** **

** **

 

 

 

 

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington****, D.C. 20549**

________________

**FORM 10-Q**

________________

 

**[X]       QUARTERLY REPORT PURSUANT TOSECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**

**            ****For the quarterly period ended March 31, 2009.**

**OR**

**[   ]       TRANSITION REPORT PURSUANTTO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**

**            ****For the transition period from____ to ____.**

** **

**Commission File Number: 0-6669**

________________

**FORWARD INDUSTRIES, INC.**

(Exact name of registrant as specified in its charter)

________________

** **

**                                     **
| **New York**                    | **13-1950672**                      |
|---------------------------------|-------------------------------------|
| (State or other jurisdiction of | (I.R.S.Employer Identification No.) |
| incorporation or organization)  |                                |

 

 

**1801 Green Rd.****, Suite E, Pompano Beach, FL  33064**

(Address of principal executive offices, including zipcode)

**(954) 419-9544**

(Registrant’s telephone number, including area code)

________________

Indicateby check mark whether the registrant (1) has filed all reports required to befiled by Section 13 or 15(d) of the Securities Exchange Act of 1934 during thepreceding twelve months (or for such shorter period that the registrant wasrequired to file such reports), and (2) has been subject to such filingrequirements for the past 90 days.    [**X**] Yes                   [   ] No

Indicateby check mark whether the registrant is a large accelerated filer, anaccelerated filer, a non-accelerated filer, or a smaller reporting company.  Seethe definitions of “ large accelerated filer”, “accelerated filer”, and“smaller reporting company” in Rule 12b-2 of the Exchange Act).
| [   ] Large accelerated filer[**  **] Non-accelerated filer (Do not check if a smaller reporting company)   | [   ] Accelerated filer           				[**X**]Smaller reporting company          
 

Indicateby check mark whether the registrant is a shell company (as defined in Rule12b-2 of the Exchange Act).          [**  **] Yes   [**X**] No

Thenumber of shares outstanding of the registrant’s common stock, par value $0.01per share, at the latest practical date April 27, 2009, was 7,923,189 shares.

1

 

 
****
 

 

 

 

**Forward Industries, Inc.**

**INDEX**

**PART  I.**

**FINANCIAL  INFORMATION**

Page No.

 

 

 

 

 

**Item  1.**

**Financial  Statements**

 

 

 

     - Consolidated Balance Sheets as of March 31, 2009 (unaudited)

 

 

 

     and September 30, 2008............................................................................................................ 

4

 

 

 

 

 

 

     - Consolidated Statements of Operations (unaudited) for the Three and Six  Months

 

 

 

Ended March 31 , 2009 and 2008............................................................................................ 

5

 

 

 

 

 

 

     - Consolidated Statements of Cash Flows (unaudited) for the Six Months

 

 

 

     Ended March 31, 2009 and 2008............................................................................................. 

6

 

 

 

 

 

 

     - Notes to Consolidated Financial Statements (unaudited)............................................... 

7

 

 

 

 

 

**Item  2.**

**Management’s  Discussion and Analysis of Financial Condition and 	Results of Operations**...................................................................................................................

  15

 

** **

** **

 

 

**Item  3.**

**Quantitative  and Qualitative Disclosures About Market Risk**........................................... 

24

 

 

** **

**Item  4.**

** **

**Controls  and Procedures**............................................................................................................ 

 

24

 

** **

 

 

**PART  II.**

**OTHER  INFORMATION**

** **

 

** **

 

 

 

**Item  1.**

**Legal  Proceedings**....................................................................................................................... 

25

 

** **

** **

 

 

**Item  1A.**

**Risk  Factors**................................................................................................................................. 

25

 

** **

** **

 

 

**Item  2**

**Unregistered  Sales of Equity Securities and Use of Proceeds**............................................ 

25

 

** **

** **

 

 

**Item  3**

**Defaults  Upon Senior Securities**.............................................................................................. 

26

 

** **

** **

 

 

**Item  4.**

**Submission  of Matters to a Vote of Security Holders**........................................................... 

26

 

** **

** **

 

 

**Item  5.**

**Other  Information........................................................................................................................ 
26

 

** **

** **

 

 

**Item  6.**

**Exhibits**.......................................................................................................................................... 

26

 

** **

** **

 

 

 

**Signatures**..................................................................................................................................... 

27

 

 

** **

 

 

 

**Certifications**................................................................................................................................ 

28

** **

2

 

 
****
 

 

 

 

**Note Regarding Use of Certain Terms**

Inthis Quarterly Report on Form 10-Q, unless the context otherwise requires, the followingterms have the meanings assigned to them as set forth below: "we", "our", and the "Company"  refer to ForwardIndustries, Inc., a New York corporation, together with its consolidatedsubsidiaries; “Forward” or “Forward Industries” refers to Forward Industries, Inc.; “common stock” refers to the common stock, $.01 par value per share, of ForwardIndustries, Inc.; "Koszegi" refers to Forward Industries’ wholly owned subsidiaryKoszegi Industries, Inc., an Indiana corporation; “Forward HK” refers to Forward Industries’ wholly owned subsidiary ForwardIndustries HK, Ltd., a Hong Kong corporation;“Forward Innovations” refers to Forward Industries’ wholly owned subsidiaryForward Innovations GmbH, a Swiss corporation; “Forward APAC” refers to ForwardIndustries’ wholly owned subsidiary Forward Asia Pacific Limited, a Hong Kongcorporation; “GAAP” refers to accounting principles generally accepted in theUnited States; “Commission” refers to the United States Securities and Exchange Commission; “Exchange Act” refers to the United States Securities Exchange Act of 1934, asamended;

“2009Quarter” refers to the three months ended March 31, 2009; 

“2008Quarter” refers to the three months ended March 31, 2008;

“2009Period” refers to the six months ended March 31, 2009;

“2008Period” refers to the six months ended March 31, 2008 

“Fiscal2009” refers to our fiscal year ending September 30, 2009; 

“Fiscal2008” refers to our fiscal year ended September 30, 2008; “Europe” refers to the countries included in the European Union; “APAC Region” refers to the Asia Pacific Region, consisting of Australia, NewZealand, Hong Kong, Taiwan, China, South Korea, Japan, Singapore, Malaysia,Thailand, Indonesia, India, the Philippines and Vietnam;

“Americas” refers to the geographic area encompassing North, Central, and South America

“OEM”refers to Original Equipment Manufacturer of certain consumer electronicproducts that are our customers

 

 

3

 

 

 

 

 

 

 
PART I.   FINANCIAL INFORMATION**Item 1.  Financial Statements**
Forward Industries,Inc.

CONSOLIDATED BALANCE SHEETS

 

 

 

 

 

 

 

 

 

**March 31,**

** **

**September 30,**

 

**2009**

** **

**2008**

**Assets**

**(Unaudited)**

** **

** **

**Current assets:**

 

 

 

Cash and cash equivalents...........................................................................................	

$18,968,569

 

$19,862,426

Accounts receivable, net ..............................................................................................	

3,610,855

 

3,659,553

Inventories, net...............................................................................................................	

1,105,884

 

1,363,862

Prepaid expenses and other current  assets................................................................ 

473,192

 

586,632

Deferred tax asset...........................................................................................................	

--

 

49,449

**Total current assets**..........................................................................................	

24,158,500

 

25,521,922

 

 

 

 

Property, plant, and equipment, net.................................................................................	

197,456

 

124,854

Deferred tax asset...............................................................................................................	

--

 

359,681

Other assets.........................................................................................................................	

59,532

 

98,259

**Total Assets**........................................................................................................................	

$24,415,488

 

$26,104,716

 

 

 

 

**Liabilities and shareholders’ equity**

 

 

 

Current liabilities:

 

 

 

   Accounts payable...........................................................................................................	

$1,634,390

 

$2,206,630

   Accrued expenses and other current liabilities...........................................................	

217,474

 

189,827

**Total current liabilities**....................................................................................	

1,851,864

 

2,396,457

 

 

 

 

**Commitments and contingencies**....................................................................................	

--

 

--

** **

 

 

 

**Shareholders’ equity:**

 

 

 

Preferred stock, par value  $0.01 per share; 4,000,000 shares authorized; 

no shares issued.................................................................................................	

--

 

--

Common stock, par value $0.01 per share;  40,000,000 shares authorized, 

8,629,599 and 8,621,932 shares issued,  respectively (including 706,410 	held in treasury)...................................................................................................

 

86,296

 

 

86,219

Capital in excess of par value....................................................................................	

16,004,413

 

15,893,480

Treasury stock, 706,410 shares at cost ...................................................................	

(1,260,057)

 

(1,260,057)

Retained earnings.......................................................................................................	

7,732,972

 

8,988,617

**Total shareholders' equity**...............................................................................................	

22,563,624

 

23,708,259

**Total liabilities and shareholders’ equity**......................................................................	

$24,415,488

 

$26,104,716

 

 

The accompanying notes are an integral part of theconsolidated financial statements.

 

4

 

 

 

 

 

 

Forward Industries,Inc.

**CONSOLIDATED STATEMENTS OF OPERATIONS -- (UNAUDITED)**

 

** **

** **

** **

 

**Three Months Ended March 31,**

** **

**Six Months Ended March 31,**

 

**2009**

** **

**2008**

** **

**2009**

** **

**2008**

**Net  sales**.......................................................................... 

$4,256,951

 

$4,727,704

 

$9,563,593

 

$9,680,794

**Cost of goods sold**.......................................................... 

3,593,423

 

4,108,644

 

7,956,062

 

7,943,914

**Gross profit**..................................................................... 

663,528

 

619,060

 

1,607,531

 

1,736,880

 

 

 

 

 

 

 

 

**Operating expenses:**

 

 

 

 

 

 

 

Selling....................................................................... 

