Forward Industries (FORD) 10-Q 14 Feb 20 2020 Q1 Quarterly report Financial data

Document And Entity Information

Document And Entity Information - shares	3 Months Ended
	Dec. 31, 2019	Feb. 12, 2020
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Dec. 31, 2019
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	Q1
Entity Registrant Name	Forward Industries, Inc.
Entity Central Index Key	0000038264
Current Fiscal Year End Date	--09-30
Entity Filer Category	Non-accelerated Filer
Entity Common Stock, Shares Outstanding		9,533,851
Entity Current Reporting Status	Yes
Entity Small Business	true
Entity Emerging Growth	false
Entity Interactive data current	Yes
Entity File Number	001-34780
Entity Incorporation State Code	NY
Entity Shell Company	false

CONDENSED CONSOLIDATED BALANCE

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($)	Dec. 31, 2019	Sep. 30, 2019
Current assets:
Cash	$ 2,068,809	$ 3,092,813
Accounts receivable, net	7,320,670	6,695,120
Inventories	1,100,467	1,608,827
Prepaid expenses and other current assets	489,545	441,502
Total current assets	10,979,491	11,838,262
Property and equipment, net	221,362	243,002
Intangible assets, net	1,207,648	1,248,712
Goodwill	2,182,427	2,182,427
Investment	326,941	326,941
Operating lease right of use assets, net	3,569,815	0
Other assets	217,486	255,008
Total Assets	18,705,170	16,094,352
Current liabilities:
Line of credit	1,300,000	1,300,000
Accounts payable	279,258	315,444
Due to Forward China	2,726,818	3,236,693
Deferred Income	58,883	219,831
Notes payable - short-term portion	1,630,022	1,654,799
Capital leases payable - short-term portion	39,598	39,941
Deferred consideration - short-term portion	634,000	834,000
Operating lease liability - short-term portion	271,680	0
Accrued expenses and other current liabilities	695,505	694,972
Total current liabilities	7,635,764	8,295,680
Other liabilities
Capital leases payable - long-term portion	18,010	26,438
Deferred rent	0	60,935
Operating lease liability - long-term portion	3,388,575	0
Total other liabilities	3,406,585	87,373
Total Liabilities	11,042,349	8,383,053
Commitments and contingencies
Shareholders' equity:
Common stock, par value $0.01 per share; 40,000,000 shares authorized; 9,533,851 and 9,533,851 shares issued and outstanding, respectively	95,338	95,338
Additional paid-in capital	18,969,309	18,936,130
Accumulated deficit	(11,401,826)	(11,320,169)
Total shareholders' equity	7,662,821	7,711,299
Total liabilities and shareholders' equity	$ 18,705,170	$ 16,094,352

CONDENSED CONSOLIDATED BALANC_2

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - $ / shares	Dec. 31, 2019	Sep. 30, 2019
Statement of Financial Position [Abstract]
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)	9,533,851	9,533,851
Common stock, shares outstanding (in shares)	9,533,851	9,533,851

CONDENSED CONSOLIDATED STATEMEN

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (Unaudited) - USD ($)	3 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Income Statement [Abstract]
Net revenues	$ 8,392,854	$ 10,183,283
Cost of sales	6,672,845	8,880,242
Gross profit	1,720,009	1,303,041
Operating expenses
Sales and marketing	535,172	469,599
General and administrative	1,213,966	1,313,969
Total operating expenses	1,749,138	1,783,568
Loss from operations	(29,129)	(480,527)
Other expenses:
Interest expense	(50,949)	(45,037)
Other expense	(1,579)	(4,963)
Total other expense	(52,528)	(50,000)
Loss before income taxes	(81,657)	(530,527)
Provision for income taxes	0	0
Net loss	$ (81,657)	$ (530,527)
Loss per share:
Basic	$ (0.01)	$ (0.06)
Diluted	$ (0.01)	$ (0.06)
Weighted average number of common and common equivalent shares outstanding
Basic	9,533,851	9,527,823
Diluted	9,533,851	9,527,823

CONDENSED CONSOLIDATED STATEM_2

CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (Unaudited) - USD ($)	Common Stock	Additional Paid-In Capital	Accumulated Deficit	Total
Beginning balance, shares at Sep. 30, 2018	9,533,851
Beginning balance, value at Sep. 30, 2018	$ 95,338	$ 18,720,396	$ (7,716,139)	$ 11,099,595
Share-based compensation		11,794		11,794
Net loss			(530,527)	(530,527)
Ending balance, shares at Dec. 31, 2018	9,533,851
Ending balance, value at Dec. 31, 2018	$ 95,338	18,732,190	(8,246,666)	(10,580,862)
Beginning balance, shares at Sep. 30, 2019	9,533,851
Beginning balance, value at Sep. 30, 2019	$ 95,338	18,963,130	(11,320,169)	7,711,299
Share-based compensation		33,179		33,179
Net loss			(81,657)	(81,657)
Ending balance, shares at Dec. 31, 2019	9,533,851
Ending balance, value at Dec. 31, 2019	$ 95,338	$ 18,969,309	$ (11,401,826)	$ 7,662,821

CONDENSED CONSOLIDATED STATEM_3

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($)	3 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Cash Flows From Operating Activities:
Net loss	$ (81,657)	$ (530,527)
Adjustments to reconcile net loss to net cash used in operating activities:
Share-based compensation	33,179	11,794
Depreciation and amortization	69,132	91,607
Bad debt expense (recovery)	(65,454)	46,510
Deferred rent	0	4,478
Changes in operating assets and liabilities:
Accounts receivable	(560,096)	(325,925)
Inventories	508,360	141,502
Prepaid expenses and other current assets	(48,043)	(27,180)
Other assets	37,522	0
Accounts payable and due to Forward China	(546,061)	(30,812)
Deferred income	(160,948)	(39,220)
Operating lease liabilities	9,681	0
Accrued expenses and other current liabilities	20,357	(131,895)
Net cash used in operating activities	(784,028)	(789,668)
Cash Flows From Investing Activities:
Purchases of property and equipment	(6,428)	(19,726)
Net cash used in investing activities	(6,428)	(19,726)
Cash Flows From Financing Activities:
Proceeds from Line of Credit borrowings	0	1,050,000
Repayment of Line of Credit borrowings	0	(100,000)
Repayment of notes payable	(24,777)	(78,942)
Repayments on capital equipment leases	(8,771)	(14,249)
Payment of deferred cash consideration	(200,000)	0
Net cash provided by (used in) financing activities	(233,548)	856,809
Net decrease in cash	(1,024,004)	47,415
Cash at beginning of year	3,092,813	4,369,866
Cash at end of year	2,068,809	4,417,281
Supplemental Disclosure of Cash Flow Information:
Cash paid for interest	50,949	39,730
Cash paid for taxes	303	1,438
Supplemental Disclosure of Non-Cash Information:
ROU assets from the adoption of ASC 842	3,648,582	0
Lease Liabilities arising from obtaining ROU assets	$ 3,729,341	$ 0

1. OVERVIEW

1. OVERVIEW	3 Months Ended
	Dec. 31, 2019
Organization, Consolidation and Presentation of Financial Statements [Abstract]
OVERVIEW	NOTE 1 OVERVIEW Forward Industries, Inc. (“Forward” or the “Company”) is a fully integrated design, development and manufacturing solution provider for top tier medical and technology customers worldwide. Through its acquisition of Intelligent Product Solutions, Inc. (“IPS”), the Company has expanded its ability to design and develop solutions for our existing multinational client base and expand beyond the diabetic product line into a variety of industries with a full spectrum of hardware and software product design and engineering services. In addition to our existing design and distribution of carry and protective solutions, primarily for handheld electronic devices, the Company is now a one-stop shop for design, development and manufacturing solutions serving a wide range of clients in the industrial, commercial and consumer industries. The Company’s previous principal customer market has been original equipment manufacturers, or “OEMs” (or the contract manufacturing firms of these OEM customers), that either package our 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 and recreational products, bar code scanners, smartphones, GPS location devices, tablets, firearms). The Company’s OEM customers are located in: (i) the Asia-Pacific Region, which we refer to as the “APAC Region”; (ii) Europe, the Middle East, and Africa, which we refer to as the “EMEA Region”; and (iii) the Americas. The Company does not manufacture any of its OEM products and sources substantially all of its OEM products from independent suppliers in China, through Forward China. As a result of the expansion of the design development capabilities through its wholly-owned subsidiary, IPS (acquired in January 2018), the Company is now able to introduce proprietary products to the market from concepts brought to it from a number of different sources, both inside and outside the Company. In the opinion of management, the accompanying condensed 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 year ending September 30, 2020. These condensed 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, 2019, and with the disclosures and risk factors presented therein. The September 30, 2019 condensed consolidated balance sheet has been derived from the audited consolidated financial statements.

