CREATIVE REALITIES, INC. Goodwill & Intangibles Disclosure

NOTE 8: INTANGIBLE ASSETS AND GOODWILL

 

Intangible Assets

 

Intangible assets consisted of the following as of December 31, 2025 and 2024:

 

		December 31,
		2025								2024
		Gross								Gross
		Carrying				Accumulated				Carrying				Accumulated
		Amount				Amortization				Amount				Amortization
Technology platform		$	13,961				3,858			$	7,140				3,041
Purchased and developed software			8,815				5,921				13,780				5,006
Customer relationships			28,561				5,889				13,910				4,350
Trademarks and trade names			1,260				1,044				1,260				852
Noncompete			22				1				-				-
Total amortizable intangible assets			52,619				16,713				36,090				13,249
Less: Accumulated amortization			(16,713	)							(13,249	)
Net book value of amortizable intangible assets		$	35,906							$	22,841

 

For the years ended December 31, 2025 and 2024, amortization of intangible assets charged to operations was $4,822 and $3,877, respectively. For the year ended December 31, 2024, the Company wrote-off a $30 fully amortized noncompete asset and the related accumulated amortization. There was no impact on the Company’s consolidated balance sheet or consolidated statement of operations as a result of this write-off during the period.

 

During the year ended December 31, 2025, the Company recognized an impairment charge of $5,712 related to a proprietary software platform capitalized as an intangible asset under ASC 350-40. The impairment was recorded after management determined that expected future cash flows associated with the platform were not sufficient to recover its carrying amount, primarily due to uncertainty regarding the renewal of an existing software license agreement. The uncertainty arose in September 2025 when the customer communicated that it was unable to renew its license agreement with the Company due to budget constraints, representing a triggering event under ASC 350-40. The impairment charge was measured as the excess of the asset’s carrying amount over its estimated fair value, which was determined using an income approach based on expected discounted cash flows and Level 3 inputs in accordance with ASC 820. The impairment charge is presented within operating expenses in the consolidated statements of operations.

 

Estimated amortization is as follows:

 

		Estimated Future
Year ending December 31,		Amortization
2026		$	5,876
2027			4,854
2028			4,351
2029			4,021
2030			4,020
Thereafter			12,784
Total		$	35,906

 

Intangible assets include the following and are being amortized over their estimated useful lives as follows:

 

		Amortization
		Period:
Acquired Intangible Asset:		(years)
Technology platform and patents			3	-	10
Purchased and developed software			3	-	7
Trade names			5
Customer relationships			10	-	15

 

Goodwill

 

As of December 31, 2025, the Company's goodwill balance includes $26,013, recognized in connection with the acquisition of CDM on November 7, 2025 (see Note 5). The Company has one reporting unit and all goodwill has been assigned to that reporting unit.

 

On September 30, 2025, the Company performed a qualitative assessment and concluded that it was not more likely than not that the fair value of its reporting unit was less than its carrying amount. Accordingly, no quantitative test was required and no impairment was recognized during the year ended December 31, 2025. On September 30, 2024, the Company performed a qualitative assessment and concluded that it was not more likely than not that the fair value of its reporting unit was less than its carrying amount. Accordingly, no quantitative test was required and no impairment was recognized during the year ended December 31, 2024.

 

The Company recognizes that changes in projected operating results, market conditions, or other assumptions could have a material impact on its assessment of goodwill impairment in future periods. Should indicators of impairment arise in subsequent periods, the Company will perform the analysis required to determine whether goodwill is impaired.

 

Changes in goodwill for the years ended December 31, 2025 and 2024 were as follows:

 

		Gross Carrying Amount
Balance as of January 1, 2024		$	37,099
Additions			-
Impairment expense			-
Balance as of December 31, 2024			37,099
Additions			26,013
Foreign currency translation adjustments			800
Balance as of December 31, 2025		$	63,912

 

		Accumulated Impairment
Balance as of January 1, 2024		$	(10,646	)
Impairment expense			-
Balance as of December 31, 2024			(10,646	)
Impairment expense			-
Balance as of December 31, 2025		$	(10,646	)
Goodwill, net of accumulated impairment		$	53,266

 

The carrying values of goodwill and intangible assets attributable to the Company's Canadian operations are denominated in Canadian dollars and are translated into U.S. dollars at the exchange rate in effect as of the balance sheet date. As a result, the reported balances of goodwill and intangible assets are subject to fluctuation due to changes in foreign currency exchange rates, with translation adjustments recorded in accumulated other comprehensive income.