In accordance with authoritative guidance issued by the FASB, the Company performed an annual impairment test of goodwill and indefinite-lived intangible assets as of November 30, 2021. For both 2021 and 2020, with respect to the Company’s two reporting units, Florida Pneumatic and Hy-Tech, the Company determined their fair value using the income approach methodology of valuation, which considers the expected present value of future cash flows. As an integral part of the valuation process, the Company utilizes its latest cash flows forecasts for the next six fiscal years, and then applies projected minimal growth for all remaining years, based upon available statistical data and management’s estimates. At December 31, 2021, only Florida Pneumatic had goodwill.

The result of the Company’s impairment test as of November 30, 2021, determined that Florida Pneumatic’s fair value exceeded the carrying value and, as such, no impairment to goodwill assets was recorded.

During the second quarter of 2020, the Company determined that a triggering event occurred as it concluded that the impact of COVID-19 on its sales, profitability and cash flows resulted in a reduction to its operating forecasts reflecting the uncertainty of the current environment. As a result, the Company performed an interim goodwill impairment test.

After completion of the interim goodwill impairment test, the Company concluded that Hy-Tech’s goodwill was fully impaired and recorded a non-cash goodwill impairment charge of $284,000 during the second quarter of 2020. Consistent with the procedures followed in the Company’s annual impairment test, it estimated the fair values of each of its reporting units using the income approach. The income approach uses projected future cash flows that are discounted using a weighted average cost of capital analysis that reflects current market conditions.

The result of the Company’s impairment test as of November 30, 2021, for Florida Pneumatic and Hy-Tech determined that their respective fair value exceeded the carrying value and, as such, no impairment to other intangible assets was recorded.

(1)

A portion of these intangibles are maintained in a foreign currency and are therefore subject to foreign exchange rate fluctuations.

The Company, during the second quarter of 2020, estimated the fair value of the NUMATX patent, and its UAT trade name based on an income approach using the relief-from-royalty method. This approach is dependent upon a number of factors, including estimates of future growth and trends, royalty rates, discount rates and other variables. For the interim impairment test, its estimates of future revenue and profitability associated with NUMATX and UAT were significantly reduced, primarily reflecting the impact of COVID-19. The Company reduced the royalty rate used to estimate the fair value, reflecting the impact of the uncertain environment resulting from COVID-19. Additionally, the weighted average cost of capital used to discount the cash flows for the interim goodwill impairment test was slightly higher than the last annual test, also reflecting the increasing uncertainty resulting from COVID-19. Further, the Company estimated the fair value of Hy-Tech’s customer relationships based on the discounted value of future cash flows and determined that, primarily for the same reasons noted above related to impairment of the NUMATX patent and the UAT trade name, Hy-Tech’s customer relationships were fully impaired. As a result of the aforementioned, the Company adjusted the fair value of the above-mentioned intangible assets by recording a non-cash impairment charge of $1,328,000 in the second quarter of 2020.

The weighted average amortization period for intangible assets was as follows:


	December 31, 2021	December 31, 2020
Customer relationships	6.7	7.6
Trademarks and trade names	9.5	10.5
Engineering drawings	5.1	6.1
Non-compete agreements	2.0	3.0
Patents	4.5	5.2

Amortization expense of intangible assets subject to amortization was as follows:

NOTE 5—GOODWILL AND OTHER INTANGIBLE ASSETS - Continued

Other Intangible Assets - Continued

Amortization expense for each of the next five years and thereafter is estimated to be as follows:


2022	$	629,000
2023		625,000
2024		577,000
2025		548,000
2026		348,000
Thereafter		678,000
	$	3,405,000

Years ended December 31,