4. GOODWILL

9 Months Ended

Jun. 30, 2020

Goodwill and Intangible Assets Disclosure [Abstract]

GOODWILL

NOTE 4 GOODWILL

The Company has recorded intangible assets, such as goodwill, trademark, and customer relationships on the IPS reporting unit’s books and accounts for these in accordance with ASC 350, which requires an annual test of goodwill and indefinite-lived assets for impairment, unless circumstances dictate more frequent assessments.

During the three months ended March 31, 2020, the Company experienced triggering events that prompted the testing of its goodwill for impairment. Those triggering events include the reduction in fair value of the contingent earn-out consideration discussed in Note 3 and revised revenue and operational projections for IPS for the remainder of the fiscal year and future periods. Based on these factors, we concluded that it was more likely than not that the fair value of the IPS reporting unit had declined below its carrying amount. The Company then calculated the fair value of this reporting unit using Level 3 inputs, which is a combination of asset-based, income and market approaches. These estimates and assumptions include discount rate, terminal growth rate, selection of peer group companies and control premium applied as well as forecasts of revenue growth rates, gross margins, operating margins, and working capital requirements. Any changes in the judgments, estimates, or assumptions used could produce significantly different results. We concluded the reporting unit’s fair value was below its carrying value by $1,015,000 and an impairment charge was recognized for this amount in the three months ended March 31, 2020.

Below is the rollforward of goodwill for IPS, the only reporting unit with goodwill.

	IPS			Consolidated
September 30, 2019	$	2,182,427		$	2,182,427
Goodwill impairment		(1,015,000	)		(1,015,000	)
June 30, 2020	$	1,167,427		$	1,167,427