748,576

 

695,487

 

1,424,664

 

1,475,192

General  and administrative.................................... 

627,807

 

650,622

 

1,293,841

 

1,585,546

**Total operating expenses**.............................. 

1,376,383

 

1,346,109

 

2,718,505

 

3,060,738

** **

 

 

 

 

 

 

 

**Loss from operations**.................................................... 

(712,855)

 

(727,049)

 

(1,110,974)

 

(1,323,858)

** **

 

 

 

 

 

 

 

**Other income:**

 

 

 

 

 

 

 

Interest  income........................................................ 

80,296

 

173,504

 

199,241

 

413,123

Other  (expense) income, net.................................. 

(12,769)

 

17,375

 

(43,410)

 

30,872

**Total other income**......................................... 

67,527

 

190,879

 

155,831

 

443,995

** **

 

 

 

 

 

 

 

**Loss before provision for (benefit from) income  	taxes**...........................................................................

(645,328)

 

(536,170)

 

(955,143)

 

(879,863)

**Provision for (benefit  from) income taxes**................. 

405,890

 

(178,047)

 

300,499

 

(234,676)

**Net loss**........................................................................... 

($1,051,218)

 

($358,123)

 

($1,255,642)

 

($645,187)

** **

 

 

 

 

 

 

 

**Net loss per common and common equivalent share**

 

 

 

 

 

 

 

Basic  and Diluted............................................ 

($0.13)

 

($0.05)

 

($0.16)

 

($0.08)

** **

 

 

 

 

 

 

 

**Weighted average number of common and common  	equivalent shares outstanding**

 

 

 

 

 

 

 

Basic  and Diluted............................................ 

7,923,019

 

7,872,606

 

7,919,229

 

7,863,975

 

 

The accompanying notes are an integral part of theconsolidated financial statements.
  
5

 

 

 

 

 

 

**Forward Industries, Inc.**

 

**CONSOLIDATED STATEMENTS OFCASH FLOWS --****(Unaudited)**

 

 

** **

 

 

**Six Months Ended**

**March 31,**

 

 

**     2009**

** **

**2008**

**Operating activities:**

 

 

 

 

	Net	loss.....................................................................................................................

 

($1,255,642)

 

($645,187)

Adjustments to reconcile net loss to net cash used  in operating activities:

 

 

 

 

	Deferred income	taxes...................................................................................

 

409,130

 

(196,439)

	Share-based	compensation..........................................................................

 

111,007

 

50,843

   	Depreciation and	amortization......................................................................

 

40,597

 

32,822

 	Provision for bad debt	expense...................................................................

 

23,401

 

(20,033)

 	Loss on disposal of property, plant, and	equipment...............................

 

11,759

 

--

 	Provision for obsolete	inventory................................................................

 

(8,302)

 

446,497

Changes  in operating assets and liabilities:

 

 

 

 

Accounts receivable.....................................................................................

 

25,297

 

616,049

Inventories.....................................................................................................

 

266,280

 

(520,953)

Prepaid expenses and other  current assets...............................................

 

113,440

 

227,646

Other assets....................................................................................................

 

38,727

 

357

Accounts payable..........................................................................................

 

(572,240)

 

41,160

Accrued expenses and other  current liabilities.........................................

 

27,647

 

(80,654)

**Net cash  used in operating activities**

 

**(768,899)**

** **

(47,892)

 

 

 

 

 

**Investing activities:**

 

 

 

 

Purchases of property,  plant, and equipment.....................................................

 

(124,958)

 

(18,892)

**Net cash used in  investing activities**

 

**(124,958)**

 

(18,892)

 

 

 

 

 

**Financing activities:**

 

** **

** **

 

Proceeds from exercise of  stock options.............................................................

 

**--**

 

38,500

**Net cash provided by  financing activities**...........................................................

 

**--**

 

38,500

 

 

 

 

 

**Net decrease in cash and  cash equivalents**............................................................

 

**(893,857)**

** **

(28,284)

** **

 

** **

** **

** **

**Cash and  cash equivalents at beginning of period**................................................

 

**19,862,426**

** **

20,267,791

** **

 

** **

** **

** **

**Cash and  cash equivalents at end of period**............................................................

 

**$18,968,569**

** **

$20,239,507

 

 

 

 

 

 

The accompanying notes are an integral part of theconsolidated financial statements.

 

6

 

 

 

 

**Forward Industries, Inc.**

 

**NOTES TO CONSOLIDATED FINANCIALSTATEMENTS**

** (UNAUDITED)**

** **

 

**NOTE 1     OVERVIEW                   **

ForwardIndustries, Inc. was incorporated under the laws of the State of New York and began operations in 1961.  The Company is engaged in the design, marketing,and distribution of custom-designed, soft-sided carrying cases and other carrysolutions products made from leather, nylon, vinyl, and other syntheticfabrics.  The cases and other products are used primarily by consumers for theprotection and transport of portable electronic devices such as medical devicesand cellular phones. The Company markets its products as a direct seller tooriginal-equipment-manufacturers (“OEMs”).  Sales to OEM customers are made inEurope, the APAC Region, and the Americas. Sales to retailers and distributorsare made in the United States, Canada, and Europe. 

In theopinion of management, the accompanying consolidated financial statementsreflect all normal recurring adjustments necessary to present fairly thefinancial position and results of operations and cash flows for the interimperiods presented herein, but are not necessarily indicative of the results ofoperations for the fiscal year ending September 30, 2009. These financialstatements should be read in conjunction with the Company's audited consolidatedfinancial statements included in its annual report on Form 10-K for the fiscalyear ended September 30, 2008, and with the disclosures and risk factorspresented herein and therein, respectively.

**NOTE 2     ACCOUNTINGPOLICIES**

**Accountingestimates**

Preparingthe Company's financial statements in conformity with accounting principlesgenerally accepted in the United States requires management to make estimatesand judgments that affect the reported amounts of assets and liabilities anddisclosures of contingent assets and liabilities at the date of the financialstatements and the reported amounts of revenues and expenses during thereporting periods. Actual results could differ from those estimates.

**Basis of presentation**

Theaccompanying consolidated financial statements include the accounts of ForwardIndustries, Inc. ("Forward") and its wholly owned subsidiaries(together, the "Company"). All significant intercompany transactionsand balances have been eliminated in consolidation.

**RevenueRecognition**

Inaccordance with the requirements of Staff Accounting Bulletin (SAB) No. 104, RevenueRecognition in Financial Statements, the Company generally recognizes revenuefrom product sales to customers when: products that do not require furtherservices by the Company are shipped, there are no uncertainties surroundingcustomer acceptance, and collectibility is reasonably assured. 

**Supplier Rebates**

EmergingIssues Task Force (EITF) Issue No. 02-16, Accounting by a Customer (Including aReseller) for Certain Consideration Received from a Vendor, permits recognitionof a rebate or refund of a specified amount of cash consideration that ispayable if the customer completes a specified cumulative level of purchases. The Company entered into agreements with several of its suppliers that grantedthe Company a rebate based on its level of purchases made during fiscal quartersprior to October 1, 2008. In lieu of a cash payment from these suppliers theCompany received a credit memo. The Company reduced accounts payable to thesupplier, inventory, and cost of goods sold each quarter as the Company earnedthe rebates.  For the three-and six-month periods ended March 31, 2008, the cumulative amount of such quarterly rebates were approximately $100,000 and $200,000,respectively. The quarterly rebate is net of amounts allocated to unsoldinventories and are reflected in the accompanying consolidated statements of operationsas a reduction of cost of goods sold for the three-and six-month periods ended March31, 2008. No such rebates were agreed to or recorded for the three- and six-monthperiods ended March 31, 2009.

7

 

 

 

 

**Forward Industries, Inc.**

 

**NOTES TO CONSOLIDATED FINANCIALSTATEMENTS**

** (UNAUDITED)**

 

 

**NOTE2     ACCOUNTING POLICIES (CONTINUED)**

**Foreign CurrencyTransactions**

Thefunctional currency of the Company's wholly owned foreign subsidiaries is theU.S. dollar. Foreign currency transactions may generate receivables or payablesthat are fixed in terms of the amount of foreign currency that will be receivedor paid. Fluctuations in exchange rates between the functional currency and thecurrency in which a transaction is denominated increases or decreases theexpected amount of functional currency cash flows upon settlement of thetransaction. These increases or decreases in expected functional currency cashflows are foreign currency transaction gains or losses that are included in“other (expense) income, net” in the accompanying consolidated statements of operations.The net (losses) gains from foreign currency transactions were approximately ($8,000)and $17,000 for the three-month periods ended March 31, 2009 and 2008,respectively. The net (losses) gains from foreign currency transactions wereapproximately ($38,000) and $27,000 for the six-month periods ended March 31,2009 and 2008, respectively. Net (losses) gains from foreign currencytransactions are included in the “Other (expense) income, net” line item on ourconsolidated statements of operations.

**Comprehensive Loss**

 For thethree and six-month periods ended March 31, 2009 and 2008, the Company did not have any components of comprehensive loss other than net loss.

**Recent AccountingPronouncements**

InDecember 2007, the FASB issued FASB Statement No. 141 (revised 2007),Business Combinations ("SFAS 141(R)"). SFAS 141(R) requiresthat the fair value of the purchase price of an acquisition including theissuance of equity securities be determined on the acquisition date; requiresthat all assets, liabilities, non-controlling interests, contingentconsideration, contingencies, and in-process research and development costs ofan acquired business be recorded at fair value at the acquisition date;requires that acquisition costs generally be expensed as incurred; requiresthat restructuring costs generally be expensed in periods subsequent to theacquisition date; and requires that changes in deferred tax asset valuationallowances and acquired income tax uncertainties after the measurement period bereflected in income tax expense.SFAS 141(R) also expands disclosures related to business combinations.SFAS 141(R) must be applied prospectively to business combinationsoccurring after the beginning of the Company's fiscal year 2010, except thatbusiness combinations consummated prior to the effective date must applySFAS 141(R) income tax requirements immediately upon adoption. 

