4. Acquisitions

Q Interactive Acquisition

To expand and strengthen the Company’s business in the consumer marketing industry, on June 8, 2016, the Company entered into and consummated the transactions contemplated by a Membership Interest Purchase Agreement with Selling Source, pursuant to which the Company acquired all of the membership interests in Q Interactive.

As consideration for the Membership Interests, after preliminary adjustment for Q Interactive’s net working capital at closing, the Company issued to Selling Source 2,369,190 shares of the Company’s common stock, par value $0.0005 per share. Selling Source may receive additional consideration for the Membership Interests if 2016 gross revenue of Q Interactive equals or exceeds $25,000 (the “Earn-out Target”). Such additional consideration, if earned, would be paid in either of the following ways, at the seller’s option, no earlier than the one-year anniversary of the closing date (the “Q Interactive Earn-out Shares”): (i) 1,200,000 shares of common stock (subject to adjustment for certain capital events) or (ii) that number of shares of common stock equal to $10,000, in the aggregate, as determined by the volume weighted average price of the common stock for the ten trading days immediately preceding Selling Source’s receipt of a statement prepared by the Company stating the Earn-out Target has been achieved. Based on management’s preliminary assessment, we concluded that it was extremely likely that Q Interactive would meet the Earn-out Target, and the estimated fair value of the Q Interactive Earn-out Shares is $10,000. As of December 31, 2016, after certain measurement period adjustments, including the finalization of the closing working capital adjustment, the net balance of contingent consideration payable in stock of $10,225 was recognized. The contingent consideration payable in stock is expected to be settled in 2017, however, it is classified as a non-current liability in the consolidated balance sheet due to the fact that this liability will be settled with the Company’s common stock.

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 Q Interactive Acquisition (the legal and accounting acquiree) at the Effective Date of the Q Interactive Acquisition.

(In thousands)
Assets acquired:
Accounts receivable	$	4,673
Prepaid expenses and other current assets		213
Property and equipment		73
Intangible assets:
Customer relationships		4,900
Trade names		1,700
Proprietary technology		2,150
Databases		4,800
Non-competition agreements		1,040
Total intangible assets		14,590
		19,549
Liabilities assumed:
Trade accounts payable		2,297
Accrued expenses and other current liabilities		1,153
Deferred revenue		52
		3,502
Goodwill		5,384
Total consideration	$	21,431

The intangible assets acquired in the Q Interactive Acquisition are amortized on a straight-line basis over the estimated useful lives. The useful lives for customer relationships, trade names, proprietary technology, databases and non-competition agreements are 10 years, 20 years, 5 years, 5 years and 2 years, respectively, and the weighted average useful life for these acquired intangible assets with definite useful lives is 8 years.

Goodwill from the Q Interactive Acquisition principally relates to intangible assets that do not qualify for separate recognition, including the assembled workforce and synergies. Goodwill is tax deductible for income tax purposes and was assigned to the Information Services and Performance Marketing reporting segments in the amount of $1,765 and $3,619, respectively.

The fair value of assets acquired and liabilities assumed from the Q Interactive Acquisition was based on a preliminary valuation and our estimates and assumptions are subject to change within the measurement period. The primary area of the purchase price not yet finalized is related to contingent consideration. Measurement period adjustments will be applied to the period that the adjustment is identified in our consolidated financial statements.

Pro forma disclosure for Q Interactive Acquisition (unaudited)

The following table includes the unaudited pro forma results for the years ended December 31, 2016, 2015 and 2014 of the combined companies as though the Q Interactive Acquisition had been completed as of the beginning of the periods being presented.

	Year Ended December 31,
(In thousands)	2016			2015 ⁽¹⁾			2014 ⁽¹⁾⁽²⁾
Revenue	$	200,347		$	190,781		$	28,528
Loss from continuing operations before income taxes		(43,062	)		(58,951	)		(34,622	)
Net loss attributable to cogint		(28,733	)		(85,881	)		(23,885	)
Basic and diluted loss per share	$	(0.63	)	$	(5.57	)	$	(3.48	)

⁽¹⁾

For the comparative pro forma results for years ended December 31, 2015 and 2014, we also assumed the Fluent Acquisition (as defined below) had been completed as of the beginning of the periods being presented.

⁽²⁾

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.

The unaudited pro forma financial information is presented for informational purposes only, and 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.

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, on December 8, 2015, the Company completed the Fluent Acquisition, pursuant to the Fluent Merger Agreement.

Cogint, Inc. is the legal and accounting acquirer in the Fluent Acquisition.

Pursuant to the Fluent Merger Agreement, the Company acquired 100% of the outstanding stock of Fluent from the sellers for the following consideration: (i) 15,001,850 shares of the Company’s common stock, par value $0.0005, with the fair value of $123.8 million, determined by multiplying the Company’s market stock price by the total shares of common stock, and (ii) approximately $99.3 million in cash. 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 Fluent Acquisition at the Effective Date of Fluent Acquisition.

(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 relationships		30,086
Trade names		16,357
Domain names		191
Proprietary technology		11,382
Databases		26,492
Non-competition agreements		728
Total intangible assets		85,236
Other non-current assets		763
		113,195
Liabilities assumed:
Accounts payable and accrued expenses		10,653
Liability for employee incentive-based compensation plan		4,000
Deferred revenue		314
Deferred tax liabilities		30,800
		45,767
Goodwill		155,645
Total consideration	$	223,073
Including:
Cash consideration	$	99,266
Fair value of common stock, as converted, issued		123,807
Total consideration	$	223,073

The intangible assets acquired in the Fluent Acquisition are amortized on a straight-line basis over the estimated useful lives. The useful lives for customer relationships, trade names, domain names, proprietary technology, databases and non-competition agreements are 7 years, 20 years, 20 years, 5 years, 10 years, and 5 years, respectively, and the weighted average useful life for these acquired intangible assets is 10 years.

Goodwill from the Fluent Acquisition principally relates to intangible assets that do not qualify for separate recognition, including the assembled workforce and synergies. Goodwill is not tax deductible for income tax purposes and was assigned to the Information Services and Performance Marketing reporting segments of $37,185 and $118,461, respectively.

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.”

Under the acquisition method of accounting, the assets (including identifiable intangible assets) and liabilities of Tiger Media prior to the TBO 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 the Company issued after the TBO 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 discussed in Note 14 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 of TBO Merger.

(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, all goodwill was written off in 2015 and 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. 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