Annual report pursuant to Section 13 and 15(d)

INTANGIBLE ASSETS

v3.23.1
INTANGIBLE ASSETS
 12 Months Ended
Dec. 31, 2022
Goodwill and Intangible Assets Disclosure [Abstract]  
INTANGIBLE ASSETS INTANGIBLE ASSETS
Intangible assets as of December 31, 2022 and 2021 consisted of the following:
(in thousands)
December 31, 2022 December 31, 2021
Estimated Useful Life
in Years		 Gross
Carrying Amount		 Accumulated Amortization Net
Carrying Amount		 Gross
Carrying
Value		 Accumulated Amortization Net
Carrying
Value
Amortizing Intangible Assets:
Customer Relationships
3 to 5
 $ 7,400  $ (7,400) $ —  $ 7,400  $ (7,400) $ — 
Trademarks and Patent
2 to 8
 4,500  (2,991) 1,509  4,500  (750) 3,750 
Operating Licenses 14 12,239  (12,239) —  100,701  (6,864) 93,837 
Total Amortizing Intangible Assets 24,139  (22,630) 1,509  112,601  (15,014) 97,587 
Non-Amortizing Intangible Assets:
Trade Names Indefinite 1,350  —  1,350  32,050  —  32,050 
Total Non-Amortizing Intangible Assets 1,350  —  1,350  32,050  —  32,050 
Total Intangible Assets, Net $ 25,489  $ (22,630) $ 2,859  $ 144,651  $ (15,014) $ 129,637 
Amortization expense related to continuing operations was $7.62 million and $3.39 million for the years ended December 31, 2022 and 2021, respectively.
During 2021, the impact of COVID-19 on the retail industry had a negative impact on our revenues and management was forced to limit store operating hours due to the pandemic. Management believes the COVID-19 outbreak will continue to have a material negative impact on the Company’s financial results. These factors, including management’s revised forecast for the future performance of our Black Oak Gallery reporting unit, indicated the carrying value of Black Oak Gallery’s customer relationships and trade name may not be recoverable. Management evaluated the recoverability of the customer relationships using Level 3 inputs and a probability-weighted approach to assess the potential impact of a long-term decline in our existing customer base due to the COVID-19 pandemic. The recoverability test indicated that the book value of customer relationships exceeded fair value. As a result, the Company recognized impairment charges of $0.46 million during the year ended December 31, 2021.
During the second quarter of 2022, management noted indicators of impairment of its indefinite-lived assets of certain asset groups. Specifically, changes in circumstances resulted in significant differences in actual revenue compared to projections. The Company used a discount rate under current market conditions to determine a preliminary estimate, noting an impairment of $22.10 million which is included as a component of impairment expense for the three months ended June 30, 2022.

In connection with its annual goodwill impairment test on September 30, 2022, the Company noted indicators of impairment of its intangible assets of certain asset groups. Earnings forecast for certain asset groups were revised based on a decrease in anticipated operating profits and cash flows for the next five years as it relates to current market conditions, the economic environment, and delays due to regulatory and licensing issues. The Company used various Level 3 inputs under the market approach to determine the fair value of these asset groups. Accordingly, the Company recorded an impairment loss on intangible assets in the amount of $97.06 million for the three months ended September 2022, which is recorded as a component of impairment expense in the consolidated statements of operations.