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GOODWILL AND OTHER INTANGIBLE ASSETS

3 Months Ended

Dec. 31, 2023

GOODWILL AND OTHER INTANGIBLE ASSETS

NOTE 6 – GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill

The goodwill in net carrying amount of $28,846,832 as at December 31, 2023 and as at September 30, 2023 pertains to the Bollinger Motors Inc. acquisition on September 7, 2022.

Goodwill is not amortized and is tested for impairment annually, or more frequently if there are indicators of impairment. Every reporting period the Company assesses qualitative factors (such as macroeconomic conditions, industry and market considerations, financial performance of the Company, entity-specific events etc.) to determine whether it is necessary to perform the quantitative goodwill impairment test. Upon the quantitative goodwill impairment test, impairment may arise to the extent carrying amount of a reporting unit that includes goodwill (i.e. Bollinger production unit, see Note 21 – Segment information) exceeds its fair value. As a result of the impairment test performed on September 1, 2023 by management with the assistance of independent third-party valuation professionals, the Company has recognized impairment loss in amount of $63,988,000 in the last quarter of the fiscal year ended September 30, 2022. No additional impairment was recognized during the quarter ended December 31, 2023.

Other intangible assets

Intangible assets are stated at cost, net of accumulated amortization. Patents and other identifiable intellectual property purchased as part of the Bollinger Motors acquisition in September 2022 have been initially recognized at fair value.

Intangible assets with indefinite useful lives are not amortized but instead tested for impairment. Due to unfavorable market conditions and decline of the market prices of the Company’s common stock, we have tested long-lived assets for recoverability in the last quarter of the fiscal year ended September 30, 2023. Based on the test performed on September 1, 2023 by independent professional appraisers, the assets of the Bollinger's segment (see Note 21 - Segment information), including indefinite-lived in-process research and development assets, acquired in September 2022, were not impaired, except for impairment of goodwill (see above). No impairment was recognized during the quarter ended December 31, 2023.

Intangible assets with finite useful lives are amortized over the period of estimated benefit using the straight-line method. The weighted average useful life of intangible assets is 8.7 years. The straight-line method of amortization represents management’s best estimate of the distribution of the economic value of the intangible assets.

In the last quarter of the fiscal year ended September 30, 2023, an impairment loss in amount of $5,873,000 has been recognized in respect of the intangible assets of the ELMS/Legacy Mullen segment (primarily engineering designs and website design and development). No additional impairment was recognized during the quarter ended December 31, 2023.


	December 31, 2023						September 30, 2023
					Net						Net
	Cost		Accumulated		Carrying		Cost		Accumulated		Carrying
	Basis		Amortization		Amount		Basis		Amortization		Amount
Finite-Lived Intangible Assets
Patents		32,447,460		(4,263,548)		28,183,912		31,708,460		(3,445,694)		28,262,766
Engineering designs		16,200,332		(621,075)		15,579,257		16,200,332		(184,274)		16,016,058
Other		1,841,639		(339,493)		1,502,146		745,947		(158,590)		587,357
Trademarks		—		—		—		1,180,138		(115,682)		1,064,456
Total finite-lived intangible assets		50,489,431		(5,224,116)		45,265,315		49,834,877		(3,904,240)		45,930,637
Indefinite-Lived Intangible Assets
In-process research and development assets	$	58,304,612	$	—	$	58,304,612	$	58,304,612	$	—	$	58,304,612
Total indefinite-lived intangible assets		58,304,612		—		58,304,612		58,304,612		—		58,304,612
Total Intangible Assets	$	108,794,043	$	(5,224,116)	$	103,569,927	$	108,139,489	$	(3,904,240)	$	104,235,249

Total future amortization expense for finite-lived intangible assets is as follows:


Years Ended September 30,	Future Amortization
2024 (9 months)	$	3,930,834
2025		5,250,711
2026		5,250,711
2027		5,240,901
2028		5,110,712
Thereafter		20,481,446
Total Future Amortization	$	45,265,315

For the three months ended December 31, 2023 and 2022, amortization of the intangible assets was $1,319,877 and $2,756,704 respectively.