Note 8 - Goodwill and Intangible Assets

6 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Goodwill and Intangible Assets Disclosure [Text Block]

Note

8

:   Goodwill and Intangible Assets

The Company’s acquisition of Bytewise in

2011

and a private software company in

2017

resulted in the recognition of goodwill totaling

$4.7

million. The Company is required, on a set date, to annually assess its goodwill in order to determine whether or

not

it is more likely than

not

that the fair value of the reporting unit’s goodwill exceeded it carrying amount. Determining the fair value of a reporting unit is subjective and requires the use of significant estimates and assumptions.

The Company performed a qualitative analysis of its Bytewise reporting unit for its

October 1, 2019

annual assessment of goodwill (commonly referred to as “Step Zero”). From a qualitative perspective, in evaluating whether it is more likely than

not

that the fair value of a reporting unit exceeds it carrying amount, relevant events and circumstances are taken into account, with greater weight assigned to events and circumstances that most affect the fair value or the carrying amounts of its assets. Items that were considered included, but were

not

limited to, the following: macroeconomic conditions, industry and market conditions, cost factors, overall financial performance and changes in management or key personnel. After assessing these and other factors the Company determined that it was more likely than

not

that the fair value of the Bytewise reporting unit exceeded it carrying amount as of

October 1, 2019.

If future results significantly vary from current estimates and related projections due to changes in industry or market conditions, the Company

may

be required to record impairment charges.

Determining the fair value of a reporting unit is subjective and requires the use of the significant estimates and assumptions. The Company estimates the fair value using an income approach based on the present value of future cash flows. The Company believes this approach yields the most appropriate evidence of fair value. The key assumptions utilized in the discounted cash flow model includes estimates of future cash flows from operating activities offset by estimated capital expenditures of the reporting unit, the estimated terminal value for the reporting unit, a discount rate based on a weighted average cost of capital and overall economic conditions. Any unfavorable material changes to these key assumptions could potentially impact the Company’s fair value determinations.

The Company last performed a quantitative analysis for its

February 1, 2019

annual assessment of goodwill associated with its purchase of a private software company. The Company estimated the fair value using an income approach based on the present value of future cash flows. The Company believes this approach yields the most appropriate evidence of fair value.  Under the quantitative analysis, the

2019

fair value assessment of the software development company’s goodwill exceeded the carrying amount.  Therefore,

no

goodwill impairment was determined to exist.  If future results significantly vary from current estimates, related projections, or business assumptions in the future due to changes in industry or market conditions, the Company

may

be required to record impairment charges.  The Company will perform the annual Step

one

assessment as of 

February 1, 2020. 

Amortizable intangible assets consist of the following (in thousands):

	12/31/201 9			6/30/201 9
Non-compete agreement	$	600		$	600
Trademarks and trade names		2,070			2,070
Completed technology		2,358			2,358
Customer relationships		5,580			5,580
Software development		9,671			8,952
Other intangible assets		325			325
Total		20,604			19,885
Accumulated amortization		(12,494	)		(11,425	)
Total net balance	$	8,110		$	8,460

Amortizable intangible assets are being amortized on a straight-line basis over the period of expected economic benefit.

The estimated useful lives of the intangible assets subject to amortization range between

5

years for software development and

20

years for some trademark and trade name assets.

The estimated aggregate amortization expense for the remainder of fiscal

2020

and for each of the next

five

years and thereafter, is as follows (in thousands):

2020 (Remainder of year)	$	1,012
2021		1,761
2022		1,531
2023		1,179
2024		881
2025		673
Thereafter		1,073
	$	8,110