2. ACCOUNTING POLICIES

2. ACCOUNTING POLICIES	3 Months Ended
	Dec. 31, 2019
Accounting Policies [Abstract]
ACCOUNTING POLICIES	NOTE 2 ACCOUNTING POLICIES Accounting Estimates The preparation of the Company’s condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) 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 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 condensed consolidated financial statements include the accounts of Forward Industries, Inc. and its wholly-owned subsidiaries (Forward US, Forward Switzerland, Forward UK and IPS). All significant intercompany transactions and balances have been eliminated in consolidation. Intercompany revenues of approximately $16,000 and $201,000 for the three months ended December 31, 2019 and 2018, respectively, related to design and marketing work performed by IPS for Forward have been eliminated in consolidation. Segment Reporting Operating segments are defined as components of an enterprise about which separate financial information is available that is regularly evaluated by a chief operating decision maker, or Forward management, in deciding how to allocate resources and in assessing performance. As a result of the acquisition of IPS in January 2018, management conducts business through two distinct operating segments, which are also our reportable segments: distribution and design. Forward US, Forward Switzerland and Forward UK comprise the distribution operating segment and IPS is the design operating segment. Organizing our business through two operating segments allows us to align our resources and manage the operations. Our management team regularly reviews operating segment revenue and profitability when assessing financial results of operating segments and allocating resources. We measure the performance of our operating segments based upon operating segment revenue and operating income (loss). Segment operating income (loss) includes revenue and expenses incurred directly by the operating segment, including cost of sales and selling, marketing, and general and administrative expenses. Goodwill Goodwill is an asset representing the future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized. Goodwill was recognized as a result of the acquisition of IPS in January 2018. Goodwill is reviewed for impairment at least annually, and when triggering events occur, in accordance with the provisions of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 350, “Intangibles – Goodwill and Other.” The Company has two reporting units for purposes of evaluating goodwill impairment and management performs our annual goodwill impairment test on September 30, at the end of the fiscal year. The Company has the option to perform a qualitative assessment to determine if an impairment is more likely than not to have occurred. If the Company can support the conclusion that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then the Company would not need to perform the impairment test for the reporting unit. If the Company cannot support such a conclusion or does not elect to perform the qualitative assessment, then the Company will compare the fair value of the reporting unit with its carrying amount, including goodwill. If the fair value of the reporting unit exceeds its carrying value, no impairment charge is recognized. If the fair value of the reporting unit is less than its carrying value, an impairment charge will be recognized for the amount by which the reporting unit’s carrying amount exceeds its fair value. A significant amount of judgment is required in performing goodwill impairment tests including estimating the fair value of a reporting unit and the implied fair value of goodwill. Management compared the fair value of the reporting unit, the design segment which holds the goodwill, with its carrying value. Based on management’s evaluation, there were no impairments to goodwill at September 30, 2019 and there was no triggering event to lead to an interim impairment test at December 31, 2019. Intangible assets Intangible assets include trademark and customer relationships, which were acquired as part of the acquisition of IPS in January 2018 and are recorded based on the estimated fair value in purchase price allocation. The intangible assets are amortized over their estimated useful lives, which are periodically evaluated for reasonableness. Our intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. In assessing the recoverability of our intangible assets, we must make estimates and assumptions regarding future cash flows and other factors to determine the fair value of the respective assets. These estimates and assumptions could have a significant impact on whether an impairment charge is recognized and also the magnitude of any such charge. Fair value estimates are made at a specific point in time, based on relevant information. These estimates are subjective in nature and involve uncertainties and matters of significant judgments and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates. If these estimates or material related assumptions change in the future, we may be required to record impairment charges related to our intangible assets. Management evaluated and concluded that there were no impairments of intangible assets at December 31, 2019. Income Taxes The Company recognizes future tax benefits and liabilities measured at enacted rates attributable to temporary differences between financial statement and income tax bases of assets and liabilities and to net tax operating loss carryforwards to the extent that realization of these benefits is more likely than not. As of December 31, 2019, there was no change to our assessment that a full valuation allowance was required against all net deferred tax assets. Accordingly, any deferred tax provision or benefit was offset by an equal and opposite change to the valuation allowance. No current book income tax provision was recorded against book net income due to the existence of significant net operating loss carryforwards. Revenue Recognition Distribution Segment The Company generally recognizes revenue in its distribution segment when: (i) finished goods are shipped to our distribution customers (in general, these conditions occur at either point of shipment or point of destination, depending on the terms of sale, i.e. transfer of control); (ii) there are no other deliverables or performance obligations; and (iii) there are no further obligations to the customer after the title of the goods has transferred. The Company defers revenue when it receives consideration before achieving the criteria previously mentioned. Design Segment Under ASC 606, the Company applies the “cost to cost” and “right to invoice” methods of revenue recognition to the contracts with customers in the design segment. The design segment typically engages in two types of contracts: (i) Time and Material and (ii) Fixed Price contracts. The Company recognizes revenue over time on its time and material contracts utilizing a “right to invoice” method. Revenues from fixed price contracts that require performance of services that are not related to the production of tangible assets are recognized by using cost inputs to measure progress toward the completion of its performance obligations or the “cost to cost” method. Revenues from contracts that contain specific deliverables are recognized when the performance obligation has been satisfied or the transfer of goods to the customer has been completed and accepted. Recognized revenues that will not be billed until a later date, or Contract assets, are recorded as an asset and classified as a component of accounts receivable in the accompanying condensed consolidated balance sheets. Contract assets at December 31, 2019 and September 30, 2019 were approximately $609,000 and $611,000, respectively. Contracts where collections to date have exceeded recognized revenues, or Contract liabilities, are recorded as a liability and classified as a component of deferred income in the accompanying condensed consolidated balance sheets. Contract liabilities at December 31, 2019 and September 30, 2019 were approximately $59,000 and $220,000, respectively. Share-Based Compensation Expense The Company recognizes employee and director share-based compensation in its condensed consolidated statements of operations at the grant date based on the fair value of stock options and other equity based compensation. The determination of stock option grant date fair value is estimated using the Black-Scholes option pricing model, which includes variables such as the expected volatility of the Company’s share price, the exercise behavior of its grantees, interest rates, and dividend yields. These variables are projected based on the Company’s historical data, experience, and other factors. In the case of awards with multiple vesting periods, the Company has elected to use the graded vesting attribution method, which recognizes compensation cost on a straight-line basis over each separately vesting portion of the award as if the award was, in substance, multiple awards. See Note 5 - Share-Based Compensation. In addition, the Company recognizes share-based compensation to non-employees based upon the fair value, using the Black-Scholes option pricing model, determined at the deemed measurement dates over the related contract service period. Recent Accounting Pronouncements In May 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers,” (“ASU 2014-09”). ASU 2014-09 supersedes the revenue recognition requirements in ASC 605, “Revenue Recognition” (“ASC 605”) and most industry-specific guidance throughout ASC 605. ASU 2014-09 establishes principles for recognizing revenue upon the transfer of promised goods or services to customers, in an amount that reflects the expected consideration received in exchange for those goods or services. The guidance in ASU 2014-09 was revised in July 2015 to be effective for interim periods beginning on or after December 15, 2017 and should be applied on a transitional basis either retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying ASU 2014-09 recognized at the date of initial application. In 2016, FASB issued additional ASUs that clarify the implementation guidance on principal versus agent considerations (ASU 2016-08), on identifying performance obligations and licensing (ASU 2016-10), and on narrow-scope improvements and practical expedients (ASU 2016-12) as well as on the revenue recognition criteria and other technical corrections (ASU 2016-20). These new standards became effective during the first quarter of fiscal 2019 and were adopted using the modified retrospective method. The Company has performed a review of ASU 2014-09 as compared to its previous accounting policies for our products and services revenues and did not identify any material impact to revenue. Therefore, there was no adjustment to retained earnings for a cumulative effect. Effective October 1, 2018, the Company adopted ASC 606 and elected the modified retrospective method on existing contracts at the date of adoption. The Company has implemented the necessary changes to such business processes, controls and systems to effectively review and account for the new contracts under this standard. Revenues recognized from the distribution segment under ASC 606 are consistent with previous revenue recognition standards under ASC 605, whereby revenue is typically recognized at either the point of shipment or point of destination, depending on the terms of the sale. Regarding the Company’s design segment, the Company has evaluated the changes from adopting this new standard on its financial reporting, disclosures and its various revenue streams. The Company now recognizes revenue over time on its time and material contracts utilizing a “right to invoice” method which is similar to previous revenue recognition standards under ASC 605. Revenues from fixed-price type contracts that require performance of services that are not related to the production of tangible assets are recognized by using cost inputs to measure progress toward the completion of its performance obligations. This method is similar to the method formerly applied to certain of the Company’s contracts covered by the previous revenue recognition standards under ASC 605. In some cases, contracts contain an arrangement of specific deliverables or production of prototypes, or a distinct performance obligation, and the Company allocates the transaction price to the performance obligation on a relative standalone selling price basis. In February 2016, the FASB issued a new standard related to leases to increase transparency and comparability among organizations by requiring the recognition of operating lease right-of-use (“ROU”) assets and lease liabilities on the balance sheet. Most prominent among the changes in the standard is the recognition of ROU assets and lease liabilities by lessees for those leases classified as operating leases. Under the standard, disclosures are required to meet the objective of enabling users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases. The Company is also required to recognize and measure new leases at the adoption date and recognize a cumulative-effect adjustment in the period of adoption using a modified retrospective approach, with certain practical expedients available. The Company adopted Accounting Standards Codification ("ASC") 842, "Leases" ("ASC 842") effective October 1, 2019 and elected to apply the available practical expedients and implemented internal controls and key system functionality to enable the preparation of financial information on adoption. The Company elected the practical expedients that allow the Company to carry forward the historical lease classification. At adoption, the Company elected the following practical expedients: (1) the "package of practical expedients", pursuant to which the Company did not need to reassess its prior conclusions about lease identification, lease classification and initial direct costs, (2) creation of an accounting policy for short-term leases resulting in lease payments being recorded as an expense on a straight-line basis over the lease term, and (3) to account separately for lease and non-lease components for all leases. The Company has established an inventory of existing leases and implemented a new process of evaluating the classification of each lease. The financial impact of the adoption primarily relates to the capitalization of right-of-use assets and recognition of lease liability related to operating leases. In the first quarter of 2019, the Company adopted FASB ASU No. 2016-16, “Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory” (“ASU 2016-16”), which requires the recognition of the income tax consequences of an intra-entity transfer of an asset, other than inventory, when the transfer occurs. The adoption of ASU 2016-16 did not have an impact to the consolidated financial statements due to the Company’s maintenance of a full valuation allowance on the Company’s net deferred tax asset. In January 2017, the FASB issued ASU 2017-04, “Intangibles - Goodwill and Other (Topic 350) - Simplifying the Test for Goodwill Impairment.” ASU 2017-04 simplifies the accounting for goodwill impairments by eliminating the requirement to compare the implied fair value of goodwill with its carrying amount as part of step two of the goodwill impairment test referenced in ASC 350, “Intangibles - Goodwill and Other (“ASC 350”).” As a result, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An impairment charge should be recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value. However, the impairment loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. ASU 2017-04 is effective for annual reporting periods beginning after December 15, 2019, including any interim impairment tests within those annual periods, with early application permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company adopted ASU 2017-04 in the first quarter of Fiscal 2019 and the adoption did not have any impact on the Company’s consolidated financial statements. In May 2017, the FASB issued ASU No. 2017-09, “Scope of Modification Accounting”, to provide guidance on which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. The Company adopted ASU No. 2017-09 in the first quarter of Fiscal 2019 and the adoption did not have any impact on the Company’s consolidated financial statements. In March 2018, the FASB issued ASU 2018-05, “Income Taxes (Topic 740), Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118.” The ASU adds various Securities and Exchange Commission (“SEC”) paragraphs pursuant to the issuance of the December 2017 SEC Staff Accounting Bulletin No. 118, “Income Tax Accounting Implications of the Tax Cuts and Jobs Act (“SAB 118”)”, which was effective immediately. The SEC issued SAB 118 to address concerns about reporting entities’ ability to timely comply with the accounting requirements to recognize all of the effects of the Tax Cuts and Jobs Act in the period of enactment. SAB 118 allows disclosure that determination of some or all of the income tax effects from the Tax Cuts and Jobs Act may be incomplete by the due date of the financial statements and, if possible, provide a reasonable estimate. The Company has accounted for the tax effects of the Tax Cuts and Jobs Act under the guidance of SAB 118. In June 2018, the FASB issued ASU 2018-07, “Compensation — Stock Compensation (Topic 718),” (“ASU 2018-07”). ASU 2018-07 is intended to reduce cost and complexity and to improve financial reporting for nonemployee share-based payments. The accounting requirements for nonemployee and employee share-based payment transactions had previously been significantly different. ASU 2018-07 expands the scope of Topic 718, Compensation — Stock Compensation (which currently only includes share-based payments to employees) to include share-based payments issued to nonemployees for goods or services. Consequently, the accounting for share-based payments to nonemployees and employees will be substantially aligned. This ASU supersedes Subtopic 505-50, “Equity — Equity-Based Payments to Nonemployees.” The amendments in this ASU are effective for fiscal years beginning after December 15, 2018, and interim periods within that fiscal year. Early adoption is permitted, but no earlier than a company’s adoption date of Topic 606, Revenue from Contracts with Customers. The Company adopted ASU 2018-07 effective October 1, 2019. The adoption of ASU 2018-07 did not have a material impact on the Company’s consolidated financial statements. In August 2018, the FASB issued ASU 2018-13, “Fair Value Measurement - Disclosure Framework (Topic 820).” The updated guidance improves the disclosure requirements on fair value measurements. The updated guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted for any removed or modified disclosures. The Company is currently assessing the timing and impact of adopting the updated provisions. In November 2019, the FASB issued ASU 2019-08, “Compensation – Stock Compensation (Topic 718) and Revenue from Contracts with Customers (Topic 606).” ASU 2019-08 is an accounting pronouncement which expands the scope of ASC Topic 718 to provide guidance for share-based payment awards granted to a customer in conjunction with selling goods or services accounted for under Topic 606. The pronouncement is effective for fiscal years beginning after December 15, 2019 and interim periods within those fiscal years. The Company is currently evaluating the effects of this pronouncement on its consolidated financial statements along with the effects of ASU 2018-07 noted above. In November 2019, the FASB issued ASU 2019-11, “Codification Improvements to Topic 326, Financial Instruments – Credit Losses.” ASU 2019-11 is an accounting pronouncement that amends ASU 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” The ASU 2019-11 amendment provides clarity and improves the codification to ASU 2016-03. The pronouncement would be effective concurrently with the adoption of ASU 2016-03. The pronouncement is effective for fiscal years beginning after December 15, 2019 and interim periods within those fiscal years. The Company is currently evaluating the effects of this pronouncement on its consolidated financial statements. Business Combinations The Company allocates the fair value of purchase consideration to the tangible assets acquired, liabilities assumed and intangible assets acquired based on their estimated fair values. The excess of the purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill. When determining the fair values of assets acquired and liabilities assumed, the Company makes significant estimates and assumptions, especially with respect to intangible assets. The Company recognizes the purchase of assets and the assumption of liabilities as an asset acquisition, if the transaction does not constitute a business combination. The excess of the fair value of the purchase price is allocated on a relative fair value basis to the identifiable assets and liabilities. No goodwill is recorded in an asset acquisition. Critical estimates in valuing certain intangible assets include but are not limited to future expected cash flows from customer relationships and developed technology, discount rates and terminal values. Our estimate of fair value is based upon assumptions believed to be reasonable, but actual results may differ from estimates. Other estimates associated with the accounting for acquisitions may change as additional information becomes available regarding the assets acquired and liabilities assumed.

