increased gross margins.

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~~Interest Expense~~

Our interest expense for the three months ended March 31, 2017 was $90,806 as compared to $113,746 for the three months ended March 31, 2016. The decrease is mainly due to changes in interest rates charged by our lenders.

~~Liquidity and Capital Resources~~

~~Our cash position was $1,812,600 as of March 31, 2017, as compared to $1,379,887 as of December 31, 2016, an increase of $432,713 primarily due to the sale and issuance of the 2017 Notes.~~

Cash used for operating activities was $837,933 during the three months ended March 31, 2017 and was primarily a result of net changes in working capital requirements. Cash used in investing activities was $321,963 during the three months ended March 31, 2017 primarily due to acquisitions of ATCG. Cash provided by financing activities was $1,592,609 during the three months ended March 31, 2017 and was attributable to the issuance of additional shares for our ATCG acquisition, the 2017 Notes and increased borrowing under our line of credit with Sterling National Bank.

On July 1, 2016, the Company entered into that certain Loan and Security Agreement (the "Loan Agreement"), with its wholly-owned subsidiaries Ameri and Partners Inc and Ameri Georgia, as borrowers (the "Borrowers"), the Company and its wholly-owned subsidiaries Linear Logics, Corp. and WinHire Inc serving as guarantors, the Company's Chief Executive Officer, Giri Devanur, serving as a validity guarantor, and Sterling National Bank, N.A. (as lender and as agent, "Sterling"). The Company joined DCM, Virtuoso and ATCG as borrowers under the Loan Agreement following their respective acquisition.

Under the Loan Agreement, the Borrowers can borrow up to an aggregate of $10 million, which includes up to $8 million in principal for revolving loans (the "Revolving Loans") for general working capital purposes, up to $2 million in principal pursuant to a term loan (the "Term Loan") for the purpose of a permitted business acquisition and up to $200,000 for letters of credit. A portion of the proceeds of the Loan Agreement were also used to repay the November 20, 2015 credit facility that was entered into between the Company, its wholly-owned subsidiary Bellsoft, Inc. (Ameri Georgia) and Federal National Payables, Inc.

~~The maturity of the loans under the Loan Agreement are as follows:~~

Revolving Loan Maturity Date: July 1, 2019; provided, however, that the Revolving Loan Maturity Date will extend and renew automatically for successive one-year terms on each anniversary of the initial Revolving Loan Maturity Date (each an "Anniversary Date") thereafter, unless not less than sixty (60) days prior to any such Anniversary Date, written notice of non-renewal is given by either party to the other, in which case the Revolving Loan Maturity Date will be such next Anniversary Date.

~~Term Loan Maturity Date: The earliest of (a) the date following acceleration of the Term Loan and/or the Revolving Loans; (b) the Revolving Loan Maturity Date; or (c) July 1, 2019.~~

~~Interest under the Loan Agreement is payable monthly in arrears and accrues as follows:~~

(a)

in the case of Revolving Loans, a rate per annum equal to the sum of (i) the Wall Street Journal Prime Rate plus (ii) 2.00%;

(b)

in the case of the Term Loan, a rate per annum equal to the sum of (i) the Wall Street Journal Prime Rate plus (ii) 3.75%; and

(c)

in the case of other obligations of the Borrowers, a rate per annum equal to the sum of (i) the greater of (A) 3.25% or (B) Wall Street Journal Prime Rate plus (ii) 3.75%.

The Loan Agreement also requires the payment of certain fees, including, but not limited to letter of credit fees and an unused Revolving Loans fee.

The Loan Agreement contains financial and other covenant requirements, including, but not limited to, financial covenants that require the Borrowers to not permit capital expenditures above $150,000 in any fiscal year, maintain a fixed charge coverage ratio of not less than 2.00 to 1.00 and maintain certain debt to EBITDA ratios. The Loan Agreement also requires the Company and Borrowers to obtain ~~Sterling's~~Sterling’s consent before making any permitted acquisitions. The amounts borrowed by the Borrowers under the Loan Agreement are guaranteed by the guarantors, and the Loan Agreement is secured by substantially all of the Borrowers’ assets.

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~~To date,~~On August 28, 2017, pursuant to an amendment of the ~~Company is~~Loan Agreement, we and certain of our subsidiaries obtained an incremental term loan from Sterling National Bank in the amount of $343,200.58, which amount was an addition to and comprised a part of the existing Term Loan under the existing Loan Agreement. In January 2018, we repaid the incremental term loan.

We are not in ~~conformance~~compliance with ~~the financial~~various covenants contained in ~~its~~the Loan Agreement with Sterling National Bank. ~~The Company~~We received ~~a waiver~~waivers from Sterling National Bank for ~~its~~our non-compliance with the Loan Agreement ~~through~~for the quarters ended March 31, 2017, June 30, 2017, September 30, 2017 and December 31, 2017 in exchange for the payment of a fee of ~~$5,000. The Company is currently negotiating~~$5,000 for each quarterly waiver. As a ~~waiver~~result of our ongoing non-compliance with Sterling National Bank to waive the Company's compliance with the Loan Agreement during the second quarter of 2017 in exchange for the payment of an additional fee that is to be determined. The Company does not expect to be in compliance with the termscovenants of the Loan Agreement, ~~following the conclusion of the terms of the waivers granted by Sterling National Bank. The Company is continuing to work with~~ Sterling National Bank notified us that it would not provide any further waivers for such non-compliance and advised us to ~~address~~find a new lender. Pursuant to its ~~non-compliance.~~notice letter, Sterling National Bank has indicated it may continue to provide the Company with financing while the Company looks for a new lender; however, the bank has reserved its rights to exercise all remedies available to it, including, but not limited to, declining to advance further funds under the Revolving Loans, terminating all loans and accelerating all obligations owed to it, and retaining the Company’s accounts receivable. We are in the process of seeking a new lender and/or financing sources to replace Sterling National Bank, but there can be no assurance that Sterling National Bank will not stop advancing funds under the Loan Agreement or terminate its loans and accelerate their repayment prior to our finding replacement financing or that we will be able to find any new financing at all.

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If Sterling National Bank elects to claim all amounts outstanding to be immediately due and payable and terminate all commitments to extend further credit, we may be unable repay the amounts due. If that were to occur, Sterling National Bank could proceed against the collateral granted to it to secure our indebtedness to it. We pledged substantially all of our assets as collateral under the Loan Agreement. The Loan Agreement is also supported by a validity guaranty from our former Chief Executive Officer. If Sterling National Bank accelerates the repayment of our loans, there is no assurance that we will have sufficient assets to repay the loans. A default under the Loan Agreement may also result in an event of default under the 2017 Notes (as defined below). We are currently looking for additional sources of financing, however there is no guarantee that we will have additional financing available to us.

Interest paid on the Term Loan during the three months ended March 31, 2018 amounted to $32,348. Principal repaid on the ~~term loan~~Term Loan during the ~~period~~three months ended March 31, ~~2017~~2018 was ~~$100,000.~~$443,200. The short term and ~~long term loan~~long-term outstanding balances on the ~~term loan as of March 31,2017 are $399,996 and $1,023,474, respectively. The revolving line of credit outstanding balance~~Term Loan as of March 31, ~~2017~~2018 were $400,000 and $1,023,466, respectively. The outstanding balance of the Revolving Loans as of March 31, 2018 was ~~$2,440,971.~~$2,942,510.

Our Indian subsidiary Bigtech ~~which was acquired as of July 1, 2016,~~ had a term loan of ~~$17,637~~$11,750 and a line of credit for ~~$373,040~~$322,298 as of March 31, ~~2017.~~2018. The Bigtech line of credit is with an Indian bank, HDFC Bank Limited, and was entered into on ~~June~~September 3, 2015 for Bigtech’s working capital requirements. The line of credit is for up to $416,667 with an interest rate of 11.85% per annum and maturity in June 2020. The Bigtech term loan accrues interest at the rate of 10.30% per annum and matures in 2020. Both the term loan and the line of credit were already in place when the Company acquired Bigtech. Interest paid during the three months ended March 31, 2018 amounted to $390 for the term loan and $8,723 line of credit held by Bigtech.

NOTE 10.

CONVERTIBLE NOTES:

On March 7, 2017, we completed the sale and issuance of ~~the 2017~~8% Convertible Unsecured Promissory Notes (the “2017 Notes”) for aggregate proceeds to us of ~~$1,250,000~~$1.25 million from four accredited investors, including one of the ~~Company's directors,~~Company’s then-directors, Dhruwa N. ~~Rai.~~Rai, and David Luci, who became a director of the Company in February 2018. The 2017 Notes were issued pursuant to Securities Purchase Agreements between the Company and each investor. The 2017 Notes bear interest at 8% per annum until maturity in March 2020, with interest being paid annually on the first, second and third anniversaries of the issuance of the 2017 Notes beginning in March 2018. From and after an event of default and for so long as the event of default is continuing, the 2017 Notes will bear default interest at the rate of 10% per annum. The 2017 Notes can be prepaid by us at any time without penalty. As of May 5, 2018, we were not current in the payment of interest on one of the 2017 Notes and were in discussion with the holder of the 2017 Note for which we are not current in the payment of interest to negotiate longer payment terms until we are able to raise more capital.

