ACQUISITIONS

12 Months Ended

Dec. 31, 2017

Business Combinations [Abstract]

ACQUISITIONS

NOTE 2 –ACQUISITIONS

FIN Holdings, Inc.

On February 8 2016, the Company entered into a Share Exchange Agreement with Fin Holdings, Inc., a Florida corporation (“FIN”), and all of the FIN shareholders (the “FIN Shareholders”), pursuant to which the Company acquired 100% of the issued and outstanding shares of FIN (the “FIN Shares”) which included FIN’s two wholly-owned subsidiaries, ID Solutions, Inc. and Cards Plus Pty Ltd. (collectively, the “Subsidiaries”), from the FIN Shareholders. One of the FIN shareholders was the Company’s Chief Operating Officer and owned then approximately 1.7% of the Company’s outstanding common stock at the time of the acquisition. In consideration for the FIN Shares, the Company issued to the FIN Shareholders an aggregate of 22,500,000 shares of common stock of the Company (the “Purchase Shares”) with a fair value of $0.40 per share or $9,000,000. The closing occurred on February 8, 2016.

In accordance with ASC 805, “Business Combinations”, the Company accounted for the acquisition of FIN 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 acquisition.

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

Common stock consideration	$	9,000,000
Liabilities assumed		914,218
Total purchase consideration		9,914,218
Current assets		(843,317	)
Property and equipment		(100,339	)
Customer relationships		(1,587,159	)
Intellectual property		(814,049	)
Goodwill	$	6,569,354

Goodwill is calculated as the excess of the consideration transferred over the net assets recognized and represents the expected revenue and benefits of the combined company. FIN was acquired on February 8, 2016 pursuant to a Share Exchange Agreement at which time control was achieved through a restructuring of the reporting hierarchy to Ipsidy management.

The consolidated financial statements for the year ended December 31, 2016 include FIN’s results for the period from the date of acquisition to December 31, 2016. Revenue for the years ended December 31, 2017 and 2016, included in the results of operations was approximately $1,909,000 and $1,583,000, respectively, and net operating profit of approximately $320,000 and $242,000, respectively.

The following unaudited proforma financial information gives effect to the Company’s acquisition of FIN as if the acquisition had occurred on January 1, 2016 and had been included in the Company’s consolidated statement of operations for the year ended 2016.

Proforma net revenue	$	2,051,494
Proforma net loss		(9,858,944	)

The activity for goodwill for the years ending December 31, 2017 and 2016 is as follows:  

Balance, January 1, 2016	$	166,689
Acquisition of FIN Holdings		6,569,354
Balance, December 31, 2016	$	6,736,043
Balance, December 31, 2017	$	6,736,043