3. FAIR VALUE MEASUREMENTS

3. FAIR VALUE MEASUREMENTS	3 Months Ended
	Dec. 31, 2019
Fair Value Disclosures [Abstract]
FAIR VALUE MEASUREMENTS	NOTE 3 FAIR VALUE MEASUREMENTS We perform fair value measurements in accordance with the guidance provided by ASC 820. ASC 820 defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required to be recorded at their fair values, we consider the principal or most advantageous market in which we would transact and consider assumptions that market participants would use when pricing the assets or liabilities, such as inherent risk, transfer restrictions, and risk of nonperformance. ASC 820 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. An asset’s or liability’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 establishes three levels of inputs that may be used to measure fair value: · · · The deferred cash consideration of $634,000 on our condensed consolidated balance sheets include a deferred cash component with a present value of $284,000 and an earn-out consideration component with a fair value of $350,000 measured using the Black-Scholes option pricing method, a Level 3 valuation technique. For the three months ended December 31, 2019, there was a scheduled payout of the deferred cash consideration component for $200,000. The following table presents the placement in the fair value hierarchy and summarizes the changes for the three months ended December 31, 2019: Fair value measurement at reporting date using Quoted prices in active markets for identical assets Significant other observable inputs Significant unobservable inputs Balance (Level 1) (Level 2) (Level 3) September 30, 2019 $ 834,000 $ – $ – $ 834,000 Payout of deferred consideration (200,000 ) – – (200,000 ) December 31, 2019 $ 634,000 $ – $ – $ 634,000 The cost method investment of $326,941 on our consolidated balance sheets is common stock received from a customer as compensation for product design services provided by the Company. The shares represent approximately a less than 2% ownership interest in the customer. Pursuant to ASC 820, management has estimated the value of the common stock consideration to be $326,941 during Fiscal 2019, based on a then recent private placement round of common stock issued to third party private investors of the customer for cash, and has recognized revenue and a cost method investment for that amount. Management has determined that the inputs used to value the common stock are observable, either directly or indirectly, and therefore classified as a Level 2 valuation. Pursuant to ASC 820, the transaction price of the cash financing round establishes the fair value of the common stock issued as consideration unless one of the following conditions exists: a. The transaction is between related parties, b. The transaction takes place under duress or the seller is forced to accept the price in the transaction, c. The unit of account represented by the transaction price is different from the unit of account for the asset or liability measured at fair value, or d. The market in which the transaction takes place is different from the principal market (or most advantageous market). Management concluded there are no impairments, other than temporary, to the investment at December 31, 2019.

4. SEGMENT INFORMATION

4. SEGMENT INFORMATION	3 Months Ended
	Dec. 31, 2019
Segment Reporting [Abstract]
SEGMENT INFORMATION	NOTE 4 SEGMENT INFORMATION The Company, post IPS acquisition, conducts its business through two operating segments, which are also its reportable segments: · · Segment operating income (loss) reflects results before shared corporate and unallocated administrative expenses and income taxes. Shared corporate and unallocated administrative expenses principally consist of costs for corporate and administrative support functions. For the Quarter Ended December 31, 2019 2018 Revenue Distribution $ 4,696,243 $ 6,280,726 Design 3,696,611 3,902,557 Total revenue 8,392,854 10,183,283 Cost of sales Distribution $ 4,093,318 $ 5,294,432 Design 2,579,527 3,585,810 Total cost of sales $ 6,672,845 $ 8,880,242 Segment operating Income (loss) from operations Distribution $ (443,189 ) $ 5,997 Design 414,060 (486,524 ) Total loss from operations $ (29,129 ) $ (480,527 ) Other expenses Distribution $ (33,580 ) $ (36,964 ) Design (18,948 ) (13,036 ) Total Other expenses $ (52,528 ) $ (50,000 ) Income (loss) before income taxes Distribution $ (476,769 ) $ (30,967 ) Design 395,112 (499,560 ) Total loss before income taxes $ (81,657 ) $ (530,527 ) The following table presents total assets by operating segment: December 31, 2019 September 30, 2019 Distribution $ 8,170,014 $ 9,554,465 Design 10,535,156 6,539,887 Total assets $ 18,705,170 $ 16,094,352

5. SHARE-BASED COMPENSATION

5. SHARE-BASED COMPENSATION	3 Months Ended
	Dec. 31, 2019
Share-based Payment Arrangement [Abstract]
SHARE-BASED COMPENSATION	NOTE 5 SHARE-BASED COMPENSATION Stock Options The fair value of each option award is estimated on the date of grant using the Black-Scholes option pricing model that uses the following assumptions. The expected term represents the period over which the stock option awards are expected to be outstanding. The Company utilizes the “simplified” method to develop an estimate of the expected term of “plain vanilla” employee option grants. The expected volatility used is based on the historical price of the Company’s stock over the most recent period commensurate with the expected term of the award. The risk-free interest rate used is based on the implied yield of U.S. Treasury zero-coupon issues with a remaining term equivalent to the award’s expected term. 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. The estimated annual forfeiture rate is based on management’s expectations and will reduce expense ratably over the vesting period. The forfeiture rate will be adjusted periodically based on the extent to which actual option forfeitures differ, or are expected to differ, from the previous estimate, when it is material. There were no options granted during the three months ended December 31, 2019 and 2018. The following table summarizes stock option activity during the three months ended December 31, 2019: Number of Options Weighted Average Exercise Price Weighted Average Remaining Life In Years Intrinsic Value Outstanding, September 30, 2019 812,879 $ 1.69 Granted – – Exercised – – Forfeited (1,501 ) 1.67 Expired – – Outstanding, December 31, 2019 811,378 $ 1.69 3.6 $ 19,900 Exercisable, December 31, 2019 622,007 $ 1.73 3.5 $ 19,900 The Company recognized compensation expense of approximately $33,000 and $10,000 during the three months ended December 31, 2019 and 2018, respectively, for stock option awards in its condensed consolidated statements of operations. As of December 31, 2018, there was approximately $25,000 of total unrecognized compensation cost related to non-vested stock option awards that is expected to be recognized over a weighted average period of 0.5 years. The following table provides additional information regarding stock option awards that were outstanding and exercisable at December 31, 2019: Options Outstanding Options Exercisable Exercise Price Weighted Average Exercise Price Outstanding Number of Options Weighted Average Exercise Price Weighted Average Remaining Life In Years Exercisable Number of Options $0.64 to $1.23 $ 0.80 77,500 $ 0.80 4.8 77,500 $1.44 to $1.67 1.51 605,378 1.49 4.1 416,007 $2.20 to $2.85 2.48 66,000 2.48 0.4 66,000 $3.73 to $3.79 3.74 62,500 3.74 1.1 62,500 811,378 3.5 622,007 Restricted Stock Awards The Company recognized compensation expense of approximately $0 and $2,000 during the three months ended December 31, 2019 and 2018, respectively, for restricted stock awards in its condensed consolidated statements of operations. As of December 31, 2019, there was no unrecognized compensation cost related to non-vested restricted stock awards.

