NOTE 3 – BUSINESS COMBINATION

Acquisition in Sweden

In July 2018, the Company acquired 100% of the outstanding shares of Detact Security Solution AB. The purpose of the acquisition was to penetrate the Swedish aviation and cargo markets. Consideration of the acquisition was 9.5 million SEK ($1,027 as of June 30, 2019), of which 6.5 million SEK ($702 as of June 30, 2019) was paid in cash upon the signing of the purchase contract and 3.0 million SEK ($325 as of June 30, 2019) was held in escrow for a period of three months or longer in case of disagreement between the parties. As of June 30, 2019, the funds in the escrow account were not released to the seller, following disagreements between the parties.

The acquisition was accounted for as a purchase and accordingly a purchase price was allocated to the assets acquired and liabilities assumed at their fair value.

The following represents the allocation of the purchase price as of the purchase date in SEK and the translation to United States Dollars as of the purchase date:

	SEK		U.S. Dollars
Cash		663		74
Accounts receivable		8,902		999
Other current assets		445		50
Fixed assets		1,189		133
Goodwill		9,005		1,010
Other assets		1,039		116
Total identifiable assets acquired		21,243		2,382

Notes Payables-banks		4,734		531
Accounts Payable		182		20
Other current liabilities		5,787		649
Non-current liabilities		1,039		117
Total liabilities assumed		11,742		1,317

		9,501		1,065

Goodwill associated with the new acquisition of Detact Security Solution AB was 9,005 SEK ($970 as of June 30, 2019) and deductible for income tax purposes. The goodwill consists principally of the expectations of future earnings and profits from expanding this business. In December 2018, the Company evaluated the goodwill and concluded the goodwill should be fully impaired.

Acquisition in Spain

In January 2018, the Company acquired 100% of the outstanding shares of Abydos Consultores de Sistemas S.L.U. The purpose of the acquisition was to increase the Company’s activities in Spain. Consideration of the acquisition was €183 ($208 as of June 30, 2019), in cash upon the signing of the purchase contract. The name of Abydos Consultores de Sistemas S.L.U. was changed into I-SEC Aviation Security S.L.

The acquisition was accounted for as a purchase and accordingly a purchase price was allocated to the assets acquired and liabilities assumed at their fair values.

The following represents the allocation of the purchase price as of the purchase date in Euros and the translation to United States Dollars as of the purchase date:

	EUR		U.S. Dollars
Cash		29		36
Accounts receivable		142		175
Fixed assets		88		108
Other assets		11		14
Goodwill		188		232
Total identifiable assets acquired		458		565

Notes payables-banks		11		14
Accounts payable		19		23
Accrued expenses and other current liabilities		126		155
Other liabilities		119		147
Total liabilities assumed		275		339
		183		226

Goodwill associated with the acquisition of Abydos Consultores de Sistemas S.L.U. was €188 ($214 as of June 30, 2019) and is deductible for income tax purposes. The goodwill arising from this acquisition consist principally of the expectations of future earnings and profits from expending this business. In December 2018 the Company evaluated the goodwill and concluded that the goodwill should be fully impaired.