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

Quarterly report pursuant to Section 13 or 15(d)

Goodwill and Purchased Identifiable Intangible Assets

Goodwill and Purchased Identifiable Intangible Assets

6 Months Ended

Jun. 30, 2018

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets Disclosure [Text Block]

Note 5. Goodwill and Purchased Identifiable Intangible Assets

Goodwill

In May 2018, the Company ceased all professional MMA promotion operations and committed to an exit/disposal plan of the promotion businesses. In conjuction with the discontinued operations, $4,440,932 of Goodwill was classified as Long term assets - discontinued operations within the December 31, 2017, condensed consolidated balance sheet, which was disposed of during the second quarter 2018. Refer to “Note 3 Discontinued Operations".

During the three and six months ended June 30, 2018, the Company recorded a goodwill impairment of $1.5 million within the Athlete Management Segment. The impairment was identified as part of Management’s review of impairment indicators. Accordingly, it was determined that the recoverable value of the reporting unit was less than the carrying value and therefore, an impairment loss was recorded.

Goodwill

The change in the carrying amount of goodwill for the six months ended June 30, 2018 is as follows:

Balance as of December 31, 2017	$	1,522,605
Impairment goodwill		(1,522,605)
Balance as of June 30, 2018	$

Intangible Assets

During the three and six months ended June 30, 2018, the Company recorded an intangible impairment charge of $413,583 related to the write down of the ticketing software, trademark and brand, fighter contracts, promoter relationships and sponsor relationships acquired intangible assets from the CageTix and SuckerPunch business acquisitions.

The change in the carrying amounts of intangible assets for the six months ended June 30, 2018 is as follows:

Balance as of December 31, 2017	$	472,250
Amortization		58,667
Impairment intangibles		413,583
Balance as of June 30, 2018	$

Identified intangible assets consist of the following:

		June 30, 2018							December 31, 2017
Intangible assets	Useful Life	Gross Assets		Accumulated Amortization		Impairment		Net	Gross Assets		Accumulated Amortization		Net
Ticketing software	3 years	$	90,000	$	(52,500)	$	37,500	$	$	90,000	$	(37,500)	$	52,500
Trademark and brand	3 years		50,000		(25,000)		25,000			50,000		(16,667)		33,333
Fighter contracts	3 years		140,000		(21,000)		119,000			140,000		(14,000)		126,000
Promoter relationships	6 years		277,099		(57,516)		219,583			277,099		(31,682)		245,417
Sponsor relationships	4 years		20,000		(7,500)		12,500			20,000		(5,000)		15,000
Total intangible assets, gross		$	577,099	$	(163,516)	$	413,583	$	$	577,099	$	(104,849)	$	472,250

Amortization expense for the three months ended June 30, 2018 and 2017, was $29,333 and $29,333, respectively.

Amortization expense for the six months ended June 30, 2018 and 2017, was $58,667 and $58,667, respectively.

In May 2018, the Company ceased all professional MMA promotion operations and committed to an exit/disposal plan of the promotion business. In conjunction with the discontinued operations, $2.4 million of intangible assets, net, were classified as long term assets - discontinued operations within the December 31, 2017, condensed consolidated balance sheet, which were disposed of during the second quarter 2018.

As of June 30, 2018, the balance of intangible assets was $0.

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

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