**NOTE 3     INVENTORIES**

Inventories consist primarily offinished goods and are stated at the lower of cost (determined by the first-in,first-out method) or market.  Based on management’s estimates, an allowance ismade to reduce excess, obsolete, slow-moving, or otherwise un-saleableinventories to net realizable value. The allowance is established throughcharges to cost of goods sold on the Company’s consolidated statements ofoperations. Reserved inventory that is disposed of is charged against theallowance. Management’s estimates in determining the adequacy of the allowanceare 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, as well as recoveries of reservedinventory, may change from time to time based on management’s assessments, andsuch changes could be material. At March 31, 2009 and September 30, 2008, theallowances for obsolete inventory were approximately $92,000 and $168,000,respectively. 

8

 

 

 

 

**Forward Industries, Inc.**

 

**NOTES TO CONSOLIDATED FINANCIALSTATEMENTS**

** (UNAUDITED)**

 

 

**NOTE 4     DEBT**

In March 2008, Forward and itswholly-owned U.S. subsidiary, Koszegi Industries, Inc., elected not to renew theircredit facility with a U.S. bank that provided for a committed line of creditin the maximum amount of $3.0 million, including a $1.5 million sub-limit forletters of credit.  Accordingly, this credit facility expired March 30, 2008. There were no borrowings or letter of credit obligations outstanding underthis facility during the six-month period ended March 31, 2008. 

In 2003, Forward’s wholly-ownedSwiss subsidiary, Forward Innovations GmbH (Forward Innovations), established acredit facility with a Swiss bank that provides for an uncommitted line ofcredit in the maximum amount of $400,000.  Amounts borrowed under the facilitymay be structured as a term loan or loans, with a maximum repayment period of12 months, as a letter of credit facility, or as a guarantee facility, or anycombination of the foregoing.  Either party may terminate the facility at anytime; however, such termination would not affect the stated maturity of anyterm loans outstanding.  Amounts borrowed other than as a term loan must besettled quarterly or converted into term loans.  In connection with thisfacility, Forward Innovations agreed to certain covenants. Amounts drawn underthis credit facility bear interest at variable rates established by the Swiss bank(5.35% as March 31, 2009).  At March 31, 2009, Forward Innovations iscontingently liable to the Swiss bank in respect of a letter of credit issuedon its behalf in the amount of €224,000 (equal to approximately $297,000 as at March 31, 2009) in favor of Forward Innovations’ freight forwarder and customs agent inconnection with its logistics operations in The Netherlands.  The effect of theissuance of the letter of credit is to reduce the availability of the creditline in an amount equal to the face amount of the letter of credit.  See Note10.

**NOTE 5     SHAREHOLDERS’EQUITY**

**Anti-takeoverProvisions**

The Company is authorized to issueup to 4,000,000 shares of "blank check" preferred stock. The Board ofDirectors has the authority and discretion, without shareholder approval, toissue preferred stock in one or more series for any consideration it deemsappropriate, and to fix the relative rights and preferences thereof includingtheir redemption, dividend and conversion rights.

**Stock Repurchase**

On September 27, 2002, the Company’s Board of Directors authorized the repurchase of up to 400,000 shares of theCompany’s outstanding common stock (approximately 7% of the number of sharesthen outstanding). On January 21, 2004, the Company’s Board increased theamount of shares authorized for repurchase to 486,200.  Under theseauthorizations, as of March 31, 2009, the Company had repurchased an aggregateof 172,603 shares at a cost of approximately $0.4 million, but none during the2009 Period, leaving a balance of 313,597 shares (approximately 4% of theshares outstanding at March 31, 2009) under those authorizations.  Separately, on March 5, 2008, the Company accepted 72,917 outstanding shares of common stock fromthe Company’s former Chairman of the Board and principal executive officer asconsideration for his exercise of options to purchase 100,000 shares of commonstock as part of a cashless exercise.   See Note 9.  

**NOTE 6     OPERATINGSEGMENT INFORMATION**

The Company operates in a singlesegment: the supply of carrying solutions for portable electronic devices. Thiscarrying-solution segment includes the design, marketing, and distribution ofproducts to its customers that include manufacturers of consumer hand heldwireless telecommunications and medical monitoring devices. The Company’s carryingsolution segment operates in geographic regions that include primarily the APAC, Americas, and Europe. Geographic regions are defined based primarily on thelocation of the customer.  The following table presents net sales related tothese geographic segments:

9

 

 

 

 

**Forward Industries, Inc.**

 

**NOTES TO CONSOLIDATED FINANCIALSTATEMENTS**

** (UNAUDITED)**

 

 

**NOTE 6     OPERATINGSEGMENT INFORMATION (CONTINUED)**

*(allamounts in thousands of dollars)*

 
**Three Months Ended**

**March 31,**

** **

**Six Months Ended**

**March 31,**

 

**2009**

** **

**2008**

** **

**2009**

** **

**2008**

APAC.......................................................... 

$1,725

 

$2,759

 

$3,420

 

$5,054

Americas........................................

1,621

 

1,047

 

3,685

 

2,571

Europe...........................................

911

 

922

 

2,460

 

2,056

**Total net sales............................................**

**$4,257**

** **

**$4,728**

** **

**$9,565**

** **

**$9,681**

 

**NOTE 7     INCOME TAXES**

The Company’s income tax expense (benefit) consists of the following United States and foreign components.

 
**Three Months Ended**

**March 31,**

** **

**Six Months Ended**

**March 31,**

 

**2009**

** **

**2008**

** **

**2009**

** **

**2008**

U.S. Federal and State:

 

 

 

 

 

 

 

    Current................................................... 

--

 

-- 

 

--

 

--

    Deferred................................................. 

($92,176)

 

($159,287)

 

($189,532)

 

($209,516)

 

** **

** **

 

** **

** **

** **

** **

Foreign:

** **

** **

 

** **

** **

** **

** **

    Current................................................... 

**--**

** **

--

** **

**--**

** **

--

    Deferred................................................. 

(12,766)

 

(18,760)

 

(20,801)

** **

(25,160)

** **

** **

** **

** **

** **

** **

** **

** **

Change  in valuation allowance............. 

**510,832**

** **

**--**

** **

**510,832**

** **

** **

**Income  tax expense (benefit).................**

**$405,890**

** **

**($178,047)**

** **

**$300,499**

** **

**($234,676)**

The Company’s effective tax ratedoes not approximate the statutory United States federal income tax rateprimarily due to the establishment of the valuation allowance and tax ratedifferentials in respect of United States state and foreign taxes.  

At March 31, 2009, the Company hadavailable net operating loss carryforwards for United States federal and state incometax purposes of approximately $821,000 and $1,613,000, respectively, expiringthrough 2028 and resulting in a combined deferred tax asset of approximately $353,000.In addition, at March 31, 2009, the Company had available net operating losscarryforward for foreign income tax purposes of approximately $1,014,000 resultingin a deferred tax asset of approximately $89,000.  At March 31, 2009, the Companyhad total deferred tax assets of approximately $511,000.

During the three-month periodended March 31, 2009, as part of its periodic evaluation of the need for avaluation allowance against its deferred tax assets, and after consideration ofall the evidence, both positive and negative (including, among others,projections of future taxable income, current year net operating losscarrforward utilization and the extent of the Company’s cumulative losses inrecent years), the Company determined that, on a more likely than not basis, itwould not be able to use any of its deferred tax assets except for taxesarising from the repatriation of certain foreign source income, which iscurrently considered to be permanently invested and for which no United Statestax liability has been accrued. Accordingly, as of March 31, 2009, the Company establisheda valuation allowance against its deferred tax assets in the amount of approximately$511,000. The establishment of the deferred tax asset valuation allowance is reflectedin “Provision for (benefit from) income taxes” line item of the Company’sconsolidated statements of operations for the three- and six-month periodsended March 31, 2009. No such valuation allowance was recorded as of September30, 2008.

10

 

 

 

 

**Forward Industries, Inc.**

 

**NOTES TO CONSOLIDATED FINANCIALSTATEMENTS**

** (UNAUDITED)**

 

 

**NOTE 7     INCOME TAXES**

EffectiveJune 2001, undistributed earnings of the Company’s Swiss subsidiary areconsidered to be permanently invested; therefore, in accordance with SFAS No.109, no provision for U.S. Federal and state income taxes on those earnings hasbeen provided.  At March 31, 2009, the Company’s Swiss subsidiary hadapproximately $4,000,000 of accumulated undistributed earnings.  

**NOTE 8     LOSS PER SHARE**

Basic pershare data for each period presented is computed using the weighted-averagenumber of shares of common stock outstanding during each period.  Diluted pershare data is computed using the weighted-average number of common and dilutivecommon-equivalent shares outstanding during each period. Dilutivecommon-equivalent shares consist of shares that would be issued upon theexercise of stock options and warrants, computed using the treasury stockmethod. For this purpose, the average quoted market prices on the NASDAQSmallCap Market for the Company's common stock for the three-month periodsended March 31, 2009 and 2008, were $1.90 and $2.29, respectively. The averagequoted market prices on the NASDAQ SmallCap Market for the Company’s commonstock for the six-month periods ended March 31, 2009 and 2008, were $2.13 and $2.48, respectively. Loss per share data for the three and six-month periodsended March 31, 2009 and 2008, excludes all outstanding common equivalentshares as inclusion of such shares would be anti-dilutive. 

Inaccordance with the contingently issuable shares provision of SFAS 128, 98,832 and44,999 shares of service-based common stock awards (“restricted stock”) wereexcluded from the calculation of diluted loss per share for the three monthperiods ended March 31, 2009 and 2008, respectively.

