Forward Industries (FORD) 10-Q 12 May 23 2023 Q2 Quarterly report Financial data

Cover

Cover - shares	6 Months Ended
	Mar. 31, 2023	Apr. 30, 2023
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Mar. 31, 2023
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2023
Current Fiscal Year End Date	--09-30
Entity File Number	001-34780
Entity Registrant Name	FORWARD INDUSTRIES, INC.
Entity Central Index Key	0000038264
Entity Tax Identification Number	13-1950672
Entity Incorporation, State or Country Code	NY
Entity Address, Address Line One	700 Veterans Memorial Highway
Entity Address, Address Line Two	Suite 100
Entity Address, City or Town	Hauppauge
Entity Address, State or Province	NY
Entity Address, Postal Zip Code	11788
City Area Code	(631)
Local Phone Number	547-3041
Title of 12(b) Security	Common Stock, par value $0.01
Trading Symbol	FORD
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		10,061,185

CONDENSED CONSOLIDATED BALANCE

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($)	Mar. 31, 2023	Sep. 30, 2022
Current assets:
Cash	$ 2,355,713	$ 2,575,522
Accounts receivable, net	8,184,823	7,542,666
Inventories, net	2,920,982	3,801,030
Prepaid expenses and other current assets	511,020	417,605
Total current assets	13,972,538	14,336,823
Property and equipment, net	261,211	241,146
Intangible assets, net	999,522	1,105,901
Goodwill	1,758,682	1,758,682
Operating lease right of use assets, net	3,227,103	3,427,726
Other assets	68,737	68,737
Total assets	20,287,793	20,939,015
Current liabilities:
Accounts payable	408,838	268,160
Due to Forward China	8,977,441	7,713,880
Deferred income	166,395	438,878
Current portion of earnout consideration	0	25,000
Current portion of operating lease liability	396,652	377,940
Accrued expenses and other current liabilities	957,613	1,153,906
Total current liabilities	10,906,939	9,977,764
Other liabilities:
Note payable to Forward China	1,300,000	1,400,000
Operating lease liability, less current portion	3,046,856	3,249,824
Earnout consideration, less current portion	30,000	45,000
Total other liabilities	4,376,856	4,694,824
Total liabilities	15,283,795	14,672,588
Commitments and contingencies
Shareholders' equity:
Common stock, par value $0.01 per share; 40,000,000 shares authorized; 10,061,185 shares issued and outstanding at March 31, 2023 and September 30, 2022	100,612	100,612
Additional paid-in capital	20,154,505	20,115,711
Accumulated deficit	(15,251,119)	(13,949,896)
Total shareholders' equity	5,003,998	6,266,427
Total liabilities and shareholders' equity	$ 20,287,793	$ 20,939,015

CONDENSED CONSOLIDATED BALANC_2

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Mar. 31, 2023	Sep. 30, 2022
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)	10,061,185	10,061,185
Common stock, shares outstanding (in shares)	10,061,185	10,061,185

CONDENSED CONSOLIDATED STATEMEN

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) - USD ($)	3 Months Ended		6 Months Ended
	Mar. 31, 2023	Mar. 31, 2022	Mar. 31, 2023	Mar. 31, 2022
Income Statement [Abstract]
Revenues, net	$ 10,657,980	$ 10,314,563	$ 21,467,659	$ 21,928,304
Cost of sales	9,145,550	8,061,889	18,036,528	17,056,861
Gross profit	1,512,430	2,252,674	3,431,131	4,871,443
Sales and marketing expenses	773,309	704,102	1,463,609	1,441,780
General and administrative expenses	1,583,179	1,871,311	3,278,457	3,538,188
Loss from operations	(844,058)	(322,739)	(1,310,935)	(108,525)
Fair value adjustment of earnout consideration	0	0	(40,000)	0
Interest expense	26,781	30,864	54,739	63,691
Interest income	(856)	0	(856)	0
Other expense/(income), net	965	2,732	(23,595)	4,095
Loss before income taxes	(870,948)	(356,335)	(1,301,223)	(176,311)
Provision for income taxes	0	0	0	0
Net loss	$ (870,948)	$ (356,335)	$ (1,301,223)	$ (176,311)
Loss per share:
Basic	$ (0.09)	$ (0.04)	$ (0.13)	$ (0.02)
Diluted	$ (0.09)	$ (0.04)	$ (0.13)	$ (0.02)
Weighted average common shares outstanding:
Basic	10,061,185	10,061,185	10,061,185	10,061,185
Diluted	10,061,185	10,061,185	10,061,185	10,061,185

CONDENSED CONSOLIDATED STATEM_2

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (UNAUDITED) - USD ($)	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Total
Beginning balance, value at Sep. 30, 2021	$ 100,612	$ 19,914,476	$ (12,571,645)	$ 7,443,443
Beginning balance, shares at Sep. 30, 2021	10,061,185
Share-based compensation		38,800		38,800
Net loss			180,024	180,024
Ending balance, value at Dec. 31, 2021	$ 100,612	19,953,276	(12,391,621)	7,662,267
Ending balance, shares at Dec. 31, 2021	10,061,185
Beginning balance, value at Sep. 30, 2021	$ 100,612	19,914,476	(12,571,645)	7,443,443
Beginning balance, shares at Sep. 30, 2021	10,061,185
Net loss				(176,311)
Ending balance, value at Mar. 31, 2022	$ 100,612	20,019,288	(12,747,956)	7,371,944
Ending balance, shares at Mar. 31, 2022	10,061,185
Beginning balance, value at Dec. 31, 2021	$ 100,612	19,953,276	(12,391,621)	7,662,267
Beginning balance, shares at Dec. 31, 2021	10,061,185
Share-based compensation		66,012		66,012
Net loss			(356,335)	(356,335)
Ending balance, value at Mar. 31, 2022	$ 100,612	20,019,288	(12,747,956)	7,371,944
Ending balance, shares at Mar. 31, 2022	10,061,185
Beginning balance, value at Sep. 30, 2022	$ 100,612	20,115,711	(13,949,896)	6,266,427
Beginning balance, shares at Sep. 30, 2022	10,061,185
Share-based compensation		23,935		23,935
Net loss			(430,275)	(430,275)
Ending balance, value at Dec. 31, 2022	$ 100,612	20,139,646	(14,380,171)	5,860,087
Ending balance, shares at Dec. 31, 2022	10,061,185
Beginning balance, value at Sep. 30, 2022	$ 100,612	20,115,711	(13,949,896)	6,266,427
Beginning balance, shares at Sep. 30, 2022	10,061,185
Net loss				(1,301,223)
Ending balance, value at Mar. 31, 2023	$ 100,612	20,154,505	(15,251,119)	5,003,998
Ending balance, shares at Mar. 31, 2023	10,061,185
Beginning balance, value at Dec. 31, 2022	$ 100,612	20,139,646	(14,380,171)	5,860,087
Beginning balance, shares at Dec. 31, 2022	10,061,185
Share-based compensation		14,859		14,859
Net loss			(870,948)	(870,948)
Ending balance, value at Mar. 31, 2023	$ 100,612	$ 20,154,505	$ (15,251,119)	$ 5,003,998
Ending balance, shares at Mar. 31, 2023	10,061,185

