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Goodwill
 9 Months Ended
Sep. 30, 2023
Goodwill  
Goodwill

Note 7. Goodwill

 

In connection with the Merger, the excess of the purchase price over the estimated fair value of the net assets assumed of $60.9 million was recognized as goodwill.

The Company tests Goodwill for impairment at the reporting unit level annually in the fourth quarter or more frequently if a change in circumstances or the occurrence of events indicates that potential impairment exists. Due to a sustained decrease in the Company’s share price during the quarter ended March 31,2023 and June 30, 2023, the Company concluded in accordance with ASC 350, a triggering event occurred indicating that potential impairment exists and required the Company to assess if impairment exists as of March 31, 2023 and June 30, 2023. In accordance with ASC 350, the Company performed a quantitative goodwill impairment test, which resulted in the carrying amount of the reporting unit exceeding the estimated fair value of the reporting unit, indicating that the goodwill of the reporting unit was impaired. The Company utilized a combination of an income and market approach to assess the fair value of the reporting unit as of June 30, 2023. The income approach considered the discounted cash flow model, considering projected future cash flows (including timing and profitability), discount rate reflecting the risk inherent in future cash flows, perpetual growth rate, and projected future economic and market conditions while the guideline public company market approach considered marketplace earnings multiples from within a peer public company group. The Company recorded the impairment charge of $56.1 and $4.8 million related to goodwill for the three months ended March 31, 2023 and June 30, 2023, respectively. As of September 30, 2023 cumulative goodwill impairment charges of $60.9 million were incurred related to the Company’s single reporting unit.

 

The following is a roll forward of goodwill as of and for the nine months ended September 30, 2023:

 

Beginning balance, January 1, 2023

 

$-

 

Goodwill recognized in connection with the Merger (Note 3)

 

 

60,934

 

Impairment charge

 

 

(60,934)

Ending balance, September 30, 2023

 

$-