It is very, very difficult to determine the value of intellectual property, such as a software program CareClix sold to SOLI. I wonder if the former accountants were the ones who recommended devaluing it from $20 mil to $2 mil. As for the valuation, there are several methods that could have been used.
One method would be the cost of development, which would include salaries and overhead, as well as patents, licenses, and all other costs. I believe Dr. Korangy spent a number of years creating CareClix, so he may have been able to justify the $2 million costs. It would not have been the method I would have chosen.
Another method would be Market based, using the value of comparable assets, usually owned by competitors. However, that information is not commonly available. Especially, since the Telehealth industry was still young.
The best method, IMO, would be Income-based, involving projections of future revenues (net of projected costs and risks.) Of course, this is the most difficult evaluation. It is based on forward-looking statements, calculated over the useful life of the asset. I could see $2 million being a reasonable valuation using this method, especially with the growth we believe CareClix has been experiencing.
There is a lot of leeway in calculating the last two methods. It is sort of like counting "Goodwill" as an intangible asset. So, I don't see a lot of problems with the valuation--except, maybe, the change of valuation, depending on how that was handled.
Is it possible Charles Scott became the majority shareholder just so Korangy would not be in charge, so the regulation you cited would not be applicable? Actually, I have more questions regarding Scott's shares being increased than about the valuation of CareClix. Did Scott's share increase coincide with the devaluing of the software from $20 mil to $2 mil? It would be a lot easier to give Scott enough stock to be the majority shareholder, if the amount of stock given to Korangy was worth $2 million, rather than $50 million.
Any thoughts? I suppose I could go back and figure out the timeline, But maybe, someone who has been around a lot longer than myself can fill in the blanks. Especially, when Charles Scott became the majority shareholder in relation to the change in valuation of the software.
