0001003297-16-000587.txt : 20160209 0001003297-16-000587.hdr.sgml : 20160209 20160209160929 ACCESSION NUMBER: 0001003297-16-000587 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 46 CONFORMED PERIOD OF REPORT: 20151231 FILED AS OF DATE: 20160209 DATE AS OF CHANGE: 20160209 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FORWARD INDUSTRIES INC CENTRAL INDEX KEY: 0000038264 STANDARD INDUSTRIAL CLASSIFICATION: PLASTICS PRODUCTS, NEC [3089] IRS NUMBER: 131950672 STATE OF INCORPORATION: NY FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-34780 FILM NUMBER: 161399766 BUSINESS ADDRESS: STREET 1: 1801 GREEN ROAD STREET 2: SUITE E CITY: POMPANO BEACH STATE: FL ZIP: 33064 BUSINESS PHONE: 9544199544 MAIL ADDRESS: STREET 1: 1801 GREEN RD STREET 2: SUITE E CITY: POMPANO BEACH STATE: FL ZIP: 33064 FORMER COMPANY: FORMER CONFORMED NAME: PROGRESS HEAT SEALING CO INC DATE OF NAME CHANGE: 19721111 10-Q 1 qv4.htm qv4.htm - Prepared by EDGARX.com

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

________________

FORM 10-Q

________________

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

             For the quarterly period ended December 31, 2015.

OR

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

             For the transition period from ____ to ____.

 

Commission File Number: 001-34780

________________

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)

 

 

 

477 S. Rosemary Ave., Suite 219, West Palm Beach, FL 33401

(Address of principal executive offices, including zip code)

(561) 465-0030  

(Registrant’s telephone number, including area code)

________________

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).       Yes [X]        No [   ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the 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         [   ]  
Smaller reporting company      [
X]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).                Yes [   ]   No [X]

The number of shares outstanding of the registrant’s common stock, par value $0.01 per share, on February 8, 2016, which is the latest practical date prior to the filing of this report, was 8,658,179 shares.

 

 

 

 


 

FORWARD INDUSTRIES, INC. AND SUBSIDIARIES   
 
 
PART I.  FINANCIAL INFORMATION  Page 
    No. 
Item 1.  Financial Statements   
  Condensed Consolidated Balance Sheets as of December 31, 2015 (Unaudited) and September 30, 2015 3 
  Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited)  
  for the Three Months Ended December 31, 2015 and 2014 4 
  Condensed Consolidated Statements of Cash Flows (Unaudited) for the Three Months Ended  
  December 31, 2015 and 2014 5 
Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations 14 
Item 3.  Quantitative and Qualitative Disclosures About Market Risk 20 
Item 4.  Controls and Procedures 20 
 
PART II.  OTHER INFORMATION   
 
Item 1.  Legal Proceedings 21 
Item 1A.  Risk Factors 21 
Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds 21 
Item 3.  Defaults Upon Senior Securities 21 
Item 4.  Mine Safety Disclosures 21 
Item 5.  Other Information 21 
Item 6.  Exhibits 21 
  Signatures 22 

 

1


 

Note Regarding Use of Certain Terms

In this Quarterly Report on Form 10-Q, unless the context otherwise requires, the following terms have the meanings assigned to them as set forth below:

“we”, “our”, and the “Company” refer to Forward Industries, Inc., a New York corporation, together with its consolidated subsidiaries;
“Forward” or “Forward Industries” refers to Forward Industries, Inc.;
“common stock” refers to the common stock, $.01 par value per share, of Forward Industries, Inc.;
“Forward US” refers to Forward Industries’ wholly owned subsidiary Forward Industries (IN), Inc., an Indiana corporation;
“Forward Switzerland” refers to Forward Industries’ wholly owned subsidiary Forward Industries (Switzerland) GmbH, a Swiss corporation;
“Forward UK” refers to Forward Industries’ former wholly owned subsidiary Forward Ind. (UK) Limited, a limited company of England and Wales;
“Forward China” refers to Forward Industries Asia-Pacific Corporation (f/k/a Seaton Global Corporation), Forward’s exclusive sourcing agent in the Asia-Pacific region;
“GAAP” refers to accounting principles generally accepted in the United States;
“Commission” refers to the United States Securities and Exchange Commission;
“Exchange Act” refers to the United States Securities Exchange Act of 1934, as amended;
“Fiscal 2015” refers to our fiscal year ended September 30, 2015;
“Fiscal 2016” refers to our fiscal year ending September 30, 2016;
“Europe” refers to the countries included in the European Union;
“EMEA Region” means the geographic area encompassing Europe, the Middle East and Africa;
“APAC Region” refers to the Asia Pacific Region, consisting of Australia, New Zealand, 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; and
“Retail” refers to the retail distribution channel.

Note Regarding Presentation of Financial Information

     Certain figures included in this Quarterly Report on Form 10-Q have been subject to rounding adjustments; accordingly, figures shown as totals in certain tables may not be an arithmetic aggregation of the figures that precede them.

 

 

 

 

 

2


 
Part I. Financial Information               
 
Item 1. Financial Statements               
 
FORWARD INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
 
    December 31,       September 30,  
    2015       2015  
    (Unaudited)          
Assets               
Current assets:               
Cash and cash equivalents  $  3,324,565     $ 4,042,124  
Accounts receivable    6,523,579       5,454,129  
Inventories    2,884,299       2,866,464  
Prepaid expenses and other current assets    377,036       296,012  
Total current assets    13,109,479       12,658,729  
Property and equipment, net    109,492       78,733  
Other assets    40,962       40,962  
Total assets  $  13,259,933     $ 12,778,424  
Liabilities and shareholders' equity               
Current liabilities:               
Accounts payable  $  280,049     $ 122,803  
Due to Forward China    4,285,854       4,168,021  
Accrued expenses and other current liabilities    925,974       1,039,085  
Total current liabilities    5,491,877       5,329,909  
Other liabilities    111,173       115,202  
Total liabilities    5,603,050       5,445,111  
Commitments and contingencies               
Shareholders' equity:               
Common stock, par value $0.01 per share; 40,000,000 shares authorized;               
8,658,179 and 8,641,755 shares issued;               
8,658,179 and 8,641,755 shares outstanding;               
at December 31, 2015 and September 30, 2015, respectively    86,582       86,418  
Additional paid-in capital    17,629,809       17,550,047  
Accumulated deficit    (10,037,287 )      (10,281,367 ) 
Accumulated other comprehensive loss    (22,221 )      (21,785 ) 
Total shareholders' equity    7,656,883       7,333,313  
Total liabilities and shareholders' equity  $  13,259,933     $ 12,778,424  

 

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

3


 

FORWARD INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(UNAUDITED)

 

Three Months Ended December 31,

 

2015

 

2014

 
Net sales 

$ 

7,137,883    

$ 

7,943,860  
Cost of goods sold    5,615,518       6,381,439  
Gross profit    1,522,365       1,562,421  
Operating expenses:               
Sales and marketing    432,888       682,457  
General and administrative    841,666       2,470,424  
Total operating expenses    1,274,554       3,152,881  
Income (loss) from operations    247,811       (1,590,460 ) 
Other (income) expense:               
Interest income    -       (3,015 ) 
Loss on marketable securities, net    -       110,001  
Other (income) expense, net    3,731       3,308  
Total other (income) expense, net    3,731       110,294  
 
Income (loss) from continuing operations    244,080       (1,700,754 ) 
Income from discontinued operations, net    -       198,963  
Net income (loss)    244,080       (1,501,791 ) 
Preferred stock dividends and accretion    -       (473,694 ) 
Net income (loss) applicable to common equity 

$ 

244,080    

$ 

(1,975,485 ) 
 
Net income (loss) 

$ 

244,080    

$ 

(1,501,791 ) 
Other comprehensive loss:               
Translation adjustments    (436 )      (867 ) 
Comprehensive income (loss) 

$ 

243,644    

$ 

(1,502,658 ) 
 
Net income (loss) per basic common share:               
Income (loss) from continuing operations 

$ 

0.03    

$ 

(0.25 ) 
Income (loss) from discontinued operations    0.00       0.02  
Net income (loss) per basic common share 

$ 

0.03    

$ 

(0.23 ) 
 
Net income (loss) per diluted common share:               
Income (loss) from continuing operations 

$ 

0.03    

$ 

(0.25 ) 
Income (loss) from discontinued operations    0.00       0.02  
Net income (loss) per diluted common share  $  0.03     $  (0.23 ) 
 
Weighted average number of common and               
common equivalent shares outstanding:               
Basic    8,387,501       8,443,391  
Diluted    8,621,524       8,443,391  

 

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

 

4


 

FORWARD INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
 
 

Three Months Ended December 31,

 
  2015   2014
Cash Flows From Operating Activities:               
Net income (loss)  $  244,080     $  (1,501,791 ) 
Adjustments to reconcile net income (loss) to net cash               

               used in operating activities: 

             
Realized and unrealized loss on marketable securities    -       110,001  
Share-based compensation    81,593       11,579  
Depreciation and amortization    13,085       16,963  
Deferred rent    (4,029 )      11,305  
Changes in operating assets and liabilities:               
Accounts receivable    (1,069,450 )      (29,378 ) 
Inventories    (17,835 )      (220,213 ) 
Prepaid expenses and other current assets    (81,024 )      (43,568 ) 
Accounts payable, due to Forward China,               

                      accrued expenses and other current liabilities 

  161,532       (735,960 ) 

                                Net cash used in operating activities 

  (672,048 )      (2,381,062 ) 
Cash Flows From Investing Activities:               
Proceeds from sales of marketable securities    -       952,127  
Purchases of marketable securities    -       (10,898 ) 
Purchases of property and equipment    (43,844 )      (23,206 ) 
Net cash (used in) provided by investing activities    (43,844 )      918,023  
Cash Flows From Financing Activities:               
Dividends paid    -       (19,322 ) 
Restricted stock repurchased and retired    (1,667 )      (12,199 ) 

                               Net cash used in financing activities 

  (1,667 )      (31,521 ) 
Net decrease in cash and cash equivalents    (717,559 )      (1,494,560 ) 
Cash and cash equivalents at beginning of period    4,042,124       6,477,132  
Cash and cash equivalents at end of period  $  3,324,565     $  4,982,572  
 
Supplemental Disclosure of Cash Flow Information:               
Supplemental disclosure of non-cash investing and financing activities:               
Preferred stock accretion  $  -     $  454,372  
Reclassification of warrant liability, net  $  -     $  1,260,057  

 

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

5


 

FORWARD INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1     OVERVIEW

     Forward Industries, Inc. (“Forward” or the “Company”) was incorporated under the laws of the State of New York and began operations in 1961 as a manufacturer and distributor of specialty and promotional products. The Company designs, markets, and distributes carry and protective solutions, primarily for hand held electronic devices. The Company’s principal customer market is original equipment manufacturers, or “OEMs” (or the contract manufacturing firms of these OEM customers), that either package their products as accessories “in box” together with their branded product offerings, or sell them through their retail distribution channels. The Company’s OEM products include carrying cases and other accessories for medical monitoring and diagnostic kits and a variety of other portable electronic and non-electronic products (such as sporting & recreational products, bar code scanners, smartphones, GPS location devices, tablets, and firearms). The Company’s OEM customers are located in the Americas, the EMEA Region, and the APAC Region. The Company does not manufacture any of its OEM products and sources substantially all of its OEM products from independent suppliers in China (refer to Note 8 – Buying Agency and Supply Agreement).

     On June 21, 2012, the Company determined to exit its global retail business and focus solely on growing its OEM business. The decision to eliminate the Retail division was primarily driven by the longer than estimated path to bring it to profitability and the strong top line growth and cost rationalizations in the OEM business. The Retail business is presented as discontinued operations.

     In the opinion of management, the accompanying condensed consolidated financial statements presented in this Quarterly Report on Form 10-Q reflect all normal recurring adjustments necessary to present fairly the financial position and results of operations and cash flows for the interim periods presented herein, but are not necessarily indicative of the results of operations for the year ending September 30, 2016. These condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements included in its Annual Report on Form 10-K for the fiscal year ended September 30, 2015, and with the disclosures and risk factors presented herein and therein, respectively. The September 30, 2015 condensed consolidated balance sheet has been derived from the audited consolidated financial statements.

NOTE 2     ACCOUNTING POLICIES

Accounting Estimates

     The preparation of the Company’s condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates and assumptions.

Basis of Presentation

     The accompanying condensed consolidated financial statements include the accounts of Forward Industries, Inc. and its wholly owned subsidiaries (Forward US, Forward Switzerland, Forward HK (inactive) and Forward UK (inactive)). All significant intercompany transactions and balances have been eliminated in consolidation.

 

 

6


 

FORWARD INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2      ACCOUNTING POLICIES (CONTINUED)

Income Taxes

     The Company accounts for its income taxes in accordance with U.S. GAAP, which requires, among other things, recognition of future tax benefits and liabilities measured at enacted rates attributable to temporary differences between financial statement and income tax bases of assets and liabilities and to net tax operating loss carry-forwards to the extent that realization of these benefits is more likely than not. As of December 31, 2015, there was no change to our assessment that a full valuation allowance was required against all net deferred tax assets. Accordingly, any deferred tax provision or benefit was offset by an equal and opposite change to the valuation allowance. No current book tax provision was recorded against book net income due to the existence of significant net operating loss carryforwards.

Revenue Recognition

     The Company generally recognizes revenue from product sales to its customers when: (1) title and risk of loss are transferred (in general, these conditions occur at either point of shipment or point of destination, depending on the terms of sale); (2) persuasive evidence of an arrangement exists; (3) the Company has no continuing obligations to the customer; and (4) collection of the related accounts receivable is reasonably assured.

Share-Based Payment Expense

     The Company recognizes employee and director share-based compensation in its condensed consolidated statements of operations and comprehensive income (loss) at the grant-date fair value of stock options and other equity-based compensation. The determination of stock option grant-date fair value is estimated using the Black-Scholes option-pricing model, which includes variables such as the expected volatility of the Company’s share price, the exercise behavior of its grantees, interest rates, and dividend yields. These variables are projected based on the Company’s historical data, experience, and other factors. In the case of awards with multiple vesting periods, the Company has elected to use the graded vesting attribution method, which recognizes compensation cost on a straight-line basis over each separately vesting portion of the award as if the award was, in-substance, multiple awards. Refer to Note 5 - Share-Based Compensation. In addition, the Company recognizes share-based compensation to non-employees based upon the fair value, using the Black-Scholes option pricing model, determined at the deemed measurement dates over the related contract service period.