CONDENSED CONSOLIDATED STATEM_3

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($)	6 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Operating Activities:
Net loss	$ (1,301,223)	$ (176,311)
Adjustments to reconcile net loss to net cash (used in)/provided by operating activities:
Share-based compensation	38,794	104,812
Depreciation and amortization	156,131	156,531
Bad debt expense	43,697	59,635
Change in fair value of earnout consideration	(40,000)	0
Changes in operating assets and liabilities:
Accounts receivable	(685,854)	15,184
Inventories	880,048	(1,834,922)
Prepaid expenses and other current assets	(93,415)	(255,178)
Accounts payable and due to Forward China	1,404,239	1,578,086
Deferred income	(272,483)	432,877
Net changes in operating lease liabilities	16,367	22,100
Accrued expenses and other current liabilities	(196,293)	257,513
Net cash (used in)/provided by operating activities	(49,992)	360,327
Investing Activities:
Purchases of property and equipment	(69,817)	(129,500)
Net cash used in investing activities	(69,817)	(129,500)
Financing Activities:
Repayment of note payable to Forward China	(100,000)	(100,000)
Net cash used in financing activities	(100,000)	(100,000)
Net (decrease)/increase in cash	(219,809)	130,827
Cash at beginning of period	2,575,522	1,410,365
Cash at end of period	2,355,713	1,541,192
Supplemental Disclosures of Cash Flow Information:
Cash paid for interest	54,739	63,669
Cash paid for taxes	5,385	6,795
Supplemental Disclosures of Non-Cash Information:
Operating lease assets obtained in exchange for operating lease liabilities	$ 0	$ 204,881

OVERVIEW

OVERVIEW	6 Months Ended
	Mar. 31, 2023
Organization, Consolidation and Presentation of Financial Statements [Abstract]
OVERVIEW	NOTE 1 OVERVIEW Business Forward Industries, Inc. (“Forward”, “we”, “our” or the “Company”) is a global design, manufacturing, sourcing and distribution company serving top tier medical and technology customers worldwide. Through the growth in our design segment, the Company is 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. Liquidity For the six months ended March 31 2023, the Company generated a net loss of $1,301,000, and used $50,000 of cash flows in operating activities. Based on our forecasted cash flows, we believe our existing cash balance and working capital will be sufficient to meet our liquidity needs through at least May 31, 2024. At March 31, 2023, the Company had $ 1,300,000 Impact of COVID-19 The effects of the COVID-19 pandemic continue to impact our business with high capitalized inventory costs for inbound ocean freight, particularly from the Asia-Pacific region, and expenses associated with outbound ground transportation. We expect to see the benefits of declining ocean freight costs in future periods. Inflation, in part associated with the pandemic, continues to increase the cost of acquiring and retaining our employees and acquiring inventory. The instability of transportation costs and future inflation are still largely unknown but are expected to continue throughout the fiscal year ended September 30, 2023 (“Fiscal 2023”). The effects of COVID-19 may further impact our business in ways we cannot predict, and such impacts could be significant. The current economic conditions may continue to negatively impact our results of operations, cash flows and financial position in future periods as well as that of our customers, including their ability to pay for our services and to choose to allocate their budgets to new or existing projects which may or may not require our services. The long-term financial impact on our business cannot be reasonably estimated at this time. As a result, the effects of COVID-19 may not be fully reflected in our financial results until future periods. Until the effects of the pandemic and associated inflationary impact have fully receded, we expect business conditions to remain challenging. In response to these challenges, we will continue to focus on those factors that we can control: closely managing and controlling our expenses and inventory levels; aligning our design and development schedules with demand in a proactive manner to minimize our cash operating costs; pursuing further improvements in the productivity and effectiveness of our development, selling and administrative activities and, where appropriate, taking advantage of opportunities to enhance our business growth and strategy.

ACCOUNTING POLICIES

ACCOUNTING POLICIES	6 Months Ended
	Mar. 31, 2023
Accounting Policies [Abstract]
ACCOUNTING POLICIES	NOTE 2 ACCOUNTING POLICIES Basis of Presentation The accompanying condensed consolidated financial statements include the accounts of Forward Industries, Inc. and all of its wholly-owned subsidiaries: Forward Industries (IN), Inc. (“Forward US”), Forward Industries (Switzerland) GmbH (“Forward Switzerland”), Forward Industries UK Limited (“Forward UK”), Intelligent Product Solutions, Inc. (“IPS”) and Kablooe, Inc. (“Kablooe”). The terms “Forward”, “we”, “our” or the “Company” as used throughout this document are used to indicate Forward Industries, Inc. and all of its wholly-owned subsidiaries. All significant intercompany transactions and balances have been eliminated in consolidation. 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 Fiscal 2023. 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, 2022, and with the disclosures and risk factors presented therein. The September 30, 2022 condensed consolidated balance sheet has been derived from the audited consolidated financial statements. 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 condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates and assumptions. Throughout this document, certain dollar amounts and percentages have been rounded to their approximate values. Segment Reporting The Company has three reportable segments: Original Equipment Manufacturing (“OEM”) distribution, retail distribution and design. The OEM distribution segment sources and sells carrying cases and other accessories for medical monitoring and diagnostic kits and a variety of other portable electronic and non-electronic devices directly to OEMs or their contract manufacturers worldwide. The retail distribution segment sources and sells smart-enabled furniture, hot tubs and saunas, and a variety of other products through various online retailer websites to customers predominantly located in the U.S. and Canada. The design segment consists of two operating segments (IPS and Kablooe, which have been aggregated into one reportable segment) that provide a full spectrum of hardware and software product design and engineering services to customers predominantly located in the U.S. See Note 5 for more information on segments. Accounts Receivable Accounts receivable consist of unsecured trade accounts with customers in amounts that have been invoiced ($ 8,430,000 7,861,000 no 48,000 20,000 851,000 852,000 The Company has agreements with various retailers which contain different terms for trade discounts, promotional and other sales allowances. At March 31, 2023 and September 30, 2022, the Company recorded accounts receivable allowances of $ 153,000 55,000 Inventories Inventories consist primarily of finished goods and are stated at the lower of cost (determined by the first-in, first-out method) or net realizable value. Based on management’s estimates, an allowance is made to reduce excess, obsolete, or otherwise unsellable inventories to net realizable value. The allowance is established through charges to cost of sales in the Company’s condensed consolidated statements of operations. In determining the adequacy of the allowance, management’s estimates are based upon several factors, including analyses of inventory levels, historical loss trends, sales history and projections of future sales demand. The Company’s estimates of the allowance may change from time to time based on management’s assessments, and such changes could be material. At March 31, 2023 and September 30, 2022, the allowance for slow-moving inventory, which relates entirely to our retail segment, was $ 657,000 535,000 Revenue Recognition OEM Distribution Segment The OEM distribution segment recognizes revenue when: (i) finished goods are shipped to its customers (in general, these conditions occur at either point of shipment or point of destination, depending on the terms of sale and 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. If the Company receives consideration before achieving the criteria previously mentioned, it records a contract liability, which is classified as a component of deferred income in the accompanying condensed consolidated balance sheets. The OEM distribution segment had no Retail Distribution Segment The retail distribution segment sells products primarily through online websites operated by authorized third-party retailers. Revenue is recognized when control (as defined in Accounting Standards Codification, “ASC”, 606, “Revenue from Contracts with Customers”) of the related goods is transferred to the retailer, which generally occurs upon shipment to the end customer. Other than product delivery, the retail distribution segment does not typically have other deliverables or performance obligations associated with its products. Revenue is measured as the amount of consideration expected to be received in exchange for the products provided, net of allowances taken by retailers for product returns and any taxes collected from customers that will be remitted to governmental authorities. When the Company receives consideration before achieving the criteria previously mentioned, it records a contract liability, which is classified as a component of deferred income in the accompanying condensed consolidated balance sheets. The retail distribution segment had no Design Segment 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. 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 fixed price 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. The design segment had contract assets of $ 807,000 609,000 693,000 166,000 439,000 188,000 Goodwill The Company reviews goodwill for impairment at least annually, or more often if triggering events occur. The Company has two reporting units with goodwill (the IPS and Kablooe operating segments) and we perform our annual goodwill impairment test on September 30, the end of the fiscal year, or upon the occurrence of a triggering event. 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 a quantitative 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 perform the quantitative assessment by comparing 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. Management evaluated and concluded that there were no indications goodwill was impaired at March 31, 2023. Intangible Assets Intangible assets include trademarks and customer relationships, which were acquired as part of the acquisitions of IPS in Fiscal 2018 and Kablooe in Fiscal 2020 and 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 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 indications of impairments of intangible assets at March 31, 2023. 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. At March 31, 2023, there was no change to our assessment that a full valuation allowance was required against all net deferred tax assets as it is not probable that such deferred tax assets will be realized. Accordingly, any deferred tax provision or benefit was offset by an equal and opposite change to the valuation allowance. Our income tax provision or benefit is generally not significant due to the existence of significant net operating loss carryforwards. Fair Value Measurements We perform fair value measurements in accordance with the guidance provided by ASC 820, “Fair Value Measurement.” 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: · Level 1: quoted prices in active markets for identical assets or liabilities; · Level 2: inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices in active markets for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; or · Level 3: unobservable inputs that are supported by little or no market activity and that are significant to the fair values of the assets or liabilities. Leases Lease assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term, using the Company’s incremental borrowing rate commensurate with the lease term, since the Company’s lessors do not provide an implicit rate, nor is one readily available. Certain leases may include an option to renew and when it is reasonably probable to exercise such option, the Company will include the renewal option terms in determining the lease asset and lease liability. Lease assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Lease expense for lease payments is recognized on a straight-line basis over the lease term. Operating lease assets are shown as right of use assets on the condensed consolidated balance sheets. The current and long-term portions of operating lease liabilities are shown separately as such on the condensed consolidated balance sheets. Recent Accounting Pronouncements In November 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2019-11, “Codification Improvements to Topic 326, Financial Instruments – Credit Losses.” ASU 2019-11 is an accounting pronouncement that provides clarity to and amends earlier guidance on this topic and would be effective concurrently with the adoption of such earlier guidance. This pronouncement is effective for fiscal years beginning after December 15, 2022 and interim periods within those fiscal years. The Company is currently evaluating the effects of this pronouncement on its condensed consolidated financial statements.

