WRAP TECHNOLOGIES, INC. Goodwill & Intangibles Disclosure
7. INTANGIBLE ASSETS AND GOODWILL
Intangible Assets
Intangible assets consisted of the following:
| December 31, | ||||||||
| 2024 | 2023 | |||||||
| Amortizable intangible assets: | ||||||||
| Patents | $ | 1,013 | $ | 873 | ||||
| Trademarks | 264 | 248 | ||||||
| Purchased software and technology | 1,752 | 1,752 | ||||||
| Customer Relationship | 160 | 160 | ||||||
| 3,189 | 3,033 | |||||||
| Accumulated amortization | (1,256 | ) | (806 | ) | ||||
| Total amortizable | 1,933 | 2,227 | ||||||
| Indefinite life assets (non-amortizable) | 421 | 421 | ||||||
| Total intangible assets, net | $ | 2,354 | $ | 2,648 | ||||
Amortization expenses were $450 and $345 for the years ended December 31, 2024 and 2023, respectively.
The Intrensic Acquisition in August 2023 resulted in several intangible assets recognized on the balance sheet including $80 in trademarks, $490 in purchased technology and $160 in customer relationships.
The Company determined in December 2023 that the intangible related to software developed by Lumeto would not have future economic benefit and the value of the intangible was written down, incurring a loss on impairment of $700.
At December 31, 2024, annual amortization of intangible assets, based upon the Company’s existing intangible assets and current useful lives, is estimated to be the following:
| 2025 | $ | 453 | ||
| 2026 | 366 | |||
| 2027 | 216 | |||
| 2028 | 216 | |||
| 2029 | 184 | |||
| Thereafter | 498 | |||
| Total estimated amortization expense | $ | 1,933 |
Goodwill
The Company recorded an initial goodwill of $1,610 related to the purchase of Intrensic in August 2023.
During 2024, the Company recorded an increase of $21 to goodwill as result of additional liabilities assumed related to the August 2023 Intrensic Acquisition.
In December 2024, the Company assessed the fair value of its Intrensic unit and determined that its carrying value exceeded its fair value by $1,631 and therefore the Company recorded a $1,631 impairment charge related to the goodwill initially recorded from the 2023 acquisition.
The table below summarizes the changes in the carrying amount of goodwill:
| Balance at January 1, 2024 | $ | 1,610 | ||
| Additional liabilities recorded post-acquisition | 21 | |||
| Impairment charge | (1,631 | ) | ||
| Balance at December 31, 2024 | $ |
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.