Note 7 - Goodwill and Other Intangible Assets

12 Months Ended

Dec. 31, 2017

Goodwill and Intangible Assets Disclosure [Text Block]

Note

– Goodwill and Other Intangible Assets

Our definite-lived intangible assets as of

December 31, 2017

and

2016

were as follows:

	December 31,			December 31,
	2017			2016

Trademarks	$	917,000		$	917,000
Technology		6,576,000			6,576,000
Customer and clinician relationships		904,000			904,000
Intangible assets		8,397,000			8,397,000
Accumulated amortization - trademarks		(101,067	)		(39,934	)
Accumulated amortization - technology		(1,207,957	)		(477,290	)
Accumulated amortization - customer and clinician relationships		(99,634	)		(39,368	)
Accumulated amortization - intangible assets		(1,408,658	)		(556,592	)
Impairment of intangible assets		(6,988,342	)		-
Intangible assets, net	$	-		$	7,840,408

Goodwill

Goodwill represents the excess of reorganization value over the fair value of tangible and identifiable intangible assets and the fair value of liabilities as of the Effective Date. Changes in goodwill for the periods presented follows:

Goodwill balance, at December 31, 2015	$	-

Fresh start accounting		2,079,284

Balance, at December 31, 2016		2,079,284

Impairment of goodwill		(2,079,284	)

Goodwill balance, at December 31, 2017	$	-

As a result of events and circumstances in the quarter ended

June 30, 2017,

including a sustained reduction in our stock price, we determined that it was more likely than

not

that our fair value was reduced below the carrying value of our net equity, requiring an impairment test as of

June 30, 2017.

We compared our carrying value to our fair value as reflected by our

June 30, 2017

market capitalization and concluded that our carrying value exceeded our fair value by approximately

$2.8

million. Consequently, we recognized a non-cash goodwill impairment charge of approximately

$2.1

million to write down goodwill to its estimated fair value of

zero

as of

June 30, 2017.

Definite-lived intangible assets – trademarks, customer and clinician relationships and technology

The Predecessor Company’s definite-lived intangible assets included Angel-related trademarks, technology (including patents) and customer relationships, and were being amortized over their useful lives ranging from

eight

twenty

years. Amortization expense associated with our Angel related definite-lived intangible assets was approximately

$0.1

million for the period from

January 1, 2016

through

May 4, 2016.

The remaining Angel related definite-lived intangible assets were eliminated as of

May 4, 2016

as the underlying Angel assets were assigned to Deerfield pursuant to the Plan of Reorganization.

The Successor Company’s Aurix related definite-lived intangible assets include trademarks, technology (including patents), and clinician relationships, and are being amortized over their useful lives ranging from

nine

fifteen

years. Amortization expense associated with our Aurix related finite-lived intangible assets was approximately

$852,000

for the year ended

December 31, 2017

of which approximately

$731,000

was charged to cost of goods sold. Amortization expense was approximately

$0.6

million for the period from

May 5, 2016

through

December 31, 2016.

As of

December 31, 2017,

the Company concluded that the remaining intangible assets of approximately

$7.0

million were impaired due to the substantial uncertainty concerning the Company as a going concern and the assessment that it was more likely than

not

that the carrying value of the intangible assets would

not

be recovered from future cash flows. As a result, the Company concluded that the fair value of the intangibles assets was

zero

as of

December 31, 2017

and recognized an impairment loss in the

fourth

quarter of

2017

of approximately

million.

- 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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