INTANGIBLE ASSETS AND GOODWILL

INTANGIBLE ASSETS AND GOODWILL	6 Months Ended
	Mar. 31, 2023
Goodwill and Intangible Assets Disclosure [Abstract]
INTANGIBLE ASSETS AND GOODWILL	NOTE 3 INTANGIBLE ASSETS AND GOODWILL Intangible Assets The Company’s intangible assets consist of the following: Intangible Assets March 31, 2023 September 30, 2022 Trademarks Customer Relationships Total Intangible Assets Trademarks Customer Relationships Total Intangible Assets Gross carrying amount $ 585,000 $ 1,390,000 $ 1,975,000 $ 585,000 $ 1,390,000 $ 1,975,000 Less accumulated amortization (183,000 ) (792,000 ) (975,000 ) (164,000 ) (705,000 ) (869,000 ) Net carrying amount $ 402,000 $ 598,000 $ 1,000,000 $ 421,000 $ 685,000 $ 1,106,000 The Company’s intangible assets resulted from the acquisitions of Kablooe and IPS in Fiscal 2020 and Fiscal 2018, respectively, and relate to the design segment of our business. Intangible assets are amortized over their expected useful lives of 15 8 53,000 106,000 At March 31, 2023, estimated amortization expense for the Company’s intangible assets is as follows: Estimated amortization expense Remainder of Fiscal 2023 $ 106,000 Fiscal 2024 213,000 Fiscal 2025 213,000 Fiscal 2026 121,000 Fiscal 2027 82,000 Thereafter 265,000 Total $ 1,000,000 Goodwill Goodwill represents the future economic benefits of assets acquired in a business combination that are not individually identified or separately recognized. The Company’s goodwill resulted from the acquisitions of Kablooe and IPS in Fiscal 2020 and Fiscal 2018, respectively. The goodwill associated with the IPS acquisition is not deductible for tax purposes, but the goodwill associated with the Kablooe acquisition is deductible for tax purposes. All of the Company’s goodwill is held under the design segment of our business.

FAIR VALUE MEASUREMENTS

FAIR VALUE MEASUREMENTS	6 Months Ended
	Mar. 31, 2023
Fair Value Disclosures [Abstract]
FAIR VALUE MEASUREMENTS	NOTE 4 FAIR VALUE MEASUREMENTS The earnout consideration of $ 30,000 70,000