The 2017 Notes are convertible into shares of our common stock at a conversion price equal to $2.80. The holders of ~~(i)~~the 2017 Notes have the right, at their option, at any time and from time to time to convert, in part or in whole, the ~~event that any registration statement for~~outstanding principal amount and all accrued and unpaid interest under the ~~public offering~~2017 Notes into shares of the Company’s common stock ~~filed by~~at the Company with the SEC in connection with an uplisting to a national stock exchange is declared effective by the SEC on or prior to December 31, 2017, such price per share that is equal to 68% of the price per share of common stock offered and sold pursuant to such registration statement, or (ii) if no such registration statement is declared effective by December 31, 2017, such price per share that is equal to the weighted average closing price per share of the Company's common stock for the 20 trading days immediately preceding December 31, 2017, subject to adjustment under certain circumstances. conversion price.

The 2017 Notes rank junior to our secured credit facility with ~~Sterling.~~Sterling National Bank. The 2017 Notes also include certain negative covenants including, without the ~~investors'~~investors’ approval, restrictions on dividends and other restricted payments and reclassification of its stock.

NOTE 11.

COMMITMENTS AND CONTINGENCIES:

Operating Leases

The Company’s principal facility is located in Princeton, New Jersey. The Company also leases office space in various locations with expiration dates between 2016 and 2021. The lease agreements often include leasehold improvement incentives, escalating lease payments, renewal provisions and other provisions which require the Company to pay taxes, insurance, maintenance costs, or defined rent increases. All of the Company’s leases are accounted for as operating leases. Rent expense is recorded over the lease terms on a straight-line basis. Rent expense was $73,310 and $71,138 for the three months ended March 31, 2018 and 2017, respectively. The increase during the comparative periods is due to the addition of office space through the acquisition of Ameri Arizona, Bigtech and Ameri California.

The Company has entered into an operating lease for its primary office facility in Princeton, New Jersey, which expires in July 2019. The future minimum rental payments under these lease agreements are as follows:

Year ending December 31,	Amount
2018		45,613
2019		67,415
2020		70,333
2021		7,371
Total	$	190,732

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NOTE 12.

FAIR VALUE MEASUREMENT:

The group’s financial instruments consist primarily of cash and cash equivalent, accounts receivable, accounts payable, contingent consideration liability and accrued liabilities. The carrying amounts of accounts receivable, accounts payable, cash and cash equivalents and accrued liabilities are considered to be the same as their fair value, due to their short-term nature.

Fair value is defined as the exchange price that would be received for an asset or an exit price paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The current accounting guidance for fair value measurements defines a three-level valuation hierarchy for disclosures as follows:

Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities;

Level 2 inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument; and

Level 3 inputs are unobservable inputs based on our own assumptions used to measure assets and liabilities at fair value.

A financial asset or liability’s classification within the hierarchy is determined based upon the lowest level input that is significant to the fair value measurement.

The following table sets forth the financial assets, measured at fair value, by level within the fair value hierarchy as of September 30, 2017 and December 31, 2016:

	March 31, 2018		December 31, 2017

Level 3
Contingent consideration	$	1,493,322	$	3,374,660

The following table presents the change in level 3 instruments:

	Three Months Ended March 31, 2018

Opening balance		3,374,660
Paid/settlements		(1,881,338	)
Closing balance		1,493,322

Contingent consideration pertaining to the acquisitions referred to in note 3 above as of March 31, 2018 has been classified under level 3 as the fair valuation of such contingent consideration has been done using one or more of the significant inputs which are not based on observable market data.

The fair value of the contingent consideration was estimated using a discounted cash flow technique with significant inputs that are not observable in the market. The significant inputs not supported by market activity included our probability assessments of expected future cash flows related to the acquisitions during the earn-out period, appropriately discounted considering the uncertainties associated with the obligation, and calculated in accordance with the respective terms of the share purchase agreements.

NOTE 13.

NON-CONTROLLING INTEREST:

The subsidiaries of the Company are all direct or indirect wholly-owned subsidiaries, and no non-controlling interest is held by the Company as of March 31, 2018.

In prior periods when the Company held non-controlling interests in one of its subsidiaries, the Company attributed relevant gains and losses to such non-controlling interests in each financial year. During the three months ended March 31, 2018 and 2017 the profit attributable to the holders of non-controlling interests amounted to $0 and $3,516, respectively, as the Company no longer held any non-controlling interests following its 2017 fiscal year.

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NOTE 14.

RESTRUCTURING AND STREAMLINING COSTS:

During the quarter ended March 31, 2018, the Company streamlined its operations by eliminating redundant positions across its acquired entities, which resulted in a restructuring charge of approximately $127,100.

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ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The accompanying unaudited condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements (and notes thereto) included in our Annual Report on Form 10-K for the year ended December 31, 2017. This Quarterly Report on Form 10-Q contains forward-looking statements that involve risks and uncertainties. See “Special Note Regarding Forward-Looking Statements” included elsewhere herein.

We use the terms “we,” “our,” “us,” “AMERI” and “the Company” in this report to refer to AMERI Holdings, Inc. and its wholly-owned subsidiaries.

Company History

We were incorporated under the laws of the State of Delaware in February 1994 as Spatializer Audio Laboratories, Inc., which was a shell company immediately prior to our completion of a “reverse merger” transaction on May 26, 2015, in which we caused Ameri100 Acquisition, Inc., a Delaware corporation and our newly created, wholly owned subsidiary, to be merged with and into Ameri and Partners Inc (“Ameri and Partners”), a Delaware corporation (the “Merger”). On May 26, 2015, we completed the Merger, in which we caused Ameri100 Acquisition, Inc., a Delaware corporation and our newly created, wholly owned subsidiary, to be merged with and into Ameri and Partners (doing business as Ameri100), a Delaware corporation. As a result of the Merger, Ameri and Partners became our wholly owned operating subsidiary. The Merger was consummated under Delaware law, pursuant to an Agreement of Merger and Plan of Reorganization, dated as of May 26, 2015 (the “Merger Agreement”), and in connection with the Merger we changed our name to AMERI Holdings, Inc. We are headquartered in Princeton, New Jersey.

Overview

We specialize in delivering SAP cloud, digital and enterprise services to clients worldwide. Our SAP focus allows us to provide technological solutions to a broad and growing base of clients. Our model inverts the conventional global delivery model wherein offshore IT service providers are based abroad and maintain a minimal presence in the United States. With a strong SAP focus, our client partnerships anchor around SAP cloud and digital services. We pursue an acquisition strategy that seeks to disrupt the established business model of offshore IT service providers.

We partnered with NEC Corporation of America (NEC), in February 2017, to offer SAP HANA Migration services. Through this partnership, the Company will offer solutions to its clients aspiring to make the transition from SAP ECC (on-premise) applications to SAP HANA applications. NEC is a leading technology integrator providing integrated communications, analytics, security, biometrics and technology solutions.

For the three months ended March 31, 2018 and March 31, 2017, sales to five major customers accounted for 39% and 41% of our total revenue, respectively. Two of our customers contributed 13% and 11% of our revenue for the three months ended March 31, 2018. For the comparable period in 2017, two customers contributed 11% and 10% of our revenue, respectively.

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Matters that May or Are Currently Affecting Our Business

The main challenges and trends that could affect or are affecting our financial results include:

Our ability to raise additional capital, if and when needed;

Our ability to enter into additional technology-management and consulting agreements, to diversify our client base and to expand the geographic areas we serve;

Our ability to attract competent, skilled professionals and on-demand technology partners for our operations at acceptable prices to manage our overhead;

Our ability to acquire other technology services companies and integrate them with our existing business; and

Our ability to control our costs of operation as we expand our organization and capabilities.

