(

)

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

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

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

and

There were

events or changes in business circumstances that would indicate an impairment might exist other than the events identified and discussed in Note

related to these specific long-lived assets.