SEGMENTS AND CONCENTRATIONS

SEGMENTS AND CONCENTRATIONS	6 Months Ended
	Mar. 31, 2023
Segment Reporting [Abstract]
SEGMENTS AND CONCENTRATIONS	NOTE 5 SEGMENTS AND CONCENTRATIONS The Company has three reportable segments: OEM distribution, retail distribution and design. See Note 2 for more information on the composition and accounting policies of our reportable segments. Our chief operating decision maker (“CODM”) regularly reviews revenue and operating income for each segment to assess financial results and allocate resources. For our OEM and retail distribution segments, we exclude general and administrative and general corporate expenses from their measure of profitability as these expenses are not allocated to the segments and therefore not included in the measure of profitability used by the CODM. For the design segment, general and administrative expenses directly attributable to that segment are included in its measure of profitability as these expenses are included in the measure of its profitability reviewed by the CODM. We do not include intercompany activity in our segment results shown below to be consistent with the information that is presented to the CODM. Segment assets consist of accounts receivable and inventory, which are regularly reviewed by the CODM, as well as goodwill and intangible assets resulting from design segment acquisitions. Information by segment and related reconciliations are shown in tables below: Segment operating income (loss) For the Three Months Ended March 31, For the Six Months Ended March 31, 2023 2022 2023 2022 Revenues: OEM distribution $ 4,057,000 $ 4,676,000 $ 8,434,000 $ 9,917,000 Retail distribution 919,000 649,000 1,976,000 2,041,000 Design 5,682,000 4,990,000 11,058,000 9,970,000 Total segment revenues $ 10,658,000 $ 10,315,000 $ 21,468,000 $ 21,928,000 Operating income/(loss): OEM distribution $ 28,000 $ 326,000 $ 140,000 $ 823,000 Retail distribution (736,000 ) (356,000 ) (1,062,000 ) (584,000 ) Design 531,000 389,000 963,000 974,000 Total segment operating (loss)/income (177,000 ) 359,000 41,000 1,213,000 General corporate expenses (667,000 ) (682,000 ) (1,352,000 ) (1,322,000 ) Total (loss)/income from operations (844,000 ) (323,000 ) (1,311,000 ) (109,000 ) Other (income)/expense, net 27,000 33,000 (10,000 ) 67,000 (Loss)/income before income taxes $ (871,000 ) $ (356,000 ) $ (1,301,000 ) $ (176,000 ) Depreciation and amortization: OEM distribution $ 1,000 $ 3,000 $ 2,000 $ 4,000 Design 78,000 80,000 154,000 153,000 Total depreciation and amortization $ 79,000 $ 83,000 $ 156,000 $ 157,000 Schedule of segment assets March 31, September 30, Segment Assets: OEM distribution $ 4,530,000 $ 4,276,000 Retail distribution 2,961,000 3,816,000 Design 6,373,000 6,116,000 Total segment assets 13,864,000 14,208,000 General corporate assets 6,424,000 6,731,000 Total assets $ 20,288,000 $ 20,939,000 The Company had certain customers in the OEM distribution segment whose individual percentage of the Company’s consolidated revenues was 10% or greater. Revenues from one customer or its affiliates or contract manufacturers represented 12.7 26.2 22.6 25.7 For the three and six months ended March 31, 2023, the Company had one customer in the design segment whose individual percentage of the Company’s consolidated revenues was 10% or greater. Revenues from this customer represented 24.1 11.7 19.2 10.2 At March 31, 2023 and September 30, 2022, the Company had customers in the OEM distribution segment whose accounts receivable balance accounted for 10% or more of the Company’s consolidated accounts receivable. Accounts receivable from two customers or their affiliates or contract manufacturers represented 31.3 28.1 At March 31, 2023, the Company had one customer in the design segment whose accounts receivable balance accounted for 10% or more of the Company’s consolidated accounts receivable. Accounts receivable from this customer represented 19.6 In March 2023, the Company’s contract with one of its major diabetic customers in the OEM distribution segment expired. Due to increased pricing pressures, the Company did not extend its contract with this customer. Revenue from this customer represented approximately 12

SHARE-BASED COMPENSATION

SHARE-BASED COMPENSATION	6 Months Ended
	Mar. 31, 2023
Share-Based Payment Arrangement [Abstract]
SHARE-BASED COMPENSATION	NOTE 6 SHARE-BASED COMPENSATION Stock Options No In October 2021 and January 2022, the Company granted options to non-employee directors to purchase an aggregate of 58,000 83,000 2.39 1.56 1.03 0.72 60,000 In January 2022, the Company granted options to one of its employees to purchase an aggregate of 14,000 1.56 0.73 10,000 In February 2022, the Company granted options to one of its non-employee directors to purchase an aggregate of 31,000 1.68 0.80 25,000 In February 2022, the Company granted options to one of its former non-employee directors to purchase an aggregate of 19,000 1.68 1.07 20,000 There were no The Company recognized compensation expense for stock option awards of $ 15,000 66,000 39,000 105,000 9,000 0.5

EARNINGS PER SHARE

EARNINGS PER SHARE	6 Months Ended
	Mar. 31, 2023
Loss per share:
EARNINGS PER SHARE	NOTE 7 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 shares that would be issued upon the exercise of stock options and warrants, computed using the treasury stock method. A reconciliation of basic and diluted earnings per share is as follows: Schedule of earnings (loss) per share For the Three Months Ended March 31, For the Six Months Ended March 31, 2023 2022 2023 2022 Numerator: Net loss $ (871,000 ) $ (356,000 ) $ (1,301,000 ) $ (176,000 ) Denominator: Weighted average common shares outstanding 10,061,000 10,061,000 10,061,000 10,061,000 Dilutive common share equivalents – – – – Weighted average diluted shares outstanding 10,061,000 10,061,000 10,061,000 10,061,000 Loss per share: Basic $ (0.09 ) $ (0.04 ) $ (0.13 ) $ (0.02 ) Diluted $ (0.09 ) $ (0.04 ) $ (0.13 ) $ (0.02 ) The following securities were excluded from the calculation of diluted earnings per share in each period because their inclusion would have been anti-dilutive: Schedule of antidilutive securities excluded For the Three Months Ended March 31, For the Six Months Ended March 31, 2023 2022 2023 2022 Options 1,040,000 1,110,000 1,040,000 1,110,000 Warrants 151,000 151,000 151,000 151,000 Total potentially dilutive shares 1,191,000 1,261,000 1,191,000 1,261,000

RELATED PARTY TRANSACTIONS

RELATED PARTY TRANSACTIONS	6 Months Ended
	Mar. 31, 2023
Related Party Transactions [Abstract]
RELATED PARTY TRANSACTIONS	NOTE 8 RELATED PARTY TRANSACTIONS Buying Agency and Supply Agreement The Company has a Buying Agency and Supply Agreement (the “Supply Agreement”) with Forward China. The Supply Agreement 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 pays 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 Supply Agreement expires October 22, 2023. Terence 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 common stock. The Company recorded service fees to Forward China of $ 349,000 350,000 694,000 712,000 The Company has prepayments to Forward China for inventory purchases of $ 20,000 Promissory Note On January 18, 2018, the Company issued a $ 1,600,000 8 26,000 31,000 54,000 63,000 December 31, 2024 100,000 1,300,000 Other Related Party Activity The Company sells smart-enabled furniture, which is sourced by Forward China and sold in the U.S. under the Koble brand name. The Koble brand is owned by The Justwise Group Ltd. (“Justwise”), a company owned by Terence Wise, Chief Executive Officer and Chairman of the Company. The Company recognized revenues from the sale of Koble products of $ 543,000 441,000 1,041,000 981,000 33,000 65,000 30,000 60,000 3,000 5,000 10,000 1,000 15,000 The Company recorded revenue from a customer whose principal owner is an immediate family member of Jenny P. Yu, a shareholder of the Company and managing director of Forward China. The Company recognized revenue from this customer of $ 251,000 135,000 385,000 401,000

LEGAL PROCEEDINGS

LEGAL PROCEEDINGS	6 Months Ended
	Mar. 31, 2023
Commitments and Contingencies Disclosure [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. At March 31, 2023, 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.

