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We have experienced recurring losses and our ability to continue as a going concern is in doubt.
Evaluation of Going Concern assessment and of impairment of Kablooe goodwill and intangible assets (Note 1, Note 2 and Note 4 to the Consolidated Financial Statements)
Our principal audit procedures related to the forecasted cash flows and operating results used in the Company’s going concern assessment and impairment of Kablooe’s goodwill and intangible assets analysis included the following:
Accordingly, our independent registered public accounting firm stated in their report on our annual financial statements for the fiscal year ended September 30, 2024, that these conditions raise substantial doubt about our ability to continue as a going concern. If we are unable to continue as a going concern, our shareholders will likely lose all of their investment in the Company.
Based on our forecasted cash flows, we believe that there is substantial doubt about our ability to continue as a going concern for a period of 12 months from the date of issuance of the condensed consolidated financial statements.
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company has suffered recurring losses from operations that raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Also in 10-K of Dec 11, 2025
Significant judgment is exercised by the Company in forecasting operating results which factor into the Company’s going concern assessment and its goodwill and intangible assets impairment analysis related to its Kablooe operating segment. Specifically, the forecasted operating results used by the Company in its going concern assessment and the impairment analysis of goodwill and intangible assets included in its Kablooe operating segment are sensitive to significant assumptions such as future revenue and expenses, all of which are affected by uncertain future events.
Given these factors, the related audit effort in evaluating management’s judgments in forecasting operating results which factor into the Company’s going concern assessment and its goodwill and intangible assets impairment analysis related to its Kablooe reporting segment, were challenging, subjective, and complex and required a high degree of auditor judgment.
In the prior reporting period, the Company identified certain conditions that raised substantial doubt about its ability to continue as a going concern. These conditions included the loss of a significant customer, the resulting decline in revenues and cash, and recurring operating losses. During the period from May 2025 to September 2025, the Company raised gross proceeds of over $1.65 billion through multiple equity financing transactions (see Note 8). As a result, the Company believes it now has sufficient liquidity to fund anticipated cash requirements for operations and working capital purposes through at least December 2026. As a result, the previously disclosed going concern uncertainty language has been removed as substantial doubt no longer exists regarding the Company’s ability to continue as a going concern.
In the prior reporting period, we identified certain conditions that raised substantial doubt about our ability to continue as a going concern. These conditions included the loss of a significant customer, the resulting decline in revenues and cash, and recurring operating losses. During the period from May 2025 to September 2025, the Company raised gross proceeds of over $1.65 billion through the multiple equity financing transactions described above. Management has evaluated the Company’s ability to continue as a going concern and has concluded that the Company now has sufficient liquidity to fund anticipated cash requirements for operations and working capital purposes for at least one year from the date of issuance of these financial statements. As a result, substantial doubt about the Company’s ability to continue as a going concern no longer exists.
At March 31, 2026, we had negative working capital of approximately $33.0 million. At April 30, 2026, our cash balance was approximately $20.0 million. The Company believes this negative working capital position does not raise substantial doubt about its ability to continue as a going concern because of our significant digital asset holdings, access to our ATM facility, and our ability to liquidate digital assets as needed to meet our obligations.
At August 3, 2026, our cash balance was approximately $4,500,000. At June 30, 2026, we had negative working capital of approximately $105,655,000. The Company believes this negative working capital position does not raise substantial doubt about its ability to continue as a going concern because of our significant digital asset holdings, access to our ATM facility, and our ability to liquidate digital assets as needed to meet our obligations.
Our consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates, among other things, the realization of assets and satisfaction of liabilities in the ordinary course of business. We had an accumulated deficit and working capital of $19,637,000 and $273,000, respectively, at September 30, 2024, a net loss of $1,951,000 in Fiscal 2024 and a cash balance of approximately $2,300,000 at November 30, 2024.
In December 2024, our largest design customer notified us of its plan to discontinue their insulin patch program, on which we were working. We expect this to cause a material decrease in our revenues beginning with the second quarter of Fiscal 2025. Based on our forecasted cash flows, we believe that there is substantial doubt about our ability to continue as a going concern for a period of 12 months from the date of issuance of the consolidated financial statements.
Also in 10-K of Dec 27, 2024
The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates, among other things, the realization of assets and satisfaction of liabilities in the ordinary course of business. The Company had an accumulated deficit and working capital of $19,637,000 and $273,000, respectively, at September 30, 2024, a net loss of $1,951,000 in Fiscal 2024 and a cash balance of approximately $2,300,000 at November 30, 2024.
