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ACQUISITION
 12 Months Ended
Dec. 31, 2011
Business Combinations [Abstract]  
Business Combination Disclosure [Text Block]

3. ACQUISITION

 

Acquisition of Positive Access Corporation

 

On August 31, 2009, the Company acquired 100% of the common stock of Positive Access Corporation, the leading competitor to Intellicheck Mobilisa for developing drivers’ license reading software. The acquisition of Positive Access increases the Company’s market presence in the commercial markets. The terms included cash payments of $1,225,000, payable $625,000 at August 31, 2009, $400,000 at August 31, 2010 and $200,000 at August 31, 2011. The notes payable have been recorded in the financial statements net of deferred debt discount of $40,000. In addition, the Company issued 608,520 shares of common stock fair valued at $750,001, plus direct issue costs of $13,000. The recorded fair value of the stock is based on the closing stock price on August 31, 2009, net of a discount of 15%, since the stock was unregistered and is subject to restrictions on its sale. Acquisition related costs of approximately $37,000 were expensed in connection with this transaction. The transaction was accounted for using the purchase method of accounting. In June 2010, through a reinterpretation of the original purchase agreement, the Company amended the terms of the Non-Compete Agreement with the former Positive Access principals, resulting in an increase in the purchase price of $50,000. As the fair value of the non-compete agreement was already included in intangible assets, this amount was added to goodwill in the second quarter of 2010. The results of Positive Access Corporation’s operations have been included in the accompanying consolidated financial statements from September 1, 2009. Pro forma supplemental financial information was not included as the impact of the acquisition was not material to the operations of the Company.

 

The total purchase price was allocated to the estimated fair value of the assets acquired and liabilities assumed based on third party valuations and managements estimates. None of the goodwill or the assigned values to intangible assets is deductible for income tax purposes.

 

Purchase Price Allocation

 

The calculation of purchase price and goodwill and other intangible assets as of August 31, 2009 was as follows:

       
Cash   $ 625,000  
Fair value of Intellicheck common stock issued to Positive Access shareholders     750,001  
Fair value of notes issued, net of deferred debt discount     560,000  
Amended non-compete payment     50,000  
Direct issue costs     13,000  
Total purchase price   $ 1,998,001  

 

            Purchase price allocated to:

 

Tangible assets acquired less liabilities assumed   $ 33,000  
Identifiable intangible assets     1,393,000  
Goodwill     572,001  
Tangible assets acquired and liabilities assumed   $ 1,998,001