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Note 7 - Goodwill and Intangible Assets

3 Months Ended

Mar. 31, 2026

Intangible Asset and Goodwill [Text Block]

7. Goodwill and Intangible Assets

In accordance with FASB ASC Topic No. 350, Intangibles-Goodwill and Other, Smith Micro reviews the recoverability of the carrying value of the Company's single reporting unit goodwill at least annually or whenever events or circumstances indicate a potential impairment. The annual impairment testing date is December 31 of each year. Recoverability of goodwill is determined by comparing the estimated fair value of the reporting unit to the carrying value of the underlying net assets in the reporting unit. If the estimated fair value of a reporting unit is determined to be less than the carrying value, goodwill is deemed impaired, and an impairment loss is recognized to the extent that the carrying value of goodwill exceeds the fair value.

In connection with the preparation of its quarterly financial statements for the second quarter of 2025, the Company assessed changes in circumstances to determine whether it was more likely than not that the fair value of its single reporting unit was below its carrying amount. While there was no single determinative event or factor, considerations including recent financial performance compared to expected forecasts, trends in stock valuation, pricing of the most recent equity raise, and the receipt of the Nasdaq minimum bid price requirement notice on June 23, 2025 led the Company to conclude that when considering the events and factors in totality it was necessary to perform an interim quantitative valuation assessment. The fair value of the reporting unit was determined based on a combination of the income approach using estimated discounted cash flows and a market-based valuation methodology utilizing market multiples. The assessment utilized Level 3 inputs including estimates of revenue growth, EBITDA contribution and discount rates. Based on the results of the assessment, a full goodwill impairment charge of $11.1 million was recorded in the second quarter of 2025.

The components of the Company’s intangible assets were as follows for the periods presented (unaudited, except for December 31, 2025, in thousands, except for useful life data):

	*March 31, 2026*
	*Weighted*
	*Average*
	*Remaining*		*Gross*
	*Useful Life*		*Carrying*		*Accumulated*
	*(in Years)*		*Amount*		*Amortization*			*Net Book Value*
Purchased technology		2	$	11,076	$	(8,262	)	$	2,814
Customer relationships		8		24,573		(11,662	)		12,911
Customer contracts		0		7,000		(6,921	)		79
Software license		3		5,419		(3,994	)		1,425
Patents		1		600		(514	)		86
Total			$	48,668	$	(31,353	)	$	17,315

	*December 31, 2025*
	*Weighted*
	*Average*
	*Remaining*		*Gross*
	*Useful Life*		*Carrying*		*Accumulated*
	*(in Years)*		*Amount*		*Amortization*			*Net Book Value*
Purchased technology		3	$	11,076	$	(7,945	)	$	3,131
Customer relationships		9		24,573		(11,000	)		13,573
Customer contracts		0		7,000		(6,895	)		105
Software license		4		5,419		(3,843	)		1,576
Patents		2		600		(493	)		107
Total			$	48,668	$	(30,176	)	$	18,492

The Company amortizes intangible assets over the pattern of economic benefit expected to be generated from the use of the assets, with a total weighted average amortization period of approximately six years as of March 31, 2026 and seven years as of December 31, 2025. During the three months ended March 31, 2026 and 2025, intangible asset amortization expense was $1.2 million and $1.3 million, respectively.

As of March 31, 2026, estimated amortization expense for the remainder of 2026 and thereafter was as follows (unaudited, in thousands):

	*Amortization*
Year Ending December 31,	*Expense*
2026		$3,532
2027		3,834
2028		2,790
2029		2,095
2030 and thereafter		5,064
Total	$	17,315