Goodwill and Intangible Assets

3 Months Ended

Oct. 31, 2018

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets

Note 10 – Goodwill and Intangible Assets

The change in the carrying amount of goodwill and other intangible assets for the year ended July 31, 2018 and three-month period ended October 31, 2018, is as follows:

	Total		Goodwill		Other Intangibles, net
Balance as of July 31, 2018	$	3,187,757	$	—	$	3,187,757
		8,946,073		8,883,982		62,091
Balance as of October 31, 2018	$	12,133,830	$	8,883,982	$	3,249,848

Intangible assets are generally amortized on a straight-line basis over the useful lives of the assets. The Company is currently not amortizing the in-process research and development until it becomes commercially viable and placed in service. At the time when the intangible assets are placed in service the Company will determine a useful life.

Goodwill for HDS was valued at $14.3 million as of the date of acquisition.  It was later determined that the value of goodwill was $13.4 million due to the change in estimates of in-process research and development.

Goodwill represents the excess of the purchase price over the fair market value of net assets acquired. Goodwill for HDS was $14.3 million as of the date of the acquisition. When the acquisition transaction closed in January 2017, HDS was a development-stage entity and its liabilities exceeded the aggregate value of its assets. Utilizing discounted cash flow (DCF) valuation methodology, Generex determined that HDS has forecasted losses throughout the reasonably foreseeable future with a nominal terminal value. In addition, there was a high degree of uncertainty as to the future cash flows of HDS. Therefore, the Company concluded that the implied goodwill arising out of the acquisition was zero and should be properly characterized as fully impaired as of July 31, 2018.