InMed Pharmaceuticals Inc. Goodwill & Intangibles Disclosure

5.	IMPAIRMENT OF INTANGIBLE ASSETS AND GOODWILL

 

During the year ended June 30, 2022, the Company recorded goodwill of $2,023,039, definite lived intangible assets of $216,000, IPR&D of $1,249,000 and patents of $1,191,000 in connection with the acquisition of BayMedica, as described in Note 7.

 

The Company performs an annual impairment test at the reporting unit level as of June 30 of each fiscal year.

 

As of June 30, 2022, the Company qualitatively assessed whether it is more likely than not that the respective fair value of the Company’s BayMedica reporting unit was less than its carrying amount, including goodwill. For a variety of reasons, performance of the BayMedica segment has not materialized as expected. Contributing factors include but are not limited to the following:

 

-

market demand for launched compounds has not materialized as quickly as the Company anticipated;

 

-

recent overarching recessionary pressures have contributed to hesitation within the health and wellness (H&W) sector to invest in, and launch, new rare cannabinoid products;

 

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in this nascent market, BayMedica’s perceived competitive advantages of certified, high purity and reliability and consistency of supply have not resonated with the industry’s current product manufacturers; and

 

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additional downward pricing pressure for cannabinoids in the H&W sector.

 

As a result of this sustained decline in performance compared to expectations and continuing market uncertainties, the Company determined that as of June 30, 2022, it was more likely than not that the carrying value of these acquired intangibles exceeded their estimated fair value. Accordingly, the Company performed an impairment analysis as of that date using the income method, the relieve from royalty method and the multi-period excess earnings method. This analysis required significant judgments, including the estimation of future revenues, royalties, licensing fees, costs, the probability of success in various phases of its development programs, potential post launch cash flows and discount rates. The Company recorded a goodwill and intangible asset impairment charge for the excess of the reporting unit’s carrying value over its fair value. 

 

As of June 30, 2023, the Company did not identify any impairment indicators and no impairment was recorded on our remaining intangible assets.

 

The following table provides the Company’s goodwill, indefinite and definite lived intangible assets as of June 30, 2023 and 2022. There was no impairment of InMed long lived intangible assets as of June 30, 2023 and 2022.

 

		$
Goodwill
Balance at July 1, 2021			-
Acquired at October 13, 2021			2,023,039
Impairment losses			(2,023,039	)
Balance at June 30, 2022 and 2023			-
Indefinite lived intangible assets
IPR&D
Balance at July 1, 2021			-
Acquired at October 13, 2021			1,249,000
Impairment losses			(1,249,000	)
Balance at June 30, 2022 and 2023			-
Definite lived intangible assets
Trademark and Intellectual Property
Balance at July 1, 2021			1,736,420
Acquired at October 13, 2021			216,000
Amortization			(786,637	)
Impairment losses			(200,554	)
Balance at June 30, 2022			965,229
Amortization			(96,468	)
Impairment losses			-
Balance at June 30, 2023			868,761
Definite lived intangible assets
Patents
Balance at July 1, 2021			-
Acquired at October 13, 2021			1,191,000
Amortization			(47,314	)
Impairment losses			-
Balance at June 30, 2022			1,143,686
Amortization			(66,168	)
Impairment losses			-
Balance at June 30, 2023			1,077,518
Intangible assets, net as of June 30, 2022			2,108,915
Intangible assets, net as of June 30, 2023			1,946,279

 

During the year ended June 30, 2022, the Company recognized a goodwill impairment charge of $2 million which is a non recuring level 3 measurement. For the identified indefinite lived assets, the Company recognized an impairment charge of $Nil and $1.2 million during the years ended June 30, 2023 and 2022, respectively. For identified definite lived intangible assets, the Company recognized an impairment charge of $Nil and $0.2 million during the years ended June 30, 2023 and 2022, respectively.