Document_and_Entity_Informatio
Document and Entity Information | 6 Months Ended | |
Mar. 31, 2014 | 1-May-14 | |
Document and Entity Information: | ' | ' |
Entity Registrant Name | 'FORWARD INDUSTRIES INC | ' |
Document Type | '10-Q | ' |
Document Period End Date | 31-Mar-14 | ' |
Amendment Flag | 'false | ' |
Entity Central Index Key | '0000038264 | ' |
Current Fiscal Year End Date | '--09-30 | ' |
Entity Common Stock, Shares Outstanding | ' | 8,195,808 |
Entity Filer Category | 'Smaller Reporting Company | ' |
Entity Current Reporting Status | 'Yes | ' |
Entity Voluntary Filers | 'No | ' |
Entity Well-known Seasoned Issuer | 'No | ' |
Document Fiscal Year Focus | '2014 | ' |
Document Fiscal Period Focus | 'Q2 | ' |
CONSOLIDATED_BALANCE_SHEETS_Un
CONSOLIDATED BALANCE SHEETS (Unaudited) (USD $) | Mar. 31, 2014 | Sep. 30, 2013 |
Current assets: | ' | ' |
Cash and cash equivalents | $6,125,422 | $6,616,995 |
Marketable securities | 1,226,127 | 1,080,747 |
Accounts receivable, net | 4,567,664 | 4,382,406 |
Inventories, net | 2,112,229 | 2,050,710 |
Prepaid expenses and other current assets | 438,039 | 390,153 |
Assets of discontinued operations | 280,034 | 339,382 |
Total current assets | 14,749,515 | 14,860,393 |
Property and equipment, net | 111,182 | 129,987 |
Other assets | 70,071 | 40,493 |
Total Assets | 14,930,768 | 15,030,873 |
Current liabilities: | ' | ' |
Accounts payable | 1,113,845 | 3,433,408 |
Due to Forward China | 2,046,982 | 107,785 |
Accrued expenses and other current liabilities | 829,120 | 1,270,457 |
Liabilities of discontinued operations | 6,261 | 25,438 |
Total current liabilities | 3,996,208 | 4,837,088 |
Other liabilities | 82,811 | 82,811 |
Total Liabilities | 4,079,019 | 4,919,899 |
6% Senior Convertible Preferred Stock, par value $0.01 per share; 1,500,000 shares authorized; 648,846 shares issued and outstanding (aggregate liquidation value of $1,275,000) | 774,990 | 716,664 |
Commitments and contingencies | 0 | 0 |
Shareholders' equity: | ' | ' |
Preferred stock, par value $0.01 per share; 4,000,000 shares authorized; no undesignated shares issued and outstanding | 0 | 0 |
Series A Participating Preferred stock, par value $0.01; 100,000 authorized; no shares issued and outstanding | 0 | 0 |
Common stock, par value $0.01 per share; 40,000,000 shares authorized, 8,902,218 and 8,819,095 shares issued; and 8,195,808 and 8,112,685 shares outstanding, respectively | 89,022 | 88,191 |
Additional paid-in capital | 18,692,449 | 17,965,327 |
Treasury stock, 706,410 shares at cost | -1,260,057 | -1,260,057 |
Accumulated deficit | -7,424,758 | -7,378,700 |
Accumulated other comprehensive loss | -19,897 | -20,451 |
Total shareholders' equity | 10,076,759 | 9,394,310 |
Total liabilities and shareholders' equity | $14,930,768 | $15,030,873 |
CONSOLIDATED_BALANCE_SHEETS_Pa
CONSOLIDATED BALANCE SHEETS Parentheticals (USD $) | Mar. 31, 2014 | Sep. 30, 2013 |
Convertible Preferred Stock | ' | ' |
Preferred Stock, Dividend Rate, Percentage | 6.00% | ' |
Temporary equity, par or stated value per share (in dollars per share) | $0.01 | ' |
Temporary equity, liquidation preference (in dollars) | $1,275,000 | ' |
Temporary equity, shares authorized (in shares) | 1,500,000 | ' |
Temporary equity, shares issued (in shares) | 648,846 | ' |
Temporary equity, shares outstanding (in shares) | 648,846 | ' |
Preferred stock, par value (in dollars per share) | $0.01 | $0.01 |
Preferred stock, shares authorized (in shares) | 4,000,000 | 4,000,000 |
Undesignated shares | 2,400,000 | 2,400,000 |
Series A Participating Preferred Stock authorized with par value of $0.01 per share | 100,000 | ' |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par or stated value per share (in dollars per share) | $0.01 | $0.01 |
Common stock, shares authorized (in shares) | 40,000,000 | 40,000,000 |
Common stock, shares issued (in shares) | 8,902,218 | 8,819,095 |
Common stock, shares outstanding (in shares) | 8,195,808 | 8,112,685 |
Treasury Stock, shares (in shares) | 706,410 | 706,410 |
CONSOLIDATED_STATEMENTS_OF_OPE
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME (UNAUDITED) (USD $) | 3 Months Ended | 6 Months Ended | ||
Mar. 31, 2014 | Mar. 31, 2013 | Mar. 31, 2014 | Mar. 31, 2013 | |
Revenues: | ' | ' | ' | ' |
Net sales | $6,699,881 | $7,786,726 | $15,115,358 | $14,760,096 |
Cost of goods sold | 5,296,250 | 6,298,968 | 11,866,527 | 11,802,308 |
Gross profit | 1,403,631 | 1,487,758 | 3,248,831 | 2,957,788 |
Operating expenses: | ' | ' | ' | ' |
Sales and marketing | 725,240 | 510,748 | 1,341,947 | 958,572 |
General and administrative | 811,769 | 770,772 | 1,668,260 | 1,844,810 |
Total operating expenses | 1,537,009 | 1,281,520 | 3,010,207 | 2,803,382 |
(Loss)Income from operations | -133,378 | 206,238 | 238,624 | 154,406 |
Other expense (income): | ' | ' | ' | ' |
Interest (income) expense | -9,212 | 1,645 | -17,730 | 256 |
(Gain)Loss on marketable securities, net | -41,407 | -85,846 | 39,433 | -328,217 |
Other expense(income), net | 199,422 | 3,514 | 152,259 | 14,182 |
Total other expense (income), net | 148,803 | -80,687 | 173,962 | -313,779 |
(Loss)income from continuing operations before income tax expense | -282,181 | 286,925 | 64,662 | 468,185 |
Income tax expense | 438 | 432 | 463 | 507 |
Income (loss) from continuing operations | -282,619 | 286,493 | 64,199 | 467,678 |
Loss from discontinued operations, net of tax expense 0 and 2055 and 0 and 2975, respectively | -18,395 | -138,419 | -13,786 | -180,839 |
Net income (loss)' | -301,014 | 148,074 | 50,413 | 286,839 |
Preferred stock dividends, accretion | -47,572 | 0 | -96,471 | 0 |
Net (loss) income applicable to common equity | -348,586 | 148,074 | -46,058 | 286,839 |
Net (loss) income | -301,014 | 148,074 | 50,413 | 286,839 |
Other comprehensive income (loss): | ' | ' | ' | ' |
Change in unrealized gains on marketable securities | 0 | 0 | 0 | 23,744 |
Translation adjustments | 554 | -14,816 | 1,033 | -9,201 |
Total other comprehensive income (loss) | 554 | -14,816 | 1,033 | 14,543 |
Comprehensive (loss) income | ($300,460) | $133,258 | $51,446 | $301,382 |
Net (loss) income per basic and diluted common share: | ' | ' | ' | ' |
(Loss )income from continuing operations | ($0.04) | $0.04 | ($0.01) | $0.06 |
Loss from discontinued operations | $0 | ($0.02) | $0 | ($0.02) |
Net loss income per share | ($0.04) | $0.02 | ($0.01) | $0.04 |
Weighted average number of common and common equivalent shares outstanding | ' | ' | ' | ' |
Basic | 8,195,808 | 8,112,685 | 8,177,996 | 8,109,759 |
Diluted | 8,195,808 | 8,127,071 | 8,177,996 | 8,124,145 |
CONSOLIDATED_STATEMENTS_OF_OPE1
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)(UNAUDITED) [Parenthetical] (USD $) | 3 Months Ended | 6 Months Ended | ||
Mar. 31, 2014 | Mar. 31, 2013 | Mar. 31, 2014 | Mar. 31, 2013 | |
COMPREHENSIVE INCOME (LOSS) | ' | ' | ' | ' |
Discontinued operations, net of tax expense of | $0 | $2,055 | $0 | $2,975 |
CONSOLIDATED_STATEMENTS_OF_CAS
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (USD $) | 6 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
Cash flows operating activities: | ' | ' |
Net income (loss). | $50,413 | $286,839 |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ' | ' |
Change in fair value of warrant liability. | 136,258 | 0 |
Share-based compensation | 128,024 | 226,490 |
Realized and unrealized loss (gain) on marketable securities | 39,432 | -328,217 |
Depreciation and amortization. | 34,011 | 36,094 |
Bad debt expense | 0 | 103,710 |
Deferred rent.. | -16,581 | 0 |
Changes in operating assets and liabilities: | ' | ' |
Accounts receivable. | -185,257 | 2,714,549 |
Inventories. | -61,519 | 1,102,098 |
Prepaid expenses and other current assets. | 11,461 | 44,658 |
Accounts payable. | -398,989 | -3,171,903 |
Accrued expenses and other current liabilities. | 9,337 | -1,219,221 |
Net cash provided by (used in) operating activities | -253,410 | -204,903 |
Investing activities: | ' | ' |
Purchases of marketable securities | -5,398,477 | -38,496,126 |
Proceeds from sales of marketable securities | 5,213,665 | 38,146,602 |
Purchases of property and equipment | -15,206 | -29,510 |
Net cash (used in) provided by investing activities | -200,018 | -379,034 |
Financing activities: | ' | ' |
Dividends paid on senior convertible preferred stock | -38,145 | 0 |
Net cash provided by financing activities | -38,145 | 0 |
Net increase (decrease) in cash and cash equivalents | -491,573 | -583,937 |
Cash and cash equivalents at beginning of period | 6,616,995 | 4,608,246 |
Cash and cash equivalents at end of period | 6,125,422 | 4,024,309 |
Supplemental Disclosures of Cash Flow Information: | ' | ' |
cash paid for Income taxes | 0 | 507 |
Supplemental Disclosure of Non-Cash Financing Activities: | ' | ' |
Preferred stock accretion, | 58,326 | 0 |
Reclassification of warrant liability | $629,381 | $0 |
OVERVIEW
OVERVIEW | 6 Months Ended |
Mar. 31, 2014 | |
OVERVIEW | ' |
OVERVIEW | ' |
NOTE 1 OVERVIEW | |
Forward Industries, Inc. (“Forward” or the “Company”) was incorporated under the laws of the State of New York and began operations in 1961 as a manufacturer and distributor of specialty and promotional products. The Company designs, markets, and distributes carry and protective solutions, primarily for hand held electronic devices. The Company’s principal customer market is original equipment manufacturers, or “OEMs” (or the contract manufacturing firms of these OEM customers), that either package its products as accessories “in box” together with their branded product offerings, or sell them through their retail distribution channels. The Company’s OEM products include carrying cases and other accessories for medical monitoring and diagnostic kits and a variety of other portable electronic and non-electronic products (such as sporting & recreational products, bar code scanners, smartphones, GPS location devices, tablets, and firearms). The Company’s OEM customers are located in the Americas, Europe, and the APAC Region. The Company does not manufacture any of its OEM products and sources substantially all of its OEM products from independent suppliers in China (refer to Note 10 – “Buying Agency and Supply Agreement”). | |
On June 21, 2012, the Company determined to exit its global Retail business and focus solely on growing its OEM business. The decision to eliminate the Retail division was primarily driven by the longer than estimated path to bring it to profitability and the strong top line growth and cost rationalizations in the OEM business. The Retail business is presented as discontinued operations. | |
In the opinion of management, the accompanying consolidated financial statements presented in this Quarterly Report on Form 10-Q reflect all normal recurring adjustments necessary to present fairly the financial position and results of operations and cash flows for the interim periods presented herein, but are not necessarily indicative of the results of operations for the fiscal year ending September 30, 2014. These consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements included in its Annual Report on Form 10-K for the fiscal year ended September 30, 2013, and with the disclosures and risk factors presented herein and therein, respectively. The September 30, 2013 consolidated balance sheet has been derived from the audited consolidated financial statements. |
ACCOUNTING_POLICIES
ACCOUNTING POLICIES | 6 Months Ended |
Mar. 31, 2014 | |
ACCOUNTING POLICIES | ' |
ACCOUNTING POLICIES | ' |
NOTE 2 ACCOUNTING POLICIES | |
Accounting Estimates | |
The preparation of the Company’s consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates and assumptions. | |
Basis of Presentation | |
The accompanying consolidated financial statements include the accounts of Forward and its wholly owned subsidiaries (Forward US, Forward Switzerland, and Forward UK). All significant intercompany transactions and balances have been eliminated in consolidation. | |
