ACQUISITION AGREEMENT

ACQUISITION AGREEMENT

THIS ACQUISITION AGREEMENT (the “ Agreement ”) made as of this 31st day of January, 2007 (the “ Effective Date ”), by and among Edentify, Inc. (“ Edentify ”), a Nevada corporation with its principal address at 74 W. Broad Street, Suite 350, Bethlehem, PA 18018, Zelcom Group, LLC (“ Zelcom ”), a limited liability company formed under the laws of the State of Illinois, with its principal address at 1821 Walden Office Square, Suite 400, Schaumburg, IL 60173, and all of its members, consisting of Robert Zelikson (“Zelikson”), Greg Fasana (“Fasana”) and Matthew Komos (“Komos”). Collectively, Zelikson and Fasana shall be referred to hereinafter as the “ Zelcom Principals .”

INTRODUCTION

WHEREAS, Zelcom is a professional services firm engaged in risk management assessment consulting for businesses;

WHEREAS, Edentify is a corporation that is engaged in providing businesses with information-based and technology based services used in the detection and prevention of identity fraud desiring to acquire all of the outstanding capital and voting interests in Zelcom;

WHEREAS, Zelikson and Fasana own all the capital and voting interests in Zelcom; and

WHEREAS, Zelikson and Fasana desire to exchange (the “Exchange”) all of their membership interests in Zelcom for an aggregate of 750,000 shares of the common stock of Edentify (hereinafter, collectively, the “Edentify Shares”) to be issued in accordance with the provisions of paragraph 2.1 of this Agreement;

NOW, THEREFORE, in consideration of the premises and mutual covenants set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be bound hereby, do mutually agree as follows:

ARTICLE I
DEFINITIONS, DISCLOSURE SCHEDULE

1.1 Defined Terms . As used in this Agreement, the following terms shall have the meanings indicated below:

“Contract” shall mean any agreement, contract, license, indenture, lease, mortgage, license, plan, arrangement, commitment or instrument including any note or other debt instrument (whether written or oral).

“Edentify Disclosure Documents” shall refer to the disclosures made by Edentify in the SEC Filings (as hereinafter defined) as well as the Schedule of Exceptions (as hereinafter defined).

“Enforceability Exceptions” shall mean the extent to which enforceability of an obligation may be limited by applicable bankruptcy, insolvency, re-organization or other similar laws affecting the enforcement of creditors’ rights generally and by principles of equity regarding the availability of remedies.

“GAAP” shall refer to generally accepted accounting principles as applicable in the United States.

“Knowledge “ shall mean with respect to a party’s awareness of the presence or absence of a fact, event or condition (a) actual knowledge plus, if different, (b) the knowledge that would be obtained if such party conducted itself faithfully and exercised sound discretion in the management of his own affairs.

“Laws” shall mean all laws, common laws, rules, regulations, ordinances, codes, judgments, injunctions, orders, decrees, permits, policies and other requirements of the United States and other jurisdictions to which Zelcom and Edentify, as applicable, are subject,.

“Liabilities” shall mean any indebtedness, liability, loss, damage, deficiency, obligation or responsibility, fixed or unfixed, choate or inchoate, liquidated or unliquidated, secured or unsecured, accrued, absolute, contingent or otherwise, whether or not of a kind required by generally accepted accounting principles to be set forth on a financial statement including the notes thereto.

“Lien” means any mortgage, pledge, lien, encumbrance, charge, adverse claim or restriction of any kind affecting title or resulting in an encumbrance against property, real or personal, tangible or intangible, or a security interest of any kind (including any conditional sale or other title retention agreement, any lease in the nature thereof, any third party option or other agreement to sell and any filing of or agreement to give, any financing statement under the Uniform Commercial Code (or equivalent statute) of any jurisdiction).

“Material Adverse Effect” or “Material Adverse Change” with respect to a party means an adverse change which would in the aggregate have material adverse effect on the assets, liabilities (whether absolute, accrued, contingent or otherwise), condition (financial or otherwise), results of operations, business or prospects on a consolidated or combined basis of such party.

“Obligations” shall mean, with respect to Edentify, all liabilities, debts, amounts due, or contracts existing as of the Closing and any claims or causes of action arising out of or as a result of actions taken prior to Closing, as well as any and all expenses and costs related thereto.

“Person” shall mean any natural person, corporation, division of a corporation, partnership, trust, joint venture, association, company, estate, unincorporated organization or governmental entity.

“Schedule of Exceptions” shall mean the schedule that may be attached to and made part of this Agreement containing any exceptions to any representations made in this Agreement, which such schedule shall be organized into paragraphs corresponding to the sections of this Agreement.

“SEC Filings” shall mean all registration statements filed by Edentify pursuant to the Securities Act or reports filed by Edentify pursuant to the Securities Exchange Act since July 31, 2005.

“Securities Act” shall mean the Securities Act of 1933, as amended.

“Securities Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

“Subsidiary” shall refer to any corporations or other entities in which a Person has a majority interest or which is otherwise controlled by such Person.

