Note 7 - Goodwill

6 Months Ended

Mar. 31, 2020

Notes to Financial Statements

Goodwill Disclosure [Text Block]

Note

7

–

Goodwill

The Company tests goodwill at least annually for impairment. The Company tests more frequently if indicators are present or changes in circumstances suggest that impairment

may

exist. These indicators include, among others, declines in sales, earnings or cash flows, or the development of a material adverse change in the business climate. The Company assesses goodwill for impairment at the reporting unit level, which is defined as an operating segment or

one

level below an operating segment. The reporting units for the Company are its

two

operating segments.

As of

March 31, 2020,

indicators were present, which indicated that the Company should test for impairment of goodwill.  These indicators included reduced revenues in the current fiscal year and the overall impact of the business climate as a result of the COVID-

19

pandemic.  While the Company is deemed an essential service during the COVID-

19

pandemic and has remained in operation, it has seen a reduced revenue stream in the current year.  Therefore, the Company performed a goodwill impairment analysis as of

March 31, 2020. 

This analysis forecasted the debt free cash flows of the segment, on a discounted basis, to estimate the fair value of the segment compared to the carrying value of the segment. For the Telco segment, the carrying value exceeded the estimated fair value of the segment by more than the carrying amount of goodwill recorded in the segment.  Therefore, the Company fully impaired the goodwill balance in the Telco segment and recorded an impairment charge of

$4.8

million.