RESULTS OF OPERATIONS

Results of Operations for the Three Months Ended March 31, 2018 Compared to the Three Months Ended March 31, 2017

	Three Months Ended March 31, 2018			Three Months Ended March 31, 2017

Revenue	$	11,063,010		$	12,340,927
Cost of revenue		8,720,125			9,039,577
Gross profit		2,342,885			3,301,350

Operating expenses
Selling, general and administration		2,878,942			3,033,455
Acquisition related expenses		10,000			209,344
Depreciation and amortization		820,736			689,100
Operating expenses		3,709,678			3,931,899
Operating (loss)		(1,366,793	)		(630,549	)
Interest expenses		(211,159	)		(90,806	)
Others, net		6,199			(4,149	)
Total other income (expenses)		(204,960	)		(94,955	)
(Loss) before income taxes		(1,571,753	)		(725,504	)
Tax benefit / (provision)		-			-
(Loss) after income taxes		(1,571,753	)		(725,504	)
Net income attributable to non-controlling interest		-			3,516
Net (loss) attributable to the Company		(1,571,753	)		(721,988	)
Dividend on preferred stock		(557,417	)		(499,965	)
Net (loss) attributable to common stock holders		(2,129,170	)		(1,221,953	)
Other comprehensive income (loss), net of tax
Foreign exchange translation		29,791			5,335
Comprehensive (loss)	$	(2,099,379	)	$	(1,216,618	)
Comprehensive income/(loss) attributable to the Company		(2,099,379	)		(1,220,134	)
Comprehensive income/(loss) attributable to the non-controlling interest		-			3,516
		(2,099,379	)		(1,216,618	)

Basic income (loss) per share	$	(0.11	)	$	(0.09	)
Diluted income (loss) per share	$	(0.11	)	$	(0.09	)

Basic weighted average number of common shares outstanding		18,654,197			14,094,536
Diluted weighted average number of common shares outstanding		18,654,197			14,094,536

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Revenues

Revenues for the three months ended March 31, 2018 decreased by $1.28 million, or 10%, as compared to the three months ended March 31, 2017, mainly due to a large project in the first quarter of 2017 for which there was no comparable large project in the three months ended March 31, 2018.

For the three months ended March 31, 2018 and March 31, 2017, sales to five major customers accounted for approximately 39% and 41% of our total revenue, respectively. For the three months ended March 31, 2018, two of our customers contributed 13% and 11% of our revenue, and for the three months ended March 31, 2017, two of our customers contributed 11% and 10% of our revenue. We derived most of our revenues from our customers located in North America for the three months ended March 31, 2018 and March 31, 2017.

Gross Margin

Our gross margin was 21% for the three months ended March 31, 2018, as compared to 27% for the three months ended March 31, 2017. The reduction in gross margin was due to ending of a large project in 2017 which carried a higher margin.

Our target gross margins in future periods are anticipated to be in the range of 20% to 25% based on a mix of project revenues and professional service revenues. However, there is no assurance that we will achieve such anticipated gross margins.

Selling, General and Administration Expenses

Selling, general and administration (“SG&A”) expenses include all costs, including rent costs, which are not directly associated with revenue-generating activities, as well as the non-cash expense for stock-based compensation. These include employee costs, corporate costs and facilities costs. Employee costs include administrative salaries and related employee benefits, travel, recruiting and training costs. Corporate costs include reorganization costs, legal, accounting and outside consulting fees. Facilities costs primarily include rent and communications costs.

SG&A expenses for the three months ended March 31, 2018 were $2.9 million, as compared to $3.0 million for the three months ended March 31, 2017. SG&A expenses, excluding stock-based compensation expenses, restructuring expenses and the full quarter effect of Ameri California which was only partially included in the first quarter of 2017, decreased by approximately $400,000 in the three months ended March 31, 2018 as the Company continues to restructure and streamline its acquired entities.

Depreciation and Amortization

Depreciation and amortization expense amounted to $0.8 million for the three months ended March 31, 2018, as compared to $0.7 million for the three months ended March 31, 2017. We capitalized the customer lists acquired during various acquisitions, resulting in increased amortization costs. The customer lists from each acquisition are amortized over a period of 60 months.

Operating Loss

Our operating loss was $1.4 million for the three months ended March 31, 2018, as compared to $0.6 million for the three months ended March 31, 2017.

Interest Expense

Our interest expense for the three months ended March 31, 2018 was $0.2 million as compared to $0.1 million for the three months ended March 31, 2017. The increase was mainly due to additional interest expenses incurred on the 2017 Notes and promissory notes issued to the former stockholders of Ameri California in March 2017.

Income Taxes

We recorded no income tax benefit or provision for the three months ended March 31 2018 or March 31 2017.

Acquisition Related Expenses

We had acquisition related expenditures of $0.01 million and $0.2 million during the three months ended March 31, 2018 and for March 31, 2017, respectively. These expenses included legal, professional services, valuation and due diligence services and other acquisition related fees incurred in connection with our acquisitions. The decrease was due to the decline in acquisition related activities in the three months ended March 31, 2018 as compared to the year ended March 31, 2017.

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Liquidity and Capital Resources

Our cash position was $1.8 million as of March 31, 2018, as compared to $4.9 million as of December 31, 2017, a decrease of $3.1 million primarily due to the use of funds towards working capital and earn-out payments.

Cash used for operating activities was $0.5 million during the three months ended March 31, 2018 and was primarily a result of net changes in working capital requirements. Cash used in investing activities was $1.0 million during the three months ended March 31, 2018. Cash used for financing activities was $1.6 million during the three months ended March 31, 2018.

The Company has been unable to make payments in respect of certain outstanding notes, certain earn-out payments that are due and a dividend on its Series A Preferred stock because of a lack of available cash. The Company is working to raise capital from which it would be able to pay the amounts owed; however, there can be no assurance that the Company will be able to raise any capital or pay the amounts owed.

Public Offering

On November 21, 2017, we completed an underwritten public offering of 1,475,000 shares of our common stock, at a price of $4.115 per share, and warrants to purchase up to an aggregate of 1,475,000 shares of our common stock, at a price of $0.01 per warrant. The warrants have a per share exercise price of $4.115, were exercisable as of November 21, 2017 and expire five years from that date. The gross proceeds to us from this offering were approximately $6,084,375, before deducting underwriting discounts and commissions and other estimated offering expenses. In connection with the offering, we uplisted our common stock from the OTCQB Marketplace to trading on The Nasdaq Capital Market under the ticker symbol “AMRH”, and we listed the publicly offered warrants for trading on The Nasdaq Capital Market under the ticker symbol “AMRHW”.

On January 24, 2018, we received confirmation from our transfer agent, Corporate Stock Transfer, Inc., which also serves as the warrant agent for the public warrant, that through such date certain holders of warrants had cumulatively exercised warrants for the purchase of a total of 153,060 shares of our common stock, at an exercise price of $4.115 per share, for gross proceeds to us of $629,841.90.

Liquidity Concerns

We incurred recurring losses as a result of costs and expenses related to our selling, general and administration activities. As of March 31, 2018, we had negative working capital of $15.2 million and cash of $1.8 million. Our principal sources of cash have included bank borrowings, the private placement of convertible notes and the public offering of securities. Our operating expenses are likely to continue to grow and, as a result, we will need to generate significant additional revenues to cover such expenses.

Our financial statements as of March 31, 2018 have been prepared under the assumption that we will continue as a going concern. Our ability to continue as a going concern is dependent upon our ability to raise additional funding through the issuance of equity or debt securities, as well as to attain further operating efficiencies and, ultimately, to generate additional revenues. Our financial statements do not include any adjustments that might result from the outcome of this uncertainty. We can give no assurances that additional capital that we are able to obtain, if any, will be sufficient to meet our needs. The foregoing conditions raise substantial doubt about our ability to continue our operations.

Available Credit Facility, Borrowings and Repayment of Debt

On July 1, 2016, the Company entered into a Loan and Security Agreement (the “Loan Agreement”), with its wholly-owned subsidiaries Ameri and Partners Inc. and Ameri Georgia, as borrowers (the “Borrowers”), the Company and its wholly-owned subsidiaries Linear Logics, Corp. and WinHire Inc. (dissolved in March 2017) serving as guarantors, the Company’s former Chief Executive Officer, serving as a validity guarantor, and Sterling National Bank, N.A. (as lender and as agent, “Sterling”). The Company joined Ameri California, Virtuoso and Ameri Arizona as borrowers under the Loan Agreement following their respective acquisition.

Under the Loan Agreement, the Borrowers can borrow up to an aggregate of $10 million, which includes up to $8 million in principal for revolving loans (the “Revolving Loans”) for general working capital purposes, up to $2 million in principal pursuant to a term loan (the “Term Loan”) for the purpose of a permitted business acquisition and up to $200,000 for letters of credit. A portion of the proceeds of the Loan Agreement were also used to repay the November 20, 2015 credit facility that was entered into between the Company, its wholly-owned subsidiary Ameri Georgia and Federal National Payables, Inc.

The maturity of the loans under the Loan Agreement are as follows:

Revolving Loan Maturity Date: July 1, 2019; provided, however, that the Revolving Loan Maturity Date will extend and renew automatically for successive one-year terms on each anniversary of the initial Revolving Loan Maturity Date (each an “Anniversary Date”) thereafter, unless not less than sixty (60) days prior to any such Anniversary Date, written notice of non-renewal is given by either party to the other, in which case the Revolving Loan Maturity Date will be such next Anniversary Date.

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Term Loan Maturity Date: The earliest of (a) the date following acceleration of the Term Loan and/or the Revolving Loans; (b) the Revolving Loan Maturity Date; or (c) July 1, 2019.

