Note 7 - Intangible Assets and Goodwill

12 Months Ended

Dec. 31, 2023

Notes to Financial Statements

Goodwill and Intangible Assets Disclosure [Text Block]

NOTE 7: INTANGIBLE ASSETS AND GOODWILL

Intangible Assets

Intangible assets consisted of the following at December 31, 2023 and 2022:

	December 31,				December 31,
	2023				2022
	Gross				Gross
	Carrying		Accumulated		Carrying		Accumulated
	Amount		Amortization		Amount		Amortization
Technology platform	$	6,900		2,255	$	9,765		4,354
Purchased and developed software		5,284		3,405		4,682		3,375
In-Process internally developed software platform		6,080		-		4,074		-
Customer relationships		13,910		3,054		15,000		2,849
Trademarks and trade names		1,260		660		1,600		808
Noncompete		30		28		30		13
Total amortizable intangible assets		33,464		9,402		35,151		11,399
Accumulated amortization		9,402				11,399
Net book value of amortizable intangible assets	$	24,062			$	23,752

For the years ended December 31, 2023 and 2022, amortization of intangible assets charged to operations was $3,055 and $2,702, respectively. For the year ended December 31, 2023, the Company wrote-off a $340 fully amortized trade name asset, a $1,090 fully amortized customer list asset, a $2,864 fully amortized technology asset, a $758 fully amortized capitalized software and the related accumulated amortization. There was no impact on the Company’s Consolidated Balance Sheet or Consolidated Statement of Operations as a result of these write-offs during the period.

Estimated amortization is as follows:

	Estimated Future
Year ending December 31,	Amortization
2024	$	3,411
2025		3,490
2026		2,850
2027		2,458
2028		2,434
Thereafter		9,419
Total	$	24,062

Intangible assets include the following and are being amortized over their estimated useful lives as follows:

	Amortization
	Period:
Acquired Intangible Asset:	(years)
Technology platform and patents	7 - 10
Purchased and developed software	3 - 5
Trade names	3 - 5
Customer relationships	3 - 15
Noncompete	2

Goodwill

Goodwill represents the excess of the purchase price over the fair value of net assets acquired. Goodwill is subject to an impairment review at a reporting unit level, on an annual basis at  September 30th each fiscal year, when an event occurs, or circumstances change that would indicate potential impairment. The Company has only one reporting unit, and therefore the entire goodwill is allocated to that reporting unit.

The Company assessed the carrying value of goodwill at the reporting unit level based on an estimate of the fair value of its reporting unit. Fair value of the reporting unit was estimated using both (1) a market approach, leveraging recent industry merger and acquisition activity as well as comparable public company information, and (2) a discounted cash flow analyses consisting of various assumptions, including expectations of future cash flows based on projections or forecasts derived from analysis of business prospects and economic or market trends that may occur. Specifically, the Company gave significant consideration to actual historic financial results, including revenue growth rates in the current and preceding three years, further informed by known backlog and customer acquisitions. Based on the Company’s assessment, we determined that the fair value of our reporting unit exceeds its carrying value, and accordingly, the goodwill associated with the reporting unit is not considered to be impaired at September 30, 2023.

While our overall business performance has been consistent with our expectations, both before and after the acquisition of Reflect, we believe a significant portion of the decline in our market price as of our assessment date related primarily to both macroeconomic and recent capital transaction factors including: (1) market wide recessionary fears, (2) a lack of comprehension by the markets of the contingent consideration issued in the Merger with Reflect, and (3) the Company’s recent execution of a public offering of 3,000,000 shares of our common stock at a discount to then-market prices, resulting in significant short-term negative volume and price pressure on our common stock unrelated to the Company fundamentals. We do not believe these factors are consistent with or reflective of the underlying value of the business, and there were no other indicators of potential impairment as of September 30, 2023. Based on the improvement of our share price and market capitalization, along with improving Company fundamentals, we believe our implied fair value continues to exceed our total carrying value as of December 31, 2023.

The Company recognizes that any changes in our projected 2024 results could potentially have a material impact on our assessment of goodwill impairment. The Company will continue to monitor the actual performance of its operations against expectations and assess indicators of possible impairment. The valuation of goodwill and intangible assets is subject to a high degree of judgment, uncertainty and complexity. Should any indicators of impairment occur in subsequent periods, the Company will be required to perform an analysis in order to determine whether goodwill is impaired.