LINE OF CREDIT

LINE OF CREDIT	6 Months Ended
	Mar. 31, 2023
Debt Disclosure [Abstract]
LINE OF CREDIT	NOTE 10 LINE OF CREDIT The Company, specifically IPS, has a $ 1,300,000 May 31, 2024 0.75% above The Wall Street Journal prime rate. 8.75 7.0 1,300,000

LEASES

LEASES	6 Months Ended
	Mar. 31, 2023
Leases
LEASES	NOTE 11 LEASES The Company’s operating leases are primarily for engineering, corporate and administrative office space. Cash paid for amounts included in operating lease liabilities for the six months ended March 31, 2023 and 2022, which have been included in cash flows from operating activities, was $ 286,000 294,000 Schedule of operating lease expense For the Three Months Ended March 31, For the Six Months Ended March 31, 2023 2022 2023 2022 Operating lease expense included in: Sales and marketing expense $ 2,000 $ 13,000 $ 3,000 $ 27,000 General and administrative expense 162,000 141,000 309,000 283,000 Total $ 164,000 $ 154,000 $ 312,000 $ 310,000 At March 31, 2023, the Company’s operating leases had a weighted average remaining lease term of 8.0 5.7 At March 31, 2023, future minimum payments under non-cancellable operating leases were as follows: Schedule of future minimum payments under operating & financial leases Remainder of Fiscal 2023 $ 290,000 Fiscal 2024 592,000 Fiscal 2025 556,000 Fiscal 2026 510,000 Fiscal 2027 419,000 Thereafter 1,979,000 Total future minimum lease payments 4,346,000 Less imputed interest (902,000 ) Present value of lease liabilities 3,444,000 Less current portion of lease liabilities (397,000 ) Long-term portion of lease liabilities $ 3,047,000

ACCRUED EXPENSES AND OTHER CURR

ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES	6 Months Ended
	Mar. 31, 2023
Payables and Accruals [Abstract]
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES	NOTE 12 ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES Accrued expenses and other current liabilities at March 31, 2023 and September 30, 2022 are as follows: Schedule of accrued expenses and other accrued liabilities March 31 September 30, 2023 2022 Accrued commissions/bonuses $ 474,000 $ 722,000 Paid time off 288,000 228,000 Other 196,000 204,000 Total $ 958,000 $ 1,154,000

ACCOUNTING POLICIES (Policies)

ACCOUNTING POLICIES (Policies)	6 Months Ended
	Mar. 31, 2023
Accounting Policies [Abstract]
Basis of Presentation	Basis of Presentation The accompanying condensed consolidated financial statements include the accounts of Forward Industries, Inc. and all of its wholly-owned subsidiaries: Forward Industries (IN), Inc. (“Forward US”), Forward Industries (Switzerland) GmbH (“Forward Switzerland”), Forward Industries UK Limited (“Forward UK”), Intelligent Product Solutions, Inc. (“IPS”) and Kablooe, Inc. (“Kablooe”). The terms “Forward”, “we”, “our” or the “Company” as used throughout this document are used to indicate Forward Industries, Inc. and all of its wholly-owned subsidiaries. All significant intercompany transactions and balances have been eliminated in consolidation. 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 Fiscal 2023. 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, 2022, and with the disclosures and risk factors presented therein. The September 30, 2022 condensed consolidated balance sheet has been derived from the audited consolidated financial statements.
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 condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates and assumptions. Throughout this document, certain dollar amounts and percentages have been rounded to their approximate values.
Segment Reporting	Segment Reporting The Company has three reportable segments: Original Equipment Manufacturing (“OEM”) distribution, retail distribution and design. The OEM distribution segment sources and sells carrying cases and other accessories for medical monitoring and diagnostic kits and a variety of other portable electronic and non-electronic devices directly to OEMs or their contract manufacturers worldwide. The retail distribution segment sources and sells smart-enabled furniture, hot tubs and saunas, and a variety of other products through various online retailer websites to customers predominantly located in the U.S. and Canada. The design segment consists of two operating segments (IPS and Kablooe, which have been aggregated into one reportable segment) that provide a full spectrum of hardware and software product design and engineering services to customers predominantly located in the U.S. See Note 5 for more information on segments.
Accounts Receivable	Accounts Receivable Accounts receivable consist of unsecured trade accounts with customers in amounts that have been invoiced ($ 8,430,000 7,861,000 no 48,000 20,000 851,000 852,000 The Company has agreements with various retailers which contain different terms for trade discounts, promotional and other sales allowances. At March 31, 2023 and September 30, 2022, the Company recorded accounts receivable allowances of $ 153,000 55,000
Inventories	Inventories Inventories consist primarily of finished goods and are stated at the lower of cost (determined by the first-in, first-out method) or net realizable value. Based on management’s estimates, an allowance is made to reduce excess, obsolete, or otherwise unsellable inventories to net realizable value. The allowance is established through charges to cost of sales in the Company’s condensed consolidated statements of operations. In determining the adequacy of the allowance, management’s estimates are based upon several factors, including analyses of inventory levels, historical loss trends, sales history and projections of future sales demand. The Company’s estimates of the allowance may change from time to time based on management’s assessments, and such changes could be material. At March 31, 2023 and September 30, 2022, the allowance for slow-moving inventory, which relates entirely to our retail segment, was $ 657,000 535,000
Revenue Recognition	Revenue Recognition OEM Distribution Segment The OEM distribution segment recognizes revenue when: (i) finished goods are shipped to its customers (in general, these conditions occur at either point of shipment or point of destination, depending on the terms of sale and 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. If the Company receives consideration before achieving the criteria previously mentioned, it records a contract liability, which is classified as a component of deferred income in the accompanying condensed consolidated balance sheets. The OEM distribution segment had no Retail Distribution Segment The retail distribution segment sells products primarily through online websites operated by authorized third-party retailers. Revenue is recognized when control (as defined in Accounting Standards Codification, “ASC”, 606, “Revenue from Contracts with Customers”) of the related goods is transferred to the retailer, which generally occurs upon shipment to the end customer. Other than product delivery, the retail distribution segment does not typically have other deliverables or performance obligations associated with its products. Revenue is measured as the amount of consideration expected to be received in exchange for the products provided, net of allowances taken by retailers for product returns and any taxes collected from customers that will be remitted to governmental authorities. When the Company receives consideration before achieving the criteria previously mentioned, it records a contract liability, which is classified as a component of deferred income in the accompanying condensed consolidated balance sheets. The retail distribution segment had no Design Segment 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. 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 fixed price 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. The design segment had contract assets of $ 807,000 609,000 693,000 166,000 439,000 188,000
Goodwill	Goodwill The Company reviews goodwill for impairment at least annually, or more often if triggering events occur. The Company has two reporting units with goodwill (the IPS and Kablooe operating segments) and we perform our annual goodwill impairment test on September 30, the end of the fiscal year, or upon the occurrence of a triggering event. 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 a quantitative 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 perform the quantitative assessment by comparing 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. Management evaluated and concluded that there were no indications goodwill was impaired at March 31, 2023.
Intangible Assets	Intangible Assets Intangible assets include trademarks and customer relationships, which were acquired as part of the acquisitions of IPS in Fiscal 2018 and Kablooe in Fiscal 2020 and 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 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 indications of impairments of intangible assets at March 31, 2023.
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. At March 31, 2023, there was no change to our assessment that a full valuation allowance was required against all net deferred tax assets as it is not probable that such deferred tax assets will be realized. Accordingly, any deferred tax provision or benefit was offset by an equal and opposite change to the valuation allowance. Our income tax provision or benefit is generally not significant due to the existence of significant net operating loss carryforwards.
Fair Value Measurements	Fair Value Measurements We perform fair value measurements in accordance with the guidance provided by ASC 820, “Fair Value Measurement.” 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: · Level 1: quoted prices in active markets for identical assets or liabilities; · Level 2: inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices in active markets for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; or · Level 3: unobservable inputs that are supported by little or no market activity and that are significant to the fair values of the assets or liabilities.
Leases	Leases Lease assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term, using the Company’s incremental borrowing rate commensurate with the lease term, since the Company’s lessors do not provide an implicit rate, nor is one readily available. Certain leases may include an option to renew and when it is reasonably probable to exercise such option, the Company will include the renewal option terms in determining the lease asset and lease liability. Lease assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Lease expense for lease payments is recognized on a straight-line basis over the lease term. Operating lease assets are shown as right of use assets on the condensed consolidated balance sheets. The current and long-term portions of operating lease liabilities are shown separately as such on the condensed consolidated balance sheets.
Recent Accounting Pronouncements	Recent Accounting Pronouncements In November 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2019-11, “Codification Improvements to Topic 326, Financial Instruments – Credit Losses.” ASU 2019-11 is an accounting pronouncement that provides clarity to and amends earlier guidance on this topic and would be effective concurrently with the adoption of such earlier guidance. This pronouncement is effective for fiscal years beginning after December 15, 2022 and interim periods within those fiscal years. The Company is currently evaluating the effects of this pronouncement on its condensed consolidated financial statements.

