SCWorx, Corp. Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Acquisitions (Tables)

Acquisitions (Tables)

12 Months Ended

Dec. 31, 2016

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

As consideration for the acquisitions of the Initial Business Units and the Acquired Assets, the Company delivered the following amounts of cash and shares of common stock, and initially estimated a contingent liability related to the specified earn outs.

Initial Business Units and Acquired Assets	Cash		Shares		Consideration Paid		Contingent Consideration		Total Shares		Total 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 Initial Business Units	$	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 Acquired 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 Initial Business Units and Acquired Assets to identifiable assets, liabilities assumed and pro forma intangible assets and goodwill:

	Initial Business Units																Acquired Assets
	Total		Shogun		CageTix		CFFC		GFL		HFC		COGA		V3 Fights		Hoss		Louis Neglia
Cash and equivalents	$	118,764	$	13,131	$	48,969	$	551	$	42,081	$	11,194	$	2,838	$		$		$
Accounts receivable and other current assets, net		34,599		20,603				3,000		900		1,096		9,000
Property and equipment, net		23,661						4,448		13,174				6,039
Intangible assets		5,839,700		52,500		360,559		1,437,000		2,041,677		617,880		431,459		443,625		300,000		155,000
Goodwill		2,878,071		692,951		6,540		937,101		1,034,911						206,568
Total identifiable assets	$	8,894,795	$	779,185	$	416,068	$	2,382,100	$	3,132,743	$	630,170	$	449,336	$	650,193	$	300,000	$	155,000
Accounts payable and accrued expenses		1,055,906		29,185		91,068		32,100		793,854		30,170		29,336		50,193
Total identifiable liabilities	$	1,055,906	$	29,185	$	91,068	$	32,100	$	793,854	$	30,170	$	29,336	$	50,193	$		$
Total purchase price	$	7,838,889	$	750,000	$	325,000	$	2,350,000	$	2,338,889	$	600,000	$	420,000	$	600,000	$	300,000	$	155,000

Schedule of Goodwill [Table Text Block]

The change in the carrying amount of goodwill for the year ended December 31, 2016 is as follows:

Balance as of December 31, 2015	$
Goodwill Initial Business Units		2,706,374
Goodwill Initial Business Units Balance Sheet adjustments		12,708
Goodwill Preliminary Purchase Accounting change in estimate		(596,658)
Goodwill Deferred tax liability from acquisition of GFL		755,647
Goodwill Iron Tiger Fight Series		393,744
Balance as of December 31, 2016	$	3,271,815

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.

Intangible assets	Useful Life	Total		Shogun		CageTix		CFFC		GFL		HFC		COGA		V3 Fights		Hoss		Louis Neglia		IT		Alliance Brand
Video library, intellectual property	5 years	$	3,512,741	$	52,500	$		$	397,000	$	2,041,677	$	161,105	$	264,459	$	141,000	$	300,000	$	155,000
Venue contracts	3 years		1,966,400						1,040,000				456,775		167,000		302,625
Brand	3 years		325,000																				255,000	70,000
Ticketing software	3 years		360,559				360,559
Total intangible assets		$	6,164,700	$	52,500	$	360,559	$	1,437,000	$	2,041,677	$	617,880	$	431,459		443,625	$	300,000	$	155,000	$	255,000	70,000

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

As of December 31, 2016, estimated amortization expense for the unamortized acquired intangible assets for the next five years and thereafter is as follows:

2017	$	1,573,201
2018		1,573,201
2019		1,372,205
2020		712,548
2021		536,911
Thereafter		12,147
	$	5,780,213

Business Acquisition, Pro Forma Information [Table Text Block]

The following table presents the pro forma operating results as if the acquisitions had been included in the Company's consolidated statements of operations as of January 1, 2016 (unaudited, in thousands except share information):

	Initial Business Units and Iron Tiger Fight Series Actual Results
	Shogun		CageTix		CFFC		GFL		HFC		COGA		V3 Fights		IT		Subtotal		Alliance MMA		Total Results		Pro Forma Adjusting Entries				Pro Forma Results
Revenue	$	546	$	132	$	554	$	403	$	258	$	117	$	136	$	137	$	2,283	$		$	2,283	$			$	2,283
Cost of revenues		376				424		261		172		72		82		104		1,491				1,491					1,491
Gross profit		170		132		130		142		86		45		54		33		792				792					792
Operating expenses		78		29		103		180		35		51		34		14		524		4,214		4,738		1,213	⁽ⁱ⁾		5,951
Other income (expense)						(1)		(1)				(1)						3				3					(3)
Net income (loss)		92		103		26		(39)		51		(7)		20		19		265		(4,214)		(3,949)		(1,213)		$	(5,162)
Weighted average common shares outstanding																											7,355,577
Net loss per common share																										$	(0.70)

(i)

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, customer and venue relationships and brand based on a number of factors, including contractual agreements, estimated production hours available on video libraries and economic factors pertaining to the combined companies.

Iron Tiger Fight Series [Member]

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

As consideration for the acquisitions of Iron Tiger Fight Series, the Company delivered the following amounts of cash and shares of common stock.

Target Company		Cash			Shares			Consideration Paid
Iron Tiger Fight Series		$	150,000			133,333		$	656,665

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 business of the Iron Tiger Fight Series to identifiable assets and preliminary pro forma intangible assets and goodwill:

	IT
Cash	$	1,716
Accounts receivable, net		6,205
Intangible assets		255,000
Goodwill		393,744
Total identifiable assets	$	656,665
Total identifiable liabilities	$
Total purchase price	$	656,665