Annual report pursuant to Section 13 and 15(d)

Intangible Assets and Impairment of Long-Lived Assets

v3.23.1
Intangible Assets and Impairment of Long-Lived Assets
12 Months Ended
Dec. 31, 2022
Goodwill and Intangible Assets Disclosure [Abstract]  
INTANGIBLE ASSETS AND IMPAIRMENT OF LONG-LIVED ASSETS

NOTE 5 - INTANGIBLE ASSETS AND IMPAIRMENT OF LONG-LIVED ASSETS

 

Intangible assets consist of the following as of December 31, 2022 and 2021:

 

    Remaining
Amortization
Period
  As of December 31, 2022     As of December 31, 2021  
    in Years at
December 31,
2022
  Gross
Asset
Value
    Accumulated
Amortization
    Net
Carrying
Value
    Gross
Asset
Value
    Accumulated
Amortization
    Net
Carrying
Value
 
Licensed patents   13.5   $ 596,259     $ (142,654 )   $ 453,605     $ 603,919     $ (110,759 )   $ 493,160  
Technology license   16.6     1,485,159       (279,906 )     1,205,253       1,658,550       (202,797 )     1,455,753  
        $ 2,081,418     $ (422,560 )   $ 1,658,858     $ 2,262,469     $ (313,556 )   $ 1,948,913  

 

Changes in the gross asset value of licensed patents and technology licenses from the dates acquired are the result of changes in the foreign currency exchange rate.

 

The Company recorded amortization expense of $109,004 and $116,297 during the years ended December 31, 2022 and 2021, respectively, related to intangible assets, which is included in general and administrative expense on the accompanying consolidated statements of operations and comprehensive loss.

 

Future amortization related to intangible assets is as follows:

 

For the Years Ending December 31,      
2023   $ 109,489  
2024     109,489  
2025     109,489  
2026     109,489  
2027     109,489  
Thereafter     1,111,413  
    $ 1,658,858  

 

Goodwill Impairment

 

The Company’s publicly traded stock closed at $78.00 per share as of December 31, 2021; during 2022, the market value of the Company’s single reporting unit significantly declined. As of March 31, 2022, June 30, 2022, September 30, 2022 and December 31, 2022, the market value of the Company’s publicly traded stock fell to $51.80, $16.96, $13.30 and $3.39, per share, respectively, and as such, the Company elected to conduct a quantitative analysis of goodwill to assess for impairment as of September 30, 2022 and December 31, 2022. The Company determined the fair market value of its single reporting unit and compared that value with the carrying amount of the reporting unit and determined that goodwill was impaired as of both measurement dates. As of September 30, 2022 and December 31, 2022, the carrying value exceeded the fair market value by $18,872,850 and $14,674,428, respectively. To recognize the impairment of goodwill, the Company recorded losses for these amounts at the end of the third and fourth quarters, which appear as a loss on goodwill impairment of $33,547,278 on the income statement for the year ended December 31, 2022.

 

The following is a summary of goodwill activity for the year ended December 31, 2022 for the Company’s single reporting unit, which includes the recorded losses on goodwill impairment described above.

 

    CBR
Pharma
Goodwill
    180 LP
Goodwill
    Consolidated
Goodwill
 
Balance, December 31, 2021   $ 23,749,631     $ 13,238,255     $ 36,987,886  
Currency translation     (664,353 )    
-
      (664,353 )
                         
Balance, March 31, 2022     23,085,278       13,238,255       36,323,533  
Currency translation     (1,734,582 )    
-
      (1,734,582 )
                         
Balance, June 30, 2022     21,350,696       13,238,255       34,588,951  
Currency translation     (1,750,386 )    
-
      (1,750,386 )
Balance before impairment     19,600,310       13,238,255       32,838,565  
Impairment of goodwill     (11,264,612 )     (7,608,238 )     (18,872,850 )
                         
Balance, September 30, 2022     8,335,698       5,630,017       13,965,715  
Currency translation     708,713      
-
      708,713  
Balance before impairment     9,044,411       5,630,017       14,674,428  
Impairment of goodwill     (9,044,411 )     (5,630,017 )     (14,674,428 )
                         
Balance, December 31, 2022   $
-
    $
-
    $
-
 

 

IP R&D Assets Impairment

 

As of December 31, 2022, the carrying amount of the IP R&D assets on the balance sheet was $12,405,084 (which consists of carrying amounts of $1,462,084 and $10,943,000 related to the Company’s CBR Pharma subsidiary and its 180 LP subsidiary, respectively). Per the valuation obtained from a third party as of year-end, the fair market value of the Company’s IP R&D assets was determined to be $9,063,000 (which consists of fair values of $0 and $9,063,000 related to the Company’s CBR Pharma subsidiary and 180 LP subsidiary, respectively). As of this measurement date, the carrying values of the CBR Pharma and 180 LP subsidiaries’ assets exceeded their fair market values by $1,462,084 and $1,880,000, respectively. As such, management determined that the consolidated IP R&D assets were impaired by $3,342,084 and, in order to recognize the impairment, the Company recorded a loss for this amount during the fourth quarter of 2022, which appears as a loss on impairment to IP R&D assets on the income statement. This reduced the IP R&D asset balances of its CBR Pharma subsidiary and its 180 LP subsidiary to zero and $9,063,000, respectively, as of December 31, 2022; the total consolidated IP R&D asset balance is $9,063,000 after impairment.

 

The following is a summary of IP R&D activity for the year ended December 31, 2022 for the Company, which includes the recorded loss for the IP R&D assets described above.

 

    CBR
Pharma IP
R&D Assets
    180 LP IP
R&D
Assets
    Consolidated
IP R&D
Assets
 
Balance, December 31, 2021   $ 1,632,780     $ 10,943,000     $ 12,575,780  
Currency translation     (45,674 )    
-
      (45,674 )
                         
Balance, March 31, 2022     1,587,106       10,943,000       12,530,106  
Currency translation     (119,252 )    
-
      (119,252 )
                         
Balance, June 30, 2022     1,467,854       10,943,000       12,410,854  
Currency translation     (120,338 )    
-
      (120,338 )
                         
Balance, September 30, 2022     1,347,516       10,943,000       12,290,516  
Currency translation     114,568      
-
      114,568  
Balance before impairment     1,462,084       10,943,000       12,405,084  
Impairment of IP R&D assets     (1,462,084 )     (1,880,000 )     (3,342,084 )
                         
Balance, December 31, 2022   $
-
    $ 9,063,000     $ 9,063,000