Veru Inc. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Goodwill and Intangible Assets

Goodwill and Intangible Assets

9 Months Ended

Jun. 30, 2018

Goodwill and Intangible Assets [Abstract]

Goodwill and Intangible Assets

Note 6 – Goodwill and Intangible Assets

Goodwill

The carrying amount of goodwill and the change in the balance for the nine months ended June 30, 2018 and 2017 is as follows:


		2018		2017
Beginning balance	$	6,878,932	$	—
Goodwill arising from APP Acquisition		—		6,878,932
Ending balance	$	6,878,932	$	6,878,932

Intangible Assets

Intangible assets acquired in the APP Acquisition included IPR&D, developed technology consisting of PREBOOST® medicated wipes for prevention of premature ejaculation, and covenants not-to-compete.

The gross carrying amounts and net book value of intangible assets are as follows at June 30, 2018:



	Gross Carrying		Accumulated		Net Book
	Amount		Amortization		Value
Intangible assets with finite lives:
Developed technology - PREBOOST®	$	2,400,000	$	234,408	$	2,165,592
Covenants not-to-compete		500,000		119,048		380,952
Total intangible assets with finite lives		2,900,000		353,456		2,546,544
Acquired in-process research and development assets		18,000,000		—		18,000,000
Total intangible assets	$	20,900,000	$	353,456	$	20,546,544

The gross carrying amounts and net book value of intangible assets are as follows at September 30, 2017:


	Gross Carrying		Accumulated		Net Book
	Amount		Amortization		Value
Intangible assets with finite lives:
Developed technology - PREBOOST®	$	2,400,000	$	81,533	$	2,318,467
Covenants not-to-compete		500,000		65,476		434,524
Total intangible assets with finite lives		2,900,000		147,009		2,752,991
Acquired in-process research and development assets		18,000,000		—		18,000,000
Total intangible assets	$	20,900,000	$	147,009	$	20,752,991

Amortization is recorded over the projected related revenue stream for the PREBOOST® developed technology over the next 10 years and on a straight-line basis over seven years for the covenants not-to-compete. The amortization expense is recorded in selling, general and administrative expenses in the accompanying unaudited condensed consolidated statements of operations. The IPR&D assets will not be amortized until the underlying development projects are completed. If and when development is complete, which generally occurs when regulatory approval to market the product is obtained, the associated IPR&D assets would be accounted for as finite-lived intangible assets and amortized over the estimated period of economic benefit. If a development project is abandoned, the associated IPR&D assets would be charged to expense.

Amortization expense was approximately $69,000 and $40,000, for the three months ended June 30, 2018 and 2017, respectively. Amortization expense was approximately $206,000 and $107,000, for the nine months ended June 30, 2018 and 2017, respectively. Based on finite-lived intangible assets recorded as of June 30, 2018, the estimated future amortization expense is as follows:


	Estimated
Year Ending September 30,	Amortization Expense
2018	$	68,815
2019		309,234
2020		316,368
2021		323,706
2022		331,316
Thereafter		1,197,105
Total	$	2,546,544

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

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