INTANGIBLE ASSETS AND GOODWILL

INTANGIBLE ASSETS AND GOODWILL (Tables)	6 Months Ended
	Mar. 31, 2023
Goodwill and Intangible Assets Disclosure [Abstract]
Intangible Assets	Intangible Assets March 31, 2023 September 30, 2022 Trademarks Customer Relationships Total Intangible Assets Trademarks Customer Relationships Total Intangible Assets Gross carrying amount $ 585,000 $ 1,390,000 $ 1,975,000 $ 585,000 $ 1,390,000 $ 1,975,000 Less accumulated amortization (183,000 ) (792,000 ) (975,000 ) (164,000 ) (705,000 ) (869,000 ) Net carrying amount $ 402,000 $ 598,000 $ 1,000,000 $ 421,000 $ 685,000 $ 1,106,000
Estimated amortization expense	Estimated amortization expense Remainder of Fiscal 2023 $ 106,000 Fiscal 2024 213,000 Fiscal 2025 213,000 Fiscal 2026 121,000 Fiscal 2027 82,000 Thereafter 265,000 Total $ 1,000,000

SEGMENTS AND CONCENTRATIONS (Ta

SEGMENTS AND CONCENTRATIONS (Tables)	6 Months Ended
	Mar. 31, 2023
Segment Reporting [Abstract]
Segment operating income (loss)	Segment operating income (loss) For the Three Months Ended March 31, For the Six Months Ended March 31, 2023 2022 2023 2022 Revenues: OEM distribution $ 4,057,000 $ 4,676,000 $ 8,434,000 $ 9,917,000 Retail distribution 919,000 649,000 1,976,000 2,041,000 Design 5,682,000 4,990,000 11,058,000 9,970,000 Total segment revenues $ 10,658,000 $ 10,315,000 $ 21,468,000 $ 21,928,000 Operating income/(loss): OEM distribution $ 28,000 $ 326,000 $ 140,000 $ 823,000 Retail distribution (736,000 ) (356,000 ) (1,062,000 ) (584,000 ) Design 531,000 389,000 963,000 974,000 Total segment operating (loss)/income (177,000 ) 359,000 41,000 1,213,000 General corporate expenses (667,000 ) (682,000 ) (1,352,000 ) (1,322,000 ) Total (loss)/income from operations (844,000 ) (323,000 ) (1,311,000 ) (109,000 ) Other (income)/expense, net 27,000 33,000 (10,000 ) 67,000 (Loss)/income before income taxes $ (871,000 ) $ (356,000 ) $ (1,301,000 ) $ (176,000 ) Depreciation and amortization: OEM distribution $ 1,000 $ 3,000 $ 2,000 $ 4,000 Design 78,000 80,000 154,000 153,000 Total depreciation and amortization $ 79,000 $ 83,000 $ 156,000 $ 157,000
Schedule of segment assets	Schedule of segment assets March 31, September 30, Segment Assets: OEM distribution $ 4,530,000 $ 4,276,000 Retail distribution 2,961,000 3,816,000 Design 6,373,000 6,116,000 Total segment assets 13,864,000 14,208,000 General corporate assets 6,424,000 6,731,000 Total assets $ 20,288,000 $ 20,939,000

EARNINGS PER SHARE (Tables)

EARNINGS PER SHARE (Tables)	6 Months Ended
	Mar. 31, 2023
Loss per share:
Schedule of earnings (loss) per share	Schedule of earnings (loss) per share For the Three Months Ended March 31, For the Six Months Ended March 31, 2023 2022 2023 2022 Numerator: Net loss $ (871,000 ) $ (356,000 ) $ (1,301,000 ) $ (176,000 ) Denominator: Weighted average common shares outstanding 10,061,000 10,061,000 10,061,000 10,061,000 Dilutive common share equivalents – – – – Weighted average diluted shares outstanding 10,061,000 10,061,000 10,061,000 10,061,000 Loss per share: Basic $ (0.09 ) $ (0.04 ) $ (0.13 ) $ (0.02 ) Diluted $ (0.09 ) $ (0.04 ) $ (0.13 ) $ (0.02 )
Schedule of antidilutive securities excluded	Schedule of antidilutive securities excluded For the Three Months Ended March 31, For the Six Months Ended March 31, 2023 2022 2023 2022 Options 1,040,000 1,110,000 1,040,000 1,110,000 Warrants 151,000 151,000 151,000 151,000 Total potentially dilutive shares 1,191,000 1,261,000 1,191,000 1,261,000

LEASES (Tables)

LEASES (Tables)	6 Months Ended
	Mar. 31, 2023
Leases
Schedule of operating lease expense	Schedule of operating lease expense For the Three Months Ended March 31, For the Six Months Ended March 31, 2023 2022 2023 2022 Operating lease expense included in: Sales and marketing expense $ 2,000 $ 13,000 $ 3,000 $ 27,000 General and administrative expense 162,000 141,000 309,000 283,000 Total $ 164,000 $ 154,000 $ 312,000 $ 310,000
Schedule of future minimum payments under operating & financial leases	Schedule of future minimum payments under operating & financial leases Remainder of Fiscal 2023 $ 290,000 Fiscal 2024 592,000 Fiscal 2025 556,000 Fiscal 2026 510,000 Fiscal 2027 419,000 Thereafter 1,979,000 Total future minimum lease payments 4,346,000 Less imputed interest (902,000 ) Present value of lease liabilities 3,444,000 Less current portion of lease liabilities (397,000 ) Long-term portion of lease liabilities $ 3,047,000

ACCRUED EXPENSES AND OTHER CU_2

ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Tables)	6 Months Ended
	Mar. 31, 2023
Payables and Accruals [Abstract]
Schedule of accrued expenses and other accrued liabilities	Schedule of accrued expenses and other accrued liabilities March 31 September 30, 2023 2022 Accrued commissions/bonuses $ 474,000 $ 722,000 Paid time off 288,000 228,000 Other 196,000 204,000 Total $ 958,000 $ 1,154,000

OVERVIEW (Details Narrative)

OVERVIEW (Details Narrative)	Mar. 31, 2023 USD ($)
Bank Line Of Credit [Member]
Line of Credit Facility [Line Items]
Line of Credit Facility, Remaining Borrowing Capacity	$ 1,300,000

