Company: FWDI
Filing Date: 2025-02-13
Form Type: 10-Q
Source: 0001683168-25-000993
Chunk: 17

Company: Forward Industries, Inc.
Filing Date: 2025-02-13
Form: 10-Q
Item: Item 1
Chunk 17
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 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
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 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

The Company has two reportable
segments: OEM distribution and design.

Our chief operating decision
maker (“CODM”) regularly reviews revenue and operating income for each segment to assess financial results and allocate resources.
For our OEM distribution segment, we exclude general and administrative and general corporate expenses from its measure of profitability
as these expenses are not allocated to the segments and therefore not included in the measure of profitability used by the CODM. For the
design segment, general and administrative expenses directly attributable to that segment are included in its measure of profitability