Interest under the Loan Agreement is payable monthly in arrears and accrues as follows:

(a)

in the case of Revolving Loans, a rate per annum equal to the sum of (i) the Wall Street Journal Prime Rate plus (ii) 2.00%;

(b)

in the case of the Term Loan, a rate per annum equal to the sum of (i) the Wall Street Journal Prime Rate plus (ii) 3.75%; and

(c)

in the case of other obligations of the Borrowers, a rate per annum equal to the sum of (i) the greater of (A) 3.25% or (B) Wall Street Journal Prime Rate plus (ii) 3.75%.

The Loan Agreement also requires the payment of certain fees, including, but not limited to letter of credit fees and an unused Revolving Loans fee.

The Loan Agreement contains financial and other covenant requirements, including, but not limited to, financial covenants that require the Borrowers to not permit capital expenditures above $150,000 in any fiscal year, maintain a fixed charge coverage ratio of not less than 2.00 to 1.00 and maintain certain debt to EBITDA ratios. The Loan Agreement also requires the Company and Borrowers to obtain Sterling’s consent before making any permitted acquisitions. The amounts borrowed by the Borrowers under the Loan Agreement are guaranteed by the guarantors, and the Loan Agreement is secured by substantially all of the Borrowers’ assets.

On August 28, 2017, pursuant to an amendment of the Loan Agreement, we and certain of our subsidiaries obtained an incremental term loan from Sterling National Bank in the amount of $343,200.58, which amount was an addition to and comprised a part of the existing Term Loan under the existing Loan Agreement. In January 2018, we repaid the incremental term loan.

We are not in compliance with the financial covenants contained in the Loan Agreement with Sterling National Bank. We received waivers from Sterling National Bank for our non-compliance with the Loan Agreement for the quarters ended March 31, 2017, June 30, 2017, September 30, 2017 and December 31, 2017 in exchange for the payment of a fee of $5,000 for each quarterly waiver. As a result of our ongoing non-compliance with covenants of the Loan Agreement, Sterling National Bank notified us that it would not provide any further waivers for such non-compliance and advised us to find a new lender. Pursuant to its notice letter, Sterling National Bank has indicated it may continue to provide the Company with financing while the Company looks for a new lender; however, the bank has reserved its rights to exercise all remedies available to it, including, but not limited to, declining to advance further funds under the Revolving Loans, terminating all loans and accelerating all obligations owed to it, and retaining the Company’s accounts receivable. We are in the process of seeking a new lender and/or financing sources to replace Sterling National Bank, but there can be no assurance that Sterling National Bank will not stop advancing funds under the Loan Agreement or terminate its loans and accelerate their repayment prior to our finding replacement financing or that we will be able to find any new financing at all.

If Sterling National Bank elects to claim all amounts outstanding to be immediately due and payable and terminate all commitments to extend further credit, we may be unable repay the amounts due. If that were to occur, Sterling National Bank could proceed against the collateral granted to it to secure our indebtedness to it. We pledged substantially all of our assets as collateral under the Loan Agreement. The Loan Agreement is also supported by a validity guaranty from our former Chief Executive Officer. If Sterling National Bank accelerates the repayment of our loans, there is no assurance that we will have sufficient assets to repay the loans. A default under the Loan Agreement may also result in an event of default under the 2017 Notes. We are currently looking for additional sources of financing, however there is no guarantee that we will have additional financing available to us.

Interest paid on the Term Loan during the three months ended March 31, 2018 amounted to $32,348. Principal repaid on the Term Loan during the three months ended March 31, 2018 was $443,200. The short term and long-term outstanding balances on the Term Loan as of March 31, 2018 were $400,000 and $1,023,466, respectively. The outstanding balance of the Revolving Loans as of March 31, 2018 was $2,942,510.

Our Indian subsidiary Bigtech had a term loan of $11,750 and a line of credit for $322,298 as of March 31, 2018. The Bigtech line of credit is with an Indian bank, HDFC Bank Limited, and was entered into on September 3, 2015 for Bigtech’s working capital requirements. The line of credit is for up to $416,667 with an interest rate of 11.85% per annum and maturity in June 2020. The Bigtech term loan accrues interest at the rate of 10.30% per annum and matures in 2020. Both the term loan and the line of credit were already in place when the Company acquired Bigtech. Interest paid during the three months ended March 31, 2018 amounted to $390 for the term loan and $8,723 line of credit held by Bigtech.

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On March 7, 2017, we completed the sale and issuance the 2017 Notes for aggregate proceeds to us of $1.25 million from four accredited investors, including one of the Company’s then-directors, Dhruwa N. Rai, and David Luci, who became a director of the Company in February 2018. The 2017 Notes were issued pursuant to Securities Purchase Agreements between the Company and each investor. The 2017 Notes bear interest at 8% per annum until maturity in March 2020, with interest being paid annually on the first, second and third anniversaries of the issuance of the 2017 Notes beginning in March 2018. From and after an event of default and for so long as the event of default is continuing, the 2017 Notes will bear default interest at the rate of 10% per annum. The 2017 Notes can be prepaid by us at any time without penalty. As of May 5, 2018, we were not current in the payment of interest on one of the 2017 Notes and were in discussion with the holder of the 2017 Note for which we are not current in the payment of interest to negotiate longer payment terms until we are able to raise more capital.

The 2017 Notes are convertible into shares of our common stock at a conversion price equal to $2.80. The holders of the 2017 Notes have the right, at their option, at any time and from time to time to convert, in part or in whole, the outstanding principal amount and all accrued and unpaid interest under the 2017 Notes into shares of the Company’s common stock at the conversion price.

The 2017 Notes rank junior to our secured credit facility with Sterling National Bank. The 2017 Notes also include certain negative covenants including, without the investors’ approval, restrictions on dividends and other restricted payments and reclassification of its stock.

Accounts Receivable

Accounts receivable for the period ended March 31, ~~2017~~2018 were ~~$9,590,446~~$8.5 million as compared to ~~$8,059,910~~$8.8 million as on December ~~31,2016. The increase is due to acquisition of ATCG during the period ended March~~ 31, 2017.

Accounts Payable

Accounts payable for the period ended March 31, ~~2017 was $4,468,533~~2018 were $5.3 million as compared to ~~$5,130,817~~$5.3 million as on December ~~31,2016. The decrease is primarily due to the payoff of accumulated accounts payable during the three months ended March~~ 31, 2017.

Accrued Expenses

Accrued expenses for the period ended March 31, ~~2017 was $3,147,210~~2018 were $2.2 million as compared to ~~$2,165,088~~$2.6 million as on December ~~31,2016. Our acquisition of ATCG led to an increase of accrued expenses of $819,574.~~31, 2017.

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Operating Activities

Our largest source of operating cash flows is cash collections from our customers for different information technology services we render under various statements of work. Our primary uses of cash for operating activities are for personnel-related expenditures, leased facilities and taxes.

Off- Balance Sheet Arrangements

We do not have any off-balance sheet arrangements.

Impact of Inflation

We do not believe that inflation had a significant impact on our results of operations for the periods presented. On an ongoing basis, we attempt to minimize any effects of inflation on our operating results by controlling operating costs and, whenever possible, seeking to ensure that billing rates reflect increases in costs due to inflation.

For all significant foreign operations, the functional currency is the local currency. Assets and liabilities of these operations are translated at the exchange rate in effect at each period end. Statements of Operations accounts are translated at the exchange rate prevailing as of the date of the transaction. The gains or losses resulting from such translation are reported under accumulated other comprehensive income (loss) as a separate component of equity. Realized gains and losses from foreign currency transactions are included in other income, net for the periods presented.

Recent Accounting Pronouncements

See Note 2 to our unaudited condensed consolidated financial statements for additional information.

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Critical Accounting Policies

~~Purchase Price Allocation.~~Revenue Recognition. We ~~allocate~~recognize revenue in accordance with the ~~purchase~~Accounting Standard Codification 605 “Revenue Recognition.” Revenue is recognized when all of the following criteria are met: (1) persuasive evidence of an arrangement exists, (2) delivery has occurred or services have been rendered, (3) the seller’s price to buyer is fixed and determinable, and (4) collectability is reasonably assured. We recognize revenue from information technology services as the services are provided. Service revenues are recognized based on contracted hourly rates, as services are rendered or upon completion of ~~our acquisitions~~specified contracted services and acceptance by the customer.

Stock-Based Compensation. Stock-based compensation expense for awards of equity instruments to employees and non-employee directors is determined based on the grant-date fair value of those awards. We recognize these compensation costs net of an estimated forfeiture rate over the requisite service period of the award. Forfeitures are estimated on the date of grant and revised if actual or expected forfeiture activity differs materially from original estimates.

Impairment. Long-lived assets, which include property, plant and equipment, and certain other assets to be held and used by us, are reviewed when events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable based on estimated future cash flows. If this assessment indicates that the carrying values will not be recoverable, as determined based on undiscounted cash flows over the remaining useful lives, an impairment loss is recognized based on the fair value of the asset.

