Discontinued Operations and Assets Held for Sale

9 Months Ended

Sep. 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 was recorded in other current asset, less $3,272 in costs to sell, and recognized a loss of $188,247 from the transaction. While the Company and Cards Plus continue to actively pursue payment of the remaining balance, which is subject to regulatory approval, management re-evaluated the likelihood of recovery and recorded an allowance for doubtful account in September 30, 2023 related to this receivable.

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. This receivable was collected in September 2023. 

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 nine months ended September 30, 2023 and 2022 on a consolidated basis are below (unaudited):

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2023			2022			2023			2022
Discontinued Operations
Total Revenues, net	$	-		$	446,643		$	29,354		$	1,468,199
Operating Expenses:
Cost of Sales		-			145,205			-			665,269
General and administrative		-			276,866			12,268			1,003,003
Impairment loss		-			-			-			143,698
Depreciation and amortization		-			(6,749	)		8,066			33,025
Total operating expenses		-			415,322			20,334			1,844,995
Income (Loss) from operations		-			31,321			9,020			(376,796	)
Other Income (Expense):
Other income		-			12,792			-			20,821
Interest expense, net		-			-			-			(364	)
Other income (expense), net		-			12,792			-			20,457
Loss before income taxes		-			44,113			9,020			(356,339	)
Income tax expense		(1,915	)		(468	)		(7,496	)		(7,046	)
Income (loss) from discontinued operations		(1,915	)		43,645			1,524			(363,385	)
Loss (gain) from sale of discontinued operations		-			(188,247	)		216,069			(188,247	)
Total income (loss) from discontinued operations	$	(1,915	)	$	(144,602	)	$	217,593		$	(551,632	)

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2023		2022			2023		2022
Cards Plus
Total Revenues, net	$	-	$	380,372		$	-	$	1,263,672
Operating Expenses:
Cost of Sales		-		145,205			-		665,269
General and administrative		-		21,539			-		412,243
Impairment loss		-		-			-		143,698
Depreciation and amortization		-		(1,482	)		-		24,415
Total operating expenses		-		165,262			-		1,245,625
Income (loss) from operations		-		215,110			-		18,047
Other Income (Expense):
Other income		-		2,103			-		8,919
Interest expense, net		-		-			-		(364	)
Other income, net		-		2,103			-		8,555
Loss before income taxes		-		217,213			-		26,602
Income tax expense		-		-			-		(4,681	)
Income from discontinued operations		-		217,213			-		21,921
Loss from sale of discontinued operations		-		(188,247	)				(188,247	)
Total Income (Loss) from discontinued operations	$	-	$	28,966		$	-	$	(166,326	)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2023			2022			2023			2022
MultiPay
Total Revenues, net	$	-		$	66,271		$	29,354		$	204,527
Operating Expenses:
General and administrative		-			255,327			12,268			590,760
Depreciation and amortization		-			(5,267	)		8,066			8,610
Total operating expenses		-			250,060			20,334			599,370
Loss from operations		-			(183,789	)		9,020			(394,843	)
Other Income:
Other income		-			10,689			-			11,902
Other income		-			10,689			-			11,902
Loss before income taxes		-			(173,100	)		9,020			(382,941	)
Income tax expense		(1,915	)		(468	)		(7,496	)		(2,365	)
Income (loss) from discontinued operations		(1,915	)		(173,568	)		1,524			(385,306	)
Gain from sale of discontinued operations		-			-			216,069			-
Total Income (loss) from discontinued operations	$	(1,915	)	$	(173,568	)	$	217,593		$	(385,306	)

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):

	Nine Months Ended
	September 30,
	2023			2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	1,524		$	(363,385	)
Adjustments to reconcile net loss with cash flows from operations:
Depreciation and amortization expense		8,067			42,364
Impairment of intangible assets		-			143,701
Changes in operating assets and liabilities:
Accounts receivable		105,194			(14,288	)
Other current assets		10,562			186,370
Inventory		-			(78,806	)
Accounts payable and accrued expenses		(13,759	)		(16,092	)
Deferred revenue		-			(36,663	)
Adjustments relating to discontinued operations		110,064			226,586
Cash flows from discontinued operations	$	111,588		$	(136,799	)

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.