Recent Accounting Pronouncements

     In May 2014, the Financial Accounting Standards Board ("FASB") issued ASU 2014-09, “Revenue from Contracts with Customers,” (“ASU 2014-09”). ASU 2014-09 supersedes the revenue recognition requirements in Accounting Standards Codification (“ASC”) 605 -Revenue Recognition and most industry-specific guidance throughout the ASC. The standard requires that an entity recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. ASU 2014-09 was further amended and is effective for annual periods and interim periods within those annual periods beginning after December 15, 2017 and should be applied retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying ASU 2014-09 recognized at the date of initial application. The Company is currently evaluating the impact of the adoption of ASU 2014-09 on its consolidated financial statements.

     In July 2015, the FASB issued ASU 2015-11, "Inventory (Topic 330): Simplifying the Measurement of Inventory," which applies to inventory that is measured using first- in, first-out ("FIFO") or average cost. Under the updated guidance, an entity should measure inventory that is within scope at the lower of cost and net realizable value, which is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. Subsequent measurement is unchanged for inventory that is measured using last-in, last-out ("LIFO"). This ASU is effective for annual and interim periods beginning after December 15, 2016, and should be applied prospectively with early adoption permitted at the beginning of an interim or annual reporting period. The Company is currently evaluating the impact of adopting this guidance.

     In November 2015, the FASB issued ASU 2015-17, "Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes," which applies to the classification of deferred tax assets and liabilities. The update eliminates the requirement to classify deferred tax assets and liabilities as noncurrent or current within a classified statement of financial position. This ASU is effective for annual and interim periods beginning after December 15, 2016, and should be applied prospectively with early adoption permitted at the beginning of an interim or annual reporting period. The Company is currently evaluating the impact of adopting this guidance.

 

 

7


 

FORWARD INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3     DISCONTINUED OPERATIONS

On June 21, 2012, the Company determined to exit its global retail business and focus solely on growing its OEM business. The decision to eliminate the Retail division was primarily driven by the longer than estimated path to bring it to profitability and the strong net sales growth and cost rationalizations in the OEM business. Accordingly, the results of operations for the Retail division have been recorded as discontinued operations in the accompanying condensed consolidated financial statements for the periods presented. The Company has completed its exit of its Retail business. Summarized operating results of discontinued operations are presented in the following table:

 

For the Three Months Ended

 

December 31,

 

2015 

 

2014

Net sales  $  -    $ 

-

 
Gross loss    -     

-

 
Operating (expenses)    -      (1,082 ) 
Other income    -      200,045  
Income from discontinued operations, net  $  -    $  198,963  

 

     The Company had $280,000 of accounts receivable relating to overdue payments pursuant to a Settlement Agreement and General Release (“Settlement Agreement”) executed on July 3, 2013 between the Company and G-Form LLC (“G-Form”) in exchange for certain retail inventories, the Company’s cooperation with certain administrative matters, and a mutual general release. Due to the age of the accounts receivable and G-Form’s non-responsiveness to the Company’s communication related to the matter, the Company established a full reserve for this receivable as of September 30, 2014. In December 2014, the Company recovered $200,000 from a third party, which was recognized as other income during the three months ended December 31, 2014. There was no activity in discontinued operations for the three months ended December 31, 2015.

NOTE 4     SHAREHOLDERS’ EQUITY

6% Senior Convertible Preferred Stock

     As of the 6% Senior Convertible Preferred Stock issuance date, the carrying amount was less than the redemption value. As a result of the Company’s determination that redemption was probable, the carrying value was being increased by periodic accretions so that the carrying value would equal the redemption amount at the earliest redemption date. Such accretion is recorded as a preferred stock dividend.

     Dividends on the 6% Senior Convertible Preferred Stock totaled approximately $0 and $19,000 for the three months ended December 31, 2015 and 2014, respectively. These dividends, in addition to the accretion, totaled approximately $0 and $474,000 for the three months ended December 31, 2015 and 2014, respectively. At the December 30, 2014 Annual Meeting, the shareholder vote resulted in the turnover of a majority of the Board members, which represented a Change of Control pursuant to the terms of the Convertible Preferred Stock. On December 31, 2014, the Company determined to recognize the balance of the accretion and bring the Convertible Preferred Stock carrying value up to its redemption value due to the likelihood of the holders requesting redemption. On January 9, 2015, the Company received a notice of deemed liquidation from a majority of the outstanding Convertible Preferred Stockholders in which they requested redemption of their Convertible Preferred Stock. On February 23, 2015 the Company paid an aggregate of $1,287,737 to the Convertible Preferred Stockholders, in order to redeem all of the outstanding shares of Convertible Preferred Stock.

Stock Repurchase

     In September 2002 and January 2004, the Board authorized the repurchase of up to an aggregate of 486,200 shares of outstanding common stock. Under those authorizations, through December 31, 2015, the Company repurchased an aggregate of 224,690 shares at a cost of approximately $487,000. During the three months ended December 31, 2015, the Company repurchased and retired an aggregate of 1,076 shares of its outstanding restricted common stock at a cost of approximately $2,000 in connection with the vesting of employee restricted stock awards, wherein certain employees surrendered a portion of their award in order to fund certain tax withholding obligations.

Changes in Shareholders’ Equity

     Changes in shareholders’ equity for the three months ended December 31, 2015 are summarized below:

8


 

FORWARD INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 4     SHAREHOLDERS’ EQUITY (CONTINUED)   
 

FORWARD INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(UNAUDITED)

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

Other

 

 

 

 

 

Common Stock

 

 

Paid-In

 

 

Accumulated

 

 

Comprehensive

 

 

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Loss

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance - September 30, 2015

  8,641,755

$

    86,418

 

$

     17,550,047

 

 $

(10,281,367 )

 

$

            (21,785 )

 

 $

 7,333,313

 

Restricted stock award issuances

       17,500

 

           175

 

 

                 (175)

 

 

                     -  

 

 

                        -  

 

 

                 -  

 

Restricted stock repurchased and retired

       (1,076)

 

           (11)

 

 

              (1,656)

 

 

                     -  

 

 

                        -  

 

 

         (1,667)

 

Share-based compensation

               -  

 

             -  

 

 

              81,593

 

 

                     -  

 

 

                        -  

 

 

         81,593

 

Foreign currency translation

               -  

 

             -  

 

 

                     -  

 

 

                     -  

 

 

                    (436)

 

 

            (436)

 

Net loss

               -  

 

             -  

 

 

                     -  

 

 

           244,080

 

 

                        -  

 

 

       244,080

 

Balance - December 31, 2015

  8,658,179

$

    86,582

 

$

     17,629,809

 

$

   (10,037,287)

 

$

             (22,221)

 

$

  7,656,883

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

NOTE 5     SHARE-BASED COMPENSATION

Stock Option Awards

     There were no options granted during the three months ended December 31, 2015 and 2014.

     The Company recognized compensation expense of approximately $4,000 and $12,000 in continuing operations for stock option awards in its condensed consolidated statements of operations and comprehensive income (loss) for the three month periods ended December 31, 2015 and 2014, respectively.

     As of December 31, 2015, there was approximately $25,000 of total unrecognized compensation cost related to unvested stock option awards, which is expected to be recognized over the remainder of the weighted average vesting period of 1.6 years.

     The following table summarizes stock option activity during the three months ended December 31, 2015:

            Weighted       
        Weighted    Average       
        Average    Remaining       
  Number of      Exercise    Life      Intrinsic 
  Options      Price    In Years      Value 
Outstanding, September 30, 2015  311,000    $  2.39           
Granted  -      -           
Exercised  -      -           
Forfeited  -      -           
Outstanding, December 31, 2015  311,000   

$ 

2.39   

5.5 

 

$ 

73,325 

 
Exercisable, December 31, 2015  235,125   

$ 

2.84   

4.3 

  $ 

17,600 

 

     The following table provides additional information regarding stock option awards that were outstanding and exercisable at December 31, 2015:

9


 

FORWARD INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 5     SHARE-BASED COMPENSATION (CONTINUED)  
 
 

Options Outstanding 

   

Options Exercisable 

      Weighted          Weighted    Weighted     
      Average    Outstanding      Average    Average    Exercisable 
Exercise      Exercise    Number of      Exercise   

Remaining Life 

  Number of 
Price      Price    Options      Price    In Years    Options 
 
$0.64 to $1.99    $  0.93    122,500    $  1.28    6.2    55,000 
$2.00 to $2.99      2.46    96,000      2.46    3.6    95,750 
$3.00 to $3.99      3.74    72,500      3.74    5.1    64,375 
$4.00 to $6.02      6.02    20,000      6.02    0.3    20,000 
          311,000          4.3    235,125 

 

Restricted Stock Awards

     On October 26, 2015, the Company granted 17,500 shares of restricted stock, pursuant to the 2007 Plan, to a director of the Company. The shares vested on December 31, 2015. The grant date value of $19,775 was recognized over the service period.

     On October 26, 2015, the Company accelerated the vesting date of 35,000 shares of restricted stock that were previously granted to a director of the Company from February 23, 2016 to December 31, 2015. The Company analyzed the modification as of the modification date and determined that the modification did not result in any incremental compensation expense, however, the remaining unamortized compensation expense attributable to the original award was recognized over the modified remaining service period.

     The Company recognized compensation expense of approximately $78,000 and $0 in continuing operations for restricted stock awards in its condensed consolidated statements of operations and comprehensive income (loss) for the three months ended December 31, 2015 and 2014, respectively.

     As of December 31, 2015, there was approximately $53,000 of unrecognized compensation cost related to shares of unvested restricted stock, which is expected to be recognized over the remainder of the weighted average vesting period of 1 year.

     The following table summarizes restricted stock activity during the three months ended December 31, 2015:

        Weighted     
        Average    Total
  Number of   Grant Date    Grant Date
  Shares   Fair Value    Fair Value
 
Non-vested, September 30, 2015  263,332     $  0.87   

$ 

230,165  
Granted  17,500       1.13      19,775  
Vested  (69,166 )      1.04      (72,158 ) 
Forfeited 

-

      -      -  
Non-vested, December 31, 2015  211,666    

$ 

0.84   

$ 

177,782  

 

10


 

FORWARD INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 6     INCOME (LOSS) PER SHARE

     Basic income (loss) per share data for each period presented is computed using the weighted-average number of shares of common stock outstanding during each such period. Diluted income (loss) per share data is computed using the weighted-average number of common and dilutive common-equivalent shares outstanding during each period. Dilutive common-equivalent shares consist of (a) shares that would be issued upon the exercise of stock options and warrants, computed using the treasury stock method, (b) shares that would be issued upon the conversion of convertible preferred stock and (c) shares of non-vested restricted stock. Net income (loss) from continuing operations per basic and diluted share for the three months ended December 31, 2015 and 2014 is net of preferred stock cash dividends and accretion.

     For the three months ended December 31, 2014, the Company did not have any effects of dilutive securities. For the three months ended December 31, 2015, the Company calculated the potential diluted earnings per share in accordance with ASC 260, as follows:

 

For the Three Months Ended

 

December 31, 

 

2015 

 

2014

Numerator:             
Net income (loss) from continuing operations applicable to common equity             
(numerator for basic and diluted earnings per share) 

$ 

244,080   

$ 

(1,975,485 ) 
 
Weighted average shares outstanding (denominator for basic earnings per share)    8,387,501      8,443,391  
 
Effective of dilutive securities             
Assumed exercise of stock options, treasury stock method    30,271      -  
Assumed exercise of warrants, treasury stock method   

- 

    -  
Assumed vesting of restricted stock, treasury stock method    203,752      -  
Dilutive potential common shares    234,023      -  
Denominator for diluted earnings per share - weighted average shares and             
assumed potential common shares    8,621,524      8,443,391  
 
Basic earnings (loss) from continuing operations per share 

$ 

0.03   

$ 

(0.23 ) 
Diluted earnings (loss) from continuing operations per share  $  0.03    $  (0.23 ) 

 

     The following securities are excluded from the calculation of weighted average dilutive common shares because their inclusion would have been anti-dilutive:

 

As of December 31, 

  2015    2014 
Options 

208,500 

  618,500 
Warrants 

723,846 

  723,846 
Convertible preferred stock 

- 

  692,919 
Non-vested restricted stock 

- 

  114,623 
Total potentially dilutive shares 

932,346 

  2,149,888 

 

NOTE 7     COMMITMENTS AND CONTINGENCIES 

Former CFO Agreement 

On February 16, 2015, the Company entered into a settlement agreement and mutual release with the Company’s former Chief Financial Officer (“Former CFO”), James McKenna, in connection with a lawsuit filed by Mr. McKenna on August 26, 2014 in the U.S. District Court for the Southern District of New York against the Company and then-directors Frank LaGrange Johnson, Robert Garrett, John F. Chiste, Timothy Gordon and Owen P.J. King (the “SDNY Lawsuit”), alleging purported claims of retaliation for whistleblowing under the Dodd-Frank Act, breach of contract and breach of the covenant of good faith and fair dealing all as against the Company, and a single claim for tortious interference with contract as against the individual defendants. The complaint sought an unspecified amount of monetary consequential damages and punitive

11


 

FORWARD INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 7     COMMITMENTS AND CONTINGENCIES (CONTINUED)

damages. Pursuant to the agreement, Mr. McKenna and the Company have agreed to settle and release all disputes or claims against the other party related to the SDNY Lawsuit and any such disputes or claims arising out of Mr. McKenna’s employment with the Company, without an admission of liability or wrongdoing. Under the Agreement, Mr. McKenna received a cash payment of $315,000, representing 18 months' salary at the rate specified in Mr. McKenna’s Amended Employment Agreement, signed between the Company and Mr. McKenna and dated October 26, 2012. Mr. McKenna also received approximately $375,000 in legal fees, back pay, prior out-of-pocket benefits, taxes and penalties on Mr. McKenna’s 401(k) loan, and accrued paid time off, in addition to 35,000 restricted stock units vesting immediately. The Agreement includes customary non-disparagement and release provisions. As of December 31, 2015, the remaining obligation to the Former CFO of approximately $30,000 is reflected as an accrual in the condensed consolidated balance sheet.

