Global Water Resources Inc

8. GOODWILL AND INTANGIBLE ASSETS

Goodwill

The Company’s goodwill is related to historical acquisitions. As of December 31, 2024, there were no indicators of impairment identified as a result of the Company’s review of events and circumstances related to its goodwill subsequent to the acquisitions.

As a result of Decision No. 79383 issued by the ACC on June 20, 2024, the Company reclassified $1.3 million of goodwill to regulatory assets for certain impacted utilities to establish the approved $1.8 million of acquisition premiums net of the $0.5 million that was previously recorded for Global Water - Rincon Water Company, Inc (now part of GW-Saguaro). Refer to Note 3 – “Regulatory Matters” for additional information.

As of December 31, 2024 and 2023, the goodwill balance consisted of the following (in thousands):

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Intangible Assets

As of December 31, 2024 and 2023, intangible assets consisted of the following (in thousands):

A CC&N is a permit issued by the ACC allowing a public service corporation to serve a specified area, and preventing other public service corporations from offering the same water and wastewater service within the specified area. The CP Water CC&N intangible asset was acquired through the acquisition of CP Water in 2006. This CC&N permit has no outstanding conditions that would require renewal.

Franchise contract rights relate to the 2018 acquisition of Global Water Red Rock Water Company, Inc. (now part of GW-Saguaro) and the 2023 acquisition of GW-Farmers. Franchise contract rights are agreements with Pima and Pinal counties for GW-Saguaro and Pima county and the Town of Sahuarita for GW-Farmers that allow the Company to place infrastructure in public right-of-way and permits expected to be renewable indefinitely. The organizational costs represent fees paid to federal or state governments for the privilege of incorporation and expenditures incident to organizing the corporation and preparing it to conduct business.

Acquired ICFAs and Sonoran contract rights relate to acquired rights under certain ICFAs through the 2004 acquisition of GW-Santa Cruz and GW-Palo Verde and the 2005 acquisition of Sonoran assets, respectively, which are amortized when cash is received in proportion to the amount of total cash expected to be received under the underlying agreements. Due to the uncertainty of the timing of when cash will be received under ICFA agreements and contract rights, the Company cannot reliably estimate when the remaining intangible assets’ amortization will be recorded. There was $0.9 million and $1.4 million of amortization recorded for these balances during the years ended December 31, 2024 and 2023, respectively.