**NOTE 9     STOCK BASEDCOMPENSATION**

In May 2007, shareholders of the Companyapproved the 2007 Equity Incentive Plan (the 2007 Plan), which authorized theissuance of up to 400,000 shares of common stock to officers, employees, andnon-employee directors of the Company upon the grant of restricted common stockand the exercise of stock options awarded to such persons. This plan was adoptedby the Board of Directors in February 2007.  The price at which restrictedcommon stock may be granted and the exercise price of stock options granted maynot be less than the fair market value of the common stock at the date ofgrant. The Company’s Compensation Committee administers the plan.  Optionsgenerally expire ten years after the date of grant and restricted stock grants generallyvest in equal proportions over three years.   As of March 31, 2009, 136,500 shares of common stock remain available for grants of awards of restricted stock andoptions to purchase common stock under the 2007 Plan.

TheCompany’s 1996 Stock Incentive Plan (the 1996 Plan) expired in accordance withits terms in November 2006.  The exercise price of incentive options grantedunder the 1996 Plan to officers, employees, and non-employee directors of theCompany were required by its provisions to be equal at least to the fair marketvalue of the common stock at the date of grant. Options expire ten years afterthe date of grant and generally vest in equal proportions over three years. Unexercised options granted pursuant to the 1996 Plan prior to expirationremain outstanding until the earlier of exercise or option expiration.

**Stock OptionAwards**

Under the1996 Plan 30,000 fully vested stock options remain outstanding and unexercised,all at exercise prices higher than the fair market value of the common stock at March 31, 2009.  

11

 

 

 

 

**Forward Industries, Inc.**

 

**NOTES TO CONSOLIDATED FINANCIALSTATEMENTS**

** (UNAUDITED)**

 

 

**NOTE 9     STOCK BASEDCOMPENSATION (CONTINUED)**

**Stock OptionAwards (continued)**

Under the2007 Plan, the Compensation Committee of the Company’s Board of Directors has grantedstock option awards to purchase 155,000 shares of common stock, in theaggregate, to the Company’s non-employee directors and a Company officer, ofwhich awards covering 20,000 shares of common stock expired unexercised, withsuch shares reverting to the 2007 Plan.  Of these awards, 55,000 were grantedduring the three month period ended March 31, 2009. These awards are subject toa continued service condition and vest on the anniversary date the awards weregranted. The Company recognized approximately $27,000 and $50,000 of compensationcosts for stock option awards in its consolidated statements of operations inthe three- and six month-periods ended March 31, 2009, respectively.  TheCompany recorded approximately $14,000 of such costs in its consolidatedstatements of operations in the three- and six-month periods ended March 31, 2008.

The followingtable summarizes stock option activity under the 2007 Plan and the 1996 Plan fromSeptember 30, 2008 through March 31, 2009: 

 

**Shares**

** **

**Weighted Average  Exercise Price**
   
**Weighted Average  Remaining 	Contractual Term 	(Years)**
   
** **

** **

** **

**Aggregate 	Intrinsic Value**

**Outstanding at September 30, 2008**

110,000

 

$4.26
   
7.40
   
$0

Granted.............................................. 

55,000

 

1.80
   
9.87
   
 

Exercised............................................ 

--

 

--
   
--
   
 

Forfeited............................................ 

--

 

--
   
--
   
 

Expired............................................... 

--

 

--
   
--
   
 

**Outstanding at March 31, 2009**

**165,000**

** **

**$3.44**
   
**8.22**
   
**$3,300**

 

 

 

 
            
**Options  vested and exercisable at 	March 31, 2009...............................**

** **

**110,000**

 

** **

**$4.26**
   
** **

**7.40**
   
 

--

The fairvalue of each stock option on the date of grant was estimated using aBlack-Scholes option-pricing formula applying the following assumptions foreach respective period: 

 

** **

**For the Three and Six-Month Periods 	Ended  March 31,**

 

** **

**2009**

** **

**2008**

	Expected term (in years)................................................

 

5.0

 

10.0

	Risk-free interest rate.....................................................

 

1.65%

 

3.78%

	Expected	volatility..........................................................

 

79.8%

 

80.2%

	Expected dividend yield................................................

 

0%

 

0%

The expected term represents theperiod over which the stock option awards are expected to be outstanding. TheCompany based the risk-free interest rate used in its assumptions on theimplied yield currently available on U.S. Treasury zero-coupon issues with aremaining term equivalent to the award’s expected term. The volatility factorused in the Company’s assumptions is based on the historical price of its stockover the most recent period commensurate with the expected term of the award.The Company historically has not paid any dividends on its common stock and hadno intention to do so on the date the share-based awards were granted.Accordingly, the Company used a dividend yield of zero in its assumptions. TheCompany estimates the expected term, volatility and forfeitures of share-basedawards based upon historical data. 

12

 

 

 

 

**Forward Industries, Inc.**

 

**NOTES TO CONSOLIDATED FINANCIALSTATEMENTS**

** (UNAUDITED)**

 

 

**NOTE 9     STOCK BASEDCOMPENSATION (CONTINUED)**

**Restricted Stock Awards**

Under the2007 Plan as of March 31, 2009, the Compensation Committee had approved andgranted awards of 130,000 shares ofrestricted stock, in the aggregate, to certain key employees, one of whom alsoserves as a director, pursuant to the 2007 Plan.  Of these awards 1,500 sharesof restricted stock have been forfeited and reverted to the 2007 Plan.  Vestingof the restricted stock is generally subject to a continued service conditionwith one-third of the awards vesting each year on the anniversary date theawards were granted typically commencing on the first such anniversary date. The fair value of the awards granted was equal to the market value of theCompany’s common stock on the grant date. During the three- and six-monthperiods ended March 31, 2009, the Company recognized approximately $37,000 and $61,000,respectively, of compensation costs in its consolidated statements ofoperations related to restricted stock awards granted under the 2007 Plan. Duringthe three- and six-month periods ended March 31, 2008, the Company recognizedapproximately $14,000 and $37,000, respectively, in its consolidated statementsof operations****of such costs.

The following table summarizes restricted stock activity under the 2007Plan from September 30, 2008, through March 31, 2009.

 

 

** **

** **

** **

**Shares**

** **

**Weighted 	Average  	Grant Date 	Fair Value**

Non-vested balance at September 30, 2008........................................ 

 

47,498

 

$2.65

Changes during the period:

 

 

 

 

Shares granted................................................................................ 

 

60,500

 

2.07

Shares vested.................................................................................. 

 

(7,667)

 

2.37

Shares forfeited............................................................................... 

 

(1,500)

 

3.49

Non-vested balance at March 31, 2009............................................... 

 

98,831

 

$2.30

As of March 31, 2009, there wasapproximately $120,000 of total unrecognized compensation cost related to sharesof unvested restricted stock awards (reflected in the table above) grantedunder the 2007 Plan. That cost is expected to be recognized over the remainderof the requisite service (vesting) periods.

**Warrants**

As of March31, 2009, warrants to purchase 75,000 shares of the Company’s common stock atan exercise price of $1.75 were outstanding. These warrants are scheduled toexpire 90 days after a registration statement is declared effective by theSecurities and Exchange Commission. As of March 31, 2009, no such registration statement has been filed with the Securities and Exchange Commission.

**NOTE 10   COMMITMENTS ANDCONTINGENCIES**

**Royalty Commitments**

On May 22,2008, the Company entered into a non-exclusive license agreement with Motorola,Inc. (“Motorola”) that granted the Company the right to distribute certainMotorola trademarked carry solution accessory products to wholesale and retailcustomers in the United States, Canada, and Europe through March 31, 2009,subject to renewal by mutual agreement.  The license agreement was made effectiveretroactive to January 1, 2008, the date subsequent to expiration of a priorlicense agreement on December 31, 2007.  In consideration of the grant, theCompany agreed to pay to Motorola a royalty based upon a percentage of actualnet sales of branded accessory products, subject to payment of minimumroyalties (irrespective of actual net sales) in the amount of $650,000 over the15-month term of the agreement. 

13

 

 

 

 

**Forward Industries, Inc.**

 

**NOTES TO CONSOLIDATED FINANCIALSTATEMENTS**

** (UNAUDITED)**

 

 

**NOTE 10   COMMITMENTS ANDCONTINGENCIES (CONTINUED)**

**Royalty Commitments (continued)**

On December 22, 2008, the Company and Motorola amended the license agreement to (i) reducethe royalty rate from 15% of Net Sales to 7% of Net Sales and (ii) eliminateall minimum royalties under the agreement with retroactive effect.

For thethree- and six-month periods ended March 31, 2009, the Company recorded $4,000 of royalty expense. For the three- and six-month periods ended March 31, 2008, the Company recorded $13,000 and $102,000 of royalty expense under theprior license. These amounts are included in selling expenses in theaccompanying consolidated statements of operations.

On December 31, 2008, the Company provided Motorola written notice of its intention not torenew the License Agreement upon expiration of its term on March 31, 2009.