NOTE 8     RELATED PARTY TRANSACTIONS

New York Office Services Agreement

     On February 1, 2014, the Company began leasing office space in New York, New York for its then Chief Executive Officer at a rate of $2,500 per month from LaGrange Capital Administration, L.L.C. (“LCA”). Frank LaGrange Johnson, the Company’s former Chairman of the Board, serves as the Managing Member of LCA. This lease was month-to-month and was cancellable by either the Company or LCA at any time. Effective April 1, 2014, LCA increased the monthly rental charge (inclusive of rent, allocable share of office assistant, and equipment leases) from $2,500 to approximately $12,700 per month. On January 16, 2015, the Company provided notice to LCA that it was immediately terminating the New York Office Services Agreement. During the three months ended December 31, 2015 and 2014, the Company recognized $0 and approximately $38,000, respectively, of rent expense related to the New York office.

Buying Agency and Supply Agreement

     On March 12, 2012, the Company, entered into a Buying Agency and Supply Agreement (the “Agreement”) with Forward Industries Asia-Pacific Corporation (f/k/a Seaton Global Corporation), a British Virgin Islands corporation (“Forward China”). On March 13, 2014 and March 11, 2015, the Company entered into amendments to the Agreement with Forward China. The Agreement, as amended, provides that, upon the terms and subject to the conditions set forth therein, Forward China will act as the Company’s exclusive buying agent and supplier of Products (as defined in the Agreement) in the Asia Pacific region. The Company purchases products at Forward China’s cost and pays a service fee to Forward China. The service fee is calculated at $100K monthly plus 4% of “Adjusted Gross Profit.” “Adjusted Gross Profit” is defined as the selling price less the cost from Forward China. The amended Agreement was terminated on September 11, 2015 and the Company entered into a new Supply Agreement on substantially similar terms on September 9, 2015 which will expire on September 8, 2016, subject to renewal. Terence Bernard Wise, a director of the Company, is a principal of Forward China. In addition, Jenny P. Yu, a Managing Director of Forward China, beneficially owns more than 5% of the Company’s shares of common stock. The Company recognized approximately $373,000 and $287,000, respectively, during the three months ended December 31, 2015 and 2014 in service fees paid to Forward China, which are included as a component of costs of goods sold in continuing operations in the accompanying condensed consolidated statements of operations and comprehensive income (loss).

Investment Management Agreement

     On April 16, 2013, the Company entered into an Investment Management Agreement (the “Investment Management Agreement”) with LCA, pursuant to which the Company retained LCA to manage certain investment accounts funded by the Company (collectively, the “Account”). Operations ceased just prior to December 31, 2014 and the Investment Management Agreement formally terminated effective February 1, 2015.

     There were no new funds invested with LCA during the three months ended December 31, 2014. During the three months ended December 31, 2014, the Company purchased approximately $11,000 of marketable securities and sold approximately $952,000 of marketable securities. As a result of these activities, the Company recognized approximately $110,000 of net investment losses during the three months ended December 31, 2014. The Company didn’t recognize any advisory fee or performance fee expense during the three months ended December 31, 2014,

12


 

FORWARD INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 9     LEGAL PROCEEDINGS

     From time to time, the Company may become a party to legal actions or proceedings in the ordinary course of its business. As of December 31, 2015, there were no such actions or proceedings, either individually or in the aggregate, that, if decided adversely to the Company’s interests, the Company believes would be material to its business.

 

 

 

 

 

 

 

13


 

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     The following discussion and analysis should be read in conjunction with our unaudited consolidated financial statements, and the notes thereto, and other financial information appearing elsewhere in this Quarterly Report on Form 10-Q and the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended September 30, 2015. The following discussion and analysis compares our consolidated results of operations for the three months ended December 31, 2015 (the “2016 Quarter”), with those for the three months ended December 31, 2014 (the “2015 Quarter”). All figures in the following discussion are presented on a consolidated basis. All dollar amounts and percentages presented herein have been rounded to approximate values.

Business Overview

     Trends and Economic Environment

     In June 2012, the Company made the strategic decision to focus solely on its core OEM business. Initially, we implemented several key restructuring measures in order to improve our operating performance and return the Company to profitability. These actions included replacing our legacy sourcing and quality assurance infrastructure with a variable lower cost solution through our use of an exclusive Asia-based sourcing agent and reducing our fixed operating expenses, including office closures and headcount reductions. Our financial results, most notably our reduction of overhead and operating expenses, reflect the impact of these restructuring measures.

     With the restructuring behind us, we have turned our focus to protecting the strong competitive position we have built across several key product categories, especially our Diabetic Products line. We have reinvested a portion of the savings generated by the restructuring towards expanding and better incentivizing our sales, design and sales support teams, which we believe has improved our ability to provide proactive and responsive support to our existing customer base. We also believe that these investments are expanding our ability to provide innovative and differentiated solutions to our existing and prospective customers. As an example, the diabetic products sector seems to be undergoing significant changes that, we believe, present us with meaningful opportunities if managed proactively.

     We remain challenged by a highly concentrated customer base and product offering, especially with respect to our Diabetic Products line, where we operate in a price sensitive environment in which we continue to experience volatility in demand and downward pricing pressure from our major Diabetic Products customers. We believe that the investments we are making in our sales and sales support teams increase our ability to expand and diversify our customer base, which we believe is essential to overcoming these challenges and the impact they have on our gross margins.

     In addition to our investments to grow and diversify our business organically, we are beginning an active search process to identify potential acquisition targets that would be complementary to our existing business and allow us to further leverage our operating infrastructure. We anticipate that this search process will be ongoing with the goal of identifying prospective target companies that, if acquired, would be accretive to our organic results.

     We continue to be challenged by rising costs from our China-based supplier base, which causes our gross margins to narrow when we are not able to fully pass cost increases through to customers. Our dedicated Asia-based sourcing agent has made meaningful progress in areas such as quality assurance and overall operational performance during Fiscal 2015, which has better positioned us to negotiate such cost increases with our customers. However, we believe and anticipate that our supplier base may become more concentrated. As a result, our ability to effectively push back against such rising material costs may continue to diminish.

Variability of Revenues and Results of Operation

     Because a high percentage of our sales revenues is highly concentrated in a few large customers, and because the volumes of these customers’ order flows to us are highly variable, with short lead times, our quarterly revenues, and consequently our results of operations, are susceptible to significant variability over a relatively short period of time.

 

 

 

 

14


 

  

Change of Directors and Officers

     On December 30, 2014, the Company held its 2014 Annual Meeting primarily for the purpose of electing either a slate of directors proposed by the then-incumbent Board of Directors or a slate of directors proposed by Terence Bernard Wise, a director and significant shareholder in the Company at the time. At the 2014 Annual Meeting, the Company’s shareholders voted for the election of the slate of directors proposed by Mr. Wise, which resulted in the turnover of a majority of the Company’s directors. Following the 2014 Annual Meeting, (a) our incumbent President and Chief Executive Officer voluntarily resigned and we executed an agreement with him which superseded his employment agreement; (b) the new board appointed an Interim President; and (c) we entered into a settlement agreement and mutual release with the Company’s former Chief Financial Officer. In connection with the incumbent Chief Executive Officer’s departure, we cancelled the month-to-month New York Office Services Agreement at a savings of $12,700 per month and we cancelled the Investment Management Agreement.

     The then-incumbent Board of Directors engaged professional services, including a proxy advisory solicitation service and supplementary legal representation, in order to facilitate the election of and promote its slate of director nominees. Such expenses, which were borne by the Company, significantly increased our 2015 first quarter expenses. In addition, the incumbent team was conducting an accelerated search process to identify attractive acquisition targets and the related financing to fund such acquisitions and the professional services associated with that effort also significantly increased our 2015 first quarter expenses.

Critical Accounting Policies and Estimates

     We discuss the material accounting policies that are critical in making these estimates and judgments in our Annual Report on Form 10-K for the fiscal year ended September 30, 2015, under the caption “Management’s Discussion and Analysis—Critical Accounting Policies and Estimates”. There has been no material change in critical accounting policies or estimates since September 30, 2015.

Recent Accounting Pronouncements

     In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers,” (“ASU 2014-09”). ASU 2014-09 supersedes the revenue recognition requirements in Accounting Standards Codification (“ASC”) 605 -Revenue Recognition and most industry-specific guidance throughout the ASC. The standard requires that an entity recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. ASU 2014-09 was further amended and is effective for annual periods and interim periods within those annual periods beginning after December 15, 2017 and should be applied retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying ASU 2014-09 recognized at the date of initial application. The Company is currently evaluating the impact of the adoption of ASU 2014-09 on its consolidated financial statements.

     In July 2015, the FASB issued ASU 2015-11, "Inventory (Topic 330): Simplifying the Measurement of Inventory," which applies to inventory that is measured using first- in, first-out ("FIFO") or average cost. Under the updated guidance, an entity should measure inventory that is within scope at the lower of cost and net realizable value, which is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. Subsequent measurement is unchanged for inventory that is measured using last-in, last-out ("LIFO"). This ASU is effective for annual and interim periods beginning after December 15, 2016, and should be applied prospectively with early adoption permitted at the beginning of an interim or annual reporting period. The Company is currently evaluating the impact of adopting this guidance.

     In November 2015, the FASB issued ASU 2015-17, "Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes," which applies to the classification of deferred tax assets and liabilities. The update eliminates the requirement to classify deferred tax assets and liabilities as noncurrent or current within a classified statement of financial position. This ASU is effective for annual and interim periods beginning after December 15, 2016, and should be applied prospectively with early adoption permitted at the beginning of an interim or annual reporting period. The Company is currently evaluating the impact of adopting this guidance.

RESULTS OF OPERATIONS FOR THE 2016 QUARTER COMPARED TO THE 2015 QUARTER

Income (loss) from Continuing Operations

     Income from continuing operations in the 2016 Quarter was $244 thousand compared to a loss of $1.7 million in the 2015 Quarter. The 2016 Quarter income is primarily due to a decrease in general and administrative expenses and selling and marketing expenses compared to the expensive costs in the 2015 Quarter associated with litigation costs, settlements with the former CFO and CEO. The reduction in costs was compounded with the savings from a reduction of personnel, offset, in part, by a decline in gross profit driven by a drop in sales volume.

 

15


 

 

  Main Components of Income( loss) from Continuing Operations
  (thousands of dollars)
  2016    2015    
  Quarter    Quarter  

Increase (Decrease)

Net sales  $  7,138    $  7,944     $  (806 ) 
 
Gross profit    1,522      1,562       (40 ) 
Sales and marketing expenses    433      683       (250 ) 
General and administrative expenses    842      2,470       (1,628 ) 
Other expense (income), net    3      110       (107 ) 
Income (loss) from continuing operations  $  244    $  (1,701 )    $  1,945  

 

     Income (loss) from continuing operations attributable to common shareholders per basic and diluted share was $0.03 and $(0.25), respectively, for the 2016 Quarter and 2015 Quarter.

Net Sales

     Net sales in the 2016 Quarter decreased $0.8 million, or 10%, to $7.1 million from $7.9 million in the 2015 Quarter primarily due to lower sales of Diabetic Products and to a lesser extent Other Products. The tables below set forth sales by channel, product line, and geographic location of our customers for the periods indicated:

 

  Net Sales for 2016 Quarter 
  (millions of dollars) 
  APAC    Americas   

EMEA 

  Total* 
Diabetic products  $ 

2.5 

 

$  1.3    $  2.4    $  6.2   

Other products 

  0.2      0.6      0.1     

0.9 

 

Total net sales 

$ 

2.7 

 

$ 

1.9   

$ 

2.5 

 

$ 

7.1 

 

 
  Net Sales for 2015 Quarter 
  (millions of dollars) 
 

APAC 

 

Americas 

 

EMEA 

 

Total* 

Diabetic products 

$ 

2.8 

 

$ 

1.4   

$ 

2.5 

 

$ 

6.7 

 

Other products 

 

0.4 

 

  0.6     

0.2 

 

 

1.2 

 

Total net sales 

$ 

3.2 

 

$ 

2.0   

$ 

2.7 

 

$ 

7.9 

 

*Tables may not total due to rounding.

Diabetic Product Sales

     We design and sell carrying cases for blood glucose diagnostic kits directly to OEMs (or their contract manufacturers). The OEM customer or its contract manufacturer packages our carry cases “in box” as a custom accessory for the OEM’s blood glucose testing and monitoring kits, or to a lesser extent, sells them through its retail distribution channels.

     Sales of Diabetic Products decreased $0.5 million to $6.2 million in the 2016 Quarter, from $6.7 million in the 2015 Quarter. The decrease was primarily due to lower sales of legacy programs with two of our largest Diabetic Products’ customers (Diabetic customers A and C). The decrease was offset, in part, by an increase in sales to the other two major Diabetic Products' customers (Diabetic customers B and D). Sales to our other Diabetic Products’ customers were flat quarter over quarter.

     The following table sets forth our sales by Diabetic Products’ customers for the periods indicated:

 

 

16


 

 
  (millions of dollars) 
    2016      2015      Increase  
    Quarter      Quarter      (Decrease)  
Diabetic Customer A  $ 

2.4 

 

$ 

2.7 

 

$  (0.3 ) 
Diabetic Customer B   

0.9 

 

 

0.8 

 

  0.1  
Diabetic Customer C   

1.5 

 

 

2.0 

 

  (0.5 ) 
Diabetic Customer D   

1.4 

 

 

1.2 

 

  0.2  
All other Diabetic Customers   

0.0 

 

 

0.0 

 

  0.0  

Totals* 

$ 

6.2   

$ 

6.7 

 

$ 

(0.5 ) 

 

*Tables may not total due to rounding.

     Sales of Diabetic Products represented 87% of our total net sales in the 2016 Quarter compared to 85% of our total net sales in the 2015 Quarter.

Other Product Sales

     We design and sell cases and protective solutions to OEMs for a diverse array of portable electronic devices (such as bar code scanners, GPS devices, cellular phones, tablets and cameras), as well as a variety of other products (such as sporting and recreational products and firearms) on a made-to-order basis that are customized to fit the products sold by our OEM customers.

     Sales of Other Products decreased approximately $0.3 million to $0.9 million in the 2016 Quarter from approximately $1.2 million in the 2015 Quarter. The decrease was primarily due to a drop in sales to two customers, a recreational products customer accounted for $0.2 million and a camera customer accounted for another $0.1 million and a collection of other customers who accounted for an aggregate drop in sales of $0.1 million, offset, in part, by an increase of $0.1 million in sales to a barcode scanner customer. Lesser fluctuations in several other customer accounts between 2016 Quarter and 2015 Quarter were not individually material.

     Sales of Other Products represented 13% of our net sales in the 2016 Quarter compared to 15% of our total net sales in the 2015 Quarter.

