4. INTANGIBLE ASSETS AND GOODWILL

12 Months Ended

Sep. 30, 2019

Goodwill and Intangible Assets Disclosure [Abstract]

INTANGIBLE ASSETS & GOODWILL

NOTE 4         INTANGIBLE ASSETS and GOODWILL

Intangible Assets

The following table provides information regarding the Company’s intangible assets, which consist of the following:

	2019									2018
	Trademark			Customer Relationships			Total Intangible Assets			Trademark			Customer Relationships			Total Intangible Assets
Gross carrying amount	$	475,000		$	1,050,000		$	1,525,000		$	475,000		$	1,050,000		$	1,525,000
Less accumulated amortization		(53,703	)		(222,585	)		(276,288	)		(22,123	)		(91,695	)		(113,818	)
Net carrying amount	$	421,297		$	827,415		$	1,248,712		$	452,877		$	958,305		$	1,411,182

The Company’s intangible assets were acquired as a result of the acquisition of IPS on January 18, 2018 and are amortized over their expected useful lives. The useful lives are 15 years for the Trademark and 8 years for the Customer Relationships. The intangible assets are held under the design segment of our business. During the years ended September 30, 2019 and 2018, the Company recorded amortization of approximately $162,000 and $114,000, respectively, which is included under the general and administrative expenses in the Company’s consolidated statements of operations.

Estimated amortization expense for the Company’s intangible assets for each of the five succeeding years and thereafter at September 30, 2019 is as follows:

Years ending September 30,		Amount
	2020	$	162,917
	2021		162,917
	2022		162,917
	2023		162,917
	2024		162,917
	Thereafter		434,127
	Total	$	1,248,712

Goodwill

The Company recognized goodwill as a result of the acquisition of IPS on January 18, 2018 in the amount of approximately $2,182,000. The Company’s goodwill is held under the design segment of our business. Goodwill is not deductible for tax purposes.

On June 30, 2018, the Company adjusted down the fair value of the earn-out consideration in connection with the IPS acquisition as a result of a shortfall in earnings performance for IPS. The shortfall in the performance was also considered a triggering event with regards to the evaluation of the carrying value of our trademark and customer relationship intangible assets as well as the goodwill resulting from the acquisition of IPS. As such, the Company performed an assessment of the carrying values considering specific qualitative facts and circumstances, macroeconomic factors and utilizing the initial inputs and projections that supported the initial fair value valuations of the intangible assets acquired from IPS. Based on these assessments, the Company concluded that the trademark, customer list and goodwill were not impaired during Fiscal 2018.

The Company performed the annual goodwill impairment test for the year ended September 30, 2019 and determined no impairment.