Note 5—Intangible Assets and Goodwill

Intangible assets are initially recorded at fair value and are stated net of accumulated amortization and impairment losses. The Company amortizes intangible assets with finite useful lives using either the straight-line method or, when reliably determinable, based on the pattern in which the economic benefits of the assets are expected to be consumed. Amortization is recorded over estimated useful lives ranging from five to fifteen years.

The Company evaluates the recoverability of its finite-lived intangible assets whenever events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable. In accordance with ASC 360, Property, Plant, and Equipment, recoverability is assessed by comparing the carrying amount of the asset group to the sum of the estimated undiscounted future cash flows expected to result from the use and eventual disposition of the asset group. If the carrying amount exceeds the undiscounted cash flows, the Company estimates the fair value of the asset group. Fair value is generally determined using an income approach, which includes a discounted cash flow analysis based on the present value of projected after-tax cash flows using a risk-adjusted discount rate. The Company’s fair value estimates incorporate market participant assumptions in accordance with ASC 820, Fair Value Measurement.

The following table presents the detail of intangible assets, net as of April 30, 2026 and July 31, 2025 (in thousands):

Impairment of Emojipedia Intangible Assets

In September 2025, Google implemented changes to its Search Engine Results Page (“SERP”) that allow users to copy emojis directly from the search engine results page, reducing referrals to third-party websites such as Emojipedia. In addition, artificial intelligence platforms, including Gemini, ChatGPT, Claude and others, now provide emoji results directly in response to user queries. These developments have adversely affected traffic and monetization for Emojipedia in the second quarter of fiscal 2026 and are expected to reduce future cash flows. As a result, management has determined that future investment in feature development and growth initiatives for Emojipedia will be limited, and the business will be operated primarily to maintain existing functionality. Accordingly, these factors represent a triggering event under ASC 360.

As a result, the Company performed a recoverability test in accordance with ASC 360 to determine whether the carrying amount of the Emojipedia asset group was recoverable based on estimated undiscounted future cash flows over the remaining useful life of the primary asset. Based on this analysis, the sum of the estimated undiscounted future cash flows was not sufficient to recover the carrying amount of the Emojipedia asset group including intangible asset and capitalized software and technology development costs.

Accordingly, the Company measured the impairment loss by estimating the fair value of the asset group. The Company utilized an income approach based on a discounted cash flow (“DCF”) analysis, which estimates the fair value by projecting after-tax cash flows attributable to the asset group and discounting those cash flows to present value using a risk-adjusted discount rate. The DCF analysis requires significant judgment, including assumptions related to revenue projections, growth rates, terminal values, and the timing and amount of expected future cash flows.

The forecasted cash flows were based on the Company’s most recent strategic plan, and for periods beyond the strategic plan, the Company applied revenue assumptions including a continued decline in revenue considered reasonable as of the measurement date and consistent with market participant expectations. The discount rate was based on an estimate of the weighted average cost of capital (“WACC”) of market participants and was intended to reflect the risks inherent in the projected cash flows. The Company applied a discount rate of 30.0%.

Based on the DCF analysis, the estimated fair value of the Emojipedia asset group was determined to be $1.2 million and below its carrying amount of $4.9 million. The remaining useful life of the Emojipedia internet domain was estimated to be 4.5 years reduced from 10.5 years as originally estimated.

As a result, the Company recorded a non-cash impairment charge of approximately $3.7 million to reduce the carrying amount of the Emojipedia asset group to its estimated fair value. In accordance with ASC 360-10-35-28, the impairment charge was allocated to the long-lived assets within the asset group on a pro rata basis based on their relative carrying amounts. The impairment charge recorded in the second quarter of fiscal 2026 was allocated as follows:

Estimated future amortization expense for intangible assets as of April 30, 2026 is as follows (in thousands):

The Company’s amortization expense for intangible assets were $286,000 and $335,000 for the nine months ended April 30, 2026 and 2025, respectively.

Goodwill

The following table summarizes the changes in the carrying amount of goodwill for the nine months ended April 30, 2026 (in thousands).

The total accumulated impairment loss of the Company’s goodwill as of April 30, 2026 was $8.7 million.