BUSINESS COMBINATION

12 Months Ended

Dec. 31, 2016

Business Combination

BUSINESS COMBINATION

NOTE 3 – BUSINESS COMBINATION

On December 7, 2016, the Company acquired 51% of the outstanding shares of Easyserve Ltd (“New Subsidiary”) in Cyprus together with third party, which holds the additional 49% of the New Subsidiary. Consideration of the acquisition for the 100% shares included €300 ($317 as of December 31, 2016) in cash upon the signing of the purchase contract.

The Company with its New Subsidiary participated in a tender for services in Cyprus. Upon winning the tender, the Company will pay additional €100 ($106 as of December 31, 2016). In addition, the purchase price will include a maximum of €300 ($317 as of December 31, 2016) out of the net profits of the New Subsidiary, which relate to the business of the New Subsidiary as it is presently carried out and which does not relate to the business resulting from the award of the tender or any other new business.

In the event that the New Subsidiary is not successful with the tender, then the seller will repay to the Company the payments made by the Company, in return the Company will transfer the shares back to the seller. As of the day of this report, the results of the tender are not known.

The acquisition was accounted for as a purchase and, accordingly, the purchase price was allocated to the assets acquired and liabilities assumed at their fair values. The Company has not finalized the allocation of the purchase price and, accordingly the excess of the purchase price over the net assets acquired of €377 ($398 as of December 31, 2016) was recorded all as goodwill. The results of operations from the date of acquisition to December 31, 2016 are not significant.

The following is the allocation of the purchase price as of December 31, 2016:

	Euro		Dollar
Cash		300		317
Due at obtaining contract tender*		100		106
Earn out liability**		300		317
Total consideration given		700		740
Recognized amounts of identifiable assets acquired and liabilities assumed:
Accounts receivable		269		284
Prepaid expenses		53		56
Property and equipment		25		26
Other assets		84		89
Goodwill		377		398
Total identifiable assets acquired		808		853
Accounts payable and accrued expenses		57		60
Other current liabilities		51		53
Total liabilities assumed		108		113
		700		740

*Amounts are reflected in accrued expenses and other liabilities on the balance sheet at December 31, 2016.

**Amounts are reflected in other liabilities on the balance sheet at December 31, 2016.