Income Taxes. We provide for income taxes utilizing the asset and liability method of accounting. Under this method, deferred income taxes are recorded to reflect the tax consequences in future years of differences between the tax basis of assets and liabilities ~~acquired, including identifiable intangible assets,~~and their financial reporting amounts at each balance sheet date, based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. If it is determined that it is more likely than not that future tax benefits associated with a deferred income tax asset will not be realized, a valuation allowance is provided. The effect on deferred income tax assets and liabilities of a change in the tax rates is recognized in income in the period that includes the enactment date. Tax benefits earned on employee stock awards in excess of recorded stock-based compensation expense are credited to additional paid-in capital. Our provision for income taxes also includes the impact of provisions established for uncertain income tax positions, as well as the related interest.

Accounts Receivable. We extend credit to clients based upon management’s assessment of their ~~respective fair values at~~credit-worthiness on an unsecured basis. We provide an allowance for uncollectible accounts based on historical experience and management evaluation of trend analysis. We include any balances that are determined to be uncollectible in allowance for doubtful accounts.

Business Combination. We account for business combinations using the ~~date of acquisition. Some~~acquisition method, which requires the identification of the items, including accounts receivable, property and equipment, other intangible assets, certain accrued liabilities and other reserves require a degree of management judgment. Certain estimates may change as additional information becomes available. Goodwill is assigned atacquirer, the ~~enterprise level and is deductible for tax purposes for certain types of acquisitions. Management finalizes the purchase price allocation within the defined measurement period~~determination of the acquisition date and the allocation of the purchase price paid by the acquirer to the identifiable tangible and intangible assets acquired, the liabilities assumed, including any contingent consideration and any non-controlling interest in the acquiree at their acquisition date fair values. Goodwill represents the excess of the purchase price over the fair value of net assets acquired, including the amount assigned to identifiable intangible assets. Identifiable intangible assets with finite lives are amortized over their useful lives. Acquisition-related costs are expensed in the periods in which the costs are incurred. The results of operations of acquired businesses are included in our consolidated financial statements from the acquisition date.

Goodwill and Purchased Intangibles. We evaluate goodwill and purchased intangible assets for impairment at least annually, or as ~~certain initial accounting~~circumstances warrant. Goodwill is evaluated at the reporting unit level by comparing the fair value of the reporting unit with its carrying amount. For purchased intangible assets, if our annual qualitative assessment indicates possible impairment, we test the assets for impairment by comparing the fair value of such assets to their carrying value. In determining the fair value, we utilize various estimates ~~are resolved.~~and assumptions, including discount rates and projections of future cash flows. If an impairment is indicated, a write down to the implied fair value of goodwill or fair value of intangible asset is recorded.

Valuation of Contingent Earn-out Consideration. Acquisitions may include contingent consideration payments based on the achievement of certain future financial performance measures of the acquired company. Contingent consideration is required to be recognized at fair value as of the acquisition date. We estimate the fair value of these liabilities based on financial projections of the acquired companies and estimated probabilities of achievement. We believe our estimates and assumptions are reasonable, however, there is significant judgment involved. We evaluate, on a routine, periodic basis, the estimated fair value of the contingent consideration and changes in estimated fair value, subsequent to the initial fair value estimate at the time of the acquisition, will be reflected in income or expense in the consolidated statements of operations. Changes in the fair value of contingent consideration obligations may result from changes in discount periods and rates, changes in the timing and amount of revenue and/or earnings estimates and changes in probability assumptions with respect to the likelihood of achieving the various earn-out criteria. Any changes in the estimated fair value of contingent consideration may have a material impact on our operating results.

~~Revenue Recognition.~~ We recognize revenue in accordance with the Accounting Standard Codification 605 "Revenue Recognition." Revenue is recognized when all of the following criteria are met: (1) persuasive evidence of an arrangement exists, (2) delivery has occurred or services have been rendered, (3) the seller's price to buyer is fixed and determinable, and (4) collectability is reasonably assured. We recognize revenue from information technology services as the services are provided. Service revenues are recognized based on contracted hourly rates, as services are rendered or upon completion of specified contracted services and acceptance by the customer.

~~Accounts Receivable.~~ We extend credit to clients based upon management's assessment of their credit-worthiness on an unsecured basis. We provide an allowance for uncollectible accounts based on historical experience and management evaluation of trend analysis. We include any balances that are determined to be uncollectible in allowance for doubtful accounts.

~~Intangible Assets.~~ We capitalize the customer lists received from each of our acquisition considering projected revenue from the top 8 to 10 customers over a period of three years. The customer lists from each acquisition are amortized over a period of 60 months.

~~Goodwill.~~ We capitalize the excess of capitalized intangible assets of an acquisition over the purchase consideration as goodwill in for each of our acquisitions. Impairment of goodwill is analyzed on an annual basis as per Company policy.

~~Recent Accounting Pronouncements~~

On November 17, 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standard Update ("ASU") 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash, which is intended to reduce diversity in the presentation of restricted cash and restricted cash equivalents in the statement of cash flows. The new standard requires that restricted cash and restricted cash equivalents be included as components of total cash and cash equivalents as presented on the statement of cash flows. As a result, entities will no longer present transfers between cash and cash equivalents and restricted cash and restricted cash equivalents in the statement of cash flows. ASU 2016-18 is effective for annual periods beginning after December 15, 2017 including interim periods within those fiscal years, but earlier adoption is permitted. We do not believe the adoption of this new standard will have a material impact on our consolidated financial statements.

In January 2017, the FASB issued ASU No. 2017-01, Clarifying the Definition of a Business, which clarifies and provides a more robust framework to use in determining when a set of assets and activities is a business. The amendments in this update should be applied prospectively on or after the effective date. This update is effective for annual periods beginning after December 15, 2017 and interim periods within those periods. Early adoption is permitted for acquisition or deconsolidation transactions occurring before the issuance date or effective date and only when the transactions have not been reported in issued or made available for issuance financial statements. We do not believe the adoption of this new standard will have a material impact on our consolidated financial statements.

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In January 2017, the FASB issued ASU No. 2017-04, Simplifying the Test for Goodwill Impairment. Under this new standard, goodwill impairment would be measured as the amount by which a reporting unit's carrying value exceeds its fair value, not to exceed the carrying value of goodwill. This ASU eliminates existing guidance that requires an entity to determine goodwill impairment by calculating the implied fair value of goodwill by hypothetically assigning the fair value of a reporting unit to all of its assets and liabilities as if that reporting unit had been acquired in a business combination. This update is effective for annual periods beginning after December 15, 2019, and interim periods within those periods. Early adoption is permitted for interim or annual goodwill impairment test performed on testing dates after January 1, 2017. We do not believe the adoption of this new standard will have a material impact on our consolidated financial statements.

In May 2014, the FASB issued Accounting Standards Update (ASU) 2014-09, "Revenue from Contracts with Customers (Topic 606)," which supersedes the revenue recognition requirements in “Revenue Recognition (Topic 605).” This ASU requires an entity to recognize revenue when goods are transferred or services are provided to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. This ASU also requires disclosures enabling users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. In August 2015, the FASB issued ASU 2015-14, "Revenue from Contracts with Customers (Topic 606), Deferral of the Effective Date.” With the issuance of ASU 2015-14, the new revenue guidance ASU 2014-09 will be effective for fiscal 2019, including interim periods within that reporting period, using one of two prescribed retrospective methods. In April 2016, the FASB issued ASU 2016-10, "Revenue from Contracts with Customer (Topic 606), Identifying Performance Obligations and Licensing." This ASU finalizes the amendments to the guidance on the new revenue standard on the identification of performance obligations and accounting for licenses of intellectual property. We do not believe that the new standard will have a material impact on our consolidated financial statements.

Special Note Regarding Forward-Looking Information

Some of the statements in this Quarterly Report on Form 10-Q and elsewhere constitute forward-looking statements under Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements involve known and unknown risks, uncertainties and other factors that may cause results, levels of activity, growth, performance, tax consequences or achievements to be materially different from any future results, levels of activity, growth, performance, tax consequences or achievements expressed or implied by such forward-looking statements. Such factors include, among other things, those listed below.