Gross Profit

      The gross profit decrease of approximately $40 thousand was driven primarily by a year over year decline in sales volumes. As a percentage of sales, our gross profit increased to 21% in the 2016 Quarter, compared to 20% in the 2015 Quarter.

Sales and Marketing Expenses

     Sales and marketing expenses decreased $249 thousand, or 37%, to $433 thousand in the 2016 Quarter compared to $682 thousand in the 2015 Quarter, primarily due to reduced personnel expenses as a result of the headcount reduction. A more cost conscious approach to travel & entertainment spending also provided for savings to a lesser extent. Fluctuations in other components of “Sales and Marketing Expenses” were not material individually or in the aggregate.

General and Administrative Expenses

     General and administrative expenses decreased $1.6 million, or 66%, to $842 thousand in the 2016 Quarter from $2.5 million in the 2015 Quarter, due primarily to the following:

  • $1.0 million decrease in legal fees and professional fees related to the FY 2015 proxy contest; and
  • $0.6 million decrease in personnel expenses related to the FY 2015 accrual for the former CFO settlement.

     Fluctuations in other components of “General and Administrative Expenses” were not individually material.

Other Expense

     Other expense, net, consisting of realized and unrealized losses on investments in marketable securities and foreign exchange losses, was $3 thousand in the 2016 Quarter compared to $110 thousand in the 2015 Quarter.

 

 

17


 

 

 

     For the three months ended December 31, 2015, no current book tax provision was recorded against book net income due to the existence of significant net operating loss carryforwards.  The Company's deferred tax provision is completely offset by a full valuation allowance.

RESULTS OF DISCONTINUED OPERATIONS FOR THE 2016 QUARTER COMPARED TO THE 2015 QUARTER

     Income from discontinued operations was $0 in the 2016 Quarter compared to income of $199 thousand in the 2015 Quarter. In the 2015 Quarter, we assigned our rights to a judgment against G-Form for a cash payment of $0.2 million.

LIQUIDITY AND CAPITAL RESOURCES

     Our primary sources of liquidity are our operations and financing activities. The primary demand on our working capital will be: i) operating losses, should they occur, and ii) accounts receivable and inventories arising in the ordinary course of business. Historically, our sources of liquidity have been adequate to satisfy working capital requirements arising in the ordinary course of business. We anticipate that our liquidity and financial resources for the next twelve months will be adequate to manage our operating and financial requirements.

     At December 31, 2015, our current ratio (current assets divided by current liabilities) was 2.4; our quick ratio (current assets less inventories divided by current liabilities) was 1.9; and our working capital (current assets less current liabilities) was $7.6 million. As of such date, we had no short or long-term debt outstanding.

     We do not anticipate the need to purchase additional material capital assets in order to carry out our business.

     During the three months ended December 31, 2015 and 2014, our sources and use of cash were as follows:

Cash Flows from Operating Activities

     During the 2016 Quarter, we used $0.7 million of cash from operations, which is derived from a net cash used in working capital items of $1.0 million, offset by a net income of $0.2 million, plus $0.1 million for non-cash credits. Cash used for working capital items consisted primarily of an increase in accounts receivable of $1.1 million and an increase of accrued expenses, prepaid expenses, and inventories of $0.1 million, in the aggregate, partially offset by an increase in accounts payable (including due to Forward China) and accrued expenses of $0.2 million.

     During the 2015 Quarter, we used $2.4 million of cash from operations, which is derived from a net loss of $1.5 million, adjusted by $0.1 million for non-cash items (primarily realized and unrealized losses on marketable securities), and net cash used in working capital items of $1.0 million. As to working capital items, cash used in operating activities consisted primarily of a decrease in accounts payable, accrued expenses and other current liabilities (including due to Forward China) and accrued expenses of $0.2 million.

Cash Flows from Investing Activities

     In the 2016 Quarter, net cash used in investing activities was $44 thousand, which was used for the purchase of property and equipment.

     In the 2015 Quarter, net cash provided by investing activities was $0.9 million, which was primarily from the sale of marketable equity securities.

Cash Flows from Financing Activities

     In the 2016 Quarter, there was approximately $2,000 used to repurchase restricted stock.

     In the 2015 Quarter, net financing activities used $19 thousand to pay dividends on the 6% Senior Convertible Preferred Stock and used $12 thousand to purchase and retire restricted stock from employees.

Related Party Transactions

     For information on related party transactions and their financial impact, see Note 8 to the Condensed Consolidated Financial Statements contained herein.

18


 

    

Cautionary statement for purposes of the “Safe Harbor” provisions of the Private Securities Litigation Reform Act of 1995

     This report contains “forward-looking statements”, as such term is used within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding our liquidity and working capital. Forward-looking statements can be identified by words such as “anticipates,” “intends,” “plans,” “seeks,” “believes,” “estimates,” “expects” and similar references to future periods. Forward-looking statements are based on our current expectations and assumptions regarding our business, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. Our actual results may differ materially from those contemplated by the forward-looking statements. We caution you therefore against relying on any of these forward-looking statements. They are neither statements of historical fact nor guarantees or assurances of future performance. Important factors that could cause actual results to differ materially from those in the forward-looking statements include the failure to receive material orders and pricing pressures. Further information on our risk factors is contained in our filings with the SEC, including our Form 10-K for the year ended September 30, 2015. Any forward-looking statement made by us speaks only as of the date on which it is made. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.

 

 

 

19


 

ITEM 3.     QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable

ITEM 4.     CONTROLS AND PROCEDURES

     Evaluation of Disclosure Controls and Procedures. Our management carried out an evaluation, with the participation of our Principal Executive Officer and Principal Financial Officer, required by Rule 13a-15 and Rule 15d-15 of the Securities Exchange Act of 1934 (the “Exchange Act”) of the effectiveness of our disclosure controls and procedures as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Exchange Act. Based on their evaluation, our management has concluded that our disclosure controls and procedures are effective as of the end of the period covered by this report to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and is accumulated and communicated to our management, including our Principal Executive Officer and Principal Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

     Changes in Internal Control Over Financial Reporting. There were no changes in our internal control over financial reporting as defined in Rule 13a-15(f) and Rule 15d-15(f) under the Exchange Act that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

     Limitations of the Effectiveness of Controls and Procedures. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Because of the inherent limitations of any control system, no evaluation of controls can provide absolute assurance that all control issues, if any, within a company have been detected.

 

 

 

 

 

20


 

PART II.     OTHER INFORMATION

ITEM 1.      LEGAL PROCEEDINGS

     From time to time, the Company may become a party to legal actions or proceedings in the ordinary course of its business. As of December 31, 2015, there were no such actions or proceedings, either individually or in the aggregate, that, if decided adversely to the Company’s interests, the Company believes would be material to its business.

ITEM 1A.     RISK FACTORS

Not applicable to smaller reporting companies. 

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

Unregistered sales of equity securities

None.

Purchases of equity securities

None.  

ITEM 3.      DEFAULTS UPON SENIOR SECURITIES 

None. 

ITEM 4.      MINE SAFETY DISCLOSURES 

Not Applicable. 

ITEM 5.      OTHER INFORMATION 

None. 

ITEM 6.      EXHIBITS 

 

The exhibits listed in the accompanying “Index to Exhibits” are filed or incorporated by reference as part of this Form 10-Q.

21


 

Signatures

     Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.

Dated: February 9, 2016

FORWARD INDUSTRIES, INC.
(Registrant)

By: /s/ Terence Wise
Terence Wise
Chief Executive Officer
(Principal Executive Officer)

By: /s/ Michael Matte
Michael Matte
Chief Financial Officer
(Principal Financial and Accounting Officer)

 

 

 

 

 

22


 

INDEX TO EXHIBITS
 
                  Filed or 
        Incorporated by Reference   Furnished 
  No.   Exhibit Description  Form   Date  Number   Herewith 
 
  3.1   Restated Certificate of Incorporation  10 -K  12/8/10  3 (i)   
  3.2   Certificate of Amendment to the Certificate of  8 -K  4/26/13  3.1    
      Incorporation, April 26, 2013             
  3.3   Certificate of Amendment to the Certificate of  8 -K  7/3/13  3.1    
      Incorporation, June 28, 2013             
  3.4   Third Amended and Restated Bylaws, as of May 28, 2014  10 -K  12/10/14  3 (ii)   
  4.1   Rights Agreement, dated as of April 26, 2013  8 -K  4/26/13  4.1    
  10.1   Buying Agency and Supply Agreement with Forward  10 -K  12/16/15  10.7    
      Industries (Asia-Pacific), Corporation, dated as of             
      September 9, 2015             
  31.1   Certification of Principal Executive Officer (Section 302)            Filed 
  31.2   Certification of Principal Financial Officer (Section 302)            Filed 
  32.1   Certification of Principal Executive Officer and Principal            Furnished* 
      Financial Officer (Section 906)             
  101 INS  XBRL Instance Document            Filed 
  101 SCH  XBRL Taxonomy Extension Schema            Filed 
  101 CAL  XBRL Taxonomy Extension Calculation Linkbase            Filed 
  101 LAB  XBRL Taxonomy Extension Label Linkbase            Filed 
  101 PRE  XBRL Taxonomy Extension Presentation Linkbase            Filed 
  101 DEF  XBRL Taxonomy Extension Definition Linkbase            Filed 
  ——————             

 

*      This exhibit is being furnished rather than filed and shall not be deemed incorporated by reference into any filing, in accordance with Item 601 of Regulation S-K.

     Copies of this report (including the financial statements) and any of the exhibits referred to above will be furnished at no cost to our stockholders who make a written request to Forward Industries, Inc., 477 S. Rosemary Ave. Ste. 219, West Palm Beach, Florida 33401, Attention: Corporate Secretary.

23

EX-31 2 e31-1.htm -Certifications -Prepared by EDGARX.com

 

 

 

Exhibit 31.1

 

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

 

I, Terence Wise, certify that:

 

 

1.

I have reviewed this quarterly report on Form 10-Q of Forward Industries, Inc.;

 

 

 

2. 

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

 

 

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

 

 

 4.

The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

 

 

 

a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

 

 

 

 b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

 

 

 

 c)

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

 

 

 

d) 

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

 

 

5.

The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

 

 

 

a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

 

 

 

b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

 

 

Date: February 9, 2016

 

/s/ Terence Wise

Terence Wise

Chief Executive Officer

(Principal Executive Officer)

 

 

EX-31 3 e31-2.htm Exhibit 31.2

 

Exhibit 31.2

 

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

 

I, Michael Matte, certify that:

 

       

1.

I have reviewed this quarterly report on Form 10-Q of Forward Industries, Inc.;

 

 

 

2. 

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

 

 

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

 

 

 4.

The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

 

 

 

a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

 

 

 

 b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

 

 

 

 c)

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

 

 

 

d) 

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

 

 

5.

The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

 

 

 

a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

 

 

 

b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

 

 

Date: February 9, 2016

 

/s/ Michael Matte

Michael Matte

Chief Financial Officer

(Principal Financial Officer)

 

EX-32 4 e32.htm E-32

 

Exhibit 32.1

 

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

 

 

In connection with the quarterly report of Forward Industries, Inc. (the “Company”) on Form 10-Q for the three months ended December 31, 2015, as filed with the Securities and Exchange Commission on the date hereof, I, Terence Wise, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

  1. The quarterly report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and
     

  2. The information contained in the quarterly report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

 

/s/ Terence Wise

Terence Wise

Chief Executive Officer

(Principal Executive Officer)

Dated: February 9, 2016

 

 

 

 

 

 

In connection with the quarterly report of Forward Industries, Inc. (the “Company”) on Form 10-Q for the three months ended December 31, 2015, as filed with the Securities and Exchange Commission on the date hereof, I, Michael Matte, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

  1. The quarterly report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and
     

  2. The information contained in the quarterly report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

/s/ Michael Matte

Michael Matte

Chief Financial Officer

(Principal Financial Officer)

