Knightscope, Inc. Goodwill & Intangibles Disclosure
NOTE 3: Goodwill and Intangible Assets, net
The Company recorded goodwill of $1.3 million during the year ended December 31, 2022 related to the Case Emergency Systems (“CASE”) acquisition. During the year ended December 31, 2023, an out of period adjustment of $0.6 million was recorded, bringing the total goodwill recorded pursuant to the CASE acquisition to $1.9 million. Goodwill is not amortized to earnings, but instead is reviewed for impairment at least annually, absent any interim indicators of impairment. There was no impairment of goodwill during the years ended December 31, 2024 and 2023.
The following table sets forth a summary of the changes in goodwill:
Balance as of January 1, 2023 | $ | 1,344 | |
Out of period adjustment |
| 578 | |
Balance as of December 31, 2023 and 2024 | $ | 1,922 |
The gross carrying amounts and accumulated amortization of the intangible assets with determinable lives are as follows:
December 31, 2024 | |||||||||||
Amortization | Gross | ||||||||||
Period | carrying | Accumulated | Carrying | ||||||||
Intangible assets with determinable lives |
| (years) |
| amount |
| amortization |
| amount, net | |||
Developed technology |
| 5 | $ | 990 | $ | (437) | $ | 553 | |||
Customer relationships |
| 8 |
| 950 |
| (262) |
| 688 | |||
Total | $ | 1,940 | $ | (699) | $ | 1,241 | |||||
|
| December 31, 2023 | |||||||||
Amortization | Gross | ||||||||||
Period | carrying | Accumulated | Carrying | ||||||||
Intangible assets with determinable lives | (years) |
| amount |
| amortization |
| amount, net | ||||
Developed technology |
| 5 | $ | 990 | $ | (239) |
| $ | 751 | ||
Customer relationships |
| 8 |
| 950 |
| (144) |
|
| 806 | ||
Total | $ | 1,940 | $ | (383) |
| $ | 1,557 | ||||
Intangible assets amortization expense was recorded as follows:
| December 31, |
| December 31, | |||
2024 | 2023 | |||||
Cost of revenue | $ | 197 | $ | 198 | ||
Sales and marketing |
| 119 |
| 301 | ||
Total intangible asset amortization | $ | 316 | $ | 499 | ||
As of December 31, 2024, future intangible assets amortization expense for each of the next five years and thereafter is as follows:
Year ending December 31, |
| Amount | |
2025 | $ | 317 | |
2026 |
| 317 | |
2027 |
| 275 | |
2028 |
| 118 | |
2029 |
| 119 | |
2030 and thereafter | 95 | ||
Total | $ | 1,241 | |
About Goodwill & Intangibles Disclosures
Goodwill and intangible asset disclosures reveal the premium paid in acquisitions and how management assesses whether that premium retains its value. Since goodwill is no longer amortized under US GAAP, the annual impairment test is the only mechanism that adjusts carrying values downward — making the assumptions behind that test critically important for investors.
Key signals: a history of goodwill impairments suggests management consistently overpays for acquisitions. Watch the gap between reporting unit fair value and carrying amount — when fair value exceeds carrying amount by less than 10-20%, a small decline in business performance could trigger a write-down. For finite-lived intangibles, examine useful life assumptions across customer relationships, technology, and trade names; aggressive estimates inflate near-term earnings. Compare total intangibles-to-total-assets ratios against peers to assess acquisition dependency. Rising goodwill as a percentage of equity can signal balance sheet fragility.