ACCOUNTING POLICIES (Details Na

ACCOUNTING POLICIES (Details Narrative) - USD ($)	Mar. 31, 2023	Sep. 30, 2022	Sep. 30, 2021
Accounts receivable	$ 8,430,000	$ 7,861,000
Inventory reserve	657,000	535,000
OEM Distribution [Member]
Accounts Receivable, Allowance for Credit Loss	0	0
Contract liabilities	0	0	$ 0
Retail Distribution [Member]
Accounts Receivable, Allowance for Credit Loss	48,000	20,000
Allowances for trade discounts, promotional and other sales allowances	153,000	55,000
Contract liabilities	0	0	0
Design Segment [Member]
Accounts Receivable, Allowance for Credit Loss	851,000	852,000
Design [Member]
Contract liabilities	166,000	439,000	188,000
Contract assets	$ 807,000	$ 609,000	$ 693,000

INTANGIBLE ASSETS AND GOODWIL_2

INTANGIBLE ASSETS AND GOODWILL (Details - Intangible Assets) - USD ($)	Mar. 31, 2023	Sep. 30, 2022
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 1,975,000	$ 1,975,000
Accumulated Amortization	(975,000)	(869,000)
Net Carrying Amount	1,000,000	1,106,000
Trademarks [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	585,000	585,000
Accumulated Amortization	(183,000)	(164,000)
Net Carrying Amount	402,000	421,000
Customer Relationships [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	1,390,000	1,390,000
Accumulated Amortization	(792,000)	(705,000)
Net Carrying Amount	$ 598,000	$ 685,000

INTANGIBLE ASSETS AND GOODWIL_3

INTANGIBLE ASSETS AND GOODWILL (Details - Estimated amortization expense) - USD ($)	Mar. 31, 2023	Sep. 30, 2022
Goodwill and Intangible Assets Disclosure [Abstract]
Remainder of Fiscal 2023	$ 106,000
Fiscal 2024	213,000
Fiscal 2025	213,000
Fiscal 2026	121,000
Fiscal 2027	82,000
Thereafter	265,000
Total	$ 1,000,000	$ 1,106,000

INTANGIBLE ASSETS AND GOODWIL_4

INTANGIBLE ASSETS AND GOODWILL (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended
	Mar. 31, 2023	Mar. 31, 2022	Mar. 31, 2023	Mar. 31, 2022
Finite-Lived Intangible Assets [Line Items]
Amortization of Intangible Assets	$ 53,000	$ 53,000	$ 106,000	$ 106,000
Trademarks [Member]
Finite-Lived Intangible Assets [Line Items]
Useful lives	15 years		15 years
Customer Relationships [Member]
Finite-Lived Intangible Assets [Line Items]
Useful lives	8 years		8 years

FAIR VALUE MEASUREMENTS (Detail

FAIR VALUE MEASUREMENTS (Details Narrative) - USD ($)	Mar. 31, 2023	Sep. 30, 2022
Kablooe [Member]
Offsetting Assets [Line Items]
Earnout liability	$ 30,000	$ 70,000

SEGMENTS AND CONCENTRATIONS (De

SEGMENTS AND CONCENTRATIONS (Details - Operations) - USD ($)	3 Months Ended		6 Months Ended
	Mar. 31, 2023	Mar. 31, 2022	Mar. 31, 2023	Mar. 31, 2022
Segment Reporting Information [Line Items]
Revenues	$ 10,657,980	$ 10,314,563	$ 21,467,659	$ 21,928,304
Total (loss)/income from operations	(844,058)	(322,739)	(1,310,935)	(108,525)
Other expense/(income), net	965	2,732	(23,595)	4,095
(Loss)/income before income taxes	(871,000)	(356,000)	(1,301,000)	(176,000)
Operating Segments [Member]
Segment Reporting Information [Line Items]
Revenues	10,658,000	10,315,000	21,468,000	21,928,000
Total (loss)/income from operations	(844,000)	(323,000)	(1,311,000)	(109,000)
Total segment operating income	(177,000)	359,000	41,000	1,213,000
General corporate expenses	(667,000)	(682,000)	(1,352,000)	(1,322,000)
Other expense/(income), net	27,000	33,000	(10,000)	67,000
(Loss)/income before income taxes	(871,000)	(356,000)	(1,301,000)	(176,000)
Depreciation and amortization	79,000	83,000	156,000	157,000
Operating Segments [Member] | OEM Distribution [Member]
Segment Reporting Information [Line Items]
Revenues	4,057,000	4,676,000	8,434,000	9,917,000
Total (loss)/income from operations	28,000	326,000	140,000	823,000
Depreciation and amortization	1,000	3,000	2,000	4,000
Operating Segments [Member] | Retail Distribution [Member]
Segment Reporting Information [Line Items]
Revenues	919,000	649,000	1,976,000	2,041,000
Total (loss)/income from operations	(736,000)	(356,000)	(1,062,000)	(584,000)
Operating Segments [Member] | Design [Member]
Segment Reporting Information [Line Items]
Revenues	5,682,000	4,990,000	11,058,000	9,970,000
Total (loss)/income from operations	531,000	389,000	963,000	974,000
Depreciation and amortization	$ 78,000	$ 80,000	$ 154,000	$ 153,000

SEGMENTS AND CONCENTRATIONS (_2

SEGMENTS AND CONCENTRATIONS (Details - Segment Assets) - USD ($)	Mar. 31, 2023	Sep. 30, 2022
Revenue, Major Customer [Line Items]
Assets	$ 20,287,793	$ 20,939,015
Net Assets, Segment [Member]
Revenue, Major Customer [Line Items]
Total segment assets	13,864,000	14,208,000
General corporate assets	6,424,000	6,731,000
Assets	20,288,000	20,939,000
Net Assets, Segment [Member] | OEM Distribution [Member]
Revenue, Major Customer [Line Items]
Other Assets	4,530,000	4,276,000
Net Assets, Segment [Member] | Retail Distribution [Member]
Revenue, Major Customer [Line Items]
Other Assets	2,961,000	3,816,000
Net Assets, Segment [Member] | Design [Member]
Revenue, Major Customer [Line Items]
Other Assets	$ 6,373,000	$ 6,116,000

SEGMENTS AND CONCENTRATIONS (_3

SEGMENTS AND CONCENTRATIONS (Details Narrative) - Customer Concentration Risk [Member]	3 Months Ended		6 Months Ended		12 Months Ended
	Mar. 31, 2023	Mar. 31, 2022	Mar. 31, 2023	Mar. 31, 2022	Sep. 30, 2022
Revenue Benchmark [Member] | One Customers [Member] | OEM Distribution [Member]
Revenue, Major Customer [Line Items]
Concentration Risk, Percentage	12.70%
Revenue Benchmark [Member] | Two Customers [Member] | OEM Distribution [Member]
Revenue, Major Customer [Line Items]
Concentration Risk, Percentage		26.20%	22.60%	25.70%
Revenue Benchmark [Member] | One Customer [Member] | OEM Distribution [Member]
Revenue, Major Customer [Line Items]
Concentration Risk, Percentage			12%	12%
Revenue Benchmark [Member] | One Customer [Member] | Design [Member]
Revenue, Major Customer [Line Items]
Concentration Risk, Percentage	24.10%	11.70%	19.20%	10.20%
Accounts Receivable [Member] | Two Customers [Member] | OEM Distribution [Member]
Revenue, Major Customer [Line Items]
Concentration Risk, Percentage			31.30%		28.10%
Accounts Receivable [Member] | One Customer [Member]
Revenue, Major Customer [Line Items]
Concentration Risk, Percentage			19.60%

