Note 5  Acquisitions EAI 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 ended August 7, 2019. During the year ended December 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 year ended December 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 first 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 (Unaudited) The following unaudited pro forma financial information presents combined results of operations as if the acquisition of Evolution AI Corporation and Pulse Evolution Corporation had occurred on January 1, 2018: Year Ended December 31, 2018 Operating Revenues $ 294 Net (Loss) Income $ (15,142 ) Proforma EPS* - basic $ (0.78 ) Proforma EPS* - dilutive $ (0.78 ) *assumes Series X Preferred stock is converted into common stock Facebank AG acquisition On August 15, 2019, the Company acquired 100% of the issued and outstanding capital stock of Facebank AG in exchange for 2,500,000 shares of common stock, par value $0.0001 per share, of the Company. The acquisition was accounted for using the acquisition method accounting. The fair value of the Companys common stock transferred as consideration in the acquisition was $19.95 million, which was determined using the closing Price of the Companys stock as traded on the OTC. Facebank AG is a privately-owned Swiss holding company which, at the time of acquisition, owned a minority interest in Nexway AG, and had entered into a binding agreement to acquire an aggregate 62.3% majority interest in Nexway AG. On September 16, 2019, Facebank AG completed its acquisition of a majority interest in Nexway AG, which is further discussed below. Facebank AG also owns 100% of SAH, a French joint stock company and investor in the global luxury, entertainment and celebrity focused industries that directly or indirectly holds investments in multiple other subsidiaries. The acquisition of Facebank AG was considered immaterial as defined by ASC 805, Business Combinations . Purchase Price Allocation The following table summarizes the preliminary allocation of the purchase price to the assets acquired and liabilities assumed for the Facebank AG acquisition (in thousands): Cash $ 329 Accounts receivable 3,709 Property and equipment 16 Investments 5,671 Financial assets as fair value 2,275 Intangible assets  customer relationships 2,241 Intangible assets  intellectual property 1,215 Intangible assets  trade names and trademarks 843 Goodwill 28,541 Accounts payable (64 ) Accrued expenses (802 ) Deferred taxes (1,161 ) Long-term borrowings (22,863 ) Stock purchase price $ 19,950 The liabilities assumed in the acquisition include long-term borrowings with an acquisition-date fair value of $22.9 million. SAH is the borrower under a EUR 20.0 million bond due March 31, 2014 and an interest rate of 7%. The principal amount outstanding under the borrowing was EUR 14.5 million and EUR 16.7 million at August 15, 2019 (acquisition date) and December 31, 2019, respectively. At August 15, 2019, SAH was also the borrower under a EUR 5.0 million term loan with Highlight Finance Corp. as the lender and an interest rate of 4.0%. The term loan was effectively settled as part of Facebank AGs acquisition of Nexway AG and Highlight Finance Corp. on September 19, 2019 and is not outstanding at December 31, 2019. Refer to the following section for further discussion on the acquisition of Nexway AG and Highlight Finance Corp. Nexway AG Acquisition On September 16, 2019, Facebank AG, a wholly owned subsidiary of the Company, acquired 333,420 shares, or approximately 51%, of Nexway and 35,000 shares, or approximately 70%, of Highlight Finance Corp. (HFC) (the Nexway AG Acquisition). Prior to the acquisition, Facebank AG owned 74,130 shares of Nexway, representing approximately 11.3% of the outstanding common shares of Nexway. Nexway is a Karlsruhe-based and Germany-listed software and solutions company, which provides a subscription-based platform for the monetization of intellectual property, principally for entertainment, games and security software companies, through its proprietary merchant presence in 180 different countries. HFC is a British Virgin Islands company with a EUR 15.0 million term bond facility issued and outstanding. The acquisition was accounted for using the acquisition method accounting. The aggregate consideration of approximately ($5.3 million) equaled the sum of cash paid ($2.2 million), the fair value of bonds issued ($1.8 million), and the fair value of the Nexway shares previously owned by Facebank AG ($1.1 million), less the fair value of Facebank AG debt effectively settled as a result of the acquisition ($10.4 million). Goodwill related to the Nexway AG Acquisition is not deductible for tax purposes. The Company did not apply pushdown accounting to its acquisition of Nexway. Purchase Price Allocation The following table summarizes the preliminary allocation of the purchase price to the assets acquired, liabilities assumed and noncontrolling interest for the Nexway AG Acquisition (in thousands): Cash $ 4,152 Accounts receivable 12,900 Prepaid expenses 1,169 Inventory 61 Property and equipment 213 Intangible assets  customer relationships 2,241 Intangible assets  intellectual property 1,215 Intangible assets  trade names and trademarks 843 Goodwill 45,900 Right-of-use assets 3,594 Accounts payable (28,381 ) Accrued expenses (16,747 ) Current portion of lease liability (756 ) Deferred income taxes (450 ) Other long-term liabilities (193 ) Lease liability (2,838 ) Long-term borrowings (24,609 ) Noncontrolling interests (3,582 ) Consideration transferred $ (5,268 ) The liabilities assumed in the acquisition include long-term borrowings with an acquisition-date fair value of $24.6 million. Nexway AG is the borrower of EUR 12.0 million secured notes, of which EUR 7.5 million was outstanding upon the acquisition on September 19, 2019. The Nexway borrowing has a maturity date of September 8, 2023 and interest rate of 6.5%. HFC is the borrower under a EUR 15.0 million bond due April 30, 2024 and an interest rate of 4%. All of the HFC bond was outstanding as of September 19, 2019 and December 31, 2019. The negative consideration transferred noted above was included with goodwill as of December 31, 2019. The Company has determined that because of the continuing losses and poor financial condition of Nexway AG, that the intangible assets and goodwill acquired in the acquisition of Nexway AG were required to be impaired in full as of December 31, 2019. Proforma  Nexway AG The following unaudited pro forma financial information for the year ended December 31, 2019 and 2018 presents combined results of operations as if the Nexway AG Acquisition had occurred on January 1, 2018 (in thousands): Year Ended December 31, 2019 2018 Operating Revenues $ 14,928 $ 25,289 Net (Loss) Income $ (44,088 ) $ (9,763 ) Proforma EPS  basic and diluted $ (1.98 ) $ (2.18 )