Note

: Goodwill and Intangible Assets

The Company’s acquisition of Bytewise in

2011

and the private software company in

2017

resulted in the recognition of goodwill totaling

$4.7

million. Under ASU

2011

08,

the Company is required, on a set date, to annually assess its goodwill in order to determine whether or

not

it is more likely than

not

that the fair value of the reporting unit’s goodwill exceeded its carrying amount. Determining the fair value of a reporting unit is subjective and requires the use of significant estimates and assumptions.

For Bytewise, the annual assessment date was

October 1, 2017.

The Company performed a quantitative analysis in accordance with ASU

2011

for its annual assessment (commonly referred to as “Step One”). With the assistance of an independent

third

-party valuation specialist, the Company estimated the fair value using an income approach based on the present value of future cash flows. The Company believes this approach yields the most appropriate evidence of fair value. The Company also utilized the comparable company multiples method and market transaction fair value method to validate the fair value amount obtained using the income approach. The key assumptions utilized in the discounted cash flow model included estimates of future cash flows from operating activities offset by estimated capital expenditures of the reporting unit, the estimated terminal value for the reporting unit, a discount rate based on a weighted average cost of capital, and an assessment of current market capitalization.

Under the quantitative analysis, the

2017

fair value assessment of the Bytewise goodwill exceeded the carrying amount by approximately

81.1%.

Therefore

goodwill impairment was determined to exist. If future results significantly vary from current estimates, related projections, or business assumptions in the future due to changes in industry or market conditions, the Company

may

be required to record impairment charges.

The Company performed a qualitative analysis in accordance with ASU

2011

for its

February 1, 2018

annual assessment of goodwill (commonly referred to as “Step Zero”) associated with its purchase of the private software company. From a qualitative perspective, in evaluating whether it is more likely than

not

that the fair value of a reporting unit exceeds its carrying amount, relevant events and circumstances are taken into account, with greater weight assigned to events and circumstances that most affect the fair value or the carrying amounts of its assets. Items that were considered included, but were

not

limited to, the following: macroeconomic conditions, industry and market conditions, cost factors, overall financial performance and changes in management or key personnel. After assessing these and other factors the Company determined that it was more likely than

not

that the fair value of this reporting unit exceeded its carrying amount as of

February 1, 2018.

Amortizable intangible assets consist of the following (in thousands):

	03/31/2018			6/30/2017
Non-compete agreement	$	600		$	600
Trademarks and trade names		2,070			2,070
Completed technology		2,358			2,358
Customer relationships		5,580			5,580
Software development		7,197			6,184
Other intangible assets		325			325
Total		18,130			17,117
Accumulated amortization		(8,678	)		(7,249	)
Total net balance	$	9,452		$	9,868

Amortizable intangible assets are being amortized on a straight-line basis over the period of expected economic benefit.

The estimated useful lives of the intangible assets subject to amortization range between

years for software development and

years for some trademark and trade name assets.

The estimated aggregate amortization expense for the remainder of fiscal

2018

and for each of the next

five

years and thereafter, is as follows (in thousands):

2018 (Remainder of year)	$	578
2019		2,210
2020		1,687
2021		1,284
2022		1,051
2023		708
Thereafter		1,934