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Note 7 - Goodwill | 12 Months Ended
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Dec. 31, 2015
Notes to Financial Statements |
Goodwill Disclosure [Text Block] |
7. | Goodwill
Goodwill is the excess of the cost of an acquired entity over the net amounts assigned to tangible and intangible assets acquired and liabilities assumed. The Company applies ASC 350 “ Goodwill and Other Intangible Assets ,” which requires testing goodwill for impairment on an annual basis. The Company assesses goodwill for impairment as part of its annual reporting process in the fourth quarter. In between valuations, the Company conducts additional tests if circumstances indicate a need for testing. The Company evaluates goodwill on a consolidated basis as the Company is organized as a single reporting unit. The Company considers certain triggering events when evaluating whether an interim goodwill impairment analysis is warranted. Among these would be a significant long-term decrease in the market capitalization of the Company based on events specific to the Company’s operations. The Company’s market capitalization decreased significantly during second and third quarters of 2015 as the Company’s share price declined from $2.80 per share as of April 30, 2015 to $0.90 per share as of September 30, 2015. As of September 30, 2015, the Company’s market capitalization was approximately $16.7 million, falling to an amount significantly less than the Company’s stockholders’ equity. In September 2015, management concluded that given the significant and sustained decrease in the Company’s share price to a level below its stockholders’ equity at that time, combined with information on the Company’s fair value derived from strategic discussions with third parties during the third quarter of 2015, a triggering event requiring an interim assessment of goodwill impairment had occurred during the third quarter of 2015. Management performed the goodwill impairment assessment using a market approach to estimating the fair value of the Company, using multiple inputs, some weighted heavier than others. The inputs included the Company’s market capitalization at that time, which, based on the inactive trading activity in the Company’s stock, was a lower level input on the fair value measurement hierarchy, and other more heavily weighted unobservable inputs as to the Company’s fair value derived from strategic discussions with third parties. The initial step one assessment indicated that it was likely the Company’s goodwill was impaired, and the Company proceeded to perform step two of its goodwill impairment assessment. As a result of that assessment, the Company concluded that a goodwill impairment loss of $11,070,991 was necessary. Following the recording of the goodwill impairment loss, the Company’s goodwill as of September 30, 2015 was $985,000. An annual impairment review was most recently completed on December 31, 2015. As of the December 31, 2015 impairment review, there was no additional impairment loss associated with recorded goodwill as the estimated fair value exceeded the carrying amount. The fair value of the reporting unit as of December 31, 2015, for the purpose of assessing the impairment of goodwill, was determined based on a qualitative assessment, utilizing the most recent baseline valuation that occurred on September 30, 2015, the market capitalization trend since the baseline valuation, and the then recently announced merger with Diffusion Pharmaceuticals LLC (See note 17 to the consolidated financial statements). The Company determined that it was more likely than not that the fair value of its businesses for accounting purposes exceeded the carrying amount, and therefore, indicated no impairment of goodwill. Following the December 31, 2015 annual impairment review of the goodwill, the Company’s goodwill as of December 31, 2015 was $985,000.

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