Quarterly report pursuant to Section 13 or 15(d)

Goodwill and Intangible Assets

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Goodwill and Intangible Assets
 6 Months Ended
Jun. 30, 2024
Goodwill and Intangible Assets [Abstract]  
GOODWILL AND INTANGIBLE ASSETS

NOTE 7 – GOODWILL AND INTANGIBLE ASSETS

 

Goodwill consists of the following:

 

(in thousands)

 

    June 30,
2024		  
Balance as of December 31, 2023   $ 3,018  
Impairment of goodwill     (3,018 )
Balance as of June 30, 2024   $
—
  

 

The Company conducts an annual impairment test of goodwill at December 31st or if events or circumstances exist that would indicate that the Company’s goodwill may be impaired. As circumstances changed during the three months ended June 30, 2024, that would, more likely than not, reduce the Company’s fair value below its net equity value, the Company performed qualitative and quantitative analyses of the potential impairment of its goodwill, specifically evaluating trends in market capitalization, current and future cash flows, revenue growth rates, and the impact of macroeconomic conditions on the Company and its performance. Based on the analysis performed, the Company determined that its goodwill was fully impaired due to the continuation of revenues being below management’s expectations, continued operating losses and negative operating cash flows, reductions in the Company’s stock price and market capitalization, and the delisting from Nasdaq and subsequent transition to the OTCQX market in the second quarter of 2024 whereby the Company’s common stock has been thinly traded. As a result, the Company recorded a goodwill impairment charge in the amount of $3.0 million for the three and six months ended June 30, 2024.

 

Intangible assets consist of the following:

 

(in thousands)

 

    June 30, 2024  
    Useful     Gross Carrying     Accumulated     Net           Net Carrying  
    Life     Amount     Amortization     Disposal     Impairment     Amount  
Trademarks     5-10 Years     $ 2,320     $ (761 )   $
—
     $ (1,559 )   $
   —
  
Noncompete agreements     5 Years       990       (644 )    
—
       (346 )    
—
  
Customer relationships     5-7 Years       3,760       (1,628 )     (51 )     (2,081 )    
—
  
Patents and patent applications     5 Years       650       (65 )    
—
       (585 )    
—
  
            $ 7,720     $ (3,098 )   $ (51 )   $ (4,571 )   $
—
  

 

    December 31, 2023  
Trademarks     5-10 Years     $ 2,320     $ (605 )   $
—
     $
—
     $ 1,715  
Noncompete agreements     5 Years       990       (545 )    
—
      
—
       445  
Customer relationships     5-7 Years       3,760       (1,342 )     (51 )    
—
       2,367  
Patents and patent applications     (*)       650      
—
      
—
      
—
       650  
            $ 7,720     $ (2,492 )   $ (51 )   $
—
     $ 5,177  

 

(*) Patents have yet to be approved by the United States Patent and Trademark Office. Useful life is determined upon placement into service after approval.

 

Amortization expense was $606 thousand and $548 thousand for the six months ended June 30, 2024 and 2023, respectively.

 

Amortization expense was $303 thousand and $274 thousand for the three months ended June 30, 2024 and 2023, respectively.

 

The Company conducts an impairment test of intangible assets when events occur or circumstances exist that would indicate the Company’s long-lived assets may be impaired. Based on the matters discussed above for goodwill and the qualitative and quantitative analyses performed, the Company determined that its intangible assets were fully impaired. As a result, the Company recorded an intangible impairment charge in the amount of $4.6 million for the three and six months ended December 31, 2024.