**Bank Guarantee**

In July2002, Forward Innovations and its European logistics provider (freightforwarding and customs agent) entered into a Representation Agreement whereby,among other things, the European logistics provider agreed to act as suchsubsidiary's fiscal representative in The Netherlands for the purpose ofproviding services in connection with any value added tax matters. As part ofthis agreement, the subsidiary agreed to provide an undertaking to thelogistics provider with respect to any value added tax liability arising in TheNetherlands that the logistics provider paid on the subsidiary's behalf. InFebruary 2004, such subsidiary entered into a guarantee agreement with a Swissbank relating to the repayment of any amount up to €224,000 (equal to approximately$297,000 as of March 31, 2009) paid by such bank to the logistics providerpursuant to a letter of credit that was issued by the Swiss bank in favor ofthe logistics provider in order to satisfy such undertaking.  The subsidiarywould be required to perform under the guarantee only in the event that: (i) avalue added tax liability is imposed on the Company's sales in The Netherlands,(ii) the logistics provider asserts that it has been called upon in itscapacity as surety by the Dutch Receiver of Taxes to pay such taxes, (iii) the subsidiary or the Company on its behalf fails or refuses to remit the amountof value added tax due to the logistics provider, and (iv) the logisticsprovider makes a drawing under the letter of credit. Commencing December 31, 2004, and on each anniversary thereafter until December 31, 2009, it is intended that the bank letter of credit will be renewed automatically for one-yearperiods. The subsidiary has agreed to keep a letter of credit guarantee inplace for five years following the date its relationship terminates with thelogistics provider to satisfy any value added tax liability arising prior toexpiration of the Representation Agreement but asserted by The Netherlandsafter expiration. As of March  31, 2009, the Company has not incurred aliability in connection with this guarantee. 

**NOTE 11   LEGALPROCEDINGS**

            From time to time,the Company may become a party to legal actions or proceedings in the ordinarycourse of its business.  As of March 31, 2009, there were no such actions orproceedings, either individually or in the aggregate, that, if decidedadversely to the Company’s interests, the Company believes would be material toits business. 

14

 

 
****
 

 

**Forward Industries, Inc.**

 

 

 

**ITEM2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OFOPERATIONS  **

*Thefollowing discussion and analysis should be read in conjunction with ourunaudited consolidated financial statements, and the notes thereto, and otherfinancial information appearing elsewhere in this Quarterly Report on Form 10-Qand the audited consolidated financial statements and notes included in ourAnnual Report on Form 10-K for the fiscal year ended September 30, 2008.  The followingdiscussion and analysis compares our consolidated results of operations for thethree months ended March 31, 2009 (the “2009 Quarter”), with those for thethree months ended March 31, 2008 (the “2008 Quarter”), and the six monthsended March 31, 2009 (the “2009 Period”), with the six months ended March 31,2008 (the “2008 Period”).  All figures in the following discussion arepresented on a consolidated basis. All dollar amounts and percentages presentedherein have been rounded to approximate values.*

**CAUTIONARY STATEMENT FOR PURPOSES OF THE “SAFE HARBOR” PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995**

Thisquarterly report contains forward-looking statements within the meaning of thePrivate Securities Litigation Reform Act of 1995 that are not based onhistorical fact. Such forward looking statements can be identified by the useof forward-looking terminology such as “may”, “might”, “will”, “should”, “likely”,“possible”, “seek”, “expect”, “anticipate”, estimate”, “plan”, “intend”,“continue”, or “believe”, or the negatives or other variations of these termsor comparable terminology.  Forward looking statements may include projections,forecasts, or estimates of future performance.  Forward looking statements arebased upon assumptions that we believe to be reasonable at the time suchforward looking statements are made.  Whether those assumptions will be borneout will be determined by future factors, developments, and events, which aredifficult to predict and may be beyond our control.  These forward-lookingstatements involve assessments of known and unknown risks, uncertainties andother factors that may cause our actual results, levels of activity,performance or achievements to be materially different from any future results,levels of activity, performance or achievements expressed or implied by suchforward-looking statements.  Such factors include, among others: the durationand severity of the current economic conditions and their impact on consumerdemand and spending, demand for our products, and uncertainties in thefinancial and credit markets; a significant change of the Company’srelationship with its customers (including changes affecting their businesses),including changes in distribution channels where concentration of sales to acertain number of customers exists; our ability to control operating expensesduring periods of declining sales and or gross margins; the impact on ourbusiness of an acquisition or the failure to make an acquisition; whether ourimportant OEM customers continue to include carry solutions “in box” with theirelectronic products; whether our important OEM customers elect to offer muchlower cost, simplified carry case accessories in box; our success in winningnew business from existing and new customers and against competing vendors; theloss of a key salesman who has significant influence on our relationships withcertain OEM customer makers of diabetic test kits; levels of demand and pricinggenerally for electronic devices sold by our customers for which we supplycarry solutions; variability in order flow from our OEM customers; the adverseimpact on gross margins of reduced prices for our products offered by our OEMcustomers; obsolescence of inventory, including the impact on inventory allowancearising out of hub agreements we have entered into; developments in thetreatment or control of diabetes that may reduce the usage of handheld bloodglucose monitors; increased competition in our business; changes in,governmental regulations; and other factors set forth under the caption “riskfactors” included elsewhere in this quarterly report on Form 10-Q and in ourAnnual Report on Form 10-K for the year ended September 30, 2008.  

Given theseuncertainties, readers are cautioned not to place undue reliance on suchforward-looking statements.  Forward looking statements speak only as of thedate made.  We undertake no obligation to publicly update or revise anyforward-looking statements, whether as a result of new information, futureevents or otherwise, after the date of this Form 10-Q.

 

15

 

 

 

 

**Forward Industries, Inc.**

 

                

**BUSINESS OVERVIEW**

     We design,market, and distribute custom-designed, soft-sided carrying cases and othercarry solutions for consumer electronic products primarily to originalequipment manufacturers (OEMs) of blood glucose monitoring kits for diabeticpatients.  Our OEM distribution channel is relatively concentrated by productline and customer.  During the past three years, cell phone revenue in the OEMand aftermarket channel (sales to distributors and retailers), whichhistorically was our largest revenue source by product line and was dependenton one or two major OEM customers, has declined so significantly that we nolonger present such revenues separately but include them as part of “otherproducts”.  Because of this decline the customer concentration and product lineconcentration risks in our business have increased.

                *Trends andEconomic Environment:*  We believe that deteriorating economic conditions,rising unemployment, tight credit markets, and heightened uncertainty infinancial markets have adversely impacted discretionary consumer spending,including spending on the types of electronic devices that are accessorized byour products.  We expect this challenging business environment to continue inthe foreseeable future.  

*               *Thedeterioration in general economic conditions worldwide has increased thechallenges in the carry solution market.  Certain of our OEM customers havesignificantly reduced their sales forecasts of electronic devices with which ourproducts are packaged in box, therefore implying reduced sales revenues fromthese customers in future periods.  Certain such customers have also advised usof proposed changes in their “in box” business model whereby the carry solutionis a much lower cost, lower price simplified carry solution.  We believe thisapproach is intended to reduce expense to the OEM.  We expect that thesechanges will result in decreased revenues from the sales of these simplifiedcarry solutions and may adversely affect our gross profit. 

We have attempted to limitincreases in operating expenses except where we think increases are critical topotential future growth. 

                See “RiskFactors” in Item 1A of Part II of this Quarterly Report on Form 10-Q and “*Ifany one or more of our OEM customers elect to reduce their “in-box” accessorymodel, our results of operations and financial condition would be materiallyand adversely affected”* in the caption “Risk Factors” in our Annual Reporton Form 10-K for the year ended September 30, 2008.

                *Variabilityof Revenues and Results of Operations*.  Because our sales revenues arehighly concentrated in a few large customers, and because the volumes of thesecustomers’ order flows to us are highly variable, with short lead times, our quarterlyrevenues, and consequently our results of operations, are susceptible tosignificant variability over a relatively short period of time.  

**CRITICALACCOUNTING POLICIES AND ESTIMATES**

Thismanagement’s discussion and analysis of financial condition and results ofoperations is based upon or derived from our unaudited consolidated financialstatements, which have been prepared in accordance with accounting principlesgenerally accepted in the United States. The preparation of these financialstatements requires us to make judgments and estimates that affect the reportedamounts of assets, liabilities, revenues, and expenses, and related disclosuresof contingent liabilities. We base these judgments and estimates on ourhistorical experience and on various other assumptions that we believe to bereasonable under the circumstances, and these judgments form the basis for our estimatesconcerning the carrying values of assets and liabilities that are not readilyapparent from other sources. We periodically re-evaluate these estimates andjudgments based on available information and experience. Actual results coulddiffer from our estimates under different assumptions and conditions. If actualresults significantly differ from our estimates, our financial condition andresults of operations could be materially impacted. We discuss the materialpolicies that are critical in making these estimates and judgments in ourAnnual Report on Form 10-K for the fiscal year ended September 30, 2008, under the caption “Management’s Discussion and Analysis—Critical AccountingPolicies and Estimates”.  There have been no material changes in criticalaccounting policies and estimates since September 30, 2008.* *

16

 

 

 

 

**Forward Industries, Inc.**

 

 

The notesto our audited consolidated financial statements in our Annual Report on Form10-K for the year ended September 30, 2008, and the notes to our consolidatedfinancial statements included in Part I, Item 1 of this Quarterly Report onForm 10-Q contain additional information related to our accounting policies andshould be read in conjunction with the following discussion and analysis relatingto our overall financial performance, operations and financial position. 
Accounts Receivable
At March 31, 2009, and September 30, 2008, our allowance for doubtful accounts wasapproximately $25 thousand and $10 thousand, respectively.  
Inventory Valuation
Inventory allowanceswere approximately $92 thousand and $168 thousand at March 31, 2009, and September 30, 2008, respectively. See Notes 3 to the Financial Statements. Changesto this account are reflected in the cost of goods sold line of our consolidatedstatements of operations.  