Reclassifications | |
Certain prior period amounts have been reclassified to conform to the current period presentation. | |
6% Senior Convertible Preferred Stock | |
Warrants | |
In accordance with ASC 815-40, the Company’s warrants were previously classified as a liability, at fair value, as a result of a related registration rights agreement that contains certain requirements for registering the underlying common shares, but has no provision for penalties upon the failure to register. At each balance sheet date, this liability’s fair value was re-measured and adjusted with the corresponding change in fair value recorded in the consolidated statement of operations and comprehensive (loss) income. As the Company has met the requirements for registering the underlying common shares, the fair value of the warrants has been reclassified to additional paid-in capital in the accompanying consolidated balance sheet at March 31, 2014. The liability associated with the warrants was previously included in “Accrued expenses and other current liabilities” in the consolidated balance sheet at September 30, 2013. |
DISCONTINUED_OPERATIONS
DISCONTINUED OPERATIONS | 6 Months Ended |
Mar. 31, 2014 | |
DISCONTINUED OPERATIONS | ' |
DISCONTINUED OPERATIONS | ' |
NOTE 3 DISCONTINUED OPERATIONS | |
On June 21, 2012, the Company determined to exit its global Retail business and focus solely on growing its OEM business. The decision to eliminate the Retail division was primarily driven by the longer than estimated path to bring it to profitability and the strong net sales growth and cost rationalizations in the OEM business. The Company has substantially completed its exit of its Retail business as of March 31, 2013. The Company has not had, and does not expect to have, any continuing involvement in the Retail business after this date. Accordingly, the results of operations for the Retail division have been recorded as discontinued operations in the accompanying consolidated financial statements for the fiscal periods presented. Net loss from discontinued operations for the three-month periods ended March 31, 2014 and 2013 was approximately $18,400 and $138,400, respectively. Net loss from discontinued operations for the six-month periods ended March 31, 2014 and 2013 was approximately $13,800 and $180,800, respectively. | |
Assets of discontinued operations as of March 31, 2014, include approximately $280,000 relating to expected payments pursuant to a Settlement Agreement and General Release (“Settlement Agreement”) executed on July 3, 2013 between the Company and G-Form LLC (“G-Form”) in exchange for certain retail inventories, the Company’s cooperation with certain administrative matters, and a mutual general release. |
MARKETABLE_SECURITIES
MARKETABLE SECURITIES | 6 Months Ended | |||||||
Mar. 31, 2014 | ||||||||
MARKETABLE SECURITIES | ' | |||||||
MARKETABLE SECURITIES | ' | |||||||
NOTE 4 MARKETABLE SECURITIES | ||||||||
The Company classifies its marketable securities as either (i) held-to-maturity, (ii) trading, or (iii) available-for-sale. Effective October 1, 2012, the Company changed its classification of marketable equity securities and corporate bonds from available-for-sale to trading. As a result of this reclassification, a gross gain of $4,764 and a gross loss of $(28,508) was reclassed out of accumulated other comprehensive income (loss) and charged to earnings using a specific identification basis. Equity securities are carried at fair value, as determined by quoted market prices, which is a Level 1 input, as established by the fair value hierarchy under ASC 820. Corporate bonds are carried at amortized cost, which approximates market value. The corresponding unrealized holding gains or losses are recognized in earnings. The Company’s marketable securities are summarized in the table below. | ||||||||
March 31, | September 30, | |||||||
2014 | 2013 | |||||||
Trading: | ||||||||
Cost.................................................. | $1,319,094 | $954,053 | ||||||
Unrealized Gains............................ | 22,940 | 174,940 | ||||||
Unrealized Losses......................... | -115,907 | -48,246 | ||||||
Total Fair Value...................... | $1,226,127 | $1,080,747 | ||||||
The net gain on marketable securities for the three-month periods ended March 31, 2014 and 2013 was approximately $41,000 and $86,000, respectively. The net (loss) gain on marketable securities for the six-month periods ended March 31, 2014 and 2013 was approximately $(39,000) and $328,000, respectively. The net (loss) gain on marketable securities is included in the accompanying consolidated statements of operations and comprehensive (loss) income. | ||||||||
The following table presents the Company’s fair value hierarchy for assets, consisting of marketable securities, measured at fair value on a recurring basis at March 31, 2014 and September 30, 2013: | ||||||||
Level 1 | Level 2 | Level 3 | Total | |||||
Equity securities..................... | $1,226,127 | $-- | $-- | $1,226,127 | ||||
Total assets at fair value at March 31, 2014................... | $1,226,127 | $-- | $-- | $1,226,127 | ||||
Equity securities..................... | $1,080,747 | $-- | $-- | $1,080,747 | ||||
Total assets at fair value at September 30, 2013........... | $1,080,747 | $-- | $-- | $1,080,747 |
SHAREHOLDERS_EQUITY
SHAREHOLDER'S EQUITY | 6 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
SHAREHOLDER'S EQUITY | ' | ||||||||
SHAREHOLDER'S EQUITY | ' | ||||||||
NOTE 5 SHAREHOLDERS’ EQUITY | |||||||||
“Blank Check” Preferred Stock | |||||||||
The Company is authorized to issue up to 4,000,000 shares of “blank check” preferred stock. The Board of Directors (the “Board”) has the authority and discretion, without shareholder approval, to issue preferred stock in one or more series for any consideration it deems appropriate, and to fix the relative rights and preferences thereof including their redemption, dividend and conversion rights. Of these shares, 1,500,000 shares have been authorized as the 6% Senior Convertible Preferred Stock and 100,000 shares have been authorized as the Series A Participating Preferred Stock. | |||||||||
6% Senior Convertible Preferred Stock with Warrants | |||||||||
On June 28, 2013, the Company completed the sale of (i) 381,674 shares of its newly authorized 6% Senior Convertible Preferred Stock, par value $0.01 per share (the “Convertible Preferred Stock”) and (ii) warrants to purchase a total of 381,674 shares of the Company’s common stock (“Common Stock”) (the “Warrants” and together with the Convertible Preferred Stock, the “Securities”) to accredited investors in a private placement pursuant to the terms of securities purchase agreements, dated June 28, 2013, by and between the Company and each Investor. The June 28, 2013 private placement included purchases of Securities by two directors of the Company that, in the aggregate, purchased 114,502 shares of Convertible Preferred Stock and Warrants. | |||||||||
On August 7, 2013, the Company completed the sale of (i) an additional 216,282 shares of its Convertible Preferred Stock and (ii) Warrants to purchase a total of 216,282 shares of the Company’s Common Stock to accredited investors in a private placement pursuant to the terms of a securities purchase agreement, dated August 7, 2013, by and between the Company and such accredited investors. | |||||||||
On August 14, 2013, the Company completed the sale of (i) an additional 50,890 shares of its Convertible Preferred Stock and (ii) Warrants to purchase a total of 50,890 shares of the Company’s Common Stock to accredited investors in a private placement pursuant to the terms of a securities purchase agreement, dated August 14, 2013, by and between the Company and such accredited investors. | |||||||||
The total aggregate purchase price paid by accredited investors via the June 28, 2013, August 7, 2013 and August 14, 2013 private placements (together, the “Investors”) for each share of Convertible Preferred Stock and Warrant was $1.965. The June 28, 2013, August 7, 2013 and August 14, 2013 private placements (together, the “Private Placements”) resulted in gross proceeds of approximately $1,275,000 to the Company. The Company has sold a total of 648,846 shares of Convertible Preferred Stock and Warrants to purchase 648,846 shares of Common Stock through these Private Placements. The Company may sell additional shares of Convertible Preferred Stock, together with related Warrants, in one or more subsequent closings. | |||||||||
The total purchase price paid by the Investors for each share of Convertible Preferred Stock and Warrant purchased in the Closing was $1.965, consisting of (i) fair values ranging from $1.105 to $1.145 in respect of the Convertible Preferred Stock, plus (ii) fair values ranging from $0.82 to $0.86 in respect of the Warrant. The Warrants have an initial exercise price of $1.84 per share, subject to adjustment upon the occurrence of certain customary events. The Warrants are exercisable at any time on or after January 1, 2014 (the “Initial Exercise Date”) and terminate on the 10-year anniversary of the Initial Exercise Date. Each share of Convertible Preferred Stock is convertible into one share of Common Stock at an initial conversion price of $1.84 per share, subject to adjustment upon the occurrence of certain customary events (the “Conversion Price”). At the initial Conversion Price, the total of 648,846 shares of Convertible Preferred Stock issued in the Private Placement as of the date of the Closing are convertible into an aggregate of 692,919 shares of Common Stock. The proceeds from these Private Placements of $1,275,000 have been allocated to the Convertible Preferred Stock and the Warrants based upon their fair values assigned (net of issuance costs of approximately $69,000) of approximately $693,000 and $513,000, respectively, as of the dates of issuance. | |||||||||
As of March 31, 2014 and September 30, 2013, the carrying value of the Convertible Preferred Stock was approximately $775,000 and $717,000, respectively, and is included on the Company’s consolidated balance sheets as temporary equity. The change in the carrying value, or accretion, of the Convertible Preferred Stock from the issuance dates to March 31, 2014 is classified as a preferred stock dividend and is included as a component of “Net (loss) income applicable to common equity” in calculating loss per share, which was approximately $29,000 and $58,000 for the three and six- month periods ended March 31, 2014. As a result of the Convertible Preferred Stock containing a beneficial conversion feature, whereby the accounting conversion price is lower than the fair value of the common stock, the Company recorded a preferred stock dividend in the amount of approximately $508,000 for the fiscal year ended September 30, 2013. This amount has been recorded as an increase to additional paid-in capital. | |||||||||
Dividends on the Convertible Preferred Stock are payable, on a cumulative basis, in cash, at the rate per annum of 6% of the Liquidation Preference (as defined below) and are payable quarterly, in arrears, on each March 31, June 30, September 30 and March 31, which commenced on September 30, 2013. The Company is prohibited from paying any dividend with respect to shares of Common Stock or other junior securities in any quarter unless full dividends are paid on the Convertible Preferred Stock in such quarter. Dividends on the Convertible Preferred Stock totaled approximately $19,000 and $38,000 for the three and six-month periods ended March 31, 2014. These dividends, in addition to the accretion, totaled approximately $48,000 and $96,000 for the three and six-month periods ended March 31, 2014. | |||||||||
