Annual report pursuant to Section 13 and 15(d)

Goodwill and intangible assets

Goodwill and intangible assets
12 Months Ended
Dec. 31, 2022
Goodwill and Intangible Assets Disclosure [Abstract]  
Goodwill and intangible assets Goodwill and intangible assets
The change in the carrying amount of goodwill for the years ended December 31, 2022 and 2021 is summarized as follows (in thousands):
December 31, 2022
Balance as of December 31, 2020 18,614 
Accumulated impairment — 
Balance as of December 31, 2021 $ 18,614 
Impairment expense (18,614)
Balance as of December 31, 2022 $ — 
Goodwill is evaluated for impairment if an event occurs or circumstances change that indicate the carrying value of a reporting unit may not be recoverable. During July 2022, the Company completed a legal merger of TruPet and Halo, Purely for Pets, Inc., a wholly owned subsidiary of Better Choice Company Inc. ("Halo"), with Halo as the surviving entity in connection with the execution of rebranding its former TruDog brand under the Halo brand umbrella. In conjunction with the legal merger and rebranding, the Company performed an analysis of its reporting units and concluded it has one reporting unit after the legal merger and rebrand, and as such, the Company performed a quantitative goodwill assessment as of July 1, 2022 in addition to its annual impairment test as of October 1, 2022.

Under the quantitative approach, the Company makes various estimates and assumptions to determine the estimated fair value of the reporting unit using a combination of a discounted cash flow model and a guideline comparable analysis. The fair value measurements used in the impairment review of goodwill are Level 3 measurements which include unobservable inputs that are supported by little, infrequent or no market activity and reflect management’s own assumptions. The key assumptions used in estimating the fair value of its reporting units as of July 1, 2022 and October 1, 2022 utilizing the income approach include the discount rate and revenue growth rates. The discount rate utilized in estimating the fair value of its reporting units as of July 1, 2022 and October 1 2022 was 20.0%, reflecting the assessment of a market participant's view of the risks associated with the projected cash flows. Revenue growth rates varied for each year included in the valuation model based on management’s best estimate of forecasted operating results. The assumptions used in estimating the fair values are based on currently available data and management's best estimates of revenues, EBITDA margins, and cash flows and, accordingly, a change in market conditions or other factors could have a material effect on the estimated values. There are inherent uncertainties related to the assumptions used and to management's application of these assumptions. As a result of the annual impairment test, the Company recorded an impairment charge of $18.6 million during the year ended December 31, 2022, resulting in full impairment to the goodwill carrying value.
Intangible assets
The Company’s intangible assets (in thousands) and related useful lives (in years) are as follows:
December 31, 2022 December 31, 2021
Estimated useful life Gross
Net carrying
Net carrying
Customer relationships 7 $ 7,190  $ (3,115) $ 4,075  $ (2,088) $ 5,102 
Trade name 15 7,500  (1,516) 5,984  (1,016) 6,484 
Total intangible assets $ 14,690  $ (4,631) $ 10,059  $ (3,104) $ 11,586 
Amortization expense was $1.5 million for the years ended December 31, 2022 and 2021, respectively.

The estimated future amortization of intangible assets over the remaining weighted average useful life of 8.7 years is as follows (in thousands):
2023 $ 1,527 
2024 1,527 
2025 1,527 
2026 1,494 
2027 500 
Thereafter 3,484 
  $ 10,059 
The Company assesses intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be fully recoverable. If impairment indicators are present, the Company performs a recoverability test by comparing the sum of the estimated undiscounted future cash flows attributable to these long-lived assets to their carrying value. Based on the impairment indicators and goodwill impairment charge described above, the Company performed an assessment of its intangible assets at the end of the reporting period and determined that the undiscounted cash flows of the identified asset grouping exceeded the carrying value, and as such, there has been no impairment of the intangible assets as of December 31, 2022.