MULTIPAY ACQUISITION

12 Months Ended

Dec. 31, 2015

Business Combinations [Abstract]

MULTIPAY ACQUISITION

NOTE 7 – MULTIPAY ACQUISITION

On April 6, 2015 (the "Closing Date"), the Company and all of the shareholders (the "Multipay Shareholders") of Multipay S.A., a Colombian corporation ("Multipay"), closed (the "Closing") on the Share Purchase Agreement entered into between the parties on March 6, 2015. As a result of the Closing, the Company acquired 100% of the issued and outstanding shares of Multipay (the "Multipay Shares") from the Multipay Shareholders on a fully diluted basis. In consideration for the Multipay Shares, the Company agreed to issue to the Multipay Shareholders up to an aggregate of 7,600,000 shares of common stock of the Company. Under the terms of the initial agreement, within ten days of the Closing Date, the Company was required to issue 7,000,000 shares of common stock. Upon the Multipay Shareholders paying certain liabilities in the approximate amount of $370,000, the Company was required to deliver the balance of 600,000 shares of common stock to the Multipay Shareholders. In the event the Multipay Shareholders do not pay the entire amount of the certain liabilities by the 12-month anniversary of the Closing Date, the Company will not be required to deliver the remaining shares of common stock. On May 7, 2015, the Company and Multipay executed an amendment to the Share Purchase Agreement to 1) amend the number of shares to be issued within ten days of the Closing Date from 7,000,000 shares to 6,101,517 shares; and 2) to amend the balance of shares to be delivered from 600,000 shares to 1,498,483 shares, upon the payment of certain liabilities by the Multipay Shareholders. The payment of these shares has been extended by six months to November 7, 2016. The 6,101,517 shares were issued on May 18, 2015. The Company has recorded a contingent liability of approximately $370,000 because of the contingency of the shares to be issued and debt to be released upon the payment of certain liabilities by the Multipay Shareholders.

In accordance with ASC 805, “Business Combinations,” the Company accounted for the acquisition of Multipay as a business combination using the acquisition method of accounting. The purchase price was allocated to specific identifiable tangible and intangible assets at their respective fair values at the date of the acquisition.

The following table summarizes the total fair value of consideration transferred as well as the fair values of the assets acquired and liabilities assumed.

Fair value of common stock	$	860,491
Liabilities assumed		909,721
Total fair value of consideration transferred	$	1,770,212
Cash	$	987
Accounts receivable		60,673
Inventory		62,861
Other assets		171,133
Property and equipment		20,000
Intellectual property		1,273,781
Non-compete agreement		14,087
Total identifiable tangible assets acquired		1,603,522
Goodwill	$	166,689

Goodwill is calculated as the excess of the consideration transferred over the net assets recognized and represents the expected revenue and cost synergies of the combined company, which are further described above. Goodwill recognized as a result of the acquisition is not deductible for tax purposes. See Notes 1 and 3 for additional information about goodwill and other intangible assets. The recognized goodwill related to MultiPay is directly attributable to its payment gateway platform. 

As noted above, control was obtained on April 6, 2015, pursuant to the Share Purchase Agreement at which time the management of IDGS took over the operations of MultiPay. Control was achieved with IDGS personnel in Colombia and a restructuring of the reporting hierarchy to IDGS management. 

The activity for Goodwill during the year ended December 31, 2015 is as follows:

	Goodwill
Balance, beginning of year	$	-
Acquisition of MultiPay		166,689
Balance, end of year	$	166,689

The Company’s consolidated financial statements for the year ended December 31, 2015 include Multipay’s results of operations from the acquisition date through December 31, 2015. Net revenues and operating loss attributable to Multipay during this period and included in the Company’s consolidated financial statements for the year ended December 31, 2015 total $229,597 and $659,524, respectively.

The following unaudited pro forma information gives effect to the Company’s acquisition of Multipay as if the acquisition had occurred on January 1, 2014 and had been included in the Company’s consolidated statements of operations for the years 2015 and 2014.

	2015			2014
Pro forma net revenues	$	816,140		$	875,804
Pro forma net loss	$	(36,752,327	)	$	(1,068,460	)