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INTANGIBLE ASSETS AND GOODWILL
 12 Months Ended
Dec. 31, 2023
Intangible Assets And Goodwill  
INTANGIBLE ASSETS AND GOODWILL

11. INTANGIBLE ASSETS AND GOODWILL

SCHEDULE OF INTELLECTUAL PROPERTY 

   Patents   Customer Relationships   Brand  

 

Software

   Goodwill   Total 
Cost                        
Balance at December 31, 2021  $41,931   $197,000   $23,000   $552,000   $5,940,409   $6,754,340 
Additions   -    -    -    4,684    -    4,684 
Foreign exchange translation   -    -    1,571    29,576    257,782    288,929 
Impairment   -    -    (24,571)   (462,577)   (6,198,191)   (6,685,339)
Balance at December 31, 2022  $41,931   $197,000   $-   $123,683   $-   $362,614 
Impairment   -    (87,415)   -    -    -    (87,415)
Balance at December 31, 2023  $41,931   $109,585   $-   $123,683   $-   $275,199 
                               
Accumulated amortization                              
Balance at December 31, 2021  $41,931   $60,414   $3,450   $114,235   $-   $220,030 
Charge for the year   -    27,317    4,719    147,446    -    179,482 
Foreign exchange translation   -    -    431    13,295    -    13,726 
Impairment   -    -    (8,600)   (221,825)   -    (230,425)
Balance at December 31, 2022   41,931    87,731    -    53,151    -    182,813 
Charge for the year   -    21,854    -    14,106    -    35,960 
Balance at December 31, 2023  $41,931   $109,585   $-   $67,257   $-   $218,773 
                               

Net book value:

                              
December 31, 2022  $-   $109,269   $-   $70,532   $-   $179,801 
December 31, 2023  $-   $-   $-   $56,426   $-   $56,426 

 

Goodwill

 

On December 31, 2022 the Company performed its annual goodwill impairment test on Vital and Dronelogics. The Company determined the recoverable amount based on a value in use calculation using the following key assumptions:

 

  ● 5 year post tax cash flow projections expected to be generated based on a financial forecast with a terminal growth rate of 2% (2021 – 2%).
  ● Budgeted cash flows calculated using a weighted average revenue EBITDA margin of 6.5% (2021 – 14%) for Dronelogics and 0% (2021 – 42%) for Vital Intelligence Inc. (“Vital”) respectively were estimated by management based on the past performance and future growth prospects as well as observed trends among comparable companies.
  ● Cash flows were discounted at the weighted average cost of capital of 19% (2021 – 17%) for Dronelogics and 29% (2021 – 24%) for Vital based on peer group averages and adjusted for the Company’s risk factors.

 

Based on the annual goodwill impairment test, the Company determined that the goodwill for Dronelogics and Vital required impairment, as such the Company recorded an impairment charge of $2,166,563 (2021 – nil) for Dronelogics and $4,031,628 (2021 - $4,579,763) for Vital. In addition to the goodwill, the Company deemed that the brand and software for Vital required impairment, as such the Company recorded an impairment charge of $15,971 and $240,752 respectively.

 

The most sensitive inputs to the value in use model are the growth and discount rates. All else being equal:

 

  ● A 10% reduction in the Value in use for the discounted cash flow model would result in a reduction of $104,248 for Dronelogics (2021 – $597,100) and $Nil for Vital (2021 - $570,133).

 

 

Draganfly Inc.

Notes to the Consolidated Financial Statements

For the Year Ended December 31, 2023

Expressed in Canadian Dollars