4. Acquisitions

Fluent Acquisition

To accelerate the Company’s strategy to apply its next generation data fusion technology to not only the risk management industry, but also as an advanced data analytics platform to the consumer marketing industry, as specified in Note 1(b) – Organization, on December 8, 2015, the Effective Date of Fluent Acquisition, the Company completed the acquisition of Fluent, pursuant to the terms and conditions of the Fluent Merger Agreement.

For accounting purposes, the Company recognized the Fluent Acquisition in accordance with ASC Topic 805 – Business Combinations. The Company’s consolidated financial statements for the year ended December 31, 2015 included Fluent’s operating results for the period from December 9, 2015 to December 31, 2015.

Under the acquisition method of accounting, the assets (including identifiable intangible assets) and liabilities of Fluent prior to the Fluent Acquisition as of the Effective Date were recorded at their respective fair values. Any excess of purchase price over the fair value of the net assets were recorded as goodwill. The Company’s financial statements issued after the Fluent Acquisition would reflect these fair values and would not be restated retroactively to reflect the historical financial position or results of operations of Fluent.

Pursuant to the Fluent Merger Agreement, the Company acquired 100% of the outstanding stock of Fluent from the Sellers of Fluent for the following considerations: (i) 300,037 shares, as adjusted, of the Company’s Series B Non-Voting Convertible Preferred Stock, par value $0.0001 (the “Series B Preferred”), convertible into 15,001,850 shares of the Company’s common stock, par value $0.0005 (the “Common Share,” and such shares of Common Share, the “Conversion Shares”) and (ii) Approximately $99.3 million in cash. The following table summarizes the preliminary purchase price allocation and the fair value of the net assets acquired and liabilities assumed (marked to market), and the resulting amount of goodwill in the acquisition of Fluent (the legal and accounting acquiree) at the Effective Date.


(In thousands)
Assets acquired:
Cash and cash equivalents	$	6,013
Accounts receivable		20,250
Prepaid expenses and other current assets		691
Property and equipment		242
Intangible assets:
Customer relationship		30,875
Trademarks		16,357
Domain names		191
Developed technology		10,716
Database		25,052
Non-competition agreements		728

Total intangible assets		83,919
Other non-current assets		763
Deferred tax assets		1,868

		113,746

Liabilities assumed:
Accounts payable and accrued expenses		10,792
Liability for employee incentive-based compensation plan		4,000
Deferred revenue		314
Deferred tax liabilities		32,111

		47,217
Goodwill		156,526

Total consideration	$	223,055

Including:
Cash consideration	$	99,289
Fair value of Series B Preferred issued		123,766

Total consideration	$	223,055

The intangible assets acquired are amortized on a straight-line basis over the estimated useful lives. The useful lives for customer relationship, trademarks, domain names, developed technology, database and non-competition agreements are 7 years, 20 years, 20 years, 5 years, 10 years, and 5 years, respectively.

Goodwill from the acquisition of Fluent principally relates to intangible assets that do not qualify for separate recognition, including the assembled workforce and synergy effects. Goodwill is not tax deductible for income tax purposes and was assigned to the Information Services and Performance Marketing reporting segments of $42,623 and $119,130, respectively.

The fair value of assets acquired and liabilities assumed from our acquisition of Fluent was based on a preliminary valuation and our estimates and assumptions are subject to change within the measurement period. The primary areas of the purchase price that are not yet finalized are related to the fair value of intangible assets, certain accrued liabilities, and income taxes. Measurement period adjustments will be applied to the period that the adjustment is identified in our consolidated financial statements.

The financial data of Fluent for the period from December 9, 2015 through December 31, 2015 is presented below:


(In thousands)	Period from December 9, 2015 to December 31, 2015
Revenue	$	10,089
Loss from continuing operations	$	(190	)
Net loss	$	(589	)

Pro forma disclosure for acquisition (unaudited)

The following table includes the pro forma results for the years ended December 31, 2015 and 2014 of the combined companies as though the acquisition had been completed as of the beginning of the periods presented.


	Pro forma (unaudited)
	Year Ended December 31,
(In thousands)	2015			2014⁽¹⁾
Revenue	$	148,863		$	19,508
Loss from continuing operations	$	(59,739	)	$	(35,403	)
Net loss	$	(87,575	)	$	(24,669	)
Basic and diluted loss per share	$	(6.72	)	$	(5.48	)

⁽¹⁾	As IDI Holdings, the accounting acquirer of the merger consummated effective as of March 21, 2015, was incorporated on September 22, 2014, the combined comparative pro forma figures of both IDI and Fluent in 2014 were from September 22, 2014, the date of inception, through December 31, 2014.