In the event of a liquidation (or deemed liquidation, as described below) of the Company, the holders of the Convertible Preferred Stock shall receive in preference to the holders of Common Stock and any junior securities of the Company an amount (the “Liquidation Preference”) equal to (i) $1.965 (the “Original Issue Price”) per each outstanding share of Convertible Preferred Stock (subject to adjustment upon the occurrence of certain customary events), plus (ii) any accrued but unpaid dividends. A Change of Control of the Company (as defined in the Certificate of Amendment) will be treated as a liquidation at the option of the holders of a majority of the Convertible Preferred Stock; provided that the amount paid to holders of Convertible Preferred Stock in such event will be equal to 101% of the Original Issue Price, plus accrued but unpaid dividends. | |||||||||
Each share of Convertible Preferred Stock is convertible at any time, at the option of the holder, into shares of Common Stock at the then applicable Conversion Price. In addition, upon the consent of 80% of the holders of the Convertible Preferred Stock, the Convertible Preferred Stock automatically will be converted to shares of Common Stock at the then-applicable Conversion Price. | |||||||||
On or after June 28, 2018, the Company may, at its option and upon at least 30 days prior written notice to the holders of the Convertible Preferred Stock, redeem all or any portion of the outstanding Convertible Preferred Stock in cash at a redemption price equal to the full Liquidation Preference as of the redemption date. In addition, at any time on or after June 28, 2023, each holder of the Convertible Preferred Stock will have the right to require the Company to redeem (provided that funds are legally available to do so) all or any portion of such holder’s outstanding Convertible Preferred Stock at a redemption price equal to the full Liquidation Preference of such shares of Convertible Preferred Stock as of the redemption date. | |||||||||
The Convertible Preferred Stock will vote together with the Common Stock on an as-converted basis on all matters except as required by law. In addition, for so long as 50% of the shares of Convertible Preferred Stock remains outstanding, without the approval of the holders of a majority of the Convertible Preferred Stock, voting as a separate class, the Company may not: (i) authorize or issue any equity security senior to the Convertible Preferred Stock; (ii) declare or pay any dividends on the Common Stock or any series of preferred stock that ranks junior to the Convertible Preferred Stock; (iii) increase or decrease the total number of authorized shares of Convertible Preferred Stock; (iv) alter or change the rights, preferences or privileges of the Convertible Preferred Stock so as to affect materially and adversely the Convertible Preferred Stock; or (v) increase the authorized capitalization of the Company, or otherwise amend its certificate of incorporation or bylaws in a manner which adversely affects the rights or preferences of the Convertible Preferred Stock. | |||||||||
During the quarter ended March 31, 2014, the Company met the requirements of the registration rights agreement for registering the underlying common shares, therefore the then fair value of the warrants of $600,000 (net of issuance costs) was reclassified to additional paid-in capital in the accompanying consolidated balance sheet at March 31, 2014. As of September 30, 2013, the liability associated with the Warrants was approximately $464,000 (net of issuance costs) and was included in “Accrued expenses and other current liabilities” in the Company’s consolidated balance sheet. The value of the warrants have been reclassed to additional paid-in capital as of March 31, 2014. | |||||||||
The fair value of the Warrants was determined using a Black-Scholes closed-form call option pricing model, which is considered a level 3 instrument under the fair value hierarchy. The fair values of the Warrants were estimated using the following assumptions as of March 31, 2014 (the date of the reclassification) and September 30, 2013: | |||||||||
31-Mar-14 | 30-Sep-13 | ||||||||
Risk-free interest rate | 2.70% | 2.60% | |||||||
Dividend yield | -- | -- | |||||||
Volatility | 32.90% | 30.00% | |||||||
Expected term (in years) | 9.75 | 10.3 | |||||||
The change in the fair value of the convertible preferred stock warrant liability for the six months ended March 31, 2014 is summarized below: | |||||||||
Balance at September 30, 2013 | $493,123 | ||||||||
Increase in fair value | 136,258 | ||||||||
Reclassification of fair value of warrants | -629,381 | ||||||||
Balance at March 31, 2014 | $0 | ||||||||
The following table presents the Company's fair value hierarchy for liabilities, consisting of a warrant liability, measured at fair value, prior to issuance costs, at September 30, 2013 (as noted above the fair value of the warrants liability as of March 31, 2014 was reclassified to additional paid-in capital). | |||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||
Warranty liability at September 30, 2013 | $-- | $-- | $493,123 | $493,123 | |||||
Anti-takeover Provisions | |||||||||
Shareholder Rights Plan | |||||||||
On April 26, 2013, the Board adopted a Shareholder Rights Plan, as set forth in the Rights Agreement dated as of April 26, 2013 (the “Rights Agreement”), between the Company and American Stock Transfer & Trust Company, LLC, as Rights Agent. Pursuant to the Rights Agreement, the Board declared a dividend distribution of one Right (a “Right”) for each outstanding share of Company Common Stock, par value $0.01 per share (the “Common Stock”) to shareholders of record at the close of business on May 6, 2013, which date will be the record date, and for each share of Common Stock issued (including shares distributed from treasury) by the Company thereafter and prior to the Distribution Date (as described below and defined in the Rights Agreement). Each Right entitles the registered holder, subject to the terms of the Rights Agreement, to purchase from the Company one one-thousandth of a share of Series A Participating Preferred Stock, $0.01 par value per share (the “Series A Preferred Stock”), at an exercise price of $4.00 per one one-thousandth of a share of Series A Preferred Stock, subject to adjustment. | |||||||||
Initially, no separate Rights Certificates will be distributed and instead the Rights will attach to all certificates representing shares of outstanding Common Stock. Subject to certain exceptions specified in the Rights Agreement, the Rights will separate from the Common Stock and become exercisable on the distribution date (the “Distribution Date”), which will occur on the earlier of (i) the 10th business day (or such later date as may be determined by the Board) after the public announcement that an Acquiring Person (as defined in the Rights Agreement) has acquired beneficial ownership of 20% or more of the Common Stock then outstanding or (ii) the 10th business day (or such later date as may be determined by the Board) after a person or group announces a tender or exchange offer that would result in a person or group of affiliated and associated persons beneficially owning 20% or more of the Common Stock then outstanding. | |||||||||
“Blank Check” Preferred Stock | |||||||||
As discussed above, the Company is authorized to issue up to 4,000,000 shares of “blank check” preferred stock. The Board has the authority and discretion, without shareholder approval, to issue preferred stock in one or more series for any consideration it deems appropriate, and to fix the relative rights and preferences thereof including their redemption, dividend and conversion rights. Of these shares, 1,500,000 shares have been authorized as the 6% Senior Convertible Preferred Stock and 100,000 shares have been authorized as the Series A Participating Preferred Stock. | |||||||||
Stock Repurchase | |||||||||
In September 2002 and January 2004, the Board authorized the repurchase of up to an aggregate of 486,200 shares of outstanding common stock. Under those authorizations, as of March 31, 2014, the Company had repurchased an aggregate of 172,603 shares at a cost of approximately $403,000, but none during the three and six-month periods ended March 31, 2014 and 2013. | |||||||||
Changes in Shareholders’ Equity | |||||||||
Changes in shareholders’ equity for the six-month period ended March 31, 2014 are summarized below: | |||||||||
Common Stock | Treasury Stock | ||||||||
Total | Number of Shares | Par Value | Additional Paid-in Capital | Retained Earnings (Accumulated Deficit) | Number of Shares | Amount | Accumulated Other Comprehensive Income (Loss) | ||
Balance at September 30, 2013 | $9,394,310 | 8,819,095 | $88,191 | $17,965,327 | ($7,378,700) | 706,410 | ($1,260,057) | ($20,451) | |
Share-based compensation | 128,024 | 83,123 | 831 | 127,193 | -- | -- | -- | -- | |
Preferred stock accretion and dividends | -96,471 | -- | -- | -- | -96,471 | -- | -- | -- | |
Foreign currency translation | 554 | -- | -- | -- | -- | -- | -- | 554 | |
Reclassification of Warrant liability | 599,929 | -- | -- | 599,929 | -- | -- | -- | -- | |
Net income | 50,413 | -- | -- | -- | 50,413 | -- | -- | -- | |
Balance at March 31, 2014 | $10,076,759 | 8,902,218 | $89,022 | $18,692,449 | ($7,424,758) | 706,410 | ($1,260,057) | ($19,897) | |
SHAREBASED_COMPNESATION
SHARE-BASED COMPNESATION | 6 Months Ended | |||||||
Mar. 31, 2014 | ||||||||
Compensation Related Costs, Share Based Payments: | ' | |||||||
SHARE-BASED COMPNESATION | ' | |||||||
NOTE 6 SHARE-BASED COMPENSATION | ||||||||
2011 Long Term Incentive Plan | ||||||||
In March 2011, shareholders of the Company approved the 2011 Long Term Incentive Plan (the “2011 Plan”), which authorizes 850,000 shares of common stock for grants of various types of equity awards to officers, directors, employees, consultants, and independent contractors. Under the 2011 Plan, as of March 31, 2014, the Compensation Committee of the Company’s Board of Directors (the “Compensation Committee”) has approved grants of restricted common stock and stock options to purchase an aggregate of 1,327,500 shares of common stock to certain of the Company’s executive officers and employees (1,032,500 shares), a consultant (160,000 shares), non-employee directors (130,000 shares), and to a non-employee executive officer (5,000 shares). Of these awards, as of March 31, 2014, 585,647 shares were forfeited and reverted to, and are eligible for re-grant under, the 2011 Plan. The total shares of common stock available for grants of equity awards under the 2011 Plan was 108,147 as of March 31, 2014. The prices at which equity awards may be granted and the exercise prices of stock options granted may not be less than the fair market value of the common stock as quoted at the close on the Nasdaq Stock Market on the grant date. The Compensation Committee administers the 2011 Plan. Options generally expire ten years after the date of grant and vest one year from the date of grant for non-employee directors, and, in the case of initial grants to officers and employees, vest over five years with 50%, 25% and 25% vesting on the third, fourth, and fifth anniversary of the grant date, respectively. Options granted under a consulting agreement in November 2011 expire three years after the grant date and vested equally over the term of the consulting agreement, which concluded February 29, 2012. | ||||||||
2007 Equity Incentive Plan | ||||||||
