6. INTANGIBLE ASSETS

12 Months Ended

Sep. 30, 2019

Intangible Assets, Net (Including Goodwill) [Abstract]

INTANGIBLE ASSETS

With the Mergers of Cure Based Development, the Company has made a strategic shift toward the CBD business and all entities and their associated intangibles have been assessed during the year ended September 30, 2019 with that focus and their ability to support that business line.

On September 8, 2017, the Company entered into a seven year wholesale license agreement with Andre Carthen and issued 45,500 shares of common stock, valued at $179,725. In addition, the Company agreed to pay $65,000 in cash within 30 days completion of its initial public offering and also issued warrants to purchase 45,500 shares of common stock at a strike price of $4.00. The warrants were valued at $65,338. Under the terms of this nonexclusive agreement, we have the right to use, assign and sublicense the marks, intellectual property and other rights in connection with "Chef Andre," "Andre Carthen," ACafe" or "Fit Chef" and all trade names, trademarks and service marks related to this intellectual property for the purpose of entering into sublicense agreements with third parties for the manufacture, marketing and sale of products utilizing these marks. In December 2018, the parties amended the agreement to remove the annual minimum guarantee in return for a one time payment of $70,000. We are amortizing the capitalized value of the cash, warrants and common stock over the seven year term of the agreement. Effective September 30, 2019 it was determined that this asset was no longer useable for the current business focus and at September 30, 2019, the Company recorded an impairment charge for the full carrying value of $296,460 (see below).

On September 8, 2017, the Company entered into a seven year wholesale license agreement with Nicholas Walker and issued 25,000 shares of common stock, valued at $98,750. In addition, the Company agreed to pay $40,000 in cash within 30 days completion of its initial public offering and also issued warrants to purchase 25,000 shares of common stock at a strike price of $4.00. The warrants were valued at $35,900. Under the terms of this nonexclusive agreement, we have the right to use, assign and sublicense the marks, intellectual property and other rights in connection with "Jardin," "Nicholas Walker," "Nicholas Walker Jardin," "Nicholas Walker Garden Party," "Cultivated by Nicholas Walker," and "Jardin Du Jour," and all trade names, trademarks and service marks related to this intellectual property for the purpose of entering into sublicense agreements with third parties for the manufacture, marketing and sale of products utilizing these marks. In December 2018, the parties amended the agreement to remove the annual minimum guarantee in return for a one time payment of $10,000. We are amortizing the capitalized value of the cash, warrants and common stock over the seven year term of the agreement. Effective September 30, 2019 it was determined that this asset was no longer useable for the current business focus and at September 30, 2019, the Company recorded an impairment charge for the full carrying value of $140,118 (see below).

On December 20, 2018, the Company completed the Mergers with Cure Based Development and acquired certain assets, including the trademark "cbdMD" and its variants and certain other intellectual property. The trademark is the cornerstone of this subsidiary and is key as we create and distribute products and continue to build this brand. We believe the trademark does not have limits on the time it will contribute to the generation of cash flows and therefore we have identified these as indefinite-lived intangible assets (see Note 2 for more information).

In September 2019, the Company purchased the rights to the trademark name HempMD for $50,000. This trademark will be used in the marketing and branding of certain products to be released under this brand name. We believe the trademark does not have limits on the time it will contribute to the generation of cash flows and therefore we have identified these as indefinite-lived intangible assets.

Intangible assets as of September 30, 2019 and 2018 consisted of the following:

	September 30,		September 30,
	2019		2018
Trademark related to cbdMD	$	21,585,000	$	-
Trademark for HempMD		50,000		-
Wholesale license agreement with Chef Andre Carthen, net		-		262,077
Wholesale license agreement with Nicholas Walker, net		-		147,620
Continuing Operations		21,635,000		409,697
Trademark and other intellectual property related to I’M1		-		971,667
Trademark and other intellectual property related to EE1		-		471,667
Trademark, tradename and other intellectual property related to kathy ireland® Health & Wellness™, net		-		1,074,194
Trademark and other intellectual property related to BPU		-		246,760
Discontinued Operations		-		2,764,288
Total	$	21,635,000	$	3,173,985

The Company performs an impairment analysis at August 1 annually on the indefinite-lived intangible assets following the guidance in ASC 350-30-35-18. Our annual impairment analysis includes a qualitative assessment to determine if it is necessary to perform the quantitative impairment test. In performing a qualitative assessment, we review events and circumstances that could affect the significant inputs used to determine if the fair value is less than the carrying value of the intangible assets. In addition, intangible assets will be tested on an interim basis if an event or circumstance indicates that it is more likely than not that an impairment loss has been incurred and the Company evaluates the indefinite-lived intangible assets each reporting period to determine whether events and circumstances continue to support an indefinite useful life. The Company performed a qualitative analysis for the year ended September 30, 2019 and has determined there has been no impairment. As the business focus of the Company has shifted to the CBD business, all intangible assets were assessed to determine how they can support the CBD business – see Note 15 for impairments related to discontinued operations.

The Company also performs an impairment analysis at August 1 annually on the definite lived intangible assets following the guidance in ASC 360-10-35-21. We first assess if there is an indicator of possible impairment such as change in the use of the asset, market price changes in the asset, or other events that impact the value of the asset. If an indicator is present we then perform a quantitative analysis to determine if the carrying amount of the asset is recoverable. This is done by comparing the total undiscounted future cash flows of the long-lived asset to its carrying amount. If the total undiscounted future cash flows exceed the carrying amount of the asset, the carrying amount is deemed recoverable and an impairment is not recorded. If the carrying amount of a long-lived asset is deemed to be unrecoverable, an impairment loss needs to be estimated.

As previously indicated, the Company has made a strategic shift toward the CBD business and all intangible assets were assessed with that focus and their ability to support that business line. As such the definite lived intangible assets, the two wholesale license agreements with Nicolas Walker and Andre Carthen do not fit into the strategic direction and the value associated with future cash flows as it relates to these assets may not be positive. As a result, the Company recorded an impairment charge during the twelve months ended September 30, 2019 for the definite lived intangible assets totaling $436,578 which is representative of $296,460 and $140,118 for the two wholesale license agreements.

In order to calculate the impairment loss, the fair value of the asset must be determined. Fair value referenced here is determined using the guidance in FASB ASC Topic 820.