6. EARNINGS PER SHARE

6. EARNINGS PER SHARE	3 Months Ended
	Dec. 31, 2019
Earnings Per Share [Abstract]
EARNINGS PER SHARE	NOTE 6 EARNINGS PER SHARE Basic earnings 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 earnings 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: (i) shares that would be issued upon the exercise of stock options and warrants, computed using the treasury stock method; and (ii) shares of nonvested restricted stock. The Company calculated the potential diluted earnings per share in accordance with ASC 260, as follows: For the Three Months Ended December 31, 2019 2018 Numerator: Net loss $ (81,657 ) $ (530,527 ) Denominator: Weighted average shares outstanding - basic 9,533,851 9,527,823 Effects of dilutive securities: Assumed exercise of stock options, treasury stock method – – Assumed vesting of restricted stock, treasury stock method – – Weighted average dilutive potential common shares – – Weighted average shares outstanding - diluted 9,533,851 9,527,823 Basic loss per share $ (0.01 ) $ (0.06 ) Diluted loss per share $ (0.01 ) $ (0.06 ) The following securities were excluded from the calculation of diluted earnings per share because their inclusion would have been anti-dilutive: As of December 31, 2019 2018 Options 811,378 545,066 Warrants 151,335 151,335 Total potentially dilutive shares 962,713 696,401

7. CONCENTRATIONS

7. CONCENTRATIONS	3 Months Ended
	Dec. 31, 2019
Risks and Uncertainties [Abstract]
CONCENTRATIONS	NOTE 7 CONCENTRATIONS Concentration of Revenues and Accounts Receivable For the three months ended December 31, 2019 and 2018, the Company had significant customers with individual percentage of total revenues equaling 10% or greater. The concentrations of revenues and accounts receivable for each reporting segment are as follows: Distribution Segment Revenues Concentration For the Three Months Ended December 31, 2019 2018 Customer 1 34.2% 31.1% Customer 2 31.2% 27.8% Customer 3 13.4% 14.3% Customer 4 4.9% 9.7% Totals 83.7% 82.9% Design Segment Revenues Concentration For the Three Months Ended December 31, 2019 2018 Customer 1 22.8% 15.5% Customer 2 12.4% 3.2% Customer 3 10.3% 0.0% Customer 4 9.6% 13.3% Customer 5 0.0% 20.8% Totals 55.1% 52.8% At December 31, 2019 and September 30, 2019, concentrations of accounts receivable with significant customers representing 10% or greater of segment accounts receivable were as follows: Distribution Segment Accounts Receivable Concentration December 31, 2019 September 30, 2019 Customer 1 32.5% 21.2% Customer 2 29.2% 29.0% Customer 3 16.1% 23.6% Customer 4 11.3% 15.7% Totals 89.1% 89.5% Design Segment Accounts Receivable Concentration December 31, 2019 September 30, 2019 Customer 1 29.4% 33.7% Customer 2 14.9% 5.9% Customer 3 11.8% 8.8% Totals 56.1% 48.4%

8. RELATED PARTY TRANSACTIONS

8. RELATED PARTY TRANSACTIONS	3 Months Ended
	Dec. 31, 2019
Related Party Transactions [Abstract]
RELATED PARTY TRANSACTIONS	NOTE 8 RELATED PARTY TRANSACTIONS Buying Agency and Supply Agreement On March 12, 2012, the Company entered into a Buying Agency and Supply Agreement (the “Supply Agreement”) with Forward Industries Asia-Pacific Corporation, a British Virgin Islands corporation (“Forward China”). The Supply 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 Supply Agreement) in the Asia Pacific region. The Company purchases products at Forward China’s cost and also pays to Forward China a monthly service fee equal to the sum of: (i) $100,000; and (ii) 4% of “Adjusted Gross Profit”, which is defined as the selling price less the cost from Forward China. The amended Supply Agreement was scheduled to expire on March 8, 2019, subject to renewal. Terence Bernard Wise, Chief Executive Officer and Chairman of the Company, is the owner of Forward China. In addition, Jenny P. Yu, a Managing Director of Forward China, beneficially owns more than 5% of the Company’s shares of common stock. The Company recognized approximately $338,000 and $359,000 during the three months ended December 31, 2019 and 2018, respectively, in service fees paid to Forward China, which are included as a component of cost of goods sold in the accompanying condensed consolidated statements of operations. Effective October 22, 2019, the Company extended the term of the supply agreement to October 22, 2020 under the same terms, substantially. Promissory Note On January 18, 2018, the Company issued a $1.6 million promissory note payable to Forward China in order to fund the acquisition of IPS. The promissory note bears an interest rate of 8% per annum. Monthly interest payments commenced on February 18, 2018. The original maturity date was January 18, 2019 and has been extended to March 17, 2020. The maturity date of the note has been extended on several occasions to assist the Company with liquidity. The Company made approximately $32,000 in interest payments associated with the note in the three months ended December 31, 2019 and 2018. The $1.6 million note payable is included as a component of the notes payable - short-term portion line of the accompanying condensed consolidated balance sheets. Related Party Sales The Company’s design division provided services to a customer, Duality Advisers. The Chief Operating and Financial Officer and equity owner of Duality Advisers is an immediate family member of a director on the Company’s board and a member on the Board’s Audit and Compensation committees. The Company sold approximately $38,000 and $0 in design services to Duality Advisers for the three months ended December 31, 2019 and 2018, respectively. At December 31, 2019 and September 30, 2019, there were outstanding receivables of approximately $4,000 and $9,000, respectively, from Duality Advisers.

9. LEGAL PROCEEDINGS

9. LEGAL PROCEEDINGS	3 Months Ended
	Dec. 31, 2019
Legal Matters and Contingencies [Abstract]
LEGAL PROCEEDINGS	NOTE 9 LEGAL PROCEEDINGS From time to time, the Company may become a party to legal actions or proceedings in the ordinary course of its business. As of December 31, 2019, 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.

10. LINE OF CREDIT

10. LINE OF CREDIT	3 Months Ended
	Dec. 31, 2019
Debt Disclosure [Abstract]
LINE OF CREDIT	NOTE 10 LINE OF CREDIT The Company, specifically IPS, has a $1,300,000 revolving line of credit with TD Bank which was renewed at the discretion of the lender on April 30, 2019. The line of credit was amended and modified on September 28, 2018 to extend the line of credit limit from $1,000,000 to $1,300,000 and repayment was guaranteed by the Company and is secured by all of IPS’ assets. The interest rate on the line of credit is 0.75% above The Wall Street Journal prime rate. The effective interest rate at December 31, 2019 and September 30, 2019 was 5.5% and 5.75%, respectively. As of December 31, 2019, the Company had $0 available under the line of credit. The Company is subject to certain debt-service ratio requirements which are measured annually. As of September 30, 2019, the Company was in violation of the required debt-service ratio covenants. The Company was granted a waiver of the violation from the lender.

11. DEBT

11. DEBT	3 Months Ended
	Dec. 31, 2019
Debt Disclosure [Abstract]
DEBT	NOTE 11 DEBT On April 1, 2016, IPS entered into a term loan with a lender in the amount of $325,000. The loan matures on April 1, 2020 and bears interest at a rate of 4.215% per annum. Interest and principal of $7,378 is paid on a monthly basis through maturity. This loan is secured by all of the IPS’ assets and is guaranteed by the Company. Outstanding balance as of December 31 and September 30, 2019 was approximately $30,000 and $52,000, respectively. The agreement contains certain restrictive covenants measured annually. As of September 30, 2019, the Company was in violation of the required debt-service ratio covenants. The Company was granted a waiver of the violation from the lender. On December 11, 2017, IPS entered into an installment payment financing arrangement with a lender in the amount of approximately $23,000. IPS makes monthly payments of $1,035, which includes an implied interest rate of 9.5%, for 24 months. The last payment was made in December 2019. The loan balance was $0 and approximately $3,000 at December 31 and September 30, 2019, respectively.

12. MOONI AGREEMENT

12. MOONI AGREEMENT	3 Months Ended
	Dec. 31, 2019
Notes to Financial Statements
MOONI AGREEMENT	NOTE 12 MOONI AGREEMENT On January 29, 2019, the Company entered into a three-year Distribution Agreement (the “Agreement”) with Mooni International AB (“Mooni”) and its owner, Staffan Bern (the “Owner”). In accordance with the Agreement, the Company: (i) was appointed as the exclusive distributor of Mooni's current and future products (including future products developed or offered by Mooni and/or the Owner) in North America, (ii) subject to certain repayment requirements, the Company paid $400,000 to Mooni, and (iii) was granted an option to purchase a controlling interest of Mooni at a valuation not to exceed $5 million which, if exercised, would be effective on the 12-month anniversary of the effective date of the Agreement. Additionally, Forward China, a company owned by Terence Wise, the Company's Chairman and Chief Executive Officer, was named the designated supplier under the Agreement. As of December 31, 2019, the unamortized fee of approximately $278,000 is included in prepaid expenses and other current assets and other assets for the short-term and long-term components, respectively, in the accompanying consolidated balance sheet. Amortization of the cost for the three months ended December 31, 2019 of approximately $33,000 is included in the Sales and Marketing expenses in the accompanying consolidated statement of operations.

