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INTANGIBLE ASSETS AND GOODWILL | 9 Months Ended
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Jun. 30, 2025
Goodwill and Intangible Assets Disclosure [Abstract] |
INTANGIBLE ASSETS AND GOODWILL |
NOTE 4 | INTANGIBLE ASSETS AND GOODWILL
Intangible Assets The Company’s intangible assets consist of the following:
Schedule of intangible assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | June 30, 2025 |  |  | September 30, 2024 |
|  | Trademarks |  |  | Customer Relationships |  |  | Total Intangible Assets |  |  | Trademarks |  |  | Customer Relationships |  |  | Total Intangible Assets |
Gross carrying amount |  | $ | 585,000 |  |  | $ | 1,390,000 |  |  | $ | 1,975,000 |  |  | $ | 585,000 |  |  | $ | 1,390,000 |  |  | $ | 1,975,000 |
Less accumulated amortization |  |  | (271,000 | ) |  |  | (1,183,000 | ) |  |  | (1,454,000 | ) |  |  | (242,000 | ) |  |  | (1,053,000 | ) |  |  | (1,295,000 | )
Net carrying amount |  | $ | 314,000 |  |  | $ | 207,000 |  |  | $ | 521,000 |  |  | $ | 343,000 |  |  | $ | 337,000 |  |  | $ | 680,000 |
The Company’s intangible assets resulted from the acquisitions of Kablooe and IPS in Fiscal 2020 and Fiscal 2018, respectively. Intangible assets are amortized over their expected useful lives of 15 years for the trademarks and eight 8years for the customer relationships. Amortization expense related to intangible assets was $53,000 for the three months ended June 30, 2025 and 2024, and $160,000 for the nine months ended June 30, 2025 and 2024, which is included in general and administrative expenses on the condensed consolidated statements of operations. At June 30, 2025, estimated amortization expense for the Company’s intangible assets is as follows:
Schedule of estimated amortization expense |  |  |  |
Remainder of Fiscal 2025 |  | $ | 53,000 |
Fiscal 2026 |  |  | 121,000 |
Fiscal 2027 |  |  | 82,000 |
Fiscal 2028 |  |  | 4,000 |
Fiscal 2029 |  |  | 39,000 |
Fiscal 2030 |  |  | 39,000 |
Thereafter |  |  | 183,000 |
Total |  | $ | 521,000 |
Goodwill Goodwill represents the future economic benefits of assets acquired in a business combination that are not individually identified or separately recognized. The Company’s goodwill resulted from the acquisitions of Kablooe and IPS in Fiscal 2020 and Fiscal 2018, respectively. The goodwill associated with the IPS acquisition is not deductible for tax purposes, but the goodwill associated with the Kablooe acquisition is deductible for tax purposes. 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 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 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. In the second and third quarters 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, primarily in the second quarter of fiscal 2025, 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 and third quarters, which the Company considered triggering events to evaluate the goodwill of the IPS reporting unit for impairment. Management concluded an impairment was more likely than not to have occurred and performed a quantitative goodwill impairment analysis for the IPS reporting unit at June 30, 2025. 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 with Level 3 of the fair value hierarchy, such as projected revenues, growth rate and discount rate. Considering the workforce reductions in January and June of 2025, modest expectations of revenue growth for this reporting unit, and the reduction in its carrying value, the quantitative testing indicated the fair value of the IPS reporting unit exceeded its carrying amount, resulting in no further goodwill impairment in the nine months ended June 30, 2025. Below is rollforward of goodwill:
Schedule of roll forward of goodwill |  |  |  |
Balance at September 30, 2024 |  | $ | 1,559,000 |
Impairment of IPS reporting unit |  |  | (225,000 | )
Balance at June 30, 2025 |  | $ | 1,334,000 |

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