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Goodwill and Intangible Assets, Net

9 Months Ended

Sep. 30, 2022

Intangible Assets and Goodwill [Abstract]

Note 7 — Goodwill and Intangible Assets, Net

Intangible assets are initially recorded at fair value and tested periodically for impairment. Goodwill represents the excess of the purchase price over the fair value of identifiable tangible and intangible assets acquired and liabilities assumed in a business combination and is tested at least annually for impairment. The Company performs its goodwill impairment testing annually during the fourth quarter, or sooner if indicators or if circumstances were to occur that would more likely than not reduce the fair value of the Company’s reporting unit below its carrying amount. The Company would recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value, not to exceed the total amount of goodwill.

The Company has concluded that there was an impairment-triggering event during the three months ended June 30, 2022 that required the Company to perform a detailed analysis of the current carrying value of its goodwill and intangible assets. For intangible asset and goodwill impairment testing purposes, the Company has one reporting unit.

During the three-month period ended June 30, 2022, the Company’s market capitalization fell below total net assets. In addition, financial performance continued to weaken during the quarter, which is contrary to prior experience. Management reassessed business performance expectations, following persistent adverse developments in equity markets, deterioration in the environment in which the Company operates, lower-than-expected sales, and an increase in operating expenses. These indicators, in the aggregate, required impairment testing for intangible assets and goodwill.

Based on the results of this testing, the Company determined that the carrying values of the aggregate value of its goodwill and intangible assets were not recoverable. The Company recorded impairment charges during the second quarter of 2022, representing a full impairment of the carrying value of its goodwill and intangible assets. The Company recorded an impairment charge of approximately $69.9 million, representing the carrying values of intangible assets and goodwill, which totaled $15.2 million and $54.7 million, respectively.

Goodwill consisted of the following:

(In thousands)	Nine Months Ended September 30, 2022			Year Ended December 31, 2021
Goodwill - beginning of period	$	50,090		$	632
Goodwill acquired during period		4,368			49,458
Goodwill impairment loss		(54,747	)		—
Goodwill purchase accounting adjustment		289			—
Goodwill - end of period	$	—		$	50,090

Intangible assets, net as of September 30, 2022 was as follows:

	Intangible Assets, Gross						Accumulated Amortization and Impairment									Intangible Assets, Net
(In thousands)	January 1, 2022		Additions		September 30, 2022		January 1, 2022			Expense and Impairments, net			September 30, 2022			January 1, 2022		September 30, 2022
Trade names	$	2,418	$	317	$	2,735	$	(227	)	$	(2,508	)	$	(2,735	)	$	2,191	$	—
Customer relationships		6,176		713		6,889		(302	)		(6,587	)		(6,889	)		5,874		—
Acquired developed technology		4,911		1,432		6,343		(191	)		(6,152	)		(6,343	)		4,720		—
Non-compete agreements		1,202		—		1,202		(60	)		(1,142	)		(1,202	)		1,142		—
Capitalized website costs		245		—		245		(100	)		(145	)		(245	)		145		—
Total intangible assets, net	$	14,952	$	2,462	$	17,414	$	(880	)	$	(16,534	)	$	(17,414	)	$	14,072	$	—

Intangible assets, net as of December 31, 2021 was as follows:

	Intangible Assets, Gross						Accumulated Amortization									Intangible Assets, Net
(In thousands)	January 1, 2021		Additions		December 31, 2021		January 1, 2021			Expense			December 31, 2021			January 1, 2021		December 31, 2021
Trade names	$	930	$	1,488	$	2,418	$	(88	)	$	(139	)	$	(227	)	$	842	$	2,191
Customer relationships		850		5,326		6,176		(89	)		(213	)		(302	)		761		5,874
Acquired developed technology		—		4,911		4,911		—			(191	)		(191	)		—		4,720
Non-compete agreements		—		1,202		1,202		—			(60	)		(60	)		—		1,142
Capitalized website costs		139		106		245		(48	)		(52	)		(100	)		91		145
Total intangible assets, net	$	1,919	$	13,033	$	14,952	$	(225	)	$	(655	)	$	(880	)	$	1,694	$	14,072

Amortization expense recorded in general and administrative in the consolidated statements of operations were $0 and $57 thousand for the three months ended September 30, 2022 and 2021, respectively, and $1.4 million and $172 thousand for the nine months ended September 30, 2022 and 2021, respectively.