13. LEASES

13. LEASES	3 Months Ended
	Dec. 31, 2019
Leases [Abstract]
LEASES	NOTE 13 LEASES Operating Leases The Company leases office space for its corporate headquarters in West Palm Beach, Florida under a 90-month agreement expiring in September 2020. The operating lease granted six initial months of free rent and escalates at 3% per year. The monthly rent payment is approximately $7,700, which includes common area maintenance costs. The Company leases office space for its Distribution segment sales and administrative office in Cham, Switzerland on a month-to-month basis. The monthly rent payment is $1,599 CHF, which is approximately $1,615. IPS leases office space in Hauppauge, New York under a noncancelable lease agreement expiring in February 2027. The monthly rent payment is approximately $29,000, which includes power utilities. IPS leases office space in Ronkonkoma, New York under a 3-year agreement expiring in January 2022. The monthly rent payment is $4,400. As of December 31, 2019, the Company did not have additional operating and financing leases that have not yet commenced. Total operating lease expenses for the three months ended December 31, 2019 was $132,046 and is recorded in general and administrative expenses on the condensed consolidated statement of operations. Supplemental cash flows information related to leases was as follows: Three Months Ended December 31, 2019 Weighted Average Remaining Lease Term Operating leases 11.66 Years Finance leases 1.52 Years Weighted Average Discount Rate Operating leases 5.75% Finance leases 5.75% Future minimum payments under non-cancellable operating leases as of December 31, 2019 are as follows: Fiscal Years Ended December 31, Amount 2020 $ 474,635 2021 416,199 2022 368,499 2023 378,190 2024 388,172 Thereafter 3,101,883 Total future minimum lease payments 5,127,578 Less: amount representing imputed interest (1,467,324 ) Total $ 3,660,254 Finance Leases The Company, specifically IPS, leases computer equipment through various finance lease agreements expiring through January 2022. Amortization expense related to assets under finance lease was $2,288 during the three months ended December 31, 2019 and interest expense related to the finance leases was $1,028 during the three months ended December 31, 2019. Future minimum payments under non-cancellable operating leases as of December 31, 2019 are as follows: Fiscal Years Ended December 31, Amount 2020 $ 43,551 2021 16,365 2022 2,111 Total future minimum lease payments 62,027 Less: amount representing imputed interest (4,419 ) Total $ 57,608

14. SUBSEQUENT EVENTS

14. SUBSEQUENT EVENTS	3 Months Ended
	Dec. 31, 2019
Subsequent Events [Abstract]
SUBSEQUENT EVENTS	NOTE 14 SUBSEQUENT EVENTS On January 21, 2020, the Company executed a non-negotiable promissory note with a design segment customer (same customer in which the Company has a cost method investment – see Note 3) to recover approximately $1.6 million in accounts receivable which had been reserved as bad debt in fiscal 2019. The principal sum of the note is approximately $1,626,000. Beginning on April 1, 2020, monthly interest and principal payments, based on a one-year amortization schedule, will be due and payable in arrears on the first day of the month until March 1, 2021. Interest shall accrue at a rate of 8% per annum.

