GOODWILL AND INTANGIBLE ASSETS

12 Months Ended

Dec. 31, 2022

NOTE 6: GOODWILL AND INTANGIBLE ASSETS

Goodwill

The Company recorded goodwill from each of its business combinations. The following is a summary of goodwill by entity for the years ended December 31, 2022 and 2021:


	Bailey		Harper & Jones		Stateside		Sundry		Total
Balances at December 31, 2020	$	6,479,218	$	—	$	—	$	—	$	6,479,218
Business combinations		—		9,681,548		2,104,056		—		11,785,604
Impairment		—		—		—		—		—
Balances at December 31, 2021		6,479,218		9,681,548		2,104,056		—		18,264,822
Business combination		—		—		—		3,711,322		3,711,322
Impairment		(3,321,095)		(8,551,237)		—		—		(11,872,332)
Balances at December 31, 2022	$	3,158,123	$	1,130,311	$	2,104,056	$	3,711,322	$	10,103,812

Refer to Note 3 for discussion on the goodwill impairment recorded in 2022.

Intangible Assets

The following table summarizes information relating to the Company’s identifiable intangible assets as of December 31, 2022 and 2021:


	Gross		Accumulated		Carrying
December 31, 2022	Amount		Amortization		Value
Amortized:
Customer relationships	$	11,452,230		(3,600,607)	$	7,851,623
		11,452,230		(3,600,607)		7,851,623

Indefinite-lived:
Brand name	$	6,575,880		—		6,575,880
	$	18,028,110	$	(3,600,607)	$	14,427,503


	Gross		Accumulated		Carrying
December 31, 2021	Amount		Amortization		Value
Amortized:
Customer relationships	$	6,453,750		(1,449,357)	$	5,004,393
		6,453,750		(1,449,357)		5,004,393

Indefinite-lived:
Brand name	$	7,836,920		—		7,836,920
	$	14,290,670	$	(1,449,357)	$	12,841,313

Due to the effects of COVID-19 and revenue levels not recovering as quickly as anticipated and related uncertainty which affected Bailey’s results and near-term demand for its products, the Company determined that there were indications for further impairment analysis in both 2022 and 2021. Due to Harper’s revenue levels lower as compared to initial projects, the Company determined that there were indications for further impairment analysis in 2022. Refer to Note 3 for discussion on the intangible asset impairment recorded in 2022 and 2021.

Management determined circumstances existed that indicated the carrying value may not be recoverable. The impairment analysis was based on the relief from royalty method using projected revenue estimates and discounts rates believed to be appropriate. Fair value determinations require considerable judgment and are sensitive to changes in underlying assumptions, estimates and market factors. The discount rate, revenue assumptions and terminal growth rate of our reporting unit were the material assumptions utilized in the model used to estimate the fair value of the Bailey unit. The analysis requires estimates, assumptions and judgments about future events. Our analysis uses our internally generated long-range plan. The long-range plan reflects management judgment, which includes observation of expected industry trends.

The Company recorded amortization expense of $2,151,250 and $1,128,524 during the years ended December 31, 2022 and 2021, respectively, which is included in general and administrative expenses in the consolidated statements of operations.

Future amortization expense at December 31, 2022 is as follows:


Year Ending December 31,
2023		3,496,577
2024		2,688,886
2025		1,666,160
	$	7,851,623