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Note 6 - Intangible Assets

3 Months Ended

Sep. 30, 2022

Intangible Assets Disclosure [Text Block]

NOTE 6.

INTANGIBLE ASSETS

Intangible assets consisted of the following as of September 30, 2022 and June 30, 2022:

	*September 30,*			*June 30,*
	*2022*			*2022*
Customer relationships	$	1,364,318		$	1,363,935
Brand name		1,297,789			1,297,789
Domain name		36,913			36,913
Recipes		1,221,601			1,221,601
Non-compete agreement		274,982			274,982
Internally developed software		217,990			217,990
Total		4,413,593			4,413,210
Less : accumulated amortization		(1,805,325	)		(1,704,314	)
Net intangibles	$	2,608,268		$	2,708,896

CUSTOMER RELATIONSHIPS

On August 11, 2015, the Company acquired Gourmet Foods, Ltd. The fair value on the acquired customer relationships was estimated to be $66,153 and is amortized over the remaining useful life of 10 years. On June 2, 2016, the Company acquired Brigadier. The fair value on the acquired customer relationships was estimated to be $434,099 and is amortized over the remaining useful life of 10 years. On December 18, 2017, the Company’s wholly owned subsidiary, Kahnalytics, Inc., acquired the assets of Original Sprout LLC. The fair value of the acquired customer relationships was determined to be $200,000 and is amortized over the remaining useful life of 7 years. On July 1, 2020, our wholly owned subsidiary, Gourmet Foods, Ltd., acquired Printstock Products Limited. The fair value of the acquired customer relationships was estimated to be $77,123 and is amortized over a useful life of 9 years. On June 20, 2022 our wholly-owned subsidiary, Marygold UK, acquired Tiger Financial and Asset Management Limited. The fair value of the acquired customer relationships was estimated to be $587,328 and is amortized over a useful life of 7 years.

	*September 30,*			*June 30,*
	*2022*			*2022*
Customer relationships	$	1,364,318			1,363,935
Less: accumulated amortization		(502,041	)		(458,550	)
Total customer relationships, net	$	862,277			905,385

BRAND NAME

On August 11, 2015, the Company acquired Gourmet Foods, Ltd. The fair value on the acquired brand name was estimated to be $61,429 and is amortized over the remaining useful life of 10 years. On June 2, 2016, the Company acquired Brigadier. The fair value on the acquired brand name was estimated to be $340,694 and is amortized over the remaining useful life of 10 years. On December 18, 2017, the Company’s wholly owned subsidiary, Kahnalytics, Inc., acquired the assets of Original Sprout LLC. The fair value of the acquired brand name was determined to be $740,000 and is considered to have an indefinite life. Unlike the brand names Gourmet Foods and Brigadier Security Systems, Original Sprout is an actual product name and recognized associated brand that is identifiable to consumers of the product and is the basis of the value proposition. That brand name will forever be associated with the product offering unless and until such time in the future as the Company may elect to discontinue the use of the brand and move towards establishment of an alternative product offering. On July 1, 2020, our wholly owned subsidiary, Gourmet Foods, Ltd., acquired Printstock Products Limited. The fair value of the brand name was determined to be $57,842 and, like that of Original Sprout, would continue to stay in use for an indefinite period of time. Therefore, the Company will test for impairment of the brand names "Original Sprout" and "Printstock" at each reporting interval with no amortization recognized.

	*September 30,*			*June 30,*
	*2022*			*2022*
Brand name	$	1,297,789		$	1,297,789
Less: accumulated amortization		(259,967	)		(249,831	)
Total brand name, net	$	1,037,822		$	1,047,958

DOMAIN NAME

On August 11, 2015, the Company acquired Gourmet Foods, Ltd. The fair value on the acquired domain name was estimated to be $21,601 and is amortized over the remaining useful life of 5 years. On June 2, 2016, the Company acquired Brigadier. The fair value on the acquired domain name was estimated to be $15,312 and is amortized over the remaining useful life of 5 years. As of September 30, 2022, the fair value of the acquired domain names had been fully amortized.

	September 30,			June 30,
	2022			2022
Domain name	$	36,913		$	36,913
Less: accumulated amortization		(36,913	)		(36,913	)
Total brand name, net	$	-		$	-

RECIPES AND FORMULAS

On August 11, 2015, the Company acquired Gourmet Foods, Ltd. The fair value on the recipes was estimated to be $1,221,601 and is amortized over the remaining useful life of 5 years. On December 18, 2017 the Company’s wholly owned subsidiary, Kahnalytics, Inc., acquired the assets of Original Sprout LLC. The fair value of the acquired recipes and formulas was determined to be $1,200,000 and is amortized over the remaining useful life of 8 years.

	*September 30,*			*June 30,*
	*2022*			*2022*
Recipes and formulas	$	1,221,601		$	1,221,601
Less: accumulated amortization		(739,543	)		(701,736	)
Total recipes and formulas, net	$	482,058		$	519,865

NON-COMPETE AGREEMENT

On June 2, 2016, the Company acquired Brigadier. The fair value on the acquired non-compete agreement was estimated to be $84,982 and is amortized over the remaining useful life of 5 years. On December 18, 2017 the Company’s wholly owned subsidiary, Kahnalytics, Inc., acquired the assets of Original Sprout LLC. The fair value of the acquired non-compete agreement was determined to be $190,000 and is amortized over the remaining useful life of 5 years.

	*September 30,*			*June 30,*
	*2022*			*2022*
Non-compete agreement	$	274,982		$	274,982
Less: accumulated amortization		(266,861	)		(257,284	)
Total non-compete agreement, net	$	8,121		$	17,698

INTERNAL USE SOFTWARE

During the quarter ended December 31, 2020, Marygold began incurring expenses in connection with the internal development of software applications that are planned for eventual integration to its consumer Fintech offering. Certain of these expenses, totaling $217,990 as of September 30, 2022, have been capitalized as intangible assets. Once development has been completed and the product is commercially available, these capitalized costs will be amortized over their useful lives. As of September 30, 2022, no amortization expense has been recorded for these intangible assets.

AMORTIZATION EXPENSE

The total amortization expense for intangible assets for the three months ended September 30, 2022 and 2021 was $100,627 and $82,309, respectively.

Estimated remaining amortization expenses of intangible assets for the next five fiscal years, are as follows:

Years Ending June 30,	*Expense*
2023	$	280,458
2024		361,226
2025		345,962
2026		234,194
2027		92,417
Thereafter		1,294,011
Total	$	2,608,268