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Note 4 - Goodwill and Intangible Assets | 12 Months Ended
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Dec. 31, 2020
Notes to Financial Statements |
Goodwill and Intangible Assets Disclosure [Text Block] |
( 4 ) | GOODWILL AND INTANGIBLE ASSETS
We have two operating segments which are also our reporting units: Thermal and EMS. Goodwill and intangible assets on our balance sheets are the result of our acquisitions of Sigma Systems Corp. ("Sigma") in October 2008, Thermonics, Inc. ("Thermonics") in January 2012 and Ambrell in May 2017. All of our goodwill and intangible assets are allocated to our Thermal segment. Goodwill Goodwill totaled $13,738 at both December 31, 2020 and 2019 and was comprised of the following:
Sigma |  | $ | 1,656 |
Thermonics |  |  | 50 |
Ambrell |  |  | 12,032 |
Total |  | $ | 13,738 |
Intangible Assets Changes in the amount of the carrying value of finite-lived intangible assets for the years ended December 31, 2020 and 2019 are as follows:
Balance - January 1, 2019 |  | $ | 8,201 |
Amortization |  |  | (1,257 | )
Balance - December 31, 2019 |  |  | 6,944 |
Amortization |  |  | (1,233 | )
Balance - December 31, 2020 |  | $ | 5,711 |
The following tables provide further detail about our intangible assets as of December 31, 2020 and 2019:
|  | December 31, 2020 |
|  | Gross Carrying Amount |  |  | Accumulated Amortization |  |  | Net Carrying Amount |
Finite-lived intangible assets: |  |  |  |  |  |  |  |  |  |  |  |
Customer relationships |  | $ | 10,480 |  |  | $ | 4,912 |  |  | $ | 5,568 |
Technology |  |  | 600 |  |  |  | 477 |  |  |  | 123 |
Patents |  |  | 590 |  |  |  | 570 |  |  |  | 20 |
Software |  |  | 270 |  |  |  | 270 |  |  |  | - |
Trade name |  |  | 140 |  |  |  | 140 |  |  |  | - |
Total finite-lived intangible assets |  |  | 12,080 |  |  |  | 6,369 |  |  |  | 5,711 |
Indefinite-lived intangible assets: |  |  |  |  |  |  |  |  |  |  |  |
Trademarks |  |  | 6,710 |  |  |  | - |  |  |  | 6,710 |
Total intangible assets |  | $ | 18,790 |  |  | $ | 6,369 |  |  | $ | 12,421 |
|  | December 31, 2019 |
|  | Gross Carrying Amount |  |  | Accumulated Amortization |  |  | Net Carrying Amount |
Finite-lived intangible assets: |  |  |  |  |  |  |  |  |  |  |  |
Customer relationships |  | $ | 10,480 |  |  | $ | 3,805 |  |  | $ | 6,675 |
Technology |  |  | 600 |  |  |  | 380 |  |  |  | 220 |
Patents |  |  | 590 |  |  |  | 541 |  |  |  | 49 |
Software |  |  | 270 |  |  |  | 270 |  |  |  | - |
Trade name |  |  | 140 |  |  |  | 140 |  |  |  | - |
Total finite-lived intangible assets |  |  | 12,080 |  |  |  | 5,136 |  |  |  | 6,944 |
Indefinite-lived intangible assets: |  |  |  |  |  |  |  |  |  |  |  |
Trademarks |  |  | 6,710 |  |  |  | - |  |  |  | 6,710 |
Total intangible assets |  | $ | 18,790 |  |  | $ | 5,136 |  |  | $ | 13,654 |
We generally amortize our finite-lived intangible assets over their estimated useful lives on a straight-line basis, unless an alternate amortization method can be reliably determined. Any such alternate amortization method would be based on the pattern in which the economic benefits of the intangible asset are expected to be consumed. None of our intangible assets have any residual value. The following table sets forth the estimated annual amortization expense for each of the next five years:
2021 |  | $ | 1,227 |
2022 |  | $ | 1,167 |
2023 |  | $ | 1,067 |
2024 |  | $ | 980 |
2025 |  | $ | 905 |
Impairment of Goodwill and Indefinite Life Intangible Assets During December 2020 and 2019, we assessed our goodwill and indefinite life intangible asset for impairment in accordance with the requirements of ASC Topic 350 using a quantitative approach. Our goodwill impairment assessment is based upon the income approach, which estimates the fair value of our reporting units based upon a discounted cash flow approach. This fair value is then reconciled to our market capitalization at year end with an appropriate control premium. The discount rate used in 2020 and 2019 for the discounted cash flows was 20.0% . The selection of the rate in each year was based upon our analysis of market-based estimates of capital costs and discount rates. The determination of the fair value of our reporting units requires management to make significant estimates and assumptions including the selection of control premiums, discount rates, terminal growth rates, forecasts of revenue and expense growth rates, income tax rates, changes in working capital, depreciation, amortization and capital expenditures. Changes in assumptions concerning future financial results or other underlying assumptions could have a significant impact on either the fair value of the reporting unit or the amount of the goodwill impairment charge. During the goodwill impairment assessment in both 2020 and 2019, we compared the fair value of our Thermal reporting unit with its carrying value. This assessment indicated no impairment existed as the fair value of the reporting unit exceeded its carrying value in both 2020 and 2019. During the indefinite life intangible asset impairment assessment in both 2020 and 2019, we compared the fair value of our indefinite life intangible assets with their carrying values. This assessment indicated no impairment existed as the fair value of the indefinite life intangible assets exceeded their carrying values in both 2020 and 2019. Impairment of Long-Lived Assets and Finite-lived Intangible Assets During 2020 and 2019, we did not review any of our long-lived assets for impairment other than the ROU assets related to the leases for our facilities in Fremont, CA and Mansfield, MA as discussed further in Notes 3 and 8. There were no events or changes in business circumstances that would indicate an impairment might exist other than the events identified and discussed in Note 3 related to these specific long-lived assets.

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