Company: FWFW
Filing Date: 2025-01-14
Form Type: 10-K
Source: 0001493152-25-002097
Chunk: 80

Company: FLYWHEEL ADVANCED TECHNOLOGY, INC.
Filing Date: 2025-01-14
Form: 10-K
Item: Item 1A
Chunk 80
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Audit Matter Description

On
July 5, 2024, the Company entered into a share purchase agreement whereby the Company received 938 shares, 9.38% of total equity, of
a privately held company, Elison, at an estimated fair value of approximately $5.4 million which is recorded as an investment in the
consolidated balance sheets as of September 30, 2024. These investments without readily determinable market values, are valued using
significant unobservable inputs that involve considerable judgment by management. The Company uses internal modeling techniques based
on projected cash flows and certain other unobservable inputs to value its investments. The significant unobservable inputs may include
discount rates, issue specific credit adjustments, material non-public financial information, estimation of future earnings and cash
flows, default rate assumptions, and liquidity assumptions.

Given
that the Company utilizes valuation models and significant unobservable inputs to estimate the fair value for its investments, performing
audit procedures to evaluate these inputs required a high degree of auditor judgment and an increased extent of effort, including the
involvement of our fair value specialists.

How
the Critical Audit Matter Was Addressed in the Audit

Our
audit procedures related to the valuation models and significant unobservable inputs utilized by the Company to estimate the fair value
of investments included the following, among others:

●We
                                            involved experienced audit team members in the performance of our audit procedures.

●With
                                            the assistance of our fair value specialists, we:

  ○
  Evaluated the valuation models
  and unobservable inputs used by the Company to estimate fair value of these investments.

  ○
  Developed independent fair
  value estimates and compared our estimates to the Company’s estimates of these investments.

●Our
                                            audit procedures related to investment valuations using significant unobservable inputs included,
                                            among others, assessing whether the valuation methodologies used were appropriate and testing
                                            the mathematical accuracy of the valuation models. We obtained management’s valuation
                                            models and compared objective inputs used in the models to agreements or underlying source
                                            documents provided by the Company. We assessed the appropriateness of certain unobservable
                                            inputs and assumptions used in the valuation models by comparing them to underlying support
                                            or available market data and evaluating the appropriateness of adjustments.

/s/
BCRG Group

BCRG
Group (PCAOB ID 7158)

We
have served as the Company’s auditor since 2024.

Irvine,
CA

January 14,