Quarterly report pursuant to Section 13 or 15(d)

Intangible Assets, net

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Intangible Assets, net
 9 Months Ended
Sep. 30, 2022
Goodwill and Intangible Assets Disclosure [Abstract]  
Intangible Assets, net
Note H – Intangible Assets, net
The intangible asset gross carrying amount and accumulated amortization were as follows:
September 30, 2022
Gross
carrying
amount		 Accumulated
amortization		 Net
carrying
amount		 Weighted average
useful life
in years
Finite-lived intangible assets:
Customer relationships
 $ 33,165  $ (3,654) $ 29,511  19
Technology
 27,348  (4,659) 22,689  14
Trademarks
 3,498  (1,275) 2,223  7
Internal-use software licenses 2,158  (740) 1,418  3
Indefinite-lived intangible assets:
Cosmos Tradename
 300  —  300 
IPR&D
 66  —  66 
Total intangible assets
 $ 66,535  $ (10,328) $ 56,207 

  December 31, 2021
  Gross
carrying
amount		 Accumulated
amortization		 Net
carrying
amount		 Weighted average
useful life
in years
Finite-lived intangible assets:
Customer relationships
 $ 48,612  $ (3,592) $ 45,020  19
Technology
 43,339  (5,894) 37,445  14
Trademarks
 6,807  (1,572) 5,235  7
Internal-use software licenses 2,292  (385) 1,907  3
Indefinite-lived intangible assets:
Cosmos Tradename
 300  —  300 
IPR&D
 935  —  935 
Total intangible assets
 $ 102,285  $ (11,443) $ 90,842 

During the second quarter of 2022, there was a significant and prolonged decline in the Company’s market capitalization driven by general economic conditions, including heightened inflation, rising interest rates and volatility in the capital markets, which indicated that recorded intangible assets may be impaired. As a result, the Company performed a quantitative impairment test of indefinite-lived intangible assets and definite-lived intangible assets in accordance with ASC 350 and ASC 360, respectively.

Under ASC 350, the fair value of the Company’s indefinite-lived intangible assets was determined using the relief from royalty method, which assumes that the asset’s fair value is the present value of license fees avoided by owning it. Under ASC 360, the Company determined that the carrying value of two asset groups within the Mission Solutions reporting unit were not recoverable based on entity-specific, undiscounted net cash flows. Accordingly, the Company determined the fair value of these two asset groups using an income approach based on a discounted cash flow model. Fair value estimates result from a complex series of judgments about future events and uncertainties and rely heavily on estimates and assumptions that have been deemed reasonable by measurement as of the measurement date.

Impairment expense was measured as the amount by which the carrying value of the intangible assets exceeded their fair value as of June 30, 2022. Based on the results of the quantitative impairment test, the Company recognized impairment expense related to customer relationships, technology, trademarks, internal-use software licenses and IPR&D of $28.2 million during the nine months ended September 30, 2022. Please refer to Note I for additional information related to the drivers of the decline in estimated future cash flows for the Mission Solutions reporting unit. Subsequent to the second quarter of 2022, the Company concluded that there were no indicators of impairment requiring further impairment testing.
The table below presents the future amortization expense on intangible assets as of September 30, 2022:
Year Total
Remainder of 2022 $ 1,402 
2023 5,607 
2024 5,295 
2025 4,721 
2026 4,450 
Thereafter 34,366 
Total future amortization expense on intangible assets $ 55,841