The 2007 Equity Incentive Plan (the “2007 Plan”), which was approved by shareholders of the Company in May 2007, and, as amended in February 2010, authorizes an aggregate of 800,000 shares of common stock for grants of restricted common stock and stock options to officers, employees, and non-employee directors of the Company. Under the 2007 Plan, the Compensation Committee approved awards of restricted common stock and stock options of 1,092,375, in the aggregate, to certain officers, employees and non-employee directors. Of these awards, as of March 31, 2014, 307,390 shares were forfeited and reverted to, and are eligible for re-grant under, the 2007 Plan. The total shares of common stock available for grants of equity awards under the 2007 Plan was 15,015 as of March 31, 2014. The prices at which restricted common stock may be granted and the exercise price of stock options granted may not be less than the fair market value of the common stock as quoted at the close on the Nasdaq Stock Market on the grant date. The Compensation Committee administers the 2007 Plan. Options generally expire ten years after the date of grant, and in the case of non-employee directors, vest on the first anniversary of the date of grant. In the case of officers and employees, options either vest in equal amounts over three to five years or vest over five years with 50%, 25% and 25% vesting on the third, fourth, and fifth anniversary of the grant date, respectively. Restricted stock grants generally vest in equal proportions over three years. | ||||||||
1996 Stock Incentive Plan | ||||||||
The Company’s 1996 Stock Incentive Plan (the “1996 Plan”) expired in accordance with its terms in November 2006. The exercise price of incentive options granted under the 1996 Plan to officers, employees, and non-employee directors of the Company was required by 1996 Plan provisions to be equal at least to the fair market value of the common stock at the date of grant. In general, options under this plan expire ten years after the date of grant and generally vest in equal proportions over three years. Unexercised options granted prior to 1996 Plan expiration remain outstanding until the earlier of exercise or option expiration. Under the 1996 Plan, 30,000 fully vested common stock options are the only awards that remain outstanding and unexercised, all at exercise prices higher than the fair market value of the common stock at March 31, 2014. | ||||||||
Stock Option Awards | ||||||||
Under the 2011 and 2007 Plans, the Compensation Committee has approved awards of stock options to purchase an aggregate of 1,770,000 shares of common stock to the Company’s current and certain former non-employee directors, to certain key employees, to current and certain former Company officers, and to a consultant, of which awards covering 255,000 shares from the 2007 Plan and 559,000 shares from the 2011 Plan of common stock were forfeited, with such shares reverting to the respective plans and eligible for grant. The exercise prices of the awards granted was, in each case equal, to the closing market value of the Company’s common stock on the Nasdaq Stock Market on the various grant dates. | ||||||||
The Company recognized compensation expense of approximately $35,000 and $92,000 in continuing operations for stock option awards in its consolidated statements of operations and comprehensive (loss) income for the three-month periods ended March 31, 2014 and 2013, respectively, and $66,000 and $128,000 for the six-month periods ended March 31, 2014 and 2013, respectively. | ||||||||
As of March 31, 2014, there was approximately $88,000 of total unrecognized compensation cost related to 266,084 shares of unvested stock option awards granted under the 2007 and 2011 Plans, which is expected to be recognized over the remainder of the weighted average vesting period (extending to August 2016). | ||||||||
Shares | Weighted AverageExercise Price | Weighted AverageRemaining Contractual Term (Years) | ||||||
Aggregate Intrinsic Value | ||||||||
Outstanding at September 30, 2013 | 897,000 | $2.98 | 6.1 | $ -- | ||||
Granted.............................................. | 32,500 | 1.59 | 9.7 | |||||
Exercised........................................... | -- | -- | ||||||
Forfeited........................................... | -28,500 | 3.61 | ||||||
Expired.............................................. | -- | -- | ||||||
Outstanding at March 31, 2014 | 901,000 | $2.91 | 5.7 | $59,025 | ||||
Options expected to vest at March 31, 2014.............................. | 237,251 | $3.66 | 8.1 | $12,025 | ||||
Options vested and exercisable at March 31, 2014.............................. | 634,916 | $2.97 | 4.7 | $47,000 | ||||
During the three and six-month period ended March 31, 2014, the Company granted 32,500 stock options at a weighted average grant date fair value of $0.90. During the three and six-month period ended March 31, 2013, the Company granted 280,000 stock options at a weighted average grant date fair value of $0.91. | ||||||||
The fair value of each stock option on the date of grant was estimated using the Black-Scholes option-pricing formula applying the following assumptions for each respective period: | ||||||||
For the Three and Six-Month Periods Ended March 31, | ||||||||
2014 | 2013 | |||||||
Expected term (in years).... | 5 | 5 | ||||||
Risk-free interest rate.......... | 1.50% | 0.6% – 0.7% | ||||||
Expected volatility.............. | 67.60% | 70.0% - 70.4% | ||||||
Expected dividend yield..... | 0% | 0% | ||||||
Forfeiture rate...................... | 10% | 5% | ||||||
The expected term represents the period over which the stock option awards are expected to be outstanding. The Company based the risk-free interest rate used in its assumptions on the implied yield currently available on U.S. Treasury zero-coupon issues with a remaining term equivalent to the award’s expected term. The volatility factor used in the Company’s assumptions is based on the historical price of its stock over the most recent period commensurate with the expected term of the award. The Company historically has not paid any dividends on its common stock and had no intention to do so on the date the share-based awards were granted. Accordingly, the Company used a dividend yield of zero in its assumptions. The Company estimates the expected term, volatility and forfeitures of share-based awards based upon historical data. | ||||||||
Restricted Stock Awards | ||||||||
Under the 2011 Plan and 2007 Plan, the Compensation Committee has approved and granted awards of 649,875 shares of restricted stock, in the aggregate, to certain key employees and current non-employee directors. Of these awards, 283,928 shares have vested, 40,671 shares have been forfeited, and 38,366 shares have expired. Such forfeited and expired shares have reverted to, and are eligible for re-grant under, the 2007 Plan. Vesting of restricted stock awards is generally subject to a continued service condition with one-third of the awards vesting each year on the three successive anniversary dates of the grant date, typically commencing on the first such anniversary date. The fair value of the awards granted was equal to the closing market value of the Company’s common stock as quoted on the Nasdaq Stock Market on the grant date. During the three-month periods ended March 31, 2014 and 2013, the Company recognized approximately $63,000 and $59,000, respectively, of compensation in continuing operations in its consolidated statements of operations and comprehensive (loss) income related to restricted stock awards. During the six-month periods ended March 31, 2014 and 2013, the Company recognized approximately $62,000 and $98,000, respectively, of compensation in continuing operations in its consolidated statements of operations and comprehensive (loss) income related to restricted stock awards. | ||||||||
The following table summarizes restricted stock activity under the 2011 Plan and 2007 Plan from September 30, 2013 through March 31, 2014: | ||||||||
Weighted Average Grant Date Fair Value | ||||||||
Shares | ||||||||
Non-vested balance at September 30, 2013........... | 371,375 | $1.16 | ||||||
Changes during the period: | ||||||||
Shares granted..................................................... | 95,000 | 1.59 | ||||||
Shares vested...................................................... | -83,123 | 1.16 | ||||||
Shares forfeited................................................... | -40,671 | 1.16 | ||||||
Shares expired..................................................... | -15,000 | 1.16 | ||||||
Non-vested balance at March 31, 2014.................. | 327,581 | $1.29 | ||||||
As of March 31, 2014, there was approximately $200,000 of total unrecognized compensation cost related to shares of unvested restricted stock awards (reflected in the table above) granted under the 2011 Plan and 2007 Plan. That cost is expected to be recognized over the remainder of the requisite service (vesting) periods (through November 2016). The total grant date fair value of restricted stock that vested during the six-month period ended March 31, 2014 was approximately $96,000. | ||||||||
Warrants | ||||||||
As of March 31, 2014, warrants to purchase 75,000 shares of the Company’s common stock at an exercise price of $1.75 issued in fiscal year ended 1999 were outstanding. By their terms these warrants expire 90 days after a registration statement registering common stock (other than pursuant to employee benefit plans) is declared effective by the Commission. As of March 31, 2014, no such registration statement has been filed with the Commission. |
INCOME_TAXES
INCOME TAXES | 6 Months Ended |
Mar. 31, 2014 | |
INCOME TAXES | ' |
INCOME TAXES | ' |
NOTE 7 INCOME TAXES | |
As of March 31, 2014, and September 30, 2013, the Company has no unrecognized income tax benefits. At March 31, 2014, the Company had available total net operating loss carryforwards for U.S. Federal and state income tax purposes of approximately $7,566,000 and $3,553,000, respectively, expiring through 2034, resulting in deferred tax assets in respect of U.S. Federal and state income taxes of approximately $2,437,000 and $324,000, respectively. In addition, at March 31, 2014, the Company had total available net operating loss carryforwards for foreign income tax purposes of approximately $4,782,000 resulting in a deferred tax asset of approximately $421,000, expiring through 2020. Total net deferred tax assets, before valuation allowances, was $3,840,000 at March 31, 2014 and $3,841,000 at September 30, 2013, respectively. Undistributed earnings of the Company’s foreign subsidiaries are considered to be permanently invested; therefore, in accordance with U.S. generally accepted accounting principles, no provision for U.S. Federal and state income taxes would result. As of March 31, 2014, there were no accumulated earnings of any of the Company’s foreign subsidiaries. | |
As of March 31, 2014, as part of its periodic evaluation of the necessity to maintain a valuation allowance against its deferred tax assets, and after consideration of all factors, both positive and negative (including, among others, projections of future taxable income, current year net operating loss carryforward utilization and the extent of the Company’s cumulative losses in recent years), the Company determined that, on a more likely than not basis, it would not be able to use its remaining deferred tax assets (except in respect of United States income taxes in the event the Company elects to effect the repatriation of certain foreign source income of its Swiss subsidiary, which income is currently considered to be permanently invested and for which no United States tax liability has been accrued). Accordingly, the Company has determined to maintain a full valuation allowance against its total deferred tax assets. As of March 31, 2014 and September 30, 2013, the valuation allowances were approximately $3,840,000 and $3,841,000, respectively. If the Company determines in a future reporting period that it will be able to use some or all of its deferred tax assets, the adjustment to reduce or eliminate the valuation allowance would reduce its tax expense and increase after-tax income. Changes in deferred tax assets and valuation allowance are reflected in the “Income tax expense (benefit)” line item of the Company’s consolidated statements of operations and comprehensive (loss) income. Based on the expected level of taxable income for the fiscal year ending September 30, 2014 and the availability of the aforementioned net operating loss carryforward, the Company’s effective tax rate is immaterial. | |