“Taxes” shall mean any income, alternative or add-on minimum, business, employment, franchise, occupancy, payroll, property, sales, transfer, use, value added, withholding or other tax, levy, impost, fee, imposition, assessment or similar charge together with any related addition to tax, interest, penalty or fine thereon.

“Transactions” shall mean, in respect of any party, all transactions set forth in or contemplated by this Agreement that involve, relate to or affect such party, including, without limitation, the Exchange.

“Zelcom Disclosure Documents” shall refer to the disclosures made by Zelcom in the Schedule of Exceptions (as hereinafter defined).

ARTICLE II
THE TRANSACTIONS

2.1 The Exchange.

In the event that, prior to the end of the second anniversary of the Closing Date, any of Zelikson, Fasana or Komos (a) voluntarily terminates his employment with Zelcom or (b) is terminated for cause, each agrees that his Edentify Closing Shares shall be cancelled by the Company and hereby appoints the Chief Executive Officer or General Counsel of the Company as his attorney-in-fact for purposes of effecting such cancellation.

2.2 Minimum distributions to Zelcom Principals. The Zelcom Principals shall also be entitled to a twenty-five percent (25%) Profits Interest in the operations of Zelcom. For purposes of this Agreement, the Profits Interest shall include net profit resulting from normal operations and accounting for all intercompany projects, for this purpose, at cost and shall be cumulative and determined at the end of each calendar year of operations, and shall be payable only when and to the extent that the aggregate cumulative amount of income generated exceeds all aggregate cumulative losses incurred after Closing. For purposes of calculating the Profits Interest, any inter-company projects (i.e. between Edentify and Zelcom) shall have a twenty percent (20%) profit margin imputed. Any Profits Interest due shall be paid during the first quarter of the succeeding year. Any net losses shall be accumulated and set off against future net profits

2.3 Edentify Funding of Zelcom . Subject to, as necessitated by, and following the approval of Zelcom’s business plan by Edentify, Edentify will provide $500,000.00 in capital funding to promote Zelcom’s business and operations, for the first six (6) months after Closing in accordance with such business plan to be deposited into the operating bank account of Zelcom as follows, with each payment subject however, to Zelcom having not exceeded expenditures set forth on the pre-closing budget attached hereto as Exhibit “A” (hereinafter, the “Pre-Closing Budget”) by more than 10% through the relevant period without the prior written agreement of Edentify: (i) $150,000 at Closing; (ii) $150,000 no later than sixty (60) days after Closing, (iii) $100,000 no later than one hundred twenty (120) days after Closing provided however, that such deposit will be conditioned upon Zelcom achieving 75% of the revenue projections set forth on the Pre-Closing Budget and (iv) $100,000 no later than one hundred eighty (180) days after Closing, provided however, that such deposit will be conditioned upon Zelcom achieving 80% of the revenue projections set forth on the Pre-Closing Budget, as revised by Zelcom, provided further that such revision is delivered to Edentify no later than ninety (90) days after Closing and approved by Edentify. For purposes of this Agreement and the determination of whether Zelcom has exceeded expenditures, the Pre-Closing Budget shall be deemed to be presented on a cash basis and the calculation of whether the 10% benchmark has been met shall be on a cash basis. From time to time, during the eighteen (18) months after Closing, Edentify, in its sole discretion and subject to conditions mandated by Edentify, may make additional capital contributions to Zelcom for working capital purposes.

2.4 Intercompany Pricing Agreement . At Closing, the parties shall enter into an Intercompany Pricing Agreement in respect of all work done by Zelcom for clients of Edentify.

2.5 Employment of Zelcom Principals. At Closing, Edentify will cause Zelcom to execute employment agreements with each of the Zelcom Principals in substantially the form attached hereto as Exhibit “B.”

2.6 Warrants to Zelcom Principals . At Closing, each of the Zelcom Principals shall receive warrants (the “Warrants”) expiring three years from the date of Closing with an exercise price of $1.00 per share to acquire the number of shares of common stock of Edentify, as follows:

The Warrants shall be in substantially the form attached hereto as Exhibit “C.” In the event that, prior to the end of the second anniversary of the Closing Date, either Zelikson or Fasana (a) voluntarily terminates his employment with Zelcom or (b) is terminated for cause or, he shall forfeit the right to exercise any Warrants granted to him pursuant to this paragraph and such Warrants shall be cancelled with no further action of either party.

2.7 Closing . The closing of the Exchange contemplated hereby (the “Closing”) shall be held on the next business day after the parties have made the deliveries required in Article 3 of this Agreement. The Closing shall be held at such place and at such time as the parties may mutually agree but in no event later than January 31, 2007 at the offices of Edentify and may be effected by the exchange of fax copies or overnight delivery of executed documents by the respective parties. The date upon which such Closing shall occur shall be referred to as the “Closing Date.”

ARTICLE III
CLOSING DELIVERIES

3.1 Closing Deliveries by Zelcom . At the Closing, in addition to documents referred to elsewhere herein, Zelcom shall deliver to Edentify in a form reasonably satisfactory to Edentify and its counsel:

(1) the Unanimous Written Consent of the members of Zelcom Group, LLC to tra