SCWorx, Corp. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Acquisitions (Tables)

Acquisitions (Tables)

9 Months Ended

Sep. 30, 2016

Schedule of Business Acquisitions, by Acquisition [Table Text Block]

As consideration for the acquisitions of the businesses of the Target Companies and the Target Assets, the Company delivered the following amounts of cash and shares of common stock, and recorded a contingent liability related to the specified earn outs.

					Consideration		Contingent		Total		Total
Target Company	Cash		Shares		Paid		Consideration		Shares		Consideration
Shogun	$	250,000		111,111	$	750,000	$	174,219		149,826	$	924,219
CageTix		150,000		38,889		325,000		75,621		55,694		400,621
CFFC Promotions		235,000		470,000		2,350,000		184,632		511,029		2,534,632
GFL		450,000		419,753		2,338,889				419,753		2,338,889
HFC		120,000		106,667		600,000		60,170		120,038		660,170
COGA		80,000		75,556		420,000		182,890		116,198		602,890
V3 Fights		100,000		111,111		600,000		38,862		119,747		638,862
Total Target Companies	$	1,385,000		1,333,087	$	7,383,889	$	716,394		1,492,285	$	8,100,283

Hoss	$	100,000		44,444	$	300,000	$			44,444	$	300,000
Louis Neglia		155,000				155,000						155,000
Total Target Assets	$	255,000		44,444	$	455,000	$	-		44,444	$	455,000
Total	$	1,640,000		1,377,531	$	7,838,889	$	716,394		1,536,729	$	8,555,283

Schedule of Recognized Identified Assets Acquired and Liabilities Assumed [Table Text Block]

The following table reflects the preliminary allocation of the purchase price for the Target Assets and the businesses of the Target Companies to identifiable assets, liabilities assumed and pro forma intangible assets and goodwill:

	Target Companies																Target Assets
																			Louis
	Total		Shogun		CageTix		CFFC		GFL		HFC		COGA		V3 Fights		Hoss		Neglia
Cash and equivalents	$	118,764	$	13,131	$	48,969	$	551	$	42,081	$	11,194	$	2,838	$		$		$
Accounts receivable and other current assets, net		30,599		20,603				3,000		900		1,096		5,000
Property and equipment, net		23,661						4,448		13,174				6,039
Intangible assets		5,963,436		52,500		360,559		1,437,000		2,041,677		653,775		519,300		443,625		300,000		155,000
Goodwill		2,706,374		867,170		82,161		1,113,733		279,264		19,567		99,049		245,430
Total identifiable assets	$	8,842,834	$	953,404	$	491,689	$	2,558,732	$	2,377,096	$	685,632	$	632,226	$	689,055	$	300,000	$	155,000
Accounts payable and accrued expenses		287,551		29,185		91,068		24,100		38,207		25,462		29,336		50,193
Total identifiable liabilities	$	287,551	$	29,185	$	91,068	$	24,100	$	38,207	$	25,462	$	29,336	$	50,193	$		$
Total purchase price	$	8,555,283	$	924,219	$	400,621	$	2,534,632	$	2,338,889	$	660,170	$	602,890	$	638,862	$	300,000	$	155,000

Schedule of Goodwill [Table Text Block]

The change in the carrying amount of goodwill for the nine months ended September 30, 2016 is as follows:

Balance as of December 31, 2015	$	-
Goodwill acquired		2,706,374
Balance as of September 30, 2016	$	2,706,374

Schedule of Finite-Lived Intangible Assets Acquired as Part of Business Combination [Table Text Block]

The preliminary estimated useful lives of intangible assets are based upon each asset’s contribution to the business platform and growth strategy. All estimates are preliminary.

	Useful			Sho												V3				Louis
Intangible assets	Life	Total		Gun		CageTix		CFFC		GFL		HFC		COGA		Fights		Hoss		Neglia
Video library, intellectual property	5 years	$	3,636,477	$	52,500	$		$	397,000	$	2,041,677	$	197,000	$	352,300	$	141,000	$	300,000	$	155,000
Venue contracts	3 years		1,966,400						1,040,000				456,775		167,000		302,625
Ticketing software	3 Years		360,559				360,559
Total intangible assets		$	5,963,436	$	52,500	$	360,559	$	1,437,000	$	2,041,677	$	653,775	$	519,300		443,625	$	300,000	$	155,000

Schedule of Finite-Lived Intangible Assets, Future Amortization Expense [Table Text Block]

As of September 30, 2016, estimated amortization expense for the unamortized acquired intangible assets for the next five years and thereafter is as follows:

The remainder of 2016	$	375,737
2017		1,502,948
2018		1,502,948
2019		1,309,035
2020		727,295
Thereafter		545,473
	$	5,963,436

Business Acquisition, Pro Forma Information [Table Text Block]

	Target Companies - Actual Results
																					Pro
															Target						Forma
													V3		Companies		Alliance		Total		Adjusting			Pro
	Shogun		CageTix		CFFC		GFL		HFC		COGA		Fights		Subtotal		MMA		Results		Entries			Forma Results
Revenue	$	302	$	106	$	432	$	340	$	193	$	90	$	97	$	1,559	$		$	1,559	$			$	1,559
Cost of revenues		204				337		231		133		50		62		1,016				1,016					1,016
Gross profit		98		106		95		109		60		40		35		543				543					543
Operating expenses
General and administrative expenses		16		22		65		125		13		27		18		285		399		684					684
Professional and consulting fees		8				8		10		8		9		10		52		420		472		(311)	⁽ⁱ⁾		161
Depreciation						1		21				6				28				28		-			28
Amortization																				-		1,127	⁽ⁱⁱ⁾		1,127
Total operating expenses		24		22		74		156		21		42		28		365		819		1,184		975			2,000
Net income (loss)		74		84		21		(47)		39		(2)		7		178		(819)		(641)		(975)		$	(1,457)
Weighted average common shares outstanding																									8,888,978
Net loss per common share																								$	0.18

(i) Professional fees. The Target Companies incurred approximately $311,000 of professional fees directly related to the acquisition of prospective targets. These costs will be non-recurring and have been adjusted from the pro forma results.

(ii) Amortization of intangible assets. Intangible assets are amortized over their estimated useful lives. The estimated useful lives of acquired intangible assets are based upon the economic benefit expected to be received and the period during which we expect to receive that benefit. A useful life of five years has been assigned to the intellectual property rights of acquired video libraries and three years to the acquired ticketing software and customer and venue relationships based on a number of factors, including contractual agreements, estimated production hours available on video libraries and economic factors pertaining to the combined companies.