All fiscal years prior to the fiscal year ended September 30, 2010 are closed to Federal and State examination, except with respect to net operating losses generated in prior fiscal years. |
LOSSINCOME_PER_SHARE
(LOSS)INCOME PER SHARE | 6 Months Ended |
Mar. 31, 2014 | |
(LOSS) INCOME PER SHARE | ' |
(LOSS) INCOME PER SHARE | ' |
NOTE 8 (LOSS) INCOME PER SHARE | |
Basic per share data for each period presented is computed using the weighted-average number of shares of common stock outstanding during each such period. Diluted per share data is computed using the weighted-average number of common and dilutive common-equivalent shares outstanding during each period. Dilutive common-equivalent shares consist of shares that would be issued upon the exercise of stock options and conversion of 6% Senior Convertible Preferred Stock and warrants computed using the if-converted method. Diluted (loss) income per share data for the three-month periods ended March 31, 2014 and 2013, exclude 1,624,846 and 1,286,741 of outstanding common-equivalent shares as inclusion of such shares would be anti-dilutive. Diluted income per share data for the six-month periods ended March 31, 2014 and 2013, exclude 1,532,346 and 1,286,741 of outstanding common-equivalent shares as inclusion of such shares would be anti-dilutive. |
COMMITMENT_AND_CONTINGENCIES
COMMITMENT AND CONTINGENCIES | 6 Months Ended |
Mar. 31, 2014 | |
COMMITMENT AND CONTINGENCIES | ' |
COMMITMENT AND CONTINGENCIES | ' |
NOTE 9 COMMITMENTS AND CONTINGENCIES | |
Employment and Agreements | |
Robert Garrett, Jr. Employment Agreement | |
Under his employment agreement, which was effective as of March 1, 2012, Mr. Robert Garrett, Jr. is currently employed as the Company’s Chief Executive Officer and his annual salary is $250,000 (and effective March 1, 2014, $300,000 per annum). In executing his employment agreement, Mr. Garrett received a signing bonus of $9,167. During the fiscal year ended September 30, 2012 (Mr. Garrett’s first year of employment), he received a bonus of $50,000. In addition, during each year of his employment, Mr. Garrett is eligible to receive an annual bonus at the discretion of the Compensation Committee in a combination of cash or equity-based compensation. Mr. Garrett received a total bonus of $100,000 for the fiscal year ended September 30, 2013. Mr. Garrett’s employment agreement also entitles him to awards of stock options to purchase an aggregate of 200,000 shares of the Company’s common stock pursuant to the 2011 Plan, which have been granted in their entirety. | |
Mr. Garrett’s employment agreement provides for successive one-year renewal terms, unless either party provides written notice of its intention not to renew the agreement not later than 90 days prior to the end of the term (or renewal period). In the event of the termination of Mr. Garrett’s employment, depending on the circumstances, Mr. Garrett could be entitled to receive a severance payment which could be up to (12) twelve months of his salary, and under certain circumstances, the immediate vesting of any unvested options pursuant to applicable equity compensation plans, as well as any accrued discretionary bonus. | |
Mr. Garrett’s employment agreement binds him to customary non-competition and non-solicitation covenants of up to one year following the expiration of the employment term. | |
James O. McKenna III Employment Agreement | |
James O. McKenna III serves as the Company’s Chief Financial Officer, Treasurer and Assistant Secretary pursuant to an Amended Employment Agreement, dated as of April 1, 2011 (the “Employment Agreement”), between the Company and Mr. McKenna. On November 8, 2012, Mr. McKenna’s Employment Agreement was further amended (the “Amendment”) in connection with the logistical coordination, planning and implementation of the move of the Company’s executive offices to West Palm Beach, Florida from Santa Monica, California, and his relocation from California to Florida at the Company’s request. Among other things, the Amendment reduced his base salary to $210,000 per annum from $225,000 per annum, eliminated his housing allowance of $90,000 per annum (paid pursuant to the Employment Agreement), and provided for a bonus payment in the amount of $172,456, less applicable withholdings and deductions, all subject to the provisions provided in the Amendment. Approximately $86,000 of such bonus payment was attributed as a bonus to Mr. McKenna in the fiscal year ended September 30, 2012, and half of the remainder was attributed to Mr. McKenna’s bonus in the fiscal year ended September 30, 2013. Mr. McKenna received a total bonus of $86,000 for the fiscal year ended September 30, 2013. Of this bonus, half represented a cash payout and the other half reduced a portion of the remainder of Mr. McKenna’s bonus prepayment from the fiscal year ended September 30, 2012 as previously described. The Company expensed the remainder as an estimated bonus for Mr. McKenna in continuing operations for the fiscal year ended September 30, 2013. The Employment Agreement automatically renewed on December 31, 2013 for one year with an automatic renewal for successive terms of one year each. Pursuant to the Employment Agreement, Mr. McKenna is entitled to a payment equal to one year of his salary as severance in the event of his termination “without cause” and termination for “good reason” (as such terms are defined in the Employment Agreement). | |
Guarantee Obligation | |
In February 2010, Forward Switzerland and its European logistics provider (freight forwarding and customs agent) entered into a Representation Agreement (the “Representation Agreement”) whereby, among other things, the European logistics provider agreed to act as Forward Switzerland’s Fiscal representative in The Netherlands for the purpose of providing services in connection with any value added tax matters. As part of this agreement, which succeeds a substantially similar agreement (except as to the amount and term of the undertaking) between the parties that expired June 30, 2009, Forward Switzerland agreed to provide an undertaking (in the form of a bank letter of guarantee) to the logistics provider with respect to any value added tax liability arising in The Netherlands that the logistics provider is required to pay to Dutch tax authorities on its behalf. | |
As of February 1, 2010, Forward Switzerland entered into a guarantee agreement with a Swiss bank relating to the repayment of any amount up to €75,000 (equal to approximately $104,000 as of March 31, 2014) paid by such bank to the logistics provider in order to satisfy such undertaking pursuant to the bank letter of guarantee. Forward Switzerland would be required to perform under the guarantee agreement only in the event that: (i) a value added tax liability is imposed on the Company’s sales in The Netherlands, (ii) the logistics provider asserts that it has been called upon in its capacity as surety by the Dutch Receiver of Taxes to pay such taxes, (iii) Forward Switzerland or the Company on its behalf fails or refuses to remit the amount of value added tax due to the logistics provider upon its demand, and (iv) the logistics provider makes a drawing under the bank letter of guarantee. Under the Representation Agreement, Forward Switzerland agreed that the letter of guarantee would remain available for drawing for three years following the date that its relationship terminates with the logistics provider to satisfy any value added tax liability arising prior to expiration of the Representation Agreement but asserted by The Netherlands after expiration. | |
The initial term of the bank letter of guarantee expired February 28, 2011, but renews automatically for one-year periods until February 28, 2015, unless Forward Switzerland provides the Swiss bank with written notice of termination at least 60 days prior to the renewal date. It is the intent of Forward Switzerland and the logistics provider that the bank letter of guarantee amount be adjusted annually. In consideration of the issuance of the letter of guarantee, Forward Switzerland has granted the Swiss bank a security interest in all of its assets on deposit with, held by, or credited to Forward Switzerland’s accounts with, the Swiss bank (approximately $1,491,000 at March 31, 2014). As of March 31, 2014, the Company had not incurred a liability in connection with this guarantee. |
RELATED_PARTY_TRANSACTIONS
RELATED PARTY TRANSACTIONS | 6 Months Ended |
Mar. 31, 2014 | |
RELATED PARTY TRANSACTIONS | ' |
RELATED PARTY TRANSACTIONS | ' |
NOTE 10 RELATED PARTY TRANSACTIONS | |
Buying Agency and Supply Agreement | |
On March 12, 2012, the Company entered into a Buying Agency and Supply Agreement (the “ Sourcing Agreement”) with Forward Industries Asia Pacific Corporation (f/k/a Seaton Global Corporation), a British Virgin Islands corporation (“Forward China”), dated as of March 7, 2012. On March 13, 2014, the Company entered into Amendment No. 1 to the Sourcing Agreement with Forward China, dated as of March 11, 2014. The Sourcing Agreement, as amended, provides that upon the terms and subject to the conditions set forth therein, Forward China will act as the Company’s exclusive buying agent and supplier of Products (as defined in the Sourcing Agreement) in the Asia Pacific region. The Company will purchase products at Forward China’s cost and pay Forward China a monthly fee for services it provides under the Sourcing Agreement. The Sourcing Agreement, as amended, terminates on March 11, 2015, subject to renewal. Terence Wise, a director of the Company, is a principal of Forward China. In addition, Jenny P. Yu, a Managing Director of Forward China, owns shares of the Company’s common stock. The Company recognized approximately $249,000 and $241,000, respectively, during the three-month periods ended March 31, 2014 and 2013 and $544,000 and $492,000, respectively, during the six-month periods ended March 31, 2014 and 2013 of Forward China service fees, which are included as a component of costs of goods sold in continuing operations in the accompanying consolidated statements of operations and comprehensive (loss) income.At March 31, 2014 and September 30, 2013, there were approximately $2,047,000 and $108,000, respectively, of service fees payable to Forward China. | |
Investment Management Agreement | |
On April 16, 2013, the Company entered into an Investment Management Agreement (the “Investment Agreement”) with LaGrange Capital Administration, L.L.C. (“LCA”), pursuant to which the Company retained LCA to manage certain investment accounts funded by the Company (collectively, the “Account”). Frank LaGrange Johnson, the Company’s Chairman of the Board, serves as the Managing Member of LCA. | |
Pursuant to the Investment Agreement, LCA is authorized, subject to supervision of the Investment Committee of the Board and the terms and conditions of the Investment Agreement, to take all actions and make all decisions regarding the investment and reinvestment of the assets of the Account utilizing the Investment Strategy (as defined in the Investment Agreement). As compensation for its services to the Company, LCA shall be entitled to advisory fees, comprised of an asset-based fee and a performance fee, as provided in the Investment Agreement. The asset-based fee will equal 1% per annum of the average Account Net Asset Value (“Account NAV”). The performance fee will equal 20% of the increase (if any) in the Account NAV over an annual period. No performance fee will be payable for any annual period in which the Account NAV at the end of such annual period is below the highest Account NAV at the end of any previous annual period. In addition to such advisory fees, the Company will reimburse LCA for certain investment and operational expenses. Under the Investment Agreement, the Company or its designees may make cash withdrawals from the Account on March 31, June 30, September 30 or December 31 of each year upon 45 days’ prior written notice to LCA; provided, that, in the event of a breach of certain terms of the Investment Agreement, the Company may make a complete cash withdrawal from the Account immediately without LCA’s consent. During the three and six-month periods ended March 31, 2014, the Company recognized approximately $3,000 and $6,000, respectively, of expense in continuing operations in its consolidated statements of operations and comprehensive (loss) income related to asset based advisory fees. There were no asset based advisory fees recorded during the three and six-month periods ended March 31, 2013. The Company has not recorded any expense related to performance based advisory fees during the three and six-month periods ended March 31, 2014. | |
