ZeroStack Corp. Goodwill & Intangibles Disclosure
11. INTANGIBLE ASSETS AND GOODWILL
A continuity of intangible assets for the years ended December 31, 2024 and 2023 is as follows:
| In Thousands of United States dollars | License | Customer and Supplier Relationships |
Trademarks and Brands |
Patents | Non- Compete Agreements |
Goodwill | Total | ||||||||||||||
| Cost | |||||||||||||||||||||
| At December 31, 2022 | $ | 1,469 | $ | 7,515 | $ | 5,153 | $ | 4,530 | $ | 1,190 | $ | 23,633 | $ | 43,490 | |||||||
| Additions | - | 194 | - | - | - | - | 194 | ||||||||||||||
| Impairment | (1,216 | ) | (6,502 | ) | (3,249 | ) | (3,432 | ) | (529 | ) | (23,372 | ) | (38,300 | ) | |||||||
| At December 31, 2023 | $ | 253 | $ | 1,207 | $ | 1,904 | $ | 1,098 | $ | 661 | $ | 261 | $ | 5,384 | |||||||
| Accumulated Amortization | |||||||||||||||||||||
| At December 31, 2022 | $ | 72 | $ | 348 | $ | 618 | $ | 621 | $ | 463 | $ | - | $ | 2,122 | |||||||
| Additions | 200 | 916 | 514 | 291 | 198 | - | 2,119 | ||||||||||||||
| At December 31, 2023 | $ | 272 | $ | 1,264 | $ | 1,132 | $ | 912 | $ | 661 | $ | - | $ | 4,241 | |||||||
| Foreign Currency translation | 19 | 57 | (12 | ) | - | - | (261 | ) | (197 | ) | |||||||||||
| Net book value at December 31, 2023 | $ | - | $ | - | $ | 760 | $ | 186 | $ | - | $ | - | $ | 946 |
| In Thousands of United States dollars | License |
Customer and Supplier Relationships |
Trademarks and Brands |
Patents |
Non- Compete Agreements |
Goodwill | Total | ||||||||||||||
| Cost | |||||||||||||||||||||
| At December 31, 2023 | $ | 253 | $ | 1,207 | $ | 1,904 | $ | 1,098 | $ | 661 | $ | 261 | $ | 5,384 | |||||||
| Acquired through business combinations | 3,193 | - | 180 | - | - | 2,280 | 5,653 | ||||||||||||||
| Impairment | - | - | (721 | ) | (165 | ) | - | (236 | ) | (1,122 | ) | ||||||||||
| At December 31, 2024 | $ | 3,446 | $ | 1,207 | $ | 1,363 | $ | 933 | $ | 661 | $ | 2,305 | $ | 9,915 | |||||||
| Accumulated Amortization | |||||||||||||||||||||
| At December 31, 2023 | $ | 272 | $ | 1,264 | $ | 1,132 | $ | 912 | $ | 661 | $ | - | $ | 4,241 | |||||||
| Additions | 487 | - | 133 | 22 | - | - | 642 | ||||||||||||||
| At December 31, 2024 | $ | 759 | $ | 1,264 | $ | 1,265 | $ | 934 | $ | 661 | $ | - | $ | 4,883 | |||||||
| Foreign Currency translation | (32 | ) | 57 | (7 | ) | 1 | - | (299 | ) | (280 | ) | ||||||||||
| Net book value at December 31, 2024 | $ | 2,655 | $ | - | $ | 91 | $ | - | $ | - | $ | 2,006 | $ | 4,752 |
The Company's intangible asset additions in 2023 primarily consist of customer relationships acquired as part of the March 2023 purchase of Original Hemp (Note 10). These customer relationships were fully impaired during the year ended December 31, 2023, and their carrying amount at December 31, 2024 was $nil.
The Company's intangible assets acquired through business combinations in 2024 consist of assets acquired as part of the April 2024 purchase of TruHC and the June 2024 purchase of AV (Note 10). Information regarding the TruHC intangible assets within the indicated categories of the table above is as follows as at December 31, 2024:
- Licenses: carrying amount $2.7 million with a remaining amortization period of 51 months
Information regarding the AV intangible assets within the indicated categories of the table above is as follows as at December 31, 2024:
- Trademark and brands: carrying amount $nil million after full impairment of $0.2 million recorded during the year ended December 31, 2024
The gross cost of the intangible assets is amortized over their estimated useful lives, as the Company does not expect the assets to have significant residual value for any of the asset classes. The weighted average amortization period at December 31, 2024 by asset class subject to amortization is as follows:
Licenses 4.3 years
Trademarks and brands 5.2 years
Total 4.3 years
Certain trademarks have renewal or extension terms available, with a weighted average of 5.2 years remaining before the next renewal or extension is due at December 31, 2024. The Company expenses such costs as incurred. The Company's trademarks and brands are registered to protect the assets from use by others, and cash flows of the related reporting units and asset groups could be negatively impacted if the Company did not successfully renew them.
At December 31, 2024, the estimated aggregate amortization expense for each of the next five years is as follows:
Thousands of United States dollars
2025 $642
2026 $642
2027 $642
2028 $642
2029 $174
The Company's goodwill is assigned to the following reporting units for the years ended December 31, 2023 and 2024:
| In Thousands of United States dollars | Vessel | JustCBD | FGH | TruHC | Australian Vaporizers |
Total | ||||||||||||
| Gross goodwill recorded prior to December 31, 2022 | $ | 19,675 | $ | 25,038 | $ | 3,732 | $ | - | $ | - | $ | 48,445 | ||||||
| Impairment recorded prior to December 31, 2022 | (19,675 | ) | (5,398 | ) | - | - | - | (25,073 | ) | |||||||||
| Net book value as at December 31, 2022 | - | 19,640 | 3,732 | - | - | 23,372 | ||||||||||||
| Impairment | - | (19,640 | ) | (3,732 | ) | - | - | (23,372 | ) | |||||||||
| Net book value as at December 31, 2023 | - | - | - | - | - | - | ||||||||||||
| Acquired through business combinations | - | - | - | 2,050 | 230 | 2,280 | ||||||||||||
| Impairment | - | - | - | - | (236 | ) | (236 | ) | ||||||||||
| Foreign exchange | - | (44 | ) | 6 | (38 | ) | ||||||||||||
| Net book value as at December 31, 2024 | $ | - | $ | - | $ | - | $ | 2,006 | $ | - | $ | 2,006 |
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2024 | Mar 24, 2025 | Showing above |
| 2023 | Mar 28, 2024 | |
| 2022 | Mar 31, 2023 | |
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.