AEMETIS, INC Goodwill & Intangibles Disclosure
As of December 31, 2015 and 2014, intangible assets and goodwill consist of the following:
| 2015 | 2014 | |||||||
| Patents | $ | 826 | $ | 906 | ||||
| In-process research and development | 554 | 630 | ||||||
| $ | 1,380 | $ | 1,536 | |||||
| Goodwill | $ | - | $ | 968 | ||||
During the year ended December 31, 2015 and 2014, the Company recognized amortization expense of $80 thousand each period related to patents.
At December 31, 2015, future patent and in-process research and development amortization for the next five years and beyond consists of the following:
| For the twelve months ending December 31, | Amortization | |||
| 2016 | $ | 80 | ||
| 2017 | 80 | |||
| 2018 | 108 | |||
| 2019 | 198 | |||
| 2020 | 108 | |||
| Thereafter | 806 | |||
| Total | $ | 1,380 | ||
In December 2015, pursuant to our annual goodwill impairment test, we recorded a full impairment of goodwill amounting to $1.0 million. Due to limitations in the our access to capital to develop the acquired technology into a product for sale and current industry conditions, the cash flow projections were lowered and the earnings forecast was revised. We determine the fair value of our reporting units utilizing discounted cash flows and incorporate assumptions that we believe marketplace participants would utilize.
We wrote off $76 thousand of abandoned patents during the year ended December 31, 2015.
About Goodwill & Intangibles Disclosures
Goodwill and intangible asset disclosures reveal the premium paid in acquisitions and how management assesses whether that premium retains its value. Since goodwill is no longer amortized under US GAAP, the annual impairment test is the only mechanism that adjusts carrying values downward — making the assumptions behind that test critically important for investors.
Key signals: a history of goodwill impairments suggests management consistently overpays for acquisitions. Watch the gap between reporting unit fair value and carrying amount — when fair value exceeds carrying amount by less than 10-20%, a small decline in business performance could trigger a write-down. For finite-lived intangibles, examine useful life assumptions across customer relationships, technology, and trade names; aggressive estimates inflate near-term earnings. Compare total intangibles-to-total-assets ratios against peers to assess acquisition dependency. Rising goodwill as a percentage of equity can signal balance sheet fragility.