2. ACCOUNTING POLICIES (Policie

2. ACCOUNTING POLICIES (Policies)	3 Months Ended
	Dec. 31, 2019
Accounting Policies [Abstract]
Accounting Estimates	Accounting Estimates The preparation of the Company’s condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) 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 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 condensed consolidated financial statements include the accounts of Forward Industries, Inc. and its wholly-owned subsidiaries (Forward US, Forward Switzerland, Forward UK and IPS). All significant intercompany transactions and balances have been eliminated in consolidation. Intercompany revenues of approximately $16,000 and $201,000 for the three months ended December 31, 2019 and 2018, respectively, related to design and marketing work performed by IPS for Forward have been eliminated in consolidation.
Segment Reporting	Segment Reporting Operating segments are defined as components of an enterprise about which separate financial information is available that is regularly evaluated by a chief operating decision maker, or Forward management, in deciding how to allocate resources and in assessing performance. As a result of the acquisition of IPS in January 2018, management conducts business through two distinct operating segments, which are also our reportable segments: distribution and design. Forward US, Forward Switzerland and Forward UK comprise the distribution operating segment and IPS is the design operating segment. Organizing our business through two operating segments allows us to align our resources and manage the operations. Our management team regularly reviews operating segment revenue and profitability when assessing financial results of operating segments and allocating resources. We measure the performance of our operating segments based upon operating segment revenue and operating income (loss). Segment operating income (loss) includes revenue and expenses incurred directly by the operating segment, including cost of sales and selling, marketing, and general and administrative expenses.
Goodwill	Goodwill Goodwill is an asset representing the future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized. Goodwill was recognized as a result of the acquisition of IPS in January 2018. Goodwill is reviewed for impairment at least annually, and when triggering events occur, in accordance with the provisions of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 350, “Intangibles – Goodwill and Other.” The Company has two reporting units for purposes of evaluating goodwill impairment and management performs our annual goodwill impairment test on September 30, at the end of the fiscal year. The Company has the option to perform a qualitative assessment to determine if an impairment is more likely than not to have occurred. If the Company can support the conclusion that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then the Company would not need to perform the impairment test for the reporting unit. If the Company cannot support such a conclusion or does not elect to perform the qualitative assessment, then the Company will compare the fair value of the reporting unit with its carrying amount, including goodwill. If the fair value of the reporting unit exceeds its carrying value, no impairment charge is recognized. If the fair value of the reporting unit is less than its carrying value, an impairment charge will be recognized for the amount by which the reporting unit’s carrying amount exceeds its fair value. A significant amount of judgment is required in performing goodwill impairment tests including estimating the fair value of a reporting unit and the implied fair value of goodwill. Management compared the fair value of the reporting unit, the design segment which holds the goodwill, with its carrying value. Based on management’s evaluation, there were no impairments to goodwill at September 30, 2019 and there was no triggering event to lead to an interim impairment test at December 31, 2019.
Intangible Assets	Intangible assets Intangible assets include trademark and customer relationships, which were acquired as part of the acquisition of IPS in January 2018 and are recorded based on the estimated fair value in purchase price allocation. The intangible assets are amortized over their estimated useful lives, which are periodically evaluated for reasonableness. Our intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. In assessing the recoverability of our intangible assets, we must make estimates and assumptions regarding future cash flows and other factors to determine the fair value of the respective assets. These estimates and assumptions could have a significant impact on whether an impairment charge is recognized and also the magnitude of any such charge. Fair value estimates are made at a specific point in time, based on relevant information. These estimates are subjective in nature and involve uncertainties and matters of significant judgments and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates. If these estimates or material related assumptions change in the future, we may be required to record impairment charges related to our intangible assets. Management evaluated and concluded that there were no impairments of intangible assets at December 31, 2019.
Income Taxes	Income Taxes The Company recognizes future tax benefits and liabilities measured at enacted rates attributable to temporary differences between financial statement and income tax bases of assets and liabilities and to net tax operating loss carryforwards to the extent that realization of these benefits is more likely than not. As of December 31, 2019, there was no change to our assessment that a full valuation allowance was required against all net deferred tax assets. Accordingly, any deferred tax provision or benefit was offset by an equal and opposite change to the valuation allowance. No current book income tax provision was recorded against book net income due to the existence of significant net operating loss carryforwards.
Revenue Recognition	Revenue Recognition Distribution Segment The Company generally recognizes revenue in its distribution segment when: (i) finished goods are shipped to our distribution customers (in general, these conditions occur at either point of shipment or point of destination, depending on the terms of sale, i.e. transfer of control); (ii) there are no other deliverables or performance obligations; and (iii) there are no further obligations to the customer after the title of the goods has transferred. The Company defers revenue when it receives consideration before achieving the criteria previously mentioned. Design Segment Under ASC 606, the Company applies the “cost to cost” and “right to invoice” methods of revenue recognition to the contracts with customers in the design segment. The design segment typically engages in two types of contracts: (i) Time and Material and (ii) Fixed Price contracts. The Company recognizes revenue over time on its time and material contracts utilizing a “right to invoice” method. Revenues from fixed price contracts that require performance of services that are not related to the production of tangible assets are recognized by using cost inputs to measure progress toward the completion of its performance obligations or the “cost to cost” method. Revenues from contracts that contain specific deliverables are recognized when the performance obligation has been satisfied or the transfer of goods to the customer has been completed and accepted. Recognized revenues that will not be billed until a later date, or Contract assets, are recorded as an asset and classified as a component of accounts receivable in the accompanying condensed consolidated balance sheets. Contract assets at December 31, 2019 and September 30, 2019 were approximately $609,000 and $611,000, respectively. Contracts where collections to date have exceeded recognized revenues, or Contract liabilities, are recorded as a liability and classified as a component of deferred income in the accompanying condensed consolidated balance sheets. Contract liabilities at December 31, 2019 and September 30, 2019 were approximately $59,000 and $220,000, respectively.
Share-Based Compensation Expense	Share-Based Compensation Expense The Company recognizes employee and director share-based compensation in its condensed consolidated statements of operations at the grant date based on the fair value of stock options and other equity based compensation. The determination of stock option grant date fair value is estimated using the Black-Scholes option pricing model, which includes variables such as the expected volatility of the Company’s share price, the exercise behavior of its grantees, interest rates, and dividend yields. These variables are projected based on the Company’s historical data, experience, and other factors. In the case of awards with multiple vesting periods, the Company has elected to use the graded vesting attribution method, which recognizes compensation cost on a straight-line basis over each separately vesting portion of the award as if the award was, in substance, multiple awards. See Note 5 - Share-Based Compensation. In addition, the Company recognizes share-based compensation to non-employees based upon the fair value, using the Black-Scholes option pricing model, determined at the deemed measurement dates over the related contract service period.
Recent Accounting Pronouncements	Recent Accounting Pronouncements In May 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers,” (“ASU 2014-09”). ASU 2014-09 supersedes the revenue recognition requirements in ASC 605, “Revenue Recognition” (“ASC 605”) and most industry-specific guidance throughout ASC 605. ASU 2014-09 establishes principles for recognizing revenue upon the transfer of promised goods or services to customers, in an amount that reflects the expected consideration received in exchange for those goods or services. The guidance in ASU 2014-09 was revised in July 2015 to be effective for interim periods beginning on or after December 15, 2017 and should be applied on a transitional basis either retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying ASU 2014-09 recognized at the date of initial application. In 2016, FASB issued additional ASUs that clarify the implementation guidance on principal versus agent considerations (ASU 2016-08), on identifying performance obligations and licensing (ASU 2016-10), and on narrow-scope improvements and practical expedients (ASU 2016-12) as well as on the revenue recognition criteria and other technical corrections (ASU 2016-20). These new standards became effective during the first quarter of fiscal 2019 and were adopted using the modified retrospective method. The Company has performed a review of ASU 2014-09 as compared to its previous accounting policies for our products and services revenues and did not identify any material impact to revenue. Therefore, there was no adjustment to retained earnings for a cumulative effect. Effective October 1, 2018, the Company adopted ASC 606 and elected the modified retrospective method on existing contracts at the date of adoption. The Company has implemented the necessary changes to such business processes, controls and systems to effectively review and account for the new contracts under this standard. Revenues recognized from the distribution segment under ASC 606 are consistent with previous revenue recognition standards under ASC 605, whereby revenue is typically recognized at either the point of shipment or point of destination, depending on the terms of the sale. Regarding the Company’s design segment, the Company has evaluated the changes from adopting this new standard on its financial reporting, disclosures and its various revenue streams. The Company now recognizes revenue over time on its time and material contracts utilizing a “right to invoice” method which is similar to previous revenue recognition standards under ASC 605. Revenues from fixed-price type contracts that require performance of services that are not related to the production of tangible assets are recognized by using cost inputs to measure progress toward the completion of its performance obligations. This method is similar to the method formerly applied to certain of the Company’s contracts covered by the previous revenue recognition standards under ASC 605. In some cases, contracts contain an arrangement of specific deliverables or production of prototypes, or a distinct performance obligation, and the Company allocates the transaction price to the performance obligation on a relative standalone selling price basis. In February 2016, the FASB issued a new standard related to leases to increase transparency and comparability among organizations by requiring the recognition of operating lease right-of-use (“ROU”) assets and lease liabilities on the balance sheet. Most prominent among the changes in the standard is the recognition of ROU assets and lease liabilities by lessees for those leases classified as operating leases. Under the standard, disclosures are required to meet the objective of enabling users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases. The Company is also required to recognize and measure new leases at the adoption date and recognize a cumulative-effect adjustment in the period of adoption using a modified retrospective approach, with certain practical expedients available. The Company adopted Accounting Standards Codification ("ASC") 842, "Leases" ("ASC 842") effective October 1, 2019 and elected to apply the available practical expedients and implemented internal controls and key system functionality to enable the preparation of financial information on adoption. The Company elected the practical expedients that allow the Company to carry forward the historical lease classification. At adoption, the Company elected the following practical expedients: (1) the "package of practical expedients", pursuant to which the Company did not need to reassess its prior conclusions about lease identification, lease classification and initial direct costs, (2) creation of an accounting policy for short-term leases resulting in lease payments being recorded as an expense on a straight-line basis over the lease term, and (3) to account separately for lease and non-lease components for all leases. The Company has established an inventory of existing leases and implemented a new process of evaluating the classification of each lease. The financial impact of the adoption primarily relates to the capitalization of right-of-use assets and recognition of lease liability related to operating leases. In the first quarter of 2019, the Company adopted FASB ASU No. 2016-16, “Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory” (“ASU 2016-16”), which requires the recognition of the income tax consequences of an intra-entity transfer of an asset, other than inventory, when the transfer occurs. The adoption of ASU 2016-16 did not have an impact to the consolidated financial statements due to the Company’s maintenance of a full valuation allowance on the Company’s net deferred tax asset. In January 2017, the FASB issued ASU 2017-04, “Intangibles - Goodwill and Other (Topic 350) - Simplifying the Test for Goodwill Impairment.” ASU 2017-04 simplifies the accounting for goodwill impairments by eliminating the requirement to compare the implied fair value of goodwill with its carrying amount as part of step two of the goodwill impairment test referenced in ASC 350, “Intangibles - Goodwill and Other (“ASC 350”).” As a result, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An impairment charge should be recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value. However, the impairment loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. ASU 2017-04 is effective for annual reporting periods beginning after December 15, 2019, including any interim impairment tests within those annual periods, with early application permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company adopted ASU 2017-04 in the first quarter of Fiscal 2019 and the adoption did not have any impact on the Company’s consolidated financial statements. In May 2017, the FASB issued ASU No. 2017-09, “Scope of Modification Accounting”, to provide guidance on which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. The Company adopted ASU No. 2017-09 in the first quarter of Fiscal 2019 and the adoption did not have any impact on the Company’s consolidated financial statements. In March 2018, the FASB issued ASU 2018-05, “Income Taxes (Topic 740), Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118.” The ASU adds various Securities and Exchange Commission (“SEC”) paragraphs pursuant to the issuance of the December 2017 SEC Staff Accounting Bulletin No. 118, “Income Tax Accounting Implications of the Tax Cuts and Jobs Act (“SAB 118”)”, which was effective immediately. The SEC issued SAB 118 to address concerns about reporting entities’ ability to timely comply with the accounting requirements to recognize all of the effects of the Tax Cuts and Jobs Act in the period of enactment. SAB 118 allows disclosure that determination of some or all of the income tax effects from the Tax Cuts and Jobs Act may be incomplete by the due date of the financial statements and, if possible, provide a reasonable estimate. The Company has accounted for the tax effects of the Tax Cuts and Jobs Act under the guidance of SAB 118. In June 2018, the FASB issued ASU 2018-07, “Compensation — Stock Compensation (Topic 718),” (“ASU 2018-07”). ASU 2018-07 is intended to reduce cost and complexity and to improve financial reporting for nonemployee share-based payments. The accounting requirements for nonemployee and employee share-based payment transactions had previously been significantly different. ASU 2018-07 expands the scope of Topic 718, Compensation — Stock Compensation (which currently only includes share-based payments to employees) to include share-based payments issued to nonemployees for goods or services. Consequently, the accounting for share-based payments to nonemployees and employees will be substantially aligned. This ASU supersedes Subtopic 505-50, “Equity — Equity-Based Payments to Nonemployees.” The amendments in this ASU are effective for fiscal years beginning after December 15, 2018, and interim periods within that fiscal year. Early adoption is permitted, but no earlier than a company’s adoption date of Topic 606, Revenue from Contracts with Customers. The Company adopted ASU 2018-07 effective October 1, 2019. The adoption of ASU 2018-07 did not have a material impact on the Company’s consolidated financial statements. In August 2018, the FASB issued ASU 2018-13, “Fair Value Measurement - Disclosure Framework (Topic 820).” The updated guidance improves the disclosure requirements on fair value measurements. The updated guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted for any removed or modified disclosures. The Company is currently assessing the timing and impact of adopting the updated provisions. In November 2019, the FASB issued ASU 2019-08, “Compensation – Stock Compensation (Topic 718) and Revenue from Contracts with Customers (Topic 606).” ASU 2019-08 is an accounting pronouncement which expands the scope of ASC Topic 718 to provide guidance for share-based payment awards granted to a customer in conjunction with selling goods or services accounted for under Topic 606. The pronouncement is effective for fiscal years beginning after December 15, 2019 and interim periods within those fiscal years. The Company is currently evaluating the effects of this pronouncement on its consolidated financial statements along with the effects of ASU 2018-07 noted above. In November 2019, the FASB issued ASU 2019-11, “Codification Improvements to Topic 326, Financial Instruments – Credit Losses.” ASU 2019-11 is an accounting pronouncement that amends ASU 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” The ASU 2019-11 amendment provides clarity and improves the codification to ASU 2016-03. The pronouncement would be effective concurrently with the adoption of ASU 2016-03. The pronouncement is effective for fiscal years beginning after December 15, 2019 and interim periods within those fiscal years. The Company is currently evaluating the effects of this pronouncement on its consolidated financial statements.
Business Combinations	Business Combinations The Company allocates the fair value of purchase consideration to the tangible assets acquired, liabilities assumed and intangible assets acquired based on their estimated fair values. The excess of the purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill. When determining the fair values of assets acquired and liabilities assumed, the Company makes significant estimates and assumptions, especially with respect to intangible assets. The Company recognizes the purchase of assets and the assumption of liabilities as an asset acquisition, if the transaction does not constitute a business combination. The excess of the fair value of the purchase price is allocated on a relative fair value basis to the identifiable assets and liabilities. No goodwill is recorded in an asset acquisition. Critical estimates in valuing certain intangible assets include but are not limited to future expected cash flows from customer relationships and developed technology, discount rates and terminal values. Our estimate of fair value is based upon assumptions believed to be reasonable, but actual results may differ from estimates. Other estimates associated with the accounting for acquisitions may change as additional information becomes available regarding the assets acquired and liabilities assumed.

