Company: FWDI
Filing Date: 2025-08-14
Form Type: 10-Q
Source: 0001683168-25-006141
Chunk: 13

Company: Forward Industries, Inc.
Filing Date: 2025-08-14
Form: 10-Q
Item: Item 1
Chunk 13
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 allowances for credit
losses of $16,000 and $27,000, respectively.

Inventories

Inventories consisted primarily
of finished goods and were 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 was made to reduce excess, obsolete, or otherwise unsellable inventories to net realizable
value. If needed, an allowance was established through charges to cost of sales in the Company’s condensed consolidated statements
of operations. In determining the adequacy of any allowance, management’s estimates were based upon several factors, including analyses
of inventory levels, historical loss trends, sales history and projections of future sales demand. Due to the Retail Exit and the OEM
Plan the Company has no remaining inventory at June 30, 2025. Inventory on hand at September 30, 2024 is presented as a component of assets
held for sale.

Revenue Recognition

Discontinued OEM Distribution Segment

The OEM distribution segment
recognized revenue when: (i) finished goods were shipped to its customers (in general, these conditions occurred at either point of shipment
or point of destination, depending on the terms of sale and transfer of control); (ii) there were no other deliverables or performance
obligations; and (iii) there were no further obligations to the customer after the title of the goods had transferred. If the Company
received consideration before achieving the criteria previously mentioned, it recorded a contract liability, which was classified as a
component of deferred income in the accompanying condensed consolidated balance sheets. The OEM distribution segment had no contract liabilities
at June 30, 2025 or September 30, 2024. The results of operations of the OEM segment are reported as discontinued operations for the three
and nine months ended June 30, 2025 and 2024. See Note 3.

     9 

Discontinued Retail Distribution Segment

The discontinued retail distribution
segment sold products primarily through online websites operated by authorized third-party retailers. Revenue was recognized when control
(as defined in Accounting Standards Codification (“ASC”) 606, “Revenue from Contracts with Customers”) of the
related goods were transferred to the retailer, which generally occurred upon shipment to the end customer. Other than product delivery,
the retail distribution segment did not typically have other deliverables or performance obligations associated with its products. Revenue
was measured as the amount of consideration expected to be received in exchange for the