Quarterly report [Sections 13 or 15(d)]

Note 11 - Goodwill and Intangibles

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Note 11 - Goodwill and Intangibles
9 Months Ended
Jun. 30, 2025
Notes to Financial Statements  
Goodwill and Intangible Assets Disclosure [Text Block]

Note 11. Goodwill and Intangible Assets

 

The Company tests goodwill for impairment annually at fiscal year-end, or more frequently when events or changes in circumstances indicate that the asset might be impaired. The Company assesses qualitative factors to determine whether the existence of events or circumstances would indicate that it is more likely than not that the fair value of the reporting unit is less than its carrying amount. The result of the analysis performed as of September 30, 2024, did not indicate an impairment of goodwill. During the nine months ended June 30, 2025, there were no triggering events that indicate potential impairment exists. The Company’s next annual test for goodwill impairment will be performed as of June 30, 2025 and will include an analysis of the value of goodwill of each reportable segment: (1) Clearfield; and (2) Nestor Cables.

 

The Company capitalizes legal costs incurred to obtain patents. Once accepted by either the United States Patent and Trademark Office or the equivalent office of a foreign country, these legal costs are amortized using the straight-line method over the remaining estimated lives, not exceeding 20 years. As of June 30, 2025, the Company has 62 patents granted and multiple pending applications both inside and outside the United States.

 

 

In addition, the Company has various finite lived intangible assets, most of which were acquired as a result of the acquisition of the active cabinet product line from Calix, Inc. during fiscal year 2018 and the acquisition of Nestor Cables in fiscal year 2022. The Company analyzes its intangible assets for impairment annually or at interim periods when events occur or changes in circumstances indicate potential impairment. The result of the analysis performed as of September 30, 2024, did not indicate an impairment of our intangible assets. During the nine months ended June 30, 2025, there were no triggering events that indicate potential impairment exists.

 

The changes in the carrying amount of goodwill by reportable segment for the nine months ended June 30, 2025, and 2024 were as follows:

 

(In thousands)

 

Clearfield, Inc.

   

Nestor Cables

   

Total

 

Balance as of September 30, 2024

 

$

4,709    

$

1,918    

$

6,627  

Currency translation effect on foreign goodwill balances

    -       113       113  

Balance as of June 30, 2025

 

$

4,709    

$

2,031    

$

6,740  

 

 

(In thousands)

 

Clearfield, Inc.

   

Nestor Cables

   

Total

 

Balance as of September 30, 2023

 

$

4,709    

$

1,819    

$

6,528  

Currency translation effect on foreign goodwill balances

    -       25       25  

Balance as of June 30, 2024

 

$

4,709    

$

1,844    

$

6,553  

 

Finite life intangible assets as of June 30, 2025, are as follows:

 

   

June 30, 2025

 

(In thousands)

 

Useful Life (Years)

   

Gross Carrying Amount

   

Accumulated Amortization

   

Net Book Value Amount

 

Customer relationships

    15     $ 4,921     $ 2,071     $ 2,850  

Certifications

    8       1,068       985       83  

Trademarks

    8-10       1,153       692       461  

Patents

    20       1,416       263       1,153  

Developed Technology

    10       366       106       260  

Other

    5       6       6       -  

Software

    1-10       9,333       3,474       5,859  

Totals

          $ 18,263     $ 7,597     $ 10,666  

 

Finite life intangible assets as of September 30, 2024, are as follows:

 

   

September 30, 2024

 

(In thousands)

 

Useful Life (Years)

   

Gross Carrying Amount

   

Accumulated Amortization

   

Net Book Value Amount

 

Customer relationships

    15     $ 4,856     $ 1,815     $ 3,041  

Certifications

    8       1,068       884       184  

Trademarks

    8-10       1,120       588       532  

Patents

    20       1,302       219       1,083  

Developed Technology

    10       346       75       271  

Other

    5       6       6       -  

Software

    1-3       3,475       2,243       1,232  

Totals

          $ 12,173     $ 5,830     $ 6,343  

 

 

Amortization expense related to these assets was $1,742,000 and $1,089,000 for the nine months ended June 30, 2025, and 2024, respectively. Estimated future amortization expense for identifiable intangibles during the next five years is as follows:

 

(In thousands)

 

Estimated amortization expense

 

FY 2025 (remaining)

 

$

1,475  

FY 2026

    1,501  

FY 2027

    1,143  

FY 2028

    1,050  

FY 2029

    930  

Thereafter

    4,567  

Total

 

$

10,666