The vastmajority of our production is made to customer specifications.  If a customerelects not to accept delivery, or defaults on a purchase order or commitment, orreturns inventory from its hub without payment in violation of the hubarrangements, additional inventory write-downs or reserves may be required andwould be reflected in cost of goods sold in the period the revision is made.Historically, actual inventory valuation results have not deviatedsignificantly from those previously estimated by us. 
Deferred IncomeTaxes 
We hadapproximately $0.5 million and $0.4 million of deferred tax assets at March 31, 2009, and September 30, 2008, respectively. The increase in deferred tax assets resultsprimarily from temporary differences between book and tax income and net lossincurred in respect of the 2009 Period.  During the 2009 Quarter, as part ofour periodic evaluation of the need for a valuation allowance against ourdeferred tax assets, and after consideration of all the evidence, both positiveand negative (including, among others, projections of future taxable income,current year net operating loss carrforward utilization and the extent of ourcumulative losses in recent years), we determined that, on a more likely thannot basis, we would not be able to use any of our deferred tax assets, exceptfor taxes arising from the repatriation of certain foreign source income, whichis currently considered to be permanently invested and for which no UnitesStates tax liability has been accrued. As such, as of March 31, 2009, we established a valuation allowance against our deferred tax assets in the amountof $0.5 million. The establishment of the deferred tax asset valuationallowance has been reflected in “Provision for (benefit from) income taxes”line item of our consolidated statements of operations for the three- andsix-month periods ended March 31, 2009. No such valuation allowance wasrecorded as of September 30, 2008.

**RESULTS OFOPERATIONS FOR THE 2009 QUARTER COMPARED TO THE 2008 QUARTER**

**Net loss**

Weincurred a net loss of $1.1 million in the 2009 Quarter compared to $0.4million in the 2008 Quarter. The $0.7 million increase was due primarily to higherincome tax expense (attributable to the effect of establishment of thevaluation allowance), compared to an income tax benefit in the 2008 Quarter, aswell as lower other income (primarily interest income) and higher sellingexpenses.  These factors were offset in small part by higher gross profit and lower,general and administrative expenses, as reflected in the table below:  

17

 

 

 

 

**Forward Industries, Inc.**

 

 

 
(millions of dollars)

 

2009 Quarter

2008 Quarter

Increase 	(Decrease)

Net Sales....................................................................................................... 

$4.3

$4.7

($0.5)

 

 

 

 

Gross Profit................................................................................................... 

0.7

0.6

0.1

Selling, General and Administrative Expenses........................................ 

(1.4)

(1.3)

(0.1)

Other Income................................................................................................ 

0.1

0.2

(0.1)

(Provision for) benefit from Income Taxes.............................................. 

**(0.4)**

**0.2**

**(0.6)**

**Net Loss*.....................................................................................................**

**($1.1)**

**($0.3)**

**($0.7)**

* Table may nottotal due to rounding.

Basic and diluted loss per share data was ($0.13) forthe 2009 Quarter, compared to ($0.05) for the 2008 Quarter. The increase in lossper share in the 2009 Quarter was due to the increase in net loss.

**Net Sales**

Netsales decreased $0.5 million, or 10%, to $4.3 million in the 2009 Quarter from$4.7 million in the 2008 Quarter, due to primarily to lower sales of diabeticproducts, which declined $0.4 million, or 12%, and to a lesser extent, lowersales of other products, which declined $0.1 million, or 4%. Cell phonerevenues, which are now included in sales of “other products”, were $0.4 millionin the 2009 Quarter compared to $0.3 million in the 2008 Quarter. The tablesbelow set forth sales by product line and geographic location of our customersfor the periods indicated.

 

**Net Sales for 2009 Quarter**

**3 Months****ended****March 31, 2009**

**(millions of dollars)**

** **

**APAC**

**Americas**

**Europe**

**Total***

Diabetic Products.................................. 

$1.4

$0.8

$0.9

$3.2

Other Products....................................... 

0.3

0.8

--

1.1

**Total***

**$1.7**

**$1.6**

**$0.9**

**$4.3**

                                

**Net Sales for 2008 Quarter**

**3 Months ended March 31, 2008**

**(millions of dollars)**

** **

**APAC**

**Americas**

**Europe**

**Total***

Diabetic Products.................................. 

$2.4

$0.4

$0.7

$3.6

Other Products....................................... 

0.3

0.6

0.2

1.2

**Total***

**$2.8**

**$1.0**

**$0.9**

**$4.7**

* Tables maynot total due to rounding.

*Diabetic Product Sales*

Wedesign to the order of and sell directly to our OEM customers carrying casesused by diabetics to carry their personal electronic, blood glucose monitoringkits. In the 2009 Quarter, OEM customers for these carrying cases included AbbottLabs, Bayer, Lifescan and Roche Diagnostics (including their subsidiaries,affiliates and contract manufacturers) as well as other customers. Our carryingcases are typically packaged as an accessory "in-box" with themonitoring kits that are sold by our OEM customers.

Salesof cases and related accessories for blood glucose monitoring kits decreased $0.4million, or 12%, to $3.2 million in the 2009 Quarter, from $3.6 million in the2008 Quarter.  These results were driven by lower sales to Lifescan, our largestcustomer, which decreased by $0.9 million in the 2009 Quarter compared to the2008 Quarter.  This decline was offset, in part, by higher sales to our othermajor diabetic product customers, which, in the aggregate, increased $0.5million in the 2009 Quarter compared to the 2008 Quarter. 

18

 

 

 

 

**Forward Industries, Inc.**

 

 

Salesof carrying cases for blood glucose monitoring kits represented 74% of ourtotal net sales in the 2009 Quarter compared to 75% of our total net sales inthe 2008 Quarter. 

*OtherProduct Sales*

Wedesign and sell a number of other carrying solutions for items such as cellphones, cameras, portable oxygen tanks, bar code scanners, MP3 players, andother carrying solutions for an assortment of products on a made-to-order basisthat are customized to meet the individual needs of our smaller OEMcustomers.   In general, sales of “other products” to order are made tonumerous customers and typically vary from period to period without necessarilyreflecting a significant trend in our business in this product line. 

Salesof other products declined less than $0.1 million to $1.1 million in the 2009Quarter from $1.2 million in the 2008 Quarter. This decline was the result of smallerdecreases in sales to several customers of these products, of which no declineexceeded $0.1 million in the 2009 Quarter. These declines were partially offsetby higher sales to Motorola, which increased $0.2 million in the 2009 Quartercompared to the 2008 Quarter.

Salesof other products represented 26% of our net sales in the 2009 Quarter comparedto 25% of net sales in the 2008 Quarter (which for that period, as we thenbroke out sales for our cell phone product line, represents the sum of “otherproduct” and “cell phone” sales).

**Gross Profit**

Grossprofit increased by less than $0.1 million, or 7%, to $0.7 million in the 2009Quarter from $0.6 million in the 2008 Quarter. This increase was primarily dueto a $0.4 million decrease in expense for reserve for obsolete inventory, whichis reflected in “cost of goods sold”.  The decrease in reserve expense morethan offset the increase in materials costs (relative to lower revenues in the2009 Quarter) and Hong Kong operating costs, which, as a percentage of sales(and on a dollar basis in the case of our Hong Costs), were higher in the 2009Quarter compared to the 2008 Quarter. Our freight costs were also slightlylower in the 2009 Quarter, both on a dollar basis and as a percentage of sales.

Gross profit as apercentage of net sales was 16% in the 2009 Quarter compared to 13% in the 2008Quarter.  

**Selling, General, and Administrative Expenses**

Operatingexpenses increased 2%, to $1.4 million in the 2009 Quarter from $1.3 million inthe 2008 Quarter. Personnel expense in selling and in general andadministrative categories was slightly higher, reflecting new hires in theseareas in the past six months, while professional fees were lower.  Changes inother categories of operating expenses were minimal.

**Other Income**

Otherincome, primarily interest income on cash balances, declined 65% to less than $0.1million in the 2009 Quarter, compared to $0.2 million in the 2008 Quarter due primarilyto lower average interest rates in the 2009 Quarter on slightly lower cashbalances compared to the 2008 Quarter. In addition, other income declined to alesser extent as a result of foreign currency losses incurred in respect of the2009 Quarter compared to the 2008 Quarter.

**Pretax Loss**

Pretaxloss increased 20% to $0.6 million in the 2009 Quarter compared to the 2008Quarter as a result of the changes as described above.

 

19

 

 

 

 

**Forward Industries, Inc.**

 

 

**Income Taxes**

Werecorded income tax expense of $0.4 million in the 2009 Quarter compared to abenefit from income taxes of $0.2 million in the 2008 Quarter primarily due to theestablishment of a full valuation allowance against our deferred tax assets inthe 2009 Quarter. See “Critical Accounting Policies and Estimates—DeferredIncome Taxes”, above, and “Note 7 – Income Taxes” in Notes to ConsolidatedFinancial Statements set forth elsewhere in this Quarterly Report on Form 10-Q.

At March31, 2009, we had approximately $4.0 million of earnings attributable to ourforeign subsidiaries for which not provisions have been recorded for income taxthat could occur upon repatriation. Except to the extent such earnings can berepatriated tax efficiently, they are permanently invested abroad. It is notpracticable to determine the amount of income taxes payable in the event allsuch foreign earnings are repatriated.

**RESULTS OFOPERATIONS FOR THE 2009 PERIOD COMPARED TO THE 2008 PERIOD**

**Net loss**

Weincurred a net loss of $1.3 million in the 2009 Period compared to $0.6 millionin the 2008 Period. The $0.6 million increase is a result of higher income taxexpense (attributable to the effect of establishment of the valuation allowancein respect of deferred tax assets, discussed above at Note 7 in Notes to the ConsolidatedFinancial Statements and “Critical Accounting Policies and Estimates—DeferredIncome Taxes”), lower other income (primarily interest income), and lower grossprofit, offset in part by lower selling, general and administrative expenses,as reflected in the table below:  

 
(millions of dollars)

 

2009 	Period

2008 	Period

Increase 	(Decrease)

Net Sales....................................................................................................... 

$9.6

$9.7

($0.1)

 

 

 

 

Gross Profit................................................................................................... 

1.6

1.7

(0.1)

Selling, General and Administrative Expenses........................................ 

(2.7)

(3.1)

0.3

Other Income................................................................................................ 

0.2

0.4

(0.3)

(Provision for) benefit from Income Taxes.............................................. 

