ACQUISITION

12 Months Ended

Sep. 30, 2021

Business Combination and Asset Acquisition [Abstract]

ACQUISITION

NOTE 3        ACQUISITION

On August 17, 2020, in order to further diversify its customer base and the industries in which it sells its products, the Company and Kablooe, Inc. (a newly formed wholly-owned subsidiary of the Company) entered into an Asset Purchase Agreement (the “Agreement”) with Kablooe Design, Inc. (“Kablooe Design”) and its sole shareholder. Kablooe Design is an innovative medical and consumer design and development company whose clients include leading brands in medical devices. In consideration for the acquisition of substantially all of the assets of Kablooe Design, the Company: (i) paid $353,000 in cash; (ii) issued 300,000 shares of its common stock; (iii) agreed to pay up to an aggregate $500,000 in contingent earnout payments based on Kablooe meeting certain earnings milestones (as defined in the Agreement) over a five-year period; and (iv) agreed to make two additional $50,000 retention payments to Kablooe’s Chief Executive Officer on the fourth and fifth anniversaries of the acquisition based on his continued employment with Kablooe and the achievement of the earnings milestones (as defined in the Agreement). Additionally, in conjunction with this acquisition, the Company entered into a five-year employment agreement with Kablooe’s Chief Executive Officer and agreed to pay him a salary of $250,000 per year.

At the date of acquisition, the consideration transferred consisted of cash, shares of Forward’s common stock, and contingent consideration based on the earnings performance of Kablooe over a five-year period. The acquisition date fair value of consideration transferred consisted of the following: 

Cash at closing (1)	$	353,000
Value of Forward's common stock (2)		370,000
Fair value of contingent earnout consideration (3)		90,000
Total Purchase Consideration	$	813,000

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(1)	Cash paid by Forward at closing.
(2)	Forward issued 300,000 shares of its common stock valued at $1.23 per share, which represents the August 17, 2020 closing price of $1.37 per share, less an estimated 10% reduction in fair value related to restrictions that limit their marketability for a period of six months.
(3)	Fair value of the contingent consideration is measured using the Black-Scholes option pricing method. Contingent consideration is to be paid in cash only upon Kablooe meeting certain earnings milestones over a five-year period.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed on the acquisition date: 

Cash	$	31,000
Accounts receivable		96,000
Customer relationships (8 yr life)		340,000
Trademark (15 yr life)		110,000
Property and equipment		9,000
Other assets		9,000
Total identifiable assets acquired		595,000
Accounts payable		(22,000	)
Accrued liabilities		(135,000	)
Deferred revenue		(46,000	)
Debt		(170,000	)
Total liabilities assumed		(373,000	)
Net identifiable assets acquired		222,000
Goodwill		591,000
Net assets acquired	$	813,000

In relation to our acquisition of Kablooe, we incurred $78,000 of acquisition related costs in Fiscal 2020, including legal and valuation costs. These costs were expensed as incurred and included as a component of general and administrative expenses on the consolidated statement of operations. Kablooe’s results of operations have been included in the consolidated financial statements since the acquisition date. Our consolidated statement of operations for Fiscal 2020 includes revenue of $172,000 for Kablooe.