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Business Acquisitions | 9 Months Ended
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Sep. 30, 2019
Business Acquisitions |
Business Acquisitions | Note 3 – Business Acquisitions On May 30, 2018, OneSpan acquired the remaining interest in Dealflo Limited and its subsidiaries (“Dealflo”), increasing our ownership percentage to 100% from 1%. Dealflo, formerly a privately-held company based in the United Kingdom, provides identity verification and end-to-end financial agreement solutions. Upon acquisition, Dealflo became a wholly-owned subsidiary of OneSpan. Dealflo’s total purchase price consideration was $53.9 million, net of $5.7 million of cash acquired. The total purchase price consideration includes $53.1 million of cash paid to acquire the remaining 99% interest in Dealflo, as well as $0.8 million of fair value of our previous 1% ownership interest. The acquisition is accounted for as a business combination using the acquisition method of accounting, which requires the net assets acquired and liabilities assumed to be recognized at their fair values on the acquisition date. During the nine months ended September 30, 2019, we recorded certain measurement period adjustments to amounts previously reported, comprised primarily of a $1.8 million increase to the deferred tax liability and a $0.6 million increase to other current assets. The effect of the measurement period adjustments recorded before the measurement period ended during the nine months ended September 30, 2019 have been determined as if such adjustments had been accounted for at the acquisition date. The net effect of the measurement period adjustments increased goodwill by $1.1 million. The measurement period adjustments did not result in material income statement effects for the nine months ended September 30, 2019. The measurement period closed on May 30, 2019. The following table summarizes our final allocation of the purchase price consideration based on the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition (net of cash acquired):
|  |  |  | Total
|  |  |  | (in thousands)
| Acquired tangible assets |  | $ | 2,700
| Acquired identifiable intangible assets |  |  | 17,900
| Liabilities assumed |  |  | (6,041)
| Goodwill |  |  | 39,295
| Total purchase price consideration |  | $ | 53,854
The excess of purchase consideration over net assets assumed was recorded as goodwill, which represents the strategic value assigned to Dealflo, including expected benefits from synergies resulting from the acquisition, as well as the knowledge and experience of the workforce in place. In accordance with applicable accounting standards, goodwill is not amortized and will be tested for impairment at least annually, or more frequently, if certain indicators are present. Goodwill and intangible assets related to this acquisition are not deductible for foreign tax purposes. Based on the final results of the acquisition valuation, $17.9 million of the purchase price consideration has been allocated to identifiable intangible assets. The following table summarizes the major classes of identifiable intangible assets, as well as the estimated weighted-average amortization periods:
|  | Estimated Fair Value |  | Weighted Average Amortization Period
Identifiable Intangible Assets |  | (in thousands) |  | (Years)
Customer relationships | $ | 11,800 |  | 7
Technology |  | 5,900 |  | 4
Trademarks |  | 200 |  | 3
| $ | 17,900 |  |
The results of operations of Dealflo subsequent to the acquisition date have been included in the consolidated statement of operations for the three and nine months ended September 30, 2019 and September 30, 2018. Revenue generated by Dealflo for the three and nine months ended September 30, 2019 was $1.6 million and $5.6 million, respectively, compared to $1.8 million and $2.3 million generated during the three and nine months ended September 30, 2018, respectively. Dealflo net losses included in the results of operations for the three and nine months ended September 30, 2019 was $1.9 million and $5.3 million, respectively, compared to net losses of $2.1 million and $2.9 million for the three and nine months ended September 30, 2018, respectively. Unaudited Pro Forma Financial Information The following presents the unaudited pro forma combined results of operations of the Company with Dealflo for the nine months ended September 30, 2018, assuming Dealflo was acquired at the beginning of 2017, and after giving effect to certain pro forma adjustments. Pro forma adjustments for the nine months ended September 30, 2018 reflect estimated amortization expense for intangible assets purchased of $2.2 million, the elimination of $0.4 million of revenue related to intercompany transactions, and the elimination of $1.1 million of non-recurring acquisition related costs. These unaudited pro forma results are not necessarily indicative of the actual consolidated results of operations had the acquisition actually occurred on January 1, 2017 or of the future results of operations of the consolidated entities (in thousands except per share data):
|  |  | Nine months ended September 30,
|  | 2018
Revenue |  | $ | 153,049
Net loss |  |  | (7,112)
Basic net loss per share |  |  | (0.18)
Diluted net loss per share |  |  | (0.18)
Shares used in computing basic and diluted net loss per share |  |  | 39,924

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- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI http://asc.fasb.org/topic&trid=2303972 + Details
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