Company: FWDI
Filing Date: 2025-12-11
Form Type: 10-K
Source: 0001683168-25-009068
Chunk: 1037

Company: Forward Industries, Inc.
Filing Date: 2025-12-11
Form: 10-K
Item: Item 9
Chunk 1037
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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
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 consolidated balance sheets. The current and long-term portions of
operating lease liabilities are shown separately as such on the consolidated balance sheets.

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 September 30, 2025, there was no change to our assessment that a full valuation allowance was required against all net deferred
tax assets. 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.

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 would be classified
as a component of liabilities held for sale in the accompanying consolidated balance sheets. The OEM distribution segment had no contract
liabilities at September 30, 2025, 2024 or 2023. The results of operations of the OEM segment are reported as discontinued operations
for Fiscal 2025 and Fiscal 2024