**(0.3)**

0.2

**(0.5)**

**Net Loss*.....................................................................................................**

**($1.3)**

**($0.6)**

**($0.6)**

* Table may nottotal due to rounding.

Basic and diluted loss per share data was ($0.16) forthe 2009 Period, compared to ($0.08) for the 2008 Period. The reduction in lossper share in the 2009 Period was due to the increase in net loss.

**Net Sales**

Netsales decreased $0.1 million, or 1%, to $9.6 million in the 2009 Period from$9.7 million in the 2008 Period, due to lower cell phone sales, which are nowincluded in “other products” sales, which decreased $0.2 million, or 9%. Thedecline in sales of “other products” was offset, in part, by higher sales ofdiabetic products, which increased slightly more than $0.1 million, or 2% inthe 2009 Period. The tables below set forth sales by product line andgeographic location of our customers for the periods indicated.

20

 

 

 

 

**Forward Industries, Inc.**

 

 

**Net Sales for 2009 Period**

**6 Months ended March 31, 2009**

**(millions of dollars)**

** **

**APAC**

**Americas**

**Europe**

**Total***

Diabetic Products.................................. 

$2.9

$1.9

$2.4

$7.2

Other Products....................................... 

0.5

1.8

$0.1

2.3

**Total***

**$3.4**

**$3.7**

**$2.5**

**$9.6**

                                

**Net Sales for 2008 Period**

**6 Months ended March 31, 2008**

**(millions of dollars)**

** **

**APAC**

**Americas**

**Europe**

**Total***

Diabetic Products.................................. 

$4.3

$1.1

$1.6

$7.1

Other Products....................................... 

0.7

1.5

0.5

2.6

**Total***

**$5.0**

**$2.6**

**$2.1**

**$9.7**

* Tables maynot total due to rounding.

*Diabetic Product Sales*

Salesof cases and related accessories for blood glucose monitoring kits increased $0.1million, or 2 %, to $7.2 million in the 2009 Period, from $7.1 million in the2008 Period.  These results were driven by higher sales to two of our largestcustomers, which increased by $1.2 million and $0.3 million, respectively, inthe 2009 Period compared to the 2008 Period.  These increases were primarilyattributable to several new in-box programs in the first fiscal quarter of 2009as well as higher volumes of existing in box programs.  The higher sales tothese two customers were offset, in part, by lower sales to Lifescan, ourlargest customer, which declined $1.4 million, or 31%, in the 2009 Period fromthe 2008 Period. 

Salesof carrying cases for blood glucose monitoring kits represented 75% of our totalnet sales in the 2009 Period compared to 73% of our total net sales in the 2008Period due primarily to the continuing significant decline in “other product”sales. 

*OtherProduct Sales*

Salesof other products declined $0.2 million, or 9%, to $2.3 million in the 2009Period from $2.6 million in the 2008 Period. This decline was primarily theresult of lower aftermarket sales of cell phone carry solutions in the 2009Period, which decreased almost $0.2 million from the 2008 Period. This declinewas offset, in part, by higher sales to one cell phone customer, which increased$0.1 million in the 2009 Period compared to the 2008 Period, as well as severalsmaller increases in sales to other customers for “other products”. 

Salesof other products represented 25% of our net sales in the 2009 Period comparedto 27% of net sales in the 2008 Period (which for that period, as we then brokeout sales for our cell phone product line, represents the sum of “other product”and “cell phone” sales).

**Gross Profit**

Grossprofit decreased $0.1 million, or 7%, to $1.6 million in the 2009 Period from $1.7million in the 2008 Period primarily due to higher costs incurred in connectionwith the relocation of our Hong Kong facility and staffing changes there thatincreased Hong Kong personnel expense. Higher compliance, warehouse, rent, and travelcosts in the 2009 Period also contributed to the higher level of Hong Kong costs.  In addition, material costs were $0.1 million higher on a lower sales basein the 2009 Period compared to the 2008 Period, which as a percentage of sales,negatively impacted gross profit as well as gross profit percentage. These costincreases were offset in part, by $0.4 million decrease in expense to reservefor obsolete inventories, and to a lesser extent, a decrease in our freightcosts which were slightly lower in the 2009 Period on both on a dollar basisand as a percentage of sales. 

21

 

 

 

 

**Forward Industries, Inc.**

 

 

Gross profit as apercentage of net sales was 17% in the 2009 Period compared to 18% in the 2008Period.  

**Selling, General, and Administrative Expenses**

Operatingexpenses decreased $0.3 million, or 11%, to $2.7 million in the 2009 Periodfrom $3.1 million in the 2008 Period due primarily to a $0.2 million reductionin personnel costs as a result of the expiration at December 31, 2007, ofemployment agreements of two executives and related severance. Additionally, weincurred $0.1 million less in royalty and commission expense in the 2009 Periodas such expense under the license that expired March 31, 2009 was de minimis(as the amendment of such license in December 2008 eliminated all minimumroyalty obligations) compared to royalty expense incurred under the priorlicense in the 2008 Period. Lesser decreases in professional fees and otheroperating expenses also contributed to the decrease in our operating costs.

**Other Income**

Otherincome, primarily interest income on cash balances, declined 65% to $0.2 millionin the 2009 Period, from $0.4 million in the 2008 Period due primarily to loweraverage interest rates in the 2009 Period on slightly lower cash balancescompared to the 2008 Period. In addition, other income declined to a lesserextent as a result of foreign currency losses incurred in respect of the 2009 Periodcompared to the 2008 Period.

**Pretax Loss**

Pretaxloss increased 9% to $1.0 million in the 2009 Period compared to $0.9 millionin the 2008 Period as a result of the changes as described above.

**Income Taxes**

Werecorded income tax expense of $0.3 million in the 2009 Period compared to abenefit from income taxes of $0.2 million in the 2008 Period primarily due to theestablishment of a full valuation allowance against our deferred tax assets inthe 2009 Period. See “Critical Accounting Policies and Estimates—DeferredIncome Taxes”, above, and “Note 7 – Income Taxes” in our Notes to ConsolidatedFinancial Statements set forth elsewhere in this Quarterly Report on Form 10-Q.

AtMarch 31, 2009, we had approximately $4.0 million of earnings attributable toour foreign subsidiaries for which no provisions have been recorded for incometax that could occur upon repatriation. Except to the extent such earnings canbe repatriated tax efficiently, they are permanently invested abroad. It is notpracticable to determine the amount of income taxes payable in the event allsuch foreign earnings are repatriated.

**LIQUIDITY AND CAPITALRESOURCES**

During the 2009 Period, we used $0.8 million of cashin operations compared to $48 thousand in the 2008 Period. Our net cash used inoperating activities in the 2009 Period consisted of a net loss of $1.3 million,reduced by $0.6 thousand for non-cash items, and changes in working capitalitems of $0.1 million. Accounts payable decreased $0.6 million, which had theeffect of contributing to the net cash used by operating activities. Thischange was offset by decreases in accounts receivable, inventories, and prepaidexpenses and other current assets of $25 thousand, $0.3 million, and $0.1million, respectively, and an increase in accrued expenses and otherliabilities of $28 thousand. The decrease in accounts receivable isattributable to the lower sales levels in the 2009 Period and the timing inwhich these accounts receivable were originated. The decrease in inventoriesand accounts payable is primarily in support of sales orders received. The decreasein prepaid expenses and other current assets is primarily due to the timing ofpayments made for our insurance policies and in connection with the inceptionof our lease for our Hong Kong facility. 

 

22

 

 

 

 

**Forward Industries, Inc.**

 

 

Duringthe 2008 Period, we used $48,000 of cash from operations consisting of a netloss of $0.6 million, decreased by $0.3 million for non-cash items, and $0.3million for net changes in working capital items, consisting primarily ofchanges in accounts receivable and prepaid expenses and other current assets of$0.6 million and $0.2 million, respectively. These changes were offset, inpart, by changes in inventories and accrued expenses and other liabilities of $0.5million and $0.1 million, respectively.

Investingactivities used $0.1 million in the 2009 Period for purchases of property,plant and equipment, primarily leasehold improvements and furniture andfixtures for our new Hong Kong procurement and quality control facility. In the2008 Period, net investing activities used $19,000 for purchases of property,plant and equipment, primarily computer and telecommunications hardware andsoftware. 

Therewere no financing activities in the 2009 Period. Financing activities generated$39,000 in proceeds from the exercise of stock options in the 2008 Period.

At March 31, 2009, our current ratio (current assets divided by current liabilities) was 13.05;our quick ratio (current assets less inventories divided by currentliabilities) was 12.45; and our working capital (current assets less currentliabilities) was $22.3 million.  As of such date, we had no short or long-termdebt outstanding. 

Ourprimary source of liquidity is our cash on hand. The primary demands on ourworking capital are: operating losses and accounts payable arising in theordinary course of business, the most significant of which arise when ourcustomers place orders and we order from our suppliers. Historically, oursources of liquidity have been adequate to satisfy working capital requirementsarising in the ordinary course of business. We anticipate that our liquidityand financial resources for the twelve months will be adequate to manage ourfinancial requirements. See “Trends in Results of Operations” for a discussionof anticipated increases in selling, general, and administrative expense.

ForwardInnovations maintains a credit facility with a Swiss bank that provides for anuncommitted line of credit in the maximum amount of $400,000.  Amountsborrowed under the facility may be structured as a term loan or loans, with amaximum repayment Period of 12 months, or as a guarantee facility, or anycombination of the foregoing.  Either party may terminate the facility atany time; however, such termination would not affect the stated maturity of anyterm loan outstanding under the facility.  Amounts borrowed other than asa term loan must be settled quarterly or converted into term loans. Amountsdrawn under this credit facility bear interest at variable rates established bythe bank (5.35% as March 31, 2009). At March 31, 2009, Forward Innovations is contingently liable to the bank under a letter of credit issued on its behalf inthe amount of €224,000 (equal to approximately $297,000 as of March 31, 2009) in favor of Forward Innovations' freight forwarder and customs agent.  The effect of the issuance of the letter of credit is to reduce the availability ofthe credit line in an amount equal to the face amount of the letter of credit. See Notes 4 and 10 to the unaudited consolidated Financial Statements set forthin Item 1.