3. FAIR VALUE MEASUREMENTS (Tab

3. FAIR VALUE MEASUREMENTS (Tables)	3 Months Ended
	Dec. 31, 2019
Fair Value Disclosures [Abstract]
Schedule of fair value measurement	Fair value measurement at reporting date using Quoted prices in active markets for identical assets Significant other observable inputs Significant unobservable inputs Balance (Level 1) (Level 2) (Level 3) September 30, 2019 $ 834,000 $ – $ – $ 834,000 Payout of deferred consideration (200,000 ) – – (200,000 ) December 31, 2019 $ 634,000 $ – $ – $ 634,000

4. SEGMENT INFORMATION (Tables)

4. SEGMENT INFORMATION (Tables)	3 Months Ended
	Dec. 31, 2019
Segment Reporting [Abstract]
Segment financial information	For the Quarter Ended December 31, 2019 2018 Revenue Distribution $ 4,696,243 $ 6,280,726 Design 3,696,611 3,902,557 Total revenue 8,392,854 10,183,283 Cost of sales Distribution $ 4,093,318 $ 5,294,432 Design 2,579,527 3,585,810 Total cost of sales $ 6,672,845 $ 8,880,242 Segment operating Income (loss) from operations Distribution $ (443,189 ) $ 5,997 Design 414,060 (486,524 ) Total loss from operations $ (29,129 ) $ (480,527 ) Other expenses Distribution $ (33,580 ) $ (36,964 ) Design (18,948 ) (13,036 ) Total Other expenses $ (52,528 ) $ (50,000 ) Income (loss) before income taxes Distribution $ (476,769 ) $ (30,967 ) Design 395,112 (499,560 ) Total loss before income taxes $ (81,657 ) $ (530,527 )
Total assets by segment	December 31, 2019 September 30, 2019 Distribution $ 8,170,014 $ 9,554,465 Design 10,535,156 6,539,887 Total assets $ 18,705,170 $ 16,094,352

5. SHARE-BASED COMPENSATION (Ta

5. SHARE-BASED COMPENSATION (Tables)	3 Months Ended
	Dec. 31, 2019
Share-based Payment Arrangement [Abstract]
Schedule of stock option activity	Number of Options Weighted Average Exercise Price Weighted Average Remaining Life In Years Intrinsic Value Outstanding, September 30, 2019 812,879 $ 1.69 Granted – – Exercised – – Forfeited (1,501 ) 1.67 Expired – – Outstanding, December 31, 2019 811,378 $ 1.69 3.6 $ 19,900 Exercisable, December 31, 2019 622,007 $ 1.73 3.5 $ 19,900
Schedule of option activity by exericse price	Options Outstanding Options Exercisable Exercise Price Weighted Average Exercise Price Outstanding Number of Options Weighted Average Exercise Price Weighted Average Remaining Life In Years Exercisable Number of Options $0.64 to $1.23 $ 0.80 77,500 $ 0.80 4.8 77,500 $1.44 to $1.67 1.51 605,378 1.49 4.1 416,007 $2.20 to $2.85 2.48 66,000 2.48 0.4 66,000 $3.73 to $3.79 3.74 62,500 3.74 1.1 62,500 811,378 3.5 622,007

6. EARNINGS PER SHARE (Tables)

6. EARNINGS PER SHARE (Tables)	3 Months Ended
	Dec. 31, 2019
Earnings Per Share [Abstract]
Schedule of earnings per share	For the Three Months Ended December 31, 2019 2018 Numerator: Net loss $ (81,657 ) $ (530,527 ) Denominator: Weighted average shares outstanding - basic 9,533,851 9,527,823 Effects of dilutive securities: Assumed exercise of stock options, treasury stock method – – Assumed vesting of restricted stock, treasury stock method – – Weighted average dilutive potential common shares – – Weighted average shares outstanding - diluted 9,533,851 9,527,823 Basic loss per share $ (0.01 ) $ (0.06 ) Diluted loss per share $ (0.01 ) $ (0.06 )
Schedule of antidilutive securities	As of December 31, 2019 2018 Options 811,378 545,066 Warrants 151,335 151,335 Total potentially dilutive shares 962,713 696,401

7. CONCENTRATIONS (Tables)

7. CONCENTRATIONS (Tables)	3 Months Ended
	Dec. 31, 2019
Risks and Uncertainties [Abstract]
Significant customers with revenue concentrations	Distribution Segment Revenues Concentration For the Three Months Ended December 31, 2019 2018 Customer 1 34.2% 31.1% Customer 2 31.2% 27.8% Customer 3 13.4% 14.3% Customer 4 4.9% 9.7% Totals 83.7% 82.9% Design Segment Revenues Concentration For the Three Months Ended December 31, 2019 2018 Customer 1 22.8% 15.5% Customer 2 12.4% 3.2% Customer 3 10.3% 0.0% Customer 4 9.6% 13.3% Customer 5 0.0% 20.8% Totals 55.1% 52.8% Distribution Segment Accounts Receivable Concentration December 31, 2019 September 30, 2019 Customer 1 32.5% 21.2% Customer 2 29.2% 29.0% Customer 3 16.1% 23.6% Customer 4 11.3% 15.7% Totals 89.1% 89.5% Design Segment Accounts Receivable Concentration December 31, 2019 September 30, 2019 Customer 1 29.4% 33.7% Customer 2 14.9% 5.9% Customer 3 11.8% 8.8% Totals 56.1% 48.4%

13. LEASES (Tables)

13. LEASES (Tables)	3 Months Ended
	Dec. 31, 2019
Leases [Abstract]
Supplemental Cashflow information related to leases	Three Months Ended December 31, 2019 Weighted Average Remaining Lease Term Operating leases 11.66 Years Finance leases 1.52 Years Weighted Average Discount Rate Operating leases 5.75% Finance leases 5.75%
Schedule of future minimum payments under operating leases	Fiscal Years Ended December 31, Amount 2020 $ 474,635 2021 416,199 2022 368,499 2023 378,190 2024 388,172 Thereafter 3,101,883 Total future minimum lease payments 5,127,578 Less: amount representing imputed interest (1,467,324 ) Total $ 3,660,254
Schedule of Future Minimum payments under finance leases	Fiscal Years Ended December 31, Amount 2020 $ 43,551 2021 16,365 2022 2,111 Total future minimum lease payments 62,027 Less: amount representing imputed interest (4,419 ) Total $ 57,608

2. ACCOUNTING POLICIES (Details

2. ACCOUNTING POLICIES (Details Narrative) - USD ($)	3 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Sep. 30, 2019
Revenues	$ 8,392,854	$ 10,183,283
Contract assets	609,000		$ 611,000
Contract liabilities	59,000		$ 220,000
Goodwill impairment	0
Intersegment Elimination [Member]
Revenues	$ 16,000	$ 210,000

3. FAIR VALUE MEASUREMENTS (Det

3. FAIR VALUE MEASUREMENTS (Details) - USD ($)	3 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Beginning balance	$ 834,000
Payout of deferred consideration	(200,000)	$ 0
Ending balance	634,000
Level 1 [Member]
Beginning balance	0
Payout of deferred consideration	0
Ending balance	0
Level 2 [Member]
Beginning balance	0
Payout of deferred consideration	0
Ending balance	0
Level 3 [Member]
Beginning balance	834,000
Payout of deferred consideration	(200,000)
Ending balance	$ 634,000

3. FAIR VALUE MEASUREMENTS (D_2

3. FAIR VALUE MEASUREMENTS (Details Narrative)	Dec. 31, 2019USD ($)
Deferred cash consideration	$ 634,000
Investment stock received value	326,941
Deferred Cash Component [Member]
Deferred cash consideration	284,000
Earnout Consideration [Member]
Deferred cash consideration	350,000
Scheduled Payout [Member]
Deferred cash consideration	$ 200,000

4. SEGMENT INFORMATION (Details

4. SEGMENT INFORMATION (Details - Income Statement) - USD ($)	3 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Revenue	$ 8,392,854	$ 10,183,283
Cost of Sales	6,672,845	8,880,242
Segment Operating Income (loss) from operations	(29,129)	(480,527)
Other expenses	(52,528)	(50,000)
Income (loss) before income taxes	(81,657)	(530,527)
Distribution [Member]
Revenue	4,696,243	6,280,726
Cost of Sales	4,093,318	5,294,432
Segment Operating Income (loss) from operations	(443,189)	5,997
Other expenses	(33,580)	(36,964)
Income (loss) before income taxes	(476,769)	(30,967)
Design [Member]
Revenue	3,696,611	3,902,557
Cost of Sales	2,579,527	3,585,810
Segment Operating Income (loss) from operations	414,060	(486,524)
Other expenses	(18,948)	(13,036)
Income (loss) before income taxes	$ 359,112	$ (499,560)

4. SEGMENT INFORMATION (Detai_2

4. SEGMENT INFORMATION (Details - Segment assets) - USD ($)	Dec. 31, 2019	Sep. 30, 2019
Assets	$ 18,705,170	$ 16,094,352
Distribution [Member]
Assets	8,170,014	9,554,465
Design [Member]
Assets	$ 10,535,156	$ 6,539,887

5. SHARE-BASED COMPENSATION (De

5. SHARE-BASED COMPENSATION (Details - Option activity) - Options [Member]	3 Months Ended
	Dec. 31, 2019USD ($)$ / sharesshares
Number of Options
Shares, Outstanding at Beginning | shares	812,879
Shares, Granted | shares	0
Shares, Exercised | shares	0
Shares, Forfeited | shares	(1,501)
Shares, Expired | shares	0
Shares, Outstanding at Ending | shares	811,378
Shares, Exercisable | shares	622,007
Weighted Average Exercise Price
Weighted average exercise price, Outstanding at Beginning | $ / shares	$ 1.69
Weighted average exercise price, Granted | $ / shares
Weighted average exercise price, Exercised | $ / shares
Weighted average exercise price, Forfeited | $ / shares	1.67
Weighted average exercise price, Expired | $ / shares
Weighted average exercise price, Outstanding at Ending | $ / shares	1.69
Weighted average exercise price, Exercisable | $ / shares	$ 1.73
Weighted Average Remaining life In Years
Weighted average remaining contractual term (Years), Outstanding	3 years 7 months 6 days
Weighted average remaining contractual term (Years), Exercisable	3 years 6 months
Intrinsic Value
Aggregate intrinsic value, Outstanding | $	$ 19,900
Aggregate intrinsic value, Exercisable | $	$ 19,900

