Company: FWDI
Filing Date: 2025-05-14
Form Type: 10-Q
Source: 0001683168-25-003548
Chunk: 10

Company: Forward Industries, Inc.
Filing Date: 2025-05-14
Form: 10-Q
Item: Item 1
Chunk 10
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 2025. 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 ($1,791,000, $2,335,000 and $4,805,000 at March 31, 2025,
September 30, 2024, and September 30, 2023, respectively) and contract assets as described further below under the heading “Revenue
Recognition.” The Company maintains an allowance for credit losses, which is recorded as a reduction to accounts receivable on the
condensed consolidated balance sheets. Collectability of accounts receivable is estimated by evaluating the number of days accounts are
outstanding, customer payment history, recent payment trends and perceived creditworthiness, adjusted as necessary based on specific customer
situations. At March 31, 2025, September 30, 2024 and September 30, 2023, the Company had allowances for credit losses of $14,000, $27,000
and $956,000, respectively.

     8 

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. Due to the Retail Exit and the OEM
Plan, all inventory is now presented as a component of assets held for sale.

Revenue Recognition

Discontinued 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