On September 27, 2002, our Board of Directors authorized the repurchase of up to 400,000shares of our outstanding common stock, or approximately 7% of the number ofshares then outstanding. On January 21, 2004, our Board increased the amount ofshares authorized for repurchase to 486,200. Under that authorization, as of March 31, 2009, we had repurchased an aggregate of 172,603 shares at a cost ofapproximately $0.4 million. In addition, in connection with an exercise ofoutstanding stock options, 72,917 shares were purchased during Fiscal 2008 in anon-cash transaction, which was outside the foregoing authorizations.  No repurchaseswere made during the 2009 Period.  The repurchase program may be discontinuedor terminated at any time.

23

 

 

 

 

**Forward Industries, Inc.**

 

 

**CONTRACTUAL OBLIGATIONS ANDCOMMERCIAL COMMITMENTS**

TheCompany has entered into various contractual obligations and commercialcommitments that, under accounting principles generally accepted in the United States, are not recorded as a liability.   The following is a summary of suchcontractual cash obligations as of March 31, 2009:

**Contractual  Obligation or 	Commitment**

**Apr 09 – Mar 10**

**Apr 10 – Mar 12**

**Apr 12 – Mar 14**

**Thereafter**

Employment Agreements

$ 319,000

$             --

$          --

$       	--

Operating Leases

313,000

527,000

27,000

--

**Totals**

**$632,000**

**$ 527,000**

**$27,000**

**    $        --**

The Company has not guaranteed thedebt of any unconsolidated entity and does not engage in derivativetransactions or maintain any off-balance sheet special purpose entities. 

**ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURESABOUT MARKET RISK**

Notapplicable.

**ITEM4. CONTROLS AND PROCEDURES **

**Evaluationof Disclosure Controls and Procedures**

Ourmanagement is responsible for establishing and maintaining a system ofdisclosure controls and procedures (as defined in Rule 13a-15(e)) under theExchange Act) that is designed to ensure that information required to bedisclosed by the Company in the reports that we file or submit under theExchange Act is recorded, processed, summarized and reported, within the timespecified in the Commission's rules and forms. Disclosure controls andprocedures include, without limitation, controls and procedures designed toensure that information required to be disclosed by an issuer in the reportsthat it files or submits under the Exchange Act is accumulated and communicatedto the issuer's management, including its principal executive officer orofficers and principal financial officer or officers, or persons performingsimilar functions, as appropriate to allow timely decisions regarding requireddisclosure.

Inaccordance with Exchange Act Rule 13a-15(b), our management, under thesupervision and with the participation of our Chief Executive Officer and ChiefFinancial Officer, performed an evaluation of the effectiveness of theCompany's disclosure controls and procedures as of the end of the fiscal quartercovered by this Quarterly Report. Based on that evaluation, the Company's ChiefExecutive Officer and Chief Financial Officer concluded that the Company'sdisclosure controls and procedures were effective, as of the end of the 2009 Quarter,to provide reasonable assurance that information required to be disclosed inthe Company's reports filed or submitted under the Exchange Act is recorded,processed, summarized and reported within the time periods specified in theCommission's rules and forms. 

**Changesin internal controls**

Ourmanagement, with the participation our Chief Executive Officer and ChiefFinancial Officer, performed an evaluation as to whether any change in ourinternal controls over financial reporting  occurred during the 2009 Quarter. Based on that evaluation, our Chief Executive Officer and our Chief FinancialOfficer concluded that no change occurred in the Company's internal controlsover financial reporting during the 2009 Quarter that has materially affected,or is reasonably likely to materially affect, the Company's internal controlsover financial reporting.

24

 

 

 

 

**Forward Industries, Inc.**

 
  PART II.   OTHER INFORMATION
**ITEM1. LEGAL PROCEEDINGS**

Fromtime to time, the Company may become a party to legal actions or proceedings inthe ordinary course of its business.  As of March 31, 2009, there were no suchactions or proceedings, either individually or in the aggregate, that, ifdecided adversely to the Company’s interests, the Company believes would bematerial to its business. 

**ITEM1A. RISK FACTORS**

Thefollowing risk factors are new or have been expanded or updated from those setforth in our Annual Report on Form 10-K for the fiscal year ended September 30,2008, but the factor below does not constitute all the risk factors thatpertain to our business.  Please review our Annual Report on Form 10-K for a completelisting of “Risk Factors” that pertain to our business. Please refer to ITEM 2.“CAUTIONARY STATEMENT FOR PURPOSES OF THE “SAFE HARBOR” PROVISIONS OF THEPRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 on page 15 of this Quarterly Report on Form 10-Q.

**Deteriorationof economic conditions could negatively impact our business**.

Ourbusiness may be adversely affected by changes in domestic and/or internationaleconomic conditions, including changes in consumer preferences or consumerspending rates, inflation, interest or exchange rates, and the effects ofgovernmental initiatives to manage economic conditions. In the 2009 Quarter, weexperienced continuing sales declines in certain product categories as well asa decline in sales to our largest customer for blood glucose monitors, aproduct line we believed might be relatively insulated from the deterioratingeconomy. Changes in economic conditions could continue to adversely affect thedemand for our products, our OEM customer relationships in channels with highcustomer concentration, the cost of needed raw materials, ortransportation-related costs, thereby adversely affecting our business,operating results and financial condition.

Therecent disruptions in credit and other financial markets and deterioration ofnational and global economic conditions could, among other things: impair thefinancial condition of some of our customers and suppliers thereby increasingcustomer bad debts or non-performance by suppliers; or make it more difficultor costly for us to obtain financing in connection with an acquisition.  We areunsure of the duration and severity of this economic crisis. If the crisispersists or worsens and economic conditions remain weak over a long period, thelikelihood of the crisis having a significant impact on our business increases.

**If any one or more of our OEM customers elect toreduce their “in-box” accessory model, our results of operations and financialcondition would be materially and adversely affected.**

The predominant percentage of our revenues is derived from sales ofcase accessories to our OEM customers who package our cases “in-box” with theirelectronics.  Certain OEM customers have begun to advise us of proposed changesin their “in box” business model whereby the carry solution is a much lowercost, lower price simplified carry solution.  We believe these reductions inthe “in box” model are intended to reduce expense to the OEM customer as wellas reduce the cost of the electronic device to the consumer.  If one or more ofour OEM customers generally begin to simplify the accessories in box asdescribed above, we would incur a significant decline in revenues and ourresults of operations and financial condition would be materially and adverselyaffected. 

**ITEM 2.UNREGISTERED SALES AND PURCHASES OF EQUITY SECURITIES AND USE OF PROCEEDS**

**IssuerPurchases of Equity Securities**

During the 2009 Quarter we did not purchase any commonstock or other equity securities pursuant to publicly announced plans orprograms or otherwise. 

25

 

 

 

 

**Forward Industries, Inc.**

 

 

**ITEM 3. DEFAULTS UPON SENIOR SECURITIES**

None.

**ITEM4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS**

TheCompany held its Annual Meeting of Shareholders on February 11, 2009.  The following matters were voted upon at the Annual Meeting of Shareholders:

 

1.       Election of a Board of Directors

 

 

 

Number of Shares Voted

Name

 

For

 

Withheld

John Chiste.................................. 

 

6,350,486

 

396,903

Bruce Galloway........................... 

 

6,360,561

 

386,828

Fred Hamilton.............................. 

 

6,293,462

 

453,927

Louis Lipschitz............................ 

 

6,323,828

 

423,561

Douglas Sabra............................. 

 

6,295,067

 

452,322

Michael Schiffman.................

 

6,361,079

 

386,310

 

 

2.       Ratification of the appointment ofKaufman, Rossin & Co., P.A. as the independent registered public accountingfirm for the Company for the Fiscal Year ending September 30, 2009.

 

 

Number of Shares Voted

 

 

For

 

Against

 

Abstain

Ratify  Kaufman, Rossin & Co., P.A. as the independent registered public  accounting firm for the Company the Fiscal Year ending September 30, 2009.............................................. 

 

6,506,279

 

211,659

 

29,450

 

No othermatters came before the meeting that required or resulted in a vote.

**ITEM5. OTHER INFORMATION**

None

**ITEM 6. EXHIBITS**

31.1      Certification of theChief Executive Officer under Section 302 of the Sarbanes-Oxley Act of 2002 

31.2      Certification of the Chief Financial Officer underSection 302 of the Sarbanes-Oxley Act of 2002 

32.1      Certification of the Chief Executive Officer andChief Financial Officer under Section 906 of the Sarbanes-Oxley Act of 2002

26

 

 

 

 

**Forward Industries, Inc.**

 

 

 

 

**SIGNATURES**

Pursuant to therequirements of the Securities Exchange Act of 1934, the registrant has duly causedthis report to be signed on its behalf by the undersigned, hereunto dulyauthorized.

 

Dated:  May 6, 2009

 
 
FORWARD INDUSTRIES, INC.
 
(Registrant)
 
                                                                        
 
 
 
By:/s/ Douglas W. Sabra                     
   
DouglasW. Sabra                               
 
ChiefExecutive Officer
                     
(PrincipalExecutive Officer)
 
 
 
 
 
By:/s/James O. McKenna                     
   
JamesO. McKenna                              
 
ChiefFinancial Officer
 
(PrincipalFinancial and Accounting Officer)

                                                                                

 

27

 
 ** |
|-------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|