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Note 8 - Intangible Assets

9 Months Ended

Sep. 30, 2024

Notes to Financial Statements

Intangible Assets Disclosure [Text Block]

NOTE 8 INTANGIBLE ASSETS

Intangible assets at September 30, 2024 and December 31, 2023 are comprised as follows:

(in thousands)		September 30, 2024
		Gross Carrying Value				Accumulated Amortization				Accumulated Impairment Losses				Net Carrying Value
Intangible assets subject to amortization:
Database		$	4,918			$	4,918			$	—			$	—
Vehicle service agreements in-force			3,680				3,680				—				—
Customer relationships			51,242				23,783				—				27,459
Developed technology			600				64				—				536
Intangible assets not subject to amortization:
Trade names			16,167				—				1,841				14,326
Total		$	76,607			$	32,445			$	1,841			$	42,321

(in thousands)		December 31, 2023
		Gross Carrying Value				Accumulated Amortization				Net Carrying Value
Intangible assets subject to amortization:
Database		$	4,918			$	4,918			$	—
Vehicle service agreements in-force			3,680				3,680				—
Customer relationships			39,942				19,521				20,421
Developed technology			600				18				582
Intangible assets not subject to amortization:
Trade names			14,667				—				14,667
Total		$	63,807			$	28,137			$	35,670

As further discussed in Note 5, "Acquisitions and Discontinued Operations," during the third quarter of 2024, the Company recorded $12.6 million of separately identifiable intangible assets, related to acquired customer relationships and trade name, as part of the acquisition of Image Solutions on September 26, 2024. The customer relationships intangible asset of $11.1 million is being amortized over thirteen years, based on the pattern in which the economic benefits of the intangible asset is expected to be consumed. The trade name intangible asset of $1.5 million is deemed to have indefinite useful life and is not amortized. The intangible assets related to this acquisition are provisional and subject to adjustment during the measurement period. The Company expects to complete its purchase price allocation within the next six months. The estimates, allocations and calculations recorded at September 30, 2024 are subject to change as we obtain further information; therefore, the final fair values of the assets acquired and liabilities assumed may not agree with the estimates included in these consolidated financial statements

As further discussed in Note 5, "Acquisitions and Discontinued Operations," during the second quarter of 2024, the Company recorded a measurement period adjustment related to acquisition of DDI that increased the customer relationships intangible asset by $0.2 million.

The Company's intangible assets with definite useful lives are amortized either based on the patterns in which the economic benefits of the intangible assets are expected to be consumed or using the straight-line method over their estimated useful lives, which range from 7 to 15 years. Amortization of intangible assets was $1.4 million for the three months ended September 30, 2024 and September 30, 2023 ($4.3 million for the nine months ended September 30, 2024 and September 30, 2023).

The trade names intangible assets have indefinite useful lives and are not amortized. Indefinite-lived intangible assets are assessed for impairment annually as of November 30, or more frequently if events or circumstances indicate that the carrying value may not be recoverable. The Company may perform its impairment test for any indefinite-lived intangible asset through a qualitative assessment or elect to proceed directly to a quantitative impairment test, however, the Company may resume a qualitative assessment in any subsequent period if facts and circumstances permit.

At March 31, 2024, June 30, 2024 and September 30, 2024, the Company determined that certain trade names should be further examined under a quantitative approach due to actual revenue coming in lower than previous projections. Based upon these assessments, the Company recorded impairment charges for the three months ended September 30, 2024 of $0.6 million related to the CSuite and Ravix indefinite-lived trade names, and $1.8 million for the nine months ended September 30, 2024, related to the SNS, CSuite and Ravix indefinite-lived trade names. The fair value of the SNS, CSuite and Ravix trade names were estimated using the relief-from-royalty method. The significant unobservable inputs used in the relief-from-royalty method, which are level 3 inputs, include a royalty rate and discount rate. The reduction in value is primarily due to higher discount rates and a reduction in projected revenue. Future impairments may be recorded if discount rates increase further, or if actual revenue falls short of current projections. The valuation of these assets is not dependent on the underlying profit or loss generated by the respective business. Therefore, even if a change in revenue does not have a significant impact on operating results, it could significantly impact the fair value of the trade name. No impairment charges were recorded during the three and nine months ended September 30, 2023.