Company: FWDI
Filing Date: 2025-05-14
Form Type: 10-Q
Source: 0001683168-25-003548
Chunk: 48

Company: Forward Industries, Inc.
Filing Date: 2025-05-14
Form: 10-Q
Item: Item 2
Chunk 48
---
, actual results could differ from these estimates.

In
December 2024, the Company was notified by its largest design customer of its plan to discontinue their insulin patch pump program, on
which IPS was working, and was beginning to wind down 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 performed quantitative testing on this reporting unit, which indicated its
carrying amount exceeded its fair value, resulting in a goodwill impairment charge of $225,000 in December 2024, primarily driven by a
reduction in its expected future performance.

In
the second quarter 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, 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 quarter,
which the Company considered another triggering event to evaluate the goodwill of the IPS reporting unit for impairment. Management performed
a quantitative goodwill impairment analysis for the IPS reporting unit at March 31, 2025, which indicated the fair value of the IPS reporting
unit exceeded its carrying amount, resulting in no further goodwill impairment in the three months ended March 31, 2025.

Due
to the historical losses of the Kablooe reporting unit, the Company elected to bypass the qualitative assessment and perform quantitative
goodwill impairment testing for the Kablooe reporting unit at September 30, 2024. This quantitative testing indicated the carrying amount
of the Kablooe reporting unit exceeded its fair value, resulting in a goodwill impairment charge of $200,000 in September 2024, primarily
driven by a reduction in its expected future performance.

 20 

We
will continue to monitor the IPS and Kablooe goodwill for impairment as needed in future periods. Changes in economic, industry or market
conditions, business operations, competition, the price of our common shares or market capitalization or our actual performance compared