Goodwill and Intangible Assets

12 Months Ended

Dec. 31, 2019

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets

Note 6 — Goodwill and Intangible Assets

Intangible assets are recorded at cost and consist of the assets acquired for the acquisition of Agribotix completed in 2018 (see Note 3). Goodwill and intangible assets were comprised of the following as of December 31, 2019:

	Estimated Life	Balance at January 1, 2019		Accumulated Amortization			Impairment			Balance at December 31, 2019
Intellectual Property/Technology	5 Years	$	433,400	$	(115,574	)	$	—		$	317,826
Customer Base	5 Years		72,000		(19,200	)		—			52,800
Tradenames and Trademarks	5 Years		58,200		(15,520	)		—			42,680
Non-compete Agreement	4 Years		160,900		(53,633	)		—			107,267
Total intangible assets			724,500		(203,927	)		—		$	520,573
Goodwill			3,270,984		—			(162,984	)		3,108,000
Total		$	3,995,484	$			$	(162,984	)	$	3,628,573

The weighted average remaining amortization period in years is 3.5 years. Amortization expense for the years ended December 31, 2019 and 2018 was $156,545 and $47,382, respectively.

Future amortization is as follows for fiscal years ending:

	2020		2021		2022		2023
Intellectual Property/Technology	$	86,680	$	86,680	$	86,680	$	57,786
Customer Base		14,400		14,400		14,400		9,600
Tradenames and Trademarks		11,640		11,640		11,640		7,760
Non-compete Agreement		40,225		40,225		26,817		—
Total	$	152,945	$	152,945	$	139,537	$	75,146

In the fourth quarter of 2019, the Company performed its annual goodwill impairment test using a quantitative approach by comparing the carrying value of the reporting unit, including goodwill, to its fair value. If the carrying value of the reporting unit, including goodwill, exceeds its fair value, a goodwill impairment loss is recognized in an amount equal to that excess. The Company estimates the fair value of each reporting unit using a combination of a discounted cash flow (DCF) (Level 3 input) analysis and market-based valuation methodology such as comparable public company trading values and values observed in recent business acquisitions. Determining fair value requires the exercise of significant judgments, including the amount and timing of expected future cash flows, long-term growth rates, discount rates and relevant comparable public company earnings multiples and relevant transaction multiples. The cash flows employed in the DCF analysis are based on estimates of future sales, earnings and cash flows after considering factors such as general market conditions, existing firm orders, expected future orders, changes in working capital, long term business plans and recent operating performance. The DCF analysis used a discount rate of 27%.

The fair value of the reporting unit was found to be less than it’s carrying value. During the year ended December 31, 2019, a goodwill impairment charge of $162,984 was recognized which is included in general and administrative expenses on the statements of operations.

Due to the goodwill impairment charge, the company tested its finite-lived intangible assets for impairment. For purposes of testing the finite-lived intangible assets the sum of the undiscounted future cash flows expected to result from the use of the asset group was compared to the asset group’s carrying value.

Based on the impairment test for the finite-lived intangibles assets related to the Agribotix reporting unit no impairment exists for those assets as of December 31, 2019. The Company will continue to amortize the related finite-intangible asset over their estimated useful lives.