Dated: February 9, 2016

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Common stock, par value $0.01 per share; 40,000,000 shares authorized; 8,658,179 and 8,641,755 shares issued; 8,658,179 and 8,641,755 shares outstanding; at December 31, 2015 and September 30, 2015, respectively Additional paid-in capital Accumulated deficit Accumulated other comprehensive loss Total shareholders' equity Total liabilities and shareholders' equity Common stock, par or stated value per share (in dollars per share) Common stock, shares authorized (in shares) Common stock, shares issued (in shares) Common stock, shares outstanding (in shares) Income Statement [Abstract] Net sales Cost of goods sold Gross profit Operating expenses: Sales and marketing General and administrative Total operating expenses Income (loss) from operations Other (income) expense: Interest income Loss on marketable securities, net Other (income) expense, net Total other (income) expense, net Income (loss) from continuing operations Income from discontinued operations, net Net income (loss) Preferred stock dividends and accretion Net income (loss) applicable to common equity Net income (loss) Other comprehensive loss: Translation adjustments Comprehensive income (loss) Net income (loss) per basic common share: Income (loss) from continuing operations Income (loss) from discontinued operations Net income (loss) per basic common share Net income (loss) per diluted common share: Income (loss) from continuing operations Income (loss) from discontinued operations Net income (loss) per diluted common share Weighted average number of common and common equivalent shares outstanding: Basic Diluted Statement of Cash Flows [Abstract] Cash Flows From Operating Activities: Adjustments to reconcile net income (loss) to net cash used in operating activities: Realized and unrealized loss on marketable securities Share-based compensation Depreciation and amortization Deferred rent Changes in operating assets and liabilities: Accounts receivable Inventories Prepaid expenses and other current assets Accounts payable, due to Forward China, accrued expenses and other current liabilities Accrued expenses and other current liabilities Net cash used in operating activities Cash Flows From Investing Activities: Proceeds from sales of marketable securities Purchases of marketable securities Purchases of property and equipment Net cash (used in) provided by investing activities Cash Flows From Financing Activities: Dividends paid Restricted stock repurchased and retired Net cash used in financing activities Net decrease in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period Supplemental Disclosure of Cash Flow Information: Supplemental disclosure of non-cash investing and financing activities: Preferred stock accretion Reclassification of warrant liability, net Organization, Consolidation and Presentation of Financial Statements [Abstract] OVERVIEW Accounting Policies [Abstract] ACCOUNTING POLICIES Discontinued Operations and Disposal Groups [Abstract] DISCONTINUED OPERATIONS Stockholders' Equity Note [Abstract] SHAREHOLDERS' EQUITY Disclosure of Compensation Related Costs, Share-based Payments [Abstract] SHARE-BASED COMPENSATION Earnings Per Share [Abstract] INCOME (LOSS) PER SHARE Commitments and Contingencies Disclosure [Abstract] COMMITMENTS AND CONTINGENCIES Related Party Transactions [Abstract] RELATED PARTY TRANSACTIONS Legal Matters and Contingencies [Abstract] LEGAL PROCEEDINGS Accounting Estimates Basis of Presentation Income Taxes Revenue Recognition Share-Based Payment Expense Recent Accounting Pronouncements Schedule of summarized operating results of discontinued operations Schedule of changes in shareholders' equity Schedule of stock option activity Schedule of additional information regarding stock option awards Schedule Of summarizes restricted stock activity Schedule of calculated potential diluted earnings per share Schedule of securities are excluded from the calculation of weighted average dilutive common shares Net sales Gross loss Operating (expenses) Other income Disposal Groups, Including Discontinued Operations [Table] Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] Accounts Receivable Other income Statement [Table] Statement [Line Items] Balance Balance, Shares Restricted stock award issuances Restricted stock award issuances, Shares Restricted stock repurchased and retired Restricted stock repurchased and retired, Shares Share-based compensation Foreign currency translation Net loss Balance Balance, Shares Temporary Equity, by Class of Stock [Table] Temporary Equity [Line Items] Class of Stock [Axis] Dividends, Preferred Stock Preferred Stock, Dividend Rate, Percentage Dividends Preferred Stock Including Accretion Payment for redemption of outstanding shares of Convertible Preferred Stock Stock Repurchase Program, Number of Shares Authorized to be Repurchased Stock Repurchased During Period, Shares Stock Repurchased During Period, Value Stock Repurchased and Retired During Period, Shares Stock Repurchased and Retired During Period, Value Schedule of Share-based Compensation Arrangements by Share-based Payment Award [Table] Share-based Compensation Arrangement by Share-based Payment Award [Line Items] Number of Options Shares, Outstanding at Beginning Shares, Granted Shares, Exercised Shares, Forfeited Shares, Outstanding at Ending Shares, Exercisable Weighted Average Exercise Price Weighted average exercise price, Outstanding at Beginning Weighted average exercise price, Granted Weighted average exercise price, Exercised Weighted average exercise price, Forfeited Weighted average exercise price, Outstanding at Ending Weighted average exercise price, Exercisable Weighted Average Remaining life In Years Weighted average remaining contractual term (Years), Outstanding Weighted average remaining contractual term (Years), Exercisable Intrinsic Value Intrinsic value, Outstanding Intrinsic value, Exercisable Exercise price lower limit Exercise price upper limit Options Outstanding, Weighted average exercise price Options Outstanding, Outstanding Number of Options Options Exercisable, Weighted average exercise price Options Exercisable, Weighted Average Remaining Life In Years Options Exercisable, Exercisable Number of Options Number of Shares Shares, Non-vested balance Shares granted Shares vested Shares forfeited Shares, Non-vested balance Weighted Average Grant Date Fair Value Weighted average grant date fair value, Non-vested balance Weighted average grant date fair value, granted Weighted average grant date fair value, vested Weighted average grant date fair value, forfeited Weighted average grant date fair value, Non-vested balance Total Grant Date Fair Value Total grant date fair value, Non-vested balance Total grant date fair value, granted Total grant date fair value, vested Total grant date fair value, forfeited Total grant date fair value, Non-vested balance Shares Granted Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested, Number of Shares Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested in Period, Fair Value Allocated Share-based Compensation Expense Unrecognized compensation expense Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period Numerator: Net income (loss) from continuing operations applicable to common equity (numerator for basic and diluted earnings per share) Weighted average shares outstanding (denominator for basic earnings per share) Effective of dilutive securities Assumed exercise of stock options, treasury stock method Assumed exercise of warrants, treasury stock method Assumed vesting of restricted stock, treasury stock method Dilutive potential common shares Denominator for diluted earnings per share - weighted average shares and assumed potential common shares Basic earnings (loss) from continuing operations per share Diluted earnings (loss) from continuing operations per share Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share [Table] Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] Total potentially dilutive shares Remaining obligation Cash payment lieu of salary Number of shares vested immediately Paid litigation settlement Schedule of Related Party Transactions, by Related Party [Table] Related Party Transaction [Line Items] Operating Leases, Rent Expense, Net Operating Leases, Rent Expense, Contingent Rentals Service Fees Paid Expenses Related Parties Adjusted groos profit percentage Payments to Acquire Marketable Securities, Total Proceeds from Sale and Maturity of Marketable Securities, Total Marketable Securities, Realized Gain (Loss), Total Carrying value as of the balance sheet date of obligations incurred and payable, pertaining to costs that are statutory in nature, are incurred on contractual obligations, or accumulate over time and for which invoices have not yet been received or will not be rendered. Examples include taxes, interest, rent and utilities and other current liabilities which is not separately disclose in the taxonomy. Represents the information associated with types of agreements. Americas region member. Apac member. Buying agency and supply agreement member. Customer b member. Customer c member. Customer d member. Customer member. Emea region member. Represents a share-based compensation arrangement wherein grants of restricted common stock and stock options to officers, employees, and non-employee directors. Exercise price four member. Exercise price one member. Exercise price three member. Exercise price two member. Refers to former highest ranking executive officer. Former Chief Financial Officer [Member] This element represents information of furniture fixtures and equipment. Refers to a legal entity. Represents the information about investment management agreement. Represents the LaGrange Capital Administration, L.L.C. ("LCA"). New york office member. Nonvested restricted stock member. Other country member. Other customer c member. The cash outflow to reacquire and retired of restricted stock during the reporting period. The amount of accretion of the preferred stock redemption discount during the period. Reclassification of warrant liability. Region axis. Shares that an entity has not yet issued because the agreed-upon consideration, such as employee services, has not yet been received and Contract that gives the holder the right, but not the obligation, either to purchase or to sell a certain number of shares of stock at a predetermined price for a specified period of time. Series participating preferred stock member. Represents a share-based compensation arrangement wherein incentive options granted to officers, employees, and non-employee directors. Supplier b member. Supplier c member. Supplier d member. Supplier e member. Supplier member. Supplier saxis. Two thousand eleven long term incentive plan member. Two zero zero seven plan member. Represents the amount of paid and unpaid preferred stock dividends declared with the form of settlement in cash, stock and payment-in-kind (PIK), including accretion. A roll forward is a reconciliation of a concept from the beginning of a period to the end of a period. Fair value of options outstanding. Excludes equity instruments other than options, for example, but not limited to, share units, stock appreciation rights, restricted stock. Fair value of options granted. Excludes equity instruments other than options, for example, but not limited to, share units, stock appreciation rights, restricted stock. Fair value of options forfeited. Excludes equity instruments other than options, for example, but not limited to, share units, stock appreciation rights, restricted stock. Assumed exercise of stock options treasury stock method. Assumed exercise of warrants treasury stock method. Assumed vesting of restricted stock treasury stock method. It represents as a cash payment in lieu of shares of restricted stock. Represents the different types of agreements. Adjusted groos profit percentage. 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Document And Entity Information - shares
3 Months Ended
Dec. 31, 2015
Feb. 08, 2016
Document And Entity Information [Abstract]    
Document Type 10-Q  
Amendment Flag false  
Document Period End Date Dec. 31, 2015  
Document Fiscal Year Focus 2016  
Document Fiscal Period Focus Q1  
Entity Registrant Name FORWARD INDUSTRIES INC  
Entity Central Index Key 0000038264  
Current Fiscal Year End Date --09-30  
Entity Filer Category Smaller Reporting Company  
Trading Symbol FORD  
Entity Common Stock, Shares Outstanding   8,658,179
Entity Well-known Seasoned Issuer No  
Entity Voluntary Filers No  
Entity Current Reporting Status Yes  
XML 12 R2.htm IDEA: XBRL DOCUMENT v3.3.1.900
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) - USD ($)
Dec. 31, 2015
Sep. 30, 2015
Current assets:    
Cash and cash equivalents $ 3,324,565 $ 4,042,124
Accounts receivable 6,523,579 5,454,129
Inventories 2,884,299 2,866,464
Prepaid expenses and other current assets 377,036 296,012
Total current assets 13,109,479 12,658,729
Property and equipment, net 109,492 78,733
Other assets 40,962 40,962
Total Assets 13,259,933 12,778,424
Current liabilities:    
Accounts payable 280,049 122,803
Due to Forward China 4,285,854 4,168,021
Accrued expenses and other current liabilities 925,974 1,039,085
Total current liabilities 5,491,877 5,329,909
Other liabilities 111,173 115,202
Total Liabilities $ 5,603,050 $ 5,445,111
Commitments and contingencies
Shareholders' equity:    
Common stock, par value $0.01 per share; 40,000,000 shares authorized; 8,658,179 and 8,641,755 shares issued; 8,658,179 and 8,641,755 shares outstanding; at December 31, 2015 and September 30, 2015, respectively $ 86,582 $ 86,418
Additional paid-in capital 17,629,809 17,550,047
Accumulated deficit (10,037,287) (10,281,367)
Accumulated other comprehensive loss (22,221) (21,785)
Total shareholders' equity 7,656,883 7,333,313
Total liabilities and shareholders' equity $ 13,259,933 $ 12,778,424
XML 13 R3.htm IDEA: XBRL DOCUMENT v3.3.1.900
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Parenthetical) - $ / shares
Dec. 31, 2015
Sep. 30, 2015
Statement of Financial Position [Abstract]    
Common stock, par or stated value per share (in dollars per share) $ 0.01 $ 0.01
Common stock, shares authorized (in shares) 40,000,000 40,000,000
Common stock, shares issued (in shares) 8,658,179 8,641,755
Common stock, shares outstanding (in shares) 8,658,179 8,641,755
XML 14 R4.htm IDEA: XBRL DOCUMENT v3.3.1.900
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (UNAUDITED) - USD ($)
3 Months Ended
Dec. 31, 2015
Dec. 31, 2014
Income Statement [Abstract]    
Net sales $ 7,137,883 $ 7,943,860
Cost of goods sold 5,615,518 6,381,439
Gross profit 1,522,365 1,562,421
Operating expenses:    
Sales and marketing 432,888 682,457
General and administrative 841,666 2,470,424
Total operating expenses 1,274,554 3,152,881
Income (loss) from operations $ 247,811 (1,590,460)
Other (income) expense:    
Interest income (3,015)
Loss on marketable securities, net 110,001
Other (income) expense, net $ 3,731 3,308
Total other (income) expense, net 3,731 110,294
Income (loss) from continuing operations $ 244,080 (1,700,754)
Income from discontinued operations, net 198,963
Net income (loss) $ 244,080 (1,501,791)
Preferred stock dividends and accretion (473,694)
Net income (loss) applicable to common equity $ 244,080 (1,975,485)
Net income (loss) 244,080 (1,501,791)
Other comprehensive loss:    
Translation adjustments (436) (867)
Comprehensive income (loss) $ 243,644 $ (1,502,658)
Net income (loss) per basic common share:    
Income (loss) from continuing operations $ 0.03 $ (0.25)
Income (loss) from discontinued operations 0 0.02
Net income (loss) per basic common share 0.03 (0.23)
Net income (loss) per diluted common share:    
Income (loss) from continuing operations 0.03 (0.25)
Income (loss) from discontinued operations 0 0.02
Net income (loss) per diluted common share $ 0.03 $ (0.23)
Weighted average number of common and common equivalent shares outstanding:    
Basic 8,387,501 8,443,391
Diluted 8,621,524 8,443,391
XML 15 R5.htm IDEA: XBRL DOCUMENT v3.3.1.900
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($)
3 Months Ended
Dec. 31, 2015
Dec. 31, 2014
Cash Flows From Operating Activities:    
Net income (loss) $ 244,080 $ (1,501,791)
Adjustments to reconcile net income (loss) to net cash used in operating activities:    
Realized and unrealized loss on marketable securities 110,001
Share-based compensation $ 81,593 11,579
Depreciation and amortization 13,085 16,963
Deferred rent (4,029) 11,305
Changes in operating assets and liabilities:    
Accounts receivable (1,069,450) (29,378)
Inventories (17,835) (220,213)
Prepaid expenses and other current assets (81,024) (43,568)
Accounts payable, due to Forward China, accrued expenses and other current liabilities 161,532 (735,960)
Net cash used in operating activities $ (672,048) (2,381,062)
Cash Flows From Investing Activities:    
Proceeds from sales of marketable securities 952,127
Purchases of marketable securities (10,898)
Purchases of property and equipment $ (43,844) (23,206)
Net cash (used in) provided by investing activities $ (43,844) 918,023
Cash Flows From Financing Activities:    
Dividends paid (19,322)
Restricted stock repurchased and retired $ (1,667) (12,199)
Net cash used in financing activities (1,667) (31,521)
Net decrease in cash and cash equivalents (717,559) (1,494,560)
Cash and cash equivalents at beginning of period 4,042,124 6,477,132
Cash and cash equivalents at end of period $ 3,324,565 4,982,572
Supplemental disclosure of non-cash investing and financing activities:    
Preferred stock accretion 454,372
Reclassification of warrant liability, net $ 1,260,057
XML 16 R6.htm IDEA: XBRL DOCUMENT v3.3.1.900
OVERVIEW
3 Months Ended
Dec. 31, 2015
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
OVERVIEW

NOTE 1     OVERVIEW

 

Forward Industries, Inc. (“Forward” or the “Company”) was incorporated under the laws of the State of New York and began operations in 1961 as a manufacturer and distributor of specialty and promotional products. The Company designs, markets, and distributes carry and protective solutions, primarily for hand held electronic devices. The Company’s principal customer market is original equipment manufacturers, or “OEMs” (or the contract manufacturing firms of these OEM customers), that either package their products as accessories “in box” together with their branded product offerings, or sell them through their retail distribution channels. The Company’s OEM products include carrying cases and other accessories for medical monitoring and diagnostic kits and a variety of other portable electronic and non-electronic products (such as sporting & recreational products, bar code scanners, smartphones, GPS location devices, tablets, and firearms). The Company’s OEM customers are located in the Americas, the EMEA Region, and the APAC Region. The Company does not manufacture any of its OEM products and sources substantially all of its OEM products from independent suppliers in China (refer to Note 8 – Buying Agency and Supply Agreement).

 

On June 21, 2012, the Company determined to exit its global retail business and focus solely on growing its OEM business. The decision to eliminate the Retail division was primarily driven by the longer than estimated path to bring it to profitability and the strong top line growth and cost rationalizations in the OEM business. The Retail business is presented as discontinued operations.