The Investment Agreement is effective as of February 1, 2013 and shall continue until the second anniversary of the effective date. Thereafter, the term of the Investment Agreement shall automatically renew for additional one year terms unless terminated in accordance with the terms of the Investment Agreement or if a party provides notice to the other party no less than 60 days prior to the end of a term of its decision to terminate the Investment Agreement at the end of the then current term. | |
The Company did not invest any additional funds with LCA during the three and six-month periods ended March 31, 2014 and 2013. | |
During the three-month periods ended March 31, 2014 and 2013, the Company purchased approximately $1,296,000 and $32,427,000 of marketable securities, respectively. During the six-month periods ended March 31, 2014 and 2013, the Company purchased approximately $5,398,000 and $38,496,000 of marketable securities, respectively. During the three-month periods ended March 31, 2014 and 2013, the Company sold approximately $1,282,000 and $32,690,000 of marketable securities, respectively. During the six-month periods ended March 31, 2014 and 2013, the Company sold approximately $5,214,000 and $38,147,000 of marketable securities, respectively. As a result of these activities, the Company recognized net investment gains (losses) of approximately $41,000 and $86,000 during the three-month periods ended March 31, 2014 and 2013, respectively, and $(39,000) and $328,000 during the six month periods ended March 31, 2014 and 2013, respectively. | |
New York Office Rent | |
In February 1, 2014, the Company began leasing office space in New York, New York for its Chief Executive Officer at a rate of $2,500 per month from LCA. This lease is month-to-month and is cancellable by either the Company or LCA at any time. Effective April 1, 2014, LCA increased the monthly rental charge (inclusive of rent, allocable share of office assistant, and equipment leases) from $2,500 to approximately $12,700 per month. During the three and six-month periods ended March 31, 2014, the Company recognized approximately $5,000 of rent expense in continuing operations in its consolidated statements of operations and comprehensive (loss) income related to the New York office. |
LEGAL_PROCEEDINGS
LEGAL PROCEEDINGS | 6 Months Ended |
Mar. 31, 2014 | |
LEGAL PROCEEDINGS: | ' |
LEGAL PROCEEDINGS | ' |
NOTE 11 LEGAL PROCEEDINGS | |
From time to time, the Company may become a party to other legal actions or proceedings in the ordinary course of its business. As of March 31, 2014, there were no such actions or proceedings, either individually or in the aggregate, that, if decided adversely to the Company’s interests, the Company believes would be material to its business. |
OPERATING_SEGMENT_INFORMATION
OPERATING SEGMENT INFORMATION | 6 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
OPERATING SEGMENT INFORMATION | ' | ||||||||
OPERATING SEGMENT INFORMATION | ' | ||||||||
NOTE 12 OPERATING SEGMENT INFORMATION | |||||||||
As of March 31, 2014, the Company reported and managed its continuing operations based on a single operating segment: the design and distribution of carry and protective solutions, primarily for hand held electronic devices. Products designed and distributed by this segment include carrying cases and other accessories for medical monitoring and diagnostic kits, portable consumer electronic devices (such as smartphones, tablets, personnel computers, notebooks, and GPS devices), and a variety of other portable electronic and non-electronic products (such as firearms, sporting, and other recreational products). This segment operates in geographic regions that include primarily the APAC Region, the Americas, and Europe. Geographic regions are defined by reference primarily to the location of the customer or its contract manufacturer. | |||||||||
On June 21, 2012, the Company determined to wind down its Retail segment, which commenced during the three-month period ended March 31, 2011, and focus solely on growing its OEM business. The decision to eliminate the Retail division was primarily driven by the longer than estimated path to bring it to profitability and the strong net sales growth and cost rationalizations in the OEM business. The Company has substantially completed its exit of its Retail business as of March 31, 2014. The Company has not had, and does not expect to have, any continuing involvement in the Retail business after this date. | |||||||||
Revenues from External Customers | |||||||||
The following table presents net sales by geographic region. | |||||||||
(dollars in millions) | |||||||||
For the Three-Month Periods Ended March 31, | For the Six-Month Periods Ended March 31, | ||||||||
2014 | 2013 | 2014 | 2013 | ||||||
Americas: | |||||||||
United States......................... | $1.70 | $2.50 | $4.10 | $5.40 | |||||
Other....................................... | 0.2 | 0.4 | 0.2 | 0.4 | |||||
Total Americas............... | $1.90 | $2.90 | $4.30 | $5.80 | |||||
APAC: | |||||||||
Hong Kong............................ | $2.10 | $1.40 | $4.40 | $2.60 | |||||
Other....................................... | 0.6 | 0.8 | 1.6 | $1.70 | |||||
Total APAC Region....... | $2.70 | $2.20 | $6.00 | $4.30 | |||||
Europe: | |||||||||
Germany................................. | $1.20 | $1.60 | $2.50 | $3.60 | |||||
Poland.................................... | 0.8 | 1.1 | 1.9 | $1.10 | |||||
Other...................................... | 0.2 | -- | 0.4 | -- | |||||
Total Europe................... | $2.20 | $2.70 | $4.80 | $4.70 | |||||
Total net sales............................ | $6.70 | $7.80 | $14.80 | ||||||
$15.10 | |||||||||
Long-Lived Assets (Net of Accumulated Depreciation and Amortization) | |||||||||
Identifiable long-lived assets, consisting predominately of property and equipment, by geographic region are as follows: | |||||||||
(dollars in thousands) | |||||||||
As of March 31, 2014 | As of September 30, 2013 | ||||||||
Americas.................................................... | $181 | $169 | |||||||
Europe........................................................ | -- | 1 | |||||||
Total Long-Lived Assets (net)................. | $181 | $170 |
ACCOUNTING_POLICIESPOLICIES
ACCOUNTING POLICIES.(POLICIES) | 6 Months Ended |
Mar. 31, 2014 | |
ACCOUNTING POLICIES.(POLICIES): | ' |
Accounting Estimates | ' |
Accounting Estimates | |
The preparation of the Company’s consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates and assumptions | |
Basis of Presentation | ' |
Basis of Presentation | |
The accompanying consolidated financial statements include the accounts of Forward and its wholly owned subsidiaries (Forward US, Forward Switzerland, and Forward UK). All significant intercompany transactions and balances have been eliminated in consolidation. | |
Reclassifications | ' |
Reclassifications | |
Certain prior period amounts have been reclassified to conform to the current period presentation. | |
6% Senior Convertible Preferred Stock | ' |
6% Senior Convertible Preferred Stock | |
Warrants | |
In accordance with ASC 815-40, the Company’s warrants were previously classified as a liability, at fair value, as a result of a related registration rights agreement that contains certain requirements for registering the underlying common shares, but has no provision for penalties upon the failure to register. At each balance sheet date, this liability’s fair value was re-measured and adjusted with the corresponding change in fair value recorded in the consolidated statement of operations and comprehensive (loss) income. As the Company has met the requirements for registering the underlying common shares, the fair value of the warrants has been reclassified to additional paid-in capital in the accompanying consolidated balance sheet at March 31, 2014. The liability associated with the warrants was previously included in “Accrued expenses and other current liabilities” in the consolidated balance sheet at September 30, 2013. |
Fair_value_of_Marketable_Secur
Fair value of Marketable Securities (Tables) | 6 Months Ended | |||||||
Mar. 31, 2014 | ||||||||
Fair value of Marketable Securities: | ' | |||||||
Fair value of Marketable Securities | ' | |||||||
March 31, | September 30, | |||||||
2014 | 2013 | |||||||
Trading: | ||||||||
Cost.................................................. | $1,319,094 | $954,053 | ||||||
Unrealized Gains............................ | 22,940 | 174,940 | ||||||
Unrealized Losses......................... | -115,907 | -48,246 | ||||||
Total Fair Value...................... | $1,226,127 | $1,080,747 | ||||||
Company's fair value hierarchy for assets | ' | |||||||
The following table presents the Company’s fair value hierarchy for assets, consisting of marketable securities, measured at fair value on a recurring basis at March 31, 2014 and September 30, 2013: | ||||||||
Level 1 | Level 2 | Level 3 | Total | |||||
Equity securities..................... | $1,226,127 | $-- | $-- | $1,226,127 | ||||
Total assets at fair value at March 31, 2014................... | $1,226,127 | $-- | $-- | $1,226,127 | ||||
Equity securities..................... | $1,080,747 | $-- | $-- | $1,080,747 | ||||
Total assets at fair value at September 30, 2013........... | $1,080,747 | $-- | $-- | $1,080,747 | ||||
NOTE 5 SHAREHOLDERS’ EQUITY |
Summary_Of_Warrant_Activities_
Summary Of Warrant Activities (Tables) | 6 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Summary Of Warrant Activities: | ' | ||||||||
Schedule of Derivative Financial Instruments Indexed to, and Potentially Settled in, Entity's Own Stock, Equity | ' | ||||||||
The fair value of the Warrants was determined using a Black-Scholes closed-form call option pricing model, which is considered a level 3 instrument under the fair value hierarchy. The fair values of the Warrants were estimated using the following assumptions as of March 31, 2014 (the date of the reclassification) and September 30, 2013: | |||||||||
31-Mar-14 | 30-Sep-13 | ||||||||
Risk-free interest rate | 2.70% | 2.60% | |||||||
Dividend yield | -- | -- | |||||||
Volatility | 32.90% | 30.00% | |||||||
Expected term (in years) | 9.75 | 10.3 | |||||||
Schedule of Stockholders' Equity Note, Warrants or Rights | ' | ||||||||
The change in the fair value of the convertible preferred stock warrant liability for the six months ended March 31, 2014 is summarized below: | |||||||||
Balance at September 30, 2013 | $493,123 | ||||||||
Increase in fair value | 136,258 | ||||||||
Reclassification of fair value of warrants | -629,381 | ||||||||
Balance at March 31, 2014 | $0 | ||||||||
The following table presents the Company's fair value hierarchy for liabilities, consisting of a warrant liability, measured at fair value, prior to issuance costs, at September 30, 2013 (as noted above the fair value of the warrants liability as of March 31, 2014 was reclassified to additional paid-in capital). | |||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||
