XML 19 R9.htm IDEA: XBRL DOCUMENT

INTANGIBLE ASSETS AND GOODWILL

9 Months Ended

Jun. 30, 2021

Goodwill and Intangible Assets Disclosure [Abstract]

NOTE 3 INTANGIBLE ASSETS AND GOODWILL

The Company’s intangible assets are all held under the design segment of our business. Amortization expense related to intangible assets was $53,000 and $41,000 for the three months ended June 30, 2021 and 2020, respectively, and $160,000 and $122,000 for the nine months ended June 30, 2021 and 2020, respectively, which is included in general and administrative expenses on the condensed consolidated statements of operations.

The Company’s intangible assets consist of the following:

Intangible Assets
	June 30, 2021									September 30, 2020
	Trademarks			Customer Relationships			Total Intangible Assets			Trademarks			Customer Relationships			Total Intangible Assets

Gross carrying amount	$	585,000		$	1,390,000		$	1,975,000		$	585,000		$	1,390,000		$1,975,000
Less accumulated amortization		(115,000	)		(488,000	)		(603,000	)		(86,000	)		(358,000	)	(444,000)
Net carrying amount	$	470,000		$	902,000		$	1,372,000		$	499,000		$	1,032,000		$1,531,000

At June 30, 2021, estimated amortization expense for the Company’s intangible assets for each of the next five years and thereafter is as follows:

Estimated amortization expense
Remainder of Fiscal 2021	$	53,000
Fiscal 2022		213,000
Fiscal 2023		213,000
Fiscal 2024		213,000
Fiscal 2025		213,000
Thereafter		467,000
Total	$	1,372,000

In March 2020, the Company experienced triggering events that prompted the testing of its goodwill for impairment. Those triggering events included the reduction in fair value of the IPS contingent earnout consideration discussed in Note 4 and revised revenue and operational projections for IPS for the remainder of the 2020 fiscal year and future periods. Based on these factors, the Company concluded that it was more likely than not that the fair value of the IPS reporting unit had declined below its carrying amount. The Company then calculated the fair value of this reporting unit using Level 3 inputs, which is a combination of asset-based, income and market approaches. The estimates and assumptions utilized in the estimated fair value calculation included discount rate, terminal growth rate, selection of peer group companies and control premium applied as well as forecasts of revenue growth rates, gross margins, operating margins and working capital requirements. Any changes in the judgments, estimates or assumptions used could produce significantly different results. The Company concluded the IPS reporting unit’s fair value was below its carrying value by $1,015,000 and an impairment charge was recognized for this amount in March 2020. Based on management’s evaluation, there were no further impairments to goodwill at September 30, 2020 and there were no triggering events leading to an interim impairment analysis at June 30, 2021.