 

In the opinion of management, the accompanying condensed consolidated financial statements presented in this Quarterly Report on Form 10-Q reflect all normal recurring adjustments necessary to present fairly the financial position and results of operations and cash flows for the interim periods presented herein, but are not necessarily indicative of the results of operations for the year ending September 30, 2016. These condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements included in its Annual Report on Form 10-K for the fiscal year ended September 30, 2015, and with the disclosures and risk factors presented herein and therein, respectively. The September 30, 2015 condensed consolidated balance sheet has been derived from the audited consolidated financial statements.

XML 17 R7.htm IDEA: XBRL DOCUMENT v3.3.1.900
ACCOUNTING POLICIES
3 Months Ended
Dec. 31, 2015
Accounting Policies [Abstract]  
ACCOUNTING POLICIES

NOTE 2     ACCOUNTING POLICIES

 

Accounting Estimates

 

The preparation of the Company’s condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates and assumptions.

 

Basis of Presentation

 

The accompanying condensed consolidated financial statements include the accounts of Forward Industries, Inc. and its wholly owned subsidiaries (Forward US, Forward Switzerland, Forward HK (inactive) and Forward UK (inactive)). All significant intercompany transactions and balances have been eliminated in consolidation.

 

Income Taxes

 

The Company accounts for its income taxes in accordance with U.S. GAAP, which requires, among other things, recognition of future tax benefits and liabilities measured at enacted rates attributable to temporary differences between financial statement and income tax bases of assets and liabilities and to net tax operating loss carry-forwards to the extent that realization of these benefits is more likely than not. As of December 31, 2015, there was no change to our assessment that a full valuation allowance was required against all net deferred tax assets. Accordingly, any deferred tax provision or benefit was offset by an equal and opposite change to the valuation allowance. No current book tax provision was recorded against book net income due to the existence of significant net operating loss carryforwards.

 

Revenue Recognition

 

The Company generally recognizes revenue from product sales to its customers when: (1) title and risk of loss are transferred (in general, these conditions occur at either point of shipment or point of destination, depending on the terms of sale); (2) persuasive evidence of an arrangement exists; (3) the Company has no continuing obligations to the customer; and (4) collection of the related accounts receivable is reasonably assured.

 

Share-Based Payment Expense

 

The Company recognizes employee and director share-based compensation in its condensed consolidated statements of operations and comprehensive income (loss) at the grant-date fair value of stock options and other equity-based compensation. The determination of stock option grant-date fair value is estimated using the Black-Scholes option-pricing model, which includes variables such as the expected volatility of the Company’s share price, the exercise behavior of its grantees, interest rates, and dividend yields. These variables are projected based on the Company’s historical data, experience, and other factors. In the case of awards with multiple vesting periods, the Company has elected to use the graded vesting attribution method, which recognizes compensation cost on a straight-line basis over each separately vesting portion of the award as if the award was, in-substance, multiple awards. Refer to Note 5 - Share-Based Compensation. In addition, the Company recognizes share-based compensation to non-employees based upon the fair value, using the Black-Scholes option pricing model, determined at the deemed measurement dates over the related contract service period.

 

Recent Accounting Pronouncements

 

In May 2014, the Financial Accounting Standards Board (“FASB”) issued ASU 2014-09, “Revenue from Contracts with Customers,” (“ASU 2014-09”). ASU 2014-09 supersedes the revenue recognition requirements in Accounting Standards Codification (“ASC”) 605 -Revenue Recognition and most industry-specific guidance throughout the ASC. The standard requires that an entity recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. ASU 2014-09 was further amended and is effective for annual periods and interim periods within those annual periods beginning after December 15, 2017 and should be applied retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying ASU 2014-09 recognized at the date of initial application. The Company is currently evaluating the impact of the adoption of ASU 2014-09 on its consolidated financial statements.

 

In July 2015, the FASB issued ASU 2015-11, "Inventory (Topic 330): Simplifying the Measurement of Inventory," which applies to inventory that is measured using first- in, first-out ("FIFO") or average cost. Under the updated guidance, an entity should measure inventory that is within scope at the lower of cost and net realizable value, which is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. Subsequent measurement is unchanged for inventory that is measured using last-in, last-out ("LIFO"). This ASU is effective for annual and interim periods beginning after December 15, 2016, and should be applied prospectively with early adoption permitted at the beginning of an interim or annual reporting period. The Company is currently evaluating the impact of adopting this guidance.

 

In November 2015, the FASB issued ASU 2015-17, "Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes," which applies to the classification of deferred tax assets and liabilities. The update eliminates the requirement to classify deferred tax assets and liabilities as noncurrent or current within a classified statement of financial position. This ASU is effective for annual and interim periods beginning after December 15, 2016, and should be applied prospectively with early adoption permitted at the beginning of an interim or annual reporting period. The Company is currently evaluating the impact of adopting this guidance.

XML 18 R8.htm IDEA: XBRL DOCUMENT v3.3.1.900
DISCONTINUED OPERATIONS
3 Months Ended
Dec. 31, 2015
Discontinued Operations and Disposal Groups [Abstract]  
DISCONTINUED OPERATIONS

NOTE 3     DISCONTINUED OPERATIONS

 

On June 21, 2012, the Company determined to exit its global retail business and focus solely on growing its OEM business. The decision to eliminate the Retail division was primarily driven by the longer than estimated path to bring it to profitability and the strong net sales growth and cost rationalizations in the OEM business. Accordingly, the results of operations for the Retail division have been recorded as discontinued operations in the accompanying condensed consolidated financial statements for the periods presented. The Company has completed its exit of its Retail business. Summarized operating results of discontinued operations are presented in the following table:

 

  For the Three Months Ended
  December 31,
  2015    2014
Net sales    -  
Gross loss        -  
Operating (expenses)        (1,082
Other income        200,045  
Income from discontinued operations, net    198,963  

 

The Company had $280,000 of accounts receivable relating to overdue payments pursuant to a Settlement Agreement and General Release (“Settlement Agreement”) executed on July 3, 2013 between the Company and G-Form LLC (“G-Form”) in exchange for certain retail inventories, the Company’s cooperation with certain administrative matters, and a mutual general release. Due to the age of the accounts receivable and G-Form’s non-responsiveness to the Company’s communication related to the matter, the Company established a full reserve for this receivable as of September 30, 2014. In December 2014, the Company recovered $200,000 from a third party, which was recognized as other income during the three months ended December 31, 2014. There was no activity in discontinued operations for the three months ended December 31, 2015.

XML 19 R9.htm IDEA: XBRL DOCUMENT v3.3.1.900
SHAREHOLDERS' EQUITY
3 Months Ended
Dec. 31, 2015
Stockholders' Equity Note [Abstract]  
SHAREHOLDERS' EQUITY

NOTE 4     SHAREHOLDERS’ EQUITY

 

6% Senior Convertible Preferred Stock

 

As of the 6% Senior Convertible Preferred Stock issuance date, the carrying amount was less than the redemption value. As a result of the Company’s determination that redemption was probable, the carrying value was being increased by periodic accretions so that the carrying value would equal the redemption amount at the earliest redemption date. Such accretion is recorded as a preferred stock dividend.

 

Dividends on the 6% Senior Convertible Preferred Stock totaled approximately $0 and $19,000 for the three months ended December 31, 2015 and 2014, respectively. These dividends, in addition to the accretion, totaled approximately $0 and $474,000 for the three months ended December 31, 2015 and 2014, respectively. At the December 30, 2014 Annual Meeting, the shareholder vote resulted in the turnover of a majority of the Board members, which represented a Change of Control pursuant to the terms of the Convertible Preferred Stock. On December 31, 2014, the Company determined to recognize the balance of the accretion and bring the Convertible Preferred Stock carrying value up to its redemption value due to the likelihood of the holders requesting redemption. On January 9, 2015, the Company received a notice of deemed liquidation from a majority of the outstanding Convertible Preferred Stockholders in which they requested redemption of their Convertible Preferred Stock. On February 23, 2015 the Company paid an aggregate of $1,287,737 to the Convertible Preferred Stockholders, in order to redeem all of the outstanding shares of Convertible Preferred Stock.

 

Stock Repurchase

 

In September 2002 and January 2004, the Board authorized the repurchase of up to an aggregate of 486,200 shares of outstanding common stock. Under those authorizations, through December 31, 2015, the Company repurchased an aggregate of 224,690 shares at a cost of approximately $487,000. During the three months ended December 31, 2015, the Company repurchased and retired an aggregate of 1,076 shares of its outstanding restricted common stock at a cost of approximately $2,000 in connection with the vesting of employee restricted stock awards, wherein certain employees surrendered a portion of their award in order to fund certain tax withholding obligations.

 

Changes in Shareholders’ Equity

 

Changes in shareholders’ equity for the three months ended December 31, 2015 are summarized below:

 

 

                          Accumulated        
              Additional           Other        
  Common Stock     Paid-In     Accumulated     Comprehensive        
  Shares     Amount     Capital     Deficit     Loss     Total  
                                   
Balance - September 30, 2015   8,641,755   $     86,418   $      17,550,047    $ (10,281,367 )   $             (21,785 )    $  7,333,313  
Restricted stock award issuances        17,500                175                      (175)                          -                               -                        -    
Restricted stock repurchased and retired        (1,076)                (11)                   (1,656)                          -                               -                (1,667)  
Share-based compensation                -                    -                     81,593                          -                               -                81,593  
Foreign currency translation                -                    -                            -                            -                           (436)                 (436)  
Net loss                -                    -                            -                  244,080                             -              244,080  
Balance - December 31, 2015   8,658,179   $     86,582   $      17,629,809   $    (10,037,287)   $              (22,221)   $   7,656,883  
                                   

 

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

XML 20 R10.htm IDEA: XBRL DOCUMENT v3.3.1.900
SHARE-BASED COMPENSATION
3 Months Ended
Dec. 31, 2015
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
SHARE-BASED COMPENSATION

NOTE 5     SHARE-BASED COMPENSATION

 

Stock Option Awards

 

There were no options granted during the three months ended December 31, 2015 and 2014.

 

The Company recognized compensation expense of approximately $4,000 and $12,000 in continuing operations for stock option awards in its condensed consolidated statements of operations and comprehensive income (loss) for the three month periods ended December 31, 2015 and 2014, respectively.

 

As of December 31, 2015, there was approximately $25,000 of total unrecognized compensation cost related to unvested stock option awards, which is expected to be recognized over the remainder of the weighted average vesting period of 1.6 years.

 

The following table summarizes stock option activity during the three months ended December 31, 2015:

 

            Weighted       
        Weighted    Average       
        Average    Remaining       
  Number of      Exercise    Life      Intrinsic 
  Options      Price    In Years      Value 
Outstanding, September 30, 2015  311,000    2.39           
Granted               
Exercised               
Forfeited               
Outstanding, December 31, 2015  311,000    2.39    5.5    73,325 
 
Exercisable, December 31, 2015  235,125    2.84    4.3    17,600 

 

The following table provides additional information regarding stock option awards that were outstanding and exercisable at December 31, 2015:

 

 
 
Options Outstanding      Options Exercisable 
      Weighted          Weighted    Weighted     
      Average    Outstanding      Average    Average    Exercisable 
Exercise      Exercise    Number of      Exercise    Remaining Life    Number of 
Price      Price    Options      Price    In Years    Options 
 
$0.64 to $1.99    0.93    122,500    1.28    6.2    55,000 
$2.00 to $2.99      2.46    96,000      2.46    3.6    95,750 
$3.00 to $3.99      3.74    72,500      3.74    5.1    64,375 
$4.00 to $6.02      6.02    20,000      6.02    0.3    20,000 
          311,000          4.3    235,125 

 

Restricted Stock Awards

 

On October 26, 2015, the Company granted 17,500 shares of restricted stock, pursuant to the 2007 Plan, to a director of the Company. The shares vested on December 31, 2015. The grant date value of $19,775 was recognized over the service period.

 

On October 26, 2015, the Company accelerated the vesting date of 35,000 shares of restricted stock that were previously granted to a director of the Company from February 23, 2016 to December 31, 2015. The Company analyzed the modification as of the modification date and determined that the modification did not result in any incremental compensation expense, however, the remaining unamortized compensation expense attributable to the original award was recognized over the modified remaining service period.

 

The Company recognized compensation expense of approximately $78,000 and $0 in continuing operations for restricted stock awards in its condensed consolidated statements of operations and comprehensive income (loss) for the three months ended December 31, 2015 and 2014, respectively.

 

As of December 31, 2015, there was approximately $53,000 of unrecognized compensation cost related to shares of unvested restricted stock, which is expected to be recognized over the remainder of the weighted average vesting period of 1 year.

 

The following table summarizes restricted stock activity during the three months ended December 31, 2015:

 

        Weighted     
        Average    Total
  Number of   Grant Date    Grant Date
  Shares   Fair Value    Fair Value
 
Non-vested, September 30, 2015  263,332     0.87    230,165  
Granted  17,500       1.13      19,775  
Vested  (69,166     1.04      (72,158
Forfeited  -           -  
Non-vested, December 31, 2015  211,666     0.84    177,782  
XML 21 R11.htm IDEA: XBRL DOCUMENT v3.3.1.900
INCOME (LOSS) PER SHARE
3 Months Ended
Dec. 31, 2015
Earnings Per Share [Abstract]  
INCOME (LOSS) PER SHARE

NOTE 6     INCOME (LOSS) PER SHARE

 

Basic income (loss) per share data for each period presented is computed using the weighted-average number of shares of common stock outstanding during each such period. Diluted income (loss) per share data is computed using the weighted-average number of common and dilutive common-equivalent shares outstanding during each period. Dilutive common-equivalent shares consist of (a) shares that would be issued upon the exercise of stock options and warrants, computed using the treasury stock method, (b) shares that would be issued upon the conversion of convertible preferred stock and (c) shares of non-vested restricted stock. Net income (loss) from continuing operations per basic and diluted share for the three months ended December 31, 2015 and 2014 is net of preferred stock cash dividends and accretion.

