Goodwill and Intangible Assets

9 Months Ended

Sep. 30, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill

The following table sets forth the changes in the carrying amount of goodwill for the nine months ended September 30, 2022:


	Amounts
Balance at December 31, 2021	$	6,570
Sale of KVH Media Group Entertainment Limited	(1,038)
Foreign currency translation adjustment	(295)
Balance at September 30, 2022	$	5,237

Intangible Assets

The changes in the carrying amount of intangible assets during the nine months ended September 30, 2022 are as follows:


	Amounts
Balance at December 31, 2021	$	1,287
Amortization expense	(409)
Intangible assets acquired in asset acquisition	42
Sale of KVH Media Group Entertainment Limited	(352)
Foreign currency translation adjustment	(101)
Balance at September 30, 2022	$	467

Intangible assets arose from the acquisition of KVH Media Group (acquired as Headland Media Limited) in May 2013. These intangible assets are being amortized on a straight-line basis over the estimated useful life of 10 years for acquired subscriber relationships. The intangible assets were recorded in pounds sterling and fluctuations in exchange rates cause these amounts to increase or decrease from time to time. As a result of the sale of KVH Media Group Entertainment Limited in April 2022, the Company determined the goodwill and intangible assets associated with this business based on an income approach which estimated the fair value of the reporting unit before and after the sale, and included such amounts in the determination of the gain on sale of the subsidiary.

In January 2017, the Company completed the acquisition of certain subscriber relationships from a third party. This acquisition did not meet the definition of a business under ASC 2017-01, Business Combinations (Topic 805)-Clarifying the Definition of a Business, which the Company adopted on October 1, 2016. The Company ascribed $100 of the initial purchase price to the acquired subscriber relationships definite-lived intangible assets with an initial estimated useful life of 10 years. Under the asset purchase agreement, the purchase price includes a component of contingent consideration under which the Company is required to pay a percentage of recurring revenues received from the acquired subscriber relationships through 2026 up to a maximum annual payment of $114. As of September 30, 2022, the carrying value of the intangible assets acquired in the asset acquisition was $450. As the acquisition did not represent a business combination, the contingent consideration arrangement is recognized only when the contingency is resolved and the consideration is paid or becomes payable. The amounts payable under the contingent consideration arrangement, if any, will be included in the measurement of the cost of the acquired subscriber relationships. An additional $42 and $47 of consideration was earned under the contingent consideration arrangement during the nine months ended September 30, 2022 and 2021, respectively.

Acquired intangible assets are subject to amortization. The following table summarizes acquired intangible assets at September 30, 2022 and December 31, 2021, respectively:


	Gross Carrying Amount		Accumulated Amortization		Net Carrying Value
September 30, 2022
Subscriber relationships	$	7,624	$	7,157	$	467
Distribution rights	315		315		—
Internally developed software	446		446		—
Proprietary content	153		153		—
Intellectual property	2,284		2,284		—

	$	10,822	$	10,355	$	467
December 31, 2021
Subscriber relationships	$	8,033	$	6,746	$	1,287
Distribution rights	315		315		—
Internally developed software	446		446		—
Proprietary content	153		153		—
Intellectual property	2,284		2,284		—

	$	11,231	$	9,944	$	1,287

Amortization expense related to intangible assets was $90 and $277 for the three months ended September 30, 2022, respectively, and $409 and $833 for the nine months ended September 30, 2022 and 2021, respectively. Amortization expense was categorized as general and administrative expense.

As of September 30, 2022, the total weighted average remaining useful lives of the definite-lived intangible assets was 3.2 years.

Estimated future amortization expense remaining at September 30, 2022 for intangible assets acquired was as follows:

Years ending December 31,


Remainder of 2022	$	87
2023	168
2024	68
2025	68
2026	68
Thereafter	8
Total future amortization expense	$	467

For definite-lived intangible assets, the Company assesses the carrying value of these assets whenever events or circumstances indicate that the carrying value may not be recoverable. Recoverability of assets to be held and used is measured by comparing the carrying amount of an asset, or asset group, to the future undiscounted cash flows expected to be generated by the asset, or asset group. There were no events or changes in circumstances during the nine months ended September 30, 2022 which indicated that an assessment of the impairment of goodwill and intangible assets was required.