In preparation of the unaudited pro forma financial data, for the year ended December 31, 2015, we included pro forma adjustments in relation to the additional acquired intangible assets amortization expenses and interest expenses of $9,412, and $6,906, respectively, and we also added back acquisition related costs, share-based compensation expenses, and the related net income tax benefit of $879, $2,553, and $4,381, respectively. For the period from September 22, 2014 through December 31, 2014, we included pro forma adjustments in relation to the additional acquired intangible assets amortization expenses, interest expenses, and share-based compensation expenses of $2,759, $2,015 and $32,386, respectively, and we also added back the related total net income tax benefit of $12,634.

The unaudited pro forma financial information is presented for information purposes only, which may not necessarily reflect our future results of operations or what the results of operations would have been had we owned and operated each company as of the beginning of the periods presented.

TBO Merger with Tiger Media

To expand Tiger Media’s business into data and analytics industry, on March 21, 2015, the Effective Date of TBO Merger, Tiger Media and TBO Merger Sub, completed the merger with TBO, pursuant to the terms and conditions of the TBO Merger Agreement, as specified in Note 1(b) – Organization,

For accounting purposes, the Company recognized the TBO Merger in accordance with ASC Topic 805-40, “Reverse Acquisitions”. Accordingly, Tiger Media has been recognized as the accounting acquiree in relation to the Merger, with IDI Holdings being the accounting acquirer, and the Company’s consolidated financial statements for the reporting period from January 1, 2015 through March 21, 2015 being those of IDI Holdings, rather than those Tiger Media. The Company’s consolidated financial statements for the period since March 22, 2015, the day after which the Merger was consummated, recognize Tiger Media and IDI Holdings as a consolidated group for accounting and reporting purposes, albeit with a carryover capital structure inherited from Tiger Media (attributable to the legal structure of the transaction).

Under the acquisition method of accounting, the assets (including identifiable intangible assets) and liabilities of Tiger Media prior to the Merger as of the Effective Date were recorded at their respective fair values and added to those of IDI Holdings. Any excess of purchase price over the fair value of the net assets were recorded as goodwill. Financial statements of IDI issued after the Merger would reflect these fair values and would not be restated retroactively to reflect the historical financial position or results of operations of Tiger Media.

Under the reverse acquisition, the accounting acquiree, the Company, issued equity shares to the owners of the accounting acquirer, IDI Holdings. The consideration transferred by IDI Holdings for its interest in the Company is based on the number of equity interests IDI Holdings would have had to issue to give the owners of the Company the same percentage equity interest in the combined entity that results from the reverse acquisition. The fair value of the number of equity interests calculated in that way can be used as the fair value of consideration transferred in exchange for the Company. Certain shareholders of IDI Holdings also have the right to receive additional shares subject to an earn-out (as mentioned in Note (13) below). The earn out conditions were deemed probable upon the effective date of the Fluent acquisition and because the measurement had closed, the Company recorded a $14,300 charge. The following table summarizes the purchase price allocation and the fair value of the net assets acquired and liabilities assumed (marked to market), and the resulting amount of goodwill in the acquisition of Tiger Media (the accounting acquiree) at the Effective Date.


(In thousands)
Assets acquired:
Cash and cash equivalents	$	3,569
Accounts receivable		1,808
Other current assets		326
Property and equipment		1,419
Intangible assets, net		4,280
Long-term deferred expenses		586

		11,988

Liabilities assumed:
Accounts payable		(1,519	)
Accrued expenses and other payables		(736	)
Acquisition consideration payable		(464	)
Amounts due to related parties		(124	)
Deferred revenue		(80	)

		(2,923	)

Non-controlling interests		(425	)
Goodwill		35,472

Total consideration	$	44,112

Goodwill from the acquisition principally relates to the assembled workforce and the synergy effects.

As all assets and liabilities related to the Advertising Business have been disposed as of December 31, 2015 for $0, no pro forma financial information was disclosed for the year ended December 31, 2015.

Interactive Data Acquisition

In order to enter the data and analytics industry, leveraging Interactive Data’s technology infrastructure to allow for penetration into the ARM marketplace, as specified in Note 1(b) – Organization, on October 2, 2014, IDI Holdings acquired 100% of the membership interests of Interactive Data for $6,320 of cash and 284,445 shares of common share. IDI Holdings accounted for the acquisition as a forward merger with IDI Holdings as both the legal and accounting acquirer. It was concluded that Interactive Data was not the predecessor accounting entity. For accounting purposes, the Company recognized the Interactive Data Acquisition in accordance with ASC Topic 805, “Business Combinations”. The Company’s consolidated financial statements for the year ended December 31, 2014 included Interactive Data’s operating results for the period from October 3, 2014 through December 31, 2014. The purchase price allocation is summarized as follows:


(In thousands)
Assets acquired:
Working capital, net	$	426
Property and equipment, net		229
Intangible assets, net		339
Deferred tax assets		99
Goodwill		5,227

Total consideration	$	6,320