NOTE
5:- GOODWILL
The
changes in the carrying amount of goodwill:
| |
|
Thousand
Dollars |
|
|
Balance
as of December 31, 2024 |
|
$
|
7,538
|
|
|
Goodwill
impairment |
|
|
(2,783
|
)
|
|
Balance
as of December 31, 2025 |
|
$
|
4,755
|
|
The
Company periodically analyses whether any indicators of goodwill impairment have occurred. In the second quarter of 2025, the Company
experienced a decline in its stock price resulting in its market capitalization being less than the carrying value of its one reporting
unit. Thus, the Company performed quantitative assessments of the Company’s reporting unit. The fair value was determined based
on the market approach. The market approach utilizes the Company's market capitalization plus an appropriate control premium. In
calculating the goodwill impairment charges, the Company estimated the fair value of its single reporting unit based on its market capitalization
and an appropriate control premium. Market capitalization is determined by multiplying the number of shares of common stock outstanding
by the market price of its common stock. The control premium, or the amount paid by a new controlling shareholder for the benefits resulting
from synergies and other potential benefits derived from controlling the acquired company, is determined by utilizing data from publicly
available premium studies for similarly situated public company transactions. A goodwill impairment loss was recognized for the difference
between the carrying value of the reporting unit and the fair value.
As
a result of this assessment, the Company recorded a goodwill impairment of $2.8
million during the year ended December 31,2025.
Long-lived
assets:
The
Company evaluates the recoverability of long-lived assets, including property and equipment and intangible assets subject to amortization
for possible impairment whenever events or circumstances indicate that the carrying amount of such assets may not be fully recoverable.
Such events and changes may include significant changes in performance relative to expected operating results, significant changes in
asset use, significant negative industry or economic trends, and changes in the Company’s business strategy. Recoverability of these
assets is measured by a comparison of the carrying amounts to the future undiscounted cash flows the assets are expected to generate.
If such review indicates that the carrying amount of long-lived assets is not recoverable, the carrying amount of such assets is reduced
to fair value.
The
carrying intangible assets were fully impaired as of December 31, 2024.
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.