5. SHARE-BASED COMPENSATION (_2

5. SHARE-BASED COMPENSATION (Details - Options by exercise price) - $ / shares	3 Months Ended
	Dec. 31, 2019	Sep. 30, 2019
$0.64 to $1.23 [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Exercise price lower limit	$ 0.64
Exercise price upper limit	1.23
Options Outstanding, Weighted average exercise price	$ 0.80
Options Outstanding, Outstanding Number of Options	77,500
Options Exercisable, Weighted average exercise price	$ 0.80
Options Exercisable, Weighted Average Remaining Life In Years	4 years 6 months 18 days
Options Exercisable, Exercisable Number of Options	77,500
$1.44 to $1.67 [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Exercise price lower limit	$ 1.44
Exercise price upper limit	1.67
Options Outstanding, Weighted average exercise price	$ 1.51
Options Outstanding, Outstanding Number of Options	605,378
Options Exercisable, Weighted average exercise price	$ 1.49
Options Exercisable, Weighted Average Remaining Life In Years	4 years 1 month 6 days
Options Exercisable, Exercisable Number of Options	416,007
$2.20 to $2.85 [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Exercise price lower limit	$ 2.20
Exercise price upper limit	2.85
Options Outstanding, Weighted average exercise price	$ 2.48
Options Outstanding, Outstanding Number of Options	66,000
Options Exercisable, Weighted average exercise price	$ 2.48
Options Exercisable, Weighted Average Remaining Life In Years	4 months 24 days
Options Exercisable, Exercisable Number of Options	66,000
$3.73 to $3.79 [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Exercise price lower limit	$ 3.73
Exercise price upper limit	3.79
Options Outstanding, Weighted average exercise price	$ 3.74
Options Outstanding, Outstanding Number of Options	62,500
Options Exercisable, Weighted average exercise price	$ 3.74
Options Exercisable, Weighted Average Remaining Life In Years	1 year 1 month 6 days
Options Exercisable, Exercisable Number of Options	62,500
Options [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options Outstanding, Weighted average exercise price	$ 1.69	$ 1.69
Options Outstanding, Outstanding Number of Options	811,378	812,879
Options Exercisable, Weighted Average Remaining Life In Years	3 years 6 months
Options Exercisable, Exercisable Number of Options	622,007

5. SHARE-BASED COMPENSATION (_3

5. SHARE-BASED COMPENSATION (Details Narrative) - USD ($)	3 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share based compensation expense	$ 33,179	$ 11,794
Options [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share based compensation expense	33,000	10,000
Options [Member] | Nonvested Stock Option Awards [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation cost	$ 25,000
Unrecognized compensation cost weighted average vesting period	6 months
Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share based compensation expense	$ 0	$ 2,000
Unrecognized compensation cost	$ 0

6. EARNINGS PER SHARE (Details

6. EARNINGS PER SHARE (Details - Earnings per share) - USD ($)	3 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Numerator:
Net loss	$ (81,657)	$ (530,527)
Denominator:
Weighted average shares outstanding - basic	9,533,851	9,527,823
Effect of dilutive securities
Assumed exercise of stock options, treasury stock method	0	0
Assumed vesting of restricted stock, treasury stock method	0	0
Dilutive potential common shares	0	0
Weighted average shares outstanding - diluted	9,533,851	9,527,823
Basic loss per share	$ (0.01)	$ (0.06)
Diluted loss per share	$ (0.01)	$ (0.06)

6. EARNINGS PER SHARE (Detail_2

6. EARNINGS PER SHARE (Details - Antidilutive shares) - shares	3 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total potentially dilutive shares	962,713	696,401
Options [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total potentially dilutive shares	811,378	545,066
Warrants [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total potentially dilutive shares	151,335	151,335

7. CONCENTRATIONS (Details - Co

7. CONCENTRATIONS (Details - Concentration sales)	3 Months Ended		12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Sep. 30, 2018
Sales Revenue, Net [Member] | Distribution [Member]
Revenue, Major Customer [Line Items]
Concentration Risk	83.70%	82.90%
Sales Revenue, Net [Member] | Design [Member]
Revenue, Major Customer [Line Items]
Concentration Risk	55.10%	52.80%
Sales Revenue, Net [Member] | Customer 1 [Member] | Distribution [Member]
Revenue, Major Customer [Line Items]
Concentration Risk	34.20%	31.10%
Sales Revenue, Net [Member] | Customer 1 [Member] | Design [Member]
Revenue, Major Customer [Line Items]
Concentration Risk	22.80%	15.50%
Sales Revenue, Net [Member] | Customer 2 [Member] | Distribution [Member]
Revenue, Major Customer [Line Items]
Concentration Risk	31.20%	27.80%
Sales Revenue, Net [Member] | Customer 2 [Member] | Design [Member]
Revenue, Major Customer [Line Items]
Concentration Risk	12.40%	3.20%
Sales Revenue, Net [Member] | Customer 3 [Member] | Distribution [Member]
Revenue, Major Customer [Line Items]
Concentration Risk	13.40%	14.30%
Sales Revenue, Net [Member] | Customer 3 [Member] | Design [Member]
Revenue, Major Customer [Line Items]
Concentration Risk	10.30%	0.00%
Sales Revenue, Net [Member] | Customer 4 [Member] | Distribution [Member]
Revenue, Major Customer [Line Items]
Concentration Risk	4.90%	9.70%
Sales Revenue, Net [Member] | Customer 4 [Member] | Design [Member]
Revenue, Major Customer [Line Items]
Concentration Risk	9.60%	13.30%
Sales Revenue, Net [Member] | Customer 5 [Member] | Design [Member]
Revenue, Major Customer [Line Items]
Concentration Risk	0.00%	20.80%
Accounts Receivable [Member] | Distribution [Member]
Revenue, Major Customer [Line Items]
Concentration Risk	89.10%		89.50%
Accounts Receivable [Member] | Design [Member]
Revenue, Major Customer [Line Items]
Concentration Risk	56.10%		48.40%
Accounts Receivable [Member] | Customer 1 [Member] | Distribution [Member]
Revenue, Major Customer [Line Items]
Concentration Risk	32.50%		21.20%
Accounts Receivable [Member] | Customer 1 [Member] | Design [Member]
Revenue, Major Customer [Line Items]
Concentration Risk	29.40%		33.70%
Accounts Receivable [Member] | Customer 2 [Member] | Distribution [Member]
Revenue, Major Customer [Line Items]
Concentration Risk	29.20%		29.00%
Accounts Receivable [Member] | Customer 2 [Member] | Design [Member]
Revenue, Major Customer [Line Items]
Concentration Risk	14.90%		5.90%
Accounts Receivable [Member] | Customer 3 [Member] | Distribution [Member]
Revenue, Major Customer [Line Items]
Concentration Risk	16.10%		23.60%
Accounts Receivable [Member] | Customer 3 [Member] | Design [Member]
Revenue, Major Customer [Line Items]
Concentration Risk	11.80%		8.80%
Accounts Receivable [Member] | Customer 4 [Member] | Distribution [Member]
Revenue, Major Customer [Line Items]
Concentration Risk	11.30%		15.70%

8. RELATED PARTY TRANSACTIONS (

8. RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($)	3 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Sep. 30, 2019	Jan. 18, 2018
Related Party Transaction [Line Items]
Notes payable - short-term portion	$ 1,630,022		$ 1,654,799
Forward China [Member]
Related Party Transaction [Line Items]
Service fees paid	$ 338,000	$ 359,000
Forward China [Member] | Promissory Note [Member]
Related Party Transaction [Line Items]
Debt issuance date	Jan. 18, 2018
Debt face amount				$ 1,600,000
Debt maturity date	Mar. 17, 2020
Debt interest rate				8.00%
Interest expense	$ 32,000	32,000
Notes payable - short-term portion	1,600,000
Duality Advisers [Member]
Related Party Transaction [Line Items]
Accrued receivables	4,000		$ 9,000
Duality Advisers [Member] | Design [Member]
Related Party Transaction [Line Items]
Revenue from related party	$ 38,000	$ 0

10. LINE OF CREDIT (Details Nar

10. LINE OF CREDIT (Details Narrative) - TD Bank [Member] - USD ($)	3 Months Ended
	Dec. 31, 2019	Sep. 30, 2019
Line of credit maximum amount	$ 1,300,000
Line of credit expiration date	Apr. 30, 2019
Line of credit interest rate	0.75% above the Wall Street Journal prime rate
Line of credit interest rate at period end	5.50%	5.75%
Line of credit outstanding	$ 1,300,000
Line of credit amount remaining	$ 0

11. DEBT (Details Narrative)

11. DEBT (Details Narrative) - IPS [Member] - USD ($)	3 Months Ended
	Dec. 31, 2019	Sep. 30, 2019
Term Loan [Member]
Debt issuance date	Apr. 1, 2016
Debt face amount	$ 325,000
Debt maturity date	Apr. 1, 2020
Debt interest rate		4.215%
Note payable outstanding	$ 30,000	$ 52,000
Payment frequency	monthly
Payment amount	$ 7,378
Financing Arrangement [Member]
Debt issuance date	Dec. 11, 2017
Debt face amount	$ 23,000
Debt interest rate		9.50%
Note payable outstanding	$ 0	$ 3,000
Payment frequency	monthly
Payment amount	$ 1,035

12. MOONI AGREEMENT (Details Na

12. MOONI AGREEMENT (Details Narrative) - Mooni International [Member] - USD ($)	1 Months Ended	3 Months Ended
	Jan. 29, 2019	Dec. 31, 2019
Payment for distribution agreement	$ 400,000
Prepaid deposit		$ 278,000
Amortization of option		$ 33,000

13. LEASES (Details - Supplemen

13. LEASES (Details - Supplemental cash flow info)	Dec. 31, 2019
Weighted Average Remaining Lease Term
Operating leases	11 years 7 months 28 days
Finance leases	1 year 6 months 7 days
Weighted Average Discount Rate
Operating leases	5.75%
Finance leases	5.75%

13. LEASES (Details - Future mi

13. LEASES (Details - Future minimum payments Operating lease)	Dec. 31, 2019USD ($)
Operating lease future minimum payments
2020	$ 474,635
2021	416,199
2022	368,499
2023	378,190
2024	388,172
Thereafter	3,101,883
Total future minimum lease payments	5,127,578
Less: amount representing imputed interest	(1,467,324)
Total	$ 3,660,254

13. LEASES (Details - Future _2

13. LEASES (Details - Future minimum payments Finance leases)	Dec. 31, 2019USD ($)
Future minimum payments finance lease
2020	$ 43,551
2021	16,365
2022	2,111
Total future minimum lease payments	62,027
Less: amount representing imputed interest	(4,419)
Total	$ 57,608

13. LEASES (Details Narrative)

13. LEASES (Details Narrative) - USD ($)	3 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Total operating expenses	$ 1,749,138	$ 1,783,568
General and administrative expenses	1,213,966	$ 1,313,969
Operating Lease Expense [Member]
General and administrative expenses	132,046
Florida [Member]
Rent payment	$ 7,700
Lease Maturity Date	Sep. 30, 2020
Cham Switzerland [Member]
Rent payment	$ 1,615
IPS Ronkonkoma New York [Member]
Rent payment	$ 4,400
Lease Maturity Date	Jan. 31, 2022