Company: FWDI
Filing Date: 2025-05-14
Form Type: 10-Q
Source: 0001683168-25-003548
Chunk: 32

Company: Forward Industries, Inc.
Filing Date: 2025-05-14
Form: 10-Q
Item: Item 1
Chunk 32
---
 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 Period 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 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