Company: FWDI
Filing Date: 2025-08-14
Form Type: 10-Q
Source: 0001683168-25-006141
Chunk: 22

Company: Forward Industries, Inc.
Filing Date: 2025-08-14
Form: 10-Q
Item: Item 1
Chunk 22
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 all activities related to it. Revenue from this customer (all of which related to this program) represented
more than 30% of the Company’s consolidated net revenues in fiscal 2024. Due to the historically high concentration of revenue with
this customer, the loss of its business was considered a triggering event which prompted the Company to evaluate the goodwill of the IPS
reporting unit. Management concluded an impairment was more likely than not to have occurred and performed a quantitative goodwill impairment
test for the IPS reporting unit at December 31, 2024. Using primarily an income approach methodology, the fair value of the IPS reporting
unit was estimated using a discounted cash flow analysis incorporating variables categorized within Level 3 of the fair value hierarchy
such as projected revenues, growth rate and discount rate. The quantitative testing indicated the carrying amount of the IPS reporting
unit exceeded its fair value, resulting in a goodwill impairment charge of $225,000 in the three months ended December 31, 2024, primarily
driven by a reduction in the expected future performance of the IPS reporting unit.

     14 

In
the second and third quarters of fiscal 2025, the IPS reporting unit continued to experience low levels of staff utilization due in part
to the loss of the aforementioned major customer, which was anticipated. In addition, due to the uncertainty in the global markets related
to tariffs on imports, primarily in the second quarter of fiscal 2025, many IPS customers were slow to commit funds to projects as they
were unsure how tariffs and other macroeconomic factors would impact their business. The combination of these events resulted in negative
gross profit for the IPS reporting unit in the second and third quarters, which the Company considered triggering events to evaluate the
goodwill of the IPS reporting unit for impairment. Management concluded an impairment was more likely than not to have occurred and performed
a quantitative goodwill impairment analysis for the IPS reporting unit at June 30, 2025. Using primarily an income approach methodology,
the fair value of the IPS reporting unit was estimated using a discounted cash flow analysis incorporating variables categorized with
Level 3 of the fair value hierarchy, such as projected revenues, growth rate and discount rate. Considering the workforce reductions in
January and June of 2025, modest expectations of revenue growth for this reporting unit, and the reduction in its carrying value, the
quantitative testing indicated the fair value of the IPS reporting unit exceeded its carrying amount, resulting in no further goodwill
impairment in the nine months