Company: FWDI
Filing Date: 2025-09-16
Form Type: 8-K
Source: 0001683168-25-007036
Chunk: 57

Company: Forward Industries, Inc.
Filing Date: 2025-09-16
Form: 8-K
Item: Item 8
Chunk 57
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000 

Goodwill

Goodwill
represents the future economic benefits of assets acquired in a business combination that are not individually identified or separately
recognized. The Company’s goodwill resulted from the acquisitions of Kablooe and IPS in Fiscal 2020 and Fiscal 2018, respectively.
The goodwill associated with the IPS acquisition is not deductible for tax purposes, but the goodwill associated with the Kablooe acquisition
is deductible for tax purposes. All of the Company’s goodwill is held under the design segment of our business.

In
December 2024, IPS was notified by its largest customer of its plan to discontinue its 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 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.

Below
is a rollforward of goodwill for the design segment, the only reportable segment with goodwill:

    Schedule of  roll forward
of goodwill 

    Balance at September 30, 2024 
    $1,559,000 
  
    Impairment of IPS reporting unit 
     (225,000)
  
    Balance at December 31, 2024 
    $1,334,000 

NOTE 5        SEGMENTS AND CONCENTRATIONS

As a result of discontinuing the retail and OEM
segments, see Note 3, the Company now has only one reportable segment. See Note 2 for more information on the composition and accounting
policies of our report