Company: FWFW
Filing Date: 2025-01-14
Form Type: 10-K
Source: 0001493152-25-002097
Chunk: 360

Company: FLYWHEEL ADVANCED TECHNOLOGY, INC.
Filing Date: 2025-01-14
Form: 10-K
Item: Item 6
Chunk 360
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 financial reporting. As part
of our audit, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing
an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our
audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether
due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence
regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles
used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.
We believe that our audits provide a reasonable basis for our opinion.

Critical
Audit Matters

The
critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated
or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial
statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters
does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit
matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

●Initial
                                            Valuation of Investments - Refer to Note 4, Investments

Critical
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