Company: FWDI
Filing Date: 2025-02-13
Form Type: 10-Q
Source: 0001683168-25-000993
Chunk: 30

Company: Forward Industries, Inc.
Filing Date: 2025-02-13
Form: 10-Q
Item: Item 1
Chunk 30
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A significant portion of
our revenue is concentrated with several large customers, some of which are the same and some of which change over time. Orders from some
of these customers can be highly variable, with short lead times, which can cause our quarterly revenues, and consequently our results
of operations, to vary over a relatively short period of time.

Critical Accounting Policies
and Estimates

We discussed the accounting
policies and significant estimation processes that are critical to our business operations and the understanding of our financial statements
in our Annual Report on Form 10-K for the fiscal year ended September 30, 2024, under the caption “Management’s Discussion
and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates.” There have been
no material changes in critical accounting policies or estimation processes during the period covered by this report, but the following
accounting estimates had a material impact on our results of operations for the 2025 Quarter and fiscal 2024.

We review goodwill for impairment
annually, or more often if events or changes in circumstances indicate the carrying value of a reporting unit may exceed its fair value.
Evaluating goodwill for impairment requires a significant amount of judgment, including the estimation of future cash flows, future growth
rates and profitability. Changes in our business strategy or adverse changes in market conditions could impact impairment analyses and
require the recognition of an impairment charge. Although we base our estimates on historical experience and various other assumptions
that we believe to be reasonable under the circumstances at the time of evaluation, 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 approximately 25.2% 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 the 2025 Quarter, primarily driven
by a reduction in its expected future performance.

Due
to the historical losses of the Kablooe reporting unit, the Company elected to bypass the qualitative assessment