XML 21 R10.htm IDEA: XBRL DOCUMENT
v3.20.2

Note 4 - PistolStar Inc. Acquisition | 6 Months Ended
--- | ---
Jun. 30, 2020
Notes to Financial Statements |
Business Combination Disclosure [Text Block] |
4. | PistolStar, Inc. acquisition
On June 30, 2020, the Company entered into a stock purchase agreement pursuant to which it acquired PistolStar, Inc., a private company based in the United States, that provides enterprise-ready identity access management solutions, including multi-factor authentication, identity-as-a-service, single sign-on and self-service password reset to commercial, government and education customers throughout the United States and internationally. From April 10, 2020 until we acquired PistolStar, we licensed PortalGuard®, PistolStar's authentication software, which the Company combines with its biometric authentication solutions offered to existing and prospective customers. The total purchase price of $2.5 million included cash payments of $2.0 million and the issuance of a $500,000 promissory note. The acquisition of PistolStar has been accounted for as a business combination and, in accordance with ASC 805, the Company has recorded the assets acquired and liabilities assumed at their respective fair values as of the acquisition date. The following table summarizes the preliminary purchase price allocation as of June 30, 2020:
Purchase consideration: |  |  |  |
Total cash paid, net of acquired cash |  | $ | 2,000,000 |
4% Promissory note |  |  | 500,000 |
Total purchase price consideration |  | $ | 2,500,000 |
Fair value of assets acquired and liabilities assumed: |  |  |  |
Cash and cash equivalents |  | $ | 100,747 |
Accounts receivable |  |  | 184,792 |
Prepaid expenses and other current assets |  |  | 9,485 |
Fixed assets |  |  | 36,467 |
Intangible assets |  |  | 2,005,000 |
Goodwill |  |  | 417,171 |
Total assets acquired |  |  | 2,753,662 |
Accrued expenses and other current liabilities |  |  | 494 |
Deferred revenue |  |  | 253,168 |
Total fair value of assets acquired and liabilities assumed |  | $ | 2,500,000 |
The promissory note, which was issued to the previous owner of PistolStar, carries interest at 4% per annum and is payable in four installments over the 12 -month period following the closing. In the three months ended June 30, 2020, acquisition-related expenses were immaterial. Acquisition-related expenses have been included primarily in general and administrative expenses in the condensed consolidated statements of operations. The operating results of PistolStar will be included in the condensed consolidated statements of operations beginning on July 1, 2020. The significant intangible assets identified in the purchase price allocation discussed above include customer relationships, which are amortized over their respective useful lives on a straight-line basis when the pattern in which their economic benefits will be consumed cannot be reliably determined. To value the developed technology asset, the Company utilized the income approach, specifically a discounted cash-flow method known as the multi-period excess earnings method. Customer relationships represent the underlying relationships with certain customers to provide ongoing services for products sold. The Company utilized the income approach, specifically the distributor method, a subset of the excess-earnings method to value the customer relationships. The fair value of the assets acquired and liabilities assumed reflected in the tables above is less than the purchase price, resulting in the recognition of goodwill. The goodwill reflects the value of the synergies the Company expects to realize and the assembled workforce. The following table presents the preliminary fair values and useful lives of the identifiable intangible assets acquired:
|  | Amount |  |  | Estimated useful life (in years) |
Developed technology |  | $ | 1,153,000 |  |  |  | 3 |
Customer relationships |  |  | 852,000 |  |  |  | 5 |
Total identifiable intangible assets |  | $ | 2,005,000 |  |  |  |  |
Pro Forma Financial Information (unaudited) The following unaudited pro forma information presents the combined results of operations of the Company and PistolStar for the three and six month periods ended June 30, 2020 as if the acquisition of PistolStar had been completed on January 1, 2020. These pro forma financial results have been prepared for comparative purposes only and include certain adjustments that reflect pro forma results of operations such as fair value adjustments (step-downs) for deferred revenue, increased amortization for the fair value of acquired intangible assets and adjustments to eliminate transaction costs incurred by the Company and PistolStar. The unaudited pro forma results do not reflect any operating efficiencies or potential cost savings which may result from the consolidation of the operations of the Company and PistolStar. Accordingly, these unaudited pro forma results are presented for informational purposes only and are not necessarily indicative of the results of operations that would have been achieved had the acquisition occurred as of January 1, 2020, nor are they intended to represent or be indicative of future results of operations (in thousands, except per share amounts):
|  | 3 Months ended June 30, |  |  | 6 Months ended June 30, |
|  | 2020 |  |  | 2020 |
Revenue |  | $ | 725,779 |  |  | $ | 1,652,678 |
Net loss |  |  | (1,580,349 | ) |  |  | (5,045,889 | )
Basic and diluted net loss per share |  | $ | (0.08 | ) |  | $ | (0.28 | )
Weighted average number of ordinary shares used in computing basic and diluted loss per share |  |  | 20,864,866 |  |  |  | 18,030,939 |

X
- 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
Name: | us-gaap_BusinessCombinationDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- References No definition available. + Details
Name: | us-gaap_DisclosureTextBlockAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration