Registration of securities issued in business combination transactions

Intangible Assets, net and Goodwill

v3.23.3
Intangible Assets, net and Goodwill
6 Months Ended 12 Months Ended
Jun. 30, 2023
Dec. 31, 2022
Goodwill and Intangible Assets Disclosure [Abstract]    
Intangible Assets, net and Goodwill

Note 4 — Intangible Assets, net and Goodwill

Finite-lived Intangible Assets

All of our finite-lived intangible assets, including capitalized software, as of June 30, 2023 and December 31, 2022 are attributable to Ample. We did not capitalize any software development costs during the three and six months ended June 30, 2023; however, we capitalized $0.7 million and $2.2 million during the three and six months ended June 30, 2022, respectively.

We performed a two step impairment test for the asset groups that had indicators of impairment during the six months ended June 30, 2023 and 2022 and while we did not record any impairments during the 2023 periods, we recorded impairments of intangible assets of $2.2 million and capitalized software of $1.0 million during the three and six months ended June 30, 2022. Each of these impairments were attributable to the Solo platform.

Goodwill

Non-Enterprise Reporting Unit

For the three and six months ended June 30, 2023, no impairment to goodwill was recorded for our Non-Enterprise business unit as the fair value exceeded the carrying value as of June 30, 2023. All of the goodwill as of June 30, 2023 and December 31, 2022 is attributable to Ample. For the three and six months ended June 30, 2022, due primarily to declines in market valuation from December 31, 2021, we recorded impairment charges of $8.0 million and $23.5 million, respectively, of which $2.7 million and $10.7 million was attributable to Ample, $4.9 million and $11.2 million was attributable to Solo and $0.4 million and $1.6 million was attributable to Trellis. The remaining goodwill associated with Solo and Trellis was fully impaired in the second half of 2022.

Enterprise Reporting Unit

For the three and six months ended June 30, 2023, no impairments to goodwill were recorded for our Enterprise business unit as there was no goodwill asset present as of June 30, 2023. For the three and six months ended June 30, 2022, we recorded an impairment of goodwill of $3.9 million attributable to Viridian due primarily to declines in market valuation from December 31, 2021. All of the remaining goodwill associated with Viridian was fully impaired in the second half of 2022.

Note 8 — Intangible Assets, net and Goodwill

Finite-lived Intangible Assets, Net

We performed a two-step impairment test for the asset groups that had indicators of impairment in the current year and determined that the intangible and capitalized software assets of Solo, Trellis and Viridian and the capitalized software assets of MJF were fully impaired as the future undiscounted cash flows over the assets’ remaining useful lives exceeded their carrying values.

Before consideration of impairments, we capitalized software costs of $2.7 million and $5.6 million during the years ended December 31, 2022 and 2021, respectively. We record amortization expense associated with acquired developed technology, acquired trade names, and customer relationships. The amortization expense of all finite-lived intangible assets, which includes capitalized software was $5.6 million and $5.1 million, for the years ended December 31, 2022 and 2021, respectively.

Intangible assets as of December 31, 2022, all of which after impairments are attributable to Ample, consist of the following:

 

Weighted
average
remaining

amortization
period
(in years)

 

Gross
carrying

amount

 

Accumulated
amortization

 

Impairment

 

Net
carrying
amount

Acquired developed technology

 

0.50

 

$

5,978,080

 

$

(3,480,769

)

 

$

(2,375,645

)

 

$

121,666

Acquired trade names

 

0.52

 

 

566,920

 

 

(365,627

)

 

 

(158,237

)

 

 

43,056

Customer relationships

 

12.50

 

 

3,440,000

 

 

(763,500

)

 

 

(676,500

)

 

 

2,000,000

Total intangible assets

     

$

9,985,000

 

$

(4,609,896

)

 

$

(3,210,382

)

 

$

2,164,722

       

 

   

 

 

 

 

 

 

 

 

 

 

Capitalized software – In-service

 

1.17

 

 

12,038,149

 

 

(8,452,649

)

 

 

(2,930,944

)

 

 

654,556

Capitalized software – Work in progress

 

N/A

 

 

1,689,976

 

 

 

 

 

(1,689,976

)

 

 

Total capitalized software

     

 

13,728,125

 

 

(8,452,649

)

 

 

(4,620,920

)

 

 

654,556

Total finite-lived intangible assets

     

$

23,713,125

 

$

(13,062,545

)

 

$

(7,831,302

)

 

$

2,819,278

Intangible assets as of December 31, 2021 consist of the following:

 

Weighted average
remaining amortization
period
(in years)

 

Gross
carrying amount

 

Accumulated
amortization

 

Impairment

 

Net
carrying

amount

Acquired developed technology

 

3.35

 

$

5,978,080

 

$

(2,703,157

)

 

$

 

 

$

3,274,923

Acquired trade names

 

3.09

 

 

566,920

 

 

(234,160

)

 

 

 

 

 

332,760

Customer relationships

 

10.18

 

 

3,440,000

 

 

(494,000

)

 

 

 

 

 

2,946,000

Total intangible assets

     

$

9,985,000

 

$

(3,431,317

)

 

$

 

 

$

6,553,683

       

 

   

 

 

 

 

 

 

 

 

 

 

Capitalized software – In-service

 

2.02

 

 

8,738,801

 

 

(4,388,524

)

 

 

 

 

 

4,350,277

Capitalized software – Work in progress

 

N/A

 

 

2,886,859

 

 

 

 

 

(296,483

)

 

 

2,590,376

Total capitalized software

     

 

11,625,660

 

 

(4,388,524

)

 

 

(296,483

)

 

 

6,940,653

Total finite-lived intangible
assets

     

$

21,610,660

 

$

(7,819,841

)

 

$

(296,483

)

 

$

13,494,336

As of December 31, 2022, expected amortization expense relating to intangible assets and capitalized software for each of the next five years is as follows:

 

Intangible
Assets

 

Capitalized
Software

2023

 

$

324,722

 

$

542,479

2024

 

 

160,000

 

 

112,077

2025

 

 

160,000

 

 

2026

 

 

160,000

 

 

2027

 

 

160,000

 

 

Thereafter

 

 

1,200,000

 

 

Total

 

$

2,164,722

 

$

654,556

Goodwill

The following table reflects the changes in the carrying amount of goodwill:

Balance as of December 31, 2020

 

$

41,789,527

 

Additions due to acquisition of Viridian

 

 

5,408,884

 

Impairment

 

 

(14,354,114

)

Balance as of December 31, 2021

 

$

32,844,297

 

Impairment

 

 

(31,135,994

)

Balance as of December 31, 2022

 

$

1,708,303

 

Impairment

Based on our qualitative assessment of goodwill and consideration of the Sale Transaction as well as our intention to discontinue Solo, Trellis and Viridian, we determined in December 2022 that it was necessary to impair the remaining goodwill asset by an incremental $3.8 million. During the first and second quarters of 2022, we recognized impairments of $15.4 million and $11.9 million, respectively, due primarily to continued declines in market valuations. During the year ended December 31, 2021, primarily due to a continued decline in market valuation and a flattening in the operating results of Ample, Solo, Trellis and Viridian compared to acquisition assumptions, we recognized impairments of $14.4 million to goodwill.