Company: FWDI
Filing Date: 2025-09-16
Form Type: 8-K
Source: 0001683168-25-007036
Chunk: 52

Company: Forward Industries, Inc.
Filing Date: 2025-09-16
Form: 8-K
Item: Item 8
Chunk 52
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 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.

     F-36 

FORWARD INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The
fair value of the earnout liability is measured on a recurring basis at each reporting date using inputs categorized within Level 3 of
the fair value hierarchy. Due to the low likelihood of Kablooe reaching the specified earnout targets, the fair value of this earnout
liability is $0 at December 31, 2024 and September 30, 2024.

The
carrying amounts of cash, accounts receivable, accounts payable, due to Forward China, and the Note Payable to Forward China approximate
fair value due their short-term maturities.

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. The Company has certain leases that 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