Intangible Assets and Goodwill
|9 Months Ended|
Sep. 30, 2022
|Goodwill and Intangible Assets Disclosure [Abstract]|
|Intangible Assets and Goodwill||
Note 10 — Intangible Assets and Goodwill
As of September 30, 2022, intangible assets consisted of the following:
Schedule of Intangible Assets
As of December 31, 2021, intangible assets consisted of the following:
Given the downturn in the Company’s business during the three months ended September 30, 2022, the Company determined that there was an early impairment indicator which would trigger an impairment test as of September 30, 2022. The Company engaged an independent third party to perform a quantitative assessment of goodwill and intangible assets related to Lomotif and Adrizer as of September 30, 2022.
The valuation methods used in the quantitative fair value assessment of the intangible assets used was a multi-period excess earnings method for developed technology, distributor method for customer relationships and relief from royalty for tradenames. Based on quantitative testing performed, the Company determined that the fair value based on a discounted cash flow model is less than the carrying value for developed technology intangible assets related to Lomotif and AdRizer. The Company wrote off $50,511,950 of developed technology net of $5,179,932 of accumulated amortization.
Further, based on the quantitative impairment test for customer relationships and tradenames, the Company determined that the sum of undiscounted cash flows is greater than or equal to the carrying value for customer relationships and trade name and therefore further impairment testing is not required no impairment and no adjustment to carrying value was deemed necessary.
In addition to the impairment analysis for Lomotif and Adrizer, during the three months ended September 30, 2022, due to changes in business strategy, the Company abandoned its consumer products business, Edison Nation, and decided not to utilize E-NFT, a legacy technology from the EVNT Platform. As a result, the Company no longer expects any future benefit from the related intangible assets and has determined it necessary to fully impair the related intangible assets. During the three months ended September 30, 2022, the Company recorded the following write offs; $498,779 net of $171,221 of accumulated amortization for customer relationships for Edison Nation, $1,221,428 net of $1,478,572 of accumulated amortization for developed technology for Edison Nation, $787,145 net of $952,855 of accumulated amortization for membership network for Edison Nation, $1,240,000 net of $0 of accumulated amortization for trademarks and tradenames for Edison Nation, and $6,607,990 net of $943,997 of accumulated amortization for developed technology for E-NFT.
Amortization expense for the three months ended September 30, 2022 and 2021 was $1,019,176 and $3,861,232, respectively. Amortization expense for the nine months ended September 30, 2022 and 2021 was $5,703,697 and $4,877,232, respectively.
The estimated future amortization of intangibles subject to amortization as of September 30, 2022 was as follows:
Schedule of Intangible Assets Future Amortization Expenses
The changes in the carrying amount of goodwill for the period January 1, 2021 through September 30, 2022, consisted of the following:
Schedule of Goodwill
The Company determined that a triggering event under ASC 350-20: Impairment – Goodwill had occurred. The current guidance requires an entity to consider whether an event has occurred or circumstances have changed that would more likely than not reduce the fair value of a reporting unit. Due to various management disputes between existing members of the Board of Directors and members of executive management; the receipt of an Alternate Exercise Notice (with respect to 67,760,699 December Warrants to receive a cash payment of $0.361 per December Warrant and with respect to 14,500,000 November Warrants to receive a cash payment of $0.65 per November Warrant), and Amendment to the July 2021 Note, the Company evaluated the value of both Goodwill and its Intangible Assets.
Taken in conjunction with the resulting Going Concern, the Company abandoned its product businesses. Our consumer products business was led by Edison Nation. Edison Nation had a number of internally developed brands (“EN Brands”), including Cloud B, Pirasta, Uber Mom, Lily and Grey, Trillion Trees, and Barkley Lane. The Company impaired the related intangible assets in the third quarter, which included customer relationships, developed technology, membership network and trademarks of $3,747,349 (net of amortization) and goodwill of $4,938,674 associated with this business. During the nine months ended September 30, 2022 the total goodwill impairment related to Edison Nation is $5,392,123.
In addition, with the spinoff of Cryptyde, the Company made the determination that it was no longer interested in continuing to operate and profit from E-NFT. The developed technology intangible asset for the EVNT platform of $6,607,989 (net of amortization) was fully impaired at September 30, 2022.
Further the Company performed a quantitative impairment test for both the remaining goodwill and intangible assets of the remaining business, Lomotif and AdRizer, and recorded impairment charges of $76,537,124 and $10,074,850, respectively during the three months ended September 30, 2022.
No definition available.
The entire disclosure for goodwill and intangible assets.
Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef