Note 5 - Goodwill and Intangibles

3 Months Ended

Mar. 31, 2025

Notes to Financial Statements

Goodwill and Intangible Assets Disclosure [Text Block]

Note 5 – Goodwill and Intangibles

We account for goodwill and other intangible assets under GAAP. Under GAAP, goodwill and intangible assets with indefinite useful lives are not amortized but are instead tested for impairment (i) on at least an annual basis and (ii) when changes in circumstances indicate that the fair value of goodwill may be below its carrying value. These circumstances include but are not limited to (i) a significant adverse change in the business climate, (ii) unanticipated competition or (iii) an adverse action or assessment by a regulator. Determining impairment involves estimating the fair value of a reporting unit using a combination of (i) the income or discounted cash flow approach and (ii) the market approach that utilizes comparable companies’ data. If the carrying amount of a reporting unit exceeds its fair value, the amount of the impairment loss must be measured. The impairment loss is calculated by comparing the implied fair value of the reporting unit’s goodwill to its carrying amount. In calculating the implied fair value of the reporting unit’s goodwill, the fair value of the reporting unit is allocated to all the assets and liabilities of the reporting unit. The excess of the fair value of a reporting unit over the amount assigned to its other assets and liabilities is the implied value of goodwill. We recognize impairment loss when the carrying amount of goodwill exceeds its implied fair value. Our goodwill totaled $35,624,660 as of March 31, 2025, and December 31, 2024.

In 2024 and 2023, we engaged an independent valuation firm to aid in the completion of an annual impairment test for existing goodwill acquired. For 2024 and 2023, the testing was completed, and we determined that there was no impairment to goodwill for Scott-Rice and Sleepy Eye Telephone Company as the determined fair value was sufficient to pass the impairment test. For 2024, after the testing, we determined that there was an impairment to goodwill for Hutchinson Telephone Company (HTC) of $4.9 million as the determined fair value was not sufficient to pass the impairment test. The impairment was recorded in the fourth quarter of 2024. For 2023, after the testing, we determined that there was an impairment to goodwill for HTC of $9.3 million as the determined fair value was not sufficient to pass the impairment test. The impairment was recorded in the fourth quarter of 2023.

Our intangible assets subject to amortization consist of acquired customer relationships, regulatory rights, and trade names. We amortize intangible assets with finite lives over their respective estimated useful lives. Identifiable intangible assets that are subject to amortization are evaluated for impairment. In addition, we periodically reassess the carrying value, useful lives, and classifications of our identifiable intangible assets.

The components of our identified intangible assets are as follows:

				March 31, 2025				December 31, 2024
				Gross				Gross
	Useful			Carrying		Accumulated		Carrying		Accumulated
	Lives (in years)			Amount		Amortization		Amount		Amortization
Definite-Lived Intangible Assets
Customers Relationships (in years)	14	-	15	$	42,878,445	$	34,082,928	$	42,878,445	$	33,677,015
Video Franchise					3,000,000		750,015		3,000,000		642,870
Indefinitely-Lived Intangible Assets
Spectrum					877,814		-		877,814		-
Total				$	46,756,259	$	34,832,943	$	46,756,259	$	34,319,885
Net Identified Intangible Assets						$	11,923,316			$	12,436,374

Amortization expense related to the definite-lived intangible assets was $513,058 and $513,058 for the three months ending March 31, 2025, and 2024. Amortization expense for the remaining nine months of 2025 and the five years after 2025 is estimated to be:

(April 1 – December 31)	$	1,534,254
2026	$	2,042,389
2027	$	1,335,247
2028	$	1,335,247
2029	$	1,335,247
2030	$	1,335,247