 

For the three months ended December 31, 2014, the Company did not have any effects of dilutive securities. For the three months ended December 31, 2015, the Company calculated the potential diluted earnings per share in accordance with ASC 260, as follows:

 

  For the Three Months Ended
  December 31, 
  2015    2014
Numerator:             
Net income (loss) from continuing operations applicable to common equity             
(numerator for basic and diluted earnings per share)  244,080    (1,975,485
 
Weighted average shares outstanding (denominator for basic earnings per share)    8,387,501      8,443,391  
 
Effective of dilutive securities             
Assumed exercise of stock options, treasury stock method    30,271      -  
Assumed exercise of warrants, treasury stock method        -  
Assumed vesting of restricted stock, treasury stock method    203,752      -  
Dilutive potential common shares    234,023      -  
Denominator for diluted earnings per share - weighted average shares and             
assumed potential common shares    8,621,524      8,443,391  
 
Basic earnings (loss) from continuing operations per share  0.03    (0.23
Diluted earnings (loss) from continuing operations per share  0.03    (0.23

 

The following securities are excluded from the calculation of weighted average dilutive common shares because their inclusion would have been anti-dilutive:

 

  As of December 31, 
  2015    2014 
Options  208,500    618,500 
Warrants  723,846    723,846 
Convertible preferred stock    692,919 
Non-vested restricted stock    114,623 
Total potentially dilutive shares  932,346    2,149,888 
XML 22 R12.htm IDEA: XBRL DOCUMENT v3.3.1.900
COMMITMENTS AND CONTINGENCIES
3 Months Ended
Dec. 31, 2015
Commitments and Contingencies Disclosure [Abstract]  
COMMITMENTS AND CONTINGENCIES

NOTE 7     COMMITMENTS AND CONTINGENCIES 

 

Former CFO Agreement 

 

On February 16, 2015, the Company entered into a settlement agreement and mutual release with the Company’s former Chief Financial Officer (“Former CFO”), James McKenna, in connection with a lawsuit filed by Mr. McKenna on August 26, 2014 in the U.S. District Court for the Southern District of New York against the Company and then-directors Frank LaGrange Johnson, Robert Garrett, John F. Chiste, Timothy Gordon and Owen P.J. King (the “SDNY Lawsuit”), alleging purported claims of retaliation for whistleblowing under the Dodd-Frank Act, breach of contract and breach of the covenant of good faith and fair dealing all as against the Company, and a single claim for tortious interference with contract as against the individual defendants. The complaint sought an unspecified amount of monetary consequential damages and punitive damages. Pursuant to the agreement, Mr. McKenna and the Company have agreed to settle and release all disputes or claims against the other party related to the SDNY Lawsuit and any such disputes or claims arising out of Mr. McKenna’s employment with the Company, without an admission of liability or wrongdoing. Under the Agreement, Mr. McKenna received a cash payment of $315,000, representing 18 months' salary at the rate specified in Mr. McKenna’s Amended Employment Agreement, signed between the Company and Mr. McKenna and dated October 26, 2012. Mr. McKenna also received approximately $375,000 in legal fees, back pay, prior out-of-pocket benefits, taxes and penalties on Mr. McKenna’s 401(k) loan, and accrued paid time off, in addition to 35,000 restricted stock units vesting immediately. The Agreement includes customary non-disparagement and release provisions. As of December 31, 2015, the remaining obligation to the Former CFO of approximately $30,000 is reflected as an accrual in the condensed consolidated balance sheet.

XML 23 R13.htm IDEA: XBRL DOCUMENT v3.3.1.900
RELATED PARTY TRANSACTIONS
3 Months Ended
Dec. 31, 2015
Related Party Transactions [Abstract]  
RELATED PARTY TRANSACTIONS

NOTE 8     RELATED PARTY TRANSACTIONS

 

New York Office Services Agreement

 

On February 1, 2014, the Company began leasing office space in New York, New York for its then Chief Executive Officer at a rate of $2,500 per month from LaGrange Capital Administration, L.L.C. (“LCA”). Frank LaGrange Johnson, the Company’s former Chairman of the Board, serves as the Managing Member of LCA. This lease was month-to-month and was cancellable by either the Company or LCA at any time. Effective April 1, 2014, LCA increased the monthly rental charge (inclusive of rent, allocable share of office assistant, and equipment leases) from $2,500 to approximately $12,700 per month. On January 16, 2015, the Company provided notice to LCA that it was immediately terminating the New York Office Services Agreement. During the three months ended December 31, 2015 and 2014, the Company recognized $0 and approximately $38,000, respectively, of rent expense related to the New York office.

 

Buying Agency and Supply Agreement

 

On March 12, 2012, the Company, entered into a Buying Agency and Supply Agreement (the “Agreement”) with Forward Industries Asia-Pacific Corporation (f/k/a Seaton Global Corporation), a British Virgin Islands corporation (“Forward China”). On March 13, 2014 and March 11, 2015, the Company entered into amendments to the Agreement with Forward China. The Agreement, as amended, provides that, upon the terms and subject to the conditions set forth therein, Forward China will act as the Company’s exclusive buying agent and supplier of Products (as defined in the Agreement) in the Asia Pacific region. The Company purchases products at Forward China’s cost and pays a service fee to Forward China. The service fee is calculated at $100K monthly plus 4% of “Adjusted Gross Profit.” “Adjusted Gross Profit” is defined as the selling price less the cost from Forward China. The amended Agreement was terminated on September 11, 2015 and the Company entered into a new Supply Agreement on substantially similar terms on September 9, 2015 which will expire on September 8, 2016, subject to renewal. Terence Bernard Wise, a director of the Company, is a principal of Forward China. In addition, Jenny P. Yu, a Managing Director of Forward China, beneficially owns more than 5% of the Company’s shares of common stock. The Company recognized approximately $373,000 and $287,000, respectively, during the three months ended December 31, 2015 and 2014 in service fees paid to Forward China, which are included as a component of costs of goods sold in continuing operations in the accompanying condensed consolidated statements of operations and comprehensive income (loss).

 

Investment Management Agreement

 

On April 16, 2013, the Company entered into an Investment Management Agreement (the “Investment Management Agreement”) with LCA, pursuant to which the Company retained LCA to manage certain investment accounts funded by the Company (collectively, the “Account”). Operations ceased just prior to December 31, 2014 and the Investment Management Agreement formally terminated effective February 1, 2015.

 

There were no new funds invested with LCA during the three months ended December 31, 2014. During the three months ended December 31, 2014, the Company purchased approximately $11,000 of marketable securities and sold approximately $952,000 of marketable securities. As a result of these activities, the Company recognized approximately $110,000 of net investment losses during the three months ended December 31, 2014. The Company didn’t recognize any advisory fee or performance fee expense during the three months ended December 31, 2014,

XML 24 R14.htm IDEA: XBRL DOCUMENT v3.3.1.900
LEGAL PROCEEDINGS
3 Months Ended
Dec. 31, 2015
Legal Matters and Contingencies [Abstract]  
LEGAL PROCEEDINGS

NOTE 9     LEGAL PROCEEDINGS

 

From time to time, the Company may become a party to legal actions or proceedings in the ordinary course of its business. As of December 31, 2015, there were no such actions or proceedings, either individually or in the aggregate, that, if decided adversely to the Company’s interests, the Company believes would be material to its business.

XML 25 R15.htm IDEA: XBRL DOCUMENT v3.3.1.900
ACCOUNTING POLICIES (Policies)
3 Months Ended
Dec. 31, 2015
Accounting Policies [Abstract]  
Accounting Estimates

Accounting Estimates

 

The preparation of the Company’s condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates and assumptions.

Basis of Presentation

Basis of Presentation

 

The accompanying condensed consolidated financial statements include the accounts of Forward Industries, Inc. and its wholly owned subsidiaries (Forward US, Forward Switzerland, Forward HK (inactive) and Forward UK (inactive)). All significant intercompany transactions and balances have been eliminated in consolidation.

Income Taxes

Income Taxes

 

The Company accounts for its income taxes in accordance with U.S. GAAP, which requires, among other things, recognition of future tax benefits and liabilities measured at enacted rates attributable to temporary differences between financial statement and income tax bases of assets and liabilities and to net tax operating loss carry-forwards to the extent that realization of these benefits is more likely than not. As of December 31, 2015, there was no change to our assessment that a full valuation allowance was required against all net deferred tax assets. Accordingly, any deferred tax provision or benefit was offset by an equal and opposite change to the valuation allowance. No current book tax provision was recorded against book net income due to the existence of significant net operating loss carryforwards.

Revenue Recognition

Revenue Recognition

 

The Company generally recognizes revenue from product sales to its customers when: (1) title and risk of loss are transferred (in general, these conditions occur at either point of shipment or point of destination, depending on the terms of sale); (2) persuasive evidence of an arrangement exists; (3) the Company has no continuing obligations to the customer; and (4) collection of the related accounts receivable is reasonably assured.

Share-Based Payment Expense

Share-Based Payment Expense

 

The Company recognizes employee and director share-based compensation in its condensed consolidated statements of operations and comprehensive income (loss) at the grant-date fair value of stock options and other equity-based compensation. The determination of stock option grant-date fair value is estimated using the Black-Scholes option-pricing model, which includes variables such as the expected volatility of the Company’s share price, the exercise behavior of its grantees, interest rates, and dividend yields. These variables are projected based on the Company’s historical data, experience, and other factors. In the case of awards with multiple vesting periods, the Company has elected to use the graded vesting attribution method, which recognizes compensation cost on a straight-line basis over each separately vesting portion of the award as if the award was, in-substance, multiple awards. Refer to Note 5 - Share-Based Compensation. In addition, the Company recognizes share-based compensation to non-employees based upon the fair value, using the Black-Scholes option pricing model, determined at the deemed measurement dates over the related contract service period.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

 

In May 2014, the Financial Accounting Standards Board (“FASB”) issued ASU 2014-09, “Revenue from Contracts with Customers,” (“ASU 2014-09”). ASU 2014-09 supersedes the revenue recognition requirements in Accounting Standards Codification (“ASC”) 605 -Revenue Recognition and most industry-specific guidance throughout the ASC. The standard requires that an entity recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. ASU 2014-09 was further amended and is effective for annual periods and interim periods within those annual periods beginning after December 15, 2017 and should be applied retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying ASU 2014-09 recognized at the date of initial application. The Company is currently evaluating the impact of the adoption of ASU 2014-09 on its consolidated financial statements.

 

In July 2015, the FASB issued ASU 2015-11, "Inventory (Topic 330): Simplifying the Measurement of Inventory," which applies to inventory that is measured using first- in, first-out ("FIFO") or average cost. Under the updated guidance, an entity should measure inventory that is within scope at the lower of cost and net realizable value, which is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. Subsequent measurement is unchanged for inventory that is measured using last-in, last-out ("LIFO"). This ASU is effective for annual and interim periods beginning after December 15, 2016, and should be applied prospectively with early adoption permitted at the beginning of an interim or annual reporting period. The Company is currently evaluating the impact of adopting this guidance.

 

In November 2015, the FASB issued ASU 2015-17, "Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes," which applies to the classification of deferred tax assets and liabilities. The update eliminates the requirement to classify deferred tax assets and liabilities as noncurrent or current within a classified statement of financial position. This ASU is effective for annual and interim periods beginning after December 15, 2016, and should be applied prospectively with early adoption permitted at the beginning of an interim or annual reporting period. The Company is currently evaluating the impact of adopting this guidance.

XML 26 R16.htm IDEA: XBRL DOCUMENT v3.3.1.900
DISCONTINUED OPERATIONS (Tables)
3 Months Ended
Dec. 31, 2015
Discontinued Operations and Disposal Groups [Abstract]  
Schedule of summarized operating results of discontinued operations

Summarized operating results of discontinued operations are presented in the following table:

 

  For the Three Months Ended
  December 31,
  2015    2014
Net sales    -  
Gross loss        -  
Operating (expenses)        (1,082
Other income        200,045  
Income from discontinued operations, net    198,963  
XML 27 R17.htm IDEA: XBRL DOCUMENT v3.3.1.900
SHAREHOLDERS' EQUITY (Tables)
3 Months Ended
Dec. 31, 2015
Stockholders' Equity Note [Abstract]  
Schedule of changes in shareholders' equity

  Changes in shareholders’ equity for the three months ended December 31, 2015 are summarized below:

 

 

                          Accumulated        
              Additional           Other        
  Common Stock     Paid-In     Accumulated     Comprehensive        
  Shares     Amount     Capital     Deficit     Loss     Total  
                                   
Balance - September 30, 2015   8,641,755   $     86,418   $      17,550,047    $ (10,281,367 )   $             (21,785 )    $  7,333,313  
Restricted stock award issuances        17,500                175                      (175)                          -                               -                        -    
Restricted stock repurchased and retired        (1,076)                (11)                   (1,656)                          -                               -                (1,667)  
Share-based compensation                -                    -                     81,593                          -                               -                81,593  
Foreign currency translation                -                    -                            -                            -                           (436)                 (436)  
Net loss                -                    -                            -                  244,080                             -              244,080  
Balance - December 31, 2015   8,658,179   $     86,582   $      17,629,809   $    (10,037,287)   $              (22,221)   $   7,656,883  
                                   
XML 28 R18.htm IDEA: XBRL DOCUMENT v3.3.1.900
SHARE-BASED COMPENSATION (Tables)
3 Months Ended
Dec. 31, 2015
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Schedule of stock option activity

The following table summarizes stock option activity during the three months ended December 31, 2015:

 

            Weighted       
        Weighted    Average       
        Average    Remaining       
  Number of      Exercise    Life      Intrinsic 
  Options      Price    In Years      Value 
Outstanding, September 30, 2015  311,000    2.39           
Granted               
Exercised               
Forfeited               
Outstanding, December 31, 2015  311,000    2.39    5.5    73,325 
 
Exercisable, December 31, 2015  235,125    2.84    4.3    17,600 
Schedule of additional information regarding stock option awards

The following table provides additional information regarding stock option awards that were outstanding and exercisable at December 31, 2015:

 

 
 
Options Outstanding      Options Exercisable 
      Weighted          Weighted    Weighted     
      Average    Outstanding      Average    Average    Exercisable 
Exercise      Exercise    Number of      Exercise    Remaining Life    Number of 
Price      Price    Options      Price    In Years    Options 
 
$0.64 to $1.99    0.93    122,500    1.28    6.2    55,000 
$2.00 to $2.99      2.46    96,000      2.46    3.6    95,750 
$3.00 to $3.99      3.74    72,500      3.74    5.1    64,375 
$4.00 to $6.02      6.02    20,000      6.02    0.3    20,000 
          311,000          4.3    235,125 
Schedule Of summarizes restricted stock activity

The following table summarizes restricted stock activity during the three months ended December 31, 2015:

 

        Weighted     
        Average    Total
  Number of   Grant Date    Grant Date
  Shares   Fair Value    Fair Value
 
