| GOODWILL AND INTANGIBLE ASSETS, NET |
|
|
5. |
GOODWILL
AND INTANGIBLE ASSETS, NET |
The
Company has goodwill of $13.6 million resulting from its acquisition of Mimosa in November 2018.
Intangible
assets, net consists of the following (in thousands):
| Schedule of intangible assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Weighted |
|
December
31, 2020 |
|
| |
|
Average
Useful Life
(in years) |
|
Gross
Carrying
Amount |
|
|
Accumulated
Amortization |
|
|
Net
Carrying Amount |
|
| Internally
developed technology |
|
10 |
|
$ |
7,810 |
|
|
$ |
(1,627 |
) |
|
$ |
6,183 |
|
| Customer
relationships |
|
6 |
|
|
2,130 |
|
|
|
(739 |
) |
|
|
1,391 |
|
| Trademarks |
|
2 |
|
|
720 |
|
|
|
(720 |
) |
|
|
— |
|
| Non-compete |
|
3 |
|
|
180 |
|
|
|
(125 |
) |
|
|
55 |
|
| Total
acquired intangible assets |
|
|
|
$ |
10,840 |
|
|
$ |
(3,211 |
) |
|
$ |
7,629 |
|
| |
|
Weighted |
|
December
31, 2020 |
|
| |
|
Average
Useful Life
(in
years) |
|
Gross
Carrying
Amount |
|
|
Accumulated
Amortization |
|
|
Net
Carrying Amount |
|
| Internally
developed technology |
|
10 |
|
$ |
7,810 |
|
|
$ |
(846 |
) |
|
$ |
6,964 |
|
| Customer
relationships |
|
6 |
|
|
2,130 |
|
|
|
(177 |
) |
|
|
1,953 |
|
| Trademarks |
|
2 |
|
|
720 |
|
|
|
(390 |
) |
|
|
330 |
|
| Non-compete |
|
3 |
|
|
180 |
|
|
|
(65 |
) |
|
|
115 |
|
| Total
acquired intangible assets |
|
|
|
$ |
10,840 |
|
|
$ |
(1,478 |
) |
|
$ |
9,362 |
|
The
Company’s intangible assets include internally developed technology, customer relationships, trademarks and non-compete agreements.
|
● |
The
internally developed software fair value was calculated by multiplying the core technology
license revenue by an estimated fair royalty rate less income taxes and taking the present
value of the annual cash flows of the estimated 10-year economic lives of the assets. |
|
● |
The
customer relationships fair value acquired at the time of the business combination was calculated
by multiplying the expected existing customer revenue, after attrition less expenses, and
taking the present value of the excess earnings. |
|
● |
The
trademarks fair value was calculated by multiplying the trademark revenue by an estimated
fair royalty rate less income taxes and taking the present value of the annual cash flows
of the estimated two year lives of the tax benefit. |
|
● |
The
non-compete fair value was calculated by the difference between the forecasted revenue with
and without the non-compete agreements and taking the present value of the annual cash flows
of the estimated three year lives of the benefit of the non-compete agreements. |
Amortization
expense related to the Company’s intangible assets amounted to $1.7 million, $1.4 million and $0.1 million for the years ended
December 31, 2020, 2019 and 2018, respectively.
Estimated
amortization expense for the next five years and thereafter related to the Company’s intangible assets is as follows (in thousands):
| Schedule of future amortization expense |
|
|
|
|
| 2021 |
|
$ |
1,191 |
|
| 2022 |
|
|
1,136 |
|
| 2023 |
|
|
1,136 |
|
| 2024 |
|
|
1,107 |
|
| 2025 |
|
|
781 |
|
| Thereafter |
|
|
2,278 |
|
| Total |
|
$ |
7,629 |
|
|
| GOODWILL AND INTANGIBLE ASSETS, NET |
|
4. |
GOODWILL AND INTANGIBLE
ASSETS, NET |
The Company has goodwill
of $13.6 million at June 30, 2021 and December 31, 2020 resulting from a prior acquisition.
Intangible assets, net consists
of the following (in thousands):
| Schedule of Intangible assets, net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Weighted |
|
June 30, 2021 |
|
| |
|
Average
Useful Life
(in years) |
|
Gross Carrying
Amount |
|
|
Accumulated Amortization |
|
|
Net Carrying Amount |
|
| |
|
|
|
|
|
|
|
|
|
|
|
| Internally developed technology |
|
10 |
|
$ |
7,810 |
|
|
$ |
(2,017 |
) |
|
$ |
5,793 |
|
| Customer relationships |
|
6 |
|
|
2,130 |
|
|
|
(917 |
) |
|
|
1,213 |
|
| Trademarks |
|
2 |
|
|
720 |
|
|
|
(720 |
) |
|
|
- |
|
| Non-compete |
|
3 |
|
|
180 |
|
|
|
(155 |
) |
|
|
25 |
|
| Total acquired intangible assets |
|
|
|
$ |
10,840 |
|
|
$ |
(3,809 |
) |
|
$ |
7,031 |
|
| |
|
Weighted |
|
December 31, 2020 |
|
| |
|
Average
Useful Life
(in years) |
|
Gross Carrying
Amount |
|
|
Accumulated Amortization |
|
|
Net Carrying Amount |
|
| |
|
|
|
|
|
|
|
|
|
|
|
| Internally developed technology |
|
10 |
|
$ |
7,810 |
|
|
$ |
(1,627 |
) |
|
$ |
6,183 |
|
| Customer relationships |
|
6 |
|
|
2,130 |
|
|
|
(739 |
) |
|
|
1,391 |
|
| Trademarks |
|
2 |
|
|
720 |
|
|
|
(720 |
) |
|
|
- |
|
| Non-compete |
|
3 |
|
|
180 |
|
|
|
(125 |
) |
|
|
55 |
|
| Total acquired intangible assets |
|
|
|
$ |
10,840 |
|
|
$ |
(3,211 |
) |
|
$ |
7,629 |
|
Amortization expense related to the
Company’s intangible assets amounted to $0.3 million and $0.4 million for the three months ended June 30, 2021 and 2020, respectively,
and $0.6 million and $0.8 million for the six months ended June 30, 2021 and 2020, respectively.
Estimated amortization expense for
the remainder of 2021 and thereafter related to the Company’s intangible assets is as follows (in thousands):
| Schedule of estimated amortization expense |
|
|
|
|
| 2021 |
|
$ |
593 |
|
| 2022 |
|
|
1,136 |
|
| 2023 |
|
|
1,136 |
|
| 2024 |
|
|
1,107 |
|
| 2025 |
|
|
781 |
|
| Thereafter |
|
|
2,278 |
|
| Total |
|
$ |
7,031 |
|
|
|