Discontinued Operations and Assets Held for Sale

6 Months Ended

Jun. 30, 2023

Discontinued Operations and Assets Held for Sale [Abstract]

DISCONTINUED OPERATIONS AND ASSETS HELD FOR SALE

NOTE 9 – DISCONTINUED OPERATIONS AND ASSETS HELD FOR SALE

The Board of Directors of authID considered it in the best interests of the Company to focus its business activities on providing biometric authentication products and services by means of our proprietary Verified platform.  Accordingly, on May 4, 2022, the Board approved a plan to exit from certain non-core activities comprising the MultiPay correspondent bank, payments services in Colombia and the Cards Plus cards manufacturing and printing business in South Africa.

Cards Plus business in South Africa

The financial statements of Cards Plus are classified as a discontinued operation and an asset held for sale, as all required classification criteria under appropriate accounting standards were met as of June 30, 2022.

On August 29, 2022, the Company completed the sale of Cards Plus for a price of $300,000 of which $150,000 was received and the remaining balance of $150,000 recorded in other current asset is expected to be received within one year, less $3,272 in costs to sell, and recognized a loss of $188,247 from the transaction.

MultiPay business in Colombia

The Company exited the MultiPay business in Colombia in an orderly fashion, honoring our obligations to employees, customers and under applicable laws and regulations.  We maintain our customer support and operations team in Bogota, which performs essential functions to support the global operations of our Verified product.

As of June 30, 2023, all impacted employees had left the Company. MultiPay finalized the sale of the Company’s proprietary software to its major customer on June 30, 2023 for approximately $96,000 of sale consideration. The Company recorded the receivable under the sale in Other current assets, released foreign currency translation gain of approximately $155,000 and recognized a gain of $216,000 from the transaction.

The following table summarizes the assets and liabilities of the MultiPay sale and the consideration received (unaudited):

	Amount
Carrying value of net assets sold:
Property and equipment write-off	$	19,528
Net assets write-off	$	19,528
Sale consideration on disposition of net assets:
Sale consideration	$	95,852
Less: Value added tax		(15,304	)
Net Consideration	$	80,548
Foreign currency translation:	$	155,049
Net gain on sale of a discontinued operation	$	216,069

The operations of Cards Plus and MultiPay for the three and six months ended June 30, 2023 and 2022 on a consolidated basis are below (unaudited):

	Three Months Ended June 30,						Six Months Ended June 30,
	2023			2022			2023			2022
Discontinued Operations
Total Revenues, net	$	15,259		$	579,246		$	29,354		$	1,021,556
Operating Expenses:
Cost of Sales		-			336,540			-			520,064
General and administrative		-			372,750			12,268			658,132
Impairment loss		-			67,984			-			211,703
Depreciation and amortization		4,157			11,572			8,066			39,774
Total operating expenses		4,157			788,846			20,334			1,429,673
Income (Loss) from operations		11,102			(209,600	)		9,020			(408,117	)
Other Income (Expense):
Other income (expense), net		(224	)		4,334			-			8,029
Interest expense,  net		-			-			-			(364	)
Other income (expense), net		(224	)		4,334			-			7,665
Income (loss) before income taxes		10,878			(205,266	)		9,020			(400,452	)
Income tax expense		(5,184	)		(1,041	)		(5,581	)		(6,578	)
Income (loss) from discontinued operations		5,694			(206,307	)		3,349			(407,030	)
Gain from sale of discontinued operations		216,069			-			216,069			-
Total income (loss) from discontinued operations	$	221,763		$	(206,307	)	$	219,508		$	(407,030	)

