Company: FWDI
Filing Date: 2025-02-13
Form Type: 10-Q
Source: 0001683168-25-000993
Chunk: 9

Company: Forward Industries, Inc.
Filing Date: 2025-02-13
Form: 10-Q
Item: Item 1
Chunk 9
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 as necessary based on specific customer
situations. At December 31, 2024, September 30, 2024 and September 30, 2023, the Company had no allowances for credit losses for the OEM
distribution segment and $51,000, $27,000 and $771,000, respectively, for the design segment.

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.

     8 

FORWARD INDUSTRIES, INC. AND
SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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 contract liabilities
at December 31, 2024, September 30, 2024 or September 30, 2023.

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