Also in 10-K of Dec 11, 2025
Our condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates, among other things, the realization of assets and satisfaction of liabilities in the ordinary course of business. We had an accumulated deficit and working capital of $22,647,000 and $1,211,000, respectively, at June 30, 2025, a net loss of $3,010,000 for the nine months ended June 30, 2025 and $1,951,000 in Fiscal 2024 and a cash balance of approximately $5,600,000 at August 12, 2025.
The accompanying condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates, among other things, the realization of assets and satisfaction of liabilities in the ordinary course of business. The Company had an accumulated deficit and working capital of $22,647,000 and $1,211,000, respectively, on June 30, 2025, a net loss of $3,010,000 for the nine months ended June 30, 2025 and $1,951,000 in Fiscal 2024 and a cash balance of approximately $5,600,000 at August 12, 2025.
Also in 10-Q of Feb 12, 2026, 10-Q of Aug 12, 2026, 10-Q of May 14, 2026
Management plans to initiate cost reduction measures in Fiscal 2025 to mitigate the impact of the loss of our largest customer, including a reduction in force which was communicated in December 2024. These plans will be evaluated and adjusted as deemed necessary based on the ongoing needs of the business. Management also plans to seek flexibility on payment terms for ongoing purchases from Forward China and attempt to obtain debt or equity financing to fund its ongoing operations. However, there are no current agreements or understanding with regard to the form, time or amount of such financing and there is no assurance that any financing can be obtained, that Forward China will grant any flexibility on payment terms or that our cost reduction efforts will be sufficient to enable the Company to continue as a going concern. The consolidated financial statements do not include any adjustments that might result if the Company is unable to continue as a going concern. Such adjustments could be material.
In December 2024, our largest customer notified us of its plan to discontinue their insulin patch pump program, on which we were working. We expect this to continue to cause a material decrease in our revenues relative to Fiscal 2024. In addition, due to the uncertainty in the global markets related to tariffs on imports, many customers have been slow to commit funds to projects with us. Based on our forecasted cash flows, we believe our existing cash balance and working capital may not be sufficient to meet our liquidity needs through August 2026, 12 months from the date of issuance of these condensed consolidated financial statements. These factors raise substantial doubt about our ability to continue as a going concern.
As discussed in Note 1 to the consolidated financial statements, significant judgment is exercised by the Company in determining whether there is substantial doubt the Company will continue as a going concern. As discussed in Notes 2 and 4 to the consolidated financial statements, the Company has goodwill and intangible assets related to its Kablooe, Inc. (“Kablooe”) operating unit. The Company reviews goodwill for impairment at least annually, or more often if triggering events occur, and performs an annual goodwill impairment test on September 30, the end of the fiscal year, or upon the occurrence of a triggering event. The Company reviews intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. The Company estimates the fair value of its reporting unit using a combination of the income, or discounted cash flows approach, and the market approach, which utilizes Kablooe’s forecasted operating results. Specifically, the Company’s forecasted cash flows are sensitive to significant assumptions such as forecasted revenue and operating results, all of which are affected by the expected future market or economic conditions and inflation.
Management initiated cost reduction measures to mitigate the impact of declining revenues, including two reductions in workforce in January and June of 2025. Management continues to evaluate and adjust cost reduction efforts as deemed necessary based on the ongoing needs of the business. In May 2025, the Company raised $1 million via the issuance of Series B Convertible Preferred Stock (see Note 6). From July 1 to August 12, 2025, the Company raised $2,432,000 additional capital via its equity line of credit (see Note 6) and $2,230,000 in a registered direct offering (See Note 12). Assuming the Company continues to meet its obligations under the Series B Preferred Stock Purchase Agreement (see Note 6), management plans to raise additional capital through the ELOC in the near future. We cannot provide any assurance that: (i) we will be able to continue selling under the ELOC, (ii) if we are able to sell under the ELOC, that we will be able to do so at prices that we believe are beneficial to the Company and its shareholders, or (iii) that our registration statement on Form S-1 registering shares to be sold under the ELOC in the future will be declared and remain effective. As of the filing date of this Form 10-Q, the Company has sold all shares registered by it under the ELOC. The condensed consolidated financial statements do not include any adjustments that might result if the Company is unable to continue as a going concern. Such adjustments could be material.