Note 5 - Goodwill and Other Intangible Assets

12 Months Ended

Dec. 31, 2022

Notes to Financial Statements

Goodwill and Intangible Assets Disclosure [Text Block]

5.     GOODWILL AND OTHER INTANGIBLE ASSETS

Impairment testing

U.S. GAAP requires that both indefinite-lived intangible assets and goodwill are tested for impairment annually and more frequently if events or changes in circumstances indicate that it is more likely than not (i.e., a likelihood greater than 50%) that the intangible asset or the reporting unit is impaired. During interim periods, ASC 350 requires companies to focus on those events and circumstances that affect the significant inputs used to determine the fair value of the asset group or reporting unit to determine whether an interim quantitative impairment test is required.

The Company performed its annual impairment test for goodwill and intangible assets as of the last day of the fourth quarter. The Company first assessed certain qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit or indefinite-lived intangible assets is less than its carrying amount, and whether it is therefore necessary to perform the quantitative impairment test. For the Industrial and Transportation Products segment, the Company performed a quantitative impairment test, including a discounted cash flow model and peer comparison. As a result of the impairment testing, it was determined that no indefinite-lived intangible assets or goodwill was impaired. The Goodwill values are presented below:

	December 31, 2022			December 31, 2021
Commercial Air Handling Equipment Segment:
Beginning Balance	$	478,256		$	478,256
Acquisitions		-			-
Adjustments		-			-
Ending Balance	$	478,256		$	478,256
Industrial and Transportation Products Segment:
Beginning Balance	$	13,926,362		$	11,027,596
Acquisitions		1,997,174			2,898,766
Adjustments		(169,854	)		-
Ending Balance	$	15,753,682		$	13,926,362
Total Company:
Beginning Balance	$	14,404,618		$	11,505,852
Acquisitions		1,997,174			2,898,766
Adjustments		(169,854	)		-
Ending Balance	$	16,231,938		$	14,404,618

The adjustment of ($169,854) in the year ended December 31, 2022 relates to reconciliation of the opening balance sheet related to the acquisition of Global-Tek Colorado and Global-Tek Manufacturing.

Intangible assets relate to the purchase of businesses. Goodwill represents the excess of cost over the fair value of identifiable assets acquired. Goodwill is not amortized, but is reviewed on an annual basis for impairment. Amortization of other intangible assets is calculated on a straight-line basis over periods ranging from one year to 15 years. Intangible assets consist of the following:

	December 31, 2022		December 31, 2021
Customer Intangibles	$	9,316,000	$	8,741,000
Non-Compete Agreements		200,000		200,000
Trademarks		4,445,649		3,599,149
Total Other Intangibles		13,961,649		12,540,149
Less: Accumulated Amortization		4,469,089		3,203,585
Other Intangibles, Net	$	9,492,560	$	9,336,564

Intangible amortization expense was as follows:

	December 31, 2022		December 31, 2021
Accumulated amortization at the beginning of the period	$	3,203,585	$	2,271,691
Amortization expense		1,265,504		931,894
Accumulated amortization at end of period	$	4,469,089	$	3,203,585

Intangible amortization for the next five years is as follows:

	Amortization in future periods
2023		1,261,210
2024		1,261,210
2025		1,261,210
2026		1,193,345
2027		817,298