Goodwill and Intangible Assets

3 Months Ended

Mar. 31, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill

The carrying amount of goodwill was $71.6 million as of March 31, 2022 and December 31, 2021.

Intangible Assets, Net

Our acquired intangible assets subject to amortization consist of customer relationships, trademarks and tradenames, and developed technology and were originally acquired by Cyxtera when it acquired the entities that formed Legacy Appgate. The useful lives of the assets were as follows: (i) customer relationships – 7.5 to 17.5 years, (ii) trademarks and tradenames – 8.5 to 14.5 years, and (iii) developed technology – 2.5 to 7.5 years. Acquired intangibles subject to amortization consist of the following as of March 31, 2022 and December 31, 2021 (in thousands):


	March 31, 2022						December 31, 2021						Weighted average remaining useful life (Years)
	Gross		Accumulated amortization		Net		Gross		Accumulated amortization		Net
Customer relationships	$	30,157	$	(16,547)	$	13,610	$	30,157	$	(15,706)	$	14,451	4.3
Trademarks and tradenames	17,932		(7,917)		10,015		18,732		(8,051)		10,681		8.7
Developed technology	34,281		(25,203)		9,078		38,881		(27,554)		11,327		2.5
Total	$	82,370	$	(49,667)	$	32,703	$	87,770	$	(51,311)	$	36,459

We stopped offering our Compliance Sheriff product. As a result, during the three months ended March 31, 2022 we recorded a loss on abandonment of the related intangible assets (namely, trademarks and tradenames and developed technology) of $1.7 million. Other than the loss on abandonment, the main changes in the carrying amount of each major class of intangible assets during the three months ended March 31, 2022 and 2021 was amortization, and to a lesser extent, foreign currency translation.

We recorded amortization expense on intangible assets of $2.1 million and $2.3 million during the three months ended March 31, 2022 and 2021, respectively. Amortization expense for all intangible assets, except our developed technology, was recorded within depreciation and amortization expense in the condensed consolidated statements of operations. Amortization expense for our developed technology was recorded within cost of revenue in the condensed consolidated statements of operations.

Future amortization expense of intangible assets is as follows (in thousands):

For the years ending:


Remaining 2022	$	6,248
2023	7,939
2024	7,377
2025	4,225
2026	2,297
Thereafter	4,617
Total	$	32,703

Impairment Tests

We perform annual impairment tests of goodwill on October 1st of each year or whenever an indicator of impairment exists. No impairment was recorded during the three months ended March 31, 2022 and 2021.