Warranty liability at September 30, 2013 | $-- | $-- | $493,123 | $493,123 | |||||
Changes in Shareholders' Equity | ' | ||||||||
Changes in shareholders’ equity for the six-month period ended March 31, 2014 are summarized below: | |||||||||
Common Stock | Treasury Stock | ||||||||
Total | Number of Shares | Par Value | Additional Paid-in Capital | Retained Earnings (Accumulated Deficit) | Number of Shares | Amount | Accumulated Other Comprehensive Income (Loss) | ||
Balance at September 30, 2013 | $9,394,310 | 8,819,095 | $88,191 | $17,965,327 | ($7,378,700) | 706,410 | ($1,260,057) | ($20,451) | |
Share-based compensation | 128,024 | 83,123 | 831 | 127,193 | -- | -- | -- | -- | |
Preferred stock accretion and dividends | -96,471 | -- | -- | -- | -96,471 | -- | -- | -- | |
Foreign currency translation | 554 | -- | -- | -- | -- | -- | -- | 554 | |
Reclassification of Warrant liability | 599,929 | -- | -- | 599,929 | -- | -- | -- | -- | |
Net income | 50,413 | -- | -- | -- | 50,413 | -- | -- | -- | |
Balance at March 31, 2014 | $10,076,759 | 8,902,218 | $89,022 | $18,692,449 | ($7,424,758) | 706,410 | ($1,260,057) | ($19,897) |
Stock_option_activity_Tables
Stock option activity (Tables) | 6 Months Ended | |||||||
Mar. 31, 2014 | ||||||||
Stock option activity: | ' | |||||||
Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions | ' | |||||||
Shares | Weighted AverageExercise Price | Weighted AverageRemaining Contractual Term (Years) | ||||||
Aggregate Intrinsic Value | ||||||||
Outstanding at September 30, 2013 | 897,000 | $2.98 | 6.1 | $ -- | ||||
Granted.............................................. | 32,500 | 1.59 | 9.7 | |||||
Exercised........................................... | -- | -- | ||||||
Forfeited........................................... | -28,500 | 3.61 | ||||||
Expired.............................................. | -- | -- | ||||||
Outstanding at March 31, 2014 | 901,000 | $2.91 | 5.7 | $59,025 | ||||
Options expected to vest at March 31, 2014.............................. | 237,251 | $3.66 | 8.1 | $12,025 | ||||
Options vested and exercisable at March 31, 2014.............................. | 634,916 | $2.97 | 4.7 | $47,000 | ||||
Schedule of Share-based Compensation, Restricted Stock and Restricted Stock Units Activity | ' | |||||||
The following table summarizes restricted stock activity under the 2011 Plan and 2007 Plan from September 30, 2013 through March 31, 2014: | ||||||||
Weighted Average Grant Date Fair Value | ||||||||
Shares | ||||||||
Non-vested balance at September 30, 2013........... | 371,375 | $1.16 | ||||||
Changes during the period: | ||||||||
Shares granted..................................................... | 95,000 | 1.59 | ||||||
Shares vested...................................................... | -83,123 | 1.16 | ||||||
Shares forfeited................................................... | -40,671 | 1.16 | ||||||
Shares expired..................................................... | -15,000 | 1.16 | ||||||
Non-vested balance at March 31, 2014.................. | 327,581 | $1.29 |
Geographical_Segment_Reporting
Geographical Segment Reporting (Tables) | 6 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Geographical Segment Reporting: | ' | ||||||||
Schedule of Segment Reporting Information, by Segment | ' | ||||||||
The following table presents net sales by geographic region. | |||||||||
(dollars in millions) | |||||||||
For the Three-Month Periods Ended March 31, | For the Six-Month Periods Ended March 31, | ||||||||
2014 | 2013 | 2014 | 2013 | ||||||
Americas: | |||||||||
United States......................... | $1.70 | $2.50 | $4.10 | $5.40 | |||||
Other....................................... | 0.2 | 0.4 | 0.2 | 0.4 | |||||
Total Americas............... | $1.90 | $2.90 | $4.30 | $5.80 | |||||
APAC: | |||||||||
Hong Kong............................ | $2.10 | $1.40 | $4.40 | $2.60 | |||||
Other....................................... | 0.6 | 0.8 | 1.6 | $1.70 | |||||
Total APAC Region....... | $2.70 | $2.20 | $6.00 | $4.30 | |||||
Europe: | |||||||||
Germany................................. | $1.20 | $1.60 | $2.50 | $3.60 | |||||
Poland.................................... | 0.8 | 1.1 | 1.9 | $1.10 | |||||
Other...................................... | 0.2 | -- | 0.4 | -- | |||||
Total Europe................... | $2.20 | $2.70 | $4.80 | $4.70 | |||||
Total net sales............................ | $6.70 | $7.80 | $14.80 | ||||||
$15.10 | |||||||||
Schedule of Assets | ' | ||||||||
Identifiable long-lived assets, consisting predominately of property and equipment, by geographic region are as follows: | |||||||||
(dollars in thousands) | |||||||||
As of March 31, 2014 | As of September 30, 2013 | ||||||||
Americas.................................................... | $181 | $169 | |||||||
Europe........................................................ | -- | 1 | |||||||
Total Long-Lived Assets (net)................. | $181 | $170 | |||||||
Schedule_of_Assmptions_based_o
Schedule of Assmptions based on Black Scholes Option method (Table) | 6 Months Ended | ||||
Mar. 31, 2014 | |||||
Schedule of Assmptions based on Black Scholes Option method (Table): | ' | ||||
Schedule of Share-based Compensation, Activity | ' | ||||
The fair value of each stock option on the date of grant was estimated using the Black-Scholes option-pricing formula applying the following assumptions for each respective period: | |||||
For the Three and Six-Month Periods Ended March 31, | |||||
2014 | 2013 | ||||
Expected term (in years).... | 5 | 5 | |||
Risk-free interest rate.......... | 1.50% | 0.6% – 0.7% | |||
Expected volatility.............. | 67.60% | 70.0% - 70.4% | |||
Expected dividend yield..... | 0% | 0% | |||
Forfeiture rate...................... | 10% | 5% |
Summary_of_operating_results_o
Summary of operating results of discontinued operations (Details) (USD $) | 3 Months Ended | 6 Months Ended | ||
Mar. 31, 2014 | Mar. 31, 2013 | Mar. 31, 2014 | Mar. 31, 2013 | |
Summary of operating results of discontinued operations | ' | ' | ' | ' |
Net loss from discontinued operations. | $18,400 | $138,400 | $13,800 | $180,800 |
Summary_of_assets_of_discontin
Summary of assets of discontinued operations parentheticals (Details) (USD $) | Mar. 31, 2014 |
Summary of assets of discontinued operations parentheticals | ' |
Assets of discontinued operations as of, | $280,000 |
Marketable_securities_classifi
Marketable securities classification (Details) (USD $) | Mar. 31, 2014 | Sep. 30, 2013 |
Marketable securities classification | ' | ' |
Cost. | $1,319,094 | $954,053 |
Unrealized Gains. | 22,940 | 174,940 |
Unrealized Losses. | -115,907 | -48,246 |
Total Fair Value. | $1,226,127 | $1,080,747 |
Fair_value_hierarchy_for_asset
Fair value hierarchy for assets (Details) (USD $) | Mar. 31, 2014 | Sep. 30, 2013 |
Equity securities. | $1,226,127 | ' |
Equity securities. | 1,226,127 | ' |
Total assets at fair value at | 1,226,127 | ' |
Equity securities at | ' | 1,080,747 |
Total assets at fair value. | ' | 1,080,747 |
Level 1 | ' | ' |
Equity securities. | 1,226,127 | ' |
Equity securities. | 1,226,127 | ' |
Total assets at fair value at | 1,226,127 | ' |
Equity securities at | ' | 1,080,747 |
Total assets at fair value. | ' | 1,080,747 |
Level 2 | ' | ' |
Equity securities. | 0 | ' |
Equity securities. | 0 | ' |
Total assets at fair value at | 0 | ' |
Equity securities at | ' | 0 |
Total assets at fair value. | ' | 0 |
Level 3 | ' | ' |
Equity securities. | 0 | ' |
Equity securities. | 0 | ' |
Total assets at fair value at | 0 | ' |
Equity securities at | ' | 0 |
Total assets at fair value. | ' | $0 |
BlackScholes_closedform_call_o
Black-Scholes closed-form call option pricing model assumptions (Details) | Mar. 31, 2014 | Sep. 30, 2013 |
Black-Scholes closed-form call option pricing model assumptions | ' | ' |
Risk-free interest rate | 2.70% | 2.60% |
Dividend yield | 0.00% | 0.00% |
Volatility | 32.90% | 30.00% |
Expected term (in years) | 9.75 | 10.3 |
Change_in_the_fair_value_of_th
Change in the fair value of the convertible preferred stock warrant liability (details) (USD $) | 6 Months Ended |
Mar. 31, 2014 | |
Change in the fair value of the convertible preferred stock warrant liability | ' |
Opening balance | $493,123 |
Decrease in fair value | 136,258 |
Reclassification of fair vale of warrants | -629,381 |
Closing balance | $0 |
Stock_repurchase_Details
Stock repurchase (Details) (USD $) | Mar. 31, 2014 |
Stock repurchase | ' |
Authorized shares of "blank check" preferred stock | 4,000,000 |
Authorized shares of 6% Senior Convertible Preferred Stock | 1,500,000 |
Authorized shares of Series A Participating Preferred Stock | 100,000 |
Company had repurchased an aggregate of shares | 172,603 |
Company had repurchased an aggregate value of shares | $403,000 |
Stock_Option_Awards_Details
Stock Option Awards (Details) (USD $) | Mar. 31, 2014 |
Stock Option Awards | ' |
Compensation Committee has approved awards of stock options to purchase Under the 2011 and 2007 Plans | 1,770,000 |
Awards covering shares from the 2007 Plan of common stock were forfeited | 255,000 |
Awards covering shares from the 2011 Plan of common stock were forfeited | 559,000 |
Total unrecognized compensation cost related to unvested stock option awards granted under the 2007 and 2011 Plans expected to be recognized | $88,000 |
Number of shares related to unvested stock option awards granted under the 2007 and 2011 Plans expected to be recognized | 266,084 |
1996_Stock_Incentive_Plan_Deta
1996 Stock Incentive Plan (Details) | Mar. 31, 2014 |
1996 Stock Incentive Plan | ' |
Fully vested common stock options outstanding and unexercised under the plan | 30,000 |
6_Senior_Convertible_Preferred
6% Senior Convertible Preferred Stock with Warrants Parentheticals (Details) (USD $) | 3 Months Ended | 6 Months Ended |
Mar. 31, 2014 | Mar. 31, 2014 | |
6% Senior Convertible Preferred Stock with Warrants Parentheticals | ' | ' |
"Net (loss) income applicable to common equity" in calculating loss per share, which was approximately | $29,000 | $58,000 |
Dividends on the Convertible Preferred Stock totaled approximately | 19,000 | 38,000 |
These dividends, in addition to the accretion, totaled approximately | $48,000 | $96,000 |
6_Senior_Convertible_Preferred1
6% Senior Convertible Preferred Stock with Warrants (Details) (USD $) | Mar. 31, 2014 | Sep. 30, 2013 | Aug. 14, 2013 | Aug. 07, 2013 | Jun. 28, 2013 |
6% Senior Convertible Preferred Stock with Warrants | ' | ' | ' | ' | ' |
Sale of shares of newly authorized 6% Senior Convertible Preferred Stock | ' | ' | ' | ' | 381,674 |
Per share value of 6% Senior Convertible Preferred Stock | ' | ' | ' | ' | $0.01 |
Sale of additional shares of Convertible Preferred Stock | ' | ' | 50,890 | 216,282 | ' |
Issue of warrants to purchase a total of shares of the Company's common stock | ' | ' | 50,890 | 216,282 | 381,674 |
The total purchase price paid by Investors for each share of Convertible Preferred Stock and Warrant purchased | ' | ' | $1.97 | $1.97 | $1.97 |
Minimum fair value of each share in respect of the Convertible Preferred Stock | ' | ' | ' | ' | $1.10 |
Maximum fair value of each share in respect of the Convertible Preferred Stock | ' | ' | ' | ' | $1.15 |
Minimum fair value of each share in respect of the Warrant | ' | ' | ' | ' | $0.82 |
Maximum fair value of each share in respect of the Warrant | ' | ' | ' | ' | $0.86 |
Gross proceeds of the Private Placement | $1,275,000 | ' | ' | ' | ' |
The Company has sold a total of shares of Convertible Preferred Stock and Warrants | 648,846 | ' | ' | ' | ' |
Number of shares of Common Stock through these Private Placements purchased | 648,846 | ' | ' | ' | ' |
Net of issuance costs reflected in the "Cash and cash equivalents" line of the Company's consolidated balance sheets | 69,000 | ' | ' | ' | ' |
Proceeds allocated to the Convertible Preferred Stock based upon their fair values | 693,000 | ' | ' | ' | ' |