	Three Months Ended June 30,					Six Months Ended June 30,
	2023		2022			2023		2022
Cards Plus
Total Revenues, net	$	-	$	510,142		$	-	$	883,300
Operating Expenses:
Cost of Sales		-		336,540			-		520,064
General and administrative		-		167,390			-		322,699
Impairment loss		-		67,984			-		211,703
Depreciation and amortization		-		4,667			-		25,897
Total operating expenses		-		576,581			-		1,080,363
Income (loss) from operations		-		(66,439	)		-		(197,063	)
Other Income (Expense):
Other income		-		3,468			-		6,816
Interest expense,  net		-		-			-		(364	)
Other income, net		-		3,468			-		6,452
Loss before income taxes		-		(62,971	)		-		(190,611	)
Income tax expense		-		-			-		(4,681	)
Loss from discontinued operations	$	-	$	(62,971	)	$	-	$	(195,292	)

	Three Months Ended June 30,						Six Months Ended June 30,
	2023			2022			2023			2022
MultiPay
Total Revenues, net	$	15,259		$	69,104		$	29,354		$	138,256
Operating Expenses:
General and administrative		-			205,360			12,268			335,433
Depreciation and amortization		4,157			6,905			8,066			13,877
Total operating expenses		4,157			212,265			20,334			349,310
Income (Loss) from operations		11,102			(143,161	)		9,020			(211,054	)
Other Income (Expense):
Other income (expense), net		(224	)		866			-			1,213
Other income (expense), net		(224	)		866			-			1,213
Income (loss) before income taxes		10,878			(142,295	)		9,020			(209,841	)
Income tax expense		(5,184	)		(1,041	)		(5,581	)		(1,897	)
Income (loss) from discontinued operations		5,694			(143,336	)		3,439			(211,738	)
Gain from sale of discontinued operations		216,069			-			216,069			-
Income (loss) from discontinued operations	$	221,763		$	(143,336	)	$	219,508		$	(211,738	)

As a result of meeting the discontinued operations/assets held for sale criteria for Cards Plus and the MultiPay operations, the assets and liabilities have been reclassified as assets held for sale as of the respective balance sheet date as follows:

	June 30, 2023		December 31,
	(Unaudited)		2022
Discontinued Operations
Current Assets:
Cash	$	-	$	2,703
Accounts receivable, net		-		105,194
Other current assets		-		10,562
Current assets held for sale		-		118,459
Noncurrent Assets:
Property and equipment, net		-		27,595
Noncurrent assets held for sale		-		27,595
Total assets held for sale	$	-	$	146,054
Current Liabilities:
Accounts payable and accrued expenses	$	-	$	13,759
Total liabilities held for sale	$	-	$	13,759

As a result of meeting the discontinued operations/assets held for sale criteria for Cards Plus and the MultiPay operations, the cash flow activity related to discontinued operations is presented separately on the statement of cash flows as summarized below (unaudited):

	Six Months Ended June 30,
	2023			2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	3,439		$	(407,030	)
Adjustments to reconcile net loss with cash flows from operations:
Depreciation and amortization expense		8,067			39,774
Impairment of intangible assets		-			211,703
Changes in operating assets and liabilities:
Accounts receivable		105,194			6,332	)
Net investment in direct financing lease		-			(17,306
Other current assets		10,562			106,920	)
Inventory		-			(140,653	)
Accounts payable and accrued expenses		(13,759	)		(11,425
Deferred revenue		-			227,078
Adjustments relating to discontinued operations		110,064			422,423
Cashflows from discontinued operations	$	113,503		$	15,393

Notes to Financial Statements – Discontinued Operations

Revenue Recognition

Cards Plus – The Company recognized revenue for the design and production of cards at the point in time when products are shipped, or services have been performed due to the short-term nature of the contracts. Additionally, the cards produced by the Company have no alternative use and the Company has an enforceable right to payment for work performed should the contract be cancelled.

MultiPay recognized revenue for variable fees generated for payment processing solutions that are earned on a usage fee over time based on monthly transaction volumes or on a monthly flat fee rate. Additionally, MultiPay also sells certain equipment from time to time for which revenue is recognized upon delivery to the customer.