The forward-looking statements included in this Form 10-Q and referred to elsewhere are related to future events or our strategies or future financial performance, including statements concerning our ~~2017~~2018 outlook, future revenue and growth, customer spending outlook, general economic trends, IT service demand, future revenue and revenue mix, utilization, new service offerings, significant customers, competitive and strategic initiatives, growth plans, potential stock repurchases, future results, tax consequences and liquidity needs. In some cases, you can identify forward-looking statements by terminology such as "may," "should," "believe," "anticipate," "anticipated," "expectation," "continued," "future," "forward," "potential," "estimate," "estimated," "forecast," "project," "encourage," "opportunity," "goal," "objective," "could," "expect," "expected," "intend," "plan," "planned,"“may,” “should,” “believe,” “anticipate,” “anticipated,” “expectation,” “continued,” “future,” “forward,” “potential,” “estimate,” “estimated,” “forecast,” “project,” “encourage,” “opportunity,” “goal,” “objective,” “could,” “expect,” “expected,” “intend,” “plan,” “planned,” or the negative of such terms or comparable terminology. These forward-looking statements inherently involve certain risks and uncertainties, although they are based on our current plans or assessments which are believed to be reasonable as of the date of this Form 10-Q. Factors that may cause actual results, goals, targets or objectives to differ materially from those contemplated, projected, forecasted, estimated, anticipated, planned or budgeted in such forward-looking statements include, among others, the following possibilities: (1) failure to obtain new customers or retain significant existing customers; (2) the loss of one or more key executives and/or employees; (3) changes in industry trends, such as a decline in the demand for Enterprise Resource Planning and Enterprise Performance Management solutions, custom development and system integration services and/or declines in industry-wide information technology spending, whether on a temporary or permanent basis and/or delays by customers in initiating new projects or existing project milestones; (4) inability to execute upon growth objectives, including new services and growth in entities acquired by our Company; (5) adverse developments and volatility involving geopolitical or technology market conditions; (6) unanticipated events or the occurrence of fluctuations or variability in the matters identified as delays in, or the failure of, our sales pipeline being converted to billable work and recorded as revenue; (8) termination by clients of their contracts with us or inability or unwillingness of clients to pay for our services, which may impact our accounting assumptions; (9) inability to recruit and retain professionals with the high level of information technology skills and experience needed to provide our services; (10) failure to expand outsourcing services to generate additional revenue; (11) any changes in ownership of the Company or otherwise that would result in a limitation of the net operating loss carry forward under applicable tax laws; (12) the failure of the marketplace to embrace advisory and product-based consulting services; ~~and~~ (13) changes in our utilization ~~levels.~~levels; (14) competition in our markets; (15) our ability to grow and manage growth profitably; our ability to access additional capital; (16) changes in applicable laws or regulations; (17) the failure to fully integrate acquired businesses; and (18) poor performance of acquired businesses following the closing of the acquisition. In evaluating these statements, you should specifically consider various factors described above. These factors may cause our actual results to differ materially from those contemplated, projected, anticipated, planned or budgeted in any such forward-looking statements.

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Although we believe that the expectations in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, growth, earnings per share or achievements. However, neither we nor any other person assumes responsibility for the accuracy and completeness of such statements. Except as otherwise required, we undertake no obligation to update any of the forward-looking statements after the date of this Form 10-Q to conform such statements to actual results.

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

ITEM 4.

CONTROLS AND PROCEDURES

~~Management's~~Management’s Report on Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the ~~SEC's~~SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow for timely decisions regarding required disclosure. In designing and evaluating our disclosure controls and procedures, our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and our management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

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As required by Rule 13a-15 under the Securities Exchange Act of 1934, as of the end of the period covered by this Quarterly Report ~~being March 31, 2017,~~on Form 10-Q, we have carried out an evaluation of the effectiveness of the design and operation of our ~~Company's~~Company’s disclosure controls and procedures. This evaluation was carried out under the supervision and with the participation of our ~~Company's~~Company’s management, including our ~~Company's~~Company’s Chief Executive Officer and Chief Financial Officer. Based upon that evaluation, our ~~company's~~company’s Chief Executive Officer and Chief Financial Officer concluded that our ~~company's~~company’s disclosure controls and procedures are not yet effective as of the end of the period covered by this report as noted below in ~~management's~~management’s report on internal control over financial reporting. This is largely due to the fact that we are acquiring privately held companies as part of our growth strategy and our control procedures over all acquired subsidiaries will not be effective until such time as we are able to fully integrate the acquisition with our company and set processes and procedures for the acquired entities. We are working to improve and harmonize our financial reporting controls and procedures across all of our companies. There have been no changes in our internal controls over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect our internal controls over financial reporting.

Disclosure controls and procedures and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time period specified in the ~~SEC's~~SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934 is accumulated and communicated to management including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

Our management, including our principal executive officer and principal financial officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all error or fraud. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Due to the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected.

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~~Management's~~Management’s Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rule 13a-15(f) of the Securities Exchange Act of 1934. Our management has assessed the effectiveness of our internal control over financial reporting as of March 31, ~~2017,~~2018, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Our internal control over financial reporting includes maintaining records that in reasonable detail accurately and fairly reflect our transactions and dispositions of our assets; providing reasonable assurance that transactions are recorded as necessary for preparation of our financial statements in accordance with generally accepted accounting principles; providing reasonable assurance that receipts and expenditures are made in accordance with authorizations of management and our directors; and providing reasonable assurance that unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements would be prevented or detected on a timely basis. As a result of this assessment, our management concluded that, as of March 31, ~~2017,~~2018, our internal control over financial reporting was not yet effective in providing reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. This is largely due to the fact that we are acquiring privately held companies as part of our growth strategy and our control procedures over all acquired subsidiaries will not be effective until such time as we are able to fully integrate the acquisition with our company and set processes and procedures for the acquired entities. We are working to improve and harmonize our financial reporting controls and procedures across all of our companies.

This Quarterly Report on Form 10-Q does not include an attestation report of our independent auditors regarding internal control over financial reporting. ~~Management's~~Management’s report was not subject to attestation by our independent auditors pursuant to temporary rules of the SEC that permit our company to provide only ~~management's~~management’s report in this Quarterly ~~Report.~~Report on Form 10-Q.

Inherent Limitations on Effectiveness of Controls

Internal control over financial reporting has inherent limitations which include but is not limited to the use of independent professionals for advice and guidance, interpretation of existing and/or changing rules and principles, segregation of management duties, scale of organization and personnel factors. Internal control over financial reporting is a process, which involves human diligence and compliance and is subject to lapses in judgment and breakdowns resulting from human failures. Internal control over financial reporting also can be circumvented by collusion or improper management override. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements on a timely basis, however these inherent limitations are known features of the financial reporting process and it is possible to design into the process safeguards to reduce, though not eliminate, this risk. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Changes in Internal Control ~~over~~Over Financial Reporting

There were changes to correct certain internal control inadequacies, due to the privately held nature of acquired subsidiaries in our internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, during the period covered by this report that have not materially affected, or are not reasonably likely to materially affect, our internal control over financial reporting.

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PART II - OTHER INFORMATION

~~ITEM 1.~~

~~LEGAL PROCEEDINGS~~

~~None.~~

ITEM 1.

LEGAL PROCEEDINGS

On May 1, 2018, MACT Holdings LLC, one of the former members of our subsidiary, Ameri Arizona, filed suit against us in the United States District Court for the Southern District of New York seeking damages in an amount equal to such former member’s potion of accrued but unpaid earn-out payments of approximately $236,950 in respect of the 2017 earn-out period, plus attorneys’ fees and expenses. The Company intends to resolve such suit in as timely and cost efficient a manner as is commercially reasonable. The Company is working to raise capital from which it would be able to pay the amounts owed; however, there can be no assurance that the Company will be able to raise any capital or pay the 2017 earn-out amounts.

~~ITEM 1A.~~

ITEM 1A.

RISK FACTORS

~~Investors should carefully review and consider~~In addition to the information ~~regarding certain factors which could materially affect our business, operating results, cash flows and financial condition~~ set forth under Item 1A ~~Risk Factors, in~~of Part I to our ~~fiscal 2017~~ Annual Report on Form 10-K ~~filed with~~for the ~~SEC on March~~year ended December 31, ~~2017.~~

~~We do not believe~~2017, the information set forth at the end of Management’s Discussion and Analysis entitled “Special Note Regarding Forward-Looking Information,” and updates noted below, you should consider that there ~~have been~~are numerous and varied risks, known and unknown, that may prevent us from achieving our goals. If any ~~other material additions~~of these risks actually occur, our business, financial condition or ~~changes to~~results of operation may be materially and adversely affected. In such case, the trading price of our common stock could decline and investors could lose all or part of their investment. These risk factors ~~previously disclosed in~~may not identify all risks that we face and our ~~fiscal 2017 Annual Report on Form 10-K, although we may disclose changes to such~~operations could also be affected by factors ~~or disclose additional factors from time to time in our future filings with the SEC. Additional risks and uncertainties~~that are not presently known to us or that we currently ~~deem~~consider to be immaterial ~~also~~to our operations.

Risk Factors Relating to Our Indebtedness

We have a substantial amount of indebtedness, which may ~~impair~~limit our operating flexibility and could adversely affect our results of operations and financial condition.

As of March 31, 2018, we had approximately $4.4 million in borrowings outstanding under our $10 million Loan Agreement with Sterling National Bank, which provides for up to $8 million in Revolving Loans for general working capital purposes, up to $2 million in principal pursuant to the Term Loan for the purpose of a permitted business ~~operations.~~acquisition and up to $200,000 for letters of credit.

