Kubient, Inc. Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

INTANGIBLE AND OTHER LONG-LIVED ASSETS

INTANGIBLE AND OTHER LONG-LIVED ASSETS

12 Months Ended

Dec. 31, 2022

INTANGIBLE AND OTHER LONG-LIVED ASSETS

NOTE 4 - INTANGIBLE AND OTHER LONG-LIVED ASSETS

On June 15, 2021, pursuant to an asset purchase agreement dated June 4, 2021, the Company closed on the acquisition of a customer list (the “Customer List”) and other assets of Advisio Solutions, LLC (“Advisio”) for consideration consisting of: (i) $1,050,000 paid in cash and (ii) the issuance of an aggregate of 100,000 shares of the Company’s common stock with an aggregate issuance date fair value of $532,000. Under the screen test requirements under ASC 805, the Company concluded that the Customer List represented substantially all of the fair value of the gross assets acquired and, accordingly, determined the set was not considered a business, such that the Company applied asset acquisition accounting and recorded the acquisition of the Customer List as an intangible asset in the amount of $1,582,000 that will be amortized on a straight-line basis over its useful life of seven years.

During the year ended December 31, 2022, the Company identified triggering events that indicated its long-lived assets including its definite-lived intangible assets were at risk of impairment and, as such, performed a quantitative impairment assessment to evaluate recoverability and, ultimately, whether carrying value exceeded fair value. The primary triggers for the impairment review were a loss of customers as well as a reduction in the value of Kubient’s market capitalization. As a result of the quantitative assessments, the Company determined the fair value of the asset group was less than the carrying value and, accordingly, determined the Company’s long-lived assets were fully impaired. As a result, during the year ended December 31, 2022, the Company recognized an impairment loss on intangible assets and property and equipment of $2,626,974 and $49,948, respectively, in its consolidated statements of operations.

Intangible assets consisted of the following:


	December 31,
	2022		2021
Acquired data	$	—	$	1,300,336
Acquired software		—		183,072
Acquired customer lists		—		2,162,000
Restrictive covenant agreements		—		70,000
		—		3,715,408
Less: accumulated amortization		—		(768,798)
Intangible assets, net	$	—	$	2,946,610

Amortization of intangible assets consisted of the following:


					Acquired		Restrictive
	Acquired		Acquired		Customer		Covenant		Accumulated
	Data		Software		Lists		Agreements		Amortization		Total
Balance as of January 1, 2021	$	1,300,336	$	100,000	$	—	$	—	$	(328,486)	$	1,071,850
Additions		—		83,072		2,162,000		70,000		—		2,315,072
Amortization expense		—		—		—		—		(440,312)		(440,312)
Balance as of December 31, 2021		1,300,336		183,072		2,162,000		70,000		(768,798)		2,946,610
Additions		—		—		—		—		—		—
Amortization expense		—		—		—		—		(319,636)		(319,636)
Impairment loss on intangible assets		(1,300,336)		(183,072)		(2,162,000)		(70,000)		1,088,434		(2,626,974)
Balance as of December 31, 2022	$	—	$	—	$	—	$	—	$	—	$	—
Weighted average remaining amortization period at December 31, 2022 (in years)		0.0		0.0		0.0		0.0		0.0


					Acquired		Restrictive
	Acquired		Acquired		Customer		Covenant		Accumulated
	Data		Software		Lists		Agreements		Amortization
Balance as of January 1, 2021	$	261,819	$	66,667	$	—	$	—	$	328,486
Amortization expense		252,081		48,538		138,528		1,165		440,312
Balance as of December 31, 2021		513,900		115,205		138,528		1,165		768,798
Amortization expense		126,040		10,929		171,000		11,667		319,636
Impairment loss on intangible assets		(639,940)		(126,134)		(309,528)		(12,832)		(1,088,434)
Balance as of December 31, 2022	$	—	$	—	$	—	$	—	$	—