SHARE-BASED COMPENSATION (Detai

SHARE-BASED COMPENSATION (Details Narrative) - USD ($)	1 Months Ended			3 Months Ended		6 Months Ended
	Feb. 28, 2022	Jan. 31, 2022	Oct. 31, 2021	Mar. 31, 2023	Mar. 31, 2022	Mar. 31, 2023	Mar. 31, 2022
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Options granted						0
Stock options exercised, shares						0	0
Share based compensation expense						$ 38,794	$ 104,812
Equity Option [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Options granted		14,000
Options granted, exercise price of options granted		$ 1.56
Option grant-date fair value per share		$ 0.73
Fair value of options granted		$ 10,000
Share based compensation expense				$ 15,000	$ 66,000	39,000	$ 105,000
Unrecognized compensation cost				$ 9,000		$ 9,000
Unrecognized compensation cost weighted average vesting period						6 months
Non Employee Directors [Member] | Equity Option [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Options granted	31,000	83,000	58,000
Options granted, exercise price of options granted	$ 1.68	$ 1.56	$ 2.39
Option grant-date fair value per share	$ 0.80	$ 0.72	$ 1.03
Fair value of options granted	$ 25,000	$ 60,000	$ 60,000
Former Non Employee Directors [Member] | Equity Option [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Options granted	19,000
Options granted, exercise price of options granted	$ 1.68
Option grant-date fair value per share	$ 1.07
Fair value of options granted	$ 20,000

EARNINGS PER SHARE (Details - D

EARNINGS PER SHARE (Details - Diluted loss per share) - USD ($)	3 Months Ended		6 Months Ended
	Mar. 31, 2023	Mar. 31, 2022	Mar. 31, 2023	Mar. 31, 2022
Numerator:
Net loss	$ (871,000)	$ (356,000)	$ (1,301,000)	$ (176,000)
Denominator:
Weighted average common shares outstanding	10,061,000	10,061,000	10,061,000	10,061,000
Dilutive common share equivalents	0	0	0	0
Weighted average diluted shares outstanding	10,061,000	10,061,000	10,061,000	10,061,000
Loss per share:
Basic	$ (0.09)	$ (0.04)	$ (0.13)	$ (0.02)
Diluted	$ (0.09)	$ (0.04)	$ (0.13)	$ (0.02)

EARNINGS PER SHARE (Details - A

EARNINGS PER SHARE (Details - Antidilutive shares) - shares	3 Months Ended		6 Months Ended
	Mar. 31, 2023	Mar. 31, 2022	Mar. 31, 2023	Mar. 31, 2022
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total potentially dilutive shares	1,191,000	1,261,000	1,191,000	1,261,000
Equity Option [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total potentially dilutive shares	1,040,000	1,110,000	1,040,000	1,110,000
Warrant [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total potentially dilutive shares	151,000	151,000	151,000	151,000

RELATED PARTY TRANSACTIONS (Det

RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($)	3 Months Ended		4 Months Ended	6 Months Ended
	Mar. 31, 2023	Mar. 31, 2022	Jan. 18, 2018	Mar. 31, 2023	Mar. 31, 2022	Sep. 30, 2022
Related Party Transaction [Line Items]
Prepaid expenses and other current assets	$ 511,020			$ 511,020		$ 417,605
Note payable outstanding balance	1,300,000			1,300,000		1,400,000
Forward China [Member]
Related Party Transaction [Line Items]
Repayment of debt				100,000
Forward China [Member] | Promissory Note [Member]
Related Party Transaction [Line Items]
Debt face amount			$ 1,600,000
Debt interest rate			8%
Interest expense	26,000	$ 31,000		54,000	$ 63,000
Debt Instrument, Maturity Date			Dec. 31, 2024
Forward China [Member] | Inventory Purchases [Member]
Related Party Transaction [Line Items]
Prepaid expenses and other current assets	20,000			20,000		20,000
Forward China [Member] | Service Fees [Member]
Related Party Transaction [Line Items]
Costs and Expenses, Related Party	349,000	350,000		694,000	712,000
Justwise Group [Member]
Related Party Transaction [Line Items]
Accounts payable to related party	1,000			1,000		$ 15,000
Justwise Group [Member] | Koble [Member]
Related Party Transaction [Line Items]
Revenue from related party	543,000	441,000		1,041,000	981,000
Related party costs	33,000	10,000		65,000	10,000
Justwise Group [Member] | Koble [Member] | Selling And Marketing [Member]
Related Party Transaction [Line Items]
Related party costs	30,000	10,000		60,000	10,000
Justwise Group [Member] | Koble [Member] | Cost of Sales [Member]
Related Party Transaction [Line Items]
Related party costs	3,000			5,000
Board [Member] | Jenny P Yu [Member]
Related Party Transaction [Line Items]
Revenue from related party	$ 251,000	$ 135,000		$ 385,000	$ 401,000

LINE OF CREDIT (Details Narrati

LINE OF CREDIT (Details Narrative) - I P S [Member] - USD ($)	6 Months Ended	12 Months Ended
	Mar. 31, 2023	Sep. 30, 2022
Line of Credit Facility [Line Items]
Line of Credit Facility, Maximum Borrowing Capacity	$ 1,300,000
Line of credit expiration date	May 31, 2024
Line of credit interest rate	0.75% above The Wall Street Journal prime rate.
Line of credit effective interest rate	8.75%	7%
Line of Credit Facility, Remaining Borrowing Capacity	$ 1,300,000

LEASES (Details)

LEASES (Details) - USD ($)	3 Months Ended		6 Months Ended
	Mar. 31, 2023	Mar. 31, 2022	Mar. 31, 2023	Mar. 31, 2022
Leases
Sales and marketing expense	$ 2,000	$ 13,000	$ 3,000	$ 27,000
General and administrative expense	162,000	141,000	309,000	283,000
Total	$ 164,000	$ 154,000	$ 312,000	$ 310,000

LEASES (Details - Future minimu

LEASES (Details - Future minimum payments Operating lease)	Mar. 31, 2023 USD ($)
Leases
Remainder of Fiscal 2023	$ 290,000
Fiscal 2024	592,000
Fiscal 2025	556,000
Fiscal 2026	510,000
Fiscal 2027	419,000
Thereafter	1,979,000
Total future minimum lease payments	4,346,000
Less imputed interest	(902,000)
Present value of lease liabilities	3,444,000
Less current portion of lease liabilities	(397,000)
Long-term portion of lease liabilities	$ 3,047,000

LEASES (Details Narrative)

LEASES (Details Narrative) - USD ($)	6 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Leases
Cash paid for amounts included in operating lease liabilities	$ 286,000	$ 294,000
Operating leases term	8 years
Operating leases	5.70%

ACCRUED EXPENSES AND OTHER CU_3

ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Details) - USD ($)	Mar. 31, 2023	Sep. 30, 2022
Payables and Accruals [Abstract]
Accrued commissions/bonuses	$ 474,000	$ 722,000
Paid time off	288,000	228,000
Other	196,000	204,000
Total	$ 958,000	$ 1,154,000