Our indebtedness could have important consequences to our investors, including, but not limited to:

increasing our vulnerability to, and reducing our flexibility to respond to, general adverse economic and industry conditions;

~~ITEM 2.~~

requiring the dedication of a substantial portion of our cash flow from operations to the payment of principal of, and interest on, our indebtedness, thereby reducing the availability of such cash flow to fund working capital, capital expenditures, acquisitions, joint ventures or other general corporate purposes;

limiting our flexibility in planning for, or reacting to, changes in our business, the competitive environment and the industry in which we operate;

placing us at a competitive disadvantage as compared to our competitors that are not as highly leveraged; and

limiting our ability to borrow additional funds and increasing the cost of any such borrowing.

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If Sterling National Bank elects to claim all amounts outstanding to be immediately due and payable and terminate all commitments to extend further credit, we may be unable repay the amounts due. If that were to occur, Sterling National Bank could proceed against the collateral granted to it to secure our indebtedness to it. We pledged substantially all of our assets as collateral under the Loan Agreement. The Loan Agreement is also supported by a validity guaranty from our former Chief Executive Officer. If Sterling National Bank accelerates the repayment of our loans, there is no assurance that we will have sufficient assets to repay the loans. A default under the Loan Agreement may also result in an event of default under the 2017 Notes. We are currently looking for additional sources of financing, however there is no guarantee that we will have additional financing available to us.

In addition, we have an outstanding aggregate of $1.25 million in 8% Convertible Unsecured Promissory Notes, which were issued to four accredited investors, including one of the Company’s then-directors, Dhruwa N. Rai, and David Luci, who became a director of the Company in February 2018. The 2017 Notes bear interest at 8% per annum until maturity in March 2020, with interest being paid annually on the first, second and third anniversaries of the issuance of the 2017 Notes beginning in March 2018. From and after an event of default and for so long as the event of default is continuing, the 2017 Notes will bear default interest at the rate of 10% per annum. The 2017 Notes can be prepaid by us at any time without penalty. As of May 5, 2018, we were not current in the payment of interest on one of the 2017 Notes and were in discussion with the holder of the 2017 Note for which we are not current in the payment of interest to negotiate longer payment terms until we are able to raise more capital.

On March 10, 2017, we issued as consideration to the selling stockholders of Ameri California unsecured promissory notes issued for the aggregate principal amount of $3,750,000 (which notes bear interest at a rate of 6% per annum and mature on June 30, 2018). On February 28, 2018, we entered into an Amendment to 6% Unsecured Promissory Note and Waiver Agreement by and between the Company and Moneta Ventures Fund I, L.P. The Amendment amended the terms of the Company’s 6% Unsecured Promissory Note Due June 30, 2018, issued on March 20, 2017, by and between the Company and Moneta. Among other things, the Amendment provided for the extension of the maturity of the Moneta Note to August 31, 2018, amendment of the payment terms of the Moneta Note, waiver by Moneta of the existence of any Company event of default pursuant to the Moneta Note as of February 28, 2018 and waiver by the Company of certain restrictions with respect to the resale of certain restricted common stock of the Company held by Moneta. Pursuant to the Amendment, the Company was obligated to pay $0.5 million to Moneta on April 30, 2018; however, the Company has been unable to make such payment due to a lack of available cash. The Company is working to raise capital from which it would be able to pay the amount owed; however, there can be no assurance that the Company will be able to raise any capital or pay the amounts owed pursuant to the Amendment.

Our level of indebtedness may make it difficult to service our debt and may adversely affect our ability to obtain additional financing, use operating cash flow in other areas of our business or otherwise adversely affect our operations.

Upon the occurrence of an event of default under our Loan Agreement, our lender could elect to accelerate payments due and terminate all commitments to extend further credit. Consequently, we may not have sufficient assets to repay the loans under the Loan Agreement.

As stated above, we are not in compliance with the financial covenants contained in the Loan Agreement, which is an event of default under our Loan Agreement. The lender thereunder could elect to declare all amounts outstanding to be immediately due and payable and terminate all commitments to extend further credit. If we were unable to repay those amounts, the lender under the Credit Facility could proceed against the collateral granted to them to secure that indebtedness. The Company has pledged substantially all of its assets as collateral under the Credit Facility. If the lender accelerates the repayment of borrowings, we cannot assure you that we will have sufficient assets to repay the Credit Facility.

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The issuance of shares of common stock to the former shareholders of ATCG and the issuance of the 2017 Notes were each previously disclosed on our Current Reports on Form 8-K, filed with the SEC on March 13, 2017 and March 8, 2017, respectively, and such issuances were made in reliance on an exemption from the registration requirements of the Securities Act of 1933, as amended (the "Securities Act"), provided by Section 4(a)(2) of the Securities Act as a private offering. Such issuances of the 2017 Notes and the shares to the former shareholders of ATCG did not involve a public offering, and each was made without general solicitation or advertising.None.

ITEM 3.

DEFAULTS UPON SENIOR SECURITIES

~~To date, the Company is~~26

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We are not in ~~conformance~~compliance with the financial covenants contained in ~~its~~the Loan Agreement with Sterling National Bank. ~~The Company~~We received ~~a waiver~~waivers from Sterling National Bank for ~~its~~our non-compliance with the Loan Agreement ~~through~~for the quarters ended March 31, 2017, June 30, 2017, September 30, 2017 and December 31, 2017 in exchange for the payment of a fee of ~~$5,000. The Company is currently negotiating~~$5,000 for each quarterly waiver. As a ~~waiver~~result of our ongoing non-compliance with Sterling National Bank to waive the Company's compliance with the Loan Agreement during the second quarter of 2017 in exchange for the payment of an additional fee that is to be determined. The Company does not expect to be in compliance with the termscovenants of the Loan Agreement, ~~following the conclusion of the terms of the waivers granted by Sterling National Bank. The Company is continuing to work with~~ Sterling National Bank notified us that it would not provide any further waivers for such non-compliance and advised us to ~~address~~find a new lender. Pursuant to its ~~non-compliance.~~notice letter, Sterling National Bank has indicated it may continue to provide the Company with financing while the Company looks for a new lender; however, the bank has reserved its rights to exercise all remedies available to it, including, but not limited to, declining to advance further funds under the Revolving Loans, terminating all loans and accelerating all obligations owed to it, and retaining the Company’s accounts receivable. We are in the process of seeking a new lender and/or financing sources to replace Sterling National Bank, but there can be no assurance that Sterling National Bank will not stop advancing funds under the Loan Agreement or terminate its loans and accelerate their repayment prior to our finding replacement financing or that we will be able to find any new financing at all.

If Sterling National Bank elects to claim all amounts outstanding to be immediately due and payable and terminate all commitments to extend further credit, we may be unable repay the amounts due. If that were to occur, Sterling National Bank could proceed against the collateral granted to it to secure our indebtedness to it. We pledged substantially all of our assets as collateral under the Loan Agreement. The ~~Company has yet~~Loan Agreement is also supported by a validity guaranty from our former Chief Executive Officer. If Sterling National Bank accelerates the repayment of our loans, there is no assurance that we will have sufficient assets to ~~make~~repay the loans. A default under the Loan Agreement may also result in an event of default under the 2017 Notes (as defined below). We are currently looking for additional sources of financing, however there is no guarantee that we will have additional financing available to us.

In addition, we have accrued approximately $0.6 million for payment of dividend ~~payment~~ on ~~its~~our Series A Preferred Stock that was payable on March 31, 2017. The Company will pay the sole holder of the Series A Preferred Stock the accrued dividend in-kind pursuant to the terms of the Certificate of Designation contemporaneously with the filing of this Quarterly Report of Form 10-Qdue for the quarter ended March 31, ~~2017.~~2018. We have been unable to declare and pay such dividend due to a lack of available cash. We are negotiating with our Series A Preferred Stock holders regarding the payment of the accrued dividend and to amend the terms of its Series A Preferred Stock.

ITEM 4.

MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5.

OTHER INFORMATION

None.

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ITEM 6.

