Acquisition

3 Months Ended

Mar. 31, 2019

Business Combinations [Abstract]

Acquisition

Note 4 – Acquisition

The EAI acquisition which occurred on August 8, 2018, was accounted for using acquisition method of accounting. The aggregate of the purchase price, plus net liabilities assumed was allocated to separately identifiable assets and the excess was recorded as goodwill. The preliminary allocation of the purchase price was based upon a valuation for which the estimates and assumptions are subject to change during the one year measurement period, which ends August 7, 2019.  During the quarter ended March 31, 2019, the Company recorded a measurement period adjustment to reduce acquisition date accrued expenses by $1.9 million, which resulted in a corresponding decrease to goodwill. In addition during the quarter ended March 31, 2019, the Company recorded a lease settlement liability measurement period adjustment of $0.1 million which should have been accrued at the time of the acquisition. This lease settlement liability was settled during the 1^st quarter of 2019 with the issuance of 18,935 shares (see Note 14).

The Company allocated the purchase consideration to the fair value of the assets acquired and liabilities assumed as summarized in the table below (in thousands except for share and per share amounts):

	Fair Value
Consideration Paid:
Series X Convertible Preferred Stock (1,000,000 shares at a fair value of $211.50 per share)	$	211,500
Purchase Price Allocation:
Property and equipment		22
Accounts payable		(2,291	)
Accrued expenses		(3,205	)
Notes payable (in default)		(3,634	)
Warrant liability		(4,437	)
Due to related parties and affiliates		(295	)
Net liabilities assumed		(13,840	)
Excess allocated to
Human animation technologies		123,436
Trademark and trade names		7,746
Animation and visual effects technologies		6,016
Digital asset library		6,255
Intangible assets		143,453
Deferred tax liability		(36,944	)
Non- controlling interest		(29,224	)
Goodwill		148,055
Total Purchase Price	$	211,500

Proforma

The following unaudited pro forma financial information for the three months ended March 31, 2018 presents combined results of operations as if the acquisition of Evolution AI Corporation and Pulse Evolution Corporation had occurred on January 1, 2017 (in thousands):

	Three Months Ended
	March 31, 2018
Operating Revenues	$	147
Net Loss	$	(5,133	)