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Intangible Assets | 12 Months Ended
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Sep. 30, 2024
Goodwill and Intangible Assets Disclosure [Abstract] |
Intangible Assets | 9. Intangib le Assets Intangible assets consist of the following, in thousands:
|  |  |  | September 30, |
|  | Amortization Period |  | 2024 |  |  | 2023 |
Backlog |  | 1 year |  | $ | 2,100 |  |  | $ | 2,100 |
Customer relationships |  | 6-10 years |  |  | 4,409 |  |  |  | 4,409 |
Developed technology |  | 1.75 years |  |  | 6,700 |  |  |  | 6,700 |
Noncompetition agreements |  | 5 years |  |  | 200 |  |  |  | 200 |
Trade names |  | 3-15 years |  |  | 2,679 |  |  |  | 2,679 |
|  |  |  |  | 16,088 |  |  |  | 16,088 |
Accumulated amortization |  |  |  |  | (5,616 | ) |  |  | (4,785 | )
Less asset impairments: |  |  |  |  |  |  |  |
Backlog |  |  |  |  | (425 | ) |  |  | (425 | )
Customer relationships |  |  |  |  | (339 | ) |  |  | (119 | )
Developed technology |  |  |  |  | (5,494 | ) |  |  | (4,645 | )
Noncompetition agreements |  |  |  |  | (160 | ) |  |  | — |
Trade names |  |  |  |  | (50 | ) |  |  | — |
Intangible assets, net |  |  |  | $ | 4,004 |  |  | $ | 6,114 |
Intangible assets are amortized over a weighted-average amortization period of 8.0 years. Our customer relationship and trade name intangible assets are amortized over weighted-average amortization periods of 4.6 and 3.4 years, respectively. We review our intangible assets for impairment when events or circumstances indicate the carrying value may not be recoverable. Except as discussed below, we concluded that a triggering event had not occurred that would more likely than not reduce the fair value of intangible assets below their carrying value. We identified a triggering event at the end of September 2023, primarily related to the prolonged downturn and general economic conditions in the semiconductor market, in addition to delays in the adoption of next-gen polishing tools, which reduced our cash flow projections. This triggering event indicated we should test the related long-lived assets for impairment in our Semiconductor Fabrication Solutions segment. We tested each identified asset group within our Semiconductor Fabrication Solutions segment by first performing a recoverability test, comparing projected undiscounted cash flows from the use and eventual disposition of each asset group to its carrying value. This test indicted that the undiscounted cash flows were not sufficient to recover the carrying value of certain asset groups. We then compared the carrying value of the individual long-lived assets within those asset groups against their fair value in order to determine if impairment existed. Determining the fair value of those asset groups involves the use of significant estimates and assumptions, including projections of revenues and expenses and related cash flows based on assumed long-term growth rates and demand trends, and estimated discount rates based on the asset group's weighted average return on assets, as derived from various methods. The fair value of the intangible assets were estimated using various valuation methodologies, including the multi-period excess earnings method, the relief from royalty method and the distributor method. These fair value measurements fall under Level 3 of the fair value hierarchy. As a result, we recorded a total impairment charge for intangible assets in our Semiconductor Fabrication Solutions segment of $5.2 million during the year ended September 30, 2023. This impairment charge relates to developed technology and backlog at Entrepix and customer relationships at Intersurface Dynamics. Additionally, at the end of December 2023, we identified a triggering event. As a result of the decline in our stock price as of December 31, 2023, our book value materially exceeded our market value. As discussed in the Goodwill section below, this resulted in a triggering event for impairment of goodwill. The results of the goodwill impairment test indicated that the book value of our Semiconductor Fabrication Solutions reporting unit was in excess of the fair value, and, thus, was impaired. Prior to recognizing any impairment of goodwill, we tested the related long-lived assets for impairment in our Semiconductor Fabrication Solutions segment. We tested each identified asset group within our Semiconductor Fabrication Solutions segment by first performing a recoverability test, comparing projected undiscounted cash flows from the use and eventual disposition of each asset group to its carrying value. This test indicated that the undiscounted cash flows were not sufficient to recover the carrying value of certain asset groups. We then compared the carrying value of the individual long-lived assets within those asset groups against their fair value in order to determine if impairment existed. Determining the fair value of those asset groups involves the use of significant estimates and assumptions, including projections of revenues and expenses and related cash flows based on assumed long-term growth rates and demand trends, and estimated discount rates based on the asset group's weighted average return on assets, as derived from various methods. The fair value of the intangible assets were estimated using various valuation methodologies, including the multi-period excess earnings method, the relief from royalty method and the distributor method. These fair value measurements fall under Level 3 of the fair value hierarchy. As a result, we recorded a total impairment charge for intangible assets in our Semiconductor Fabrication Solutions segment of $1.3 million during the quarter ended December 31, 2023. This impairment charge relates to developed technology, trade name, customer relationships and non-competition agreements at Entrepix. Amortization expense related to intangible assets w as $0.8 mi llion, $3.1 million and $0.1 million in 2024, 2023 and 2022, respectively. Future amortization expense for the remaining unamortized balance as of September 30, 2024 is estimated as follows, in thousands:
Years Ending September 30, |  | Amortization Expense |
2025 |  | $ | 511 |
2026 |  |  | 511 |
2027 |  |  | 511 |
2028 |  |  | 511 |
2029 |  |  | 511 |
Thereafter |  |  | 1,449 |
Total |  | $ | 4,004 |

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