Note 12 – Impairment Charges

The Company reviews property, plant and equipment and other long-lived assets, including leasehold improvements, for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable in accordance with ASC 360, “Property, Plant and Equipment.”

During the fourth quarter of 2024, the Company identified impairment indicators for certain long-lived assets, primarily due to the terminated partnership negotiations for the future development & commercialization of MAT2203 and subsequent cost-cutting measures.

In accordance with ASC 360-10, long-lived assets that are held and used are tested for impairment at the asset group level, which represents the lowest level for which identifiable cash flows are largely independent of the cash flows of other groups of assets and liabilities. The Company has historically determined that its long-lived assets are sufficiently interdependent to constitute one asset group and performed impairment testing at the reporting unit level. However, the workforce reduction implemented in October 2024 and related pause of product development activities indicates a change in the interdependency of the Company’s cash flows. The Company’s long-lived assets will now be evaluated as three asset groups:

ASC 360-10-35 provides that impairment testing for specific assets should be performed in the following order:

Indefinite-lived intangible assets

IPR&D

The Company’s indefinite-lived intangible assets are comprised of in-process research and development (“IPR&D”). For the years ended December 31, 2024 and 2023, the Company assessed IPR&D impairment by performing a quantitative analysis for which involved comparing the fair value of the asset, determined using an income approach which is based on discounted cash flow techniques, to the carrying value of the asset.

During the fourth quarter of 2024, the Company identified impairment indicators for its IPR&D and recorded an impairment charge of $757, which represented the excess of the carrying value of the asset over the calculated fair value. The impairment charge has been included in the Company’s Consolidated Statement of Operations and Comprehensive Loss for the year ended December 31, 2024. The Company did not record an impairment charge of IPR&D during the year ended December 31, 2023.

Goodwill

For the year ended December 31, 2024 and 2023, the Company assessed goodwill impairment by performing a quantitative analysis for its reporting unit. As part of the quantitative review, the Company considered whether its fair value, determined as the price a market participant would be willing to pay in a potential acquisition of the Company, exceeds its carrying value, including goodwill.

During the fourth quarter of 2024, the Company identified impairment indicators for its goodwill and recorded an impairment charge of $1,336, which represented the carrying value of goodwill. The impairment charge has been included in the impairment charges of goodwill line item in the Company’s Consolidates Statement of Operations and Comprehensive Loss for the year ended December 31, 2024. The Company did not record an impairment charge of goodwill during the year ended December 31, 2023.

Long-lived assets

The recoverability test for the Company’s long-lived assets was performed by comparing the carrying amount of each asset group to its estimated future undiscounted pre-tax cash flows over the remaining useful life of the primary long-lived asset within each group. As a result of this analysis, the Company concluded that the carrying value of the asset group including the ROU asset associated with the Bridgewater facility lease and related leasehold improvements, and the asset group including machinery & equipment located at the Bridgewater facility, were not fully recoverable. The Company determined the fair value of the asset group which includes the ROU asset associated with the Bridgewater facility lease and related leasehold improvements using the discounted cash flow method, considering cash flows associated with a potential sublease of the facility. Significant assumptions used include estimated sublease payments, a period of vacancy before the sublease begins and expenses incurred to facilitate the sublease. The Company determined the fair value of the asset group which includes machinery & equipment at the Bridgewater facility by considering its potential salvage value, determined by estimating a salvage rate of proceeds which could be realized in the sale of equipment to a third party. These analyses led to the recognition of impairment charges totaling $2,338. The impairment charges have been included in the Impairment charges of other assets line item in the Company’s Consolidated Statement of Operations and Comprehensive Loss for the year ended December 31, 2024. The Company did not record an impairment charge of other assets during the year ended December 31, 2023.

The following table provides the total amount of impairment charges of other assets as follows:

 Schedule of Impairment Charges of Other Assets