EXHIBITS

Exhibit		Description

2.1		Agreement of Merger and Plan of Reorganization, dated as of May 26, 2015, among Spatializer Audio Laboratories, Inc., Ameri100 Acquisition, Inc. and Ameri and Partners Inc. (filed as Exhibit 2.1 to AMERI Holdings, Inc.'s Current Report on Form 8-K filed with the SEC on May 26, 2015 and incorporated herein by reference).
~~2.2~~		Stock Purchase Agreement by and between Ameri Holdings, Inc. and the shareholders of Ameri Consulting Service Private Limited. (filed as Exhibit 10.3 to Ameri Holdings, Inc.'s Current Report on Form 8-K filed with the SEC on June 1, 2015 and incorporated herein by reference).
~~2.3~~		Share Purchase Agreement, dated as of November 20, 2015, by and among Ameri Holdings, Inc., Bellsoft, Inc., and all of the shareholders of Bellsoft, Inc. (filed as Exhibit 10.1 to Ameri Holdings, Inc.'s’s Current Report on Form 8-K filed with the SEC on November 23, 2015 and incorporated herein by reference).
~~2.4~~	2.2	Agreement of Merger and Plan of Reorganization, dated as of July 22, 2016, by and among Ameri Holdings, Inc., Virtuoso Acquisition Inc., Ameri100 Virtuoso Inc., Virtuoso, L.L.C. and the sole member of Virtuoso, L.L.C. (filed as Exhibit 2.1 to Ameri Holdings, Inc.'s’s Current Report on Form 8-K filed with the SEC on July 27, 2016 and incorporated herein by reference).
~~2.5~~	2.3	Membership Interest Purchase Agreement, dated as of July 29, 2016, by and among Ameri Holdings, Inc., DC&M Partners, L.L.C., all of the members of ~~DCM,~~DC&M Partners, L.L.C., Giri Devanur and Srinidhi ~~"Dev"~~“Dev” Devanur (filed as Exhibit 2.1 to Ameri Holdings, Inc.'s’s Current Report on Form 8-K filed with the SEC on August 1, 2016 and incorporated herein by reference).
~~2.6~~	2.4	Share Purchase Agreement, dated as of March 10, 2017, by and among Ameri Holdings, Inc., ATCG Technology Solutions, Inc., all of the stockholders of ATCG Technology Solutions, Inc., and the ~~Stockholders'~~Stockholders’ representative (filed as Exhibit 2.1 to Ameri Holdings, Inc.'s’s Current Report on Form 8-K filed with the SEC on March 13, 2017 and incorporated herein by reference).
3.1		Amended and Restated Certificate of Incorporation of Ameri Holdings, Inc. (filed as Exhibit 3.1 to Ameri Holdings, Inc.'s’s Current Report on Form 8-K filed with the SEC on June 23, 2016 and incorporated herein by reference).
3.2		Certificate of Designation of Rights and Preferences of 9.00% Series A Cumulative Preferred Stock (filed as Exhibit 3.1 to Ameri Holdings, Inc.'s’s Current Report on Form 8-K filed with the SEC on January 4, 2017 and incorporated herein by reference).
3.3		Corrected Certificate of Designation of Rights and Preferences of 9.00% Series A Cumulative Preferred Stock (filed as Exhibit 3.3 to Ameri Holdings, Inc.’s Registration Statement on Form S-1, Amendment No. 1, filed with the SEC on April 18, 2017 and incorporated herein by reference).
3.4		Amended and Restated Bylaws of Ameri Holdings, Inc. (filed as Exhibit 3.2 to Ameri Holdings, Inc.'s’s Current Report on Form 8-K filed with the SEC on June 23, 2016 and incorporated herein by reference).
4.1		Form of Certificate Representing Shares of common stock of Registrant (filed as Exhibit 4.1 to Ameri Holdings, Inc.'s Registration Statement on Form S-8 filed with the SEC on December 17, 2015 and incorporated herein by reference).
~~4.2~~		Form of common stock Purchase Warrant issued by Ameri Holdings, Inc. to Lone Star Value Investors, LP, dated May 26, 2015 (filed as Exhibit 4.1 to Ameri Holdings, Inc.'s Current Report on Form 8-K filed with the SEC on June 1, 2015 and incorporated herein by reference).
~~4.3~~		Common Stock Purchase Warrant, dated May 12, 2016, issued by Ameri Holdings, Inc. to Lone Star Value Investors, LP, dated May 12, 2016 (filed as Exhibit 4.3 to Ameri Holdings, Inc.'s Quarterly Report on Form 10-Q filed with the SEC on May 16, 2016 and incorporated herein by reference).
~~4.4~~		Amended and Restated Registration Rights Agreement, dated May 12, 2016, by and between Ameri Holdings, Inc. and Lone Star Value Investors, LP (filed as Exhibit 10.3 to Ameri Holdings, Inc.'s Quarterly Report on Form 10-Q filed with the SEC on May 16, 2016 and incorporated herein by reference).
~~4.5~~		Form of 8% Convertible Unsecured Promissory Note due March 2020 (filed as Exhibit 10.2 to Ameri Holdings, Inc.'s’s Current Report on Form 8-K filed with the SEC on March 8, 2017 and incorporated herein by reference).
~~4.6~~		Form of Registration Rights Agreement for 2017 Notes Investors (filed as Exhibit 10.3 to Ameri Holdings, Inc.'s Current Report on Form 8-K filed with the SEC on March 8, 2017 and incorporated herein by reference).
~~4.7~~	4.2	Form of 6% Unsecured Promissory Note (filed as Exhibit 10.1 to Ameri Holdings, Inc.'s’s Current Report on Form 8-K filed with the SEC on March 13, 2017 and incorporated herein by reference).
10.1		~~Employment~~Amendment to 6% Unsecured Promissory Note and Waiver Agreement, dated ~~as of May 26, 2015,~~February 28, 2018, by and between ~~Giri Devanur and~~ Ameri Holdings, Inc. ~~(filed as Exhibit 10.4 to Ameri Holdings, Inc.'s Current Report on Form 8-K filed with the SEC on June 1, 2015~~ and ~~incorporated herein by reference).~~

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~~10.2~~		Employment Agreement, dated as of May 26, 2015, between Srinidhi "Dev" Devanur and Ameri Holdings, Inc. (filed as Exhibit 10.5 to Ameri Holdings, Inc.'s Current Report on Form 8-K filed with the SEC on June 1, 2015 and incorporated herein by reference).
~~10.3~~		~~Employment Letter, dated April 24, 2016, between Ameri and Partners Inc and Viraj Patel~~Moneta Ventures Fund I, L.P. (filed as Exhibit 10.1 to Ameri Holdings, Inc.~~'s Current Report on Form 8-K filed with the SEC on April 25, 2017 and incorporated herein by reference).~~
~~10.4~~		~~Form of Securities Purchase Agreement for 2017 Notes Investors (filed as Exhibit 10.1 to Ameri Holdings, Inc.'s~~’s Current Report on Form 8-K filed with the SEC on March ~~8, 2017 and incorporated herein by reference).~~
~~10.5~~		Exchange Agreement, dated as of December 30, 2016, between Ameri Holdings, Inc. and Lone Star Value Investors, LP (filed as Exhibit 10.1 to Ameri Holdings, Inc.'s Current Report on Form 8-K filed with the SEC on January 4, 2017 and incorporated herein by reference).
~~10.6~~		Loan and Security Agreement, dated as of July 1, 2016, by and among Ameri and Partners Inc, Bellsoft, Inc., Ameri Holdings, Inc., Linear Logics, Corp., Winhire Inc, Giri Devanur, the lenders which become a party to the Loan and Security Agreement, and Sterling National Bank, N.A. (a lender and as agent for the lenders) (filed as Exhibit 10.1 to Ameri Holdings, Inc.'s Current Report on Form 8-K filed with the SEC on July 7, 20162, 2018 and incorporated herein by reference).
31.1*		Section 302 Certification of Principal Executive Officer
31.2*		Section 302 Certification of Principal Financial and Accounting Officer
32.1**		Section 906 Certification of Principal Executive Officer
32.2**		Section 906 Certification of Principal Financial and Accounting Officer
101**		The following materials from Ameri Holdings, Inc.'s’s Quarterly Report on Form 10-Q for the three months ended March 31, ~~2017~~2018 are formatted in XBRL (eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations, (iii) the Consolidated Statement of ~~Stockholders'~~Stockholders’ Equity (Deficit), (iv) the Consolidated Statements of Cash Flow, and (iv) Notes to the Consolidated Financial Statements.

*	Furnished herewith.

In accordance with Item 601of Regulation S-K, this Exhibit is hereby furnished to the SEC as an accompanying document and is not deemed ~~"filed"~~“filed” for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that Section, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933.

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SIGNATURES

Pursuant to the requirements of the Section 13 or 15 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on the 15th day of May ~~2017.~~2018.

	AMERI Holdings, Inc.

	By:	/s/ ~~Giri Devanur~~Brent Kelton
		~~Giri Devanur~~Brent Kelton
		~~President and~~ Chief Executive Officer (Principal Executive Officer)

	By:	/s/ Viraj Patel
		Viraj Patel
		Chief Financial Officer (Principal Accounting Officer)

	March 31, 2017		December 31, 2016

Capitalized intangible assets	$	12,513,206	$	10,074,546
Accumulated amortization		667,296		1,309,842
Total intangible assets	$	11,845,910	$	8,764,704

Years ending December 31,	Amount

2017	$	2,258,388
2018		2,955,873
2019		2,727,968
2020		2,652,000
2021		1,251,681
Total	$	11,845,910

	Three Months Ended March 31,
	2017				2016


Net income (loss) attributable to the Company		$	(1,225,469	)		$	(1,097,381	)
Weighted average common shares outstanding			14,094,536				11,874,361
Basic net income (loss) per share of common stock		$	(0.09	)		$	(0.09	)
Diluted net income (loss) per share of common stock		$	(0.09	)		$	(0.09	)