5. GOODWILL AND OTHER INTANGIBLE ASSETS, NET

Goodwill represents the excess of cost over the fair value of identifiable assets acquired. U.S. GAAP requires that both indefinite-lived intangible assets and goodwill are tested for impairment annually and more frequently if events or changes in circumstances indicate that it is more likely than not (i.e., a likelihood greater than 50%) that the intangible asset or the reporting unit is impaired. During interim periods, ASC 350 requires companies to focus on those events and circumstances that affect the significant inputs used to determine the fair value of the asset group or reporting unit to determine whether an interim quantitative impairment test is required. The Company performed its annual impairment test for goodwill and intangible assets as of the last day of the fourth quarter. The Company first assessed certain qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit or indefinite-lived intangible assets is less than its carrying amount, and whether it is therefore necessary to perform the quantitative impairment test. In 2024, for all reporting units other than CAD Enterprises, Federal Hose and Marine Products International, the qualitative analysis indicated that a quantitative analysis was not necessary. For the identified reporting units, impairment testing was performed as of  December 31, 2024 using an income approach based on management’s determination of the prospective financial information, and no indefinite-lived intangible assets or goodwill was determined to be impaired.

There were no impairment indicators identified during the three-month periods ended March 31, 2025 or March 31, 2024.

Goodwill increased by $4.1 million from $18.5 million at  December 31, 2024 to $22.6 million at  March 31, 2025. The increase in Goodwill was driven primarily by an addition of $3.9 million in the Industrial and Transportation Products segment related to the acquisition of Rahn Industries Incorporated ("Rahn") in the  first quarter of 2025. Also contributing to the increase in goodwill were final fair value adjustments to the inventory and fixed assets of Heany Industries LLC ("Heany"), in the amount of $63,624 and $90,400, respectively.

Goodwill increased by $2.1 million from $16.5 million at   December 31, 2023 to $18.5 million at   December 31, 2024. The increase in Goodwill was driven by an addition of $2.1 million in the Industrial and Transportation Products segment related to the acquisitions of Heany and Advanced Industrial Coatings, LLC ("AIC") in the first and third quarters of 2024, respectively. 

Goodwill by reportable segment is as follows:

The Company's intangible assets have primarily been generated via acquisitions. Intangibles are being amortized on a straight-line basis over periods ranging from one to 15 years.

Intangible assets consist of the following:

Amortization of intangible assets was $444,809 and $350,336 for the three months ended March 31, 2025 and 2024, respectively. The $4.1 million increase in customer relationships value from $12.7 million at December 31, 2024 to $16.8 million at March 31, 2025 resulted from the Rahn acquisition.

Intangible amortization for the remainder of 2025 and the next four years is expected to be as follows: