Intangible Asset

and Goodwill

During the year ended

December 31, 2018,

the Company experienced a significant and sustained decline in its stock price. The decline resulted in the Company’s market capitalization falling significantly below the recorded value of its consolidated net assets. As a result, the Company performed a quantitative assessment as of

June 30, 2018

and computed a fair value for its intangible assets and goodwill. In performing the assessment, the Company used current market capitalization, discounted future cash flows, internal forecasts and other factors as the best evidence of fair value. These assumptions represent Level

inputs. The assessment determined that the carrying amount for the Company’s goodwill exceeded the estimated fair value. Additionally, the Company’s indefinite-lived intangible assets, relating to the clinical protocols was also determined to be impaired. Also, the Company has significantly reduced its operating activities in India and impaired the remaining goodwill and substantially all of the intangible assets including the remainder of the clinical protocols, associated with the acquisition of our Totipotent subsidiaries.

The Company recorded an impairment charge of

$13,195,000

to goodwill and

$19,886,000

to intangible assets during the year ended

December 31, 2018,

as shown in the following table.

	Intangible Assets			Goodwill
Balance at December 31, 2017, net	$	21,629,000		$	13,976,000

Amortization and foreign exchange (current year)		(152,000	)		--

Impairment loss		(19,886,000	)		(13,195,000	)

Balance at December 31, 2018, net	$	1,591,000		$	781,000

Also, there was a

$310,000

impairment of the covenants

not

to compete intangible assets during the year ended

June 30, 2017

as the assumed revenues that were in the fair value estimate have been delayed due to the delay in the clinical trial.

Intangible assets consist of the following based on the Company’s determination of the fair value of identifiable assets acquired:

As of December 31, 2018
	Weighted Average Amortization Period (in Years)		Gross Carrying Amount		Accumulated Amortization		Impairment		Net
Trade names		3	$	54,000	$	38,000			$	16,000
Developed technology		10		318,000		48,000				270,000
Licenses		7		448,000		307,000				141,000
Device registration		7		84,000		68,000	$	16,000		--
Customer relationships		3		451,000		430,000		--		21,000
Amortizable intangible assets				1,355,000		891,000		16,000		448,000
In process technology				1,143,000		--		--		1,143,000
Clinical protocols				19,870,000		--		19,870,000		--
Total			$	22,368,000	$	891,000	$	19,886,000	$	1,591,000

As of December 31, 2017
	Weighted Average Amortization Period (in Years)		Gross Carrying Amount		Accumulated Amortization		Net
Trade names		7	$	56,000	$	21,000	$	35,000
Developed technology		10		318,000		16,000		302,000
Licenses		7		489,000		271,000		218,000
Customer relationships		3		490,000		456,000		34,000
Device registration		7		92,000		65,000		27,000
Amortizable intangible assets				1,445,000		829,000		616,000
In process technology				1,143,000		--		1,143,000
Clinical protocols				19,870,000		--		19,870,000
Total			$	22,458,000	$	829,000	$	21,629,000

The change in the gross carrying amount is due to foreign currency exchange fluctuations and the write-off of assets for impairment. Amortization of intangible assets was

$131,000

for the year ended

December 31, 2018;

$68,000

for the

six

months ended

December 31, 2017

and

$359,000

for the year ended

June 30, 2017.

In process technology has

not

yet been introduced to the market place and is therefore

not

yet subject to amortization. Clinical protocols were

not

introduced to the market place and is therefore were

not

subject to amortization prior to being written off during the year ended

December 31, 2018.

The Company’s estimated future amortization expense for subsequent years, are as follows:

Year Ended December 31,
2019	$	122,000
2020		111,000
2021		40,000
2022		32,000
2023		32,000
Thereafter		111,000
Total	$	448,000