TELOS CORP
For the period ended Sep 30, 2024. Filed Nov 12, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Nov 12, 2024
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8. Intangible Assets, Net
- INTANGIBLE ASSETS, NET
| Table 8.1: Details of Intangible Assets, Net | |||||||
|---|---|---|---|---|---|---|---|
| September 30, 2024 · December 31, 2023 | |||||||
| Estimated Useful Life | Gross Carrying Amount | Accumulated Amortization | Net Carrying Value | Gross Carrying Amount | Accumulated Amortization | Net Carrying Value | |
| (in years) · (in thousands) | |||||||
| Acquired technology | 8 | $3,630 | $(1,437) | $2,193 | $3,630 | $(1,097) | $2,533 |
| Customer relationship | 3 | 40 | (40) | — | 40 | (32) | 8 |
| Software development costs | 2 - 5 | 26,316 | (14,255) | 12,061 | 35,312 | (12,256) | 23,056 |
| Subtotal | 29,986 | (15,732) | 14,254 | 38,982 | (13,385) | 25,597 | |
| In-process software development costs (1) | 15,373 | — | 15,373 | 14,019 | — | 14,019 | |
| Total | $45,359 | $(15,732) | $29,627 | $53,001 | $(13,385) | $39,616 | |
(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.
The Company evaluates its intangible assets for potential impairment whenever there is evidence that events or changes in circumstances indicate that the carrying value may not be recoverable. During the third quarter of 2024, there were selected capitalized software projects for which the Company decided to discontinue the development and/or sale of all or a part of certain solutions and certain projects which the Company ceased use before the end of its useful life. As a result of the Company's decision to abandon the associated software, the Company wrote-off $11.7 million of the previously capitalized software costs, of which $5.3 million was recorded as "Impairment loss on intangible assets" under cost of sales and $6.4 million was recorded as "Impairment loss on intangible assets" under operating expenses in the Company's unaudited statement of operations for the three and nine months ended September 30, 2024. An impairment loss of $0.3 million was recorded under operating expenses for the three and nine months ended September 30, 2023, with no similar charges under cost of sales.
No impairment losses were recorded on other intangible assets during the three and nine months ended September 30, 2024, and 2023.
| Table 8.2: Amortization Expense | ||||
|---|---|---|---|---|
| For the Three Months Ended | For the Nine Months Ended | |||
| September 30, 2024 | September 30, 2023 | September 30, 2024 | September 30, 2023 | |
| (in thousands) | ||||
| Amortization expense related to: | ||||
| Software development costs – cost of sales (1) | $1,402 | $1,767 | $4,509 | $1,767 |
| Software development costs – research and development | 588 | (19) | 2,286 | 843 |
| Other intangible assets – general and administrative | 115 | 117 | 348 | 350 |
| Total | $2,105 | $1,865 | $7,143 | $2,960 |
(1) Amortization expense for software development costs related to assets to be sold, leased, or otherwise marketed is charged under cost of sales on the unaudited consolidated statements of operations.
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