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GOODWILL AND OTHER INTANGIBLE ASSETS, NET

12 Months Ended

Dec. 31, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

GOODWILL AND OTHER INTANGIBLE ASSETS, NET

NOTE 7 – GOODWILL AND OTHER INTANGIBLE ASSETS, NET

The Company’s intangible assets include trademarks, franchisee agreements, franchise license, domain names, customer list, proprietary recipes and non-compete agreements. The Company’s trademark – Muscle Maker had an indefinite life as of December 31, 2021. The Company determined that as of January 1, 2022, the trademark – Muscle Maker had a finite life of 3 years and will be amortizing the value over the new estimate life. The other intangible assets are amortized over useful lives ranging from 2 to 13 years.

MUSCLE MAKER, INC. & SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

A summary of the intangible assets is presented below:

SCHEDULE OF INTANGIBLE ASSETS

Intangible Assets	Intangible assets, net at December 31, 2022		Acquisitions		Impairment of intangible assets			Amortization expense			Intangible assets, net at December 31, 2021		Acquisitions		Impairment of intangible assets			Amortization expense			Intangible assets, net at December 31, 2020
Trademark Muscle Maker Grill	$	669,992	$	—	$	(347,110	)	$	(508,551	)	$	1,525,653	$	—	$	(998,347	)	$	—		$	2,524,000
Franchise Agreements		135,659		—		—			(26,780	)		162,439		—		(141,561	)		(50,278	)		354,278
Trademark SuperFit		29,080		—		—			(8,995	)		38,075		45,000		—			(6,925	)		—
Domain Name SuperFit		80,778		—		—			(24,986	)		105,764		125,000		—			(19,236	)		—
Customer List SuperFit		90,470		—		—			(27,985	)		118,455		140,000		—			(21,545	)		—
Proprietary Recipes SuperFit		103,396		—		—			(31,982	)		135,378		160,000		—			(24,622	)		—
Non-Compete Agreement SuperFit		106,751		—		—			(86,588	)		193,339		260,000		—			(66,661	)		—
Trademark Pokemoto		117,881		—		—			(34,981	)		152,862		175,000		—			(22,138	)		—
Franchisee License Pokemoto		2,322,125		—		—			(277,348	)		2,599,473		2,775,000		—			(175,527	)		—
Proprietary Recipes Pokemoto		866,614		—		—			(161,302	)		1,027,916		1,130,000		—			(102,084	)		—
Non-Compete Agreement Pokemoto		88,110		—		—			(240,000	)		328,110		480,000		—			(151,890	)		—

	$	4,610,856	$	—	$	(347,110	)	$	(1,429,498	)	$	6,387,464	$	5,290,000	$	(1,139,908	)	$	(640,906	)	$	2,878,278

Amortization expense related to intangible assets was $1,429,498 and $640,906 for the years ended December 31, 2022 and 2021, respectively.

The estimated future amortization expense is as follows:

SCHEDULE OF FUTURE AMORTIZATION EXPENSE

For the year ended December 31,	2023		2024		2025		2026		2027		Thereafter		Total
Trademark Muscle Maker Grill	$	334,997	$	334,996	$	—	$	—	$	—	$	—	$	669,992
Franchise Agreements		26,780		26,853		26,780		26,780		26,780		1,686		135,659
Trademark SuperFit		8,995		9,020		8,995		2,070		—		—		29,080
Domain Name SuperFit		24,986		25,055		24,986		5,751		—		—		80,778
Customer List SuperFit		27,985		28,061		27,985		6,439		—		—		90,470
Proprietary Recipes SuperFit		31,982		32,071		31,982		7,361		—		—		103,396
Non-Compete Agreement SuperFit		86,588		20,163		—		—		—		—		106,751
Trademark Pokemoto		34,981		35,077		34,981		12,842		—		—		117,881
Franchisee License Pokemoto		277,348		278,108		277,348		277,348		277,348		934,625		2,322,125
Proprietary Recipes Pokemoto		161,303		161,744		161,303		161,303		161,303		59,658		866,614
Non-Compete Agreement Pokemoto		88,110		—		—		—		—		—		88,110

Total	$	1,104,055	$	1,124,702	$	594,359	$	499,893	$	465,430	$	995,972	$	4,610,856

The Company sustained operating and cash flow losses from inception which formed a basis for performing an impairment test of its Intangible Assets. The Company performed a recoverability test on the Company’s intangible assets based on its projected future undiscounted cash flows. As a result of a failed recoverability test the Company proceeded to measure the fair value of those assets based on the future discounted cash flows and recorded an impairment charge in the aggregate amount of $347,110 and $1,139,908 during the years ended December 31, 2022 and 2021, respectively. The key assumptions used in the estimates of projected cash flows utilized in both the test and measurement steps of the impairment analysis were projected revenues and royalty payments. These forecasts were based on actual revenues and take into account recent developments as well as the Company’s plans and intentions.

MUSCLE MAKER, INC. & SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

A summary of the goodwill assets is presented below:

SCHEDULE OF GOODWILL ASSETS


Goodwill	Muscle Maker Grill			Pokemoto		SuperFit Food		Total
Goodwill, net at January 1, 2021	$	656,348		$	—	$	—	$	656,348
Acquisitions		—			1,798,399		258,000		2,056,399
Impairment of goodwill		(86,348	)		—		—		(86,348	)
Goodwill, net at December 31, 2021	$	570,000		$	1,798,399	$	258,000	$	2,626,399
Goodwill net	$	570,000		$	1,798,399	$	258,000	$	2,626,399
Acquisitions		—			—		—		—
Impairment of goodwill		—			—		—		—
Goodwill, net at December 31, 2022	$	570,000		$	1,798,399	$	258,000	$	2,626,399
Goodwill, net	$	570,000		$	1,798,399	$	258,000	$	2,626,399

During the years ended December 31, 2022 and 2021, the Company performed a quantitative goodwill assessment and determined the fair value of Muscle Maker Grill restaurant using a discounted cash flow model. The discounted cash flow model relied on making assumptions, such as the extent of the economic downturn related to the COVID-19 pandemic, the expected timing of recovery, and the expected growth in profitability and discount rate, which we believed were appropriate. The results of our 2021 goodwill impairment test indicated that the estimated carrying value of Muscle Maker Grill exceeded its fair value amount. As a result, we recorded a goodwill impairment charge of $86,348 during the year ended December 31, 2021. No impairment charge was recorded during the year ended December 31, 2022.