Non-vested, September 30, 2015  263,332     0.87    230,165  
Granted  17,500       1.13      19,775  
Vested  (69,166     1.04      (72,158
Forfeited  -           -  
Non-vested, December 31, 2015  211,666     0.84    177,782  
XML 29 R19.htm IDEA: XBRL DOCUMENT v3.3.1.900
INCOME (LOSS) PER SHARE (Tables)
3 Months Ended
Dec. 31, 2015
Earnings Per Share [Abstract]  
Schedule of calculated potential diluted earnings per share

For the three months ended December 31, 2015, the Company calculated the potential diluted earnings per share in accordance with ASC 260, as follows:

 

  For the Three Months Ended
  December 31, 
  2015    2014
Numerator:             
Net income (loss) from continuing operations applicable to common equity             
(numerator for basic and diluted earnings per share)  244,080    (1,975,485
 
Weighted average shares outstanding (denominator for basic earnings per share)    8,387,501      8,443,391  
 
Effective of dilutive securities             
Assumed exercise of stock options, treasury stock method    30,271      -  
Assumed exercise of warrants, treasury stock method        -  
Assumed vesting of restricted stock, treasury stock method    203,752      -  
Dilutive potential common shares    234,023      -  
Denominator for diluted earnings per share - weighted average shares and             
assumed potential common shares    8,621,524      8,443,391  
 
Basic earnings (loss) from continuing operations per share  0.03    (0.23
Diluted earnings (loss) from continuing operations per share  0.03    (0.23
Schedule of securities are excluded from the calculation of weighted average dilutive common shares

The following securities are excluded from the calculation of weighted average dilutive common shares because their inclusion would have been anti-dilutive:

 

  As of December 31, 
  2015    2014 
Options  208,500    618,500 
Warrants  723,846    723,846 
Convertible preferred stock    692,919 
Non-vested restricted stock    114,623 
Total potentially dilutive shares  932,346    2,149,888 
XML 30 R20.htm IDEA: XBRL DOCUMENT v3.3.1.900
DISCONTINUED OPERATIONS - Summary of operating results of discontinued operations (Details) - USD ($)
3 Months Ended
Dec. 31, 2015
Dec. 31, 2014
Discontinued Operations and Disposal Groups [Abstract]    
Net sales
Gross loss
Operating (expenses) $ (1,082)
Other income 200,045
Income from discontinued operations, net $ 198,963
XML 31 R21.htm IDEA: XBRL DOCUMENT v3.3.1.900
DISCONTINUED OPERATIONS (Details Narrative) - USD ($)
3 Months Ended
Dec. 31, 2014
Jul. 03, 2013
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]    
Other income $ 200,000  
G Form LLC [Member]    
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]    
Accounts Receivable   $ 280,000
XML 32 R22.htm IDEA: XBRL DOCUMENT v3.3.1.900
SHAREHOLDERS' EQUITY (Details)
3 Months Ended
Dec. 31, 2015
USD ($)
shares
Common Stock  
Balance $ 86,418
Balance, Shares | shares 8,641,755
Restricted stock award issuances $ 175
Restricted stock award issuances, Shares | shares 17,500
Restricted stock repurchased and retired $ (11)
Restricted stock repurchased and retired, Shares | shares (1,076)
Share-based compensation
Foreign currency translation
Net loss
Balance $ 86,582
Balance, Shares | shares 8,658,179
Additional Paid-in Capital  
Balance $ 17,550,047
Restricted stock award issuances (175)
Restricted stock repurchased and retired (1,656)
Share-based compensation $ 81,593
Foreign currency translation
Net loss
Balance $ 17,629,809
Accumulated Deficit  
Balance $ (10,281,367)
Restricted stock award issuances
Restricted stock repurchased and retired
Share-based compensation
Foreign currency translation
Net loss $ 244,080
Balance (10,037,287)
Accumulated Other Comprehensive Loss  
Balance $ (21,785)
Restricted stock award issuances
Restricted stock repurchased and retired
Share-based compensation
Foreign currency translation $ (436)
Net loss
Balance $ (22,221)
Balance $ 7,333,313
Restricted stock award issuances
Restricted stock repurchased and retired $ (1,667)
Share-based compensation 81,593
Foreign currency translation (436)
Net loss 244,080
Balance $ 7,656,883
XML 33 R23.htm IDEA: XBRL DOCUMENT v3.3.1.900
SHAREHOLDERS' EQUITY (Details Narratives) - USD ($)
3 Months Ended
Dec. 31, 2015
Dec. 31, 2014
Feb. 23, 2015
Jan. 31, 2004
Sep. 30, 2002
Temporary Equity [Line Items]          
Payment for redemption of outstanding shares of Convertible Preferred Stock     $ 1,287,737    
Stock Repurchased and Retired During Period, Value $ (1,667)        
Convertible Preferred Stock [Member]          
Temporary Equity [Line Items]          
Dividends, Preferred Stock $ 0 $ 19,000      
Preferred Stock, Dividend Rate, Percentage 6.00%        
Dividends Preferred Stock Including Accretion $ 0 $ 474,000      
Common Stock          
Temporary Equity [Line Items]          
Stock Repurchase Program, Number of Shares Authorized to be Repurchased       486,200 486,200
Stock Repurchased During Period, Shares 224,690        
Stock Repurchased During Period, Value $ 487,000        
Stock Repurchased and Retired During Period, Shares (1,076)        
Stock Repurchased and Retired During Period, Value $ (11)        
Restricted Stock [Member]          
Temporary Equity [Line Items]          
Stock Repurchased and Retired During Period, Shares 1,076        
Stock Repurchased and Retired During Period, Value $ 2,000        
XML 34 R24.htm IDEA: XBRL DOCUMENT v3.3.1.900
SHARE-BASED COMPENSATION (Details) - Employee Stock Option [Member]
3 Months Ended
Dec. 31, 2015
USD ($)
$ / shares
shares
Number of Options  
Shares, Outstanding at Beginning | shares 311,000
Shares, Granted | shares 0
Shares, Exercised | shares 0
Shares, Forfeited | shares 0
Shares, Outstanding at Ending | shares 311,000
Shares, Exercisable | shares 235,125
Weighted Average Exercise Price  
Weighted average exercise price, Outstanding at Beginning | $ / shares $ 2.39
Weighted average exercise price, Granted | $ / shares 0.00
Weighted average exercise price, Exercised | $ / shares 0.00
Weighted average exercise price, Forfeited | $ / shares 0.00
Weighted average exercise price, Outstanding at Ending | $ / shares 2.39
Weighted average exercise price, Exercisable | $ / shares $ 2.84
Weighted Average Remaining life In Years  
Weighted average remaining contractual term (Years), Outstanding 5 years 6 months
Weighted average remaining contractual term (Years), Exercisable 4 years 3 months 18 days
Intrinsic Value  
Intrinsic value, Outstanding | $ $ 73,325
Intrinsic value, Exercisable | $ $ 17,600
XML 35 R25.htm IDEA: XBRL DOCUMENT v3.3.1.900
SHARE-BASED COMPENSATION (Details 1)
3 Months Ended
Dec. 31, 2015
$ / shares
shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]  
Options Outstanding, Outstanding Number of Options | shares 311,000
Options Exercisable, Weighted Average Remaining Life In Years 4 years 3 months 18 days
Options Exercisable, Exercisable Number of Options | shares 235,125
Exercise Price One [Member]  
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]  
Exercise price lower limit $ 0.64
Exercise price upper limit 1.99
Options Outstanding, Weighted average exercise price $ 0.93
Options Outstanding, Outstanding Number of Options | shares 122,500
Options Exercisable, Weighted average exercise price $ 1.28
Options Exercisable, Weighted Average Remaining Life In Years 6 years 2 months 12 days
Options Exercisable, Exercisable Number of Options | shares 55,000
Exercise Price Two [Member]  
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]  
Exercise price lower limit $ 2.00
Exercise price upper limit 2.99
Options Outstanding, Weighted average exercise price $ 2.46
Options Outstanding, Outstanding Number of Options | shares 96,000
Options Exercisable, Weighted average exercise price $ 2.46
Options Exercisable, Weighted Average Remaining Life In Years 3 years 7 months 6 days
Options Exercisable, Exercisable Number of Options | shares 95,750
Exercise Price Three [Member]  
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]  
Exercise price lower limit $ 3.00
Exercise price upper limit 3.99
Options Outstanding, Weighted average exercise price $ 3.74
Options Outstanding, Outstanding Number of Options | shares 72,500
Options Exercisable, Weighted average exercise price $ 3.74
Options Exercisable, Weighted Average Remaining Life In Years 5 years 1 month 6 days
Options Exercisable, Exercisable Number of Options | shares 64,375
Exercise Price Four [Member]  
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]  
Exercise price lower limit $ 4.00
Exercise price upper limit 6.02
Options Outstanding, Weighted average exercise price $ 6.02
Options Outstanding, Outstanding Number of Options | shares 20,000
Options Exercisable, Weighted average exercise price $ 6.02
Options Exercisable, Weighted Average Remaining Life In Years 3 months 18 days
Options Exercisable, Exercisable Number of Options | shares 20,000
XML 36 R26.htm IDEA: XBRL DOCUMENT v3.3.1.900
SHARE-BASED COMPENSATION (Details 2) - Restricted Stock [Member]
3 Months Ended
Dec. 31, 2015
USD ($)
$ / shares
shares
Number of Shares  
Shares, Non-vested balance | shares 263,332
Shares granted | shares 17,500
Shares vested | shares (69,166)
Shares forfeited | shares 0
Shares, Non-vested balance | shares 211,666
Weighted Average Grant Date Fair Value  
Weighted average grant date fair value, Non-vested balance | $ / shares $ 0.87
Weighted average grant date fair value, granted | $ / shares 1.13
Weighted average grant date fair value, vested | $ / shares 1.04
Weighted average grant date fair value, forfeited | $ / shares 0.00
Weighted average grant date fair value, Non-vested balance | $ / shares $ 0.84
Total Grant Date Fair Value  
Total grant date fair value, Non-vested balance | $ $ 230,165
Total grant date fair value, granted | $ 19,775
Total grant date fair value, vested | $ (72,158)
Total grant date fair value, forfeited | $ 0
Total grant date fair value, Non-vested balance | $ $ 177,782
XML 37 R27.htm IDEA: XBRL DOCUMENT v3.3.1.900
SHARE-BASED COMPENSATION (Details Narrative) - USD ($)
1 Months Ended 3 Months Ended 10 Months Ended
Oct. 26, 2015
Dec. 31, 2015
Dec. 31, 2014
Dec. 31, 2015
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]        
Allocated Share-based Compensation Expense   $ 4,000 $ 12,000  
Unrecognized compensation expense   $ 25,000   $ 25,000
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period   1 year 7 months 6 days    
Restricted Stock [Member]        
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]        
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested, Number of Shares       35,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested in Period, Fair Value   $ 72,158    
Allocated Share-based Compensation Expense   78,000 $ 0  
Unrecognized compensation expense   $ 53,000   $ 53,000
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period   1 year    
Restricted Stock [Member] | 2007 Plan [Member]        
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]        
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested, Number of Shares 17,500      
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested in Period, Fair Value $ 19,775      
XML 38 R28.htm IDEA: XBRL DOCUMENT v3.3.1.900
INCOME (LOSS) PER SHARE (Details) - USD ($)
3 Months Ended
Dec. 31, 2015
Dec. 31, 2014
Numerator:    
Net income (loss) from continuing operations applicable to common equity (numerator for basic and diluted earnings per share) $ 244,080 $ (1,975,485)
Weighted average shares outstanding (denominator for basic earnings per share) 8,387,501 8,443,391
Effective of dilutive securities    
Assumed exercise of stock options, treasury stock method 30,271
Assumed exercise of warrants, treasury stock method
Assumed vesting of restricted stock, treasury stock method 203,752
Dilutive potential common shares 234,023
Denominator for diluted earnings per share - weighted average shares and assumed potential common shares 8,621,524 8,443,391
Basic earnings (loss) from continuing operations per share $ 0.03 $ (0.23)
Diluted earnings (loss) from continuing operations per share $ 0.03 $ (0.23)
XML 39 R29.htm IDEA: XBRL DOCUMENT v3.3.1.900
INCOME (LOSS) PER SHARE (Details 1) - shares
3 Months Ended
Dec. 31, 2015
Dec. 31, 2014
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]    
Total potentially dilutive shares 932,346 2,149,888
Convertible Preferred Stock [Member]    
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]    
Total potentially dilutive shares 0 692,919
Options [Member]    
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]    
Total potentially dilutive shares 208,500 618,500
Warrants [Member]    
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]    
Total potentially dilutive shares 723,846 723,846
Non-Vested Restricted Stock [Member]    
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]    
Total potentially dilutive shares 0 114,623
XML 40 R30.htm IDEA: XBRL DOCUMENT v3.3.1.900
COMMITMENTS AND CONTINGENCIES (Details Narrative) - Former Chief Financial Officer [Member] - USD ($)
1 Months Ended
Feb. 16, 2015
Dec. 31, 2015
Remaining obligation   $ 30,000
Cash payment lieu of salary $ 315,000  
Number of shares vested immediately 35,000  
Paid litigation settlement $ 375,000  
XML 41 R31.htm IDEA: XBRL DOCUMENT v3.3.1.900
RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($)
1 Months Ended 3 Months Ended
Apr. 02, 2014
Feb. 02, 2014
Sep. 30, 2015
Dec. 31, 2015
Dec. 31, 2014
Related Party Transaction [Line Items]          
Service Fees Paid Expenses Related Parties       $ 373,000 $ 287,000
Payments to Acquire Marketable Securities, Total       10,898
Proceeds from Sale and Maturity of Marketable Securities, Total       952,127
Marketable Securities, Realized Gain (Loss), Total       110,001
Buying Agency and Supply Agreement [Member]          
Related Party Transaction [Line Items]          
Service Fees Paid Expenses Related Parties     $ 100,000    
Adjusted groos profit percentage     4.00%    
LaGrange Capital Administration, L.L.C. [Member] | Chief Executive Officer [Member]          
Related Party Transaction [Line Items]          
Operating Leases, Rent Expense, Net   $ 2,500      
New York office [Member] | LaGrange Capital Administration, L.L.C. [Member]          
Related Party Transaction [Line Items]          
Operating Leases, Rent Expense, Net $ 2,500     $ 0 $ 38,000
Operating Leases, Rent Expense, Contingent Rentals $ 12,700        
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