Intangible Assets and Goodwill

6 Months Ended

Jun. 30, 2021

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible Assets and Goodwill

Note 5: Intangible Assets and Goodwill

Intangible assets at June 30, 2021 and December 31, 2020 are summarized in the tables below:

June 30, 2021	Gross  Carrying  Value		Accumulated  Amortization			Net Carrying  Amount
Definite-lived Intangible assets, estimated lives in years:
FDA 503B Registration & Compliance - USC, 10 years	$	3,963,000	$	(2,068,466	)	$	1,894,534
Customer Relationships - USC, 10 years		5,572,000		(2,908,274	)		2,663,726
Total Definite-lived Assets		9,535,000		(4,976,740	)		4,558,260
Trade Name and Brand - USC, Indefinite		1,245,000		—			1,245,000
SYMJEPI Domain Name		9,674		—			9,674
Balance, June 30, 2021	$	10,789,674	$	(4,976,740	)	$	5,812,934

December 31, 2020	Gross Carrying Value		Accumulated Amortization				Impairment		Net Carrying Amount
Definite-lived Intangible assets, estimated lives in years:
Patents, Taper DPI Intellectual Property - 10 years	$	9,708,700	$	(6,796,090	)	$	(2,912,610	)	$	—
FDA 503B Registration & Compliance - USC, 10 years		3,963,000		(1,870,316	)		—			2,092,684
Customer Relationships, 10 years		5,572,000		(2,629,674	)		—			2,942,326
Website Design, 3 years		16,163		(16,163	)		—			—
Total Definite-lived Assets		19,259,863		(11,312,243	)		(2,912,610	)		5,035,010
Trade Name and Brand - USC, Indefinite		1,245,000		—			—			1,245,000
SYMJEPI Domain Name		9,674		—			—			9,674
Balance, December 31, 2020	$	20,514,537	$	(11,312,243	)	$	(2,912,610	)	$	6,289,684

Amortization expense for the three months ended June 30, 2021 and 2020 was approximately $238,000 and $481,000, respectively; and for the six months ended June 30, 2021 and 2020, amortization expense was approximately $477,000 and $963,000, respectively.   

Estimated amortization expense of definite-lived intangible assets at June 30, 2021 for each of the five succeeding years and thereafter is as follows:

Year ending December 31,
Remainder of 2021	$	476,750
2022		953,500
2023		953,500
2024		953,500
2025		953,500
Thereafter		267,510
Total	$	4,558,260

We have two operating segments and two reporting units. During the three months ended March 31, 2020, COVID-19 spread across the globe and adversely impacted economic growth, including as a result of government mandated shut-downs, stay-at-home policies and social distancing efforts intended to mitigate the spread of the virus. In light of the current economic downturn, that we believe affected the trading prices of our common stock, we determined that it was more likely than not that the fair value of our reporting unit was less than its carrying value. This triggered the Company to perform an interim impairment assessment to test the carrying value of goodwill, all of which is related to the Compounded Pharmaceuticals reporting unit, as of March 31, 2020. We also performed our annual impairment testing related to our Compounded Pharmaceuticals reporting unit as of December 31, 2020. The results of the annual impairment test indicated that the estimated fair value of the reporting unit was less than its carrying value. This was primarily due to a decline in projected net cash flows as a result of the continued impact of COVID-19 on revenue and related cash flows.

For both the interim and annual impairment assessments, the Company utilized a combination of the market-based approach and income approach to determine the fair value of our Compounded Pharmaceuticals business segment. Our quantitative assessments utilized a market-based approach and assessed guideline publicly traded companies operating in the drug manufacturing and compounding industry in the healthcare sector that are similar from an investment standpoint to the Company. The income approach required management to estimate the future cash flows related to our reporting unit and included an adjustment to the discount rate for a company specific risk premium to account for the increased risk to future cash flows in the current environment. As a result of these analyses, the carrying value of our reporting unit exceeded the fair value by approximately $3,143,000 and $3,629,000 as of March 31, 2020 and December 31, 2020, respectively. The difference between the carrying values and fair values which were recorded as goodwill impairment expense in their respective periods. No impairment charge was recorded for the year ended December 31, 2019.

The carrying value of the Company's goodwill as of June 30, 2021 and December 31, 2020 was approximately $ 868,000 .

The change in the carrying amount of goodwill consisted of the following activity:

Balance, December 31, 2019	$	7,640,622
Less: March 31, 2020 Impairment		(3,143,200)
Less: December 31, 2020 Impairment		(3,629,010)
Balance, December 31, 2020	$	868,412
Balance, June 30, 2021	$	868,412