TELOS CORP
For the period ended Dec 31, 2023. Filed Mar 15, 2024.
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FY2023 · Filed Mar 15, 2024
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8. Intangible Assets, Net
- INTANGIBLE ASSETS, NET
| Table 8.1: Details of Intangible Assets, Net | |||||||
|---|---|---|---|---|---|---|---|
| Estimated useful life · As of December 31, 2023 · As of December 31, 2022 | |||||||
| Gross Carrying Amount · Accumulated Amortization · Net Carrying Value · Gross Carrying Amount · Accumulated Amortization · Net Carrying Value | |||||||
| (in thousands) | |||||||
| Acquired technology | 8 years | $3,630 | $(1,097) | $2,533 | $3,630 | $(643) | $2,987 |
| Customer relationships | 3 years | 40 | (32) | 8 | 40 | (19) | 21 |
| Software development costs | 2 - 5 years | 35,312 | (12,256) | 23,056 | 26,956 | (7,793) | 19,163 |
| Subtotal | 38,982 | (13,385) | 25,597 | 30,626 | (8,455) | 22,171 | |
| In-process software development costs (1) (2) | 14,019 | — | 14,019 | 8,124 | — | 8,124 | |
| Software held for resale (3) | — | — | — | 7,120 | — | 7,120 | |
| Total | $53,001 | $(13,385) | $39,616 | $45,870 | $(8,455) | $37,415 | |
(1) In-process software development costs are costs for software that is not yet available for its intended use or general release to customers as of balance sheet date, thus not yet amortized.
(2) An impairment charge of $0.5 million was recorded against software development costs in fiscal year 2023 related to the write-off of certain software projects.
(3) This amount is net of $0.7 million charged into cost of sales in fiscal year 2022.
In 2023, as a result of the impairment assessment, the Company identified conditions demonstrating impairment of certain software development costs and an impairment charge of $0.5 million was recorded under "Research and Development" expenses in the Company's consolidated statements of operations. No similar impairment charge was recorded on software development costs during the fiscal year ended December 31, 2022.
The Company did not recognize any impairment charges on other intangible assets for the periods presented.
| Table 8.2: Amortization Expense | ||
|---|---|---|
| For the year ended December 31, | ||
| 2023 | 2022 | |
| (in thousands) | ||
| Amortization expense related to: | ||
| Software development costs - cost of sales (1) | $2,840 | $— |
| Software development costs - research and development | 1,623 | 1,362 |
| Other intangible assets - general and administrative | 467 | 401 |
| Total | $4,930 | $1,763 |
(1) Amortization expense for software development costs related to assets to be sold, leased, or otherwise marketed are charged under cost of sales on the Consolidated Statements of Operations.
| Table 8.3: Estimated Future Amortization Expense of Intangible Assets, Net | |
|---|---|
| (in thousands) | |
| Year Ending December 31, 2024 | $8,037 |
| Year Ending December 31, 2025 | 7,270 |
| Year Ending December 31, 2026 | 4,864 |
| Year Ending December 31, 2027 | 3,520 |
| Year Ending December 31, 2028 | 1,642 |
| Thereafter | 264 |
| Total (1) | $25,597 |
(1) This does not include amortization of in-process software development costs, as estimation of the timing of future amortization expenses would be impractical.
Actual amortization expense in future periods could differ from these estimates as a result of impairments, future releases, future acquisitions, divestitures, and other factors.
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