Company: FWDI
Filing Date: 2025-09-16
Form Type: 8-K
Source: 0001683168-25-007036
Chunk: 88

Company: Forward Industries, Inc.
Filing Date: 2025-09-16
Form: 8-K
Item: Item 1
Chunk 88
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 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
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 condensed consolidated balance sheets. The current and long-term
portions of operating lease liabilities are shown separately as such on the condensed consolidated balance sheets.

Recent Accounting Pronouncements

In November 2024, the Financial
Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2024-03, “Income
Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement
Expenses” and in January 2025, the FASB issued ASU No. 2025-01, “Income Statement—Reporting Comprehensive
Income—