GOODWILL |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2026 | ||||||||||||||||||||||||||||||||||||||||||||||
| Intangible Asset, Goodwill and Other [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
| GOODWILL | NOTE 10. GOODWILL
Goodwill represents the excess of the purchase price over the fair value of net assets acquired in business combinations. As of June 30, 2026, the Company had goodwill of $2,212,000, all of which resulted from the acquisition of GreenAcres Market in July 2024.
The Company tests goodwill for impairment annually on September 30 or more frequently if there are indicators that the carrying amount of goodwill exceeds its estimated fair value.
Goodwill Impairment Assessment — Three Months Ended June 30, 2026
During the second quarter of 2026, the Company performed a qualitative assessment under ASC 350-20-35-3C to determine whether any events or circumstances occurred that would make it more likely than not that the fair value of the Company’s single reporting unit is less than its carrying amount. Management considered various factors, including macroeconomic conditions, industry and market considerations, cost factors, overall financial performance, entity-specific events, and share price performance.
Based on this assessment, management concluded that no triggering event occurred during the period that would more likely than not reduce the fair value of the reporting unit below its carrying amount. Although no triggering event was identified, management elected to voluntarily perform a quantitative impairment test for goodwill as of June 30, 2026. The quantitative analysis, which used a combination of an income approach and a market approach, confirmed that the fair value of the reporting unit exceeded its carrying amount. Accordingly, no goodwill impairment was recognized for the three and six months ended June 30, 2026.
Goodwill Impairment Assessment — Year Ended December 31, 2025
During the fourth quarter of 2025, the Company’s stock price traded below its book value per share for a sustained period. As a decline in market capitalization below book value is a potential indicator of impairment, management concluded that a triggering event had occurred, necessitating an interim quantitative impairment test as of December 31, 2025. For this interim test, the fair value of the single reporting unit was estimated using a combination of an income approach and a market approach, consistent with the methodology used in the annual test. The Company used significant judgment to estimate the fair value of this single reporting unit including estimating future cash flows, determining appropriate discount rates and other assumptions, including assumptions about secular economic and market conditions, future sales growth, gross margin, operating margin, terminal growth rate, and the application of an appropriate discount rate. As of December 31, 2025, the estimated fair value of the Company’s single reporting unit exceeded its carrying value. The income approach and market approach yielded consistent fair value estimates, providing a sufficient margin of safety despite the recent decline in the Company’s stock price. Accordingly, no goodwill impairment was recognized for the year ended December 31, 2025.
The changes in the carrying amount of goodwill as of June 30, 2026 and December 31, 2025 are as follows:
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