Note 5. Business Combinations

Purchase accounting

On February 1, 2019, the Company’s shareholders exchanged all of its outstanding shares in exchange for 5,263,158 shares of Alliance common stock. Due to the Company’s shareholders acquiring a controlling interest in Alliance after acquisition, the transaction was treated as a reverse merger for accounting purposes, with SCWorx being the reporting company. In accordance with purchase accounting rules under ASC 805, the purchase consideration was $11,765,491.

The acquisition was accounted for under the acquisition method of accounting. The assets acquired, liabilities assumed and purchase allocation, which is based on valuations of management, is as follows:

Identified intangible assets consist of the following:

Amortization expense for the years ended December 31, 2019 and 2018, was $34,781 and $0, respectively.

As of December 31, 2019, the estimated future amortization expense on an annual basis of amortizable intangible assets is as follows:

The estimated future amortization expense for the next five years and thereafter is as follows:

Goodwill

The changes to the carrying value of goodwill from January 1, 2019 through December 31, 2019 are reflected below:

During the measurement period the Company adjusted the original goodwill amount by $99,815.