Intangible Assets

3 Months Ended

Mar. 31, 2017

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible Assets

7. Intangible Assets

As of March 31, 2017 and December 31, 2016, the Company’s amortizing and indefinite lived intangible assets consisted of the following:

	March 31, 2017										December 31, 2016
Amortizing Intangible	Gross Carrying		Accumulated			Impairment			Net		Gross Carrying		Accumulated			Impairment			Net
Assets	Amount		Amortization			Loss			Balance		Amount		Amortization			Loss			Balance
Charter/ Cooperation agreements (iii)	$	2,755,821		(909,257	)		(1,846,564	)		-	$	2,755,821	$	(909,257	)	$	(1,846,564	)	$	-
Software and licenses		267,991		(244,585	)		-			23,406		267,991		(241,932	)		-			26,059
Patent and trademark		92,965		(39,943	)		-			53,022		92,965		(39,943	)		-			53,022
Website and mobile app development (ii)		593,193		(421,129	)		(172,064	)		-		593,193		(421,129	)		(172,064	)		-
Workforce (i)		305,694		(101,898	)		-			203,796		305,694		(76,422	)		-			229,272
Total amortizing intangible assets	$	4,015,664		(1,716,812	)		(2,018,628	)		280,224	$	4,015,664	$	(1,688,683	)	$	(2,018,628	)	$	308,353
Indefinite lived intangible assets																				-
Website name		134,290		-			-			134,290		134,290		-			-			134,290
Patent		10,599		-			-			10,599		10,599		-			-			10,599
Total intangible assets	$	4,160,553		(1,716,812	)		(2,018,622	)		425,113	$	4,160,553	$	(1,688,683	)	$	(2,018,628	)	$	453,242

(i) On April 1, 2016, Wecast Network entered into an agreement with Mr. Liu Changsheng, under which Wecast Network agreed to pay Mr. Liu Changsheng cash consideration of $187,653 and 66,500 shares of restricted shares with a six month restriction period and a fair value of $121,695 in exchange for a workforce of 10 personnel experienced in programing content mobile apps. All 10 personnel enter into three year employment contracts with Wecast Network effective from April 1, 2016. The Company also acquired certain laptop and desktop computers with fair value of $3,655. According to the agreement, 30% of the cash consideration is due upon the signing of the agreement, 20% is due 2 months after the signing of the agreement and 50% is due 6 months after the signing of the agreement. Cash consideration of $93,825 has been paid as of March 31, 2017, and $93,828 was paid on October 31, 2016. If any of three key staff, as defined, terminated their employment with Wecast Network during the first 12 months of employment, Wecast Network has right to forfeit the unpaid cash consideration. In addition, Mr. Liu Changsheng would be required to pay a default penalty at minimal of $129,180. Wecast Network has accounted for the transaction as an asset acquisition in which Wecast Network mainly acquired a workforce, which is recognized as an intangible asset at cost. Subsequently, the workforce intangible is amortized over the employment term of three years.

The Company recorded amortization expense related to our amortizing intangible assets of approximately $28,129 and $63,000 for the three months ended March 31, 2017 and March 31, 2016 respectively, which included the amortization expense of the workforce acquired as stated above.

(ii) Considering a new mobile app has been developed to be put into market in October, 2016, the Company determined that the future cash flows generated from the old mobile app was nil. In accordance with ASC 350, Intangibles – Goodwill and Other, recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the estimated undiscounted future cash flows expected to be generated by the asset. The Company estimated the fair value of this intangible asset to be nil as of March 31, 2017 and December 31, 2016. Fair value was determined using unobservable (Level 3) inputs. Impairment loss from mobile app development of $172,000 was recognized in 2016 to write off the entire book value of the old mobile app.

(iii) During the fourth quarter of 2016, the Company determined that the Charter/Cooperation agreements will not serve the business or generate future cash flow. As no future cash flows will be generated from the Charter/Cooperation agreements, the Company estimated the fair value of the Charter/Cooperation agreements to be nil as of December 31, 2016. Fair value was determined using unobservable (Level 3) inputs. Impairment loss from Charter/Cooperation agreements of $1,846,000 was recognized in 2016 to write off the entire book value of the Charter/Cooperation agreements.

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The following table outlines the amortization expense for the next five years and thereafter:

	Amortization to be
Years ending December 31,	Recognized
2017(9 months)		90,277
2018		118,254
2019		35,794
2020 and thereafter		35,899
Total amortization to be recognized	$	280,224