Proceeds allocated to the the Warrants based upon their fair values | 513,000 | ' | ' | ' | ' |
The Private Placement included purchases of Securities by two directors of the Company | ' | ' | ' | ' | 114,502 |
Warrants initial exercise price per share | ' | ' | ' | ' | $1.84 |
Each share of Convertible Preferred Stock is convertible into shares of Common Stock at an initial conversion price per share | ' | ' | ' | ' | $1.84 |
Carrying value of the Convertible Preferred Stock reflecting as temporary equity | 775,000 | 717,000 | ' | ' | ' |
Net income applicable to common equity in calculating income per share | ' | ' | ' | $30,000 | ' |
Liability associated with the Warrants included in the "Accrued expenses and other current liabilities" | 412,000 | ' | ' | 464,000 | ' |
Fair value of the warrants of (net of issuance costs) was reclassified to additional paid-in capital | 600,000 | ' | ' | ' | ' |
Dividends on the Convertible Preferred Stock payable, on a cumulative basis, in cash, at the rate per annum of the Liquidation Preference | 6.00% | ' | ' | ' | ' |
Company recorded a preferred stock dividend in the amount | $96,000 | ' | ' | $508,000 | ' |
Companys_fair_value_hierarchy_
Company's fair value hierarchy for liabilties (details) (USD $) | Sep. 30, 2013 |
Company's fair value hierarchy for liabilties | ' |
Level 1 warrant liability | $0 |
Level 2 warrant liability | 0 |
Level 3 warrant liability | 493,123 |
Total warrant liability | $493,123 |
2011_Long_Term_Incentive_Plan_
2011 Long Term Incentive Plan (Details) | Mar. 31, 2014 |
2011 Long Term Incentive Plan | ' |
Authorized shares of common stock for grants of various types of equity awards to officers, directors, employees, consultants, and independent contractors | 850,000 |
Compensation Committee approved awards of stock options to purchase aggregate shares of common stock to certain of the Company's executive officers and employees | 1,327,500 |
Compensation Committee approved awards of stock options to purchase shares of common stock to certain of the Company's executive officers and employees | 1,032,500 |
Compensation Committee approved awards of stock options to purchase shares of common stock to a consultant | 160,000 |
Compensation Committee approved awards of stock options to purchase shares of common stock to non-employee directors | 130,000 |
Compensation Committee approved awards of stock options to purchase shares of common stock to to a non-employee executive officer | 5,000 |
Number of shares were forfeited and reverted to, and are eligible for re-grant | 585,647 |
The total shares of common stock available for grants of equity awards under the 2011 Plan | 108,147 |
Expiry period of options in years | 10 |
Expiry period of options in years for Options granted under a consulting agreement | 3 |
2007_Equity_Incentive_Plan_Det
2007 Equity Incentive Plan (Details) | Mar. 31, 2014 |
2007 Equity Incentive Plan | ' |
Authorized shares of common stock for grants of restricted common stock and stock options to officers, employees, and non-employee directors of the Company | 800,000 |
Compensation Committee approved awards of restricted common stock and stock options | 1,092,375 |
Number of shares were forfeited and reverted to, and are eligible for re-grant under, the 2007 Plan | 307,390 |
The total shares of common stock available for grants of equity awards under the 2007 Plan | 15,015 |
Expiry period of options in years under the 2007 Plan | 10 |
Restricted stock grants generally vest in equal proportions over years | 3 |
Recognized_compensation_cost_D
Recognized compensation cost (Details) (USD $) | 3 Months Ended | 6 Months Ended | ||
Mar. 31, 2014 | Mar. 31, 2013 | Mar. 31, 2014 | Mar. 31, 2013 | |
Recognized compensation cost | ' | ' | ' | ' |
Company recognized approximately an expense of compensation in continuing operations for stock option awards | $35,000 | $92,000 | $66,000 | $128,000 |
Stock options granted during the period by the Company | 32,500 | 280,000 | ' | ' |
weighted average grant date fair value of options | $0.90 | $0.91 | ' | ' |
Summary_of_stock_option_activi
Summary of stock option activity under 2011 Plan and 2007 Plan (Details) | Shares | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term (Years) | Aggregate Intrinsic Value |
Outstanding at Sep. 30, 2013 | 897,000 | 2.98 | 6.1 | 0 |
Granted | 32,500 | 1.59 | 9.7 | 0 |
Exercised | 0 | 0 | 0 | 0 |
Forfeited | -28,500 | 3.61 | 0 | 0 |
Expired | 0 | 0 | 0 | 0 |
Options vested and exercisable at Mar. 31, 2014 | 634,916 | 2.97 | 4.7 | 47,000 |
Options expected to vest at Mar. 31, 2014 | 237,251 | 3.66 | 8.1 | 12,025 |
Outstanding , at Mar. 31, 2014 | 901,000 | 2.91 | 5.7 | 59,025 |
The_fair_value_of_stock_option
The fair value of stock options estimated assumptions (Details) | 3 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
The fair value of stock options estimated assumptions | ' | ' |
Expected term (in years) | 9.75 | ' |
Risk-free interest rate. Minimum | 0.015 | 0.006 |
Risk-free interest rate. Maximum | 0.015 | 0.007 |
Expected volatility. Minimum | 0.676 | 0.7 |
Expected volatility. Maximum | 0.676 | 0.704 |
Expected dividend yield. | 0.00% | 0.00% |
Forfeiture rate. | 10.00% | 5.00% |
Restricted_stock_activity_unde
Restricted stock activity under the 2011 Plan and 2007 (Details) | Shares. | Weighted Average Grant Date Fair Value |
Non-vested balance at Sep. 30, 2013 | 371,375 | 1.16 |
Shares granted | 95,000 | 1.59 |
Shares vested | -83,123 | 1.16 |
Shares forfeited | -40,671 | 1.16 |
Shares expired | -15,000 | 1.16 |
Non-vested balance at Mar. 31, 2014 | 327,581 | 1.29 |
Restricted_Stock_Awards_Detail
Restricted Stock Awards (Details) (USD $) | 3 Months Ended | 6 Months Ended | ||
Mar. 31, 2014 | Mar. 31, 2013 | Mar. 31, 2014 | Mar. 31, 2013 | |
Restricted Stock Awards | ' | ' | ' | ' |
Under the 2011 and 2007 Plan, the Compensation Committee approved and granted awards of shares of restricted stock, | 649,875 | ' | ' | ' |
Vested awards of stock options | 283,928 | ' | ' | ' |
Restricted stock forfeited and reverted and are eligible for regrant under 2007 plan | 40,671 | ' | ' | ' |
Restricted stock expired and are eligible for regrant under 2007 plan | 38,366 | ' | ' | ' |
Compensation expense recognized in continuing operations | $63,000 | $59,000 | $62,000 | $98,000 |
Unrecognized compnesation expneses related to unvested restriceted stock awards under 2011 and 2007 plans | 200,000 | ' | ' | ' |
Total grant date fair value of restricted stock vested | $96,000 | $35,000 | ' | ' |
Warrants issued at an exercise price of $1.75 per share were outstanding | 75,000 | ' | ' | ' |
Dilutive_commonequivalent_shar
Dilutive common-equivalent shares (Details) | 3 Months Ended | 6 Months Ended | ||
Mar. 31, 2014 | Mar. 31, 2013 | Mar. 31, 2014 | Mar. 31, 2013 | |
Dilutive common-equivalent shares | ' | ' | ' | ' |
Anti dilutive common-equivalent shares outstanding during each period | 1,624,846 | 1,286,741 | 1,532,346 | 1,286,741 |
Employment_and_Agreements_Chie
Employment and Agreements - Chief Executive Officer (Details) (USD $) | Mar. 01, 2012 |
Employment and Agreements Chief Executive Officer | ' |
Under his employment agreement Mr. Robert Garrett Jr should receive an annual salary in the amount | $250,000 |
Signing bonus received by Mr. Robert Garrett Jr | 9,167 |
In the first year of employment Mr. Garrett received a bonus | 50,000 |
Mr. Garrett received a total bonus in amount for the period | $100,000 |
Mr. Garrett's employment agreement also entitles him to awards of stock options to purchase an aggregate of shares of the Company's common stock pursuant to the 2011 Plan | 200,000 |
Written notice period of intention not to renew the agreement | 90 |
Guarantee_Obligation_Details
Guarantee Obligation (Details) (USD $) | Mar. 31, 2014 |
Guarantee Obligation | ' |
Repayment of any amount up to €75,000 paid by such bank to the logistics provider in order to satisfy such undertaking pursuant to the bank letter of guarantee | $104,000 |
Forward Switzerland has granted the Swiss bank a security interest in all of its assets of value | $1,491,000 |
Employment_and_Agreements_Chie1
Employment and Agreements Chief Financial Officer (Details) (USD $) | Nov. 08, 2012 | Apr. 02, 2011 |
Employment and Agreements Chief Financial Officer | ' | ' |
Base salary of McKenna as per employment agreement per annum | ' | $225,000 |
Base salary of McKenna as per employment agreement per annum after reduction | 210,000 | ' |
Eliminated housing allowance per annum which was paid pursuant to the Employment Agreement | 90,000 | ' |
Provision for a bonus payment in the amount less applicable withholdings and deductions payable to McKenna | 172,456 | ' |
Bonus payment attributed as a bonus to Mr. McKenna in Fiscal 2012, with the remainder to be attributed to future periods | $86,000 | ' |
Buying_Agency_and_Supply_Agree
Buying Agency and Supply Agreement with Forward Industries Asia-Pacific Corporation (Details) (USD $) | 3 Months Ended | 6 Months Ended | ||
Mar. 31, 2014 | Mar. 31, 2013 | Mar. 31, 2014 | Mar. 31, 2013 | |
Buying Agency and Supply Agreement with Forward Industries Asia-Pacific Corporation | ' | ' | ' | ' |
Forward China service fees included as a component of costs of goods sold in continuing operations | $249,000 | $241,000 | $544,000 | $492,000 |
Recognized comprehensive (loss) income related to asset based advisory fees | 3,000 | ' | 6,000 | ' |
Company began leasing office space in New York, New York for its Chief Executive Officer at a rental charge per month from LCA | 2,500 | ' | ' | ' |
LCA increased the monthly rental charge (inclusive of rent, allocable share of office assistant, and equipment leases) from $2,500 to approximately | 12,700 | ' | ' | ' |
Company recognized of rent expense | ' | ' | $5,000 | ' |
Effect_of_marketable_securitie
Effect of marketable securities reclassification (Details) (USD $) | 3 Months Ended | 6 Months Ended | ||
Mar. 31, 2014 | Mar. 31, 2013 | Mar. 31, 2014 | Mar. 31, 2013 | |
Effect of marketable securities reclassification | ' | ' | ' | ' |
Net (loss) gain on marketable securities. | $41,000 | $86,000 | ($39,000) | $328,000 |
Deferred_tax_assets_and_Liabil
Deferred tax assets and Liabilities (Details) (USD $) | Mar. 31, 2014 | Sep. 30, 2013 |
Deferred tax assets and Liabilities | ' | ' |
Unrecognized income tax benefits | $0 | $0 |
Available total net operating loss carryforwards for U.S. Federal and state income tax | 7,566,000 | 3,553,000 |
Deferred tax assets in respect of U.S. Federal and state income taxes | 2,437,000 | 324,000 |
Company had total available net operating loss carryforwards for foreign income tax purposes | 4,782,000 | 0 |
Deferred tax assets in respect of for foreign income tax purposes | 421,000 | 0 |
Deferred tax assets in total | 3,840,000 | 3,841,000 |
valuation allowances | 3,840,000 | 3,841,000 |
Deferred tax assets net | $0 | $0 |
LongLived_Assets_Net_of_Accumu
Long-Lived Assets (Net of Accumulated Depreciation and Amortization) (Details) (dollars in thousands) (USD $) | Mar. 31, 2014 | Sep. 30, 2013 |
Identifiable long-lived assets | ' | ' |
Americas | $181 | $169 |
Europe | ' | 1 |
Total Long-Lived Assets (net) | $181 | $170 |
Revenues_from_External_Custome
Revenues from External Customers (Details) (dollars in millions) (USD $) | 3 Months Ended | 6 Months Ended | ||
Mar. 31, 2014 | Mar. 31, 2013 | Mar. 31, 2014 | Mar. 31, 2013 | |
Revenues from External Customers | ' | ' | ' | ' |
United States | $1.70 | $2.50 | $4.10 | $5.40 |
Other Americas | 0.2 | 0.4 | 0.2 | 0.4 |
Total Americas | 1.9 | 2.9 | 4.3 | 5.8 |
Hong Kong | 2.1 | 1.4 | 4.4 | 2.6 |
Other APAC | 0.6 | 0.8 | 1.6 | 1.7 |
Total APAC Region | 2.7 | 2.2 | 6 | 4.3 |
Germany | 1.2 | 1.6 | 2.5 | 3.6 |
Poland | 0.8 | 1.1 | 1.9 | 1.1 |
Other Europe | 0.2 | ' | 0.4 | ' |
Total Europe Region | 2.2 | 2.7 | 4.8 | 4.7 |
Total net sales* | $6.70 | $7.80 | $15.10 | $14.80 |